Attached files
| file | filename |
|---|---|
| 8-K - 8-K - YADKIN FINANCIAL Corp | a8-k.htm |
| EX-99.2 - EXHIBIT 99.2 - YADKIN FINANCIAL Corp | q12015earningscallvfinal.htm |
FOR IMMEDIATE RELEASE
Yadkin Financial Corporation Announces Financial Results for the First Quarter of 2015 and Strategic Realignment
RALEIGH, N.C., April 23, 2015 – Yadkin Financial Corporation (NYSE: YDKN) (the "Company" or "Yadkin"), the parent company of Yadkin Bank, today announced financial results for the first quarter ended March 31, 2015.
First Quarter 2015 financial highlights:
• | Net income available to common shareholders totaled $9.6 million or $0.30 per diluted share during Q1 2015. |
• | Net operating earnings available to common shareholders, which excludes certain non-operating items, totaled $10.3 million, or $0.33 per diluted share, in Q1 2015, compared to $0.35 per diluted share in Q4 2014. |
• | Annualized operating return on average assets equaled 1.04 percent in Q1 2015. |
• | Annualized operating return on average tangible common equity equaled 11.35 percent in Q1 2015. |
• | Operating efficiency, which represents operating expenses to total operating revenues, improved to 62.1 percent in Q1 2015, compared to 63.5 percent in Q4 2014. |
• | Net charge-offs during Q1 2015 declined to $494 thousand or 0.07 percent of average loans, compared to 0.09 percent during Q4 2014. |
• | Annualized net loan growth was approximately 2.2 percent in Q1 2015, resulting from loan originations and commitments of $304.8 million. |
Strategic Realignment
"During the first quarter of 2015, we continued efforts to create a more efficient operating model and to achieve our efficiency targets," stated Scott Custer, Chief Executive Officer of the Company. "Late in the first quarter, we executed on an expense reduction plan that will generate annualized salary savings totaling $1.9 million through the elimination of various positions management had concluded were no longer required following successful integration of the merged banks' operating systems."
"Additionally, following a strategic review of our branch network, we are announcing our plans to close or sell six branches during the third quarter of 2015," Custer reported. "After extensive consideration, we concluded that our decision to close these branches would strengthen the Company as we seek to optimize our resources." Management estimates the branch closings will result in annual pre-tax savings of $1.5 million.
The Company recognized a restructuring charge of $907 thousand during the first quarter of 2015 as a result of the expense reduction initiatives and branch closings, primarily related to severance expense.
Custer also announced the Company has received approval from the Federal Reserve Bank of Richmond to redeem $28.4 million of preferred stock that had initially been issued in connection with the TARP Capital Purchase Program. "Redemption of the preferred stock will improve pre-tax earnings by $2.6 million and will increase fully-diluted net income per common share by $0.08 annually," added Custer. The redemption is scheduled to occur on or around May 13, 2015.
The Company also announced that, effective June 30, 2015, Joe Towell will transition from his position as Executive Chairman to Chairman of the Board, and will continue as a member of the board of directors. “Although Joe will no longer be involved in day-to-day operations, Yadkin will continue to benefit from his strong background in banking and his deep commitment to our Company,” Custer noted in announcing Mr. Towell’s transition to the Chairmanship role. The cost of Mr. Towell’s transition will be reflected in the Company’s Q2 financial results.
Results of Operations and Asset Quality
1Q 2015 compared to 4Q 2014
Net operating earnings available to common shareholders, which excludes merger and conversion costs, restructuring charges, securities gains, and a fourth quarter tax benefit from the reversal of a valuation allowance on certain holding company deferred tax assets, totaled $10.3 million in the first quarter of 2015 compared to $11.0 million in the fourth quarter of 2014. Pre-tax, pre-provision operating earnings, which also excludes nonrecurring income and expenses, was $18.2 million in the first quarter of 2015 compared to $18.4 million in the fourth quarter of 2014. Net income available to common shareholders totaled $9.6 million in the first quarter of 2015, or $0.30 per diluted share, compared to $14.7 million, or $0.46 per diluted share, in the fourth quarter of 2014.
Net interest income totaled $39.2 million in the first quarter of 2015 compared to $40.8 million in the fourth quarter of 2014. Net interest income was negatively impacted during the quarter by fewer days and lower accelerated accretion. Net interest margin decreased from 4.43 percent in the fourth quarter of 2014 to 4.33 percent in the first quarter of 2015 due to pressure on loan yields. Core net interest margin, which excludes the impact of accretion income on net interest income, declined from 3.76 percent in the fourth quarter of 2014 to 3.74 percent in the first quarter of 2015 as the Company continued to face significant pricing pressure on loan originations from a combination of low prevailing market interest rates and stiff competition for loans from other financial institutions. Despite this challenging market environment, the Company has maintained a disciplined loan pricing strategy that emphasizes proper interest rate risk management.
Net accretion income on acquired loans totaled $4.5 million in the first quarter of 2015, which consisted of $1.5 million of net accretion on purchased credit-impaired ("PCI") loans and $2.9 million of accretion income on purchased non-impaired loans. Net accretion income on acquired loans in the fourth quarter of 2014 totaled $5.1 million, which included $873 thousand of accretion on PCI loans and $4.2 million of accretion income on purchased non-impaired loans. Accretion income on purchased non-impaired loans included $906 thousand of accelerated accretion due to principal prepayments in the first quarter of 2015 compared to $1.8 million in the fourth quarter of 2014.
Provision for loan losses was $961 thousand in the first quarter of 2015 compared to $843 thousand in the fourth quarter of 2014. 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 | |||||||||
Q1 2015 | ||||||||||||
Balance at January 1, 2015 | $ | 6,519 | $ | 1,298 | $ | 7,817 | ||||||
Net charge-offs | (494 | ) | — | (494 | ) | |||||||
Provision for loan losses | 882 | 79 | 961 | |||||||||
Balance at March 31, 2015 | $ | 6,907 | $ | 1,377 | $ | 8,284 | ||||||
Q4 2014 | ||||||||||||
Balance at October 1, 2014 | $ | 5,779 | $ | 1,862 | $ | 7,641 | ||||||
Net charge-offs | (654 | ) | (13 | ) | (667 | ) | ||||||
Provision for loan losses | 1,394 | (551 | ) | 843 | ||||||||
Balance at December 31, 2014 | $ | 6,519 | $ | 1,298 | $ | 7,817 | ||||||
The increase in provision for loan losses was primarily due to a $630 thousand increase in provision expense on PCI loans. The Company recorded a $551 thousand provision credit on PCI loans in the fourth quarter of 2014 due to the reversal of previously established reserves on certain commercial and residential real estate loan pools as cash flows improved in those pools. Provision expense on PCI loans totaled $79 thousand in the first quarter of 2015. Offsetting the increased PCI provision expense, non-PCI loan provision expense declined by $512 thousand due to lower net charge-offs and softer loan growth. Net charge-offs totaled $494 thousand in the first quarter of 2015, which was a decline from $667 thousand in the fourth quarter of 2014. Annualized net charge-offs were 0.07 percent of average loans in the first quarter of 2015 compared to 0.09 percent of average loans in the fourth quarter of 2014.
The ALLL was $8.3 million, or 0.28 percent of total loans as of March 31, 2015 compared to $7.8 million, or 0.27 percent of total loans, as of December 31, 2014. Adjusted ALLL, which includes the ALLL as well as net acquisition accounting fair value adjustments for acquired loans, was 2.04 percent of total loans as of March 31, 2015, which was down from 2.17 percent as of December 31, 2014. The reduction in adjusted ALLL resulted primarily from lower loss rates used in the Company's ALLL model due to improvement in charge-off levels and continued accretion of fair value discounts.
Nonperforming loans as a percentage of total loans was 1.29 percent as of March 31, 2015, which was an increase from 0.92 percent as of December 31, 2014. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 1.17 percent as of March 31, 2015 compared to 0.93 percent as of December 31, 2014.
Non-interest income totaled $8.8 million in the first quarter of 2015, compared to $9.6 million in the fourth quarter of 2014. Service charges and fees on deposit accounts declined by $253 thousand. Government-guaranteed, small business lending income, which includes gains on sales of the guaranteed portion of certain SBA loans as well as servicing fees on previously sold SBA loans, contributed $2.9 million to non-interest income during the first quarter of 2015. Mortgage banking income increased by $320 thousand due to higher production volumes resulting from favorable mortgage rates in the quarter, partially offset by higher amortization of the servicing asset. Other non-interest income fell from $1.6 million in the fourth quarter of 2014 to $918 thousand in the first quarter of 2015 due to reduced trust and brokerage income, a decline in certain loan fee income and lower earnings on purchased accounts receivable.
Non-interest expense totaled $31.0 million in the first quarter of 2015, which was a decline from $33.6 million in the fourth quarter of 2014. Salaries and employee benefits were cut by $1.6 million in the quarter due to workforce reductions that occurred late in 2014 following the mergers. Merger and conversion costs, which include professional fees, severance, technology, rebranding, and branch network costs necessary to complete the mergers and subsequent conversion, decreased by $1.4 million. Restructuring charges of $907 thousand in the first quarter of 2015 related to severance costs associated with the Company's expense reduction and branch optimization plan which includes the elimination of twenty-five back office positions and the planned closing of six branches scheduled to occur in the third quarter of 2015. The Company's operating efficiency ratio, which excludes merger and conversion costs and restructuring charges, improved from 63.5 percent in the fourth quarter of 2014 to 62.1 percent in the first quarter of 2015.
Income tax expense was $5.8 million in the first quarter of 2015 compared to $607 thousand in the fourth quarter of 2014. The Company's effective tax rate was 36.3 percent in the first quarter of 2015 compared to 3.8 percent in the fourth quarter of 2014. The fourth quarter 2014 effective tax rate was favorably impacted by the reversal of a $4.7 million valuation allowance on certain deferred tax assets generated by Piedmont prior to its merger with Yadkin.
1Q 2015 compared to 1Q 2014
Net operating earnings available to common shareholders, which excludes merger and conversion costs, restructuring charges, and securities gains, totaled $10.3 million in the first quarter of 2015, which was a significant improvement from $2.2 million in the first quarter of 2014. Pre-tax, pre-provision operating earnings, which also excludes nonrecurring income and expenses, was $18.2 million in the first quarter of 2015 compared to $7.3 million in the first quarter of 2014. Net income available to common shareholders rose to $9.6 million in the first quarter of 2015, or $0.30 per diluted share, from $1.2 million, or $0.14 per diluted share, in the first quarter of 2014. The Company's operations and financial performance were significantly impacted in nearly every respect by Yadkin's mergers with VantageSouth Bancshares, Inc. and Piedmont Community Bank Holdings, Inc. on July 4, 2014. Therefore, financial results in Q1 2015 are not comparable to results reported for Q1 2014.
****
Yadkin Financial Corporation is the holding company for Yadkin Bank, a full-service state-chartered community bank providing services in 73 branches across North Carolina and upstate South Carolina. Serving over 80,000 customers, the Company has assets of $4.3 billion. The Bank’s primary business is providing banking, mortgage, investment and insurance services to residents and businesses across the Carolinas. The Bank provides mortgage-lending services through its mortgage division, Yadkin Mortgage, headquartered in Greensboro, NC. The Bank’s SBA Lending (Government Guaranteed Lending) is headquartered in Charlotte, 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 April 23, 2015, to discuss the Company's financial results. The call may be accessed by dialing (800) 768-4046 and requesting the Yadkin Financial Corporation First 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 May 25, 2015, by dialing (800) 633-8284 or (402) 977-9140 and entering reservation number 21766342.
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 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 their 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. 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; 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 writedown assets; the amount of our loan portfolio collateralized by real estate, and the weakness in the commercial real estate market; 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, increased 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 recent 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 as a result of 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 sources such as FHLB advances, sales of securities and loans, federal funds lines of credit from correspondent banks and out-of-market time deposits, to meet our liquidity needs; loss of consumer confidence and economic disruptions resulting from terrorist activities or other 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 ("SEC"), 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.
CONTACT:
Terry Earley, CFO
Yadkin Financial Corporation
Phone: (919) 659-9015
Email: Terry.Earley@yadkinbank.com
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Three months ended | |||||||||||||||||||
(Dollars in thousands, except per share data) | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | ||||||||||||||
Interest income | |||||||||||||||||||
Loans | $ | 39,796 | $ | 41,160 | $ | 41,667 | $ | 19,817 | $ | 19,969 | |||||||||
Investment securities | 3,996 | 4,058 | 3,756 | 1,992 | 1,985 | ||||||||||||||
Federal funds sold and interest-earning deposits | 50 | 54 | 38 | 26 | 26 | ||||||||||||||
Total interest income | 43,842 | 45,272 | 45,461 | 21,835 | 21,980 | ||||||||||||||
Interest expense | |||||||||||||||||||
Deposits | 2,889 | 2,714 | 2,374 | 1,657 | 1,659 | ||||||||||||||
Short-term borrowings | 289 | 168 | 65 | 96 | 78 | ||||||||||||||
Long-term debt | 1,488 | 1,599 | 1,510 | 1,029 | 1,031 | ||||||||||||||
Total interest expense | 4,666 | 4,481 | 3,949 | 2,782 | 2,768 | ||||||||||||||
Net interest income | 39,176 | 40,791 | 41,512 | 19,053 | 19,212 | ||||||||||||||
Provision for loan losses | 961 | 843 | 816 | 464 | 1,290 | ||||||||||||||
Net interest income after provision for loan losses | 38,215 | 39,948 | 40,696 | 18,589 | 17,922 | ||||||||||||||
Non-interest income | |||||||||||||||||||
Service charges and fees on deposit accounts | 3,253 | 3,506 | 3,265 | 1,488 | 1,315 | ||||||||||||||
Government-guaranteed lending | 2,873 | 2,917 | 2,072 | 2,120 | 2,341 | ||||||||||||||
Mortgage banking | 1,322 | 1,002 | 1,520 | 530 | 318 | ||||||||||||||
Bank-owned life insurance | 472 | 517 | 572 | 389 | 306 | ||||||||||||||
Gain (loss) on sales of available for sale securities | 1 | 4 | (96 | ) | 218 | — | |||||||||||||
Gain on sale of branch | — | — | 415 | — | — | ||||||||||||||
Other | 918 | 1,616 | 1,313 | 519 | 750 | ||||||||||||||
Total non-interest income | 8,839 | 9,562 | 9,061 | 5,264 | 5,030 | ||||||||||||||
Non-interest expense | |||||||||||||||||||
Salaries and employee benefits | 15,202 | 16,787 | 16,800 | 8,657 | 9,098 | ||||||||||||||
Occupancy and equipment | 4,799 | 5,009 | 4,856 | 2,547 | 2,663 | ||||||||||||||
Data processing | 1,888 | 1,959 | 1,255 | 991 | 1,030 | ||||||||||||||
Professional services | 1,092 | 1,431 | 1,153 | 674 | 685 | ||||||||||||||
FDIC insurance premiums | 714 | 636 | 700 | 365 | 390 | ||||||||||||||
Foreclosed asset expenses | 188 | 129 | 129 | 150 | 263 | ||||||||||||||
Loan, collection, and repossession expense | 936 | 849 | 1,192 | 353 | 681 | ||||||||||||||
Merger and conversion costs | 220 | 1,589 | 17,270 | 2,068 | 1,209 | ||||||||||||||
Restructuring charges | 907 | 33 | 180 | 93 | 836 | ||||||||||||||
Amortization of other intangible assets | 815 | 861 | 845 | 224 | 227 | ||||||||||||||
Other | 4,197 | 4,309 | 3,807 | 2,017 | 1,954 | ||||||||||||||
Total non-interest expense | 30,958 | 33,592 | 48,187 | 18,139 | 19,036 | ||||||||||||||
Income before income taxes | 16,096 | 15,918 | 1,570 | 5,714 | 3,916 | ||||||||||||||
Income tax expense | 5,846 | 607 | 621 | 2,504 | 1,681 | ||||||||||||||
Net income | 10,250 | 15,311 | 949 | 3,210 | 2,235 | ||||||||||||||
Dividends on preferred stock | 639 | 639 | 630 | — | — | ||||||||||||||
Net income attributable to non-controlling interests | — | — | — | 1,476 | 990 | ||||||||||||||
Net income available to common shareholders | $ | 9,611 | $ | 14,672 | $ | 319 | $ | 1,734 | $ | 1,245 | |||||||||
NET INCOME PER COMMON SHARE | |||||||||||||||||||
Basic | $ | 0.30 | $ | 0.46 | $ | 0.01 | $ | 0.19 | $ | 0.14 | |||||||||
Diluted | 0.30 | 0.46 | 0.01 | 0.19 | 0.14 | ||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||
Basic | 31,606,909 | 31,597,798 | 31,597,659 | 9,219,378 | 9,219,378 | ||||||||||||||
Diluted | 31,608,928 | 31,602,497 | 31,602,192 | 9,219,378 | 9,219,378 | ||||||||||||||
SELECTED PERFORMANCE RATIOS AND FINANCIAL DATA
As of and for the three months ended | |||||||||||||||||||
(Dollars in thousands, except per share data) | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | ||||||||||||||
Selected Performance Ratios | |||||||||||||||||||
Return on average assets | 0.98 | % | 1.44 | % | 0.09 | % | 0.61 | % | 0.43 | % | |||||||||
Return on average shareholders' equity | 7.37 | 11.07 | 0.69 | 5.34 | 4.18 | ||||||||||||||
Return on average tangible common equity | 10.58 | 16.52 | 0.37 | 6.15 | 4.91 | ||||||||||||||
Yield on earning assets, tax equivalent | 4.84 | 4.92 | 5.12 | 4.72 | 4.79 | ||||||||||||||
Cost of interest-bearing liabilities | 0.63 | 0.60 | 0.54 | 0.67 | 0.68 | ||||||||||||||
Net interest margin, tax equivalent | 4.33 | 4.43 | 4.68 | 4.12 | 4.19 | ||||||||||||||
Efficiency ratio | 64.48 | 66.71 | 95.28 | 74.59 | 78.52 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Net operating return on average assets | 1.04 | % | 1.09 | % | 1.17 | % | 0.89 | % | 0.74 | % | |||||||||
Net operating return on average shareholders' equity | 7.87 | 8.40 | 8.76 | 7.86 | 7.17 | ||||||||||||||
Net operating return on average tangible common equity | 11.35 | 12.37 | 13.02 | 9.05 | 8.41 | ||||||||||||||
Operating efficiency ratio | 62.13 | 63.50 | 61.16 | 66.30 | 70.09 | ||||||||||||||
Per Common Share | |||||||||||||||||||
Net income, basic | $ | 0.30 | $ | 0.46 | $ | 0.01 | $ | 0.19 | $ | 0.14 | |||||||||
Net income, diluted | 0.30 | 0.46 | 0.01 | 0.19 | 0.14 | ||||||||||||||
Book value | 17.07 | 16.75 | 16.26 | 15.98 | 15.68 | ||||||||||||||
Common shares outstanding | 31,609,021 | 31,599,150 | 31,598,907 | 9,219,378 | 9,219,378 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Net operating earnings, basic | $ | 0.33 | $ | 0.35 | $ | 0.36 | $ | 0.28 | $ | 0.24 | |||||||||
Net operating earnings, diluted | 0.33 | 0.35 | 0.36 | 0.28 | 0.24 | ||||||||||||||
Tangible book value | 11.78 | 11.44 | 10.93 | 13.98 | 13.66 | ||||||||||||||
Asset Quality Data and Ratios | |||||||||||||||||||
Nonperforming loans | $ | 37,630 | $ | 26,759 | $ | 25,533 | $ | 20,928 | $ | 20,856 | |||||||||
Foreclosed assets | 12,427 | 12,891 | 11,078 | 9,786 | 9,505 | ||||||||||||||
Total nonperforming assets | $ | 50,057 | $ | 39,650 | $ | 36,611 | $ | 30,714 | $ | 30,361 | |||||||||
Restructured loans not included in nonperforming assets | $ | 2,043 | $ | 5,067 | $ | 4,424 | $ | 4,000 | $ | 985 | |||||||||
Net charge-offs to average loans | 0.07 | % | 0.09 | % | 0.09 | % | 0.07 | % | 0.33 | % | |||||||||
Allowance for loan losses to loans | 0.28 | 0.27 | 0.27 | 0.54 | 0.52 | ||||||||||||||
Nonperforming loans to loans | 1.29 | 0.92 | 0.90 | 1.53 | 1.51 | ||||||||||||||
Nonperforming assets to total assets | 1.17 | 0.93 | 0.88 | 1.44 | 1.44 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Adjusted allowance for loan losses to loans | 2.04 | % | 2.17 | % | 2.50 | % | 2.42 | % | 2.54 | % | |||||||||
Capital Ratios | |||||||||||||||||||
Tangible equity to tangible assets | 9.78 | % | 9.52 | % | 9.32 | % | 10.16 | % | 10.18 | % | |||||||||
Tangible common equity to tangible assets | 9.08 | 8.82 | 8.61 | 10.16 | 10.18 | ||||||||||||||
Yadkin Financial Corporation1: | |||||||||||||||||||
Tier 1 leverage | 9.29 | % | 9.34 | % | 9.41 | % | 8.92 | % | 8.78 | % | |||||||||
Common equity Tier 12 | 8.99 | NR | NR | NR | NR | ||||||||||||||
Tier 1 risk-based capital | 10.47 | 11.04 | 10.80 | 10.60 | 10.38 | ||||||||||||||
Total risk-based capital | 11.90 | 12.53 | 12.35 | 13.66 | 13.44 | ||||||||||||||
Yadkin Bank1: | |||||||||||||||||||
Tier 1 leverage | 10.28 | % | 10.13 | % | 10.32 | % | 10.31 | % | 10.14 | % | |||||||||
Common equity Tier 12 | 11.53 | NR | NR | NR | NR | ||||||||||||||
Tier 1 risk-based capital | 11.53 | 12.00 | 11.84 | 12.26 | 12.00 | ||||||||||||||
Total risk-based capital | 11.89 | 12.37 | 12.26 | 13.12 | 12.85 | ||||||||||||||
1 Regulatory capital ratios for Q1 2015 are estimates. | |||||||||||||||||||
2 Yadkin became subject to new 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) | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | ||||||||||||||
Assets | |||||||||||||||||||
Cash and due from banks | $ | 55,426 | $ | 65,312 | $ | 59,837 | $ | 38,770 | $ | 30,969 | |||||||||
Interest-earning deposits with banks | 52,826 | 66,548 | 31,223 | 76,125 | 42,474 | ||||||||||||||
Federal funds sold | 250 | 505 | 15 | — | — | ||||||||||||||
Investment securities available for sale | 658,323 | 672,421 | 694,993 | 394,492 | 407,231 | ||||||||||||||
Investment securities held to maturity | 39,511 | 39,620 | 39,728 | 3,119 | 3,119 | ||||||||||||||
Loans held for sale | 32,322 | 20,205 | 26,853 | 10,658 | 11,158 | ||||||||||||||
Loans | 2,913,859 | 2,898,266 | 2,827,426 | 1,368,568 | 1,384,732 | ||||||||||||||
Allowance for loan losses | (8,284 | ) | (7,817 | ) | (7,641 | ) | (7,451 | ) | (7,213 | ) | |||||||||
Net loans | 2,905,575 | 2,890,449 | 2,819,785 | 1,361,117 | 1,377,519 | ||||||||||||||
Purchased accounts receivable | 62,129 | 44,821 | 43,187 | 44,537 | 39,762 | ||||||||||||||
Federal Home Loan Bank stock | 20,277 | 19,499 | 19,320 | 8,950 | 8,455 | ||||||||||||||
Premises and equipment, net | 78,683 | 80,379 | 81,554 | 44,211 | 44,350 | ||||||||||||||
Bank-owned life insurance | 77,462 | 76,990 | 76,500 | 48,700 | 33,386 | ||||||||||||||
Foreclosed assets | 12,427 | 12,891 | 11,078 | 9,786 | 9,505 | ||||||||||||||
Deferred tax asset, net | 66,415 | 72,403 | 72,919 | 48,783 | 52,276 | ||||||||||||||
Goodwill | 151,083 | 151,083 | 151,083 | 26,254 | 26,254 | ||||||||||||||
Other intangible assets, net | 15,862 | 16,677 | 17,538 | 5,432 | 5,657 | ||||||||||||||
Accrued interest receivable and other assets | 38,782 | 36,506 | 34,502 | 18,214 | 16,853 | ||||||||||||||
Total assets | $ | 4,267,353 | $ | 4,266,309 | $ | 4,180,115 | $ | 2,139,148 | $ | 2,108,968 | |||||||||
Liabilities | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Non-interest demand | $ | 655,333 | $ | 680,387 | $ | 657,554 | $ | 228,243 | $ | 195,568 | |||||||||
Interest-bearing demand | 472,524 | 469,898 | 439,117 | 348,075 | 356,134 | ||||||||||||||
Money market and savings | 1,010,348 | 1,004,796 | 970,571 | 473,258 | 472,968 | ||||||||||||||
Time | 1,070,970 | 1,092,283 | 1,117,697 | 620,336 | 630,132 | ||||||||||||||
Total deposits | 3,209,175 | 3,247,364 | 3,184,939 | 1,669,912 | 1,654,802 | ||||||||||||||
Short-term borrowings | 325,500 | 250,500 | 216,500 | 140,500 | 129,500 | ||||||||||||||
Long-term debt | 137,199 | 180,164 | 210,154 | 69,932 | 69,962 | ||||||||||||||
Accrued interest payable and other liabilities | 27,660 | 30,479 | 26,192 | 13,070 | 11,392 | ||||||||||||||
Total liabilities | 3,699,534 | 3,708,507 | 3,637,785 | 1,893,414 | 1,865,656 | ||||||||||||||
Shareholders' equity | |||||||||||||||||||
Preferred stock | 28,405 | 28,405 | 28,405 | — | — | ||||||||||||||
Common stock | 31,609 | 31,599 | 31,599 | 9,219 | 9,219 | ||||||||||||||
Common stock warrant | 717 | 717 | 717 | — | — | ||||||||||||||
Additional paid-in capital | 492,192 | 492,014 | 491,864 | 146,471 | 146,374 | ||||||||||||||
Retained earnings (accumulated deficit) | 16,923 | 7,311 | (7,361 | ) | (7,679 | ) | (9,413 | ) | |||||||||||
Accumulated other comprehensive loss | (2,027 | ) | (2,244 | ) | (2,894 | ) | (670 | ) | (1,587 | ) | |||||||||
Shareholders' equity before non-controlling interests | 567,819 | 557,802 | 542,330 | 147,341 | 144,593 | ||||||||||||||
Non-controlling interests | — | — | — | 98,393 | 98,719 | ||||||||||||||
Total shareholders' equity | 567,819 | 557,802 | 542,330 | 245,734 | 243,312 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 4,267,353 | $ | 4,266,309 | $ | 4,180,115 | $ | 2,139,148 | $ | 2,108,968 | |||||||||
QUARTERLY NET INTEREST MARGIN ANALYSIS
Three months ended March 31, 2015 | Three months ended December 31, 2014 | Three months ended March 31, 2014 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest* | Yield/Cost* | Average Balance | Interest* | Yield/Cost* | Average Balance | Interest* | Yield/Cost* | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Loans | $ | 2,924,287 | $ | 39,796 | 5.52 | % | $ | 2,887,688 | $ | 41,160 | 5.65 | % | $ | 1,400,086 | $ | 19,969 | 5.78 | % | ||||||||||||||
Investment securities | 706,888 | 4,229 | 2.43 | 728,683 | 4,293 | 2.34 | 415,870 | 1,991 | 1.94 | |||||||||||||||||||||||
Federal funds and other | 59,572 | 50 | 0.34 | 55,101 | 54 | 0.39 | 46,384 | 26 | 0.23 | |||||||||||||||||||||||
Total interest-earning assets | 3,690,747 | 44,075 | 4.84 | % | 3,671,472 | 45,507 | 4.92 | % | 1,862,340 | 21,986 | 4.79 | % | ||||||||||||||||||||
Goodwill | 151,083 | 151,083 | 26,254 | |||||||||||||||||||||||||||||
Other intangibles, net | 16,359 | 17,032 | 5,769 | |||||||||||||||||||||||||||||
Other non-interest-earning assets | 391,489 | 385,284 | 207,252 | |||||||||||||||||||||||||||||
Total assets | $ | 4,249,678 | $ | 4,224,871 | $ | 2,101,615 | ||||||||||||||||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 470,919 | $ | 160 | 0.14 | % | $ | 454,369 | $ | 156 | 0.14 | % | $ | 348,050 | $ | 180 | 0.21 | % | ||||||||||||||
Money market and savings | 1,003,156 | 716 | 0.29 | 975,788 | 695 | 0.28 | 475,698 | 349 | 0.30 | |||||||||||||||||||||||
Time | 1,089,950 | 2,013 | 0.75 | 1,103,572 | 1,863 | 0.67 | 630,727 | 1,130 | 0.73 | |||||||||||||||||||||||
Total interest-bearing deposits | 2,564,025 | 2,889 | 0.46 | 2,533,729 | 2,714 | 0.42 | 1,454,475 | 1,659 | 0.46 | |||||||||||||||||||||||
Short-term borrowings | 288,000 | 289 | 0.41 | 233,500 | 168 | 0.29 | 128,000 | 78 | 0.25 | |||||||||||||||||||||||
Long-term debt | 150,450 | 1,488 | 4.01 | 199,043 | 1,599 | 3.19 | 60,587 | 1,031 | 6.90 | |||||||||||||||||||||||
Total interest-bearing liabilities | 3,002,475 | 4,666 | 0.63 | % | 2,966,272 | 4,481 | 0.60 | % | 1,643,062 | 2,768 | 0.68 | % | ||||||||||||||||||||
Non-interest-bearing deposits | 657,702 | 683,402 | 232,807 | |||||||||||||||||||||||||||||
Other liabilities | 25,356 | 26,393 | 9,079 | |||||||||||||||||||||||||||||
Total liabilities | 3,685,533 | 3,676,067 | 1,884,948 | |||||||||||||||||||||||||||||
Shareholders’ equity | 564,145 | 548,804 | 216,667 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,249,678 | $ | 4,224,871 | $ | 2,101,615 | ||||||||||||||||||||||||||
Net interest income, taxable equivalent | $ | 39,409 | $ | 41,026 | $ | 19,218 | ||||||||||||||||||||||||||
Interest rate spread | 4.21 | % | 4.32 | % | 4.11 | % | ||||||||||||||||||||||||||
Tax equivalent net interest margin | 4.33 | % | 4.43 | % | 4.19 | % | ||||||||||||||||||||||||||
Percentage of average interest-earning assets to average interest-bearing liabilities | 122.92 | % | 123.77 | % | 113.35 | % | ||||||||||||||||||||||||||
* Taxable equivalent basis | ||||||||||||||||||||||||||||||||
APPENDIX - RECONCILIATION OF NON-GAAP MEASURES
As of and for the three months ended | |||||||||||||||||||
(Dollars in thousands, except per share data) | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | ||||||||||||||
Operating Earnings | |||||||||||||||||||
Net income (GAAP) | $ | 10,250 | $ | 15,311 | $ | 949 | $ | 3,210 | $ | 2,235 | |||||||||
Securities (gains) losses | (1 | ) | (4 | ) | 96 | (218 | ) | — | |||||||||||
Gain on sale of branch | — | — | (415 | ) | — | — | |||||||||||||
Merger and conversion costs | 220 | 1,589 | 17,270 | 2,068 | 1,209 | ||||||||||||||
Restructuring charges | 907 | 33 | 180 | 93 | 836 | ||||||||||||||
Income tax effect of adjustments | (431 | ) | (601 | ) | (6,075 | ) | (425 | ) | (452 | ) | |||||||||
DTA valuation allowance reversal | — | (4,706 | ) | — | — | — | |||||||||||||
Net operating earnings (Non-GAAP) | 10,945 | 11,622 | 12,005 | 4,728 | 3,828 | ||||||||||||||
Dividends on preferred stock | 639 | 639 | 630 | — | — | ||||||||||||||
Net income attributable to non-controlling interests | — | — | — | 1,476 | 990 | ||||||||||||||
Allocation of adjustments to non-controlling interests | — | — | — | 632 | 599 | ||||||||||||||
Net operating earnings available to common shareholders (Non-GAAP) | $ | 10,306 | $ | 10,983 | $ | 11,375 | $ | 2,620 | $ | 2,239 | |||||||||
Net operating earnings per common share: | |||||||||||||||||||
Basic (Non-GAAP) | $ | 0.33 | $ | 0.35 | $ | 0.36 | $ | 0.28 | $ | 0.24 | |||||||||
Diluted (Non-GAAP) | 0.33 | 0.35 | 0.36 | 0.28 | 0.24 | ||||||||||||||
Pre-Tax, Pre-Provision Operating Earnings | |||||||||||||||||||
Net income (GAAP) | $ | 10,250 | $ | 15,311 | $ | 949 | $ | 3,210 | $ | 2,235 | |||||||||
Provision for loan losses | 961 | 843 | 816 | 464 | 1,290 | ||||||||||||||
Income tax expense | 5,846 | 607 | 621 | 2,504 | 1,681 | ||||||||||||||
Pre-tax, pre-provision income | 17,057 | 16,761 | 2,386 | 6,178 | 5,206 | ||||||||||||||
Securities (gains) losses | (1 | ) | (4 | ) | 96 | (218 | ) | — | |||||||||||
Gain on sale of branch | — | — | (415 | ) | — | — | |||||||||||||
Merger and conversion costs | 220 | 1,589 | 17,270 | 2,068 | 1,209 | ||||||||||||||
Restructuring charges | 907 | 33 | 180 | 93 | 836 | ||||||||||||||
Pre-tax, pre-provision operating earnings (Non-GAAP) | $ | 18,183 | $ | 18,379 | $ | 19,517 | $ | 8,121 | $ | 7,251 | |||||||||
Operating Non-Interest Expense | |||||||||||||||||||
Non-interest expense (GAAP) | $ | 30,958 | $ | 33,592 | $ | 48,187 | $ | 18,139 | $ | 19,036 | |||||||||
Merger and conversion costs | (220 | ) | (1,589 | ) | (17,270 | ) | (2,068 | ) | (1,209 | ) | |||||||||
Restructuring charges | (907 | ) | (33 | ) | (180 | ) | (93 | ) | (836 | ) | |||||||||
Operating non-interest expense (Non-GAAP) | $ | 29,831 | $ | 31,970 | $ | 30,737 | $ | 15,978 | $ | 16,991 | |||||||||
Operating Efficiency Ratio | |||||||||||||||||||
Efficiency ratio (GAAP) | 64.48 | % | 66.71 | % | 95.28 | % | 74.59 | % | 78.52 | % | |||||||||
Effect to adjust for securities gains (losses) | — | 0.01 | (0.18 | ) | 0.68 | — | |||||||||||||
Effect to adjust for gain on sale of branch | — | — | 0.79 | — | — | ||||||||||||||
Effect to adjust for merger and conversion costs | (0.46 | ) | (3.15 | ) | (34.37 | ) | (8.58 | ) | (4.98 | ) | |||||||||
Effect to adjust for restructuring costs | (1.89 | ) | (0.07 | ) | (0.36 | ) | (0.39 | ) | (3.45 | ) | |||||||||
Operating efficiency ratio (Non-GAAP) | 62.13 | % | 63.50 | % | 61.16 | % | 66.30 | % | 70.09 | % | |||||||||
Adjusted Allowance for Loan Losses | |||||||||||||||||||
Allowance for loan losses (GAAP) | $ | 8,284 | $ | 7,817 | $ | 7,641 | $ | 7,451 | $ | 7,213 | |||||||||
Net acquisition accounting fair value discounts to loans | 51,125 | 55,166 | 62,969 | 25,624 | 27,906 | ||||||||||||||
Adjusted allowance for loan losses (Non-GAAP) | $ | 59,409 | $ | 62,983 | $ | 70,610 | $ | 33,075 | $ | 35,119 | |||||||||
Loans | $ | 2,913,859 | $ | 2,898,266 | $ | 2,827,426 | $ | 1,368,568 | $ | 1,384,732 | |||||||||
Adjusted allowance for loan losses to loans (Non-GAAP) | 2.04 | % | 2.17 | % | 2.50 | % | 2.42 | % | 2.54 | % | |||||||||
Tangible Common Equity | |||||||||||||||||||
Shareholders' equity (GAAP) | $ | 567,819 | $ | 557,802 | $ | 542,330 | $ | 147,341 | $ | 144,593 | |||||||||
Less preferred stock | 28,405 | 28,405 | 28,405 | — | — | ||||||||||||||
Less goodwill and other intangible assets | 166,945 | 167,760 | 168,621 | 18,489 | 18,620 | ||||||||||||||
Tangible common equity (non-GAAP) | $ | 372,469 | $ | 361,637 | $ | 345,304 | $ | 128,852 | $ | 125,973 | |||||||||