Yadkin Valley Financial Corporation Announces Capital Raise and Classified Asset Disposition Plan; Continues Trend of Problem Asset Reduction in Third Quarter
(firmenpresse) - ELKIN, NC -- (Marketwire) -- 10/25/12 -- Yadkin Valley Financial Corporation (NASDAQ: YAVY)
The Company has completed a $45 million private placement offering pursuant to which several institutional investors and members of the Board and management purchased shares of Series A mandatorily convertible preferred stock.
The Company will use the proceeds from the private placement to complete strategic classified asset disposition sales during the fourth quarter of 2012 and the first quarter of 2013.
In connection with the private placement, following the receipt of shareholder approval, the Company will convert approximately $21 million of its outstanding Series T and Series T-ACB preferred shares to common shares (voting and non-voting).
Income before taxes and preferred dividends was $811,000 for the third quarter of 2012. Net loss available to common shareholders for the third quarter of 2012 was $81,000, or $0.00 per diluted share, essentially breakeven for the quarter.
Management made the decision to sell two large problem assets totaling $15.1 million during the quarter, resulting in higher than normal charge-offs, but leading to a significant decrease in the amount of risk on the balance sheet.
Adversely classified loans decreased $4.8 million, or 4.6%, compared to the second quarter of 2012.
Nonperforming loans decreased $6.3 million to $57.1 million, or 4.12% of total loans, down from 4.53% at June 30, 2012.
Nonperforming assets decreased $9.5 million to $79.3 million, or 4.13% of total assets, down from 4.57% at June 30, 2012.
Non-interest income increased by $258,000, or 5.9%, to $4.7 million, largely due to increases in securities gains for the quarter.
Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced today a $45 million capital raise and plans to dispose of approximately $67 million in classified assets, as well as financial results for the third quarter ended September 30, 2012. Net loss available to common shareholders for the quarter was $81,000, or $0.00 per diluted share, compared to net income of $10.2 million, or $0.52 per diluted share, in the second quarter of 2012, and net income of $2.9 million, or $0.15 per diluted share, in the third quarter of 2011.
Joe Towell, President and CEO of Yadkin Valley Financial, commented, "This was an exciting quarter at Yadkin Valley, as we made significant progress on several of our strategic goals. First, we have successfully completed a $45 million private placement offering. This capital raise is the result of many months of internal work to determine the best strategy for the Company to improve its capital ratios and risk profile. In connection with this capital raise, following shareholder approval, we will be converting a portion of our outstanding Series T and Series T-ACB preferred stock to voting and non-voting common stock. We believe the events of the quarter put us in a strong position as we finish out 2012 and look ahead to 2013. With a bolstered capital position and an improving credit profile, we are looking toward the opportunities available to us as we serve our customers throughout the Carolinas.
"Turning to our third quarter results, management made the prudent decision to exit two of our large problem assets during the quarter. These were assets on which we had worked internally for more than three years and, once we had the opportunity to sell them, albeit at a loss, we did so in order to reduce the amount of risk on our balance sheet, thus improving the overall risk profile of the Bank.
"In addition to this asset disposition in the third quarter, we had improvements in our credit metrics: nonperforming assets decreased $9.5 million, our adversely classified ratio decreased to 60%, and nonperforming assets to total assets decreased to 4.13%, all compared to the prior quarter.
"Like many banks, we continue to see pressure on our net interest margin. While we did decrease our cost of deposits again this quarter, down to 0.91%, we continue to experience margin pressures due to this low rate environment."
The Company entered into definitive agreements and sold $45 million in Series A mandatorily convertible preferred stock to certain institutional investors and members of the Board of Directors and executive management at a price of $1,000 per share. The mandatorily convertible stock will convert to common shares at a price of $2.80 per share following the receipt of required shareholder approvals. In connection with the sale of the convertible preferred stock, upon the receipt of shareholder approval, the Company has agreed to convert approximately $21 million in outstanding Series T and Series T-ACB preferred shares, which have recently been purchased by unaffiliated third parties from the U.S. Treasury, to common shares (voting and non-voting), at 95% of par and a price of $2.80 per share.
The Company will use the proceeds from the capital raise to further remove risk from its balance sheet and accelerate the disposition of approximately $67 million in classified assets composed of $16.5 million in other real estate owned (OREO) and $50 million in classified loans. The Company anticipates the after-tax charges associated with this asset disposition to be in the range of $26 million to $30 million in the aggregate. The assets will be marked in the fourth quarter of 2012, and the disposition process is anticipated to be substantially complete by the end of the first quarter of 2013.
Following the private placement, the conversion of the Series T and Series T-ACB preferred shares, and the successful completion of the asset disposition plan, the Company's credit and capital profiles will show significant improvement. Using the Company's September 30, 2012 financials as a comparison, and assuming a $26 million after-tax loss on the asset disposition plan, our key credit metrics and capital ratios would be as follows:
Keefe, Bruyette, & Woods, Inc. (KBW) acted as financial advisor and placement agent for the private placement offering. In addition, KBW is acting as exclusive financial advisor to Yadkin Valley in connection with the asset disposition plan.
The third quarter of 2012 shows improvement in nearly all of the Bank's key asset quality metrics. First, nonperforming loans decreased for the third consecutive quarter, down $6.3 million to $57.1 million in the third quarter of 2012 from $63.3 million at June 30, 2012. This decrease indicates continued improvement in our levels of problem assets and significantly slower inflow to our nonperforming categories. In addition, our adversely classified loans, which include substandard, substandard-impaired, and doubtful loans, decreased $4.8 million compared to the second quarter of 2012. This is largely due to the disposition of two of our largest problem loans during the quarter. Management made the decision to remove these loans from the portfolio and take a higher than normal charge-off, as the risk associated with the loans was too great to sustain on our balance sheet.
Other real estate owned (OREO) totaled $22.3 million at September 30, 2012, a decrease of $3.3 million compared to $25.6 million at June 30, 2012. This decrease in OREO was the result of $1.8 million in foreclosures for the quarter, offset by dispositions of $5.1 million. Total nonperforming assets at September 30, 2012 were $79.3 million, or 4.13% of total assets, a decrease of $9.5 million from June 30, 2012, due to the continued decrease in nonperforming loans and OREO balances.
During the third quarter of 2012, the provision for loan losses was $4.3 million, an increase of $2.0 million from the second quarter of 2012. The increase in provision was driven by the increase in charge-offs for the quarter. Net loan charge-offs for the quarter totaled $5.8 million, an increase of $2.3 million from the second quarter of 2012. Our charge-off activity was higher this quarter as we continued to organically remove risk from our loan portfolio.
At September 30, 2012, the allowance for loan losses was $27.2 million, compared to $28.8 million at June 30, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 2.00% in the third quarter of 2012, down from 2.10% in the second quarter of 2012. Our reserve continues to decrease modestly due to the continued decrease in total loans and improving trends in adversely classified loans and nonperforming loans. Out of the $27.2 million in total allowance for loan losses at September 30, 2012, the specific allowance for impaired loans accounted for $3.8 million, up from $3.7 million in the second quarter. The specific allowance for impaired loans increased slightly as part of the Company's ongoing assessment of the values on impaired loans. The remaining general allowance of $23.4 million attributed to unimpaired loans was down from $25.1 million at the end of the second quarter as nonperforming and adversely classified loans continue to decline.
Net interest income was essentially flat quarter over quarter, totaling $15.2 million for the third quarter of 2012. The net interest margin decreased 2 basis points to 3.37% as compared to 3.39% in the prior quarter.
However, we continue to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 52.2% of total deposits, our highest percentage in the last eight quarters, as we focus on core deposit growth. As a result of this strategy, our cost of deposits decreased to 0.91% for the quarter as compared to 0.98% in the second quarter of 2012.
Non-interest income increased $258,000, or 5.9%, to $4.7 million compared to $4.4 million in the second quarter of 2012. This increase is primarily due to $1.3 million in securities gains offset by a $900,000 loss on a loan held-for-sale. The strategic decision to take the loss on this loan was due to management's focus on problem asset disposition in the third quarter.
Non-interest expense decreased $941,000, or 6.0%, to $14.8 million, down from $15.7 million in the second quarter of 2012. The majority of this decrease is due to decreased cost of OREO.
Total assets decreased $25.0 million during the third quarter of 2012 as part of our continued balance sheet management strategy. Gross loans held-for-investment decreased $13.5 million compared to the second quarter of 2012, due to our disposition of several large problem credits during the quarter. Total deposits decreased $21.9 million, which primarily consists of higher-cost time deposits, as our non-interest bearing demand deposits increased $12.2 million compared to the prior quarter.
The Company's capital ratios continue to exceed all regulatory requirements. As of September 30, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.7%, 11.2%, and 12.4%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.8%, 11.4%, and 12.6%, respectively, for the holding company as of September 30, 2012. For capital adequacy purposes, leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio must be in excess of 5.00%, 6.00%, and 10.00%, respectively, to be considered well-capitalized. Regulatory capital ratios for the Company continue to improve due to positive operating results.
Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EDT on Thursday, October 25, 2012 to discuss financial results, business highlights, and outlook. The call may be accessed by dialing 877-359-3650 at least 10 minutes prior to the call. A webcast of the call audio may be accessed at . A replay of the call will be available until November 2, 2012 by dialing 855-859-2056 or 404-537-3406 and entering conference ID 50176883.
About Yadkin Valley Financial Corporation
Yadkin Valley Financial Corporation is the holding company for Yadkin Valley Bank and Trust Company, a full-service community bank providing services in 34 branches throughout its two regions in North Carolina and South Carolina. The Western Region serves Avery, Watauga, Ashe, Surry, Wilkes, Yadkin, and Iredell Counties. The Southern Region serves Durham, Orange, Granville, Mecklenburg, and Union Counties in North Carolina, and Cherokee and York Counties in South Carolina. The Bank provides mortgage lending services through its subsidiary, Sidus Financial, LLC, headquartered in Greensboro, NC. Securities brokerage services are provided by Main Street Investment Services, Inc., a Bank subsidiary with four offices located in the branch network. Yadkin Valley Financial Corporation's website is . Yadkin Valley shares are traded on NASDAQ under the symbol YAVY.
SAFE HARBOR
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. Forward looking statements generally include words such as "expects," "projects," "anticipates," "believes," "intends," "estimates," "strategy," "plan," "potential," "possible" and other similar expressions. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward-Looking Statements" on pages 42-43 of Yadkin Valley Financial Corporation's quarterly report filed on Form 10-Q with the SEC the quarter ended June 30, 2012 and in the sections entitled "Risk Factors" in quarterly reports filed on Form 10-Q for the quarters ended June 30, 2012 and March 30, 2012, annual report filed on Form 10-K for the year ended December 31, 2011, and, once available, the quarterly report filed on Form 10-Q for the period ended September 30, 2012. Additional factors that may cause our forward-looking statements to differ materially from actual results include, without limitation: (1) the shareholder approvals required for the Private Placement may not be obtained or may not be obtained on the schedule that we anticipate; (2) other closing conditions for the Private Placement may not be satisfied; (3) we may not successfully negotiate and enter into definitive agreements with respect to, and close the, asset sales or accelerated foreclosed properties dispositions under the Asset Disposition Plan; and (4) the asset sales or accelerated foreclosed properties dispositions may not occur within our currently expected ranges for price and other terms, and the pre-tax charges associated with such sales may exceed the pre-tax charges that we currently anticipate. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.
ADDITIONAL INFORMATION
The private placement involves the sale of securities in private transactions that will not be registered under the Securities Act of 1933, as amended, and will be subject to the resale restrictions under that Act. Such securities being sold in the Private Placement may not be offered or sold absent registration or an applicable exemption from registration. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
In connection with the private placement, the Company plans to file with the Securities and Exchange Commission (the "SEC") and mail to its shareholders a proxy statement (the "Proxy Statement"). This news release is not a solicitation of a proxy and is not a substitute for the Proxy Statement or other filings that will be made with the SEC in connection with the potential transactions described in this new release. Security holders are urged to read the Proxy Statement carefully when it becomes available.
The written materials described above and other documents filed by the Company with the SEC will be available free of charge from the SEC's web site at . In addition, free copies of these documents may also be obtained by directing a written request to the attention of Corporate Secretary, Yadkin Valley Financial Corporation, P.O. Drawer 888, Elkin, North Carolina 28621.
For additional information contact:
Joseph H. Towell
President and Chief Executive Officer
(704) 768-1133
Jan H. Hollar
Executive Vice President and Chief Financial Officer
(704) 768-1161
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Datum: 25.10.2012 - 10:45 Uhr
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News-ID 196158
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