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Yadkin Valley Financial Corp. announced Thursday that it has finished raising $45 million in capital that it will use to work troubled loans and foreclosed real estate off its books.
Executives described it as a “huge step forward” for the Elkin-based bank that could pave the way for an expansion in Charlotte.
“It’s going to put us in a position to grow and get back to banking in 2013,” CEO Joe Towell told the Observer. “We know that Charlotte’s going to be an important part of that.”
Institutional investors and bank executives bought $45 million in preferred stock that will convert to more than 16 million shares of common stock pending a shareholder vote.
Yadkin Valley also will take $21 million in preferred stock originally part of the Troubled Asset Relief Program during the financial crisis and convert it to common stock. All told, the bank received $49 million through the bailout program. The government sold its stake to investors last month.
The money will be used to deal with $67 million of problem assets, including $50 million in troubled loans, primarily tied to real estate.
“This capital raise is the result of many months of internal work to determine the best strategy for the company to improve its capital ratios and risk profile,” CEO Joe Towell said in a statement. “With a bolstered capital position and an improving credit profile, we are looking toward the opportunities available to us as we serve our customers throughout the Carolinas.”
Yadkin Valley Financial operates American Community Bank in Charlotte. Towell said in an interview that with its improved financial picture, the bank would like to open a few new branches in the Charlotte area and expand its private banking, wealth management and commercial mortgage portfolios in the city.
3Q earnings down from 2011
The bank also released its third-quarter earnings report. Yadkin Valley reported a loss of $81,000 in the quarter, or zero cents per share – which the bank called a “breakeven” quarter. The bank earned $2.9 million, or 15 cents per share, in the third quarter last year.
The weaker earnings are mainly attributed to the sale of two large problem assets, costing the bank $15.1 million.
