PremierWest Bancorp Has Strong Growth for Its First Quarter and Closes Of the Timberline Acquisition

Apr 16, 2001, 01:00 ET from PremierWest Bancorp

    MEDFORD, Ore., April 16 /PRNewswire/ -- PremierWest Bancorp
 (OTC Bulletin Board:   PRWT) announced today its operating performance for the
 first quarter of 2001 with a slight increase in net earnings to $650,000
 ($0.07 per dilutive share) compared to $622,000 ($0.07 per dilutive share) for
 the same three-month period in 2000.  This performance continued even though
 there was a 150 basis point drop in the prime rate during the first quarter of
 2001.  Deposits' pricing was not reduced until late in the first quarter to
 not diminish PremierWest's strong customer deposit base.  These factors caused
 a tightening of the interest margins.
     Management and the staff of PremierWest have been extremely busy merging
 the operations of Douglas National Bank in May 2000 with Bank of Southern
 Oregon (now PremierWest Bank), conversion of the bank's data processing system
 in July 2000, purchasing a consumer finance company in October 2000, and
 purchasing a real estate mortgage division in December 2000. Effective
 Monday, April 16, 2001, PremierWest has now also completed its merger with
 Timberline Bancshares, Inc. (OTC Bulletin Board:   TBLS), and its wholly owned
 subsidiary, Timberline Community Bank with approximately $98 million is total
 assets.
     The following discussion excludes Timberline's total assets, loans and
 deposits and its operating performance for the reporting periods.
 
     Loan Growth, 24%; Deposit Growth, 26%; Equity Growth, 16%
     With continued strong loan demand, loans increased $46 million since the
 first quarter of 2000.  New customer accounts and movement from the investment
 sector to interest-bearing deposits increased total deposits by $61 million
 during this time.  With net loans at $239 million and total deposits at over
 $299 million, PremierWest has an 80% loan to deposit ratio.  "We have over
 $20 million in federal funds sold at quarter end providing us the room to
 continue our loan growth," stated CEO and President of PremierWest,
 John Anhorn.  "This growth has not been by acquisition but with new
 customers."  By growing both loans and deposits, total assets are now over
 $348 million, a 12% increase since March 31, 2000.
     PremierWest's loan portfolio quality remains sound with similar amounts
 added to the allowance for loan losses during each of the comparable quarters.
 Non-performing assets to total assets was 2.8% at year end 2000 improving to
 1.84% as of first quarter ended 2001.  Pre-merger non-performing loans on the
 Bank of Southern Oregon portfolio have been reduced, however, there are a few
 new non-performing loans from the Douglas National Bank portfolio that are
 being firmly dealt with by management.  PremierWest believes it has adequate
 collateral to limit potential losses along with its allowance for loan losses
 of $3.6 million, or 1.5% of gross loans.
     Stockholders' equity increased by $4.6 million to $33.8 million at quarter
 end.  With significant growth in equity and total assets during the last
 four quarters, annualized return on average equity was down to 7.80% for 2001
 from 8.57% for the comparable quarter of 2000 while return on average assets
 was 0.77% for 2001 compared to 0.83% for 2000.
 
     Net Interest Income Increased 5%
     While total interest income increased 16% as a result of higher loan
 volume, it was offset by a prime rate decrease of 150 basis points since the
 first of the year 2001.  "With the increase in customer deposits and to
 maintain its customer base, PremierWest did not immediately adjust its
 interest-bearing deposits as a result of the prime rate decrease," said
 Bruce McKee, PremierWest's Chief Financial Officer.  "In addition,
 certificates of deposit do not adjust immediately as prime rate changes."  The
 result of these factors was an increase in interest expense of 33% for the
 first quarter of 2001 as compared to the prior year quarter resulting in a
 decline in net interest margin of 39 basis points.  John Anhorn stated,
 "Though net interest margins have been negatively impacted during this
 first quarter, PremierWest's strategy of expanding its customer base is
 anticipated to result in higher net interest margins and returns on average
 equity over the coming quarters."
 
     Non-interest Income Increased 71%
     Non-interest income increased by $292,000 mostly as a result of its newly
 acquired mortgage loan division that contributed approximately $253,000 during
 the first quarter of 2001 compared to $65,000 earned during the first quarter
 of 2000.  Rich Hieb, PremierWest's Chief Operating Officer said,  "With
 declining mortgage interest rates customers refinanced and bought new homes
 through PremierWest Mortgage Division.  Over $23 million in single and
 multi-family residential mortgage loans were generated and sold during the
 first quarter of 2001."
     With increases in asset growth, assimilation of new bank operations and in
 the real estate mortgage and consumer finance areas, salaries and employee
 benefits rose about $336,000 for the first quarter of 2001 compared to the
 same period of 2000.  Occupancy expense also went up by $67,000 with the
 addition of upgraded computer equipment and new branch locations added during
 this last four quarters.  Other non-interest expense increased by
 approximately $73,000 as a result of similar factors.
 
     Completion of the Timberline Community Bank Merger into PremierWest Bank
     Effective Monday, April 16, 2001, PremierWest expanded into
 Northern California with its merger with Timberline.  Timberline Community
 Bank, the wholly owned subsidiary of Timberline Bancshares, Inc., combined
 operations into PremierWest Bank, which is PremierWest Bancorp's wholly owned
 subsidiary.  Based on March 31, 2001 reports, PremierWest's combined total
 assets are now $446 million with loans of $295 million and deposits of
 $388 million.
     Shareholders of Timberline Bancshares will receive cash, shares of
 PremierWest common stock, or a combination of cash and shares equal to
 $13.50 for each share of Timberline stock held.  Based upon the merger
 agreement and elections made by Timberline shareholders, approximately
 1.1 million new shares of PremierWest common stock will be issued to
 Timberline shareholders, bringing PremierWest's total shares outstanding to
 approximately 9.7 million.  Cash of approximately $6 million will be paid for
 the balance of the Timberline shares.
     John Anhorn, CEO and President of PremierWest stated, "We are very excited
 to complete the merger and add eight new locations in Siskiyou County,
 California.  We continue to develop and grow the bank according to our plan."
 
     Continued Expansion
     In March 2001, PremierWest opened a temporary full-service branch in
 Grants Pass, Oregon.  Construction of the permanent branch in Grants Pass has
 begun with completion expected this summer.  In addition, construction has
 also begun on the annex to its headquarters facility on Medford's Airport
 Road.
     PremierWest will be continuing its expansion as opportunities arise with
 its mission to be "The Community Bank."  And, its philosophy with customers of
 'People doing business with people' provides a niche-banking concept to the
 future as evidenced by PremierWest's continued growth.
     PremierWest Bancorp is the parent company for PremierWest Bank with
 branches located in Oregon at 1455 McAndrews Road, Medford; 2600 E. Barnett
 Road, Medford; 3369 Crater Lake Highway, Medford; 300 E. Pine, Central Point;
 257 2nd Street, Drain; 350 N.E. Garden Valley, Roseburg; 19421 N. Umpqua
 Highway, Glide; 555 SE Kane, Roseburg; 2665 NW van Pelt, Roseburg;
 2030 Stewart Parkway in Roseburg; 1000 W. Central, Sutherlin; 40 N.W.
 Glenheart, Winston; 221 NE 7th Street, Grants Pass; and Loan Production and
 Administration offices located at 503 Airport Road, Medford.  PremierWest Bank
 is the parent company of PremierWest Investment Company and Premier Finance
 Company, now opened in Portland, Oregon.  Motor Investment Company, a division
 of PremierWest Bank, is located in Klamath Falls, Oregon.  PremierWest
 Mortgage (formerly Leader Mortgage) is a division of PremierWest Bank with
 offices located in Klamath Falls, Grants Pass and Medford, Oregon.
     PremierWest Bancorp stock is traded on the OTC Bulletin Board under the
 symbol PRWT.  The two primary market makers in PRWT stock are A.G. Edwards
 (541-779-4500 or 800-453-8899) and D.A. Davidson & Company (503-603-3051 or
 800-755-9643).  Some of the other brokerage firms trading PRWT stock include
 Merrill Lynch (541-858-8815), Paine Webber (541-773-7773), Salomon-Smith
 Barney (541-779-5010) and Strand Atkinson (541-772-6826).  For more
 information about PremierWest Bancorp, please call our investor line at
 541-618-5970 or the Administration main line at 541-618-6003.
     This report contains certain forward-looking statements that are subject
 to risks and uncertainties that could cause actual results to differ
 materially from those reflected in those statements, which are representative
 only on the date hereof. These forward-looking statements are based on
 management's assumptions and projections, and are sometimes identifiable by
 the use of the words, "expect to," "plan," "will," "believe" and words of a
 similar predictive nature.  Because management's assumptions and projections
 are based on anticipation of future events, you should not place undue
 emphasis on forward-looking statements.  You should anticipate that our actual
 performance may vary from these projections, and these variations may be
 material and adverse.  You should not rely solely on the forward-looking
 statements in evaluating an investment or prospective investment, and you
 should consider all uncertainties and risks discussed in the filings of
 PremierWest Bancorp with the Securities and Exchange Commission (SEC).
 PremierWest undertakes no obligation to update any forward-looking statements
 contained herein.
 
                  Selected Consolidated Financial Information
                (In thousands, except per share data and ratios)
                                  (Unaudited)
 
                                            Three-Months Ended March 31,
 
       Income Statement Data            2001            2000      % Change
       Total interest income         $ 6,853          $5,906         16.0%
       Total interest expense          3,123           2,346         33.1%
       Net interest income             3,730           3,560          4.8%
       Loan loss provision               162             186        -12.9%
       Net income after provision
        for loan losses                3,568           3,374          5.7%
       Total non-interest income         706             414         70.5%
       Total non-interest expense      3,300           2,824         16.9%
       Income before taxes               974             964          1.0%
       Provision for income taxes        324             342         -5.3%
       Net income                       $650           $ 622          4.5%
 
     Share Data
       Earnings per common share data
        Basic                          $0.08           $0.07         14.3%
        Diluted                        $0.07           $0.07          0.0%
       Book value per common share     $3.93           $3.40         15.5%
       Basic average shares
        outstanding                    8,599           8,350            --
       Fully diluted shares
        outstanding                    8,701           8,453            --
       Total common shares outstanding
        at period end                  8,599           8,574            --
 
     Balance Sheet Data (period end)
       Total cash and equivalents    $31,586         $15,770        100.3%
       Total investment
        securities, net               60,468          85,994        -29.7%
       Loans and discounts, net      238,504         192,999         23.6%
       Premises and Equipment, net    11,158          10,267          8.7%
       Other assets                    6,634           6,273          5.8%
       Total assets                 $348,350        $311,303         11.9%
 
       Total deposits               $299,494        $238,615         25.5%
       Other liabilities              15,052          43,497        -65.4%
       Total liabilities             314,546         282,112         11.5%
       Stockholders' equity           33,804          29,191         15.8%
       Total Liabilities
        and Equity                  $348,350       $ 311,303         11.9%
 
 
     Selected Ratios
       Return on Average Assets (A)                     0.77%          0.83%
       Return on Average Equity (A)                     7.80%          8.57%
       Equity to Total Assets                           9.70%          9.38%
       Net Loans to Deposits                           79.64%         80.88%
       Net Interest Margin                              4.83%          5.22%
       Efficiency Ratio (B)                            74.39%         71.06%
       Net Charge-offs (Recoveries) to
        Average Loans                                   0.00%          0.08%
 
       Allowance for Loan Losses to End
        of Period Loans                                 1.50%          1.55%
       Non-Performing Assets to Total Assets (C)        1.84%          1.25%
       Allowance for Loan Losses to
        Non-Performing Loans                           56.60%         78.08%
       Non-Performing Assets to Equity and
        Allowance for Loan Losses                      17.13%         12.10%
 
        Notes:
        (A)  Annualized
        (B)  Efficiency ratio is non-interest expense divided by (net interest
             income plus non-interest income).
        (C)  Non-performing assets consist of loans contractually past due
             90 days or more, nonaccrual loans and other real estate owned.
 
 

SOURCE PremierWest Bancorp
    MEDFORD, Ore., April 16 /PRNewswire/ -- PremierWest Bancorp
 (OTC Bulletin Board:   PRWT) announced today its operating performance for the
 first quarter of 2001 with a slight increase in net earnings to $650,000
 ($0.07 per dilutive share) compared to $622,000 ($0.07 per dilutive share) for
 the same three-month period in 2000.  This performance continued even though
 there was a 150 basis point drop in the prime rate during the first quarter of
 2001.  Deposits' pricing was not reduced until late in the first quarter to
 not diminish PremierWest's strong customer deposit base.  These factors caused
 a tightening of the interest margins.
     Management and the staff of PremierWest have been extremely busy merging
 the operations of Douglas National Bank in May 2000 with Bank of Southern
 Oregon (now PremierWest Bank), conversion of the bank's data processing system
 in July 2000, purchasing a consumer finance company in October 2000, and
 purchasing a real estate mortgage division in December 2000. Effective
 Monday, April 16, 2001, PremierWest has now also completed its merger with
 Timberline Bancshares, Inc. (OTC Bulletin Board:   TBLS), and its wholly owned
 subsidiary, Timberline Community Bank with approximately $98 million is total
 assets.
     The following discussion excludes Timberline's total assets, loans and
 deposits and its operating performance for the reporting periods.
 
     Loan Growth, 24%; Deposit Growth, 26%; Equity Growth, 16%
     With continued strong loan demand, loans increased $46 million since the
 first quarter of 2000.  New customer accounts and movement from the investment
 sector to interest-bearing deposits increased total deposits by $61 million
 during this time.  With net loans at $239 million and total deposits at over
 $299 million, PremierWest has an 80% loan to deposit ratio.  "We have over
 $20 million in federal funds sold at quarter end providing us the room to
 continue our loan growth," stated CEO and President of PremierWest,
 John Anhorn.  "This growth has not been by acquisition but with new
 customers."  By growing both loans and deposits, total assets are now over
 $348 million, a 12% increase since March 31, 2000.
     PremierWest's loan portfolio quality remains sound with similar amounts
 added to the allowance for loan losses during each of the comparable quarters.
 Non-performing assets to total assets was 2.8% at year end 2000 improving to
 1.84% as of first quarter ended 2001.  Pre-merger non-performing loans on the
 Bank of Southern Oregon portfolio have been reduced, however, there are a few
 new non-performing loans from the Douglas National Bank portfolio that are
 being firmly dealt with by management.  PremierWest believes it has adequate
 collateral to limit potential losses along with its allowance for loan losses
 of $3.6 million, or 1.5% of gross loans.
     Stockholders' equity increased by $4.6 million to $33.8 million at quarter
 end.  With significant growth in equity and total assets during the last
 four quarters, annualized return on average equity was down to 7.80% for 2001
 from 8.57% for the comparable quarter of 2000 while return on average assets
 was 0.77% for 2001 compared to 0.83% for 2000.
 
     Net Interest Income Increased 5%
     While total interest income increased 16% as a result of higher loan
 volume, it was offset by a prime rate decrease of 150 basis points since the
 first of the year 2001.  "With the increase in customer deposits and to
 maintain its customer base, PremierWest did not immediately adjust its
 interest-bearing deposits as a result of the prime rate decrease," said
 Bruce McKee, PremierWest's Chief Financial Officer.  "In addition,
 certificates of deposit do not adjust immediately as prime rate changes."  The
 result of these factors was an increase in interest expense of 33% for the
 first quarter of 2001 as compared to the prior year quarter resulting in a
 decline in net interest margin of 39 basis points.  John Anhorn stated,
 "Though net interest margins have been negatively impacted during this
 first quarter, PremierWest's strategy of expanding its customer base is
 anticipated to result in higher net interest margins and returns on average
 equity over the coming quarters."
 
     Non-interest Income Increased 71%
     Non-interest income increased by $292,000 mostly as a result of its newly
 acquired mortgage loan division that contributed approximately $253,000 during
 the first quarter of 2001 compared to $65,000 earned during the first quarter
 of 2000.  Rich Hieb, PremierWest's Chief Operating Officer said,  "With
 declining mortgage interest rates customers refinanced and bought new homes
 through PremierWest Mortgage Division.  Over $23 million in single and
 multi-family residential mortgage loans were generated and sold during the
 first quarter of 2001."
     With increases in asset growth, assimilation of new bank operations and in
 the real estate mortgage and consumer finance areas, salaries and employee
 benefits rose about $336,000 for the first quarter of 2001 compared to the
 same period of 2000.  Occupancy expense also went up by $67,000 with the
 addition of upgraded computer equipment and new branch locations added during
 this last four quarters.  Other non-interest expense increased by
 approximately $73,000 as a result of similar factors.
 
     Completion of the Timberline Community Bank Merger into PremierWest Bank
     Effective Monday, April 16, 2001, PremierWest expanded into
 Northern California with its merger with Timberline.  Timberline Community
 Bank, the wholly owned subsidiary of Timberline Bancshares, Inc., combined
 operations into PremierWest Bank, which is PremierWest Bancorp's wholly owned
 subsidiary.  Based on March 31, 2001 reports, PremierWest's combined total
 assets are now $446 million with loans of $295 million and deposits of
 $388 million.
     Shareholders of Timberline Bancshares will receive cash, shares of
 PremierWest common stock, or a combination of cash and shares equal to
 $13.50 for each share of Timberline stock held.  Based upon the merger
 agreement and elections made by Timberline shareholders, approximately
 1.1 million new shares of PremierWest common stock will be issued to
 Timberline shareholders, bringing PremierWest's total shares outstanding to
 approximately 9.7 million.  Cash of approximately $6 million will be paid for
 the balance of the Timberline shares.
     John Anhorn, CEO and President of PremierWest stated, "We are very excited
 to complete the merger and add eight new locations in Siskiyou County,
 California.  We continue to develop and grow the bank according to our plan."
 
     Continued Expansion
     In March 2001, PremierWest opened a temporary full-service branch in
 Grants Pass, Oregon.  Construction of the permanent branch in Grants Pass has
 begun with completion expected this summer.  In addition, construction has
 also begun on the annex to its headquarters facility on Medford's Airport
 Road.
     PremierWest will be continuing its expansion as opportunities arise with
 its mission to be "The Community Bank."  And, its philosophy with customers of
 'People doing business with people' provides a niche-banking concept to the
 future as evidenced by PremierWest's continued growth.
     PremierWest Bancorp is the parent company for PremierWest Bank with
 branches located in Oregon at 1455 McAndrews Road, Medford; 2600 E. Barnett
 Road, Medford; 3369 Crater Lake Highway, Medford; 300 E. Pine, Central Point;
 257 2nd Street, Drain; 350 N.E. Garden Valley, Roseburg; 19421 N. Umpqua
 Highway, Glide; 555 SE Kane, Roseburg; 2665 NW van Pelt, Roseburg;
 2030 Stewart Parkway in Roseburg; 1000 W. Central, Sutherlin; 40 N.W.
 Glenheart, Winston; 221 NE 7th Street, Grants Pass; and Loan Production and
 Administration offices located at 503 Airport Road, Medford.  PremierWest Bank
 is the parent company of PremierWest Investment Company and Premier Finance
 Company, now opened in Portland, Oregon.  Motor Investment Company, a division
 of PremierWest Bank, is located in Klamath Falls, Oregon.  PremierWest
 Mortgage (formerly Leader Mortgage) is a division of PremierWest Bank with
 offices located in Klamath Falls, Grants Pass and Medford, Oregon.
     PremierWest Bancorp stock is traded on the OTC Bulletin Board under the
 symbol PRWT.  The two primary market makers in PRWT stock are A.G. Edwards
 (541-779-4500 or 800-453-8899) and D.A. Davidson & Company (503-603-3051 or
 800-755-9643).  Some of the other brokerage firms trading PRWT stock include
 Merrill Lynch (541-858-8815), Paine Webber (541-773-7773), Salomon-Smith
 Barney (541-779-5010) and Strand Atkinson (541-772-6826).  For more
 information about PremierWest Bancorp, please call our investor line at
 541-618-5970 or the Administration main line at 541-618-6003.
     This report contains certain forward-looking statements that are subject
 to risks and uncertainties that could cause actual results to differ
 materially from those reflected in those statements, which are representative
 only on the date hereof. These forward-looking statements are based on
 management's assumptions and projections, and are sometimes identifiable by
 the use of the words, "expect to," "plan," "will," "believe" and words of a
 similar predictive nature.  Because management's assumptions and projections
 are based on anticipation of future events, you should not place undue
 emphasis on forward-looking statements.  You should anticipate that our actual
 performance may vary from these projections, and these variations may be
 material and adverse.  You should not rely solely on the forward-looking
 statements in evaluating an investment or prospective investment, and you
 should consider all uncertainties and risks discussed in the filings of
 PremierWest Bancorp with the Securities and Exchange Commission (SEC).
 PremierWest undertakes no obligation to update any forward-looking statements
 contained herein.
 
                  Selected Consolidated Financial Information
                (In thousands, except per share data and ratios)
                                  (Unaudited)
 
                                            Three-Months Ended March 31,
 
       Income Statement Data            2001            2000      % Change
       Total interest income         $ 6,853          $5,906         16.0%
       Total interest expense          3,123           2,346         33.1%
       Net interest income             3,730           3,560          4.8%
       Loan loss provision               162             186        -12.9%
       Net income after provision
        for loan losses                3,568           3,374          5.7%
       Total non-interest income         706             414         70.5%
       Total non-interest expense      3,300           2,824         16.9%
       Income before taxes               974             964          1.0%
       Provision for income taxes        324             342         -5.3%
       Net income                       $650           $ 622          4.5%
 
     Share Data
       Earnings per common share data
        Basic                          $0.08           $0.07         14.3%
        Diluted                        $0.07           $0.07          0.0%
       Book value per common share     $3.93           $3.40         15.5%
       Basic average shares
        outstanding                    8,599           8,350            --
       Fully diluted shares
        outstanding                    8,701           8,453            --
       Total common shares outstanding
        at period end                  8,599           8,574            --
 
     Balance Sheet Data (period end)
       Total cash and equivalents    $31,586         $15,770        100.3%
       Total investment
        securities, net               60,468          85,994        -29.7%
       Loans and discounts, net      238,504         192,999         23.6%
       Premises and Equipment, net    11,158          10,267          8.7%
       Other assets                    6,634           6,273          5.8%
       Total assets                 $348,350        $311,303         11.9%
 
       Total deposits               $299,494        $238,615         25.5%
       Other liabilities              15,052          43,497        -65.4%
       Total liabilities             314,546         282,112         11.5%
       Stockholders' equity           33,804          29,191         15.8%
       Total Liabilities
        and Equity                  $348,350       $ 311,303         11.9%
 
 
     Selected Ratios
       Return on Average Assets (A)                     0.77%          0.83%
       Return on Average Equity (A)                     7.80%          8.57%
       Equity to Total Assets                           9.70%          9.38%
       Net Loans to Deposits                           79.64%         80.88%
       Net Interest Margin                              4.83%          5.22%
       Efficiency Ratio (B)                            74.39%         71.06%
       Net Charge-offs (Recoveries) to
        Average Loans                                   0.00%          0.08%
 
       Allowance for Loan Losses to End
        of Period Loans                                 1.50%          1.55%
       Non-Performing Assets to Total Assets (C)        1.84%          1.25%
       Allowance for Loan Losses to
        Non-Performing Loans                           56.60%         78.08%
       Non-Performing Assets to Equity and
        Allowance for Loan Losses                      17.13%         12.10%
 
        Notes:
        (A)  Annualized
        (B)  Efficiency ratio is non-interest expense divided by (net interest
             income plus non-interest income).
        (C)  Non-performing assets consist of loans contractually past due
             90 days or more, nonaccrual loans and other real estate owned.
 
 SOURCE  PremierWest Bancorp