PremierWest Bancorp reports third quarter losses

PremierWest Bancorp reported a $3.5 million third-quarter loss today, compared to a loss of $1.4 million a year ago as it aggressively moved to clear bad loans and foreclosure-related costs from its books.

The Medford-based parent company of PremierWest bank boosted its loan loss reserve — which directly cuts earnings — by $5.1 million from $1.6 million during a similar period in 2010.

"We are accelerating our loan loss resolution," Jim Ford, president and chief executive officer said today. "We look at it as future revenue versus future expenses. The quicker we resolve the problems the sooner it should lead to profitability."

PremierWest charged off $6.5 million in loans during the third quarter, compared to $3.4 million in charge offs a year ago, while loans past due — between 30 and 89 days — and still accruing interest fell to $1.2 million from $11.1 million a year ago.

"Our delinquencies were the lowest they have been since before the recession began," Ford said. "On the front end, the number of problem loans is diminishing quickly. As we go forward, we will have less expenses, less carrying costs and less write downs."

He said the declining value of bare land remains an issue and there is no sure way to know when the cycle will end.

"One thing we do know, is that it can't decline to zero," Ford said. "Land has some intrinsic value. Throughout the country and the West Coast, we're getting back to pre-2005 values. I think we will go right past the right number (of value) and then it will come back up. Bubble values go up too fast and then it goes down too fast."

Ford said non-interest expenses — covering everything from salaries and benefits to legal fees and advertising — declined to $13.3 million in the third quarter from $18 million in the second quarter.

"We're always looking at expenses and what it takes to run profitably in a low-growth environment," he said. "If your top-line revenue is not growing dramatically, then you have to look at expenses."

The company said in its earnings release it has established exposure levels-based industry type, real estate and geography as well as single-borrower limits.

Nonetheless, Ford said PremierWest has more than $300 million available to loan, presently invested in low-yield instruments.

"Our portfolio yield is less than 3 percent now, if we were to turn that into loans it would earn say 5 percent."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.

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