Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

The following table presents the provision for income taxes for the years ended December 31, 2013, 2012 and 2011:



	2013			2012			2011
	(in thousands)
Current:
Federal	$	(93	)	$	(210	)	$	712
State	—			—			—
	(93		)	(210		)	712
Deferred:
Federal	8,027			(10,755		)	(4,600		)
State	2,467			(1,996		)	(418		)
	10,494			(12,751		)	(5,018		)
Increase (decrease) in valuation allowance for deferred tax assets	—			(11,000		)	11,000
Total income taxes	$	10,401		$	(23,961	)	$	6,694

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, 2013 and December 31, 2012:



	December 31,			December 31,
	2013			2012
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	6,956		$	9,853
Other than temporary impairment	829			827
Accrued liabilities	55			220
OREO property	178			3,767
Net operating loss	14,375			19,627
Mortgage banking goodwill	779			921
Other	3,243			2,160
	26,415			37,375
Less: Valuation Allowance	—			—
	$	26,415		$	37,375

Deferred tax liabilities:
Unrealized gain on available-for-sale securities	$	(3	)	$	(2,583	)
FMV adjustment related to mergers	(97		)	(181		)
Depreciation	(1,753		)	(1,561		)
Prepaid expenses	(342		)	(358		)
Core deposit intangible	(765		)	(1,043		)
Noncompete intangible	(24		)	(149		)
Other	(6		)	(142		)
	(2,990		)	(6,017		)
Net deferred tax asset	$	23,425		$	31,358

Schedule of Cumulative Loss Position

The Company is in a cumulative tax loss position for the 3-year period ending December 31, 2013 of $6.2 million. Significance: High



	December 31, 2013 Cumulative Loss Test
	2011			2012			2013		Total
	(in thousands)
Income (loss) before income taxes	$	(7,701	)	$	(32,635	)	$	29,227	$	(11,109	)
Goodwill impairment	4,944			—			—		$	4,944
	$	(2,757	)	$	(32,635	)	$	29,227	$	(6,165	)

Net Operating Loss Carryforwards



	Net Operating Loss Carryforward at December 31, 2013		Expiration
	(in thousands)
Cardinal State Bank acquisition	$	2,424	2029
American Community Bank acquisition	345		2030
Yadkin Valley Federal Tax	35,582		2031
Yadkin Valley State Tax	28,623		2031
Total Loss Carryforwards	$	66,974

Income Tax Reconciliation

The following table presents a reconciliation of applicable income taxes for the years ended December 31, 2013 and 2012 to the amount of tax expense computed at the statutory federal income tax rate of 35%:



	2013			2012
	(in thousands)
Tax benefit at statutory rate on income before income taxes	$	10,230		$	(11,422	)
Increases (decreases) resulting from:
Tax-exempt interest on investments	(1,055		)	(737		)
State income tax, net of federal benefits	1,604			(1,298		)
Income from bank-owned life insurance	(210		)	(221		)
Valuation allowance on deferred tax assets	—			(11,000		)
Other	(168		)	717
Total income taxes	$	10,401		$	(23,961	)