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, 2000
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OR
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 333-96209
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PREMIERWEST BANCORP
(Exact name of registrant as specified in its charter)
OREGON 93-1282171
(State of Incorporation) (I.R.S. Employer
Identification Number)
1455 East McAndrews Road
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of latest practicable date:
8,573,533 shares as of May 15, 2000.
<PAGE>
Disclosure Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on the beliefs of the
Company's management and on assumptions made by and information currently
available to management. All statements other than statements of historical
fact, regarding the Company's financial position, business strategy and plans
and objectives of management for future operations of the Company are
forward-looking statements. When used herein, 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 to identify
forward-looking statements. Examples of forward-looking statements include,
but are not limited to (i) projections of revenues, income or expenses,
earnings per share, capital expenditures, dividends, capital structure and
other financial items, (ii) statements of the plans and objectives of the
Company or its management, or Board of Directors, including the introduction
of new products or services, plans for expansion, acquisitions or future
growth, or estimates or predictions of actions by customers, vendors,
competitors or regulatory authorities, (iii) statements of future economic
performance, and (iv) statements of assumptions underlying other statements
about the Company and its business. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those indicated by
the forward-looking statements. These risks and uncertainties include the
Company's ability to maintain or expand its market share, net interest
margins, or implement its marketing and growth strategies. Further, actual
results may be affected by the Company's ability to compete on price and other
factors with other financial institutions; customer acceptance of new products
and services; general trends in the banking industry and the regulatory
environment, as they relate to the Company's cost of funds and returns on
assets. In addition, there are risks inherent in the banking industry relating
to collectibility of loans and changes in interest rates. The reader is
advised that this list of risks is not exhaustive and should not be construed
as any prediction by the Company as to which risks would cause actual results
to differ materially from those indicated by the forward-looking statements.
2
<PAGE>
Form 10-Q
Table of Contents
Part I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements .................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................... 9
Part II OTHER INFORMATION
Item 1. Legal Proceedings ............................................... 10
Item 6. Exhibits and Reports on Form 8-K ................................ 10
Signatures ............................................................... 10
3
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
PREMIERWEST BANCORP
BALANCE SHEETS
March 31, 2000 and December 31, 1999
ASSETS
2000 1999
Due from Bank of Southern Oregon $ 2,153 $ 2,300
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Liabilities -
Accounts payable $ 21,112 $ 17,106
Shareholder's equity (deficit):
Preferred stock, no par value;
1,000,000 shares authorized; none issued - -
Common stock, no par value;
20,000,000 shares authorized; 10 shares
issued and outstanding 100 100
Accumulated deficit (19,059) (14,906)
--------- ---------
Total shareholder's equity (deficit) (18,959) (14,806)
--------- ---------
Total liabilities and shareholder's equity (deficit)$ 2,153 $ 2,300
========= =========
See accompanying notes.
4
<PAGE>
PREMIERWEST BANCORP
STATEMENT OF OPERATIONS
For the three months ended March 31, 2000
Organizational costs $ (6,653)
Credit for income taxes 2,500
---------
Net loss $ (4,153)
=========
See accompanying notes.
5
<PAGE>
PREMIERWEST BANCORP
STATEMENT OF CHANGES IN
SHAREHOLDER'S EQUITY (DEFICIT)
For the three-month period ended March 31, 2000
Total
Number of shareholder's
common Common Accumulated equity
shares stock deficit (deficit)
- ------------------------------------------------------------------------------
Balance at
January 1, 2000 10 $ 100 $(14,906) $(14,806)
Net loss -- -- (4,153) (4,153)
---- -------- -------- --------
Balance at
March 31, 2000 10 $ 100 $(19,059) $(18,959)
==== ======== ======== ========
See accompanying notes.
6
<PAGE>
PremierWest Bancorp - Notes to Condensed Financial Statements
March 31, 2000
1. Summary of organization, business and significant accounting policies
Organization and merger: PremierWest Bancorp (Bancorp) was incorporated
in the state of Oregon on November 26, 1999, and as of March 31, 2000,
was a wholly owned subsidiary of the Bank of Southern Oregon (the Bank).
Effective on May 8, 2000, in a reorganization and merger accounted for as
a pooling-of-interests, Bancorp became the holding company for the Bank;
United Bancorp (United) was merged with and into Bancorp, and Douglas
National Bank (United's wholly owned subsidiary) was merged with and into
the Bank. In connection with the merger, Bancorp issued 3,715,993 shares
of its common stock to United shareholders and 4,857,540 shares of its
common stock to Bank shareholders.
Basis of presentation: The accompanying financial statements include
only the accounts and transactions of Bancorp and do not include any of
the accounts and transactions of the Bank. Bancorp's fiscal year-end for
tax and financial reporting purposes is December 31.
Method of accounting: Bancorp prepares its financial statements in
conformity with generally accepted accounting principles. Bancorp
utilizes the accrual method of accounting, which recognizes income when
earned and expenses when incurred. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and the
reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
Organizational costs: Costs associated with the organization of Bancorp
have been expensed in the period incurred.
Income taxes: The results of operations of Bancorp are reported for
income tax purposes in consolidated income tax returns filed by the Bank.
The credit for income taxes in the accompanying statement of operations
is computed based upon Bancorp's taxable loss for financial reporting
purposes.
Operations and cash flow: During the period from November 26, 1999
(inception) through December 31, 1999, and for the three months ended
March 31, 2000, Bancorp had no significant operations other than
organizational activities. During these periods, the Bank paid expenses
on behalf of Bancorp and, therefore, Bancorp had no cash flows. Bancorp
intends to use dividends received from the Bank to help fund operations
and service any borrowings under Bancorp's line-of-credit agreement (see
Note 2).
7
<PAGE>
2. Line of credit agreement
As of March 31, 2000 and December 31, 1999, Bancorp had a line-of-credit
agreement (the Agreement) with West Coast Bank to pay for organizational
costs up to $250,000. Borrowings under the Agreement are unsecured and
bear interest at prime rate. As part of the Agreement, certain covenants
are in existence. There were no borrowings outstanding as of March 31,
2000 and December 31, 1999; however, Bancorp borrowed $25,000 on May 4,
2000, to pay its accounts payable. Interest will be due monthly and any
outstanding principal will be due June 1, 2000.
3. Due from the Bank
Amounts due from the Bank as of March 31, 2000 and December 31, 1999,
represent Bancorp's credit for income taxes that will be utilized by the
Bank, offset by organizational costs paid by the Bank on behalf of
Bancorp during the period.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FOR THE THREE MONTHS ENDED MARCH 31,2000
Net loss for PremierWest Bancorp (Bancorp) was $4,153 for the three months
ended March 31,2000, consisting of organizational costs and the income tax
benefit of those costs. There were no operations during the comparable period
of 1999.
FINANCIAL CONDITION. Total assets at March 31, 2000 and December 31, 1999,
consist of $2,153 and $2,300, respectively, due from its affiliate, Bank of
Southern Oregon.
Accounts payable at March 31, 2000 and December 31, 1999, of $21,112 and
$17,106, respectively, consist of amounts owed for organizational costs.
As of March 31, 2000, Bancorp had a shareholder's deficit of $18,959. After
the May 8, 2000 merger with United Bancorp and its wholly owned subsidiary,
Douglas National Bank, Bancorp had consolidated shareholders' equity of
approximately $30 million.
LIQUIDITY. Bancorp has a line-of-credit for $250,000 with an unaffiliated
bank, of which no advances were made as of March 31, 2000. Funds totaling
$25,000 have subsequently been drawn upon for operations. Bancorp intends to
retire any outstanding borrowings from the line-of-credit in the near future.
Bancorp will obtain funds for repayment of the line-of-credit through a
dividend from its wholly owned subsidiary, PremierWest Bank. (See notes to the
condensed financial statements.)
Bancorp's future sources of funds will continue to mostly be through
PremierWest Bank.
The ability of Bancorp to obtain funds for the payment of dividends and for
other cash requirements is dependent on the amount of dividends that may be
declared by its wholly owned subsidiary, PremierWest Bank. Under the Oregon
Bank Act, an Oregon-chartered bank may not pay a cash dividend if the amount
of the dividend exceeds its net unreserved retained earnings, after first
deducting:
o bad debts, excepting bad debts that have already been charged against
earnings or reserved for, and excepting bad debts that are fully secured
and in the process of collection;
o all other assets charged off as required by the Director of the Oregon
Department of Consumer and Business Services or by a state or federal
examiner; and
o all accrued expenses, interest and taxes of the bank.
For this purpose, "bad debt" means a debt on which interest is past due and
unpaid for at least six months. Additionally, the Director of the Department
of Consumer and Business Services may require an institution to suspend
dividends if the Director determines that payment of dividends would result in
remaining shareholders' equity being inadequate for the safe and sound
operation of the bank. State-chartered banks' ability to pay dividends may be
affected by capital adequacy guidelines of their primary federal bank
regulatory agency.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are being filed or incorporated by
reference. This list constitutes the index.
Exhibit
Number Description
* 3.1 Articles of Incorporation of PremierWest Bancorp
* 3.2 Bylaws of PremierWest Bancorp
* 4.0 Specimen common stock certificate
** 27.0 Financial Data Schedule
- --------------
* Incorporated by reference to the registration statement on Form S-4, File
Number 333-96209, as declared effective by the Commission on April 4,
2000.
** Filed herewith.
(b) Reports on Form 8-K - None filed this period
SIGNATURES: Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DATED: May 15, 2000
PREMIERWEST BANCORP
/s/ Bruce R. McKee
- --------------------------------------- .
Bruce R. McKee, Chief Financial Officer
/s/ John L. Anhorn
- --------------------------------------- .
John L. Anhorn, Chief Executive Officer
10
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