PremierWest losses widen in first quarter

PremierWest losses widen in first quarter

PremierWest Bancorp said its losses widened during the first quarter of 2012, even as its problem loans declined, and it announced the closure of branches and layoffs.

The Medford-based parent company of PremierWest Bank reported a $4.8 million loss, as it set aside $3.5 million for loan losses, spent $2.4 million on foreclosed property and absorbed $829,000 in costs associated with branch closures.

The first-quarter loss followed a $4.1 million loss in fourth-quarter 2011.

"It's never satisfying to post a loss," said PremierWest President and Chief Executive Officer Jim Ford. "But in our case, as we are working through these problem loans, a loss is the cost of doing business."

Ford said nonperforming loans are at the lowest level they've been since June 2009, and substandard loans are at the lowest point since February 2009.

PremierWest charged off $5.9 million in loans during the quarter, compared with charge-offs of $7.3 million in fourth quarter 2011.

The good news is appraisals on foreclosed properties are flattening out, rather than reflecting plummeting land values. "In the last six months, the declines have been much lower, about 10 percent at annualized rate," Ford said. "In times past we saw declines of 25 to as much as 70 percent."

Ford isn't necessarily predicting the real-estate market bottom has been reached in its territory stretching from Douglas County to south of Sacramento, but signs are positive. "If we are nearing a bottom, that bodes well for us as we work out problem loans."

Ford said PremierWest has $300 million in short-term investment that can be turned into loans.

"Our capital levels are still strong — almost double the required level — but not at the (regulatory) consent level," he said. "We've weathered the storm this long, so I don't see any reason we can't continue to do well."

PremierWest has restructured loans for some commercial borrowers in recent months, moving toward Small Business Administration-guaranteed loans.

"Our SBA pipeline continues to grow every month as businesses figure out what the new normal is," Ford said. "They can go to longer terms with a guarantee. That helps with cash flow when they have losses or lower revenues so that they can buy a piece of equipment they need."

He said the bank was able to shift more employees than expected into other roles from nine branches that will be shuttered by the end of this month. "That meant less severance costs," Ford said.

Reach reporter Greg Stiles at 541-776-4463.

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