Junior Subordinated Debentures

9 Months Ended

Sep. 30, 2011

Junior Subordinated Debentures [Abstract]

Junior Subordinated Debentures

NOTE 8 – JUNIOR SUBORDINATED DEBENTURES

On December 30, 2004, the Company established two wholly-owned statutory business trusts ("PremierWest Statutory Trust I and II") that were formed to issue junior subordinated debentures and related common securities. On August 25, 2005, Stockmans Financial Group established a wholly-owned statutory business trust ("Stockmans Financial Trust I") to issue junior subordinated debentures and related common securities. Following the acquisition of Stockmans Financial Group, the Company became the successor-in-interest to Stockmans Financial Trust I. Common stock issued by each of 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 September 30, 2011.

Trust Name	Issue Date	Issued Amount		Rate	Maturity Date	Redemption Date
PremierWest Statutory Trust I	December 2004	$	7,732,000	LIBOR + 1.75% (1)	December 2034	December 2009
PremierWest Statutory Trust II	December 2004		7,732,000	LIBOR + 1.79% (2)	March 2035	March 2010
Stockmans Financial Trust I	August 2005		15,464,000	LIBOR + 1.42% (3)	September 2035	September 2010
		$	30,928,000

(1) PremierWest Statutory Trust I was bearing interest at the fixed rate of 5.65% until mid-December 2009, at which time it changed to a variable rate of 3-month LIBOR (0.35% at September 15, 2011) plus 1.75% or 2.10%, adjusted quarterly, through the final maturity date in December 2034.

(2) PremierWest Statutory Trust II was bearing interest at the fixed rate of 5.65% until March 2010, at which time it changed to the variable rate of 3-month LIBOR (0.35% at September 15, 2011) plus 1.79% or 2.14%, adjusted quarterly, through the final maturity date in March 2035.

(3) Stockmans Financial Trust I was bearing interest at the fixed rate of 5.93% until September 2010, at which time it changed to the variable rate of 3-month LIBOR (0.35% at September 15, 2011) plus 1.42% or 1.77%, adjusted quarterly, through the final maturity date in September 2035.

The Oregon Department of Consumer and Business Services, which supervises banks and bank holding companies through its Division of Finance and Corporate Securities, and the Federal Reserve have policies that encourage banks and bank holding companies to pay dividends from current earnings, and have the general authority to limit the dividends paid by banks and bank holding companies, respectively. The Company does not expect to be in a position to pay interest payments on trust preferred securities without regulatory approval or until the Bank is "well-capitalized" and has satisfied conditions in its regulatory agreement (see Note 2). The Company is permitted to defer such interest payments for up to 20 consecutive quarters, but during a deferral period it is prohibited from making dividend payments on its capital stock. The amount of accrued and unpaid interest was approximately $2.1 million as of September 30, 2011. At September 30, 2011, the Company had deferred payment of interest for eight consecutive quarters.