PremierWest Bancorp Announces Third Quarter Results
(firmenpresse) - MEDFORD, OR -- (Marketwire) -- 10/25/11 -- PremierWest Bancorp (NASDAQ: PRWT) announced
results for the third quarter ending September 30, 2011, as follows:
Net loss applicable to common shareholders of $3.5 million, after $5.1
million in loan loss provision and net OREO and foreclosed asset expenses
of $600,000. This compares to a net loss applicable to common shareholders
of $1.4 million in third quarter 2010, after $1.6 million in loan loss
provision and net OREO and foreclosed asset expenses of $1.4 million;
Net interest margin of 4.21%, an increase of 21 basis points from 4.00%
in third quarter 2010;
Average rate paid on total deposits and borrowings of 0.72%, a 36 basis
point decline from 1.08% the same quarter in 2010;
Net loan charge-offs of $6.5 million, compared to $3.4 million in third
quarter 2010;
Loans past due 30 - 89 days and still accruing of $1.2 million or 0.14%
of total loans, down from $11.1 million or 1.12% at September 30,
2010;
Allowance for loan losses of $27.0 million, or 3.16% of gross loans,
compared to $42.1 million, or 4.07%, at September 30, 2010.
Management continued to execute strategies that have resulted in further
strengthening of the Company, including:
Reducing adversely classified loans by 7%, or $14.6 million, during the
quarter, and $115.8 million, or 38% to $192.4 million, compared to $308.2
million at September 30, 2010;
Reducing nonperforming assets by 11%, or $13.7 million, during the
quarter and 27%, or $38.7 million over the past twelve months;
Improvement in the Bank's total risk-based and leverage capital ratios
to 12.71% and 8.80%, respectively, up from 12.14% and 8.69% at September
30, 2010;
Growth in average non-interest bearing demand deposits of $13.9 million
during the quarter to $273.6 million, or 23% of total average deposits, up
from $259.7 million, or 21% of total deposits in preceding quarter and
$250.5 million, or 19% of total average deposits in third quarter 2010.
James M. Ford, PremierWest's President & Chief Executive Officer,
commented, "The results of this quarter displayed the positive impact of
all the on-going initiatives to improve our performance and eliminate
problem assets. Our net loss was up from the same quarter in 2010,
primarily due to an additional $3.6 million provision taken as a specific
reserve due to recent uncertainties related to the value of collateral
supporting the Bank's largest non-performing borrowing relationship. While
economic difficulties continue, I am pleased to report we continue to
accomplish solid reductions in nonperforming and adversely classified
loans. This quarter represents the fourth consecutive period of such
declines. A good portion of this progress in credit quality was due to
improvements in risk ratings, repayments or upgrades to performing status
for a number of loan relationships. As planned, commercial real estate
(CRE) and acquisition, development and construction (ADC) loan balances
continue to decline.
"Our net interest margin continued to display improvement in part by
growing our non-interest bearing deposits through new customer acquisition
and expansion of existing client relationships while reducing our
higher-cost certificates of deposits," explained Ford. "Due to the
sluggish economy, loan demand continues to be soft. Therefore, we are
managing our balance sheet primarily by building our investment portfolio.
The portfolio is structured to have the liquidity when needed to respond
when loan demand improves, while deploying the rest of our portfolio into
higher-yielding, high quality federal government agency and municipal
securities to improve earnings."
In closing, Ford stated, "While we made additional progress in a number of
areas this quarter, we know we have work to do. I am grateful for the
continuing effort and dedication of our employees that has brought us to
this point. I am also appreciative of the support of the shareholders as
we continue our progress through this challenging economic period."
At September 30, 2011, the Company had $192.4 million in adversely
classified loans. This compares favorably to $207.1 million and $308.2
million at June 30, 2011 and September 30, 2010, respectively. Adversely
classified loans have declined for four consecutive quarters and were down
7.1% from June 30, 2011 and 37.6% from September 30, 2010.
Included in adversely classified loans at September 30, 2011, were
nonperforming loans of $78.2 million, compared to $92.5 million, at June
30, 2011, and $115.1 million, at September 30, 2010. Nonperforming loans
have declined for three consecutive quarters and were down 15.5% from June
30, 2011 and 32.1% from September 30, 2010. Reductions in nonperforming
loans occurred primarily in the construction, land and land development and
commercial real estate loan categories. Of those loans currently
designated as nonperforming, approximately $21.5 million, or 27.5% 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 nonperforming assets. Total
delinquencies were $1.2 million, or 0.14% of total loans, at September 30,
2011, down from $2.8 million, or 0.32%, at June 30, 2011, and a reduction
from $11.1 million, or 1.12%, at September 30, 2010.
For the quarter ended September 30, 2011, total net loan charge-offs were
$6.5 million compared to $4.9 million in the quarter ended June 30, 2011
and $3.4 million in the quarter ended September 30, 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. The ratio of net loan charge-offs to average gross loans
(annualized) for the current quarter was 2.95% compared to 2.18% in the
previous quarter and 1.26% in the quarter one year ago. Quarterly average
gross loans in the current period were 18.2% lower as compared to the same
quarter in 2010.
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 over
the past several years, loss factors used in management's estimates to
establish reserve levels have declined commensurately. During the current
period, $5.1 million was provided to the allowance for credit losses up
from the amount in both the second quarter of 2011 and the third quarter of
2010. This additional provision included a $3.6 million specific reserve
established due to recent uncertainties surrounding the value of collateral
supporting a specific borrowing relationship totaling approximately $21
million.
While loan net charge-offs in the current quarter increased versus the
third quarter of 2010, the overall risk profile of the Company's loan
portfolio continues to improve, as stated above. In addition, the
percentage of loans past due 30 - 89 days and still accruing as of
September 30, 2011 is down significantly from the same period one year ago.
The provision for credit losses was $11.4 million for the nine months ended
September 30, 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 and the interest rate environment, as an increase in
interest rates could put pressure on the ability of our borrowers to repay
loans.
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. While loan balances contracted, we have
experienced an increase in our unfunded loan commitments. 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.
At September 30, 2011, total nonperforming assets were down compared to
December 31, 2010. Nonperforming assets and loans have also declined in
terms of percentage of total assets and loans, respectively. The amount of
additions to nonperforming 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.
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 has remained focused on OREO property disposition activities.
While sales are down year-to-date as compared to the prior year, current
period sales were higher than the same period last year. The largest
balances in the OREO portfolio at September 30, 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 number of OREO properties has increased during the quarter
from the addition of a number of smaller residential and commercial
development properties.
For the quarter ended September 30, 2011, total net loan charge-offs were
down from the quarter ended December 31, 2010, but were up as compared to
third quarter 2010. The Bank continued to recognize impairments on
collateral dependent loans, primarily commercial real estate. The amount
for this period included an $800,000 charge associated with the purchase of
a note from the Bank by a third party.
Third quarter 2011 average total deposits declined 9.8% from the same
quarter in 2010. This decrease was mainly due to the decision to continue
to reduce higher cost time deposit balances, which declined 18.5% 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 third quarter 2011, down
significantly from the same quarter in 2010.
Total brokered deposits were $500,000, compared to $700,000 at December 31,
2010, and $2.1 million at September 30, 2010. Brokered deposits are
currently not being replaced as they mature.
Third quarter 2011 net interest income decreased from the same quarter in
2010 and as compared to the previous calendar quarter. 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 comprise a higher
percentage of the Bank's earning assets.
However, the third quarter 2011 net interest margin increased from third
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 in the third quarter
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.
Total non-interest income for the quarter ended September 30, 2011 was
virtually unchanged as compared to the third quarter of 2010. Service
charge income on deposit accounts in 2011 declined due to a reduction in
the amount of non-sufficient check items from the same period in 2010.
Also, the third quarter of 2010 contained a one-time recovery of a prior
period operating loss of $200,000. Offsetting the above declines were
increases in gains on sales of securities achieved as part of a plan to
reduce the proportion of lower yielding cash-equivalent investments and
increase the proportion of higher-yielding federal government guaranteed
and municipal securities. Investment brokerage fee income also grew in
2011 versus 2010 due to increased sales of higher yield investment products
in a period of historically low deposit interest rates. In addition, the
Bank continues to experience growth in debit card interchange income due to
the increased use of this channel to access deposit services.
Non-interest income for the nine months ended September 30, 2011 increased
as compared to the same period in 2010. The year-to-date increase in
non-interest income was primarily due to gains on sales of securities,
growth in investment brokerage fee income, increases in debit card
interchange income as noted above and gain in death-benefit from bank-owned
life insurance. The increase was partially offset by the decline in
deposit account service charge income as previously noted.
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 may adversely affect noninterest income
in future periods.
Non-interest expense for the three months ended September 30, 2011 declined
compared to third 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 currently experienced 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. Costs associated with OREO and
related third-party loan expenses declined due to a reduction in the number
of such assets reappraised during the period versus the same period in the
prior year. In addition, the Company's FDIC insurance premium expense
declined from the third quarter in 2010 as a result of a recent change in
assessment methodology and the planned deleveraging of the Bank. Occupancy
and equipment expenses were higher in the current period due to one-time
costs associated with the termination of a lease versus third quarter 2010.
Non-interest expense for the nine months ended September 30, 2011,
increased compared to the same period in 2010. The increase was primarily
due to larger dollar amounts of OREO write downs to current market value.
Occupancy and equipment expenses were higher due to increased repairs and
maintenance expenses versus the first nine months of 2010. Reductions in
salary and employee benefits and FDIC insurance premium expense were
achieved in this period as compared to the same period in 2010 for the same
reasons stated above. The Company continues to make progress in its efforts
to lower its cost structure without negative effects on our customers. We
expect our noninterest expenses will continue to be affected by expenses
associated with elevated levels of nonperforming 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 September 30, 2011,
with ratios of 12.71 percent and 11.45 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 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: 25.10.2011 - 13:30 Uhr
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Kategorie:
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