PREMIERWEST BANCORP - 10-Q Quarterly Report

/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

503 Airport Road
P.O. Box 40
Medford, Oregon 97504
(Address of principal executive offices) (Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes /X / No / /

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
14,566,033 shares as of July 30, 2004

This report includes forward-looking statements within the meaning of the "safe-harbor" provisions of Sections 21D and 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of PremierWest Bancorp's (the Company) management and on assumptions made by management on the basis of information currently available. Other than for statements of historical fact, all statements about our financial position and results of operations, business strategy and management's plans and objectives for future operations are forward-looking statements. When used in this report, the words "anticipate," "believe," "estimate," "expect," and "intend" and words or phrases of similar meaning, as they relate to the Company or management, are intended in part to help identify forward-looking statements. Examples of forward-looking statements include, but are not limited to statements that include projections or management's expectations for revenues, income or expenses, earnings per share, capital expenditures, dividends, capital structure and other financial items; statements of the plans and objectives of the Company, its management or its board of directors, including the introduction of new products or services, plans for expansion, acquisitions or future growth and estimates or predictions of actions by customers, vendors, competitors or regulatory authorities; statements about future economic performance; and statements of assumptions underlying other statements about the Company and its business. Although management believes that the expectations reflected in forward-looking statements are reasonable, we can make no assurance that such expectations will prove correct. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties include our ability to effectively integrate our merger with Mid Valley Bank; factors that might increase the costs or delay or diminish the expected benefits of that merger; factors that might inhibit our ability to maintain or expand our market share or our net interest margins; and factors that could limit or delay implementation of our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; localized economic conditions and events that disproportionately affect our business; and general trends in the banking industry, interest rate economy and regulatory environment. In addition, we face various risks inherent in the banking industry relating to collectibility of loans and changes in interest rates. Other risks include those identified from time to time in our past and future filings with the Securities and Exchange Commission. Note that this list of risks is not exhaustive, and risks identified are applicable as of the date made and cannot be updated.


Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 2.	Changes in Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matters to a Vote of Securities Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits and Reports on Form 8-K	21
SIGNATURES		22

PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in 000’s)


			(Unaudited)			(Audited)
			June 30,			December 31,
			2004			2003

Cash and cash equivalents:
Cash and due from banks		$	34,661		$	18,949
Federal funds sol d			40,650			31,400


Total cash and cash equivalents			75,311			50,349


Interest-bearing deposits with Federal Home Loan Bank			28			5

Investments:
Investment securities available-for-sale, at fair market value			23,183			23,351
Federal Home Loan Bank stock			1,828			1,792
Other equity investments			277			5

Total Investments			25,288			25,148

Loans, net of allowance for loan losses and deferred loan fees			604,707			452,972
Premises and equipment, net of accumulated depreciation
and amortization			26,154			21,784
Goodwill, net of amortization			20,079			6,633
Accrued interest and other assets			24,003			14,430


TOTAL ASSETS	$		775,570	$		571,321


LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest-bearing demand		$	169,986		$	121,467
Savings and interest-bearing demand			307,566			227,267
Time			182,878			127,012


Total deposits			660,430			475,746

Federal Home Loan Bank borrowings			22,738			23,058
Securities sold under agreements to repurchase			264			3,401
Accrued interest and other liabilities			6,988			4,365


Total liabilities			690,420			506,570


COMMITMENTS AND CONTINGENCIES (Note 6)

SHAREHOLDERS' EQUITY
Series A Preferred Stock, no par value, 1,000,000 shares
authorized, 11,000 shares issued and outstanding			9,590			9,590
Common stock - no par value; 20,000,000 shares authorized;
and 14,564,354 and 12,162,026 shares issued and outstanding
in 2004 and 2003, respectively			62,213			38,260
Retained earnings			13,192			16,463
Accumulated other comprehensive income, net of taxes			155			438


Total shareholders' equity			85,150			64,751


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	775,570		$	571,321

PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in 000’s, Except for Earnings per Share Data)
(UNAUDITED)


		FOR THE THREE MONTHS ENDED				FOR THE SIX MONTHS ENDED

		June 30,		June 30,		June 30,		June 30,
		2004		2003		2004		2003

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	9,994	$	7,420	$	19,049	$	14,753
Taxable interest on investment securities		81		205		250		450
Nontaxable interest on investment securities		129		155		280		318
Interest on federal funds sold		120		120		246		201
Dividends on Federal Home Loan Bank stock
an d other equity investments		22		23		41		51

Total interest and dividend income		10,346		7,923		19,866		15,773

INTEREST EXPENSE

Interest-bearing demand and savings		491		439		935		875
Time		924		1,018		1,853		2,102
Federal funds purchased and securities sold under
agreements to repurchase		2		23		5		45
Federal Home Loan Bank and other borrowings		179		206		360		414

Total interest expense		1,596		1,686		3,153		3,436

NET INTEREST INCOME		8,750		6,237		16,713		12,337
LOAN LOSS PROVISION		200		300		500		600

Net interest income after loan loss provision		8,550		5,937		16,213		11,737

NONINTEREST INCOME
Service charges on deposits accounts		663		535		1,253		936
Mortgage loan brokerage and other fees		326		519		579		973
Investment brokerage and annuity fees		243		199		500		372
Other commissions and fees		316		206		614		402
Gains on sales of investment securities, net		1		11		1		26
Other noninterest income		147		106		300		223

Total noninterest income		1,696		1,576		3,247		2,932

NONINTEREST EXPENSE
Salaries and employee benefits		3,958		2,958		7,705		6,070
Net occupancy and equipment		1,263		982		2,429		1,977
Communications		372		284		694		520
Professional fees		254		151		428		275
Advertising		231		166		396		292
Other		1,029		682		1,929		1,368

Total noninterest expense		7,107		5,223		13,581		10,502

INCOME BEFORE PROVISION FOR INCOME TAXES		3,139		2,290		5,879		4,167
PROVISION FOR INCOME TAXES		1,036		769		1,940		1,398

NET INCOME	$	2,103	$	1,521	$	3,939	$	2,769

Earnings per common share:
Basic	$	0.14	$	0.12	$	0.27	$	0.22

Diluted	$	0.13	$	0.12	$	0.25	$	0.22

PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in 000’s)
(UNAUDITED)


												Accumulated
										Unearned		Other		Total
	Preferred Stock			Common Stock				Retained		ESOP		Comprehensive		Shareholders'	Comprehensive
	Shares		Amount	Shares		Amount		Earnings		Compensation		Income		Equity	Income

	(in thousands, except share amounts)
BALANCE - JANUARY 1, 2003	-	$	-	11,567,559	$	33,875	$	14,772	$	(16)	$	541	$	49,172
Comprehensive income:
Net income						-		2,769		-		-		2,769	$ 2,769
Unrealized gains
on investment securities
available-for-sale of $124


OREGON		93-1282171
(State of Incorporation)		(I.R.S. Employer
		Identification Number)