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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
     

[Mark One] 

   
[X]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
 
for the quarterly period ended March 31, 2005
     
[  ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
         
    For the transition period from    to  
 
Commission File Number: 000-50332
 

PREMIERWEST BANCORP

(Exact name of registrant as specified in its charter)

OREGON    93-1282171 
(State or other jurisdiction of    (I.R.S. Employer Identification Number) 
incorporation or organization)     

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

(541) 618-6003
 (Registrant's telephone number, including area 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:
                      Common stock, no par value: 14,620,572 shares as of April 22, 2005

Disclosure Regarding Forward-Looking Statements

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 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.

2

Form 10-Q
Table of Contents
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   17 
Item 4.    Controls and Procedures    17 
Part II    OTHER INFORMATION     
Item 1.    Legal Proceedings    18 
Item 2.    Changes in Securities and Use of Proceeds    18 
Item 3.    Defaults Upon Senior Securities    18 
Item 4.    Submission of Matters to a Vote of Securities Holders    18 
Item 5.    Other Information    18 
Item 6.    Exhibits    19 
SIGNATURES    20 
 

3

     PART I. FINANCIAL INFORMATION                 
 
     ITEM 1. FINANCIAL STATEMENTS                 
 
 
PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in 000's)
(Unaudited)
ASSETS                 
 
        March 31,    December 31, 
        2005    2004 
Cash and cash equivalents:                 
       Cash and due from banks    $    23,362    $    21,084 
       Federal funds sold        1,700        15,350 
                       Total cash and cash equivalents        25,062        36,434 
Interest-bearing deposits with Federal Home Loan Bank        18        21 
Investments:                 
       Investment securities available-for-sale, at fair market value        6,422        6,515 
       Investment securities held-to-maturity, at amortized cost        10,881        11,087 
       Restricted equity securities        1,605        1,599 
               Total investments        18,908        19,201 
 
Mortgage loans held-for-sale, at cost, which approximates market        300        533 
Loans, net of allowance for loan losses and deferred loan fees        721,548        678,594 
               Total loans        721,848        679,127 
 
Premises and equipment, net of accumulated depreciation                 
       and amortization        29,204        27,922 
Core deposit intangibles, net of amortization        2,874        2,997 
Goodwill        19,566        19,566 
Accrued interest and other assets        18,570        19,177 
TOTAL ASSETS    $    836,050    $    804,445 
 
LIABILITIES AND SHAREHOLDERS' EQUITY             
LIABILITIES                 
       Deposits:                 
               Demand    $    189,772    $    183,845 
               Interest-bearing demand and savings        340,205        324,834 
               Time        187,919        180,306 
                       Total deposits        717,896        688,985 
 
       Federal Home Loan Bank borrowings        2,259        2,419 
       Junior subordinated debentures        15,464        15,464 
       Accrued interest and other liabilities        7,283        6,997 
                       Total liabilities        742,902        713,865 
COMMITMENTS AND CONTINGENCIES (Note 7)                 
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;                 
               14,620,157 shares issued and outstanding (14,612,332 in 2004)        62,539        62,482 
       Retained earnings        20,802        18,224 
       Accumulated other comprehensive income, net of taxes        217        284 
                       Total shareholders' equity        93,148        90,580 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $    836,050    $    804,445 
 
 
                 

See accompanying notes. 

4

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

                                        For the Three Months Ended March 31,   

           

2005 

 

   2004   

 
INTEREST AND DIVIDEND INCOME                     
       Interest and fees on loans                       

$ 

  12,251    $    9,055 
       Interest on investments:                     
               Taxable            56        170 
               Nontaxable            109        151 
       Interest on federal funds sold            76        126 
       Other interest and dividends            4        18 
 
               Total interest and dividend income            12,496        9,520 
 
INTEREST EXPENSE                     
       Deposits:                     
               Interest-bearing demand and savings            935        446 
               Time            1,128        927 
       Federal funds purchased and securities sold under                 
               agreements to repurchase            3        3 
       Federal Home Loan Bank borrowings            252        181 
 
               Total interest expense            2,318        1,557 
 
               Net Interest Income            10,178        7,963 
LOAN LOSS PROVISION            150        300 
 
               Net interest income after loan loss provision        10,028        7,663 
NONINTEREST INCOME                     
       Service charges on deposit accounts            647        612 
       Mortgage loan brokerage and other fees            261        253 
       Investment brokerage and annuity fees            301        258 
       Other commissions and fees            331        267 
       Other noninterest income            219        161 
 
               Total noninterest income            1,759        1,551 
 
NONINTEREST EXPENSE                     
       Salaries and employee benefits            4,578        3,748 
       Net occupancy and equipment            1,368        1,167 
       Communications            372        323 
       Professional fees            321        162 
       Advertising            138        165 
       Other            970        910 
 
               Total noninterest expense            7,747        6,475 
 
INCOME BEFORE PROVISION FOR INCOME TAXES        4,040        2,739 
PROVISION FOR INCOME TAXES            1,393        904 
 
NET INCOME        

$ 

  2,647    $    1,835 
 
EARNINGS PER COMMON SHARE:                     
 BASIC        

$ 

  0.18    $    0.13 
 
 DILUTED        

$ 

  0.17    $    0.12 
 

See accompanying notes. 

5

   

 PREMIERWEST BANCORP AND SUBSIDIARY   

                           
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY                             
            (in thousands, except share amounts)                                     
                (Unaudited)                                         
 
                                                         
                                        Accumulated                 
   

Preferred Stock 

  Common Stock                  Other        Total     

Retained

 Comprehensive Shareholders' 

Comprehensive
   

Shares 

     

 Amount 

 

Shares 

     

Amount 

     

Earnings 

      Income (Loss)        Equity   

  Income 

 
 
BALANCE, January 1, 2004    11,000    $    9,590    12,162,026    $    38,260    $    16,463    $    438    $    64,751         
 
     Comprehensive income:                                                         
             Net income                                1,835                1,835    $    1,835 
             Unrealized gain                                                         
                     on investment securities                                                         
                     available-for-sale of $47                                                         
                     (net of taxes of $24)    -        -    -        -        -        47        47        47 
             Comprehensive income                                                    $    1,882 
     Common stock issued to                                                         
             shareholders of                                                         
             Mid Valley Bank    -        -    1,697,473        16,805        -        -        16,805         
     Preferred stock dividend declared    -        -    -        -        (68)        -        (68)         
     Stock options exercised    -        -    7,680        52        -        -        52         
     Income tax benefit of stock options                                                         
             exercised    -        -    -        9        -        -        9         
BALANCE, March 31, 2004    11,000        9,590    13,867,179        55,126        18,230        485        83,431         
 
BALANCE - January 1, 2005    11,000    $    9,590    14,612,332    $    62,482    $    18,224    $    284    $    90,580         
 
     Comprehensive income:                                                         
             Net income                                2,647                2,647    $    2,647 
             Other comprehensive income -                                                         
                     Amortization of unrealized                                                         
                     gains for investment securities                                                         
                     transferred to held-to-maturity                                                         
                     of $31 (net of taxes of $18)    -        -    -        -        -        (31)        (31)        (31) 
 
             Unrealized losses on investment                                                         
                     securities available-for-sale of                                                         
                     $36 (net of taxes of $18)    -        -    -        -        -        (36)        (36)        (36) 
             Comprehensive income                                                    $    2,580 
     Preferred stock dividend declared    -        -   

- 

     

- 

      (69)        -        (69)         
     Stock options exercised    -        -    7,825        39                -        39         
     Income tax benefit of stock options                                                         
             exercised    -        -    -