Summary of PREMIER FINANCIAL BANCORP INC

Item 3.03 - Material Modification to Rights of Security Holders.

On October 2, 2009, Premier issued and sold to the United States Department of the U.S. Treasury (the "U.S. Treasury") (i) 22,252 of Premier's Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (the "Series A Preferred Shares"), and (ii) a ten-year warrant (the "Warrant") to purchase 628,588 Premier common shares, each without par value (the "Common Shares"), at an exercise price of $5.31 per share (subject to certain anti-dilution and other adjustments), for an aggregate purchase price of $22,252,000 in cash.

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This investment was made as part of the U.S. Treasury's TARP Capital Purchase Program (the "Capital Purchase Program"). The issuance and sale to the U.S. Treasury of the Series A Preferred Shares and the Warrant was a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4 (2) thereof. All of the proceeds from the sale of the Series A Preferred Shares and the Warrant by Premier to the U.S. Treasury under the Capital Purchase Program will qualify as Tier 1 capital for regulatory purposes. Upon the request of the U.S. Treasury at any time, Premier has agreed to promptly enter into a depositary arrangement pursuant to which the Series A Preferred Shares may be deposited and depositary shares ("Depositary Shares"), representing fractional Series A Preferred Shares, may be issued. Premier has agreed to register with the SEC on Form S-3 the resale of the Series A Preferred Shares and the Depositary Shares, if any, and the Warrant, and the issuance of Common Shares upon exercise of the Warrant (the "Warrant Shares"), as soon as practicable after the date of the issuance of the Series A Preferred Shares and the Warrant (and in any event no later than 30 days after such date of issuance).

To finalize Premier's participation in the Capital Purchase Program, Premier and the U.S. Treasury entered into a Letter Agreement, dated October 2, 2009 (the "Letter Agreement"), including a Securities Purchase Agreement - Standard Terms which is attached thereto (the "Securities Purchase Agreement" and together with the Letter Agreement, the "UST Agreement").

Pursuant to the UST Agreement and under standardized Capital Purchase Program terms, cumulative dividends on the Series A Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years and at a rate of 9% per annum thereafter. These dividends will be paid only if, as and when declared by Premier's Board of Directors. The Series A Preferred Shares have no maturity date and rank senior to the Common Shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of Premier. Subject to the approval of the Appropriate Federal Banking Agency (as defined in the Securities Purchase Agreement, which for Premier is the Board of Governors of the Federal Reserve System), the Series A Preferred Shares are redeemable at the option of Premier at 100% of their liquidation preference plus accrued and unpaid dividends, provided that the Series A Preferred Shares may be redeemed prior to November 15, 2012, only if (i) Premier has raised aggregate gross proceeds in one or more Qualified Equity Offerings (as defined in the Securities Purchase Agreement) in excess of $5,563,000 and (ii) the aggregate redemption price of the Series A Preferred Shares does not exceed the aggregate net proceeds from such Qualified Equity Offerings. The Series A Preferred Shares are generally non-voting.

Notwithstanding the foregoing, The American Recovery and Reinvestment Act of 2009 ("ARRA"), which was signed into law on February 17, 2009, provides that the Secretary of the Treasury shall permit a recipient of funds under TARP, subject to consultation with the recipient's appropriate Federal banking agency, to repay such assistance without regard to whether the recipient has replaced such funds from any other source or to any waiting period. ARRA further provides that when the recipient repays such assistance, the Secretary of the Treasury shall liquidate the Warrant associated with the assistance at the current market price. It appears that ARRA will permit Premier, if it so elects and following consultation with the Federal Reserve Board, to redeem the Series A Preferred Shares at any time without restriction.

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The U.S. Treasury may not transfer a portion or portions of the Warrant with respect to, and/or exercise the Warrant for more than one-half of, the 628,588 Common Shares issuable upon exercise of the Warrant, in the aggregate, until the earlier of (i) the date on which Premier has received aggregate gross proceeds of not less than $22,252,000 from one or more Qualified Equity Offerings and
(ii) December 31, 2009. The U.S. Treasury has agreed not to exercise voting power with respect to any Common Shares issued to it upon exercise of the Warrant. Any Common Shares issued by Premier upon exercise of the Warrant will be issued from Common Shares held in treasury to the extent available. If no treasury shares are available, Common Shares will be issued from authorized but unissued Common Shares.

The UST Agreement, pursuant to which the Series A Preferred Shares and the Warrant were sold, contains limitations on the payment of dividends on the Common Shares from and after October 2, 2009 (including with respect to the payment of cash dividends in excess of $0.11 per share, which is the amount of the last quarterly cash dividend declared by Premier prior to October 14, 2008). Prior to the earlier of (i) October 2, 2012 and (ii) the date on which the Series A Preferred Shares have been redeemed in whole or the U.S. Treasury has transferred the Series A Preferred Shares to third parties which are not Affiliates (as defined in the Securities Purchase Agreement) of the U.S. Treasury, any increase in common share dividends by Premier would be prohibited without the prior approval of the U.S. Treasury. In addition, unless the Series A Preferred Shares have been transferred to third parties which are not Affiliates of the U.S. Treasury or have been redeemed in whole, until October 2, 2012, the U.S. Treasury's consent would be required for any repurchases of (i) Common Shares or other capital stock or other equity securities of any kind of . . .