MEDFORD, Ore., July 19, 2007 (PRIME NEWSWIRE) -- PremierWest Bancorp (Nasdaq:PRWT) announced second quarter earnings of $3,941,000, an increase of 17.0% over the immediately preceding quarter and a 3.6% increase when compared to the same quarter in 2006 when the Company posted net income of $3,805,000. Earnings per share on a fully diluted basis amounted to $0.21 for the second quarter of 2007, an increase of 16.7% when compared to the first quarter of 2007 and unchanged when compared to the same quarter in 2006.
John Anhorn, Chief Executive Officer, stated, "Despite a tougher and more competitive landscape, PremierWest continues to perform well in all key performance metrics. We continue to solidify PremierWest's presence in our more mature markets, and at the same time are gaining momentum in the newer markets recently entered. Our employees continue to make the difference and set us apart from our competitors."
SOLID NET INCOME GROWTH
Net income for the first six months of 2007 totaled $7,309,000, an increase of $218,000 or 3.1% when compared to the first six months of 2006. Year to date earnings per share, on a fully diluted basis, amounted to $0.39 for the period ended June 30, 2007, an increase of $0.01 or 2.6% when compared to the same period in 2006. Jim Ford, President, stated, "The increase in per share earnings was achieved despite the additional expenses incurred with the opening of three new denovo banking offices over the last four quarters. New banking offices are an immediate drain on net income and generally require several quarters before they begin to make a positive contribution to net income." Ford further stated, "Despite the additional expense, expanding our geographical presence is an important element of our strategy to profitably grow PremierWest." John Anhorn, added, "Performance for the period ended June 30, 2007 marked the 26th consecutive quarter where year to date earnings growth was achieved by PremierWest, with 23 of the 26 quarters posting double digit percentage growth."
LOANS & DEPOSITS
Gross loans outstanding at June 30, 2007 totaled $974.2 million, an increase of $46.5 million when compared to gross loans of $927.7 million at March 31, 2007. As noted in the first quarter earnings release, gross loans at March 31, 2007 included $20 million attributable to one commercial customer who drew on their line of credit and temporarily deposited the funds into their money market checking account. The line of credit and the deposit account declined proportionately the first business day of the second quarter. June 30, 2007 loan totals include the purchase of a $10.8 million portfolio of consumer finance loans which was completed on June 29, 2007. Absent the temporary $20 million increase in loans at March 31, 2007 and the purchased portfolio, loan growth attributable to in-market activity totaled $55.7 million during the quarter, an annualized growth rate of 24.5%. Jim Ford, President, stated "I am extremely pleased with our recent expansion into the Eugene and Coos Bay, Oregon markets with our Finance Company operations." Ford continued, "Strong in-market growth was also achieved throughout our geographical footprint and further validates the economic strength of the communities we serve."
Credit quality remained strong with non-performing assets totaling $3.6 million or 0.33% of total assets at June 30, 2007. The non-performing assets are centered in approximately nine credit relationships and one parcel of other real estate owned. We expect minimal loss on these credits and have reserved for accordingly. The allowance for loan losses totaled $11.3 million or 1.16% of outstanding loans at June 30, 2007. In addition to the allowance for loan losses, we have an established reserve of $255,000 related to unfunded commitments to lend and letters of credit. The change in the Allowance is a result of a $75,000 provision during the quarter, a $436,000 addition related to the acquisition of the consumer finance loan portfolio and recoveries on previously charged off loans totaling approximately $17,000. Management believes, based on their analysis of the portfolio both geographically and by business sector, the Allowance is adequate as of June 30, 2007.
Total deposits amounted to $924.1 million at June 30, 2007, an increase of $41.0 million or 4.6% when compared to the immediately preceding quarter ended March 31, 2007. Non-interest-bearing deposits grew $11.0 million during the quarter, totaling $201.1 million or 21.8% of total deposits at June 30, 2007. Interest bearing deposits, which included $35.7 million of brokered deposits, totaled $723.0 million at June 30, 2007. Absent the $20 million temporarily deposited at March 31, 2007, deposits (excluding brokered deposits), increased $25.3 million.
NET INTEREST MARGIN
Net interest income totaled $13.8 million, an increase of $464,000 or 3.5% when compared to the immediately preceding quarter when net interest income totaled $13.3 million. PremierWest's net interest margin, on a tax adjusted basis, totaled 5.85% for the quarter ended June 30, 2007, a slight (9 basis point) decline from the 5.94% tax adjusted margin achieved during the first quarter of 2007. PremierWest's margin continues to be in the top tier when compared to peer banks, both regionally and nationally.
The yield on earning assets for the second quarter of 2007 totaled 8.60%, unchanged when compared to the yield for the first quarter of 2007, and a 19 basis point improvement when compared to the same quarter in 2006. The 8.60% yield achieved for the first six months of 2007 represents a 32 basis point improvement when compared to the 8.28% yield earned during the same period in 2006. The cost of average deposits and borrowings for the quarter and year to date ended June 30, 2007 totaled 2.85% and 2.80%, respectively.
IMPROVED OPERATING EFFICIENCIES
PremierWest's efficiency ratio, which is calculated by dividing non-interest expense by net interest income and non-interest income, continued the steady improving trend established over the last several years. This important ratio was 59.88% for the quarter ended June 30, 2007 and 61.50% for the six month period ended June 30, 2007. The improvement is a direct result of the increase in net interest income and non-interest income, combined with a concerted effort to limit expense growth.
Non-interest income totaled $2,287,000 for the quarter ended June 30, 2007, an increase of $321,000 or 16.3% when compared to the same period in 2006 when non-interest income totaled $1,966,000, and an increase of $277,000 or 13.8% when measured against the first quarter of 2007 when non-interest income totaled $2,010,000. The increase in non-interest income, when compared to both the immediately preceding quarter and the same quarter in 2006, is a result of growth in both service charges on deposit relationships and revenue from PremierWest Investment Services. The increase in income derived from service charges on deposit relationships is attributable to an increased customer base and improved tracking of relationship profitability and service charge waivers. PremierWest Investment Services revenue growth is a reflection of the improved equities market and growth of assets under management. At June 30, 2007 PremierWest Investment Service representatives managed in excess of $200 million of investment assets for customers.
Non-interest expense totaled $9,636,000 for the quarter ended June 30, 2007, a decline of $68,000 or 0.70% when compared to non-interest expense of $9,704,000 for the immediately preceding quarter and an increase of $214,000 or 2.31% when compared to $9,422,000 of non interest expense for the same period in 2006. Core non-interest expense, which excludes FASB 91 accounting for loan fees, increased 0.45% when compared to the immediately preceding quarter and 3.8% when compared to the second quarter in 2006.
EXPANSION
Jim Ford stated, "We continue to introduce PremierWest to new communities and at the same time strengthen our commitment to the communities we currently serve. Prior to the end of 2007, we expect to open a second office serving the vibrant and growing Chico, California community, and to open a second location in the Klamath Falls, Oregon area, specifically serving residents of the Running Y Resort." Ford further stated, "Construction of a replacement facility serving the Corning, California community is under way and is projected to be completed late in the fourth quarter."
SHAREHOLDER VALUE
PremierWest shareholders received a 7th consecutive 5% stock dividend on June 29, 2007. A $0.05 cash dividend will be paid to shareholders on July 31, 2007. This will be the second cash dividend paid this year, and will return in excess of $850,000 to PremierWest shareholders holding approximately 17 million shares.
ABOUT PREMIERWEST BANCORP
PremierWest Bancorp (Nasdaq:PRWT) is a financial services holding company headquartered in Medford, Oregon, and operates primarily through its subsidiary PremierWest Bank. PremierWest 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. During the last several years PremierWest expanded into the Klamath Falls and Central Oregon communities of Bend and Redmond, and into Yolo and Placer counties in California.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements within the meaning of the "safe-harbor" provisions of Sections 21D and 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of PremierWest Bancorp's (the Company) management and on assumptions made by management on the basis of information currently available. Other than for statements of historical fact, all statements about our financial position and results of operations, business strategy and management's plans and objectives for future operations are forward-looking statements. When used in this report, the words "anticipate," "believe," "estimate," "expect," and "intend" and words or phrases of similar meaning, as they relate to the Company or management, are intended in part to help identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that include projections or management's expectations for revenues, income or expenses, earnings per share, capital expenditures, dividends, capital structure and other financial items; statements of the plans and objectives of the Company, its management or its board of directors, including the introduction of new products or services, plans for expansion, acquisitions or future growth and estimates or predictions of actions by customers, vendors, competitors or regulatory authorities; statements about future economic performance; and statements of assumptions underlying other statements about the Company and its business. Although management believes that the expectations reflected in forward-looking statements are reasonable, we can make no assurance that such expectations will prove correct. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties include factors that might inhibit our ability to maintain or expand our market share or our net interest margins and factors that could limit or delay implementation of our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; localized economic conditions and events that disproportionately affect our business; and general trends in the banking industry, interest rate economy and regulatory environment. In addition, we face various risks inherent in the banking industry relating to collectibility of loans and changes in interest rates. Other risks include those identified from time to time in our past and future filings with the Securities and Exchange Commission. Note that this list of risks is not exhaustive, and risks identified are applicable as of the date made and cannot be updated.
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
EARNINGS AND PER SHARE DATA
For the Three Months
Ended June 30 2007 2006 Change % Change
-------- -------- -------- --------
Interest income $ 20,337 $ 18,086 $ 2,251 12.4%
Interest expense 6,531 4,441 2,090 47.1%
-------- -------- --------
Net interest income 13,806 13,645 161 1.2%
Provision for possible
loan losses 75 200 (125) -62.5%
Non-interest income 2,287 1,966 321 16.3%
Non-interest expense 9,636 9,422 214 2.3%
-------- -------- --------
Pre-tax income 6,382 5,989 393 6.6%
Provision for income
taxes 2,441 2,184 257 11.8%
-------- -------- --------
Net income $ 3,941 $ 3,805 $ 136 3.6%
======== ======== ========
Basic earnings per share $ 0.23 $ 0.22 $ 0.01 4.5%
======== ======== ========
Diluted earnings per share $ 0.21 $ 0.21 $ -- 0.0%
======== ======== ========
Average shares
outstanding -- basic 17,032,090 16,974,465 57,625 0.3%
Average shares
outstanding -- diluted 18,554,696 18,530,253 24,443 0.1%
For the Six Months
Ended June 30
Interest income $ 39,697 $ 34,785 $ 4,912 14.1%
Interest expense 12,549 8,165 4,384 53.7%
-------- -------- --------
Net interest income 27,148 26,620 528 2.0%
Provision for possible
loan losses 275 500 (225) -45.0%
Non-interest income 4,297 3,800 497 13.1%
Non-interest expense 19,340 18,755 585 3.1%
-------- -------- --------
Pre-tax income 11,830 11,165 665 6.0%
Provision for income taxes 4,521 4,074 447 11.0%
-------- -------- --------
Net income $ 7,309 $ 7,091 $ 218 3.1%
======== ======== ========
Basic earnings per share $ 0.42 $ 0.41 $ 0.01 2.4%
======== ======== ========
Diluted earnings per share $ 0.39 $ 0.38 $ 0.01 2.6%
======== ======== ========
Average shares
outstanding -- basic 17,029,725 16,969,037 60,688 0.4%
Average shares
outstanding -- diluted 18,551,187 18,550,577 610 0.0%
For the three
months ended
March 31,
2007 Change % Change
--------------------- --------
Interest income $ 19,360 $ 977 5.0%
Interest expense 6,018 513 8.5%
--------------------
Net interest income 13,342 464 3.5%
Provision for possible loan losses 200 (125) -62.5%
Non-interest income 2,010 277 13.8%
Non-interest expense 9,704 (68) -0.7%
--------------------
Pre-tax income 5,448 934 17.1%
Provision for income taxes 2,080 361 17.4%
--------------------
Net income $ 3,368 $ 573 17.0%
====================
Basic earnings per share $ 0.19 $ 0.04 21.1%
====================
Diluted earnings per share $ 0.18 $ 0.03 16.7%
====================
Average shares
outstanding -- basic 17,028,077 4,013 0.0%
Average shares
outstanding -- diluted 18,535,087 19,609 0.1%
SELECTED FINANCIAL RATIOS
(annualized)
For the three
months ended
For the Three Months March 31,
Ended June 30 2007 2006 Change 2007 Change
------ ------ ------ ----------- ------
Yield on average
gross loans (1) 8.64% 8.49% 0.15 8.64% 0.00
Yield on average
investments (1) 5.70% 4.69% 1.01 5.17% 0.53
Total yield on
average earning
assets (1) 8.60% 8.41% 0.19 8.60% 0.00
Cost of average
interest-bearing
deposits 3.52% 2.44% 1.08 3.42% 0.10
Cost of average
borrowings 5.69% 5.41% 0.28 5.77% (0.08)
Cost of average
total deposits
and borrowings 2.85% 2.11% 0.74 2.75% 0.10
Cost of average
interest-bearing
liabilities 3.62% 2.75% 0.87 3.51% 0.11
Net interest
spread 4.98% 5.66% (0.68) 5.09% (0.11)
Net interest
margin (1) 5.85% 6.36% (0.51) 5.94% (0.09)
Return on average
equity 12.95% 14.07% (1.12) 11.53% 1.42
Return on average
assets 1.50% 1.59% (0.09) 1.35% 0.15
Efficiency
ratio (2) 59.88% 60.35% (0.47) 63.21% (3.33)
For the Six Months Ended June 30
Yield on average
gross loans (1) 8.64% 8.35% 0.29
Yield on average
investments (1) 5.44% 4.62% 0.82
Total yield on
average earning
assets (1) 8.60% 8.28% 0.32
Cost of average
interest-bearing
deposits 3.47% 2.31% 1.16
Cost of average
borrowings 5.72% 5.28% 0.44
Cost of average
total deposits
and borrowings 2.80% 1.99% 0.81
Cost of average
interest-bearing
liabilities 3.56% 2.60% 0.96
Net interest
spread 5.04% 5.68% (0.64)
Net interest
margin (1) 5.89% 6.34% (0.45)
Net charge-offs to
average loans 0.01% 0.02% (0.01)
Allowance for loan
losses to loans 1.16% 1.23% (0.07)
Allowance for loan
losses to non-
performing loans 317.85% 1307.47% (989.62)
Non-performing
loans to total
loans 0.36% 0.09% 0.27
Non-performing
assets/total assets 0.33% 0.08% 0.25
Return on average
equity 12.26% 13.39% (1.13)
Return on average
assets 1.43% 1.51% (0.08)
Efficiency
ratio (2) 61.50% 61.65% (0.15)
Notes:
(1) Tax equivalent
(2) Non-interest expense divided by net interest income
plus non-interest income
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
BALANCE SHEET %
At June 30 2007 2006 Change Change
----------- ----------- -------- ------
Fed funds sold
and investments $ 12,099 $ 13,763 $ (1,664) -12.1%
----------- ----------- --------
Gross loans 974,153 869,098 105,055 12.1%
Reserve for loan
losses (11,252) (10,682) (570) 5.3%
----------- ----------- --------
Net loans 962,901 858,416 104,485 12.2%
Other assets 120,795 112,346 8,449 7.5%
----------- ----------- --------
Total assets $ 1,095,795 $ 984,525 $111,270 11.3%
=========== =========== ========
Non-interest-bearing
deposits $ 201,065 $ 195,998 $ 5,067 2.6%
Interest-bearing
deposits 722,997 586,688 136,309 23.2%
----------- ----------- --------
Total deposits 924,062 782,686 141,376 18.1%
Borrowings 38,294 84,370 (46,076) -54.6%
Other liabilities 10,602 7,463 3,139 42.1%
Stockholders' equity 122,837 110,006 12,831 11.7%
----------- ----------- --------
Total liabilities
and stockholders'
equity $ 1,095,795 $ 984,525 $111,270 11.3%
=========== =========== ========
Period end shares
outstanding (1) 18,203,839 18,149,135 54,704 0.3%
Book value per share $ 6.75 $ 6.06 $ 0.69 11.4%
Tangible book value
per share $ 5.49 $ 4.81 $ 0.68 14.1%
Allowance for loan
losses:
Balance beginning
of period $ 10,877 $ 10,341 $ 536 5.2%
Balance-sheet
reclassification (2) (255) -- (255) nm
Finance portfolio
purchased (3) 436 -- 436 nm
Provision for loan
losses 275 500 (225) -45.0%
Net (charge-offs)
recoveries (81) (159) 78 -49.1%
----------- ----------- --------
Balance end of period $ 11,252 $ 10,682 $ 570 5.3%
=========== =========== ========
Non-performing assets:
Non-performing loans $ 3,540 $ 817 $ 2,723 333.3%
Real estate owned 101 -- 101 0.0%
----------- ----------- --------
Total non-performing
assets $ 3,641 $ 817 $ 2,824 345.7%
=========== =========== ========
Balance Sheet
at March 31, %
2007 Change Change
------------ --------- ------
Fed funds sold and investments $ 8,819 $ 3,280 37.2%
------------ ---------
Gross loans 927,651 46,502 5.0%
Reserve for loan losses (10,724) (528) 4.9%
------------ ---------
Net loans 916,927 45,974 5.0%
Other assets 107,127 13,668 12.8%
------------ ---------
Total assets $ 1,032,873 $ 62,922 6.1%
============ =========
Non-interest-bearing deposits $ 190,033 $ 11,032 5.8%
Interest-bearing deposits 692,990 30,007 4.3%
------------ ---------
Total deposits 883,023 41,039 4.6%
Borrowings 19,476 18,818 96.6%
Other liabilities 10,670 (68) -0.6%
Stockholders' equity 119,704 3,133 2.6%
------------ ---------
Total liabilities and
stockholders' equity $ 1,032,873 $ 62,922 6.1%
============ =========
Period end shares
outstanding (1) 18,198,678 5,161 0.0%
Book value per share $ 6.58 $ 0.17 2.6%
Tangible book value per share $ 5.35 $ 0.14 2.6%
Allowance for loan losses:
Balance beginning of period $ 10,877 $ -- 0.0%
Balance-sheet
reclassification (2) (255) -- 0.0%
Finance portfolio
purchased (3) -- 436 nm
Provision for loan losses 200 75 37.5%
Net (charge-offs)
recoveries (98) 17 -17.3%
------------ ---------
Balance end of period $ 10,724 $ 528 4.9%
============ =========
Non-performing assets:
Non-performing loans $ 2,317 $ 1,223 52.8%
Real estate owned -- 101 0.0%
------------ ---------
Total non-performing assets $ 2,317 $ 1,324 57.1%
============ =========
Notes:
(1) Amount includes 11,000 shares of preferred stock issued
November 17, 2003 as if converted into common stock at a
conversion ratio of 106.35 to 1 for a total of 1,169,925
common shares.
(2) Amount reclassifed from the allowance for loan losses to other
liabilities in accordance with Financial Accounting Standard
No. 5. The amount reclassifed represents the off-balance sheet
credit exposure related to unfunded commitments to lend and
letters of credit.
(3) Amount resulting from the purchase of a consumer finance loan
portfolio on June 29, 2007.
For the Three Months
Ended June 30 2007 2006 Change % Change
---------- ---------- ---------- --------
Average fed funds sold
and investments $ 10,550 $ 16,942 $ (6,392) -37.7%
Average loans, gross 940,453 849,029 91,424 10.8%
Average total assets 1,050,511 960,675 89,836 9.4%
Average non-interest-
bearing deposits 194,242 195,945 (1,703) -0.9%
Average interest-bearing
deposits 692,627 581,782 110,845 19.1%
Average total deposits 886,869 777,727 109,142 14.0%
Average total borrowings 31,707 66,433 (34,726) -52.3%
Average stockholders'
equity 122,098 108,465 13,633 12.6%
For the Six Months Ended
June 30
Average fed funds sold
and investments $ 11,158 $ 17,244 $ (6,086) -35.3%
Average loans, gross 922,650 834,295 88,355 10.6%
Average total assets 1,032,796 944,563 88,233 9.3%
Average non-interest-
bearing deposits 192,121 195,670 (3,549) -1.8%
Average interest-bearing
deposits 681,985 571,856 110,129 19.3%
Average total deposits 874,106 767,526 106,580 13.9%
Average total borrowings 28,391 61,962 (33,571) -54.2%
Average stockholders'
equity 120,271 106,765 13,506 12.7%
For the three
months ended
March 31,
2007 Change % Change
---------- ---------- ---------
Average fed funds sold and
investments $ 11,772 $ (1,222) -10.4%
Average loans, gross 904,650 35,803 4.0%
Average total assets 1,014,884 35,627 3.5%
Average non-interest-bearing
deposits 189,977 4,265 2.2%
Average interest-bearing deposits 671,224 21,403 3.2%
Average total deposits 861,201 25,668 3.0%
Average total borrowings 25,038 6,669 26.6%
Average stockholders' equity 118,424 3,674 3.1%