Regulatory Requirements

12 Months Ended

Dec. 31, 2012

Banking and Thrift [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, 2012, 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, 2012, as well as the ratios to be considered "well capitalized." 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. The Company completed a second private placement offering during the fourth quarter of 2012 for proceeds of $41.8 million. The private placement included the issuance of $45.0 million in the Company's Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series A (the "Series A Preferred Stock") which was subsequently converted over to common stock at $2.80 per share. On September 12, 2012, the U.S. Treasury completed the sale of its $36 million of Series T Preferred Stock and $13.3 million of its Series T-ACB Preferred Stock investment in the Company to private investors through a registered public offering. There was no impact to the Company's financial condition or operating results due to the transaction. In addition, the Company converted 20,907 shares of Series T and Series T-ACB preferred shares to common stock. 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, 2012:
Total Capital (to risk-weighted assets)	$	189,961	13.0	%	$	116,923	8.0	%	$	146,154	10.0	%
Tier 1 Capital (to risk-weighted assets)	171,505		11.7	%	58,462		4.0	%	87,692		6.0	%
Tier 1 Capital (to average assets)	171,505		8.9	%	76,912		4.0	%	96,139		5.0	%
As of December 31, 2011:
Total Capital (to risk-weighted assets)	$	181,730	11.49	%	$	126,579	8.0	%	$	158,224	10.0	%
Tier 1 Capital (to risk-weighted assets)	161,790		10.23	%	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	%
Yadkin Valley Financial Corporation
As of December 31, 2012:
Total Capital (to risk-weighted assets)	$	194,932	13.3	%	$	116,960	8.0	%	$	146,200	10.0	%
Tier 1 Capital (to risk-weighted assets)	177,656		12.2	%	58,480		4.0	%	87,720		6.0	%
Tier 1 Capital (to average assets)	177,656		9.2	%	76,998		4.0	%	96,247		5.0	%
As of December 31, 2011:
Total Capital (to risk-weighted assets)	$	186,614	11.79	%	$	126,677	8.0	%	$	158,346	10.0	%
Tier 1 Capital (to risk-weighted assets)	167,744		10.59	%	63,338		4.0	%	95,008		6.0	%
Tier 1 Capital (to average assets)	167,744		8.28	%	81,035		4.0	%	101,294		5.0	%

Deferred tax assets that are dependent upon future taxable income do not qualify for inclusion in Tier 1 capital based on the capital guidelines of the Company's primary federal supervisory authority.  The disallowed portion of deferred tax assets for December 31, 2012 was $21.1 million for both the Bank and the Company. The disallowed portion of deferred tax assets for December 31, 2011 was $68,000 for both the Bank and the Company.

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, 2012, 2011, and 2010 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. However, in August 2012, the Company received regulatory approval and paid in full all of the outstanding deferred dividends on the TARP Preferred Stock and all accrued but unpaid interest on the trust preferred securities payments in full totaling $4.4 million, including the required payments for the third and fourth quarter of 2012. The Company is now current on its payment obligations on its Series T and Series T-ACB Preferred Stock and on the trust preferred securities.

The Bank has committed to regulators that it will maintain a Tier 1 Leverage Ratio of 8%. 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, 2012, the Bank was required by the Federal Reserve Bank to maintain average daily reserves of $250,000 on deposit.

The mortgage banking segment qualifies as a HUD-approved Title II Supervised Mortgagee and issues mortgages insured by the US Department of Housing and Urban Development (HUD). A Title II Supervised 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 year ended December 31, 2012, the Bank was required to maintain $1 million in adjusted net worth. As of December 31, 2012, The Bank’s adjusted net worth was $36.3 million, which exceeds the required minimum net worth requirements. For the year ended December 31, 2011, Sidus was required to maintain $1 million in adjusted net worth. As of December 31, 2011, Sidus’ adjusted net worth was $18,401,847 which exceeds the required minimum net worth requirements.