MEDFORD, Ore., Oct. 18, 2007 (PRIME NEWSWIRE) -- PremierWest Bancorp (Nasdaq:PRWT) announced a 9.4% increase in net income for the quarter ended September 30, 2007. Net income totaled $4,043,000 or $0.22 per fully diluted share for the third quarter of 2007, compared to the third quarter of 2006 when net income totaled $3,697,000, or $0.20 per fully diluted share.
Net income through the first three quarters increased 5.2% when comparing 2007 year-to-date net income of $11,352,000 or $0.61 per fully diluted share to 2006 net income of $10,788,000 or $0.58 per fully diluted share.
John Anhorn, Chief Executive Officer, stated, "Strong balance sheet growth, excellent credit quality, a solid net interest margin and a focus on improving our efficiency ratio are key components to our success this most recent quarter." Anhorn followed, "We continue to successfully implement our strategy of profitably growing relationships in our existing communities while looking for expansion opportunities both within and contiguous to our geographical footprint."
STRONG BALANCE SHEET GROWTH
At September 30, 2007 gross outstanding loans totaled $1.0 billion, representing growth of $28.3 million, or 11.6% annualized when compared to the immediately preceding quarter. For the three months ended September 30, 2007, outstanding loans averaged $990.2 million, an increase of $49.8 million when compared to the $940.5 million average for the three months ended June 30, 2007. Jim Ford, President stated, "Strong growth in our major markets combined with the acquisition of a $10.8 million consumer finance portfolio on the last business day of the second quarter contributed to the substantial increase in average outstanding loans this most recent quarter." Ford continued, "During the last four quarters, gross loans outstanding have grown $134.9 million or an average of $33.7 million per quarter."
Total deposits at September 30, 2007 amounted to $926.4 million, an increase of $2.3 million or 1.0%, annualized, when compared to the immediately preceding quarter. Non-interest bearing deposits averaged $198.0 million during the quarter, an increase of $3.8 million or 2.0% when compared to the second quarter ended June 30, 2007. Interest bearing deposits, which at September 30, 2007 include $57.6 million in brokered deposits, totaled $732.7 million. Management noted that the increased use of wholesale funding is a direct reflection of the continued competitive deposit environment. Borrowings at September 30, 2007 totaled $52.1 million, compared to $38.3 million at June 30, 2007.
EXCELLENT CREDIT QUALITY
Non-performing assets, which include all loans past due 90 days or more, loans on non-accrual status, and other real estate owned, totaled 0.37% of assets at September 30, 2007, relatively unchanged from 0.33% at June 30, 2007. No other real estate was held at quarter end, and non-performing loans amounted to $4.1 million. The majority of the non-performing loans are concentrated in five credit relationships. The largest of these relationships amounts to $1.2 million and is secured by real estate. Management believes the potential for loss on this credit is $275,000 or less and has established a specific reserve to address the potential loss. Of the four remaining credits composing the majority: one is an established business in the process of selling with an expected closing date of early November, and was brought current during the first week in October; two are fully secured either with real estate or federal guarantees and no loss is expected. Non-performing loans also include one $700,000 credit acquired with the acquisition of Mid Valley Bank in 2004. The credit was placed on a "cash basis" at the time of the acquisition and has been performing satisfactorily during the last three years.
The Allowance for Loan Losses totaled $11.4 million, or 1.14% of total loans at September 30, 2007. PremierWest's loan loss provision for the quarter ended September 30, 2007 was $225,000, compared to a combined loan loss provision of $275,000 for the first two quarters of 2007. The increased loan loss provision this most recent quarter is attributable both to growth in the credit portfolio and management's review and assessment of the economic environment in the markets we lend. Management monitors the loan portfolio to ensure the Allowance remains adequate to absorb potential losses identified by the review process. Management believes the Allowance is adequate as of September 30, 2007.
SOLID NET INTEREST MARGIN
Net interest income totaled $14.3 million for the quarter ended September 30, 2007, an increase of 3.5% when compared to the immediately preceding quarter when net interest income totaled $13.8 million. PremierWest's net interest margin on a tax adjusted basis, amounted to 5.72% and 5.83% for the quarter and year-to-date ended September 30, 2007. The yield on average earning assets remained stable at 8.60% for the quarter. The cost of average deposits and borrowings for the quarter and the year-to-date ended September 30, 2007 amounted to 2.98% and 2.87%, respectively. PremierWest's net interest margin continues to be in the top tier when compared to peer banks, both regionally and nationally.
IMPROVED EFFICIENCY RATIO
PremierWest's efficiency ratio, which is calculated by dividing non-interest expense by net interest income and non-interest income, continued to show improvement during the third quarter. This important ratio was 59.21% for quarter ended September 30, 2007, compared to 59.88% for the immediately preceding quarter. The efficiency ratio for the nine months ended September 30, 2007 was 60.71%, a modest improvement when compared to 61.18% for the first nine months of 2006. The improving trend is a result of a solid net interest margin, increased non-interest income and containment of non-interest expenses.
Non-interest income grew 13.7% when comparing the $2.3 million generated during this most recent quarter to the same period in 2006. Non-interest income of $6.6 million for the nine months ended September 30, 2007 represents a 13.4% increase when compared to the $5.8 million generated during the same period in 2006. Non-interest expense totaled $9.8 million and $29.2 million for the quarter and year-to-date ended September 30, 2007. Non-interest expenses when compared to the previous quarter and year-to-date increased 2.0% and 3.4%, respectively. Containment of non-interest expense to an increase of less than 3.5% on a year-to-date comparison was achieved despite the additional expenses related to execution of our growth strategy. The first nine months of 2007 includes $1.3 million of non-interest expense directly related to the operation of five PremierWest Bank branches and three Premier Finance Company offices opened late in 2006 or during 2007. 2006 non-interest expenses for these eight offices totaled $359,000. 2007 year-to-date non-interest expense increased less than 0.02%, absent the increase directly related to these eight new locations.
EXPANSION
Jim Ford stated, "The recent opening of our second office in Chico, California was completed earlier this month and provides us with an immense opportunity to grow our presence in the Chico market. The South Chico office is located in a temporary facility while we evaluate potential sites for a larger permanent building." Ford also noted, "The opening of a second office in Klamath Falls, Oregon should occur late this year or early in 2008, and the construction of a replacement facility serving the Corning, California community is on schedule and should be completed sometime in November of this year."
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 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. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Specific risks in this press release include the collectability of identified non-performing loans, the adequacy of our Allowance for Loan Losses and the timely completion of our new branch in Klamath Falls, Oregon and our replacement facility in Corning, California.
PREMIERWEST BANCORP
FINANCIAL HIGHLIGHTS
(All amounts in 000's, except per share data)
(unaudited)
EARNINGS AND PER SHARE DATA
For the Three
Months Ended
September 30 2007 2006 Change %Change
----------- ----------- --------- --------
Interest income $ 21,540 $ 18,861 $ 2,679 14.2%
Interest expense 7,250 5,212 2,038 39.1%
----------- ----------- ---------
Net interest
income 14,290 13,649 641 4.7%
Provision for
possible loan
losses 225 150 75 50.0%
Non-interest
income 2,308 2,030 278 13.7%
Non-interest
expense 9,828 9,449 379 4.0%
----------- ----------- ---------
Pre-tax income 6,545 6,080 465 7.6%
Provision for
income taxes 2,502 2,383 119 5.0%
----------- ----------- ---------
Net income $ 4,043 $ 3,697 $ 346 9.4%
=========== =========== =========
Basic earnings
per share $ 0.23 $ 0.21 $ 0.02 9.5%
=========== =========== =========
Diluted earnings
per share $ 0.22 $ 0.20 $ 0.02 10.0%
=========== =========== =========
Average
shares
outstanding --
basic 17,007,857 17,006,932 925 0.0%
Average
shares
outstanding --
diluted 18,449,381 18,563,043 (113,662) -0.6%
For the three
months ended
June 30,
2007 Change % Change
------------------------- ---------
Interest income $ 20,337 $ 1,203 5.9%
Interest expense 6,531 719 11.0%
-------------------------
Net interest
income 13,806 484 3.5%
Provision for
possible loan
losses 75 150 200.0%
Non-interest
income 2,287 21 0.9%
Non-interest
expense 9,636 192 2.0%
-------------------------
Pre-tax income 6,382 163 2.6%
Provision for
income taxes 2,441 61 2.5%
-------------------------
Net income $ 3,941 $ 102 2.6%
=========================
Basic earnings
per share $ 0.23 $ -- 0.0%
=========================
Diluted earnings
per share $ 0.21 $ 0.01 4.8%
=========================
Average
shares
outstanding --
basic 17,032,090 (24,233) -0.1%
Average
shares
outstanding --
diluted 18,554,696 (105,315) -0.6%
For the Nine
Months Ended
September 30 2007 2006 Change %Change
----------- ----------- --------- --------
Interest income $ 61,237 $ 53,647 $ 7,590 14.1%
Interest expense 19,799 13,378 6,421 48.0%
----------- ----------- ---------
Net interest
income 41,438 40,269 1,169 2.9%
Provision for
possible loan
losses 500 650 (150) -23.1%
Non-interest
income 6,610 5,830 780 13.4%
Non-interest
expense 29,173 28,204 969 3.4%
----------- ----------- ---------
Pre-tax income 18,375 17,245 1,130 6.6%
Provision for
income taxes 7,023 6,457 566 8.8%
----------- ----------- ---------
Net income $ 11,352 $ 10,788 $ 564 5.2%
=========== =========== =========
Basic earnings
per share $ 0.65 $ 0.62 $ 0.03 4.8%
=========== =========== =========
Diluted earnings
per share $ 0.61 $ 0.58 $ 0.03 5.2%
=========== =========== =========
Average
shares
outstanding --
basic 17,022,356 16,981,809 40,547 0.2%
Average
shares
outstanding --
diluted 18,512,521 18,571,144 (58,623) -0.3%
SELECTED FINANCIAL RATIOS
(annualized)
For the
three
months
ended
For the Three Months June 30,
Ended September 30 2007 2006 Change 2007 Change
Yield on average
gross loans(1) 8.63% 8.66% (0.03) 8.64% (0.01)
Yield on average
investments(1) 5.02% 4.42% 0.60 5.70% (0.68)
Total yield on
average earning
assets(1) 8.60% 8.58% 0.02 8.60% 0.00
Cost of average
interest-bearing
deposits 3.64% 2.91% 0.73 3.52% 0.12
Cost of average
borrowings 5.61% 5.65% (0.04) 5.69% (0.08)
Cost of average
total deposits
and borrowings 2.98% 2.43% 0.55 2.85% 0.13
Cost of average
interest-bearing
liabilities 3.75% 3.17% 0.58 3.62% 0.13
Net interest
spread 4.85% 5.41% (0.56) 4.98% (0.13)
Net interest
margin(1) 5.72% 6.22% (0.50) 5.85% (0.13)
Return on
average
equity 12.84% 13.03% (0.19) 12.95% (0.11)
Return on
average
assets 1.46% 1.51% (0.05) 1.50% (0.04)
Efficiency
ratio(2) 59.21% 60.27% (1.06) 59.88% (0.67)
For the Nine Months
Ended September 30
Yield on average
gross loans(1) 8.64% 8.46% 0.18
Yield on average
investments(1) 5.37% 4.61% 0.76
Total yield on
average earning
assets(1) 8.60% 8.38% 0.22
Cost of average
interest-bearing
deposits 3.53% 2.51% 1.02
Cost of average
borrowings 5.67% 5.40% 0.27
Cost of average
total deposits
and borrowings 2.87% 2.14% 0.73
Cost of average
interest-bearing
liabilities 3.63% 2.79% 0.84
Net interest
spread 4.97% 5.59% (0.62)
Net interest
margin(1) 5.83% 6.30% (0.47)
Net charge-offs
to average
loans 0.02% 0.03% (0.01)
Allowance for
loan losses to
loans 1.14% 1.24% (0.10)
Allowance for
loan losses to
non-performing
loans 275.91% 924.48% (648.57)
Non-performing
loans to total
loans 0.41% 0.13% 0.28
Non-performing
assets/total
assets 0.37% 0.12% 0.25
Return on
average
equity 12.46% 13.27% (0.81)
Return on
average
assets 1.44% 1.51% (0.07)
Efficiency
ratio(2) 60.71% 61.18% (0.47)
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 September 30 2007 2006 Change % Change
---------- --------- --------- --------
Fed funds sold
and investments $ 8,188 $ 13,526 $ (5,338) -39.5%
---------- --------- ---------
Gross loans 1,002,441 867,589 134,852 15.5%
Reserve for loan
losses (11,387) (10,761) (626) 5.8%
---------- --------- ---------
Net loans 991,054 856,828 134,226 15.7%
Other assets 115,671 110,604 5,067 4.6%
---------- --------- ---------
Total assets $1,114,913 $ 980,958 $ 133,955 13.7%
========== ========= =========
Non-interest-
bearing deposits $ 193,666 $ 199,256 $ (5,590) -2.8%
Interest-bearing
deposits 732,735 604,788 127,947 21.2%
---------- --------- ---------
Total deposits 926,401 804,044 122,357 15.2%
Borrowings 52,098 54,560 (2,462) -4.5%
Other liabilities 11,266 9,228 2,038 22.1%
Stockholders'
equity 125,148 113,126 12,022 10.6%
---------- --------- ---------
Total liabilities
and stockholders'
equity $1,114,913 $ 980,958 $ 133,955 13.7%
========== ========= =========
Period end shares
outstanding(1) 18,164,288 18,183,422 (19,134) -0.1%
Book value per
share $ 6.89 $ 6.22 $ 0.67 10.8%
Tangible book
value per share $ 5.65 $ 4.98 $ 0.67 13.5%
Allowance for loan
losses:
Balance beginning
of period $ 10,877 $ 10,341 $ 536 5.2%
Balance-sheet
reclassification(2) (255) -- (255.00) 0%
Finance portfolio
purchased(3) 436 -- 436.00 0%
Provision for loan
losses 500 650 (150) -23.1%
Net (charge-offs)
recoveries (171) (230) 59 -25.7%
---------- --------- ---------
Balance end of
period $ 11,387 $ 10,761 $ 626 5.8%
========== ========= =========
Non-performing assets:
Non-performing loans $ 4,127 $ 1,164 $ 2,963 254.6%
Real estate owned -- -- -- 0.0%
---------- --------- ---------
Total non-performing
assets $ 4,127 $ 1,164 $ 2,963 254.6%
========== ========= =========
Balance
Sheet at
June 30,
2007 Change % Change
------------ --------- ---------
Fed funds sold
and investments $ 12,099 $ (3,911) -32.3%
------------ --------
Gross loans 974,153 28,288 2.9%
Reserve for loan
losses (11,252) (135) 1.2%
------------ --------
Net loans 962,901 28,153 2.9%
Other assets 120,795 (5,124) -4.2%
------------ --------
Total assets $ 1,095,795 $ 19,118 1.7%
============ ========
Non-interest-
bearing deposits $ 201,065 $ (7,399) -3.7%
Interest-bearing
deposits 722,997 9,738 1.3%
------------ --------
Total deposits 924,062 2,339 0.3%
Borrowings 38,294 13,804 36.0%
Other liabilities 10,602 664 6.3%
Stockholders'
equity 122,837 2,311 1.9%
------------ --------
Total liabilities
and stockholders'
equity $ 1,095,795 $ 19,118 1.7%
============ ========
Period end shares
outstanding(1) 18,203,839 (39,551) -0.2%
Book value per
share $ 6.75 $ 0.14 2.1%
Tangible book
value per share $ 5.49 $ 0.16 2.9%
Allowance for loan
losses:
Balance beginning
of period $ 10,877 $ -- 0.0%
Balance-sheet
reclassification(2) (255) -- 0.0%
Finance portfolio
purchased(3) 436 -- 0.0%
Provision for loan
losses 275 225 81.8%
Net (charge-offs)
recoveries (81) (90) 111.1%
------------ --------
Balance end of period $ 11,252 $ 135 1.2%
============ ========
Non-performing
assets:
Non-performing loans $ 3,540 $ 587 16.6%
Real estate owned 101 (101) 0.0%
------------ --------
Total non-performing
assets $ 3,641 $ 486 13.3%
============ ========
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 reclassified from the allowance for loan losses to
other liabilities in accordance with Financial Accounting
Standard No. 5. The amount reclassified 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 September 30 2007 2006 Change % Change
---------- --------- --------- --------
Average fed funds sold
and investments $ 9,319 $ 15,456 $ (6,137) -39.7%
Average loans, gross 990,231 860,051 130,180 15.1%
Average total assets 1,102,091 972,614 129,477 13.3%
Average non-interest-
bearing deposits 198,045 198,568 (523) -0.3%
Average interest-
bearing deposits 724,993 589,912 135,081 22.9%
Average total deposits 923,038 788,480 134,558 17.1%
Average total
borrowings 42,654 62,741 (20,087) -32.0%
Average stockholders'
equity 124,962 112,596 12,366 11.0%
For the three
months ended
June 30,
2007 Change % Change
----------- --------- ---------
Average fed funds sold
and investments $ 10,550 $ (1,231) -11.7%
Average loans, gross 940,453 49,778 5.3%
Average total assets 1,050,511 51,580 4.9%
Average non-interest-
bearing deposits 194,242 3,803 2.0%
Average interest-
bearing deposits 692,627 32,366 4.7%
Average total deposits 886,869 36,169 4.1%
Average total
borrowings 31,707 10,947 34.5%
Average stockholders'
equity 122,098 2,864 2.3%
For the Nine Months
Ended September 30 2007 2006 Change % Change
---------- -------- --------- --------
Average fed funds sold
and investments $ 10,412 $ 16,642 $ (6,230) -37.4%
Average loans, gross 945,424 842,975 102,449 12.2%
Average total assets 1,056,148 954,016 102,132 10.7%
Average non-interest-
bearing deposits 194,117 196,646 (2,529) -1.3%
Average interest-
bearing deposits 696,479 577,941 118,538 20.5%
Average total deposits 890,596 774,587 116,009 15.0%
Average total
borrowings 33,198 62,225 (29,027) -46.6%
Average stockholders'
equity 121,852 108,730 13,122 12.1%