Yadkin Financial Corporation Announces First Quarter 2014 Results, Highlights Strength of Core Banking Activities

ELKIN, NC--(Marketwired - Apr 24, 2014) -  Yadkin Financial Corporation (NASDAQ: YDKN)

First Quarter Highlights:

• Net income available to common shareholders excluding merger-related expenses for the first quarter of 2014 was $4.6 million, or $0.32 per diluted share. Net income available to common shareholders was $3.3 million, or $0.23 per diluted share.
• The Company incurred merger-related expenses in the first quarter in association with our pending merger with VantageSouth of $1.4 million or $0.09 per diluted share.
• The average net interest margin for the quarter was 4.11%, an increase of 7 basis points compared to the prior quarter.
• Total loan balances increased $24.0 million, or 1.8%, compared to the prior quarter, our fourth consecutive quarter of loan growth.
• Nonperforming assets decreased for the fifth consecutive quarter, ending the quarter at 0.99% of total assets.
• Net charge-offs totaled $1.1 million, or 0.32% of average loans on an annualized basis, for the first quarter of 2014.

Yadkin Financial Corporation (NASDAQ: YDKN), the holding company for Yadkin Bank, announced today financial results for the first quarter ended March 31, 2014. Net income available to common shareholders excluding merger-related expenses for the quarter was $4.6 million, or $0.32 per share. Net income available to common shareholders for the quarter was $3.3 million, or $0.23 per diluted share, compared to $4.2 million, or $0.30 per diluted share, for the fourth quarter of 2013, and $4.2 million, or $0.30 per diluted share, for the first quarter of 2013.

Joe Towell, President and CEO of Yadkin Financial Corporation, commented, "We are pleased with our results for the first quarter of 2014 and are particularly proud of our net interest margin, which is increasing due to the strong performance of our core bank. Our net interest margin expanded to 4.11% this quarter as a result of commercial and consumer loan growth, a decrease in our cost of deposits, and increasing yield in our securities portfolio. Furthermore, our asset quality continues to improve, as our nonperforming assets to total assets ratio was 0.99% at the end of the first quarter.

We continue to execute on our organic loan growth strategy and capitalize on increasing loan demand in our markets. Loan balances increased for the fourth consecutive quarter, and are up 1.8% over the prior quarter. Additionally, we are excited about the response from our recent launch of the Business Express loan program for small business customers. This expedited loan platform streamlines the paperwork and approval process so that qualified customers can receive loan decisions quickly and efficiently. Small businesses are at the core of our community banking strategy, and we believe this program allows us to serve them in even better ways.

We are working diligently through the integration process in our pending merger with VantageSouth. We have been encouraged to see the success of our teams working together, as we target closing the merger in the third quarter of 2014. Our strategic focus in this merger process is to create the least amount of disruption for customers on both sides while working to create an efficient community bank with a robust set of products and services. We will continue to provide updates on our progress in the coming quarters."

First Quarter 2014 Financial Highlights

Asset Quality

Yadkin Bank's key asset quality metrics continue to be strong as we maintain our focus on quality lending, underwriting, and problem asset resolution. First, our adversely classified assets to Tier 1 capital and loan loss reserve ratio has continued to exceed expectations, down to 17.01% at the end of the first quarter. Our nonperforming loans were down slightly compared to the prior quarter, totaling $15.1 million at March 31, 2014. In addition, the nonperforming loans to total loans ratio decreased to 1.09% at March 31, 2014, compared to 1.12% at December 31, 2013. 

		Nonperforming Loan Analysis
		(Dollars in thousands)
		March 31, 2014						December 31, 2013
					% of						% of
		Outstanding			Total			Outstanding			Total
Loan Type		Balance			Loans			Balance			Loans
Construction/land development		$	1,595		0.12	%		$	1,742		0.13	%
Residential construction			586		0.04	%			589		0.04	%
HELOC			904		0.07	%			1,285		0.09	%
1-4 Family residential			2,682		0.19	%			2,734		0.20	%
Commercial real estate			7,797		0.56	%			6,479		0.47	%
Commercial & industrial			1,245		0.09	%			2,306		0.17	%
Consumer & other			272		0.02	%			258		0.02	%
Total		$	15,081		1.09	%		$	15,393		1.12	%

Other real estate owned (OREO) totaled $2.8 million at March 31, 2014, a decrease of $400,000 compared to December 31, 2013. Total nonperforming assets at March 31, 2014 were $17.9 million, or 0.99% of total assets, a decrease of $750,000 from December 31, 2013. In addition, total net charge-offs for the first quarter of 2014 were $1.1 million, or 0.32% of average loans on an annualized basis.

During the first quarter of 2014, the recovery of loan losses was $460,000, which combined with the net charge-offs noted above, resulted in a $1.5 million decrease in the allowance for loan losses as compared to the prior quarter. Following the accelerated asset disposition plan, credit quality has continued to improve, leading to a decrease in the allowance which was prudent given the risk profile of the Company's balance sheet. Management continues to focus on the allowance to ensure that adequate coverage is maintained.

At March 31, 2014, the allowance for loan losses was $16.5 million, compared to $18.1 million at December 31, 2013. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.19% in the first quarter of 2014, down from 1.33% in the fourth quarter of 2013. Out of the $16.5 million in total allowance for loan losses at March 31, 2014, the specific allowance for impaired loans accounted for $690,000, up from $557,000 in the fourth quarter. The remaining general allowance of $15.8 million attributed to unimpaired loans was down from $17.5 million at the end of the fourth quarter.

Net Interest Income and Net Interest Margin

Net interest income after provision decreased by $2.7 million to $17.1 million for the quarter. In the prior quarter, the Company recorded a $3.0 million provision reversal, which positively impacted our net interest income after provision. In the first quarter of 2014, we recorded $460,000 in provision reversal, leading to the decrease in net interest income after provision. Our net interest margin continued to expand with the quarterly average margin increasing 7 basis points to 4.11%, up from 4.04% at December 31, 2013.

In the first quarter of 2014, our core deposits increased by $31.0 million, and core deposits now represent 65.0% of total deposits. As a result of this strategy, our cost of deposits decreased to 0.45% for the quarter as compared to 0.46% in the fourth quarter of 2013.

Non-Interest Income

Non-interest income increased $3.5 million to $4.7 million in the first quarter compared to $1.2 million in the fourth quarter of 2013. This increase is due primarily to a gain on sale of securities recognized during the quarter, as management made a strategic decision to redeploy the cash from this gain on sale to our lending activities.

Non-Interest Expense

Non-interest expense increased $1.5 million during the first quarter, to $15.2 million as compared to $13.7 million in the fourth quarter. This increase is primarily the result of $1.4 million in merger-related expenses recorded during the first quarter of 2014.

Balance Sheet and Capital

Total assets increased $7.5 million during the first quarter of 2014, due primarily to our continued loan growth, offset by the decrease in our securities portfolio.

The Company's capital ratios have strengthened and continue to exceed all regulatory requirements. As of March 31, 2014, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 11.7%, 13.7%, and 14.8%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 11.9%, 13.9%, and 15.0% respectively, for the holding company as of March 31, 2014. In addition, the Company's tangible common equity to total tangible assets ratio was 8.8% at the end of the first quarter, compared to 8.5% at December 31, 2013. For capital adequacy purposes, leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio must be in excess of 5.0%, 6.0%, and 10.0%, respectively, to be considered well-capitalized.

Conference Call

Yadkin Financial Corporation will host a conference call at 10:00 a.m. EDT on Thursday, April 24, 2014 to discuss financial results, business highlights, and outlook. The call may be accessed by dialing 877-312-5527 at least 10 minutes prior to the call. A webcast of the call audio may be accessed at http://www.media-server.com/m/p/58beuukr. A replay of the call will be available until April 30, 2014 by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 28304860.

About Yadkin Financial Corporation
Yadkin Financial Corporation is the holding company for Yadkin Bank, a full-service community bank with 33 branches throughout its two regions in North Carolina and South Carolina. The Western Region serves Avery, Watauga, Ashe, Surry, Wilkes, Yadkin, Durham, and Orange Counties. The Southern Region serves Iredell, Mecklenburg, and Union Counties in North Carolina, and Cherokee and York Counties in South Carolina. The Bank provides mortgage-lending services through its mortgage division, Yadkin Mortgage, headquartered in Greensboro, NC. Securities brokerage services are provided by Yadkin Wealth, Inc., a Bank subsidiary with offices located throughout the branch network. Yadkin Financial Corporation's website is www.yadkinbank.com. Yadkin shares are traded on NASDAQ under the symbol YDKN.

SAFE HARBOR

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. Forward looking statements generally include words such as "expects," "projects," "anticipates," "believes," "intends," "estimates," "strategy," "plan," "potential," "possible" and other similar expressions. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" on pages 1-2 of Yadkin Financial Corporation's annual report filed on Form 10-K with the SEC for the year ended December 31, 2013, and in the section entitled "Risk Factors" in the annual report filed on Form 10-K for the year ended December 31, 2013. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

Yadkin Financial Corporation
Consolidated Balance Sheets (Unaudited)
				(Amounts in thousands except share and per share data)
				March 31, 2014			December 31, 2013 (a)			September  30, 2013			June 30, 2013			March 31, 2013
Assets:
Cash and due from banks				$	32,254		$	32,226		$	32,417		$	28,104		$	22,210
Federal funds sold					15			10			15			50			50
Interest-earning deposits with banks					29,249			8,759			6,695			4,654			20,447
U.S. government agencies					16,324			16,392			16,536			16,625			17,232
Mortgage-backed securities					165,519			170,674			199,492			203,173			248,030
State and municipal securities					82,178			98,704			109,626			110,410			115,435
Common and preferred stocks					3,072			3,152			3,036			137			149
		Total investment securities			267,093			288,922			328,690			330,345			380,846
Construction loans					124,946			131,035			128,951			127,564			133,200
Commercial, financial and other loans					197,109			206,833			191,874			186,965			182,268
Residential mortgages					180,106			174,072			171,747			167,784			166,565
Commercial real estate loans					655,190			621,405			616,116			604,667			596,790
Installment loans					32,546			31,256			31,450			32,133			32,037
Revolving 1-4 family loans					192,801			194,145			193,299			195,648			193,404
		Total loans			1,382,698			1,358,746			1,333,437			1,314,761			1,304,264
Allowance for loan losses					(16,522	)		(18,063	)		(21,014	)		(22,924	)		(24,492	)
		Net loans			1,366,176			1,340,683			1,312,423			1,291,837			1,279,772
Loans held for sale					6,962			18,913			12,632			22,545			18,461
Accrued interest receivable					5,915			6,219			6,339			6,546			6,502
Bank premises and equipment					40,396			40,698			41,050			42,410			42,454
Foreclosed real estate					2,828			3,267			2,989			3,812			5,449
Non-marketable equity securities at cost					2,789			3,473			5,273			3,473			3,474
Investment in bank-owned life insurance					27,169			27,032			26,888			26,736			26,587
Core deposit intangible					1,818			1,974			2,133			2,301			2,475
Other assets					30,823			33,851			35,973			39,102			37,865
		Total assets		$	1,813,487		$	1,806,027		$	1,813,517		$	1,801,915		$	1,846,592
Liabilities and shareholders' equity:
Deposits:
Non-interest bearing				$	287,585		$	267,596		$	266,951		$	252,618		$	257,388
NOW, savings and money market accounts					704,581			693,558			676,502			686,438			656,524
Time certificates:
	$100 or more				218,273			227,919			236,787			251,168			281,652
	Other				315,035			329,350			311,096			332,873			366,095
		Total deposits			1,525,474			1,518,423			1,491,336			1,523,097			1,561,659
Borrowings					90,039			89,214			131,080			91,896			99,160
Accrued expenses and other liabilities					9,198			13,920			12,229			12,306			10,922
		Total liabilities			1,624,711			1,621,557			1,634,645			1,627,299			1,671,741
Total shareholders' equity					188,776			184,470			178,872			174,616			174,851
Total liabilities and shareholders' equity				$	1,813,487		$	1,806,027		$	1,813,517		$	1,801,915		$	1,846,592
Period end shares outstanding					14,380,673			14,383,986			14,383,986			14,383,986			14,383,884
(a) Derived from audited consolidated financial statements.

Yadkin Financial Corporation
Consolidated Income Statements (Unaudited)
			Three Months Ended
			(Amounts in thousands except share and per share data)
			March 31,			December			September			June 30,			March 31,
			2014			31, 2013			30, 2013			2013			2013
Interest and fees on loans			$	16,937		$	17,126		$	16,849		$	16,950		$	16,679
Interest on securities				1,719			1,773			1,616			1,686			1,548
Interest on federal funds sold				1			1			-			2			6
Interest-bearing deposits				9			3			5			13			42
	Total interest income			18,666			18,903			18,470			18,651			18,275
Time deposits of $100 or more				845			803			877			1,009			1,352
Other deposits				824			929			1,034			1,112			1,432
Borrowed funds				394			422			423			409			439
	Total interest expense			2,063			2,154			2,334			2,530			3,223
		Net interest income		16,603			16,749			16,136			16,121			15,052
Provision for (recovery of) loan losses				(460	)		(3,017	)		40			55			237
Net interest income after provision for (recovery of) loan losses				17,063			19,766			16,096			16,066			14,815
Non-interest income
	Service charges on deposit accounts			1,224			1,264			1,336			1,317			1,269
	Other service fees			1,025			1,066			1,259			1,401			927
	Income on investment in bank-owned life insurance			137			145			152			150			153
	Mortgage banking activities			1,022			1,162			1,713			2,546			3,288
	Gain (loss) on sale of securities			1,128			(2,884	)		253			272			4
	Other than temporary impairment of investments			-			-			-			-			(39	)
	Loss on sale of subsidiary			-			-			-			-			(1	)
	Gain on sale of loans			-			202			-			373			-
	Gain on sale of branch			-			-			310			-			-
	Other			161			227			358			125			56
		Total non-interest income		4,697			1,182			5,381			6,184			5,657
Non-interest expense
	Salaries and employee benefits			7,917			7,854			7,780			7,953			7,389
	Occupancy and equipment			1,746			2,049			2,001			1,951			1,815
	Printing and supplies			193			151			159			150			163
	Data processing			275			376			374			350			395
	Communication expense			380			368			350			338			332
	Advertising and marketing			205			(322	)		348			433			256
	Amortization of core deposit intangible			156			159			166			175			178
	FDIC assessment expense			151			433			363			642			592
	Attorney fees			65			81			90			178			90
	Other professional fees			344			456			237			497			476
	Loan collection expense			97			118			203			201			217
	(Gain) loss on fixed assets			-			(12	)		154			-			-
	Net cost of operation of other real estate owned			310			302			93			(174	)		(822	)
	Merger related expenses			1,352			-			-			-			-
	Other			2,002			1,699			1,832			2,149			2,134
		Total non-interest expense		15,193			13,712			14,150			14,843			13,215
Income before income taxes				6,567			7,236			7,327			7,407			7,257
Provision for income taxes				2,659			2,579			2,616			2,598			2,608
Net income				3,908			4,657			4,711			4,809			4,649
		Preferred stock dividend and amortization of preferred stock discount		559			421			421			590			445
Net income available to common shareholders			$	3,349		$	4,236		$	4,290		$	4,219		$	4,204
Net income per common share (a)
		Basic	$	0.24		$	0.30		$	0.30		$	0.30		$	0.30
		Diluted	$	0.23		$	0.30		$	0.30		$	0.30		$	0.30
Weighted average number of common shares outstanding
		Basic		14,211,456			14,206,070			14,205,705			14,205,223			14,198,382
		Diluted		14,269,453			14,259,809			14,249,152			14,223,604			14,200,424
(a) Net income per share for periods prior to the second quarter of 2013 have been adjusted to reflect the 1-for-3 reverse stock split.

Yadkin Financial Corporation
(unaudited)
		At or For the Three Months Ended
		March 31,			December			September			June 30,			March 31,
		2014			31, 2013			30, 2013			2013			2013
Per Share Data:
Basic Earnings per Share (8)		$	0.24		$	0.30		$	0.30		$	0.30		$	0.30
Diluted Earnings per Share (8)			0.23			0.30			0.30			0.30			0.30
Book Value per Share (8)			11.15			10.85			10.47			10.17			10.21
Selected Performance Ratios:
Return on Average Assets (annualized)			0.76	%		0.93	%		0.95	%		0.93	%		0.91	%
Return on Average Equity (annualized)			7.29	%		9.31	%		9.74	%		9.63	%		9.94	%
Net Interest Margin (annualized)			4.11	%		4.04	%		3.93	%		3.90	%		3.57	%
Net Interest Spread (annualized)			3.97	%		3.90	%		3.80	%		3.76	%		3.40	%
Non-interest Income as a % of Revenue (6)			21.59	%		5.64	%		25.05	%		27.79	%		27.63	%
Non-interest Income as a % of Average Assets			0.26	%		0.07	%		0.30	%		0.34	%		0.30	%
Non-interest Expense as a % of Average Assets			0.85	%		0.76	%		0.79	%		0.82	%		0.70	%
Asset Quality:
Loans 30-89 days past due (000's) (4)		$	11,372		$	8,702		$	4,412		$	6,493		$	6,060
Loans over 90 days past due still accruing (000's)			-			-			-			-			-
Nonperforming Loans (000's)			15,082			15,393			17,874			19,698			23,712
Other Real Estate Owned (000's)			2,828			3,267			2,989			3,812			5,449
Nonperforming Assets (000's)(5)			17,910			18,660			20,864			23,510			29,161
Accruing/Performing troubled debt restructurings (000's)			3,444			6,287			5,599			9,162			8,579
Nonperforming Loans to Total Loans			1.09	%		1.12	%		1.33	%		1.47	%		1.79	%
Nonperforming Assets to Total Assets			0.99	%		1.03	%		1.15	%		1.30	%		1.58	%
Allowance for Loan Losses to Total Loans			1.19	%		1.31	%		1.56	%		1.71	%		1.85	%
Allowance for Loan Losses to Total Loans Held for Investment			1.19	%		1.33	%		1.58	%		1.74	%		1.88	%
Allowance for Loan Losses to Nonperforming Loans			109.55	%		117.34	%		117.57	%		116.38	%		103.29	%
Net Charge-offs (Recoveries) to Average Loans (annualized)			0.32	%		-0.02	%		0.58	%		0.49	%		0.27	%
Capital Ratios:
Equity to Total Assets			10.41	%		10.22	%		9.86	%		9.69	%		9.47	%
Tier 1 leverage ratio(1)			11.71	%		11.24	%		10.88	%		10.30	%		9.72	%
Tier 1 risk-based ratio(1)			13.73	%		13.21	%		12.92	%		12.49	%		12.23	%
Total risk-based capital ratio(1)			14.82	%		14.41	%		14.17	%		13.74	%		13.49	%
Non-GAAP disclosures(2):
Tangible Book Value per Share		$	11.03		$	10.71		$	10.32		$	10.01		$	10.03
Return on Tangible Equity (annualized) (3)			7.36	%		9.42	%		9.87	%		9.76	%		10.09	%
Tangible Common Equity to Tangible Assets (3)			8.75	%		8.54	%		8.19	%		8.00	%		7.83	%
Efficiency Ratio (7)			66.14	%		62.80	%		63.47	%		66.55	%		66.39	%
Net Income to common shareholders excluding merger costs (9)		$	4,576		$	4,236		$	4,290		$	4,219		$	4,204

Notes:
(1)	Tier 1 leverage, Tier 1 risk-based, and Total risk-based ratios are ratios for the bank, Yadkin Bank
	as reported on Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only - FFIEC 041.
(2)	Management uses these non-GAAP financial measures because it believes they are useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies.
(3)	Tangible Common Equity is the difference of shareholders' equity less preferred shares and core deposit intangibles.
	Tangible Assets are the difference of total assets less core deposit intangibles.
(4)	Past due numbers exclude loans classified as nonperforming.
(5)	Nonperforming assets exclude accruing troubled debt restructured loans.
(6)	Ratio is calculated by taking non-interest income as a percentage of net interest income after provision for loan losses plus total non-interest income.
(7)	Efficiency ratio is calculated by taking noninterest expense less the amortization of intangibles and gains on sale of OREO, as a percentage of total taxable equivalent net interest income and noninterest income less gains on sale of securities, gains (losses) on sale of loans, gains on sale of branch and other than temporary impairment of investments.
(8)	Per share amounts for periods prior to the second quarter of 2013 have been adjusted to reflect the 1-for-3 reverse stock split.
(9)	Net income to common shareholders excluding merger costs was calculated by adding back $1,352 in merger costs, less a $125 adjustment for taxes for the three months ended March 31, 2014.

Yadkin Financial Corporation
Average Balance Sheets and Net Interest Income Analysis (Unaudited)
	Three Months Ended March 31,
	2014									2013
	(Dollars in Thousands)
	Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/ Rate
INTEREST EARNING ASSETS
Total loans (1,2)	$	1,371,694		$	16,966		5.02	%		$	1,321,253		$	16,708		5.13	%
Investment securities		286,094			2,046		2.90	%			364,453			1,838		2.05	%
Interest-bearing deposits & federal funds sold		16,794			10		0.24	%			62,707			48		0.31	%
Total average earning assets (1)		1,674,582			19,022		4.61	%	(6)		1,748,413			18,594		4.31	%	(6)
Non-interest earning assets		122,754									128,610
Total average assets	$	1,797,336								$	1,877,023
INTEREST BEARING LIABILITIES
Time deposits	$	548,673			1,376		1.02	%		$	693,150			2,510		1.47	%
Other deposits		685,356			293		0.17	%			638,377			274		0.17	%
Borrowed funds		89,624			394		1.78	%			101,763			439		1.75	%
Total interest bearing liabilities		1,323,653			2,063		0.63	%	(7)		1,433,290			3,223		0.91	%	(7)
Non-interest bearing deposits		276,878									259,883
Other liabilities		10,459									12,307
Total average liabilities		1,610,990									1,705,480
Shareholders' equity		186,346									171,543
Total average liabilities and shareholders' equity	$	1,797,336								$	1,877,023
NET INTEREST INCOME/
YIELD (3,4)				$	16,959		4.11	%					$	15,371		3.57	%
INTEREST SPREAD (5)							3.97	%								3.40	%

(1)	Yields related to securities and loans exempt from Federal income taxes are stated on a fully tax-equivalent basis, assuming a Federal income tax rate of 35%, reduced by the nondeductible portion of interest expense.
(2)	The loan average includes loans on which accrual of interest has been discontinued.
(3)	Net interest income is the difference between income from earning assets and interest expense.
(4)	Net interest yield is net interest income divided by total average earning assets.
(5)	Interest spread is the difference between the average interest rate received on earning assets and the average rate paid on interest bearing liabilities.
(6)	Interest income for 2014 and 2013 includes $57,000 and $45,000, respectively, of accretion for purchase accounting adjustments related to loans acquired in the merger with American Community.
(7)	Interest expense for 2014 and 2013 includes $9,000 of accretion for purchase accounting adjustments related to deposits and borrowings acquired in the merger with American Community.

For additional information contact:

Joseph H. Towell
President and Chief Executive Officer
[phone]
Email Contact

Jan H. Hollar
Executive Vice President and Chief Financial Officer
[phone]
Email Contact