Following the lead of major banking institutions, Medford-based PremierWest Bancorp has increased its loan-loss provisions to hedge against possible defaults.

Following the lead of major banking institutions, Medford-based PremierWest Bancorp has increased its loan-loss provisions to hedge against possible defaults.

As a result PremierWest's first-quarter net income fell 46 percent to $1.80 million, or 8 cents a share, from $3.37 million, or 18 cents a share, a year earlier, due in part to higher loan-loss provisions. The financial institution beefed up its loan-loss reserve to $3.1 million from $200,000.

Noninterest income rose to $2.3 million from $2 million, and net interest income rose to $15.1 million from $13.3 million.

PremierWest's nonperforming assets totaled $24.8 million as of March 31, an increase of $9.4 million compared to $15.4 million in non-performing assets at the end of 2007. A significant portion of the nonperforming assets — $7.0 million — was the result of PremierWest's acquisition of Stockmans Bank of Elk Grove, Calif., on Jan. 26.

Approximately $22.1 million or 90.1 percent of the nonperforming assets are attributable to three borrowing relationships in separate markets.

The largest of these relationships is composed of two purchased participation loans secured with approved residential lots in the greater Sacramento area. PremierWest purchased a minority position from two separate institutions, each with a national presence.

PremierWest reported assets of $1.47 billion on March 31, up from $1.03 billion.

Gross outstanding loans as of March 31 totaled $1.26 billion, an increase of $237.3 million or 23.2 percent when compared to the previous quarter's loan totals of $1.02 billion. Loan growth for the quarter was $20.9 million or 8.2 percent annualized absent the $216.4 million in gross loans attributable to the Stockmans acquisition.

Total deposits amounted to $1.23 billion, an increase of 39.3 percent or $347.1 million when compared to the same quarter in 2007, of which $300.5 million of deposits were acquired with the merger of Stockmans Bank.

Reach reporter Greg Stiles at 776-4463 or at business@mailtribune.com