SOURCE: Yadkin Valley Financial Corporation

Yadkin Valley Financial Corporation

October 25, 2012 06:45 ET

Yadkin Valley Financial Corporation Announces Capital Raise and Classified Asset Disposition Plan; Continues Trend of Problem Asset Reduction in Third Quarter

ELKIN, NC--(Marketwire - Oct 25, 2012) - Yadkin Valley Financial Corporation (NASDAQ: YAVY)

Capital Raise and Classified Asset Disposition Plan Highlights:

  • The Company has completed a $45 million private placement offering pursuant to which several institutional investors and members of the Board and management purchased shares of Series A mandatorily convertible preferred stock.
  • The Company will use the proceeds from the private placement to complete strategic classified asset disposition sales during the fourth quarter of 2012 and the first quarter of 2013.
  • In connection with the private placement, following the receipt of shareholder approval, the Company will convert approximately $21 million of its outstanding Series T and Series T-ACB preferred shares to common shares (voting and non-voting).

Third Quarter Highlights:

  • Income before taxes and preferred dividends was $811,000 for the third quarter of 2012. Net loss available to common shareholders for the third quarter of 2012 was $81,000, or $0.00 per diluted share, essentially breakeven for the quarter.
  • Management made the decision to sell two large problem assets totaling $15.1 million during the quarter, resulting in higher than normal charge-offs, but leading to a significant decrease in the amount of risk on the balance sheet.
  • Adversely classified loans decreased $4.8 million, or 4.6%, compared to the second quarter of 2012.
  • Nonperforming loans decreased $6.3 million to $57.1 million, or 4.12% of total loans, down from 4.53% at June 30, 2012.
  • Nonperforming assets decreased $9.5 million to $79.3 million, or 4.13% of total assets, down from 4.57% at June 30, 2012.
  • Non-interest income increased by $258,000, or 5.9%, to $4.7 million, largely due to increases in securities gains for the quarter.

Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced today a $45 million capital raise and plans to dispose of approximately $67 million in classified assets, as well as financial results for the third quarter ended September 30, 2012. Net loss available to common shareholders for the quarter was $81,000, or $0.00 per diluted share, compared to net income of $10.2 million, or $0.52 per diluted share, in the second quarter of 2012, and net income of $2.9 million, or $0.15 per diluted share, in the third quarter of 2011.

Joe Towell, President and CEO of Yadkin Valley Financial, commented, "This was an exciting quarter at Yadkin Valley, as we made significant progress on several of our strategic goals. First, we have successfully completed a $45 million private placement offering. This capital raise is the result of many months of internal work to determine the best strategy for the Company to improve its capital ratios and risk profile. In connection with this capital raise, following shareholder approval, we will be converting a portion of our outstanding Series T and Series T-ACB preferred stock to voting and non-voting common stock. We believe the events of the quarter put us in a strong position as we finish out 2012 and look ahead to 2013. With a bolstered capital position and an improving credit profile, we are looking toward the opportunities available to us as we serve our customers throughout the Carolinas.

"Turning to our third quarter results, management made the prudent decision to exit two of our large problem assets during the quarter. These were assets on which we had worked internally for more than three years and, once we had the opportunity to sell them, albeit at a loss, we did so in order to reduce the amount of risk on our balance sheet, thus improving the overall risk profile of the Bank.

"In addition to this asset disposition in the third quarter, we had improvements in our credit metrics: nonperforming assets decreased $9.5 million, our adversely classified ratio decreased to 60%, and nonperforming assets to total assets decreased to 4.13%, all compared to the prior quarter.

"Like many banks, we continue to see pressure on our net interest margin. While we did decrease our cost of deposits again this quarter, down to 0.91%, we continue to experience margin pressures due to this low rate environment."

Capital Raise and Classified Asset Disposition Plan

The Company entered into definitive agreements and sold $45 million in Series A mandatorily convertible preferred stock to certain institutional investors and members of the Board of Directors and executive management at a price of $1,000 per share. The mandatorily convertible stock will convert to common shares at a price of $2.80 per share following the receipt of required shareholder approvals. In connection with the sale of the convertible preferred stock, upon the receipt of shareholder approval, the Company has agreed to convert approximately $21 million in outstanding Series T and Series T-ACB preferred shares, which have recently been purchased by unaffiliated third parties from the U.S. Treasury, to common shares (voting and non-voting), at 95% of par and a price of $2.80 per share.

The Company will use the proceeds from the capital raise to further remove risk from its balance sheet and accelerate the disposition of approximately $67 million in classified assets composed of $16.5 million in other real estate owned (OREO) and $50 million in classified loans. The Company anticipates the after-tax charges associated with this asset disposition to be in the range of $26 million to $30 million in the aggregate. The assets will be marked in the fourth quarter of 2012, and the disposition process is anticipated to be substantially complete by the end of the first quarter of 2013.

Following the private placement, the conversion of the Series T and Series T-ACB preferred shares, and the successful completion of the asset disposition plan, the Company's credit and capital profiles will show significant improvement. Using the Company's September 30, 2012 financials as a comparison, and assuming a $26 million after-tax loss on the asset disposition plan, our key credit metrics and capital ratios would be as follows:

         
    9/30/12 Actual   9/30/12 Pro Forma
Nonperforming Assets/Loans + OREO (1)   6.63%   2.57%
Allowance for Loan Losses/Total Loans   1.97%   2.04%
Allowance for Loan Losses/Nonperforming Loans (2)   38.36%   94.94%
Classified Assets/Tier 1 Capital + Allowance for Loan Losses   60.07%   26.38%
         
Tangible Common Equity/Total Assets   5.42%   7.23%
Tier 1 Leverage (3)   8.84%   8.87%
Tier 1 Risk Based Capital (3)   11.41%   11.78%
Total Risk Based Capital (3)   12.59%   12.97%
         
(1) Nonperforming Assets includes nonperforming loans, accruing troubled debt restructures, and OREO
(2) Nonperforming Loans includes nonaccrual loans and accruing troubled debt restructures
(3) Assumes entire deferred tax asset created in conjunction with classified asset disposition is disallowed for regulatory capital purposes
 

Keefe, Bruyette, & Woods, Inc. (KBW) acted as financial advisor and placement agent for the private placement offering. In addition, KBW is acting as exclusive financial advisor to Yadkin Valley in connection with the asset disposition plan.

Third Quarter 2012 Financial Highlights

Asset Quality

The third quarter of 2012 shows improvement in nearly all of the Bank's key asset quality metrics. First, nonperforming loans decreased for the third consecutive quarter, down $6.3 million to $57.1 million in the third quarter of 2012 from $63.3 million at June 30, 2012. This decrease indicates continued improvement in our levels of problem assets and significantly slower inflow to our nonperforming categories. In addition, our adversely classified loans, which include substandard, substandard-impaired, and doubtful loans, decreased $4.8 million compared to the second quarter of 2012. This is largely due to the disposition of two of our largest problem loans during the quarter. Management made the decision to remove these loans from the portfolio and take a higher than normal charge-off, as the risk associated with the loans was too great to sustain on our balance sheet.

       
    Nonperforming Loan Analysis  
    (Dollars in thousands)  
                     
    September 30, 2012     June 30, 2012  
        % of         % of  
    Outstanding   Total     Outstanding   Total  
Loan Type   Balance   Loans     Balance   Loans  
Construction/land development   $ 12,785   0.92 %   $ 16,935   1.21 %
Residential construction     3,712   0.27 %     3,647   0.26 %
HELOC     3,950   0.29 %     2,856   0.20 %
1-4 Family residential     6,370   0.46 %     6,891   0.49 %
Commercial real estate     21,420   1.54 %     23,682   1.70 %
Commercial & industrial     8,293   0.60 %     8,745   0.63 %
Consumer & other     523   0.04 %     549   0.04 %
Total   $ 57,053   4.12 %   $ 63,305   4.53 %
                         

Other real estate owned (OREO) totaled $22.3 million at September 30, 2012, a decrease of $3.3 million compared to $25.6 million at June 30, 2012. This decrease in OREO was the result of $1.8 million in foreclosures for the quarter, offset by dispositions of $5.1 million. Total nonperforming assets at September 30, 2012 were $79.3 million, or 4.13% of total assets, a decrease of $9.5 million from June 30, 2012, due to the continued decrease in nonperforming loans and OREO balances.

During the third quarter of 2012, the provision for loan losses was $4.3 million, an increase of $2.0 million from the second quarter of 2012. The increase in provision was driven by the increase in charge-offs for the quarter. Net loan charge-offs for the quarter totaled $5.8 million, an increase of $2.3 million from the second quarter of 2012. Our charge-off activity was higher this quarter as we continued to organically remove risk from our loan portfolio.

At September 30, 2012, the allowance for loan losses was $27.2 million, compared to $28.8 million at June 30, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 2.00% in the third quarter of 2012, down from 2.10% in the second quarter of 2012. Our reserve continues to decrease modestly due to the continued decrease in total loans and improving trends in adversely classified loans and nonperforming loans. Out of the $27.2 million in total allowance for loan losses at September 30, 2012, the specific allowance for impaired loans accounted for $3.8 million, up from $3.7 million in the second quarter. The specific allowance for impaired loans increased slightly as part of the Company's ongoing assessment of the values on impaired loans. The remaining general allowance of $23.4 million attributed to unimpaired loans was down from $25.1 million at the end of the second quarter as nonperforming and adversely classified loans continue to decline.

Net Interest Income and Net Interest Margin

Net interest income was essentially flat quarter over quarter, totaling $15.2 million for the third quarter of 2012. The net interest margin decreased 2 basis points to 3.37% as compared to 3.39% in the prior quarter.

However, we continue to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 52.2% of total deposits, our highest percentage in the last eight quarters, as we focus on core deposit growth. As a result of this strategy, our cost of deposits decreased to 0.91% for the quarter as compared to 0.98% in the second quarter of 2012.

Non-Interest Income

Non-interest income increased $258,000, or 5.9%, to $4.7 million compared to $4.4 million in the second quarter of 2012. This increase is primarily due to $1.3 million in securities gains offset by a $900,000 loss on a loan held-for-sale. The strategic decision to take the loss on this loan was due to management's focus on problem asset disposition in the third quarter.

Non-Interest Expense

Non-interest expense decreased $941,000, or 6.0%, to $14.8 million, down from $15.7 million in the second quarter of 2012. The majority of this decrease is due to decreased cost of OREO.

Balance Sheet and Capital

Total assets decreased $25.0 million during the third quarter of 2012 as part of our continued balance sheet management strategy. Gross loans held-for-investment decreased $13.5 million compared to the second quarter of 2012, due to our disposition of several large problem credits during the quarter. Total deposits decreased $21.9 million, which primarily consists of higher-cost time deposits, as our non-interest bearing demand deposits increased $12.2 million compared to the prior quarter.

The Company's capital ratios continue to exceed all regulatory requirements. As of September 30, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.7%, 11.2%, and 12.4%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.8%, 11.4%, and 12.6%, respectively, for the holding company as of September 30, 2012. For capital adequacy purposes, leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio must be in excess of 5.00%, 6.00%, and 10.00%, respectively, to be considered well-capitalized. Regulatory capital ratios for the Company continue to improve due to positive operating results.

Conference Call

Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EDT on Thursday, October 25, 2012 to discuss financial results, business highlights, and outlook. The call may be accessed by dialing 877-359-3650 at least 10 minutes prior to the call. A webcast of the call audio may be accessed at http://investor.shareholder.com/media/eventdetail.cfm?eventid=120339&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until November 2, 2012 by dialing 855-859-2056 or 404-537-3406 and entering conference ID 50176883.

About Yadkin Valley Financial Corporation

Yadkin Valley Financial Corporation is the holding company for Yadkin Valley Bank and Trust Company, a full-service community bank providing services in 34 branches throughout its two regions in North Carolina and South Carolina. The Western Region serves Avery, Watauga, Ashe, Surry, Wilkes, Yadkin, and Iredell Counties. The Southern Region serves Durham, Orange, Granville, Mecklenburg, and Union Counties in North Carolina, and Cherokee and York Counties in South Carolina. The Bank provides mortgage lending services through its subsidiary, Sidus Financial, LLC, headquartered in Greensboro, NC. Securities brokerage services are provided by Main Street Investment Services, Inc., a Bank subsidiary with four offices located in the branch network. Yadkin Valley Financial Corporation's website is www.yadkinvalleybank.com. Yadkin Valley shares are traded on NASDAQ under the symbol YAVY.

SAFE HARBOR

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. Forward looking statements generally include words such as "expects," "projects," "anticipates," "believes," "intends," "estimates," "strategy," "plan," "potential," "possible" and other similar expressions. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward-Looking Statements" on pages 42-43 of Yadkin Valley Financial Corporation's quarterly report filed on Form 10-Q with the SEC the quarter ended June 30, 2012 and in the sections entitled "Risk Factors" in quarterly reports filed on Form 10-Q for the quarters ended June 30, 2012 and March 30, 2012, annual report filed on Form 10-K for the year ended December 31, 2011, and, once available, the quarterly report filed on Form 10-Q for the period ended September 30, 2012. Additional factors that may cause our forward-looking statements to differ materially from actual results include, without limitation: (1) the shareholder approvals required for the Private Placement may not be obtained or may not be obtained on the schedule that we anticipate; (2) other closing conditions for the Private Placement may not be satisfied; (3) we may not successfully negotiate and enter into definitive agreements with respect to, and close the, asset sales or accelerated foreclosed properties dispositions under the Asset Disposition Plan; and (4) the asset sales or accelerated foreclosed properties dispositions may not occur within our currently expected ranges for price and other terms, and the pre-tax charges associated with such sales may exceed the pre-tax charges that we currently anticipate. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

ADDITIONAL INFORMATION

The private placement involves the sale of securities in private transactions that will not be registered under the Securities Act of 1933, as amended, and will be subject to the resale restrictions under that Act. Such securities being sold in the Private Placement may not be offered or sold absent registration or an applicable exemption from registration. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

In connection with the private placement, the Company plans to file with the Securities and Exchange Commission (the "SEC") and mail to its shareholders a proxy statement (the "Proxy Statement"). This news release is not a solicitation of a proxy and is not a substitute for the Proxy Statement or other filings that will be made with the SEC in connection with the potential transactions described in this new release. Security holders are urged to read the Proxy Statement carefully when it becomes available.

The written materials described above and other documents filed by the Company with the SEC will be available free of charge from the SEC's web site at www.sec.gov. In addition, free copies of these documents may also be obtained by directing a written request to the attention of Corporate Secretary, Yadkin Valley Financial Corporation, P.O. Drawer 888, Elkin, North Carolina 28621.

   
Yadkin Valley Financial Corporation  
Consolidated Balance Sheets (Unaudited)  
   
  (Amounts in thousands except share and per share data)  
     
  September 30,   June 30   March 31,   December 31,   September 30,  
  2012   2012   2012   2011 (a)   2011  
Assets:                              
Cash and due from banks $ 26,048   $ 25,642   $ 36,478   $ 40,790   $ 32,315  
Federal funds sold   50     50     50     50     50  
Interest-earning deposits with banks   97,124     75,895     67,443     52,078     136,552  
                               
U.S. government agencies   32,869     23,058     23,433     23,726     24,013  
Mortgage-backed securities   221,806     248,674     263,230     232,494     201,586  
State and municipal securities   54,769     66,607     72,751     73,118     66,369  
Common and preferred stocks   1,112     1,133     1,111     1,084     1,110  
    Total investment securities   310,556     339,472     360,525     330,422     293,078  
                               
Construction loans   147,408     189,840     196,991     202,803     229,789  
Commercial, financial and other loans   190,294     189,245     187,037     200,750     197,672  
Residential mortgages   174,728     167,774     166,563     179,047     179,457  
Commercial real estate loans   615,733     594,798     605,539     631,639     625,193  
Installment loans   34,216     34,177     34,926     35,465     37,125  
Revolving 1-4 family loans   196,489     196,547     196,818     201,220     204,364  
    Total Loans   1,358,868     1,372,381     1,387,874     1,450,924     1,473,600  
Allowance for loan losses   (27,231 )   (28,797 )   (30,062 )   (32,848 )   (33,673 )
    Net loans   1,331,637     1,343,584     1,357,812     1,418,076     1,439,927  
Loans held for sale   24,766     24,867     20,548     19,534     13,801  
Accrued interest receivable   6,229     6,512     6,932     6,745     6,447  
Bank premises and equipment   41,460     41,547     41,861     42,120     44,074  
Foreclosed real estate   22,294     25,573     28,751     24,966     21,307  
Non-marketable equity securities at cost   4,155     4,630     6,130     6,130     7,005  
Investment in bank-owned life insurance   26,274     26,114     26,091     25,934     25,769  
Core deposit intangible   2,914     3,180     3,455     3,733     4,015  
Other assets   26,871     28,273     20,530     22,610     22,791  
                               
    Total assets $ 1,920,378   $ 1,945,339   $ 1,976,606   $ 1,993,188   $ 2,047,131  
                               
Liabilities and shareholders' equity:                              
Deposits:                              
Non-interest bearing $ 256,402   $ 244,191   $ 235,417   $ 229,895   $ 228,448  
NOW, savings and money market accounts   606,220     613,051     626,538     625,560     615,303  
Time certificates:                              
  $100 or more   342,356     348,072     356,793     360,388     383,877  
  Other   446,482     468,049     492,072     515,498     556,484  
    Total deposits   1,651,460     1,673,363     1,710,820     1,731,341     1,784,112  
                               
Borrowings   102,299     99,310     105,723     105,539     108,309  
Accrued expenses and other liabilities   11,383     18,087     16,571     15,722     16,494  
    Total liabilities   1,765,142     1,790,760     1,833,114     1,852,602     1,908,915  
                               
Total shareholders' equity   155,236     154,579     143,492     140,586     138,216  
                               
Total liabilities and shareholders' equity $ 1,920,378   $ 1,945,339   $ 1,976,606   $ 1,993,188   $ 2,047,131  
                               
Period End Shares Outstanding   20,003,688     20,003,688     19,506,188     19,526,188     19,526,188  
                               
(a) Derived from audited consolidated financial statements  
   
   
Yadkin Valley Financial Corporation  
Consolidated Income Statements (Unaudited)  
     
  Three Months Ended  
  (Amounts in thousands except share and per share data)  
     
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2012   2012   2012   2011 (a)   2011  
                               
Interest and fees on loans (b) $ 17,735   $ 17,944   $ 18,939   $ 19,173   $ 19,341  
Interest on securities   1,674     1,754     2,006     1,709     2,146  
Interest on federal funds sold   9     8     7     6     7  
Interest-bearing deposits   28     38     37     71     71  
  Total interest income   19,446     19,744     20,989     20,959     21,565  
                               
Time deposits of $100 or more   1,762     1,913     1,993     2,271     2,326  
Other deposits   2,018     2,193     2,371     2,569     3,120  
Borrowed funds (b)   477     479     735     516     494  
  Total interest expense   4,257     4,585     5,099     5,356     5,940  
                               
    Net interest income   15,189     15,159     15,890     15,603     15,625  
Provision for loan losses   4,251     2,218     2,350     3,627     1,956  
Net interest income after provision for loan losses   10,938     12,941     13,540     11,976     13,669  
                               
Non-interest income                              
  Service charges on deposit accounts (b)   1,319     1,325     1,243     1,381     1,464  
  Other service fees (b)   857     893     895     782     837  
  Income on investment in bank owned life insurance   159     157     157     166     167  
  Mortgage banking activities (b)   1,599     1,674     1,139     1,267     1,023  
  Gains on sale of securities   1,348     300     -     678     1,556  
  Other than temporary impairment of investments   -     -     -     -     (74 )
  Loss on sale of loans   (900 )   -     -     -     -  
  Other   283     57     75     140     90  
    Total non-interest income   4,665     4,406     3,509     4,414     5,063  
                               
Non-interest expense                              
  Salaries and employee benefits (b)   6,914     6,354     6,110     6,135     6,073  
  Occupancy and equipment   1,794     1,790     1,851     1,781     1,961  
  Printing and supplies   168     151     145     154     141  
  Data processing   456     453     387     377     404  
  Communication expense   314     354     351     367     372  
  Advertising and marketing   103     100     76     101     127  
  Amortization of core deposit intangible   266     275     278     282     289  
  FDIC assessment expense   650     659     694     718     79  
  Attorney fees   311     150     216     108     95  
  Loan collection expense (b)   69     204     236     287     378  
  (Gain) loss on fixed assets   -     (1 )   (21 )   13     286  
  Net cost of operation of other real estate owned   1,322     2,745     1,229     1,086     759  
  Other (b)   2,425     2,499     2,026     2,267     1,705  
    Total non-interest expense   14,792     15,733     13,578     13,676     12,669  
                               
Income before income taxes   811     1,614     3,471     2,714     6,063  
Provision for income taxes (benefit)   54     (9,383 )   -     (211 )   2,384  
                               
Net income   757     10,997     3,471     2,925     3,679  
    Preferred stock dividend and amortization of preferred stock discount   838     833     821     771     771  
Net income (loss) available to common shareholders $ (81)   $ 10,164   $ 2,650   $ 2,154   $ 2,908  
                               
    Basic $ (0.00)   $ 0.52   $ 0.14   $ 0.11   $ 0.15  
    Diluted $ (0.00)   $ 0.52   $ 0.14   $ 0.11   $ 0.15  
                               
Weighted average number of shares outstanding                              
    Basic   19,389,251     19,386,519     19,378,198     19,371,469     19,364,855  
    Diluted   19,390,253     19,386,519     19,378,198     19,371,469     19,364,855  
                               
(a) Derived from audited consolidated financial statements  
(b) Certain income and expense amounts have been reclassified based on a change in our mortgage reporting segment.  
   
   
Yadkin Valley Financial Corporation  
(unaudited)  
   
    At or For the Three Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,  
    2012     2012     2012     2011     2011  
                                         
Per Share Data:                                        
Basic Earnings per Share   $ 0.00     $ 0.52     $ 0.14     $ 0.11     $ 0.15  
Diluted Earnings per Share     0.00       0.52       0.14       0.11       0.15  
Book Value per Share     5.36       5.34       4.92       4.77       4.66  
                                         
Selected Performance Ratios:                                        
Return on Average Assets (annualized)     -0.02 %     2.08 %     0.54 %     0.42 %     0.56 %
Return on Average Equity (annualized)     -0.21 %     26.93 %     6.48 %     6.17 %     8.49 %
Net Interest Margin (annualized)(7)     3.37 %     3.39 %     3.54 %     3.16 %     3.28 %
Net Interest Spread (annualized)(7)     3.19 %     3.21 %     3.35 %     2.98 %     3.09 %
Non-interest Income as a % of Revenue(6)(7)     29.90 %     25.55 %     20.73 %     32.14 %     32.60 %
Non-interest Income as a % of Average Assets (7)     0.24 %     0.23 %     0.18 %     0.26 %     0.30 %
Non-interest Expense as a % of Average Assets (7)     0.76 %     0.81 %     0.69 %     0.68 %     0.64 %
                                         
Asset Quality:                                        
Loans 30-89 days past due (000's) (4)   $ 13,354     $ 10,321     $ 10,245     $ 25,888     $ 23,739  
Loans over 90 days past due still accruing (000's)     -       -       -       -       -  
Nonperforming Loans (000's)     57,053       63,305       66,088       70,355       70,775  
Other Real Estate Owned (000's)     22,294       25,573       28,751       24,966       21,307  
Nonperforming Assets (000's)(5)     79,347       88,878       94,839       95,321       92,082  
Accruing/Performing troubled debt restructurings (000's)     13,929       12,596       15,259       17,173       21,809  
Nonperforming Loans to Total Loans     4.12 %     4.53 %     4.69 %     4.78 %     4.76 %
Nonperforming Assets to Total Assets     4.13 %     4.57 %     4.80 %     4.78 %     4.50 %
Allowance for Loan Losses to Total Loans     1.97 %     2.06 %     2.13 %     2.23 %     2.26 %
Allowance for Loan Losses to Total Loans Held for Investment     2.00 %     2.10 %     2.17 %     2.26 %     2.29 %
Allowance for Loan Losses to Nonperforming Loans     47.73 %     45.49 %     45.49 %     47.31 %     47.58 %
Net Charge-offs/Recoveries to Average Loans (annualized)     1.66 %     0.99 %     1.44 %     1.20 %     1.04 %
                                         
Capital Ratios:                                        
Equity to Total Assets     8.08 %     7.95 %     7.26 %     7.05 %     6.75 %
Tier 1 leverage ratio(1)     8.73 %     8.55 %     8.30 %     7.99 %     7.58 %
Tier 1 risk-based ratio(1)     11.18 %     10.89 %     10.61 %     10.23 %     9.72 %
Total risk-based capital ratio(1)     12.44 %     12.15 %     11.87 %     11.49 %     10.98 %
                                         
Non-GAAP disclosures(2):                                        
Tangible Book Value per Share   $ 5.21     $ 5.18     $ 4.74     $ 4.58     $ 4.45  
Return on Tangible Equity (annualized) (3)     -0.21 %     27.54 %     6.63 %     6.34 %     8.49 %
Tangible Equity to Tangible Assets (3)     7.94 %     7.80 %     7.10 %     6.88 %     6.57 %
Efficiency Ratio (7)     72.21 %     77.92 %     67.59 %     66.26 %     59.94 %
                                         
Notes:                                        
(1) Tier 1 leverage, Tier 1 risk-based, and Total risk-based ratios are ratios for the bank, Yadkin Valley Bank and Trust Company as reported on Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only - FFIEC 041.  
(2) Management uses these non-GAAP financial measures because it believes it is useful for evaluating our operations and performance over periods oftime, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes thesenon-GAAP financial measures provides users of our financial information with a meaningful measure for assessing our financial results and credittrends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute foroperating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies.  
(3) Tangible Equity is the difference of shareholders' equity less core deposit intangibles. Tangible Assets are the difference of total assets less core deposit intangibles.  
(4) Past due numbers exclude loans classified as nonperforming.  
(5) Nonperforming assets exclude accruing troubled debt restructured loans.  
(6) Ratio is calculated by taking non-interest income as a percentage of net interest income after provision for loan losses plus total non-interest income.  
(7) Certain income and expense amounts in the current and prior periods have been reclassified based on a change in our mortgage reporting segment.  
     
     
Yadkin Valley Financial Corporation    
Average Balance Sheets and Net Interest Income Analysis (Unaudited)    
                                 
    Three Months Ended September 30,    
    2012       2011    
    (Dollars in Thousands)    
                                 
    Average       Yield/       Average       Yield/    
    Balance   Interest   Rate       Balance   Interest   Rate    
INTEREST EARNING ASSETS                                        
Total loans (1,2)   $ 1,393,717   $ 17,770   5.07 % (8)   $ 1,560,011   $ 20,414   5.25 % (8)
Investment securities     355,133     1,901   2.13 %       311,000     2,502   3.23 %  
Interest-bearing deposits & federal funds sold     74,243     37   0.20 %       148,778     99   0.27 %  
Total average earning assets (1)   $ 1,823,093     19,708   4.30 % (6)   $ 2,019,789     23,015   4.57 % (6)
Noninterest earning assets     129,713                   143,915              
Total average assets   $ 1,952,806                 $ 2,163,704              
                                         
INTEREST BEARING LIABILITIES                                        
Time deposits   $ 796,695     3,449   1.72 %     $ 1,057,510     5,349   2.03 %  
Other deposits     610,286     331   0.22 %       612,221     923   0.60 %  
Borrowed funds     113,048     477   1.68 %       103,991     540   2.08 %  
Total interest bearing liabilities     1,520,029     4,257   1.11 % (7)     1,773,722     6,812   1.54 % (7)
                                         
Noninterest bearing deposits     249,054                   223,318              
Other liabilities     28,542                   15,036              
Total average liabilities     1,797,625                   2,012,076              
                                         
Shareholders' equity     155,181                   151,628              
                                         
                                         
Total average liabilities and shareholders' equity   $ 1,952,806                 $ 2,163,704              
                                         
                                         
NET INTEREST INCOME/ YIELD (3,4)         $ 15,451   3.37 % (8)         $ 16,203   3.22 % (8)
                                         
INTEREST SPREAD (5)               3.19 % (8)               3.03 % (8)
                                         
(1) Yields related to securities and loans exempt from Federal income taxes are stated on a fully tax-equivalent basis, assuming a Federal income tax rate of 35%, reduced by the nondeductible portion of interest expense.
(2) The loan average includes loans on which accrual of interest has been discontinued.
(3) Net interest income is the difference between income from earning assets and interest expense.
(4) Net interest yield is net interest income divided by total average earning assets.
(5) Interest spread is the difference between the average interest rate received on earning assets and the average rate paid on interest bearing liabilities.
(6) Interest income for 2012 and 2011 includes $41,000 and $176,000, respectively, of accretion for purchase accounting adjustments relatedto loans acquired in the merger with American Community.
(7) Interest expense for 2012 and 2011 includes $135,000 and $116,000, respectively, of accretion for purchase accounting adjustments relatedto deposits and borrowings acquired in the merger with American Community.
(8) Certain income and expense amounts have been reclassified based on a change in our mortgage reporting segment.

Contact Information

  • For additional information contact:

    Joseph H. Towell
    President and Chief Executive Officer
    (704) 768-1133
    Email Contact

    Jan H. Hollar
    Executive Vice President and Chief Financial Officer
    (704) 768-1161
    Email Contact