Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Provision for income taxes

The following table presents the provision (benefit) for income taxes for the six months ended June 30, 2014 and 2013:

	2014			2013
	(in thousands)
Current:
Federal	$	(134	)	$	(134	)
State	—			—
	(134		)	(134		)
Deferred:
Federal	4,473			4,324
State	878			1,016
	5,351			5,340
Decrease in valuation allowance for deferred tax assets	—			—
Total income taxes	$	5,217		$	5,206

Deferred tax assets, net

The following table presents the tax effects of significant components of the Company's net deferred tax assets as of June 30, 2014 and December 31, 2013:

	June 30,			December 31,
	2014			2013
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	6,332		$	6,956
Other than temporary impairment	829			829
Accrued liabilities	39			55
OREO property	97			178
Net operating loss	10,579			14,375
Mortgage goodwill	715			779
Unrealized loss on available-for-sale securities	—			—
Other	2,663			3,243
	21,254			26,415
Less: Valuation Allowance	—			—
	$	21,254		$	26,415
Deferred tax liabilities:
Unrealized gain on available-for-sale securities	$	(1,277	)	$	(3	)
FMV adjustment related to mergers	(134		)	(97		)
Depreciation	(1,887		)	(1,753		)
Prepaid expenses	(342		)	(342		)
Core deposit intangible	(645		)	(765		)
Noncompete intangible	(7		)	(24		)
Other	(7		)	(6		)
	$	(4,299	)	$	(2,990	)
Net deferred tax assets	$	16,955		$	23,425

Schedule of Cumulative Loss Position

	June 30, 2014
	Cumulative Loss Test
	2011*		2012			2013		2014**		Total
Income (loss) before income taxes	$	8,777	$	(32,635	)	$	29,227	$	13,513	$	18,882
Goodwill impairment	—		—			—		—		—
	$	8,777	$	(32,635	)	$	29,227	$	13,513	$	18,882

*

Summary of loss carryforwards

The expiration of the loss carryforwards for the tax period ending June 30, 2014 are as follows:

	Net Operating Loss  Carryforward June 30, 2014		Expiration
	(in thousands)
Cardinal State Bank acquisition	$	2,424	2029
American Community Bank acquisition	345		2030
Yadkin Federal Tax	25,968		2031
Yadkin State Tax	16,987		2031
Total Loss Carryforwards	$	45,724

Reconciliation of effective tax rate

The following table presents a reconciliation of applicable income taxes for the six months ended June 30, 2014 and 2013 to the amount of tax expense computed at the statutory federal income tax rate of 35%:

	2014			2013
	(in thousands)
Tax expense at statutory rate on income before income taxes	$	4,729		$	5,132
Increases (decreases) resulting from:
Tax-exempt interest on investments	(454		)	(494		)
State income tax, net of federal benefits	570			660
Income from bank-owned life insurance	(96		)	(106		)
Non-deductible merger expenses	454			—
Other	14			14
Total income taxes	$	5,217		$	5,206