PremierWest trims second-quarter losses

PremierWest Bancorp trimmed its second-quarter losses as it continued overhauling its real estate portfolio.

The Medford-based parent company of PremierWest Bank reported a net loss of $2.1 million, or 2 cents per share, for the quarter ending June 30, compared with the $28.6 million, or $1.15 per share, loss during the second quarter of 2009. The company had a $3.3 million loss during the first quarter of 2010.

"During the quarter, we continued to take very aggressive actions in assessing real estate collateral values," PremierWest Bank's President and Chief Executive Officer Jim Ford said in releasing the quarterly results. "We updated the majority of appraisals that were more than six months old on real estate collateral supporting nonperforming loans. This was done to stay ahead of any prospective collateral value deterioration risk as much as possible."

The bank sold off more than $7 million worth of property acquired through foreclosures and wrote off losses on other real estate during the period. Real estate loans that turned bad after the housing bubble burst played a key real role in leading PremierWest into the Troubled Asset Relief Program, where it received $41.4 million from the U.S. Treasury in February 2009.

PremierWest has not paid its past three quarterly 5 percent dividends ($1.55 million) to the Treasury, Chief Financial Officer Mike Fowler said Thursday.

"Our consent order agreements with the Federal Reserve and FDIC prohibit us from making payments without their approval," Fowler said. "We have to first request consent to do it. Their concern is that we preserve capital until the downturn comes to an end and we're profitable. Right now, we're showing definite signs of improvement."

PremierWest's loans declined $27.3 million, or 2 percent, from March 31 to $1.1 billion. During the quarter, $16 million worth of loans were paid off, another $8.6 million was written off and $2.7 million were foreclosed on. The bank said borrowers were paying down loans faster than new loans are taken out.

Halfway through the year, the bank had deposits of $1.3 billion, down $48.4 million, or 4 percent, from the end of March.

The bank's average for noninterest bearing deposits remained steady, totaling $250.6 million, 19 percent of total deposits, during the quarter. However, the bank said it was de-emphasizing interest-bearing accounts that have attracted public entity deposits in the past. That resulted in a drop of $16.9 million in such accounts. On the flip side, PremierWest opened 1,563 new noninterest accounts totaling $5.9 million during the period.

PremierWest shares rose two cents to close at 46 cents, during Thursday's trading on the Nasdaq.

Reach reporter Greg Stiles at 541-776-4463 or e-mail

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