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Yadkin Valley Financial Corporation Announces Second Quarter 2008 Results ELKIN, NC--(MARKET WIRE)--Aug 11, 2008 -- Yadkin Valley Financial Corporation (YAVY - News) Highlights:
-- Reserves of 1.42% of total loans held for investment, compared to
1.32% in the second quarter of 2007 and 1.40% in the first quarter of 2008
-- Total nonperforming loans of 0.43% of total loans, with net charge-
offs of $384,000 or 0.14% of average loans (annualized)
-- Tier one ratio of 9.37%, total capital ratio of 10.62%, and leverage
ratio, of 8.43%; tangible equity as a percentage of tangible assets of
6.63%
-- Net interest margin was 3.34% compared to 4.21% in the second quarter
of 2007 and 3.56% in the first quarter of 2008
-- Net income decreased by 44% to $2.1 million compared to $3.8 million
in the second quarter of 2007
-- Diluted earnings per share decreased by 46% to $0.19, compared to
$0.35 in the second quarter of 2007
-- Thirtieth location opened in Hillsborough, NC (Cardinal State region)
-- Completed core banking system conversion of Cardinal State Bank
acquisition
Yadkin Valley Financial Corporation (YAVY - News), the holding company for Yadkin Valley Bank and Trust Company, today announced financial results for the second quarter ending June 30, 2008. Operating revenues, defined as net interest income after loan loss provision plus noninterest income, decreased by 7% to $13.3 million compared to $14.3 million in the second quarter of 2007. The decrease in operating revenues was largely related to net interest margin compression of 87 basis points to 3.34% from 4.21% during the second quarter of 2007 due to the 325 basis point decrease in interest rates that has occurred since September 2007. Offsetting the margin compression was a 28% increase in average loans to $1.1 billion compared to the second quarter of 2007, following the Cardinal State Bank merger which closed on March 31, 2008. Also impacting operating revenues was an $878,000 increase in the loan loss provision to $1.1 million compared to $200,000 during the second quarter of 2007. The higher provision resulted from a combination of loan growth associated with the Cardinal State Bank acquisition, an increased level of nonperforming assets, and a softening of economic conditions across the company's financial markets. Second quarter 2008 net income decreased year-over-year by 44% to $2.1 million compared to $3.8 million in second quarter 2007. Net income decreased by 27% compared to $2.9 million in the first quarter of 2008. Diluted earnings per share were $0.19, compared to $0.35 for the second quarter of 2007 and $0.27 for the first quarter of 2008 The decrease in net income during the second quarter of 2008 was primarily due to a 17% increase in expenses compared to the second quarter of 2007, reflecting the first full quarter of expenses following the Cardinal merger as well as start-up costs associated with the New England expansion of Sidus. Excluding one-time merger-related expenses, second quarter 2008 net income was $2.4 million, representing diluted earnings per share of $0.21. One-time, merger-related expenses totaled approximately $330,000 in salaries and benefits as well as data processing expenses. Start-up costs associated with the New England expansion of Sidus totaled $97,000 during the quarter.
Key Figures
(Dollars in thousands, except per share
data) Second Second
Qtr Qtr First Qtr
2008 2007 2008
--------- --------- ---------
Income Statement Highlights:
--------- --------- ---------
Net Interest Income 10,373 10,409 9,357
--------- --------- ---------
Loan Loss Provision 1,078 200 450
--------- --------- ---------
Non-interest Income 4,047 4,113 3,929
--------- --------- ---------
Non-interest Income as a percentage of
revenues 30% 29% 31%
--------- --------- ---------
Operating Revenues 13,342 14,322 12,836
--------- --------- ---------
Noninterest Expenses 10,153 8,683 8,643
--------- --------- ---------
Net Income 2,136 3,786 2,914
--------- --------- ---------
Earnings per share (diluted) $ 0.19 $ 0.35 $ 0.27
--------- --------- ---------
Average shares outstanding - diluted 11,526 10,792 10,634
--------- --------- ---------
Balance Sheet Highlights:
--------- --------- ---------
Total Assets 1,431,731 1,130,835 1,425,212
--------- --------- ---------
Total Gross Loans 1,123,656 857,356 1,093,170
--------- --------- ---------
Total Deposits 1,096,719 942,515 1,112,434
--------- --------- ---------
Performance Metrics:
--------- --------- ---------
Net Interest Margin 3.34% 4.21% 3.56%
--------- --------- ---------
Return on Average Assets (annualized) 0.61% 1.36% 0.98%
--------- --------- ---------
Return on Average Equity (annualized) 5.66% 11.79% 8.55%
--------- --------- ---------
Efficiency Ratio 67.82% 57.77% 62.68%
--------- --------- ---------
Asset Quality Metrics:
--------- --------- ---------
Nonperforming loans/total loans 0.43% 0.31% 0.48%
--------- --------- ---------
Allowance for loan losses/total loans HFI 1.42% 1.32% 1.40%
--------- --------- ---------
Net charge-offs/average loans (annualized) 0.14% 0.01% (0.01%)
--------- --------- ---------Bill Long, President and CEO, commented, "We continued to benefit from strong asset quality. For example, nonperforming loans were 0.43% of loans, a slight improvement from the prior quarter, and net charge-offs were 0.14% of average loans. Thanks to the sound decisions and integrity of our experienced management team, Yadkin Valley continues to perform well in the current challenging economic environment. "The Cardinal merger is off to a great start. Loans at Cardinal increased 5%, while deposits increased 7% compared to the first quarter of 2008. The rapidly growing market area in and around Durham will be a key source for long term growth, and the newly opened Hillsborough and Creedmoor offices in this region have already been successful in generating new loans and deposits. During the first half of this year, we have replaced several loan officers with three seasoned commercial lenders within this new key market, and they have already begun to contribute to loan and deposit growth. "We are seeing a significant opportunity at Sidus, our mortgage lending subsidiary, as customers seeking trust and stability have returned to the banks for their mortgages. Sidus successfully entered six New England states in April, and we expect these new markets to fuel a significant part of Sidus' volumes during the second half of 2008. The housing downturn has had a modest effect on Sidus' business, as it reported record production and profitability, including the New England start-up costs, during the first six months of 2008. "Lending policies and procedures and credit quality will remain the key areas on which we will continue to concentrate during the remainder of 2008 and into 2009. We have recently improved our past due and risk grade reporting processes, which has resulted in better information flow and management control of the loan portfolio. We are in the process of strengthening our credit administration and review processes, with both structure and resources, which will allow us to better manage credit approvals and renewals. "We remain confident in our ability to manage our bank through this difficult and volatile environment. There are several metrics on which we base this optimism. First, we believe that our net interest margin has bottomed during the second quarter of 2008, and expect it to expand over the next two quarters as 48% of our CDs reprice at lower rates. Secondly, we anticipate cost savings related to the Cardinal transaction, to be in the range of $750,000, over the second half of 2008, which should positively impact operating expenses. We do recognize that our asset quality may deteriorate slightly during the second half of the year. Nevertheless, for the remainder of 2008, we believe that Yadkin Valley will outperform the industry average recorded in the second quarter, which showed nonperforming loans as a percentage of total loans at 1.01% and median net charge off ratio of 0.31%." SECOND QUARTER 2008 FINANCIAL HIGHLIGHTS Net Interest Income and Net Interest Margin Net interest income was $10.4 million, compared to $10.4 million in the second quarter of 2007. Net interest income was supported by an increase of 28% in average loans to $1.1 billion from $859 million as of June 30, 2007. The significant increase in average loans is largely attributed to the Cardinal State Bank acquisition. Offsetting the increase in average loans was a decrease in the net interest margin of 87 basis points to 3.34% from 4.21% as of the second quarter of 2007, and a decrease of 22 basis points from 3.56% as of the first quarter of 2008. The year-over-year decrease in the net interest margin was due to the rapid 325 basis points drop in interest rates that occurred since September of 2007, which had a more immediate effect upon variable rate loans. The sequential decrease in the net interest margin was primarily related to the 25 basis point interest rate decrease that took affect in April, as well as Cardinal's balance sheet mix and the intense competitive environment for deposits. As of the second quarter of 2008, variable rate loans accounted for approximately 50% of total loans. Non-Interest Income Non-interest income of $4.0 million decreased by 2% compared to $4.1 million in the second quarter of 2007. The decrease reflects lower service fees, income related to bank owned life insurance, and mortgage banking income. These decreases were offset by higher service charges, and net gains on mortgage loan sales due to a one-time accounting change that took effect during the first quarter of 2008. Compared to the first quarter 2008, non-interest income increased by 3% due to increases across most non-interest income categories. Non-Interest Expense Non-interest expense increased by 17% to $10.2 million, compared to $8.7 million in the second quarter of 2007 and by 18% compared to the first quarter 2008. The year-over-year and sequential increases were largely due to higher salary and benefits expenses and data processing expenses, reflecting the first full quarter of operations which included the Cardinal State Bank acquisition. Start-up costs associated with Sidus's New England expansion amounted to $234,000 ($137,000 in the first quarter and $97,000 in the second quarter), and operating efficiency is expected to improve over the next several quarters as new loan volume increases. Balance Sheet Total gross loans increased $266.3 million, or 31% compared to the second quarter of 2007, due to loans acquired in connection with the Cardinal State Bank acquisition. Loans increased $30.5 million or 3% compared to the first quarter of 2008, primarily due to growth in commercial loans across most of the Company's markets. Excluding loans acquired with the Cardinal merger, loans increased $129.8 million or 15% compared to the second quarter 2007, and $23.7 million or 3% compared to the first quarter 2008. At Cardinal, loans increased $6.5 million or 5% compared to the first quarter of 2008. The increase was primarily due to a 9% increase in commercial loans, which more than offset lower levels of construction, consumer, and home equity loans and lines of credit. A break-down of the current loan composition, compared to the second quarter 2007 and the first quarter 2008 is as follows (dollars in thousands):
Second Qtr 2008 Second Qtr 2007 First Qtr 2008
------------------ ---------------- ------------------
Percent Percent Percent
of of of
Amount Total Amount Total Amount Total
----------- ----- --------- ----- ----------- -----
Construction/land
development $ 207,275 18.4% $ 111,704 13.0% $ 191,031 17.5%
HELOC 114,650 10.2% 95,467 11.1% 107,539 9.9%
1-4 Family
residential 162,107 14.4% 107,605 12.6% 165,663 15.2%
Multifamily 20,813 1.9% 22,713 2.6% 21,509 2.0%
Commercial real
estate 410,928 36.6% 326,043 38.0% 397,872 36.5%
Commercial &
industrial 135,485 12.1% 131,616 15.4% 137,722 12.6%
Consumer & Other 72,398 6.4% 62,194 7.3% 69,454 6.4%
----------- ----- --------- ----- ----------- -----
Total, net of
unearned income $ 1,123,656 100.0% $ 857,342 100.0% $ 1,090,790 100.0%
----------- ----- --------- ----- ----------- -----Deposits increased $154.2, or 16% compared to the second quarter of 2007. The year-over-year increase in deposits was primarily due to deposits acquired in connection with the Cardinal acquisition. Compared to the first quarter of 2008, deposits decreased $15.7 million or 1%, primarily due to a slight runoff of higher cost CDs that were replaced with lower cost short-term borrowings. The Company continues to rely primarily on home-grown deposits to fund its loan growth, as brokered CDs represented only 2% of total deposits, compared to negligible amounts in the second quarter of 2007 and the first quarter of 2008. Asset Quality Nonperforming loans decreased by 3% to $4.8 million or 0.43% of loans held for investment compared to $5.0 million or 0.48% during the first quarter of 2008. Residential construction and land development loans accounted for approximately half of nonperforming loans during the second quarter of 2008, with the remainder occurring across all other loan types. The following chart highlights nonperforming loans by loan category, and as a percentage of loans held for investment:
Nonperforming Loan Analysis
(Dollars in thousands)
Second Quarter 2008 First Quarter 2008
------------------- -------------------
% of % of
Total Total
Outstanding Loans Outstanding Loans
Loan Type Balance HFI Balance HFI
----------- ------ ----------- ------
Construction/land development $ 882 0.08% $ 1,492 0.14%
Residential construction 1,633 0.15% 1,875 0.18%
HELOC 346 0.03% 475 0.05%
1-4 Family residential 482 0.04% 570 0.05%
Multifamily residential 26 0.00% 104 0.01%
Commercial real estate 430 0.04% 229 0.02%
Commercial & industrial 951 0.08% 106 0.01%
Consumer & other 81 0.01% 141 0.01%
----------- ------ ----------- ------
Total $ 4,830 0.43% $ 4,992 0.48%
----------- ------ ----------- ------During the second quarter of 2008, net charge-offs totaled 0.14% of average loans, compared to 0.01% during the second quarter of 2007 and a net recovery of 0.01% during the first quarter of 2008. The provision covered net charge-offs by 281% in the second quarter of 2008, and reserves as a percentage of loans held for investment increased to 1.42%, compared to 1.32% in the second quarter of 2007 and 1.40% in the first quarter of 2008. Capital The bank remains well-capitalized for regulatory purposes. The total capital ratio was 10.62%, tier one ratio was 9.37%, and leverage ratio was 8.43% (at the bank level) as of the second quarter of 2008. This compares to a total capital ratio of 10.68%, tier one ratio of 9.48%, and leverage ratio of 8.26% as of the second quarter of 2007. Tangible equity as a percentage of tangible assets was 6.63%, compared to 8.29% compared to the same period in 2007 and 6.80% during the first quarter of 2008.
Yadkin Valley Financial Corporation
(Amounts in thousands except per share data)
(unaudited)
For the Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
Interest Income:
Interest and fees on loans $17,224 $16,214 $16,916
Interest on federal funds sold 26 11 128
Interest on taxable securities 1,344 1,305 1,262
Interest on tax-exempt securities 373 368 292
Interest-bearing deposits 134 5 49
------ ------ -------
Interest income 19,101 17,903 18,647
Interest expense 8,728 8,546 8,238
------ ------ -------
Net interest income 10,373 9,357 10,409
Provision for loan losses 1,078 450 200
------ ------ -------
Net interest income after provision
for loan loss 9,295 8,907 10,209
------ ------ -------
Noninterest Income:
Service charges on deposit accounts 1,066 1,009 954
Other service fees 877 864 1,014
Net gain on sales of mortgage loans 1,785 1,772 1,646
Net gain on sales of investment securities (7) - -
Income on investment in bank owned life
Insurance 235 233 314
Mortgage banking income 68 10 133
Other income 23 41 52
------ ------ -------
Total noninterest income 4,047 3,929 4,113
------ ------ -------
Noninterest Expense:
Salaries and employee benefits 5,048 4,868 4,989
Occupancy and equipment expense 1,294 977 988
Printing and supplies 196 185 139
Data processing 271 112 110
Communications expense 278 208 348
Amortization of core deposit intangible 235 188 197
Other expense 2,831 2,105 1,912
------ ------ -------
Total noninterest expense 10,153 8,643 8,683
------ ------ -------
Income before income taxes 3,189 4,193 5,638
Income taxes 1,053 1,279 1,852
------ ------ -------
Net income $ 2,136 $ 2,914 $ 3,786
======= ======= ========
Income per share:
Basic $ 0.19 $ 0.28 $0.36
Diluted $ 0.19 $ 0.27 $0.35
Average shares outstanding - basic 11,493 10,574 10,614
Average shares outstanding - diluted 11,526 10,634 10,792
Yadkin Valley Financial Corporation
(Amounts in thousands except per share data)
(unaudited)
For the Six Months Ended June 30,
2008 2007
Interest income $ 37,004 $ 36,623
Interest expense 17,274 15,997
-------- --------
Net interest income 19,730 20,626
Provision for loan losses 1,528 500
-------- --------
Net interest income after provision for loan
loss 18,202 20,126
-------- --------
Noninterest Income:
Service charges on deposit accounts 2,074 1,935
Other service fees 1,741 1,856
Net gain on sales of mortgage loans 3,557 3,056
Net gain on sales of investment securities (7) -
Income on investment in bank owned life
insurance 468 530
Mortgage banking income 78 212
Other income 66 602
-------- --------
Total noninterest income 7,977 8,191
-------- --------
Noninterest Expense:
Salaries and employee benefits 9,916 9,828
Occupancy and equipment expense 2,271 2,002
Printing and supplies 381 283
Data processing 383 211
Communications expense 486 597
Amortization of core deposit intangible 423 395
Other expense 4,935 4,228
-------- --------
Total noninterest expense 18,795 16,947
-------- --------
Income before income taxes 7,384 11,370
Income taxes 2,333 3,671
-------- --------
Net income $ 5,051 $ 7,699
========= =========
Income per share:
Basic $ 0.46 $ 0.73
Diluted $ 0.46 $ 0.71
Average shares outstanding - basic 11,033 10,614
Average shares outstanding - diluted 11,092 10,798
Yadkin Valley Financial Corporation
(Amounts in thousands except per share data)
(unaudited)
As of As of
Jun 30, Dec 31,
2008 2007*
Assets
Cash and due from banks $ 28,403 $ 24,268
Federal funds sold and interest-bearing
deposits 14,245 2,058
Securities available for sale 141,198 142,484
Gross loans held for investment 1,076,513 898,753
Allowance for loan losses (15,249) (12,446)
Loans held for sale 47,143 52,754
Accrued interest receivable 5,891 6,055
Premises and equipment, net 33,029 26,780
Federal Home Loan Bank stock 6,767 2,557
Investment in bank-owned life insurance 23,149 22,683
Goodwill 54,033 32,697
Core deposit intangible 5,114 4,261
Other assets 11,495 8,173
---------- ----------
Total Assets $1,431,731 $1,211,077
========== ==========
Liabilities and Stockholders' Equity
Non-interest bearing deposits $ 165,056 $ 154,979
NOW, savings, and money market 283,404 232,888
Time deposits over $100,000 276,957 267,530
Other time deposits 371,303 308,045
Borrowed funds 172,966 104,199
Accrued interest payable 3,382 3,435
Other liabilities 8,524 6,732
---------- ----------
Total Liabilities 1,281,592 1,077,808
Stockholders' equity 150,139 133,269
---------- ----------
Total Liabilities and
Stockholders' Equity $1,431,731 $1,211,077
========== ==========
Shares outstanding at end of period 11,516 10,563
* Note: Derived from audited financial statements
Yadkin Valley Financial Corporation
(unaudited)
For the Three Months Ended
Jun Mar Dec Sept Jun
30, 31, 31, 30, 30,
2008 2008 2007 2007 2007
Per Share Data:
Basic Earnings per Share $ 0.19 $ 0.28 $ 0.29 $ 0.37 $ 0.36
Diluted Earnings per Share $ 0.19 $ 0.27 $ 0.29 $ 0.37 $ 0.35
Book Value per Share $13.04 $13.16 $12.62 $12.38 $12.06
Tangible Book Value per Share $ 7.88 $ 8.12 $ 9.12 $ 8.87 $ 8.54
Cash Dividends per Share $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.13
Selected Performance Ratios:
Return on Average Assets
(annualized) 0.61% 0.98% 1.04% 1.38% 1.36%
Return on Average Equity
(annualized) 5.66% 8.55% 9.14% 11.94% 11.79%
Return on Tangible Equity
(annualized) 9.21% 11.75% 12.66% 16.72% 16.63%
Net Interest Margin
(annualized) 3.34% 3.56% 4.03% 4.24% 4.21%
Net Interest Spread
(annualized) 2.87% 2.94% 3.30% 3.52% 3.50%
Noninterest Income as a % of
Revenue 30.33% 30.61% 26.45% 25.43% 28.72%
Noninterest Income as a % of
Average Assets 0.29% 0.33% 0.32% 0.32% 0.37%
Noninterest Expense as a % of
Average Assets 0.72% 0.73% 0.69% 0.71% 0.78%
Net Noninterest income as a %
of Average Assets -0.43% -0.40% -0.37% -0.40% -0.41%
Efficiency Ratio 67.82% 62.68% 54.12% 54.10% 57.77%
Asset Quality:
Nonperforming Loans (000's) 4,830 4,992 1,962 1,682 2,639
Nonperforming Assets (000's) 6,945 7,289 2,564 2,630 3,317
Nonperforming Loans to Total
Loans 0.43% 0.48% 0.21% 0.19% 0.31%
Nonperforming Assets to Total
Assets 0.49% 0.51% 0.21% 0.23% 0.29%
Allowance for Loan Losses to
Total Loans Held For
Investment 1.42% 1.40% 1.38% 1.32% 1.32%
Allowance for Loan Losses to
Nonperforming Loans 316% 292% 634% 668% 427%
Net Charge-offs/Recoveries to
Average Loans (annualized) 0.14% (0.01)% 0.21% 0.16% 0.01%
Capital Ratios:
Equity to Total Assets 10.49% 10.58% 11.01% 11.45% 11.32%
Tangible Equity to Tangible
Assets(2) 6.63% 6.80% 8.21% 8.47% 8.29%
Tier 1 leverage ratio(1) 8.43% 10.07% 8.41% 8.53% 8.26%
Tier 1 risk-based ratio(1) 9.37% 9.50% 9.16% 9.41% 9.48%
Total risk-based capital
ratio(1) 10.62% 10.74% 10.36% 10.54% 10.68%
Yadkin Valley Financial Corporation
(unaudited)
For the Six Months Ended
June 30, June 30, June 30,
2008 2007 2006
Selected Performance Ratios:
Return on Average Assets (annualized) 0.78% 1.41% 1.24%
Return on Average Equity (annualized) 7.02% 12.16% 10.78%
Return on Tangible Equity (annualized) 10.58% 17.22% 15.82%
Net Interest Margin 3.44% 4.27% 4.51%
Net Interest Spread 2.87% 3.57% 3.99%
Noninterest Income as a % of Revenue 30.47% 28.93% 25.88%
Noninterest Income as a % of Average
Assets 0.61% 0.74% 0.64%
Noninterest Expense as a % of
Average Assets 1.44% 1.54% 1.54%
Net Noninterest income as a % of
Average Assets -0.83% -0.80% 0.90%
Efficiency Ratio 65.30% 57.78% 56.97%
Asset Quality:
Net Charge-offs to Average Loans
(annualized) 0.07% 0.01% 0.08%
Yadkin Valley Financial Corporation
Average Balance Sheets and Net
Interest Income Analysis
(Dollars in Thousands)
(Unaudited)
Three Months Ended: June 30, 2008 June 30, 2007
------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ------- ----- ---------- ------- -----
INTEREST EARNING ASSETS
Federal funds sold $ 5,423 $ 26 1.92% $ 9,828 $ 128 5.22%
Interest bearing
deposits 15,341 134 3.50% 3,528 49 5.57%
Investment securities
(1) 143,659 1,881 5.25% 134,138 1,683 5.03%
Total loans (1,2) 1,103,901 17,261 6.27% 859,217 16,953 7.91%
---------- ------- ---------- -------
Total average earning
assets (1) 1,268,324 19,302 6.10% 1,006,711 18,813 7.50%
------- -------
Noninterest earning
assets 143,654 113,111
---------- ----------
Total average assets $1,411,978 $1,119,822
========== ==========
INTEREST BEARING
LIABILITIES
NOW and money market $ 249,149 $ 1,018 1.64% $ 187,481 $ 1,040 2.22%
Savings 37,678 48 0.51% 36,596 92 1.01%
Time certificates 648,981 6,646 4.11% 552,262 6,633 4.82%
---------- ------- ---------- -------
Total interest bearing
deposits 935,808 7,712 3.31% 776,339 7,765 4.01%
Repurchase agreements
sold 48,293 263 2.18% 33,625 272 3.24%
Borrowed funds 96,839 753 3.12% 17,602 201 4.58%
---------- ------- ---------- -------
Total interest bearing
liabilities 1,080,940 8,728 3.24% 827,566 8,238 3.99%
---------- ------- ---------- -------
Noninterest bearing
deposits 161,137 155,557
Stockholders' equity 151,507 128,788
Other liabilities 18,394 7,911
---------- ----------
Total average
liabilities and
stockholders' equity $1,411,978 $1,119,822
========== ==========
NET INTEREST INCOME/
YIELD (3,4) $10,574 3.34% $10,575 4.21%
======= =======
INTEREST SPREAD (5) 2.87% 3.50%
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, 2008 June 30, 2007
------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ------- ----- ---------- ------- -----
INTEREST EARNING ASSETS
Federal funds sold $ 3,394 $ 37 2.19% $ 6,137 $ 168 4.56%
Interest bearing
deposits 9,800 139 2.84% 2,728 63 4.66%
Investment securities
(1) 144,036 3,719 5.18% 132,036 3,322 5.07%
Total loans (1,2) 1,017,687 33,515 6.60% 849,781 33,399 7.93%
---------- ------- ---------- -------
Total average earning
assets (1) 1,174,917 37,410 6.39% 990,682 36,952 7.52%
------- -------
Noninterest earning
assets 126,125 112,928
---------- ----------
Total average assets $1,301,042 $1,103,610
========== ==========
INTEREST BEARING
LIABILITIES
NOW and money market $ 223,633 $ 2,013 1.81% $ 187,481 $ 2,059 2.21%
Savings 36,597 109 0.60% 36,160 182 1.01%
Time certificates 603,561 13,071 4.34% 537,494 12,735 4.78%
---------- ------- ---------- -------
Total interest bearing
deposits 863,791 15,193 3.53% 761,135 14,976 3.97%
Repurchase agreements
sold 47,681 628 2.64% 34,879 570 3.30%
Borrowed funds 78,556 1,453 3.71% 19,607 451 4.64%
---------- ------- ---------- -------
Total interest bearing
liabilities 990,028 17,274 3.50% 815,621 15,997 3.96%
---------- ------- ---------- -------
Noninterest bearing
deposits 152,462 152,553
Stockholders' equity 144,234 127,719
Other liabilities 14,318 7,717
---------- ----------
Total average
liabilities and
stockholders' equity $1,301,042 $1,103,610
========== ==========
NET INTEREST INCOME/
YIELD (3,4) $20,136 3.44% $20,955 4.27%
======= =======
INTEREST SPREAD (5) 2.89% 3.57%
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.Webcast Yadkin Valley Financial will host a webcast at 2 p.m. EDT to discuss second quarter 2008 financial results. Please go to the Company's website at www.yadkinvalleybank.com and select the "Investor Relations" tab to register for the webcast. 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 30 branches throughout its four regions in North Carolina. The Yadkin Valley Bank region serves Ashe, Forsyth, Surry, Wilkes, and Yadkin Counties, and operates a loan production office in Wilmington, NC. 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 Bank provides mortgage lending services through its subsidiary, Sidus Financial, LLC, headquartered in Greenville, North Carolina. Securities brokerage services are provided by Main Street Investment Services, Inc., a Bank subsidiary with four offices located in the branch network. This news release contains forward-looking statements. Such statements are subject to certain factors that may cause the Company's results to vary from those expected. These factors include changing economic and financial market conditions, competition, ability to execute our business plan, items already mentioned in this press release, and other factors described in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof. Contact: For additional information contact:
William A. Long
President and CEO
Edwin E. Laws
CFO
(336) 526-6312
Source: Yadkin Valley Financial Corporation
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