PremierWest Bancorp 2011 Annual Report

Transcription

1 PremierWest Bancorp 2011 Annual Report

2 People doing business with people is at the heart of our culture... We re Here for Our Customers, First & Foremost Face to face. One to one. The value of loyalty and long-term relationships cannot be overstated. We Believe in Our Communities We dig in to help our communities to be prosperous and better places to live and work. We re Committed to Strength & Soundness Our customers, communities, shareholders, and employees count on us, and we deliver on our promises. Table of Contents The Year in Review 3-4 Premier Territory 5-6 Customer Profiles 7-12 Community Involvement Managing Committee 15 Board of Directors 16 Financial Services 17 PremierWest Locations 18 1 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

3 Dear Shareholders: The Year in Review On behalf of the Board of Directors and the management team, we want to extend our sincere appreciation for your continued support of PremierWest Bancorp marked an extension of the difficulties facing our local communities and our nation. In addition, our industry faced unprecedented new legislation, continued regulatory pressure, and further declines in real estate values. Our bank has experienced significant challenges in this economy, but 2011 marked a turning point in many of the key indicators of our future performance. We made great strides in improving our risk profile, removing non-performing assets from our balance sheet, and continuing to build on a strong foundation for long-term financial health. There is no question there are still challenges ahead, but we are moving forward and believe our future will be bright. Management and the Board are encouraged by the 2011 progress made in the following areas: We originated over $76 million in new loans. We grew our average non-interest deposits to 22% of average total deposits, up from 19% at the end of We reduced our cost of deposits and borrowing to.78%, an 18 basis point improvement over We achieved all the requirements under our Consent Order, except meeting the 10% Bank Tier 1 Leverage Capital Ratio. At year-end our Bank Leverage Ratio was 8.72%. Adversely Classified Loans decreased $105.9 million, or 40%, over year end 2010, due to the diligent efforts of our loan teams. Loans transferring from performing to non-performing in 2011 were $22.3 million vs. $99.1 million in Payments made on these nonperforming loans increased from $7.8 million in 2010 to $20.9 million in In the fourth quarter we reached a settlement with our largest nonperforming loan relationship leading to a significant reduction in nonperforming loans, which were transferred to OREO in January We announced the consolidation of 11 branches in an effort to reduce overhead expense plans include further reductions in problem loans and the high costs associated with those problem assets. While we are cautiously optimistic that we are seeing a slowing in the rate of real estate valuation declines, we will continue to be dependent on those valuations until we have resolved the remaining problem assets on our balance sheet. We are confident that our strategy will prove successful as we move forward. We appreciate your continued support. In this annual report you will find many examples of our committment to our customers and the communities in which we live. We encourage you to visit our website, where you can review detailed press releases and our required Securities and Exchange Commission filings. Sincerely, President & CEO PremierWest Bancorp & PremierWest Bank Chairman of the Board PremierWest Bancorp Day in and day out, great customer service is job one for every PremierWest employee. John A. Duke - Chairman of the Board PremierWest Bancorp ~ James M. Ford James M. Ford - President & CEO PremierWest Bancorp & PremierWest Bank Financial Highlights At or for the Year Ended December 31 (Dollars in thousands, except per share data) Total Assets $1,266,047 $1,411,220 $1,536,314 Gross Loans $797,878 $978,546 $1,149,027 Total Cash & Cash Equivalents and Investments $392,264 $358,814 $319,729 Total Deposits $1,127,749 $1,266,249 $1,420,762 Core Deposits $1,085,274 $1,208,778 $1,154,556 Net Income Applicable to Common Shareholders $(17,616) $(7,492) $(148,643) Tier 1 Leverage Capital 8.01% 8.66% 5.38% Fully Diluted EPS $(1.76) $(0.90) $(60.07) Allowance for Loan Losses to Gross Loans 2.84% 3.64% 3.99% Net Loan Charge-Offs to Average Gross Loans 3.06% 1.88% 4.85% 3 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

4 We re Here for Our Customers, First & Foremost We are obsessed with customer service. PremierWest is proud to serve our remarkable customers, go-getters whose diligence, creativity, and determination have stood the test of time. They thrive in part because they hold fast to a basic principle shared by their bankers and friends at PremierWest: great customer service is at the heart of business success. PREMIERWEST IS ACTIVE IN OUR COMMUNITY BEYOND WHAT I HAVE SEEN ELSEWHERE. ~ Tammy Thompson Executive Director Twin Lakes Food Bank 5 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

5 Kidney & Hypertension Center Roseburg, Oregon Building for the Future... Dr. Neil Kumar has seen his medical practice grow dramatically over the years, particularly involving complications of diabetes and hypertension. And, he felt his patients would be better served with a world class dialysis center just steps away. It became clear that a new office, with the Davita Dialysis Center in an adjacent space, was needed. After planning for five years, Dr. Kumar and his wife Sumi searched for a bank to handle the construction financing of their new medical facility. PremierWest rose to the top with concise and accurate documentation and reporting before and after the loan transaction. PremierWest made the paperwork so easy, says Dr. Kumar. Making it easy for our customers is what PremierWest is all about. California Future Farmers of America Galt, California The mission of the FFA is to make a positive difference in the lives of students by developing their potential for premier leadership, personal growth, and career success through agricultural education. The California Association of FFA serves over 70,000 students through their state headquarters in Galt. The curriculum delves into every aspect of agricultural life from animal husbandry to welding, to agriculture, mechanics, and horticulture. Over the years the FFA s relationship with PremierWest has been marked by friendship, loyalty and trust. Each staff person in our Galt branch has been with the bank over eight years. They know the FFA team by name and genuinely care about each and every one. In the past, we ve worked with different banks, but we know the people at PremierWest, says Katie Otto, Finance Director of the California Association of FFA. If I have questions, I know that a real person, one who knows me, will answer the phone. The Association funds their scholarship program in part with interest earned on deposits. With deposit rates nationally at historic lows in 2011, the ability to fund scholarships was hampered. We needed to do something more Katie said. PremierWest stepped up and donated to our scholarship fund. With another bank, that wouldn t have happened. They share our passion. Growing Relationships, One by One... PremierWest made the paperwork so easy. ~ Dr. Neil Kumar Kidney & Hypertension Center 7 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

6 PremierWest has stood behind us and fought for us when we ve had rough times. Hays Oil Company Medford, Oregon ~ Steven Hays President- Hays Oil Relationships Marked By Integrity... For three generations, the Hays family has been providing the fuel and lubricants that keep Southern Oregon moving. Hays Oil Company has been a customer and partner of PremierWest for more than a decade. Now run by Steven and Michael Hays, Hays Oil appreciates that even during tough times, PremierWest has been there for them. Ours is a cyclical business, says Steven Hays. PremierWest understands those cycles and has stayed the course with us, helping us to keep going and growing. Steve and Mike s dad Bob says unlike other banks in the early days that wouldn t give us the time of day to acquire the land we needed, PremierWest s management said, You bet we can help you. That spirit continues today, as Elizabeth Baker of PremierWest takes the time to understand the uniqueness of Hays Oil. That s loyalty - and it cuts both ways. Enduring Loyalty from Day One... Twin Lakes Food Bank Folsom, California Neighbors helping neighbors. For 25 years, neighbors in the California towns of Folsom, El Dorado Hills, Granite Bay and Orangevale have helped each other through the services of the Twin Lakes Food Bank. With the tough times in recent years, Twin Lakes Food Bank has seen the needs of the community explode. In 2011 they ve seen the number of people they serve increase by 50%. Despite bursting at the seams, they continue to give people not a hand out but a hand up, treating their neighbors with dignity. When it comes to neighbors helping neighbors, Twin Lakes Executive Director Tammy Thompson recognizes the community spirit of PremierWest. PremierWest Bank is active in our community beyond what I ve seen elsewhere, says Tammy. And, their customer service exceeds excellence. Integrity, honesty and friendship define our relationship with PremierWest. Integrity, Honesty, and friendship define our relationship with PremierWest. ~ Tammy Thompson Executive Director - Twin Lakes Food Bank 9 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

7 People Helping People. That s Community... Dutch Bros. Coffee Grants Pass, Oregon Dutch Bros. Coffee is a story of phenomenal growth the old fashioned way: organically. Founded as a family business in Grants Pass Oregon in 1992, Dutch Bros. now has over 170 locations with franchisees located in seven western states. Their growth has come from within; franchisees need to have worked for the company prior to owning a franchise. It sets us apart, says Travis Boersma, Co-Founder of Dutch Bros. Debbie Larmour and Patti Moore are relationship people. They like to know who they work with and it shows in the path they have forged over 20 years in providing services and life skills training for people with disabilities. In 2001, they opened Mid Valley Providers, a residential facility in Redding CA with just four clients. Today, they have over 35 residential clients, five residence homes, and employ over 100 people. They then started Premier Solutions, a nonprofit organization dedicated to providing work skills to foster their clients integration into the community. At their remarkable facility in Lake Shasta City, clients get a chance to choose a career and learn the work and life skills necessary in a hands-on work training environment. Dutch Bros. employees volunteer a substantial amount of time in their communities, and the company is incredibly generous. One percent of the company s gross annual revenue, an amount exceeding $1,000,000 per year, is given back. When communities and organizations need a hand, Dutch Bros. is there. In 2011, Dutch Bros. chose PremierWest as their banking partner after considering proposals from a number of financial institutions. Why PremierWest? Dutch Bros. was impressed with the service, relationships, and the community spirit of PremierWest. Said Travis: We like doing business face to face. Working with people who value relationships is paramount. From the bank s management to our day to day contacts, those relationships run deep. That brings tremendous value to us. Debbie and Patti have been with PremierWest Bank since its inception. Everyone at the branch knows our name, and they know our staff too, says Debbie. We re not just a number like we would be at so many other banks. Mid Valley Providers / Premier Solutions Lake Shasta City, California Personal Service at its Best PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

8 We Believe in Our Communities Our Employees Volunteered Over 13,000 hours in 2011 Community Connections Premierwest Bank has a long history of giving back to our communities. Year after year, regardless of the economic climate, when something needs doing in the community you ll see PremierWest employees with their sleeves rolled up. Whether the need is in the form of donations, event sponsorships, financial training, volunteer hours, or community development lending, we know what building vital communities is all about. Lending Community Development Loans (CDL) are part of the mission of a community bank, and in 2011 PremierWest did its share to help with loans and lines of credit throughout our territory. CDL s typically support activities that promote economic development, provide services to low to moderate income individuals, provide affordable housing, or revitalize low to moderate income geographies. Volunteerism In 2011, at a time when many businesses cut back on community participation, PremierWest stepped up. Our employees donated over 13,000 hours of service. That s an average of over 28 hours for each and every PremierWest employee in 2011, a staggering number that serves as a tribute to our staff and a beacon to our neighborhoods. Donations & Sponsorships We provided financial support via donations and sponsorships to over 300 organizations and nonprofit events throughout our territory in Our philanthropy focused on five broad areas: Health and Human Services, Community Development, Education, Youth Sports, and Arts and Culture. Drive Through Window Wash - Winston, OR At a time when other banks have pulled back on their community support, PremierWest has increased ours through volunteerism, lending, sponsorships, and awareness campaigns for our non-profit customers. Why do we do it? Because we re neighbors helping neighbors, friends lending a hand. Not only during the work week, but on nights and weekends as well, we re there. Where we live and how we live matters, and we believe that PremierWest should be at the heart of each community we serve. We don t do it for the recognition, although once again in 2011 recognition has come our way. As just one example, in 2011 PremierWest was honored by being only the 7th recipient of the prestigious Lifetime Award from Access the Community Action Agency of Jackson County Oregon. We accepted the honor with pride, and then rolled up our sleeves yet again. Donations & Sponsorships Health/ Human Services 37% Community Development 29% Education 22% Youth Sports 7% Arts/Culture 5% Big Brothers/Big Sisters - Grass Valley, CA Corning Volunteer Firefighters - Corning, CA Lending a Helping Hand Relay for Life - Redding, CA United Way Day of Caring - jackson County, OR Extreme Makeover: Home Edition - Jackson County, OR Think Pink - Redding, CA 13 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

9 We re Committed to Strength & Soundness Board of Directors John A. Duke Chairman of the Board PremierWest Bancorp John L. Anhorn Chairman of the Board PremierWest Bank Patrick G. Huycke Vice Chairman of the Board PremierWest Bancorp & PremierWest Bank James M. Ford President & Chief Executive Officer Georges C. St. Laurent Jr. John B. Dickerson Managing Committee (pictured above from left to right) Steve Erb - Executive Vice President, Head of Community Banking Steve Erb serves as Executive Vice President and Head of Community Banking for PremierWest Bank. During his 26 year banking career, Mr. Erb has served in a variety of managerial, operational, line and administrative roles. Mr. Erb holds a Bachelor of Science degree from the University of Oregon in Economics, and is a graduate of the Pacific Coast Banking School at the University of Washington. Doug Biddle - Executive Vice President, Chief Financial Officer During his 33 year career, Doug Biddle has served in various capacities in the Northern California community banking industry including stints as Chief Financial Officer, Chief Operating Officer, and President & Chief Executive Officer. He has also worked as a National Bank Examiner with the Office of the Comptroller of the Currency. Doug earned a BA in Political Science from University of California - Davis, an MBA from UCLA, and is a Certified Management Accountant. Jim Ford - President and Chief Executive Officer Jim Ford serves as President and Chief Executive Officer for PremierWest Bancorp and its subsidiary PremierWest Bank. Jim s career spans over 30 years in the financial services industry including roles as Executive Vice President of Planning and Development and Executive Vice President & Chief Operating Officer. Among other duties, he serves on the Board of Directors of the Oregon Bankers Association. Jim is a graduate of the University of Oregon and of the Pacific Coast Banking School at University of Washington. Rickar D. Watkins Brian Pargeter James L. Patterson Richard R. Hieb Dennis Hoffbuhr Thomas Becker Joe Danelson - Executive Vice President, Chief Credit Officer Joe Danelson s banking experience extends over 28 years including serving as President of the Oregon Valley Coast Region for a major national bank. Joe has earned degrees from Montana State, Washington State, and the Pacific Coast Banking School at University of Washington. He also earned an MBA from Colorado State University. Ken Wells - Executive Vice President, Chief Marketing Officer Ken Wells has over 30 years of increasingly senior leadership roles in marketing, brand management, and community relations with major multinational brands. Ken is a graduate of The American University, Washington, D.C., with a BA in Government Administration. Tom Anderson - Executive Vice President, Chief Administrative Officer Tom Anderson serves as Executive Vice President & Chief Administrative Officer and Corporate Secretary for PremierWest Bancorp and its subsidiary PremierWest Bank. Tom s career spans 39 years in the banking industry. During the last 35 years he has held various senior executive positions, including Chief Operating Officer and Chief Financial Officer with two Southern Oregon headquartered community banks. 15 PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report Mary Carryer The deep experience and dedication of our management team leads the way for a culture of excellence. ~ John A. Duke Chairman of the Board PremierWest Bancorp

10 PremierWest Financial Services PremierWest Locations In many of our communities, the local PremierWest Bank branch is the only place that customers need to visit, not only for customary banking services, but for investment and mortgage products. Many of our offices also include PremierWest Investment Services, PremierWest Mortgage Division and Premier Finance Company offices. Our Premier Finance Company also operates out of independent offices in some communities. These well-established subsidiaries round out our product and service offerings. Premier Finance Company has been providing customers in Oregon and Northern California with superior service. Premier Finance provides loans, retail financing, and other credit-related products, including dealer financing. We are a full service lender with loans structured to accommodate a broad spectrum of the consumer credit market. Our financial associates provide the flexibility and customer service needed to assist our customers one by one. We make the process of buying a home simple and convenient whether you re a first time buyer or an old hand at purchasing real estate. At PremierWest, your home loan decision is just minutes away. We offer one of the easiest, fastest processes anywhere. Our online system can process your information in six simple steps that only take a few minutes. Call any time, or chat with a mortgage specialist online. Since 2001, PremierWest Investment Services has offered professional investment advice and wealth management to customers of the bank throughout the entire branch network. We offer a wide array of products including mutual funds, stocks, bonds, annuities and insurance products for individuals and the business owners as well as services such as wealth management and trust, advisory services, financial planning, and retirement planning. Corporate Administration 503 Airport Rd Oregon Region OR Region Administration 1459 E. McAndrews Rd., Bldg. B McAndrews Business Banking Center 1455 E. McAndrews Rd Mid-Oregon Business Banking Center 555 S.E. Kane St Airport Road Business Banking Center 503 Airport Rd Ashland Branch 2235 Highway 66 Ashland, OR Bend-Tuscan Square Branch 2155 N.E. Highway 20 Bend, OR Black Oak Branch 2600 E. Barnett Rd * Mortgage Division Central Point Branch 300 E. Pine St. Central Point, OR Eagle Point Branch 44 W. Linn Rd. Eagle Point, OR Garden Valley Branch 350 N.E. Garden Valley Blvd Kane Street Branch 555 S.E. Kane St * Mortgage Division Klamath Falls Branch 421 S. 7th St. Klamath Falls, OR Linus Oakes Branch 2665 N.W. Van Pelt Blvd McAndrews Branch 1455 E. McAndrews Rd North Grants Pass Branch 1409 N.E. 7th St. Grants Pass, OR Redmond-Nolan Town Center Branch 875 S.W. Rimrock Way, Ste. 100 Redmond, OR Rogue Valley Manor Branch 1200 Mira Mar Ave South Grants Pass Branch 1689 Williams Hwy. Grants Pass, OR California Region CA Region Administration 890 Cypress Ave. Redding, CA Northern California Business Banking Center 890 Cypress Ave. Redding, CA Sacramento Business Banking Center 9340 E. Stockton Blvd. Elk Grove, CA Government Guaranteed Lending Center 701 E. Bidwell St. Folsom, CA Anderson Branch 2590 North St. Anderson, CA Corning Branch 1201 Solano St. Corning, CA Cypress Branch 880 Cypress Ave. Redding, CA Davis Branch 333 A-F St. Davis, CA Elk Grove Branch 9340 E. Stockton Blvd. Elk Grove, CA Folsom Branch 701 E. Bidwell St. Folsom, CA Greenview Branch 6701 N. Highway 3 Greenview, CA Mangrove Branch 1834 Mangrove Ave., Ste. 1 Chico, CA Mt. Shasta Branch 312 Maple St. Mt. Shasta, CA Red Bluff Branch 950 Main St. Red Bluff, CA Rocklin Branch 4875 Granite Dr. Rocklin, CA Woodland Branch 1100 Main St., Ste. 170 Woodland, CA Yreka Branch 123 N. Main St. Yreka, CA Premier Finance Co. Cypress Office 890 Cypress Ave. Redding, CA Eugene Office 1020 Green Acres Rd., Ste. 1A Eugene, OR Garden Valley Office 350 N.E. Garden Valley Blvd North Grants Pass Office 1409 N.E. 7th St., Ste. A Grants Pass, OR Portland Office S.E. Stark St., Ste. F Portland, OR Redmond Office 875 S.W. Rimrock Way, Ste. 101 Redmond, OR PremierWest Investment Services, Inc. Black Oak Office 2600 E. Barnett Rd Corning Office 1201 Solano St. Corning, CA Crater Lake Plaza Office 3369 Crater Lake Hwy Davis Office 333 A-F St. Davis, CA Elk Grove Office 9340 E. Stockton Blvd. Elk Grove, CA Grass Valley Branch 115 West McKnight Way Grass Valley, CA Kane Street Office 555 S.E. Kane St Crater Lake Plaza Branch 3369 Crater Lake Hwy Sutherlin Branch 731 W. Central Ave. Sutherlin, OR Galt Branch 701 C St. Galt, CA Klamath Falls Office 701 Plum Ave. Klamath Falls, OR McAndrews Office 1463 E. McAndrews Rd., Bldg. A Downtown Medford Branch 300 E. Main St. Medford, OR Winston Branch 40 N.W. Glenhart Ave. Winston, OR Grass Valley Branch 115 West McKnight Way Grass Valley, CA Medford Office 1463 E. McAndrews, Bldg. A Red Bluff Office 950 Main St. Red Bluff, CA PremierWest Bancorp Annual Report 2011 PremierWest Bancorp Annual Report

11 People Doing Business with People 503 Airport Road Medford, OR