---

---

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 September 30, 2004

---

OR

/ / Transition Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the transition period from	___________________ to





___________________

Commission File Number 000-50332

---



PREMIERWEST BANCORP 
(Exact name of registrant as specified in its charter)

OREGON
	
	93-1282171(State of Incorporation)
	
	(I.R.S. EmployerIdentification Number)


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:

14,591,782 shares as of November 1, 2004

1

---

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 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 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.

2

---

Form 10-Q Table of Contents

Part I
	
	FINANCIAL INFORMATIONItem 1.
	
	Financial Statements
	
	4Item 2.
	
	Management's Discussion and Analysis of Financial Condition and Results of Operations
	
	14Item 3.
	
	Quantitative and Qualitative Disclosures About Market Risk
	
	19Item 4.
	
	Controls and Procedures
	
	19Part II
	
	OTHER INFORMATIONItem 1.
	
	Legal Proceedings
	
	20Item 2.
	
	Changes in Securities and Use of Proceeds
	
	20Item 3.
	
	Defaults Upon Senior Securities
	
	20Item 4.
	
	Submission of Matters to a Vote of Securities Holders
	
	20Item 5.
	
	Other Information
	
	20Item 6.
	
	Exhibits and Reports on Form 8-K
	
	21SIGNATURES
	
	22


3

---

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in 000s)

ASSETS

(Unaudited)
	
	
	(Audited)September 30,
	
	
	December 31,2004
	
	
	2003Cash and cash equivalents:Cash and due from banks
	
	$
	28,406
	
	$
	18,949Federal funds sold
	
	
	21,260
	
	
	31,400Total cash and cash equivalents
	
	
	49,666
	
	
	50,349Interest-bearing deposits with Federal Home Loan Bank
	
	
	318
	
	
	5Investments:Investment securities available-for-sale, at fair market value
	
	
	8,993
	
	
	23,351Investment securities held-to-maturity, at amortized cost
	
	
	12,262
	
	
	-Federal Home Loan Bank stock
	
	
	1,844
	
	
	1,792Other equity investments
	
	
	277
	
	
	5Total Investments
	
	
	23,376
	
	
	25,148Loans, net of allowance for loan losses and deferred loan fees
	
	
	626,543
	
	
	452,972Premises and equipment, net of accumulated depreciationand amortization
	
	
	26,472
	
	
	21,784Goodwill, net of amortization
	
	
	20,079
	
	
	6,633Accrued interest and other assets
	
	
	22,802
	
	
	14,430TOTAL ASSETS
	
	$
	769,256
	
	$
	571,321LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIESDeposits:Non-interest-bearing demand
	
	$
	176,754
	
	$
	121,467Savings and interest-bearing demand
	
	
	314,709
	
	
	227,267Time
	
	
	179,446
	
	
	127,012Total deposits
	
	
	670,909
	
	
	475,746Federal Home Loan Bank borrowings
	
	
	2,579
	
	
	23,058Securities sold under agreements to repurchase
	
	
	-
	
	
	3,401Accrued interest and other liabilities
	
	
	7,948
	
	
	4,365Total liabilities
	
	
	681,436
	
	
	506,570COMMITMENTS AND CONTINGENCIES (Note 6)SHAREHOLDERS' EQUITYSeries A Preferred Stock, no par value, 1,000,000 sharesauthorized, 11,000 shares issued and outstanding
	
	
	9,590
	
	
	9,590Common stock - no par value; 20,000,000 shares authorized;14,591,451 and 12,162,026 shares issued and outstandingin 2004 and 2003, respectively
	
	
	62,320
	
	
	38,260Retained earnings
	
	
	15,550
	
	
	16,463Accumulated other comprehensive income, net of taxes
	
	
	360
	
	
	438Total shareholders' equity
	
	
	87,820
	
	
	64,751TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
	
	$
	769,256
	
	$
	571,321


See accompanying notes.

4

---

PREMIERWEST BANCORP AND SUBSIDIARY 
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in 000s, Except for Earnings per Share Data)
 (UNAUDITED)

FOR THE THREE MONTHS ENDED
	
	FOR THE NINE MONTHS ENDEDSeptember 30,
	
	September 30,
	
	September 30,
	
	September 30,2004









	









	2003









	









	2004









	









	2003INTEREST AND DIVIDEND INCOMEInterest and fees on loans
	$
	10,908
	$
	7,750
	$
	29,957
	$
	22,503Taxable interest on investment securities
	
	68
	
	129
	
	317
	
	578Nontaxable interest on investment securities
	
	123
	
	145
	
	404
	
	463Interest on federal funds sol d
	
	112
	
	122
	
	358
	
	323Dividends on Federal Home Loan Bank stockand other equity investments
	
	16
	
	23
	
	57
	
	74Total interest and dividend income
	
	11,227
	
	8,169
	
	31,093
	
	23,941INTEREST EXPENSEDeposits:Interest-bearing demand and savings
	
	577
	
	360
	
	1,512
	
	1,235Time
	
	935
	
	966
	
	2,787
	
	3,067Federal funds purchased and securities sold underagreements to repurchase
	
	-
	
	8
	
	5
	
	53Federal Home Loan Bank and other borrowings
	
	87
	
	204
	
	448
	
	618Total interest expense
	
	1,599
	
	1,538
	
	4,752
	
	4,973NET INTEREST INCOME
	
	9,628
	
	6,631
	
	26,341
	
	18,968LOAN LOSS PROVISION
	
	150
	
	300
	
	650
	
	900Net interest income after loan loss provision
	
	9,478
	
	6,331
	
	25,691
	
	18,068NONINTEREST INCOMEService charges on deposits accounts
	
	694
	
	565
	
	1,946
	
	1,502Mortgage loan brokerage and other fees
	
	263
	
	533
	
	843
	
	1,505Investment brokerage and annuity fees
	
	222
	
	185
	
	722
	
	557Other commissions and fees
	
	372
	
	191
	
	986
	
	592Gains on sales of investment securities, net
	
	-
	
	1
	
	1
	
	27Other noninterest income
	
	136
	
	124
	
	436
	
	347Total noninterest income
	
	1,687
	
	1,599
	
	4,934
	
	4,530NONINTEREST EXPENSESalaries and employee benefits
	
	4,104
	
	3,156
	
	11,809
	
	9,227Net occupancy and equipment
	
	1,247
	
	1,001
	
	3,676
	
	3,047Communications
	
	389
	
	270
	
	1,083
	
	789Professional fees
	
	331
	
	165
	
	760
	
	455Advertising
	
	265
	
	186
	
	660
	
	478Other
	
	1,208
	
	686
	
	3,137
	
	1,970Total noninterest expense
	
	7,544
	
	5,464
	
	21,125
	
	15,966INCOME BEFORE PROVISION FOR INCOME TAXES
	
	3,621
	
	2,466
	
	9,500
	
	6,632PROVISION FOR INCOME TAXES
	
	1,195
	
	824
	
	3,135
	
	2,221NET INCOME
	$
	2,426
	$
	1,642
	$
	6,365
	$
	4,411Earnings per common share:Basic
	$
	0.16
	$
	0.13
	$
	0.43
	$
	0.35Diluted
	$
	0.15
	$
	0.13
	$
	0.41
	$
	0.34


See accompanying notes.

5

---

PREMIERWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Dollars in 000s) 
(UNAUDITED)

AccumulatedUnearned
	
	Other
	
	TotalPreferred Stock
	
	Common Stock
	
	Retained
	
	ESOP
	
	Comprehensive
	
	Shareholders'
	
	ComprehensiveShares
	
	Amount
	
	Shares
	
	Amount
	
	Earnings
	
	Compensation
	
	Income
	
	Equity
	
	Income(in thousands, except share amounts)BALANCE - JANUARY 1, 2003
	
	-
	$
	-
	
	11,567,559
	$
	33,875
	$
	14,772
	$
	(16)
	$
	541
	$
	49,172Comprehensive income:Net income
	
	
	
	
	
	
	
	-
	
	4,411
	
	-
	
	-
	
	4,411
	$
	4,411Unrealized losson investment securitiesavailable-for-sale of $30(net of taxes of $15)
	
	-
	
	-
	
	-
	
	-
	
	-
	
	-
	
	(30)
	
	(30)
	
	(30)Reclassification adjustmentfor net gains on sales ofinvestment securitiesavailable-for-sale included innet income of $18 (net oftaxes of $9)
	
	-
	
	-
	
	-
	
	-
	
	-
	
	-
	
	(18)
	
	(18)
	
	(18)Comprehensive income
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	$
	4,363Stock dividend paid (5%)
	
	-
	
	-
	
	578,200
	
	4,311
	
	(4,311)
	
	-
	
	-
	
	-ESOP compensation expense
	
	-
	
	-
	
	-
	
	8
	
	-
	
	16
	
	-
	
	24Stock options exercised
	
	-
	
	-
	
	15,267
	
	27
	
	-
	
	-
	
	-
	
	27Income tax benefit of stock optionsexercised
	
	-
	
	-
	
	-
	
	34
	
	-
	
	-
	
	-
	
	34BALANCE - SEPTEMBER 30, 2003
	
	-
	$
	-
	
	12,161,026
	$
	38,255
	$
	14,872
	$
	-
	$
	493
	$
	53,620BALANCE - JANUARY 1, 2004
	
	11,000
	$
	9,590
	
	12,162,026
	$
	38,260
	$
	16,463
	$
	-
	$
	438
	$
	64,751Comprehensive income:Net income
	
	-
	
	-
	
	-
	
	-
	
	6,365
	
	-
	
	-
	
	6,365
	$
	6,365Unrealized losseson investment securitiesavailable-for-sale of $78(net of taxes of $40)
	
	-
	
	-
	
	-
	
	-
	
	-
	
	-
	
	(78)
	
	(78)
	
	(78)Comprehensive income
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	$
	6,287Common stock issued toshareholders ofMid Valley Bank
	
	-
	
	-
	
	1,697,473
	
	16,805
	
	-
	
	-
	
	-
	
	16,805Preferred stock dividend declared
	
	-
	
	-
	
	-
	
	-
	
	(206)
	
	-
	
	-
	
	(206)Stock dividend paid (5%)
	
	-
	
	-
	
	692,698
	
	7,072
	
	(7,072)
	
	-
	
	-
	
	-Stock options exercised
	
	-
	
	-
	
	39,254
	
	145
	
	-
	
	-
	
	-
	
	145Income tax benefit of stock optionsexercised
	
	-
	
	-
	
	-
	
	38
	
	-
	
	-
	
	-
	
	38BALANCE - SEPTEMBER 30, 2004
	
	11,000
	$
	9,590
	
	14,591,451
	$
	62,320
	$
	15,550
	$
	-
	$
	360
	$
	87,820


See accompanying notes.

6

---

PREMIERWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in 000s) 
(UNAUDITED)

FOR THE NINE MONTHS ENDEDSeptember 30,
	
	September 30,2004
	
	2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
	
	
	$
	6,365
	$
	4,411Adjustments to reconcile net income to net cashfrom operating activities:Depreciation and amortization
	
	
	
	1,793
	
	1,442Amortization of premiumson investment securities, net
	
	
	
	110
	
	(3)Dividends on Federal Home Loan Bank stock
	
	
	
	(52)
	
	(74)Gains on sales of investment securities available-for-sale, net
	
	
	
	(1)
	
	(27)Deferred income taxes
	
	
	
	(395)
	
	-Losses (Gains) on sales of premises and equipment
	
	
	
	(7)
	
	5Losses (Gains) on sales of other real estate owned
	
	
	
	286
	
	-Loan loss provision
	
	
	
	650
	
	900Recognition of deferred compensation relating to ESOP
	
	
	
	-
	
	24Decrease in accrued interest and other assets
	
	
	
	829
	
	66Increase in accrued interest and other liabilities
	
	
	
	323
	
	1,296Net cash from operating activities
	
	
	
	9,901
	
	8,040CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investment securities available-for-sale
	
	
	
	-
	
	(5,989)Proceeds from sales of investment securities available-for-sale
	
	
	
	38,566
	
	1,024Proceeds from calls and maturities of investmentsecurities available-for-sale
	
	
	
	11,876
	
	20,782Proceeds from redemption of Federal Reserve Bankand Federal Home Loan Bank stock
	
	
	
	340
	
	-Increase in interest-bearing deposit withFederal Home Loan Bank
	
	
	
	(313)
	
	(105)Increase (decrease) in other investments
	
	
	
	5
	
	(11)Loan originations, net
	
	
	
	(72,763)
	
	(29,532)Proceeds from sale of premises and equipment
	
	
	
	40
	
	55Proceeds from sale of other real estate owned
	
	
	
	675Purchase of premises and equipment
	
	
	
	(2,403)
	
	(1,893)Cash and cash equivalents received in acquisition of Mid Valley Bank,net of cash paid of $9,813 and acquisition costs of $627
	
	
	
	6,817
	
	-Net cash from investing activities
	
	
	
	(17,160)
	
	(15,669)CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in deposits
	
	
	
	30,311
	
	42,423Net decrease in Federal Home Loan Bank borrowings
	
	
	
	(20,479)
	
	(4,015)Net decrease in securities sold under agreements to repurchase
	
	
	
	(3,401)
	
	-Proceeds from exercise of stock options
	
	
	
	145
	
	27Net cash from financing activities
	
	
	
	6,576
	
	38,435INCREASE IN CASH AND CASH EQUIVALENTS
	
	
	
	(683)
	
	30,806CASH AND CASH EQUIVALENTS - Beginning of the period
	
	
	
	50,349
	
	41,437CASH AND CASH EQUIVALENTS - End of the period
	
	
	$
	49,666
	$
	72,243SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
	
	
	$
	4,712
	$
	5,056Cash paid for taxes
	
	
	$
	1,908
	$
	1,622SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ANDFINANCING ACTIVITIES:Transfer of loans to other real estate owned
	
	
	$
	34
	$
	1,138Preferred stock dividend declared
	
	
	$
	206
	$
	-Transfer securities from Available For Sale to Hold To Maturity classification
	
	
	$
	12,262
	$
	-Income tax benefit of stock options exercised
	
	
	$
	38
	$
	-


See accompanying notes.

7

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

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.

On January 23, 2004, the Company completed its acquisition of Mid Valley Bank ("MVB"). Mid Valley Bank, with nearly $177 million in assets at acquisition, consisted of 5 branch locations in the northern California
communities of Red Bluff, Redding, Corning and Chico.  The combined institution benefits the customers of Mid Valley Bank by providing an expanded array of financial products and services that the larger organization can provide, while also
solidifying the presence of PremierWest Bank in the northern California market. Internal system integration was completed in mid-May and as of July 1, 2004 all signage at the five Mid Valley Bank branches had been changed to PremierWest Bank. The
acquisition was accounted for using the purchase method of accounting. Accordingly, assets and liabilities of MVB have been recorded by the Company at their respective fair values at the time of the completion of the merger and the results of MVB
have been included with those of the Company since the date of acquisition. The effects of the business acquisition are further described in Note 2.

The Bank has conducted a general banking business operating primarily in Jackson, Josephine, Douglas, and Klamath counties of southern Oregon, and Siskiyou and Shasta counties of northern California.  The acquisition of MVB
added locations in Tehama and Butte counties of northern California and during the third quarter of 2004 the Company opened an office in the Yolo County community of Woodland, California. Its activities include the usual lending and deposit
functions of a commercial bank - commercial, real estate, installment, and mortgage loans; checking, time deposit, and savings accounts; mortgage loan brokerage services; and 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 balance sheet data as of December 31, 2003 was derived from audited financial statements and does not include all disclosures contained in the 2003 Annual Report to Shareholders. The interim consolidated financial
statements should be read in conjunction with the Company's 2003 consolidated financial statements, including the notes thereto, included in the 2003 Annual Report to Shareholders. 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 2003 Annual Report on Form 10-K. We believe that the judgments and 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.

Dividends declared- On March 1, 2004, the Company declared a 5% common stock dividend payable on June 21, 2004 to its May 28, 2004 common shareholders of record. On March 27, 2003,
the Company declared a 5% common stock dividend payable on June 20, 2003 to its May 30, 2003 common shareholders of record. Share and per share data for 2003 in the accompanying consolidated financial statements have been retroactively restated to
reflect the common stock dividends.

On July 19, 2004 the Company approved an annual cash dividend payment, to be declared quarterly and paid December 15, 2004 to preferred shareholders of record December 1, 2004. The dividend amount declared for the quarter
ending September 30, 2004 was $6.25 per share. Preferred stock dividends declared have been included in the calculation of fully diluted earnings per share.

8

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

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 the Bank, 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 nine months ended September 30, 2004 and 2003 resulted in an estimated weighted-average grant date fair value of $3.29 and $1.97 for the
three and nine months ended September 30, 2004 and 2003. Had compensation costs been determined consistent with SFAS 123, the Company's net income and earnings per common share, and diluted earnings per common share for the quarter and nine months
ended September 30, 2004 and 2003 would have been as follows: (Dollar in 000s, except per share amounts)

FOR THE THREE MONTHS ENDED
	
	FOR THE NINE MONTHS ENDEDSeptember 30, 2004
	September 30, 2003
	
	September 30, 2004
	September 30, 2003Net income:As reported
	
	$
	2,426
	$
	1,642
	$
	6,365
	$
	4,411Fair value of stock-basedcompensation cost, net of tax
	
	$
	(24)
	$
	(7)
	$
	(57)
	$
	(63)Pro forma net income
	
	$
	2,402
	$
	1,635
	$
	6,308
	$
	4,348Basic earnings per common share:As reported
	
	$
	0.16
	$
	0.13
	$
	0.43
	$
	0.35Pro forma
	
	$
	0.16
	$
	0.13
	$
	0.42
	$
	0.34Diluted earnings per share:As reported
	
	$
	0.15
	$
	0.13
	$
	0.41
	$
	0.34Pro forma
	
	$
	0.15
	$
	0.13
	$
	0.40
	$
	0.34


The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions for September 30, 2004 and 2003:

FOR THE THREE MONTHS ENDED
	
	FOR THE NINE MONTHS ENDEDSeptember 30, 2004
	
	September 30, 2003
	
	September 30, 2004
	
	September 30, 2003Dividend yield
	
	5.0%
	
	5.1%
	
	5.0%
	
	5.1%Expected life (years)
	
	7.75 years
	
	3 years
	
	7.75 years
	
	3 yearsExpected volatility
	
	40%
	
	48%
	
	40%
	
	48%Risk-free rate
	
	3.4%
	
	3.3%
	
	3.4%
	
	3.3%


NOTE 2 - ACQUISITION OF MID VALLEY BANK

On January 23, 2004, the Company completed its acquisition of Mid Valley Bank (MVB).  To complete its acquisition, the Company issued 1,697,473 shares of its common stock valued at $16,804,990 and $9,812,956 in cash to
shareholders of MVB. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the assets and liabilities of MVB have been recorded by the Company at their respective fair values at the time of the completion of
the transaction and the results of MVB have been included with those of the Company since acquisition. The excess of the Company's purchase price of MVB over the estimated net fair value of the assets acquired and the liabilities assumed, including
identifiable intangible assets, is reported as goodwill.

9

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

The estimated fair values of net assets acquired at the acquisition date remain preliminary as of the date of these financial statements and are summarized as follows: (Dollars in 000's)

ASSETSCash and due from banks
	
	
	$
	11,092Federal funds sold
	
	
	
	6,165Investment securities
	
	
	
	49,755Loans, net of allowance for loan losses
	
	
	
	101,458Property and equipment
	
	
	
	4,105Other assets
	
	
	
	22,888Total assets acquired
	
	
	$
	195,463LIABILITIESDeposits
	
	
	$
	165,126Other liabilities
	
	
	
	1,526Total liabilities assumed
	
	
	
	166,652Net assets acquired
	
	
	
	28,811$
	195,463


Component cost to the Company for the net assets acquired were as follows: (Dollars in 000's)

Fair value of common stock issued to Mid Valley Bank shareholders
	
	
	$
	16,805Cash paid to Mid Valley Bank shareholders
	
	
	
	9,813Direct transaction costs incurred
	
	
	
	627Restructuring charges in the form of severance and other payments
	
	
	
	1,566Net assets acquired
	
	
	$
	28,811


The direct transaction costs included in the above schedule involve expenses incurred primarily for legal, accounting, and investment banking services related to the business acquisition.  Restructuring charges primarily
include severance costs for the termination of personnel and charges for the discontinuance of contract activities for which management has established a plan that will be executed in 2004. Some of these restructuring charges are presently being
negotiated by management and may ultimately result in an adjustment to the preliminary valuation of goodwill.

During the quarter ending June 30, 2004, $460,000 in payments were made for restructuring charges while adjustments to the initial fair market value of assets acquired were made to reflect a $154,000 increase to investment
securities and $288,000 increase to property and equipment based on a final fair value assessment. In addition, increases of $197,000 were made to restructuring charges for additional severance and other accruals and $14,000 was accrued for direct
transaction costs associated with accounting and legal services relating to the acquisition. During the quarter ending September 30, 2004, $138,000 in payments were made for restructuring charges and there were no adjustments made to the initial
fair market value of assets acquired or restructuring charges. Each of the these adjustments resulted in an adjustment to the recorded value of goodwill.

The following reconciles the activity affecting the liability for restructure related charges:

Restructuring charges liability balance as of March 31, 2004
	
	
	$
	1,368Payments made for restructuring charges
	
	
	
	(598)Adjustments made to increase restructuring charge liability
	
	
	
	198Restructuring charges liability balance as of September 30, 2004
	
	
	$
	968


10

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

The following pro forma information represents the Company's consolidated results of operation as if the acquisition of MVB had occurred at the beginning of the earliest period presented. The pro forma information does not
purport to be indicative of the actual results of operations that would have occurred had the transaction taken place at the beginning of the periods presented or of future results of operations.  Management of the Company anticipates that
significant cost savings and operational synergies will be realized as the operations of Mid Valley Bank are fully integrated in 2004.

(Dollars in 000's, except earnings per share)

Three months ended September 30,
	
	Nine months ended September 30,2004
	
	2003
	
	2004
	
	2003Total interest and noninterest income
	
	$
	12,914
	$
	12,478
	$
	36,496
	$
	36,494Net income
	
	$
	2,426
	$
	1,956
	$
	6,182
	$
	5,342Basic earnings per common share
	
	$
	0.16
	$
	0.13
	$
	0.43
	$
	0.37Diluted earnings per common share
	
	$
	0.15
	$
	0.13
	$
	0.39
	$
	0.37Basic shares outstanding
	
	
	14,579,630
	
	14,547,493
	
	14,541,069
	
	14,539,948Diluted shares outstanding
	
	
	15,787,918
	
	14,689,015
	
	15,731,575
	
	14,601,688


NOTE 3 - INVESTMENT SECURITIES

Investment securities at September 30, 2004 and December 31, 2003 consisted of the following: (Dollars in 000's)

2004Gross
	
	Gross
	
	EstimatedAmortized
	
	unrealized
	
	unrealized
	
	faircost
	
	gains
	
	losses
	
	valueAvailable-for-saleU.S. Government and agency securities
	$
	6,131
	$
	-
	$
	(40)
	$
	6,091Mortgage-backed securities and collateralizedmortgage obligations
	
	483
	
	9
	
	(2)
	
	490Obligations of states and political subdivisions
	
	-
	
	-
	
	
	
	-Corporate bonds
	
	2,000
	
	59
	
	-
	
	2,059Equity securities
	
	353
	
	-
	
	-
	
	353Total
	$
	8,967
	$
	68
	$
	(42)
	$
	8,993Held-to-maturit yObligations of states and political subdivisions
	$
	12,262
	$
	520
	$
	-
	$
	12,782


During the third quarter 2004, the bank reclassified obligations of states and political subdivision securities from available-for-sale to held-to maturity to more accurately reflect the purpose and intent of the securities
portfolio. The unrealized holding gain at the time of transfer was $559,000 and is being amortized as an adjustment to yield from the date of transfer through the maturity date of each security transferred.

2003Gross
	
	Gross
	
	EstimatedAmortized
	
	unrealized
	
	unrealized
	
	faircost
	
	gains
	
	losses
	
	valueAvailable-for-saleU.S. Government and agency securities
	$
	3,997
	$
	48
	$
	-
	$
	4,045Mortgage-backed securities and collateralizedmortgage obligations
	
	595
	
	12
	
	(2)
	
	605Obligations of states and political subdivisions
	
	13,747
	
	554
	
	-
	
	14,301Corporate bonds
	
	3,957
	
	98
	
	-
	
	4,055Equity securities
	
	345
	
	-
	
	-
	
	345Total
	$
	22,641
	$
	712
	$
	(2)
	$
	23,351


At September 30, 2004, $16.2 million in investment securities were pledged to secure public deposits, certain nonpublic deposits, and borrowings.

11

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

NOTE 4-LOANS, NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

Loans as of September 30, 2004 and December 31, 2003 consisted of the following: (Dollars in 000's)

2004
	
	2003Real estate-commercial
	
	
	$
	339,458
	$
	284,881Real estate-construction
	
	
	
	127,963
	
	54,900Real estate-residential
	
	
	
	8,853
	
	3,170Commercial
	
	
	
	85,782
	
	60,598Agricultural
	
	
	
	21,331
	
	12,310Consumer
	
	
	
	43,744
	
	34,273Other
	
	
	
	10,383
	
	9,631637,514
	
	459,763Less:Allowance for loan losses
	
	
	
	(8,795)
	
	(5,466)Deferred loan fees
	
	
	
	(2,176)
	
	(1,325)(10,971)
	
	(6,791)Loans, net
	
	
	$
	626,543
	$
	452,972


Transactions in the allowance for loan losses for the nine months ended September 30, 2004 and September 30, 2003 were as follows: (Dollars in 000's)

2004
	
	2003BALANCE - Beginning of the period
	
	$
	5,466
	$
	4,838Loans charged-off
	
	
	(3,700)
	
	(414)Loan recoveries
	
	
	294
	
	43Loan loss provision
	
	
	650
	
	900Allowance for loan losses recorded with acquisition of Mid Valley Bank
	
	
	6,085
	
	-BALANCE - End of the period
	
	$
	8,795
	$
	5,367


The following table summarizes non-performing assets as of September 30, 2004 and December 31, 2003: (Dollars in 000's)

2004
	
	2003Loans on non-accrual status
	
	$
	2,455
	$
	385Loans past due greater than 90 days butnot on non-accrual status
	
	
	160
	
	15Total non-performing loans
	
	
	2,615
	
	400Other real estate owned
	
	
	550
	
	1,511Total non-performing assets
	
	$
	3,165
	$
	1,911Percentage of non-performing loans to total loans
	
	
	0.41%
	
	0.09%Percentage of non-performing assets to total assets
	
	
	0.41%
	
	0.33%


12

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

NOTE 5 - LINE OF CREDIT AND OTHER BORROWINGS

The Company has a secured line of credit available with the 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 September 30, 2004, the Company had pledged available collateral of approximately $43.9 million. As of September 30,

2004 and December 31, 2003, the Company had borrowed long-term funds from the FHLB against this line of credit, aggregating to $2.6 million and $23.1 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 September 30, 2004, the weighted average interest rate was 5.92% . Required
repayments of principal are $2.4 million at approximately $50,000 monthly through August 2008 and the remaining $158,000 being amortized at approximately $3,200 monthly with maturity dates ranging between July 2007 and February 2014.

Borrowings of $3.4 million at December 31, 2003, relate to repurchase agreements used for customer overnight sweep accounts. Certain investment securities, as required, have been pledged as collateral to fully secure the
long-term debt and the repurchase agreements.

Additionally, as of September 30, 2004, the Company has approximately $40 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 September 30, 2004 and December 31, 2003.

NOTE 6 - 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 September 30, 2004, the Company has $162.2 million of commitments to extend credit to customers and
$10.9 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 7 - 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.

Three-months ended September 30, 2004 and 2003:Weighted average number of common shares:
	
	2004
	
	2003Basic common shares
	
	14,579,630
	
	12,765,146Diluted common per shares
	
	15,787,918
	
	12,906,668Nine-months ended September 30, 2004 and 2003:Weighted average number of common shares:
	
	2004
	
	2003Basic common shares
	
	14,391,456
	
	12,757,601Diluted common per shares
	
	15,581,962
	
	12,819,341


NOTE 8 - RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This statement establishes standards
regarding classification and measurement of certain financial instruments with characteristics of both liabilities and equity. It requires financial instruments within the scope of this statement to be classified as liabilities (or an asset in some
circumstances). Many of these financial instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and was otherwise effective at the beginning of the first
interim period beginning after June 15, 2003. For financial instruments created before the issuance date of this statement and still existing at the beginning of the interim period of adoption, transition is achieved by reporting the cumulative
effect of a change in an accounting principle by initially measuring the financial instruments at fair value. Application of the provisions of this statement did not have a material impact on PremierWest's consolidated financial statements.

13

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities." This interpretation clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," and requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. This interpretation explains how to identify
variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. In December 2003, FASB made revisions and delayed implementation of certain provisions of FIN 46. As
a public entity that is not a "Small Business Issuer," PremierWest was required to apply FIN 46 to all unconsolidated variable interest entities no later than March 31, 2004, with the exception of unconsolidated special-purpose entities, which had
an implementation deadline of December 31, 2003. Special-purpose entities for this provision are expected to include entities whose activities are primarily related to securitizations or other forms of asset-backed financings or single-lessee
leasing arrangements. PremierWest's management does not expect that the application of the provisions of this interpretation will have a material impact on PremierWest's consolidated financial statements.

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

HIGHLIGHTS

For the third quarter and year-to-date period ended September 30, 2004, the Company earned $2,426,000 and $6,365,000 respectively, an increase of 47.75% and 44.30% when compared to the same periods a year ago. Diluted
earnings per share were $0.15 and $0.13 for the quarters ended September 30, 2004 and September 30, 2003. Return on average shareholder's equity was 11.18% and return on average assets was 1.26% for the quarter ended September 30, 2004 as compared
to a return on average shareholders' equity of 12.39% and a return on average assets of 1.20% for the quarter ended September 30, 2003.

The significant increase in net income in comparison to a year ago was driven by a combination of internal growth from existing operations and management's successful progression of its I-5 growth strategy for establishing
a community banking franchise between Sacramento, California to the south and Eugene, Oregon to the north.  Results of management's expansion plans in the current year include the acquisition on January 23, 2004 of Mid Valley Bank, the opening of a
full service branch office in Klamath Falls, Oregon and a loan production office in Woodland, California. The Woodland office will include a full service branch facility before year end. In addition, the Company opened two new Premier Finance
Company offices in Grants Pass and Roseburg, Oregon and announced its entry into the Bend, Oregon market with a loan production office.

At September 30, 2004 and December 31, 2003, gross loans, net of deferred loan fees, totaled $635.3 and $458.4 million, respectively, an increase of $176.9 million or 38.59% since year end and an increase of $210.0 million
or 49.39% when compared to gross loans, net of deferred fees, of $425.2 million as of September 30, 2003. Of this growth, approximately $108.0 million was attributable to the Mid Valley Bank acquisition. Deposits totaled $670.9 million at September
30, 2004 compared to $475.7 million at December 31, 2003 and $470.8 million at September 30, 2003, representing a 41.03% increase since year end and 42.50% compared to a year ago. A significant portion of this growth came as a result of the
acquisition of Mid Valley Bank from which $162.6 million of deposit growth can be attributed.

14

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

The Company recorded net income of $2.4 million for the three months ended September 30, 2004, which was an increase of $784,000 (or 47.75%)	 compared to the same period in 2003. The primary contributing factor to the
improvement in net income was from increased net interest income that resulted from a combination of a $3.1 million increase in interest income offset by a $61,000 increase in interest expense. 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.

Analysis for the three-month period ended
	
	
	
	
	
	IncreaseSeptember 30, 2004 and 2003 (Dollars in 000's)
	
	2004
	
	2003
	
	(Decrease)
	
	% ChangeAverage federal funds sold and investments
	$
	55,002
	$
	75,254
	
	$ (20,252)
	
	-26.91%Average gross loans
	
	623,305
	
	418,860
	
	204,445
	
	48.81%Average interest-earning assets
	
	678,307
	
	494,114
	
	184,193
	
	37.28%Average interest-bearing liabilities
	
	500,420
	
	383,794
	
	116,626
	
	30.39%Average total assets
	
	769,100
	
	545,864
	
	223,236
	
	40.90%Average equity
	
	86,771
	
	52,996
	
	33,775
	
	63.73%Average yield earned (1)
	
	6.68%
	
	6.69%
	
	(0.01)
	
	-0.15%Average rate paid
	
	0.95%
	
	1.26%
	
	(0.31)
	
	-24.60%Net interest spread
	
	5.73%
	
	5.43%
	
	0.30
	
	5.52%Net interest income to averageinterest-earning assets (net interestmargin) (1)
	
	5.73%
	
	5.44%
	
	0.29
	
	5.33%Return on average assets
	
	1.26%
	
	1.20%
	
	0.06
	
	5.00%Return on average equity
	
	11.18%
	
	12.39%
	
	(1.21)
	
	-9.77%Efficiency ratio (2)
	
	66.67%
	
	66.39%
	
	0.28
	
	0.42%


Notes:
(1) Tax equivalent at a 34% rate
(2) Non-interest expense divided by net interest income plus non-interest income

NET INTEREST INCOME- Net interest income before the loan loss provision increased $3.0 million for the three-month period ended September 30, 2004 as compared to the same period in
2003. The increase was primarily due to an increase in interest income of $3.0 million that resulted from higher levels of earning assets partially offset by a $61,000 increase in interest expense. The overall declining interest rate environment
between years impacted yields for both loans and deposits; however, average earning assets, which consists primarily of loans, increased 37.28% while average interest-bearing liabilities increased only 30.39% .  Further assisting the decline in
interest expense were changes in the Bank's overall deposit mix as interest paid on certificates of deposit declined 72 basis points and non-interest-bearing demand deposits, as a percentage of total deposits, increased to 26.34% as of September 30,
2004 compared to 23.25% as of September 30, 2003. The change in deposit mix is a direct result of management's efforts to reduce the Bank's past dependence on higher priced time certificate accounts and build a stable base of lower cost core
deposits.  Net loans increased approximately $206.7 million (including approximately $108.0 million from the acquisition of Mid Valley Bank) from September 30, 2003 to September 30, 2004 leading to an increase in loan interest income of
approximately $3.2 million for the three months ended September 30, 2004 compared to the same period of 2003. This was offset by a $100,000 decline in interest income from investments and fed funds sold as average balances and yields declined
approximately $20.0 million and 58 basis points respectively for the period ending September 30, 2004 as compared to the same period in 2003.  Overall, the Company's average interest-earning assets increased approximately $184.2 million in the Third
quarter of 2004 over 2003 and average interest-bearing liabilities increased approximately $116.6 million.  The Company's net interest margin, net interest income divided by average interest-earning assets, increased 29 basis points for the three
months ending September 30, 2004 compared to the same period of 2003.

LOAN LOSS PROVISION- The loan loss provision was $150,000 and $300,000 respectively for the three-month periods ended September 30, 2004 and September 30, 2003. The Company had net
charge-offs of $6,000 during the three-month period ended September 30, 2004 compared to net charge-offs of $188,650 for the corresponding period in 2003.

NON-INTEREST INCOME- Non-interest income increased 5.50% to $1.7 million for the three months ended September 30, 2004, as compared to $1.6 million for the same period in 2003. The
$88,000 increase was a consequence of benefits from the merger and internal growth. Of the overall increase, service charges on deposit accounts contributed $129,000, $37,000 was related to investment services and $193,000 was related to other
sources of non-interest income including fees, commissions and increased cash surrender value of life insurance. These increases were partially offset by a $270,000 decrease in mortgage loan fee income that resulted from lower demand for home
mortgages and a decline of $1,000 in gains on sales of investment securities. Approximately $298,000 of total non-interest income arose from the acquired operations of Mid Valley Bank which more than offset the $270,000 decline in mortgage loan fee
income from the PremierWest operations.

15

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

NON-INTEREST EXPENSE- Non-interest expense increased approximately $2.1 million for the three months ended September 30, 2004 as compared to the corresponding period in 2003. The
increase resulted from a $948,000 increase in salaries and benefit expenses; a $246,000 increase in occupancy and equipment expenses; and a $886,000 increase in other non-interest expenses including a loss on the sale of other real estate of
$286,000. Of the total increase, 39.00% or $819,000 was directly attributable to the acquired ongoing operations of Mid Valley Bank and consisted of $572,000 in salaries and benefits expense, $119,000 in occupancy expense and $128,000 in other
non-interest expenses. The remaining 61.00% increase for the quarter approximated $1.3 million and resulted from the on-going operations of PremierWest. The increases included approximately $376,000 in salaries and benefits expense attributed to
annual salary increases, additional staffing associated with two new offices and key administrative positions to support the Bank's expansion; $127,000 in occupancy expense primarily as a result of greater depreciation expense in support of the
Company's growth; and approximately $758,000 in other non-interest expense.

EFFICIENCY RATIO- The Company's efficiency ratio was 66.67% for the Third quarter of 2004 compared to 66.39% for the Third quarter of 2003. This deterioration was anticipated and
came as a result of increased non-interest expenses associated with merger related activities that occurred in the first two quarters of 2004. However, the efficiency ratio improved 139 basis points compared to the 68.06% ratio for the immediately
preceding quarter ended June 30, 2004. Management does not anticipate any further merger related expenses and expects progressive efficiency gains, with a targeted efficiency ratio in the low 60% range. The 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 from the increase in the cash surrender value of life insurance, which is nontaxable,
was 65.55% for the third quarter of 2004 compared to 64.88% for the third quarter of 2003.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

The Company recorded net income of $6.4 million for the nine months ended September 30, 2004, which was an increase of $2.0 million (or 44.30%)	 compared to the same period in 2003. The primary contributing factor to
improved net income was increased net interest income from a combination of a $7.2 million increase in interest income and a $221,000 decrease in interest expense. 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.

Analysis for the nine-month period ended
	
	
	
	
	
	IncreaseSeptember 30, 2004 and 2003 (Dollars in 000's)
	
	2004
	
	2003
	
	(Decrease)
	
	%ChangeAverage federal funds sold and investments
	
	$ 73,213
	
	$ 72,436
	
	$ 777
	
	1.07%Average gross loans
	
	586,746
	
	406,309
	
	180,437
	
	44.41%Average interest-earning assets
	
	659,959
	
	478,745
	
	181,214
	
	37.85%Average interest-bearing liabilities
	
	490,116
	
	378,061
	
	112,055
	
	29.64%Average total assets
	
	742,780
	
	531,258
	
	211,522
	
	39.82%Average equity
	
	83,236
	
	51,530
	
	31,706
	
	61.53%Average yield earned (1)
	
	6.34%
	
	6.74%
	
	(0.40)
	
	-5.93%Average rate paid
	
	0.97%
	
	1.40%
	
	(0.43)
	
	-30.71%Net interest spread
	
	5.37%
	
	5.34%
	
	0.03
	
	0.56%Net interest income to averageinterest-earning assets (net interestmargin) (1)
	
	5.38%
	
	5.36%
	
	0.02
	
	0.37%Return on average assets
	
	1.14%
	
	1.11%
	
	0.03
	
	2.70%Return on average equity
	
	10.20%
	
	11.41%
	
	(1.21)
	
	-10.60%Efficiency ratio (2)
	
	67.55%
	
	67.95%
	
	(0.40)
	
	-0.59%


Notes:
(1) Tax equivalent at a 34% rate
(2) Non-interest expense divided by net interest income plus non-interest income

NET INTEREST INCOME- Net interest income before the loan loss provision increased $7.4 million for the nine-month period ended September 30, 2004 as compared to the same period in
2003. The increase was primarily due to an increase in interest income of $7.2 million that resulted from higher levels of earning assets in combination with a reduction in interest expense by $221,000. The declining interest rate environment
impacted yields for both loans and deposits; however, average earning assets, which consist primarily of loans, increased 37.85% while interest-bearing liabilities increased 29.64% . Further assisting the decline in interest expense were changes in
the Bank's overall deposit mix as interest paid on certificates of deposit declined 82 basis points while non-interest-bearing demand deposits, as a percentage of total deposits, increased to 26.34% of September 30, 2004 compared to 23.25% as of
September 30, 2003. The change in deposit mix is a direct result of management's efforts to reduce the Bank's past dependence on higher priced time certificate accounts and build a stable base of lower cost core deposits. Net loans increased
approximately $206.7 million (including approximately $108.0 million from the acquisition of Mid Valley Bank) from September 30, 2003 to September 30, 2004 leading to an increase in loan interest income of approximately $7.5 million for the nine
months ended September 30, 2004 compared to the same period of 2003. This was offset by a

16

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

$302,000 decline in interest income from investments and fed funds sold primarily the result of a 57 basis point lower average yield for the nine month period ending September 30, 2004 compared to the same period in 2003.
Overall, the Company's average interest-earning assets increased approximately $181.2 million during the first three quarters of 2004 over 2003 and average interest-bearing liabilities increased approximately $112.1 million. The Company's net
interest margin, net interest income divided by average interest-earning assets, increased 2 basis points for the nine months ending September 30, 2004 compared to 2003.

LOAN LOSS PROVISION- The loan loss provision was $650,000 and $900,000 for the nine month periods ended September 30, 2004 and September 30, 2003, respectively. The Company had net
charge-offs of $3.4 million during the nine-month period ended September 30, 2004 compared to net charge-offs of $371,000 for the corresponding period in 2003.  The unusually large level of net charge-offs experienced during the nine-month period
ended September 30, 2004 was principally the result of one loan acquired from the Mid Valley Bank portfolio that had been recognized at acquisition and was specifically reserved for in MVB's allowance for loan losses.

NON-INTEREST INCOME- Non-interest income increased 8.92% to $4.9 million for the nine months ended September 30, 2004, as compared to $4.5 million for the same period in 2003.  The
acquired operations of Mid Valley Bank contributed $672,000 to this improvement. Of the overall increase, service charges on deposit accounts contributed $444,000, while $165,000 was related to investment services and $483,000 was related to other
sources of non-interest income including fees, commissions and increased cash surrender value of life insurance. These increases were offset by a $662,000 decrease in mortgage loan fee income resulting from lower demand for home mortgages and a
decline of $26,000 in gains on sales of investment securities.

NON-INTEREST EXPENSE- Non-interest expense increased approximately $5.2 million for the nine months ended September 30, 2004 as compared to the corresponding period in 2003. The
increase resulted from a $2.6 million increase in salaries and benefit expenses; a $672,000 increase in occupancy and equipment expenses; and a $1.9 million increase in other non-interest expenses. Of the total increase, 42.31% or approximately $2.2
million was directly attributable to the acquired operations of Mid Valley Bank and consisted of $1.45 million in salaries and benefits expense, $274,000 in occupancy expense and $467,000 in other non-interest expenses.  The remaining 57.69%
increase for the nine month period approximated $3.0 million and resulted from the on-going operations of PremierWest. The increases included approximately $1.13 million in salaries and benefits expense attributed to annual salary increases,
additional staffing associated with two new offices and key administrative positions to support the Bank's expansion; $398,000 in occupancy expense primarily as a result of greater depreciation expense in support of the Company's growth; and
approximately $1.4 million in other non-interest expense, including approximately $150,000 in one-time merger related expenses associated with the acquisition of Mid Valley Bank and a loss on the sale of other real estate of $286,000.

EFFICIENCY RATIO- The Company's efficiency ratio was 67.55% for the nine month period ending September 30, 2004 compared to 67.95% for the same period of 2003. The improvement in
this key measure of operating efficiency was the result of combined increases in the Company's net interest income and non-interest income that exceeded the increase that occurred in non-interest expense for the nine month period ending September
30, 2004 when compared to the same period of 2003. While the Company experienced improvement in this ratio for the nine-month period ending September 30, 2004 as compared to the same period of 2003, the ratio does reflect an unfavorable movement of
223 basis points when compared to the 65.32% efficiency ratio achieved for the fourth quarter ending December 31, 2003. This change was anticipated due to increased non-interest expenses associated with merger and growth related activities that
occurred during the first nine months of 2004.  Management does not anticipate any further merger related expenses and expects progressive efficiency gains, with a targeted efficiency ratio in the low 60% range. The 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 66.26% for the nine months ended September 30, 2004 compared to 66.31% for the comparable period ended September 30, 2003.

FINANCIAL CONDITION -
Total assets of $769.3 million at September 30, 2004 increased 34.65% over total assets of $571.3 million at December 31, 2003. This amount includes $195 million
of assets initially recognized upon the acquisition of Mid Valley Bank. As of September 30, 2004, net loans totaled $626.5 million of which the operations of Mid Valley Bank contributed approximately $108.0 million.  Federal funds sold decreased to
$21.3 million at September 30, 2004 from $31.4 million at December 31, 2003.  Investment securities decreased $1.6 million as $10.5 million of the securities acquired with the Mid Valley acquisition were offset by securities that were called or
matured during the nine months ended September 30, 2004.

Gross loans grew by approximately $176.9 million during the nine months ending September 30, 2004, including approximately $68.9 million from PremierWest Bank loan growth and $108.0 million in loans from the Mid Valley Bank
acquisition. Net loans accounted for 81.45% of total assets at September 30, 2004 compared to 79.29% at December 31, 2003. As of September 30, 2004, the allowance for loan losses increased to $8.8 million from $5.5 million at December 31, 2003. The
increase in the allowance for loan losses was significantly impacted by the allowance for loan losses acquired with Mid Valley Bank. The Company's ratio of allowance for loan losses to total loans was 1.38% at September 30, 2004, compared to 1.19%
at December 31, 2003. 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 $3.2 million and $1.9 million at
September 30, 2004 and December 31, 2003, respectively. At September 30, 2004, approximately $1.9 million or 59.4% of total non performing assets were directly attributable to the acquired operations of Mid Valley Bank.

Deposits increased to $670.9 million at September 30, 2004 with $162.6 attributable to the operations acquired from Mid Valley Bank. This increase resulted in a loan-to-deposit ratio of 93.39% compared to 95.21% as of
December 31, 2003. The decrease in the loan-to-deposit ratio is attributable to loans and deposits acquired from MVB which separately had a loan to deposit ratio of 61.40% compared to 99.78% for PremierWest Bank. Management has continued to focus on
shifting the deposit mix away from higher-priced certificates of deposit and into core deposit products, especially non-interest demand deposits. The percentage of non-interest-bearing deposits to total deposits increased to 26.35% at September 30,
2004 compared to 25.53% at December 31, 2003.

17

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

The table below sets forth certain summary balance sheet information for September 30, 2004 and December 31, 2003: (Dollars in 000's)

September 30
	
	December 31
	
	Increase (Decrease)2004
	
	2003
	
	9/30/04 - 12/31/03(Dollars in 000's)ASSETSFederal funds sol d
	
	21,260
	
	31,400
	
	(10,140)
	
	-32.29%Securities
	
	21,255
	
	23,351
	
	(2,096)
	
	-8.98%Federal Home Loan Bankdeposits and stock
	
	2,162
	
	1,797
	
	365
	
	20.31%Loans, net
	
	626,543
	
	452,972
	
	173,571
	
	38.32%Other assets (1)
	
	98,036
	
	61,801
	
	36,235
	
	58.63%Total assets
	
	$ 769,256
	
	$ 571,321
	
	$ 197,935
	
	34.65%LIABILITIESNoninterest-bearingdeposits
	
	176,754
	
	121,467
	
	55,287
	
	45.52%Interest-bearingdeposits
	
	494,155
	
	354,279
	
	139,876
	
	39.48%Total deposits
	
	670,909
	
	475,746
	
	195,163
	
	41.02%Other liabilities (2)
	
	10,527
	
	30,824
	
	(20,297)
	
	-65.85%Total liabilities
	
	681,436
	
	506,570
	
	174,866
	
	34.52%SHAREHOLDERSEQUITY
	
	87,820
	
	64,751
	
	23,069
	
	35.63%Total liabilitiesand share-holders equit y
	
	$ 769,256
	
	$ 571,321
	
	$ 197,935
	
	34.65%


(1)     Includes cash and due from
banks, unrealized gains on securities transferred from available-for-sale to
held-to-maturity
               
classification, other equity investments, premises and equipment, goodwill,
accrued interest receivable, bank-owned life
               
insurance and other intangible assets

(2)    Includes borrowings, repurchase
agreements, accrued interest payable and other liabilities

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. Including the acquisition of Mid Valley Bank, the Company's liquidity declined during the nine-month period ended September 30, 2004. Excess cash was invested on a short-term basis into federal
funds sold and interest-earning deposits with the FHLB. As of September 30, 2004, the Company had $21.3 million in federal funds sold.

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 September 30, 2004, $2.6 million had been advanced
in long-term borrowings from the FHLB against the Company's credit line at an average cost of approximately 5.92% for the Third quarter of 2004 compared to 2.78% for the same period in 2003. The Company also has established credit lines of
approximately $40 million through certain correspondent banks and the discount window with the Federal Reserve Bank of San Francisco.

At September 30, 2004, the Company had approximately $173.2 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.

18

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

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 risk. It requires minimum standards, by capital tier, for risk-based capital. 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 September 30, 2004, the Company's regulatory capital ratios were as follows: total risk-based capital ratio of 10.19%, Tier 1 capital ratio of
8.96%, and a leverage capital ratio of 8.66% . 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 non-interest-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 September 30, 2004 as compared to December 31, 2003.

As stated in the annual report on Form 10-K for 2003, 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, 2003.

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. Further, management's compliance efforts are on schedule for meeting the documentation and testing requirements of Section 404 of the Sarbanes-Oxley Act by year-end.

19

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

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 September 30, 2004.

ITEM 5. OTHER INFORMATION

[None.]

20

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)
	
	ExhibitsThe following exhibits are filed herewith, and this list constitutes the exhibit index:10.1
	
	Employment Agreement, dated July 29, 2004, between PremierWest Bancorp and John Anhorn 110.2
	
	Amendment, dated July 29, 2004, to Executive Deferred Compensation Agreement, dated August 9, 2002, betweenPremierWest Bancorp and John Anhorn 210.3
	
	Supplemental Executive Retirement Plan Agreement, dated July 29, 2004, between PremierWest Bancorp and JohnAnhorn 310.4
	
	Amendment, dated July 29, 2004, to Executive Survivor Income Agreement, dated November 12, 2002 betweenPremierWest Bancorp and John Anhorn 410.5
	
	Employment Agreement, dated July 29, 2004, between PremierWest Bancorp and Tom Anderson 510.6
	
	Executive Deferred Compensation Agreement, dated July 29, 2004, between PremierWest Bancorp and TomAnderson 610.7
	
	Supplemental Executive Retirement Plan Agreement, dated July 29, 2004, between PremierWest Bancorp and TomAnderson 710.8
	
	Amendment, dated July 29, 2004, to Executive Survivor Income Agreement, dated November 12, 2002 betweenPremierWest Bancorp and Tom Anderson 831.1
	
	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).31.2
	
	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).32.1
	
	Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
	
	Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.




> A substantially identical agreement exists between PremierWest Bancorp and Richard Hieb, except that Mr. Hieb's
> agreement provides for a base salary of $150,000.
>     A substantially identical agreement exists between PremierWest Bancorp and Richard Hieb.
>     A substantially identical agreement exists between PremierWest Bancorp and Richard Hieb, except that Mr. Hieb's
> agreement provides for retirement pay of 42% of base salary.
>     A substantially identical agreement exists between PremierWest Bancorp and Richard Hieb, except that Mr. Hieb'sagreement provides for a pre-retirement death benefit of $150,000.
>     A substantially identical agreement exists between PremierWest Bancorp and James Earley, except that Mr.Earley's agreement provides for a base salary of $110,000.
>     A substantially identical agreement exists between PremierWest Bancorp and James Earley.
>     A substantially identical agreement exists between PremierWest Bancorp and James Earley, except that Mr.Earley's agreement provides for retirement pay of 40% of base salary.
>     A substantially identical agreement exists between PremierWest Bancorp and James Earley, except that Mr.Earley's agreement provides for pre- and post-retirement death benefits of $150,000 and $150,000, respectively.



(b)         Reports on Form 8-K

> On October 18, 2004, the Company filed a current report on Form 8-K to provide under Items 7 and 12, a press release reporting the release of earnings for the Third quarter of 2004. Such information shall not be deemed
> "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.

21

---

PREMIERWEST BANCORP AND SUBSIDIARY 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

September 30, 2004

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: November 5, 2004 
PREMIERWEST BANCORP

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

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

22

---



Exhibit 10.1

Employment Agreement for John Anhorn

---

PREMIERWEST BANCORP

EMPLOYMENT AGREEMENT



FORJOHN ANHORN



Dated as of July 29, 2004

---

Table of ContentsPage1.
      
      EMPLOYMENT
      
      11.1
      
      Officer Position
      
      11.2
      
      Board Service
      
      12.
      
      TERM OF AGREEMENT
      
      22.1
      
      Initial Term/Automatic Renewal
      
      22.2
      
      Perpetual Term After Change in
      Control
      
      22.3
      
      Termination Upon Retirement
      
      23.
      
      NO TERM OF EMPLOYMENT
      
      24.
      
      DUTIES
      
      24.1
      
      Duties
      
      24.2
      
      Obligations
      
      25.
      
      COMPENSATION
      
      35.1
      
      Base Salary
      
      35.2
      
      Vacation
      
      35.3
      
      Stock Options
      
      35.4
      
      Long-Term Care Insurance
      
      35.5
      
      Disability Policy
      
      35.6
      
      Automobile
      
      45.7
      
      Club Dues
      
      45.8
      
      Other Benefits
      
      45.9
      
      Reimbursements
      
      45.10
      
      Existing Benefit Agreements
      
      46.
      
      TERMINATION
      
      56.1
      
      For Cause
      
      56.2
      
      Without Cause
      
      56.3
      
      For Good Reason
      
      56.4
      
      Resignation
      
      56.5
      
      Death or Disability
      
      66.6
      
      Retirement
      
      67.
      
      DEFINITIONS
      
      67.1
      
      Cause
      
      67.2
      
      Good Reason
      
      77.3
      
      Disability
      
      87.4
      
      Change in Control
      
      88.
      
      PAYMENT UPON TERMINATION
      
      99.
      
      RETIREMENT BENEFITS
      
      99.1
      
      Stock Option Vesting
      
      99.2
      
      401(k) Contribution
      
      99.3
      
      Retiree Health Insurance
      
      99.4
      
      Long-Term Care Insurance
      
      1010.
      
      CONSIDERATION FOR RELEASE OF
      CLAIMS
      
      1010.1
      
      Normal Retirement Benefits
      
      10




i

---

10.2
      
      Disability Insurance
      
      1010.3
      
      Post-Employment Consulting
      
      1011.
      
      CONSIDERATION FOR NOT COMPETING
      
      1111.1
      
      Self-Imposed Limitation
      
      1111.2
      
      Amount/Payment of Consideration
      
      1112.
      
      CHANGE IN CONTROL RETENTION
      BONUS
      
      1113.
      
      IRC 


      280G ADJUSTMENT
      
      1113.1
      
      Adjustment of Benefits
      
      1113.2
      
      Adjustment for Overpayments and
      Underpayments
      
      1214.
      
      POTENTIAL TRANSACTION BONUS
      
      1215.
      
      CONFIDENTIALITY AND CREATIVE
      WORK
      
      1315.1
      
      Nondisclosure
      
      1315.2
      
      Return of Material
      
      1315.3
      
      Injunctive Relief
      
      1315.4
      
      Creative Work
      
      1416.
      
      DISPUTE RESOLUTION
      
      1416.1
      
      Arbitration
      
      1416.2
      
      Expenses/Attorneys' Fees
      
      1416.3
      
      Injunctive Relief
      
      1417.
      
      NOTICES
      
      1518.
      
      GENERAL PROVISIONS
      
      1518.1
      
      Governing Law
      
      1518.2
      
      Saving Provision
      
      1518.3
      
      Survival Provision
      
      1518.4
      
      Captions and Counterparts
      
      1518.5
      
      Entire Agreement
      
      1518.6
      
      Previous Agreement
      
      1618.7
      
      Waiver/Amendment
      
      1618.8
      
      Assignment
      
      1619.
      
      ADVICE OF COUNSEL
      
      17




ii

---



EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") by and
among PremierWest Bancorp, an Oregon corporation, PremierWest Bank, an Oregon
state chartered bank (the "Bank") (collectively "PremierWest") and John Anhorn
("Executive"), is dated July 29, 2004.



RECITALS

A.Incentive to
Continued Service. PremierWest recognizes that
Executive possesses unique skills, knowledge, and experience related to
PremierWest's business and Executive has made and is expected to continue to
make major contributions to the profitability, growth and financial strength of
PremierWest and its affiliates. To assure itself of the continuity of
management, PremierWest desires to provide incentives for Executive to remain
employed until retirement age and following a Change in Control.

B.Replace Existing
Agreement. Executive and PremierWest were parties
to an employment agreement dated April 2, 1998 and another employment agreement
dated August 9, 2002. The parties intend for this Agreement to supersede and
replace the provisions of these previous employment agreement, except as
otherwise stated herein.

C.No Currently
Anticipated Change in Control. As of the date of
this Agreement none of the conditions or events included in the definition of
the term "golden parachute payment" that is set forth in Section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(l)(ii) [12 CFR 359.1(f)(l)(ii)]
exists or, to the best knowledge of PremierWest, is contemplated insofar as
PremierWest or any affiliates are concerned.



AGREEMENT

> 1. EMPLOYMENT

1.1Officer Position.
    PremierWest Bancorp and the Bank shall continue to employ Executive to serve as President and Chief
    Executive Officer
    according to the terms and conditions of this Agreement,
    for the period stated in Section 2 below.

1.2Board Service. Executive is
currently serving on the boards of directors of PremierWest Bancorp (the
"Board") and the Bank (the "Bank Board"). PremierWest Bancorp shall nominate
Executive for election as a director at such times as necessary so that
Executive will, if elected by stockholders, remain on the Board throughout the
term of this Agreement. PremierWest shall also undertake every lawful effort to
ensure that Executive continues throughout the term of his employment on the
Bank Board. Executive shall be deemed to have resigned from the Board and the
Bank Board effective immediately after termination of Executive's employment,
regardless of whether Executive submits a formal, written resignation as
director.

1

---

> 2. TERM OF AGREEMENT.

2.1Initial Term/Automatic Renewal.
The initial term of this Agreement shall expire on December 31, 2006. On each anniversary of the
expiration date, this Agreement shall be extended automatically for one (1)
additional year unless the Board determines that the term shall not be extended.
If the Board determines not to extend the term, it shall promptly notify
Executive in writing and this Agreement will remain in force only until its term
expires. The Board's decision not to extend the term of this Agreement shall not
by itself give Executive any rights under this Agreement to claim an adverse
change in his position, compensation, or circumstances or otherwise to claim
entitlement to rights under Sections 10, 11, or 12 below.

2.2Perpetual Term After Change in Control.
Following a Change in Control, this Agreement will be subject to a perpetual
term and will only be terminable with Executive's written consent.

2.3Termination Upon Retirement.
Unless sooner terminated, Executive's employment shall terminate automatically
when he reaches age 65.

3.NO TERM OF EMPLOYMENT.
Notwithstanding the term of this Agreement, PremierWest may terminate
Executive's employment at any time for any lawful reason or for no reason at
all, subject to the provisions of this Agreement.

4. DUTIES.

4.1Duties. As President and Chief
Executive Officer, Executive shall serve under the direction of the Board and the Bank Board and in
accordance with the Articles of Incorporation and Bylaws (as each may be amended
or restated from time to time) of PremierWest Bancorp and the Bank,
respectively.

4.2Obligations.

(a)
Executive agrees that to the best of Executive's ability and
experience, Executive will at all times loyally and conscientiously
perform all of the duties and obligations required of Executive pursuant to the
express and implicit terms of this Agreement and as directed by the Board or the
Supervisor.

(b)
Executive shall devote Executive's entire working time,
attention and efforts to PremierWest's business and affairs, shall faithfully
and diligently serve PremierWest's interests and shall not engage in any
business or employment activity that is not on PremierWest's behalf (whether or
not pursued for gain or profit) except for (a) activities approved in writing in
advance by the Board and (b) passive investments that do not involve Executive
providing any advice or services to the businesses in which the investments are
made.

2

---

5.COMPENSATION. For all services
performed under this Agreement, PremierWest agrees to pay the following
compensation and benefits:

5.1Base Salary. Executive's annual
base salary is $210,000
payable in semi-monthly installments (the "Base Salary").
Executive's base salary shall be subject to annual review by the Board's
Compensation Committee. Taking into account the committee's recommendation, the
Board may increase the Base Salary, but the Base Salary shall not be reduced.

5.2Vacation. Executive is entitled
to not less than four (4) weeks of paid vacation per year to be used in
accordance with the terms and conditions of the Bank's personnel policies.
Notwithstanding anything in the Bank's personnel policies to the contrary, up to
two weeks of Executive's four weeks of paid vacation may be carried over from
one year to the next if unused by the end of the year, but Executive shall not
be entitled under any circumstance to payment for unused vacation.

5.3Stock Options. Executive is
eligible to participate in PremierWest Bancorp's stock option plans and other stock-based
compensation, incentive, bonus, or purchase plans currently existing or adopted
during the term of this Agreement for the benefit of officers or employees. The
Employment Agreement dated April 2, 1998 between Executive and PremierWest
continues to govern the terms of the stock options granted under that agreement
except thatExecutive
acknowledges that he is prevented from treating the entirety of the stock
options granted on April 2, 1998 as incentive stock options. Executive agrees
that the portion of the stock option grant exceeding Internal Revenue Service
limits for incentive stock options shall be treated as nonqualified stock
options under the Internal Revenue Code, even though the original intention when
the stock option was granted might have been that the entire stock option grant
would be a qualified incentive stock option grant.

5.4Long-Term Care Insurance.
PremierWest currently pays the premiums on long term care insurance policies for
Executive and Executive's spouse. PremierWest may cease to pay such premiums at
any time prior to a Change in Control or prior to vesting of such benefits under
Section 9 or 10 below, but following a Change in Control or vesting of the
benefits under Section 9 or 10 below, PremierWest shall continue to pay all
remaining premium payments, if PremierWest has made a premium payment on the
policy the preceding 12 months.

5.5Disability Policy. PremierWest
shall maintain or cause to be maintained the disability policy currently in
force for Executive: (policy number OOC7583940, effective October 1,1998,
Standard Insurance Company) or a replacement disability policy providing equal
or greater disability benefits. Disability benefits will be paid out under the
terms of the policy.

5.6Automobile. PremierWest has
purchased a vehicle for Executive's use during the term of his employment. The
vehicle will have a maximum cost determined by the Chairman of the Board or a
Vice Chairman of the Board. PremierWest will pay all expenses associated with
the maintenance, repair, and operation of the vehicle, including insurance
coverage. Executive shall maintain records of his use of the vehicle with
sufficient detail to allow PremierWest to determine Executive's personal versus
business use of the vehicle. Executive's

3

---

year end W-2 will include the value of the personal use of
the vehicle as required by IRS regulations. Because the value of Executive's
personal use of the vehicle will be treated as taxable income to him,
PremierWest shall annually make a cash payment to Executive in an amount
sufficient to offset fully all taxes payable by Executive that are attributable
to his personal use of the vehicle, and the cash payment shall be grossed up to
compensate Executive for taxes payable on the cash payment itself. Upon
termination of Executive's employment other than Termination For Cause or
Resignation (as defined below), PremierWest shall transfer all right, title, and
interest in and to the vehicle to Executive.

5.7Club Dues. During the term of
this Agreement, PremierWest shall pay Executive's monthly golf and social dues
at the Rogue Valley Country Club.

5.8Other Benefits. Executive is
entitled to participate in all officer or employee compensation, bonus,
incentive, and benefit plans in effect from time to time throughout the term of
this Agreement, including without limitation plans providing pension, medical,
dental, disability, and group life benefits, and 401(k) retirement plans, and to
receive any and all other fringe benefits provided from time to time, provided
that Executive satisfies the eligibility requirements for any such plans or
benefits.

5.9Reimbursements. Executive shall
be entitled to reimbursement for all reasonable business expenses incurred in
performing his obligations under this Agreement, including but not limited to
all reasonable business travel and entertainment expenses incurred while acting
at the request of or in the service of PremierWest, provided such expenses are
incurred and accounted for in accordance with the policies and procedures
established from time to time by PremierWest.

5.10Existing Benefit Agreements.
Executive and PremierWest are already parties to the following additional
benefit agreements, the benefits under which shall be governed solely by the
terms of those agreements:

(b)      Executive Survivor Income
    Agreement (death benefits); and

(c)  Deferred Compensation Agreement.



4

---

6.TERMINATION. Executive's
employment may be terminated before the expiration of this Agreement as
described in this Section, in which event Executive's compensation and benefits
shall terminate except as otherwise provided in this Agreement. Any purported
termination by PremierWest or by Executive shall be communicated by written
notice of termination to the other. The notice must state (i) the specific
termination provision of this Agreement relied upon, (ii) the date on which
termination shall become effective and (iii) if Termination For Cause or
Termination For Good Reason the notice must state in reasonable detail the facts
and circumstances forming the basis for termination. Employment shall terminate:

6.1For Cause. Upon delivery to
Executive of notice of termination of Executive for Cause (as defined in Section
7.1 below), along with a copy of the duly adopted Board or Bank Board resolution
finding Cause, as described below ("Termination For Cause").

(a) As a prerequisite to Termination For Cause, at a
meeting called and held for such purpose the Board or Bank Board must adopt a
resolution which (i) contains findings that, in the good faith opinion of the
Board or Bank Board, as appropriate, Executive has committed an act constituting
Cause, and (ii) specifies the particulars thereof in detail. The resolution must
be adopted by the affirmative vote of at least 75% of the directors of the Board
or the Bank Board.

(b) Notice of that meeting and the proposed
Termination For Cause shall be given to Executive a reasonable amount of time
before the meeting. Executive and his counsel (if Executive chooses to have
counsel present) shall have a reasonable opportunity to be heard at the meeting.
Nothing in this Agreement limits Executive's or his beneficiaries' right to
contest the validity or propriety of the Board or Bank Board's determination of
Cause.

6.2Without Cause. Upon
PremierWest's termination of Executive without Cause, upon 90 days' written
notice, at any time in PremierWest's sole discretion, for any reason other than
for Cause or for no reason ("Termination Without Cause"). A Change in Control
does not in itself constitute Termination Without Cause.

6.3For Good Reason. Upon
Executive's termination of the employment for Good Reason (as defined in Section
7.2 below) ("Termination For Good Reason").

6.4Resignation. Upon Executive's
voluntary resignation without Good Reason ("Resignation"), written notice of
which Executive must give to PremierWest at least 90 days in advance of
Resignation.

6.5Death or Disability. Upon
Executive's death or Disability (as defined in Section 7.3 below).

6.6Retirement. Upon Executive
reaching the retirement age of 65 ("Retirement Age"). The automatic termination upon
reaching Retirement Age is referred to as "Retirement."

5

---

7. 
DEFINITIONS.

7.1
Cause. "Cause" for
Executive's termination will exist upon the occurrence of one or more of the following events:

(a)Fraudulent Conduct.
An intentional act of fraud, embezzlement, or theft by Executive in the course
of his employment with PremierWest Bancorp or the Bank. No act or failure to act
on Executive's part shall be deemed to have been intentional if it was due
primarily to an error in judgment or negligence. An act or failure to act on
Executive's part shall be considered intentional if it is not in good faith and
if it is without a reasonable belief that the action or failure to act is in
PremierWest's best interests;

(b)Material Breach of
Agreement. A material breach by Executive of this
Agreement if such breach is not remedied or is not being remedied to the Board
or the Bank Board's satisfaction within 30 days after written notice including a
detailed description of the breach has been delivered by the respective board to
Executive;

(c)Gross
Negligence/Insubordination. Gross negligence or
insubordination by Executive in the performance of his duties as an officer of
PremierWest Bancorp or the Bank if such gross negligence or insubordination is
not remedied or is not being remedied to the Board or the Bank Board's
satisfaction within 30 days after written notice including a detailed
description of the gross negligence or insubordination has been delivered by the
respective board to Executive;

(d)Breach of Fiduciary
Duties. A breach by Executive of his fiduciary
duties to PremierWest Bancorp and its stockholders or misconduct involving
dishonesty, in either case whether in his capacity as an officer or as a
director of PremierWest Bancorp or the Bank;

(e)Criminal Conviction.
Conviction of Executive for a felony or conviction of a misdemeanor involving
moral turpitude;

(f)Violation of Law.
Intentional violation of any law or significant policy of PremierWest Bancorp or
the Bank committed in connection with Executive's employment, which has a
material adverse effect on PremierWest Bancorp or the Bank; or

(g)FDIC Removal Order.
Removal of Executive from office or permanent prohibition of Executive from
participating in the conduct of PremierWest Bank's affairs by an order issued
under section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(l).

7.2Good Reason. "Good Reason" for
Executive's resignation of employment will exist upon the occurrence, without
Executive's consent, of one or more of the following events, if Executive has
informed PremierWest in writing of the circumstances described below

6

---

in this Section 7.2 that could give rise to Termination
For Good Reason and PremierWest has not removed the circumstances within 30 days
of the written notice:

(a)Reduction in Base Salary.Areduction of Executive's Base Salary;

(b)Reduced Participation in Bonus, Incentive, Compensation, and
Other Plans.A reduction of
Executive's bonus, incentive, and other compensation award opportunities under
PremierWest Bancorp's benefit plans and the Bank's benefit plans, unless in the
case of either, a company-wide reduction of all officers' award opportunities
occurs simultaneously;

(c)Participation in Benefit Plans.
Discontinuance of Executive's participation in any officer or
employee benefit plan maintained by PremierWest Bancorp or by the Bank, unless
the plan is discontinued by reason of law or loss of tax deductibility to
PremierWest with respect to contributions to the plan, or is discontinued as a
matter of PremierWest Bancorp policy or PremierWest Bank policy applied equally
to all participants in the plan;

(d)A Reduction in
Responsibilities or Statusbased on one of the
following:

(1)
Assignment to Executive of duties or responsibilities that
are materially inconsistent with Executive's position as
stated in this Agreement or that represent a material reduction of his
authority;

(2)Any other action by PremierWest that results in a
material reduction or material adverse change in Executive's position,
authority, duties or responsibilities; or

(3)Failure to appoint or reappoint Executive to the
position stated in this Agreement;

(4)Failure to reelect Executive or cause Executive to be
reelected to the Bank Board without Executive's written consent;

(5)Failure to nominate Executive as a director of
PremierWest Bancorp;

(6)
Following a Change in Control, failure to retain Executive in
an executive officer position with authority, duties or responsibilities
consistent with that of an executive officer.

(Subsections (d)(1), (2), (3), (4) and (5) do not apply
following a Change in Control);

(e)Failure to Obtain Assumption Agreement.The failure of a successor or assign of the Bank to assume and agree to perform
this Agreement, if assignment and assumption does not occur automatically under
operation of law;

(f)Termination without Compliance with this Agreement.Termination by PremierWest of Executive's employment
without the notice required under this Agreement;

7

---

(g)Material Breach.A material
breach of this Agreement by PremierWest that is not corrected within a
reasonable time; or

(h)Relocation of
Executive.Requiring Executive to change his
principal work location, to any location that is more than 15 miles from the
location of PremierWest Bancorp's principal executive offices on the date of
this Agreement.

7.3Disability. "Disability" shall
mean that (i) Executive has been unable to perform Executive's duties under this
Agreement as a result of Executive's incapacity due to physical or mental
illness for at least 90 consecutive calendar days or 150 calendar days during
any consecutive 12 month period and (ii) a physician selected by PremierWest and
its insurers and acceptable to Executive or Executive's legal representative
(with such Agreement on acceptability of the physician not to be unreasonably
withheld), determines the incapacity to be (a) total and permanent and (b)
prohibiting of Executive's ability to perform the essential functions of
Executive's position with or without reasonable accommodation. Executive shall
not be deemed to be disabled, however, if he returns to work on a full-time
basis within 30 days after PremierWest gives him notice of termination due to
Disability. PremierWest may require Executive to submit to such physical or
mental evaluations and tests as the board of directors deems appropriate.

7.4
Change in Control. For
purposes of this Agreement, a "Change in Control" shall be deemed to have occurred
when any of the following events take place:

(a)Merger.PremierWest Bancorp
merges into or consolidates with another corporation, or merges another
corporation into PremierWest Bancorp, and as a result, less than 50% of the
combined voting power of the resulting corporation immediately after the merger
or consolidation is held by persons who were the holders of PremierWest
Bancorp's voting securities immediately before the merger or consolidation. The
term "person"means
an individual, corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or other
entity.

(b)Acquisition of Significant Share Ownership.
(1) A report on Schedule 13D or another form or schedule
(other than Schedule 13G) is filed or is required to be filed under sections
13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses
that the filing person or persons acting in concert has or have become the
beneficial owner of 25% or more of a class of PremierWest Bancorp's voting
securities, or (2) a person or persons acting in concert has or have become the
beneficial owner of 10% or more of a class of PremierWest Bancorp's voting
securities and the person or the person's or group's nominee becomes the
Chairman of the Board of PremierWest Bancorp, but this paragraph (b) shall not
apply to beneficial ownership of voting shares of PremierWest Bancorp held in a
fiduciary capacity by an entity in which PremierWest Bancorp directly or
indirectly beneficially owns 50% or more of the outstanding voting securities;

(c)Change in Board Composition.During any period of two (2) consecutive years, individuals who constitute
PremierWest Bancorp's board of directors at the beginning of the two-year period
cease for any reason to constitute at least a majority thereof;provided,

8

---

however,that for
purposes of this paragraph (c), each director who is first elected by the board
(or first nominated by the board for election by stockholders) by a vote of at
least two-thirds of the directors who were directors at the beginning of the
period shall be deemed to have been a director at the beginning of the two-year
period.

(d)Sale of Assets.PremierWest
Bancorp sells to a third party all or substantially all of PremierWest Bancorp's
assets. For this purpose, sale of all or substantially all of PremierWest
Bancorp's assets includes sale of PremierWest Bank.

8.PAYMENT UPON TERMINATION. Upon
termination of Executive's employment for any of the reasons set forth in
Section 6 above, Executive or Executive's estate, as appropriate, will receive
payment for all Base Salary earned through the date of termination and, except
in the event of Termination For Cause or Resignation, all unpaid bonus or
incentive compensation due to Executive for the previous calendar year ("Earned
Compensation"). Earned Compensation shall be paid by the end of the business day
following termination or sooner if required by applicable law.

9.RETIREMENT BENEFITS. Upon
Retirement, Executive shall additionally be entitled to the following benefits:

9.1Stock Option Vesting. Executive
shall also be fully vested in any stock options, restricted stock grants, or
other similar equity compensation arrangements regardless of whether the
respective plan provides for accelerated vesting.

9.2401(k) Contribution.
PremierWest shall contribute or cause to be contributed to Executive's 401(k)
plan account the matching and profit sharing contributions, if any, that would
have been made had Executives employment not terminated before the end of the
plan year.

9.3Retiree Health Insurance.
Executive shall be entitled to retiree health care coverage for himself and his
spouse for 15 years after termination of employment as follows: (1) until
Executive and his spouse, respectively, reach the eligible age for Medicare, the
retiree health care coverage for each shall be substantially similar to coverage
maintained for PremierWest employees and (2) after Executive and his spouse,
respectively, reach the eligible age for Medicare, PremierWest will provide
Medicare Supplemental Insurance comparable to the best of such policies offered
by a major insurance carrier in the market area. If Executive dies within 15
years after termination of employment, Executive's spouse shall continue to
receive retiree health care coverage on the same terms and conditions that
Executive would have; provided, however, such spousal coverage will expire no
later than 15 years after termination of Executive's employment.

9.4Long-Term Care Insurance. To
the extent premiums on Executive and his spouse's long-term care insurance
remain to be paid, if PremierWest has made a payment within the previous 12
months, PremierWest shall continue to pay the remaining long-term care insurance
premiums for Executive and Executive's spouse until fully paid or until
Executive's death. If Executive dies and Executive's spouse is the beneficiary
of the death benefit under Executive Survivor Income Agreement, Executive's
spouse has the option to request that

9

---

PremierWest pay the remaining premiums on her long term
care insurance policy and in exchange PremierWest will reduce the amount of the
payment to Executive's spouse under Executive Survivor Income Agreement by the
amount of such remaining premium payments.

10.CONSIDERATION FOR RELEASE OF CLAIMS.
In the event of (i) Termination Without Cause, (ii) Termination for Good Reason,
or (iii) if termination occurs for any reason other than Termination For Cause
more than six (6) months after a Change in Control, (each an "Eligible
Termination Event") PremierWest will offer and Executive may choose to execute
the Separation Agreement, attached hereto as Exhibit A, which provides for the
release of claims against PremierWest. Provided Executive executes and does not
revoke Section 7(a) of the Separation Agreement, Executive will be entitled to
the benefits listed below in this Section 10 in consideration for the release of
claims.

10.1Normal Retirement Benefits.
Executive will be entitled to all of the benefits in Section 9 that Executive
would have received had the employment terminated due to Retirement.

10.2Disability Insurance.
PremierWest will continue to pay premiums on Executive's disability policy until
age 65.

10.3Post-Employment Consulting. At
Executive's election, Executive may enter into a post-employment consulting
arrangement with PremierWest for a period of up to 24 months, under the terms of
which Executive will continue to receive, for the term of the consulting
agreement, the highest Base Salary Executive received while employed by
PremierWest; provided however, Executive is available to provide consulting
services up to 40 hours per work on an "as needed" basis for PremierWest.
PremierWest may terminate the consulting agreement if Executive breaches any of
the terms of the Separation Agreement. The consulting agreement shall include a
covenant that Executive will provide services exclusively for PremierWest during
the consulting period.

11.CONSIDERATION FOR NOT COMPETING.

11.1Self-Imposed Limitation.In the
event of an Eligible Termination Event

(as defined in Section 10 above), which occurs after a
Change in Control, Executive may choose to indicate in the Separation Agreement
that Executive does not intend to engage in certain activities competitive to
PremierWest, as identified in Section 2 of the Separation Agreement attached
hereto as Exhibit A. For as long as Executive does not engage in such
activities, up to a maximum of two years (the "Optional Restriction Period"),
PremierWest will pay Executive the consideration set forth in Section 11.2.
Unless Executive executes the Separation Agreement (regardless of whether
Executive revokes Section 7(a) of the Separation Agreement) and indicates
Executive's intention not to engage in the competitive activities, PremierWest
will not compensate Executive for refraining from engaging in such activities.

11.2Amount/Payment of Consideration.As consideration for each month during the Optional Restriction Period that
Executive does not engage in the competitive activities, PremierWest will pay
Executive one-twelfth (1/12) of the amount of any bonuses or incentive
compensation earned for the calendar year ended immediately before the year in
which

10

---

the Change in Control occurred, or the subsequent year, if
ended, whichever is greater (not including the Potential Transaction Bonus in
Section 14). Payment of the consideration will be made starting the next regular
pay period following Executive's execution of the Separation Agreement.

12.CHANGE IN CONTROL
RETENTION BONUS. If Executive remains employed
with PremierWest or its successor for six (6) months following a Change in
Control, as additional compensation for assisting PremierWest with the Change in
Control transition and as a reward for continued service, upon termination of
employment (other than Termination For Cause), PremierWest will pay Executive an
amount of cash equal to the amount of interest that would have accrued had
PremierWest, upon the six month anniversary of the Change in Control, paid to
Executive's Deferral Account under the Deferred Compensation Agreement, an
amount equal to two times the sum of (i) Executive's annual Base Salary and (ii)
the amount of any bonuses or incentive compensation earned for the calendar year
ended immediately before the year in which the Change in Control occurred, or
the subsequent year, if ended, whichever is greater (not including the Potential
Transaction Bonus in Section 14).

13.IRC 280G ADJUSTMENT.

13.1Adjustment of Benefits. In the
event Executive becomes entitled to a payment or benefit pursuant to the terms of this Agreement
or of any other plan, arrangement or agreement (collectively, the "Payments") of
PremierWest or its successor (collectively, the "Employer"), and the Employer's
Auditor determines that the Payments result in "excess parachute payments" under
section 280G of the Internal Revenue Code (the "Code"), then Executive shall
receive, instead of the Payments, aggregate payments equal to the Reduced Amount
(defined below). Executive shall direct in which order the payments are to be
reduced, but no change in the timing of any payment shall be made without the
consent of the Employer. For purposes of this Section 13, the "Reduced Amount"
shall be the amount, expressed as a present value, that maximizes the aggregate
present value of the payments without causing any payment to be nondeductible by
the Employer under section 280G of the Code. "Employer's Auditor" shall mean the
independent auditors retained most recently prior to the transaction implicating
section 280G of the Code by the Employer, or, if the Employer is not the
surviving entity following the Change in Control, by the Employer's successor
(or any affiliate). In computing the maximum amount payable, the Employer's
Auditor shall take into account the independent value to the Employer of
Executive's restrictive covenants following a Change in Control as set forth in
the Separation Agreement, which value should constitute separate consideration
outside of sections 280G and 4999 of the Code.

13.2Adjustment for Overpayments and Underpayments.
As a result of uncertainty in the application of sections 280G and 4999 of the
Code at the time of an initial determination by the Employer's Auditor, it is
possible that a payment will have been made by the Employer that should not have
been made (an "Overpayment") or that an additional payment that will not have
been made by the Employer could have been made (an "Underpayment"). In the event
that the Employer's Auditor, based upon the assertion of a deficiency by the
Internal Revenue Service against the Employer or Executive that the Employer's
Auditor believes has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a bilateral error subject to adjustment which Executive shall

11

---

repay to the Employer, together with interest at the
applicable federal rate specified in section 7872(f)(2) of the Code. In the
event that the Employer's Auditor determines that an Underpayment has occurred,
such Underpayment shall promptly be paid or transferred by the Employer to, or
for the benefit of, Executive, together with interest at the applicable federal
rate specified in section 7872(f)(2) of the Code.

14.POTENTIAL TRANSACTION BONUS. If
a Change in Control occurs, Executive may be entitled to a Transaction Bonus
under this Section. The Transaction Bonus, if any, is separate from and shall
not be reduced by any benefit payable to Executive under Sections 10, 11, or 12.
The Transaction Bonus is an amount in cash equal to 30% of Executive's Base
Salary at the time of the Change in Control and shall be payable to Executive at
the time of the Change in Control. The Transaction Bonus shall be payable to
Executive if but only if the Change in Control provides that shareholders of
PremierWest Bancorp receive as consideration for each share of PremierWest
Bancorp common stock:

(a)
    cash equal to or greater than 2.5 times
    the book value per share of PremierWest Bancorp common stock;(b)
    securities whose fair market value at the
    time of closing of the Change in Control equals or exceeds 2.5 times the
    book value per share of PremierWest Bancorp common stock; or(c)
    a combination of cash and securities
    whose value, calculated as provided in paragraphs (a) and (b) immediately
    above, equals or exceeds 2.5 times the book value per share of PremierWest
    Bancorp common stock.


For purposes of this Section, "book value" shall be
based on shareholders' equity and shares outstanding reflected in PremierWest
Bancorp's consolidated balance sheet as of the end of the quarter preceding the
date of announcement of the Change in Control.]

15.1Nondisclosure. Executive covenants and agrees
    that he will not reveal to any person, firm, or corporation any Confidential
Information of any nature concerning PremierWest or its business, or anything connected
therewith. "Confidential Information"
means all of PremierWest's confidential and proprietary
information and trade secrets in existence on the date hereof or existing at any
time during the term of this Agreement, including but not limited to:

(a)
the whole or any portion or phase of any business plans,
financial information, purchasing data, supplier data, accounting data, or other
financial information;

(b)
the whole or any portion or phase of any research and
development information, design procedures, algorithms or processes, or other
technical information;

12

---

(c)
the whole or any portion or phase of any marketing or sales
information, sales records, customer lists, prices, sales projections, or other
sales information; and

(d)
trade secrets, as defined from time to time by the laws of
the State of Oregon.

Notwithstanding the foregoing, Confidential Information
excludes information that, as of the date hereof or at any time after the date
hereof, is published or disseminated without obligation of confidence or that
becomes a part of the public domain (1) by or through action of PremierWest, or
(2) by or through action of another person not in violation of non-disclosure
covenant with PremierWest. This Section does not prohibit disclosure required by
an order of a court having jurisdiction or a subpoena from an appropriate
governmental agency or disclosure made by Executive in the ordinary course of
business and within the scope of his authority.

15.2Return of Material. Executive
agrees to deliver or return to PremierWest upon termination of employment, or as
soon thereafter as possible, all written information and any other similar items
furnished by PremierWest or prepared by Executive in connection with his
services hereunder. Executive will retain no copies thereof after termination of
Executive's employment.

15.3Injunctive Relief. Executive
acknowledges that it is impossible to measure in money the damages that will
accrue to PremierWest if Executive fails to observe the obligations imposed on
him by this Section. Accordingly, if PremierWest institutes an action to enforce
the provisions hereof, Executive hereby waives the claim or defense that an
adequate remedy at law is available to PremierWest, and Executive agrees not to
urge in any such action the claim or defense that an adequate remedy at law
exists.

15.4Creative Work. Executive agrees
that all creative work and work product, including but not limited to all
technology, business management tools, processes, software, patents, trademarks,
and copyrights developed by Executive during his employment with PremierWest,
regardless of when or where such work or work product was produced, constitutes
work made for hire, all rights of which are owned by PremierWest. Executive
hereby assigns to PremierWest Bancorp and to PremierWest Bank all rights, title,
and interest, whether by way of copyrights, trade secret, trademark, patent, or
otherwise, in all such work or work product, regardless of whether the same is
subject to protection by patent, trademark, or copyright laws.

16.1Arbitration.The parties agree to submit any
    dispute arising under this Agreement to final, binding, private arbitration in
Medford, Oregon. The disputes subject to arbitration include not only disputes
involving the meaning or performance of the Agreement, but disputes about its
negotiation, drafting, or execution. The dispute will be determined by a single
arbitrator and governed by the then-existing rules of arbitration procedure in
Jackson County Circuit Court, except as set forth herein. Instead of filing of a
civil complaint in Jackson County Circuit Court, a party will commence the
arbitration process by noticing the other party. The parties will choose an
arbitrator who specializes in employment conflicts from the

13

---

arbitration list for Jackson County Circuit Court. If the
parties are unable to agree on an arbitrator within ten (10) days of receipt of
the list of arbitrators, each party will select one attorney from the list, and
those two attorneys shall select the arbitrator from the list (with each of the
two selecting attorneys then concluding their services and each being
compensated by the party selecting each attorney, subject to recovery of such
fees under Section 16.2) . The arbitrator may charge his or her standard
arbitration fees rather than the fees prescribed in the Jackson County Circuit
Court arbitration procedures. The arbitrator will have full authority to
determine all issues, including arbitrability, to award any remedy, including
permanent injunctive relief, and to determine any request for attorneys' fees,
costs and expenses in accordance with Section 16.2. There shall be no right to
review of the arbitrator's decision in court. The arbitrator's award may be
reduced to final judgment or decree in Jackson County Circuit Court.

16.2Expenses/Attorneys' Fees.The
prevailing party shall be awarded all costs and expenses of the proceeding,
including, but not limited to, attorneys' fees, filing and service fees, witness
fees, and arbitrators' fees. If arbitration is commenced, the arbitrator will
have full authority and complete discretion to determine the "prevailing party"
and the amount of costs and expenses to be awarded.

16.3Injunctive Relief.Notwithstanding any other provision of this Agreement, an aggrieved party may
seek a temporary restraining order or preliminary injunction in Jackson County
Circuit Court to preserve the status quo during the arbitration proceeding,
provided however, that the party seeking relief agrees that ultimate resolution
of the dispute will still be determined through arbitration and not through
court process. The filing of the court action for injunctive relief shall not
hinder or delay the arbitration process.

17.NOTICES. All notices, requests,
demands, and other communications provided for by this Agreement will be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by a nationally-recognized delivery service (such as Federal Express), or
three (3) business days after being deposited in the U.S. mail as certified
mail, return receipt requested, with postage prepaid, if such notice is properly
addressed. Unless otherwise changed in writing, notice shall be properly
addressed to Executive if addressed to the address of Executive on the books and
records of PremierWest at the time of mailing of such notice, and properly
addressed to PremierWest if addressed to PremierWest Bancorp 503 Airport Road,
Medford, OR 97504 Attention: Corporate Secretary.

18.1Governing Law. The validity, interpretation,
    construction and performance of this Agreement shall be governed by the laws of the
State of Oregon.

18.2Saving Provision. If any part
of this Agreement is held to be unenforceable, it shall not affect any other
part. If any part of this Agreement is held to be unenforceable as written, it
shall be enforced to the maximum extent allowed by applicable law.

14

---

18.3Survival Provision. If any
benefits provided under this Agreement are still owed, or claims pursuant to
this Agreement are still pending, at the time of termination of this Agreement,
this Agreement shall continue in force, with respect to those obligations or
claims, until such benefits are paid in full or claims are resolved in full. The
Sections related to Confidential Information and Creative Work shall survive
after termination of this Agreement and shall be enforceable regardless of any
claim Employee may have against PremierWest.

18.4Captions and Counterparts. The
captions in this Agreement are solely for convenience. The captions in no way
define, limit, or describe the scope or intent of this Agreement. This Agreement
may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.

18.5Entire Agreement. Except as
otherwise stated herein, this Agreement constitutes the sole Agreement of the
parties regarding Executive's benefits upon termination of employment and
together with PremierWest's employee handbook governs the terms of Executive's
employment. Where there is a conflict between the employee handbook and this
Agreement, the terms of this Agreement shall govern.

18.6Previous Agreement. This
Agreement supersedes all prior oral and written agreements between Executive and
PremierWest, or any affiliates or representatives of PremierWest regarding the
subject matters set forth herein.

18.7Waiver/Amendment. This
Agreement may not be amended, released, discharged, abandoned, changed, or
modified in any manner, except by an instrument in writing signed by each of the
parties hereto. The failure of any party hereto to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a waiver of
any such provision, nor in any way to affect the validity of this Agreement or
any part thereof or the right of any party thereafter to enforce each and every
such provision. No waiver or any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.

18.8Assignment.

(a) Executive shall not assign or transfer any of
Executive's rights pursuant to this Agreement, wholly or partially, to any other
person or to delegate the performance of its duties under the terms of this
Agreement. If Executive attempts an assignment or transfer that is contrary to
this Section, PremierWest shall have no liability to pay any amount to the
assignee or transferee.

(b) The rights and obligations of PremierWest under
this Agreement shall inure to the benefit of and be binding in each and every
respect upon the direct and indirect successors and assigns of PremierWest's,
regardless of the manner in which the successors or assigns succeed to the
interests or assets of PremierWest's. If this Agreement is not otherwise
transferred to and assumed by PremierWest's successor or assign by operation of
law, PermierWest shall require such successor of substantially all of the
business or assets of PremierWest Bancorp to expressly assume and agree to
perform PremierWest's obligations hereunder.

15

---

(c) This Agreement shall not be terminated by the
voluntary or involuntary dissolution of PremierWest, by any merger,
consolidation or acquisition where PremierWest is not the surviving corporation,
by any transfer of all or substantially all of PremierWest's assets, or by any
other change in PremierWest's structure or the manner in which PremierWest's
business or assets are held. Executive's employment shall not be deemed
terminated upon the occurrence of one of the foregoing events.

(d) This Agreement will inure to the benefit of and
be enforceable by Executive's personal or legal representatives, executives,
administrators, successors, heirs, distributees and legatees.

19.ADVICE OF COUNSEL.Executive acknowledges that, in executing this Agreement,
Executive has had the opportunity to seek the advice of independent legal
counsel, and has read and understood all of the terms and provisions of this
Agreement. This Agreement shall not be construed against any party by reason of
the drafting or preparation hereof.

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.

PREMIERWEST BANCORP
    
    EXECUTIVEBy:
    ______________________________Its:
    ______________________________John AnhornPREMIERWEST BANKBy:
    ______________________________Its:
    ______________________________




16

---

Exhibit A - Employment Agreement

SEPARATION AGREEMENT

ThisSEPARATIONAGREEMENT(this "Agreement") is entered into as of this
_____
day of _____________, 20__, by and among PremierWest Bancorp, an Oregon corporation,
PremierWest Bank, an Oregon-chartered bank and wholly owned subsidiary of
PremierWest Bancorp (the "Bank"), and John Anhorn (the "Executive"). (PremierWest
Bancorp, the Bank, and their subsidiaries and affiliates, including any entity
or organization controlling, controlled by, or under common control with
PremierWest Bancorp or the Bank, are hereinafter sometimes referred to
collectively or individually as the "Corporation").

WHEREAS,Executive, PremierWest Bancorp, and the Bank entered into
an Employment Agreement dated effective as of July 29, 2004 (as the same may be
amended, the "Employment Agreement") which provided that the Corporation would
provide certain benefits to Executive after termination of his employment under
certain circumstances specified in the Employment Agreement as consideration for
Executive's for release of claims against PremierWest and certain other benefits
as consideration for Executive's agreement not to engage in certain competitive
activities for a specified period of time;

WHEREAS,Executive's employment will terminate on
_____________, 20 ___ (the "Termination Date");

WHEREAS,Executive has consulted with counsel of Executive's
choice concerning this Agreement, or Executive has chosen not to consult with
counsel, and Executive, and as applicable Executive's counsel, have had the
opportunity to discuss with the Corporation the terms and conditions of this
Agreement; and

NOW THEREFORE,in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Executive hereby agree as follows.

1.Consideration for Release of Claims.Provided Executive does not revoke Section 7(a)
and complies with the terms of this Agreement, the Corporation will provide
Executive the benefits set forth in Section 10 of the Employment Agreement.

2.Intent Not to Compete. .[This Section 2 is applicable only if termination
of Employment occurs after a Change in Control]

2.1Declaration of
Intent.Executive hereby indicates that Executiveintends / does not intend[indicate by crossing through the inapplicable
language] to refrain from engaging in certain
activities specified in Section 2.2 ("Competitive Activities") for some period
of time following termination of employment. If Executive has indicated an
intent not to engage in Competitive Activities, in consideration for each month
Executive refrains from engaging in Competitive Activities, the Corporation will
pay Executive the monthly payments as described in Section 11 of the Employment
Agreement until the earlier of (i) when Executive engages in a

1

---

Competitive Activity or (ii) the end of the Optional
Restriction Period, which is[one year/two years]after the date on which Executive's termination of
employment becomes effective

2.2Competitive Activities.
Competitive Activities include:

(a) Becoming associated with any entity, whether as
an owner, principal, partner, director, trustee, employee, agent, consultant, or
stockholder (except as a holder of 1% or less of the outstanding voting stock of
a company) that is engaged or proposes to engage in any business that solicits,
deposits or offers loans and is located within a 30 mile radius of any of the
Corporation's offices or branches (a "Competitor");

(b) Encouraging or soliciting or assisting any other
person or firm in encouraging or soliciting any person who, during the two-year
period preceding Executive's termination of employment, is or was engaged in a
business relationship with the Corporation to terminate the person's
relationship with the Corporation or to engage in a business relationship with a
Competitor; or

(c) Inducing any employee of the Corporation to
terminate employment with the Corporation and, either individually or as owner,
principal, partner, director, trustee, agent, employee, consultant or otherwise,
employing, offering employment, or causing employment to be offered to any
person who is or was employed by the Corporation unless such person shall have
ceased to be employed by such entity for a period of at least six months.

2.3Notice of
Activities.If Executive has indicated above an
intent not to engage in Competitive Activities, Executive will notify the
Corporation before engaging in any such activities. If Executive fails to give
such notice and continues to receive payments under this Section, Executive
shall not be entitled to keep any payments received after engaging in a
Competitive Activity.

2.4Not Enforceable Covenant.
This is not a covenant not to compete and the Corporation may not seek injunctive relief to prohibit
Executive from engaging in a Competitive Activity. If Executive chooses to
engage in a Competitive Activity, the Corporation will cease making monthly
payments of the consideration.

3.Nondisclosure.
Executive covenants and agrees that he will not reveal to any
person, firm, or corporation any Confidential Information of any nature
concerning the Corporation or concerning the business of any of them. As used in
this Agreement, the term "Confidential Information" means all of the
Corporation's confidential and proprietary information and trade secrets in
existence on the date hereof or existing at any time during the term of this
Agreement, including but not limited to -

(a)the whole or any portion or phase of any business
plans, financial information, purchasing data, supplier data, accounting data,
or other financial information,

(b)the whole or any portion or phase of any research and
development information, design procedures, algorithms or processes, or other
technical information,

2

---

(c)
the whole or any portion or phase of any marketing or sales
information, sales records, customer lists, prices, sales projections, or other
sales information, and

(d)
trade secrets, as defined from time to time by the laws of
the State of Oregon.

Notwithstanding the foregoing, Confidential Information
excludes information that, as of the date hereof or at any time after the date
hereof, is published or disseminated without obligation of confidence or that
becomes a part of the public domain (1) by or through action of the Corporation,
or (2) by or through action of another person not in violation of a
nondisclosure covenant with the Corporation. This Section does not prohibit
disclosure required by an order of a court having jurisdiction or a subpoena
from an appropriate governmental agency or disclosure made by Executive in the
ordinary course of business and within the scope of his authority.

4.Return of Materials.Executive agrees to deliver or return to the Bank upon termination of employment
or as soon thereafter as possible all written information and any other similar
items furnished by the Corporation or prepared by Executive in connection with
his service to the Corporation. Executive will retain no copies thereof after
termination of employment.

5.Creative Work.
Executive agrees that all creative work and work product,
including but not limited to all technology, business management tools,
processes, software, patents, trademarks, and copyrights developed by Executive
during the term of his employment with the Corporation, regardless of when or
where such work or work product was produced, constitutes work made for hire,
all rights of which are owned by the Corporation. Executive hereby assigns to
PremierWest Bancorp and to the Bank all rights, title, and interest, whether by
way of copyrights, trade secret, trademark, patent, or otherwise, in all such
work or work product, regardless of whether the same is subject to protection by
patent, trademark, or copyright laws.

6. Agreement to Cooperate with the Corporation Through the Date
of Termination.Executive agrees to cooperate as directed by the
Corporation with the Corporation and its customers through the Termination Date
and throughout the term of any post-employment consulting agreement, if any. If
Executive fails to cooperate to the Corporation's satisfaction as reasonably
determined by the Corporation, Executive shall be deemed to have resigned for
purposes of determining benefits under the Employment Agreement, but the other
provisions of this Agreement shall remain in full force and effect.

(a)Release
    and Covenant Not to Sue.As consideration for
    receipt of certain benefits specified in the Employment Agreement, Executive, on his
or her own behalf and on behalf of Executive's heirs, executors, successors, and
assigns hereby releases the Corporation, its directors, officers, executives,
managers, and employees from any and all debts, claims, demands, rights,
actions, causes of action, suits, or damages whatsoever and of every kind and
nature, whether known or unknown, contingent or otherwise (collectively the
"Claims"), against the Corporation and the others released herein, relating to
or arising out of Executive's termination, except to the extent such Claims
cannot under applicable law be released. Executive also covenants not to sue or
file or cause to be filed any complaint with any federal, state, or local agency
or in any court against the Corporation or the others released herein regarding
any

3

---

matter related to Executive's termination of employment
with the Corporation, including but not limited to any Claims under the Age
Discrimination in Employment Act or any similar federal, state or local law,
except to the extent such Claims cannot under applicable law be released. The
release of liability set forth herein does not extend to rights or claims that
may arise from events occurring after execution of this Agreement, including but
not limited to claims for the enforcement of this Agreement, or to Executive's
exercise of rights under the Consolidated Omnibus Budget Reconciliation Act of
1986 to continued insurance, if applicable.

(b)Acceptance and
Revocation Period.Executive shall have a period
of 21 days from the date of delivery of this Agreement to accept Section 7(a) of
this Agreement. Executive shall have a period of seven days after his execution
of this Agreement during which Executive may revoke his acceptance of Section
7(a) of this Agreement by providing written notice of revocation to PremierWest
Bancorp. Any such acceptance or revocation must be addressed to the Chairman,
PremierWest Bancorp, 503 Airport Road, Medford, Oregon 97504 or such other
address as Executive may be directed in writing by PremierWest Bancorp to
provide such acceptance or revocation. To be effective, the acceptance or
revocation must be received no later than 5:00 p.m. Pacific Time within the
applicable time period. The 21-day acceptance period may be waived by Executive,
but the seven-day revocation period may not be waived. If Executive's acceptance
of Section 7(a) of this Agreement is not affirmatively revoked in writing by
Executive during the seven-day revocation period, it shall be deemed to have
been accepted and not revoked. Section 7(a) of this Agreement shall not be
effective or enforceable until the seven-day revocation period has expired. If
Executive properly executes his right to revoke acceptance of Section 7(a), the
remainder of this Agreement shall nevertheless remain in full force and effect.

8.No Admission of Wrongdoing.Executive acknowledges and agrees that nothing in
this Agreement constitutes or shall be construed as an admission of liability or
wrongdoing on the part of the Corporation or the others released herein.

9.Successors.
This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the Corporation and its successors and assigns.

10.Severabilitv.
The provisions of this Agreement shall be deemed severable.
The invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions of this Agreement. Any
provision held to be invalid or unenforceable shall be reformed to the extent
(and only to the extent) necessary to make it valid and enforceable.

11.Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Oregon, without giving effect to the principles
of conflict of laws of such State.

12.Arbitration.
The parties agree to submit any dispute arising under this
Agreement to final, binding, private arbitration in Medford, Oregon. The
disputes subject to arbitration include not only disputes involving the meaning
or performance of the Agreement, but disputes about its negotiation, drafting,
or execution. The dispute will be determined by a single arbitrator and governed
by the then-existing rules of arbitration procedure in Jackson County Circuit
Court, except as set forth herein. Instead of filing of a civil complaint in
Jackson County Circuit Court,

4

---

a party will commence the arbitration process by noticing
the other party. The parties will choose an arbitrator who specializes in
employment conflicts from the arbitration list for Jackson County Circuit Court.
If the parties are unable to agree on an arbitrator within ten (10) days of
receipt of the list of arbitrators, each party will select one attorney from the
list, and those two attorneys shall select the arbitrator from the list (with
each of the two selecting attorneys then concluding their services and each
being compensated by the party selecting each attorney, subject to recovery of
such fees under Section 13). The arbitrator may charge his or her standard
arbitration fees rather than the fees prescribed in the Jackson County Circuit
Court arbitration procedures. The arbitrator will have full authority to
determine all issues, including arbitrability, to award any remedy, including
permanent injunctive relief, and to determine any request for attorneys' fees,
costs and expenses in accordance with Section 13. There shall be no right to
review of the arbitrator's decision in court. The arbitrator's award may be
reduced to final judgment or decree in Jackson County Circuit Court.

13.Expense/Attorneys' Fees.
The prevailing party shall be awarded all costs and expenses of the proceeding,
including, but not limited to, attorneys' fees, filing and service fees, witness
fees, and arbitrators' fees. If arbitration is commenced, the arbitrator will
have full authority and complete discretion to determine the "prevailing party"
and the amount of costs and expenses to be awarded.

14.Injuctive Relief.Notwithstanding any other provision of this Agreement, an aggrieved party may
seek a temporary restraining order or preliminary injunction in Jackson County
Circuit Court to preserve the status quo during the arbitration proceeding,
provided however, that the party seeking relief agrees that ultimate resolution
of the dispute will still be determined through arbitration and not through
court process. The filing of the court action for injunctive relief shall not
hinder or delay the arbitration process.

15.This Agreement is Not Exclusive.This Agreement does not supersede any other
agreement to which Executive may be party with the Corporation relating to
noncompetition, nondisclosure, or the other matters referred to in this
Agreement, whether those noncompetition, nondisclosure, or other provisions are
contained in an employment agreement, a severance agreement, a salary
continuation agreement, or any other agreement. This Agreement is in addition to
any such other agreement(s). In case of conflict between this Agreement, on one
hand, and any such other agreement(s), on the other, the Corporation shall have
sole and exclusive authority to determine whether this Agreement or such other
agreement(s) shall govern in the particular case and whether to enforce its
rights under this Agreement, under such other agreement(s), or under both.

16.Defined Terms.
Terms used but not defined in this Agreement shall have the
meanings given to them in the Employment Agreement.

[Signature Page to Follow]

5

---

IN WITNESS WHEREOF,Executive, PremierWest Bancorp, and the Bank have
executed this Separation Agreement effective as of the day and year first set
forth above.

| |                     
| | --------------------
| | PREMIERWEST BANCORP:
| |                     
| | By:                 
| |                     
| | Its:                
| |                     
| | PREMIERWEST BANK    
| |                     
| | By:                 
| |                     
| | Its:                



By signing below, I hereby agree to and accept all
provisions of this Separation Agreement, specifically including but not limited
to the release and covenant not to sue that is set forth in Section 7(a) of this
Separation Agreement. I understand that I have seven days after the date of my
execution of this Separation Agreement to revoke my acceptance of the release
and covenant not to sue contained in Section 7(a) of the Separation Agreement,
and that if I do not revoke my acceptance by 5:00 p.m. Pacific Time on that date
the release and covenant not to sue will become effective. I understand that if
I do revoke my acceptance of the release and covenant not to sue, I will forfeit
all consideration for the release of claims as set forth in Section 10 of the
Employment Agreement.

EXECUTIVE:By:John AnhornDate signed:     ____________,
    20________




6

---

Exhibit 10.2 AMENDMENT TO

EXECUTIVE DEFERRED COMPENSATION
AGREEMENT

FOR JOHN ANHORN

1

---

AMENDMENT TO

EXECUTIVE DEFERRED COMPENSATION
AGREEMENT

The Executive Deferred
Compensation Agreement among John L. Anhorn, PremierWest Bancorp, and
PremierWest Bank dated August 9, 2002 is hereby amended effective July 29, 2004
as stated below.

1.3"Compensation"
    means both salary and bonus compensation that
    would be paid to the Executive during a Plan
    Year.

3.1.2Interest.
    At the end of each Plan Year under this
    Agreement but only until commencement of the
benefit payments under this Agreement or until a Change in Control has occurred,
interest is to be credited on the account balance at an annual rate equal to the
Bank's ROE (return on equity) for that Plan Year, compounded monthly, with a
maximum crediting rate of 18% and a minimum credit rate of 7%. In the event the
Executive and the Bank do not agree on what the Bank's ROE was for a particular
Plan Year, the Executive and the Bank agree that the ROE derived from the
quarterly report of condition filed by the Bank with the Federal Deposit
Insurance Corporation for the fourth quarter of any year shall be the ROE for
purposes of this Agreement's interest rate matching contribution. The quarterly
report of condition is the report required to be filed under Section 7(a) of the
Federal Deposit Insurance Act. If a Change in Control has occurred or if benefit
payments have commenced, the Bank will not continue to credit interest pursuant
to the ROE formula but rather will credit interest at an annual rate of
interest, compounded monthly, on the remaining account balance during any
applicable installment period, equal to the highest "Prime Rate" as published in
the Wall Street Journal's "Money Rates" section. The interest credited each Plan
Year shall be determined by reference to the "Prime Rate" as of the last
business day of the preceding Plan Year.

4.2Early Retirement Benefit.
    Upon Termination of Employment prior to the
    Normal Retirement Age for reasons other than death, or Disability,
the Bank shall pay to the Executive the benefit described in this Section 4.2 in
lieu of any other benefit under this Agreement.

4.2.1Amount of Benefit.
The benefit under this Section 4.2 is the Deferral
Account balance at the Executive's Termination of Employment.

4.2.2Payment of Benefit.
The Bank shall pay the benefit to the Executive in
the form elected by the Executive in the Election Form commencing the month
following the last cash payment either pursuant to Section 11 of the Employment
Agreement between the Executive, Bancorp and the Bank dated July 29, 2004 (the
"Employment Agreement") or pursuant to a post-employment consulting arrangement,
or otherwise commencing the month following Executive's Termination of
Employment. If the Executive elects payment of the benefit as other than a lump
sum, the Bank will not continue to credit interest pursuant to the ROE

1

---

formula of Section 3.1.2 but
rather will credit interest at Prime Rate as defined in Section 3.1.2.

The Executive Deferred Compensation
Agreement shall continue in full force and effect, subject only to the
amendments stated herein.

IN WITNESS WHEREOF, the parties have caused
this Amendment to be executed as of the effective date stated above.

Executive:
    
    PremierWest Bancorp_____________________________
    
    By:_____________________________John L. AnhornIts:
    _____________________________PremierWest BankBy:
    _____________________________Its:
    _____________________________




2

---

Exhibit 10.3

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT

FOR JOHN ANHORN

---

PremierWest Bank

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT
(SERP)

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN AGREEMENT(this "Agreement") is
effective as of July 29, 2004, by and between PremierWest Bank, an
Oregon-chartered, FDIC-insured bank with its main office in Medford, Oregon (the
"Bank"), and John Anhorn, (the "Executive").

WHEREAS,
the Executive has contributed substantially to the
success of the Bank and its parent corporation, PremierWest Bancorp ("Bancorp"),
and the Bank desires that the Executive continue in its employ;

WHEREAS,
to encourage the Executive to remain an employee of
the Bank, the Bank is willing to provide supplemental retirement benefits to the
Executive, payable out of the Bank's general assets;

WHEREAS,
none of the conditions or events included in the
definition of the term "golden parachute payment" contained in section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(l)(ii) [12 CFR 359.1(f)(l)(ii)]
exists or, to the best knowledge of the Bank, is contemplated insofar as the
Bank is concerned;

WHEREAS,
the Executive and the Bank desire to replace the
Salary Continuation Agreement between the Bank and the Executive dated November
12, 2002 (the "Old Agreement") and terminate the Addendum A to the Old
Agreement, also dated November 12, 2002;

Now THEREFORE,
in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1Definitions

Whenever used in this Agreement, the following
terms shall have the meanings specified:

1.1"Adjusted
Base Salary" means the highest amount of
Base Salary paid to the Executive during employment with the Bank adjusted by a
4% per year compounded increase for each full year between the date of
Termination of Employment and the Normal Retirement Date.

1.2"Base
Salary" means the annual base
compensation, not including any bonuses or benefits, paid to the Executive.

1.3"Cause"
shall have the definition given in any employment or severance agreement with
the Bank to which the Executive is or hereafter may be a party. If the term
"Cause" is not so defined, whether the Executive is terminated for Cause shall
be determined by the Board of Directors in its sole discretion.

1.4"Change
in Control"means if any one of the following events
occurs:

1

---

> (a)Merger.Bancorp merges into or
> consolidates with another corporation, or merges another corporation into
> Bancorp, and as a result less than 50% of the combined voting power of the
> resulting corporation immediately after the merger or consolidation is held by
> persons who were the holders of Bancorp's voting securities immediately before
> the merger or consolidation;
> (b)Acquisition of Significant Share Ownership.
> (1) A report on Schedule 13D or another form or
> schedule (other than Schedule 13G) is filed or is required to be filed under
> sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule
> discloses that the filing person or persons acting in concert has or have become
> the beneficial owner of 25% or more of a class of Bancorp's voting securities,
> but this paragraph or (2) a person or persons acting in concert has or have
> become the beneficial owner of 10% or more of a class of Bancorp's voting
> securities and the person or the person's or group's nominee becomes the
> Chairman of the Board of Bancorp,] but this paragraph (b) shall not apply to
> beneficial ownership of voting shares of Bancorp held in a fiduciary capacity by
> an entity in which Bancorp directly or indirectly beneficially owns 50% or more
> of the outstanding voting securities;
> (c)Change in Board Composition.During any period of two consecutive
> years, individuals who constitute Bancorp's board of directors at the beginning
> of the two-year period cease for any reason to constitute at least a majority
> thereof;provided, however,
> that for purposes of this paragraph (c) each
> director who is first elected by the board (or first nominated by the board for
> election by stockholders) by a vote of at least two-thirds (2/3) of the
> directors who were directors at the beginning of the period shall be deemed to
> have been a director at the beginning of the two-year period; or
> (d)Sale of Assets.
> Bancorp sells to a third party all or substantially
> all of Bancorp's assets. For this purpose, sale of all or substantially all of
> Bancorp's assets includes sale of the shares or assets of the Bank.

1.5 "Disability"means the Executive suffers a sickness,
accident or injury which has been determined by the carrier of any individual or
group disability insurance policy covering the Executive, or by the Social
Security Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Bank of the
carrier's or Social Security Administration's determination upon the request of
the Bank.

1.6 "Disability
Retirement"means termination of the Executive's
employment due to Disability.

1.7 "Early
Retirement"means the Executive's Termination of
Employment with the Bank before Normal Retirement Age for reasons other than
death, Disability, Termination under Article 5 of this Agreement, termination
without Cause or termination with Good Reason, and any termination other than
termination for Cause more than six (6) months after a Change in Control.

1.9  "Effective
    Date" means July 29, 2004.

1.10 "Good
Reason" shall have the definition given
in any employment or severance agreement with the Bank as that term is defined
in any employment or severance agreement to which the Executive is or may
hereafter be a party. If the term "Good Reason" is not so defined, it means:

> (a)a material reduction in Executive's title or
> responsibilities;

2

---

> (b)  a reduction in Base Salary as in
>     effect on the date of a Change in Control;
>   (c)  requiring the Executive to
>     change his or her principal work location, to any location that is more than 15 miles from the
> location of the Bank's principal executive offices on the date of this
> Agreement;
> (d)the adverse and substantial alteration in the
> nature and quality of the office space within which the Executive performs his
> or her duties, including the size and location thereof, as well as the
> secretarial and administrative support provided to the Executive;
> (e)the failure by the Bank to continue to
> provide the Executive with compensation and benefits substantially similar to
> those provided to the Executive under any of the employee benefit plans in which
> the Executive becomes a participant, or the taking of any action by the Bank
> which would directly or indirectly materially reduce any of such benefits or
> deprive the Executive of any material fringe benefit to which the Executive was
> entitled at the time of the Change in Control; or
> (f)the failure of a successor or assign of the
> Bank to assume and agree to perform this Agreement, if assignment and assumption
> does not occur under operation of law.

1.12  "Person"
    means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or other entity.

1.13 "Plan
Year"means a twelve-month period commencing on
January 1, and ending on the last day of December of each year. The initial Plan
Year shall commence on the Effective Date of this Agreement.

1.14 "Termination
of Employment"with the Bank means that the Executive
shall have ceased to be employed by the Bank for any reason whatsoever,
excepting a leave of absence approved by the Bank. For purposes of this
Agreement, if there is a dispute over the employment status of the Executive or
the date of termination of the Executive's employment, the Bank shall have the
sole and absolute right to decide the dispute, unless a Change in Control shall
have occurred.

ARTICLE 2Lifetime Benefits

2.1Normal Retirement Benefit.Upon the
Executive's Termination of Employment on or after the Normal Retirement Date for
reasons other than death, the Bank shall pay to the Executive the benefit
described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1Amount of Benefit.
The annual benefit under this Section 2.1 shall be
calculated as a percentage of Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which the Normal Retirement Date
occurs as shown on Schedule A. In its sole discretion, the Bank's board of
directors may increase the applicable percentage and such increase shall be
reflected on a revised Schedule A.

2.1.2Payment of Benefit.
Beginning the month after termination of employment
following the Executive's Normal Retirement Date, the Bank shall pay the annual
benefit to the Executive in 12 equal monthly installments on the first day of
each month. The annual benefit shall be paid to the Executive for 15 years.

3

---

2.2Early
Retirement/ Disability Retirement Benefit.
Upon Early Retirement or Disability Retirement, the Bank shall pay to the
Executive the benefit described in this Section 2.2 instead of any other benefit
under this Agreement.

2.2.1Amount of Benefit.
The annual benefit under this Section 2.2 is
calculated as a percentage of Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which Early Retirement or
Disability Retirement, as appropriate, occurs as shown on Schedule A. In its
sole discretion, the Bank's board of directors may increase the applicable
percentage and such increase shall be reflected on a revised Schedule A.

2.2.2Payment of Benefit.
Beginning the month after the Normal Retirement Date, the Bank shall pay the annual
benefit to the Executive in 12 equal monthly installments on the first day of
each month. The annual benefit shall be paid to the Executive for 15 years.

2.3Premature Termination Benefit.If the
Executive's employment with the Bank is terminated by the Bank without Cause or
by the Executive for Good Reason, the Bank shall pay to the Executive the
benefit described in this Section 2.3 instead of any other benefit under this
Agreement.

2.3.1Amount of Benefit. The annual benefit
under this Section 2.3 is calculated as a percentage of the Adjusted Base
Salary. The applicable percentage is the percentage corresponding to the Plan
Year in which the Normal Retirement Date would occur, as shown on Schedule A.

2.3.2 Beginning the month after termination,
the Bank shall pay the annual benefit to the Executive in 12 monthly
installments on the first day of each month. The annual benefit shall be paid to
the Executive for 15 years.

2.4Change-in-Control Retention Benefit. If
more than six (6) months after a Change in Control the Executive's employment is
terminated for any reason other than for Cause, the Bank shall pay to the
Executive the benefit described in this Section 2.4 instead of any other benefit
under this Agreement.

2.4.1Amount of Benefit.The annual benefit
under this Section 2.4 is calculated as a percentage of the Adjusted Base
Salary. The applicable percentage is the percentage corresponding to the year in
which the Normal Retirement Date would occur, as shown on Schedule A.

2.4.2Payment
of Benefit. Beginning the month after
termination, the Bank shall pay the annual benefit to the Executive in 12
monthly installments on the first day of each month. The annual benefit shall be
paid to Executive for 15 years.

2.5Petition for Payment in Lump Sum.The Executive or the Executive's designated
beneficiary or estate, as appropriate, may petition the board of directors to
have the benefit under this Article 2 paid to the Executive in a single lump
sum. The board of directors shall have sole and absolute discretion about
whether to pay the remaining benefit in a single lump sum. The amount of the
lump sum payment shall equal the present value of the stream of payments to
which the Executive is entitled using a discount rate equal to the Prime Rate
published in the Wall Street Journal's "Money Rates" section on the date the
board of directors approves the lump sum payment and the lump sum payment shall
be made within 30 days of the board's approval. If payment of the remaining
benefit is paid in a single lump sum, the Bank shall have no further obligations
under this Agreement.

4

---

ARTICLE 3Death Benefits

3.1Death During Active Service.
Except as provided in Section 5.1, if the Executive dies in active service to
the Bank before the Normal Retirement Date, Executive's designated beneficiary
is entitled to receive the benefit in this Section 3.1 instead of any other
benefit under this Agreement.

3.1.1Amount of Benefit.The annual benefit
under this Section 3.1 is calculated as a percentage of the Adjusted Base
Salary. The applicable percentage is the percentage corresponding to year in
which the Normal Retirement Date would have occurred. In its sole discretion,
the Bank's board of directors may increase the applicable percentage and such
increase shall be reflected in a revised Schedule A.

3.1.2Payment of Benefit.Beginning with the
month after the Executive's death, the Bank shall pay the annual benefit to the
Executive's designated beneficiary in 12 monthly installments on the first day
of each month. The annual benefit shall be paid to the Executive's designated
beneficiary for 15 years.

3.2Death During Benefit Period.
If the Executive dies after benefit payments under
Article 2 of this Agreement have commenced but before receiving all such
payments, the Bank shall pay the remaining benefits to the Executive's
beneficiary(ies) at the same time and in the same amounts they would have been
paid to the Executive had the Executive survived.

3.3Death After Termination of Employment But
Before Benefit Payments Commence.If the
Executive is entitled to benefit payments under Article 2 but dies before
payments commence, the benefits shall be payable to the Executive's
beneficiary(ies), but payments shall commence on the first day of the month
after the date of the Executive's death. Payments shall be made in the same
amounts they would have been paid to the Executive had the Executive survived.

3.4Petition for Benefit Payments.
If the Executive's designated is entitled to receive
benefit payments under Section 3.1, 3.2 or 3.3, the Executive's beneficiary(ies)
or estate may petition the Board of Directors to have the benefit under this
Article 3 paid to the to the Executive's beneficiary(ies) or estate in a single
lump sum. The board of directors shall have sole and absolute discretion about
whether to pay the remaining benefit in a single lump sum. The amount of the
lump sum payment shall equal the present value of the stream of payments to
which the Executive's beneficiary(ies) is entitled using a discount rate equal
to the Prime Rate published in the Wall Street Journal's "Money Rates" section
on the date the board of directors approves the lump sum payment and the lump
sum payment shall be made within 30 days of the board's approval. If payment of
the remaining benefit is paid in a single lump sum, the Bank shall have no
further obligations under this Agreement.

ARTICLE 4Beneficiaries

4.1Beneficiary Designations.The Executive
shall designate a beneficiary or beneficiaries by filing a written designation
with the Bank. The Executive may revoke or modify the designation at any time by
filing a new designation. However, designations will be effective only if signed
by the Executive and accepted by the Bank during the Executive's lifetime. The
Executive's beneficiary designation shall be deemed automatically revoked if the
beneficiary predeceases the Executive, or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive dies
without a valid beneficiary designation, all payments shall be made to the
Executive's estate.

5

---

4.2Facility of Payment.If a benefit is
payable to a minor, to a person declared incapacitated, or to a person incapable
of handling the disposition of his or her property, the Bank may pay such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incapacitated person or incapable person. The Bank may
require such proof of incapacity, minority or guardianship as the Bank deems
appropriate before distribution of the benefit. Distribution shall completely
discharge the Bank from all liability for such benefit.

ARTICLE 5General Limitations

5.1Suicide or Misstatement.
The Bank shall not pay any benefit under this
Agreement if the Executive commits suicide before January 1, 2005. Additionally,
the Bank shall not pay any benefit under this Agreement if the Executive has
made any material misstatement of fact on any application or resume provided to
the Bank, or on any application for any benefits provided by the Bank to the
Executive.

5.2Removal.
If the Executive is removed from office or
permanently prohibited from participating in the conduct of the Bank's affairs
by an order issued under section 8(e)(4) or (g)(l) of the Federal Deposit
Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(l), all obligations of the Bank under
this Agreement shall terminate as of the effective date of the order.

5.3Insolvency.
If the Commissioner of the Oregon Department of
Banking appoints the Federal Deposit Insurance Corporation as receiver for the
Bank under Oregon Revised Statutes section 711.405, all obligations under this
Agreement shall terminate as of the date of the Bank's declared insolvency.

Article 6CLAIMS AND REVIEW PROCEDURES

6.1Claims Procedure.A person or beneficiary
("claimant") who has not received benefits under the Agreement that he or she
believes should be paid shall make a claim for such benefits as follows:

6.1.1Initiation - Written Claim.
The claimant initiates a claim by submitting to the
Bank a written claim for the benefits.

6.1.2Timing of Bank Response.
The Bank shall respond to such claimant within 90
days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its decision.

6.1.3Notice of Decision.
If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank shall write
the notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

6.1.3.2  A reference to the specific
    provisions of the Agreement on which the denial is based;

6

---

6.1.3.3 A description of any additional information or material necessary for
the claimant to perfect the claim and an explanation of why it is needed;

6.1.3.4 An explanation of the Agreement's
review procedures and the time limits applicable to such procedures; and

6.1.3.5 A statement of the claimant's right
to bring a civil action under ERISA (Employees Retirement Income Security Act)
Section 502(a) following an adverse benefit determination on review.

6.2Review Procedure.If the Bank denies part
or all of the claim, the claimant shall have the opportunity for a full and fair
review by the Bank of the denial, as follows:

6.2.1Initiation - Written Request.
To initiate the review, the claimant, within 60 days
after receiving the Bank's notice of denial, must file with the Bank a written
request for review.

6.2.2Additional Submissions - Information
Access.The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits.

6.2.3Considerations on Review.
In considering the review, the Bank shall take into
account all materials and information the claimant submits relating to the
claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

6.2.4Timing of Bank Response.
The Bank shall respond in writing to such claimant
within 60 days after receiving the request for review. If the Bank determines
that special circumstances require additional time for processing the claim, the
Bank can extend the response period by an additional 60 days by notifying the
claimant in writing, prior to the end of the initial 60-day period, that an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its
decision.

6.2.5Notice of Decision.
The Bank shall notify the claimant in writing of its
decision on review. The Bank shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth:

6.2.5.2  A reference to the specific
    provisions of the Agreement on which the denial is based;

6.2.5.3 A statement that the claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant's claim for benefits; and

6.2.5.4 A statement of the claimant's right
to bring a civil action under ERISA Section 502(a).

7

---

ARTICLE 7Miscellaneous

7.1Amendments and Termination.
This Agreement may be amended or terminated only by
a written agreement signed by the Bank and the Executive.

7.2Binding Effect.
This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrators
and transferees.

7.3No Guarantee of Employment.
This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Bank, nor does it interfere with the Bank's right to discharge the Executive. It
also does not require the Executive to remain an employee nor interfere with the
Executive's right to terminate employment at any time.

7.4Non-Transferability.
Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached, or encumbered in any manner.

7.5Successors; Binding Agreement.
If any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Bank does not assume this Agreement by operation of
law, the Bank shall require such successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank
would be required to perform this Agreement if no such succession had occurred.
The Bank's failure to obtain an assumption agreement, if necessary, before the
succession becomes effective shall be considered a breach of this Agreement and
shall entitle the Employee to the right to payments specified in Section 2.4.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Bank, by any merger, consolidation or acquisition where the
Bank is not the surviving corporation, by any transfer of all or substantially
all of the Bank's assets, or by any other change in the Bank's structure or the
manner in which the Bank's business or assets are held. Executive's employment
shall not be deemed terminated upon the occurrence of one of the foregoing
events.

7.6Tax Withholding.
The Bank shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.

7.7Applicable Law.
Except to the extent preempted by the laws of the
United States of America, the validity, interpretation, construction, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon, without giving effect to the principles of
conflict of laws of such state.

7.8Unfunded Arrangement.
The Executive and the Executive's beneficiary(ies)
are general unsecured creditors of the Bank for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Bank to which the Executive and beneficiary(ies) have no preferred
or secured claim.

7.9Administration.
The Bank shall have the powers that are necessary to
administer this Agreement, including but not limited to the power to:

(b)  establish and revise the method
    of accounting for the Agreement;



8

---

(d)establish rules and prescribe forms necessary
or desirable to administer the Agreement.

7.10Named Fiduciary.
The Bank shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan,
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

7.11Severability.
If for any reason any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall in no way affect the remainder of
the provision, and the remainder of such provision, together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

7.12Headings.
The headings of sections herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.

7.13Notices.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid. If the communication is to the Bank, it should be directed to the
Bank's Chief Executive Officer and addressed to the Bank's corporate office. If
the communication is to the Executive, it should be addressed to the most recent
address provided by the Executive to the Bank.

7.14IRC Section 1035 Exchanges. The Executive
recognizes and agrees that after this Agreement is adopted the Bank may wish to
exchange the policy of life insurance on the Executive's life, to be used to
fund the benefit under Article 3 of this Agreement for another contract of life
insurance insuring the Executive's life. Provided that the policy is replaced
(or intended to be replaced) with a comparable policy of life insurance, the
Executive agrees to provide medical information and cooperate with
medical insurance-related testing required by a prospective insurer for
implementing the policy or, if necessary, for modifying or updating to a
comparable insurer.

9

---

7.15Entire Agreement.This Agreement
constitutes the entire agreement between the Bank and the Executive concerning
the subject matter hereof and supersedes in its entirety the Salary Continuation
Agreement between the Bank and the Executive dated November 12, 2002.  Addendum A to the Salary Continuation Agreement,
also dated November 12, 2002 is hereby terminated in its entirety. No rights are
granted to the Executive under this Agreement other than those specifically set
forth herein.

IN WITNESS WHEREOF,the Executive and a duly authorized Bank officer have signed this Agreement the
day and year first written above.

THE EXECUTIVE :THE BANK:

PREMIERWEST BANK

_____________________________ By:
________________________________________
John Anhorn

Its:
________________________________________

Agreement to Cooperate with Insurance
Underwriting Incident to I.R.C. Section 10355 Exchange

I acknowledge that I have read this
Agreement and agree to be bound by its terms, particularly the covenant on my
part set forth in Section 7.14 to provide medical information and cooperate with
medical insurance-related testing required by an insurer to issue a comparable
insurance policy to cover the benefit provided under Article 3 of this
Agreement.

___________________________                                                        _____________________________
Witness                                                                                                       
Executive

10

---

BENEFICIARY DESIGNATIONPREMIER WEST BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT

(SERP)

I designate the following as beneficiary of any
death benefits under this Supplemental Executive Retirement Plan Agreement:

Primary: 
____________________________________________________________________

Contingent: 
__________________________________________________________________

Note: To name a trust as beneficiary, please
provide the name of the trustee(s) and theexactname
and date of the trust agreement.

I understand that I may change these
beneficiary designations by filing a new written designation with the Bank. I
further understand that the designations will be automatically revoked if the
beneficiarypredeceases me, or if I
have named my spouse as beneficiary and our marriage is subsequently dissolved.

Signature:Date:


Accepted by the Bank this day of
    _____________, 2004.

By: 
    __________________________



11

---

SCHEDULE A PREMIER WEST
BANK

SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN AGREEMENT

The following Schedule sets forth the
applicable percentage for purposes of calculating the annual benefits, as
referenced in Article 2 of the SERP Agreement.

Plan Year
    Year ended December 31,
    Executive's 
    Age at End of  Period
    Applicable 
    Percentage %
    
    Projected  Annual  Benefit(1)1
    2004
    62
    28%
    $
    58,800.002
    2005
    63
    34%
    $
    74,256.003
    2006
    64
    37%
    $
    84,072.644
    2007
    65
    40%
    $
    94,573.61




> (1)    Projected Annual
>     Benefit assumes a 4% annual increase in Base Salary.  The actual annualbenefit, which
>     is paid for 15 years will depend on the actual Base Salary and thecircumstances of
>     termination of employment as set forth in the SERP Agreement.



12

---

Exhibit 10.4

AMENDMENT TO EXECUTIVE SURVIVOR INCOME
AGREEMENT

FOR JOHN ANHORN

---

AMENDMENT TO

EXECUTIVE SURVIVOR INCOME
AGREEMENT

The Executive Survivor Income Agreement
between PremierWest Bank and John Anhorn (the "Executive") dated November 16,
2002 is hereby amended effective July 29, 2004 as stated below.

Section 2.5.1 is amended to read:

"2.5.1Pre-Retirement Death Benefit.
If the Executive is employed by the Bank, either as
a regular employee or on a consulting basis, at the time of death, the death
benefit shall be $250,000."

Section 2.5.2 is amended to read:

"2.5.2Post-Retirement Death Benefit.
If the Executive is no longer employed by the Bank at the time of death but had
terminated employment

- due to Disability;
- on or after Normal Retirement Age;
- due to termination by the Bank without Cause;
- due to termination by Executive for Good; or
- for any reason other than termination for
  Cause more than six (6) months after a Change in Control

the death benefit shall be $150,000."

The Executive Survivor Agreement shall
continue in full force and effect, subject only to the amendments stated herein.

These amendments are made as part of a
restructuring of the Executive's employment benefits and such restructuring,
which includes additional benefits provided under an employment agreement,
constitute consideration for this amendment.

IN WITNESS WHEREOF, the Executive and a duly
authorized Bank officer have executed this Amendment as of the effective date
stated above.

Executive:                                                                                                                     Bank:

___________________________By:_____________________________John Anhorn

Its:_____________________________

---

EXHIBIT 10.5

EMPLOYMENT AGREEMENT FOR TOM ANDERSON

---

PREMIERWEST BANCORP

EMPLOYMENT AGREEMENT

FOR

TOM ANDERSON

Dated as of July 29, 2004

---

Table of ContentsPage1.
    
    EMPLOYMENT
    
    12.
    
    TERM OF AGREEMENT
    
    12.1
    
    Initial Term/Automatic Renewal
    
    12.2
    
    Perpetual Term After Change in
    Control
    
    22.3
    
    Termination Upon Retirement
    
    23.
    
    NO TERM OF EMPLOYMENT
    
    24.
    
    DUTIES
    
    24.1
    
    Duties
    
    24.2
    
    Obligations
    
    25.
    
    COMPENSATION
    
    25.1
    
    Base Salary
    
    25.2
    
    Vacation
    
    35.3
    
    Stock Options
    
    35.4
    
    Long-Term Care Insurance
    
    35.5
    
    Disability Policy
    
    35.6
    
    Automobile
    
    35.7
    
    Other Benefits
    
    35.8
    
    Reimbursements
    
    45.9
    
    Existing Benefit Agreements
    
    46.
    
    TERMINATION
    
    46.1
    
    For Cause
    
    46.2
    
    Without Cause
    
    56.3
    
    For Good Reason
    
    56.4
    
    Resignation
    
    56.5
    
    Death or Disability
    
    56.6
    
    Retirement
    
    57.
    
    DEFINITIONS
    
    57.1
    
    Cause
    
    57.2
    
    Good Reason
    
    67.3
    
    Disability
    
    77.4
    
    Change in Control
    
    78.
    
    PAYMENT UPON TERMINATION
    
    89.
    
    RETIREMENT BENEFITS
    
    89.1
    
    Stock Option Vesting
    
    89.2
    
    401(k) Contribution
    
    99.3
    
    Retiree Health Insurance
    
    99.4
    
    Long-Term Care Insurance
    
    910.
    
    CONSIDERATION FOR RELEASE OF CLAIMS
    
    910.1
    
    Normal Retirement Benefits
    
    910.2
    
    Disability Insurance
    
    911.
    
    CONSIDERATION FOR NOT COMPETING
    
    1011.1
    
    Self-Imposed Limitation
    
    10




i

---

11.2
    
    Amount/Payment of Consideration
    
    1012.
    
    CHANGE IN CONTROL RETENTION BONUS
    
    1013.
    
    IRC
    
    280G ADJUSTMENT
    
    1013.1
    
    Adjustment of Benefits
    
    1013.2
    
    Adjustment for Overpayments and
    Underpayments
    
    1114.
    
    CONFIDENTIALITY AND CREATIVE WORK
    
    1114.1
    
    Nondisclosure
    
    1114.2
    
    Return of Material
    
    1214.3
    
    Injunctive Relief
    
    1214.4
    
    Creative Work
    
    1215.
    
    DISPUTE RESOLUTION
    
    1215.1
    
    Arbitration
    
    1315.2
    
    Expenses/Attorneys' Fees
    
    1315.3
    
    Injunctive Relief
    
    1316.
    
    NOTICES
    
    1417.
    
    GENERAL PROVISIONS
    
    1417.1
    
    Governing Law
    
    1417.2
    
    Saving Provision
    
    1417.3
    
    Survival Provision
    
    1417.4
    
    Captions and Counterparts
    
    1417.5
    
    Entire Agreement
    
    1417.6
    
    Previous Agreement
    
    1417.7
    
    Waiver/Amendment
    
    1517.8
    
    Assignment
    
    1518.
    
    ADVICE OF COUNSEL
    
    15




ii

---

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") by and
among PremierWest Bancorp, an Oregon corporation, PremierWest Bank, an Oregon
state chartered bank (the "Bank") (collectively "PremierWest") and Tom Anderson
("Executive"), is dated July 29, 2004.

RECITALS

A.Incentive to
Continued Service. PremierWest recognizes that
Executive possesses unique skills, knowledge, and experience related to
PremierWest's business and Executive has made and is expected to continue to
make major contributions to the profitability, growth and financial strength of
PremierWest and its affiliates. To assure itself of the continuity of
management, PremierWest desires to provide incentives for Executive to remain
employed until retirement age and following a Change in Control.

B.Replace Existing
Agreement. Executive and PremierWest were parties
to an employment agreement dated January 11, 2002. The parties intend for this
Agreement to supersede and replace the provisions of these previous employment
agreement, except as otherwise stated herein.

C.No Currently
Anticipated Change in Control. As of the date of
this Agreement none of the conditions or events included in the definition of
the term "golden parachute payment" that is set forth in Section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(l)(ii) [12 CFR 359.1(f)(l)(ii)]
exists or, to the best knowledge of PremierWest, is contemplated insofar as
PremierWest or any affiliates are concerned.

AGREEMENT

1.EMPLOYMENT.PremierWest Bancorp
and the Bank shall continue to employ Executive to serve as Senior Vice
President and Chief Financial Officer
according to the terms and conditions of this Agreement, for
the period stated in Section 2 below.

2.1Initial
    Term/Automatic Renewal. The initial term of
    this Agreement shall expire on December 31, 2006. On each anniversary of the
expiration date, this Agreement shall be extended automatically for one (1)
additional year unless PremierWest Bancorp's Board of Directors (the "Board")
determines that the term shall not be extended. If the Board determines not to
extend the term, it shall promptly notify Executive in writing and this
Agreement will remain in force only until its term expires. The Board's decision
not to extend the term of this Agreement shall not by itself give Executive any
rights under this Agreement to claim an adverse change in his position,
compensation, or circumstances or otherwise to claim entitlement to rights under
Sections 10, 11, or 12 below.

1

---

2.2Perpetual Term After Change in Control.
Following a Change in Control, or replacement of the current Chief Executive
Officer,this
Agreement will be subject to a perpetual term and will only be terminable with
Executive's written consent.

2.3Termination Upon Retirement.
Unless sooner terminated, Executive's employment shall terminate automatically
when he reaches age 62.

3.NO TERM OF EMPLOYMENT.
Notwithstanding the term of this Agreement, PremierWest may terminate
Executive's employment at any time for any lawful reason or for no reason at
all, subject to the provisions of this Agreement.

4.1Duties.
    As Senior Vice President & Chief Financial Officer, Executive shall serve under the direction of the Board, the Bank's
Board (the "Bank Board"), and the
Chief Operating Officer (the "Supervisor") and in accordance
with the Articles of Incorporation and Bylaws (as each may be amended or
restated from time to time) of PremierWest Bancorp and the Bank, respectively.

(a) Executive agrees that to the best of
    Executive's ability and experience, Executive will at all times loyally and conscientiously
perform all of the duties and obligations required of Executive pursuant to the
express and implicit terms of this Agreement and as directed by the Board or the
Supervisor.

(b)
Executive shall devote Executive's entire working time,
attention and efforts to PremierWest's business and affairs, shall faithfully
and diligently serve PremierWest's interests and shall not engage in any
business or employment activity that is not on PremierWest's behalf (whether or
not pursued for gain or profit) except for (a) activities approved in writing in
advance by the Board and (b) passive investments that do not involve Executive
providing any advice or services to the businesses in which the investments are
made.

5.COMPENSATION. For all services
performed under this Agreement, PremierWest agrees to pay the following
compensation and benefits:

5.1Base Salary. Executive's annual
base salary is $125,000 payable in semi-monthly installments (the "Base
Salary"). Executive's base salary shall be subject to annual review by the
Board's Compensation Committee. Taking into account the committee's
recommendation, the Board may increase the Base Salary, but the Base Salary
shall not be reduced.

5.2Vacation. Executive is entitled
to not less than four (4) weeks of paid vacation per year to be used in
accordance with the terms and conditions of the Bank's personnel policies.
Notwithstanding anything in the Bank's personnel policies to the contrary, up to
two weeks of Executive's four weeks of paid vacation may be carried over from
one year to the next

2

---

if unused by the end of the year, but Executive shall not
be entitled under any circumstance to payment for unused vacation.

5.3Stock Options. Executive is
eligible to participate in PremierWest Bancorp's stock option plans and other stock-based
compensation, incentive, bonus, or purchase plans currently existing or adopted
during the term of this Agreement for the benefit of officers or employees.

5.4Long-Term Care Insurance.
PremierWest currently pays the premiums on long term care insurance policies for
Executive's spouse. PremierWest may cease to pay such premiums at any time prior
to a Change in Control or prior to vesting of such benefits under Section 9 or
10 below, but following a Change in Control or vesting of the benefits under
Section 9 or 10 below, PremierWest shall continue to pay all remaining premium
payments, if PremierWest has made a premium payment on the policy the preceding
12 months.

5.5Disability Policy. PremierWest
shall continue to reimburse Executive for payment of premiums on the disability
policy currently in force for Executive or a replacement disability policy
providing equal or greater disability benefits.

5.6Automobile. If PremierWest
chooses to provide a vehicle for use by Executive during the term of his
employment, upon Termination Without Cause or Termination For Good Reason,
PremierWest shall transfer all right, title, and interest in and to the vehicle
to Executive. Notwithstanding the foregoing, PremierWest is not obligated to
provide Executive a vehicle.

5.7Other Benefits. Executive is
entitled to participate in all officer or employee compensation, bonus,
incentive, and benefit plans in effect from time to time throughout the term of
this Agreement, including without limitation plans providing pension, medical,
dental, disability, and group life benefits, and 401(k) retirement plans, and to
receive any and all other fringe benefits provided from time to time, provided
that Executive satisfies the eligibility requirements for any such plans or
benefits.

5.8Reimbursements. Executive shall
be entitled to reimbursement for all reasonable business expenses incurred in
performing his obligations under this Agreement, including but not limited to
all reasonable business travel and entertainment expenses incurred while acting
at the request of or in the service of PremierWest, provided such expenses are
incurred and accounted for in accordance with the policies and procedures
established from time to time by PremierWest.

5.9Existing Benefit Agreements.
Executive and PremierWest are already parties to the following additional
benefit agreements, the benefits under which shall be governed solely by the
terms of those agreements:

(b)  Executive Survivor Income Agreement
    (death benefits); and

3

---

(c) Deferred Compensation Agreement.

6.TERMINATION. Executive's
employment may be terminated before the expiration of this Agreement as
described in this Section, in which event Executive's compensation and benefits
shall terminate except as otherwise provided in this Agreement. Any purported
termination by PremierWest or by Executive shall be communicated by written
notice of termination to the other. The notice must state (i) the specific
termination provision of this Agreement relied upon, (ii) the date on which
termination shall become effective and (iii) if Termination For Cause or
Termination For Good Reason the notice must state in reasonable detail the facts
and circumstances forming the basis for termination. Employment shall terminate:

6.1For Cause. Upon delivery to
Executive of notice of termination of Executive for Cause (as defined in Section
7.1 below), along with a copy of the duly adopted Board or Bank Board resolution
finding Cause, as described below ("Termination For Cause").

(a) As a prerequisite to Termination For Cause, at a
meeting called and held for such purpose the Board or Bank Board must adopt a
resolution which (i) contains findings that, in the good faith opinion of the
Board or Bank Board, as appropriate, Executive has committed an act constituting
Cause, and (ii) specifies the particulars thereof in detail. The resolution must
be adopted by the affirmative vote of at least 75% of the directors of the Board
or the Bank Board.

(b) Notice of that meeting and the proposed
Termination For Cause shall be given to Executive a reasonable amount of time
before the meeting. Executive and his counsel (if Executive chooses to have
counsel present) shall have a reasonable opportunity to be heard at the meeting.
Nothing in this Agreement limits Executive's or his beneficiaries' right to
contest the validity or propriety of the Board or Bank Board's determination of
Cause.

6.2Without Cause. Upon
PremierWest's termination of Executive without Cause, upon 90 days' written
notice, at any time in PremierWest's sole discretion, for any reason other than
for Cause or for no reason ("Termination Without Cause"). A Change in Control
does not in itself constitute Termination Without Cause.

6.3For Good Reason. Upon
Executive's termination of the employment for Good Reason (as defined in Section
7.2 below) ("Termination For Good Reason").

6.4Resignation. Upon Executive's
voluntary resignation without Good Reason ("Resignation"), written notice of
which Executive must give to PremierWest at least 90 days in advance of
Resignation.

6.6  Retirement.
    Upon Executive reaching the retirement age of 62 ("Retirement Age").  The automatic termination upon
    reaching Retirement Age is referred to as "Retirement."

4



---

7.1Cause.
    "Cause" for Executive's termination will exist upon the occurrence of one or more of the following events:

(a)Fraudulent Conduct.
An intentional act of fraud, embezzlement, or theft by Executive in the course
of his employment with PremierWest Bancorp or the Bank. No act or failure to act
on Executive's part shall be deemed to have been intentional if it was due
primarily to an error in judgment or negligence. An act or failure to act on
Executive's part shall be considered intentional if it is not in good faith and
if it is without a reasonable belief that the action or failure to act is in
PremierWest's best interests;

(b)Material Breach of
Agreement. A material breach by Executive of this
Agreement if such breach is not remedied or is not being remedied to the Board
or the Bank Board's satisfaction within 30 days after written notice including a
detailed description of the breach has been delivered by the respective board to
Executive;

(c)Gross
Negligence/Insubordination. Gross negligence or
insubordination by Executive in the performance of his duties as an officer of
PremierWest Bancorp or the Bank if such gross negligence or insubordination is
not remedied or is not being remedied to the Board or the Bank Board's
satisfaction within 30 days after written notice including a detailed
description of the gross negligence or insubordination has been delivered by the
respective board to Executive;

(d)Breach of Fiduciary
Duties. A breach by Executive of his fiduciary
duties to PremierWest Bancorp and its stockholders or misconduct involving
dishonesty, in either case whether in his capacity as an officer of PremierWest
Bancorp or the Bank;

(e)Criminal Conviction.
Conviction of Executive for a felony or conviction of a misdemeanor involving
moral turpitude;

(f)Violation of Law.
Intentional violation of any law or significant policy of PremierWest Bancorp or
the Bank committed in connection with Executive's employment, which has a
material adverse effect on PremierWest Bancorp or the Bank; or

(g)FDIC Removal Order.
Removal of Executive from office or permanent prohibition of Executive from
participating in the conduct of PremierWest Bank's affairs by an order issued
under section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(l).

7.2Good Reason. "Good Reason" for
Executive's resignation of employment will exist upon the occurrence, without
Executive's consent, of one or more of the following events, if Executive has
informed PremierWest in writing of the circumstances described below

5

---

in this Section 7.2 that could give rise to Termination
For Good Reason and PremierWest has not removed the circumstances within 30 days
of the written notice:

(b)  Reduced Participation in Bonus,
    Incentive, Compensation, and Other Plans.A reduction of
Executive's bonus, incentive, and other compensation award opportunities under
PremierWest Bancorp's benefit plans and the Bank's benefit plans, unless in the
case of either, a company-wide reduction of all officers' award opportunities
occurs simultaneously;

(c)Participation in Benefit Plans.
Discontinuance of Executive's participation in any officer or
employee benefit plan maintained by PremierWest Bancorp or by the Bank, unless
the plan is discontinued by reason of law or loss of tax deductibility to
PremierWest with respect to contributions to the plan, or is discontinued as a
matter of PremierWest Bancorp policy or PremierWest Bank policy applied equally
to all participants in the plan;

(1) Assignment to Executive of duties or
    responsibilities that are materially inconsistent with Executive's position as
stated in this Agreement or that represent a material reduction of his
authority;

(3)  Failure to appoint or reappoint
    Executive to the position stated in this Agreement;

(4)
Following a Change in Control, failure to retain Executive in
an executive officer position with authority, duties or responsibilities
consistent with that of an executive officer.

(Subsections (d)(1), (2) and (3) do not apply following a
Change in Control);

(e)Failure to Obtain Assumption Agreement.The failure of a successor or assign of the Bank to assume and agree to perform
this Agreement, if assignment and assumption does not occur automatically under
operation of law;

(f)Termination without Compliance with this Agreement.Termination by PremierWest of Executive's employment
without the notice required under this Agreement;

(g)Material Breach.A material
breach of this Agreement by PremierWest that is not corrected within a
reasonable time; or

(h)Relocation of
Executive.Requiring Executive to change his
principal work location, to any location that is more than 15 miles from the
location of PremierWest Bancorp's principal executive offices on the date of
this Agreement.

6

---

7.3Disability. "Disability" shall
mean that (i) Executive has been unable to perform Executive's duties under this
Agreement as a result of Executive's incapacity due to physical or mental
illness for at least 90 consecutive calendar days or 150 calendar days during
any consecutive 12 month period and (ii) a physician selected by PremierWest and
its insurers and acceptable to Executive or Executive's legal representative
(with such Agreement on acceptability of the physician not to be unreasonably
withheld), determines the incapacity to be (a) total and permanent and (b)
prohibiting of Executive's ability to perform the essential functions of
Executive's position with or without reasonable accommodation. Executive shall
not be deemed to be disabled, however, if he returns to work on a full-time
basis within 30 days after PremierWest gives him notice of termination due to
Disability. PremierWest may require Executive to submit to such physical or
mental evaluations and tests as the board of directors deems appropriate.

7.4
Change in Control. For
purposes of this Agreement, a "Change in Control" shall be deemed to have occurred
when any of the following events take place:

(a)Merger.PremierWest Bancorp
merges into or consolidates with another corporation, or merges another
corporation into PremierWest Bancorp, and as a result, less than 50% of the
combined voting power of the resulting corporation immediately after the merger
or consolidation is held by persons who were the holders of PremierWest
Bancorp's voting securities immediately before the merger or consolidation. The
term "person"means
an individual, corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or other
entity.

(b)Acquisition of Significant Share Ownership.
A report on Schedule 13D or another form or schedule (other
than Schedule 13G) is filed or is required to be filed under sections 13(d) or
14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the
filing person or persons acting in concert has or have become the beneficial
owner of 25% or more of a class of PremierWest Bancorp's voting securities, but
this paragraph (b) shall not apply to beneficial ownership of voting shares of
PremierWest Bancorp held in a fiduciary capacity by an entity in which
PremierWest Bancorp directly or indirectly beneficially owns 50% or more of the
outstanding voting securities;

(c)Change in Board Composition.During any period of two (2) consecutive years, individuals who constitute
PremierWest Bancorp's board of directors at the beginning of the two-year period
cease for any reason to constitute at least a majority thereof;provided, however,that for
purposes of this paragraph (c), each director who is first elected by the board
(or first nominated by the board for election by stockholders) by a vote of at
least two-thirds of the directors who were directors at the beginning of the
period shall be deemed to have been a director at the beginning of the two-year
period.

(d)Sale of Assets.PremierWest
Bancorp sells to a third party all or substantially all of PremierWest Bancorp's
assets. For this purpose, sale of all or substantially all of PremierWest
Bancorp's assets includes sale of PremierWest Bank.

7

---

8.PAYMENT UPON TERMINATION. Upon
termination of Executive's employment for any of the reasons set forth in
Section 6 above, Executive or Executive's estate, as appropriate, will receive
payment for all Base Salary earned through the date of termination and, except
in the event of Termination For Cause or Resignation, all unpaid bonus or
incentive compensation due to Executive for the previous calendar year ("Earned
Compensation"). Earned Compensation shall be paid by the end of the business day
following termination or sooner if required by applicable law.

9.RETIREMENT BENEFITS. Upon
Retirement, Executive shall additionally be entitled to the following benefits:

9.1Stock Option Vesting. Executive
shall also be fully vested in any stock options, restricted stock grants, or
other similar equity compensation arrangements regardless of whether the
respective plan provides for accelerated vesting.

9.2401(k) Contribution.
PremierWest shall contribute or cause to be contributed to Executive's 401(k)
plan account the matching and profit sharing contributions, if any, that would
have been made had Executives employment not terminated before the end of the
plan year.

9.3Retiree Health Insurance.
Executive shall be entitled to retiree health care coverage for himself and his
spouse for 15 years after termination of employment as follows: (1) until
Executive and his spouse, respectively, reach the eligible age for Medicare, the
retiree health care coverage for each shall be substantially similar to coverage
maintained for PremierWest employees and (2) after Executive and his spouse,
respectively, reach the eligible age for Medicare, PremierWest will provide
Medicare Supplemental Insurance comparable to the best of such policies offered
by a major insurance carrier in the market area. If Executive dies within 15
years after termination of employment, Executive's spouse shall continue to
receive retiree health care coverage on the same terms and conditions that
Executive would have; provided, however, such spousal coverage will expire no
later than 15 years after termination of Executive's employment.

9.4Long-Term Care Insurance. To
the extent premiums on Executive' spouse's long-term care insurance remain to be
paid, if PremierWest has made a payment within the previous 12 months,
PremierWest shall continue to pay the remaining long-term care insurance
premiums for Executive's spouse until fully paid or until Executive's death. If
Executive dies and Executive's spouse is the beneficiary of the death benefit
under Executive Survivor Income Agreement, Executive's spouse has the option to
request that PremierWest pay the remaining premiums on her long term care
insurance policy and in exchange PremierWest will reduce the amount of the
payment to Executive's spouse under Executive Survivor Income Agreement by the
amount of such remaining premium payments.

10.CONSIDERATION FOR RELEASE OF CLAIMS.
In the event of (i) Termination Without Cause, (ii) Termination for Good Reason,
or (iii) if termination occurs for any reason other than Termination For Cause
more than six (6) months after a Change in Control, (each an "Eligible
Termination Event") PremierWest will offer and Executive may choose to execute
the Separation Agreement, attached hereto as Exhibit A, which provides for the
release of claims

8

---

against PremierWest. Provided Executive executes and does
not revoke Section 7(a) of the Separation Agreement, Executive will be entitled
to the benefits listed below in this Section 10 in consideration for the release
of claims.

10.2  Disability Insurance.
    PremierWest will continue to pay premiums on Executive's
disability policy until age 65.

11.1Self-Imposed Limitation.In the event of an
    Eligible Termination Event (as defined in Section 10 above), Executive may choose to
indicate in the Separation Agreement that Executive does not intend to engage in
certain activities competitive to PremierWest, identified in Section 2 of the
Separation Agreement attached hereto as Exhibit A. For as long as Executive does
not engage in such activities, up to a maximum of one year (the "Optional
Restriction Period"), PremierWest will pay Executive the consideration set forth
in Section 11.2. Unless Executive executes the Separation Agreement (regardless
of whether Executive revokes Section 7(a) of the Separation Agreement) and
indicates Executive's intention not to engage in the competitive activities,
PremierWest will not compensate Executive for refraining from engaging in such
activities.

(a) As consideration for each month
    during the Optional Restriction Period that Executive does not engage in the competitive
activities, PremierWest will continue to pay Executive's monthly Base Salary.
Payment of the consideration will be made starting the next regular pay period
following Executive's execution of the Separation Agreement.

(b) If the Eligible Termination Event occurs after a
Change in Control, the monthly Base Salary payment shall be increased by
one-twelfth (1/12) of the amount of any bonuses or incentive compensation earned
for the calendar year ended immediately before the year in which the Change in
Control occurred, or the subsequent year, if ended, whichever is greater. For
purposes of this Section, Termination for Cause or Termination for Good Reason
will be deemed to have occurred after a Change in Control if termination of
employment occurs after discussions between PremierWest and a third party
regarding a Change in Control commence, if those discussions ultimately conclude
with a Change in Control.

12.CHANGE IN CONTROL
RETENTION BONUS. If Executive remains employed
with PremierWest or its successor for six (6) months following a Change in
Control, as additional compensation for assisting PremierWest with the Change in
Control transition and as a reward for continued service, upon termination of
employment (other than Termination For Cause), PremierWest will pay Executive an
amount of cash equal to the amount of interest that would have accrued had
PremierWest, upon the six month anniversary of the Change in Control, paid to
Executive's Deferral Account under the Deferred Compensation Agreement, an
amount

9

---

equal to one times the sum of (i) Executive's annual Base
Salary and (ii) the amount of any bonuses or incentive compensation earned for
the calendar year ended immediately before the year in which the Change in
Control occurred, or the subsequent year, if ended, whichever is greater).

13.1Adjustment of Benefits. In the event
    Executive becomes entitled to a payment or benefit pursuant to the terms of this Agreement
or of any other plan, arrangement or agreement (collectively, the "Payments") of
PremierWest or its successor (collectively, the "Employer"), and the Employer's
Auditor determines that the Payments result in "excess parachute payments" under
section 280G of the Internal Revenue Code (the "Code"), then Executive shall
receive, instead of the Payments, aggregate payments equal to the Reduced Amount
(defined below). Executive shall direct in which order the payments are to be
reduced, but no change in the timing of any payment shall be made without the
consent of the Employer. For purposes of this Section 13, the "Reduced Amount"
shall be the amount, expressed as a present value, that maximizes the aggregate
present value of the payments without causing any payment to be nondeductible by
the Employer under section 280G of the Code. "Employer's Auditor" shall mean the
independent auditors retained most recently prior to the transaction implicating
section 280G of the Code by the Employer, or, if the Employer is not the
surviving entity following the Change in Control, by the Employer's successor
(or any affiliate). In computing the maximum amount payable, the Employer's
Auditor shall take into account the independent value to the Employer of
Executive's restrictive covenants following a Change in Control as set forth in
the Separation Agreement, which value should constitute separate consideration
outside of sections 280G and 4999 of the Code.

13.2Adjustment for Overpayments and Underpayments.
As a result of uncertainty in the application of sections 280G and 4999 of the
Code at the time of an initial determination by the Employer's Auditor, it is
possible that a payment will have been made by the Employer that should not have
been made (an "Overpayment") or that an additional payment that will not have
been made by the Employer could have been made (an "Underpayment"). In the event
that the Employer's Auditor, based upon the assertion of a deficiency by the
Internal Revenue Service against the Employer or Executive that the Employer's
Auditor believes has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a bilateral error subject to adjustment which Executive shall repay to the
Employer, together with interest at the applicable federal rate specified in
section 7872(f)(2) of the Code. In the event that the Employer's Auditor
determines that an Underpayment has occurred, such Underpayment shall promptly
be paid or transferred by the Employer to, or for the benefit of, Executive,
together with interest at the applicable federal rate specified in section
7872(f)(2) of the Code.

14.1Nondisclosure. Executive covenants and agrees
    that he will not reveal to any person, firm, or corporation any Confidential
Information of any nature concerning PremierWest or its business, or anything connected
therewith. "Confidential Information"
means all of PremierWest's confidential and proprietary
information and trade secrets in existence on

10

---

the date hereof or existing at any time during the term of
this Agreement, including but not limited to:

(a)the whole or any portion or phase of any business
plans, financial information, purchasing data, supplier data, accounting data,
or other financial information;

(b)
the whole or any portion or phase of any research and
development information, design procedures, algorithms or processes, or other
technical information;

(c)
the whole or any portion or phase of any marketing or sales
information, sales records, customer lists, prices, sales projections, or other
sales information; and

(d)
trade secrets, as defined from time to time by the laws of
the State of Oregon.

Notwithstanding the foregoing, Confidential Information
excludes information that, as of the date hereof or at any time after the date
hereof, is published or disseminated without obligation of confidence or that
becomes a part of the public domain (1) by or through action of PremierWest, or
(2) by or through action of another person not in violation of non-disclosure
covenant with PremierWest. This Section does not prohibit disclosure required by
an order of a court having jurisdiction or a subpoena from an appropriate
governmental agency or disclosure made by Executive in the ordinary course of
business and within the scope of his authority.

14.2Return of Material. Executive
agrees to deliver or return to PremierWest upon termination of employment, or as
soon thereafter as possible, all written information and any other similar items
furnished by PremierWest or prepared by Executive in connection with his
services hereunder. Executive will retain no copies thereof after termination of
Executive's employment.

14.3Injunctive Relief. Executive
acknowledges that it is impossible to measure in money the damages that will
accrue to PremierWest if Executive fails to observe the obligations imposed on
him by this Section. Accordingly, if PremierWest institutes an action to enforce
the provisions hereof, Executive hereby waives the claim or defense that an
adequate remedy at law is available to PremierWest, and Executive agrees not to
urge in any such action the claim or defense that an adequate remedy at law
exists.

14.4Creative Work. Executive agrees
that all creative work and work product, including but not limited to all
technology, business management tools, processes, software, patents, trademarks,
and copyrights developed by Executive during his employment with PremierWest,
regardless of when or where such work or work product was produced, constitutes
work made for hire, all rights of which are owned by PremierWest. Executive
hereby assigns to PremierWest Bancorp and to PremierWest Bank all rights, title,
and interest, whether by way of copyrights, trade secret, trademark, patent, or
otherwise, in all such work or work product, regardless of whether the same is
subject to protection by patent, trademark, or copyright laws.

11

---

15.1Arbitration.The parties agree to submit any
    dispute arising under this Agreement to final, binding, private arbitration in
Medford, Oregon. The disputes subject to arbitration include not only disputes
involving the meaning or performance of the Agreement, but disputes about its
negotiation, drafting, or execution. The dispute will be determined by a single
arbitrator and governed by the then-existing rules of arbitration procedure in
Jackson County Circuit Court, except as set forth herein. Instead of filing of a
civil complaint in Jackson County Circuit Court, a party will commence the
arbitration process by noticing the other party. The parties will choose an
arbitrator who specializes in employment conflicts from the arbitration list for
Jackson County Circuit Court. If the parties are unable to agree on an
arbitrator within ten (10) days of receipt of the list of arbitrators, each
party will select one attorney from the list, and those two attorneys shall
select the arbitrator from the list (with each of the two selecting attorneys
then concluding their services and each being compensated by the party selecting
each attorney, subject to recovery of such fees under Section 15.2) . The
arbitrator may charge his or her standard arbitration fees rather than the fees
prescribed in the Jackson County Circuit Court arbitration procedures. The
arbitrator will have full authority to determine all issues, including
arbitrability, to award any remedy, including permanent injunctive relief, and
to determine any request for attorneys' fees, costs and expenses in accordance
with Section 15.2. There shall be no right to review of the arbitrator's
decision in court. The arbitrator's award may be reduced to final judgment or
decree in Jackson County Circuit Court.

15.2Expenses/Attorneys' Fees.The
prevailing party shall be awarded all costs and expenses of the proceeding,
including, but not limited to, attorneys' fees, filing and service fees, witness
fees, and arbitrators' fees. If arbitration is commenced, the arbitrator will
have full authority and complete discretion to determine the "prevailing party"
and the amount of costs and expenses to be awarded.

15.3Injunctive Relief.Notwithstanding any other provision of this Agreement, an aggrieved party may
seek a temporary restraining order or preliminary injunction in Jackson County
Circuit Court to preserve the status quo during the arbitration proceeding,
provided however, that the party seeking relief agrees that ultimate resolution
of the dispute will still be determined through arbitration and not through
court process. The filing of the court action for injunctive relief shall not
hinder or delay the arbitration process.

12

---

16.NOTICES. All notices, requests,
demands, and other communications provided for by this Agreement will be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by a nationally-recognized delivery service (such as Federal Express), or
three (3) business days after being deposited in the U.S. mail as certified
mail, return receipt requested, with postage prepaid, if such notice is properly
addressed. Unless otherwise changed in writing, notice shall be properly
addressed to Executive if addressed to the address of Executive on the books and
records of PremierWest at the time of mailing of such notice, and properly
addressed to PremierWest if addressed to PremierWest Bancorp 503 Airport Road,
Medford, OR 97504 Attention: Corporate Secretary.

17.1Governing Law. The validity, interpretation,
    construction and performance of this Agreement shall be governed by the laws of the
State of Oregon.

17.3Saving Provision. If any part
of this Agreement is held to be unenforceable, it shall not affect any other
part. If any part of this Agreement is held to be unenforceable as written, it
shall be enforced to the maximum extent allowed by applicable law.

17.4Survival Provision. If any
benefits provided under this Agreement are still owed, or claims pursuant to
this Agreement are still pending, at the time of termination of this Agreement,
this Agreement shall continue in force, with respect to those obligations or
claims, until such benefits are paid in full or claims are resolved in full. The
Sections related to Confidential Information and Creative Work shall survive
after termination of this Agreement and shall be enforceable regardless of any
claim Employee may have against PremierWest.

17.5Captions and Counterparts. The
captions in this Agreement are solely for convenience. The captions in no way
define, limit, or describe the scope or intent of this Agreement. This Agreement
may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.

17.6Entire Agreement. Except as
otherwise stated herein, this Agreement constitutes the sole Agreement of the
parties regarding Executive's benefits upon termination of employment and
together with PremierWest's employee handbook governs the terms of Executive's
employment. Where there is a conflict between the employee handbook and this
Agreement, the terms of this Agreement shall govern.

17.7Previous Agreement. This
Agreement supersedes all prior oral and written agreements between Executive and
PremierWest, or any affiliates or representatives of PremierWest regarding the
subject matters set forth herein.

17.8Waiver/Amendment. This
Agreement may not be amended, released, discharged, abandoned, changed, or
modified in any manner, except by an instrument in writing signed by each of the
parties hereto. The failure of any party hereto to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a waiver of
any such provision, nor in any way to affect the validity of this Agreement or
any part thereof or the right of any party thereafter to enforce each and every
such provision. No waiver or any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.

13

---

17.9Assignment.

(a) Executive shall not assign or transfer any of
Executive's rights pursuant to this Agreement, wholly or partially, to any other
person or to delegate the performance of its duties under the terms of this
Agreement. If Executive attempts an assignment or transfer that is contrary to
this Section, PremierWest shall have no liability to pay any amount to the
assignee or transferee.

(b) The rights and obligations of PremierWest under
this Agreement shall inure to the benefit of and be binding in each and every
respect upon the direct and indirect successors and assigns of PremierWest's,
regardless of the manner in which the successors or assigns succeed to the
interests or assets of PremierWest's. If this Agreement is not otherwise
transferred to and assumed by PremierWest's successor or assign by operation of
law, PermierWest shall require such successor of substantially all of the
business or assets of PremierWest Bancorp to expressly assume and agree to
perform PremierWest's obligations hereunder.

(c) This Agreement shall not be terminated by the
voluntary or involuntary dissolution of PremierWest, by any merger,
consolidation or acquisition where PremierWest is not the surviving corporation,
by any transfer of all or substantially all of PremierWest's assets, or by any
other change in PremierWest's structure or the manner in which PremierWest's
business or assets are held. Executive's employment shall not be deemed
terminated upon the occurrence of one of the foregoing events.

(d) This Agreement will inure to the benefit of and
be enforceable by Executive's personal or legal representatives, executives,
administrators, successors, heirs, distributees and legatees.

18.ADVICE OF COUNSEL.Executive acknowledges that, in executing this Agreement,
Executive has had the opportunity to seek the advice of independent legal
counsel, and has read and understood all of the terms and provisions of this
Agreement. This Agreement shall not be construed against any party by reason of
the drafting or preparation hereof.

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.

PREMIERWEST BANCORP
    
    EXECUTIVEBy:______________________________Its:______________________________Tom AndersonPREMIERWEST BANKBy:______________________________Its:______________________________




14

---

Exhibit A - Employment Agreement

SEPARATION AGREEMENT

ThisSEPARATIONAGREEMENT(this "Agreement") is entered into as of this
_____
day of _______, 20_________, by and among PremierWest Bancorp, an Oregon corporation,
PremierWest Bank, an Oregon-chartered bank and wholly owned subsidiary of
PremierWest Bancorp (the "Bank"), and Tom Anderson (the "Executive"). (PremierWest
Bancorp, the Bank, and their subsidiaries and affiliates, including any entity
or organization controlling, controlled by, or under common control with
PremierWest Bancorp or the Bank, are hereinafter sometimes referred to
collectively or individually as the "Corporation").

WHEREAS,Executive, PremierWest Bancorp, and the Bank entered into
an Employment Agreement dated effective as of July 29, 2004 (as the same may be
amended, the "Employment Agreement") which provided that the Corporation would
provide certain benefits to Executive after termination of his employment under
certain circumstances specified in the Employment Agreement as consideration for
Executive's for release of claims against PremierWest and certain other benefits
as consideration for Executive's agreement not to engage in certain competitive
activities for a specified period of time;

WHEREAS,Executive's employment will terminate on
_____________, 20 ___ (the "Termination Date");

WHEREAS,Executive has consulted with counsel of Executive's
choice concerning this Agreement, or Executive has chosen not to consult with
counsel, and Executive, and as applicable Executive's counsel, have had the
opportunity to discuss with the Corporation the terms and conditions of this
Agreement; and

NOW THEREFORE,in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Executive hereby agree as follows.

1.Consideration for Release of Claims.Provided Executive does not revoke Section 7(a)
and complies with the terms of this Agreement, the Corporation will provide
Executive the benefits set forth in Section 10 of the Employment Agreement.

2. Declared Intent Not to Compete.
Executive hereby indicates that Executiveintends/ does not intend[indicate
by crossing through the inapplicable language] to
refrain from engaging in certain activities specified in Section 2.1
("Competitive Activities") for some period of time following termination of
employment. If Executive has indicated an intent not to engage in Competitive
Activities, in consideration for each month Executive refrains from engaging in
Competitive Activities, the Corporation will pay Executive the monthly payments
as described in Section 11 of the Employment Agreement until the earlier of (i)
when Executive engages in a Competitive Activity or (ii) the end of the Optional
Restriction Period, which is[one year/two years]after the date on which Executive's termination of
employment becomes effective.

15

---

2.1Competitive Activities.
Competitive Activities include:

(a) Becoming associated with any entity, whether as
an owner, principal, partner, director, trustee, employee, agent, consultant, or
stockholder (except as a holder of 1% or less of the outstanding voting stock of
a company) that is engaged or proposes to engage in any business that solicits,
deposits or offers loans and is located within a 30 mile radius of any of the
Corporation's offices or branches (a "Competitor");

(b) Encouraging or soliciting or assisting any other
person or firm in encouraging or soliciting any person who, during the two-year
period preceding Executive's termination of employment, is or was engaged in a
business relationship with the Corporation to terminate the person's
relationship with the Corporation or to engage in a business relationship with a
Competitor; or

(c) Inducing any employee of the Corporation to
terminate employment with the Corporation and, either individually or as owner,
principal, partner, director, trustee, agent, employee, consultant or otherwise,
employing, offering employment, or causing employment to be offered to any
person who is or was employed by the Corporation unless such person shall have
ceased to be employed by such entity for a period of at least six months.

2.2Notice of
Activities.If Executive has indicated above an
intent not to engage in Competitive Activities, Executive will notify the
Corporation before engaging in any such activities. If Executive fails to give
such notice and continues to receive payments under this Section, Executive
shall not be entitled to keep any payments received after engaging in a
Competitive Activity.

2.3Not Enforceable
Covenant. This is not a covenant not to compete
and the Corporation may not seek injunctive relief to prohibit Executive from
engaging in a Competitive Activity. If Executive chooses to engage in a
Competitive Activity, the Corporation will cease making monthly payments of the
consideration.

3.Nondisclosure.
Executive covenants and agrees that he will not reveal to any
person, firm, or corporation any Confidential Information of any nature
concerning the Corporation or concerning the business of any of them. As used in
this Agreement, the term "Confidential Information" means all of the
Corporation's confidential and proprietary information and trade secrets in
existence on the date hereof or existing at any time during the term of this
Agreement, including but not limited to -

(a)the whole or any portion or phase of any business
plans, financial information, purchasing data, supplier data, accounting data,
or other financial information,

(b)the whole or any portion or phase of any research and
development information, design procedures, algorithms or processes, or other
technical information,

(c)
the whole or any portion or phase of any marketing or sales
information, sales records, customer lists, prices, sales projections, or other
sales information, and

16

---

(d)
trade secrets, as defined from time to time by the laws of
the State of Oregon.

Notwithstanding the foregoing, Confidential Information
excludes information that, as of the date hereof or at any time after the date
hereof, is published or disseminated without obligation of confidence or that
becomes a part of the public domain (1) by or through action of the Corporation,
or (2) by or through action of another person not in violation of a
nondisclosure covenant with the Corporation. This Section does not prohibit
disclosure required by an order of a court having jurisdiction or a subpoena
from an appropriate governmental agency or disclosure made by Executive in the
ordinary course of business and within the scope of his authority.

4.Return of Materials.Executive agrees to deliver or return to the Bank upon termination of employment
or as soon thereafter as possible all written information and any other similar
items furnished by the Corporation or prepared by Executive in connection with
his service to the Corporation. Executive will retain no copies thereof after
termination of employment.

5.Creative Work.
Executive agrees that all creative work and work product,
including but not limited to all technology, business management tools,
processes, software, patents, trademarks, and copyrights developed by Executive
during the term of his employment with the Corporation, regardless of when or
where such work or work product was produced, constitutes work made for hire,
all rights of which are owned by the Corporation. Executive hereby assigns to
PremierWest Bancorp and to the Bank all rights, title, and interest, whether by
way of copyrights, trade secret, trademark, patent, or otherwise, in all such
work or work product, regardless of whether the same is subject to protection by
patent, trademark, or copyright laws.

6. Agreement to Cooperate with the Corporation Through the Date
of Termination.Executive agrees to cooperate as directed by the
Corporation with the Corporation and its customers through the Termination Date
and throughout the term of any post-employment consulting agreement, if any. If
Executive fails to cooperate to the Corporation's satisfaction as reasonably
determined by the Corporation, Executive shall be deemed to have resigned for
purposes of determining benefits under the Employment Agreement, but the other
provisions of this Agreement shall remain in full force and effect.

(a)Release
    and Covenant Not to Sue.As consideration for
    receipt of certain benefits specified in the Employment Agreement, Executive, on his
or her own behalf and on behalf of Executive's heirs, executors, successors, and
assigns hereby releases the Corporation, its directors, officers, executives,
managers, and employees from any and all debts, claims, demands, rights,
actions, causes of action, suits, or damages whatsoever and of every kind and
nature, whether known or unknown, contingent or otherwise (collectively the
"Claims"), against the Corporation and the others released herein, relating to
or arising out of Executive's termination, except to the extent such Claims
cannot under applicable law be released.

Executive also covenants not to sue or file or cause to be
filed any complaint with any federal, state, or local agency or in any court
against the Corporation or the others released herein regarding any matter
related to Executive's termination of employment with the Corporation,

17

---

including but not limited to any Claims under the Age
Discrimination in Employment Act or any similar federal, state or local law,
except to the extent such Claims cannot under applicable law be released. The
release of liability set forth herein does not extend to rights or claims that
may arise from events occurring after execution of this Agreement, including but
not limited to claims for the enforcement of this Agreement, or to Executive's
exercise of rights under the Consolidated Omnibus Budget Reconciliation Act of
1986 to continued insurance, if applicable.

(b)Acceptance and
Revocation Period.Executive shall have a period
of 21 days from the date of delivery of this Agreement to accept Section 7(a) of
this Agreement. Executive shall have a period of seven days after his execution
of this Agreement during which Executive may revoke his acceptance of Section
7(a) of this Agreement by providing written notice of revocation to PremierWest
Bancorp. Any such acceptance or revocation must be addressed to the Chairman,
PremierWest Bancorp, 503 Airport Road, Medford, Oregon 97504 or such other
address as Executive may be directed in writing by PremierWest Bancorp to
provide such acceptance or revocation. To be effective, the acceptance or
revocation must be received no later than 5:00 p.m. Pacific Time within the
applicable time period. The 21-day acceptance period may be waived by Executive,
but the seven-day revocation period may not be waived. If Executive's acceptance
of Section 7(a) of this Agreement is not affirmatively revoked in writing by
Executive during the seven-day revocation period, it shall be deemed to have
been accepted and not revoked. Section 7(a) of this Agreement shall not be
effective or enforceable until the seven-day revocation period has expired. If
Executive properly executes his right to revoke acceptance of Section 7(a), the
remainder of this Agreement shall nevertheless remain in full force and effect.

8.No Admission of Wrongdoing.Executive acknowledges and agrees that nothing in
this Agreement constitutes or shall be construed as an admission of liability or
wrongdoing on the part of the Corporation or the others released herein.

9.Successors.
This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the Corporation and its successors and assigns.

10.Severabilitv.
The provisions of this Agreement shall be deemed severable.
The invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions of this Agreement. Any
provision held to be invalid or unenforceable shall be reformed to the extent
(and only to the extent) necessary to make it valid and enforceable.

11.Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Oregon, without giving effect to the principles
of conflict of laws of such State.

12.Arbitration.
The parties agree to submit any dispute arising under this
Agreement to final, binding, private arbitration in Medford, Oregon. The
disputes subject to arbitration include not only disputes involving the meaning
or performance of the Agreement, but disputes about its negotiation, drafting,
or execution. The dispute will be determined by a single arbitrator and governed
by the then-existing rules of arbitration procedure in Jackson County Circuit
Court, except as set forth herein. Instead of filing of a civil complaint in
Jackson County Circuit Court, a party will commence the arbitration process by
noticing the other party.

18

---

The parties will choose an arbitrator who specializes in
employment conflicts from the arbitration list for Jackson County Circuit Court.
If the parties are unable to agree on an arbitrator within ten (10) days of
receipt of the list of arbitrators, each party will select one attorney from the
list, and those two attorneys shall select the arbitrator from the list (with
each of the two selecting attorneys then concluding their services and each
being compensated by the party selecting each attorney, subject to recovery of
such fees under Section 13). The arbitrator may charge his or her standard
arbitration fees rather than the fees prescribed in the Jackson County Circuit
Court arbitration procedures. The arbitrator will have full authority to
determine all issues, including arbitrability, to award any remedy, including
permanent injunctive relief, and to determine any request for attorneys' fees,
costs and expenses in accordance with Section 13. There shall be no right to
review of the arbitrator's decision in court. The arbitrator's award may be
reduced to final judgment or decree in Jackson County Circuit Court.

13.Expense/Attorneys' Fees.
The prevailing party shall be awarded all costs and expenses of the proceeding,
including, but not limited to, attorneys' fees, filing and service fees, witness
fees, and arbitrators' fees. If arbitration is commenced, the arbitrator will
have full authority and complete discretion to determine the "prevailing party"
and the amount of costs and expenses to be awarded.

14.Injuctive Relief.Notwithstanding any other provision of this Agreement, an aggrieved party may
seek a temporary restraining order or preliminary injunction in Jackson County
Circuit Court to preserve the status quo during the arbitration proceeding,
provided however, that the party seeking relief agrees that ultimate resolution
of the dispute will still be determined through arbitration and not through
court process. The filing of the court action for injunctive relief shall not
hinder or delay the arbitration process.

15.This Agreement is Not Exclusive.This Agreement does not supersede any other
agreement to which Executive may be party with the Corporation relating to
noncompetition, nondisclosure, or the other matters referred to in this
Agreement, whether those noncompetition, nondisclosure, or other provisions are
contained in an employment agreement, a severance agreement, a salary
continuation agreement, or any other agreement. This Agreement is in addition to
any such other agreement(s). In case of conflict between this Agreement, on one
hand, and any such other agreement(s), on the other, the Corporation shall have
sole and exclusive authority to determine whether this Agreement or such other
agreement(s) shall govern in the particular case and whether to enforce its
rights under this Agreement, under such other agreement(s), or under both.

16.Defined Terms.
Terms used but not defined in this Agreement shall have the
meanings given to them in the Employment Agreement.

[Signature Page to Follow]

19

---

IN WITNESS WHEREOF,Executive, PremierWest Bancorp, and the Bank have
executed this Separation Agreement effective as of the day and year first set
forth above.

PREMIERWEST BANCORP:By: 
    ____________________________Its: 
    ______________________________PREMIERWEST BANKBy: 
    ____________________________Its:_____________________________


By signing below, I hereby agree to and accept all
provisions of this Separation Agreement, specifically including but not limited
to the release and covenant not to sue that is set forth in Section 7(a) of this
Separation Agreement. I understand that I have seven days after the date of my
execution of this Separation Agreement to revoke my acceptance of the release
and covenant not to sue contained in Section 7(a) of the Separation Agreement,
and that if I do not revoke my acceptance by 5:00 p.m. Pacific Time on that date
the release and covenant not to sue will become effective. I understand that if
I do revoke my acceptance of the release and covenant not to sue, I will forfeit
all consideration for the release of claims as set forth in Section 10 of the
Employment Agreement.

EXECUTIVE:By:___________________________________Tom Anderson




20

---

EXHIBIT 10.6

EXECUTIVE DEFERRED COMPENSATION
AGREEMENT

FOR TOM ANDERSON

---

PremierWest Bank

EXECUTIVEDEFERREDCOMPENSATIONAGREEMENT

THIS AGREEMENT is made July
29, 2004 by and among PremierWest Bancorp, an Oregon corporation ("Bancorp"),
PremierWest Bank, an Oregon-chartered bank (the "Bank"), and Tom Anderson (the
"Executive").

INTRODUCTION

To encourage the Executive to remain an
employee of the Bank, the Bank is willing to provide to the Executive a deferred
compensation opportunity together with matching contributions by the Bank. The
Bank will pay the Executive's benefits from the Bank's general assets.

AGREEMENT

Article 1 
Definitions

Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

> (a)  Merger.
>     Bancorp merges into or consolidates with another
>     corporation, or merges another corporation into
>     Bancorp, and as a result less than 50% of the combined voting power of the
>     resulting corporation immediately after the merger or consolidation is held
>     by persons who were the holders of Bancorp's voting securities immediately
>     before the merger or consolidation. For purposes of this Agreement, the term
>     "person"
>     means an individual, corporation, partnership, trust, association, joint
>     venture, pool, syndicate, sole proprietorship, unincorporated organization
>     or other entity,
>   (b)  Acquisition of Significant
>     Share Ownership.(1) a report on
>     Schedule 13D or another form or schedule (other
>     than Schedule 13G) is filed or is required to be filed under sections 13(d)
>     or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses
>     that the filing person or persons acting in concert has or have become the
>     beneficial owner of 25% or more of a class of Bancorp's voting securities,
>     or (2) a person or persons acting in concert has or have become the
>     beneficial owner of 10% or more of a class of Bancorp's voting securities
>     and the person or the person's or group's nominee becomes the Chairman of
>     the Board of Bancorp, but this paragraph (b) shall not apply to beneficial
>     ownership of voting shares of Bancorp held in a fiduciary capacity by an
>     entity in which Bancorp directly or indirectly beneficially owns 50% or more
>     of the outstanding voting securities,
>   (c)  Change in Board Composition,during any period of two consecutive
>     years, individuals who constitute
>     Bancorp's board of directors at the beginning of the two-year period cease
>     for any reason to constitute at least a majority thereof;provided, however,
>     that - for purposes of this paragraph (c) - each
>     director who is first elected by the board (or first nominated by the board
>     for election by stockholders) by a vote of at least two-thirds (2/3) of the
>     directors who were directors at the beginning of the period shall be deemed
>     to have been a director at the beginning of the two-year period, or

1

---

> (d)Sale of Assets.
> Bancorp sells to a third party all or substantially
> all of Bancorp's assets. For this purpose, sale of all or substantially all of
> Bancorp's assets includes sale of the shares or assets of the Bank.

1.3  "Compensation"
    means both salary and bonus compensation that
    would be paid to the Executive during a Plan Year.

1.4"Deferral Account"
means the Bank's accounting of the Executive's
accumulated Deferrals plus accrued interest.

1.5"Deferrals"
means the amount of the Executive's Compensation
that the Executive elects to defer according to this Agreement.

1.6"Disability"
means the Participant's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group disability insurance policy covering the Participant, or by the Social
Security Administration, to be a disability rendering the Participant totally
and permanently disabled. The Participant must submit proof to the Bank of the
carrier's or Social Security Administration's determination upon the request of
the Bank.

1.8  "Election Form"
    means the Form attached as Exhibit 1.

1.10"Normal Retirement Date"means the later of the Normal Retirement Age or
Termination of Employment.

1.12  "Termination for Cause"means the definition of termination
    for cause specified in any employment agreement existing on the date
hereof or hereafter entered into between the Executive and the Bancorp or the
Bank. If the Executive is not a party to an employment agreement containing a
definition of termination for cause, Termination for Cause means the Bank has
terminated the Executive's employment for any of the following reasons:

> (a)  Gross negligence or gross
>     neglect of duties; 
>   (b)  Commission of a felony or
>     commission of a misdemeanor involving moral turpitude; or
>   (c)  Fraud, disloyalty or
>     willful violation of any law or significant Bank policy committed in
>     connection with the Executive's employment and resulting in an adverse effect on the
>     Bank.

2



---

Article 2

DeferralElection

2.1Initial Election.
The Executive shall make an initial deferral
election under this Agreement by filing with the Bank a signed Election Form
within 30 days after the Effective Date of this Agreement. The Election Form
shall set forth the amount of Compensation to be deferred and shall be effective
to defer only Compensation earned after the date the Election Form is received
by the Bank. In no event can the Executive's Deferrals for any Plan Year exceed
75% of the Executive's Compensation for that Plan Year.

2.2.1Generally.
    Upon the Bank's approval, the Executive may
    modify the amount of Compensation to be deferred annually by filing
a new Election Form with the Bank prior to the beginning of the Plan Year in
which the Compensation is to be deferred. The modified deferral election shall
not be effective until the calendar year following the year in which the
subsequent Election Form is received and approved by the Bank.

2.2.2Hardship.If an unforeseeable financial
emergency arising from the death of a family member, divorce, sickness, injury,
catastrophe or similar event outside the control of the Executive occurs, the
Executive, by written instructions to the Bank, may reduce future deferrals
under this Agreement as soon as is practically possible for the Bank to process
such instruction.

Article 3Deferral Account

3.1Establishing and Crediting.The Bank
shall establish a Deferral Account on its books for the Executive and shall
credit to the Deferral Account the following amounts:

3.1.1Deferrals.
The portion of the Compensation deferred by the
Executive as of the time the Compensation would have otherwise been paid to the
Executive.

3.1.2Interest.At
the end of each Plan Year under this Agreement but only until commencement of
the benefit payments under this Agreement or until a Change in Control has
occurred, interest is to be credited on the account balance at an annual rate
equal to the Bank's ROE (return on equity) for that Plan Year, compounded
monthly, with a maximum crediting rate of 18% and a minimum credit rate of 7%.
In the event the Executive and the Bank do not agree on what the Bank's ROE was
for a particular Plan Year, the Executive and the Bank agree that the ROE
derived from the quarterly report of condition filed by the Bank with the
Federal Deposit Insurance Corporation for the fourth quarter of any year shall
be the ROE for purposes of this Agreement's interest rate matching contribution.
The quarterly report of condition is the report required to be filed under
Section 7(a) of the Federal Deposit Insurance Act. If a Change in Control has
occurred or if benefit payments have commenced, the Bank will not continue to
credit interest pursuant to the ROE formula but rather will credit interest at
an annual rate of interest, compounded monthly, on the remaining account balance
during any applicable installment period, equal to the highest "Prime Rate" as
published in the Wall Street Journal's "Money Rates" section. The interest
credited each Plan Year shall be determined by reference to the "Prime Rate" as
of the last business day of the preceding Plan Year.

3

---

3.2Statement of Accounts.Within 120 days after the end of each Plan Year, the Bank shall provide to the
Executive a statement setting forth the Deferral Account balance.

3.3Accounting Device Only.The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Executive is a general unsecured creditor of the
Bank for the payment of benefits. The benefits represent the mere promise of the
Bank to pay such benefits. The Executive's rights are not subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by the Executive's creditors.

Article 4Benefits During Lifetime

4.1Normal Retirement Benefit.Upon the
Normal Retirement Date, the Bank shall pay to the Executive the benefit
described in this Section 4.1 in lieu of any other benefit under this Agreement.

4.1.1Amount of Benefit.
The benefit under this Section 4.1 is the Deferral
Account balance at the Executive's Normal Retirement Date.

4.1.2Payment of Benefit.
The Bank shall pay the benefit to the Executive in
the form elected by the Executive in the Election Form commencing with the month
following the Executive's Normal Retirement Date. If the Executive elects
payment of the benefit as other than a lump sum, the Bank will not continue to
credit interest pursuant to the ROE formula of Section 3.1.2 but rather will
credit interest at Prime Rate as defined in Section 3.1.2.

4.2Early Retirement Benefit.Upon
Termination of Employment prior to the Normal Retirement Age for reasons other
than death, or Disability, the Bank shall pay to the Executive the benefit
described in this Section 4.2 in lieu of any other benefit under this Agreement.

4.2.3Amount of Benefit.
The benefit under this Section 4.2 is the Deferral
Account balance at the Executive's Termination of Employment.

4.2.4Payment of Benefit.
The Bank shall pay the benefit to the Executive in
the form elected by the Executive in the Election Form commencing the month
following the last cash payment pursuant to Section 11 of the Employment
Agreement between the Executive, Bancorp and the Bank dated July 29, 2004 (the
"Employment Agreement") is paid by the Bank or Bancorp to the Executive or if no
cash payment is made pursuant to Section 11 of the Employment Agreement, the
month following Executive's Termination of Employment. If the Executive elects
payment of the benefit as other than a lump sum, the Bank will not continue to
credit interest pursuant to the ROE formula of Section 3.1.2 but rather will
credit interest at Prime Rate as defined in Section 3.1.2.

4.3Disability Benefit. If the Executive
terminates employment due to Disability prior to Normal Retirement Age, the Bank
shall pay to the Executive the benefit described in this Section 4.3  in lieu of any other benefit
    under this Agreement.



4

---

4.3.2Payment of Benefit.
The Bank shall pay the benefit to the Executive in
the form elected by the Executive in the Election Form commencing with the month
following the Executive's Termination of Employment. If the Executive elects
payment of the benefit as other than a lump sum, the Bank will not continue to
credit interest pursuant to the ROE formula of Section 3.1.2 but rather will
credit interest at Prime Rate as defined in Section 3.1.2.

4.4Hardship Distribution. Upon the Board of
Director's determination (following petition by the Executive) that the
Executive has suffered an unforeseeable financial emergency as described in
Section 2.2.2, the Bank shall distribute to the Executive all or a portion of
the Deferral Account balance as determined by the Bank, but in no event shall
the distribution be greater than is necessary to relieve the financial hardship.

Article 5Death Benefits

5.1Death During Active Service.If the Executive dies while in the
employment of the Bank, the Bank shall pay to the Executive's beneficiary the
Early Retirement Benefit described in Section 4.2.1 commencing the month after
the Executive's death, in lieu of any other benefit under this Agreement.

5.2Death During Payment of a Benefit.If the Executive dies after any benefit
payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.

5.3Death After Termination of Employment But Before Benefit Payments Commence.If the Executive is entitled to benefit
payments under this Agreement, but dies prior to the commencement of said
benefit payments, the Bank shall pay the same benefit payments to the
Executive's beneficiary that the Executive was entitled to prior to death except
that the benefit payments shall commence on the first day of the month following
the date of the Executive's death.

Article 6Beneficiaries

6.1Beneficiary Designations.The Executive shall designate a beneficiary by
filing a written designation with the Bank. The Executive may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Executive and received by the Bank
during the Executive's lifetime. The Executive's beneficiary designation shall
be deemed automatically revoked if the beneficiary predeceases the Executive or
if the Executive names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Executive dies without a valid beneficiary designation, all
payments shall be made to the Executive's estate.

6.2Facility of Payment.
If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Bank may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Bank may require proof of incompetence, minority
or guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Bank from all liability with
respect to such benefit.

5

---

Article 7General Limitations

7.1Termination for Cause.Notwithstanding
any provision of this Agreement to the contrary, the Bank shall not pay any
benefit under this Agreement that is in excess of the Executive's Deferrals(i.e.,
the amount deferred under Section 3.1.1 and the
interest earned on the Deferral Account) if Termination of Employment is due to
the Executive's actions resulting in Termination for Cause. The Executive's
Deferrals shall be paid to the Executive in a manner to be determined by the
Bank. No interest shall be credited to the Deferrals during any applicable
installment period.

Article 8
Claims and Review Procedures

8.1Claims Procedure.
A participant or beneficiary ("claimant") who has
not received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:

8.1.1Initiation - Written Claim.The claimant initiates a claim by submitting to
the Bank a written claim for the benefits.

8.1.2Timing of Bank Response.The Bank shall respond to such claimant within
90 days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its decision.

8.1.3Notice of Decision.
If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank shall write
the notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

(b)  A reference to the specific
    provisions of the Agreement on which the denial is based,

(c)A description of any additional information
or material necessary for the claimant to perfect the claim and an explanation
of why it is needed,

(d)An explanation of the Agreement's review
procedures and the time limits applicable to such procedures, and

(e)A statement of the claimant's right to bring
a civil action under ERISA (Employee Retirement Income Security Act of 1974, 29
U.S.C. Section 1001, et. seq.) Section 502(a) following an adverse benefit
determination on review.

8.2Review Procedure.If the Bank denies part
or all of the claim, the claimant shall have the opportunity for a full and fair
review by the Bank of the denial, as follows:

8.2.1Initiation - Written Request.To initiate the review, the claimant,
within 60 days after receiving the Bank's notice of denial, must file with the
Bank a written request for review.

6

---

8.2.2Additional Submissions -
Information Access.The claimant shall
then have the opportunity to submit written comments, documents, records and
other information relating to the claim. The Bank shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant's claim for benefits.

8.2.3Considerations on Review.In considering
the review, the Bank shall take into account all materials and information the
claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

8.2.4Timing of Bank Response.
The Bank shall respond in writing to such claimant
within 60 days after receiving the request for review. If the Bank determines
that special circumstances require additional time for processing the claim, the
Bank can extend the response period by an additional 60 days by notifying the
claimant in writing, prior to the end of the initial 60-day period, that an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its
decision.

8.2.5Notice of Decision.The Bank shall notify
the claimant in writing of its decision on review. The Bank shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

(b)  A reference to the specific
    provisions of the Agreement on which the denial is based,

(c)A statement that the claimant is entitled
to receive, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant's claim for benefits, and

(d)A statement of the claimant's right to
bring a civil action under ERISA Section 502(a).

Article 9
Amendments and Termination

This Agreement may be amended or terminated
only by a written agreement signed by the Bank and the Executive.

Notwithstanding the previous paragraph in
this Article 9, the Bank may amend or terminate this Agreement at any time if,
pursuant to legislative, judicial or regulatory action, continuation of the
Agreement would (i) cause benefits to be taxable to the Executive prior to
actual receipt, or (ii) result in significant financial penalties or other
significantly detrimental ramifications to the Bank (other than the financial
impact of paying the benefits). In no event shall this Agreement be terminated
under this section without payment to the Executive of the Deferral Account
balance attributable to the Executive's Deferrals and interest credited on such
amounts,

7

---

Article 10
Miscellaneous

10.1Binding Effect.
This Agreement shall bind the Executive and the Bank
and their beneficiaries, survivors, executors, administrators and transferees.

10.2No Guarantee of Employment.This Agreement is not a contract for employment.
It does not give the Executive the right to remain an employee of the Bank, nor
does it interfere with the Bank's right to discharge the Executive. It also does
not require the Executive to remain an employee nor interfere with the
Executive's right to terminate employment at any time.

10.3Non-Transferability.
Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

10.4Tax Withholding.
The Bank shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.

10.5Applicable Law.
The Agreement and all rights hereunder shall be
governed by the laws of Oregon, except to the extent the laws of the United
States of America otherwise require.

10.6Unfunded Arrangement.
The Executive and the Executive's beneficiary are
general unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Bank to which the Executive and the Executive's beneficiary have no
preferred or secured claim.

10.7Reorganization.
The Bank shall not merge or consolidate into or with
another Bank, or reorganize, or sell substantially all of its assets to another
Bank, firm, or person unless such succeeding or continuing Bank, firm, or person
agrees to assume and discharge the obligations of the Bank under this Agreement.
Upon the occurrence of such event, the term "Bank" as used in this Agreement
shall be deemed to refer to the successor or survivor Bank.

10.8Entire Agreement.
This Agreement constitutes the entire agreement
between the Bank and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

10.9Administration.
The Bank shall have powers which are necessary to
administer this Agreement, including but not limited to:

(b)  Establishing and revising the
    method of accounting for the Agreement;

(d)  Establishing rules and
    prescribing any forms necessary or desirable to administer the Agreement.

10.10Named Fiduciary.For purposes of the
Employee Retirement Income Security Act of 1974, if applicable, the Bank shall
be the named fiduciary and plan administrator under this Agreement. The named
fiduciary may delegate to others certain aspects of the management and

8

---

operation responsibilities of the plan including
the employment of advisors and the delegation of ministerial duties to qualified
individuals.

IN WITNESS WHEREOF, the Executive and a duly
authorized Bank officer have signed this Agreement.



|Executive:
    ______________________________Tom Anderson | Bank:PREMIERWEST BANCORP:By: 
    ____________________________
    Its: 
    ______________________________
|--------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------



9



---

EXHIBIT 1 TO
PremierWest Bank
EXECUTIVE DEFERRED COMPENSATION
AGREEMENT

Deferral Election

I elect to defer my Compensation pursuant to this
Agreement with the Bank, as follows:

Amount of Deferral
    
    Duration[Initial and Complete
    one]
    
    [Initial One]______ I elect to defer
    ____%
    of my
    
    ______ One Year onlyCompensation annually.
    
    ______ For ______
     [Insert
    Number]Years______ I elect to defer $______ of my
    
    ______ Until Termination of
    EmploymentCompensation annually.
    
    ______ Until  ______ , ______ 
    (Date)______ I elect not to defer any
    of myCompensation




Form of Benefit

I elect to receive benefits under the Agreement
in the following form:

___ Lump Sum

___ Equal monthly installments for One Hundred
Twenty (120) months

I understand that I may not change the form of
benefit elected, even if I later change the amount of my deferrals under the
Agreement without written approval of the Board of Directors of the Bank.

Upon the Bank's approval,
I understand that I may change the amount and duration of my deferrals by filing
a new election form with the Bank; provided, however, that any subsequent
election will not be effective until the calendar year following the year in
which the new election is received by the Bank.

| | Signature: 
    _____________________________
| | ---------------------------------------------

| | Date: 
    _____________________________
| | ----------------------------------------

Received by the Bank this
_________
day of
___________________,
______________.

| | By: 
    _______________________________
| | ----------------------------------------

| | Title: 
    ______________________________
| | ------------------------------------------

10

---

Beneficiary Designation

PremierWest Bank
EXECUTIVE DEFERRED COMPENSATION
AGREEMENT

I designate the following as beneficiary of
benefits under this Agreement payable following my death:

Primary:
___________________________________________________________________________

Contingent:

___________________________________________________________________________

Note: To name a trust as beneficiary, please
provide the name of the trustee(s) and theexactname
and date of the trust agreement.

I understand that I may change these beneficiary
designations by filing a new written designation with the Bank. I further
understand that the designations will be automatically revoked if the
beneficiary predeceases me, or, if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.

| | Signature: 
    _____________________________
| | ---------------------------------------------

| | Date: 
    _____________________________
| | ----------------------------------------

Received by the Bank this
_________
day of
___________________,
______________.

| | By: 
    _______________________________
| | ----------------------------------------

| | Title: 
    ______________________________
| | ------------------------------------------



11

---

EXHIBIT 10.7

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT

FOR TOM ANDERSON

---

PremierWest Bank

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
( SERP)

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN AGREEMENT(this "Agreement") is
effective as of July 29, 2004, by and between PremierWest Bank, an
Oregon-chartered, FDIC-insured bank with its main office in Medford, Oregon (the
"Bank"), and Tom Anderson, (the "Executive").

WHEREAS,
the Executive has contributed substantially to the
success of the Bank and its parent corporation, PremierWest Bancorp ("Bancorp"),
and the Bank desires that the Executive continue in its employ;

WHEREAS,
to encourage the Executive to remain an employee of
the Bank, the Bank is willing to provide supplemental retirement benefits to the
Executive, payable out of the Bank's general assets;

WHEREAS,
none of the conditions or events included in the
definition of the term "golden parachute payment" contained in section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(l)(ii) [12 CFR 359.1(f)(l)(ii)]
exists or, to the best knowledge of the Bank, is contemplated insofar as the
Bank is concerned;

Now THEREFORE,
in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1Definitions

Whenever used in this Agreement, the following
terms shall have the meanings specified:

1.1"Base
Salary" means the annual base
compensation, not including any bonuses or benefits, paid to the Executive.

1.2"Cause"
shall have the definition given in any employment or severance agreement with
the Bank to which the Executive is or hereafter may be a party. If the term
"Cause" is not so defined, whether the Executive is terminated for Cause shall
be determined by the Board of Directors in its sole discretion.

> (a)Merger.Bancorp merges into or consolidates
>     with another corporation, or merges another corporation into Bancorp, and as a
> result less than 50% of the combined voting power of the resulting corporation
> immediately after the merger or consolidation is held by persons who were the
> holders of Bancorp's voting securities immediately before the merger or
> consolidation;

1

---

> (b)Acquisition of Significant Share Ownership.
> A report on Schedule 13D or another form or schedule
> (other than Schedule 13G) is filed or is required to be filed under sections
> 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses
> that the filing person or persons acting in concert has or have become the
> beneficial owner of 25% or more of a class of Bancorp's voting securities, but
> this paragraph (b) shall not apply to beneficial ownership of voting shares of
> Bancorp held in a fiduciary capacity by an entity in which Bancorp directly or
> indirectly beneficially owns 50% or more of the outstanding voting securities;
> (c)Change in Board Composition.During any period of two consecutive
> years, individuals who constitute Bancorp's board of directors at the beginning
> of the two-year period cease for any reason to constitute at least a majority
> thereof;provided, however,
> that for purposes of this paragraph (c) each
> director who is first elected by the board (or first nominated by the board for
> election by stockholders) by a vote of at least two-thirds (2/3) of the
> directors who were directors at the beginning of the period shall be deemed to
> have been a director at the beginning of the two-year period; or
> (d)Sale of Assets.
> Bancorp sells to a third party all or substantially
> all of Bancorp's assets. For this purpose, sale of all or substantially all of
> Bancorp's assets includes sale of the shares or assets of the Bank.

1.4 "Disability"means the Executive suffers a sickness,
accident or injury which has been determined by the carrier of any individual or
group disability insurance policy covering the Executive, or by the Social
Security Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Bank of the
carrier's or Social Security Administration's determination upon the request of
the Bank.

1.5 "Disability
Retirement"means termination of the Executive's
employment due to Disability.

1.6 "Early
Retirement"means the Executive's Termination of
Employment with the Bank before Normal Retirement Age for reasons other than
death, Disability, Termination under Article 5 of this Agreement, termination
without Cause or termination with Good Reason, and any termination other than
termination for Cause more than six (6) months after a Change in Control.

1.8  "Effective
    Date" means July 29, 2004.

> (a)  a material reduction in
>     Executive's title or responsibilities;
>   (b)  a reduction in Base Salary as in
>     effect on the date of a Change in Control;
>   (c)  requiring the Executive to
>     change his or her principal work location, to any location that is more than 15 miles from the
> location of the Bank's principal executive offices on the date of this
> Agreement;

2

---

> (d)the adverse and substantial alteration in the
> nature and quality of the office space within which the Executive performs his
> or her duties, including the size and location thereof, as well as the
> secretarial and administrative support provided to the Executive;
> (e)the failure by the Bank to continue to
> provide the Executive with compensation and benefits substantially similar to
> those provided to the Executive under any of the employee benefit plans in which
> the Executive becomes a participant, or the taking of any action by the Bank
> which would directly or indirectly materially reduce any of such benefits or
> deprive the Executive of any material fringe benefit to which the Executive was
> entitled at the time of the Change in Control; or
> (f)the failure of a successor or assign of the
> Bank to assume and agree to perform this Agreement, if assignment and assumption
> does not occur under operation of law.

1.12  "Person"
    means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or other entity.

1.13 "Plan
Year"means a twelve-month period commencing on
January 1, and ending on the last day of December of each year. The initial Plan
Year shall commence on the Effective Date of this Agreement.

1.14 "Termination
of Employment"with the Bank means that the Executive
shall have ceased to be employed by the Bank for any reason whatsoever,
excepting a leave of absence approved by the Bank. For purposes of this
Agreement, if there is a dispute over the employment status of the Executive or
the date of termination of the Executive's employment, the Bank shall have the
sole and absolute right to decide the dispute, unless a Change in Control shall
have occurred.

ARTICLE 2Lifetime Benefits

2.1Normal Retirement Benefit.Upon the
Executive's Termination of Employment on or after the Normal Retirement Date for
reasons other than death, the Bank shall pay to the Executive the benefit
described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.3Amount of Benefit.
The annual benefit under this Section 2.1 shall be
calculated as a percentage of Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which the Normal Retirement Date
occurs as shown on Schedule A. In its sole discretion, the Bank's board of
directors may increase the applicable percentage and such increase shall be
reflected on a revised Schedule A.

2.1.4Payment of Benefit.
Beginning the month after termination of employment
following the Executive's Normal Retirement Date, the Bank shall pay the annual
benefit to the Executive in 12 equal monthly installments on the first day of
each month. The annual benefit shall be paid to the Executive for 15 years.

2.2Early
Retirement/ Disability Retirement Benefit.
Upon Early Retirement or Disability Retirement, the Bank shall pay to the
Executive the benefit described in this Section 2.2 instead of any other benefit
under this Agreement.

2.2.3Amount of Benefit.
The annual benefit under this Section 2.2 is
calculated as a percentage of Base Salary. The applicable percentage is the
percentage corresponding to the Plan Year in which Early Retirement or
Disability

3

---

Retirement, as appropriate, occurs as shown on
Schedule A. In its sole discretion, the Bank's board of directors may increase
the applicable percentage and such increase shall be reflected on a revised
Schedule A.

2.2.4Payment of Benefit.
Beginning the month after the Normal Retirement Date, the Bank shall pay the annual
benefit to the Executive in 12 equal monthly installments on the first day of
each month. The annual benefit shall be paid to the Executive for 15 years.

2.3Premature Termination Benefit.If the
Executive's employment with the Bank is terminated by the Bank without Cause or
by the Executive for Good Reason, the Bank shall pay to the Executive the
benefit described in this Section 2.3 instead of any other benefit under this
Agreement.

2.3.1Amount of Benefit. The annual benefit
under this Section 2.3 is calculated as a percentage of Base Salary. The
applicable percentage is the percentage, as shown on Schedule A corresponding to
the Plan Year three (3) years after the Plan Year in which the termination of
employment occurs. In its sole discretion, the Bank's board of directors may
increase the applicable percentage and such increase shall be reflected on a
revised Schedule A.

2.3.2 Beginning the month after termination,
the Bank shall pay the annual benefit to the Executive in 12 monthly
installments on the first day of each month. The annual benefit shall be paid to
the Executive for 15 years.

2.4Change-in-Control Retention Benefit. If
more than six (6) months after a Change in Control the Executive's employment is
terminated for any reason other than for Cause, the Bank shall pay to the
Executive the benefit described in this Section 2.4 instead of any other benefit
under this Agreement.

2.4.1Amount of Benefit.The annual benefit
under this Section 2.4 is calculated as a percentage of Base Salary. The
applicable percentage is the percentage, as shown on Schedule A corresponding to
the Plan Year three (3) years after the Plan Year in which the termination of
employment occurs. In its sole discretion, the Bank's board of directors may
increase the applicable percentage and such increase shall be reflected on a
revised Schedule A.

2.4.2Payment
of Benefit. Beginning the month after
termination, the Bank shall pay the annual benefit to the Executive in 12
monthly installments on the first day of each month. The annual benefit shall be
paid to Executive for 15 years.

2.5Petition for Payment in Lump Sum.The Executive or the Executive's designated
beneficiary or estate, as appropriate, may petition the board of directors to
have the benefit under this Article 2 paid to the Executive in a single lump
sum. The board of directors shall have sole and absolute discretion about
whether to pay the remaining benefit in a single lump sum. The amount of the
lump sum payment shall equal the present value of the stream of payments to
which the Executive is entitled using a discount rate equal to the Prime Rate
published in the Wall Street Journal's "Money Rates" section on the date the
board of directors approves the lump sum payment and the lump sum payment shall
be made within 30 days of the board's approval. If payment of the remaining
benefit is paid in a single lump sum, the Bank shall have no further obligations
under this Agreement.

4

---

ARTICLE 3Death Benefits

3.1Death During Active Service.
Except as provided in Section 5.1, if the Executive dies in active service to
the Bank before the Normal Retirement Date, Executive's designated beneficiary
is entitled to receive the benefit in this Section 3.1 instead of any other
benefit under this Agreement.

3.1.1Amount of Benefit.The annual benefit
under this Section 3.1 is calculated as a percentage of the Adjusted Base
Salary. The applicable percentage is the percentage corresponding to year in
which the Normal Retirement Date would have occurred. In its sole discretion,
the Bank's board of directors may increase the applicable percentage and such
increase shall be reflected in a revised Schedule A.

3.1.2Payment of Benefit.Beginning with the
month after the Executive's death, the Bank shall pay the annual benefit to the
Executive's designated beneficiary in 12 monthly installments on the first day
of each month. The annual benefit shall be paid to the Executive's designated
beneficiary for 15 years.

3.2Death During Benefit Period.
If the Executive dies after benefit payments under
Article 2 of this Agreement have commenced but before receiving all such
payments, the Bank shall pay the remaining benefits to the Executive's
beneficiary(ies) at the same time and in the same amounts they would have been
paid to the Executive had the Executive survived.

3.3Death After Termination of Employment But
Before Benefit Payments Commence.If the
Executive is entitled to benefit payments under Article 2 but dies before
payments commence, the benefits shall be payable to the Executive's
beneficiary(ies), but payments shall commence on the first day of the month
after the date of the Executive's death. Payments shall be made in the same
amounts they would have been paid to the Executive had the Executive survived.

3.4Petition for Benefit Payments.
If the Executive's designated is entitled to receive
benefit payments under Section 3.1, 3.2 or 3.3, the Executive's beneficiary(ies)
or estate may petition the Board of Directors to have the benefit under this
Article 3 paid to the to the Executive's beneficiary(ies) or estate in a single
lump sum. The board of directors shall have sole and absolute discretion about
whether to pay the remaining benefit in a single lump sum. The amount of the
lump sum payment shall equal the present value of the stream of payments to
which the Executive's beneficiary(ies) is entitled using a discount rate equal
to the Prime Rate published in the Wall Street Journal's "Money Rates" section
on the date the board of directors approves the lump sum payment and the lump
sum payment shall be made within 30 days of the board's approval. If payment of
the remaining benefit is paid in a single lump sum, the Bank shall have no
further obligations under this Agreement.

ARTICLE 4Beneficiaries

4.1Beneficiary Designations.The Executive
shall designate a beneficiary or beneficiaries by filing a written designation
with the Bank. The Executive may revoke or modify the designation at any time by
filing a new designation. However, designations will be effective only if signed
by the Executive and accepted by the Bank during the Executive's lifetime. The
Executive's beneficiary designation shall be deemed automatically revoked if the
beneficiary predeceases the Executive, or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive dies
without a valid beneficiary designation, all payments shall be made to the
Executive's estate.

4.2Facility of Payment.If a benefit is
payable to a minor, to a person declared incapacitated, or to a person incapable
of handling the disposition of his or her property, the Bank may pay such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incapacitated person or incapable person. The Bank may
require such proof of

5

---

incapacity, minority or guardianship as the Bank
deems appropriate before distribution of the benefit. Distribution shall
completely discharge the Bank from all liability for such benefit.

ARTICLE 5General Limitations

5.1Suicide or Misstatement.
The Bank shall not pay any benefit under this
Agreement if the Executive commits suicide before January 1, 2005. Additionally,
the Bank shall not pay any benefit under this Agreement if the Executive has
made any material misstatement of fact on any application or resume provided to
the Bank, or on any application for any benefits provided by the Bank to the
Executive.

5.2Removal.
If the Executive is removed from office or
permanently prohibited from participating in the conduct of the Bank's affairs
by an order issued under section 8(e)(4) or (g)(l) of the Federal Deposit
Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(l), all obligations of the Bank under
this Agreement shall terminate as of the effective date of the order.

5.3Insolvency.
If the Commissioner of the Oregon Department of
Banking appoints the Federal Deposit Insurance Corporation as receiver for the
Bank under Oregon Revised Statutes section 711.405, all obligations under this
Agreement shall terminate as of the date of the Bank's declared insolvency.

Article 6CLAIMS AND REVIEW PROCEDURES

6.1Claims Procedure.A person or beneficiary
("claimant") who has not received benefits under the Agreement that he or she
believes should be paid shall make a claim for such benefits as follows:

6.1.1Initiation - Written Claim.
The claimant initiates a claim by submitting to the
Bank a written claim for the benefits.

6.1.2Timing of Bank Response.
The Bank shall respond to such claimant within 90
days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its decision.

6.1.3Notice of Decision.
If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank shall write
the notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

6.1.3.2  A reference to the specific
    provisions of the Agreement on which the denial is based;

6.1.3.3 A description of any additional
information or material necessary for the claimant to perfect the claim and an
explanation of why it is needed;

6

---

6.1.3.4 An explanation of the Agreement's
review procedures and the time limits applicable to such procedures; and

6.1.3.5 A statement of the claimant's right
to bring a civil action under ERISA (Employees Retirement Income Security Act)
Section 502(a) following an adverse benefit determination on review.

6.2Review Procedure.If the Bank denies part
or all of the claim, the claimant shall have the opportunity for a full and fair
review by the Bank of the denial, as follows:

6.2.1Initiation - Written Request.
To initiate the review, the claimant, within 60 days
after receiving the Bank's notice of denial, must file with the Bank a written
request for review.

6.2.2Additional Submissions - Information
Access.The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits.

6.2.3Considerations on Review.
In considering the review, the Bank shall take into
account all materials and information the claimant submits relating to the
claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

6.2.4Timing of Bank Response.
The Bank shall respond in writing to such claimant
within 60 days after receiving the request for review. If the Bank determines
that special circumstances require additional time for processing the claim, the
Bank can extend the response period by an additional 60 days by notifying the
claimant in writing, prior to the end of the initial 60-day period, that an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Bank expects to render its
decision.

6.2.5Notice of Decision.
The Bank shall notify the claimant in writing of its
decision on review. The Bank shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth:

6.2.5.2  A reference to the specific
    provisions of the Agreement on which the denial is based;

6.2.5.3 A statement that the claimant is entitled
to receive, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant's claim for benefits; and

6.2.5.4 A statement of the
claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7Miscellaneous

7

---

7.1Amendments and Termination.
This Agreement may be amended or terminated only by
a written agreement signed by the Bank and the Executive.

7.2Binding Effect.
This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrators
and transferees.

7.3No Guarantee of Employment.
This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Bank, nor does it interfere with the Bank's right to discharge the Executive. It
also does not require the Executive to remain an employee nor interfere with the
Executive's right to terminate employment at any time.

7.4Non-Transferability.
Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached, or encumbered in any manner.

7.5Successors; Binding Agreement.
If any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Bank does not assume this Agreement by operation of
law, the Bank shall require such successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank
would be required to perform this Agreement if no such succession had occurred.
The Bank's failure to obtain an assumption agreement, if necessary, before the
succession becomes effective shall be considered a breach of this Agreement and
shall entitle the Employee to the right to payments specified in Section 2.4.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Bank, by any merger, consolidation or acquisition where the
Bank is not the surviving corporation, by any transfer of all or substantially
all of the Bank's assets, or by any other change in the Bank's structure or the
manner in which the Bank's business or assets are held. Executive's employment
shall not be deemed terminated upon the occurrence of one of the foregoing
events.

7.6Tax Withholding.
The Bank shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.

7.7Applicable Law.
Except to the extent preempted by the laws of the
United States of America, the validity, interpretation, construction, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon, without giving effect to the principles of
conflict of laws of such state.

7.8Unfunded Arrangement.
The Executive and the Executive's beneficiary(ies)
are general unsecured creditors of the Bank for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Bank to which the Executive and beneficiary(ies) have no preferred
or secured claim.

7.9Administration.
The Bank shall have the powers that are necessary to
administer this Agreement, including but not limited to the power to:

> (a)  interpret the provisions of the
>     Agreement;
>   (b)  establish and revise the method
>     of accounting for the Agreement;
>   (c)  maintain a record of benefit
>     payments; and
>   (d)  establish rules and prescribe
>     forms necessary or desirable to administer the Agreement.

8

---

7.10Named Fiduciary.
The Bank shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan,
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

7.11Severability.
If for any reason any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall in no way affect the remainder of
the provision, and the remainder of such provision, together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

7.12Headings.
The headings of sections herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.

7.13Notices.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid. If the communication is to the Bank, it should be directed to the
Bank's Chief Executive Officer and addressed to the Bank's corporate office. If
the communication is to the Executive, it should be addressed to the most recent
address provided by the Executive to the Bank.

7.14IRC Section 1035 Exchanges. The Executive
recognizes and agrees that after this Agreement is adopted the Bank may wish to
exchange the policy of life insurance on the Executive's life, to be used to
fund the benefit under Article 3 of this Agreement for another contract of life
insurance insuring the Executive's life. Provided that the policy is replaced
(or intended to bereplaced) with a
comparable policy of life insurance, the Executive agrees to provide medicalinformation and cooperate with
medical insurance-related testing required by a prospective insurer for
implementing the policy or, if necessary, for modifying or updating to a
comparable insurer.

9

---

7.15Entire Agreement.This Agreement
constitutes the entire agreement between the Bank and the Executive concerning
the subject matter hereof and supersedes in its entirety the Salary Continuation
Agreement between the Bank and the Executive dated November 12, 2002.  Addendum A to the Salary Continuation Agreement,
also dated November 12, 2002 is hereby terminated in its entirety. No rights are
granted to the Executive under this Agreement other than those specifically set
forth herein.

IN WITNESS WHEREOF,the Executive and a duly authorized Bank officer have signed this Agreement the
day and year first written above.

THE EXECUTIVE :                                                                                                 THE BANK:

PREMIERWEST BANK

___________________________                                             By:
________________________________
Tom Anderson

Its: ________________________________

Agreement to Cooperate with Insurance
Underwriting Incident to I.R.C. Section 10355 Exchange

I acknowledge that I have read this
Agreement and agree to be bound by its terms, particularly the covenant on my
part set forth in Section 7.14 to provide medical information and cooperate with
medical insurance-related testing required by an insurer to issue a comparable
insurance policy to cover the benefit provided under Article 3 of this
Agreement.

___________________________                                                                   
_____________________________________
Witness                                                                                                                   
Executive

10

---

BENEFICIARY DESIGNATIONPREMIER WEST BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT

(SERP)

I designate the following as beneficiary of any
death benefits under this Supplemental Executive Retirement Plan Agreement:

Primary: 
____________________________________________________________________

Contingent: 
__________________________________________________________________

Note: To name a trust as beneficiary, please
provide the name of the trustee(s) and theexactname
and date of the trust agreement.

I understand that I may change these
beneficiary designations by filing a new written designation with the Bank. I
further understand that the designations will be automatically revoked if the
beneficiarypredeceases me, or if I
have named my spouse as beneficiary and our marriage is subsequently dissolved.



Date: 
_____________________________________



Title:
    _________________________

11

---

SCHEDULE A

PREMIER WEST
BANK
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN AGREEMENT

The following Schedule sets forth the
applicable percentage for purposes of calculating the annual benefits, as
referenced in Article 2 of the SERP Agreement.

Plan Year
    Year ended
    Executive's
    Applicable
    
    ProjectedDecember 31,
    Age at End of
    Percentage %
    
    AnnualPeriod
    
    
    Benefit(1)1
    2004
    53
    16%
    $
    20,000.002
    2005
    54
    18%
    $
    23,400.003
    2006
    55
    20%
    $
    27,050.404
    2007
    56
    22%
    $
    30,961.605
    2008
    57
    24%
    $
    35,147.746
    2009
    58
    26%
    $
    39,624.357
    2010
    59
    28%
    $
    44,407.988
    2011
    60
    30%
    $
    49,516.119
    2012
    61
    32%
    $
    54,967.2210
    2013
    62
    34%
    $
    60,780.7411
    2014
    
    36%12
    2015
    
    38%13
    2016
    
    40%




> (1)  Projected Annual
>     Benefit assumes a 4% annual increase in Base Salary. The actual annual benefit, which
>     is paid for 15 years will depend on the actual Base Salary and the circumstances of
>     termination of employment as set forth in the SERP Agreement.



12

---

EXHIBIT 10.8

EXECUTIVE SURVIVOR INCOME AGREEMENT

---

AMENDMENT TOEXECUTIVE SURVIVOR INCOME
AGREEMENT

The Executive Survivor Income Agreement
between PremierWest Bank and Tom Anderson (the "Executive") dated November 16,
2002 is hereby amended effective July 29, 2004 as stated below.

Section 2.5.1 is amended to read:

"2.5.1Pre-Retirement Death Benefit.
If the Executive is employed by the Bank, at the
time of death, the death benefit shall be $250,000."

Section 2.5.2 is amended to read:

"2.5.2Post-Retirement Death Benefit.
If the Executive is no longer employed by the Bank at the time of death but had
terminated employment

- due to Disability;
- on or after Normal Retirement Age;
- due to termination by the Bank without Cause;
- due to termination by Executive for Good
  Reason; or
- for any reason other than termination for
  Cause more than six (6) months after a Change in Control

the death benefit shall be $250,000."

The Executive Survivor Agreement shall
continue in full force and effect, subject only to the amendments stated herein.

These amendments are made as part of a
restructuring of the Executive's employment benefits and such restructuring,
which includes additional benefits provided under an employment agreement,
constitute consideration for this amendment.

IN WITNESS WHEREOF, the Executive and a duly
authorized Bank officer have executed this Amendment as of the effective date
stated above.



EXECUTIVE :                                                                                                        
BANK:

___________________________                                             By:
________________________________
Tom Anderson

Its: ________________________________



---

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES -OXLEY ACT OF 2002

I, John Anhorn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PremierWest Bancorp;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-(e) for the registrant and have:

> a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
> consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
> b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the
> period covered by this quarterly report based on such evaluation; and
> c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to
> affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):

> a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
> summarize and report financial information; and
> b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2004

/s/ John Anhorn
John Anhorn 
President and Chief Executive Officer

---

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES -OXLEY ACT OF 2002

I, Tom Anderson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PremierWest Bancorp;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-(e) for the registrant and have:

> a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
> consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
> b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the
> period covered by this quarterly report based on such evaluation; and
> c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to
> affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):

> a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
> summarize and report financial information; and
> b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2004

/s/ Tom Anderson
Tom Anderson 
Senior Vice President & Chief Financial Officer

---

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PremierWest Bancorp (the "Company") on Form 10-Q for the quarter ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"),
I, John Anhorn, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

|(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the period certified.

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.

/s/ John AnhornJohn Anhorn 
President and Chief Executive Officer 
November 5, 2004

---

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PremierWest Bancorp (the "Company") on Form 10-Q for the quarter ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Tom Anderson, Senior Vice-President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

|(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the period certified.

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.

/s/ Tom AndersonTom Anderson 
Senior Vice-President and Chief Financial Officer 
November 5, 2004

---

---