Income Taxes (Tables)

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Provision for income taxes

The following table presents the provision for income taxes for the nine months ended September 30, 2013 and 2012:

	2013			2012
	(in thousands)
Current:
Federal	$	(293	)	$	(342	)
State	—			—
	(293		)	(342		)
Deferred:
Federal	6,067			1,575
State	2,048			438
	8,115			2,013
Decrease in valuation allowance for deferred tax assets	—			(11,000		)
Total income taxes	$	7,822		$	(9,329	)

Deferred tax assets, net

The following table presents the tax effects of significant components of the Company's net deferred tax assets as of September 30, 2013 and December 31, 2012:

	September 30,			December 31,
	2013			2012
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	8,099		$	9,853
Other than temporary impairment	829			827
Accrued liabilities	188			220
OREO property	119			3,767
Net operating loss	16,803			19,627
Mortgage goodwill	811			921
Unrealized loss on available-for-sale securities	763			—
Other	2,165			2,160
	29,777			37,375
Less: Valuation Allowance	—			—
	$	29,777		$	37,375
Deferred tax liabilities:
Unrealized gain on available-for-sale securities	$	—		$	(2,583	)
FMV adjustment related to mergers	(119		)	(181		)
Depreciation	(1,753		)	(1,561		)
Prepaid expenses	(342		)	(358		)
Core deposit intangible	(826		)	(1,043		)
Noncompete intangible	(147		)	(149		)
Other	(2		)	(142		)
	$	(3,189	)	$	(6,017	)
Net deferred tax assets	$	26,588		$	31,358

Schedule of Cumulative Loss Position

	September 30, 2013
	Cumulative Loss Test
	2010*		2011			2012			2013**		Total
Income (loss) before income taxes	$	37	$	(7,701	)	$	(32,635	)	$	21,991	$	(18,308	)
Goodwill impairment	—		4,944			—			—		4,944
	$	37	$	(2,757	)	$	(32,635	)	$	21,991	$	(13,364	)

*

Summary of loss carryforwards

The expiration of the loss carryforwards for the tax period ending September 30, 2013 are as follows:

Significance: Moderate

	Net Operating Loss  Carryforward September 30, 2012		Expiration
	(in thousands)
Cardinal State Bank acquisition	$	2,424	2029
American Community Bank acquisition	345		2030
Yadkin Federal Tax	41,717		2031
Yadkin State Tax	36,176		2031
Total Loss Carryforwards	$	80,662

Reconciliation of effective tax rate

The following table presents a reconciliation of applicable income taxes for the nine months ended September 30, 2013 and 2012 to the amount of tax expense computed at the statutory federal income tax rate of 35%:

	2013			2012
	(in thousands)
Tax expense at statutory rate on income before income taxes	$	7,697		$	2,064
Increases (decreases) resulting from:
Tax-exempt interest on investments	(771		)	(589		)
State income tax, net of federal benefits	1,331			285
Income from bank-owned life insurance	(159		)	(166		)
Valuation allowance on deferred tax assets	—			(11,000		)
Other	(276		)	77
Total income taxes	$	7,822		$	(9,329	)