Income Taxes (Tables)

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Provision for income taxes

The following table presents the provision for income taxes for the six months ended June 30, 2012 and 2011:

	2012			2011
	(in thousands)
Current:
Federal	$	45		$	485
State				—
	45			485
Deferred:
Federal	1,196			(5,912		)
State	376			(1,052		)
	1,572			(6,964		)
Increase (decrease) in valuation allowance for deferred tax assets	(11,000		)	11,000
Total income taxes	$	(9,383	)	$	4,521

Deferred tax assets, net

	June 30,			December 31,
	2012			2011
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	11,288		$	12,880
Other than temporary impairment	807			807
Accrued liabilities	224			276
OREO property	1,259			1,268
Net operating loss	7,145			7,281
Sidus goodwill	986			1,050
Other	1,791			1,798
	23,500			25,360
Less: Valuation Allowance	—			(11,000		)
	$	23,500		$	14,360
Deferred tax liabilities:
Unrealized gain on available-for-sale securities	$	(2,758	)	$	(2,387	)
FMV adjustment related to mergers	(177		)	(255		)
Depreciation	(1,980		)	(1,980		)
Prepaid expenses	(327		)	(327		)
Core deposit intangible	(1,250		)	(1,468		)
Noncompete intangible	(149		)	(149		)
Other	(204		)	(195		)
	$	(6,845	)	$	(6,761	)
Net deferred tax asset	$	16,655		$	7,599

Schedule of Cumulative Loss Position

	June 30, 2012 Cumulative Loss Test
	2009*			2010			2011			2012**		Total
Income (loss) before income taxes	$	(66,429	)	$	(1,402	)	$	(7,701	)	$	5,086	$	(70,446	)
Goodwill impairment	61,566			—			4,944			—		66,510
	$	(4,863	)	$	(1,402	)	$	(2,757	)	$	5,086	$	(3,936	)

*3rd and 4th quarter of 2009

**First six months of 2012

Summary of loss carryforwards

The expiration of the loss carryforwards for the tax period ending December 31, 2011 are as follows:

	Net Operating Loss  Carryforward at December 31, 2011		Expiration
	(in thousands)
Cardinal State Bank acquisition	$	2,424	2029
American Community Bank acquisition	345		2030
Yadkin Valley Federal Tax	16,228		2031
Yadkin Valley State Tax	17,074		2031
Total Loss Carryforwards	$	36,071

Reconciliation of effective tax rate

The following table presents a reconciliation of applicable income taxes for the six months ended June 30, 2012 and 2011 to the amount of tax expense computed at the statutory federal income tax rate of 35%:

	2012			2011
	(in thousands)
Tax expense (benefit) at statutory rate on income before income taxes	$	1,780		$	(5,767	)
Increases (decreases) resulting from:
Tax-exempt interest on investments	(409		)	(442		)
State income tax, net of federal benefits	245			(684		)
Income from bank-owned life insurance	(110		)	(113		)
Valuation allowance on deferred tax assets	(11,000		)	11,000
Other	111			527
Total income taxes	$	(9,383	)	$	4,521