PremierWest Bancorp Announces Fourth Quarter Results
(firmenpresse) - MEDFORD, OR -- (Marketwire) -- 01/24/12 -- PremierWest Bancorp (NASDAQ: PRWT) announced
results for the fourth quarter and year ending December 31, 2011, as
follows:
For the quarter ended December 31, 2011:
Net loss applicable to common shareholders of $4.1 million, after $3.0
million in loan loss provision and net OREO and foreclosed asset expenses
of $1.4 million. This compares to a net loss applicable to common
shareholders of $706,000 in fourth quarter 2010, with no loan loss
provision and net OREO and foreclosed asset expenses of $2.6 million;
Net interest margin of 3.95%, an increase of 17 basis points from 3.78%
in fourth quarter 2010;
Average rate paid on total deposits and borrowings of 0.66%, a 33 basis
point decline from 0.99% the same quarter in 2010;
Net loan charge-offs of $7.3 million, $6.2 million of which was
related to the master settlement reached with the Bank's largest
non-performing loan relationship. This compares to net loan charge-offs of
$6.5 million in fourth quarter 2010.
For the year ended December 31, 2011:
Net loss applicable to common shareholders of $17.6 million, after
$14.4 million in loan loss provision and net OREO and foreclosed asset
expenses of $8.6 million. This compares to a net loss applicable to common
shareholders of $7.5 million for the year ended 2010, with a $10.1 million
loan loss provision and net OREO and foreclosed asset expenses of $6.9
million;
Net interest margin of 4.05%, a decrease of 3 basis points from 4.08%
for the year ended 2010;
Average rate paid on total deposits and borrowings of 0.78%, an 18
basis point decline from 0.96% for the year ended 2010;
Net loan charge-offs of $27.2 million, compared to $20.4 million for
the year ended 2010;
Loans past due 30 - 89 days and still accruing of $2.9 million or 0.40%
of total loans, down from $4.2 million or 0.49% at December 31, 2010;
Allowance for loan losses of $22.7 million, or 2.84% of gross loans,
compared to $35.6 million, or 3.64%, at December 31, 2010.
Management continued to execute strategies that have resulted in further
strengthening of the Company, including:
Reducing adversely classified loans by 17%, or $32.5 million, during
the quarter, to $159.9 million and by $105.5 million, or 40%, from $265.4
million at December 31, 2010;
Reducing non-performing assets by 7%, or $7.3 million, during the
quarter to $99.1 million, and by $62.6 million, or 39%, from $161.6 million
at December 31, 2010;
Stability of the Bank's total risk-based and leverage capital ratios of
13.03% and 8.72%, respectively, as compared to 12.59% and 8.85% at December
31, 2010;
Growth in average non-interest bearing demand deposits of $27.9 million
during the quarter to $301.5 million, or 26% of total average deposits, up
from $273.6 million, or 23% of total average deposits in preceding quarter
and $252.0 million, or 20% of total average deposits in fourth quarter
2010.
On January 3, 2012, the Company entered into a master settlement agreement
with its largest non-performing loan relationship totaling $28.7 million.
This settlement resulted in a charge-off of $6.2 million including a
partial write-down of a remaining non-performing loan and a cash settlement
in exchange for deeds in lieu of foreclosure and dismissal of lawsuits. The
impact on operations of this settlement was reflected in fourth quarter
2011, whereas the Company obtained possession of real property and other
collateral on January 11, 2012. In addition, all parties executed a
stipulation of dismissal of the lawsuits on January 13, 2012.
The table provided below displays selected asset quality ratios as of
December 31, 2011, and those same ratios adjusted for the impact of this
settlement, had the collateral and real property been obtained as of
December 31, 2011:
On January 13, 2012, the Company announced it will consolidate 11 branches
into existing nearby branches by the end of April 2012. Five of the
branches to be consolidated are located in Oregon with the other six
branches located in California. The decision to consolidate these branches
and the projected reduction in expenses followed an extensive branch
network analysis with a focus on reducing expense, improving efficiency,
and positively impacting the overall value of the Company. These branches
represent less than 10% of the total bank-wide deposits.
James M. Ford, PremierWest's President & Chief Executive Officer, remarked,
"This current quarter's results demonstrated our ability to continue to
make progress in reducing problem assets. Our net loss was up from the same
quarter in 2010, primarily due to increased credit resolution costs,
however capital ratios remained stable. Even though difficult economic
conditions persist, we continue to accomplish solid reductions in
non-performing and adversely classified loans. These reductions are a
result of upgrades in credit quality, repayments and the return to
performing status for a number of borrowing relationships. Per our plans to
diversify our loan portfolio mix, we continue to achieve reductions in
commercial real estate (CRE) and acquisition, development and construction
(ADC) loan balances. This quarter represents the fifth consecutive period
of such declines. I am pleased that we reached a settlement with our
largest
non-performing borrowing relationship earlier this month. This will enable
the Bank to expedite resolution of this problem relationship through direct
control over the collateral securing these loans.
"Despite a significant decline in interest rates due to on-going
international and domestic economic uncertainty, our net interest margin
continued to display resiliency during this past quarter. This was
accomplished in part by additional growth in non-interest bearing deposits
through new customer acquisition and expansion of existing client
relationships while reducing our higher-cost certificates of deposits,"
explained Ford. "Unfortunately, loan demand remains marginal due to the
continued sluggish economy. Therefore, the balance sheet is being managed
by building our investment portfolio in order achieve higher returns than
holding cash and cash equivalents while retaining liquidity to respond when
loan demand improves. The investment portfolio consists of relatively
higher-yielding, high quality federal government agency and municipal
securities for increased earnings."
In closing, Ford commented, "While we made additional progress in a number
of areas this quarter, we know we have work to do. In addition to our
efforts to continue to reduce problem assets, we have the large task of
completing the branch consolidations over the next several months. I am
grateful for the unfailing commitment of our employees for the significant
progress we have made during this difficult economic environment. I am also
thankful for the shareholders' support as we continue our progress through
this challenging business climate."
At December 31, 2011, the Company had $159.9 million in adversely
classified loans. This compares favorably to $192.4 million and $265.4
million at September 30, 2011 and December 31, 2010, respectively.
Adversely classified loans have declined for five consecutive quarters and
were down 16.9% from September 30, 2011 and 39.7% from December 31, 2010.
Included in adversely classified loans at December 31, 2011, were
non-performing loans of $75.9 million, compared to $78.2 million, at
September 30, 2011, and $129.6 million, at December 31, 2010.
Non-performing loans have declined for five consecutive quarters and were
down 3.0% from September 30, 2011 and 41.2% from December 31, 2010.
Reductions in non-performing loans occurred primarily in the commercial
real estate loan category. Of those loans currently designated as
non-performing, approximately $31.5 million, or 41.4% are current as to
payment of principal and interest.
The Company monitors delinquencies, defined as loans on accruing status
30-89 days past due, as an indicator of future non-performing assets. Total
delinquencies were $2.9 million, or 0.40% of gross loans, at December 31,
2011, up from $1.2 million, or 0.16%, at September 30, 2011, and a
reduction from $4.2 million, or 0.49%, at December 31, 2010.
For the quarter ended December 31, 2011, total net loan charge-offs were
$7.3 million compared to $6.5 million in the quarter ended September 30,
2011, and $6.5 million in the quarter ended December 31, 2010. The net
charge-offs in the current period were concentrated in the construction and
land development and non-owner occupied commercial real estate loan
categories and were primarily associated with the master settlement with
the Bank's largest non-performing loan relationship. The ratio of net loan
charge-offs to average gross loans (annualized) for the current quarter was
3.50% compared to 2.95% in the previous quarter and 2.56% in the quarter
one year ago. Quarterly average gross loans in the current period were 5.7%
lower than the previous quarter and 18.5% lower as compared to the same
quarter in 2010.
Reductions in non-performing loans were largely due to the Company taking
ownership of additional residential and commercial properties related to
loans which previously were on nonaccrual status, nonaccrual loan payoffs,
charge-offs, and the return of loans to performing status.
The Company's allowance for credit losses continues to decline in concert
with the reduction in adversely classified loans, loan delinquencies and
other relevant credit metrics. With the reduction in net charge-offs and
change in the loan portfolio composition over the past several years, loss
factors used in management's estimates to establish reserve levels have
declined commensurately. During the current period, $3.0 million was
provided to the allowance for credit losses down from the amount in the
third quarter of 2011 and up from the fourth quarter of 2010.
While loan net charge-offs in the current quarter increased versus the
third quarter of 2011, the overall risk profile of the Company's loan
portfolio continues to improve, as stated above. The provision for credit
losses was $14.4 million for the twelve months ended December 31, 2011,
compared to $10.1 million in the same period last year. The trend of future
provision for credit losses will depend primarily on economic conditions,
level of adversely-classified assets, and changes in collateral values.
At December 31, 2011, total non-performing assets were down compared to
December 31, 2010. Non-performing assets and non-performing loans have also
declined compared to December 31, 2010, in terms of percentage of total
assets and loans, respectively. The amount of additions to non-performing
assets has slowed during 2011 versus the prior year. This is due to the
positive impact of business improvement plans implemented by a number of
borrowers in response to the current economic downturn.
The Company has remained focused on OREO property disposition activities.
While sales were down compared to the prior year, current period sales were
higher than the same period last year. The largest balances in the OREO
portfolio at December 31, 2011, were attributable to residential and
commercial site development projects, followed by income producing
properties, all of which are located within the regions in which we
operate. The total number of OREO property units has decreased during the
quarter.
The Bank's total loan portfolio declined from December 31, 2010, reflecting
the continued challenges in the local and national economy. As a result,
commercial, real estate construction, and commercial & industrial loan
balances declined from year end. Loan totals have also declined because the
Company exited a number of higher risk rated loan relationships over the
past year which contributed to the contraction in the commercial real
estate loan category over the same period.
Interest and fees earned on our loan portfolio are our primary source of
revenue. Our ability to achieve loan growth will be dependent on many
factors, including the effects of competition, economic conditions in our
markets, retention of key personnel and valued customers, and our ability
to close loans in the pipeline.
The Company manages new commercial, including agricultural, loan
origination volume using concentration limits that establish maximum
exposure levels by designated industry segment, real estate product types,
geography, and single borrower limits. We expect the commercial loan
portfolio to be an important contributor to growth in future revenues as we
continue to seek to limit our exposure to construction and development and
commercial real estate.
Fourth quarter 2011 average total deposits declined 10.1% from the same
quarter in 2010. This decrease was mainly due to the decision to continue
to reduce higher cost time deposit balances. Total average time deposits
declined 21.2% from the same quarter last year. Time deposits declined as a
percentage of the Company's average total deposits in the most recent
quarter versus the same quarter last year. The combination of the Company's
efforts to reduce higher-cost time deposits and recent deposit pricing
strategies to lower interest rates in concert with market conditions has
helped reduce the average rate paid on total deposits in fourth quarter
2011, down significantly from the same quarter in 2010.
Total brokered deposits were $241,000, compared to $742,000 at December 31,
2010. Brokered deposits are currently not being replaced as they mature.
Net interest income for the quarter ended December 31, 2011 declined from
the same quarter in 2010. Similarly, net interest income for twelve months
ended December 31, 2011, was down as compared to the prior year. This is
primarily due to a decline in average interest earning assets during these
periods as part of the company's deleveraging strategy. Correspondingly,
average interest bearing liabilities decreased during these same periods.
Changes in the balance sheet mix also contributed to declines in net
interest income during these periods. Loan balances have declined through
payoffs and charge-offs. Investment securities have grown as a proportion
of the balance sheet with loan demand continuing to be weak due to the
economic slowdown. As such, lower yielding investment securities, which
typically generate a lower yield than loans, comprise a higher percentage
of the Bank's earning assets.
Net interest margin for the fourth quarter 2011 increased as compared to
the fourth quarter 2010, predominantly due to a lower cost of interest
bearing deposits. The spread between the yield earned on loans and rate
paid on interest bearing deposits improved year-over-year despite the
decline in higher yielding loan balances as a proportion of average earning
assets. The improvement in yields on investment securities also contributed
to the increase in net interest margin between the periods. Net interest
margin for the fourth quarter 2011 decreased as compared to the third
quarter 2011, predominantly due to a one-time premium amortization
adjustment made to more properly reflect the expected life of a type of
securities. This adjustment resulted in a 26 basis point decline in the
yield on investment securities and an 8 basis point decline in net interest
margin during the quarter. The decline in costs of interest-bearing
liabilities was more than offset by the decrease in yield on earning
assets, primarily loans. This is a result of lower yields currently
available in the market due to the recent decline in mid-term interest
rates, particularly during the last several months of the year.
Non-interest income for the quarter ended December 31, 2011, was down
compared to the fourth quarter of 2010. Service charge income on deposit
accounts declined due to a reduction in the amount of non-sufficient check
items from the same period in 2010. In addition, gains on sales of
securities declined as compared to the fourth quarter of 2010. The
Company's plan to reduce the proportion of lower yielding cash-equivalent
investments and increase the proportion of relatively higher-yielding
federal government guaranteed and municipal securities had been completed
by the current period. Investment brokerage fee income fell in the fourth
quarter of 2011 versus the fourth quarter of 2010 on reduced sales volume
in part due to significant volatility in the equity markets related to
international economic uncertainty and the August 2011 downgrade of the
credit rating of the federal government. Finally, other income declined as
compared to the fourth quarter of 2010 due to the occurrence of a one-time
gain on death benefit from bank-owned life insurance in the fourth quarter
of 2010.
Non-interest income for the twelve months ended December 31, 2011 was
relatively unchanged as compared to the same period in 2010. Increases in
non-interest income were partially due to gains on sales of securities in
order to execute the portfolio strategy mentioned above. In addition,
investment brokerage fee income grew from increased sales of investment
products in a period of historically low deposit interest rates. This was
offset by declines in the one-time gain on death-benefit from bank-owned
life insurance and in deposit account service charge income as compared to
the previous period.
In November 2010 the Federal Deposit Insurance Corporation ("FDIC") issued
mandates on overdraft payment programs applicable to its supervised
institutions, including the Bank. These restrictions were effective July 1,
2011. The Bank began implementing changes to its overdraft payment program
in the second quarter of 2011 to comply with the FDIC's mandates. The
Company believes these mandates have adversely affected non-interest
income.
Non-interest expense for the three months ended December 31, 2011 declined
compared to fourth quarter 2010. Salaries and employee benefits expense
decreased due to a reduction in loan workout personnel to reflect the
decline in problem assets. Personnel reductions were also affected in loan
production staff in response to soft loan demand due to the current
economic downturn. Reductions in branch personnel were also made to
correspond to the continued growth in use of non-branch channels by
customers to access banking services. Total costs associated with OREO and
related third-party loan expenses declined. This was due to a reduction in
expenses to maintain these properties and an increase in gains on sale of
OREO. In addition, the Company's FDIC insurance premium expense declined
from the fourth quarter in 2010 as a result of a change in assessment
methodology beginning in 2011 and lower average deposit balances as part of
the planned deleveraging of the Bank.
Non-interest expense for the twelve months ended December 31, 2011 declined
compared to the same period in 2010. The decrease was primarily due to
reductions in salary and employee benefits and FDIC insurance premium
expense as compared to the same period in 2010 for the same reasons stated
above. This decrease was partially offset by larger dollar amounts of OREO
write downs to current market value and expenses incurred to sell and
maintain these properties. We expect our non-interest expense will continue
to be affected by expenses associated with elevated levels of
non-performing assets.
PremierWest Bank has met the quantitative thresholds to be considered
"Well-Capitalized" under published regulatory standards for total
risk-based capital and Tier 1 risk-based capital at December 31, 2011, with
ratios of 13.03 percent and 11.77 percent, respectively. However, we
continue to be subject to the terms of the Consent Order with the FDIC and
have not yet reached the 10.00 percent leverage ratio required by the
Consent Order. As such, we are not considered "Well-Capitalized" for all
regulatory ratios.
PremierWest Bancorp (NASDAQ: PRWT) is a bank holding company headquartered
in Medford, Oregon, and operates primarily through its subsidiary,
PremierWest Bank. PremierWest Bank 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. In January 2008,
PremierWest acquired Stockmans Financial Group, and its wholly-owned
subsidiary, Stockmans Bank, with five full service banking offices in the
Sacramento, California area. During the last several years, PremierWest
expanded into Klamath Falls and the Central Oregon communities of Bend and
Redmond, and into Nevada, Yolo and Butte counties in California.
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,
and risks that we are unable to increase capital levels as planned or
effectively implement asset reduction and credit quality improvement
strategies, unable to comply with regulatory agreements and the risk that
market conditions deteriorate. You should not place undue reliance on
forward-looking statements and we undertake no obligation to update any
such statements. We make forward-looking statements in this press release
about branch consolidations and the expected savings related thereto,
future profitability of the Company, net interest margin, regulatory
compliance, loan demand, interest rate changes, loan upgrades, loan
migration, the prospects for earnings growth, deposit and loan growth,
capital levels, the effective management of our credit quality, the
collectability of identified non-performing loans, real estate market
conditions and the adequacy of our Allowance for Loan Losses.
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Datum: 24.01.2012 - 14:30 Uhr
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Kategorie:
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