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, 2000
                                       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  16,  2001  was  $35,317,552.  The  number  of  shares
outstanding of the Registrant's Common Stock as of March 16, 2001 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 2001 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,  2001,  operated  seventeen
banking  offices in  Kentucky,  six  banking  offices in Ohio,  and six  banking
offices in West Virginia  through its eight bank  subsidiaries  (the  "Affiliate
Banks").  At December 31, 2000, Premier had total consolidated  assets of $889.9
million,  total  consolidated  deposits of $728.4 million and total consolidated
shareholders' equity of $55.8 million.

         Premier  began  an  acquisition   program  in  1993  and  acquired  six
commercial  banks and five branches of other  commercial  banks through December
31, 2000.  Premier also owns nonbank  subsidiaries that provide consumer lending
and data processing services.

     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 one of its subsidiary  banks, the Bank
of Mt.  Vernon.  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.

         Premier will  continue to explore  opportunities  permitted by the Bank
Holding  Company  Act of 1956,  as amended  (the "BHC Act").  Premier  regularly
reviews,  analyzes  and engages in  discussions  regarding  possible  additional
acquisitions,  but only if they meet Premier's long term  objectives.  It is not
presently  known  whether,  or on what terms,  such  discussions  will result in
further transactions,  if any. Premier generally does not announce a transaction
until after the execution of a definitive agreement.

         During June 2000,  the Company  announced  a  management  change in the
appointment  of  Gardner  E.  Daniel  to the  position  of  President  and Chief
Executive  Officer.  An executive  search committee has been appointed to seek a
successor for Mr. Daniel who is currently serving on an interim basis.

         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
<PAGE>
conducive  to friendly,  informed  and  courteous  service.  This  decentralized
approach also enables each Bank to offer local and timely  decision-making,  and
flexible and reasonable operating procedures and credit policies limited only by
a framework  of  centralized  risk  controls  provided by the Company to promote
prudent  banking  practices.  Each Bank maintains its community  orientation by,
among other things,  having selected  members of its community as members of its
board of directors,  who assist in the introduction of prospective  customers to
the Bank and in the development or modification of products and services to meet
customer needs. As a result of the development of personal banking relationships
with its customers and the  convenience  and service  offered by the Banks,  the
Banks' lending and investing activities are funded primarily by core deposits.

         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 seven of the Banks as well as one  non-affiliated
bank.

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

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

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

Competition

         The  Banks  encounter  strong  competition  both in  making  loans  and
attracting deposits. The deregulation of the banking industry and the widespread
enactment of state laws that permit multi-bank  holding companies as well as the
availability of nationwide  interstate banking have created a highly competitive
environment  for  financial  services  providers.  In one or more aspects of its
business,  each Bank  competes  with other  commercial  banks,  savings and loan
associations,   credit  unions,  finance  companies,   mutual  funds,  insurance
companies,  brokerage  and  investment  banking  companies  and other  financial
intermediaries  operating  in  its  market  and  elsewhere,  many  of 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
<PAGE>
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 per-sonal  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.

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

         Both federal and state law extensively regulates various aspects of the
banking business, such as reserve and capital requirements, truth-in-lending and
truth-in-savings  disclosure,  equal credit opportunity,  fair credit reporting,
trading in securities  and other  aspects of banking  operations.  Premier,  the
Affiliate  Banks and  Premier's  nonbank  subsidiaries  are also affected by the
fiscal and monetary  policies of the federal  government and the Federal Reserve
and by various other governmental laws,  regulations and requirements.  Further,
the earnings of Premier and  Affiliate  Banks are  affected by general  economic
conditions and prevailing interest rates. Legislation and administrative actions
affecting the banking  industry are  frequently  considered by the United States
Congress, state legislatures and various regulatory agencies. It is not possible
to predict with certainty  whether such  legislation or  administrative  actions
will be enacted or the extent to which the  banking  industry,  in  general,  or
Premier and the Affiliate Banks, in particular, would be affected.
<PAGE>
Liability for Bank Subsidiaries - The Federal Reserve has a policy to the effect
that a bank  holding  company is  expected to act as a source of  financial  and
managerial  strength to each of its subsidiary  banks and to maintain  resources
adequate to support each such  subsidiary  bank. This support may be required at
times when  Premier may not have the  resources to provide it. In the event of a
bank holding company's bankruptcy, any commitment by the bank holding company to
a federal bank  regulatory  agency to maintain the capital of a subsidiary  bank
would be assumed by the bankruptcy trustee and entitled to priority of payment.

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

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

         Bank holding  companies  currently  are required to maintain Tier I and
total capital (the sum of Tier 1 and Tier 2 capital) equal to at least 4% and 8%
of total risk-weighted assets,  respectively.  At December 31, 2000, Premier met
both requirements,  with Tier I and total capital equal to 9.0% and 12.0% 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, 2000, Premier's leverage ratio was 6.1%.

         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.
<PAGE>
         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.

         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.

         Three of the  company's  subsidiaries,  Citizens  Deposit Bank & Trust,
Bank of Germantown and Bank of Mt. Vernon,  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, 2000,  approximately  $2.3 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.
<PAGE>
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."

         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.

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

Number  of  Employees  - The  Company  and  its  subsidiaries  collectively  had
approximately  361 full-time  equivalent  employees as of December 31, 2000. Its
executive  offices  are  located  at  115  North  Hamilton  Street,  Georgetown,
Kentucky, telephone number (502) 863-1955 (facsimile number (502) 863-5604).


Item 2.  Properties

         The Company owns 115 North Hamilton Street in Georgetown,  Kentucky, at
which the  Company's  executive  offices  are  located.  The  Company  also owns
property located at 104 Jefferson Street, Brooksville, Kentucky, which serves as
a branch for Bank of Germantown.  In South Webster, Ohio, Premier owns 110 North
Jackson  Street,  which is the site occupied by a branch of Ohio River Bank. The
Company also owns 120 Main Street in Mt.  Vernon,  Kentucky,  which it currently
leases.  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 five branch offices in Lewis County,
Kentucky,  including one leased facility. The Bank of Germantown,  with its main
office located on Highway 10 in Germantown,  Kentucky,  has 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,
as a result  of the  merger  with  another  Premier  affiliate,  Citizens  Bank,
Sharpsburg in October 2000. Farmers Deposit Bank, in addition to its main office
at 5230 South Main  Street in  Eminence,  Kentucky,  has two  branches  in Henry
County,  Kentucky.  The Sabina Bank, in addition to its main office at 135 North
Howard Street in Sabina, Ohio, has two branches,  one each located in Hardin and
Auglaize Counties,  Ohio. Ohio River Bank, in addition to its main office at 221
Railroad Street in Ironton, Ohio, has two branches, one each located in Lawrence
and Scioto Counties,  Ohio. The Bank of Philippi, in addition to its main office
at 2 South Main  Street in  Philippi,  West  Virginia,  has a branch  located in
Upshur County,  West Virginia,  and a loan production  office located in Barbour
County, West Virginia.  Boone County Bank, in addition to its main office at 300
State Street,  Madison, West Virginia,  has 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
<PAGE>
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, 2000, the Company had  approximately 766 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>
         1999:
           First Quarter                 $    0.15             $17.50         $14.00
           Second Quarter                     0.15              14.88          12.31
           Third Quarter                      0.15              14.44          11.00
           Fourth Quarter                     0.15              11.88           9.00
                                         ---------
                                         $    0.60
                                         =========

         2000:
           First Quarter                 $    0.15             $10.25         $ 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                 $       -             $ 7.25         $ 5.25
</TABLE>


        Due to Premier's recognition of an increase in problem assets, the Board
of Directors voluntarily 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,
2000, approximately $2.3 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>
                                              2000           1999            1998            1997           1996
                                              ----           ----            ----            ----           ----
Earnings
   Net interest income                   $      28,676   $      28,665  $      20,107   $      17,458   $      13,454
   Provision for loan losses                     4,932           3,294          1,742           1,399             953
   Non-interest income                           4,012           3,776          4,673           4,562           1,835
   Non-interest expense                         26,105          22,630         15,337          12,232           9,230
   Income taxes                                    316           1,927          1,997           2,605           1,588
     Net income                          $       1,335   $       4,590  $       5,704   $       5,784   $       3,518

Financial Position
   Total assets                          $     889,932   $     852,468  $     657,744   $     464,890   $     363,739
   Loans, net of unearned
     income                                    595,576         570,106        395,620         312,102         265,453
   Allowance for loan losses                     7,821           6,812          4,363           3,479           3,127
   Goodwill and other intangibles               22,856          24,339         21,555           7,262           5,565
   Securities                                  194,400         170,420        177,192          73,409          58,253
   Deposits                                    728,412         692,843        523,193         358,605         297,116
   Other borrowings                             71,240          73,929         47,670          21,842          15,392
   Debt                                         28,750          28,750         28,750          28,750               0
   Stockholders' equity                         55,830          52,127         54,399          52,007          48,694

Share Data
   Net income - basic                     $      .26      $      .88     $     1.09     $      1.11     $      .82
   Net income - diluted                          .26             .88           1.09            1.10            .82
   Book value                                  10.67            9.96          10.40            9.94           9.30
   Cash dividend                                0.15            0.60           0.60            0.55           0.50

Ratios
   Return on average assets                      .15%            .57%           .97%           1.29%          1.22%
   Return on average equity                     2.53%           8.54%         10.80%          11.51%          9.54%
   Dividend payout                             58.80%          68.41%         53.79%          41.60%         51.66%
   Stockholders' equity to total
     assets at period-end                       6.27%           6.11%          8.27%          11.19%         13.39%
   Average stockholders' equity
     to average total assets                    6.07%           6.72%          9.02%          11.21%         12.79%

Capital Ratios
   Equity to assets                             6.3%            6.1%           8.3%           11.2%          13.4%
   Leverage ratio                               6.1%            6.2%           8.1%           13.6%          12.2%
</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 2000,  Premier continued to consolidate its network of independently  managed
community  banks  into 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 one of its subsidiary  banks, the Bank of
Mt.  Vernon.  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 2000,  net income  was $1,335  compared  to $4,590  for 1999;  total  assets
increased  to $889,932  from the  $852,468  in 1999,  and  shareholders'  equity
increased to $55,830 from $52,127 in 1999.

Quarterly  unaudited  financial  information for the Company for the years ended
December 31, 2000 and 1999, 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
                                                         -----       ------       -----       ------       ----
   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                                   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
   1999
   ----      Interest Income                              $14,785      $15,672     $15,936     $16,479      $62,872
             Interest Expense                               8,067        8,427       8,541       9,172       34,207
             Net Interest Income                            6,718        7,245       7,395       7,307       28,665
             Provision for Loan Losses                        474          621       1,648         551        3,294
             Securities Gains                                  31         (26)           2          10           17
             Net Overhead                                   4,613        4,737       4,626       4,895       18,871
             Income before Income Taxes                     1,662        1,861       1,123       1,871        6,517
             Net Income                                     1,218        1,311         771       1,290        4,590
             Basic Net Income per share                      0.23         0.25        0.15        0.25         0.88
             Diluted Net Income per share                    0.23         0.25        0.15        0.25         0.88
             Dividends Paid per share                        0.15         0.15        0.15        0.15         0.60
</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
majority of premises and equipment  (approximately  $1.6 million) of the Bank of
Mt.  Vernon under the terms of a Purchase and  Assumption  Agreement.  The final
settlement  is  pending  due to certain  recourse  provisions  available  to the
purchaser.  As a result of this transaction,  the banking charter of the Bank of
Mt.  Vernon has been  relinquished  and the Company has agreed to not compete in
the markets previously served by the Bank of Mt. Vernon.


<PAGE>


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

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


RESULTS OF OPERATIONS

Earnings Summary

Premier  recorded  net income for 2000 of $1,335,  versus  $4,590 and $5,704 for
1999 and 1998.  Basic  earnings per common share were $0.26 in 2000  compared to
$0.88 in 1999 and $1.09 in 1998. 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 income of $4,590 in 1999  represented a 19.5%  decrease from the 1998 amount
of $5,704.  Net  interest  income  increased  from $20,107 in 1998 to $28,665 in
1999,  an  increase  of $8,558 or 42.6%,  and the  provision  for  income  taxes
decreased  from $1,997 in 1998 to $1,927 in 1999, a  difference  of $70 or 3.5%.
Offsetting the increase in net interest  income was an increase in the provision
for  loan  losses  from  $1,742  in 1998 to  $3,294  in  1999,  an  increase  in
noninterest  expense of  $7,293,  or 47.6%,  from  $15,337 in 1998 to $22,630 in
1999,  and a decrease  in  noninterest  income  from $4,673 in 1998 to $3,776 in
1999.


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>
                                                                         2000             1999            1998
                                                                         ----             ----            ----

Interest income..........................................           $      69,234    $      62,872   $      45,350
Tax equivalent adjustment................................                     723              726             608
                                                                    -------------    -------------   -------------
    Interest income......................................                  69,957           63,598          45,958
Interest expense.........................................                  40,558           34,207          25,243
                                                                    -------------    -------------   -------------
    Net interest income..................................           $      29,399    $      29,391   $      20,715
                                                                    =============    =============   =============
</TABLE>


The following  table shows,  for the three year period ended  December 31, 2000,
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 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 interest
bearing  liabilities 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  liquidation  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.

In 1999, tax equivalent net interest income increased to $29,391 from $20,715 in
1998,  an increase of $8,676 or 41.9%.  This  increase was due to an increase of
$188,915 or 35.1% in average earning assets and an increase of $197,897 or 41.7%
in average interest bearing liabilities.  The yield on earning assets in 1999 of
8.74% was 21 basis points higher than the 8.53% earned in 1998,  and the cost of
interest  bearing  liabilities  decreased  23 basis points from 5.32% in 1998 to
5.09% in 1999.  Premier's net interest  spread  increased  from 3.21% in 1998 to
3.65% in 1999 and the net interest margin  increased from 3.85% in 1998 to 4.04%
in 1999.  The  increase  in net  interest  spread  and net  interest  margin  is
primarily  attributable  to the placement of funds in higher  yielding loans and
the overall lowering of the cost of interest bearing liabilities.


<PAGE>


The  following  table  presents  average  balances  and  interest  rates for the
three-year period ended December 31, 2000.
<TABLE>
<CAPTION>
              Average Consolidated Balance Sheets and Net Interest
                                    Analysis
                             (Dollars in thousands)
                                                   2000                            1999                              1998
                                                   ----                            ----                              ----
<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                       $ 152,479  $    9,674     6.34%  $ 152,454  $   9,213     6.04%   $ 139,655  $    8,249   5.91%
  States and municipal
    obligations (1)                     24,156       1,885     7.80      23,906      1,920     8.03       19,223       1,556   8.09
  Other securities (1)                   7,215         688     9.54       6,839        577     8.44        5,953         565   9.49
                                     ---------  ----------     ----   ---------  ---------     ----    ---------  ----------   ----
     Total investment securities     $ 183,850  $   12,247     6.66   $ 183,199  $  11,710     6.39    $ 164,831  $   10,370   6.29
  Federal funds sold                    22,714       1,398     6.15      20,909      1,047     5.01       31,667       1,686   5.32
  Interest-bearing deposits with
     banks                               1,052          67     6.37       3,273         19     5.87        2,146         115   5.36

  Loans, net of unearned income
   (3) (4)
    Commercial                         228,760      22,090     9.66     211,948     20,200     9.53      144,557      14,284   9.88
    Real estate mortgage               287,713      26,197     9.11     241,708     23,065     9.54      145,004      14,208   9.80
    Installment                         74,045       7,958    10.75      66,611      7,384    11.09       50,528       5,295  10.48
                                     ---------  ----------    -----   ---------  ---------    -----    ---------  ----------  -----
       Total loans                   $ 590,518  $   56,245     9.52   $ 520,267  $  50,649     9.74    $ 340,089  $   33,787   9.93

Total interest-earning assets        $ 798,134  $   69,957     8.77%  $ 727,648  $  63,598     8.74%   $ 538,733  $   45,958   8.53%
Allowance for loan losses               (7,626)                          (6,084)                          (3,936)
Cash and due from banks                 20,580                           21,794                           17,657
Premises and equipment                  15,143                           14,120                            9,850
Other assets                            42,386                           41,395                           23,280
                                     ---------                        ---------                        ---------
   Total assets                      $ 868,617                        $ 798,873                        $ 585,584

Liabilities:
  Interest bearing deposits:
    NOW and money market             $ 175,166  $    7,272     4.15%  $ 150,165  $   5,475     3.65%   $  93,741  $    3,268   3.49%
    Savings                             63,850       1,929     3.02      63,227      1,961     3.10       51,818       1,525   2.94
    Certificates of deposit and
      other time deposits              394,763      23,302     5.90     368,720     20,372     5.53      251,047      14,666   5.84
                                     ---------  ----------     ----   ---------  ---------     ----    ---------  ----------   ----
         Total interest-bearing
            deposits                 $ 633,779  $   32,503     5.13   $ 582,112  $  27,808     4.78    $ 396,606  $   19,459   4.91
    Other borrowings                    44,382       3,212     7.24      28,977      1,754     6.05       18,271       1,194   6.53
    FHLB advances                       32,071       1,991     6.21      32,826      1,793     5.46       31,141       1,738   5.58
    Debt                                28,750       2,852     9.92      28,750      2,852     9.92       28,750       2,852   9.92
                                     ---------  ----------     ----   ---------  ---------     ----    ---------  ----------   ----
   Total interest-bearing
      liabilities                    $ 738,982  $   40,558     5.49%  $ 672,665  $  34,207     5.09%   $ 474,768  $   25,243   5.32%

   Non-interest bearing demand
     deposits                           72,392                           66,483                           54,043
   Other liabilities                     4,482                            6,005                            3,949
                                     ---------                        ---------                        ---------
        Total liabilities            $ 815,856                        $ 745,153                        $ 532,760

Shareholders' Equity:                   52,761                           53,720                           52,824

Total liabilities and shareholders'  ---------                        ---------                        ---------
   equity                            $ 868,617                        $ 798,873                        $ 585,584

Net interest income (1)                             29,399                          29,391                            20,715

Net interest spread (1)                                        3.28%                           3.65%                           3.21%
Net interest margin (1)                                        3.68%                           4.04%                           3.85%
</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
2000 and 1999.
<TABLE>
<CAPTION>
                           Analysis of Changes in Net
                                 Interest Income
              (Dollars in thousands on a taxable equivalent basis)

                                                      2000 vs. 1999                              1999 vs. 1998
                                          Increase (decrease) due to change in       Increase (decrease) due to change in
<S>                                          <C>           <C>           <C>           <C>            <C>           <C>
                                           Volume         Rate        Net Change      Volume         Rate       Net Change
Interest Income:
Loans                                   $     6,734   $    (1,138)   $     5,596   $    17,554   $      (692)  $    16,862
Investment securities                            42           495            537         1,172           169         1,341
Federal funds sold                               96           255            351          (544)          (95)         (639)
Deposits with banks                            (140)           15           (125)           65            12            77
                                        -----------   -----------    -----------   -----------   -----------   -----------
    Total interest income               $     6,732   $      (373)   $     6,359   $    18,247   $      (606)  $    17,641

Interest Expense:
Deposits -
  NOW and money market                  $       980   $       817    $     1,797   $     2,051   $       156   $     2,207
  Savings                                        19           (51)           (32)          350            86           436
  Certificates of deposit                     1,489         1,441          2,930         6,540          (834)        5,706
  Other borrowings                            1,066           392          1,458           654           (94)          560
  FHLB borrowings                               (42)          240            198            93           (37)           56
  Debt                                            -             -              -             -             -             -
                                        -----------   -----------    -----------   -----------   -----------   -----------
    Total interest expense              $     3,512   $     2,839    $     6,351   $     9,688   $      (723)  $     8,965

       Net interest income              $     3,220   $    (3,212)   $         8   $     8,559   $       117   $     8,676
</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  rates 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  potential  losses in the loan
portfolio.  The allowance is increased by the provision for possible loan losses
as well as recoveries of previously  charged-off loans, and is decreased by loan
charge-offs.  The  provision is the  necessary  charge to expense to provide for
current  loan  losses  and  to  maintain  the  allowance  at an  adequate  level
commensurate  with  management's  evaluation  of the risks  inherent in the loan
portfolio.  Various  factors  are  taken  into  consideration  when the  Company
determines the amount of the provision and the adequacy of the  allowance.  Some
of the factors include:

* 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
future loss on specific loans is developed in  conjunction  with an overall risk
evaluation of the total loan portfolio.


<PAGE>


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


                                                                               Years Ended December 31,
                                                        -----------------------------------------------------------------------
<S>                                                         <C>           <C>           <C>             <C>              <C>

                                                            2000          1999          1998           1997           1996
                                                            ----          ----          ----           ----           ----

Balance at beginning of year                            $     6,812   $     4,363   $     3,479   $      3,127    $     2,113
Balance of allowance for loan losses of
  acquired subsidiaries at acquisition date                       -         1,310           115              -            812
Amounts charged off:
   Commercial                                                 3,298         1,380           500            532            252
   Real estate mortgage                                         125           381            60            139             68
   Consumer                                                     959           795           629            634            656
                                                        -----------   -----------   -----------   ------------    -----------
     Total loans charged off                            $     4,382   $     2,556   $     1,189   $      1,305    $       976

Recoveries on amounts previously charged off:
   Commercial                                                   257           158            45             48             91
   Real estate mortgage                                           4            12             1              -              4
   Consumer                                                     198           231           170            210            130
                                                        -----------   -----------   -----------   ------------    -----------
     Total recoveries                                           459           401           216            258            225

Net charge-offs                                               3,923         2,155           973          1,047            751
Provision for loan losses                                     4,932         3,294         1,742          1,399            953
                                                        -----------   -----------   -----------   ------------    -----------
Balance at end of year                                  $     7,821   $     6,812   $     4,363   $      3,479    $     3,127

Total loans, net of unearned income:
   Average                                                  590,518       520,267       340,089        285,208        207,006
   At December 31                                           595,576       570,106       395,620        312,102        265,453

As a percentage of average loans:
   Net charge-offs                                              .66%          .41%          .29%          .37%           .36%
   Provision for loan losses                                    .84%          .63%          .51%          .49%           .46%
Allowance as a percentage of year-end net loans                1.31%         1.19%         1.10%         1.11%          1.18%
Allowance as a multiple of net charge-offs                        2             3             4             3               4
</TABLE>

The provision for loan losses for 2000 was $4,932 compared to $3,294 in 1999, an
increase  of  $1,638.  This  increase  can be mainly  attributed  to  additional
charge-offs,  loan growth,  and the timely  identification of additional problem
credits.  In 2000, net  charge-offs  were $3,923  compared to $2,155 in 1999, an
increase of $1,768. The increase in 2000 net charge-offs is primarily attributed
to the deterioration in the commercial loan portfolio  principally  within three
of the Company's  markets.  At December 31, 2000,  Premier's  allowance for loan
losses was 1.31% of period-end loans compared to 1.19% at December 31, 1999.
<PAGE>



Net  charge-offs  to average  loans were .66% for the year 2000 compared to .41%
for the year 1999. At December 31, 2000,  Premier's  allowance for loan
losses totaled  $7,821,  representing  an increase of $1,009 over the amount for
December  31,  1999.   The  allowance  for  loan  losses  was  73%  of
nonperforming  loans on December 31, 2000, compared to 98% at December 31, 1999.
At year end 2000,  nonperforming  loans  represented  1.80% of total outstanding
loans, up from 1.22% on December 31, 1999.

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  to  such  factors  as  management's
evaluation of risk in each category,  current economic conditions and charge-off
experience.  An  allocation  for the  allowance  for  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.
<TABLE>
<CAPTION>
                 Allocation of the Allowance for Loan Losses and
                         Percent of Loans to Total Loans
                             (Dollars in thousands)


                                                                    At December 31,
                       -----------------------------------------------------------------------------------------------------------
                              2000                  1999                 1998                  1997                 1996
                              ----                  ----                 ----                  ----                 ----
<S>                      <C>        <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>        <C>
                        Amount       %        Amount       %       Amount       %        Amount       %        Amount       %
                       -------     -----     -------     -----    -------      -----    -------      -----   --------       -----
Commercial             $ 2,535      17.0%    $ 2,123      20.6%   $ 1,695       22.5%   $ 1,226       27.0%  $  1,066        18.5%
Real estate mortgage     3,417      64.8       2,490      61.9      1,728       57.8        732       51.1      1,229        60.7
Consumer                 1,261      18.2         948      17.5        738       19.7        965       21.9        739        20.8
Unallocated                608        --       1,251        --        202         --        556         --         93          --
                       -------     -----     -------     -----    -------      -----    -------      -----   --------       -----
  Total                $ 7,821     100.0%    $ 6,812     100.0%   $ 4,363      100.0%   $ 3,479      100.0%  $  3,127       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 believed to be
temporary and should not materially affect the allowance.

NONINTEREST INCOME AND EXPENSES

Noninterest income is a significant component of the Company's total income. The
Company  continues  to develop and enhance  existing  products and to create new
products  in order to  augment  fee income as trends in the  financial  services
industry and the economic  environment continue to put pressure on the Company's
ability to increase its net interest income. Noninterest income includes deposit
service  charges,  fees  from  data  processing  and  trust  services,  fees and
commissions  from many other  corporate and retail products and gains and losses
from the sale of investment securities.
<PAGE>
Total fees and other income in 2000 increased $243 or 6.5% to $4,002 from $3,759
in 1999.  Service charges on deposit accounts  increased 13.7% or $270 to $2,235
from $1,965 in 1999.  Insurance  commissions  decreased  21.6% and other  income
increased 7.7%.

Total  fees and other  income  increased  $641 or 20.6% in 1999 to  $3,759  from
$3,118 in 1998.  Service  charges on deposit  accounts  increased  24.0% and all
other income increased 15.4%.

Losses on the sale of investment  securities in 2000 were $(279),  a decrease of
$296  from  the  gains  of $17 in  investment  securities  in  1999.  Investment
securities gains in 1999 were $17 versus $224 in 1998, a decrease of $207.

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.

Premier  recognized  a $1.3 million  finder's  fee during the second  quarter of
1998. Received in cash and without recourse, the fee is the Company's portion of
an agreement to assist  another  financial  institution  in connection  with the
acquisition  and subsequent  resale of several  branches of Banc One Corporation
located in West Virginia.  There was no similar  non-recurring fee recognized in
1999 or 2000.

Noninterest  expenses increased $3,475 or 15.4% in 2000, from $22,630 in 1999 to
$26,105 in 2000, and increased $7,293 or 47.6% in 1999 from $15,337 in 1998.

Salaries and employee  benefits,  the largest component of noninterest  expense,
increased  14.2%  in 2000  and  53.0%  in 1999.  The  increases  include  salary
increases and reflect increases in the number of full time equivalent  employees
from 273 at December  31,  1998 to 351 at December  31, 1999 and 361 at December
31, 2000, due to acquisitions and expansion of the Company's  business activity.
1999  was the  first  full  year  of  salaries  and  employee  benefits  expense
associated with the mid year 1998 purchase of the West Virginia  branches.  Also
contributing  to the 1999 increase was the January 20, 1999  acquisition  of Mt.
Vernon Bancshares. 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 2000 of $3,187 was $302 or 10.5% higher than
the $2,885 for 1999.  The  increase  in 1999 was $704,  or 32.3%,  more than the
$2,181  expensed  in  1998.  The  increases  in  1999  and  2000  are  primarily
attributable  to the  expansion  in the number of banking  locations  from 23 at
December 31, 1998 up to 34 at December 31, 2000.

Other  noninterest  expense,  which is the second  largest  category,  increased
$1,461 or 28.6% in 2000 and $1,703 or 50.1% in 1999. This increase  includes the
addition  of the  purchased  West  Virginia  branches  in June  1998  and  their
respective  operating  expenses as full service banks. Also included in the 1999
increases  are the  respective  costs  assumed  with the Mt.  Vernon  Bancshares
purchase.  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.

Premier incurred no acquisition-related expenses in 2000 or 1999.

The Company  incurred  expenses  relating to the acquisitions of Ohio River Bank
and the West Virginia branches of $132 in 1998. Expenses related to acquisitions
are charged to expense for

<PAGE>


acquisitions  accounted  for as  pooling of  interests  while  certain  expenses
related  to  acquisitions  accounted  for  as  purchases  are  capitalized  as a
component of the purchase price and  ultimately  increase the amount of goodwill
included with the purchase.

Amortization  of  intangibles  decreased $54 or 3.3% to $1,571 for 2000 from the
1999 amount of $1,625. The 1999 amount is an increase of $643 from the amount of
$982 in 1998. The 1999 increase is primarily attributed to goodwill amortization
of intangible cost regarding branch  acquisitions along with the purchase of Mt.
Vernon Bancshares.

The Company  continually  seeks to develop  fees and other  income for  services
provided  while holding  operating  expenses to the minimum  amount  required to
provide quality  service.  In 2000,  total net noninterest  expenses  (excluding
investment  securities  gains,  gain  on  FHLB  advance  sale,  finders  fee and
acquisition  expenses) as a percent of average total assets were 2.54%, compared
to 2.36% in 1999 and 2.06% in 1998.

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)
                                                                             2000 vs.                                1999 vs.
                                                     2000         1999         1999          1999         1998         1998
                                                  -----------------------------------------------------------------------------
Non-Interest Income:
   Service charges on deposit accounts            $   2,235    $   1,965    $       270  $   1,965     $   1,585    $       380
   Insurance income                                     443          565           (122)       565           468             97
   Other                                              1,324        1,229             95      1,229         1,065            164
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total fees and other income                 $   4,002    $   3,759    $       243  $   3,759     $   3,118    $       641
   Investment securities gains(losses)                 (279)          17           (296)        17           224           (207)
   Gain on FHLB advance sale                            289            -            289          -             -              -
   Finders Fee                                            -            -              -          -         1,331         (1,331)
                                                  ---------    ---------    -----------  ---------     ---------    -----------
        Total non-interest income                 $   4,012    $   3,776    $       236  $   3,776     $   4,673    $      (897)

Non-Interest Expense:
   Salaries and employee benefits                    13,332       11,679          1,653     11,679         7,634          4,045
   Occupancy and equipment expense                    3,187        2,885            302      2,885         2,181            704
   Professional fees                                    705          547            158        547           452             95
   Taxes, other than payroll, property
      and income                                        749          794            (45)       794           559            235
   Acquisition related expenses                           -            -              -          -           132           (132)
   Amortization of intangibles                        1,571        1,625            (54)     1,625           982            643
   Other expenses                                     6,561        5,100          1,461      5,100         3,397          1,703
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total non-interest expenses                 $  26,105    $  22,630    $     3,475  $  22,630     $  15,337    $     7,293

Net non-interest expenses as a percent
   of average assets                                 2.54%        2.36%                     2.36%          1.82%
Net non-interest expenses as a percent
   of average assets (excluding investment
     securities  gains,  finders  fee,  gain  on
     FHLB advance sale, and acquisition related
     expenses)                                       2.54%        2.36%                     2.36%          2.06%
</TABLE>





<PAGE>


INCOME TAXES

The  Company's  provision for income taxes was $316 in 2000,  which  represented
19.1% of pre-tax  income  versus  $1,927 in 1999 or 29.6% and $1,997 or 25.9% of
pre-tax income in 1998. The dollar amount of decrease is primarily attributed to
the decrease in income before income taxes.

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 2000, the Company
and its regulators  identified certain  deficiencies within its affiliate system
and has implemented  definitive action plans to address these deficiencies.  The
improvements  made to the  credit  administration  network  during  2000  should
enhance  the  scope,   breadth,   and  depth  of  the   Company's   credit  risk
identification processes.

Total loans,  net of unearned  income,  averaged  $590,518 in 2000 compared with
$520,267  in 1999.  At year end  2000,  loans  net of  unearned  income  totaled
$595,576  compared to $570,106 at December 31,  1999,  an increase of $25,470 or
4.5%.

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>
                                  2000     %         1999       %         1998       %        1997      %        1996        %

Commercial, secured by real
  estate                      $149,733   25.1%   $135,078    23.7%    $ 86,010    21.6%    $ 71,818  22.8%    $ 63,179      23.6%
Commercial, other               86,069   14.5      98,543    17.3       73,982    18.6       48,309  15.4       37,609      14.1
Real estate construction        24,774    4.2      26,092     4.6       13,374     3.4        8,352   2.6        4,523       1.7
Real estate mortgage           211,662   35.5     192,088    33.6      131,212    33.0      103,664  33.0       94,844      35.4
Agricultural                    13,817    2.3      17,525     3.1       15,433     3.9       13,232   4.2       11,751       4.4
Consumer                       108,646   18.2     100,075    17.5       73,100    18.4       68,461  21.8       54,160      20.2
Other                            1,246    0.2       1,352     0.2        4,502     1.1          674   0.2        1,493       0.6
                              --------  -----    --------   -----     --------   -----     -------- -----     --------     -----
  Total loans                 $595,947  100.0%   $570,753   100.0%    $397,613   100.0%    $314,510 100.0%    $267,559     100.0%

  Less unearned income            (371)              (647)              (1,993)              (2,408)            (2,106)
                              --------           --------             --------             --------           --------
     Total loans net of
        unearned income       $595,576           $570,106             $395,620             $312,102           $265,453
</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 .66% of loans in 2000 and .41% in 1999. With respect
to consumer loans in particular, net charge-offs for the year ended December 31,
2000 were $761,  or .70% of total  consumer  loans  outstanding  at December 31,
2000, and $564 in 1999, or .56% of total consumer loans  outstanding at December
31, 1999.

The  following  table  sets  forth  the  maturity   distribution   and  interest
sensitivity  of selected loan  categories at December 31, 2000.  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, 2000
                             (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                   $    105,929   $     36,156    $      7,648  $    149,733

Commercial, other                                          65,438         16,354           4,277        86,069

Real estate construction                                   18,107          5,525           1,142        24,774

Agricultural                                               13,817              -               -        13,817
                                                     ------------   ------------    ------------  ------------
    Total                                            $    203,291   $     58,035    $     13,067  $    274,393
                                                     ============   ============    ============  ============

Fixed rate loans                                     $    131,536   $     58,035    $     13,067  $    202,638

Floating rate loans                                        71,755              -               -        71,755
                                                     ------------   ------------    ------------  ------------
    Total                                            $    203,291   $     58,035    $     13,067  $    274,393
                                                     ============   ============    ============  ============
</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 that become 90 days
past due as to principal or interest  unless they are adequately  secured and in
the process of  collection.  A loan remains in a nonaccrual  status until doubts
concerning  the  collectibility  no  longer  exist.  A loan is  classified  as a
restructured  loan when the interest rate is  materially  reduced or the term is
extended  beyond the  original  maturity  date  because of the  inability of the
borrower  to service  the loan under the  original  terms.  Other real estate is
recorded at the lower of cost or fair value less estimated costs to sell.



<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>
                                                   2000             1999             1998            1997            1996
                                                   ----             ----             ----            ----            ----
Nonaccrual loans                           $         7,840  $         4,540  $         3,500  $          562 $        768
Accruing loans which are contractually
  past due 90 days or more                           2,196            1,721            1,322             522          594
Restructured loans                                     689              666              105             356            0
                                           ---------------  ---------------  ---------------  -------------- ------------
  Total nonperforming and restructured
     loans                                 $        10,725  $         6,927  $         4,927  $        1,440 $      1,362
Other real estate acquired through
     foreclosures                                    3,116            3,009              961             836          485
                                           ---------------  ---------------  ---------------  -------------- ------------
   Total nonperforming and restructured
     loans and other real estate           $        13,841  $         9,936  $         5,888  $        2,276 $      1,847
Nonperforming and restructured loans
  as a percentage of net loans                       1.80%            1.22%            1.25%            .46%         .51%
Nonperforming and restructured loans
  and other real estate as a percentage
  of total assets                                    1.56%            1.17%             .90%            .49%         .51%
</TABLE>

Nonaccrual  loans  increased  from  $4,540  at  December  31,  1999 to $7,840 at
December 31, 2000. Total nonperforming  assets increased from $9,936 at December
31, 1999 to $13,841 at December 31, 2000. The percentage of nonperforming  loans
to total loans increased from 1.22% to 1.80%.

The increase in total  nonperforming loans and other real estate owned of $3,905
is  largely  attributable  to the  deterioration  in loan  quality  concentrated
principally within three of the Company's markets.

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)

                                                   2000         1999         1998         1997          1996
                                                   ----         ----         ----         ----          ----
<S>                                                 <C>           <C>         <C>          <C>           <C>
    Contractual interest                            673          272          135           77            73
    Interest recognized                              89            6            6           62             2
</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.  The Company has  classified  the
majority  of its  municipal  securities  and certain U. S.  Treasury  and agency
securities as held to maturity based on management's positive intent and ability
to hold such securities to maturity. These municipal securities provide tax-free
income and are within  management's  guidelines  with respect to credit risk and
market risk. The municipal  securities have been issued  principally by Kentucky
municipalities. The U. S. Treasury and agency securities are held as a source of
stable,  long-term  income,  which can be used as collateral to secure municipal
deposits  and  repurchase  agreements.   All  other  investment  securities  are
classified as available for sale.  The portfolio  does contain  holdings in GNMA
mortgage-backed   securities.   The   securities   portfolio  does  not  contain
significant   holdings  in   collateralized   mortgage   obligations   or  other
mortgage-related derivative products and/or structured notes.

Securities as a percentage of average interest-earning assets decreased to 23.0%
in 2000 versus 25.2% in 1999 and 30.6% in 1998.  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.
<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>
                                                               2000                 1999                 1998
                                                               ----                 ----                 ----

U.S. Treasury and Federal agencies:
   Available for sale                                   $         157,245    $         128,101    $         132,106
   Held to maturity                                                 1,233                1,733                3,529
State and municipal obligations:
   Available for sale                                               7,132                7,354                3,831
   Held to maturity                                                16,656               16,876               16,474
Equity securities:
   Available for sale                                               2,798                2,775                2,798
   Held to maturity                                                     0                    0                    0
Other securities:
   Available for sale                                               9,319               13,557               18,405
   Held to maturity                                                    17                   24                   49
Total securities:
   Available for sale                                             176,494              151,787              157,140
   Held to maturity                                                17,906               18,633               20,052
                                                        -----------------    -----------------    -----------------
Total                                                   $         194,400    $         170,420    $         177,192
</TABLE>
<TABLE>
<CAPTION>
                                             Maturity Distribution of Securities
                                                      December 31, 2000
                                                    (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                     $  33,991   $  97,349    $   18,178     $  7,727  $      -       $  157,245   $  157,245
    Held to maturity                               -       1,233             -            -         -            1,233        1,230
State and municipal obligations:
    Available for sale                           622       1,113         2,949        2,448         -            7,132        7,132
    Held to maturity                           1,416       5,277         7,046        2,917         -           16,656       17,003
Other securities:
    Available for sale                             -           -             -            -    12,117           12,117       12,117
    Held to maturity                               -           -             -            -        17               17           16
Total securities:
    Available for sale                        34,613      98,462        21,127       10,175    12,117          176,494      176,494
    Held to maturity                           1,416       6,510         7,046        2,917        17           17,906       18,249
                                           ---------   ---------    ----------     --------  --------       ----------   ----------
Total                                      $  36,029   $ 104,972    $   28,173     $ 13,092  $ 12,134       $  194,400   $  194,743
                                           =========   =========    ==========     ========  ========       ==========   ==========
Percent of total                               18.53%      54.00%        14.49%        6.74%     6.24%          100.00%
Weighted average yield*                         6.05%       6.12%         6.51%        6.86%     7.34%            6.29%
</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  $706,171 in 2000, a 8.9%  increase  over 1999.  Total
deposits  averaged $648,595 in 1999, an increase of $197,946 or 43.9% over 1998.
Noninterest  bearing deposits averaged 10.3% of total deposits in 2000, compared
to 10.3% in 1999 and 12.0% in 1998.

At  December  31,  2000,  deposits  totaled  $728,412,  compared  to $692,843 at
December 31, 1999, an increase of $35,569, or 5.1%.

The table below  provides  information  on the  maturities  of time  deposits of
$100,000 or more at December 31, 2000.
<TABLE>
<CAPTION>
                                                  Maturity of Time
                                            Deposits of $100,000 or More
           <S>                                                                     <C>
                                                                             December 31, 2000
                                                                              (In thousands)

         Maturing 3 months or less                                           $         20,376
         Maturing over 3 months through 6 months                                       19,740
         Maturing over 6 months through 12 months                                      41,251
         Maturing over 12 months                                                       24,123
                                                                             ----------------
         Total                                                               $        105,490
                                                                             ================
</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)

                                         2000                          1999                          1998
                                         ----                          ----                          ----
         Category               Amount        Rate (%)        Amount        Rate (%)        Amount        Rate (%)
<S>                               <C>           <C>             <C>           <C>            <C>            <C>
Demand                       $    72,392            0%     $    66,483            0%     $    54,043            0%
NOW and money
  market accounts                175,166         4.15%         150,165         3.65%          93,741         3.49%
Savings                           63,850         3.02%          63,227         3.10%          51,818         2.94%
Certificates of deposit
  and other time                 394,763         5.90%         368,720         5.53%         251,047         5.84%
                             -----------         ----      -----------         ----      -----------         ----
     Total                   $   706,171         4.60%     $   648,595         4.29%     $   450,649         4.32%

</TABLE>



<PAGE>


Capital

Stockholders'  equity increased $3,703 in 2000 to $55.8 million or 6.3% of total
assets at December 31, 2000.  This compares to $52.1  million,  or 6.1% of total
assets at  December  31,  1999.  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.  This is a
component  of  accumulated  other   comprehensive   income.   The  increase  was
supplemented  by the  retention of net  earnings of $550 in 2000.  Stockholders'
equity  decreased $2,272 or 4.2% in 1999 from $54.4 million at December 31, 1998
to  $52.1  million  for  1999.  The  primary  reason  for the 1999  decrease  in
stockholders' equity was the increase in unrealized loss on securities of $3,722
from ($300) on December 31, 1998, to ($4,022) on December 31, 1999. The decrease
was  partially  offset by the  retention of net earnings of $1,450 in 1999.  The
consolidated statements of changes in stockholders' equity detail the changes in
equity for the last three years.

The fair  value  adjustment  of the  Company's  available  for  sale  securities
portfolio,  which is recorded as a component of stockholders' equity, may change
significantly as market  conditions  change.  At December 31, 2000 and 1999, the
adjustment  resulted in a reduction of stockholders'  equity of $869 and $4,022.
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 2001, the Banks could, without prior
approval,  declare  dividends to the Company of approximately  $2.3 million plus
any 2001 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
                                                                   2000               1999               Change
                                                                   ----               ----               ------
<S>                                                               <C>                <C>                  <C>
Stockholders' Equity                                        $         55,830    $         52,127   $          3,703
   Qualifying capital securities of subsidiary
      trust                                                           18,872              18,683                189
   Disallowed amounts of goodwill and other
      intangibles                                                    (22,856)            (24,339)             1,483
   Unrealized loss on securities available
      for sale                                                           785               3,923             (3,138)
                                                            ----------------    ----------------   ----------------
Tier I capital                                              $         52,631    $         50,394   $          2,237



Tier II capital adjustments:
   Qualifying capital securities of subsidiary
      trust                                                            9,878              10,067
   Allowance for loan losses                                           7,298               6,812
                                                            ----------------    ----------------
Total capital                                               $         69,807    $         67,273

Total risk-weighted assets                                  $        583,259    $        566,632
Ratios
Tier I capital to risk-weighted assets                                9.0%                8.9%
Total capital to risk-weighted assets                                12.0%               11.9%
Leverage at year-end                                                  6.1%                6.2%
</TABLE>

As a result of the disposition in January 2001 of  substantially  all the loans,
deposits  and  premises  and  equipment  of the  Company's  Bank  of Mt.  Vernon
subsidiary,   the  Company's  net  gain  on  the  sale  and  the elimination  of
approximately  $4.1  million of  goodwill  had the effect of  increasing  Tier I
capital by  approximately  $4.7 million and  increasing  the Company's  leverage
ratio from 6.1% as of  December  31,  2000 to  approximately  7.5%.

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  $80.7  million as of December 31, 2000.  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  $142.3  million at December  31,  2000.  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
14.5% and 14.3% of total  deposits  at December  31, 2000 and 1999.  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

                                                                          2000            1999            1998
                                                                          ----            ----            ----
            <S>                                                           <C>              <C>             <C>
         Total loans/total deposits...............................        83.6%           80.2%           75.5%
         Total loans/total deposits less float....................        84.8%           81.0%           76.3%
</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.



<PAGE>


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


                                                                             2000            1999           1998
                                                                             ----            ----           ----
<S>                                                                          <C>              <C>           <C>
Repurchase Agreements:

   Balance at year end                                                   $    20,553    $    21,282     $     7,772

   Weighted average rate at year end                                            6.67%          5.80%           4.47%

   Average balance during the year                                       $    23,580    $     8,640     $    20,167

   Weighted average rate during the year                                        6.40%          5.14%           4.58%

   Maximum month-end balance                                             $    28,009    $    21,282     $    82,755

Other short-term borrowings:

   Balance at year end                                                   $    19,825    $    11,225     $    18,225

   Weighted average rate at year end                                            6.62%          5.93%           5.74%

   Average balance during the year                                       $    17,418    $    12,184     $    14,867

   Weighted average rate during the year                                        6.58%          5.61%           5.83%

   Maximum month-end balance                                             $    24,493    $    15,788     $    19,800

Total short-term borrowings:

   Balance at year end                                                   $    38,878    $    32,507     $    25,997

   Weighted average rate at year end                                            6.65%          5.84%           5.36%

   Average balance during the year                                       $    40,998    $    20,824     $    35,034

   Weighted average rate during the year                                        6.48%          5.41%           5.12%

   Maximum month-end balance                                             $    52,502    $    32,507     $    92,719
</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, 2000, 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, 2000.
<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              $    237,787  $   170,900   $    133,155   $    53,734    $    595,576
   Investment securities                            15,737       20,292        104,972        57,875         198,876
   Interest-earning balances                           288            -            292           157             737
   Federal funds sold                               21,087            -              -             -          21,087
                                              ------------  -----------   ------------   -----------    ------------
       Total earning assets                   $    274,899  $   191,192   $    238,419   $   111,766    $    816,276

Sources of Funds
   NOW, money market and
       savings                                $     83,387  $    55,592   $     92,652   $    28,048    $    259,679
   Time deposits                                    77,267      208,011        109,017             -         394,295
   Borrowings                                       46,060       16,523          8,657             -          71,240
                                              ------------  -----------   ------------   -----------    ------------
     Total interest bearing liabilities       $    206,714  $   280,126   $    210,326   $    28,048    $    725,214

Interest Sensitivity Gap
   For the period                             $     68,185  $   (88,934)  $     28,093   $    83,718    $     91,062
   Cumulative                                       68,185      (20,749)         7,344        91,062               -
   Cumulative as a percent of
     earning assets                                 8.35%       (2.54)%          .90%         11.16%

</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 increase by  approximately
1.4% of stable rate net  interest  income if rates rise by 100 basis points over
the next year.  It  projects  a decrease  of 3.8% 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 rise above that earned in a
stable rate  environment  by 1.7% in a rising rate scenario and decrease by 8.6%
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, 2000, a 200 basis point  increase in rates is estimated to decrease
EVR by 14.2%. Additionally,  EVR is projected to decrease by 10.0% if rates fall
by  200  basis  points.   The   calculations   of  present  value  have  certain
shortcomings. The

<PAGE>


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
                                                   2000          1999      Guidelines
                                                 --------      --------    ----------
<S>                                                 <C>           <C>         <C>
Projected 1-Year Net Interest Income
   -100 bp change vs. Base Rate                    -3.8%        -3.2%        +/-10%
   +100 bp change vs. Base Rate                     1.4%         3.0%        +/-10%
Projected 1-Year Net Interest Income
   -200 bp change vs. Base Rate                    -8.6%        -9.3%        +/-10%
   +200 bp change vs. Base Rate                     1.7%         5.3%        +/-10%
Economic Value Change
   -200 bp Change vs. Base Rate                   -10.0%       -16.2%        +/-20%
   +200 bp Change vs. Base Rate                   -14.2%          .5%        +/-20%
</TABLE>


Interest Rate Risk Management

Premier's strategy of investing  primarily in loans and securities permits it to
limit its exposure to interest rate risk,  together  with credit risk,  while at
the same time  achieving a positive  interest  rate  spread from the  difference
between the income  earned on interest  earning  assets and the cost of interest
bearing  liabilities.  Managing this exposure involves  significant  assumptions
about the  relationship  of various  interest rate indices of certain  financial
instruments.  Prepayments  on loans  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 decreasing further during
2001 and believes  that the current  modest level of  liability  sensitivity  is
appropriate  when taken in conjunction  with the unlikely event of a significant
rate increase.  Premier's interest sensitivity profile changed from 1999 to 2000
as a result of the increase in shorter-term liability instruments.

Trade Risk Management

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

Derivative Instruments

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





<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, 2000 and 1999
         Consolidated Statements of Income - Years Ended December 31, 2000, 1999
                  and 1998
         Consolidated  Statements of Comprehensive Income - Years Ended December
                  31, 2000, 1999 and 1998
         Consolidated  Statements of Changes in Stockholders' Equity - Years
                  ended December 31, 2000, 1999 and 1998
         Consolidated Statements of Cash Flows - Years ended December 31, 2000,
                  1999 and 1998
         Notes to Consolidated Financial Statements

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

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







<PAGE>
















                         PREMIER FINANCIAL BANCORP, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



<PAGE>









                         PREMIER FINANCIAL BANCORP, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998





                                    CONTENTS




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

FINANCIAL STATEMENTS
   Consolidated Balance Sheets.......................................    2
   Consolidated Statements of Income.................................    3
   Consolidated Statements of Comprehensive Income...................    4
   Consolidated Statements of Changes in Stockholders' Equity........    5
   Consolidated Statements of Cash Flows.............................    6 - 7
   Notes to Consolidated Financial Statements........................    8 - 31






<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,  2000 and 1999,  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, 2000. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Premier Financial
Bancorp, Inc. as of December 31, 2000 and 1999 and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
2000 in conformity with generally accepted accounting principles.





                          Crowe, Chizek and Company LLP

Lexington, Kentucky
March 14, 2001


                                                                            1.
<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999

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

                                                                                    2000                   1999
                                                                                    ----                   ----
                                                                                           (In Thousands)
<S>                                                                                <C>                      <C>
ASSETS
Cash and due from banks                                                           $     23,339         $     28,227
Interest-earning balances with banks                                                       737                1,634
Federal funds sold                                                                      21,087               25,197
Investment securities
   Available for sale                                                                  176,494              151,787
   Held to maturity                                                                     17,906               18,633
Loans                                                                                  595,947              570,753
   Unearned income                                                                        (371)                (647)
   Allowance for loan losses                                                            (7,821)              (6,812)
                                                                                  ------------         ------------
     Net loans                                                                         587,755              563,294
Federal Home Loan Bank and Federal Reserve Bank stock                                    4,476                4,123
Premises and equipment, net                                                             15,474               14,935
Real estate and other property acquired through foreclosure                              3,116                3,019
Interest receivable                                                                     10,144                9,814
Goodwill and other intangibles                                                          22,856               24,339
Other assets                                                                             6,548                7,466
                                                                                  ------------         ------------
Total assets                                                                      $    889,932         $    852,468
                                                                                  ============         ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
   Non-interest bearing                                                           $     74,438         $     68,490
   Time deposits, $100,000 and over                                                    105,490               99,292
   Other interest bearing                                                              548,484              525,061
                                                                                  ------------         ------------
     Total deposits                                                                    728,412              692,843
Securities sold under agreements to repurchase                                          20,553               21,282
Federal Home Loan Bank advances                                                         30,687               32,647
Other borrowed funds                                                                    20,000               20,000
Interest payable                                                                         3,901                3,265
Other liabilities                                                                        1,799                1,554
                                                                                  ------------         ------------
   Total liabilities                                                                   805,352              771,591

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                                                                    12,151               11,601
   Accumulated other comprehensive income                                                 (869)              (4,022)
                                                                                  ------------         ------------
     Total stockholders' equity                                                         55,830               52,127
                                                                                  ------------         ------------
Total liabilities and stockholders' equity                                        $    889,932         $    852,468
                                                                                  ============         ============
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.

                                                                            2.
<PAGE>

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

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

                                                                    2000               1999                1998
                                                                    ----               ----                ----
                                                                                  (In Thousands)
<S>                                                                <C>                 <C>                 <C>
Interest income
   Loans, including fees                                        $    56,245         $    50,649         $    33,787
   Investment securities -
     Taxable                                                         10,120               9,575               8,582
     Tax-exempt                                                       1,404               1,409               1,180
   Federal funds sold                                                 1,398               1,047               1,686
   Other interest income                                                 67                 192                 115
                                                                -----------         -----------         -----------
     Total interest income                                           69,234              62,872              45,350

Interest expense
   Deposits                                                          32,503              27,808              19,459
   Other borrowings                                                   5,203               3,547               2,932
   Debt                                                               2,852               2,852               2,852
                                                                -----------         -----------         -----------
     Total interest expense                                          40,558              34,207              25,243

Net interest income                                                  28,676              28,665              20,107
Provision for loan losses                                             4,932               3,294               1,742
                                                                -----------         -----------         -----------
Net interest income after provision for loan losses                  23,744              25,371              18,365

Non-interest income
   Service charges                                                    2,235               1,965               1,585
   Insurance commissions                                                443                 565                 468
   Investment securities gains (losses)                                (279)                 17                 224
   Other income                                                       1,613               1,229               2,396
                                                                -----------         -----------         -----------
                                                                      4,012               3,776               4,673

Non-interest expenses
   Salaries and employee benefits                                    13,332              11,679               7,634
   Occupancy and equipment expenses                                   3,187               2,885               2,181
   Professional fees                                                    705                 547                 452
   Taxes, other than payroll, property and income                       749                 794                 559
   Acquisition related expenses                                           -                   -                 132
   Amortization of intangibles                                        1,571               1,625                 982
   Other expenses                                                     6,561               5,100               3,397
                                                                -----------         -----------         -----------
                                                                     26,105              22,630              15,337

Income before income taxes                                            1,651               6,517               7,701
Provision for income taxes                                              316               1,927               1,997
                                                                -----------         -----------         -----------
Net income                                                      $     1,335         $     4,590         $     5,704
                                                                ===========         ===========         ===========
Weighted average common shares outstanding:
   Basic                                                              5,232               5,232               5,232
   Diluted                                                            5,232               5,232               5,247

Earnings per share:
   Basic                                                        $       .26         $       .88         $      1.09
   Diluted                                                              .26                 .88                1.09

</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.
                                                                            3.
<PAGE>


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

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    2000               1999                1998
                                                                    ----               ----                ----
                                                                                  (In Thousands)
<S>                                                                 <C>               <C>                  <C>

Net Income                                                      $     1,335         $     4,590         $     5,704
Other comprehensive income (loss), net of tax:
   Unrealized gains and (losses) arising during
     the period                                                       2,969              (3,711)                (95)
   Reclassification of realized amount                                  184                 (11)               (149)
     Net change in unrealized gain (loss) on                    -----------         -----------         -----------
       securities                                                     3,153              (3,722)               (244)
                                                                -----------         -----------         -----------
Comprehensive income                                            $     4,488         $       868         $     5,460
                                                                ===========         ===========         ===========
</TABLE>

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

<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2000, 1999 and 1998

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         Accumulated
                                                                                             Other
                                              Common                      Retained       Comprehensive
                                               Stock        Surplus       Earnings          Income          Total
                                                              (In Thousands, Except Per Share Data)

<S>                                             <C>           <C>           <C>              <C>             <C>
Balances, January 1, 1998                   $    985      $  38,795      $  12,283       $      (56)     $   52,007

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

Net income                                         -              -          5,704                -           5,704

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

Stock dividend                                   118          4,650         (4,768)               -               -
                                            --------      ---------      ---------       ----------      ----------
Balances, December 31, 1998                 $  1,103      $  43,445      $  10,151       $     (300)     $   54,399

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

Net income                                         -              -          4,590                -           4,590

Dividends paid - $.60 per share                    -              -         (3,140)               -          (3,140)
                                            --------      ---------      ---------       ----------      ----------
Balances, December 31, 1999                 $  1,103      $  43,445      $  11,601       $   (4,022)     $   52,127

Net change in unrealized 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
                                            ========      =========      =========       ==========      ==========
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.
                                                                            5.


<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Years Ended December 31

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

                                                                      2000              1999            1998
                                                                      ----              ----            ----
                                                                                   (In Thousands)
<S>                                                                     <C>              <C>            <C>
Cash flows from operating activities
   Net income                                                      $  1,335      $    4,590     $      5,704
   Adjustments to reconcile net income to
     net cash from operating activities
       Depreciation                                                   1,436           1,214              872
       Provision for loan losses                                      4,932           3,294            1,742
       Amortization, net                                              1,228           1,750              591
       FHLB stock dividends                                            (311)           (254)            (227)
       Write-downs of other real estate owned                           617               1                -
       Investment securities gains(losses), net                         279             (17)            (224)
       Changes in
         Interest receivable                                           (330)           (409)          (2,566)
         Other assets                                                  (705)           (312)            (161)
         Interest payable                                               636             256              578
         Other liabilities                                              245             127             (531)
                                                                   --------      ----------      -----------
           Net cash from operating activities                         9,362          10,240            5,778

Cash flows from investing activities
   Purchases of securities available for sale                       (61,664)        (82,373)        (640,535)
   Proceeds from sales of securities available for sale              19,727          40,082          222,750
   Proceeds from maturities and calls of securities
     available for sale                                              21,985          52,865          313,671
   Purchases of securities held to maturity                          (1,571)         (2,055)          (4,978)
   Proceeds from maturities and calls of securities
     held to maturity                                                 2,296           3,472            5,276
   Purchases of FHLB stock                                              (42)            (61)            (155)
   Net change in interest-earning balances with banks                   897          (1,634)               -
   Net change in federal funds sold                                   4,110           6,933           21,840
   Net change in loans                                              (30,692)        (82,882)         (75,665)
   Purchases of premises and equipment, net                          (1,975)         (2,396)          (2,129)
   Proceeds from sale of other real estate acquired
     through foreclosure                                                584             943              399
   Net cash received (paid) related to acquisitions                       -          (8,579)         123,971
                                                                   --------      ----------      -----------
     Net cash from investing activities                             (46,345)        (75,685)         (35,555)

Cash flows from financing activities
   Net change in deposits                                            35,569          50,983           14,137
   Advances from Federal Home Loan Bank                              62,783          16,345           27,225
   Repayment of Federal Home Loan Bank advances                     (64,743)        (15,596)         (10,590)
   Proceeds from other borrowed funds                                     -          12,000            8,000
   Net change in securities sold under agreements to
      repurchase                                                       (729)         12,909            1,193
   Dividends paid                                                      (785)         (3,140)          (3,068)
                                                                   --------      ----------      -----------
     Net cash from financing activities                              32,095          73,501           36,897
                                                                   --------      ----------      -----------
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)
                                                                            6.



<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Years Ended December 31

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           2000             1999             1998
                                                                           ----             ----             ----
                                                                                       (In Thousands)
<S>                                                                         <C>             <C>               <C>
Net change in cash and cash equivalents                                     (4,888)          8,056            7,120

Cash and cash equivalents at beginning
   of year                                                                  28,227          20,171           13,051
                                                                      ------------     -----------      -----------
Cash and cash equivalents at end of year                              $     23,339     $    28,227      $    20,171
                                                                      ============     ===========      ===========
Supplemental disclosures of cash flow information:
     Cash paid during the year for -
       Interest                                                       $     39,922     $    33,951      $    24,665
       Income taxes                                                          1,115           2,050            2,550

     Loans transferred to real estate acquired
       through foreclosure                                            $      1,298     $     2,943      $       555

</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.
                                                                            7.


<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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, 2000
                                                                                 Year                         Net
                                                                               Acquired       Assets        Income
                                                                               --------       ------        ------
                                                                                                 (In Thousands)
<S>                                            <C>                              <C>              <C>          <C>
Citizens Deposit Bank & Trust               Vanceburg, Kentucky                 1991         $  115,152    $    448
Bank of Germantown                          Germantown, Kentucky                1992             28,934        (463)
Citizens Bank (Kentucky), Inc.              Georgetown, Kentucky                1995            110,162       1,120
Farmers Deposit Bank                        Eminence, Kentucky                  1996            144,729       1,748
The Sabina Bank                             Sabina, Ohio                        1997             58,934         357
Ohio River Bank                             Ironton, Ohio                       1998             69,027         414
The Bank of Philippi, Inc.                  Philippi, West Virginia             1998             77,614         231
Boone County Bank, Inc.                     Madison, West Virginia              1998            150,733         969
The Bank of Mt. Vernon                      Richmond, Kentucky                  1999            132,159         724
</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.

On October 20, 2000,  the Company merged two of its  wholly-owned  subsidiaries,
Georgetown  Bank and Trust  Company,  Georgetown,  Kentucky,  and Citizens Bank,
Sharpsburg, Kentucky, to form Citizens Bank (Kentucky), Inc.

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)
                                                                            8.
<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

--------------------------------------------------------------------------------
                                  (Continued)
                                                                            9.

<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

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

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

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.

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


<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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  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.  The final  settlement
--------------------------------------------------------------------------------
                                  (Continued)
                                                                           11.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  2 - BUSINESS COMBINATIONS (Continued)

is pending due to certain recourse provisions  available to the purchaser.  As a
result of this  transaction,  the banking  charter of the Bank of Mt. Vernon has
been  relinquished  and the  Company  has agreed to not  compete in the  markets
previously served by the Bank of Mt. Vernon.

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

On March 20, 1998, the Company  acquired Ohio River Bank,  Ironton,  Ohio, (Ohio
River) whereby the Company  exchanged 297,840 shares of its common stock for all
the  issued  and  outstanding  shares of Ohio  River in a  business  combination
accounted  for as a pooling of interests.  Based on the date of the  acquisition
agreement,  the  market  value of the shares  exchanged  was $7.7  million.  The
accompanying  consolidated  financial  statements  for  1998  are  based  on the
assumption  that the  companies  were combined for the full year. At the date of
acquisition,  Ohio River had $40.9 million in total assets, $28.0 million in net
loans, $35.2 million in deposits, and $4.3 million in stockholders' equity.

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.

Three of the  Company's  subsidiaries,  Citizens  Deposit Bank & Trust,  Bank of
Germantown and Bank of Mt.  Vernon,  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.

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

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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,  2000 and 1999 was $3.6
million and $2.2 million.

NOTE  5 - INVESTMENT SECURITIES

Amortized cost and fair value of investment securities, by category, at December
31, 2000 are as follows:
<TABLE>
<CAPTION>
                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                   ---------         ----------        ----------          -----
                                                                           (In Thousands)
<S>                                                  <C>                <C>               <C>               <C>
Available for sale
   U. S. Treasury securities                     $     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
   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)
                                                                           13.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  5 - INVESTMENT SECURITIES (Continued)

Amortized cost and fair value of investment securities, by category, at December
31, 1999 are as follows:
<TABLE>
<CAPTION>
                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                   ---------         ----------        ----------          -----
                                                                           (In Thousands)
<S>                                                   <C>               <C>               <C>               <C>
Available for sale
   U. S. Treasury securities                     $     2,900         $      -         $      (6)        $     2,894
   U. S. agency securities                           130,254                -            (5,047)            125,207
   Obligations of states and political
     subdivisions                                      7,468                -              (114)              7,354
   Mortgage-backed securities                         14,333                -              (776)             13,557
   Preferred stock                                     2,000                -                 -               2,000
   Other securities                                      925                -              (150)                775
                                                 -----------         --------         ---------         -----------
     Total available for sale                    $   157,880         $      -         $  (6,093)        $   151,787
                                                 ===========         ========         =========         ===========
Held to maturity
   U. S. Treasury securities                     $       500         $      -         $      (1)        $       499
   U. S. agency securities                             1,233                -               (29)              1,204
   Obligations of states and political
     subdivisions                                     16,876              132              (150)             16,858
   Mortgage-backed securities                             24                -                 -                  24
                                                 -----------         --------         ---------         -----------
     Total held to maturity                      $    18,633         $    132         $    (180)        $    18,585
                                                 ===========         ========         =========         ===========
</TABLE>


The amortized cost and fair value of investment securities at December 31, 2000,
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                                                        $    34,609           $    34,613
   Due after one year through five years                                               98,938                98,462
   Due after five years through ten years                                              21,426                21,127
   Due after ten years                                                                 10,433                10,175
   Mortgage-backed securities                                                           9,478                 9,319
   Preferred stock                                                                      2,000                 2,000
   Other securities                                                                       925                   798
                                                                                  -----------           -----------
     Total available for sale                                                     $   177,809           $   176,494
                                                                                  ===========           ===========
</TABLE>
--------------------------------------------------------------------------------
                                  (Continued)
                                                                           14.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  5 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                                      Amortized             Fair
                                                                                        Cost                Value
                                                                                      ---------             -----
                                                                                             (In Thousands)
<S>                                                                                  <C>                    <C>
Held to maturity
   Due in one year or less                                                        $     1,416           $     1,420
   Due after one year through five years                                                6,510                 6,603
   Due after five years through ten years                                               7,046                 7,202
   Due after ten years                                                                  2,917                 3,008
   Mortgage-backed securities                                                              17                    16
                                                                                  -----------           -----------
     Total held to maturity                                                       $    17,906           $    18,249
                                                                                  ===========           ===========
</TABLE>

Proceeds from sales of  investment  securities  during 2000,  1999 and 1998 were
$19.7 million,  $40.1 million and $222.7 million. Gross gains of $7,000, $44,000
and $232,000, and gross losses of $286,000,  $27,000 and $8,000 were realized on
those sales.

Investment  securities with an approximate  carrying value of $134.1 million and
$76.3  million at  December  31,  2000 and 1999 were  pledged  to secure  public
deposits,  trust funds,  securities sold under  agreements to repurchase and for
other purposes as required or permitted by law.

NOTE  6 - LOANS

Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
                                                    December 31
                                              2000               1999
                                              ----               ----
                                                   (In Thousands)
<S>                                            <C>               <C>
Commercial, secured by real estate       $    149,733       $    135,078
Commercial, other                              86,069             98,543
Real estate construction                       24,774             26,092
Residential real estate                       211,662            192,088
Agricultural                                   13,817             17,525
Consumer and home equity                      108,646            100,075
Other                                           1,246              1,352
                                         ------------       ------------
                                         $    595,947       $    570,753
                                         ============       ============
</TABLE>

Certain  directors and executive  officers of the Banks and companies,  in which
they have beneficial ownership, were loan customers of the Banks during 2000 and
1999.  Such loans were made in the  ordinary  course of  business  at the Banks'
normal credit terms and interest rates.

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

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  6 - LOANS (Continued)

An analysis of the 2000  activity  with respect to all  director  and  executive
officer loans is as follows:
<TABLE>
<CAPTION>
                                                                  (In Thousands)
<S>                                                                     <C>
Balance, December 31, 1999                                        $       12,276
Additions, including loans now meeting disclosure
   requirements                                                            2,221
Amounts collected, including loans no longer meeting
   disclosure requirements                                                (2,678)
                                                                  --------------
Balance, December 31, 2000                                        $       11,819
                                                                  ==============
</TABLE>

Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>

                                                                         2000              1999             1998
                                                                         ----              ----             ----
                                                                                      (In Thousands)
<S>                                                                      <C>                <C>              <C>
Balance, beginning of year                                             $   6,812        $   4,363         $   3,479
Allowance related to acquired subsidiaries                                     -            1,310               115
Loans charged off                                                         (4,382)          (2,556)           (1,189)
Recoveries                                                                   459              401               216
Provision for loan losses                                                  4,932            3,294             1,742
                                                                       ---------        ---------         ---------
Balance, end of year                                                   $   7,821        $   6,812         $   4,363
                                                                       =========        =========         =========
</TABLE>

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

                                                                         2000              1999             1998
                                                                                      (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
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           16.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  6 - LOANS (Continued)
<TABLE>
<CAPTION>
                                                                         2000              1999             1998
                                                                         ----              ----             ----
                                                                                      (In Thousands)
<S>                                                                      <C>               <C>               <C>
Nonperforming loans at year end were as follows:
  Loans past due over 90 days still on accrual                         $   2,196        $   1,721         $   1,322
  Nonaccrual loans                                                         7,840            4,540             3,500
</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

Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>

                                                   ---------December 31--------
                                                       2000             1999
                                                       ----             ----
                                                          (In Thousands)
<S>                                                    <C>                <C>
Land                                               $    2,257        $    2,252
Buildings and leasehold improvements                   11,283            10,566
Furniture and equipment                                 9,876             8,655
                                                   ----------        ----------
                                                       23,416            21,473
Less: accumulated depreciation                         (7,942)           (6,538)
                                                   ----------        ----------
                                                   $   15,474        $   14,935
                                                   ==========        ==========
</TABLE>

NOTE 8 - DEPOSITS

At December 31, 2000, the scheduled maturities of time deposits are as follows:
<TABLE>
<CAPTION>
                                                              (In Thousands)
            <S>                                                    <C>
           2001                                                 $  282,046
           2002                                                     81,838
           2003                                                     20,421
           2004                                                      4,163
           2005 and thereafter                                       5,827
                                                                ----------
                                                                $  394,295
                                                                ==========
</TABLE>

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

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           17.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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:
<TABLE>
<CAPTION>
                                                         ---------December 31---------
                                                             2000            1999
                                                             ----            ----
                                                            (Dollars In Thousands)
<S>                                                         <C>                <C>
Year-end balance                                          $  20,553      $    21,282
Average balance during the year                           $  23,580      $     8,640
Average interest rate during the year                         6.40%            5.14%
Maximum month-end balance during the year                 $  28,009      $    21,282
</TABLE>

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.

At December 31, 2000 and 1999,  $30.7 million and $32.6 million  represented the
balance due on the above advances from the FHLB. All advances are paid either on
a monthly basis or at maturity,  over  remaining  terms of one to fifteen years,
with  interest  rates  ranging from 5.50% 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, 2000 are as follows:
<TABLE>
<CAPTION>

                                                                 (In Thousands)
            <S>                                                        <C>
           2001                                                    $   20,449
           2002                                                           432
           2003                                                           145
           2004                                                           122
           2005 and thereafter                                          9,539
                                                                   ----------
                                                                   $   30,687
                                                                   ==========
</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
April 2001,  contains certain covenants and performance terms, all of which have
been complied with or waiver received thereon at December 31, 2000.  Interest is
payable at term at LIBOR plus 1.75% and adjusts  based on agreed  terms.  Common
stock of seven of the  Company's  subsidiary  Banks is  pledged  to  secure  the
agreement.  There was $20 million  borrowed under this agreement at December 31,
2000 and 1999.
--------------------------------------------------------------------------------
                                  (Continued)
                                                                           18.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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 is payable at an annual rate of 9.75%
of the stated liquidation amount of $25 per Capital Security, payable quarterly.
Cash  distributions on the Preferred  Securities are made to the extent interest
on the debentures is received by the Trust.  In the event of certain  changes or
amendments  to  regulatory  requirements  or federal  tax rules,  the  Preferred
Securities  are  redeemable in whole.  Otherwise,  the Preferred  Securities are
generally  redeemable  by the  Company  in whole or in part on or after June 30,
2002 at 100% of the  liquidation  amount.  The  Trust's  obligations  under  the
Preferred Securities are fully and unconditionally guaranteed by the Company.

NOTE  13 - INCOME TAXES

The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
                                                                          2000             1999             1998
                                                                          ----             ----             ----
                                                                                      (In Thousands)
<S>                                                                        <C>            <C>               <C>

Current                                                               $       794     $        2,157     $     2,350
Deferred                                                                     (478)              (230)           (118)
Change in valuation allowance                                                   -                  -            (235)
                                                                      -----------     --------------     -----------
                                                                      $       316     $        1,927     $     1,997
                                                                      ===========     ==============     ===========
</TABLE>

The Company's  deferred tax assets and liabilities at December 31, 2000 and 1999
are shown below.  No valuation  allowance  for the  realization  of deferred tax
assets is considered necessary at December 31, 2000 and 1999.
<TABLE>
<CAPTION>
                                                              2000             1999
                                                              ----             ----
                                                                  (In Thousands)
<S>                                                           <C>               <C>
Deferred tax assets
   Allowance for loan losses                               $   2,288         $   1,703
   Unrealized loss on investment securities                      492             2,071
   Other                                                         276               184
                                                           ---------         ---------
     Total deferred tax assets                                 3,056             3,958
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           19.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  13 - INCOME TAXES (Continued)
<TABLE>
<CAPTION>
                                                             2000             1999
                                                             ----             ----
                                                                 (In Thousands)
<S>                                                           <C>              <C>
Deferred tax liabilities
   Depreciation                                          $    (491)        $    (445)
   Federal Home Loan Bank dividends                           (406)             (300)
   Other                                                      (183)             (135)
                                                         ---------         ---------
       Total deferred tax liabilities                       (1,080)             (880)

Net deferred tax asset, included in other assets         $   1,976         $   3,078
                                                         =========         =========
</TABLE>

An analysis of the differences between the effective tax rates and the statutory
U.S. federal income tax rate is as follows:
<TABLE>
<CAPTION>
                                                  2000                        1999                      1998
                                                  ----                        ----                      ----
                                                                     (Dollars In Thousands)
<S>                                             <C>     <C>             <C>       <C>               <C>       <C>
U. S. federal income tax rate             $     561     34.0%        $  2,216     34.0%        $   2,618    34.0%

Changes from the statutory rate
   Tax-exempt investment income                (445)   (27.0)            (494)    (7.6)             (425)   (5.5)
   Non-deductible interest expense
     related to carrying tax-exempt
     investments                                 73      4.4               66      1.0                57      .7
   Tax credits                                  (71)    (4.3)             (70)    (1.1)             (149)   (1.9)
   Change in valuation allowance                  -      -                  -      -                (235)   (3.1)
   Goodwill amortization                        206     12.5              202      3.1               137     1.8
   Other                                         (8)    (0.5)               7      0.1                (6)   (0.1)
                                          ---------     ----         --------     ----         ---------    ----
                                          $     316     19.1%        $  1,927     29.5%        $   1,997    25.9%
                                          =========     ====         ========     ====         =========    ====
</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 $276,000,  $251,000 and $180,000 in 2000,  1999
and 1998.

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

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           20.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  14 - EMPLOYEE BENEFIT PLANS (Continued)

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>
                                          ---------2000---------   ---------1999---------    ----------1998----------
                                                       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       42,000      $  12.38

Granted                                           -           -            -            -      20,000         16.50
                                             ------                   ------                   ------
Outstanding at year end                      62,000     $ 13.71       62,000    $  13.71       62,000      $  13.71
                                             ======                   ======                   ======

Exercisable at year end                      58,000                   49,800                   41,600
Weighted average remaining life                 6.3                      7.3                      8.3
</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.

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:
<TABLE>
<CAPTION>
                                                                      2000              1999              1998
                                                                      ----              ----              ----
                                                                               (Dollars In Thousands)
<S>                                                                    <C>              <C>                <C>
Net income
   As reported                                                  $     1,335         $     4,590         $     5,704
   Pro forma                                                          1,295               4,550               5,649

Basic earnings per share
   As reported                                                  $       .26         $       .88         $      1.09
   Pro forma                                                            .25                 .87                1.08

Diluted earnings per share
   As reported                                                  $       .26         $       .88         $      1.09
   Pro forma                                                            .25                 .87                1.08
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           21.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  14 - EMPLOYEE BENEFIT PLANS (Continued)

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

                                                                      2000              1999              1998
                                                                      ----              ----              ----
                                                                               (Dollars In Thousands)
<S>                                                                  <C>                <C>                <C>
Weighted averages
   Fair value of options granted                                $         -         $      -            $     4.66
   Risk free interest rate                                                -                -                  5.50%
   Expected life                                                          -                -               10 years
   Expected volatility                                                    -                -                 17.88%
   Expected dividend                                            $         -         $      -            $       .60
</TABLE>

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

NOTE  15 - RELATED PARTY TRANSACTIONS

During 2000, 1999, and 1998, the Company paid approximately $391,000,  $432,000,
and $369,000  for  printing,  supplies,  furniture,  and  equipment to a company
affiliated  by  common   ownership.   The  Company  also  paid  this   affiliate
approximately  $1,066,000,  $820,000,  and $649,000 in 2000,  1999,  and 1998 to
permit the Company's  employees to participate in its employee  medical  benefit
plan.

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

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 2000,
1999 and 1998 is presented below:
<TABLE>
<CAPTION>
                                                                       ------------------Year Ended----------------
                                                                          2000              1999            1998
                                                                          ----              ----            ----
                                                                           (In Thousands, Except Per Share Data)
<S>                                                                       <C>               <C>              <C>
Basic earnings per share
   Net income available to common
     stockholders                                                    $       1,335   $        4,590    $        5,704
   Weighted average common shares
     outstanding                                                             5,232            5,232             5,232
   Earnings per share                                                $         .26   $          .88    $         1.09
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           22.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  16 - EARNINGS PER SHARE (Continued)
<TABLE>
<CAPTION>
                                                                       ------------------Year Ended----------------
                                                                          2000              1999            1998
                                                                          ----              ----            ----
                                                                           (In Thousands, Except Per Share Data)
<S>                                                                       <C>              <C>               <C>
Diluted earnings per share
   Net income available to common
     stockholders                                                    $    1,335         $     4,590     $     5,704
   Weighted average common shares
     outstanding                                                          5,232               5,232           5,232
   Add dilutive effects of assumed exercise
     of stock options                                                         -                   -              15
                                                                     ----------         -----------     -----------
   Weighted average common and dilutive
     potential common shares outstanding                                  5,232               5,232           5,247
   Earnings per share assuming dilution                                $    .26         $       .88     $      1.09
</TABLE>

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

NOTE  17 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the Company's financial  instruments at December 31, 2000 and
1999 are as follows:
<TABLE>
<CAPTION>
                                             --------------2000-------------         -------------1999--------------
                                               Carrying              Fair             Carrying             Fair
                                                Amount               Value             Amount              Value
                                                                         (In Thousands)
<S>                                              <C>                  <C>                <C>                 <C>
Financial assets
  Cash and due from banks                   $    23,339         $    23,339         $    28,227         $    28,227
  Interest-earning balances                         737                 742               1,634               1,642
  Federal funds sold                             21,087              21,087              25,197              25,197
  Investment securities                         194,400             194,743             170,420             170,372
  Loans, net                                    587,755             585,037             563,294             563,324
  Federal Home Loan Bank and
    Federal Reserve Bank stock                    4,476               4,476               4,123               4,123
  Interest receivable                            10,144              10,144               9,814               9,814

Financial liabilities
  Deposits                                  $  (728,412)        $  (729,270)        $  (692,843)        $  (693,250)
  Securities sold under agreements
    to repurchase                               (20,553)            (20,605)            (21,282)            (21,282)
  Federal Home Loan Bank advances               (30,687)            (30,567)            (32,647)            (32,236)
  Other borrowed funds                          (20,000)            (20,019)            (20,000)            (20,000)
  Guaranteed preferred beneficial
    interests in Company's debentures           (28,750)            (24,006)            (28,750)            (27,888)
  Interest payable                               (3,901)             (3,901)             (3,265)             (3,265)
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           23.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  17 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)

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.

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, 2000 and 1999, the Banks had the following financial instruments
whose approximate contract amounts represent credit risk:
<TABLE>
<CAPTION>
                                                        2000                1999
                                                        ----                ----
                                                              (In Thousands)
<S>                                                       <C>                 <C>

Standby letters of credit                            $     1,497         $     2,219

Commitments to extend credit:
    Fixed                                            $    17,157         $    19,638
    Variable                                              22,265              31,623
</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 7.75% to 18%.  Commitments  generally  have fixed
expiration dates or other termination clauses and may

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           24.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  18 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Cont.)

require payment of a fee. The Banks evaluate each customer's creditworthiness on
a  case-by-case  basis.  Since some of the  commitments  are  expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future  cash  requirements.  Collateral  held  varies but may include
accounts  receivable,  inventory,  property and equipment,  and income producing
properties.

NOTE  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, 2000,  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 paid a 5% stock  dividend on September 30, 1998 to  stockholders  of
record  on  September  21,  1998.  A total of  249,027  shares  were  issued  in
connection with the stock dividend.

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 2001, the
Banks could,  without prior approval,  declare  dividends of approximately  $2.3
million  plus  any  2001  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,

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           25.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  20 - STOCKHOLDERS' EQUITY (Continued)

as of December 31, 2000, the Company and the Banks meet all quantitative capital
adequacy requirements to which they are subject.

The  capital  amounts  and  classifications  are  also  subject  to  qualitative
judgments by the regulators.  As a result of these  qualitative  judgments,  the
Company and three 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 9.2% at December 31, 2000.

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 6.9% at December 31,
2000.

Mt. Vernon Bancshares,  Inc. is precluded from declaring or paying any dividends
without prior  approval as the result of an existing  agreement with the Federal
Reserve Bank. Mt. Vernon's Tier I capital to average assets was 8.6% at December
31, 2000.

As of December 31, 2000, 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)
                                                                           26.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  20 - STOCKHOLDERS' EQUITY (Continued)

The Company's and the four largest  subsidiary Banks' capital amounts and ratios
as of December 31, 2000 and 1999 are presented in the table below.
<TABLE>
<CAPTION>
                                                                                               To Be Well Capitalized
                                                                            For Capital        Under Prompt Corrective
                                                       Actual            Adequacy Purposes        Action Provisions
                    2000                          Amount      Ratio       Amount       Ratio      Amount       Ratio
                    ----                                               (Dollars In Thousands)
<S>                                                <C>          <C>         <C>         <C>         <C>         <C>
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  69,807     12.0%     $  46,661      8%       $  58,326     10%
   Farmers Deposit Bank                             16,157     15.1          8,545      8           10,681     10
   Boone County Bank                                13,984     17.8          6,297      8            7,872     10
   Citizens Deposit Bank                            11,693     14.2          6,608      8            8,260     10
   The Bank of Mt. Vernon                           12,495     13.1          7,632      8            9,540     10

Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                  $  52,631      9.0%     $  23,330      4%       $  34,996      6%
   Farmers Deposit Bank                             14,840     13.9          4,272      4            6,409      6
   Boone County Bank                                13,055     16.6          3,149      4            4,723      6
   Citizens Deposit Bank                            10,656     12.9          3,304      4            4,956      6
   The Bank of Mt. Vernon                           11,301     11.8          3,816      4            5,724      6

Tier I Capital (to Average Assets):
   Consolidated                                  $  52,631      6.1%     $  34,448      4%       $  43,060      5%
   Farmers Deposit Bank                             14,840     10.6          5,598      4            6,998      5
   Boone County Bank                                13,055      9.3          5,633      4            7,042      5
   Citizens Deposit Bank                            10,656      9.2          4,628      4            5,785      5
   The Bank of Mt. Vernon                           11,301      8.6          5,255      4            6,569      5

                    1999
                    ----
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  67,273     11.9%     $  45,331      8%       $  56,663     10%
   Farmers Deposit Bank                             14,759     14.4          8,181      8           10,227     10
   Boone County Bank                                12,800     18.3          5,603      8            7,004     10
   Citizens Deposit Bank                            12,608     13.5          7,468      8            9,335     10
   The Bank of Mt. Vernon                           11,400     11.9          7,652      8            9,565     10

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

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

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           27.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  21 - PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                            Condensed Balance Sheets
                                   December 31
                                                                   2000            1999
                                                                   ----            ----
                                                                      (In Thousands)
                                     ASSETS
<S>                                                                <C>              <C>
Cash                                                           $      817       $       616
Investment in subsidiaries                                        100,242            95,175
Investment securities available for sale                            2,005             2,005
Premises and equipment                                                976             1,653
Other real estate acquired through foreclosure                        380               490
Other assets                                                        1,487             1,507
                                                               ----------       -----------
Total assets                                                   $  105,907       $   101,446
                                                               ==========       ===========
</TABLE>
<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                <C>             <C>
Other liabilities                                              $    1,327       $       569
Other borrowed funds                                               20,000            20,000
                                                               ----------       -----------
   Total liabilities                                               21,327            20,569

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                                               12,151            11,601
   Accumulated other comprehensive income                            (869)           (4,022)
                                                               ----------       -----------
       Total stockholders' equity                                  55,830            52,127
                                                               ----------       -----------
Total liabilities and stockholders' equity                     $  105,907       $   101,446
                                                               ==========       ===========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                           28.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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

                                                                        2000              1999             1998
                                                                        ----              ----             ----
                                                                                     (In Thousands)
<S>                                                                    <C>                 <C>             <C>
Income
   Dividends from subsidiary banks                                   $     3,775      $     6,300       $         -
   Interest and dividend income                                              229              203             1,748
   Gain on sale of investment securities                                       -                -               136
   Other income                                                               15               93             1,620
                                                                     -----------      -----------       -----------
     Total income                                                          4,019            6,596             3,504

Expenses
   Interest expense                                                        4,507            4,111             3,593
   Salaries and employee benefits                                          1,459              921               461
   Other expenses                                                            927              708               684
                                                                     -----------      -----------       -----------
     Total expenses                                                        6,893            5,740             4,738

Income (loss) before income taxes and equity
   in undistributed income of subsidiaries                                (2,874)             856            (1,234)

Income tax expense (benefit)                                              (2,315)          (1,899)             (516)
                                                                     -----------      -----------       -----------
Income (loss) before equity in undistributed
   income of subsidiaries                                                   (559)           2,755              (718)

Equity in undistributed income of subsidiaries                             1,894            1,835             6,422
                                                                     -----------      -----------       -----------
Net income                                                           $     1,335      $     4,590       $     5,704
                                                                     ===========      ===========       ===========
</TABLE>








--------------------------------------------------------------------------------
                                  (Continued)
                                                                           29.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

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

                                                                        2000              1999             1998
                                                                        ----              ----             ----
                                                                                     (In Thousands)
<S>                                                                     <C>              <C>               <C>
Cash flows from operating activities
   Net income                                                       $      1,335     $      4,590     $       5,704
   Adjustments to reconcile net income to net
     cash from operating activities
       Depreciation                                                           76              169               134
       Write-down of other real estate owned                                 110                -                 -
       Investment securities gains                                             -                -              (136)
       Equity in undistributed income of
         subsidiaries                                                     (1,894)          (1,835)           (6,422)
       Change in other assets                                                 20              573              (534)
       Change in other liabilities                                           758              430               (28)
                                                                    ------------     ------------     -------------
         Net cash from operating activities                                  405            3,927            (1,282)

Cash flows from investing activities
   Purchase of subsidiary banks                                                -          (13,677)          (15,168)
   Capital contributed to subsidiaries                                       (21)             (88)          (14,908)
   Purchase of securities available for sale                                   -               (5)          (87,687)
   Proceeds from sale of securities                                            -                -            87,823
   Net change in federal funds sold                                            -                -            16,340
   Net change in loans                                                         -             (490)            5,621
   Purchase of premises and equipment                                        (80)            (269)           (1,309)
   Proceeds from sale of fixed assets                                        682            2,041                 -
                                                                    ------------     ------------     -------------
     Net cash from investing activities                                      581          (12,488)           (9,288)

Cash flows from financing activities
   Dividends paid                                                           (785)          (3,140)           (3,068)
   Proceeds from other borrowed funds                                          -           12,000             8,000
                                                                    ------------     ------------     -------------
     Net cash from financing activities                                     (785)           8,860             4,932

Net change in cash and cash equivalents                                      201              299            (5,638)

Cash and cash equivalents at beginning of year                               616              317             5,955
                                                                    ------------     ------------     -------------
Cash and cash equivalents at end of year                            $        817     $        616     $         317
                                                                    ============     ============     =============
Supplemental disclosure of cash flow information:
Loans transferred to real estate acquired
    through foreclosure                                              $         -      $       490       $         -
</TABLE>


--------------------------------------------------------------------------------
                                  (Continued)
                                                                           30.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998

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

NOTE  22 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                 Interest        Net Interest          Net              Earnings per Share
                                  Income            Income           Income         Basic          Fully Diluted
<S>                                 <C>              <C>              <C>            <C>               <C>
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

1999
----
    First Quarter               $    14,785     $    6,718        $    1,218      $   .23        $      .23
    Second Quarter                   15,672          7,245             1,311          .25               .25
    Third Quarter                    15,936          7,395               771          .15               .15
    Fourth Quarter                   16,479          7,307             1,290          .25               .25
</TABLE>


--------------------------------------------------------------------------------
                                                                           31.
<PAGE>


                                    PART III

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

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

                                     PART IV

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

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

       1.  Financial Statements:

           Independent Auditors Report
           Consolidated Balance Sheets - December 31, 2000 and 1999
           Consolidated  Statement  of Income - Years Ended  December  31, 2000,
                  1999 and 1998
           Consolidated Statement of Comprehensive Income - Years Ended December
                  31, 2000, 1999 and 1998
           Consolidated  Statements of Changes in  Stockholders'  Equity - Years
                  Ended December 31, 2000, 1999 and 1998
           Consolidated Statements of Cash Flows - Years Ended December 31,2000,
                  1999 and 1998
           Notes to Consolidated Financial Statements

       2.  Financial Statement Schedules:

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

       3.  List of Exhibits:

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

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

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

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

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

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

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

10.2 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).

10.3 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).

10.4 An agreement dated June 30, 2000 by and between Premier Financial  Bancorp,
     Inc. and its former Chief Executive Officer, J. Howell Kelly.

21   Subsidiaries of registrant
</TABLE>


 (b)   Reports on Form 8-K

       No Form 8-K was filed during the quarter ending December 31, 2000.
<PAGE>

                                   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, 2001.

                                                PREMIER FINANCIAL BANCORP, INC.


                                           By:  /s/ Gardner E. Daniel, President
                                                --------------------------------
                                                Gardner E. Daniel, President

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


March 27, 2001           /s/ Gardner E. Daniel  Principal Executive and Director
                         ---------------------
                         Gardner E. Daniel


March 27, 2001           /s/ Edward Barnes      Principal Financial and
                         ---------------------  Accounting Officer
                         Edward Barnes


March 27, 2001           /s/ Toney K. Adkins    Director
                         ---------------------
                         Toney K. Adkins


March 27, 2001           /s/ Edsel R. Burns     Director
                         ---------------------
                         Edsel R. Burns


March 27, 2001           /s/ E. V. Holder, Jr.  Director
                         ---------------------
                         E. V. Holder, Jr.


March 27, 2001           /s/ Wilbur M. Jenkins  Director
                         ---------------------
                         Wilbur M. Jenkins


March 27, 2001           /s/ Keith F. Molihan   Director
                         ---------------------
                         Keith F. Molihan


March 27, 2001           /s/ Marshall T. Reynolds   Director
                         ------------------------
                         Marshall T. Reynolds


March 27, 2001           /s/ Neal Scaggs            Director
                         ------------------------
                         Neal Scaggs

<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

County Finance (a direct subsidiary of 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                                                            Ohio

Ohio River Bank                                                            Ohio

The Bank of Philippi                                                       West Virginia

Boone County Bank                                                          West Virginia
</TABLE>


<PAGE>


Exhibit 10.4

                                    AGREEMENT

     This is an  Agreement  (the  "Agreement")  effective  as of June  30,  2000
between  Premier  Financial  Bancorp,  Inc.  ("PFBI")  and J. Howell  Kelly (the
"Executive").
                                        I

         1.1 Resignation. Executive hereby resigns as President, Chief Executive
Officer and Director,  and from all other positions with PFBI, its  subsidiaries
and  affiliates,  effective  June 30,  2000 (the  "Resignation  Date")  with all
accrued  benefits  to that date due,  and PFBI hereby  accepts  the  Executive's
resignation,  effective as of the  Resignation  date;  provided,  however,  that
Executive  shall  remain  employed  by  PFBI as an  advisor  and  consultant  as
described in paragraph 1.2.

         1.2 Consultation.  From time to time upon specific,  occasional request
by PFBI,  Executive  shall  make  himself  available  at  times  and in a manner
convenient  to  Executive  to provide  advice  and  consultation  to PFBI,  this
availability not to be unreasonably withheld.

         1.3  Severance  Benefit.  PFBI shall pay  Executive  his  regular  base
monthly  salary as in effect as of June 15,  2000 each  month  during the period
from the Resignation  Date to and including  December 31, 2001 (the "Period") on
PFBI's regular payroll payment dates.

         1.4  Additional  Benefits.  PFBI  shall  provide  and  pay  for  health
insurance  coverage  under PFBI's group health plan for Executive for the Period
in the manner consistent with Executive's last election immediately prior to the
Resignation Date. In the event Executive is ineligible for coverage under PFBI's
plan, PFBI shall compensate and reimburse the Executive for (a) the full cost of
alternative  health insurance as selected by the Executive,  including,  but not
limited to,  Executive's  election pursuant to his continuation  coverage rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"),  and
(b)  the  amount  of  any   additional  tax  incurred  as  a  result  of  PFBI's
reimbursement.

         1.5  Automobile.  PFBI shall transfer to Executive,  on the Resignation
Date, title to the automobile  currently used by Executive for one dollar.  PFBI
shall  pay any  sales,  use or  transfer  tax or  fees  due as a  result  of the
transfer.

         1.6  Stock  Options.  All PFBI  stock  options  previously  granted  to
Executive  are hereby  fully  vested.  The period for exercise of all PFBI stock
options  granted to Executive  pursuant to any stock option plan  maintained  by
PFBI is extended until the expiration date for exercise of those options as that
expiration   date  would  have  been   determined   immediately   preceding  and
notwithstanding Executive's resignation.

         1.7  Consideration  Not Compensation For Services.  All  consideration,
including   severance   amounts,   are  paid  or  provided  by  PFBI  solely  in
consideration for the Executive's agreements and undertaking set out herein, and
not for any present,  past, or future services.  The payments and benefits to be
provided by PFBI to the  Executive  provided  for in this  Agreement  may not be
reduced or avoided for any failure by the Executive to provide  future  services
pursuant to paragraph 1.2 or otherwise.
<PAGE>
                                       II

         2.1 Releases by PFBI. PFBI hereby binds itself, its wholly or partially
owned   subsidiaries,   affiliates,   predecessors,   successors,   and  assigns
(collectively  "PFBI").  PFBI  hereby  releases  the  Executive  and his  heirs,
executors, administrators, representatives, agents and assigns (collectively the
"Executive Releasees").

         2.2  Full  General   Release  of  Executive   Releasees.   PFBI  hereby
irrevocably and unconditionally  releases and discharges the Executive Releasees
from, and shall hold the Executive Releasees harmless from, any and all actions,
causes of  action,  suits,  debts,  charges,  complaints,  claims,  liabilities,
obligations,   promises,   agreements,   controversies,   damages  and  expenses
(including attorneys' fees and costs actually incurred) of any nature whatsoever
in law or equity, whether known or unknown,  accrued or not accrued, against any
of the Executive  Releasees,  arising out of events  occurring  before or on the
effective date hereof.

                                       III

         3.1 Releases by Executive.  The  Executive  hereby binds  himself,  his
heirs, executors, administrators,  personal representatives,  agents and assigns
(collectively  the  "Executive").  Executive  hereby  releases  PFBI and  PFBI's
present  and  former  agents,  directors,  shareholders,  officers,  executives,
representatives, agents, wholly or partially owned subsidiaries, and affiliates,
and their predecessors,  successors, heirs, executors, administrators,  personal
representatives, agents and assigns (collectively the "PFBI Releasees").

         3.2 Full General Release of All Claims.  Executive  hereby  irrevocably
and  unconditionally  releases and discharges the PFBI Releasees from, and shall
hold the PFBI Releasees  harmless  from, any and all actions,  causes of action,
suits, debts, charges, complaints, claims, liabilities,  obligations,  promises,
agreements,  controversies,  damages and expenses (including attorneys' fees and
costs  actually  incurred) of any nature  whatsoever  in law or equity,  whether
known or unknown,  accrued or not  accrued,  against any of the PFBI  Releasees,
arising out of events occurring before or on the effective date hereof.

         3.3 Specific Release of All Other  Employment Law Claims.  Claims being
released under Paragraph 3.2 include, but are not limited to, any and all claims
against the PFBI Releasees  arising under any federal,  state or local statutes,
ordinances, resolutions,  regulations or constitutional provisions and/or common
law(s),  and  specifically  include  claims of harassment or  discrimination  in
employment on the basis of race, sex, religion, national origin, age, disability
and/or  veteran's  status  arising  under or  pursuant to Title VII of the Civil
Rights Act of 1991, as amended, 42 U.S.C.  ss.2000e, et seq.; the Americans With
Disabilities  Act, as amended;  the Fair Labor  Standards  Act, as amended;  the
Family and  Medical  Leave  Act;  the  Federal  Rehabilitation  Act of 1973,  as
amended;  Executive  Order  11246;  any and all tort claims  including,  but not
limited to claims of wrongful termination,  assault, battery, and intentional or
negligent  infliction of emotional  distress and outrage;  any and all claims of
breach of any  express or implied  employment  contract;  any and all claims for
unpaid benefits, commissions, stock options, pension or profit sharing plans, or
entitlements  asserted  under any plan or policy,  benefits  offering or program
(except  as  reserved  below);  and any  and all  claims  for  attorneys'  fees,
interest,  costs or injunctive relief to which Executive is, or may be, entitled
either by statute or otherwise.

         3.4 Indemnification.  Provided, however, the Executive does not release
the PFBI  Releasees  from any  obligation  to indemnify  or advance  expenses on
behalf of the  Executive  as a former  employee,  officer  or  director  of PFBI
pursuant  to  the   provisions  of  applicable   law  and  PFBI's   Articles  of
Incorporation and bylaws.
<PAGE>
                                       IV

         4.1 No  Admission.  This  Agreement is made in  settlement  of disputed
claims and neither it, nor the fact of  settlement,  constitutes an admission of
any liability,  violation of law or wrongdoing of any kind or nature  whatsoever
on the part of PFBI or the  Executive.  No release,  waiver or other promise set
forth in this  Agreement  shall be  construed  to  prohibit  either  party  from
enforcing the terms of this Agreement.

         4.2  Governing  Law  and   Severability.   This   Agreement   shall  be
interpreted,  enforced and governed under the laws of Kentucky.  The language of
all  parts of this  Agreement  shall in all  cases  be  interpreted  as a whole,
according to its fair  meaning,  and not strictly for or against  either  party,
regardless of which party is the drafter of this Agreement. Should any provision
of this  Agreement  be declared  or  determined  to be illegal or  invalid,  the
validity  of the  remaining  parts,  terms or  provisions  shall not be affected
thereby and said illegal or invalid part,  term or provision shall be deemed not
to be a part of this Agreement.  This Agreement sets forth the entire  Agreement
between the Executive and PFBI and fully supersedes any and all prior agreements
or understandings between them relating to the subject matter hereof.

         4.3 Arbitration Of Disputes.  Any dispute or controversy  arising under
this agreement shall be determined and settled by arbitration under the rules of
the American Arbitration  Association.  The arbitration award shall be final and
binding and judgment on the award may be entered by any court  having  competent
jurisdiction.

         4.4  Non-Disparagement.  Executive  Releasees  will  not  disparage  or
comment  negatively about PFBI Releasees.  Executive shall not discourage anyone
from doing  business with PFBI, or encourage  anyone to terminate any employment
with PFBI Releasees.

         4.5  Inquiries.  PFBI will not  disparage or comment  negatively  about
Executive  Releasees.  PFBI  will  respond  to any  oral  or  written  inquiries
regarding the Executive's employment with PFBI with a statement to the following
effect:

                  Executive  was  employed  as  President  and  Chief  Executive
                  Officer of PFBI from January 1, 1995 until June 30,  2000.  He
                  resigned from this position under mutually agreeable terms.

         4.6  Confidentiality.  Executive  and PFBI shall keep the  contents and
terms of this  Agreement  confidential  and shall not  disclose to any person or
entity  any of the  terms,  conditions,  or other  facts  with  respect  to this
Agreement,  except as required by law,  without the prior written consent of the
other.  If  Executive  or PFBI is required by legal  process or by  operation of
applicable  law to disclose  any of the  foregoing,  the party so required  will
provide  prompt  notice of such  requirement  to the other  within a  reasonable
amount of time prior to any such disclosure.  Executive shall not to disclose to
others,   or  use,  any   Confidential   Information  (of  either  technical  or
non-technical  nature) of PFBI, of which  Executive  became  informed during the
course  of  his  employment   with  PFBI.   For  purposes  of  this   paragraph,
"Confidential  Information"  means  strategic  information of PFBI not generally
known in the banking and financial services industry, which was disclosed to the
Executive,  or known by the  Executive,  as a  consequence  of, or through,  his
employment with PFBI.

         Executive and PFBI have signed this  Agreement  effective June 30, 2000
on the dates indicated below.
<PAGE>

                                                  /s/ J. Howell Kelly
                                                  ------------------------------
                                                  J. Howell Kelly

                                                  Date: 6/30/00
                                                        ------------------------

                                                 PREMIER FINANCIAL BANCORP, INC.

                                                 By /s/ Gardner Daniel
                                                    ----------------------------
                                                 Title:  President & CEO
                                                         -----------------------
                                                 Date:   June 30, 2000
                                                         -----------------------