PremierWest Bancorp narrows its losses in second quarter

PremierWest Bancorp narrowed its losses in the second quarter, reporting a $2.7 million setback for the three months ending June 30.

The Medford-based parent company of PremierWest Bank continued reducing the bad loans that knocked the once aggressive financial institution on its heels following the credit crunch of 2008.

PremierWest's per share loss of 27 cents, on the heels of a first-quarter loss of $7.4 million, or 74 cents per share, followed a $6.3 million in loan loss provision and real estate foreclosure related expenses of $2.1 million.

President and Chief Executive Officer Jim Ford said PremierWest has achieved meaningful reductions in non-performing assets.

"This quarter represents the fourth consecutive period of declines in adversely-classified loans," Ford said. "It was gratifying to see that a good portion of this progress in credit quality was a result of risk rating improvements, repayments or upgrades to performing status for a number of loan relationships."

He added commercial real estate and acquisition, development and construction loan balances continue to decline. At the same time, the bank added to its customer base and was able to reduce its higher-cost certificates of deposit.

Ford said the company has redeployed its investment portfolio into higher-yielding, high quality federal government agency and municipal securities to improve earnings.

During the quarter, PremierWest reduced its bad loan portfolio by $19.5 million, or 14 percent, to $120.1 million. That is 9.1 percent of the bank's total assets. At the end of the first quarter, PremierWest's bad loans of $139.6 million accounted for 10.2 percent of total assets.

Loans past due between 30 and 89 days of $2.8 million, or 0.32 percent of total loans, dropped from $7.1 million, or 0.77 percent, during the quarter.

PremierWest said it has reduced construction, land and development, commercial real estate and higher risk commercial and industrial loans. As a result, the institution's loans totaled $880.9 million at the end of the quarter, down $40.2 million, or 4.4 percent from the first quarter. It also marks a reduction of $210 million, 19.3 percent from its June 30, 2010 level.

While PremierWest Bank has met "Well-Capitalized" regulatory standards for total risk-based capital and Tier 1 risk-based capital, it remains under the FDIC's consent order because it has not reached a 10 percent leverage ratio.

—Greg Stiles

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