YADKIN FINANCIAL Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - YADKIN FINANCIAL Corp	form8-k1q14.htm

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

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.

Elkin, NC - April 24, 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
Loan Type	Outstanding Balance		% of Total Loans		Outstanding Balance		% of Total 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. EST 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.

For additional information contact:

Joseph H. Towell

President and Chief Executive Officer

(704) 768-1133

joe.towell@yadkinbank.com

Jan H. Hollar

Executive Vice President and Chief Financial Officer

(704) 768-1161

jan.hollar@yadkinbank.com



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, 2014			December 31, 2013			September 30, 2013		June 30, 2013			March 31, 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			—		3			6
Interest-bearing deposits	9			3			5		12			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		)
Gain on sale of loans	—			202			—		—			—
Gain on sale of branch	—			—			310		—			—
Other	161			227			358		498			55
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 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, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013

Per Share Data:
Basic Earnings (Loss) per Share (8)	$	0.24		$	0.30		$	0.30		$	0.30		$	0.30
Diluted Earnings (Loss) 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)	17,910			18,660			20,864			23,510			29,161
Accruing/Performing Troubled Debt Restructurings (000's) (5)	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 it is 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 provides 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, less the sum of goodwill and core deposit intangible. Tangible Assets are the difference of total assets less the sum of goodwill and core deposit intangible.


(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 non-interest expense less the amortization of intangibles and gains on sale of OREO, as a percentage of total taxable equivalent net interest income and non-interest 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 expenses, 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				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		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.

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