MEDFORD, OR -- (Marketwire) -- 10/25/11 -- PremierWest Bancorp (NASDAQ: PRWT) announced results for the third quarter ending September 30, 2011, as follows:
- Net loss applicable to common shareholders of $3.5 million, after $5.1 million in loan loss provision and net OREO and foreclosed asset expenses of $600,000. This compares to a net loss applicable to common shareholders of $1.4 million in third quarter 2010, after $1.6 million in loan loss provision and net OREO and foreclosed asset expenses of $1.4 million;
- Net interest margin of 4.21%, an increase of 21 basis points from 4.00% in third quarter 2010;
- Average rate paid on total deposits and borrowings of 0.72%, a 36 basis point decline from 1.08% the same quarter in 2010;
- Net loan charge-offs of $6.5 million, compared to $3.4 million in third quarter 2010;
- Loans past due 30 - 89 days and still accruing of $1.2 million or 0.14% of total loans, down from $11.1 million or 1.12% at September 30, 2010;
- Allowance for loan losses of $27.0 million, or 3.16% of gross loans, compared to $42.1 million, or 4.07%, at September 30, 2010.
Management continued to execute strategies that have resulted in further strengthening of the Company, including:
- Reducing adversely classified loans by 7%, or $14.6 million, during the quarter, and $115.8 million, or 38% to $192.4 million, compared to $308.2 million at September 30, 2010;
- Reducing nonperforming assets by 11%, or $13.7 million, during the quarter and 27%, or $38.7 million over the past twelve months;
- Improvement in the Bank's total risk-based and leverage capital ratios to 12.71% and 8.80%, respectively, up from 12.14% and 8.69% at September 30, 2010;
- Growth in average non-interest bearing demand deposits of $13.9 million during the quarter to $273.6 million, or 23% of total average deposits, up from $259.7 million, or 21% of total deposits in preceding quarter and $250.5 million, or 19% of total average deposits in third quarter 2010.
James M. Ford, PremierWest's President & Chief Executive Officer, commented, "The results of this quarter displayed the positive impact of all the on-going initiatives to improve our performance and eliminate problem assets. Our net loss was up from the same quarter in 2010, primarily due to an additional $3.6 million provision taken as a specific reserve due to recent uncertainties related to the value of collateral supporting the Bank's largest non-performing borrowing relationship. While economic difficulties continue, I am pleased to report we continue to accomplish solid reductions in nonperforming and adversely classified loans. This quarter represents the fourth consecutive period of such declines. A good portion of this progress in credit quality was due to improvements in risk ratings, repayments or upgrades to performing status for a number of loan relationships. As planned, commercial real estate (CRE) and acquisition, development and construction (ADC) loan balances continue to decline.
"Our net interest margin continued to display improvement in part by growing our non-interest bearing deposits through new customer acquisition and expansion of existing client relationships while reducing our higher-cost certificates of deposits," explained Ford. "Due to the sluggish economy, loan demand continues to be soft. Therefore, we are managing our balance sheet primarily by building our investment portfolio. The portfolio is structured to have the liquidity when needed to respond when loan demand improves, while deploying the rest of our portfolio into higher-yielding, high quality federal government agency and municipal securities to improve earnings."
In closing, Ford stated, "While we made additional progress in a number of areas this quarter, we know we have work to do. I am grateful for the continuing effort and dedication of our employees that has brought us to this point. I am also appreciative of the support of the shareholders as we continue our progress through this challenging economic period."
CREDIT QUALITY
At September 30, 2011, the Company had $192.4 million in adversely classified loans. This compares favorably to $207.1 million and $308.2 million at June 30, 2011 and September 30, 2010, respectively. Adversely classified loans have declined for four consecutive quarters and were down 7.1% from June 30, 2011 and 37.6% from September 30, 2010.
Included in adversely classified loans at September 30, 2011, were nonperforming loans of $78.2 million, compared to $92.5 million, at June 30, 2011, and $115.1 million, at September 30, 2010. Nonperforming loans have declined for three consecutive quarters and were down 15.5% from June 30, 2011 and 32.1% from September 30, 2010. Reductions in nonperforming loans occurred primarily in the construction, land and land development and commercial real estate loan categories. Of those loans currently designated as nonperforming, approximately $21.5 million, or 27.5% are current as to payment of principal and interest.
The Company monitors delinquencies, defined as loans on accruing status 30-89 days past due, as an indicator of future nonperforming assets. Total delinquencies were $1.2 million, or 0.14% of total loans, at September 30, 2011, down from $2.8 million, or 0.32%, at June 30, 2011, and a reduction from $11.1 million, or 1.12%, at September 30, 2010.
For the quarter ended September 30, 2011, total net loan charge-offs were $6.5 million compared to $4.9 million in the quarter ended June 30, 2011 and $3.4 million in the quarter ended September 30, 2010. The net charge-offs in the current period were concentrated in the construction and land development and non-owner occupied commercial real estate loan categories. The ratio of net loan charge-offs to average gross loans (annualized) for the current quarter was 2.95% compared to 2.18% in the previous quarter and 1.26% in the quarter one year ago. Quarterly average gross loans in the current period were 18.2% lower as compared to the same quarter in 2010.
The Company's allowance for credit 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 over the past several years, loss factors used in management's estimates to establish reserve levels have declined commensurately. During the current period, $5.1 million was provided to the allowance for credit losses up from the amount in both the second quarter of 2011 and the third quarter of 2010. This additional provision included a $3.6 million specific reserve established due to recent uncertainties surrounding the value of collateral supporting a specific borrowing relationship totaling approximately $21 million.
While loan net charge-offs in the current quarter increased versus the third quarter of 2010, the overall risk profile of the Company's loan portfolio continues to improve, as stated above. In addition, the percentage of loans past due 30 - 89 days and still accruing as of September 30, 2011 is down significantly from the same period one year ago. The provision for credit losses was $11.4 million for the nine months ended September 30, 2011, compared to $10.1 million in the same period last year. The trend of future provision for credit losses will depend primarily on economic conditions and the interest rate environment, as an increase in interest rates could put pressure on the ability of our borrowers to repay loans.
LOANS AND DEPOSITS
The Bank's total loan portfolio declined from December 31, 2010, reflecting the continued challenges in the local and national economy. As a result, commercial, real estate construction, and commercial & industrial loan balances declined from year end. While loan balances contracted, we have experienced an increase in our unfunded loan commitments. 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 loan category over the same period.
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 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.
At September 30, 2011, total nonperforming assets were down compared to December 31, 2010. Nonperforming assets and loans have also declined in terms of percentage of total assets and loans, respectively. The amount of additions to nonperforming assets has slowed during 2011 versus the prior year. This is due to the positive impact of business improvement plans implemented by a number of borrowers in response to the current economic downturn.
Reductions in non-performing loans were largely due to the Company taking ownership of additional residential and commercial properties related to loans which previously were on nonaccrual status, nonaccrual loan payoffs, charge-offs, and the return of loans to performing status.
The Company has remained focused on OREO property disposition activities. While sales are down year-to-date as compared to the prior year, current period sales were higher than the same period last year. The largest balances in the OREO portfolio at September 30, 2011, were attributable to residential and commercial site development projects, followed by income producing properties, all of which are located within the regions in which we operate. The number of OREO properties has increased during the quarter from the addition of a number of smaller residential and commercial development properties.
For the quarter ended September 30, 2011, total net loan charge-offs were down from the quarter ended December 31, 2010, but were up as compared to third quarter 2010. The Bank continued to recognize impairments on collateral dependent loans, primarily commercial real estate. The amount for this period included an $800,000 charge associated with the purchase of a note from the Bank by a third party.
Third quarter 2011 average total deposits declined 9.8% from the same quarter in 2010. This decrease was mainly due to the decision to continue to reduce higher cost time deposit balances, which declined 18.5% from the same quarter last year. Time deposits declined as a percentage of the Company's average total deposits in the most recent quarter versus the same quarter last year. The combination of the Company's efforts to reduce higher-cost time deposits and recent deposit pricing strategies to lower interest rates in concert with market conditions has helped reduce the average rate paid on total deposits in third quarter 2011, down significantly from the same quarter in 2010.
Total brokered deposits were $500,000, compared to $700,000 at December 31, 2010, and $2.1 million at September 30, 2010. Brokered deposits are currently not being replaced as they mature.
NET INTEREST INCOME
Third quarter 2011 net interest income decreased from the same quarter in 2010 and as compared to the previous calendar quarter. This is primarily due to a decline in average interest earning assets during these periods as part of the company's deleveraging strategy. Correspondingly, average interest bearing liabilities decreased during these same periods. 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 weak due to the economic slowdown. As such, lower yielding investment securities comprise a higher percentage of the Bank's earning assets.
However, the third quarter 2011 net interest margin increased from third quarter 2010, predominantly due to a lower cost of interest bearing deposits. The spread between the yield earned on loans and rate paid on interest bearing deposits improved year-over-year in the third quarter despite the decline in higher yielding loan balances as a proportion of average earning assets. The improvement in yields on investment securities also contributed to the increase in net interest margin between the periods.
NON-INTEREST INCOME
Total non-interest income for the quarter ended September 30, 2011 was virtually unchanged as compared to the third quarter of 2010. Service charge income on deposit accounts in 2011 declined due to a reduction in the amount of non-sufficient check items from the same period in 2010. Also, the third quarter of 2010 contained a one-time recovery of a prior period operating loss of $200,000. Offsetting the above declines were increases in gains on sales of securities achieved as part of a plan to reduce the proportion of lower yielding cash-equivalent investments and increase the proportion of higher-yielding federal government guaranteed and municipal securities. Investment brokerage fee income also grew in 2011 versus 2010 due to increased sales of higher yield investment products in a period of historically low deposit interest rates. In addition, the Bank continues to experience growth in debit card interchange income due to the increased use of this channel to access deposit services. Non-interest income for the nine months ended September 30, 2011 increased as compared to the same period in 2010. The year-to-date increase in non-interest income was primarily due to gains on sales of securities, growth in investment brokerage fee income, increases in debit card interchange income as noted above and gain in death-benefit from bank-owned life insurance. The increase was partially offset by the decline in deposit account service charge income as previously noted.
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 second quarter of 2011 to comply with the FDIC's mandates. The Company believes these mandates may adversely affect noninterest income in future periods.
NON-INTEREST EXPENSE
Non-interest expense for the three months ended September 30, 2011 declined compared to third quarter 2010. Salaries and employee benefits expense decreased due to a reduction in loan workout personnel to reflect the decline in problem assets. Personnel reductions were also affected in loan production staff in response to soft loan demand currently experienced due to the current economic downturn. Reductions in branch personnel were also made to correspond to the continued growth in use of non-branch channels by customers to access banking services. Costs associated with OREO and related third-party loan expenses declined due to a reduction in the number of such assets reappraised during the period versus the same period in the prior year. In addition, the Company's FDIC insurance premium expense declined from the third quarter in 2010 as a result of a recent change in assessment methodology and the planned deleveraging of the Bank. Occupancy and equipment expenses were higher in the current period due to one-time costs associated with the termination of a lease versus third quarter 2010.
Non-interest expense for the nine months ended September 30, 2011, increased compared to the same period in 2010. The increase was primarily due to larger dollar amounts of OREO write downs to current market value. Occupancy and equipment expenses were higher due to increased repairs and maintenance expenses versus the first nine months of 2010. Reductions in salary and employee benefits and FDIC insurance premium expense were achieved in this period as compared to the same period in 2010 for the same reasons stated above. The Company continues to make progress in its efforts to lower its cost structure without negative effects on our customers. We expect our noninterest expenses will continue to be affected by expenses associated with elevated levels of nonperforming assets.
CAPITAL
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 September 30, 2011, with ratios of 12.71 percent and 11.45 percent, respectively. 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. As such, we are not considered "Well-Capitalized" for all regulatory ratios.
Regulatory Regulatory
Minimum to Minimum to
September December September be be
30, 31, 30, "Adequately "Well-
2011 2010 2010 Capitalized" Capitalized"
---------- ---------- --------- ------------ ------------
greater than greater than
or equal to or equal to
Total
risk-based
capital
ratio 12.71% 12.59% 12.14% 8.00% 10.00%
Tier 1
risk-based
capital
ratio 11.45% 11.31% 10.86% 4.00% 6.00%
Leverage
ratio 8.80% 8.85% 8.69% 4.00% 5.00%
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 two subsidiaries, Premier Finance Company and 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, with eight branch offices located in Siskiyou County in northern California. In January 2004, PremierWest acquired Mid Valley Bank with five branch offices 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, with five full service banking offices 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 as planned 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 future profitability of the Company, net interest margin, regulatory compliance, loan demand, interest rate changes, loan upgrades, loan migration, the prospects for earnings growth, deposit and loan growth, capital levels, the effective management of our credit quality, the collectability of identified non-performing loans, real estate market conditions and the adequacy of our Allowance for Loan Losses.
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
STATEMENT OF OPERATIONS
AND LOSS PER COMMON SHARE DATA
For the Three September 30, September 30,
Months Ended 2011 2010 Change % Change
------------- ------------- ---------- ----------
Interest and dividend
income $ 15,036 $ 17,269 $ (2,233) -12.9%
Interest expense 2,187 3,636 (1,449) -39.9%
------------- ------------- ----------
Net interest income 12,849 13,633 (784) -5.8%
Loan loss provision 5,050 1,600 3,450 215.6%
Non-interest income 2,667 2,728 (61) -2.2%
Non-interest expense 13,298 15,562 (2,264) -14.5%
------------- ------------- ----------
Loss before provision
for income taxes (2,832) (801) (2,031) -253.6%
Provision for income
taxes 23 - 23 nm
------------- ------------- ----------
Net loss $ (2,855) $ (801) $ (2,054) -256.4%
Less preferred stock
dividends and
discount accretion 614 620 (6) -1.0%
------------- ------------- ----------
Net loss applicable
to common
shareholders $ (3,469) $ (1,421) $ (2,048) -144.1%
============= ============= ==========
Basic loss per common
share (1) $ (0.35) $ (0.14) $ (0.21) -150.0%
============= ============= ==========
Diluted loss per
common share (1) $ (0.35) $ (0.14) $ (0.21) -150.0%
============= ============= ==========
Average common shares
outstanding--basic
(1) 10,035,241 10,034,830 411 0.0%
Average common shares
outstanding--diluted
(1) 10,035,241 10,034,830 411 0.0%
For the Three Months June 30,
Ended 2011 Change % Change
---------- ---------- ----------
Interest and dividend
income $ 15,697 $ (661) -4.2%
Interest expense 2,571 (384) -14.9%
---------- ----------
Net interest income 13,126 (277) -2.1%
Loan loss provision - 5,050 nm
Non-interest income 2,865 (198) -6.9%
Non-interest expense 18,044 (4,746) -26.3%
---------- ----------
Loss before provision
for income taxes (2,053) (779) -37.9%
Provision for income
taxes 5 18 360.0%
---------- ----------
Net loss $ (2,058) $ (797) -38.7%
Less preferred stock
dividends and
discount accretion 613 1 0.2%
---------- ----------
Net loss applicable
to common
shareholders $ (2,671) $ (798) -29.9%
========== ==========
Basic loss per common
share (1) $ (0.27) $ (0.08) -29.6%
========== ==========
Diluted loss per
common share (1) $ (0.27) $ (0.08) -29.6%
========== ==========
Average common shares
outstanding--basic
(1) 10,034,491 750 0.0%
Average common shares
outstanding--diluted
(1) 10,034,491 750 0.0%
For the Nine Months September 30, September 30,
Ended 2011 2010 Change % Change
------------- ------------- ---------- ----------
Interest and dividend
income $ 45,765 $ 53,118 $ (7,353) -13.8%
Interest expense 7,589 9,815 (2,226) -22.7%
------------- ------------- ----------
Net interest income 38,176 43,303 (5,127) -11.8%
Loan loss provision 11,350 10,050 1,300 12.9%
Non-interest income 8,691 7,876 815 10.3%
Non-interest expense 47,140 46,048 1,092 2.4%
------------- ------------- ----------
Loss before provision
for income taxes (11,623) (4,919) (6,704) -136.3%
Provision for income
taxes 44 - 44 nm
------------- ------------- ----------
Net loss $ (11,667) $ (4,919) $ (6,748) -137.2%
Less preferred stock
dividends and
discount accretion 1,883 1,867 16 0.9%
------------- ------------- ----------
Net loss applicable
to common
shareholders $ (13,550) $ (6,786) $ (6,764) -99.7%
============= ============= ==========
Basic loss per common
share (1) $ (1.35) $ (0.88) $ (0.47) -53.4%
============= ============= ==========
Diluted loss per
common share (1) $ (1.35) $ (0.88) $ (0.47) -53.4%
============= ============= ==========
Average common shares
outstanding--basic
(1) 10,035,240 7,739,490 2,295,750 29.7%
Average common shares
outstanding--diluted
(1) 10,035,240 7,739,490 2,295,750 29.7%
(1) As of September 30, 2011, June 30, 2011, and September 30, 2010,
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.
nm = not meaningful
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL RATIOS
(annualized) (unaudited)
For the Three September 30, September 30, June 30,
Months ended 2011 2010 Change 2011 Change
----------- ----------- -------- -------- --------
Yield on average
gross loans (1) 6.06% 5.96% 0.10 6.18% (0.12)
Yield on average
investments (1) 1.99% 1.74% 0.25 2.00% (0.01)
Total yield on
average earning
assets (1) 4.93% 5.06% (0.13) 5.01% (0.08)
Cost of average
interest bearing
deposits 0.90% 1.27% (0.37) 1.02% (0.12)
Cost of average
borrowings 1.71% 3.65% (1.94) 1.73% (0.02)
Cost of average
total deposits and
borrowings 0.72% 1.08% (0.36) 0.83% (0.11)
Cost of average
interest bearing
liabilities 0.93% 1.33% (0.40) 1.04% (0.11)
Net interest spread 4.00% 3.73% 0.27 3.97% 0.03
Net interest margin
(1) 4.21% 4.00% 0.21 4.19% 0.02
Net charge-offs to
average gross
loans 2.95% 1.26% 1.69 2.18% 0.77
Allowance for loan
losses to gross
loans 3.16% 4.07% (0.91) 3.22% (0.06)
Allowance for loan
losses to
non-performing
loans 34.49% 36.59% (2.10) 30.74% 3.75
Loans 30-89 days
past due and still
accruing as a
percent of gross
loans 0.14% 1.12% (0.98) 0.32% (0.18)
Non-performing
loans to gross
loans 9.16% 11.11% (1.95) 10.48% (1.32)
Non-performing
assets to total
assets 8.17% 10.18% (2.01) 9.08% (0.91)
Return on average
common equity -26.94% -9.12% (17.82) -21.35% (5.59)
Return on average
assets -1.04% -0.39% (0.65) -0.79% (0.25)
Efficiency ratio
(2) 85.71% 95.12% (9.41) 112.84% (27.13)
For the Nine Months September September
ended 30, 2011 30, 2010 Change
----------- ----------- --------
Yield on average
gross loans (1) 6.00% 5.96% 0.04
Yield on average
investments (1) 1.91% 1.84% 0.07
Total yield on
average earning
assets (1) 4.88% 5.11% (0.23)
Cost of average
interest bearing
deposits 1.00% 1.08% (0.08)
Cost of average
borrowings 1.85% 4.14% (2.29)
Cost of average
total deposits and
borrowings 0.81% 0.95% (0.14)
Cost of average
interest bearing
liabilities 1.03% 1.17% (0.14)
Net interest spread 3.85% 3.94% (0.09)
Net interest margin
(1) 4.08% 4.17% (0.09)
Net charge-offs to
average gross
loans 2.92% 1.67% 1.25
Allowance for loan
losses to gross
loans 3.16% 4.07% (0.91)
Allowance for loan
losses to
non-performing
loans 34.49% 36.59% (2.10)
Non-performing
loans to gross
loans 9.16% 11.11% (1.95)
Non-performing
assets to total
assets 8.17% 10.18% (2.01)
Return on average
common equity -34.39% -17.14% (17.25)
Return on average
assets -1.33% -0.61% (0.72)
Efficiency ratio
(2) 100.58% 89.97% 10.61
(1) Tax-exempt income as been adjusted to a tax equivalent basis at a 40%
rate.
(2) Non-interest expense divided by net interest income plus non-interest
Income
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
Reconciliation of Non-GAAP Measure:
Tax Equivalent Net Loss Applicable to Common Shareholders
(Dollars in 000's)
September 30, September 30,
For the Three Months ended 2011 2010
-------------- --------------
Net interest income $ 12,849 $ 13,633
Tax equivalent adjustment for municipal
loan interest 45 47
Tax equivalent adjustment for municipal
bond interest 3 33
-------------- --------------
Tax equivalent net interest income 12,897 13,713
Provision for loan losses 5,050 1,600
Non-interest income 2,667 2,728
Non-interest expense 13,298 15,562
Provision for income taxes 23 -
-------------- --------------
Tax equivalent net loss (2,807) (721)
Preferred stock dividends and discount
accretion 614 620
-------------- --------------
Tax equivalent net income (loss) applicable
to common shareholders $ (3,421) $ (1,341)
============== ==============
September 30, September 30,
For the Nine Months ended 2011 2010
-------------- --------------
Net interest income $ 38,176 $ 43,303
Tax equivalent adjustment for municipal
loan interest 134 141
Tax equivalent adjustment for municipal
bond interest 51 101
-------------- --------------
Tax equivalent net interest income 38,361 43,545
Provision for loan losses 11,350 10,050
Non-interest income 8,691 7,876
Non-interest expense 47,140 46,048
Provision for income taxes 44 -
-------------- --------------
Tax equivalent net loss (11,482) (4,677)
Preferred stock dividends and discount
accretion 1,883 1,867
-------------- --------------
Tax equivalent net loss applicable to
common shareholders $ (13,365) $ (6,544)
============== ==============
Non-GAAP financial measures have inherent limitations, are not required to
be uniformly applied, and are not audited.
Management believes that presentation of this non-GAAP financial measure
provides useful information frequently used by shareholders in the
evaluation of a company.
Non-GAAP financial measures have limitations as analytical tools should not
be considered in isolation or as a substitute for analyses of results as
reported under GAAP.
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
BALANCE SHEET
September 30, September 30, %
2011 2010 Change Change
----------- ----------- ----------- ------
Cash and cash equivalents $ 66,061 $ 118,973 $ (52,912) -44.5%
Interest-bearing
certificates of deposit 1,500 1,500 - 0.0%
Investments 303,927 196,927 107,000 54.3%
Gross loans, net of deferred
fees 851,838 1,034,558 (182,720) -17.7%
Allowance for loan losses (26,975) (42,120) 15,145 -36.0%
----------- ----------- -----------
Net loans 824,863 992,438 (167,575) -16.9%
Other assets 104,760 114,841 (10,081) -8.8%
----------- ----------- -----------
Total assets $ 1,301,111 $ 1,424,679 $ (123,568) -8.7%
=========== =========== ===========
Total deposits 1,161,032 1,277,625 (116,593) -9.1%
Borrowings 33,801 30,951 2,850 9.2%
Other liabilities 17,938 16,401 1,537 9.4%
Stockholders' equity 88,340 99,702 (11,362) -11.4%
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 1,301,111 $ 1,424,679 $ (123,568) -8.7%
=========== =========== ===========
Period end common shares
outstanding 10,035,241 10,034,830 411 0.0%
Book value per common share
(1) $ 4.79 $ 5.96 $ (1.17) -19.6%
Tangible book value per
common share (2) $ 4.58 $ 5.69 $ (1.11) -19.5%
Adversely classified loans
Rated substandard or worse $ 114,223 $ 193,133 $ (78,910) -40.9%
Impaired 78,210 115,103 (36,893) -32.1%
----------- ----------- -----------
Total adversely classified
loans (3) $ 192,433 $ 308,236 $ (115,803) -37.6%
=========== =========== ===========
Loans 30-89 days past due
and still accruing $ 1,208 $ 11,129 $ (9,921) -89.1%
Non-performing assets:
Loans on nonaccrual
status $ 78,109 $ 114,990 $ (36,881) -32.1%
90-days past due and
accruing 101 113 (12) -10.6%
----------- ----------- -----------
Total non-performing loans 78,210 115,103 (36,893) -32.1%
Other real estate owned
and foreclosed assets 28,127 29,902 (1,775) -5.9%
----------- ----------- -----------
Total non-performing assets $ 106,337 $ 145,005 $ (38,668) -26.7%
=========== =========== ===========
Troubled debt
restructurings:
On accrual status $ 2,618 $ 225 $ 2,393 1063.6%
On nonaccrual status 47,678 34,120 13,558 39.7%
----------- ----------- -----------
Total troubled-debt
restructurings $ 50,296 $ 34,345 $ 15,951 46.4%
=========== =========== ===========
June 30, %
2011 Change Change
----------- ----------- ------
Cash and cash equivalents $ 71,003 $ (4,942) -7.0%
Interest-bearing
certificates of deposit 1,500 - 0.0%
Investments 290,816 13,111 4.5%
Gross loans, net of deferred
fees 880,853 (29,015) -3.3%
Allowance for loan losses (28,433) 1,458 -5.1%
----------- -----------
Net loans 852,420 (27,557) -3.2%
Other assets 106,300 (1,540) -1.4%
----------- -----------
Total assets $ 1,322,039 $ (20,928) -1.6%
=========== ===========
Total deposits 1,177,838 (16,806) -1.4%
Borrowings 37,833 (4,032) -10.7%
Other liabilities 17,963 (25) -0.1%
Stockholders' equity 88,405 (65) -0.1%
----------- -----------
Total liabilities and
stockholders' equity $ 1,322,039 $ (20,928) -1.6%
=========== ===========
Period end common shares
outstanding 10,034,491 750 0.0%
Book value per common share
(1) $ 4.81 $ (0.02) -0.4%
Tangible book value per
common share (2) $ 4.59 $ (0.01) -0.2%
Adversely classified loans
Rated substandard or worse $ 114,565 $ (342) -0.3%
Impaired 92,505 (14,295) -15.5%
----------- -----------
Total adversely classified
loans (3) $ 207,070 $ (14,637) -7.1%
=========== ===========
Loans 30-89 days past due
and still accruing $ 2,781 $ (1,573) -56.6%
Non-performing assets:
Loans on nonaccrual
status $ 92,266 $ (14,157) -15.3%
90-days past due and
accruing 239 (138) -57.7%
----------- -----------
Total non-performing loans 92,505 (14,295) -15.5%
Other real estate owned
and foreclosed assets 27,579 548 2.0%
----------- -----------
Total non-performing assets $ 120,084 $ (13,747) -11.4%
=========== ===========
Troubled debt
restructurings:
On accrual status $ 1,827 $ 791 43.3%
On nonaccrual status 43,375 4,303 9.9%
----------- -----------
Total troubled-debt
restructurings $ 45,202 $ 5,094 11.3%
=========== ===========
(1) 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.
(2) 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.
(3) Includes non-performing loans shown in total below
nm = not meaningful
QUARTERLY ACTIVITY
September 30, September 30,
2011 2010 Change % Change
----------- ----------- --------- --------
Allowance for loan losses:
Balance beginning of
period $ 28,433 $ 43,917 $ (15,484) -35.3%
Provision for loan
losses 5,050 1,600 3,450 215.6%
Net (charge-offs)
recoveries (6,508) (3,397) 3,111 -91.6%
----------- -----------
Balance end of period $ 26,975 $ 42,120 $ (15,145) -36.0%
=========== ===========
Nonperforming loans:
Balance beginning of period $ 92,505 $ 129,703 $ (37,198) -28.7%
Transfers from performing
loans 2,391 10,504 (8,113) -77.2%
Loans returned to
performing status (3,068) (93) (2,975) -3198.9%
Transfers to OREO (4,731) (17,259) 12,528 72.6%
Principal reduction from
payment (1,980) (4,009) 2,029 50.6%
Principal reduction from
charge-off (6,907) (3,743) (3,164) -84.5%
----------- -----------
Total nonperforming loans $ 78,210 $ 115,103 $ (36,893) -32.1%
=========== ===========
Other real estate owned
(OREO) and foreclosed
assets, beginning of
period $ 27,579 $ 15,084 $ 12,495 82.8%
Transfers from
outstanding loans 4,731 17,259 (12,528) -72.6%
Improvements and other
additions - 95 (95) -100.0%
Sales, net of gains (3,310) (1,807) 1,503 83.2%
Impairment charges (873) (729) 144 -19.8%
----------- -----------
Total OREO and foreclosed
assets, end of period $ 28,127 $ 29,902 $ (1,775) -5.9%
=========== ===========
June 30,
2011 Change % Change
--------- --------- -------
Allowance for loan losses:
Balance beginning of
period $ 33,366 $ (4,933) -14.8%
Provision for loan
losses - 5,050 nm
Net (charge-offs)
recoveries (4,933) 1,575 -31.9%
---------
Balance end of period $ 28,433 $ (1,458) -5.1%
=========
Nonperforming loans:
Balance beginning of period $ 109,844 $ (17,339) -15.8%
Transfers from performing
loans 4,760 2,369 -49.8%
Loans returned to
performing status (4,428) (1,360) 30.7%
Transfers to OREO (4,122) 609 -14.8%
Principal reduction from
payment (6,933) (4,953) 71.4%
Principal reduction from
charge-off (6,616) 291 -4.4%
---------
Total nonperforming loans $ 92,505 $ (14,295) -15.5%
=========
Other real estate owned
(OREO) and foreclosed
assets, beginning of
period $ 29,757 $ (2,178) -7.3%
Transfers from
outstanding loans 4,122 609 14.8%
Improvements and other
additions - - nm
Sales, net of gains (1,566) 1,744 111.4%
Impairment charges (4,734) (3,861) 81.6%
---------
Total OREO and foreclosed
assets, end of period $ 27,579 $ 548 2.0%
=========
QUARTERLY AVERAGES
September 30, September 30,
2011 2010 Change % Change
------------ ------------ ---------- -------
Average fed funds sold and
investments $ 338,133 $ 288,591 $ 49,542 17.2%
Average gross loans $ 875,930 $ 1,070,369 $ (194,439) -18.2%
Average mortgages held for
sale $ 440 $ 625 $ (185) -29.6%
Average interest earning
assets $ 1,214,503 $ 1,359,585 $ (145,082) -10.7%
Average total assets $ 1,317,351 $ 1,449,421 $ (132,070) -9.1%
Average non-interest-bearing
deposits $ 273,599 $ 250,473 $ 23,126 9.2%
Average interest-bearing
deposits $ 898,787 $ 1,049,939 $ (151,152) -14.4%
Average total deposits $ 1,172,386 $ 1,300,412 $ (128,026) -9.8%
Average total borrowings $ 35,269 $ 30,952 $ 4,317 13.9%
Average stockholders' equity $ 91,277 $ 101,641 $ (10,364) -10.2%
Average common equity $ 51,085 $ 61,833 $ (10,748) -17.4%
June 30,
2011 Change % Change
----------- ---------- -------
Average fed funds sold and
investments $ 353,971 $ (15,838) -4.5%
Average gross loans $ 907,056 $ (31,126) -3.4%
Average mortgages held for
sale $ 603 $ (163) -27.0%
Average interest earning
assets $ 1,261,630 $ (47,127) -3.7%
Average total assets $ 1,357,844 $ (40,493) -3.0%
Average non-interest-bearing
deposits $ 259,668 $ 13,931 5.4%
Average interest-bearing
deposits $ 953,536 $ (54,749) -5.7%
Average total deposits $ 1,213,204 $ (40,818) -3.4%
Average total borrowings $ 36,443 $ (1,174) -3.2%
Average stockholders' equity $ 90,269 $ 1,008 1.1%
Average common equity $ 50,173 $ 912 1.8%
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
YEAR-TO-DATE ACTIVITY
September 30, September 30, %
2011 2010 Change Change
------------- ------------- ---------- ------
Allowance for loan
losses:
Balance beginning of
period $ 35,582 $ 45,903 $ (10,321) -22.5%
Provision for loan
losses 11,350 10,050 1,300 12.9%
Net (charge-offs)
recoveries (19,957) (13,833) 6,124 -44.3%
------------- -------------
Balance end of period $ 26,975 $ 42,120 $ (15,145) -36.0%
============= =============
Nonperforming loans:
Balance beginning of
period $ 129,616 $ 103,917 $ 25,699 24.7%
Transfers from
performing loans 9,874 73,614 (63,740) -86.6%
Loans returned to
performing status (4,428) (11,988) 7,560 63.1%
Transfers to OREO (13,103) (22,368) 9,265 41.4%
Principal reduction
from payment (17,675) (9,362) (8,313) -88.8%
Principal reduction
from charge-off (26,074) (18,710) (7,364) -39.4%
------------- -------------
Total nonperforming loans $ 78,210 $ 115,103 $ (36,893) -32.1%
============= =============
Other real estate owned
(OREO) and foreclosed
assets, beginning of
period $ 32,009 $ 24,748 $ 7,261 29.3%
Transfers from
outstanding loans 13,103 22,368 (9,265) -41.4%
Improvements and
other additions 10 419 (409) -97.6%
Sales, net of gains (9,312) (13,809) (4,497) -32.6%
Impairment charges (7,683) (3,824) 3,859 -100.9%
------------- -------------
Total OREO and foreclosed
assets, end of period $ 28,127 $ 29,902 $ (1,775) -5.9%
============= =============
YEAR-TO-DATE AVERAGES
September 30, September 30, %
2011 2010 Change Change
------------- ------------- ---------- ------
Average fed funds sold
and investments $ 343,674 $ 288,509 $ 55,165 19.1%
Average gross loans $ 914,128 $ 1,107,243 $ (193,115) -17.4%
Average mortgages held
for sale $ 587 $ 613 $ (26) -4.2%
Average interest earning
assets $ 1,258,389 $ 1,396,365 $ (137,976) -9.9%
Average total assets $ 1,357,355 $ 1,484,693 $ (127,338) -8.6%
Average
non-interest-bearing
deposits $ 262,470 $ 251,550 $ 10,920 4.3%
Average interest-bearing
deposits $ 949,623 $ 1,094,300 $ (144,677) -13.2%
Average total deposits $ 1,212,093 $ 1,345,850 $ (133,757) -9.9%
Average total borrowings $ 34,505 $ 30,953 $ 3,552 11.5%
Average stockholders'
equity $ 92,774 $ 92,658 $ 116 0.1%
Average common equity $ 52,677 $ 52,946 $ (269) -0.5%
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
Loans by category
September 30, % of Gross June 30,
(Dollars in 000's) 2011 Loans 2011 $ Change
------------ ------------ --------- ---------
Construction, Land Dev
& Other Land $ 46,730 5% $ 52,153 $ (5,423)
Commercial & Industrial 98,017 11% 98,086 (69)
Commercial Real Estate
Loans 559,251 66% 585,340 (26,089)
Secured Multifamily
Residential 21,886 3% 22,791 (905)
Other Commercial Loans
Secured by RE 49,522 6% 50,641 (1,119)
Loans to Individuals,
Family & Personal
Expense 11,271 1% 12,203 (932)
Consumer/Finance 35,222 4% 35,561 (339)
Other Loans 31,361 4% 25,525 5,836
Overdrafts 297 0% 353 (56)
------------ --------- ---------
Gross loans 853,557 882,653 (29,096)
Less: allowance
for loan losses (26,975) -3% (28,433) 1,458
Less: deferred fees
and restructed
loan concessions (1,719) 0% (1,800) 81
------------ --------- ---------
Loans, net $ 824,863 $ 852,420 $ (27,557)
============ ========= =========
March 31, December 31, September 30,
(Dollars in 000's) 2011 2010 2010
------------ ------------ ------------
Construction, Land Dev
& Other Land $ 55,533 $ 62,666 $ 75,272
Commercial & Industrial 109,836 119,077 128,624
Commercial Real Estate
Loans 606,616 626,387 653,865
Secured Multifamily
Residential 23,156 24,227 24,756
Other Commercial Loans
Secured by RE 55,518 59,284 61,933
Loans to Individuals,
Family & Personal
Expense 12,240 12,472 12,550
Consumer/Finance 36,244 36,859 37,269
Other Loans 23,359 37,255 41,309
Overdrafts 309 319 501
------------ ------------ ------------
Gross loans 922,811 978,546 1,036,079
Less: allowance
for loan losses (33,366) (35,582) (42,120)
Less: deferred
fees and restructed
loan concessions (1,793) (1,751) (1,521)
------------ ------------ ------------
Loans, net $ 887,652 $ 941,213 $ 992,438
============ ============ ============
Nonperforming loans by
category
September 30, % of Loan June 30,
(Dollars in 000's) 2011 Category 2011 $ Change
------------ ------------ --------- ---------
Construction, Land Dev
& Other Land $ 13,670 18% $ 20,015 $ (6,345)
Commercial & Industrial 1,580 2% 1,107 473
Commercial Real Estate
Loans 55,629 71% 64,256 (8,627)
Secured Multifamily
Residential 144 0% 144 -
Other Commercial Loans
Secured by RE 3,634 5% 4,337 (703)
Loans to Individuals,
Family & Personal
Expense 966 1% 20 946
Consumer/Finance 86 0% 139 (53)
Other Loans 2,501 3% 2,487 14
------------ --------- ---------
Total non-performing
loans $ 78,210 $ 92,505 $ (14,295)
============ ========= =========
March 31, December 31, September 30,
(Dollars in 000's) 2011 2010 2010
------------ ------------ ------------
Construction, Land Dev
& Other Land $ 24,207 $ 32,584 $ 27,166
Commercial & Industrial 2,026 2,709 3,408
Commercial Real Estate
Loans 72,287 80,604 77,784
Secured Multifamily
Residential - 307 313
Other Commercial Loans
Secured by RE 8,673 10,725 5,766
Loans to Individuals,
Family & Personal
Expense 23 26 29
Consumer/Finance 91 123 113
Other Loans 2,537 2,538 434
------------ ------------ ------------
Total non-performing
loans $ 109,844 $ 129,616 $ 115,013
============ ============ ============
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
(Dollars in 000's)
For The Three Months Ended
September 30, September 30,
Non-interest income 2011 2010 $ Change % Change
------------- ------------- -------- --------
Service charges on deposit
accounts $ 946 $ 1,092 $ (146) -13.4%
Other commissions and fees 724 716 8 1.1%
Gains on sales of
securities 227 84 143 170.2%
Investment brokerage and
annuity fees 468 340 128 37.6%
Mortgage banking fees 61 110 (49) -44.5%
Other non-interest income:
Other income 85 12 73 608.3%
Increase in value of BOLI 126 136 (10) -7.4%
Other non-interest income 30 238 (208) -87.4%
------------- -------------
Total non-interest income $ 2,667 $ 2,728 $ (61) -2.2%
============= =============
Non-interest income June 30, 2011 $ Change % Change
------------- -------- --------
Service charges on deposit
accounts $ 921 $ 25 2.7%
Other commissions and fees 671 53 7.9%
Gains on sales of
securities 596 (369) -61.9%
Investment brokerage and
annuity fees 426 42 9.9%
Mortgage banking fees 84 (23) -27.4%
Other non-interest income:
Other income 7 78 1114.3%
Increase in value of BOLI 135 (9) -6.7%
Other non-interest income 25 5 20.0%
-------------
Total non-interest income $ 2,865 $ (198) -6.9%
=============
For The Nine Months Ended
September 30, September 30,
Non-interest income 2011 2010 $ Change % Change
------------- ------------- -------- --------
Service charges on deposit
accounts $ 2,822 $ 3,187 $ (365) -11.5%
Other commissions and fees 2,040 2,156 (116) -5.4%
Gains on sales of
securities 1,229 413 816 197.6%
Investment brokerage and
annuity fees 1,394 1,047 347 33.1%
Mortgage banking fees 270 291 (21) -7.2%
Other non-interest income:
Other income 137 23 114 495.7%
Increase in value of BOLI 384 406 (22) -5.4%
Other non-interest income 415 353 62 17.6%
------------- -------------
Total non-interest income $ 8,691 $ 7,876 $ 815 10.3%
============= =============
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
(Dollars in 000's)
For The Three Months Ended
September 30, September 30,
Non-interest expense 2011 2010 $ Change % Change
------------- ------------- -------- --------
Salaries and employee
benefits $ 6,395 $ 7,578 $ (1,183) -15.6%
Net cost of OREO and
foreclosed assets 644 1,385 (741) -53.5%
Net occupancy and equipment 2,140 1,904 236 12.4%
FDIC and state assessments 800 1,166 (366) -31.4%
Professional fees 613 731 (118) -16.1%
Communications 488 484 4 0.8%
Advertising 241 172 69 40.1%
Losses on sales of
securities - - - 0.0%
Professional liability
insurance 202 187 15 8.0%
Third-party loan costs 196 406 (210) -51.7%
Problem loan expense 263 34 229 673.5%
Other non-interest expense: -
Director fees 98 101 (3) -3.0%
Internet costs 161 104 57 54.8%
ATM debit card costs 196 155 41 26.5%
Business development 81 116 (35) -30.2%
Amortization 116 240 (124) -51.7%
Supplies 154 157 (3) -1.9%
Other non-interest
expense 510 642 (132) -20.6%
------------- -------------
Total non-interest expense $ 13,298 $ 15,562 $ (2,264) -14.5%
============= =============
Non-interest expense June 30, 2011 $ Change % Change
------------- -------- --------
Salaries and employee
benefits $ 7,113 $ (718) -10.1%
Net cost of OREO and
foreclosed assets 4,406 (3,762) -85.4%
Net occupancy and equipment 1,845 295 16.0%
FDIC and state assessments 798 2 0.3%
Professional fees 757 (144) -19.0%
Communications 480 8 1.7%
Advertising 207 34 16.4%
Losses on sales of
securities 172 (172) -100.0%
Professional liability
insurance 175 27 15.4%
Third-party loan costs 431 (235) -54.5%
Problem loan expense 102 161 157.8%
Other non-interest expense:
Director fees 100 (2) -2.0%
Internet costs 114 47 41.2%
ATM debit card costs 187 9 4.8%
Business development 90 (9) -10.0%
Amortization 116 - 0.0%
Supplies 117 37 31.6%
Other non-interest
expense 834 (324) -38.8%
-------------
Total non-interest expense $ 18,044 $ (4,746) -26.3%
=============
For The Nine Months Ended
September 30, September 30,
Non-interest expense 2011 2010 $ Change % Change
------------- ------------- -------- --------
Salaries and employee
benefits $ 20,534 $ 21,540 $ (1,006) -4.7%
Net cost of OREO and
foreclosed assets 7,174 4,350 2,824 64.9%
Net occupancy and equipment 5,959 5,902 57 1.0%
FDIC and state assessments 2,721 3,530 (809) -22.9%
Professional fees 2,246 2,061 185 9.0%
Communications 1,443 1,503 (60) -4.0%
Advertising 693 568 125 22.0%
Losses on sales of
securities 230 34 196 576.5%
Professional liability
insurance 577 499 78 15.6%
Third-party loan costs 923 1,090 (167) -15.3%
Problem loan expense 453 267 186 69.7%
Other non-interest expense:
Director fees 299 302 (3) -1.0%
Internet costs 387 284 103 36.3%
ATM debit card costs 502 437 65 14.9%
Business development 255 320 (65) -20.3%
Amortization 383 719 (336) -46.7%
Supplies 421 470 (49) -10.4%
Other non-interest
expense 1,940 2,172 (232) -10.7%
------------- -------------
Total non-interest expense $ 47,140 $ 46,048 $ 1,092 2.4%
============= =============