Yadkin Valley Financial Corporation Announces Solid Core Profitability and Rebranding Initiative; Back to Basics in Q1 2013

Marketwired

ELKIN, NC--(Marketwired - Apr 25, 2013) -  Yadkin Valley Financial Corporation (NASDAQ: YAVY)

First Quarter Highlights:

  • Net income available to common shareholders for the first quarter of 2013 was $4.2 million, or $0.10 per diluted share.
  • The Company executed the remaining portion of its problem asset disposition plan by substantially completing the auction of Other Real Estate Owned (OREO) during the first quarter, which resulted in a $1.1 million net gain on sale.
  • The Bank's key credit quality metrics continue to improve, with the ratio of adversely classified items to Tier 1 capital and loan loss reserve at 26.85% at the end of the first quarter.
  • Net interest margin for the quarter was 3.57%, an increase of 29 basis points compared to the prior quarter.
  • The Company announced a rebranding initiative to be completed over the next 30 days. We will begin doing business as Yadkin Financial Corporation and Yadkin Bank on May 28, 2013.

Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced today financial results for the first quarter ended March 31, 2013. Net income available to common shareholders for the quarter was $4.2 million, or $0.10 per diluted share, compared to a net loss of $25.3 million, or $1.21 per diluted share, in the fourth quarter of 2012, and net income of $2.7 million, or $0.14 per diluted share, in the first quarter of 2012.

Joe Towell, President and CEO of Yadkin Valley Financial Corporation, commented, "We are very pleased with our results in the first quarter, and we are also excited to be able to announce our rebranding initiative in conjunction with our financial results. With strong core net income, a significant decrease in non-interest expense, increased loan production, and continued strong results from our mortgage division, we believe that we are getting back to the basics of banking and providing superior financial solutions and service to our customers throughout the Carolinas.

Our rebranding initiative is a project we have been developing for some time. While there was benefit to retaining the names of our five community banks, our mortgage division, and our brokerage subsidiary over the years, we believe that now is the time to harness the synergy of our organization by bringing the values of our Company together under one strong brand. We will officially begin doing business as Yadkin Financial Corporation and Yadkin Bank on May 28, 2013. Our mortgage division will operate under the name Yadkin Mortgage, and our brokerage subsidiary will be Yadkin Wealth. At that time, we will also change our trading symbol to YDKN to align with the new brand. We will continue to trade on the NASDAQ exchange.

Additionally, we have announced our intention to effect a reverse stock split, pending shareholder approval at our Annual Meeting of Shareholders to be held on May 23, 2013. As we have evaluated our options, we believe that effecting this reverse stock split will be in the best interest of our shareholders as we continue to build value in our franchise in 2013 and beyond."

First Quarter 2013 Financial Highlights

Asset Quality

The Bank's key asset quality metrics continue to be strong following the completion of the accelerated asset disposition plan. First, our adversely classified items to Tier 1 capital and loan loss reserve ratio has continued to decrease, down to 26.85% at the end of the first quarter. In addition, while our nonperforming loans did increase slightly compared to the prior quarter due to two individual loans, they have decreased $42.4 million compared to the first quarter of 2012. 

                     
    Nonperforming Loan Analysis  
    (Dollars in thousands)  
                     
    March 31, 2013     December 31, 2012  
        % of         % of  
    Outstanding   Total     Outstanding   Total  
Loan Type   Balance   Loans     Balance   Loans  
Construction/land development   $ 5,290   0.40 %   $ 4,636   0.35 %
Residential construction     2,284   0.17 %     2,749   0.21 %
HELOC     2,005   0.15 %     1,041   0.08 %
1-4 Family residential     3,027   0.23 %     3,123   0.23 %
Commercial real estate     8,040   0.61 %     8,023   0.60 %
Commercial & industrial     2,756   0.21 %     2,790   0.21 %
Consumer & other     310   0.02 %     455   0.03 %
Total   $ 23,712   1.79 %   $ 22,817   1.71 %
                         

Other real estate owned (OREO) totaled $5.4 million at March 31, 2013, a decrease of $3.3 million compared to $8.7 million at December 31, 2012. As we announced last quarter, we completed a public auction of approximately 59 OREO properties during the first quarter of 2013. We did not experience further loss on those properties as a result of the auction. Total nonperforming assets at March 31, 2013 were $29.2 million, or 1.58% of total assets, a decrease of $2.4 million from December 31, 2012.

During the first quarter of 2013, the provision for loan losses was $237,000, a decrease of $31.3 million from the fourth quarter of 2012. This significant decrease is due to the significantly improved credit profile of the Company following the completion of the accelerated asset disposition plan. Total net charge-offs for the first quarter of 2013 were $1.0 million, or 0.27% of average loans on an annualized basis.

At March 31, 2013, the allowance for loan losses was $24.5 million, compared to $25.1 million at December 31, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.88% in the first quarter of 2013, down from 1.92% in the fourth quarter of 2012. While credit quality has improved, the reserve remains at a conservative level due to continued economic uncertainty and other external factors in our markets. Out of the $24.5 million in total allowance for loan losses at March 31, 2013, the specific allowance for impaired loans accounted for $2.1 million, up from $1.4 million in the fourth quarter. The remaining general allowance of $22.4 million attributed to unimpaired loans was down slightly from $23.7 million at the end of the fourth quarter given improvement in several credit metrics.

Net Interest Income and Net Interest Margin

Net interest income was up quarter over quarter, totaling $15.1 million for the first quarter of 2013. We also experienced a significant increase in our net interest margin. The quarterly average margin increased 29 basis points to 3.57%, up from 3.28% at December 31, 2012. This increase in margin is due primarily to the continued repricing of our time deposits, the reduction in non-earning assets, the reinvestment of cash from the accelerated asset disposition, and the shift in deposit mix.

In the first quarter of 2013, we continued to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 58.5% of total deposits, our highest percentage over the past five years, as we focus on core deposit growth. As a result of this strategy, our cost of deposits decreased to 0.71% for the first quarter of 2013 as compared to 0.84% in the fourth quarter of 2012.

Non-Interest Income

Non-interest income increased $4.7 million to $5.7 million in the first quarter of 2013 compared to $986,000 in the fourth quarter of 2012. The previous quarter included several losses related to the asset disposition plan and the sale of our reinsurance line of business, which impacted our non-interest income last quarter. Our mortgage division delivered $2.0 million in mortgage banking income during the first quarter of 2013 before recording negative provisions for reserves on mortgage loans sold of $1.3 million. Negative provisions resulted during the quarter due to the previously announced dissolution of our mortgage subsidiary.

Non-Interest Expense

Non-interest expense decreased in the first quarter of 2013 to $13.2 million as compared to $22.7 million in the fourth quarter of 2012. Last quarter, our non-interest expense was impacted by the asset disposition plan. With that plan behind us and continued reduction in OREO, our non-interest expense decreased as a result. The salary and benefits line item increased approximately $400,000 compared to the prior quarter. While our core salary expense remained flat, we began accruing for performance-based incentives in the first quarter. Also, like many other companies, we experienced higher payroll taxes beginning January 1, 2013.

Balance Sheet and Capital

Total assets decreased $76.8 million during the first quarter of 2013, and gross loans held-for-investment decreased only slightly compared to the fourth quarter as we begin to modestly grow our loan portfolio. Total deposits decreased $70.0 million, which primarily consists of higher-cost time deposits, as our core deposits increased $15.6 million compared to the prior quarter.

The Company's capital ratios have strengthened and continue to exceed all regulatory requirements. As of March 31, 2013, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.7%, 12.2%, and 13.5%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 10.0%, 12.6%, and 13.8% respectively, for the holding company as of March 31, 2013. In addition, the Company's tangible common equity to total tangible assets ratio was 7.83% at the end of the first quarter, compared to 7.30% at December 31, 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.

Conference Call

Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EST on Thursday, April 25, 2013 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=128673&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until May 1, 2013 by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 46253205.

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 mortgage division, Yadkin Valley Mortgage, 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, business environment, and potential implementation of the reverse stock split. 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 1-2 of Yadkin Valley Financial Corporation's annual report filed on Form 10-K with the SEC for the year ended December 31, 2012 and in the section entitled "Risk Factors" in the annual report filed on Form 10-K for the year ended December 31, 2012. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

   
   
Yadkin Valley Financial Corporation  
Consolidated Balance Sheets (Unaudited)  
   
    (Amounts in thousands except share and per share data)  
    March 31,   December   September   June 30,   March 31,  
    2013   31, 2012 (a)   30, 2012   2012   2012  
Assets:                                
Cash and due from banks   $ 22,210   $ 36,125   $ 26,048   $ 25,642   $ 36,478  
Federal funds sold     50     50     50     50     50  
Interest-earning deposits with banks     20,447     102,221     97,124     75,895     67,443  
                                 
U.S. government agencies     17,232     27,527     32,869     23,058     23,433  
Mortgage-backed securities     248,030     230,894     221,806     248,674     263,230  
State and municipal securities     115,435     84,567     54,769     66,607     72,751  
Common and preferred stocks     149     132     1,112     1,133     1,111  
    Total investment securities     380,846     343,120     310,556     339,472     360,525  
                                 
Construction loans     133,200     131,981     147,408     189,840     196,991  
Commercial, financial and other loans     182,268     193,810     190,294     189,245     187,037  
Residential mortgages     166,565     140,931     174,728     167,774     166,563  
Commercial real estate loans     596,790     617,468     615,733     594,798     605,539  
Installment loans     32,037     33,426     34,216     34,177     34,926  
Revolving 1-4 family loans     193,404     191,888     196,489     196,547     196,818  
    Total loans     1,304,264     1,309,504     1,358,868     1,372,381     1,387,874  
Allowance for loan losses     (24,492 )   (25,149 )   (27,231 )   (28,797 )   (30,062 )
    Net loans     1,279,772     1,284,355     1,331,637     1,343,584     1,357,812  
Loans held for sale     18,461     27,679     24,766     24,867     20,548  
Accrued interest receivable     6,502     6,376     6,229     6,512     6,932  
Bank premises and equipment     42,454     41,849     41,460     41,547     41,861  
Foreclosed real estate     5,449     8,738     22,294     25,573     28,751  
Non-marketable equity securities at cost     3,474     4,154     4,155     4,630     6,130  
Investment in bank-owned life insurance     26,587     26,433     26,274     26,114     26,091  
Core deposit intangible     2,475     2,653     2,914     3,180     3,455  
Other assets     37,865     39,685     26,871     28,273     20,530  
                                 
    Total assets   $ 1,846,592   $ 1,923,438   $ 1,920,378   $ 1,945,339   $ 1,976,606  
                                 
Liabilities and shareholders' equity:                                
Deposits:                                
Non-interest bearing   $ 257,388   $ 273,896   $ 256,402   $ 244,191   $ 235,417  
NOW, savings and money market accounts     656,524     624,460     606,220     613,051     626,538  
Time certificates:                                
  $100 or more     281,652     316,146     342,356     348,072     356,793  
  Other     366,095     417,160     446,482     468,049     492,072  
    Total deposits     1,561,659     1,631,662     1,651,460     1,673,363     1,710,820  
                                 
Borrowings     99,160     105,136     102,299     99,310     105,723  
Accrued expenses and other liabilities     10,922     15,846     11,383     18,087     16,571  
    Total liabilities     1,671,741     1,752,644     1,765,142     1,790,760     1,833,114  
                                 
Total shareholders' equity     174,851     170,794     155,236     154,579     143,492  
                                 
Total liabilities and shareholders' equity   $ 1,846,592   $ 1,923,438   $ 1,920,378   $ 1,945,339   $ 1,976,606  
                                 
Period end shares outstanding     43,151,652     43,151,646     20,003,688     20,003,688     19,506,188  
                                 
                                 
(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)  
    March 31,   December   September   June 30,   March 31,  
    2013   31 2012 (a)   30, 2012   2012   2012  
                                 
Interest and fees on loans (b)   $ 16,679   $ 17,338   $ 17,735   $ 17,944   $ 18,939  
Interest on securities     1,548     1,381     1,674     1,754     2,006  
Interest on federal funds sold     6     8     9     8     7  
Interest-bearing deposits     42     66     28     38     37  
  Total interest income     18,275     18,793     19,446     19,744     20,989  
                                 
Time deposits of $100 or more     1,352     1,346     1,762     1,913     1,992  
Other deposits     1,432     2,132     2,018     2,193     2,370  
Borrowed funds (b)     439     570     477     480     735  
  Total interest expense     3,223     4,048     4,257     4,586     5,097  
                                 
    Net interest income     15,052     14,745     15,189     15,158     15,892  
Provision for loan losses     237     31,554     4,251     2,218     2,351  
Net interest income after provision for loan losses     14,815     (16,809 )   10,938     12,940     13,541  
                                 
Non-interest income                                
  Service charges on deposit accounts (b)     1,269     1,398     1,319     1,325     1,243  
  Other service fees (b)     927     986     857     893     895  
  Income on investment in bank-owned life insurance     153     159     159     157     157  
  Mortgage banking activities (b)     3,288     1,448     1,599     1,674     1,139  
  Gains on sale of securities     4     96     1,348     300     -  
  Other than temporary impairment of investments     (39 )   (50 )   -     -     -  
  Loss on sale of subsidiary     (1 )   (1,019 )   -     -     -  
  Loss on sale of loans     -     (2,132 )   (900 )   -     -  
  Other     56     100     283     57     75  
    Total non-interest income     5,657     986     4,665     4,406     3,509  
                                 
Non-interest expense                                
  Salaries and employee benefits (b)     7,389     6,935     6,914     6,354     6,110  
  Occupancy and equipment     1,815     1,562     1,794     1,790     1,851  
  Printing and supplies     163     157     168     151     145  
  Data processing     395     447     456     453     387  
  Communication expense     332     354     314     354     351  
  Advertising and marketing     256     77     103     100     76  
  Amortization of core deposit intangible     178     260     266     275     279  
  FDIC assessment expense     592     664     650     659     695  
  Attorney fees     90     263     311     150     216  
  Other professional fees     476     736     491     479     306  
  Loan collection expense (b)     217     569     69     192     249  
  (Gain) loss on fixed assets     -     153     -     (1 )   (21 )
  Net cost of operation of other real estate owned     (822 )   8,136     1,322     2,745     1,228  
  Other (b)     2,134     2,395     1,934     2,031     1,707  
    Total non-interest expense     13,215     22,708     14,792     15,732     13,579  
                                 
Income (loss) before income taxes     7,257     (38,531 )   811     1,614     3,471  
Provision for income taxes (benefit)     2,608     (14,632 )   54     (9,383 )   -  
                                 
Net income (loss)     4,649     (23,899 )   757     10,997     3,471  
    Preferred stock dividend and amortization of preferred stock discount     445     1,419     838     833     821  
Net income (loss) available to common shareholders   $ 4,204   $ (25,318 ) $ (81 ) $ 10,164   $ 2,650  
                                 
    Basic   $ 0.10   $ (1.21 ) $ (0.00 ) $ 0.52   $ 0.14  
    Diluted   $ 0.10   $ (1.21 ) $ (0.00 ) $ 0.52   $ 0.14  
                                 
Weighted average number of shares outstanding                                
    Basic     42,595,147     20,917,579     19,389,251     19,386,519     19,378,198  
    Diluted     42,601,273     20,917,579     19,390,253     19,386,519     19,378,198  
                                 
(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 to conform to 2012 presentation.  
   
   
   
Yadkin Valley Financial Corporation  
(unaudited)  
   
    At or For the Three Months Ended  
    March 31,     December     September     June 30,     March 31,  
    2013     31, 2012     30, 2012     2012     2012  
                                         
Per Share Data:                                        
Basic Earnings per Share   $ 0.10     $ (1.21 )   $ 0.00     $ 0.52     $ 0.14  
Diluted Earnings per Share     0.10       (1.21 )     0.00       0.52       0.14  
Book Value per Share     3.40       3.31       5.36       5.34       4.92  
                                         
Selected Performance Ratios:                                        
Return on Average Assets (annualized)     0.91 %     -5.15 %     -0.02 %     2.08 %     0.54 %
Return on Average Equity (annualized)     9.94 %     -53.53 %     -0.21 %     26.93 %     6.48 %
Net Interest Margin (annualized)(7)     3.57 %     3.28 %     3.37 %     3.39 %     3.55 %
Net Interest Spread (annualized)(7)     3.40 %     3.08 %     3.19 %     3.21 %     3.36 %
Non-interest Income as a % of Revenue(6)(7)     27.63 %     -6.23 %     29.90 %     25.40 %     20.58 %
Non-interest Income as a % of Average Assets (7)     0.30 %     0.05 %     0.24 %     0.23 %     0.18 %
Non-interest Expense as a % of Average Assets (7)     0.70 %     1.17 %     0.76 %     0.80 %     0.69 %
                                         
Asset Quality:                                        
Loans 30-89 days past due (000's) (4)   $ 6,060     $ 14,000     $ 13,354     $ 10,321     $ 10,245  
Loans over 90 days past due still accruing (000's)     -       -       -       -       -  
Nonperforming Loans (000's)     23,712       22,817       57,053       63,305       66,088  
Other Real Estate Owned (000's)     5,449       8,738       22,294       25,573       28,751  
Nonperforming Assets (000's)(5)     29,161       31,555       79,347       88,878       94,839  
Accruing/Performing troubled debt restructurings (000's)     8,579       17,667       13,929       12,596       15,259  
Nonperforming Loans to Total Loans     1.79 %     1.71 %     4.12 %     4.53 %     4.69 %
Nonperforming Assets to Total Assets     1.58 %     1.64 %     4.13 %     4.57 %     4.80 %
Allowance for Loan Losses to Total Loans     1.85 %     1.88 %     1.97 %     2.06 %     2.13 %
Allowance for Loan Losses to Total Loans Held for Investment     1.88 %     1.92 %     2.00 %     2.10 %     2.17 %
Allowance for Loan Losses to Nonperforming Loans     103.29 %     110.22 %     47.73 %     45.49 %     45.49 %
Net Charge-offs/Recoveries to Average Loans (annualized)     0.27 %     9.74 %     1.66 %     0.99 %     1.44 %
                                         
Capital Ratios:                                        
Equity to Total Assets     9.47 %     8.88 %     8.08 %     7.95 %     7.26 %
Tier 1 leverage ratio(1)     9.72 %     8.92 %     8.73 %     8.55 %     8.30 %
Tier 1 risk-based ratio(1)     12.23 %     11.73 %     11.18 %     10.89 %     10.61 %
Total risk-based capital ratio(1)     13.49 %     12.99 %     12.44 %     12.15 %     11.87 %
                                         
Non-GAAP disclosures(2):                                        
Tangible Book Value per Share   $ 3.34     $ 3.25     $ 5.21     $ 5.18     $ 4.74  
Return on Tangible Equity (annualized) (3)     10.09 %     -54.34 %     -0.21 %     27.54 %     6.63 %
Tangible Common Equity to Tangible Assets (3)     7.83 %     7.30 %     5.44 %     5.33 %     4.69 %
Efficiency Ratio (7)     66.40 %     88.62 %     66.46 %     65.63 %     63.51 %
                                         
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 they are 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 provide 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 Common Equity is the difference of shareholders' equity less preferred shares and 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 March 31,    
    2013       2012    
    (Dollars in Thousands)    
                                 
    Average       Yield/       Average       Yield/    
    Balance   Interest   Rate       Balance   Interest   Rate    
INTEREST EARNING ASSETS                                        
Total loans (1,2)   $ 1,321,253   $ 16,708   5.13 % (8)   $ 1,433,311   $ 18,976   5.32 % (8)
Investment securities     364,453     1,838   2.05 %       349,550     2,261   2.60 %  
Interest-bearing deposits & federal funds sold     62,707     48   0.31 %       50,358     44   0.35 %  
Total average earning assets (1)     1,748,413     18,594   4.31 % (6)     1,833,219     21,281   4.67 % (6)
Non-interest earning assets     128,610                   135,972              
Total average assets   $ 1,877,023                 $ 1,969,191              
                                         
INTEREST BEARING LIABILITIES                                        
Time deposits   $ 693,150     2,510   1.47 %     $ 843,764     3,858   1.84 %  
Other deposits     638,378     274   0.17 %       616,823     505   0.33 %  
Borrowed funds     101,762     439   1.75 %       104,187     735   2.84 %  
Total interest bearing liabilities     1,433,290     3,223   0.91 % (7)     1,564,774     5,098   1.31 % (7)
                                         
Non-interest bearing deposits     259,883                   224,427              
Other liabilities     12,307                   16,100              
Total average liabilities     1,705,480                   1,805,301              
                                         
Shareholders' equity     171,543                   163,890              
                                         
Total average liabilities and                                        
shareholders' equity   $ 1,877,023                 $ 1,969,191              
                                         
                                         
NET INTEREST INCOME/ YIELD (3,4)         $ 15,371   3.57 % (8)         $ 16,183   3.55 % (8)
                                         
INTEREST SPREAD (5)               3.40 % (8)               3.36 % (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 2013 and 2012 includes $45,000 and $41,000, respectively, of accretion for purchase accounting adjustments related to loans acquired in the merger with American Community.
(7) Interest expense for 2013 and 2012 includes $9,000 and $(135,000), respectively, of accretion for purchase accounting adjustments related 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.
Contact:
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
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