Yadkin Financial Corporation Achieves Record Operating EPS of $0.40 in the Third Quarter of 2015

RALEIGH, N.C., Oct. 22, 2015 (GLOBE NEWSWIRE) — Yadkin Financial Corporation (NYSE:YDKN) (“Yadkin” or the “Company”), the parent company of Yadkin Bank, today announced financial results for the third quarter ended September 30, 2015.

“We are very pleased to report strong operating EPS for the third quarter of 2015, driven by record loan production, robust core deposit growth and cost reductions,” commented Scott Custer, Yadkin’s CEO. “Our continued focus on superior customer service and operating efficiency has enabled us to achieve record operating results for the second consecutive quarter.”

“We also recently announced an agreement to acquire NewBridge Bancorp, a $2.8 billion bank holding company headquartered in Greensboro, North Carolina,” Mr. Custer continued. “We are obviously excited about the combination of these two high quality organizations. With this proposed merger, Yadkin will become the largest community bank in North Carolina with over $7 billion in assets and a strong statewide presence in every major market. NewBridge also has an attractive customer base, top-notch associates, and a healthy balance sheet. In every way, this acquisition will enhance our ability to be the bank of choice for businesses and consumers throughout our markets.”

“Yadkin has positive operating momentum and enjoys a healthy balance sheet with strong capital, asset quality, and liquidity,” said Mr. Custer. “We look forward to continued growth in our businesses.”

Third Quarter 2015 Performance Highlights 

  • The Company recently announced an agreement to acquire NewBridge Bancorp and its wholly-owned bank subsidiary, NewBridge Bank. The NewBridge acquisition is expected to close in the second quarter of 2016, subject to regulatory approval and customary closing conditions.
  • Net operating earnings available to common shareholders, which excludes certain non-operating items, improved to $12.5 million, or 0.40 per diluted share, in Q3 2015 from $0.38 per diluted share in Q2 2015 and $0.36 per diluted share in Q3 2014.
  • Net income available to common shareholders totaled $11.8 million, or $0.37 per diluted share, in Q3 2015 compared to $0.33 per diluted share in Q2 2015 and $0.01 per diluted share in Q3 2014.
  • Annualized operating return on average tangible common equity, which excludes preferred stock, goodwill, and other intangible assets, improved to 13.85 percent in Q3 2015 from 13.35 percent in Q2 2015.
  • Annualized operating return on average assets improved to 1.15 percent in Q3 2015 from 1.14 percent in Q2 2015. 
  • Operating efficiency, the ratio of operating expenses, excluding certain non-operating items, to total operating revenues, improved to 57.3 percent in Q3 2015 compared to 60.0 percent in Q2 2015.
  • Low cost deposit growth was 9.5 percent annualized in Q3 2015 while non-interest demand deposits increased to 22.5 percent of total deposits at September 30, 2015 from 21.5 percent at June 30, 2015 and 20.6 percent at September 30, 2014.
  • Annualized net loan growth was 3.2 percent in Q3 2015 as a result of new loan originations and commitments of $396 million.
  • Tangible book value per share increased to $12.31 at September 30, 2015 from $12.01 at June 30, 2015 and $10.89 at September 30, 2014.


Results of Operations and Asset Quality

3Q 2015 vs. 2Q 2015

Net operating earnings available to common shareholders, which is a non-GAAP metric that excludes securities gains, merger and conversion costs, restructuring charges, and the income tax effect of adjustments, improved to $12.5 million in the third quarter of 2015 from $11.9 million in the second quarter of 2015. Pre-tax, pre-provision operating earnings, which also excludes securities gains, merger and conversion costs, and restructuring charges, also improved to $21.4 million in the third quarter of 2015 from $20.0 million in the second quarter of 2015.

Net income available to common shareholders improved to $11.8 million in the third quarter of 2015, or $0.37 per diluted share, compared to $10.6 million, or $0.33 per diluted share, in the second quarter of 2015.

Net interest income was largely flat at $39.3 million in the second and third quarters of 2015. Net interest margin decreased from 4.29 percent in the second quarter of 2015 to 4.19 percent in the third quarter of 2015. Loan growth mostly offset the impact of a declining net interest margin as average loan balances increased by $18.1 million. The Company also increased the average balance of its investment portfolio in the quarter by $24.1 million. Core net interest margin, which excludes the impact of accretion income on net interest income, was 3.77 percent in the third quarter of 2015, unchanged from the second quarter. Similar to its peers, the Company continues to face pricing pressure on loan originations and elevated levels of prepayments on existing loans, both of which weighed on core loan yields. 

Net accretion income on acquired loans totaled $3.4 million in the third quarter of 2015, which consisted of $895 thousand of net accretion on purchased credit-impaired (“PCI”) loans and $2.5 million of accretion income on purchased non-impaired loans. Net accretion income on acquired loans in the second quarter of 2015 totaled $4.1 million, which included $812 thousand of net accretion on PCI loans and $3.3 million of net accretion income on purchased non-impaired loans. Net accretion income on purchased non-impaired loans included $978 thousand of accelerated accretion due to principal prepayments in the third quarter of 2015 compared to $1.5 million in the second quarter of 2015.

Provision for loan losses was $1.6 million in the third quarter of 2015, which was an increase from $1.0 million in the second quarter of 2015.The table below summarizes changes in the allowance for loan losses (“ALLL”) for the quarters presented.

(Dollars in thousands)   Non-PCI
Loans
  PCI Loans   Total
             
Q3 2015            
Balance at July 1, 2015   $ 7,000     $ 1,358     $ 8,358  
Net charge-offs   (934 )       (934 )
Provision for loan losses   1,536     40     1,576  
Balance at September 30, 2015   $ 7,602     $ 1,398     $ 9,000  
             
Q2 2015            
Balance at April 1, 2015   $ 6,907     $ 1,377     $ 8,284  
Net charge-offs   (920 )       (920 )
Provision for loan losses   1,013     (19 )   994  
Balance at June 30, 2015   $ 7,000     $ 1,358     $ 8,358  
 

The ALLL was $9.0 million, or 0.30 percent of total loans as of September 30, 2015 compared to $8.4 million, or 0.28 percent of total loans, as of June 30, 2015.  Adjusted ALLL, which is a non-GAAP metric that includes the ALLL, as well as net acquisition accounting fair value adjustments for acquired loans, declined from 1.88 percent of total loans as of June 30, 2015 to 1.75 percent as of September 30, 2015 due to accretion of fair value discounts.

The provision for loan losses on non-PCI loans increased by $523 thousand in the third quarter of 2015 as the Company increased its reserves on originated loans. Net charge-offs totaled $934 thousand in the third quarter of 2015 compared to $920 thousand in the second quarter of 2015. The annualized net charge-off rate was unchanged at 0.12 percent of average loans in both the second and third quarters of 2015. Provision expense on PCI loans increased by $59 thousand in the third quarter of 2015.

Nonperforming loans, which include nonaccrual loans, loans past due 90 days or more and still accruing, as a percentage of total loans was 1.25 percent as of September 30, 2015 compared to 1.10 percent as of June 30, 2015. Total nonperforming assets (which include nonperforming loans and foreclosed assets) as a percentage of total assets was 1.12 percent as of September 30, 2015 compared to 1.06 percent as of June 30, 2015.

Non-interest income totaled $10.8 million in both the second and third quarters of 2015. Government-guaranteed, small business lending income, which includes gains on sales of the guaranteed portion of certain U.S. Small Business Administration “SBA” loans as well as servicing fees on previously sold SBA loans, contributed $3.0 million to non-interest income during the third quarter of 2015. Although the Company had the highest level of SBA loan originations in its history, third quarter income represented a $668 thousand decrease on a linked-quarter basis due to the originated product mix (i.e., larger proportion of loans originated under the SBA’s 504 program vs. the 7(a) program), lower loan sale premiums, and a larger proportion of multi-funding loans which take longer to sell. Other non-interest income increased from $1.4 million in the second quarter of 2015 to $2.0 million in the third quarter of 2015 primarily due to a gain on a real estate sale.

Non-interest expense totaled $28.8 million in the third quarter of 2015, which was a decrease from $32.3 million in the second quarter of 2015. The $3.5 million expense decline included a $2.2 million reduction in restructuring charges. Additionally, salaries and employee benefits decreased by $863 thousand in the third quarter of 2015 from the Company’s recent restructuring initiatives and a decline in employee incentive accruals. The Company’s operating efficiency ratio, which is a non-GAAP metric that excludes securities gains, merger and conversion costs, and restructuring charges, improved from 60.0 percent in the second quarter of 2015 to 57.3 percent in the third quarter of 2015.

Income tax expense totaled $7.9 million in the third quarter of 2015, which was an increase from $6.1 million in the second quarter of 2015. The Company’s effective tax rate increased to 40.1 percent in the third quarter of 2015 from 36.1 percent in the second quarter of 2015. The higher effective tax rate reflected a $651 thousand one-time charge to income tax expense in the third quarter of 2015 to account for the revaluation of the Company’s state deferred tax assets as the North Carolina state corporate income tax rate will be reduced from 5 percent to 4 percent effective January 1, 2016.

3Q 2015 vs. 3Q 2014

Net operating earnings available to common shareholders, which excludes nonrecurring income and expenses, improved to $12.5 million in the third quarter of 2015 from $11.4 million in the third quarter of 2014. Pre-tax, pre-provision operating earnings, which also excludes nonrecurring income and expenses, also improved to $21.4 million in the third quarter of 2015 from $19.5 million in the third quarter of 2014. Net operating earnings benefited from higher operating non-interest income and lower operating non-interest expense in the quarter.

Net income available to common shareholders improved to $11.8 million in the third quarter of 2015, or $0.37 per diluted share, compared to $319 thousand, or $0.01 per diluted share, in the third quarter of 2014.

Dividend Information

On October 21, 2015, Yadkin’s Board of Directors declared a regular quarterly cash dividend of $0.10 per share on its outstanding shares of unrestricted common stock, payable on November 19, 2015 to shareholders of record on November 5, 2015.

Yadkin Financial Corporation is the bank holding company for Yadkin Bank, a full-service state-chartered community bank providing services in 70 branches across North Carolina and upstate South Carolina. Serving over 80,000 customers, the Company has assets of $4.4 billion. The Bank’s primary business is providing banking, mortgage, investment and insurance services to consumers and businesses across the Carolinas. The Bank provides SBA lending services through its Government Guaranteed Lending division, headquartered in Charlotte, NC, and mortgage lending services through Yadkin Mortgage, headquartered in Greensboro, NC. Yadkin Financial Corporation’s website is www.yadkinbank.com. Yadkin Financial Corporation’s common stock is traded on the NYSE under the symbol YDKN.

Conference Call

Yadkin Financial Corporation will host a conference call at 10:00 a.m. Eastern Time on October 22, 2015, to discuss the Company’s financial results. The call may be accessed by dialing (877) 256-8284  and requesting the Yadkin Financial Corporation Third Quarter 2015 Conference Call. Listeners should dial in 10-15 minutes prior to the start of the call.

A webcast of the conference call will be available online at www.yadkinbank.com and following the links to About Us, Investor Relations. A replay of the call will be available through November 23, 2015, by dialing (800) 633-8284 or (402) 977-9140 and entering reservation number 21779820.

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. Yadkin management uses non-GAAP financial measures, including: (i) net operating earnings available to common shareholders; (ii) pre-tax, pre-provision operating earnings; (iii) operating non-interest expense, (iv) operating efficiency ratio, (v) adjusted allowance for loan losses to loans; and (vi) tangible common equity, in its analysis of the Company’s performance. Net operating earnings available to common shareholders excludes the following from net income available to common shareholders: securities gains and losses, a one-time branch sale gain, merger and conversion costs, restructuring charges, income tax expense from the change in future state tax rates, and the income tax effect of adjustments. Pre-tax, pre-provision operating earnings excludes the following from net income: provision for loan losses, income tax expense, securities gains and losses, a one-time branch sale gain, merger and conversion costs, and restructuring charges. Operating non-interest expense excludes merger and conversion costs and restructuring charges from non-interest expense. The operating efficiency ratio excludes a one-time branch sale gain, securities gains and losses, merger and conversion costs, and restructuring charges 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 shareholders’ equity.

Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company and provide meaningful comparisons to its peers. 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 Yadkin 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 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, reduced earnings due to larger than expected credit losses in the sectors of our loan portfolio secured by real estate due to economic factors, including declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors; reduced earnings due to larger credit losses because our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral; the rate of delinquencies and amount of loans charged-off; the adequacy of the level of our allowance for loan losses and the amount of loan loss provisions required in future periods; costs or difficulties related to the integration of the banks we acquired or may acquire may be greater than expected; factors relating to our proposed acquisition of NewBridge Bancorp (“NewBridge”), including our ability to consummate the transaction on a timely basis, if at all, our ability to effectively and timely integrate the operations of Yadkin and NewBridge, our ability to achieve the estimated synergies from this proposed transaction and once integrated, the effects of such business combination on our future financial condition, operating results, strategy and plans; results of examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for loan losses or write down assets; the amount of our loan portfolio collateralized by real estate; our ability to maintain appropriate levels of capital; adverse changes in asset quality and resulting credit risk-related losses and expenses; increased funding costs due to market illiquidity, competition for funding, and increased regulatory requirements with regard to funding; significant increases in competitive pressure in the banking and financial services industries; changes in political conditions or the legislative or regulatory environment, including the effect of future financial reform legislation on the banking industry; general economic conditions, either nationally or regionally and especially in our primary service area, becoming less favorable than expected resulting in, among other things, a deterioration in credit quality; our ability to retain our existing customers, including our deposit relationships; changes occurring in business conditions and inflation; changes in monetary and tax policies; ability of borrowers to repay loans; risks associated with a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers or other third parties, including cyber attacks, which could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses; changes in accounting principles, policies or guidelines; changes in the assessment of whether a deferred tax valuation allowance is necessary; our reliance on secondary liquidity sources such as Federal Home Loan Bank advances, sales of securities and loans, federal funds lines of credit from correspondent banks and out-of-market time deposits; loss of consumer confidence and economic disruptions resulting from terrorist activities or military actions; and changes in the securities markets. 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.

Additional Information About the Proposed Transaction and Where to Find It

This communication is being made in respect of the proposed transaction involving Yadkin and NewBridge. This material is not a solicitation of any vote or approval of Yadkin’s or NewBridge’s shareholders and is not a substitute for the joint proxy statement/prospectus or any other documents which Yadkin and NewBridge may send to their respective shareholders in connection with the proposed merger. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities.

In connection with the proposed transaction, Yadkin intends to file with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Yadkin and NewBridge and a prospectus of Yadkin, as well as other relevant documents concerning the proposed transaction. Investors and security holders are also urged to carefully review and consider each of Yadkin’s and NewBridge’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. Both NewBridge and Yadkin will mail the joint proxy statement/prospectus to their respective shareholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SHAREHOLDERS OF YADKIN AND NEWBRIDGE ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the proxy statement/prospectus (when available) and other filings containing information about Yadkin and NewBridge at the SEC’s website at www.sec.gov. The joint proxy statement/prospectus (when available) and the other filings may also be obtained free of charge at Yadkin’s website at www.yadkinbank.com, or at NewBridge’s website at www.newbridgebank.com.

Yadkin, NewBridge and certain of their respective directors and executive officers, under the SEC’s rules, may be deemed to be participants in the solicitation of proxies of Yadkin’s and NewBridge’s shareholders in connection with the proposed transaction. Information about the directors and executive officers of Yadkin and their ownership of Yadkin common stock is set forth in the proxy statement for Yadkin’s 2015 Annual Meeting of Shareholders, as filed with the SEC on Schedule 14A on April 10, 2015. Information about the directors and executive officers of NewBridge and their ownership of NewBridge’s common stock is set forth in the proxy statement for NewBridge’s 2015 Annual Meeting of Shareholders, as filed with the SEC on a Schedule 14A on April 2, 2015. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

 
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
 
  Three months ended
(Dollars in thousands, except per share data) September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014
Interest income                  
Loans $ 40,300     $ 40,404     $ 39,796     $ 41,160     $ 41,667  
Investment securities 3,957     3,786     3,996     4,058     3,756  
Federal funds sold and interest-earning deposits 47     45     50     54     38  
Total interest income 44,304     44,235     43,842     45,272     45,461  
Interest expense                  
Deposits 3,097     3,073     2,889     2,714     2,374  
Short-term borrowings 437     331     289     168     65  
Long-term debt 1,465     1,504     1,488     1,599     1,510  
Total interest expense 4,999     4,908     4,666     4,481     3,949  
Net interest income 39,305     39,327     39,176     40,791     41,512  
Provision for loan losses 1,576     994     961     843     816  
Net interest income after provision for loan losses 37,729     38,333     38,215     39,948     40,696  
Non-interest income                  
Service charges and fees 3,566     3,495     3,253     3,506     3,265  
Government-guaranteed lending 3,009     3,677     2,873     2,917     2,072  
Mortgage banking 1,731     1,633     1,322     1,002     1,520  
Bank-owned life insurance 470     465     472     517     572  
Gain (loss) on sales of available for sale securities     84     1     4     (96 )
Gain on sale of branch                 415  
Other 2,022     1,446     918     1,616     1,313  
Total non-interest income 10,798     10,800     8,839     9,562     9,061  
Non-interest expense                  
Salaries and employee benefits 14,528     15,391     15,202     16,787     16,800  
Occupancy and equipment 4,641     4,637     4,799     5,009     4,856  
Data processing 1,851     1,929     1,888     1,959     1,255  
Professional services 1,196     1,407     1,092     1,431     1,153  
FDIC insurance premiums 732     772     714     636     700  
Foreclosed asset expenses 277     445     188     129     129  
Loan, collection, and repossession expense 931     850     936     849     1,192  
Merger and conversion costs 104     (25 )   220     1,589     17,270  
Restructuring charges 50     2,294     907     33     180  
Amortization of other intangible assets 761     777     815     861     845  
Other 3,777     3,839     4,197     4,309     3,807  
Total non-interest expense 28,848     32,316     30,958     33,592     48,187  
Income before income taxes 19,679     16,817     16,096     15,918     1,570  
Income tax expense 7,891     6,076     5,846     607     621  
Net income 11,788     10,741     10,250     15,311     949  
Dividends on preferred stock     183     639     639     630  
Net income available to common shareholders $ 11,788     $ 10,558     $ 9,611     $ 14,672     $ 319  
                   
NET INCOME PER COMMON SHARE                  
Basic $ 0.37     $ 0.33     $ 0.30     $ 0.46     $ 0.01  
Diluted 0.37     0.33     0.30     0.46     0.01  
                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                  
Basic 31,608,909     31,609,021     31,606,909     31,597,798     31,597,659  
Diluted 31,686,150     31,610,620     31,608,928     31,602,497     31,602,192  
                             

SELECTED PERFORMANCE RATIOS AND FINANCIAL DATA
 
  As of and for the three months ended
(Dollars in thousands, except per share data) September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014
                   
Selected Performance Ratios (Annualized)                  
Return on average assets 1.08 %   1.01 %   0.98 %   1.44 %   0.09 %
Net operating return on average assets (Non-GAAP) 1.15     1.14     1.04     1.09     1.17  
Return on average shareholders’ equity 8.45     7.71     7.37     11.07     0.69  
Net operating return on average shareholders’ equity (Non-GAAP) 8.98     8.68     7.87     8.40     8.76  
Return on average tangible common equity 12.55     11.38     10.61     16.52     0.37  
Net operating return on average tangible common equity (Non-GAAP) 13.85     13.35     11.94     12.97     13.62  
Yield on earning assets, tax equivalent 4.72     4.83     4.84     4.92     5.12  
Cost of interest-bearing liabilities 0.66     0.65     0.63     0.60     0.54  
Net interest margin, tax equivalent 4.19     4.29     4.33     4.43     4.68  
Efficiency ratio 57.58     64.47     64.48     66.71     95.28  
Operating efficiency ratio (Non-GAAP) 57.27     60.04     62.13     63.50     61.16  
                   
Per Common Share                  
Net income, basic $ 0.37     $ 0.33     $ 0.30     $ 0.46     $ 0.01  
Net income, diluted 0.37     0.33     0.30     0.46     0.01  
Net operating earnings, basic (Non-GAAP) 0.40     0.38     0.33     0.35     0.36  
Net operating earnings, diluted (Non-GAAP) 0.40     0.38     0.33     0.35     0.36  
Book value 17.56     17.28     17.07     16.75     16.26  
Tangible book value (Non-GAAP) 12.31     12.01     11.75     11.41     10.89  
Common shares outstanding 31,711,901     31,712,021     31,609,021     31,599,150     31,598,907  
                   
Asset Quality Data and Ratios                  
Nonperforming loans $ 37,133     $ 32,492     $ 37,630     $ 26,759     $ 25,533  
Foreclosed assets 11,793     13,547     12,427     12,891     11,078  
Total nonperforming assets $ 48,926     $ 46,039     $ 50,057     $ 39,650     $ 36,611  
Restructured loans not included in nonperforming assets $ 2,564     $ 2,333     $ 2,043     $ 3,948     $ 4,424  
Net charge-offs to average loans (annualized) 0.12 %   0.12 %   0.07 %   0.09 %   0.09 %
Allowance for loan losses to loans 0.30     0.28     0.28     0.27     0.27  
Adjusted allowance for loan losses to loans (Non-GAAP) 1.75 %   1.88 %   2.04 %   2.17 %   2.50 %
Nonperforming loans to loans 1.25     1.10     1.29     0.92     0.90  
Nonperforming assets to total assets 1.12     1.06     1.17     0.93     0.88  
                   
Capital Ratios                  
Tangible equity to tangible assets 9.30 %   9.16 %   9.75 %   9.49 %   9.29 %
Tangible common equity to tangible assets 9.30     9.16     9.06     8.80     8.58  
Yadkin Financial Corporation1:                  
Tier 1 leverage 9.33 %   9.22 %   9.60 %   9.33 %   9.40 %
Common equity Tier 12 10.55     10.43     10.14     NR       NR    
Tier 1 risk-based capital 10.55     10.43     10.82     10.87     10.81  
Total risk-based capital 12.00     11.88     12.25     12.34     12.36  
Yadkin Bank1:                  
Tier 1 leverage 10.27 %   10.17 %   10.59 %   10.13 %   10.32 %
Common equity Tier 12 11.62     11.53     11.97     NR       NR    
Tier 1 risk-based capital 11.62     11.53     11.97     11.82     11.85  
Total risk-based capital 12.02     11.93     12.34     12.18     12.27  
                   
1  Regulatory capital ratios for Q3 2015 are estimates.
Yadkin became subject to new Basel III regulatory capital rules in Q1 2015. The common equity Tier 1 ratio was not reported in prior periods.

QUARTERLY BALANCE SHEETS (UNAUDITED)
 
  Ending balances
(Dollars in thousands, except per share data) September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014
Assets                  
Cash and due from banks $ 54,667     $ 65,620     $ 55,426     $ 65,312     $ 59,837  
Interest-earning deposits with banks 23,088     57,141     52,826     66,548     31,223  
Federal funds sold     200     250     505     15  
Investment securities available for sale 713,492     649,015     658,323     672,421     694,993  
Investment securities held to maturity 39,292     39,402     39,511     39,620     39,728  
Loans held for sale 37,962     38,622     32,322     20,205     26,853  
Loans 2,979,779     2,955,771     2,913,859     2,898,266     2,827,426  
Allowance for loan losses (9,000 )   (8,358 )   (8,284 )   (7,817 )   (7,641 )
Net loans 2,970,779     2,947,413     2,905,575     2,890,449     2,819,785  
Purchased accounts receivable 69,383     69,933     62,129     44,821     43,187  
Federal Home Loan Bank stock 22,932     21,976     20,277     19,499     19,320  
Premises and equipment, net 75,530     77,513     78,683     80,379     81,554  
Bank-owned life insurance 78,397     77,927     77,462     76,990     76,500  
Foreclosed assets 11,793     13,547     12,427     12,891     11,078  
Deferred tax asset, net 54,402     62,179     67,071     73,059     73,575  
Goodwill 152,152     152,152     152,152     152,152     152,152  
Other intangible assets, net 14,324     15,085     15,862     16,677     17,538  
Accrued interest receivable and other assets 44,033     39,327     38,782     36,506     34,502  
Total assets $ 4,362,226     $ 4,327,052     $ 4,269,078     $ 4,268,034     $ 4,181,840  
                   
Liabilities                  
Deposits:                  
Non-interest demand $ 730,928     $ 697,653     $ 655,333     $ 680,387     $ 657,554  
Interest-bearing demand 484,187     475,597     472,524     469,898     439,117  
Money market and savings 1,001,739     991,982     1,010,348     1,004,796     970,571  
Time 1,030,915     1,077,862     1,070,970     1,092,283     1,117,697  
Total deposits 3,247,769     3,243,094     3,209,175     3,247,364     3,184,939  
Short-term borrowings 395,500     355,500     325,500     250,500     216,500  
Long-term debt 129,859     147,265     137,199     180,164     210,154  
Accrued interest payable and other liabilities 32,301     33,077     29,385     32,204     27,917  
Total liabilities 3,805,429     3,778,936     3,701,259     3,710,232     3,639,510  
                   
Shareholders’ equity                  
Preferred stock         28,405     28,405     28,405  
Common stock 31,712     31,712     31,609     31,599     31,599  
Common stock warrant 717     717     717     717     717  
Additional paid-in capital 492,387     492,151     492,194     492,014     491,864  
Retained earnings (accumulated deficit) 36,109     27,481     16,922     7,311     (7,361 )
Accumulated other comprehensive loss (4,128 )   (3,945 )   (2,028 )   (2,244 )   (2,894 )
Total shareholders’ equity 556,797     548,116     567,819     557,802     542,330  
Total liabilities and shareholders’ equity $ 4,362,226     $ 4,327,052     $ 4,269,078     $ 4,268,034     $ 4,181,840  

QUARTERLY NET INTEREST MARGIN ANALYSIS
 
  Three months ended
September 30, 2015
  Three months ended
June 30, 2015
  Three months ended
September 30, 2014
(Dollars in thousands) Average
Balance
  Interest*   Yield/Cost*   Average
Balance
  Interest*   Yield/Cost*   Average
Balance
  Interest*   Yield/Cost*
                                   
Assets                                  
Loans $ 2,985,063     $ 40,362     5.36 %   $ 2,966,953     $ 40,468     5.47 %   $ 2,794,765     $ 41,667     5.91 %
Investment securities 709,914     4,209     2.35     685,796     4,024     2.35     694,239     3,907     2.23  
Federal funds and other 55,246     47     0.34     49,407     45     0.37     44,165     38     0.34  
Total interest-earning assets 3,750,223     44,618     4.72 %   3,702,156     44,537     4.83 %   3,533,169     45,612     5.12 %
Goodwill 152,152             152,152             152,152          
Other intangibles, net 14,763             15,570             17,758          
Other non-interest-earning assets 400,811             401,690             377,754          
Total assets $ 4,317,949             $ 4,271,568             $ 4,080,833          
                                   
Liabilities and Equity                                  
Interest-bearing demand $ 487,173     $ 130     0.11 %   $ 475,546     $ 158     0.13 %   $ 481,460     $ 156     0.13 %
Money market and savings 996,357     713     0.28     997,732     718     0.29     956,128     567     0.24  
Time 1,056,806     2,254     0.85     1,078,460     2,197     0.82     1,123,293     1,651     0.58  
Total interest-bearing deposits 2,540,336     3,097     0.48     2,551,738     3,073     0.48     2,560,881     2,374     0.37  
Short-term borrowings 349,900     437     0.50     320,694     331     0.41     203,193     65     0.13  
Long-term debt 125,846     1,465     4.62     136,377     1,504     4.42     148,650     1,510     4.03  
Total interest-bearing liabilities 3,016,082     4,999     0.66 %   3,008,809     4,908     0.65 %   2,912,724     3,949     0.54 %
Non-interest-bearing deposits 718,989             676,858             602,888          
Other liabilities 29,196             27,090             19,613          
Total liabilities 3,764,267             3,712,757             3,535,225          
Shareholders’ equity 553,682             558,811             545,608          
Total liabilities and shareholders’ equity $ 4,317,949             $ 4,271,568             $ 4,080,833          
                                   
Net interest income, taxable equivalent     $ 39,619             $ 39,629             $ 41,663      
Interest rate spread         4.06 %           4.18 %           4.58 %
Tax equivalent net interest margin         4.19 %           4.29 %           4.68 %
                                   
Percentage of average interest-earning assets to average interest-bearing liabilities         124.34 %           123.04 %           121.30 %
                                   
* Taxable equivalent basis                                  

APPENDIX – RECONCILIATION OF NON-GAAP MEASURES
 
  As of and for the three months ended
(Dollars in thousands, except per share data) September 30, 2015   June 30, 2015   March 31, 2015   December 31, 2014   September 30, 2014
                   
Operating Earnings                  
Net income (GAAP) $ 11,788     $ 10,741     $ 10,250     $ 15,311     $ 949  
Securities (gains) losses     (84 )   (1 )   (4 )   96  
Gain on sale of branch                 (415 )
Merger and conversion costs 104     (25 )   220     1,589     17,270  
Restructuring charges 50     2,294     907     33     180  
Income tax effect of adjustments (59 )   (836 )   (431 )   (601 )   (6,075 )
DTA revaluation from reduction in state income tax rates, net of federal benefit 651                  
DTA valuation allowance reversal             (4,706 )    
Net operating earnings (Non-GAAP) 12,534     12,090     10,945     11,622     12,005  
Dividends on preferred stock     183     639     639     630  
Net operating earnings available to common shareholders (Non-GAAP) $ 12,534     $ 11,907     $ 10,306     $ 10,983     $ 11,375  
Net operating earnings per common share:                  
Basic (Non-GAAP) $ 0.40     $ 0.38     $ 0.33     $ 0.35     $ 0.36  
Diluted (Non-GAAP) 0.40     0.38     0.33     0.35     0.36  
                   
Pre-Tax, Pre-Provision Operating Earnings                
Net income (GAAP) $ 11,788     $ 10,741     $ 10,250     $ 15,311     $ 949  
Provision for loan losses 1,576     994     961     843     816  
Income tax expense 7,891     6,076     5,846     607     621  
Pre-tax, pre-provision income 21,255     17,811     17,057     16,761     2,386  
Securities (gains) losses     (84 )   (1 )   (4 )   96  
Gain on sale of branch                 (415 )
Merger and conversion costs 104     (25 )   220     1,589     17,270  
Restructuring charges 50     2,294     907     33     180  
Pre-tax, pre-provision operating earnings (Non-GAAP) $ 21,409     $ 19,996     $ 18,183     $ 18,379     $ 19,517  
                   
Operating Non-Interest Income                  
Non-interest income (GAAP) $ 10,798     $ 10,800     $ 8,839     $ 9,562     $ 9,061  
Gain on sale of branch                 (415 )
Securities (gains) losses     (84 )   (1 )   (4 )   96  
Operating non-interest income (Non-GAAP) $ 10,798     $ 10,716     $ 8,838     $ 9,558     $ 8,742  
                   
Operating Non-Interest Expense                  
Non-interest expense (GAAP) $ 28,848     $ 32,316     $ 30,958     $ 33,592     $ 48,187  
Merger and conversion costs (104 )   25     (220 )   (1,589 )   (17,270 )
Restructuring charges (50 )   (2,294 )   (907 )   (33 )   (180 )
Operating non-interest expense (Non-GAAP) $ 28,694     $ 30,047     $ 29,831     $ 31,970     $ 30,737  
                   
Operating Efficiency Ratio                  
Efficiency ratio (GAAP) 57.58 %   64.47 %   64.48 %   66.71 %   95.28 %
Effect to adjust for securities gains (losses)     0.11         0.01     (0.18 )
Effect to adjust for gain on sale of branch                 0.79  
Effect to adjust for merger and conversion costs (0.21 )   0.04     (0.46 )   (3.15 )   (34.37 )
Effect to adjust for restructuring costs (0.10 )   (4.58 )   (1.89 )   (0.07 )   (0.36 )
Operating efficiency ratio (Non-GAAP) 57.27 %   60.04 %   62.13 %   63.50 %   61.16 %
                   
                   
Adjusted Allowance for Loan Losses                  
Allowance for loan losses (GAAP) $ 9,000     $ 8,358     $ 8,284     $ 7,817     $ 7,641  
Net acquisition accounting fair value discounts to loans 43,095     47,160     51,125     55,166     62,969  
Adjusted allowance for loan losses (Non-GAAP) 52,095     55,518     59,409     62,983     70,610  
Loans 2,979,779     2,955,771     2,913,859     2,898,266     2,827,426  
Adjusted allowance for loan losses to loans (Non-GAAP) 1.75 %   1.88 %   2.04 %   2.17 %   2.50 %
                   
Tangible Common Equity                  
Shareholders’ equity (GAAP) $ 556,797     $ 548,116     $ 567,819     $ 557,802     $ 542,330  
Less preferred stock         28,405     28,405     28,405  
Less goodwill and other intangible assets 166,476     167,237     168,014     168,829     169,690  
Tangible common equity (Non-GAAP) $ 390,321     $ 380,879     $ 371,400     $ 360,568     $ 344,235  
                   

 

CONTACT: CONTACT:
Terry Earley, CFO
Yadkin Financial Corporation
Phone: (919) 659-9015
Email: Terry.Earley@yadkinbank.com