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 securities3,957  3,786  3,996  4,058  3,756 
Federal funds sold and interest-earning deposits47  45  50  54  38 
Total interest income44,304  44,235  43,842  45,272  45,461 
Interest expense         
Deposits3,097  3,073  2,889  2,714  2,374 
Short-term borrowings437  331  289  168  65 
Long-term debt1,465  1,504  1,488  1,599  1,510 
Total interest expense4,999  4,908  4,666  4,481  3,949 
Net interest income39,305  39,327  39,176  40,791  41,512 
Provision for loan losses1,576  994  961  843  816 
Net interest income after provision for loan losses37,729  38,333  38,215  39,948  40,696 
Non-interest income         
Service charges and fees3,566  3,495  3,253  3,506  3,265 
Government-guaranteed lending3,009  3,677  2,873  2,917  2,072 
Mortgage banking1,731  1,633  1,322  1,002  1,520 
Bank-owned life insurance470  465  472  517  572 
Gain (loss) on sales of available for sale securities  84  1  4  (96)
Gain on sale of branch        415 
Other2,022  1,446  918  1,616  1,313 
Total non-interest income10,798  10,800  8,839  9,562  9,061 
Non-interest expense         
Salaries and employee benefits14,528  15,391  15,202  16,787  16,800 
Occupancy and equipment4,641  4,637  4,799  5,009  4,856 
Data processing1,851  1,929  1,888  1,959  1,255 
Professional services1,196  1,407  1,092  1,431  1,153 
FDIC insurance premiums732  772  714  636  700 
Foreclosed asset expenses277  445  188  129  129 
Loan, collection, and repossession expense931  850  936  849  1,192 
Merger and conversion costs104  (25) 220  1,589  17,270 
Restructuring charges50  2,294  907  33  180 
Amortization of other intangible assets761  777  815  861  845 
Other3,777  3,839  4,197  4,309  3,807 
Total non-interest expense28,848  32,316  30,958  33,592  48,187 
Income before income taxes19,679  16,817  16,096  15,918  1,570 
Income tax expense7,891  6,076  5,846  607  621 
Net income11,788  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 
Diluted0.37  0.33  0.30  0.46  0.01 
          
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING         
Basic31,608,909  31,609,021  31,606,909  31,597,798  31,597,659 
Diluted31,686,150  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 assets1.08% 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' equity8.45  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 equity12.55  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 equivalent4.72  4.83  4.84  4.92  5.12 
Cost of interest-bearing liabilities0.66  0.65  0.63  0.60  0.54 
Net interest margin, tax equivalent4.19  4.29  4.33  4.43  4.68 
Efficiency ratio57.58  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, diluted0.37  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 value17.56  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 outstanding31,711,901  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 assets11,793  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 loans0.30  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 loans1.25  1.10  1.29  0.92  0.90 
Nonperforming assets to total assets1.12  1.06  1.17  0.93  0.88 
          
Capital Ratios         
Tangible equity to tangible assets9.30% 9.16% 9.75% 9.49% 9.29%
Tangible common equity to tangible assets9.30  9.16  9.06  8.80  8.58 
Yadkin Financial Corporation1:         
Tier 1 leverage9.33% 9.22% 9.60% 9.33% 9.40%
Common equity Tier 1210.55  10.43  10.14  NR     NR    
Tier 1 risk-based capital10.55  10.43  10.82  10.87  10.81 
Total risk-based capital12.00  11.88  12.25  12.34  12.36 
Yadkin Bank1:         
Tier 1 leverage10.27% 10.17% 10.59% 10.13% 10.32%
Common equity Tier 1211.62  11.53  11.97  NR     NR    
Tier 1 risk-based capital11.62  11.53  11.97  11.82  11.85 
Total risk-based capital12.02  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 banks23,088  57,141  52,826  66,548  31,223 
Federal funds sold  200  250  505  15 
Investment securities available for sale713,492  649,015  658,323  672,421  694,993 
Investment securities held to maturity39,292  39,402  39,511  39,620  39,728 
Loans held for sale37,962  38,622  32,322  20,205  26,853 
Loans2,979,779  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 loans2,970,779  2,947,413  2,905,575  2,890,449  2,819,785 
Purchased accounts receivable69,383  69,933  62,129  44,821  43,187 
Federal Home Loan Bank stock22,932  21,976  20,277  19,499  19,320 
Premises and equipment, net75,530  77,513  78,683  80,379  81,554 
Bank-owned life insurance78,397  77,927  77,462  76,990  76,500 
Foreclosed assets11,793  13,547  12,427  12,891  11,078 
Deferred tax asset, net54,402  62,179  67,071  73,059  73,575 
Goodwill152,152  152,152  152,152  152,152  152,152 
Other intangible assets, net14,324  15,085  15,862  16,677  17,538 
Accrued interest receivable and other assets44,033  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 demand484,187  475,597  472,524  469,898  439,117 
Money market and savings1,001,739  991,982  1,010,348  1,004,796  970,571 
Time1,030,915  1,077,862  1,070,970  1,092,283  1,117,697 
Total deposits3,247,769  3,243,094  3,209,175  3,247,364  3,184,939 
Short-term borrowings395,500  355,500  325,500  250,500  216,500 
Long-term debt129,859  147,265  137,199  180,164  210,154 
Accrued interest payable and other liabilities32,301  33,077  29,385  32,204  27,917 
Total liabilities3,805,429  3,778,936  3,701,259  3,710,232  3,639,510 
          
Shareholders' equity         
Preferred stock    28,405  28,405  28,405 
Common stock31,712  31,712  31,609  31,599  31,599 
Common stock warrant717  717  717  717  717 
Additional paid-in capital492,387  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' equity556,797  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 securities709,914  4,209  2.35  685,796  4,024  2.35  694,239  3,907  2.23 
Federal funds and other55,246  47  0.34  49,407  45  0.37  44,165  38  0.34 
Total interest-earning assets3,750,223  44,618  4.72% 3,702,156  44,537  4.83% 3,533,169  45,612  5.12%
Goodwill152,152      152,152      152,152     
Other intangibles, net14,763      15,570      17,758     
Other non-interest-earning assets400,811      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 savings996,357  713  0.28  997,732  718  0.29  956,128  567  0.24 
Time1,056,806  2,254  0.85  1,078,460  2,197  0.82  1,123,293  1,651  0.58 
Total interest-bearing deposits2,540,336  3,097  0.48  2,551,738  3,073  0.48  2,560,881  2,374  0.37 
Short-term borrowings349,900  437  0.50  320,694  331  0.41  203,193  65  0.13 
Long-term debt125,846  1,465  4.62  136,377  1,504  4.42  148,650  1,510  4.03 
Total interest-bearing liabilities3,016,082  4,999  0.66% 3,008,809  4,908  0.65% 2,912,724  3,949  0.54%
Non-interest-bearing deposits718,989      676,858      602,888     
Other liabilities29,196      27,090      19,613     
Total liabilities3,764,267      3,712,757      3,535,225     
Shareholders’ equity553,682      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 costs104  (25) 220  1,589  17,270 
Restructuring charges50  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 benefit651         
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 losses1,576  994  961  843  816 
Income tax expense7,891  6,076  5,846  607  621 
Pre-tax, pre-provision income21,255  17,811  17,057  16,761  2,386 
Securities (gains) losses  (84) (1) (4) 96 
Gain on sale of branch        (415)
Merger and conversion costs104  (25) 220  1,589  17,270 
Restructuring charges50  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 loans43,095  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 
Loans2,979,779  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 assets166,476  167,237  168,014  168,829  169,690 
Tangible common equity (Non-GAAP)$390,321  $380,879  $371,400  $360,568  $344,235 
          

 


            

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