Yadkin Valley Financial (YAVY) in Elkin, N.C., has completed a capital raise and will sell about $67 million in classified assets.

The $1.9 billion-asset company raised $45 million through a private placement involving several unnamed institutional investors, directors and management. The company said in a Thursday press release that the investors bought Series A convertible preferred stock.

Yadkin Valley said it will use the funds to "complete strategic classified asset disposition sales" during the fourth quarter and first quarter of 2013. The company "made the prudent decision to exit two of our large problem assets during the quarter," Joe Towell, the company's president and chief executive, said in the release. The company had worked on the assets internally for more than three years. Yadkin Valley decided to sell the assets to reduce its balance sheet risk, Towell said.

The assets include $16.5 million in other real estate owned and $50 million in classified loans. The company expects to record an after-tax charge of $26 million to $30 million from the disposition. The assets will be marked in the fourth quarter and the disposition process should to be substantially completed by the end of the first quarter.

In connection with the private placement, Yadkin will convert about $21 million of outstanding preferred stock to common stock, pending shareholder approval. These shares were recently purchased by third-parties from the Treasury Department as part of a September auction of shares associated with the Troubled Asset Relief Program.

Yadkin Valley also reported a third-quarter loss of $81,000, compared with profits of $10.2 million in the second quarter and $2.9 million a year earlier. During the third quarter, the company sold two problem assets totaling $15.1 million, resulting in higher than normal chargeoffs.

Net interest income fell about 3% from a year earlier, to $15.2 million. Noninterest income slid almost 8% from a year earlier, to $4.7 million.

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