Real estate deals and property developments that soured continue to plague PremierWest Bank, even as it intends to join another institution.
The troubled Medford bank said today foreclosed property cost the company $4.6 million during the final quarter of 2012 — up from $883,000 in the third quarter and $1.4 million in fourth quarter 2011.
That led to a loss of $7.3 million during the final three months of 2012 and a $13.9 million loss for the year. The bank lost $4.1 million in the fourth quarter of 2011, leading to a $17.6 million loss for all of 2011.
PremierWest shareholders are scheduled to vote on a proposed takeover by private equity-backed AmericanWest Bank of Spokane on Feb. 19 at Rogue Valley Country Club.
Starbuck Bancshares said on Oct. 29 it plans to acquire PremierWest for $1.65 per share, as well as paying off its $41.4 million TARP Capital Purchase Program debt to the U.S. Treasury.
In releasing the fourth-quarter data, President and Chief Executive Officer Jim Ford reiterated PremierWest's need for a cash infusion, which led to the AmericanWest agreement.
"Without an infusion of additional capital, the bank would not be able to exit all problem credit relationships, meet obligations to holders of our trust preferred securities at the expiration of the deferral period, comply with the FDIC consent order, satisfy our commitment to the U.S. Treasury.
"We continue to make significant reductions in problem assets," Ford continued. "As part of this effort, (real estate) impairment charges taken this quarter resulted in a net loss for the current period."
Ford said PremierWest took back a large amount of property as part of a settlement. The property, slated for development, has continued to lose value. The bank, however, has reduced problem loans to their lowest levels since 2007. Ford said more than $3.9 million in nonperforming loans were paid down or paid off during the year.
The bank absorbed a $2.8 million charge during the fourth quarter to cover health insurance benefits of current and former directors and officers.