PremierWest Bancorp (NASDAQ: PRWT) (Company), parent company of
PremierWest Bank (Bank), announced results for the fourth quarter
and year ended December 31, 2012, as follows:
For the quarter ended December 31, 2012:
- Net loss applicable to common shareholders of $7.3 million,
compared to net income of $114,000 in third quarter 2012 and a $4.1
million net loss in fourth quarter 2011;
- Net OREO and foreclosed asset expenses of $4.6 million, an
increase from $883,000 in third quarter 2012, and $1.4 million in
fourth quarter 2011;
- No loan loss provision expense in fourth or third quarter 2012,
compared to $3.0 million in fourth quarter 2011;
- Net loan charge-offs of $614,000 compared to net loan
charge-offs of $344,000 in third quarter 2012 and $7.3 million in
fourth quarter 2011;
- A charge of $2.8 million was taken to recognize an updated
estimate of a liability for post-retirement health insurance
benefits previously committed to certain current and former
directors and officers;
- Net interest margin of 3.85%, a decrease from 4.01% in third
quarter 2012 and 3.95% in fourth quarter 2011;
- Average rate paid on total deposits and borrowings of 0.50%, a
decline from 0.55% in the third quarter in 2012 and 0.66% in fourth
quarter 2011.
For the year ended December 31, 2012:
- Net loss applicable to common shareholders of $13.9 million,
after $4.8 million in loan loss provision, net OREO and foreclosed
asset expenses of $9.2 million and a charge of $2.8 million to
recognize an updated estimate of a liability associated with
post-retirement benefits, as noted above. This compares to a net
loss applicable to common shareholders of $17.6 million for the
year ended 2011, with a $14.4 million loan loss provision and net
OREO and foreclosed asset expenses of $8.6 million;
- Net interest margin of 4.08%, an increase of 3 basis points
from 4.05% for the year ended 2011;
- Average rate paid on total deposits and borrowings of 0.56%, a
22 basis point decline from 0.78% for the year ended 2011;
- Net loan charge-offs of $8.9 million, compared to $27.2 million
for the year ended 2011;
- Allowance for loan losses of $18.6 million, or 2.87% of gross
loans, compared to $22.7 million, or 2.84%, at December 31,
2011;
- Non-performing loans of $22.7 million, or 3.50% of gross loans,
compared to $76.2 million, or 9.56% of gross loans, at December 31,
2011, representing a $53.6 million, or 70%, reduction when
comparing the two periods;
- OREO of $25.4 million, up from $22.8 million at December 31,
2011.
Management continued to execute strategies that have resulted in
further strengthening of the Company, including:
- Reducing adversely classified loans by $82.3 million, or 52%,
from $159.8 million at December 31, 2011;
- Reducing non-performing assets by $51.1 million, or 52%, from
$99.1 million at December 31, 2011;
- Strengthening the Bank's total risk-based and leverage capital
ratios to 14.06% and 8.95%, respectively, as compared to 13.03% and
8.72% at December 31, 2011;
- Improving non-interest bearing demand deposits as a percentage
of total deposits to 28% at December 31, 2012, up from 25% at
December 31, 2011.
James M. Ford, President & Chief Executive Officer, stated,
"As I have reported over the past several quarters, the Company has
made significant progress. However, the Board of Directors and
executive management determined that without an infusion of
additional capital, the Bank would not be able to exit all problem
credit relationships, meet obligations to holders of our trust
preferred securities at the expiration of the deferral period,
comply with the FDIC Consent Order, satisfy our commitment to the
U.S. Treasury as holder of our Series B Preferred Stock issued
under TARP, and complete the restructuring initiatives begun
earlier this year. After studying many options, we announced in
October our decision to merge with AmericanWest Bank as the best
course of action for our employees, shareholders and
communities.
"We continue to make significant reductions in problem assets,"
Ford continued. "As part of this effort, OREO impairment charges
taken this quarter resulted in a net loss for the current period.
These charges were associated with numerous properties received
earlier this year as part of a master settlement agreement with a
large non-performing loan relationship. These charges were taken
primarily on properties for land development, which have continued
to experience declines in value. Concurrently, we had another
successful quarter in reducing problem assets, which are now at the
lowest levels since 2007. Contributing to this reduction was the
paydown or payoff of over $3.9 million in non-performing loans. As
a result of these improvements in credit quality, net charge-offs
were at reduced levels for the second consecutive quarter.
Non-interest expenses included a charge of $2.8 million during the
fourth quarter to recognize an updated estimate of a liability for
post-retirement health insurance benefits previously committed to
certain current and former directors and officers. Despite this,
the expense reduction initiatives completed earlier this year have
produced the expected results. These efforts validate our
commitment to operating a more cost-effective organization.
"We continue to be successful at reducing our levels of
higher-cost certificates of deposits. In addition, we remain
focused on having non-interest bearing deposits as an important
component of our funding," commented Ford. "Loan demand remains
subdued due to the continued sluggish economy. In the meantime,
contributions to revenue are being made by the investment
portfolio, investment brokerage and mortgage banking
activities."
In closing, Ford remarked, "I believe that our efforts to reduce
problem assets and restructure our business operations are proving
beneficial, even with the OREO impairment charges we incurred this
quarter. Similarly, reductions in infrastructure expenses and
continued deleveraging have contributed to additional improvement
in our capital levels. We remain focused in our efforts to enhance
the operating results of PremierWest through the continued
reduction in problem assets and enhanced efficiency of our business
operations."
OPERATING RESULTS
Net Interest Income Net interest income
for the quarter and twelve months ended December 31, 2012 declined
from the three and twelve months ended December 31, 2011. This is
primarily due to a decline in average interest earning assets
during these periods as a result of the Company's deleveraging
strategy. In addition, average interest bearing liabilities
decreased during these same periods. Correspondingly, interest
expense continued to decline due to the reduction in the balances
of, and rates paid on, certificates of deposit. Changes in the
balance sheet mix also contributed to declines in net interest
income during these periods. Loan balances have declined through
payoffs and charge-offs. Investment securities have grown as a
proportion of the balance sheet with loan demand continuing to be
soft due to continued weakness in the economy. As such, investment
securities, which typically generate a lower yield than loans,
comprise a higher percentage of the Bank's earning assets.
Certain reclassifications have been made to the following
financial table presentations to conform to current period
presentations. These reclassifications have no effect on previously
reported net income (loss) per share.
STATEMENT OF OPERATIONS OVERVIEW
(Dollars in Thousands, Except for Loss per Share Data)
For the Three For the Three
Months Ended Months Ended
December 31, September 30,
2012 2012 $ Change % Change
------------- ------------- --------- --------
Interest and dividend
income $ 11,398 $ 12,110 $ (712) -6%
Interest expense 1,325 1,486 (161) -11%
------------- ------------- ---------
Net interest income 10,073 10,624 (551) -5%
Loan loss provision - - - 0%
Non-interest income 2,717 3,350 (633) -19%
Non-interest expense 19,415 13,215 6,200 47%
------------- ------------- ---------
Income (loss) before
provision for income
taxes (6,625) 759 (7,384) 973%
Provision for income
taxes 10 11 (1) -9%
------------- ------------- ---------
Net income (loss) (6,635) 748 (7,383) 987%
Preferred stock dividends
and discount accretion 632 634 (2) 0%
------------- ------------- ---------
Net income (loss)
applicable to common
shareholders $ (7,267) $ 114 $ (7,381) 6475%
============= ============= =========
Income (loss) per common
share:
Basic (1) $ (0.72) $ 0.01 $ (0.73) 7300%
============= ============= =========
Diluted (1) $ (0.72) $ 0.01 $ (0.73) 7300%
============= ============= =========
Average common shares
outstanding - basic (1) 10,034,741 10,034,741 - 0%
Average common shares
outstanding - diluted
(1) 10,034,741 10,034,741 - 0%
For the Three
Months Ended
December 31,
2011 $ Change % Change
------------- --------- --------
Interest and dividend
income $ 13,710 $ (2,312) -17%
Interest expense 1,969 (644) -33%
------------- ---------
Net interest income 11,741 (1,668) -14%
Loan loss provision 3,000 (3,000) -100%
Non-interest income 2,377 340 14%
Non-interest expense 14,476 4,939 34%
------------- ---------
Income (loss) before
provision for income
taxes (3,358) (3,267) 97%
Provision for income
taxes 26 (16) -62%
------------- ---------
Net income (loss) (3,384) (3,251) 96%
Preferred stock dividends
and discount accretion 682 (50) -7%
------------- ---------
Net income (loss)
applicable to common
shareholders $ (4,066) $ (3,201) 79%
============= =========
Income (loss) per common
share:
Basic (1) $ (0.41) $ (0.31) 76%
============= =========
Diluted (1) $ (0.41) $ (0.31) 76%
============= =========
Average common shares
outstanding - basic (1) 10,035,241 (500) 0%
Average common shares
outstanding - diluted
(1) 10,035,241 (500) 0%
For the Year For the Year
Ended Ended
December 31, December 31, %
2012 2011 $ Change Change
------------ ------------ -------- -------
Interest and dividend income $ 49,803 $ 59,475 $ (9,672) -16%
Interest expense 6,098 9,558 (3,460) -36%
------------ ------------ --------
Net interest income 43,705 49,917 (6,212) -12%
Loan loss provision 4,775 14,350 (9,575) -67%
Non-interest income 13,144 10,838 2,306 21%
Non-interest expense 63,413 61,386 2,027 3%
------------ ------------ --------
Income (loss) before
provision for income taxes (11,339) (14,981) 3,642 24%
Provision for income taxes 68 70 (2) -3%
------------ ------------ --------
Net loss (11,407) (15,051) 3,644 24%
Preferred stock dividends and
discount accretion 2,528 2,565 (37) -1%
------------ ------------ --------
Net loss applicable to
common shareholders $ (13,935) $ (17,616) $ 3,681 21%
============ ============ ========
Loss per common share:
Basic (1) $ (1.39) $ (1.76) $ 0.37 21%
============ ============ ========
Diluted (1) $ (1.39) $ (1.76) $ 0.37 21%
============ ============ ========
Average common shares
outstanding - basic (1) 10,034,741 10,035,241 (500) 0%
Average common shares
outstanding - diluted (1) 10,034,741 10,035,241 (500) 0%
(1) As of December 31, 2012, September 30, 2012, and December 31, 2011,
109,039 common shares related to the potential exercise of the warrant
issued to the U.S. Treasury pursuant to the Troubled Asset Relief Program
(TARP) Capital Purchase Program were not included in the computation of
diluted earnings per share as their inclusion would have been anti-
dilutive.
The following table provides the reconciliation of net income
(loss) applicable to common shareholders to pre-tax, pre-credit
operating income (loss) (non-GAAP) for the periods presented:
Reconciliation of Non-GAAP Measure:
Non-GAAP Operating Income (Loss)
(Dollars in Thousands)
December 31, September 30, %
For The Three Months Ended 2012 2012 $ Change Change
------------- ------------- -------- -------
Net income (loss)
applicable to common
shareholders $ (7,267) $ 114 $ (7,381) 6475%
Provision for loan losses - - - 0%
Net cost of operations of
other real estate owned
and foreclosed assets 4,642 883 3,759 426%
Provision for income
taxes 10 11 (1) -9%
Preferred stock dividends
and discount accretion 632 634 (2) 0%
------------- ------------- --------
Pre-tax, pre-credit cost
operating income (loss) $ (1,983) $ 1,642 $ (3,625) -221%
============= ============= ========
December 31, %
For The Three Months Ended 2011 $ Change Change
------------- -------- -------
Net income (loss)
applicable to common
shareholders $ (4,066) $ (3,201) 79%
Provision for loan losses 3,000 (3,000) 100%
Net cost of operations of
other real estate owned
and foreclosed assets 1,380 3,262 236%
Provision for income
taxes 26 (16) -62%
Preferred stock dividends
and discount accretion 682 (50) -7%
------------- --------
Pre-tax, pre-credit cost
operating income (loss) $ 1,022 $ (3,005) -294%
============= ========
December 31, December 31, %
For The Year Ended 2012 2011 $ Change Change
------------ ------------ -------- -------
Net loss applicable to common
shareholders $ (13,935) $ (17,616) $ 3,681 21%
Provision for loan losses 4,775 14,350 (9,575) -67%
Net cost of operations of
other real estate owned
and foreclosed assets 9,172 8,554 618 7%
Provision for income taxes 68 70 (2) -3%
Preferred stock dividends
and discount accretion 2,528 2,565 (37) -1%
------------ ------------ --------
Pre-tax, pre-credit cost
operating income $ 2,608 $ 7,923 $ (5,315) -67%
============ ============ ========
The following table provides a summary of tax equivalent net
income (loss) applicable to common shareholders (non-GAAP) for the
periods presented:
Reconciliation of Non-GAAP Measure:
Tax Equivalent Net Income (Loss) Applicable to Common Shareholders
(Dollars in Thousands)
December 31, September 30, %
For the Three Months ended 2012 2012 $ Change Change
------------- ------------- -------- -------
Net interest income $ 10,073 $ 10,624 $ (551) -5%
Tax equivalent adjustment
for municipal loan interest 33 41 (8) -20%
Tax equivalent adjustment
for municipal bond interest 2 3 (1) -33%
------------- ------------- --------
Tax equivalent net interest
income 10,108 10,668 (560) -5%
Provision for loan losses - - - 0%
Non-interest income 2,717 3,350 (633) -19%
Non-interest expense 19,415 13,215 6,200 47%
Provision for income taxes 10 11 (1) -9%
------------- ------------- --------
Tax equivalent net income
(loss) (6,600) 792 (7,392) 933%
Preferred stock dividends
and discount accretion 632 634 (2) 0%
------------- ------------- --------
Tax equivalent net income
(loss) applicable to common
shareholders $ (7,232) $ 158 $ (7,390) 4677%
============= ============= ========
December 31, %
For the Three Months ended 2011 $ Change Change
------------- -------- -------
Net interest income $ 11,741 $ (1,668) -14%
Tax equivalent adjustment
for municipal loan interest 44 (11) -25%
Tax equivalent adjustment
for municipal bond interest 7 (5) -71%
------------- --------
Tax equivalent net interest
income 11,792 (1,684) -14%
Provision for loan losses 3,000 (3,000) -100%
Non-interest income 2,377 340 14%
Non-interest expense 14,476 4,939 34%
Provision for income taxes 26 (16) -62%
------------- --------
Tax equivalent net income
(loss) (3,333) (3,267) 98%
Preferred stock dividends
and discount accretion 682 (50) -7%
------------- --------
Tax equivalent net income
(loss) applicable to common
shareholders $ (4,015) $ (3,217) 80%
============= ========
December 31, December 31, %
For the Year ended 2012 2011 $ Change Change
------------ ------------ -------- -------
Net interest income $ 43,705 $ 49,917 $ (6,212) -12%
Tax equivalent adjustment for
municipal loan interest 157 178 (21) -12%
Tax equivalent adjustment for
municipal bond interest 22 58 (36) -62%
------------ ------------ --------
Tax equivalent net interest
income 43,884 50,153 (6,269) -12%
Provision for loan losses 4,775 14,350 (9,575) -67%
Non-interest income 13,144 10,838 2,306 21%
Non-interest expense 63,413 61,386 2,027 3%
Provision for income taxes 68 70 (2) -3%
------------ ------------ --------
Tax equivalent net loss (11,228) (14,815) 3,587 24%
Preferred stock dividends and
discount accretion 2,528 2,565 (37) -1%
------------ ------------ --------
Tax equivalent net loss
applicable to common
shareholders $ (13,756) $ (17,380) $ 3,624 21%
============ ============ ========
Non-GAAP financial measures have inherent limitations, are not
required to be uniformly applied, and are not audited. Management
believes that presentation of these non-GAAP financial measures
provide useful information frequently used by shareholders in the
evaluation of a company. Non-GAAP financial measures have
limitations as analytical tools and should not be considered in
isolation or as a substitute for analyses of results as reported
under GAAP.
Non-interest Income Non-interest income
for the quarter ended December 31, 2012 increased compared to the
quarter ended December 31, 2011. Service charge income on deposit
accounts declined due to a reduction in the amount of
non-sufficient check items. This was partially offset by growth in
mortgage banking income, primarily associated with refinancing
activity. Investment brokerage and annuity fee income also grew due
to an increase in sales volume. Other non-interest income increased
due to a gain from sale of fixed assets associated with the sale of
a former branch location.
Non-interest income for the twelve months ended December 31,
2012, grew as compared to the twelve months ended December 31,
2011. Service charge income on deposit accounts declined due to a
reduction in the amount of non-sufficient check items. Growth in
investment brokerage and annuity fees due to an increase in sales
volume was accompanied by similar growth in income from increased
mortgage banking revenue, primarily due to increased refinancing
activity. Continued repositioning of the investment securities
portfolio to adjust to changes in market outlook occurred
throughout the current period, resulting in higher net gains on
sale of securities. Other non-interest income increased due to a
gain from sale of fixed assets associated with the sale of a former
branch location.
In November 2010, the Federal Deposit Insurance Corporation
("FDIC") issued mandates on overdraft payment programs applicable
to its supervised institutions, including the Bank. These
restrictions were effective July 1, 2011. The Bank began
implementing changes to its overdraft payment program in the third
quarter of 2011 to comply with the FDIC's mandates. The Company
believes these mandates have continued to adversely affect
non-interest income.
Non-interest income
(Dollars in Thousands)
For The Three Months Ended
December 31, September 30, %
2012 2012 $ Change Change
------------- ------------- -------- -------
Service charges on deposit
accounts $ 816 $ 847 $ (31) -4%
Other commissions and fees 664 676 (12) -2%
Net gain (loss) on sale of
securities, available for
sale (4) 713 (717) -101%
Investment brokerage and
annuity fees 397 581 (184) -32%
Mortgage banking fees 329 204 125 61%
Other non-interest income:
Increase in value of BOLI 122 123 (1) -1%
Other non-interest income 393 206 187 91%
------------- ------------- --------
Total non-interest income $ 2,717 $ 3,350 $ (633) -19%
============= ============= ========
For The Three Months Ended
December 31, %
2011 $ Change Change
------------- -------- -------
Service charges on deposit
accounts $ 898 $ (82) -9%
Other commissions and fees 684 (20) -3%
Net gain (loss) on sale of
securities, available for
sale 116 (120) -103%
Investment brokerage and
annuity fees 360 37 10%
Mortgage banking fees 143 186 130%
Other non-interest income:
Increase in value of BOLI 125 (3) -2%
Other non-interest income 51 342 671%
------------- --------
Total non-interest income $ 2,377 $ 340 14%
============= ========
For The Year Ended
December 31, December 31, %
2012 2011 $ Change Change
------------ ------------ -------- -------
Service charges on deposit
accounts $ 3,416 $ 3,720 $ (304) -8%
Other commissions and fees 2,686 2,724 (38) -1%
Net gain on sale of securities,
available for sale 3,104 1,115 1,989 178%
Investment brokerage and
annuity fees 1,786 1,754 32 2%
Mortgage banking fees 753 413 340 82%
Other non-interest income:
Increase in value of BOLI 488 508 (20) -4%
Other non-interest income 911 604 307 51%
------------ ------------ --------
Total non-interest income $ 13,144 $ 10,838 $ 2,306 21%
============ ============ ========
Non-interest Expense Non-interest expense
for the current quarter increased from the quarter ended December
31, 2011. This was primarily due to increases in net cost of
operations of OREO from impairment charges taken on numerous
properties received earlier this year as part of a master
settlement agreement with a large non-performing loan relationship.
These charges were taken primarily on properties for land
development, which have continued to experience declines in value.
In addition, a charge of $2.8 million was taken during the current
quarter to recognize an updated estimate of a liability for
post-retirement health insurance benefits previously committed to
certain current and former directors and officers. This charge,
which is not related to the proposed merger with AmericanWest Bank,
increased director fee expense by $1.6 million and salaries and
employee benefits expense by $1.2 million. Excluding the impact of
recording the post-retirement obligation, salary and employee
benefits expense fell versus the quarter ended December 31, 2011
due to branch consolidation, branch sales and administrative
restructuring initiatives completed earlier in 2012.
Non-interest expense for the twelve months ended December 31,
2012 increased compared to the twelve months ended December 31,
2011. The increase was primarily due to higher net cost of
operations of OREO and problem loan expenses associated with the
payment of delinquent property taxes of $1.6 million incurred to
acquire OREO properties. Salary and employee benefits expense
declined despite the charges taken to recognize a liability for
post-retirement health insurance benefits, as mentioned above, due
to the branch reduction and administrative restructuring
initiatives completed earlier in 2012. In addition, a number of
expense categories experienced declines due to company-wide efforts
to reduce expenses. Such reductions were primarily the result of
operating fewer branch locations. Similarly, FDIC assessments
dropped commensurate with the decline in total assets over the
period. Director fee expenses increased as a result of the charge
to record a liability for post-retirement health insurance
benefits, as mentioned above. Other non-interest expense increased
primarily due to a cost of approximately $800,000 to retire assets
as a result of the branch reduction initiative completed in second
quarter 2012.
Non-interest expense
(Dollars in Thousands)
For The Three Months Ended
December 31, September 30, %
2012 2012 $ Change Change
------------- ------------- -------- -------
Salaries and employee
benefits $ 6,925 $ 6,065 $ 860 14%
Net cost of operations of
other real estate owned and
foreclosed assets 4,642 883 3,759 426%
Net occupancy and equipment 1,757 1,694 63 4%
FDIC and state assessments 628 690 (62) -9%
Professional fees 876 1,020 (144) -14%
Communications 388 411 (23) -6%
Advertising 186 166 20 12%
Third-party loan costs 250 165 85 52%
Professional liability
insurance 214 215 (1) 0%
Problem loan expense 459 570 (111) -19%
Other non-interest expense:
Director fees 1,774 120 1,654 1378%
Internet costs 121 113 8 7%
ATM debit card costs 177 210 (33) -16%
Business development 54 61 (7) -11%
Amortization 210 105 105 100%
Supplies 95 91 4 4%
Other non-interest expense 659 636 23 4%
------------- ------------- --------
Total non-interest expense $ 19,415 $ 13,215 $ 6,200 47%
============= ============= ========
For The Three Months Ended
December 31, %
2011 $ Change Change
------------- -------- -------
Salaries and employee
benefits $ 6,302 $ 623 10%
Net cost of operations of
other real estate owned and
foreclosed assets 1,380 3,262 236%
Net occupancy and equipment 1,690 67 4%
FDIC and state assessments 727 (99) -14%
Professional fees 807 69 9%
Communications 509 (121) -24%
Advertising 135 51 38%
Third-party loan costs 343 (93) -27%
Professional liability
insurance 540 (326) -60%
Problem loan expense 200 259 130%
Other non-interest expense:
Director fees 105 1,669 1590%
Internet costs 237 (116) -49%
ATM debit card costs 190 (13) -7%
Business development 85 (31) -36%
Amortization 116 94 81%
Supplies 149 (54) -36%
Other non-interest expense 961 (302) -31%
------------- --------
Total non-interest expense $ 14,476 $ 4,939 34%
============= ========
For The Year Ended
December 31, December 31, %
2012 2011 $ Change Change
------------ ------------ -------- -------
Salaries and employee benefits $ 26,077 $ 26,836 $ (759) -3%
Net cost of operations of other
real estate owned and
foreclosed assets 9,172 8,554 618 7%
Net occupancy and equipment 7,024 7,953 (929) -12%
FDIC and state assessments 2,700 3,448 (748) -22%
Professional fees 2,933 3,053 (120) -4%
Communications 1,720 1,953 (233) -12%
Advertising 743 828 (85) -10%
Third-party loan costs 984 1,266 (282) -22%
Professional liability
insurance 855 813 42 5%
Problem loan expense 3,106 652 2,454 376%
Other non-interest expense:
Director fees 2,124 405 1,719 424%
Internet costs 492 624 (132) -21%
ATM debit card costs 722 692 30 4%
Business development 257 340 (83) -24%
Amortization 547 499 48 10%
Supplies 419 569 (150) -26%
Other non-interest expense 3,538 2,901 637 22%
------------ ------------ --------
Total non-interest expense $ 63,413 $ 61,386 $ 2,027 3%
============ ============ ========
Income Taxes The Company recorded an
income tax provision for the three months ended December 31, 2012,
September 30, 2012, and December 31, 2011. The provision was made
for minimum state income taxes owed.
As of December 31, 2012, the Company maintained a full valuation
allowance against its deferred tax asset. If the Company returns to
sustained profitability, all or a portion of the deferred tax asset
valuation allowance may be reversed. A reversal of the deferred tax
asset valuation allowance would decrease the Company's income tax
expense and increase net income. Currently, the only tax expense
the Company is recognizing relates to Oregon minimum tax.
BALANCE SHEET OVERVIEW
(Dollars in Thousands)
December 31, September 30, %
2012 2012 $ Change Change
------------- ------------- ---------- ---------
Assets:
Cash and cash
equivalents $ 80,252 $ 65,543 $ 14,709 22%
Interest-bearing
certificates of
deposit 1,500 1,500 - 0%
Investment securities 333,157 328,627 4,530 1%
Gross loans, net of
deferred fees 647,272 676,101 (28,829) -4%
Allowance for loan
losses (18,560) (19,174) 614 3%
------------- ------------- ----------
Net loans 628,712 656,927 (28,215) -4%
Other assets 96,346 104,953 (8,607) -8%
------------- ------------- ----------
Total assets $ 1,139,967 $ 1,157,550 $ (17,583) -2%
============= ============= ==========
Liabilities and
stockholders' equity
Total deposits $ 1,006,184 $ 1,014,982 $ (8,798) -1%
Borrowings 36,281 37,965 (1,684) -4%
Other liabilities 24,141 23,549 592 3%
Stockholders' equity 73,361 81,054 (7,693) -9%
------------- ------------- ----------
Total liabilities
and stockholders'
equity $ 1,139,967 $ 1,157,550 $ (17,583) -2%
============= ============= ==========
BALANCE SHEET OVERVIEW
(Dollars in Thousands)
December 31, %
2011 $ Change Change
------------- ---------- ---------
Assets:
Cash and cash
equivalents $ 71,349 $ 8,903 12%
Interest-bearing
certificates of
deposit 1,500 - 0%
Investment securities 319,415 13,742 4%
Gross loans, net of
deferred fees 797,416 (150,144) -19%
Allowance for loan
losses (22,683) 4,123 18%
------------- ----------
Net loans 774,733 (146,021) -19%
Other assets 99,050 (2,704) -3%
------------- ----------
Total assets $ 1,266,047 $ (126,080) -10%
============= ==========
Liabilities and
stockholders' equity
Total deposits $ 1,127,749 $ (121,565) -11%
Borrowings 35,169 1,112 3%
Other liabilities 18,764 5,377 29%
Stockholders' equity 84,365 (11,004) -13%
------------- ----------
Total liabilities
and stockholders'
equity $ 1,266,047 $ (126,080) -10%
============= ==========
The Company's liquidity position remains strong as evidenced by
its current level of combined cash and cash equivalents and
investment securities. Over the past year, the Company has
continued to manage its investment securities to maintain a
diversified portfolio consisting of government guaranteed
collateralized mortgage obligations and mortgage-backed securities.
Municipal securities rated AA or better with maturities generally
ranging from 5 to 15 years were also purchased during this period.
The expected duration of the investment portfolio was 4.0 years at
December 31, 2012, compared to 3.9 years at September 30, 2012, and
4.4 years at December 31, 2011.
LOANS
The Bank's total loan portfolio continues to decline, reflecting
the Company's efforts to reduce adversely classified loans. These
declines are accentuated by soft loan demand due to continued
weakness in the local and national economy. As a result,
commercial, real estate construction, and commercial &
industrial loan balances declined during the current year. Loan
totals have also declined because the Company exited a number of
higher risk rated loan relationships over the past year which
contributed to the contraction in the commercial real estate and
construction, land development & other land loan categories
over the same period. This included a reduction, after charge-offs,
of approximately $15 million in loan balances associated with
settlement of the largest non-performing lending relationship in
first quarter 2012.
Interest and fees earned on our loan portfolio are our primary
source of revenue. Our ability to achieve loan growth will be
dependent on many factors, including the ability to raise
additional capital, effects of competition, economic conditions in
our markets, retention of key personnel and valued customers, and
our ability to close loans in the pipeline.
The Company manages new commercial, including agricultural, loan
origination volume using concentration limits that establish
maximum exposure levels by designated industry segment, real estate
product types, geography, and single borrower limits. We expect the
commercial loan portfolio to be an important contributor to growth
in future revenues as we continue to seek to limit our exposure to
construction and development and commercial real estate.
Loans by category
% of % of
(Dollars in December Gross September Gross %
Thousands) 31, 2012 Loans 30, 2012 Loans $ Change Change
---------- ----- ---------- ----- --------- ------
Construction, Land
Dev & Other Land $ 34,062 5% $ 36,434 5% $ (2,372) -7%
Commercial &
Industrial 103,818 16% 115,395 17% (11,577) -10%
Commercial Real
Estate Loans 395,959 61% 402,237 59% (6,278) -2%
Secured Multifamily
Residential 19,290 3% 20,221 3% (931) -5%
Other Loans Secured
by 1-4 Family RE 41,151 6% 43,400 6% (2,249) -5%
Loans to
Individuals,
Family & Personal
Expense 20,666 3% 21,859 3% (1,193) -5%
Indirect Consumer 22,838 4% 23,264 3% (426) -2%
Other Loans 9,550 1% 13,316 2% (3,766) -28%
Overdrafts 193 0% 228 0% (35) -15%
---------- ---------- ---------
Gross loans 647,527 676,354 (28,827) -4%
Less: allowance
for loan
losses (18,560) -3% (19,174) -3% 614 3%
Less: deferred
fees and
restructured
loan
concessions (255) 0% (253) 0% (2) 1%
---------- ---------- ---------
Loans, net $ 628,712 $ 656,927 $ (28,215) -4%
========== ========== =========
Loans by category
% of
(Dollars in December 31, Gross %
Thousands) 2011 Loans $ Change Change
------------ ----- ---------- ------
Construction, Land
Dev & Other Land $ 81,241 10% $ (47,179) -58%
Commercial &
Industrial 124,422 16% (20,604) -17%
Commercial Real
Estate Loans 449,347 56% (53,388) -12%
Secured Multifamily
Residential 21,792 3% (2,502) -11%
Other Loans Secured
by 1-4 Family RE 47,912 6% (6,761) -14%
Loans to
Individuals,
Family & Personal
Expense 24,034 3% (3,368) -14%
Indirect Consumer 21,272 3% 1,566 7%
Other Loans 27,594 3% (18,044) -65%
Overdrafts 264 0% (71) -27%
------------ ----------
Gross loans 797,878 (150,351) -19%
Less: allowance
for loan
losses (22,683) -3% 4,123 18%
Less: deferred
fees and
restructured
loan
concessions (462) 0% 207 45%
------------ ----------
Loans, net $ 774,733 $ (146,021) -19%
============ ==========
DEPOSITS AND BORROWINGS
The trend in the decline in total deposits continues from recent
quarters. This decrease was mainly due to the decision to continue
to reduce higher cost time deposit balances. Time deposits declined
as a percentage of the Company's total deposits in the most recent
quarter versus the same quarter last year. In addition, deposits
have declined as a result of the branch consolidation and sale of
two branches during second quarter 2012. These branches represented
approximately $102.0 million, or less than 10% of total Bank-wide
deposits as of December 31, 2011. As of December 31, 2012, only
$35.0 million in deposits have been lost as a result of this
initiative, including $16.3 million located in the two branches
sold to another financial institution. This represents a loss of
deposits in these branches of 3.1% of total deposits as of December
31, 2011.
The combination of the Company's efforts to reduce higher-cost
time deposits and deposit pricing strategies to lower interest
rates in concert with market conditions has reduced the average
rate paid on total deposits in fourth quarter 2012 from the same
quarter in 2011. It has also increased the proportion of the
Company's funding from non-interest bearing and lower-cost
non-maturity deposits over this period.
Total brokered deposits were $241,000 at December 31, 2012 and
December 31, 2011. These deposits are currently not being replaced
as they mature.
Deposits
December Percent September Percent
(Dollars in Thousands) 31, 2012 of Total 30, 2012 of Total
---------- -------- ---------- --------
Interest-bearing demand and money
market $ 302,042 30% $ 301,976 30%
Savings 94,032 9% 91,335 9%
Time deposits 329,295 33% 346,054 34%
---------- ----------
Total interest-bearing deposits 725,369 72% 739,365 73%
Non-interest bearing demand 280,815 28% 275,617 27%
---------- ----------
Total deposits $1,006,184 100% $1,014,982 100%
========== ==========
Deposits
December Percent
(Dollars in Thousands) $ Change 31, 2011 of Total $ Change
--------- ---------- -------- ---------
Interest-bearing demand and money
market $ 66 $ 326,994 29% $ (24,952)
Savings 2,697 87,483 8% 6,549
Time deposits (16,759) 431,753 38% (102,458)
--------- ---------- ---------
Total interest-bearing deposits (13,996) 846,230 75% (120,861)
Non-interest bearing demand 5,198 281,519 25% (704)
--------- ---------- ---------
Total deposits $ (8,798) $1,127,749 100% $(121,565)
========= ========== =========
CAPITAL
As of December 31, 2012, capital ratios at the Bank have
improved as compared to December 31, 2011, primarily due to the
Company's deleveraging strategy and shift in the balance sheet mix
to less risk-weighted assets, such as investment securities.
PremierWest Bank has met the quantitative thresholds to be
considered "Well-Capitalized" under published regulatory standards
for total risk-based capital and Tier 1 risk-based capital at
December 31, 2012. However, we continue to be subject to the terms
of the Consent Order with the FDIC and have not yet reached the
10.00 percent leverage ratio required by the Consent Order. An
additional $12.0 million in capital would be needed to achieve the
10.00 percent leverage ratio requirement. As such, we are not
considered "Well-Capitalized" under all applicable regulatory
requirements.
Bancorp:
Regulatory
December September December Minimum to be
31, 30, 31, "Adequately
2012 2012 2011 Capitalized"
--------- ---------- --------- -------------
greater than
or equal to
Total risk-based
capital ratio 12.97% 13.32% 12.45% 8.00%
Tier 1 risk-based
capital ratio 10.70% 11.37% 10.80% 4.00%
Leverage ratio 7.48% 8.15% 8.01% 4.00%
Bank:
Regulatory Regulatory
December September December Minimum to be Minimum to be
31, 30, 31, "Adequately "Well-
2012 2012 2011 Capitalized" Capitalized"
--------- ---------- --------- ------------- -------------
greater than greater than
or equal to or equal to
Total risk-based
capital ratio 14.06% 14.28% 13.03% 8.00% 10.00%
Tier 1 risk-based
capital ratio 12.80% 13.02% 11.77% 4.00% 6.00%
Leverage ratio 8.95% 9.34% 8.72% 4.00% 5.00%
The total risk based capital ratios of Bancorp include $30.9
million of junior subordinated debentures, of which $21.9 million
qualified as Tier 1 capital at December 31, 2012, under guidance
issued by the Federal Reserve. As provided in the Dodd-Frank Act,
which was signed into law on July 21, 2010, Bancorp currently
expects to continue to rely on these junior subordinated debentures
as part of its regulatory capital. However, Bancorp also expects
that future regulations related to Basel III capital standards
could adversely impact continued reliance on junior subordinated
debentures.
FINANCIAL
PERFORMANCE
OVERVIEW
December December
For The Three 31, September 31,
Months Ended 2012 30, 2012 Change 2011 Change
----------- ----------- ------- ----------- -------
Selective quarterly
performance ratios
Return on average
assets, annualized -2.51% 0.04% (2.55) -1.25% (1.26)
Return on average
common equity,
annualized -72.47% 1.12% (73.59) -34.12% (38.35)
Efficiency ratio
(1) 151.80% 94.57% 57.23 102.54% 49.26
Share and per share
information
Average common
shares outstanding
- basic 10,034,741 10,034,741 - 10,035,241 (500)
Average common
shares outstanding
- diluted 10,034,741 10,034,741 - 10,035,241 (500)
Basic income (loss)
per common share $ (0.72) $ 0.01 $ (0.73) $ (0.41) $ (0.31)
Diluted income
(loss) per common
share $ (0.72) $ 0.01 $ (0.73) $ (0.41) $ (0.31)
Book value per
common share (2) $ 3.24 $ 4.02 $ (0.78) $ 4.38 $ (1.14)
Tangible book value
per common share
(3) $ 3.10 $ 3.85 $ (0.75) $ 4.18 $ (1.08)
December December
31, 31,
For The Year Ended 2012 2011 Change
----------- ----------- -------
Selective quarterly
performance ratios
Return on average
assets, annualized -1.17% -1.31% 0.14
Return on average
common equity,
annualized -33.47% -34.33% 0.86
Efficiency ratio
(1) 111.55% 101.04% 10.51
Share and per share
information
Average common
shares outstanding
- basic 10,034,741 10,035,241 (500)
Average common
shares outstanding
- diluted 10,034,741 10,035,241 (500)
Basic loss per
common share $ (1.39) $ (1.76) $ 0.37
Diluted loss per
common share $ (1.39) $ (1.76) $ 0.37
(1) Non-interest expense divided by net interest income plus non-interest
income.
(2) Book value is calculated as the total common equity (less preferred
stock and the discount on preferred stock) divided by the period ending
number of common shares outstanding.
(3) Tangible book value is calculated as the total common equity (less
preferred stock and the discount on preferred stock) less core deposit
intangibles divided by the period ending number of common shares
outstanding.
Net Interest Margin Net interest margin
for the three months ended December 31, 2012 decreased as compared
to the same period in 2011 due to a decline in higher yielding loan
balances and the impact of falling interest rates on investment
securities purchased during 2012. The decline in investment yields
was due primarily to an increase in premium amortization on
collateralized mortgage obligations as a result of an acceleration
of prepayment speeds that resulted from a drop in interest rates to
historically low levels during the period. The decline in asset
yields was partially mitigated by the falling costs of
interest-bearing liabilities caused by the Company's on-going
efforts to reduce higher-cost certificates of deposits as a source
of funding. For the twelve months ended December 31, 2012, net
interest margin increased over the same period in 2011. This was
primarily due to the collection of approximately $500,000 in loan
interest from the sale of a note in second quarter 2012. This
additional interest income resulted in a 5 basis points increase in
net interest margin for the twelve months ended December 31, 2012,
as compared to same period in 2011. The margin was also positively
impacted by the continued decline in costs of interest-bearing
liabilities, as previously referenced.
(Annualized, tax-equivalent basis)
For The Three Months Ended
December September December
31, 2012 30, 2012 Change 31, 2011 Change
--------- ---------- ------ --------- ------
Selective quarterly
performance ratios
Yield on average gross loans
(1) 5.99% 6.07% (0.08) 5.90% 0.09
Yield on average investment
securities (1)(2) 1.49% 1.71% (0.22) 1.64% (0.15)
Cost of average interest
bearing deposits 0.63% 0.64% (0.01) 0.85% (0.22)
Cost of average borrowings 1.95% 2.93% (0.98) 1.72% 0.23
Cost of average total
deposits and borrowings 0.50% 0.55% (0.05) 0.66% (0.16)
Yield on average interest-
earning assets (1) 4.36% 4.56% (0.20) 4.61% (0.25)
Cost of average interest-
bearing liabilities 0.69% 0.75% (0.06) 0.88% (0.19)
Net interest spread 3.67% 3.81% (0.14) 3.73% (0.06)
Net interest margin (1) 3.85% 4.01% (0.16) 3.95% (0.10)
For The Year Ended
December December
31, 2012 31, 2011 Change
--------- ---------- ------
Selective quarterly
performance ratios
Yield on average gross loans
(1) 6.07% 5.98% 0.09
Yield on average investment
securities (1)(2) 1.84% 1.84% -
Cost of average interest
bearing deposits 0.69% 0.96% (0.27)
Cost of average borrowings 2.17% 1.81% 0.36
Cost of average total
deposits and borrowings 0.56% 0.78% (0.22)
Yield on average interest-
earning assets (1) 4.64% 4.82% (0.18)
Cost of average interest-
bearing liabilities 0.75% 0.99% (0.24)
Net interest spread 3.89% 3.83% 0.06
Net interest margin (1) 4.08% 4.05% 0.03
(1) Tax-exempt income has been adjusted to a tax equivalent basis at a 40%
rate.
(2) Includes interest-bearing cash equivalents.
ASSET QUALITY
At December 31, 2012, the Company experienced a continued
decrease in adversely classified loans, due to a decline in both
loans rated substandard or worse but not impaired and
non-performing loans. Non-performing loans have continued to
decline, primarily in the construction and land development loan
category, as a result of improvements in credit quality ratings,
transfers to OREO, pay offs, and charge-offs of impaired loans. Of
those loans currently designated as non-performing, approximately
$13.4 million, or 59.3%, are current as to payment of principal and
interest in accordance with terms pursuant to a formal plan.
The Company monitors delinquencies, defined as loans on accruing
status 30-89 days past due, as an indicator of future
non-performing assets. Total 30-89 days delinquencies remain below
1.00%, mirroring the improvement in overall credit quality noted
previously. Loans to individuals experienced an increase in
delinquencies in fourth quarter due to a more assertive collection
methodology being applied to loans formerly housed in the Bank's
now dissolved Finance Company. This approach is expected to reduce
delinquencies going forward. Although the local and national
economy continues to languish, more borrowers are demonstrating the
ability to adjust to current economic conditions.
At December 31, 2012, total non-performing assets were down
compared to December 31, 2011. Non-performing assets and
non-performing loans also declined during this period in terms of
percentage of total assets and loans, respectively. The amount of
additions to non-performing loans declined in the current quarter
as compared to the same quarter in 2011.
Adversely classified loans
(Dollars in
Thousands)
December September % December %
31, 2012 30, 2012 $ Change Change 31, 2011 $ Change Change
-------- --------- -------- ------ -------- --------- ------
Rated
substandard
or worse but
not impaired $ 54,830 $ 73,225 $(18,395) -25% $ 83,583 $ (28,753) -34%
Impaired 22,651 30,473 (7,822) -26% 76,241 (53,590) -70%
-------- --------- -------- -------- ---------
Total
adversely
classified
loans* $ 77,481 $ 103,698 $(26,217) -25% $159,824 $ (82,343) -52%
======== ========= ======== ======== =========
Gross loans $647,527 $ 676,354 $(28,827) -4% $797,878 $(150,351) -19%
Adversely
classified
loans to
gross loans 11.97% 15.33% -3.36% 20.03% -8.06%
Allowance for
loan losses $ 18,560 $ 19,174 $ (614) -3% $ 22,683 $ (4,123) -18%
Percentage of
non-
performing
loans to
total gross
loans 3.50% 4.51% 9.56%
Accruing
Loans 30-89
days past
due to total
accruing
loans 0.68% 0.66% 0.40%
* Adversely classified loans are defined as loans having a
well-defined weakness or weaknesses related to the
borrower's financial capacity or to pledged collateral
that may jeopardize the repayment of the debt. They are
characterized by the possibility that the Bank may sustain
some loss if the deficiencies giving rise to the
substandard classification are not corrected.
The following table summarizes the Company's non-performing
assets as of the periods shown:
Non-performing assets
December September December
(Dollars in Thousands) 31, 2012 30, 2012 $ Change 31, 2011 $ Change
-------- --------- -------- -------- --------
Loans on nonaccrual
status $ 22,651 $ 30,082 $ (7,431) $ 76,097 $(53,446)
Loans past due greater
than 90 days but not on
nonaccrual status - 391 (391) 144 (144)
-------- --------- -------- -------- --------
Total non-performing
loans 22,651 30,473 (7,822) 76,241 (53,590)
Other real estate owned
and foreclosed assets 25,357 29,288 (3,931) 22,829 2,528
-------- --------- -------- -------- --------
Total non-performing
assets $ 48,008 $ 59,761 $(11,753) $ 99,070 $(51,062)
======== ========= ======== ======== ========
Percentage of non-
performing assets to
total assets 4.21% 5.16% 7.83%
The Company's OREO property disposition activities continued at
a steady pace in 2012, with proceeds from sales down slightly from
2011. The dollar volume of real estate properties taken into the
OREO portfolio increased for the twelve months ended December 31,
2012 as compared to the same period in 2011. This is due primarily
to the approximately $15 million in properties taken into OREO in
first quarter 2012 associated with settlement of the Company's
largest non-performing lending relationship. Charges for valuation
adjustments related to the properties associated with this
relationship totaled $4.6 million in 2012, of which $4.0 million
was taken in the current quarter. During the twelve months ended
December 31, 2012, the Company disposed of 45 OREO properties while
acquiring 39 properties. At December 31, 2012, the OREO portfolio
consisted of 73 properties. The largest balances in the OREO
portfolio were attributable to income-producing properties and
residential or commercial land for development, all of which are
located within our footprint.
ALLOWANCE FOR LOAN LOSSES
The Company's allowance for loan losses continues to decline in
concert with the reduction in adversely classified loans, loan
delinquencies and other relevant credit metrics. With the reduction
in net charge-offs and change in the loan portfolio composition
over the past several years, loss factors used in Management's
estimates to establish reserve levels have declined commensurately.
As such, there was no provision provided in the quarter ended
December 31, 2012. As a result, amounts provided to the allowance
for loan losses declined for the twelve months ended December 31,
2012, as compared to the same period in 2011.
For the quarter ended December 31, 2012, total gross and net
loan charge-offs were down substantially versus the quarter ended
December 31, 2011. Similarly, total gross and net loan charge-offs
were down substantially compared to the twelve months ended
December 31, 2011. The significant decline in charge-offs during
2012 as compared to 2011 is due primarily to reductions in
adversely classified loans during the period. Net charge-offs in
the current period were concentrated in the construction and land
development real estate, non-owner occupied commercial real estate
and consumer loan categories.
The overall risk profile of the Company's loan portfolio
continues to improve, as stated above. However, the trend of future
provision for loan losses will depend primarily on economic
conditions, level of adversely-classified assets, and changes in
collateral values.
Allowance for Loan Losses
(Dollars in
Thousands)
For the Three December September % December %
Months Ended 31, 2012 30, 2012 $ Change Change 31, 2011 $ Change Change
-------- --------- --------- ------- -------- --------- ------
Gross loans
outstanding
at end of
period $647,527 $ 676,354 $ (28,827) -4% $797,878 $(150,351) -19%
======== ========= ========= ======== =========
Average loans
outstanding,
gross $663,644 $ 691,869 $ (28,225) -4% $825,724 $(162,080) -20%
======== ========= ========= ======== =========
Allowance for
loan losses,
beginning of
period $ 19,174 $ 19,518 $ (344) -2% $ 26,975 $ (7,801) -29%
-------- --------- --------- -------- ---------
Charge-offs:
Commercial - (96) 96 (1,093) 1,093
Real Estate (433) (1,201) 768 (5,434) 5,001
Consumer (523) (241) (282) (500) (23)
Other (505) (633) 128 (955) 450
-------- --------- --------- -------- ---------
Total charge-
offs (1,461) (2,171) 710 33% (7,982) 6,521 82%
-------- --------- --------- -------- ---------
Recoveries:
Commercial 146 61 85 102 44
Real Estate 483 1,606 (1,123) 451 32
Consumer 156 89 67 62 94
Other 62 71 (9) 75 (13)
-------- --------- --------- -------- ---------
Total
recoveries 847 1,827 (980) -54% 690 157 23%
-------- --------- --------- -------- ---------
Net charge-
offs (614) (344) (270) 78% (7,292) 6,678 92%
-------- --------- --------- -------- ---------
Provision
charged to
income - - - 0% 3,000 (3,000) -100%
-------- --------- --------- -------- ---------
Allowance for
loan losses,
end of
period $ 18,560 $ 19,174 $ (614) -3% $ 22,683 $ (4,123) -18%
======== ========= ========= ======== =========
Ratio of net
loans
charged-off
to average
gross loans
outstanding,
annualized 0.37% 0.20% 0.17 3.50% (3.13)
======== ========= ========
Ratio of
allowance
for loan
losses to
gross loans
outstanding 2.87% 2.83% 0.04 2.84% 0.03
======== ========= ========
Allowance for
loan losses
as a
percentage
of adversely
classified
loans 23.95% 18.49% 5.46 14.19% 9.76
======== ========= ========
Allowance for
loan losses
to total
non-
performing
loans 81.94% 62.92% 19.02 29.75% 52.19
======== ========= ========
For the Year December December %
Ended 31, 2012 31, 2011 $ Change Change
-------- --------- --------- -------
Gross loans
outstanding
at end of
period $647,527 $ 797,878 $(150,351) -19%
======== ========= =========
Average loans
outstanding,
gross $712,704 $ 891,846 $(179,142) -20%
======== ========= =========
Allowance for
loan losses,
beginning of
period $ 22,683 $ 35,582 $ (12,899) -36%
-------- --------- ---------
Charge-offs:
Commercial (453) (3,786) 3,333
Real Estate (9,382) (26,770) 17,388
Consumer (2,693) (1,090) (1,603)
Other (1,552) (2,410) 858
-------- --------- ---------
Total charge-
offs (14,080) (34,056) 19,976 59%
-------- --------- ---------
Recoveries:
Commercial 1,323 5,016 (3,693)
Real Estate 3,058 1,236 1,822
Consumer 716 323 393
Other 85 232 (147)
-------- --------- ---------
Total
recoveries 5,182 6,807 (1,625) -24%
-------- --------- ---------
Net charge-
offs (8,898) (27,249) 18,351 67%
-------- --------- ---------
Provision
charged to
income 4,775 14,350 (9,575) -67%
-------- --------- ---------
Allowance for
loan losses,
end of
period $ 18,560 $ 22,683 $ (4,123) -18%
======== ========= =========
Ratio of net
loans
charged-off
to average
gross loans
outstanding,
annualized 1.25% 3.06% (1.81)
======== =========
ABOUT PREMIERWEST BANCORP
PremierWest Bancorp (NASDAQ: PRWT) is a bank holding company
headquartered in Medford, Oregon, and operates primarily through
its subsidiary, PremierWest Bank. PremierWest Bank offers expanded
banking-related services through its subsidiary, PremierWest
Investment Services, Inc.
PremierWest Bank was created following the merger of the Bank of
Southern Oregon and Douglas National Bank in May 2000. In April
2001, PremierWest Bancorp acquired Timberline Bancshares, Inc. and
its wholly-owned subsidiary, Timberline Community Bank, located in
Siskiyou County in northern California. In January 2004,
PremierWest acquired Mid Valley Bank located in the northern
California counties of Shasta, Tehama and Butte. In January 2008,
PremierWest acquired Stockmans Financial Group, and its
wholly-owned subsidiary, Stockmans Bank, located in the Sacramento,
California area. During the last several years, PremierWest
expanded into Klamath Falls and the Central Oregon communities of
Bend and Redmond, and into Nevada, Yolo and Butte counties in
California.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This press release includes forward-looking statements within
the meaning of the "Safe-Harbor" provisions of the Private
Securities Litigation Reform Act of 1995, which management believes
are a benefit to shareholders. These statements are necessarily
subject to risk and uncertainty and actual results could differ
materially due to certain risk factors, including those set forth
from time to time in PremierWest's filings with the SEC, and risks
that we are unable to increase capital levels or effectively
implement asset reduction and credit quality improvement
strategies, unable to comply with regulatory agreements and the
risk that market conditions deteriorate. You should not place undue
reliance on forward-looking statements and we undertake no
obligation to update any such statements. We make forward-looking
statements in this press release about the proposed merger with
AmericanWest Bank, future profitability of the Company, deferred
tax asset valuation allowance and the effect of reversal thereof,
sources of revenue, and the prospects for earnings growth, the
effective management of our credit quality, liquidity, commercial
loan growth, real estate market conditions, the adequacy of our
Allowance for Loan Losses, reduced delinquencies in loans to
individuals, and the inclusion of junior subordinated debentures as
part of regulatory capital.
Additional Information Contacts: Jim Ford President & Chief
Executive Officer (541) 618-6020 Jim.Ford@PremierWestBank.com Doug
Biddle Executive Vice President & Chief Financial Officer (541)
282-5391 Doug.Biddle@PremierWestBank.com
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