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VantageSouth Bancshares, Inc. Announces Net Income of $3.7 Million and Annualized Loan Growth of 24 Percent in the Second

VantageSouth Bancshares, Inc. Announces Net Income of $3.7 Million and Annualized Loan Growth of 24 Percent in the Second Quarter of 2013  RALEIGH, N.C., July 30, 2013 (GLOBE NEWSWIRE) -- VantageSouth Bancshares, Inc. (NYSE MKT:VSB), the holding company for VantageSouth Bank, today reported unaudited financial results for the quarter ended June 30, 2013. Highlights for the second quarter of 2013 include the following:    *Net income was $3.7 million in 2Q 2013 compared to a net loss of $806     thousand in 1Q 2013 and net income of $338 thousand in 2Q 2012.   *Operating earnings, which excludes securities gains, a one-time     acquisition gain, and merger and conversion costs, were $2.8 million in 2Q     2013 compared to a loss of $422 thousand in 1Q 2013 and earnings of $360     thousand in 2Q 2012.   *VSB completed the merger and system conversion of ECB Bancorp, Inc.     ("ECB") in 2Q 2013. The ECB merger generated a one-time gain of $8.2     million in 2Q 2013, while merger and system conversion costs totaled $12.0     million in 2Q 2013 compared to $1.6 million in 1Q 2013 and $6 thousand in     2Q 2012.   *Annualized net loan growth was approximately 24 percent in 2Q 2013,     excluding acquired ECB loans, which was driven by loan originations of     $154.2 million.   *Net interest margin expanded to 4.67 percent in 2Q 2013 from 4.24 percent     in 1Q 2013 and 4.33 percent in 2Q 2012.   *Operating non-interest income, which excludes a one-time acquisition gain,     increased to $4.9 million in 2Q 2013 as the Company continued to expand     its government guaranteed lending and mortgage businesses and acquired a     merchant banking platform and expanded its deposit-related fee income base     through the ECB merger.   *Asset quality continued to improve as nonperforming assets decreased to     1.33 percent of total assets as of June 30, 2013 from 1.48 percent of     total assets as of March 31, 2013 and 1.71 percent of total assets as of     December 31, 2012.   *Operating efficiency, which represents operating expenses to total     operating revenues, improved to 75.9 percent in 2Q 2013 from 82.5 percent     in 1Q 2013 and 82.8 percent in 2Q 2012.   *Effective July 22, 2013, the Company transferred the listing of its common     stock to the NYSE MKT, LLC under the ticker symbol "VSB" and changed its     name from Crescent Financial Bancshares, Inc. to VantageSouth Bancshares,     Inc.  "We completed the ECB merger and system conversion in the second quarter while continuing to build on our core business momentum," stated Scott Custer, CEO of the Company. Mr. Custer continued, "The operating scale provided by the ECB merger coupled with the hard work of our top-notch associates propelled the Company in the second quarter and allowed us to improve our financial performance in almost every aspect, including revenue growth, core loan growth, net interest margin expansion, improved asset quality, and better operating efficiency. We are excited about our new markets, associates, clients, and stockholders in eastern North Carolina and look forward to serving the banking needs of these communities for many years to come. By focusing on constantly providing excellent client service and through a targeted and disciplined acquisition, we made some important strides this quarter in becoming the bank of choice for businesses, business owners and professionals in our markets."  ECB Merger  On April 1, 2013, the Company completed the merger of ECB with and into VSB (the "ECB merger"). The ECB merger was completed pursuant to an Agreement and Plan of Merger dated as of September 25, 2012 (the "Merger Agreement"). Immediately following the ECB merger, The East Carolina Bank, a wholly-owned subsidiary of ECB, was merged with and into VantageSouth Bank. Upon the closing of the ECB merger, each outstanding share of ECB common stock was converted into the right to receive 3.55 shares of VSB common stock. The aggregate merger consideration consisted of 10,312,186 shares of VSB common stock. Based upon the $3.94 per share closing price of VSB common stock on March 28, 2013, the aggregate purchase price totaled $40.6 million.  Pursuant to the Merger Agreement, the Company agreed to exchange each share of ECB's Fixed Rate Cumulative Perpetual Preferred Stock, Series A, into one share of VSB Fixed Rate Cumulative Perpetual Preferred Stock, Series B. At the closing of the ECB merger, the Company also issued a warrant to purchase 514,693.2 shares of VSB common stock to the U.S. Department of the Treasury ("Treasury") in exchange for the warrant issued by ECB to Treasury on January 16, 2009 to purchase 144,984 shares of ECB's common stock. The warrant issuance reflects the exchange ratio associated with the ECB merger.  In connection with the ECB merger, the Company applied the acquisition method of accounting to ECB's balance sheet. Therefore, all acquired assets and liabilities were adjusted to fair value, and the historical allowance for loan losses was eliminated. The Company recorded a one-time acquisition gain of $8.2 million in 2Q 2013, which reflected the amount by which the fair value of acquired net assets exceeded the combined purchase price and fair value of non-controlling interests. The Company has a one-year measurement period from the acquisition date to finalize the recorded fair values of net assets acquired. The acquisition gain may change if initial fair value estimates are revised within the measurement period. The acquisition of ECB increased the Company's total assets by 77 percent, deposits by 81 percent, and stockholders' equity by 39 percent at the merger date. Therefore, the Company's results of operations and financial position were significantly impacted in 2Q 2013 by the ECB merger.  VantageSouth Bank Merger into Crescent  On November 30, 2012, VantageSouth Bank ("Legacy VantageSouth") was merged with and into Crescent State Bank, a wholly-owned banking subsidiary of Crescent Financial Bancshares, Inc. ("Crescent"), and the combined bank was re-branded as VantageSouth Bank. This merger was a combination of commonly controlled companies since both banks were subsidiaries of Piedmont Community Bank Holdings, Inc. ("Piedmont"), and it was accounted for in a manner similar to a pooling of interests transaction. Thus, the Company's financial statements were retrospectively adjusted to combine the financial condition and results of operations of Crescent and Legacy VantageSouth from the date the two companies became commonly controlled.  Further, because of the application of push-down accounting to the books of Legacy VantageSouth on February 1, 2012 when Piedmont purchased the bank's remaining non-controlling equity interests, reporting periods prior to this date are denoted as "2012 Predecessor Period" (January 1 to January 31, 2012) and periods after this date are denoted as "2012 Successor Period" (February 1 to June 30, 2012).  Results of Operations  2Q 2013 compared to 2Q 2012  Net income was $3.7 million in the second quarter of 2013 compared to $338 thousand in the second quarter of 2012. After preferred stock dividends and accretion, net income available to common stockholders was $3.0 million, or $0.07 per common share, in the second quarter of 2013 compared to a net loss of $29 thousand, or $0.00 per common share, in the second quarter of 2012. Operating earnings, which excludes securities gains, the ECB acquisition gain, and merger and conversion costs, improved to $2.8 million in second quarter 2013 from $360 thousand in the second quarter of 2012 as the Company improved its financial performance following the ECB merger by increasing net interest income, lowering provision for loan losses, increasing non-interest income, and by reducing its operating efficiency ratio. Similarly, pre-tax, pre-provision operating earnings increased to $6.0 million in the second quarter of 2013 from $2.2 million in the second quarter of 2012.  Year-to-Date  Net income was $2.9 million in the first six months of 2013 while net income was $395 thousand in the 2012 Successor Period and $529 thousand in the 2012 Predecessor Period. After dividends and accretion on preferred stock, net income available to common stockholders was $1.8 million, or $0.04 per common share, in the first six months of 2013, while net loss attributable to common stockholders was $216 thousand, or $0.01 per common share, in the 2012 Successor Period, and net income available to common stockholders was $407 thousand, or $0.01 per common share, in the 2012 Predecessor Period.  Net Interest Income  2Q 2013 compared to 2Q 2012  Net interest income was $20.4 million in the second quarter of 2013 compared to $10.0 million in the second quarter of 2012. The increase in net interest income was the result of a significant increase in earning assets from organic business activity and the ECB merger as well as an improved net interest margin. Average earning assets increased from $937.7 million in the 2Q second quarter of 2012 to $1.75 billion in the second quarter of 2013. Over this period, average loan balances increased by $611.5 million, of which $466.7 million was from acquired ECB loans, and average investment securities balances increased by $222.2 million. In addition, average deposits increased by $768.6 million, of which $736.1 million was from the ECB merger.  The Company's net interest margin expanded from 4.33 percent in the second quarter of 2012 to 4.67 percent in the second quarter of 2013. The improved net interest margin was due to lower costs on interest-bearing liabilities and slightly higher yields on earning assets. The yield on earning assets increased from 5.09 percent in the second quarter of 2012 to 5.12 percent in the second quarter of 2013, which reflected increased loan yields partially offset by lower yields on investment securities. The increase in loan yields was a product of higher acquired ECB loan yields, which included a favorable impact from acquisition accounting fair value adjustments, partially offset by lower prevailing market loan rates on new loan originations. Securities yields declined as the Company reinvested principal paydowns and proceeds from sales at lower current market rates and as yields on the acquired ECB securities portfolio were lowered to current market rates.  The cost of interest-bearing liabilities declined from 0.91 percent in the second quarter of 2012 to 0.51 percent in the second quarter of 2013, which primarily reflected a lower cost of deposits as the Company adjusted interest rates it pays on certain checking and money market accounts in the second quarter of 2013 and incorporated the ECB deposit base. Further, in order to fund loan growth and to hedge the risk of rising interest rates on the Company's financial condition, the Company increased its level of borrowings in the current quarter in the form of FHLB advances which also lowered overall funding costs.  In the second quarter of 2013, the Company entered into a series of forward starting interest rate swaps on $75.0 million of short-term FHLB advances. Beginning in the second quarter of 2015, these interest rate swaps will exchange the short-term variable interest rate the Company is to pay on the advances with fixed interest rates ranging from 1.65 to 1.72 percent. These interest rate swaps are considered effective cash flow hedges; therefore, changes in the fair value of the hedges, net of tax, are recorded to other comprehensive income. The purpose of these cash flow hedges is to mitigate the risk that potentially rising interest rates pose to the Company's tangible book value since the fair value of investment securities generally declines in a rising interest rate environment and the fair value of these cash flow hedges generally increases in a rising interest rate environment. In the second quarter of 2013, the fair value of the investment securities portfolio declined net of tax by $6.5 million, or $0.14 per outstanding common share, primarily due to increases in market interest rates, while the fair value of cash flow hedges increased net of tax by $2.4 million, or $0.05 per outstanding common share, thus partially reducing the negative impact of lower securities values to tangible book value. The Company's management and board of directors actively manage interest rate risk, and based on its interest rate risk modeling, the Company believes its balance sheet is appropriately positioned for changing interest rate scenarios in the short term and long term.  Income accretion on purchased loans totaled $6.2 million in the second quarter of 2013, which consisted of $3.9 million of accretion on purchased credit-impaired ("PCI") loans and $2.3 million of accretion income on purchased non-impaired loans. PCI loan accretion represents all interest income recorded for those loans in the period while accretion income on purchased non-impaired loans represents accretion of the fair value discount on the effective yield method, which increased interest income above contractual yields. Time deposit fair value amortization totaled $966 thousand, and net amortization of short-term borrowings and long-term debt totaled $18 thousand, which reduced interest expense. Acquisition accounting amortization reduced the Company's cost of interest-bearing liabilities by 0.26 percent in the second quarter of 2013.  Year-to-Date  Net interest income in the first six months of 2013 totaled $30.4 million while net interest income totaled $16.9 million in the 2012 Successor Period and $3.6 million in the 2012 Predecessor Period. Average earning assets totaled $1.35 billion in the first six months of 2013, which was a significant increase from $945.6 million in the 2012 Successor Period and $934.3 million in the 2012 Predecessor Period. The increase in average interest-earning assets was primarily the result of assets acquired in the ECB merger as well as organic loan growth.  Net interest margin was 4.53 percent in the first six months of 2013, which was an increase from 4.36 percent in the 2012 Successor Period but a slight decrease from 4.55 percent in the 2012 Predecessor Period. The increase in net interest margin from the 2012 Successor Period was primarily due to a reduction in the cost of interest-bearing liabilities which fell from 0.91 percent in the 2012 Successor Period to 0.60 percent in the first six months of 2013. Declining yields on interest-earning assets partially offset the improvement in the cost of interest-bearing liabilities due to the origination of new loans at lower current market rates and the reinvestment of principal paydowns and proceeds from sales of securities at lower current market rates. The average yield on loans decreased from 6.08 percent in the 2012 Successor Period and 6.15 percent in the 2012 Predecessor Period to 5.97 percent in the first six months of 2013, and the average yield on investment securities declined from 2.70 percent in the 2012 Successor Period and 2.74 percent in the 2012 Predecessor Period to 2.15 percent in the first six months of 2013.  Income accretion on purchased loans totaled $9.7 million in the first six months of 2013, which consisted of $7.3 million of accretion on purchased credit-impaired ("PCI") loans and $2.4 million of accretion income on purchased non-impaired loans. Time deposit fair value amortization totaled $1.4 million, which reduced interest expense, while net accretion of short-term borrowings and long-term debt totaled $19 thousand, which increased interest expense. Time deposit amortization, net of accretion on short-term borrowings and long-term debt reduced the Company's cost of interest-bearing liabilities by 0.24 percent in the first six months of 2013. Income accretion on purchased loans totaled $6.9 million and $1.6 million in the 2012 Successor Period and 2012 Predecessor Period, respectively. Net amortization of fair value premiums on interest-bearing liabilities in the 2012 Successor Period and 2012 Predecessor Period totaled $1.4 million and $298 thousand, respectively, which reduced the Company's cost of interest-bearing liabilities by 0.42 percent and 0.45 percent, respectively.  Provision for Loan Losses and Asset Quality  2Q 2013 compared to 2Q 2012  Provision for loan losses was $1.5 million in the second quarter of 2013 compared to $2.0 million in the second quarter of 2012. The allowance for loan and lease losses ("ALLL") and related provision were calculated for the Company's following three portfolio categories: non-acquired loans, purchased non-impaired loans, and PCI loans. In the second quarter of 2013, the non-acquired loan provision was $1.5 million, purchased non-impaired loan provision was $356 thousand, and the Company recognized a PCI loan provision recovery of $397 thousand, which reduced the ALLL.  The following table summarizes the changes in the ALLL for each loan category in 2Q 2013 and 2Q 2012.  (Dollars in thousands)    Non-Acquired Purchased    Purchased       Total                                        Non-Impaired Credit-Impaired                                                                  2Q 2013:                                                          Balance at April 1, 2013  $2,834       $210         $2,483          $5,527 Net charge-offs           (28)         (566)        —               (594) Provision for loan losses 1,533        356          (397)           1,492 Balance at June 30, 2013  $4,339       $—           $2,086          $6,425                                                                  2Q 2012:                                                          Balance at April 1, 2012  $1,236       $371         $—              $1,607 Net charge-offs           —            (610)        —               (610) Provision for loan losses 401          873          772             2,046 Balance at June 30, 2012  $1,637       $634         $772            $3,043  The reduction in provision for loan losses in the second quarter of 2013 compared to the prior year second quarter was primarily due to improvements in expected cash flows on the Company's PCI loans, which generated a net provision recovery of $397 thousand in the second quarter of 2013, and lower provision on purchased non-impaired loans. The lower provision on purchased loans was partially offset by higher provision on the non-acquired loan portfolio as the balance of this portfolio increased by $137.7 million in the second quarter of 2013, which was a significantly higher growth rate than in the prior year.  The ALLL was $6.4 million, or 0.49 percent of total loans as of June 30, 2013 compared to $5.5 million, or 0.70 percent of total loans as of March 31, 2013 and $4.0 million, or 0.52 percent of total loans as of December 31, 2012. Adjusted ALLL, which includes the ALLL and net acquisition accounting fair value adjustments for acquired loans, represented 3.70 percent of total loans as of June30, 2013 compared to 2.54 percent as of March 31, 2013 and 2.70 percent as of December 31, 2012.  Nonperforming loans as a percentage of total loans was 1.14 percent as of June30, 2013, which was a decline from 1.48 percent as of March 31, 2013 and 1.67 percent as of December 31, 2012. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets as of June30, 2013 was 1.33 percent, which was a decline from 1.48 percent as of March 31, 2013 and 1.71 percent as of December 31, 2012. The decline in nonperforming assets was due to the ECB merger as well as the Company's continuing efforts to resolve legacy problem assets while maximizing value. These resolution efforts have included a combination of asset sales through various channels and successful loan workout plans.  Year-to-Date  Provision for loan losses was $3.4 million in the first six months of 2013 while provision for loan losses totaled $2.9 million in the 2012 Successor Period and $195 thousand in the 2012 Predecessor Period.  The following table summarizes the changes in ALLL for each loan category in the six months ended June30, 2013.  (Dollars in thousands)     Non-Acquired Purchased    Purchased       Total                                         Non-Impaired Credit-Impaired                                                                   Balance at January 1, 2013 $2,665       $55          $1,278          $3,998 Net charge-offs            (118)        (887)        —               (1,005) Provision for loan losses  1,792        832          808             3,432 Balance at June 30, 2013   $4,339       $—           $2,086          $6,425  Non-Interest Income  2Q 2013 compared to 2Q 2012  Non-interest income totaled $13.1 million in the second quarter of 2013, which was a significant increase from $2.4 million in the second quarter of 2012. Non-interest income in the current quarter included a one-time acquisition gain of $8.2 million related to the ECB merger, which reflected the amount by which the fair value of acquired net assets exceeded the combined purchase price and fair value of non-controlling interests.  Service charges and fees on deposit accounts increased by $968 thousand primarily due to the addition of deposit accounts acquired in the ECB merger. Mortgage banking income increased by $326 thousand with the addition of mortgage lenders in eastern North Carolina and improving residential real estate markets which provided more lending opportunities for home purchases. Government-guaranteed lending income, which includes gains on sales of the guaranteed portion of certain SBA loans originated by the Company as well as servicing fees on previously sold SBA loans, increased by $486 thousand. The Company sells the guaranteed portion of certain SBA loans in the secondary market without recourse and recognizes gains as those loans are sold at a premium.  Year-to-Date  Non-interest income totaled $16.6 million in the first six months of 2013 while non-interest income totaled $3.9 million in the 2012 Successor Period and $657 thousand in the 2012 Predecessor Period. Non-interest income in the current year-to-date period included a one-time acquisition gain of $8.2 million related to the ECB merger. Securities gains totaled $1.2 million in the first six months of 2013 as the Company recognized gains upon selling the majority of its municipal bonds for balance sheet management and tax purposes. Additionally, service charges and fees on deposits, mortgage banking income, government-guaranteed lending income, and bank-owned life insurance income totaled $2.0 million, $1.5 million, $2.2 million, and $505 thousand, respectively, in the first six months of 2013.  Non-Interest Expense  2Q 2013 compared to 2Q 2012  Non-interest expense totaled $31.1 million in the second quarter of 2013 which was a significant increase from $10.3 million in the second quarter of 2012. The increase in expenses was primarily due to $12.0 million in merger and conversion-related costs in the second quarter of 2013, which included professional fees, severance, and other expenses required to close the ECB merger as well as costs to convert ECB's data processing, technology, signage, and branch network to the Company's integrated platform. Additionally, salaries and employee benefits, occupancy and equipment, data processing, and other non-interest expense categories increased primarily due to the ECB merger which added employees, branch and other facilities, and equipment to the Company's expense base. The Company's operating efficiency ratio, which excludes non-recurring merger and conversion costs, improved from 82.8 percent in the second quarter of 2012 to 75.9 percent in the second quarter of 2013. Much of the improvement in the operating efficiency ratio was due to increased scale and operating leverage provided by the ECB merger combined with cost cutting measures implemented during the second quarter of 2013 which will begin to fully benefit the Company in the third quarter of 2013. For example, full time equivalent employees for the combined Company decreased from 520 as of March 31, 2013 to 485 as of June 30, 2013.  Year-to-Date  Non-interest expense totaled $43.8 million in the first six months of 2013 while non-interest expense totaled $17.7 million in the 2012 Successor Period and $3.2 million in the 2012 Predecessor Period. Expenses in the first six months of 2013 were significantly impacted by ECB merger and system conversion costs, which totaled $13.6 million, as well as a higher general expense run rate following the ECB merger. The Company's operating efficiency ratio was 78.2 percent in the first six months of 2013 compared to 82.9 percent in the 2012 Successor Period and 74.7 percent in the 2012 Predecessor Period.  Income Taxes  The Company's income tax benefit was $2.8 million in the second quarter of 2013 compared to $259 thousand in the second quarter of 2012. Taxable income is calculated using pre-tax net income adjusted for the one-time acquisition gain in the second quarter of 2013, non-taxable municipal investment income, bank-owned life insurance income, and non-deductible merger costs. The Company's income tax benefit was $3.2 million in the first six months of 2013. The income tax benefit was $255 thousand in the 2012 Successor Period, and income tax expense was $270 thousand in the 2012 Predecessor Period.  Linked Quarter Comparison  Net income was $3.7 million in the second quarter of 2013 compared to a net loss of $806 thousand in the first quarter of 2013. After preferred stock dividends and accretion, net income available to common stockholders was $3.0 million, or $0.07 per common share, in the second quarter of 2013 compared to a net loss attributable to common stockholders of $1.2 million, or $0.03 per common share, in the first quarter of 2013. Operating earnings, which excludes securities gains, the ECB acquisition gain, and merger and conversion costs, improved to $2.8 million in the second quarter of 2013 from a loss of $422 thousand in the first quarter of 2013 as the Company improved its financial performance following the ECB merger by increasing net interest income, lowering provision for loan losses, increasing non-interest income, and by reducing its operating efficiency ratio. Similarly, pre-tax, pre-provision earnings increased to $6.0 million in the second quarter of 2013 from $1.2 million in the first quarter of 2013.  Net interest income was $20.4 million in the second quarter of 2013 compared to $9.9 million in the first quarter of 2013. The increase in net interest income was the result of a significant increase in earning assets from organic business activity and the ECB merger as well as an improved net interest margin. Average earning assets increased from $956.1 million in the first quarter of 2013 to $1.75 billion in the second quarter of 2013. Over this period, average loan balances increased by $533.2 million, of which $466.7 million was from acquired ECB loans, and average investment securities balances increased by $250.9 million. In addition, average deposits increased by $751.0 million, of which $736.1 million was from the ECB merger.  The Company's net interest margin expanded from 4.24 percent in the first quarter of 2013 to 4.67 percent in the second quarter of 2013. The improved net interest margin was due to lower costs on interest-bearing liabilities and higher yields on earning assets. The cost of interest-bearing liabilities declined from 0.76 percent in the first quarter of 2013 to 0.51 percent in the second quarter of 2013, which primarily reflected a lower cost of deposits as the Company adjusted interest rates it pays on certain checking and money market accounts in the second quarter of 2013 and incorporated the ECB deposit base. Further, in order to fund loan growth and to hedge the risk of rising interest rates on the Company's tangible book value, the Company increased its level of borrowings in the current quarter in the form of FHLB advances, which also lowered overall funding costs in the quarter. Core net interest margin, which excludes the impact of acquisition accounting, was 3.64 percent in the second quarter of 2013 compared to 3.63 percent in the first quarter of 2013.  Provision for loan losses was $1.5 million in the second quarter of 2013 compared to $1.9 million in the first quarter of 2013. The reduction in provision for loan losses in the second quarter of 2013 was primarily due to improvements in expected cash flows on the Company's PCI loans, which generated a net provision recovery of $397 thousand in the second quarter of 2013, and lower provision on purchased non-impaired loans. The lower provision on purchased loans was partially offset by higher provision on the non-acquired loan portfolio as the balance of this portfolio increased by $137.7 million in the second quarter of 2013, which was a significantly higher growth rate than in the prior quarter.  Non-interest income totaled $13.1 million in the second quarter of 2013, which was a significant increase from $3.5 million in the first quarter of 2013. Non-interest income in the current quarter included a one-time acquisition gain of $8.2 million related to the ECB merger, which reflected the amount by which the fair value of acquired net assets exceeded the combined purchase price and fair value of non-controlling interests. Service charges and fees on deposit accounts increased by $1.0 million primarily due to the addition of deposit accounts acquired in the ECB merger. Mortgage banking income increased by $705 thousand with the addition of mortgage lenders in eastern North Carolina and improving residential real estate markets which provided more lending opportunities for home purchases.  Non-interest expense totaled $31.1 million in the second quarter of 2013, which was a significant increase from $12.7 million in the first quarter of 2013. Higher expenses on a linked quarter basis were partially due to a $10.4 million increase in merger and conversion-related costs. Additionally, salaries and employee benefits, occupancy and equipment, data processing, and other non-interest expense categories increased primarily due to the ECB merger which added employees, branch and other facilities, and equipment to the Company's expense base. The Company's operating efficiency ratio, which excludes merger and conversion costs, improved from 82.5 percent in the first quarter of 2013 to 75.9 percent in the second quarter of 2013.  VantageSouth Bank is a state-chartered bank operating forty-six banking offices in central and eastern North Carolina. The common stock of VantageSouth Bancshares, Inc. is listed on the NYSE MKT, LLC under the symbol VSB. Investors can access additional corporate information, product descriptions and online services through VantageSouth Bank's website at www.VantageSouth.com.  Conference Call  VSB will conduct a conference call at 10:00 a.m. EDT today to discuss today's press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at http://www.VantageSouth.com (under the Investor Relations section). A telephone playback of the conference call will be available approximately one hour after the completion of the call by dialing (800) 633-8284 and entering passcode 21668871.  Non-GAAP Financial Measures  Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP financial measures to GAAP financial measures.The Company's management uses these non-GAAP financial measures, including: (i) net operating earnings (loss); (ii) pre-tax, pre-provision operating earnings; (iii) operating non-interest income, (iv) operating efficiency ratio, (v) adjusted allowance for loan losses to loans; and (vi) tangible common equity, in their analysis of the Company's performance. Net operating earnings (loss) excludes the following from net income (loss): securities gains, a one-time acquisition gain, merger and conversion costs, and the income tax effect of adjustments. Pre-tax, pre-provision operating earnings excludes the following from net income (loss): provision for loan losses, income tax expense (benefit), securities gains, a one-time acquisition gain, and merger and conversion costs. The operating efficiency ratio excludes a one-time acquisition gain and merger and conversion costs from the efficiency ratio. Adjusted allowance for loan losses adds net acquisition accounting fair value discounts to the allowance for loan losses. Tangible common equity excludes preferred stock as well as goodwill and other intangible assets, net, from total stockholders' equity.  Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company.Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.  Forward-looking Statements  Information in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, risks associated with the ownership by Piedmont of a majority of the Company's voting power, including the possibility of the interests of Piedmont differing from other Company stockholders or any change in management, strategic direction, business plan, or operations, the ability of our management to successfully integrate the Company's business and execute its business plan across several geographic areas, local economic conditions affecting retail and commercial real estate, disruptions in the credit markets, changes in interest rates, adverse developments in the real estate market affecting the value and marketability of collateral securing loans made by the Bank, the failure of assumptions underlying loan loss and other reserves, competition, our ability to successfully integrate any businesses that we acquire, and the risk of new and changing regulation. Additional factors that could cause actual results to differ materially are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. The forward-looking statements in this press release speak only as of the date of the press release, and the Company does not assume any obligation to update such forward-looking statements.  QUARTERLY RESULTS OF OPERATIONS                         Three Months Ended (Dollars in thousands,  June 30,   March 31,  December   September  June 30, except per share data)  2013       2013       31,        30,        2012                                               2012       2012                                                                 Interest income                                                  Loans                   $20,376  $10,697  $10,898  $10,810  $10,707 Investment securities   2,005      815        855        1,036      1,070 Federal funds sold and interest-earning        21         16         20         16         33 deposits Total interest income   22,402     11,528     11,773     11,862     11,810 Interest expense                                                 Deposits                1,619      1,302      1,309      1,320      1,462 Short-term borrowings   42         12         10         3          4 Long-term debt          313        270        279        274        311 Total interest expense  1,974      1,584      1,598      1,597      1,777 Net interest income     20,428     9,944      10,175     10,265     10,033 Provision for loan      1,492      1,940      1,167      1,077      2,046 losses Net interest income after provision for     18,936     8,004      9,008      9,188      7,987 loan losses Non-interest income                                              Service charges and fees on deposit         1,525      515        508        523        557 accounts Mortgage banking        1,096      391        771        1,127      770 Government-guaranteed   1,058      1,119      1,718      776        572 lending Bank-owned life         310        195        208        215        203 insurance Gain (loss) on sales of available for sale      123        1,092      603        483        (27) securities Gain on acquisition     8,241      —          —          —          — Other                   743        150        325        208        315 Total non-interest      13,096     3,462      4,133      3,332      2,390 income Non-interest expense                                             Salaries and employee   11,009     5,991      6,588      5,648      5,513 benefits Occupancy and equipment 2,408      1,547      1,321      1,385      1,353 Data processing         1,075      644        698        644        594 FDIC insurance premiums 400        227        216        205        229 Professional services   914        497        684        800        584 Foreclosed asset        79         183        662        251        295 expenses Other loan-related      792        461        352        419        335 expense Merger and conversion   11,961     1,601      2,114      547        6 costs Other                   2,502      1,516      1,719      1,241      1,389 Total non-interest      31,140     12,667     14,354     11,140     10,298 expense Income (loss) before    892        (1,201)    (1,213)    1,380      79 income taxes Income tax expense      (2,808)    (395)      (3,326)    95         (259) (benefit) Net income (loss)       3,700      (806)      2,113      1,285      338 Dividends and accretion 705        369        368        367        367 on preferred stock Net income available (loss attributable) to  $2,995   $(1,175)  $1,745   $918     $(29) common stockholders                                                                 NET INCOME (LOSS) PER                                            COMMON SHARE Basic                   $0.07    $(0.03)  $0.05    $0.03    $— Diluted                 $0.07    $(0.03)  $0.05    $0.03    $—                                                                 WEIGHTED AVERAGE COMMON                                          SHARES Weighted average common shares outstanding -    45,916,707 35,758,033 35,728,359 35,725,915 35,723,442 basic Weighted average common shares outstanding -    45,935,330 35,758,033 35,806,191 35,749,168 35,723,442 diluted                                                                                                 Three Months Ended (Dollars in thousands, except   June 30, March 31, December September June 30, per share data)                 2013     2013      31,      30,       2012                                                    2012     2012                                                                   PERFORMANCE RATIOS                                                                                                                   Return on average assets        0.75%    (0.30)%   0.79%    0.49%     0.13% Return on average equity        6.27%    (1.88)%   4.84%    2.98%     0.80% Yield on earning assets, tax    5.12%    4.91%     5.05%    5.18%     5.09% equivalent Cost of interest-bearing        0.51%    0.76%     0.80%    0.83%     0.91% liabilities Net interest margin, tax        4.67%    4.24%     4.37%    4.49%     4.33% equivalent Efficiency ratio                92.89%   94.49%    100.32%  81.93%    82.89% Net loan charge-offs            0.18%    0.21%     0.17%    0.44%     0.35%                                                                   Reconciliation of GAAP to                                          Non-GAAP                                                                   OPERATING EARNINGS                                                                                                                   Net income (loss) (GAAP)        $ 3,700  $ (806)   $ 2,113  $ 1,285   $ 338 Securities (gains) losses       (123)    (1,092)   (603)    (483)     27 Gain on acquisition             (8,241)  —         —        —         — Merger and conversion costs     11,961   1,601     2,114    547       6 Income tax effect of            (4,484)  (125)     (89)     33        (11) adjustments Deferred tax asset valuation    —        —         (3,300)  —         — allowance reversal Net operating earnings (loss)   $ 2,813  $ (422)   $ 235    $ 1,382   $ 360 (Non-GAAP)                                                                   PRE-TAX, PRE-PROVISION                                             OPERATING EARNINGS                                                                   Net income (loss) (GAAP)        $ 3,700  $ (806)   $ 2,113  $ 1,285   $ 338 Provision for loan losses       1,492    1,940     1,167    1,077     2,046 Income tax expense (benefit)    (2,808)  (395)     (3,326)  95        (259) Pre-tax, pre-provision income   2,384    739       (46)     2,457     2,125 (loss) Securities (gains) losses       (123)    (1,092)   (603)    (483)     27 Gain on acquisition             (8,241)  —         —        —         — Merger and conversion costs     11,961   1,601     2,114    547       6 Pre-tax, pre-provision          $ 5,981  $ 1,248   $ 1,465  $ 2,521   $ 2,158 operating earnings (Non-GAAP)                                                                   OPERATING NON-INTEREST INCOME                                                                                                        Non-interest income (GAAP)      $ 13,096 $ 3,462   $ 4,133  $ 3,332   $ 2,390 Gain on acquisition             (8,241)  —         —        —         — Operating non-interest income   $ 4,855  $ 3,462   $ 4,133  $ 3,332   $ 2,390 (non-GAAP)                                                                   OPERATING EFFICIENCY RATIO                                                                                                           Efficiency ratio (GAAP)         92.89%   94.49%    100.32%  81.93%    82.89% Effect to adjust for gain on    30.28%   —%        —%       —%        —% acquisition Effect to adjust for merger and (47.31)% (11.94)%  (14.77)% (4.02)%   (0.04)% conversion costs Operating efficiency ratio      75.86%   82.55%    85.55%   77.91%    82.85% (Non-GAAP)  YEAR-TO-DATE RESULTS OF OPERATIONS                                     Successor                    Predecessor                                     Company                      Company                                     Six Months     Period from   Period from (Dollars in thousands, except per   Ended          February 1 to January 1 to share data)                         June 30, 2013 June 30, 2012 January 31,                                                                  2012                                                                Interest income                                                 Loans                               $31,073      $18,009     $3,807 Investment securities               2,820          1,826         395 Federal funds sold and              37             49            4 interest-earning deposits Total interest income               33,930         19,884        4,206 Interest expense                                                Deposits                            2,921          2,457         530 Short-term borrowings               54             6             — Long-term debt                      583            512           103 Total interest expense              3,558          2,975         633 Net interest income                 30,372         16,909        3,573 Provision for loan losses           3,432          2,915         195 Net interest income after provision 26,940         13,994        3,378 for loan losses Non-interest income                                             Service charges and fees on deposit 2,040          906           194 accounts Mortgage banking                    1,487          1,266         225 Government-guaranteed lending       2,177          566           98 Bank-owned life insurance           505            337           70 Gain on sales of available for sale 1,215          165           — securities Gain on acquisition                 8,241          —             — Other                               893            622           70 Total non-interest income           16,558         3,862         657 Non-interest expense                                            Salaries and employee benefits      17,000         9,013         1,737 Occupancy and equipment             3,955          2,162         396 Data processing                     1,719          1,039         212 FDIC insurance premiums             627            506           141 Professional services               1,411          1,125         144 Foreclosed asset expenses           262            390           11 Other loan-related expense          1,253          752           162 Merger and conversion costs         13,562         503           78 Other                               4,018          2,226         355 Total non-interest expense          43,807         17,716        3,236 Income (loss) before income taxes   (309)          140           799 Income tax expense (benefit)        (3,203)        (255)         270 Net income                          2,894          395           529 Dividends and accretion on          1,074          611           122 preferred stock Net income available (loss attributable) to common             $1,820       $(216)       $407 stockholders                                                                NET INCOME (LOSS) PER COMMON SHARE                              Basic                               $0.04        $(0.01)     $0.01 Diluted                             $0.04        $(0.01)     $0.01                                                                                                                                                         Successor                    Predecessor                                 Company                      Company (Dollars in thousands, except   Six Months     Period from   Period from per share data)                 Ended          February 1 to January 1 to                                 June 30, 2013 June 30, 2012 January 31, 2012                                                            PERFORMANCE RATIOS                                                                                                     Return on average assets        0.38%          0.09%         0.58% Return on average equity        2.84%          0.56%         3.67% Yield on earning assets, tax    5.06%          5.13%         5.35% equivalent Cost of interest-bearing        0.60%          0.91%         0.95% liabilities Net interest margin, tax        4.53%          4.36%         4.55% equivalent Efficiency ratio                93.35%         85.29%        76.50% Net loan charge-offs            0.19%          0.39%         —%                                                            Reconciliation of GAAP to                                   Non-GAAP                                                            OPERATING EARNINGS                                                                                                     Net income (GAAP)               $ 2,894        $ 395         $ 529 Securities gains                (1,215)        (165)         — Gain on acquisition             (8,241)        —             — Merger and conversion costs     13,562         503           78 Income tax effect               (4,609)        (129)         (30) Net operating earnings          $ 2,391        $ 604         $ 577 (Non-GAAP)                                                            PRE-TAX, PRE-PROVISION                                      OPERATING EARNINGS                                                            Net income (GAAP)               $ 2,894        $ 395         $ 529 Provision for loan losses       3,432          2,915         195 Income tax expense (benefit)    (3,203)        (255)         270 Pre-tax, pre-provision income   3,123          3,055         994 Securities (gains) losses       (1,215)        (165)         — Gain on acquisition             (8,241)        —             — Merger and conversion costs     13,562         503           78 Pre-tax, pre-provision          $ 7,229        $ 3,393       $ 1,072 operating earnings (Non-GAAP)                                                            OPERATING NON-INTEREST INCOME                                                                                          Non-interest income (GAAP)      $ 16,558       $ 3,862       $ 657 Gain on acquisition             (8,241)        —             — Operating non-interest income   $ 8,317        $ 3,862       $ 657 (non-GAAP)                                                            OPERATING EFFICIENCY RATIO                                                                                             Efficiency ratio (GAAP)         93.35%         85.29%        76.50% Effect to adjust for gain on    19.88%         —             — acquisition Effect to adjust for merger and (35.05)%       (2.42)%       (1.84)% conversion costs Operating efficiency ratio      78.17%         82.87%        74.66% (Non-GAAP)  QUARTERLY BALANCE SHEETS                  Ending Balances (Dollars in      June 30,     March 31,    December 31, September    June 30, thousands)                                              30,                 2013         2013         2012         2012         2012 Assets                                                            Cash and due     $29,264    $11,020    $15,735    $13,187    $18,776 from banks Interest-earning deposits with    57,689       4,092        7,978        3,821        6,817 banks Federal funds    855          29,125       26,750       20,550       44,535 sold Investment securities       376,536      154,634      136,311      153,742      173,757 available for sale Investment securities held  200          194          180          166          130 to maturity Loans held for   21,390       8,671        16,439       8,239        7,357 sale Loans            1,323,981    794,623      763,416      739,028      696,872 Allowance for    (6,425)      (5,527)      (3,998)      (3,146)      (3,043) loan losses Net loans        1,317,556    789,096      759,418      735,882      693,829 Federal Home     6,904        2,382        2,307        2,172        3,894 Loan Bank stock Premises and     42,917       17,885       17,351       17,068       17,130 equipment, net Bank-owned life  32,642       20,138       19,976       19,800       19,620 insurance Foreclosed       11,632       4,752        5,837        6,697        7,772 assets Deferred tax     58,560       37,525       36,659       33,162       33,590 asset, net Goodwill         26,254       26,254       26,254       26,254       26,254 Other intangible 6,343        2,266        2,376        2,487        2,597 assets, net Accrued interest receivable and   20,678       8,008        11,654       10,842       11,771 other assets Total assets     $2,009,420 $1,116,042 $1,085,225 $1,054,069 $1,067,829                                                                  Liabilities                                                       Deposits:                                                         Non-interest     $197,229   $73,756    $71,613    $111,725   $102,596 demand Interest-bearing 344,515      188,463      188,843      139,768      146,027 demand Money market and 482,672      270,994      260,966      241,324      245,913 savings Time             630,283      370,710      351,800      360,172      372,074 Total deposits   1,654,699    903,923      873,222      852,989      866,610 Short-term       68,002       6,000        7,500        —            — borrowings Long-term debt   45,341       28,902       19,864       24,326       24,288 Accrued interest payable and      11,505       4,818        10,698       5,243        7,050 other liabilities Total            1,779,547    943,643      911,284      882,558      897,948 liabilities                                                                  Stockholders'                                                     equity Preferred stock, 42,437       24,715       24,657       24,601       24,544 no par value Common stock,    46           36           36           36           36 $0.001 par value Common stock     1,457        1,325        1,325        1,325        1,325 warrant Additional       188,408      147,738      147,510      146,655      146,648 paid-in capital Retained earnings         416          (2,578)      (1,405)      (3,200)      (4,115) (accumulated deficit) Accumulated other            (2,891)      1,163        1,818        2,094        1,443 comprehensive income (loss) Total stockholders'    229,873      172,399      173,941      171,511      169,881 equity Total liabilities and  $2,009,420 $1,116,042 $1,085,225 $1,054,069 $1,067,829 stockholders' equity                                                                  Supplemental information on components of accumulated                                          other comprehensive income (loss): Investment securities       $(5,115)    $1,374     $2,085     $2,367     $1,443 available for sale, net of tax Cash flow hedges, net of   2,224        (211)        (267)        (273)        — tax Total accumulated other            $(2,891)    $1,163     $1,818     $2,094     $1,443 comprehensive income (loss)                                                                                                                                                   Ending Balances                 June 30,     March 31,    December 31, September    June 30,                                                         30,                 2013         2013         2012         2012         2012 COMMON SHARE                                                      DATA                                                                  Book value per   $4.07      $4.13      $4.18      $4.11      $4.07 common share Tangible book value per common $3.36      $3.33      $3.37      $3.31      $3.26 share Ending shares    46,038,808   35,779,127   35,754,247   35,747,576   35,749,689 outstanding                                                                  CAPITAL RATIOS                                                                                                                     Tangible equity to tangible      9.98%        13.23%       13.75%       13.92%       13.57% assets Tangible common equity to        7.83%        10.96%       11.42%       11.52%       11.21% tangible assets VantageSouth                                                      Bank: Tier 1 leverage  8.26%        11.08%       11.45%       9.89%        9.41% ratio Tier 1 risk-based       10.22%       13.13%       13.66%       12.82%       12.02% capital ratio Total risk-based 11.11%       14.58%       14.96%       13.28%       12.49% capital ratio Crescent State                                                    Bank: Tier 1 leverage  N/A          N/A          N/A          12.21%       12.11% ratio Tier 1 risk-based       N/A          N/A          N/A          13.81%       14.22% capital ratio Total risk-based N/A          N/A          N/A          15.20%       15.61% capital ratio                                                                  ASSET QUALITY                                                     DATA                                                                  Nonperforming    $15,116    $11,792    $12,770    $14,023    $17,983 loans Foreclosed       11,632       4,752        5,837        6,697        7,772 assets Total nonperforming    $26,748    $16,544    $18,607    $20,720    $25,755 assets                                                                  Allowance for loan losses to   0.49%        0.70%        0.52%        0.43%        0.44% loans Nonperforming loans to total   1.14%        1.48%        1.67%        1.90%        2.58% loans Nonperforming assets to total  1.33%        1.48%        1.71%        1.97%        2.41% assets Restructured loans not        $550       $558       $104       $—         $— included in categories above                                                                  Reconciliation of GAAP to                                                        Non-GAAP                                                                  ADJUSTED ALLOWANCE FOR                                                     LOAN LOSSES                                                                  Allowance for loan losses      $6,425     $5,527     $3,998     $3,146     $3,043 (GAAP) Net acquisition accounting fair  42,534       14,688       16,633       17,962       18,582 value discounts to loans Adjusted allowance for    48,959       20,215       20,631       21,108       21,625 loan losses Loans            $1,323,981 $794,623   $763,416   $739,028   $696,872 Adjusted allowance for    3.70%        2.54%        2.70%        2.86%        3.10% loan losses to loans (Non-GAAP)                                                                  TANGIBLE COMMON                                                   EQUITY                                                                  Total stockholder's    $229,873   $172,399   $173,941   $171,511   $169,881 equity (GAAP) Less: Preferred  42,437       24,715       24,657       24,601       24,544 stock Less: Goodwill and other        32,597       28,520       28,630       28,741       28,851 intangible assets, net Tangible common equity           $154,839   $119,164   $120,654   $118,169   $116,486 (Non-GAAP)  QUARTERLY NET INTEREST MARGIN ANALYSIS                      Three months ended           Three months ended           Three months ended                     June 30, 2013                 March 31, 2013                June 30, 2012 (Dollars in          Average              Yield/  Average              Yield/  Average              Yield/ thousands)                     Balance    Interest* Cost*  Balance    Interest* Cost*  Balance    Interest* Cost*                                                                                                Assets                                                                                          Loans                $1,316,237 $20,376    6.21%   $783,023   $10,697    5.54%   $704,723   $10,707    6.11% Investment           394,398    2,008      2.04    143,475    857        2.42    172,228    1,138      2.66 securities Federal funds and    43,719     21         0.19    29,625     16         0.22    60,791     33         0.22 other Total interest-earning     1,754,354  22,405     5.12%   956,123    11,570     4.91%   937,742    11,878     5.09% assets Non-interest-earning 225,912                     134,333                     128,305               assets Total assets         $1,980,266                  $1,090,456                  $1,066,047                                                                                                           Liabilities and                                                                                 Equity Interest-bearing     $333,215   183        0.22%   $183,667   139        0.31%   $144,283   $162       0.45% demand Money market and     484,685    346        0.29    264,917    343        0.53    234,163    395        0.68 savings Time                 620,441    1,090      0.70    363,248    820        0.92    382,972    905        0.95 Total interest-bearing     1,438,341  1,619      0.45    811,832    1,302      0.65    761,418    1,462      0.77 deposits Short-term           58,292     42         0.29    7,200      12         0.68    2,889      4          0.56 borrowings Long-term debt       45,465     313        2.76    23,211     270        4.72    22,764     311        5.49 Total interest-bearing     1,542,098  1,974      0.51%   842,243    1,584      0.76%   787,071    1,777      0.91% liabilities Noninterest-bearing  192,459                     67,970                      100,767               deposits Other liabilities    8,846                       6,427                       7,237                 Total liabilities    1,743,403                   916,640                     895,075               Stockholders' equity 236,863                     173,816                     170,972               Total liabilities and stockholders'    $1,980,266                  $1,090,456                  $1,066,047            equity                                                                                                Net interest income,           $20,431                     $9,986                      $10,101     taxable equivalent Interest rate spread                     4.61%                       4.15%                       4.18% Tax equivalent net                       4.67%                       4.24%                       4.33% interest margin                                                                                                Percentage of average interest-earning                         113.76%                     113.52%                     119.14% assets to average interest-bearing liabilities * Taxable equivalent                                                                            basis  YEAR-TO-DATE NET INTEREST MARGIN ANALYSIS                      Successor Company                                               Predecessor Company                     Six months ended               Period from February 1 to      Period from January 1 to                     June 30, 2013                   June 30, 2012                   January 31, 2012 (Dollars in          Average                Yield/  Average                Yield/  Average                Yield/ thousands)                     Balance      Interest* Cost*  Balance      Interest* Cost*  Balance      Interest* Cost*                                                                                                      Assets                                                                                                Loans                $1,049,646 $31,073  5.97%   $717,407   $18,009  6.08%   $730,387   $3,807   6.15% Investment           268,589      2,866      2.15    174,542      1,941      2.70    180,220      419        2.74 securities Federal funds and    36,672       37         0.20    53,610       49         0.22    23,719       4          0.20 other Total interest-earning     1,354,907    33,976     5.06%   945,559      19,999     5.13%   934,326      4,230      5.35% assets Non-interest-earning 180,565                       121,443                       134,240                 assets Total assets         $1,535,472                  $1,067,002                  $1,068,566                                                                                                                 Liabilities and                                                                                       Equity Interest-bearing     $258,441   323       0.25%   $151,751   $318     0.51%   $172,363   $108     0.74% demand Money market and     374,801      689        0.37    224,160      634        0.69    184,716      96         0.61 savings Time                 491,845      1,909      0.78    386,767      1,505      0.94    404,999      326        0.95 Total interest-bearing     1,125,087    2,921      0.52    762,678      2,457      0.78    762,078      530        0.82 deposits Short-term           32,751       54         0.33    3,766        6          0.39    968          —          — borrowings Long-term debt       34,333       583        3.42    23,333       512        5.32    24,217       103        5.02 Total interest-bearing     1,192,171    3,558      0.60%   789,777      2,975      0.91%   787,263      633        0.95% liabilities Noninterest-bearing  130,215                       100,070                       107,156                 deposits Other liabilities    7,634                         6,739                         4,184                   Total liabilities    1,330,020                     896,586                       898,603                 Stockholders' equity 205,452                       170,416                       169,963                 Total liabilities and stockholders'    $1,535,472                  $1,067,002                  $1,068,566            equity                                                                                                      Net interest income,             $30,418                     $17,024                     $3,597    taxable equivalent Interest rate spread                       4.46%                         4.22%                         4.40% Tax equivalent net                         4.53%                         4.36%                         4.55% interest margin                                                                                                      Percentage of average interest-earning                           113.65%                       119.72%                       118.68% assets to average interest-bearing liabilities * Taxable equivalent                                                                                  basis  CONTACT: Terry Earley, CFO          VantageSouth Bancshares, Inc.          Phone: (919) 659-9015          Email: Terry.Earley@vsb.com  VantageSouth Bank Logo  
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