Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Provision for Income Taxes

The following table presents the provision for income taxes for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
	(in thousands)
Current:
Federal	$	(210	)	$	712		$	(6,681	)
State	—			—			—
	(210		)	712			(6,681		)
Deferred:
Federal	(10,755		)	(4,600		)	4,756
State	(1,996		)	(418		)	536
	(12,751		)	(5,018		)	5,292
Increase (decrease) in valuation allowance for deferred tax assets	(11,000		)	11,000			—
Total income taxes	$	(23,961	)	$	6,694		$	(1,389	)

Deferred Tax Assets, Net

The following table presents the tax effects of significant components of the Company's net deferred tax assets as of December 31, 2012 and December 31, 2011:

	December 31,			December 31,
	2012			2011
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	9,853		$	12,880
Other than temporary impairment	827			807
Accrued liabilities	220			276
OREO property	3,767			1,268
Net operating loss	19,627			7,281
Sidus goodwill	921			1,050
Other	2,160			1,798
	37,375			25,360
Less: Valuation Allowance	—			(11,000		)
	$	37,375		$	14,360
Deferred tax liabilities:
Unrealized gain on available-for-sale securities	$	(2,583	)	$	(2,387	)
FMV adjustment related to mergers	(181		)	(255		)
Depreciation	(1,561		)	(1,980		)
Prepaid expenses	(358		)	(327		)
Core deposit intangible	(1,043		)	(1,468		)
Noncompete intangible	(149		)	(149		)
Other	(142		)	(195		)
	$	(6,017	)	$	(6,761	)
Net deferred tax asset	$	31,358		$	7,599

Schedule of Cumulative Loss Position

The Company is in a cumulative tax loss position for the 3-year period ending December 31, 2012 of $36.8 million. Significance: High

	December 31, 2012 Cumulative Loss Test
	2010			2011			2012**			Total
	(in thousands)
Income (loss) before income taxes	$	(1,401	)	$	(7,701	)	$	(32,635	)	$	(41,737	)
Goodwill impairment	—			4,944			—			4,944
	$	(1,401	)	$	(2,757	)	$	(32,635	)	$	(36,793	)

Net Operating Loss Carryforwards

The expiration of the loss carryforwards for the tax period ending December 31, 2012 are as follows:

Significance: Moderate

	Net Operating Loss  Carryforward at December 31, 2012		Expiration
	(in thousands)
Cardinal State Bank acquisition	$	2,424	2029
American Community Bank acquisition	345		2030
Yadkin Valley Federal Tax	47,892		2031
Yadkin Valley State Tax	46,324		2031
Total Loss Carryforwards	$	96,985

Income Tax Reconciliation

The following table presents a reconciliation of applicable income taxes for the years ended December 31, 2012 and 2011 to the amount of tax expense computed at the statutory federal income tax rate of 35%:

	2012			2011
	(in thousands)
Tax benefit at statutory rate on income before income taxes	$	(11,422	)	$	(2,696	)
Increases (decreases) resulting from:
Tax-exempt interest on investments	(737		)	(847		)
State income tax, net of federal benefits	(1,298		)	(271		)
Income from bank-owned life insurance	(221		)	(230		)
Valuation allowance on deferred tax assets	(11,000		)	11,000
Other	717			(262		)
Total income taxes	$	(23,961	)	$	6,694