ELKIN, NC--(Marketwire - Jan 24, 2013) - Yadkin Valley Financial Corporation (
Fourth Quarter Highlights:
- The Company successfully executed its announced accelerated asset disposition plan, using the proceeds of the capital raise announced last quarter.
- As a result of the asset disposition plan, nonperforming loans decreased $34.2 million to $22.8 million, or 1.71% of total loans, down from 4.12% at September 30, 2012 and nonperforming assets decreased $47.8 million to $31.6 million, or 1.64% of total assets, down from 4.13% at September 30, 2012.
- The ratio of loan loss reserve to nonperforming loans, a key credit quality indicator, increased to 110.22% in the fourth quarter of 2012, as compared to 47.73% in the prior quarter.
- Adversely classified loans decreased $47.2 million to $49.8 million at December 31, 2012 as compared to $97.1 million at September 30, 2012. The ratio of adversely classified assets to Tier 1 capital and the loan loss reserve was 29.79% at the end of the fourth quarter, down from 60.07% at the end of the third quarter of 2012.
- Net loss to common shareholders for the fourth quarter of 2012 was $25.3 million, or $1.21 per diluted share. The increased loss is due primarily to credit loss from the announced asset disposition plan carried out in the fourth quarter.
- Cost of deposits continued to decrease, down to 0.84% from 0.91% in the third quarter of 2012. Core deposits now represent 55.1% of total deposits, up from 52.2% last quarter as our mix shows further improvement.
- As of December 31, 2012, the Company's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3%, respectively. In addition, our tangible common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter, compared to 5.44% at the end of the third quarter of 2012.
- Net loss to common shareholders for the full year 2012 was $12.6 million, or $0.64 per diluted share.
- Year over year, the Bank has shown dramatic improvements in credit quality due to management's prudent decisions regarding problem asset disposition.
- Capital ratios have improved significantly year over year due to capital preservation efforts by the Company in addition to $45 million in new capital raised during the fourth quarter of 2012.
- Core deposits increased $42.9 million, or 5.01%, in 2012, and core deposits now represent 55.1% of total deposits, as compared to 49.4% at December 31, 2011.
Yadkin Valley Financial Corporation (
Joe Towell, President and CEO of Yadkin Valley Financial, commented, "As we outlined our accelerated asset disposition plan last quarter, we have executed our plan using the proceeds from our capital raise. We have successfully sold $49 million in problem loans and other real estate owned as of December 31, 2012, and we have taken additional write downs of $14 million. We achieved our internal goals relative to the reductions we took on these assets and the prices at which they were sold. This asset disposition yields dramatically improved credit metrics, with our nonperforming assets to total assets ratio dropping to 1.64%, down from 4.13% in the third quarter.
"For the fourth quarter, we are very pleased to report that we have lowered our cost of deposits to 0.84%, down from 0.91% in the prior quarter. However, the rate environment continues to negatively impact our margin. Despite that, our net interest income is in a position to improve over the next several quarters due to the disposition of many non-earning assets during the fourth quarter and our redeployment of funds into earning assets.
"2012 was a breakthrough year in the life of our Company as we worked through TARP, a capital raise, and improving the quality of our balance sheet. While we took larger charge-offs in the fourth quarter, we are pleased with the success we've had with our accelerated asset disposition. As we look toward 2013, we believe our future has great potential for increased profitability as we serve our customers throughout the Carolinas."
Fourth Quarter 2012 Financial Highlights
The Bank's key asset quality metrics are vastly improved compared to the prior quarter due to the successful execution of the asset disposition plan announced last quarter. First, nonperforming loans decreased for the fifth consecutive quarter, down $34.2 million to $22.8 million in the fourth quarter of 2012 from $57.1 million at September 30, 2012. In addition, our adversely classified loans, which include substandard, substandard-impaired, and doubtful loans, decreased $47.2 million compared to the third quarter of 2012.
|Nonperforming Loan Analysis|
|(Dollars in thousands)|
|December 31, 2012||September 30, 2012|
|% of |
|% of |
|1-4 Family residential||3,123||0.23||%||6,370||0.46||%|
|Commercial real estate||8,023||0.60||%||21,420||1.54||%|
|Commercial & industrial||2,790||0.21||%||8,293||0.60||%|
|Consumer & other||455||0.03||%||523||0.04||%|
Other real estate owned (OREO) totaled $8.7 million at December 31, 2012, a decrease of $13.6 million compared to $22.3 million at September 30, 2012. As part of our asset disposition plan, approximately 59 OREO properties were marked to our best estimate of an exit price at December 31, 2012 in anticipation of including these properties in a public auction during the first quarter of 2013. The decrease in total OREO in the fourth quarter is due to $6.1 million in sales for the quarter and taking the write downs, and we do not expect further significant loss following the completion of the auction. Total nonperforming assets at December 31, 2012 were $31.6 million, or 1.64% of total assets, a decrease of $47.8 million from September 30, 2012, due to the accelerated decrease in nonperforming loans and OREO balances.
During the fourth quarter of 2012, the provision for loan losses was $31.6 million, an increase of $27.3 million from the third quarter of 2012. The increase in provision was driven by the increase in credit losses for the quarter due to the execution of the accelerated nonperforming loan disposition plan. Total net charge-offs for the fourth quarter of 2012 were $33.6 million, or 9.74% of average loans on an annualized basis.
At December 31, 2012, the allowance for loan losses was $25.1 million, compared to $27.2 million at September 30, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.92% in the fourth quarter of 2012, down from 2.00% in the third quarter of 2012. The reserve remains at a conservative level due to continued economic uncertainty and other external factors in our markets. Out of the $25.1 million in total allowance for loan losses at December 31, 2012, the specific allowance for impaired loans accounted for $1.4 million, down from $3.7 million in the third quarter. The remaining general allowance of $23.7 million attributed to unimpaired loans was up slightly from $23.5 million at the end of the third quarter.
Net Interest Income and Net Interest Margin
Net interest income was down quarter over quarter, totaling $14.7 million for the fourth quarter of 2012. Due to the low rate environment and the Company's increased cash position at year end as a result of the asset sale, the net interest margin experienced compression, ending the quarter at 3.28%. We expect improvement in both net interest income and the net interest margin in coming quarters due to the elimination of nonperforming assets during the fourth quarter of 2012, the deployment of excess liquidity on the balance sheet, the repricing of our time deposits, and our continued shift in deposit mix.
In the fourth quarter of 2012, we continued to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 55.1% 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 0.84% for the quarter as compared to 0.91% in the third quarter of 2012.
Non-interest income decreased $3.7 million to $986,000 compared to $4.7 million in the third quarter of 2012. This significant decrease is due primarily to the $2.1 million loss on sale of loans recorded as a result of the asset disposition plan and the $1.0 million loss on sale of subsidiary related to the Company's sale of its mortgage reinsurance line of business. However, income from fees increased 15.1% and income from service charges increased 5.98%, both compared to the prior quarter.
Non-interest expense increased in the fourth quarter to $22.7 million as compared to $14.8 million in the third quarter of 2012. This increase was due to increased cost of OREO because of the write downs taken on OREO properties to our best estimation of an exit price in anticipation of an auction of these properties in the first quarter of 2013.
Balance Sheet and Capital
Total assets increased $3.1 million during the fourth quarter of 2012 as the Company's balance sheet began to stabilize. Gross loans held-for-investment decreased $49.4 million compared to the third quarter of 2012, due to the loans sold through our accelerated asset disposition plan. Excluding these loan sales, our gross loans decreased slightly quarter over quarter, as we continue to implement a more aggressive business acquisition strategy. Total deposits decreased $19.8 million, which primarily consists of higher-cost time deposits, as our core deposits increased $35.7 million compared to the prior quarter.
The Company's capital ratios have strengthened and continue to exceed all regulatory requirements. As of December 31, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.9%, 11.7%, and 13.0%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3% respectively, for the holding company as of December 31, 2012. In addition, the Company's tangible common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter. 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 improved this quarter primarily due to increased capital levels from the Company's capital raise during the fourth quarter of 2012.
Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EST on Thursday, January 24, 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=124449&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until January 31, 2013 by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 91530348.
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.
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 45-47 of Yadkin Valley Financial Corporation's quarterly report filed on Form 10-Q with the SEC for the quarter ended September 30, 2012 and in the sections entitled "Risk Factors" in quarterly reports filed on Form 10-Q for the quarters ended September 30, 2012, June 30, 2012 and March 31, 2012, annual report filed on Form 10-K for the year ended December 31, 2011, and, once available, the annual report filed on Form 10-K for the year ended December 31, 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.
|Yadkin Valley Financial Corporation|
|Consolidated Balance Sheets (Unaudited)|
|(Amounts in thousands except share and per share data)|
|December 31,||September 30,||June 30||March 31,||December 31,|
|Cash and due from banks||$||36,125||$||26,048||$||25,642||$||36,478||$||40,790|
|Federal funds sold||50||50||50||50||50|
|Interest-earning deposits with banks||102,221||97,124||75,895||67,443||52,078|
|U.S. government agencies||27,527||32,869||23,058||23,433||23,726|
|State and municipal securities||84,567||54,769||66,607||72,751||73,118|
|Common and preferred stocks||132||1,112||1,133||1,111||1,084|
|Total investment securities||343,120||310,556||339,472||360,525||330,422|
|Commercial, financial and other loans||193,810||190,294||189,245||187,037||200,750|
|Commercial real estate loans||617,468||615,733||594,798||605,539||631,639|
|Revolving 1-4 family loans||191,888||196,489||196,547||196,818||201,220|
|Allowance for loan losses||(25,149||)||(27,231||)||(28,797||)||(30,062||)||(32,848||)|
|Loans held for sale||27,679||24,766||24,867||20,548||19,534|
|Accrued interest receivable||6,376||6,229||6,512||6,932||6,745|
|Bank premises and equipment||41,849||41,460||41,547||41,861||42,120|
|Foreclosed real estate||8,738||22,294||25,573||28,751||24,966|
|Non-marketable equity securities at cost||4,154||4,155||4,630||6,130||6,130|
|Investment in bank-owned life insurance||26,433||26,274||26,114||26,091||25,934|
|Core deposit intangible||2,653||2,914||3,180||3,455||3,733|
|Liabilities and shareholders' equity:|
|NOW, savings and money market accounts||624,460||606,220||613,051||626,538||625,560|
|$100 or more||316,146||342,356||348,072||356,793||360,388|
|Accrued expenses and other liabilities||15,846||11,383||18,087||16,571||15,722|
|Total shareholders' equity||170,794||155,236||154,579||143,492||140,586|
|Total liabilities and shareholders' equity||$||1,923,438||$||1,920,378||$||1,945,339||$||1,976,606||$||1,993,188|
|Period End Shares Outstanding||43,151,646||20,003,688||20,003,688||19,506,188||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)|
|December 31||September 30,||June 30,||March 31,||December 31|
|Interest and fees on loans (b)||$||17,338||$||17,735||$||17,944||$||18,939||$||19,173|
|Interest on securities||1,381||1,674||1,754||2,006||1,709|
|Interest on federal funds sold||8||9||8||7||6|
|Total interest income||18,793||19,446||19,744||20,989||20,959|
|Time deposits of $100 or more||1,346||1,762||1,913||1,992||2,271|
|Borrowed funds (b)||570||477||480||735||516|
|Total interest expense||4,048||4,257||4,586||5,097||5,356|
|Net interest income||14,745||15,189||15,158||15,892||15,603|
|Provision for loan losses||31,554||4,251||2,218||2,351||3,627|
|Net interest income after provision for loan losses|| |
|Service charges on deposit accounts (b)||1,398||1,319||1,325||1,243||1,381|
|Other service fees (b)||986||857||893||895||782|
|Income on investment in bank owned life insurance||159||159||157||157||166|
|Mortgage banking activities (b)||1,448||1,599||1,674||1,139||1,267|
|Gains on sale of securities||96||1,348||300||-||678|
|Other than temporary impairment of investments||(50||)||-||-||-||-|
|Loss on sale of subsidiary||(1,019||)||-||-||-||-|
|Loss on sale of loans||(2,132||)||(900||)||-||-||-|
|Total non-interest income||986||4,665||4,406||3,509||4,414|
|Salaries and employee benefits (b)||6,935||6,914||6,354||6,110||6,135|
|Occupancy and equipment||1,562||1,794||1,790||1,851||1,781|
|Printing and supplies||157||168||151||145||154|
|Advertising and marketing||77||103||100||76||101|
|Amortization of core deposit intangible||260||266||275||279||282|
|FDIC assessment expense||664||650||659||695||718|
|Loan collection expense (b)||569||211||219||249||287|
|(Gain) loss on fixed assets||153||-||(1||)||(21||)||13|
|Net cost of operation of other real estate owned||8,136||1,322||2,745||1,228||1,086|
|Total non-interest expense||22,708||14,792||15,732||13,579||13,676|
|Income (loss) before income taxes||(38,531||)||811||1,614||3,471||2,714|
|Provision for income taxes (benefit)||(14,632||)||54||(9,383||)||-||(211||)|
|Net income (loss)||(23,899||)||757||10,997||3,471||2,925|
|Preferred stock dividend and amortization of preferred stock discount|| |
|Net income (loss) available to common shareholders||$||(25,318||)||$||(81||)||$||10,164||$||2,650||$||2,154|
|Weighted average number of shares outstanding|