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| 8-K - FORM 8-K - YADKIN FINANCIAL Corp | form8-k2q2012.htm |
Yadkin Valley Financial Corporation Continues Trend of Profitability and Strength in the Second Quarter; Problem Asset Levels Drop
Second Quarter Highlights:
• | Net income available to common shareholders for the second quarter of 2012 was $10.2 million, or $0.52 per diluted share. |
• | The Company reversed the remaining deferred tax asset valuation allowance, resulting in $9.8 million in recovery to tax expense and a sign of strength for the Company. |
• | Adversely classified loans decreased $11.5 million, or 10.1%, compared to the first quarter, which contributed to lower provision for loan losses of $2.2 million, down from $2.4 million in the first quarter of 2012. |
• | Nonperforming assets decreased $5.9 million to $88.9 million, or 4.57% of total assets, down from $94.8 million, or 4.80% of total assets at March 31, 2012. |
• | Nonperforming loans decreased $2.8 million, down to $63.3 million for the second quarter of 2012. |
• | Non-interest income increased by $899,000, or 25.4%, to $4.4 million, largely due to increases in mortgage banking activity income. |
• | Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.8%, 11.2%, and 12.4%, respectively, for the holding company as of June 30, 2012, exceeding all regulatory requirements. |
Elkin, NC - July 26, 2012 - Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced financial results for the second quarter ended June 30, 2012. Net income available to common shareholders for the quarter was $10.2 million, or $0.52 per diluted share, compared to net income of $2.7 million, or $0.14 per diluted share, in the first quarter of 2012, and a net loss of $20.9 million, or $1.16 per diluted share, in the second quarter of 2011.
Joe Towell, President and CEO of Yadkin Valley Financial, commented, “Continuing to execute our game plan is proving to be the right strategy for our Company. We are glad to see our fourth consecutive quarter of profitability, and a nice boost to net income and capital with the reversal of our deferred tax asset (DTA) valuation allowance. Excluding the reversal of the valuation allowance of $9.8 million, we posted after-tax net income of $1.2 million before preferred dividends.
As we have said for the past several quarters, asset quality is our primary focus. We have put forth a tremendous amount of time and effort on disposition of our nonperforming assets, and we're glad to see tangible results from that effort in the decrease of adversely classified loans, nonperforming loans, nonperforming assets, and other real estate owned (OREO). Further, our loans 30-89 days past due continue to be at a lower level for the second consecutive quarter, a sign that we are not experiencing inflows to our problem loan categories.
We continued to improve our deposit mix in the second quarter which is in line with our strategic goal of increasing core deposits. However, we experienced high prepayments in our securities portfolio this quarter causing some downward pressure on our net interest margin in this low-rate environment. At the same time, we are seeing pockets of loan demand increase, particularly in the commercial and industrial and owner occupied real estate segments, but overall demand continues to be soft as economic recovery in the Carolinas remains sluggish.
Last quarter, we announced the filing of an S-1 registration statement for the potential sale of our TARP preferred shares. While we have no new information to report on this particular event at this time, I do want to stress that our Board remains committed to our capital plan which includes resolution of our TARP.
While we are pleased with our results this quarter, we remain intently focused on problem asset resolution, and we recognize that this is not a smooth process due to economic conditions and other factors beyond our control."
Second Quarter 2012 Financial Highlights
Asset Quality
Nonperforming loans decreased for the second consecutive quarter, down $2.8 million to $63.3 million in the second quarter of 2012 from $66.1 million at March 31, 2012. This decrease indicates continued improvement in our levels of problem assets and significantly slower inflow to our nonperforming categories.
Nonperforming Loan Analysis | ||||||||||||
(Dollars in thousands) | ||||||||||||
June 30, 2012 | March 31, 2012 | |||||||||||
Loan Type | Outstanding Balance | % of Total Loans | Outstanding Balance | % of Total Loans | ||||||||
Construction/land development | $ | 16,935 | 1.21 | % | $ | 18,708 | 1.33 | % | ||||
Residential construction | 3,647 | 0.26 | % | 4,612 | 0.33 | % | ||||||
HELOC | 2,856 | 0.2 | % | 2,632 | 0.19 | % | ||||||
1-4 family residential | 6,891 | 0.49 | % | 6,245 | 0.44 | % | ||||||
Commercial real estate | 23,682 | 1.69 | % | 25,664 | 1.82 | % | ||||||
Commercial & industrial | 8,745 | 0.63 | % | 7,782 | 0.55 | % | ||||||
Consumer & other | 549 | 0.04 | % | 445 | 0.03 | % | ||||||
Total | $ | 63,305 | 4.53 | % | $ | 66,088 | 4.69 | % | ||||
OREO totaled $25.6 million at June 30, 2012, a decrease of $3.2 million compared to $28.8 million at March 31, 2012. This decrease in OREO was the result of $4.5 million in foreclosures for the quarter, offset by dispositions of $5.4 million. We also recognized $2.3 million in additional write downs on OREO, as part of our ongoing review of our OREO portfolio. Total nonperforming assets at June 30, 2012 were $88.9 million, or 4.57% of total assets, a decrease of $5.9 million from March 31, 2012, due to the decrease in nonperforming loans and OREO balances.
During the second quarter of 2012, the provision for loan losses was $2.2 million, a decrease of $132,000 from the first quarter of 2012. The decrease in provision was driven by an $11.5 million, or 10.1%, decrease in adversely classified loans and a 1.12% decrease in total loans compared to the previous quarter. Net loan charge-offs for the quarter totaled $3.5 million, a decrease of $1.7 million from the first quarter of 2012. This decrease in charge-offs resulted in net charge-off to average loans on an annualized basis ratio of 0.99%. Our charge-off activity continues to be on track with our internal loss analysis and projections.
At June 30, 2012, the allowance for loan losses was $28.8 million, compared to $30.1 million at March 31, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 2.10% in the second quarter of 2012, down from 2.17% in the first quarter of 2012. Our reserve continues to decrease modestly due to the continued decrease in total loans and continued improving trends in adversely classified loans, nonperforming loans, net loan charge-offs, and loans 30-89 days past due. Out of the $28.8 million in total allowance for loan losses at June 30, 2012, the specific allowance for impaired loans accounted for $3.7 million, up from $3.4 million in the first 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 $25.1 million attributed to unimpaired loans was down from $26.6 million at the end of the first quarter as net charge-offs and adversely classified loans continue to decline.
Net Interest Income and Net Interest Margin
Net interest income decreased $732,000 or 4.6%, quarter over quarter, totaling $15.2 million for the second quarter
of 2012. The net interest margin decreased to 3.39% as compared to 3.54% in the prior quarter due to lower investment income in this low-rate environment.
However, we continue to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 51.2% of total deposits, our highest percentage in the last eight quarters, as we focus on core deposit acquisition. As a result of this strategy, our cost of deposits decreased to 0.98% for the quarter as compared to 1.04% in the first quarter of 2012.
Non-Interest Income
Non-interest income increased $899,000, or 25.4%, to $4.4 million compared to $3.5 million in the first quarter of 2012. This increase is primarily due to an increase in mortgage banking activity income, along with $300,000 in gains on securities.
Non-Interest Expense
Non-interest expense increased $2.2 million, or 15.8%, to $15.8 million, up from $13.6 million in the first quarter of 2012. The majority of this increase was driven by increased write downs of other real estate owned, as we continue to manage our credit costs related to our nonperforming assets.
Tax Expense
In the second quarter of 2012, the Company recorded $9.4 million in income tax benefit after recapturing the remaining deferred tax asset valuation allowance in the amount of $9.8 million. This led to an increase in net income as well as capital for the quarter. Additionally, it is a sign of strength in Company operations and projected earnings potential.
Balance Sheet and Capital
Total assets decreased $31.3 million for the second quarter of 2012 as part of our continued balance sheet management strategy. Gross loans held-for-investment decreased $15.5 million compared to the first quarter of 2012, and total deposits decreased $37.5 million. This deposit decrease continues to be mostly higher-cost time deposits, as our non-interest bearing demand deposits continue to increase in volume.
The Bank capital ratios continue to exceed all regulatory requirements. As of June 30, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.6%, 10.9%, and 12.2%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.8%, 11.2%, and 12.4% respectively, for the holding company as of June 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, July 26, 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 and accompanying visual aids may be accessed at http://investor.shareholder.com/media/eventdetail.cfm?eventid=116700&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until August 2, 2012 by dialing 855-859-2056 or 404-537-3406 and entering conference ID 12780407.
####
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.
FORWARD LOOKING STATEMENTS
Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements include but are not limited to (1) statements regarding potential future economic recovery, (2) statements with respect to our plans, objectives, expectations and intentions and other statements that are not historical facts, and (3) other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expressions. Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan losses, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (2) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (3) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the company's loan portfolio and allowance for loan losses; (4) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (5) changes in deposit rates, the net interest margin, and funding sources; (6) changes in the U.S. legal and regulatory framework, including the effect of recent financial reform legislation on the banking industry; and (7) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the company. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
For additional information contact:
Joseph H. Towell
President and Chief Executive Officer
(704) 768-1133
joe.towell@yadkinvalleybank.com
Jan H. Hollar
Executive Vice President and Chief Financial Officer
(704) 768-1161
jan.hollar@yadkinvalleybank.com
Yadkin Valley Financial Corporation | |||||||||||||||||||
Consolidated Balance Sheets (Unaudited) | |||||||||||||||||||
(Amounts in thousands except share and per share data) | |||||||||||||||||||
June 30, 2012 | March 31, 2012 | December 31, 2011 (a) | September 30, 2011 | June 30, 2011 | |||||||||||||||
Assets: | |||||||||||||||||||
Cash and due from banks | $ | 25,642 | $ | 36,478 | $ | 40,790 | $ | 32,315 | $ | 30,011 | |||||||||
Federal funds sold | 50 | 50 | 50 | 50 | 36 | ||||||||||||||
Interest-earning deposits with banks | 75,895 | 67,443 | 52,078 | 136,552 | 99,122 | ||||||||||||||
U.S. government agencies | 23,058 | 23,433 | 23,726 | 24,013 | 34,485 | ||||||||||||||
Mortgage-backed securities | 248,674 | 263,230 | 232,494 | 201,586 | 214,796 | ||||||||||||||
State and municipal securities | 66,607 | 72,751 | 73,118 | 66,369 | 67,034 | ||||||||||||||
Common and preferred stocks | 1,133 | 1,111 | 1,084 | 1,110 | 1,144 | ||||||||||||||
339,472 | 360,525 | 330,422 | 293,078 | 317,459 | |||||||||||||||
Construction loans | 189,840 | 196,991 | 202,803 | 229,789 | 243,681 | ||||||||||||||
Commercial, financial and other loans | 189,245 | 187,037 | 200,750 | 197,672 | 204,421 | ||||||||||||||
Residential mortgages | 167,774 | 166,563 | 179,047 | 179,457 | 179,372 | ||||||||||||||
Commercial real estate loans | 594,798 | 605,539 | 631,639 | 625,193 | 632,209 | ||||||||||||||
Installment loans | 34,177 | 34,926 | 35,465 | 37,125 | 39,275 | ||||||||||||||
Revolving 1-4 family loans | 196,547 | 196,818 | 201,220 | 204,364 | 205,309 | ||||||||||||||
Total loans | 1,372,381 | 1,387,874 | 1,450,924 | 1,473,600 | 1,504,267 | ||||||||||||||
Allowance for loan losses | (28,797 | ) | (30,062 | ) | (32,848 | ) | (33,673 | ) | (35,652 | ) | |||||||||
Net loans | 1,343,584 | 1,357,812 | 1,418,076 | 1,439,927 | 1,468,615 | ||||||||||||||
Loans held for sale | 24,867 | 20,548 | 19,534 | 13,801 | 27,737 | ||||||||||||||
Accrued interest receivable | 6,512 | 6,932 | 6,745 | 6,447 | 7,066 | ||||||||||||||
Bank premises and equipment | 41,547 | 41,861 | 42,120 | 44,074 | 44,173 | ||||||||||||||
Foreclosed real estate | 25,573 | 28,751 | 24,966 | 21,307 | 22,046 | ||||||||||||||
Non-marketable equity securities at cost | 4,630 | 6,130 | 6,130 | 7,005 | 7,814 | ||||||||||||||
Investment in bank-owned life insurance | 26,114 | 26,091 | 25,934 | 25,769 | 25,602 | ||||||||||||||
Core deposit intangible | 3,180 | 3,455 | 3,733 | 4,015 | 4,304 | ||||||||||||||
Other assets | 28,273 | 20,530 | 22,610 | 22,791 | 27,057 | ||||||||||||||
Total assets | $ | 1,945,339 | $ | 1,976,606 | $ | 1,993,188 | $ | 2,047,131 | $ | 2,081,042 | |||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Non-interest bearing | $ | 244,191 | $ | 235,417 | $ | 229,895 | $ | 228,448 | $ | 222,556 | |||||||||
NOW, savings and money market accounts | 613,051 | 626,538 | 625,560 | 615,303 | 597,611 | ||||||||||||||
Time certificates: | |||||||||||||||||||
$100 or more | 348,072 | 356,793 | 360,388 | 383,877 | 409,410 | ||||||||||||||
Other | 468,049 | 492,072 | 515,498 | 556,484 | 596,218 | ||||||||||||||
Total deposits | 1,673,363 | 1,710,820 | 1,731,341 | 1,784,112 | 1,825,795 | ||||||||||||||
Borrowings | 99,310 | 105,723 | 105,539 | 108,309 | 103,524 | ||||||||||||||
Accrued expenses and other liabilities | 18,087 | 16,571 | 15,722 | 16,494 | 17,656 | ||||||||||||||
Total liabilities | 1,790,760 | 1,833,114 | 1,852,602 | 1,908,915 | 1,946,975 | ||||||||||||||
Total shareholders' equity | 154,579 | 143,492 | 140,586 | 138,216 | 134,067 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 1,945,339 | $ | 1,976,606 | $ | 1,993,188 | $ | 2,047,131 | $ | 2,081,042 | |||||||||
Period End Shares Outstanding | 20,003,688 | 19,506,188 | 19,526,188 | 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) | |||||||||||||||||||
June 30, 2012 | March 31, 2012 | December 31, 2011 (a) | September 30, 2011 | June 30, 2011 | |||||||||||||||
Interest and fees on loans (b) | $ | 17,944 | $ | 18,939 | $ | 19,173 | $ | 19,341 | $ | 20,374 | |||||||||
Interest on securities | 1,754 | 2,006 | 1,709 | 2,146 | 2,255 | ||||||||||||||
Interest on federal funds sold | 8 | 7 | 6 | 7 | 9 | ||||||||||||||
Interest-bearing deposits | 38 | 37 | 71 | 71 | 90 | ||||||||||||||
Total interest income | 19,744 | 20,989 | 20,959 | 21,565 | 22,728 | ||||||||||||||
Time deposits of $100 or more | 1,913 | 1,993 | 2,271 | 2,326 | 2,541 | ||||||||||||||
Other deposits | 2,193 | 2,371 | 2,569 | 3,120 | 3,731 | ||||||||||||||
Borrowed funds | 479 | 735 | 516 | 494 | 567 | ||||||||||||||
Total interest expense | 4,585 | 5,099 | 5,356 | 5,940 | 6,839 | ||||||||||||||
Net interest income | 15,159 | 15,890 | 15,603 | 15,625 | 15,889 | ||||||||||||||
Provision for loan losses | 2,218 | 2,350 | 3,627 | 1,956 | 10,393 | ||||||||||||||
Net interest income after provision for loan losses | 12,941 | 13,540 | 11,976 | 13,669 | 5,496 | ||||||||||||||
Non-interest income | |||||||||||||||||||
Service charges on deposit accounts | 1,360 | 1,343 | 1,509 | 1,604 | 1,437 | ||||||||||||||
Other service fees (b) | 858 | 795 | 654 | 697 | 736 | ||||||||||||||
Income on investment in bank owned life insurance | 157 | 157 | 166 | 167 | 161 | ||||||||||||||
Mortgage banking activities (b) | 1,708 | 1,171 | 1,267 | 1,023 | 1,437 | ||||||||||||||
Gains on sale of securities | 300 | — | 678 | 1,556 | 429 | ||||||||||||||
Other than temporary impairment of investments | — | — | — | (74 | ) | (22 | ) | ||||||||||||
Other | 57 | 75 | 140 | 90 | 101 | ||||||||||||||
Total non-interest income | 4,440 | 3,541 | 4,414 | 5,063 | 4,279 | ||||||||||||||
Non-interest expense | |||||||||||||||||||
Salaries and employee benefits (b) | 6,354 | 6,110 | 6,135 | 6,073 | 7,663 | ||||||||||||||
Occupancy and equipment | 1,790 | 1,851 | 1,781 | 1,961 | 2,330 | ||||||||||||||
Printing and supplies | 151 | 145 | 154 | 141 | 156 | ||||||||||||||
Data processing | 453 | 387 | 377 | 404 | 381 | ||||||||||||||
Communication expense | 354 | 351 | 367 | 372 | 473 | ||||||||||||||
Advertising and marketing | 100 | 76 | 101 | 127 | 169 | ||||||||||||||
Amortization of core deposit intangible | 275 | 278 | 282 | 289 | 299 | ||||||||||||||
FDIC assessment expense | 659 | 694 | 718 | 79 | 1,328 | ||||||||||||||
Attorney fees | 150 | 216 | 108 | 95 | 194 | ||||||||||||||
Loan collection expense (b) | 204 | 236 | 287 | 378 | 468 | ||||||||||||||
(Gain) loss on fixed assets | (1 | ) | (21 | ) | 13 | 286 | 1,195 | ||||||||||||
Net cost of operation of other real estate owned | 2,745 | 1,229 | 1,086 | 759 | 2,430 | ||||||||||||||
Goodwill impairment | — | — | — | — | 4,944 | ||||||||||||||
Other (b) | 2,533 | 2,058 | 2,267 | 1,705 | 2,928 | ||||||||||||||
Total non-interest income | 15,767 | 13,610 | 13,676 | 12,669 | 24,958 | ||||||||||||||
Income (loss) before income taxes | 1,614 | 3,471 | 2,714 | 6,063 | (15,183 | ) | |||||||||||||
Provision for income taxes (benefit) | (9,383 | ) | — | (211 | ) | 2,384 | 5,030 | ||||||||||||
Net income (loss) | 10,997 | 3,471 | 2,925 | 3,679 | (20,213 | ) | |||||||||||||
Preferred stock dividend and amortization of preferred stock discount | 833 | 821 | 771 | 771 | 674 | ||||||||||||||
Net income (loss) available to common shareholders | $ | 10,164 | $ | 2,650 | $ | 2,154 | $ | 2,908 | $ | (20,887 | ) | ||||||||
Basic | $ | 0.52 | $ | 0.14 | 0.11 | $ | 0.15 | $ | (1.16 | ) | |||||||||
Diluted | $ | 0.52 | $ | 0.14 | 0.11 | $ | 0.15 | $ | (1.16 | ) | |||||||||
Weighted average number of shares outstanding | |||||||||||||||||||
Basic | 19,386,519 | 19,378,198 | 19,371,469 | 19,364,855 | 18,041,174 | ||||||||||||||
Diluted | 19,386,519 | 19,378,198 | 19,371,469 | 19,364,855 | 18,041,174 | ||||||||||||||
(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 | |||||||||||||||||||
June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | June 30, 2011 | |||||||||||||||
Per Share Data: | |||||||||||||||||||
Basic Earnings (Loss) per Share | $ | 0.52 | $ | 0.14 | $ | 0.11 | $ | 0.15 | $ | (1.16 | ) | ||||||||
Diluted Earnings (Loss) per Share | 0.52 | 0.14 | 0.11 | 0.15 | (1.16 | ) | |||||||||||||
Book Value per Share | 5.34 | 4.92 | 4.77 | 4.66 | 4.45 | ||||||||||||||
Selected Performance Ratios: | |||||||||||||||||||
Return on Average Assets (annualized) | 2.08 | % | 0.54 | % | 0.42 | % | 0.56 | % | (3.87 | )% | |||||||||
Return on Average Equity (annualized) | 26.93 | % | 6.48 | % | 6.17 | % | 8.49 | % | (55.25 | )% | |||||||||
Net Interest Margin (annualized)(7) | 3.39 | % | 3.54 | % | 3.16 | % | 3.28 | % | 3.22 | % | |||||||||
Net Interest Spread (annualized)(7) | 3.21 | % | 3.35 | % | 2.98 | % | 3.09 | % | 3.03 | % | |||||||||
Non-interest Income as a % of Revenue(6)(7) | 25.55 | % | 20.73 | % | 32.14 | % | 32.60 | % | 43.36 | % | |||||||||
Non-interest Income as a % of Average Assets (7) | 0.23 | % | 0.18 | % | 0.26 | % | 0.30 | % | 0.19 | % | |||||||||
Non-interest Expense as a % of Average Assets (7) | 0.81 | % | 0.69 | % | 0.68 | % | 0.64 | % | 1.15 | % | |||||||||
Asset Quality: | |||||||||||||||||||
Loans 30-89 days past due (000's) (4) | $ | 10,321 | $ | 10,245 | $ | 25,888 | $ | 23,739 | $ | 24,368 | |||||||||
Loans over 90 days past due still accruing (000's) | — | — | — | — | — | ||||||||||||||
Nonperforming Loans (000's) | 63,305 | 66,088 | 70,355 | 70,775 | 68,898 | ||||||||||||||
Other Real Estate Owned (000's) | 25,573 | 28,751 | 24,966 | 21,307 | 22,046 | ||||||||||||||
Nonperforming Assets (000's) | 88,878 | 94,839 | 95,321 | 92,082 | 90,944 | ||||||||||||||
Troubled debt restructurings (000's) (5) | 12,596 | 15,259 | 17,173 | 21,809 | 12,932 | ||||||||||||||
Nonperforming Loans to Total Loans | 4.53 | % | 4.69 | % | 4.78 | % | 4.76 | % | 4.50 | % | |||||||||
Nonperforming Assets to Total Assets | 4.57 | % | 4.80 | % | 4.78 | % | 4.50 | % | 4.37 | % | |||||||||
Allowance for Loan Losses to Total Loans | 2.06 | % | 2.13 | % | 2.23 | % | 2.26 | % | 2.33 | % | |||||||||
Allowance for Loan Losses to Total Loans Held for Investment | 2.10 | % | 2.17 | % | 2.26 | % | 2.29 | % | 2.37 | % | |||||||||
Allowance for Loan Losses to Nonperforming Loans | 45.49 | % | 45.49 | % | 47.31 | % | 47.58 | % | 51.75 | % | |||||||||
Net Charge-offs/Recoveries to Average Loans (annualized) | 0.99 | % | 1.44 | % | 1.2 | % | 1.04 | % | 2.73 | % | |||||||||
Capital Ratios: | |||||||||||||||||||
Equity to Total Assets | 7.95 | % | 7.26 | % | 7.05 | % | 6.75 | % | 6.44 | % | |||||||||
Tier 1 leverage ratio(1) | 8.55 | % | 8.30 | % | 7.99 | % | 7.58 | % | 7.14 | % | |||||||||
Tier 1 risk-based ratio(1) | 10.89 | % | 10.61 | % | 10.23 | % | 9.72 | % | 9.42 | % | |||||||||
Total risk-based capital ratio(1) | 12.15 | % | 11.87 | % | 11.49 | % | 10.98 | % | 10.68 | % | |||||||||
Non-GAAP disclosures(2): | |||||||||||||||||||
Tangible Book Value per Share | $ | 5.31 | $ | 4.74 | $ | 4.58 | $ | 4.45 | $ | 4.23 | |||||||||
Return on Tangible Equity (annualized) (3) | 27.54 | % | 6.63 | % | 6.34 | % | 8.49 | % | (58.92 | )% | |||||||||
Tangible Equity to Tangible Assets (3) | 7.80 | % | 7.10 | % | 6.88 | % | 6.57 | % | 6.25 | % | |||||||||
Efficiency Ratio (7) | 77.92 | % | 67.59 | % | 66.26 | % | 59.94 | % | 120.63 | % | |||||||||
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 of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provides users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating 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 the sum of goodwill and core deposit intangible. Tangible Assets are the difference of total assets less the sum of goodwill and core deposit intangible. |
(4)Past due numbers exclude loans classified as nonperforming.
(5)Troubled debt restructured loans exclude loans classified as nonperforming.
(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 June 30, | ||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
INTEREST EARNING ASSETS | ||||||||||||||||||||||
Total loans (1,2) | $ | 1,405,230 | $ | 17,980 | 5.15 | % | (8) | $ | 1,560,011 | $ | 20,414 | 5.25 | % | (8) | ||||||||
Investment securities | 352,876 | 2,000 | 2.28 | % | 311,000 | 2,502 | 3.23 | % | ||||||||||||||
Interest-bearing deposits & federal funds sold | 74,548 | 46 | 0.25 | % | 148,778 | 99 | 0.27 | % | ||||||||||||||
Total average earning assets (1) | $ | 1,832,654 | 20,026 | 4.39 | % | (6) | 2,019,789 | 23,015 | 4.57 | % | (6) | |||||||||||
Non-interest earning assets | 124,973 | 143,915 | ||||||||||||||||||||
Total average assets | $ | 1,957,627 | $ | 2,163,704 | ||||||||||||||||||
INTEREST BEARING LIABILITIES | ||||||||||||||||||||||
Time deposits | $ | 835,120 | 3,665 | 1.77 | % | $ | 1,057,510 | 5,349 | 2.03 | % | ||||||||||||
Other deposits | 616,773 | 440 | 0.29 | % | 612,221 | 923 | 0.60 | % | ||||||||||||||
Borrowed funds | 103,715 | 480 | 1.86 | % | 103,991 | 540 | 2.08 | % | ||||||||||||||
Total interest bearing liabilities | 1,555,608 | 4,585 | 1.19 | % | (7) | 1,773,722 | 6,812 | 1.54 | % | (7) | ||||||||||||
Non-interest bearing deposits | 238,370 | 223,318 | ||||||||||||||||||||
Other liabilities | 12,279 | 15,036 | ||||||||||||||||||||
Total average liabilities | 1,806,257 | 2,012,076 | ||||||||||||||||||||
Shareholders' equity | 151,370 | 151,628 | ||||||||||||||||||||
Total average liabilities and | ||||||||||||||||||||||
shareholders' equity | $ | 1,957,627 | $ | 2,163,704 | ||||||||||||||||||
NET INTEREST INCOME/ | ||||||||||||||||||||||
YIELD (3,4) | $ | 15,441 | 3.39 | % | (8) | $ | 16,203 | 3.22 | % | (8) | ||||||||||||
INTEREST SPREAD (5) | 3.21 | % | (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 $62,000 and $176,000, respectively, of accretion for purchase accounting adjustments related to loans acquired in the merger with American Community. |
(7) | Interest expense for 2012 and 2011 includes $79,000 and $116,000, respectively, of accretion for purchase accounting adjustments relate to 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. |
