By MEDFORD, OR -- (Marketwire) -- 01/22/13 -- 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 & hief Executive Officer (541) 618-6020 Jim.Ford@PremierWestBank.com Doug Biddle Executive Vice President & Chief Financial Officer (541) 282-5391 Doug.Biddle@PremierWestBank.com
Source: PremierWest Bancorp
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