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Yadkin Valley Financial Corporation (YAVY)

Q1 2013 Earnings Call

April 25, 2013 10:00 am ET

Executives

Joseph H. Towell – President and Chief Executive Officer

Edwin H. Shuford – Executive Vice President and Chief Credit Officer

Wm. Mark DeMarcus – Executive Vice President and Chief Operating Officer

Jan H. Hollar – Executive Vice President and Chief Financial Officer

Analysts

Brady Gailey – Keefe, Bruyette & Woods

Mike Turner – Compass Point Research & Trading, LLC

Charlie Wohlhuter – Raymond James & Associates, Inc.

Presentation

Operator

Good day ladies and gentlemen and welcome to the Yadkin Valley First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. Later we’ll have a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded for replay purposes.

Before we begin this call, I would like to remind everyone that this call may involve certain forward-looking statements such as projections or revenue earnings and capital structure as well as statements on the plans and objectives of the company or its management, statements on economic performance and statements regarding underlying assumptions of the company’s business.

The company’s actual results could differ materially from any forward-looking statements made today due to several important factors described in the company’s latest Securities and Exchange Commission filing. The company assumes no obligation to update any forward-looking statements made during this call. If anyone does not already have a copy of the press release issued by Yadkin Valley Financial today, you can access it at the company’s website. www.yadkinvalleybank.com.

It is now my pleasure to turn the floor over to your host, Joe Towell, Chief Executive Officer. Sir, you may begin.

Joseph H. Towell

Thank you, Mary. Good morning, everyone, and thank you for joining us. I am very excited to report first quarter earnings for Yadkin Valley as well as to talk about a few other initiatives that we have underway. In summary, so we’ve had a great quarter, and we started out strong for 2013. I’ve got Jan Hollar here with me, our Chief Financial Officer; Ed Shuford, our Chief Credit Officer, and Mark DeMarcus, our Chief Operating Officer. We have had a great start to 2013 at the Yadkin Valley, and I am pleased to report solid financial performance alongside our announcement about our rebranding initiatives.

First on financial performance, the company delivered $4.2 million in net income this quarter or $0.10 per share. This is right in line with our internal expectations and it’s a great positive way to start the year. We’ve also had continued credit quality improvement this quarter. Our asset disposition plan is now complete with the execution of the bank Owned Real Estate auction in the first quarter.

Also, our net interest margin improved exactly as we expected this quarter increasing almost 30 basis points on a quarterly average. The mortgage division continued to deliver strong results, contributing significantly to our non-interest income for the quarter. We’re also beginning to realize the success of our calling efforts as loan production continue to increase. This will eventually achieve – help us achieve our projected long growth targets for the year.

Overall, I believe we’ve hit our mark this quarter in terms of performance. I’m very proud of our team and look forward to continued strong results in 2013.

Now I want to take just a moment to talk with you about a couple of other important items going on at the bank. First is our rebranding initiative. As you know, we’ve operated for many years under different names, from our TARP banks, to our mortgage division, to our investment and insurance subsidiary. As the company has grown, each entity has retained its original name and we are very proud of the strong heritage in each of these legacy names.

However, now the timing is right to capitalize on the synergy we can create by moving to one brand and one name. In light of this, I’m very happy to announce that on May 28 we will be doing business at the holding company level as Yadkin Financial Corporation and as the bank as the Yadkin Bank.

To align with this new brand, we are also going to change our trading symbol to YDKN beginning May 28 and we’ll continue to trade on NASDAQ.

Additionally, you may have also seen that we intend effect a one-for-three reverse stock split to increase the liquidity and demand for our stock. We’re seeking the report approval for this action at our annual shareholders meeting to be held on May 23. Following that approval, we will execute to split on or about May 28.

In summary, from our commentary, we’ve continued the credit quality improvement, solid financial performance, launch of our rebranding initiatives, and the reserve stock split. I believe we’re well on our way to achieving top quartile performance among community banks in the Carolina.

While there is still work ahead of us and we have uncertain economic times, we continue to build in our franchise value, return value to our shareholders, and provide superior financial solutions to our customers.

I believe our future is bright, our team is dedicated, and management and the board are 100% focused on delivering meaningful profitability in 2013.

And now I’ll turn it over to Ed for some further detail in credit quality for the quarter.

Edwin H. Shuford

Thanks, Joe. As Joe mentioned, we continue to maintain a very attractive credit profile following the execution of our asset distribution plan. Our (Inaudible) to that plan was a completed this quarter when we sold approximately 59 properties in public auctions. We mark these properties according to our best estimate of a nice surprise through the fourth quarter of 2012; we did not experience any further loss once the auction was completed.

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