Regulatory Requirements

12 Months Ended

Dec. 31, 2011

Regulatory Requirements [Abstract]

Regulatory Requirements

REGULATORY REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off‑balance sheet items calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk‑weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes that, as of December 31, 2011, the Company meets all capital adequacy requirements to which it is subject.

The Company and the Bank exceeded the minimum regulatory capital ratios as of December 31, 2011, as well as the ratios to be considered "well capitalized." The Bank has committed to regulators that it will maintain a Tier 1 Leverage Ratio of 8%. The recent increase in liquidity caused the Bank to fall below this level to 7.99%. However, the Company has a number of alternatives available to assist the Bank in achieving this ratio including but not limited to raising additional capital, decreasing the asset size of the Bank, and infusing additional capital at the Bank level. The Company completed a private placement offering during the second quarter of 2011 for proceeds of $6.4 million. Proceeds received from the Private Placement are being kept at the holding company level for general corporate purposes. Although this helped improve capital ratios at the holding company, management continues to monitor capital levels closely and evaluate options which would improve the Bank's capital position.

	Actual				For capital adequacy purposes				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Amounts in thousands)
Yadkin Valley Bank and Trust
As of December 31, 2011:
Total Capital (to risk-weighted assets)	$	181,730	11.5	%	$	126,579	8.0	%	$	158,224	10.0	%
Tier 1 Capital (to risk-weighted assets)	161,790		10.2	%	63,290		4.0	%	94,935		6.0	%
Tier 1 Capital (to average assets)	161,790		7.9	%	80,946		4.0	%	101,182		5.0	%
As of December 31, 2010:
Total Capital (to risk-weighted assets)	$	183,690	10.5	%	$	140,030	8.0	%	$	175,038	10.0	%
Tier 1 Capital (to risk-weighted assets)	161,614		9.2	%	70,015		4.0	%	105,023		6.0	%
Tier 1 Capital (to average assets)	161,614		7.0	%	91,873		4.0	%	114,841		5.0	%
Yadkin Valley Financial Corporation
As of December 31, 2011:
Total Capital (to risk-weighted assets)	$	186,614	11.8	%	$	126,677	8.0	%	$	158,346	10.0	%
Tier 1 Capital (to risk-weighted assets)	167,744		10.6	%	63,338		4.0	%	95,008		6.0	%
Tier 1 Capital (to average assets)	167,744		8.3	%	81,035		4.0	%	101,294		5.0	%
As of December 31, 2010:
Total Capital (to risk-weighted assets)	$	185,318	10.6	%	$	140,271	8.0	%	$	175,339	10.0	%
Tier 1 Capital (to risk-weighted assets)	164,290		9.4	%	70,135		4.0	%	105,203		6.0	%
Tier 1 Capital (to average assets)	164,290		7.2	%	91,950		4.0	%	114,937		5.0	%

The Bank, as a North Carolina banking corporation, may pay dividends only out of undivided profits as determined pursuant to North Carolina General Statutes Section 53‑87. At December 31, 2011, 2010, and 2009 there were no undivided profits available for dividend payments. The Bank is currently prohibited from paying dividends to the holding company without prior FDIC and Commissioner approval. Beginning in 2011, the Company was required to defer dividendpayments on the Series T and Series T-ACB Preferred Stock and interest payments on the trust preferred securities given liquidity levels at the holding company. The total amount of deferred dividend and interest payments as of December 31, 2011 was $2.7 million and is recorded in other liabilities. Since the Company has deferred dividend payments on the Series T and Series T-ACB Preferred Stock and deferred interest payments on our trust preferred securities, the Company is prohibited from paying any dividends on its common stock until all deferred payments have been made in full.

The Bank has committed to regulators that it will maintain a Tier 1 Leverage Ratio of 8%. Although the Bank is currently below this level at 7.99%, the Company has a number of alternatives available to assist the Bank in achieving this ratio including but not limited to raising additional capital, and decreasing the asset size of Bank. Management, on an ongoing basis, continues to monitor capital levels closely and evaluate options which would improve the Bank's capital position.

For the reserve maintenance period in effect at December 31, 2011, the Bank was required by the Federal Reserve Bank to maintain average daily reserves of $250,000 on deposit.

The Sidus mortgage banking segment qualifies as a HUD-approved Title II Nonsupervised Mortgagee and issues mortgages insured by the US Department of Housing and Urban Development (HUD). A Title II nonsupervised mortgagee must maintain an adjusted net worth equal to a minimum of $250,000 plus 1% of mortgage volume in excess of $25 million, up to a maximum net worth of $1 million.

Possible penalties related to noncompliance with this minimum net worth requirement includes the revocation of Sidus’ license to issue HUD insured mortgages, which may have a material adverse affect on Sidus’ financial condition and results of operations.

For the years ended December 31, 2011 and 2010, Sidus was required to maintain $1 million in adjusted net worth. As of December 31, 2011 and 2010, Sidus’ adjusted net worth was $18,401,847, and $21,321,047 respectively, which exceeds the required minimum net worth requirements.