PremierWest Bancorp announced results for the third quarter of 2010 with its total risk-based capital ratios improved to 11.98 percent for Bancorp and 12.14 percent for the bank.
Net interest margin of 4.23 percent was unchanged from the quarter ended June 30, 2010, and had a 59 basis point improvement from the 3.64 percent recorded during the three months ended September 30, 2009.
Loan loss reserve remained strong at $42.1 million or 4.07 percent of gross loans at September 30, 2010, compared to $43.9 million or 4.02 percent at June 30, 2010.
Charge-offs, net of recoveries, were reduced to $3.4 million compared to $5.0 million in the preceding quarter.
Non-performing loans were reduced by $14.6 million to $115.1 million or 11.11 percent of gross loans compared to $129.7 million or 11.88 percent of gross loans at June 30, 2010. Approximately 47 percent of the non-performing loan total at September 30, 2010 is current as to payment of principal and interest despite being on non-accrual status.
Other real estate owned (OREO) and foreclosed assets increased $14.8 million to $29.9 million with sales for the quarter of $1.8 million at a net gain of $147 thousand.
Provision for loan losses of $1.6 million was booked in the current quarter versus $2.4 million for the second quarter of 2010, and $10.3 million for the quarter ended September 30, 2009.
Total deposits of $1.28 billion were down $35.9 million from June 30, 2010, with non-interest bearing demand deposits at 19 percent of total deposits.
Liquidity of $119.0 million in cash and cash equivalents.
Net loss applicable to common shareholders of $1.4 million compared to a net loss of $2.1 million for the second quarter ended June 30, 2010, and a net loss of $5.6 million for the quarter ended September 30, 2009.
Total deposits at period end of $1.28 billion were down $143.1 million from December 31, 2009.
James M. Ford, PremierWest’s president & chief executive officer, stated, “We have continued to focus on improving the credit profile of our loan portfolio. During the most recently completed quarter, our Federal and State regulators completed our annual safety and soundness examination. We believe this examination corroborates our current assessment that, while we have significant work to do on reducing problem assets, we are mitigating risks inherent in our balance sheet and that our credit metrics are trending in the right direction.
“We have seen a decline in loan volumes during the currently completed quarter; but in view of the state of the economy, this was expected. I am pleased that our underlying financial vitality as measured by our net interest margin has remained relatively stable despite the decrease in loans and an increase in lower yielding investment portfolio securities and short-term cash investments.
“We will continue to focus on reducing our non-interest expense run rate and operating more efficiently to meet the realities of the current business environment. A significant portion of the increase in expenses in the past year is associated with managing the high volume of non-performing assets. In addition, the changing regulatory environment with the recently enacted Dodd-Frank Act will require that we review our business model and practices to both streamline our processes and take advantage of the opportunities that will come with the changes occurring in the banking industry.
“For the immediate future, however, our key objectives are to build on the strengthened credit culture and to reduce our non-performing assets to acceptable levels. When we achieve the latter of these goals, we expect to see the return to profitability that our shareholders rightfully expect.”