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PREMIERWEST BANCORP

(Exact name of registrant as specified in its charter)

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.

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3

See accompanying notes. 

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See accompanying notes. 

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See accompanying notes.

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See accompanying notes. 

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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - The accompanying consolidated financial statements include the accounts of PremierWest Bancorp and its wholly-owned subsidiary PremierWest Bank (collectively, "PremierWest", "the Company" or "the Bank"). PremierWest Bank's wholly-owned subsidiaries include PremierWest Investment Services, Inc., Premier Finance Company, and Blue Star Properties, Inc.

The Bank conducts a general commercial banking business operating primarily in Jackson, Josephine, Douglas, and Klamath counties of southern Oregon, Deschutes County in central Oregon and Siskiyou, Shasta, Tehama, Butte and Yolo counties of northern California. Its activities include the usual lending and deposit functions of a commercial bank including commercial, real estate, installment, and mortgage loans; checking, time deposit, and savings accounts; mortgage loan brokerage services; automated teller machines (ATMs); and safe deposit facilities.

Basis of presentation - The consolidated financial statements include the accounts of PremierWest Bancorp and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

The interim consolidated financial statements are not audited, but include all adjustments that management considers necessary for a fair presentation of the results of operations for such interim periods.

The statement of income data for the three month period ending March 31, 2004 includes the acquired operations of Mid Valley Bank from the acquisition date (January 23, 2004) through March 31, 2004.

The balance sheet data as of December 31, 2004 was derived from audited financial statements and does not include all disclosures contained in the 2004 Annual Report to Shareholders. The interim consolidated financial statements should be read in conjunction with the Company's 2004 consolidated financial statements, including the notes thereto, included in the 2004 Annual Report to Shareholders as filed with the Securities and Exchange Commission under Form 10-K. The reader should keep in mind that the results of operations for the interim periods shown in the accompanying consolidated financial statements are not necessarily indicative of results for any future interim periods or the entire fiscal year.

Method of accounting and use of estimates - The Bank prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. The Bank utilizes the accrual method of accounting, which recognizes income when earned and expenses when incurred.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Elements of our accounting policies are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified certain policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of our consolidated financial statements. These policies relate primarily to the determination of our allowance for loan losses and the valuation of goodwill and intangible assets.

There are other complex accounting standards that require the Company to employ significant judgment in interpreting and applying certain of the principles prescribed by those standards. These judgments include the determination of whether a financial instrument or other contract meets the definition of a derivative and qualifies for accounting in accordance with Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". These judgments also include significant estimates and assumptions necessary to determine the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" and Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123." These policies and judgments, estimates and assumptions are described in greater detail in the Notes to the consolidated financial statements included in our 2004 Annual Report on Form 10-K. We believe that the judgments, estimates and assumptions used in the preparation of our consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of our consolidated financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition.

Stock dividends - On March 22, 2005, the Company declared a 5% stock dividend payable on June 27, 2005 to its shareholders of record on June 1, 2005. On March 1, 2004, the Company declared a 5% stock dividend payable on June 21, 2004 to its shareholders of record on May 28, 2004. Share and per share data in the accompanying consolidated financial statements have been retroactively restated to reflect the 2004 stock dividend.

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NOTE 2 - STOCK-BASED COMPENSATION

Stock options - The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock option plans. SFAS No. 123, "Accounting for Stock-Based Compensation," requires companies, such as Bancorp, that use the intrinsic value method to account for employee stock options, to provide pro forma disclosures of the net income and earnings per share effect of applying the fair value-based method of accounting for stock options.

The effect of applying the fair-value based method to stock options granted during the three months ended March 31, 2005 and 2004 resulted in an estimated weighted-average grant date fair value of $2.74 and $2.51, respectively. Had compensation costs been recorded as determined consistent with SFAS 123, the Company's net income and earnings per common share, and diluted earnings per common share for the first quarter ended March 31, 2005 and 2004 would have been as follows: (Dollars in 000's, except per share amounts)

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NOTE 3 - INVESTMENT SECURITIES

Investment securities at March 31, 2005 and December 31, 2004 consisted of the following: (Dollars in 000's)

During the third quarter of 2004, the Bank reclassified obligations of state and political subdivision securities from available-for-sale to held-to-maturity to more accurately reflect the purpose and intent in holding these securities for long-term pledging requirements. The unrealized holding gains at the time of transfer was $335,000, net of deferred taxes of $224,000, and is being amortized as an adjustment to yield. This is offset by the amortization of a similar amount recorded in shareholder's equity within accumulated other comprehensive income from the date of transfer through the maturity date of each security transferred.

All unrealized losses reflected above were the result of changes in interest rates subsequent to the purchase of the securities. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Bank has the ability and intent to hold these investments until a market price recovery or to maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

At March 31, 2005, $16.1 million in investment securities were pledged to secure public deposits, certain nonpublic deposits, and borrowings.

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NOTE 5 - LINE OF CREDIT AND OTHER BORROWINGS

The Company has a secured line of credit available with Federal Home Loan Bank of Seattle (FHLB) under which it may borrow up to 10% of the Bank's total assets. The line of credit is secured by loans and securities, including restricted FHLB stock owned by the Company. As of March 31, 2005, the Company had pledged available collateral of approximately $49.5 million. As of March 31, 2005 and December 31, 2004, the Company had borrowed long-term funds from the FHLB against this line of credit, aggregating to $2.3 million and $2.4 million, respectively. Interest and principal payments are due monthly on any outstanding borrowings and the Company is presently making monthly principal payments of approximately $53,000 plus interest at rates between 5.82% and 7.63% . As of March 31, 2005, the weighted average interest rate was 5.92% . Required repayments of principal are $2.1 million by August 2008, and the remaining $164,000 is due at various times through February 2014.

Additionally, as of March 31, 2005 the Company has approximately $45 million in available borrowings through lines of credit with certain correspondent banks and through the Federal Reserve Bank's discount window. No balances were outstanding as of March 31, 2005 and December 31, 2004.

NOTE 6 - JUNIOR SUBORDINATED DEBENTURES

On December 30, 2004, the Company established two wholly-owned statutory business trusts (Trusts) that were formed to issue trust preferred securities and related common securities. The $15,464,000 junior subordinated debentures issued by the Trusts require quarterly interest-only payments and are reflected as junior subordinated debentures in the consolidated balance sheets. Common stock issued by the Trusts and held as an investment by the Company is recorded in other assets in the consolidated balance sheets. Following are the terms of the junior subordinated debentures as of March 31, 2005.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve various levels and elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated financial statements. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. As of March 31, 2005, the Company has $174.9 million of commitments to extend credit to customers and $11.7 million of standby letters of credit.

In the ordinary course of business, the Bank may become involved in various litigation arising from normal banking activities. In the opinion of management, the ultimate disposition of current actions will not have a material adverse effect on the Bank's consolidated financial position or results of operations.

NOTE 8 - EARNINGS PER SHARE

The Company's basic earnings per common share is computed by dividing net income, less dividends declared on convertible preferred stock, by the weighted average number of common shares outstanding during the period, retroactively adjusted for all stock dividends. The Company's diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding plus dilutive common shares related to stock options and convertible preferred shares, retroactively adjusted for all stock dividends. The following summarizes the weighted average shares outstanding for computation of basic and diluted shares as of March 31, 2005 and 2004.

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NOTE 9 - RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2004, the FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) regarding Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF Issue 03-1 provides guidance on recognition and measurement of other-than-temporary impairment and its application to certain investments, including all debt securities and equity securities that are subject to the scope of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities."

On September 30, 2004, the FASB issued a proposed Board-directed Staff Position, FSP EITF Issue 03-1-a, "Implementation Guidance for the Application of Paragraph 16," of EITF Issue No. 03-1. The proposed FSP will provide implementation guidance with respect to debt securities that are impaired solely due to interest rates and/or sector spreads and analyzed for other-than-temporary impairment under paragraph 16 of EITF Issue 03-1. The Board has delayed the effective date to provide further implementation guidance. This delay does not suspend the requirement to recognize other-than-temporary impairments as required by existing authoritative literature. The delay of the effective date for paragraphs 10 through 20 of EITF Issue 03-1 will be superseded concurrent with the final issuance of FSP EITF Issue 03-1-a. Management does not anticipate adoption of EITF Issue 03-1-a will have a significant impact upon PremierWest's consolidated financial statements.

In December 2004, the FASB revised SFAS No. 123, "Accounting for Stock-Based Compensation." This statement supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. The statement requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award, also known as the requisite service period (usually the vesting period). Originally, SFAS No. 123R was to become effective for public entities as of the beginning of the first interim reporting period that begins after June 15, 2005. On April 14, 2005, the SEC announced it would permit companies to implement Statement 123R at the beginning of their first fiscal year beginning after June 15, 2005. The effects on future periods are dependent upon stock options granted or vesting after the implementation date.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HIGHLIGHTS - For the first quarter ended March 31, 2005 the Company earned $2,647,000, an increase of 44.25% compared to $1,835,000 in net income for the quarter ended March 31, 2004. Diluted earnings per share were $0.17 and $0.12 for the quarters ended March 31, 2005 and 2004, respectively. Annualized return on average shareholder's equity was 11.49% and return on average assets was 1.29% for the quarter ended March 31, 2005 as compared to a return on average shareholders' equity of 9.35% and a return on average assets of 1.05% for the quarter ended March 31, 2004. At March 31, 2005 and December 31, 2004, gross loans, net of deferred loan fees, totaled $731.2 and $688.3 million, respectively, an increase of $42.9 million or 6.23% since year end and an increase of $148.9 million or 25.56% when compared to gross loans, net of deferred loan fees, of $582.4 million as of March 31, 2004. Deposits totaled $717.9 million at March 31, 2005 compared to $689.0 million at December 31, 2004 and $634.6 million at March 31, 2004, representing a 4.20% increase since year end and 13.13% compared to a year ago.

The increase in net income for the first quarter of 2005 compared to the same period a year ago was principally a function of internal growth. Additionally, the results for the first quarter of 2004 include the operations acquired from Mid Valley Bank only from the date of its acquisition on January 23, 2004, forward.

During the first quarter of 2005 management continued to pursue its business strategy of building a dominant community banking franchise along the Interstate 5 corridor between Eugene, Oregon and Sacramento, California by strengthening or expanding the Company's position in existing markets and seeking opportunities for entering new market areas. The first quarter of 2005 was the first full quarter of operations in two of our more recent market areas - Woodland, California and Bend, Oregon. Our Woodland, California location progressed from a loan production office to a full service banking office during the 4^th quarter of 2004 and our Bend, Oregon loan production office initially opened for business during the 4^th quarter of 2004. Both offices were start-up operations requiring an investment in overhead for facilities and personnel in return for expected increasing contribution to the overall profitability of our Bank. Also during the 1^st quarter of 2005, management solidified its 2005-2006 growth plans for establishing offices in Roseville, California and the Jackson County, Oregon communities of Eagle Point, Shady Cove and Ashland.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

The following table presents information regarding yields on interest-earning assets, rates paid on interest-bearing liabilities, net interest spreads, net yields on average interest-earning assets, returns on average assets and returns on average equity for the periods indicated.

NET INTEREST INCOME - Net interest income before the loan loss provision increased $2,215,000 for the three-month period ended March 31, 2005 as compared to the same period in 2004. The increase resulted from a $3.0 million increase in interest income driven primarily by the growth in our loan portfolio in combination with the generally rising short-term interest rate environment over the past year. Additionally, the 2005 results of operations include the operations of Mid Valley Bank for the entire first quarter compared to 2004 which include operations of Mid Valley Bank from the date of its acquisition on January 23, 2004. Interest income was offset by a smaller increase in interest expense of $761,000. The increase in interest expense was also a function of our higher level of interest bearing liabilities, the rising interest rate environment and the full quarter impact from the acquired operations of Mid Valley Bank.

While the rising interest rate environment impacted yields for earning assets and interest-bearing liabilities, our average earning assets increased 16.79% compared to our average interest-bearing liabilities increasing only 15.60% . Additionally the mix of our earning assets shifted in favor of higher yielding loans versus lower yielding investments. As of March 31, 2005 our average

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loans to average earning assets grew to 95.66% compared to 85.40% as of March 31, 2004. The Company's interest rate margin (net interest income divided by average interest-earning assets) increased 46 basis points for the first three months of 2005 as compared to 2004.

LOAN LOSS PROVISION - The loan loss provision was $150,000 and $300,000 for the three-month periods ended March 31, 2005 and March 31, 2004, respectively. The Company had net recoveries of $57,000 during the three-month period ended March 31, 2005 compared to net charge-offs of $94,000 for the corresponding period in 2004. The reduction in provision expense for the first quarter of 2005 compared to the first quarter of 2004 is directly related to Management's assessment of the improving trends in the Bank's overall loan portfolio quality and the adequacy of our Allowance for Loan Losses.

NONINTEREST INCOME - Noninterest income increased 13.41% to $1.8 million for the three months ended March 31, 2005, compared to $1.6 million for the same period in 2004. Growth in noninterest income occurred in each of our primary categories and included: $35,000 from account service fees; $8,000 from mortgage loan fees; $43,000 from commissions earned from investment services; $64,000 from other commissions and fees and $58,000 was from other noninterest income including an increase in the cash surrender value of life insurance and gains on sales of fixed assets.

NONINTEREST EXPENSE - Noninterest expense increased approximately $1.3 million or 19.64% for the three months ended March 31, 2005 as compared to the corresponding period in 2004. On a consolidated basis, the increase resulted from an $830,000 increase in salaries and benefits expenses; a $201,000 increase in occupancy and equipment expenses; and, a $241,000 increase in other noninterest expenses. The increases in noninterest expense are the result of our growth in general, including annual salary increases that begin in the first quarter of each year, and the implementation of our growth strategies, including establishing a presence in new markets which result in initially higher occupancy and personnel expense.

EFFICIENCY RATIO - The Company's efficiency ratio was 64.90% during the first quarter 2005 compared to 68.06% for the first quarter of 2004. The improvement in this key measure of operating efficiency was driven by the overall growth in our net interest income and gains in operating efficiency both positively impacted by our successful integration of the acquired operations of Mid Valley Bank. Overall the increase in our net interest income and noninterest income exceeded the increase in noninterest expense for the quarter ending March 31, 2005 when compared to the quarter ending March 31, 2004. The efficiency ratio for the first quarter of 2005 reflected a 1.41 basis point decline when compared to the 63.49% efficiency ratio achieved for the immediately preceding quarter ending December 31, 2004. This decline was the result of our noninterest expenses for the period increasing at a faster rate than our net interest income and noninterest income, and is attributable to the increased overhead we are incurring in the short run from the implementation of our growth strategies including the completion and occupancy of a new branch and regional administrative facility in Redding, CA with the concurrent consolidation of two existing facilities at this location; expenses associated with establishing new offices in Roseville, CA and Eagle Point, OR; and, the typical increase in overhead that occurs in our first quarter principally from annual salary increases. Management continues to target an efficiency ratio in the low 60% range. Our tax equivalent efficiency ratio, adjusted for the effective tax rate on interest earned on municipal bond securities, tax free loan interest income, tax credits earned on equipment leases and income earned on the increase in the cash surrender value of life insurance, which is nontaxable, was 63.92% for the first quarter of 2005 compared to 64.01% for the first quarter of 2004.

FINANCIAL CONDITION - Total assets of $836.0 million at March 31, 2005 increased 3.93% over total assets of $804.4 million at December 31, 2004. The increase in assets primarily resulted from an increase in net loans outstanding offset by decreases in federal funds sold and investment securities. Loans, net of allowance for loan losses and deferred fees, increased $42.7 million while fed funds sold decreased $13.7 million and investment securities decreased $299,000.

Net loans accounted for 86.34% of total assets at March 31, 2005 compared to 84.42% at December 31, 2004. As of March 31, 2005, the allowance for loan losses increased to $9.4 million from $9.2 million at December 31, 2004. The Company's ratio of allowance for loan losses to total loans was 1.28% at March 31, 2005, compared to 1.33% at December 31, 2004. Non-performing assets (defined as loans on non-accrual status, loans 90 days or more past due and other real estate owned) either specifically reserved or adequately collateralized were approximately $2.4 million at both March 31, 2005 and December 31, 2004. Management maintains and adheres to disciplined underwriting standards and has a proven track record for managing credit risk as well as identifying and aggressively administering problem loans.

Total deposits increased to $717.9 million at March 31, 2005, a $28.9 million or 4.20% increase compared to $689.0 million as of December 31, 2004. Net loan growth has continued to outpace our growth in deposits and as a result, as of March 31, 2005, net loans exceeded deposits resulting in a loan-to-deposit ratio of 100.55% compared to a ratio of 98.57% as of December 31, 2004. As anticipated, deposit growth in our new markets has lagged behind loan production. Notwithstanding management's desire to maintain a loan-to-deposit ratio at or below 100%, the Bank's deposit mix remains stable and highly flexible with a ratio of noninterest bearing demand deposits to total deposits of 26.43% and a core deposit base, consisting of noninterest bearing demand deposits, interest-bearing demand deposits and regular savings, representing 73.82% of total deposits. Because time deposits presently make up only 26.18% of total deposits, should liquidity needs dictate the need to grow deposits more rapidly, the Bank has flexibility in pricing time deposits more aggressively in order to attract deposits at a higher cost of funds.

Management closely monitors the Bank's liquidity needs and maintains the ability to borrow from the Federal Home Loan Bank of Seattle and other correspondent banks. For more information about liquidity refer to the Liquidity and Capital Resources section below.

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The table below sets forth certain summary balance sheet information for March 31, 2005 and December 31, 2004:
 (Dollars in 000's)

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY - Liquidity enables the Company to fund loan commitments and meet customer withdrawals of deposits. The Company maintains its liquidity position through maintenance of cash resources and the stability of its core deposit base. The Bank's liquidity position decreased during the quarter ended March 31, 2005 as our loan volume continues to exceed the growth rate of our deposit base. As a result, during the quarter, our loan-to-deposit ratio tightened further and exceeded 100% at March 31, 2005. Liquidity previously maintained as excess cash and generally invested on a short-term basis into federal funds sold and interest-earning deposits with the FHLB decreased approximately $13.7 million during the quarter. As of March 31, 2005, the Company had $1.7 million in federal funds sold compared to $15.4 million at December 31, 2004.

Management maintains contingency plans for addressing the Bank's ongoing liquidity needs and presently believes the Bank's stable core deposit base, representing 73.82% of total deposits, provides for immediate flexibility and opportunity should management decide to attract deposits more aggressively by increasing the rate of interest offered on deposits - particularly certificates of deposit. Management has also identified particular loans where a portion of the outstanding balance could be sold or participated out to other banks. Further, should loan demand outpace our ability to gather deposits or fund with other borrowings, the Company could slow down the volume of loan growth through higher pricing. A further source of liquidity is the Company's ability to borrow funds by maintaining a secured line-of-credit with the FHLB of up to 10% of the Bank's total assets. As of March 31, 2005, $2.3 million had been advanced in long-term borrowings from the FHLB against the Company's credit line. The Company also has established secured credit lines of approximately $45.0 million through certain correspondent banks and the discount window with the Federal Reserve Bank of San Francisco. As of March 31, 2005 there were no outstanding borrowings against these credit lines.

At March 31, 2005, the Company had approximately $174.9 million in outstanding commitments to extend credit for newly approved loans and construction projects. Under the terms of construction project commitments, completion of specified project benchmarks must be certified before funds may be drawn. In addition, it is anticipated that a portion of these commitments will expire or terminate without funding. Management believes that the Company's available resources will be sufficient to fund these commitments in the normal course of business.

CAPITAL RESOURCES - Federal regulators require the measurement of various capital ratios, including risk-based capital measurements. Risk-weighted ratios require an analysis that weights balance sheet and off-balance sheet items for their inherent

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risk. It requires minimum standards for risk-based capital by capital tier. As a minimum requirement, the total risk-based capital ratio should be at least 8.00%, the Tier 1 capital ratio should be at least 4.00%, and the leverage capital ratio should be at least 4.00% . At March 31, 2005, the Company's regulatory capital ratios were as follows: total risk-based capital ratio of 11.60%, Tier 1 capital ratio of 10.45%, and a leverage capital ratio of 10.75% . If the Company achieved only minimum regulatory capital levels, further growth could be restricted to the level attainable through generation and retention of net income or the Company may find it necessary to seek additional capital from outside sources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises principally from interest rate risk in its lending, deposit and borrowing activities. The Company is experiencing a positive response to its interest rate management through a reduction in cost of deposits as noninterest-bearing deposits increase and certificates of deposits with higher interest rates run off. Management actively monitors and manages its interest rate risk exposure. Although the Company manages other risks, such as credit quality and liquidity risk, in the normal course of business, management considers interest rate risk to be a significant market risk, which could have the largest material effect on the Company's financial condition and results of operations. Other types of market risks, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities. The Company did not experience a significant change in market risk at March 31, 2005 as compared to December 31, 2004.

As stated in the annual report on Form 10-K for 2004, the Company attempts to monitor interest rate risk from the perspective of changes in the economic value of equity, also referred to as net portfolio value (NPV), and changes in net interest income. Changes to the NPV and net interest income are simulated using instant and permanent rate shocks of plus and minus 200 basis points, in increments of 50 basis points. It is the Company's policy to manage interest rate risk to maximize long-term profitability under the range of likely interest-rate scenarios. For additional information, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" referenced in the Company's annual report on Form 10-K for the year ended December 31, 2004.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS - From time to time, in the normal course of business, PremierWest may become party to various legal actions. Generally these actions are not expected to have a material adverse impact on our business, financial condition or results of operations. Litigation matters that have been reported previously have been resolved or, in the opinion of management, are not expected to have a material adverse impact on the financial condition or results of operations for the Company.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)    [Not applicable.]
(b)    [Not applicable.]
(c)    [Not applicable.]
(d)    [Not applicable.]

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a)    [Not applicable.]
(b)    [Not applicable.]

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No matters were submitted to a vote of securities holders of PremierWest during the quarter ended March 31, 2005.

ITEM 5. OTHER INFORMATION

[None.]

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ITEM 6.     EXHIBITS

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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: April 29, 2005
PREMIERWEST BANCORP

/s/ John L. Anhorn
John L. Anhorn, President and Chief Executive Officer

/s/ Tom Anderson
Tom Anderson, Senior Vice-President and Chief Financial Officer

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Exhibit 31.1
 

 I, John L. Anhorn, certify that:

Exhibit 31.2
 

I, Tom Anderson, certify that:

Exhibit 32.1
 

         In connection with the Quarterly Report of PremierWest Bancorp (the "Company") on Form 10-Q for the quarter ending March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John L. Anhorn, the President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

         This certification is being furnished solely to comply with the requirements of 18 U.S.C. Section 1350, and shall not be incorporated by reference into any of the Company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, or otherwise be deemed to be filed as part of the Report or under such Acts.

Exhibit 32.2

         In connection with the Quarterly Report of PremierWest Bancorp (the "Company") on Form 10-Q for the quarter ending March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tom Anderson, the Chief Financial Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

         This certification is being furnished solely to comply with the requirements of 18 U.S.C. Section 1350, and shall not be incorporated by reference into any of the Company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, or otherwise be deemed to be filed as part of the Report or under such Acts.