Business & Finance
Business and Finance
Business and Finance
Tue, August 18, 2009
Mon, August 17, 2009 Yadkin Valley Financial Corporation: Yadkin Valley Financial Corporation Announces Second Quarter 2009 Results
ELKIN, NC--(Marketwire - August 17, 2009) - Yadkin Valley Financial Corporation (
Financial Highlights:
-- Non-interest income increased $2.3 million or 44% compared to the first quarter of 2009 -- Tier 1, total capital, and leverage ratios of 9.04%, 10.25%, and 8.21%, respectively for the bank holding company as reported to the Federal Reserve; tangible equity ratio of 6.27% -- Provision for loan losses of $16.5 million, an increase of $5.9 million compared to the first quarter 2009 -- Loan loss reserves increased to 2.62% of total gross loans or 2.82% of total loans held for investment, compared to 2.27% of total gross loans or 2.61% of total loans held for investment in the first quarter 2009 -- Nonperforming loans increased to 1.82% of total gross loans from 1.28% in the first quarter 2009 -- Nonperforming assets increased to 1.84% of total assets from 1.33% in the first quarter 2009 -- Net charge-offs decreased to $1.1 million or 0.27% of average loans on an annualized basis, compared to $2.0 million or 0.63% on an annualized basis in the first quarter 2009 -- Net interest margin was 3.76%, an increase of 89 basis points compared to 2.87% in the first quarter -- Net loss of $6.6 million; and after the preferred dividend, a net loss for common shareholders of $7.1 million, or $0.46 per diluted share
Yadkin Valley Financial Corporation (
Bill Long, President and CEO, commented, "We are excited to begin a new chapter of Yadkin Valley Financial following the historic merger with American Community. We believe that our entrance into the high growth markets in Union and Mecklenburg Counties through the addition of American Community is a significant step toward long term asset growth.
"Even during this extremely challenging credit cycle, we have continued to manage our problem assets well. Due to our conservative approach to identifying and working through nonperforming loans, we believe that our asset quality has continued to outperform our peers. Nonperforming assets increased to 1.84% of total assets compared to our peer average of over 2.80%. We continued to make significant additions to the allowance for loan losses in the second quarter following our regular conservative analysis of the loan portfolio. Accordingly, our loan loss reserves as a percentage of total gross loans of 2.62%, or 2.82% of loans held for investment, remained stronger than our peer average which was just over 1.75%. While our nonperforming assets are expected to be higher than historic amounts for the remainder of 2009, we believe they will remain at manageable levels.
"Looking ahead to the second half of 2009, we anticipate that our core net interest margin will remain relatively stable assuming no changes to interest rates, and depending upon our level of nonperforming loans. Over the second half of 2009, we anticipate further reductions in our cost of funds as we continue to focus on low cost deposit gathering. While fee income due to mortgage refinance activity remained robust during the first half of 2009, we anticipate that it will slow during the second half of this year as mortgage rates have risen slightly which has cooled refinancings. We also anticipate a more muted level of loan growth in 2009 compared to recent years due to the slow economy. In addition, we anticipate a higher yet manageable level of net charge-offs as we continue to aggressively work through our problem assets so that we can return to our focus on growth by early 2010. Lastly, we are currently evaluating a number of different capital raising options over the second half of 2009, which if completed would increase our regulatory capital levels, support our growth initiatives, and absorb loan losses. Armed with additional capital, and with the steps that we are taking to manage our nonperforming assets, we believe that we will emerge from the current economic cycle as a stronger financial institution."
Second Quarter 2009 Financial Highlights
Asset Quality
Nonperforming loans increased by $14.6 million to $32.0 million, or 1.82% of total gross loans, compared to $17.4 million, or 1.28% of total gross loans, as of the first quarter of 2009. The majority of the increase was due to the addition of 17 commercial real estate loans totaling $6.5 million, 12 residential construction loans totaling $4.6 million, 16 commercial and industrial loans totaling $2.5 million, and 12 construction/land development loans totaling $2.1 million. These increases were partially offset by $2.5 million in loans that were moved out of nonaccrual status at the end of the second quarter.
Nonperforming Loan Analysis (Dollars in thousands) ----------------------------------------- Second Quarter 2009 First Quarter 2009 -------------------- -------------------- % of % of Outstanding Total Outstanding Total Loan Type Balance Loans Balance Loans ----------- ------- ----------- ------- Construction/land development 7,567 0.43% 2,911 0.21% Residential construction 8,415 0.48% 2,924 0.21% HELOC 1,229 0.07% 942 0.07% 1-4 Family residential 2,754 0.16% 2,635 0.19% Multifamily residential 0 0.00% 539 0.04% Commercial real estate 8,177 0.46% 4,363 0.32% Commercial & industrial 3,583 0.20% 2,920 0.21% Consumer & other 282 0.02% 185 0.01% ----------- ------- ----------- ------- Total $ 32,008 1.82% $ 17,420 1.28% ----------- ------- ----------- -------
Other real estate owned (OREO) totaled $7.8 million at the end of the second quarter, up from $4.3 million in the first quarter. The increase in OREO was primarily due to the addition of residential construction properties totaling $2.3 million and land development properties totaling $805,000. Total nonperforming assets were $39.8 million, or 1.84% of total assets, up from $21.7 million, or 1.33% of total assets, as of March 31, 2009.
During the second quarter of 2009, the provision for loan losses increased $5.9 million to $16.5 million compared to the first quarter. The allowance for loan losses increased to $46.2 million, an increase of $15.3 million compared to $30.9 million in the first quarter. Net charge-offs totaled 0.27% of average loans on an annualized basis compared to 0.63% on an annualized basis during the first quarter. Loan loss reserves as a percentage of total gross loans increased to 2.62%, up from 2.27% in the first quarter, and 2.82% of total loans held for investment, up from 2.61% in the first quarter. Loan loss reserves were 1.44 times nonperforming loans, a decrease from 1.77 times in the first quarter.
Out of the $46.2 million in total allowance for loans losses at June 30, 2009, the specific allowance for impaired loans accounted for $12.0 million, up from $6.6 million at the end of the first quarter. The remaining general allowance, $34.2 million, was attributed to unimpaired loans and was up from $24.3 million at the end of the first quarter. This increase in the general allowance was driven primarily by increased charge-offs for the rolling eight quarters ended June 30, 2009 as compared to the eight quarter period ending March 31, 2009, and by downgrades to loans.
Net Interest Income and Net Interest Margin
Net interest income totaled $17.6 million, an increase of $7.6 million compared to the first quarter of 2009. The increase in net interest income is due to a $483 million or 34% increase in average earning assets resulting from the American Community merger which closed on April 17, 2009. On a linked quarter basis, the net interest margin increased 89 basis points to 3.76% from 2.87%. The net interest margin was positively impacted by adjustments to assets and liabilities to their fair market values as part of purchase accounting treatment relating to the merger. Excluding these fair market value adjustments, the core net interest margin was 2.90%, an increase of three basis points compared to the first quarter. The increase in the core net interest margin was largely due to a reduction in deposit costs as market rates continued to ease during the second quarter.
Non-Interest Income
Non-interest income increased 44% to $7.6 million, compared to $5.3 million in the first quarter of 2009. The sequential growth in non-interest income was primarily due to a 47% increase in deposit service charges, a 28% increase in other service fees, and a 50% increase in gains on mortgage loan sales. The increase in deposit service charges was primarily related to an increased number of accounts following the American Community merger. The increase in other service fees and gains on mortgage loan sales were attributed to an increased level of mortgage loan refinance activity due to the low interest rate environment. Partially offsetting these items was a $207,000 loss on mortgage banking income related to a decrease in the value of mortgage servicing rights, and a $114,000 other loss related to the sale of foreclosed real estate.
Non-Interest Expense
Non-interest expense increased 59% to $18.7 million, compared to $11.8 million in the first quarter of 2009. The increase was primarily due to a higher expense base following the American Community merger. Also impacting non-interest expense in the second quarter of 2009 was a one-time $1.0 million FDIC special assessment, as well as $2.2 million in merger-related expenses.
Balance Sheet and Capital
Compared to the first quarter of 2009, total assets, loans, and deposits increased 32%, 39%, and 42%, respectively. Excluding the impact of the American Community merger, loans held for investment and total deposits increased approximately 4% and 7%, respectively. Loan growth was primarily attributable to strong loan demand in the Company's Piedmont and Yadkin regions. Organic deposit growth was primarily related to an increase in CD and reciprocal CDAR balances, particularly within the Piedmont, American Community, and High Country regions.
The Company remains well-capitalized for regulatory purposes. As of June 30, 2009, the Company's Tier 1, total capital, and leverage ratios were 9.04%, 10.25%, and 8.21%, respectively. Tangible equity as a percentage of tangible assets was 6.27%.
Conference Call
Yadkin Valley Financial will host a conference call today at 2:00 p.m. EDT to discuss second quarter 2009 financial results. The call may be accessed by dialing 877-723-9518 at least 10 minutes prior to the call. A webcast of the call may also be accessed at[ http://investor.shareholder.com/media/eventdetail.cfm?mediaid=38409&c=YAVY&mediakey=8E6871487CB61D679BE097C14C767A4E&e=0 ] (Due to its length, this URL may need to be copied and pasted into your Internet browser's address field. Remove the extra space if one exists.) A replay of the conference call will be available until August 31 by dialing 888-203-1112 and entering access code 9004623.
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 43 branches throughout its four regions in North Carolina, and one region that operates in both North and South Carolina. The Yadkin Valley Bank region serves Ashe, Forsyth, Surry, Wilkes, and Yadkin Counties. The Piedmont Bank region serves Iredell and Mecklenburg Counties. The High Country Bank region serves Avery and Watauga Counties. The Cardinal State Bank region serves Durham, Orange, and Granville Counties. The American Community Bank region serves 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 Greenville, North Carolina and operates a loan production office in Wilmington, 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 website is [ www.yadkinvalleybank.com ]. Yadkin Valley shares are traded on NASDAQ under the symbol YAVY.
Certain statements in this press release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements concerning our future growth, plans, objectives, expectations, performance, events and the like, as well as any other statements that are not historical facts and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, including, but not limited to: the businesses of Yadkin Valley and American Community may not be integrated successfully or such integration may take longer to accomplish than expected; disruption from the merger may make it more difficult to maintain relationships with clients, associates, or suppliers; continued disruption in worldwide and U.S. economic conditions; changes in the interest rate environment which may reduce the net interest margin; a continued downturn in the economy or real estate market; greater than expected noninterest expenses or excessive loan losses as a result of changes in market conditions and the adverse impact on the value of the underlying collateral and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. For a more detailed description of factors that could cause or contribute to such differences, please see Yadkin Valley's and American Community's filings with the Securities and Exchange Commission.
Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable though they are inherently uncertain and difficult to predict. 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 either company or any person that the future events, plans, or expectations contemplated by either company will be achieved. Yadkin Valley does not intend to and assumes no responsibility for updating or revising any forward-looking statement contained in this press release, whether as a result of new information, future events or otherwise.
Yadkin Valley Financial Corporation Condensed Consolidated Statements of Income (unaudited) For the Three Months Ended ---------------------------- June 30, March 31, June 30, 2009 2009 2008 -------- -------- -------- ($ in thousands except share and per share data) INTEREST INCOME: Interest and fees on loans $ 23,936 $ 16,028 $ 17,224 Interest on federal funds sold 1 1 26 Interest and dividends on securities: Taxable 1,363 1,175 1,344 Non-taxable 513 385 373 Interest-bearing deposits 10 11 134 -------- -------- -------- TOTAL INTEREST INCOME 25,823 17,600 19,101 -------- -------- -------- INTEREST EXPENSE: Time deposits of $100,000 or more 3,734 3,101 2,726 Other interest bearing deposits 3,753 3,960 4,985 Borrowed funds 782 625 1,017 -------- -------- -------- TOTAL INTEREST EXPENSE 8,269 7,686 8,728 -------- -------- -------- NET INTEREST INCOME 17,554 9,914 10,373 PROVISON FOR LOAN LOSSES 16,457 10,550 1,708 -------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,097 (636) 8,665 -------- -------- -------- NONINTEREST INCOME: Service charges on deposit accounts 1,535 1,047 1,066 Other service fees 1,365 1,065 877 Net gain on sales of mortgage loans 4,802 3,199 1,785 Net loss on sales of investment securities - - (7) Income on investment in bank owned life insurance 234 231 235 Mortgage banking income (loss) (207) (307) 68 Other income (loss) (122) 36 23 -------- -------- -------- TOTAL NONINTEREST INCOME 7,607 5,271 4,047 -------- -------- -------- NONINTEREST EXPENSES: Salaries and employee benefits 8,299 5,627 5,048 Occupancy and equipment expense 1,842 1,327 1,294 Printing and supplies 272 232 196 Data processing 427 133 271 Communications expense 330 323 278 Advertising and marketing expense 213 376 152 Amortization of core deposit intangible 350 225 235 FDIC assessment expense 1,797 662 191 Loss on other than temporary impairment of securities - 179 - Other expense 5,524 2,709 2,488 -------- -------- -------- TOTAL NONINTEREST EXPENSE 19,054 11,793 10,153 -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES (10,350) (7,158) 2,559 INCOME TAX (BENEFIT) (3,795) (2,995) 832 -------- -------- -------- NET INCOME (LOSS) (6,555) (4,163) 1,727 Preferred stock dividend 528 445 - -------- -------- -------- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (7,083) $ (4,608) $ 1,727 ======== ======== ======== INCOME PER COMMON SHARE: Basic $ (0.46) $ 0.40 $ 0.15 Diluted (0.46) 0.40 0.15 CASH DIVIDENDS PER COMMON SHARE AVERAGE SHARES OUTSTANDING: Basic 15,322 11,537 11,493 Diluted 15,322 11,537 11,526 Yadkin Valley Financial Corporation Consolidated Statements of Income (unaudited) For the Six Months Ended -------------------------------- June 30, June 30, June 30, 2009 2008 2007 --------- --------- ---------- ($ in thousands except share and per share data) INTEREST INCOME: Interest and fees on loans $ 39,964 $ 33,437 $ 33,325 Interest on federal funds sold 2 37 168 Interest and dividends on securities: Taxable 2,538 2,649 2,488 Non-taxable 898 742 579 Interest-bearing deposits 21 139 63 --------- --------- ---------- TOTAL INTEREST INCOME 43,423 37,004 36,623 --------- --------- ---------- INTEREST EXPENSE: Time deposits of $100,000 or more 6,835 5,683 5,727 Other time and savings deposits 7,713 9,510 9,250 Borrowed funds 1,407 2,081 1,020 --------- --------- ---------- TOTAL INTEREST EXPENSE 15,955 17,274 15,997 --------- --------- ---------- NET INTEREST INCOME 27,468 19,730 20,626 PROVISON FOR LOAN LOSSES 27,007 2,158 500 --------- --------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 461 17,572 20,126 --------- --------- ---------- NON-INTEREST INCOME: Service charges on deposit accounts 2,582 2,075 1,935 Other service fees 2,430 1,741 1,856 Net gain on sales of mortgage loans 8,001 3,557 3,056 Net loss on sales of investment securities (4) (7) 530 Income on investment in bank owned life insurance 465 468 212 Mortgage banking income (loss) (514) 78 482 Other income (loss) (78) 64 120 --------- --------- ---------- TOTAL NON-INTEREST INCOME 12,882 7,976 8,191 --------- --------- ---------- NON-INTEREST EXPENSES: Salaries and employee benefits 13,926 9,915 9,828 Occupancy and equipment expense 3,170 2,271 2,002 Printing and supplies 504 381 283 Data processing 560 383 211 Communications expense 652 486 597 Advertising and marketing expense 589 336 236 Amortization of core deposit intangible 575 423 395 FDIC assessment expense 2,459 243 89 Loss on other than temporary impairment of securities - 179 Other expense 8,412 4,178 3,306 --------- --------- ---------- TOTAL NON-INTEREST EXPENSE 30,847 18,795 16,947 --------- --------- ---------- INCOME (LOSS) BEFORE INCOME TAXES (17,504) 6,753 11,370 INCOME TAX (BENEFIT) (6,790) 2,112 3,671 --------- --------- ---------- NET INCOME (LOSS) (10,714) 4,641 7,699 Preferred stock dividend 973 - - --------- --------- ---------- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (11,687) $ 4,641 $ 7,699 ========= ========= ========== INCOME PER COMMON SHARE: Basic $ (0.87) $ 0.42 $ 0.73 Diluted (0.87) 0.42 0.71 CASH DIVIDENDS PER COMMON SHARE AVERAGE SHARES OUTSTANDING: Basic 13,440 11,033 10,614 Diluted 13,440 11,093 10,798 Yadkin Valley Financial Corporation Consolidated Balance Sheets Unaudited As of ------------------------------------- June 30, December 31, June 30, 2009 2008* 2008 ----------- ----------- ----------- ASSETS CASH AND CASH EQUIVALENTS Cash and due from banks $ 39,586 $ 22,554 $ 28,403 Federal funds sold 362 58 - Interest-bearing deposits 5,150 3,411 14,245 ----------- ----------- ----------- TOTAL CASH AND CASH EQUIVALENTS 45,098 26,023 42,648 ----------- ----------- ----------- SECURITIES AVAILABLE FOR SALE 196,229 137,813 141,198 GROSS LOANS 1,641,097 1,187,569 1,076,513 Less: Allowance for loan losses (46,243) (22,355) (15,879) ----------- ----------- ----------- NET LOANS 1,594,854 1,165,214 1,060,634 ----------- ----------- ----------- LOANS HELD FOR RESALE 121,142 49,929 47,143 ACCRUED INTEREST RECEIVABLE 7,380 5,442 5,891 PREMISES AND EQUIPMENT, NET 44,531 33,900 33,029 FORECLOSED REAL ESTATE 7,769 4,018 2,115 FEDERAL HOME LOAN BANK STOCK, AT COST 10,539 7,877 6,767 INVESTMENT IN BANK-OWNED LIFE INSURANCE 24,073 23,607 23,149 GOODWILL 66,510 53,503 54,033 CORE DEPOSIT INTANGIBLE 6,852 4,660 5,114 OTHER ASSETS 33,383 12,302 9,380 ----------- ----------- ----------- TOTAL ASSETS $ 2,158,360 $ 1,524,288 $ 1,431,101 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY DEPOSITS Non-interest bearing demand deposits 201,846 153,573 165,056 NOW, savings and money market accounts 396,239 283,891 283,404 Time certificates: Over $100,000 554,704 333,375 276,957 Other 625,371 384,203 371,303 ----------- ----------- ----------- TOTAL DEPOSITS 1,778,160 1,155,042 1,096,720 ----------- ----------- ----------- SHORT-TERM BORROWINGS 105,870 169,112 153,650 LONG-TERM BORROWINGS 46,886 38,850 19,316 ACCRUED INTEREST PAYABLE 3,534 3,555 3,381 OTHER LIABILITIES 20,441 8,085 8,305 ----------- ----------- ----------- TOTAL LIABILITIES 1,954,891 1,374,644 1,281,372 ----------- ----------- ----------- STOCKHOLDERS' EQUITY COMMON STOCK 16,130 11,537 11,516 PREFERRED STOCK 34,422 - - SURPLUS 116,268 88,030 87,846 RETAINED EARNINGS 34,725 48,070 50,775 ACCUMULATED OTHER COMPREHENSIVE INCOME 1,924 2,007 (408) ----------- ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 203,469 149,644 149,729 ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,158,360 $ 1,524,288 $ 1,431,101 =========== =========== =========== * Note: Derived from audited financial statements Yadkin Valley Financial Corporation (unaudited) At or For the Three Months Ended ------------------------------------------------ June 30, Mar 31, Dec 31, Sept 30, June 30, 2009 2009 2008 2008 2008 -------- -------- -------- -------- -------- Per Share Data: Basic Earnings per Share $ (0.46) $ (0.40) $ (0.22) $ 0.16 $ 0.15 Diluted Earnings per Share (0.46) (0.40) (0.22) 0.15 0.15 Book Value per Share 10.48 12.63 12.97 13.24 13.00 Tangible Book Value per Share 5.93 7.61 7.93 8.12 7.87 Cash Dividends per Share 0.06 0.06 0.13 0.13 0.13 Selected Performance Ratios: Return on Average Assets (annualized) -1.27% -1.07% -0.69% 0.49% 0.49% Return on Average Equity (annualized) -12.81% -9.25% -6.64% 4.66% 4.57% Return on Tangible Equity (annualized) -18.93% -13.62% -10.79% 7.61% 7.58% Net Interest Margin (annualized) 3.76% 2.87% 2.94% 3.33% 3.34% Net Interest Spread (annualized) 3.45% 2.53% 2.57% 2.90% 2.87% Noninterest Income as a % of Revenue 87.40% 113.72% 68.88% 24.76% 31.84% Noninterest Income as a % of Average Assets 0.37% 0.34% 0.30% 0.21% 0.29% Noninterest Expense as a % of Average Assets 0.92% 0.75% 0.73% 0.68% 0.72% Net Noninterest income as a % of Average Assets -0.55% -0.42% -0.42% -0.47% -0.43% Efficiency Ratio 73.44% 75.38% 73.32% 68.64% 67.82% Asset Quality: Nonperforming Loans (000's) $ 32,008 $ 17,420 $ 13,647 $ 8,169 $ 4,830 Nonperforming Assets(000's) 39,777 21,738 17,665 11,169 6,945 Nonperforming Loans to Total Loans 1.82% 1.28% 1.10% 0.70% 0.43% Nonperforming Assets to Total Assets 1.84% 1.33% 1.16% 0.76% 0.49% Allowance for Loan Losses to Total Loans Held For Investment 2.82% 2.61% 1.88% 1.48% 1.47% Allowance for Loan Losses to Nonperforming Loans 144.00% 177.00% 164.00% 202.00% 329.00% Net Charge-offs/Recoveries to Average Loans (annualized) 0.27% 0.63% 0.60% 0.24% 0.14% Capital Ratios: Equity to Total Assets 7.83% 11.00% 9.82% 10.39% 10.46% Tangible Equity to Tangible Assets (2) 4.59% 7.73% 6.24% 6.64% 6.60% Tier 1 leverage ratio(1) 7.87% 8.65% 8.12% 8.36% 8.40% Tier 1 risk-based ratio(1) 8.67% 9.71% 9.01% 9.40% 9.34% Total risk-based capital ratio(1) 9.92% 10.97% 10.26% 10.65% 10.59% 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) Tangible Equity is the difference of stockholders' 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 Yadkin Valley Financial Corporation (unaudited) For the Six Months Ended June 30, ---------------------- 2009 2008 2007 ------ ------ ------ Selected Performance Ratios: Return on Average Assets (annualized) -1.19% 0.72% 1.41% Return on Average Equity (annualized) -10.66% 6.45% 12.16% Return on Tangible Equity (annualized) -15.40% 9.72% 17.22% Net Interest Margin 3.37% 3.44% 4.27% Net Interest Spread 3.06% 2.89% 3.57% Noninterest Income as a % of Revenue 96.55% 30.47% 28.93% Noninterest Income as a % of Average Assets 0.71% 0.61% 0.74% Noninterest Expense as a % of Average Assets 1.69% 1.44% 1.54% Net Noninterest income as a % of Average Assets -0.99% -0.83% -0.80% Efficiency Ratio 74.16% 65.30% 57.78% Asset Quality: Net Charge-offs to Average Loans (annualized) 0.42% 0.07% 0.01% Yadkin Valley Financial Corporation Average Balance Sheets and Net Interest Income Analysis (Dollars in Thousands) (Unaudited) Three Months Ended June 30, ---------------------------------------------------- 2009 2008 ------------------------- ------------------------- Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ---------- -------- ----- ---------- -------- ----- INTEREST EARNING ASSETS Total loans (1,2) $1,691,622 $ 23,974 5.68% $1,103,901 $ 17,261 6.27% Federal funds sold 3,946 1 0.10% 5,423 26 1.92% Investment securities 200,218 2,146 4.30% 143,659 1,881 5.25% Interest-bearing deposits 10,287 10 0.39% 15,341 134 3.50% ---------- -------- ---------- -------- Total average earning assets (1) 1,906,073 26,131 5.50% 1,268,324 19,302 6.10% -------- -------- Noninterest earning assets 156,713 143,654 ---------- ---------- Total average assets $2,062,786 $1,411,978 ========== ========== INTEREST BEARING LIABILITIES Time deposits $1,076,689 $ 6,642 2.47% $ 648,981 $ 6,646 4.11% Other deposits 390,228 845 0.87% 286,827 1,066 1.49% Borrowed funds 152,875 782 2.05% 145,132 1,016 2.81% ---------- -------- ---------- -------- Total interest bearing liabilities 1,619,792 8,269 2.05% 1,080,940 8,728 3.24% Noninterest bearing deposits 190,726 161,137 Other liabilities 16,677 18,394 ---------- ---------- Total average liabilities 1,827,195 1,260,471 ---------- ---------- Stockholders' equity 235,591 151,507 Total average liabilities and ---------- ---------- stockholders' equity $2,062,786 $1,411,978 ========== ========== NET INTEREST INCOME/ -------- -------- YIELD (3,4) $ 17,862 3.76% $ 10,574 3.34% ======== ======== INTEREST SPREAD (5) 3.45% 2.87% 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 34%, 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. Yadkin Valley Financial Corporation Average Balance Sheets and Net Interest Income Analysis (Dollars in Thousands) (Unaudited) Six Months Ended June 30, ---------------------------------------------------- 2009 2008 ------------------------- ------------------------- Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ---------- -------- ----- ---------- -------- ----- INTEREST EARNING ASSETS Total loans (1,2) $1,488,518 $ 40,037 5.42% $1,017,687 $ 33,515 6.60% Federal funds sold 4,309 2 0.09% 3,394 37 2.19% Investment securities 172,262 3,832 4.49% 144,036 3,719 5.18% Interest-bearing deposits 6,199 21 0.68% 9,800 139 2.84% ---------- -------- ---------- -------- Total average earning assets (1) 1,671,288 43,892 5.30% 1,174,917 37,410 6.39% -------- -------- Noninterest earning assets 149,294 126,125 ---------- ---------- Total average assets $1,820,582 $1,301,042 ========== ========== INTEREST BEARING LIABILITIES Time deposits $ 912,012 $ 12,976 2.87% $ 603,561 $ 13,071 4.34% Other deposits 338,990 1,572 0.94% 260,230 2,122 1.64% Borrowed funds 185,754 1,407 1.53% 126,237 2,081 3.31% ---------- -------- ---------- -------- Total interest bearing liabilities 1,436,756 15,955 2.24% 990,028 17,274 3.50% Noninterest bearing deposits 168,093 152,462 Other liabilities 12,967 14,318 ---------- ---------- Total average liabilities 1,617,816 1,156,808 ---------- ---------- Stockholders' equity 202,766 144,234 Total average liabilities and ---------- ---------- stockholders' equity $1,820,582 $1,301,042 ========== ========== NET INTEREST INCOME/ -------- -------- YIELD (3,4) $ 27,937 3.37% $ 20,136 3.44% ======== ======== INTEREST SPREAD (5) 3.06% 2.89% 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 34%, 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.
