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 June 30, 2002
                               --------------

                                       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   333-96209
                       -----------

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

              OREGON                                      93-1282171
     (State of Incorporation)                          (I.R.S. Employer
                                                     Identification 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 the number of shares outstanding of each of the issuer's classes
of common stock, as of latest practicable date: 11,528,193 shares as of July 31,
2002.


<PAGE>


                 Disclosure Regarding Forward-Looking Statements


This report includes  forward-looking  statements  within the meaning of Section
21D of the  Securities  Exchange Act of 1934, as amended.  Such  forward-looking
statements  are  based  on  the  beliefs  of  the  Company's  management  and on
assumptions  made by and  information  currently  available to  management.  All
statements  other than  statements  of historical  fact  regarding the Company's
financial position, business strategy and plans and objectives of management for
future  operations  of the Company  are  forward-looking  statements.  When used
herein, the words "expect to", "plan", "anticipate",  "believe", "estimate", and
"intend" and words or phrases of similar  predictive  nature,  as they relate to
the Company or  management,  are  intended  in part to identify  forward-looking
statements.  Examples of forward-looking statements include, but are not limited
to (i) projections of revenues, income or expenses,  earnings per share, capital
expenditures,  dividends,  capital  structure and other  financial  items,  (ii)
statements  of the plans and  objectives  of the Company or its  management,  or
Board of  Directors,  including  the  introduction  of new products or services,
plans for expansion,  acquisitions or future growth, or estimates or predictions
of actions by customers,  vendors, competitors or regulatory authorities,  (iii)
statements about future economic  performance and potential economic conditions,
and (iv) statements of assumptions underlying other statements about the Company
and its business.  Although management believes that the expectations  reflected
in such forward-looking statements are reasonable, it can give no assurance that
such  expectations will prove to have been correct.  Forward-looking  statements
are subject to various risks and uncertainties, which could cause actual results
to differ  materially and adversely from those indicated by the  forward-looking
statements.  These  risks and  uncertainties  include the  Company's  ability to
maintain or expand its market  share and net interest  margins,  or to implement
its marketing and growth strategies.  Further, actual results may be affected by
the Company's ability to compete on price and other factors with other financial
institutions;  customer acceptance of new products and services;  general trends
in the banking  industry and the regulatory  environment,  as they relate to the
Company's  cost of funds and  returns on assets.  In  addition,  there are risks
inherent in the banking industry relating to collectibility of loans and changes
in  interest  rates.  The  reader  is  advised  that  this  list of risks is not
exhaustive  and should not be construed as any  prediction  by the Company as to
which risks would cause  actual  results to differ from those  indicated  by the
forward-looking statements.


<PAGE>


                                    Form 10-Q
                                Table of Contents


Part I     FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements.....................4

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................13



Part II    OTHER INFORMATION

Item 1.    Legal Proceedings..............................................16

Item 4.    Submission of Matters to a Vote of Securities Holders..........16

Item 6.    Exhibits and Reports on Form 8-K...............................17

Signatures................................................................17

Certifications............................................................18



<PAGE>


PART I. FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
                          PREMIERWEST BANCORP AND SUBSIDIARY
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Dollars in 000's)
                                   (UNAUDITED)
                                                                           June 30,     December 31,
                                                                             2002           2001
                                                                          ----------    ----------
                                                ASSETS
<S>                                                                        <C>           <C>
CASH AND DUE FROM BANKS                                                    $ 25,070      $ 19,731
FEDERAL FUNDS SOLD AND INTEREST-BEARING DEPOSITS                              6,474        15,000
                                                                          ----------    ----------
                Total cash and cash equivalents                              31,544        34,731
INVESTMENT SECURITIES AVAILABLE-FOR-SALE                                     43,029        65,328
LOANS, NET OF ALLOWANCE FOR LOAN LOSSES                                     379,134       352,791
FEDERAL HOME LOAN BANK STOCK                                                  1,643         1,595
PREMISES AND EQUIPMENT, NET                                                  18,518        18,286
ACCRUED INTEREST AND OTHER ASSETS                                            16,407        15,579
                                                                          ----------    ----------
                TOTAL ASSETS                                              $ 490,275     $ 488,310
                                                                          ==========    ==========
                                 LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
      DEPOSITS:
        Non-interest-bearing checking                                      $ 85,683      $ 82,685
        Savings and interest-bearing demand                                 206,474       187,372
        Time                                                                128,488       159,998
                                                                          ----------    ----------
                 Total deposits                                             420,645       430,055
      FEDERAL HOME LOAN BANK BORROWINGS                                      10,746         5,566
      REPURCHASE AGREEMENTS                                                   9,526         5,480
      EMPLOYEE STOCK OWNERSHIP PLAN NOTES PAYABLE                                64           162
                                                                          ----------    ----------
                 Total borrowings                                            20,336        11,208
      OTHER LIABILITIES                                                       2,945         3,353
                                                                          ----------    ----------
                 Total liabilities                                          443,926       444,616
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
      Preferred stock - no par value; 1,000,000 shares authorized;
        none issued                                                               -             -
      Common stock - no par value; 20,000,000 shares authorized;
        and 11,527,193 and 11,397,468 shares issued and outstanding
        in 2002 and 2001, respectively                                       33,493        29,480
      Retained earnings                                                      12,402        14,008
      Unearned Employee Stock Ownership Plan compensation                       (64)         (162)
      Accumulated other comprehensive income                                    518           368
                                                                          ----------    ----------
                 Total shareholders' equity                                  46,349        43,694
                                                                          ----------    ----------
                 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY               $ 490,275     $ 488,310
                                                                          ==========    ==========
</TABLE>


                             See accompanying notes

                                       4
<PAGE>
<TABLE>
<CAPTION>
                       PREMIERWEST BANCORP AND SUBSIDIARY
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (Dollars in 000's, Except for Earnings per Share Data)
                                   (UNAUDITED)
                                                FOR THE THREE MONTHS ENDED   FOR THE SIX MONTHS ENDED
                                                ---------------------------  ------------------------
                                                  June 30,       June 30,     June 30,     June 30,
                                                    2002          2001          2002         2001
                                                -------------  ------------  -----------  -----------
<S>                                             <C>            <C>            <C>         <C>
Interest income:
  Interest and fees on loans                         $ 7,330       $ 6,739     $ 14,628     $ 12,451
  Interest-earning deposits                               12           353           64          481
  Investment securities                                  691         1,008        1,491        2,021
                                                -------------  ------------  -----------  -----------
     Total interest income                             8,033         8,100       16,183       14,953
Interest expense:
  Deposits                                             1,981         3,513        4,337        6,453
  Other borrowings                                       126           126          228          309
                                                -------------  ------------  -----------  -----------
     Total interest expense                            2,107         3,639        4,565        6,762
                                                -------------  ------------  -----------  -----------
Net interest income                                    5,926         4,461       11,618        8,191
Loan loss provision                                      295           193          587          355
                                                -------------  ------------  -----------  -----------
     Net interest income after
       loan loss provision                             5,631         4,268       11,031        7,836
Non-interest income
     Service fees                                        576           372        1,103          762
     Mortgage loan brokerage fees                        410           427          868          666
     Commissions from investment services                208            29          314           67
     Net gains on sale of investment securities          141            11          285           35
     Other                                                33           112           76          127
                                                -------------  ------------  -----------  -----------
                                                       1,368           951        2,646        1,657
Non-interest expense:
  Salaries and employee benefits                       3,114         2,476        6,265        4,440
  Occupancy & equipment, net                           1,022           779        2,007        1,334
  Communications                                         274           191          570          319
  Professional fees                                      215            95          389          175
  Supplies                                               101           124          244          191
  Other                                                  600           649        1,145        1,155
                                                -------------  ------------  -----------  -----------
Total non-interest expense                             5,326         4,314       10,620        7,614
                                                -------------  ------------  -----------  -----------
Income before income taxes                             1,673           905        3,057        1,879
Provision for income taxes                               546           305        1,023          629
                                                -------------  ------------  -----------  -----------
     Net income before cumulative effect
       of an accounting change                         1,127           600        2,034        1,250
Cumulative effect of an accounting change,
     net of tax                                          (99)            -          (99)           -
                                                -------------  ------------  -----------  -----------
     Net income                                      $ 1,028         $ 600      $ 1,935      $ 1,250
                                                =============  ============  ===========  ===========
Earnings per common share:
  Basic                                               $ 0.10        $ 0.05       $ 0.18       $ 0.12
                                                =============  ============  ===========  ===========
  Diluted                                             $ 0.10        $ 0.05       $ 0.18       $ 0.12
                                                =============  ============  ===========  ===========
  Per share cumulative effect of an
    accounting change, net of tax                    $ (0.01)          $ -      $ (0.01)         $ -
                                                =============  ============  ===========  ===========
  Basic                                               $ 0.09        $ 0.05       $ 0.17       $ 0.12
                                                =============  ============  ===========  ===========
  Diluted                                             $ 0.09        $ 0.05       $ 0.17       $ 0.12
                                                =============  ============  ===========  ===========
</TABLE>

                             See accompanying notes

                                        5
<PAGE>
<TABLE>
<CAPTION>
                       PREMIERWEST BANCORP AND SUBSIDIARY
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                               (Dollars in 000's)
                                   (UNAUDITED)
                                                                                           Accumulated
                                                                             Unearned        other                        Total
                                              Comprehensive     Retained        ESOP       comprehensive     Common    shareholders'
                                                 income         earnings    compensation   income (loss)     stock        equity
                                              ------------    -----------   ------------   ------------    ----------   -----------
<S>                                           <C>             <C>           <C>            <C>             <C>          <C>
BALANCE - JANUARY 1, 2001                                       $ 14,514         $ (383)        $ (368)     $ 18,679      $ 32,442
    Comprehensive income:
        Net income                                $ 1,250          1,250              -              -             -         1,250
        Unrealized gains
            on investment securities
            available-for-sale,
            net of taxes                              658              -              -            658             -           658
                                              ------------
       Comprehensive income                       $ 1,908
                                              ============
    Common stock issued to
    shareholders of Timberline Bancshares, Inc.                        -              -              -         7,995         7,995
    Stock dividend paid (5%)                                      (2,546)             -              -         2,546             -
    ESOP compensation expense                                          -            111              -            34           145
    Tax benefit of stock  options exercised                            -              -              -            31            31
    Stock options exercised                                            -              -              -           106           106
                                                              -----------   ------------   ------------    ----------   -----------
BALANCE - JUNE 30, 2001                                         $ 13,218         $ (272)         $ 290      $ 29,391      $ 42,627
                                                              ===========   ============   ============    ==========   ===========
BALANCE - JANUARY 1, 2002                                       $ 14,008         $ (162)         $ 368      $ 29,480      $ 43,694
    Comprehensive income:
        Net income                                $ 1,935          1,935              -              -             -         1,935
        Unrealized gains
            on investment securities
            available-for-sale (net of taxes),
            net of reclassification adjustment
            for gains included in the income
            statement of approximately $188
            (net of $97 in taxes)                     150              -              -            150             -           150
                                              ------------
        Comprehensive income                      $ 2,085
                                              ============
    Stock dividend paid (5%)                                      (3,541)             -              -         3,541             -
    ESOP compensation expense                                          -             98              -            43           141
    Tax benefit of stock
        options exercised                                              -              -              -           162           162
    Stock options exercised                                            -              -              -           267           267
                                                              -----------   ------------   ------------    ----------   -----------
BALANCE - JUNE 30, 2002                                         $ 12,402          $ (64)         $ 518      $ 33,493      $ 46,349
                                                              ===========   ============   ============    ==========   ===========
</TABLE>

                             See accompanying notes

                                        6
<PAGE>
<TABLE>
<CAPTION>
                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Dollars in 000's)
                                       (UNAUDITED)
                                                                       FOR THE SIX MONTHS ENDED
                                                                       ------------------------
                                                                          June 30,     June 30,
                                                                            2002         2001
                                                                        ----------   ----------
<S>                                                                     <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                          $ 1,935      $ 1,250
      Adjustments to reconcile net income to net cash provided
           by operating activities:
           Depreciation and amortization                                      984          661
           Amortization of premiums
            on investment securities, net                                      28           25
           Dividends on Federal Home Loan Bank stock                          (48)         (50)
           Net securities gains                                              (285)         (35)
           Net (gain) loss on sale of property                                (43)          57
           Loan loss provision                                                587          355
           Recognition of deferred compensation relating to ESOP              141          145
           (Increase) decrease in accrued interest and other assets           (51)          20
           Decrease in accrued interest and other liabilities                (459)        (194)
                                                                        ----------   ----------
                 Net cash provided by operating activities                  2,789        2,234
CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of investment securities, available-for-sale               (7,056)     (19,867)
      Proceeds from sales of investment securities, available-for-sale     12,482            -
      Proceeds from calls and maturities of investment
           securities, available-for-sale                                  16,602       35,190
      Loan originations, net                                              (26,813)     (32,125)
      Proceeds from sale of property                                           75          815
      Purchase of premises and equipment                                   (1,248)      (3,158)
      Acquired net assets of Timberline, net of cash and cash
          equivalents acquired of $24,314                                       -       17,835
                                                                        ----------   ----------
                 Net cash used by investing activities                     (5,958)      (1,310)
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net (decrease) increase in deposits                                  (9,410)      22,928
      Net borrowings                                                        9,125          683
      Proceeds from exercise of stock options                                 267          106
                                                                        ----------   ----------
                 Net cash (used) provided by financing activities             (18)      23,717
                                                                        ----------   ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                           (3,187)      24,641
CASH AND CASH EQUIVALENTS - Beginning of the period                        34,731       18,036
                                                                        ----------   ----------
CASH AND CASH EQUIVALENTS - End of the period                            $ 31,544     $ 42,677
                                                                        ==========   ==========
</TABLE>

                             See accompanying notes

                                        7
<PAGE>
                       PREMIERWEST BANCORP AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 2002


1.     SUMMARY OF ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
       ---------------------------------------------------------------------

       Organization  and merger:  PremierWest  Bancorp was  incorporated  in the
       state of Oregon on November  26,  1999.  Effective  on May 8, 2000,  in a
       reorganization  and  merger  accounted  for  as  a  pooling-of-interests,
       PremierWest  Bancorp  became the  holding  company for  PremierWest  Bank
       (formerly,  Bank of Southern  Oregon);  United Bancorp  ("United") merged
       with and into PremierWest Bancorp and United's  wholly-owned  subsidiary,
       Douglas National Bank, merged with and into PremierWest Bank.

       On April 16, 2001,  PremierWest  Bancorp  completed  the  acquisition  of
       Timberline Bancshares,  Inc. and its wholly-owned subsidiary,  Timberline
       Community Bank  ("Timberline").  The  acquisition was accounted for using
       the purchase method of accounting.  Accordingly,  PremierWest Bancorp has
       recorded the assets and  liabilities  of Timberline  at their  respective
       fair values at the time of the  completion  of the merger and the results
       of Timberline have been included with those of PremierWest  Bancorp since
       the date of the acquisition. The financial statement data for the periods
       presented are not comparable as a result of the acquisition of Timberline
       using the purchase method of accounting (see Note 8).

       PremierWest Bank, including its subsidiaries,  serves Jackson, Josephine,
       Douglas,  and Klamath counties of Southern Oregon and Siskiyou and Shasta
       counties of Northern California.

       Basis of presentation:  The condensed  consolidated  financial statements
       include  the  accounts  of  PremierWest  Bancorp  and  its  wholly  owned
       subsidiary,  PremierWest  Bank, and the  PremierWest  Bank's wholly owned
       subsidiaries,  PremierWest Investment Services,  Premier Finance Company,
       and Blue Star  Properties,  Inc.  (collectively,  "the  Company"  or "the
       Bank"). All significant  intercompany accounts and transactions have been
       eliminated in consolidation.

       The interim condensed  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.
       In preparing the condensed consolidated financial statements,  management
       is required to make  estimates and  assumptions  that affect the reported
       amounts of assets and  liabilities  as of the date of the balance  sheets
       and income and expenses for the periods. Actual results could differ from
       those estimates.

       Balance  sheet data as of  December  31, 2001 was  derived  from  audited
       financial  statements and does not include all  disclosures  contained in
       the 2001 Annual Report on Form 10-K. The interim  condensed  consolidated
       financial  statements  should be read in  conjunction  with the Company's
       2001  consolidated  financial  statements,  including the notes  thereto,
       included in the 2001 Annual  Report to  Shareholders.  The reader  should
       keep in mind that the results of operations for the interim periods shown
       in the accompanying  condensed  consolidated financial statements are not
       necessarily  indicative of results for any future interim  periods or the
       entire fiscal year.

       Method of accounting:  The Company  prepares its financial  statements in
       conformity with accounting  principles  generally  accepted in the United
       States.  The Company  utilizes the accrual  method of  accounting,  which
       recognizes income when earned and expenses when incurred. The preparation
       of  financial   statements  in  conformity  with  accounting   principles
       generally  accepted  in the United  States  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.

       Stock  dividends:  On April 19,  2001,  the  Company  declared a 5% stock
       dividend payable to its shareholders of record June 1, 2001. On March 28,
       2002, the Board of Directors of the Company  declared a 5% stock dividend
       payable to its  shareholders  of record  June 1, 2002.  All share and per
       share  data  in  the  accompanying   condensed   consolidated   financial
       statements  have  been  retroactively   restated  to  reflect  the  stock
       dividends.




                                       8
<PAGE>
                       PREMIERWEST BANCORP AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 2002



2.     INVESTMENT SECURITIES
       ---------------------

       Investment  securities  available-for-sale  at June 30, 2002 and December
       31, 2001 consisted of the following:
<TABLE>
<CAPTION>
                                                                                        2002
                                                     --------------------------------------------------------------------------
                                                                             Gross              Gross             Estimated
                                                        Amortized         unrealized          unrealized            fair
(Dollars in 000's)                                         cost              gains              losses              value
                                                     ----------------   ----------------    ---------------    ----------------
<S>                                                  <C>                <C>                 <C>                <C>
U.S. agency securities                                      $ 19,004              $ 337                $ -            $ 19,341
Mortgage-backed securities
            and collateralized mortgage obligations            2,171                 28                  1               2,198
Obligations of states and
            political subdivisions                            16,623                413                  2              17,034
Corporate bonds                                                3,968                 64                  -               4,032
Other securities                                                 424                  -                  -                 424
                                                     ----------------   ----------------    ---------------    ----------------
            Total                                           $ 42,190              $ 842                $ 3            $ 43,029
                                                     ================   ================    ===============    ================
                                                                                        2001
                                                     --------------------------------------------------------------------------
                                                                             Gross              Gross             Estimated
                                                        Amortized         unrealized          unrealized            fair
(Dollars in 000's)                                         cost              gains              losses              value
                                                     ----------------   ----------------    ---------------    ----------------
U.S. agency securities                                      $ 31,263              $ 453               $ 35            $ 31,681
Mortgage-backed securities
            and collateralized mortgage obligations           11,669                161                 11              11,819
Obligations of states and
            political subdivisions                            16,255                162                 84              16,333
Corporate bonds                                                3,971                  -                 50               3,921
Other securities                                               1,574                  -                  -               1,574
                                                     ----------------   ----------------    ---------------    ----------------
            Total                                           $ 64,732              $ 776              $ 180            $ 65,328
                                                     ================   ================    ===============    ================
</TABLE>


       At June 30, 2002,  approximately  $42.6 million in investment  securities
       available-for-sale  were pledged to secure public  deposits and nonpublic
       deposits and borrowings.


3.     LOANS AND ALLOWANCE FOR LOAN LOSSES
       -----------------------------------

The composition of the loan portfolio at June 30, 2002 and December 31, 2001 was
as follows:

  (Dollars in 000's)                                      2002          2001
                                                       ----------    ----------
  Commercial                                           $ 101,561      $ 80,866
  Real estate - construction                              57,199        59,754
  Real estate - other                                    189,648       175,047
  Consumer installment                                    34,224        36,110
  Other                                                    2,807         6,616
                                                       ----------    ----------
                                                         385,439       358,393
  Less:
  Allowance for loan losses                                5,202         4,825
  Deferred loan fees                                       1,103           777
                                                       ----------    ----------
    Loan, net                                          $ 379,134     $ 352,791
                                                       ==========    ==========

       Impaired loans,  on which the accrual of interest had been  discontinued,
       were  approximately  $3.8  million and $3.7  million at June 30, 2002 and
       December 31, 2001, respectively.

                                       9
<PAGE>
                       PREMIERWEST BANCORP AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 2002
A summary of changes in the allowance for loan losses for the six months ended
June 30, 2002 and 2001 were as follows:

     (Dollars in 000's)                                     2002       2001
                                                          --------   --------
     Balance - Beginning of the period                    $ 4,825    $ 3,476
     Loans charged-off                                       (266)       (77)
     Loan recoveries                                           56         36
     Loan loss provision                                      587        355
     Allowance for loan losses acquired from Timberline         -        676
                                                          --------   --------
     Balance - End of the period                          $ 5,202    $ 4,466
                                                          ========   ========


4.     LINE OF CREDIT AND OTHER BORROWINGS
       -----------------------------------

       The Company  has a line of credit  available  with the Federal  Home Loan
       Bank of Seattle (FHLB) for up to approximately $73 million as of June 30,
       2002.  This line of credit is secured by  restricted  FHLB stock owned by
       the Company and is limited to 15% of the Bank's  total  assets and by the
       amount of FHLB stock held by the Bank.  Interest and  principal  payments
       are due monthly on any outstanding  borrowings.  As of June 30, 2002, the
       Company had $5.5  million in advances on  short-term  advances  from FHLB
       under the line of credit.  As of December  31,  2001,  the Company had no
       advances  from the FHLB under the line of credit.  The  Company  has also
       borrowed  long-term  funds  from the FHLB  against  this line of  credit,
       aggregating  approximately  $5.2  million and $5.6 million as of June 30,
       2002 and  December  31, 2001,  respectively.  As of June 30,  2002,  $4.7
       million is due August 28,  2008,  and the  remaining  $500,000  is due at
       various  times  through  February  2014.  The  Company is making  monthly
       principal  payments of  approximately  $53,000 plus  interest at rates of
       5.82% to 7.63%.

       Borrowings  of  approximately  $9.5  million and $5.5 million at June 30,
       2002 and December  31, 2001,  relate to  repurchase  agreements  used for
       customer  overnight sweep  accounts.  The cost of these funds at June 30,
       2002 is an  average  annual  rate of  interest  of  approximately  1.34%.
       Certain  investment  securities,   as  required,  have  been  pledged  as
       collateral  to  fully  secure  the  long-term  debt  and  the  repurchase
       agreements.

       Additionally,  as of June 30,  2002,  the Company has  approximately  $20
       million  in   available   borrowings   through   lines  of  credit   with
       correspondent  banks and  through  the Federal  Reserve  Bank's  discount
       window.

5.     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  condensed  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 June 30, 2002, the Company has $57.7 million
       of  commitments  to extend  credit to customers and $3 million of standby
       letters of credit.

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

6.     EARNINGS PER SHARE
       ------------------

       The Company's basic earnings per common share is computed by dividing net
       income 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,  retroactively  adjusted for all
       stock dividends.


                                      10
<PAGE>
                       PREMIERWEST BANCORP AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 2002

       Three-months ended June 30, 2002 and 2001:
       ------------------------------------------
       Weighted average number of common shares:          2002          2001
                                                      -----------   -----------
       Basic earnings per common share                 11,467,000    11,012,000
       Diluted earnings common per share               11,554,000    11,110,000

       Six-months ended June 30, 2002 and 2001:
       ------------------------------------------
       Weighted average number of common shares:       2002          2001
                                                      -----------   -----------
       Basic earnings per common share                 11,486,000    10,250,000
       Diluted earnings common per share               11,548,000    10,348,000

7.     RECENTLY ISSUED ACCOUNTING STANDARDS
       ------------------------------------

       In June 2001,  the  Financial  Accounting  Standards  Board (FASB) issued
       Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and
       Other  Intangible  Assets."  SFAS No. 142  discontinues  the  practice of
       amortizing  goodwill and requires that goodwill be continually  evaluated
       for impairment and be written-down  when  appropriate.  SFAS No. 142 also
       requires  that  other   intangible   assets  that  have  been  separately
       identified and accounted for continue to be amortized over a determinable
       useful life.  SFAS No. 142 is effective for fiscal years  beginning after
       December 15, 2001. Application of the non-amortization provisions of SFAS
       No. 142 have  eliminated the Bank's  amortization  of goodwill  beginning
       with the six months ended June 30, 2002. In June 2002, the Bank performed
       the first of the required  goodwill  impairment  tests to determine if an
       impairment  loss should be recognized.  Adoption of SFAS No. 142 requires
       that a review be performed  of the  valuation of goodwill at all relevant
       business  unit  levels.   Management   determined  the  effect  of  these
       impairment  tests  on the  Bank's  consolidated  financial  position  and
       results of operations recognizing a $99,000 goodwill impairment loss, net
       of $51,000 in related taxes,  due to an acquisition of a finance  company
       in October 2000.  Analyses of other recorded goodwill components indicate
       that no additional impairment of asset values exists.

       In June  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for  Asset
       Retirement  Obligations." SFAS No. 143 addresses financial accounting and
       reporting obligations associated with the retirement of long-lived assets
       and the associated asset retirement  costs. SFAS No. 143 is effective for
       fiscal years  beginning  after June 15, 2002.  Management does not expect
       that the  adoption  of SFAS No.  143 will have a  material  effect on the
       Bank's consolidated financial statements.

       In  August  2001,  the FASB  issued  SFAS No.  144,  "Accounting  for the
       Impairment  or Disposal of  Long-Lived  Assets."  SFAS No. 144  addresses
       financial  accounting  and  reporting  for the  impairment or disposal of
       long-lived assets.  This statement  supersedes SFAS No. 121,  "Accounting
       for the Impairment of Long-Lived  Assets and for Long-Lived  Assets to be
       Disposed of," and provides guidance on the  classification and accounting
       for such  assets when held for sale or  abandonment.  SFAS No. 144 became
       effective for fiscal years  beginning after December 15, 2001. The Bank's
       adoption  of  SFAS  No.  144  did  not  have  a  material  effect  on its
       consolidated financial statements.

       In  April  2002,  the  FASB  issued  SFAS No.  145,  "Rescission  of FASB
       Statements  No. 4, 44, and 64,  Amendment of FASB  Statement  No. 13, and
       Technical  Corrections."  This  Statement  rescinds FASB Statement No. 4,
       "Reporting  Gains  and  Losses  from  Extinguishment  of  Debt,"  and  an
       amendment of that Statement,  FASB Statement No. 64,  "Extinguishments of
       Debt Made to Satisfy  Sinking-Fund  Requirements."  This  Statement  also
       rescinds FASB  Statement No. 44,  "Accounting  for  Intangible  Assets of
       Motor Carriers." This Statement amends FASB Statement No. 13, "Accounting
       for  Leases,"  to  eliminate  an   inconsistency   between  the  required
       accounting for  sale-leaseback  transactions and the required  accounting
       for certain  lease  modifications  that have  economic  effects  that are
       similar to sale-leaseback transactions.  This Statement also amends other
       existing   authoritative   pronouncements   to  make  various   technical
       corrections,  clarify  meanings,  or describe their  applicability  under
       changed conditions.  Management does not expect that the adoption of SFAS
       No. 145 will have a material effect on the Bank's consolidated  financial
       statements.

       In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS
       No.  146,   "Accounting  for  Costs  Associated  with  Exit  or  Disposal
       Activities." This Statement addresses financial  accounting and reporting
       for costs  associated  with exit or  disposal  activities  and  nullifies
       Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability  Recognition
       for  Certain  Employee  Termination  Benefits  and Other Costs to Exit an
       Activity  (including  Certain Costs  Incurred in a  Restructuring)."  The
       statement is effective for exit or disposal activities that are initiated
       after December 31, 2002, with early  application  encouraged.  Management
       does not expect  that the  adoption  of SFAS No. 146 will have a material
       effect on the Bank's consolidated financial statements.


                                      11
<PAGE>
                       PREMIERWEST BANCORP AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 2002


8.     ACQUISITION OF TIMBERLINE BANSCHARES, INC.
       ------------------------------------------

       On April 16, 2001,  the Company  completed the  acquisition of Timberline
       Bancshares,  Inc. and its wholly-owned  subsidiary,  Timberline Community
       Bank.  The  acquisition  was accounted  for using the purchase  method of
       accounting.  Accordingly,  the assets and  liabilities of Timberline have
       been recorded by the Company at their respective estimated fair values at
       the  time  of the  completion  of the  transaction  and  the  results  of
       Timberline have been included with those of the Company since the date of
       the  acquisition.  As  of  June  30,  2002,  the  accompanying  condensed
       consolidated  balance  sheet  included   approximately  $6.0  million  in
       goodwill related to this acquisition.

       The estimated fair values of net assets acquired at the acquisition  date
       are summarized as follows:

       (Dollars in 000's)
       Cash and due from banks                                     $ 4,614
       Federal funds sold                                           19,700
       Investment securities                                        10,159
       Loans, net of allowance for loan losses                      56,040
       Property and equipment                                        2,847
       Other assets                                                  8,604
                                                          -----------------
          Total assets acquired                                  $ 101,964
                                                          =================
       Deposits                                                   $ 86,800
       Other liabilities                                               783
                                                          -----------------
          Total liabilities assumed                                 87,583
           Net assets acquired                                      14,381
                                                          -----------------
                                                                 $ 101,964
                                                          =================

       The following pro forma information  presents the Company's  consolidated
       results of operations as if the acquisition of Timberline had occurred at
       the  beginning  of the  six-month  period  ended June 30, 2001  presented
       below. The pro forma information does not purport to be indicative of the
       actual   results  of   operations   that  would  have  occurred  had  the
       transactions  taken  place  at  the  beginning  of the  six-month  period
       presented or of future results of operations.

       (Dollars in 000's, except earnings per share) Six-months ended June 30,
                                                   ---------------------------
                                                      2002             2001
                                                   ------------    -----------
                                                      Actual         Pro Forma
                                                   ------------    -----------
       Total interest and non-interest income       $ 18,829        $ 18,700
       Net income                                   $  1,935        $  1,370
       Basic earnings per common share              $   0.17        $   0.12
       Diluted earnings per common share            $   0.17        $   0.12








                                      12
<PAGE>

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

HIGHLIGHTS
----------

Effective May 8, 2000,  PremierWest  Bancorp and its subsidiaries  consummated a
merger  among Bank of Southern  Oregon,  which  changed its name to  PremierWest
Bank, and United Bancorp and its wholly owned subsidiary, Douglas National Bank.
The transaction was accounted for as a pooling of interest.

On  April  16,  2001,  the  Company  completed  the  acquisition  of  Timberline
Bancshares,  Inc. and its  wholly-owned  subsidiary,  Timberline  Community Bank
("Timberline").  The  acquisition was accounted for using the purchase method of
accounting.  Accordingly, the Company has recorded the assets and liabilities of
Timberline )at their fair market value,  and the results of Timberline have been
included  with  those of the  Company  since  the date of the  acquisition.  The
unidentified  intangible assets related to the excess of the Company's  purchase
price over the estimated net fair value of the assets  acquired and  liabilities
assumed is reported as goodwill and is tested  periodically for impairment.  The
financial  statement data for the six-month periods presented are not comparable
as a result  of the  acquisition  of  Timberline  using the  purchase  method of
accounting.

FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
-------------------------------------------------

The Company had net income of $1,028,000,  after a $99,000  goodwill  impairment
charge (net of tax),  for the three  months  ended June 30,  2002,  which was an
increase  of  $428,000  (or 71.3%)  compared  to the same  period in 2001.  This
increase is due mainly to a $1.9  million  increase in net  interest  income and
non-interest  income  offset by an  increase  of $1.0  million  in  non-interest
expense and  applicable  income taxes over the  comparative  three-month  period
ended June 30, 2001.

The following table presents  information  regarding yields on  interest-earning
assets, expense on interest-bearing liabilities, net interest spread, net yields
on  average  interest-earning  assets,  return on  average  assets and return on
average equity for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
Analysis for the three-month period ended                              Increase
June 30, 2002 and 2001                      2002           2001       (Decrease)       %Change
----------------------                   ------------   -----------   ------------   ------------
<S>                                         <C>          <C>            <C>              <C>
Average fed funds sold and investments      $ 58,549     $ 103,719      $ (45,170)        -43.6%
Average gross loans                          375,696       297,968         77,728          26.1%
Average interest earning assets              434,245       401,687         32,558           8.1%
Average interest bearing liabilities         437,674       411,865         25,809           6.3%
Average total assets                         485,096       455,245         29,851           6.6%
Average equity                                45,699        37,500          8,199          21.9%
Average yield earned (1)                       7.47%         8.14%          -0.7%          -8.2%
Average rate paid                              1.93%         3.54%          -1.6%         -45.5%
                                         ------------   -----------   ------------
Net interest spread                            5.54%         4.60%           0.9%          20.4%
                                         ============   ===========   ============
Net interest income to average
     interest earning assets                   5.47%         4.45%           1.0%          22.9%
Return on average assets                       0.85%         0.53%           0.3%          60.4%
Return on average equity                       9.02%         6.42%           2.6%          40.5%
Efficiency ratio (2)                          73.01%        79.71%          -6.7%          -8.4%
</TABLE>

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 $1.5 million for the  three-month  period ended June 30, 2002 over the
same period in 2001. The increase was mainly due to an increase of $32.6 million
in the volume of average  earning  assets offset by a 70 basis point decrease in
overall  yields.  Though the  Company's  cost of funds  decreased to 1.93%,  the
volume of its  interest-bearing  liabilities  increased $25.8 million during the
three-month  period ended June 30, 2002 compared to the comparative period ended
June 30, 2001.  As a result,  the Company's  interest rate margin  increased 102
basis points.

LOAN LOSS  PROVISION.  The loan loss provision  during the  three-month  periods
ended June 30, 2002 was $295,000 compared to $193,000 for the three-month period
ended June 30,  2001.  The Company had net  charge-offs  of $235,000  during the
three-month  period ended June 30, 2002,  compared to net charge-offs of $33,000
for the corresponding  period in 2001. Additions to the loan loss provision have
increased  the  allowance  for loan losses to $5.2  million as of June 30, 2002,
compared to $4.5 million as of June 30, 2001.  The increase in the allowance for
loan losses is primarily  related to specific  and  inherent  losses in the loan
portfolio.  The Company's  ratio of allowance for loan losses to total loans was
1.35%  at  June  30,  2002,  compared  to  1.37%  at June  30,  2001.  Loans  of
approximately  $1.7 million  were put on  non-accrual  status  during the second
quarter.  Management  believes that  non-performing  loans have been  adequately
provided for in the allowance for loan losses. 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 totaled
$7.7 million and $6.9 million at June 30, 2002 and 2001, respectively.
                                      13
<PAGE>
NON-INTEREST INCOME. Non-interest income increased 43.8% to $1.4 million for the
three months ended June 30, 2002, as compared to $951,000 for the same period in
2001. Of this  increase,  $130,000  relates to net gains on sale of  securities,
$17,000 relates to a decrease in mortgage brokerage fees, $179,000 relates to an
increase in the volume of investment services, and $204,000 relates to increases
in account service fees.

NON-INTEREST EXPENSE.  Non-interest expense increased $1.0 million for the three
months  ended June 30,  2002 as compared  to the  corresponding  period in 2001.
Salaries and employee  benefits  increased  $638,000 as a result of higher costs
associated with new branch  personnel,  severance  costs incurred,  increases in
commissions  paid and employee  benefits  incurred during the three months ended
June 30, 2002 as compared to the  corresponding  period in 2001.  Occupancy  and
equipment expenses increased a total of $243,000 for the three months ended June
30, 2002, as compared to the same period in 2001.  This increase was  attributed
to  depreciation   and  other  building  charges  with  new  branch  and  office
facilities.  Other  non-interest  expense  increased  by  $131,000  due  to  the
Company's  increase  in loan  collection  efforts  and in its  growth in overall
operations.

The Company's efficiency ratio of 73.01% during the second quarter 2002 compared
to 79.71% for the second  quarter of 2001 was mainly due to an  increase  in net
interest income and non-interest income.

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
-----------------------------------------------

The Company had net income of $1,935,000 for the six months ended June 30, 2002,
which was an  increase  of  $685,000  (or 54.8%)  compared to the same period in
2001.  This  increase is due mainly to a $4.4  million  increase in net interest
income and  non-interest  income offset by an increase of $3.0 million or 39.47%
in  non-interest  expense  and  applicable  income  taxes  over the  comparative
six-month period ended June 30, 2001.

The following table presents  information  regarding yields on  interest-earning
assets, expense on interest-bearing liabilities, net interest spread, net yields
on  average  interest-earning  assets,  return on  average  assets and return on
average equity for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
Analysis for the six-month period ended                              Increase
June 30, 2002 and 2001                     2002          2001       (Decrease)      %Change
                                        -----------   -----------   ------------  ------------
<S>                                       <C>           <C>           <C>             <C>
Average fed funds sold and investments    $ 66,098      $ 92,189      $ (26,091)       -28.3%
Average gross loans                        369,906       267,706        102,200         38.2%
Average interest earning assets            436,004       359,895         76,109         21.1%
Average interest bearing liabilities       438,247       359,461         78,786         21.9%
Average total assets                       485,243       396,404         88,839         22.4%
Average equity                              45,085        36,000          9,085         25.2%
Average yield earned (1)                     7.54%         8.45%          -0.9%        -10.8%
Average rate paid                            2.10%         3.79%          -1.7%        -44.6%
                                        -----------   -----------   ------------
Net interest spread                          5.44%         4.66%           0.8%         16.7%
                                        ===========   ===========   ============
Net interest income to average
     interest earning assets                 5.37%         4.59%           0.8%         17.0%
Return on average assets                     0.80%         0.64%           0.2%         25.0%
Return on average equity                     8.65%         7.00%           1.7%         23.6%
Efficiency ratio (2)                        74.45%        77.32%          -2.9%         -3.7%
</TABLE>

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  $3.4  million for the  six-month  period ended June 30, 2002 over the
same  period  in 2001.  Of this  increase,  $680,000  was  contributed  from the
Timberline  operations.  The remaining increase was mainly due to an increase of
$76  million  in the  volume of  average  interest  earning  assets  offset by a
decrease  of 91 basis  points in the total  yield on  average  interest  earning
assets.  Of the increase in average earning  assets,  $25 million relates to the
acquired Timberline  operations.  The Company's cost of funds decreased to 2.10%
with the volume of its  interest-bearing  liabilities  increasing  $78.8 million
($37 million  relating to the  acquired  Timberline  operations)  during the six
months  ended June 30,  2002 as compared  to the  corresponding  period in 2001.
These  factors  caused the  Company's  interest rate margin to increase 78 basis
points to 5.37% from 4.59% for the comparative two periods. The decline in yield
was more than offset by decline in cost of funds.

LOAN LOSS PROVISION.  The loan loss provision during the six-month periods ended
June 30, 2002 was $587,000  compared to $355,000 for the six-month  period ended
June 30, 2001. The Company had net  charge-offs of $210,000 during the six-month
period  ended June 30,  2002,  compared  to net  charge-offs  of $41,000 for the
corresponding  period  in  2001.  Additions  to the  loan  loss  provision  have
increased the allowance for loan losses by $736,000 as of June 30, 2002 compared
to June 30, 2001,  $676,000 of which relates to $56 million of loans acquired in
the  Timberline  transaction.  The remaining  increase in the allowance for loan
losses is primarily related to

                                      14
<PAGE>
specific and inherent losses in the loan portfolio.

NON-INTEREST INCOME. Non-interest income increased 59.7% to $2.6 million for the
six months ended June 30, 2002,  as compared to $1.7 million for the same period
in 2001. Of this increase,  $250,000 relates to net gains on sale of securities,
$202,000  relates to an increase  in  mortgage  loan  brokerage  fees,  $247,000
relates to an increase in the volume of investment services,  $43,000 relates to
net gains on sale of  property,  and  $341,000  relates to  increases in account
service fees.

NON-INTEREST  EXPENSE.  Non-interest  expense increased $3.0 million for the six
months  ended June 30,  2002 as compared  to the  corresponding  period in 2001.
Salaries  and employee  benefits  increased  $1.8 million  ($384,000 of salaries
relates to Timberline, including $47,000 of non-compete payments) as a result of
higher costs  associated  with new branch  personnel,  severance and non-compete
payments,  increases in commissions paid and employee  benefits  incurred during
the six months  ended June 30, 2002 as compared to the  corresponding  period in
2001.  Occupancy and equipment  expenses increased a total of $673,000 ($142,000
relates to Timberline) for the six months ended June 30, 2002 as compared to the
same period in 2001 as a result of new branch and office facility charges. Other
non-interest expense increased by $508,000 due to the Company's increase in loan
collection  efforts and costs associated with improved  customer service efforts
in the northern California market.

The Company's  efficiency ratio of 74.45% during the six-month period ended June
30, 2002 compared to 77.32% for the comparative  period of 2001. If Timberline's
results of operations had been combined with  PremierWest's  as of the beginning
of 2001, the combined  efficiency  ratio would have been 78.0% for the six-month
period ended June 30, 2001.

FINANCIAL  CONDITION.  Total assets at June 30, 2002 increased  slightly to $490
million  since  December  31,  2001.  Loans grew $26.7  million to $384  million
accounting  for 78% of total  assets.  Total  deposits  declined $9.4 million or
2.19% when compared to December 31, 2001 total deposits of $430.1  million.  The
decline was primarily  attributable to a $31.5 million reduction in certificates
of deposit, which was partially offset by increased volumes in both non-interest
bearing  demand,  savings  and  other  interest  bearing  demand  deposits.  The
Company's loan to deposit ratio  increased to 91.4% as of June 30, 2002 compared
to 80.1% as of June 30, 2001.  With the acquisition of Timberline in April 2001,
the Company added  approximately  $8 million to capital.  Adding net income from
PremierWest's operations,  the Company's capital to assets ratio was 9.45% as of
June 30, 2002.

LIQUIDITY. Liquidity enables the Company to meet withdrawals of its deposits and
borrowing  needs of its loan  customers.  The Company  maintains  its  liquidity
position  through  maintenance  of cash  resources and the stability of its core
deposit base. Liquidity declined slightly during this quarter as a result of the
increase in loan volume.  Excess cash was  invested on a  short-term  basis into
federal funds sold and  interest-earning  deposits with the FHLB. As of June 30,
2002, the Company had $6.5 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 up to 15% of the Bank's total
assets.  As of June 30, 2002,  the Company had $5.5 in overnight  borrowings and
$5.2 million in long-term  borrowings from the FHLB against the Company's credit
line.  Other  borrowings  of  approximately  $9.5 million  relate to  repurchase
agreements for customer overnight sweep accounts. The cost of all borrowed funds
was  approximately  3.12% as of June 30, 2002. The Company also has  established
credit  lines of  approximately  $20  million  through  correspondent  banks and
through the "discount window" with the Federal Reserve Bank of San Francisco.

At June 30, 2002,  the Company had  approximately  $57.7 million in  outstanding
commitments to extend credit for newly  approved  loans and available  funds for
construction  projects.  Under  the  terms  of  construction  loan  commitments,
completion of specified project benchmarks must be certified before funds may be
drawn. In addition,  it is anticipated that a portion of other  commitments will
expire or terminate  without  funding.  Management  believes  that the Company's
available  resources will be sufficient to fund these  commitments in the normal
course of business.

CAPITAL  RESOURCES.  Federal  regulators  require the  calculation of risk-based
capital.  This is an analysis that weights balance sheet and  off-balance  sheet
items for their  inherent  risk. It requires  minimum  standards for  risk-based
capital-by-capital  tier. As a minimum  requirement,  total  risk-based  capital
ratio should be at least 8.00%,  Tier 1 capital  ratio should be at least 4.00%,
and a leverage  capital  ratio should be at least 4.00%.  At June 30, 2002,  the
Company's estimated regulatory capital ratios were as follows:  total risk-based
capital ratio of 10.38%,  Tier 1 capital ratio of 9.14%,  and a leverage capital
ratio of 8.03%.  If the Company were fully  leveraged,  further  growth could be
restricted  to the level  attainable  through  generation  and  retention of net
income or the Company could seek additional capital from outside sources.

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.  Management actively
monitors  and manages its  interest  rate risk  exposure.  Although  the Company
manages  other risks,  as in 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 had not
experienced a significant  change in market risk at June 30, 2002 as compared to
December 31, 2001.  The Company is  experiencing a reduction in cost of deposits
due to the increase in non-interest bearing deposits and a repricing opportunity
for previously acquired high-cost  transactional time deposits,  resulting in an
improvement in its interest rate margin.


                                      15
<PAGE>
PART II. OTHER INFORMATION


ITEM 1. LEGAL  PROCEEDINGS.  From time to time  PremierWest  or its wholly owned
subsidiary,  PremierWest  Bank  (the  "Bank"),  is  involved  in  various  legal
proceedings  that are incident to its  business.  The following  information  is
given with respect to the more significant pending matters.


Bernard J. Woodward,  et al vs. Bank of Southern Oregon (nka PremierWest  Bank),
Black Oak Construction,  Inc., et al; Jackson County Circuit Court, Oregon filed
March 1, 2001.

This  matter  involves a claim  that the Bank  deposited  checks  payable to the
plaintiff  and  Black  Oak  Construction,  a bank  customer,  in the  amount  of
$930,840,  without  plaintiff's  consent.  Plaintiff  is  seeking  return of the
proceeds, interest and costs, and has indicated intent to seek punitive damages.
The Bank has denied liability and filed a counterclaim for  approximately  $1.16
million  for  losses  incurred  on other  loans to Black Oak  Construction.  The
dispute  involves the right of the Bank depositing  proceeds from checks payable
to Black Oak Construction  thereby repaying certain  outstanding  loans of Black
Oak  Construction  in connection with a joint  construction  project between the
plaintiff  and Black Oak  Construction.  The  Bank's  counterclaim  alleges  the
plaintiff  intentionally  caused  Black  Oak  Construction  to  under-bid  other
construction  contracts.  Discovery in the case is not yet  completed.  No trial
date has been set.  Management  believes  its actions were  proper;  however,  a
favorable outcome in the litigation cannot be assured.

Bank of Southern Oregon (nka PremierWest Bank) vs. Barry Fronek,  Stanley Kelly,
et al;  Jackson  County  Circuit  Court,  Oregon filed in 1998; on Appeal to the
Court of Appeals, State of Oregon.

The Bank  brought  suit  against the  defendant  borrowers  and  guarantors  for
collection  of a loan  owing to the  Bank.  After a trial in 2001,  the Bank was
awarded an amount of $1,200,000 plus interest and attorney fees. When the Bank's
borrowers failed to pay the loan,  defendant  Stanley Kelly, as guarantor,  paid
the total judgment in the amount of $1,475,000.  However, Mr. Kelly has appealed
the judgment as it applied to him arguing, among other things, that his guaranty
was obtained by the Bank fraudulently.  Management believes the judgment will be
affirmed  though no assurances can be given that the appellate court will uphold
the decision of the trial court judge.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
<TABLE>
<CAPTION>
Annual Shareholders' Meeting held May 23, 2002
Results of Shareholder Votes
Proposal 1:                                                                 Percent Voting for
-----------                                                                 ------------------
Election of Board Directors             Yes           No         Abstain     Director/Proposal
---------------------------             ---           --         -------     -----------------
<S>                                  <C>    <C>    <C>    <C>    <C>         <C>
John L. Anhorn                       8,902,100       -0-          5,998           81.2%
Richard Hieb                         8,902,100       -0-          5,998           81.2%
John A. Duke                         8,902,405       -0-          5,693           81.2%
Patrick G. Huycke                    8,902,405       -0-          5,693           81.2%
Thomas Becker                        8,902,405       -0-          5,693           81.2%
Don L. Hilton                        8,902,405       -0-          5,693           81.2%
Dennis N. Hoffbuhr                   8,902,405       -0-          5,693           81.2%
Pete Martini                         8,902,405       -0-          5,693           81.2%
James L. Patterson                   8,900,025       -0-          8,073           81.2%
Rickar D. Watkins                    8,902,405       -0-          5,693           81.2%
Jeffrey Chamberlain                  8,902,405       -0-          5,693           81.2%
David Emmett                         8,902,405       -0-          5,693           81.2%
Brian Pargeter                       8,902,405       -0-          5,693           81.2%
Norman Fiock                         8,898,330       -0-          9,768           81.2%
Richard Karchmer                     8,902,405       -0-          5,693           81.2%
Proposal 2:
-----------
Approval of 2002 Stock Option Plan   6,907,601        315,877    49,400           63.0%
         - Broker non-votes                  -            -   2,925,350
Quorum:
Allowed shares to vote:             10,964,339
Responded:                           8,917,866
</TABLE>



                                      16
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      None

(b)      June 27, 2002 - Change in Certifying Public Accountants

(c)      Certification Pursuant to Sarbanes-Oxley Act



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: August 12, 2002
PREMIERWEST BANCORP


/s/ TOM ANDERSON
-------------------------------------------------------------------
Tom Anderson, Chief Financial Officer



/s/ JOHN L. ANHORN
-------------------------------------------------------------------
John L. Anhorn, Chief Executive Officer

















                                      17
<PAGE>
                                                                     Exhibit c


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





This certification is given by the undersigned Chief Financial Officer and Chief
Executive Officer of PremierWest Bancorp  ("PremierWest") in connection with the
Quarterly Report of PremierWest on Form 10-Q for the period ended June 30, 2002,
as filed with the United States  Securities and Exchange  Commission on the date
therein  specified (the  "Report").  Each of the  undersigned  hereby  certifies
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002:


(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 results of operations of PremierWest.





/S/ TOM ANDERSON


Tom Anderson,
Senior Vice President and Chief Financial Officer
August 12, 2002



/s/ JOHN L. ANHORN

John L Anhorn,
President and Chief Executive Officer
August 12, 2002











                                      18
<PAGE>