Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 INVESTOR PRESENTATION - YADKIN FINANCIAL Corp | q22015earningscallvfinal.htm |
| 8-K - 8-K Q2 2015 EARNINGS RELEASE - YADKIN FINANCIAL Corp | form8-kq22015pressrelease.htm |
FOR IMMEDIATE RELEASE
Yadkin Financial Corporation Announces Record Operating Earnings for the Second Quarter of 2015
RALEIGH, N.C., July 23, 2015 – Yadkin Financial Corporation (NYSE: YDKN) (the "Company" or "Yadkin"), the parent company of Yadkin Bank, today announced financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 financial highlights:
• | Net income available to common shareholders totaled $10.6 million or $0.33 per diluted share during Q2 2015, compared to $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 $11.9 million, or $0.38 per diluted share, in Q2 2015, compared to $0.33 per diluted share in Q1 2015. |
• | Annualized operating return on average assets equaled 1.14 percent in Q2 2015, compared to 1.04 percent in Q1 2015. |
• | Annualized operating return on average tangible common equity equaled 12.83 percent in Q2 2015, compared to 11.38 percent in Q1 2015. |
• | Operating efficiency, the ratio of operating expenses to total operating revenues, improved to 60.0 percent in Q2 2015, compared to 62.1 percent in Q1 2015. |
• | Total nonperforming assets as a percentage of total assets declined to 1.06 percent at June 30, 2015, compared to 1.17 percent at March 31, 2015. |
• | Annualized net loan growth was approximately 5.8 percent in Q2 2015, resulting from loan originations and commitments of $389.6 million. |
• | During May, the Company redeemed $28.4 million of preferred stock that had initially been issued in connection with the TARP Capital Purchase Program. Redemption of the preferred stock is expected to improve annual pre-tax earnings by $2.6 million and is expected to increase fully-diluted net income available to common shareholders by $0.08 per common share annually. |
• | Tangible common equity to tangible assets increased to 9.16 percent at June 30, 2015, compared to 9.06 percent at March 31, 2015. |
In summarizing the second quarter 2015 financial results, CEO Scott Custer noted that Yadkin's financial performance was strong, with a 15.5 percent increase in operating earnings. 'Clearly, our continued focus on growing revenues while remaining disciplined with our operating expenses is working,' Custer said. 'Successful delivery of our products and services through our traditional branch network, combined with the revenues generated by our specialized business units, particularly our SBA lending function, is allowing Yadkin to generate solid financial returns.'
Yadkin also announced that the Board of Directors has declared a quarterly cash dividend of $0.10 per share of its outstanding unrestricted common stock, payable August 20, 2015, to shareholders of record as of August 6, 2015. In announcing the cash dividend, Custer reported that 'following careful consideration of Yadkin's capital needs, the Board concluded that the dividend is appropriate, given the strength of the Company's performance in the year since the July 2014 merger.'
Results of Operations and Asset Quality
2Q 2015 vs. 1Q 2015
Net operating earnings available to common shareholders, which excludes merger and conversion costs, restructuring charges, securities gains, and the income tax effect of adjustments, totaled $11.9 million in the second quarter of 2015 compared to $10.3 million in the first quarter of 2015. Pre-tax, pre-provision operating earnings, which also excludes nonrecurring income and expenses, was $20.0 million in the second quarter of 2015 compared to $18.2 million in the first quarter of 2015. Net income available to common shareholders totaled $10.6 million in the second quarter of 2015, or $0.33 per diluted share, compared to $9.6 million, or $0.30 per diluted share, in the first quarter of 2015.
Net interest income totaled $39.3 million in the second quarter of 2015, up slightly from $39.2 million in the first quarter of 2015. Net interest margin decreased from 4.33 percent in the first quarter of 2015 to 4.29 percent in the second quarter of 2015 due to pressure on loan and investment security yields and an increase in funding costs. However, core net interest margin, which excludes the impact of accretion income on net interest income, increased from 3.74 percent in the first quarter of 2015 to 3.76 percent in the second quarter of 2015. While the Company continues to face significant pricing pressure on loan originations from both low prevailing market interest rates and stiff competition for loans from other financial institutions, Yadkin benefited from a favorable change in its earning asset and funding mix during the second quarter of 2015.
Net accretion income on acquired loans totaled $4.1 million in the second quarter of 2015, which consisted of $812 thousand of net accretion on purchased credit-impaired ("PCI") loans and $3.3 million of accretion income on purchased non-impaired loans. Net accretion income on acquired loans in the first quarter of 2015 totaled $4.5 million, which included $1.5 million of accretion on PCI loans and $2.9 million of accretion income on purchased non-impaired loans. Accretion income on purchased non-impaired loans included $1.5 million of accelerated accretion due to principal prepayments in the second quarter of 2015, compared to $906 thousand in the first quarter of 2015.
Provision for loan losses was $994 thousand in the second quarter of 2015 compared to $961 thousand in the first 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 | |||||||||
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 | ||||||
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 | ||||||
The provision for loan losses for non-PCI loans increased increased by $131 thousand during the second quarter of 2015 due to higher net charge-offs. Provision expense on PCI loans declined $98 thousand in the second quarter of 2015 due to the reversal of previously established reserves on certain commercial and residential real estate loan pools as cash flows improved in those pools. Net charge-offs totaled $920 thousand in the second quarter of 2015, which was an increase from $494 thousand in the first quarter of 2015. Annualized net charge-offs were 0.12 percent of average loans in the second quarter of 2015 compared to 0.07 percent of average loans in the first quarter of 2015.
The ALLL was $8.4 million, or 0.28 percent of total loans as of June 30, 2015, compared to $8.3 million, or 0.28 percent of total loans, as of March 31, 2015. Adjusted ALLL, which includes the ALLL as well as net acquisition accounting fair value adjustments for acquired loans, was 1.88 percent of total loans as of June 30, 2015, down from 2.04 percent as of March 31, 2015. The reduction in adjusted ALLL resulted primarily from lower loss rates used in the Company's ALLL model and continued accretion of fair value discounts.
Nonperforming loans as a percentage of total loans was 1.10 percent as of June 30, 2015, compared to 1.29 percent as of March 31, 2015. 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 1.06 percent as of June 30, 2015 compared to 1.17 percent as of March 31, 2015.
Non-interest income totaled $10.8 million in the second quarter of 2015, compared to $8.8 million in the first quarter of 2015. 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 $3.7 million to non-interest income during the second quarter of 2015, an increase of $804 thousand over the first quarter of 2015. Mortgage banking income increased by $311 thousand due to higher production volumes and reversal of previously-recognized servicing impairment. Service charges and fees on deposit accounts increased by $242 thousand. Other non-interest income increased from $918 thousand in the first quarter of 2015 to $1.4 million in the second quarter of 2015, due to increases in trust and brokerage income, certain loan fee income and higher earnings on purchased accounts receivable.
Non-interest expense totaled $32.3 million in the second quarter of 2015, which was an increase from $31.0 million in the first quarter of 2015. Salaries and employee benefits increased by $189 thousand in the second quarter of 2015, due to merit increases that were effective during April and higher incentive-based compensation, partially offset by lower personnel expenses resulting from the positions eliminated during the first quarter. Restructuring charges of $2.3 million in the second quarter of 2015 primarily related to recognition of an obligation to a former executive officer. The Company's operating efficiency ratio, which excludes merger and conversion costs, securities gains, and restructuring charges, improved from 62.1 percent in the first quarter of 2015 to 60.0 percent in the second quarter of 2015.
Income tax expense was $6.1 million in the second quarter of 2015 compared to $5.8 million in the first quarter of 2015. The Company's effective tax rate was 36.1 percent in the second quarter of 2015 compared to 36.3 percent in the first quarter of 2015.
2Q 2015 vs. 2Q 2014
Net operating earnings available to common shareholders, which excludes merger and conversion costs, restructuring charges, securities gains, and the income tax effect of adjustments, totaled $11.9 million in the second quarter of 2015, which was a significant improvement from $2.6 million in the second quarter of 2014. Pre-tax, pre-provision operating earnings, which also excludes nonrecurring income and expenses, was $20.0 million in the second quarter of 2015 compared to $8.1 million in the second quarter of 2014. Net income available to common shareholders increased to $10.6 million in the second quarter of 2015, or $0.33 per diluted share, from $1.7 million, or $0.19 per diluted share, in the second 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 the second quarter of 2015 are not comparable to results reported for the second quarter of 2014.
****
Yadkin Financial Corporation is the holding company for Yadkin Bank, a full-service state-chartered community bank providing services in 74 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 July 23, 2015, to discuss the Company's financial results. The call may be accessed by dialing (800) 734-8592 and requesting the Yadkin Financial Corporation Second 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 August 24, 2015, by dialing (800) 633-8284 or (402) 977-9140 and entering reservation number 21771960.
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. 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 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.
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) | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | ||||||||||||||
Interest income | |||||||||||||||||||
Loans | $ | 40,404 | $ | 39,796 | $ | 41,160 | $ | 41,667 | $ | 19,817 | |||||||||
Investment securities | 3,786 | 3,996 | 4,058 | 3,756 | 1,992 | ||||||||||||||
Federal funds sold and interest-earning deposits | 45 | 50 | 54 | 38 | 26 | ||||||||||||||
Total interest income | 44,235 | 43,842 | 45,272 | 45,461 | 21,835 | ||||||||||||||
Interest expense | |||||||||||||||||||
Deposits | 3,073 | 2,889 | 2,714 | 2,374 | 1,657 | ||||||||||||||
Short-term borrowings | 331 | 289 | 168 | 65 | 96 | ||||||||||||||
Long-term debt | 1,504 | 1,488 | 1,599 | 1,510 | 1,029 | ||||||||||||||
Total interest expense | 4,908 | 4,666 | 4,481 | 3,949 | 2,782 | ||||||||||||||
Net interest income | 39,327 | 39,176 | 40,791 | 41,512 | 19,053 | ||||||||||||||
Provision for loan losses | 994 | 961 | 843 | 816 | 464 | ||||||||||||||
Net interest income after provision for loan losses | 38,333 | 38,215 | 39,948 | 40,696 | 18,589 | ||||||||||||||
Non-interest income | |||||||||||||||||||
Service charges and fees on deposit accounts | 3,495 | 3,253 | 3,506 | 3,265 | 1,488 | ||||||||||||||
Government-guaranteed lending | 3,677 | 2,873 | 2,917 | 2,072 | 2,120 | ||||||||||||||
Mortgage banking | 1,633 | 1,322 | 1,002 | 1,520 | 530 | ||||||||||||||
Bank-owned life insurance | 465 | 472 | 517 | 572 | 389 | ||||||||||||||
Gain (loss) on sales of available for sale securities | 84 | 1 | 4 | (96 | ) | 218 | |||||||||||||
Gain on sale of branch | — | — | — | 415 | — | ||||||||||||||
Other | 1,446 | 918 | 1,616 | 1,313 | 519 | ||||||||||||||
Total non-interest income | 10,800 | 8,839 | 9,562 | 9,061 | 5,264 | ||||||||||||||
Non-interest expense | |||||||||||||||||||
Salaries and employee benefits | 15,391 | 15,202 | 16,787 | 16,800 | 8,657 | ||||||||||||||
Occupancy and equipment | 4,637 | 4,799 | 5,009 | 4,856 | 2,547 | ||||||||||||||
Data processing | 1,929 | 1,888 | 1,959 | 1,255 | 991 | ||||||||||||||
Professional services | 1,407 | 1,092 | 1,431 | 1,153 | 674 | ||||||||||||||
FDIC insurance premiums | 772 | 714 | 636 | 700 | 365 | ||||||||||||||
Foreclosed asset expenses | 445 | 188 | 129 | 129 | 150 | ||||||||||||||
Loan, collection, and repossession expense | 850 | 936 | 849 | 1,192 | 353 | ||||||||||||||
Merger and conversion costs | (25 | ) | 220 | 1,589 | 17,270 | 2,068 | |||||||||||||
Restructuring charges | 2,294 | 907 | 33 | 180 | 93 | ||||||||||||||
Amortization of other intangible assets | 777 | 815 | 861 | 845 | 224 | ||||||||||||||
Other | 3,839 | 4,197 | 4,309 | 3,807 | 2,017 | ||||||||||||||
Total non-interest expense | 32,316 | 30,958 | 33,592 | 48,187 | 18,139 | ||||||||||||||
Income before income taxes | 16,817 | 16,096 | 15,918 | 1,570 | 5,714 | ||||||||||||||
Income tax expense | 6,076 | 5,846 | 607 | 621 | 2,504 | ||||||||||||||
Net income | 10,741 | 10,250 | 15,311 | 949 | 3,210 | ||||||||||||||
Dividends on preferred stock | 183 | 639 | 639 | 630 | — | ||||||||||||||
Net income attributable to non-controlling interests | — | — | — | — | 1,476 | ||||||||||||||
Net income available to common shareholders | $ | 10,558 | $ | 9,611 | $ | 14,672 | $ | 319 | $ | 1,734 | |||||||||
NET INCOME PER COMMON SHARE | |||||||||||||||||||
Basic | $ | 0.33 | $ | 0.30 | $ | 0.46 | $ | 0.01 | $ | 0.19 | |||||||||
Diluted | 0.33 | 0.30 | 0.46 | 0.01 | 0.19 | ||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||
Basic | 31,609,021 | 31,606,909 | 31,597,798 | 31,597,659 | 9,219,378 | ||||||||||||||
Diluted | 31,610,620 | 31,608,928 | 31,602,497 | 31,602,192 | 9,219,378 | ||||||||||||||
SELECTED PERFORMANCE RATIOS AND FINANCIAL DATA
As of and for the three months ended | |||||||||||||||||||
(Dollars in thousands, except per share data) | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | ||||||||||||||
Selected Performance Ratios | |||||||||||||||||||
Return on average assets | 1.01 | % | 0.98 | % | 1.44 | % | 0.09 | % | 0.61 | % | |||||||||
Return on average shareholders' equity | 7.71 | 7.37 | 11.07 | 0.69 | 5.34 | ||||||||||||||
Return on average tangible common equity | 11.38 | 10.61 | 16.52 | 0.37 | 6.15 | ||||||||||||||
Yield on earning assets, tax equivalent | 4.83 | 4.84 | 4.92 | 5.12 | 4.72 | ||||||||||||||
Cost of interest-bearing liabilities | 0.65 | 0.63 | 0.60 | 0.54 | 0.67 | ||||||||||||||
Net interest margin, tax equivalent | 4.29 | 4.33 | 4.43 | 4.68 | 4.12 | ||||||||||||||
Efficiency ratio | 64.47 | 64.48 | 66.71 | 95.28 | 74.59 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Net operating return on average assets | 1.14 | % | 1.04 | % | 1.09 | % | 1.17 | % | 0.89 | % | |||||||||
Net operating return on average shareholders' equity | 8.68 | 7.87 | 8.40 | 8.76 | 7.86 | ||||||||||||||
Net operating return on average tangible common equity | 12.83 | 11.38 | 12.37 | 13.02 | 9.05 | ||||||||||||||
Operating efficiency ratio | 60.04 | 62.13 | 63.50 | 61.16 | 66.30 | ||||||||||||||
Per Common Share | |||||||||||||||||||
Net income, basic | $ | 0.33 | $ | 0.30 | $ | 0.46 | $ | 0.01 | $ | 0.19 | |||||||||
Net income, diluted | 0.33 | 0.30 | 0.46 | 0.01 | 0.19 | ||||||||||||||
Book value | 17.28 | 17.07 | 16.75 | 16.26 | 15.98 | ||||||||||||||
Common shares outstanding | 31,712,021 | 31,609,021 | 31,599,150 | 31,598,907 | 9,219,378 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Net operating earnings, basic | $ | 0.38 | $ | 0.33 | $ | 0.35 | $ | 0.36 | $ | 0.28 | |||||||||
Net operating earnings, diluted | 0.38 | 0.33 | 0.35 | 0.36 | 0.28 | ||||||||||||||
Tangible book value | 12.01 | 11.75 | 11.41 | 10.89 | 13.98 | ||||||||||||||
Asset Quality Data and Ratios | |||||||||||||||||||
Nonperforming loans | $ | 32,492 | $ | 37,630 | $ | 26,759 | $ | 25,533 | $ | 20,928 | |||||||||
Foreclosed assets | 13,547 | 12,427 | 12,891 | 11,078 | 9,786 | ||||||||||||||
Total nonperforming assets | $ | 46,039 | $ | 50,057 | $ | 39,650 | $ | 36,611 | $ | 30,714 | |||||||||
Restructured loans not included in nonperforming assets | $ | 2,333 | $ | 2,043 | $ | 3,948 | $ | 4,424 | $ | 4,000 | |||||||||
Net charge-offs to average loans | 0.12 | % | 0.07 | % | 0.09 | % | 0.09 | % | 0.07 | % | |||||||||
Allowance for loan losses to loans | 0.28 | 0.28 | 0.27 | 0.27 | 0.54 | ||||||||||||||
Nonperforming loans to loans | 1.10 | 1.29 | 0.92 | 0.90 | 1.53 | ||||||||||||||
Nonperforming assets to total assets | 1.06 | 1.17 | 0.93 | 0.88 | 1.44 | ||||||||||||||
Non-GAAP: | |||||||||||||||||||
Adjusted allowance for loan losses to loans | 1.88 | % | 2.04 | % | 2.17 | % | 2.50 | % | 2.42 | % | |||||||||
Capital Ratios | |||||||||||||||||||
Tangible equity to tangible assets | 9.16 | % | 9.75 | % | 9.49 | % | 9.29 | % | 10.16 | % | |||||||||
Tangible common equity to tangible assets | 9.16 | 9.06 | 8.80 | 8.58 | 10.16 | ||||||||||||||
Yadkin Financial Corporation1: | |||||||||||||||||||
Tier 1 leverage | 9.22 | % | 9.60 | % | 9.33 | % | 9.40 | % | 8.92 | % | |||||||||
Common equity Tier 12 | 10.29 | 10.14 | NR | NR | NR | ||||||||||||||
Tier 1 risk-based capital | 10.29 | 10.83 | 10.87 | 10.81 | 10.60 | ||||||||||||||
Total risk-based capital | 11.72 | 12.25 | 12.34 | 12.37 | 13.66 | ||||||||||||||
Yadkin Bank1: | |||||||||||||||||||
Tier 1 leverage | 10.17 | % | 10.59 | % | 10.13 | % | 10.32 | % | 10.31 | % | |||||||||
Common equity Tier 12 | 11.35 | 11.97 | NR | NR | NR | ||||||||||||||
Tier 1 risk-based capital | 11.35 | 11.97 | 11.82 | 11.85 | 12.26 | ||||||||||||||
Total risk-based capital | 11.73 | 12.34 | 12.18 | 12.27 | 13.12 | ||||||||||||||
1 Regulatory capital ratios for Q2 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) | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | ||||||||||||||
Assets | |||||||||||||||||||
Cash and due from banks | $ | 65,620 | $ | 55,426 | $ | 65,312 | $ | 59,837 | $ | 38,770 | |||||||||
Interest-earning deposits with banks | 57,141 | 52,826 | 66,548 | 31,223 | 76,125 | ||||||||||||||
Federal funds sold | 200 | 250 | 505 | 15 | — | ||||||||||||||
Investment securities available for sale | 649,015 | 658,323 | 672,421 | 694,993 | 394,492 | ||||||||||||||
Investment securities held to maturity | 39,402 | 39,511 | 39,620 | 39,728 | 3,119 | ||||||||||||||
Loans held for sale | 38,622 | 32,322 | 20,205 | 26,853 | 10,658 | ||||||||||||||
Loans | 2,955,771 | 2,913,859 | 2,898,266 | 2,827,426 | 1,368,568 | ||||||||||||||
Allowance for loan losses | (8,358 | ) | (8,284 | ) | (7,817 | ) | (7,641 | ) | (7,451 | ) | |||||||||
Net loans | 2,947,413 | 2,905,575 | 2,890,449 | 2,819,785 | 1,361,117 | ||||||||||||||
Purchased accounts receivable | 69,933 | 62,129 | 44,821 | 43,187 | 44,537 | ||||||||||||||
Federal Home Loan Bank stock | 21,976 | 20,277 | 19,499 | 19,320 | 8,950 | ||||||||||||||
Premises and equipment, net | 77,513 | 78,683 | 80,379 | 81,554 | 44,211 | ||||||||||||||
Bank-owned life insurance | 77,927 | 77,462 | 76,990 | 76,500 | 48,700 | ||||||||||||||
Foreclosed assets | 13,547 | 12,427 | 12,891 | 11,078 | 9,786 | ||||||||||||||
Deferred tax asset, net | 62,179 | 67,071 | 73,059 | 73,575 | 48,783 | ||||||||||||||
Goodwill | 152,152 | 152,152 | 152,152 | 152,152 | 26,254 | ||||||||||||||
Other intangible assets, net | 15,085 | 15,862 | 16,677 | 17,538 | 5,432 | ||||||||||||||
Accrued interest receivable and other assets | 39,327 | 38,782 | 36,506 | 34,502 | 18,214 | ||||||||||||||
Total assets | $ | 4,327,052 | $ | 4,269,078 | $ | 4,268,034 | $ | 4,181,840 | $ | 2,139,148 | |||||||||
Liabilities | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Non-interest demand | $ | 697,653 | $ | 655,333 | $ | 680,387 | $ | 657,554 | $ | 228,243 | |||||||||
Interest-bearing demand | 475,597 | 472,524 | 469,898 | 439,117 | 348,075 | ||||||||||||||
Money market and savings | 991,982 | 1,010,348 | 1,004,796 | 970,571 | 473,258 | ||||||||||||||
Time | 1,077,862 | 1,070,970 | 1,092,283 | 1,117,697 | 620,336 | ||||||||||||||
Total deposits | 3,243,094 | 3,209,175 | 3,247,364 | 3,184,939 | 1,669,912 | ||||||||||||||
Short-term borrowings | 355,500 | 325,500 | 250,500 | 216,500 | 140,500 | ||||||||||||||
Long-term debt | 147,265 | 137,199 | 180,164 | 210,154 | 69,932 | ||||||||||||||
Accrued interest payable and other liabilities | 33,077 | 29,385 | 32,204 | 27,917 | 13,070 | ||||||||||||||
Total liabilities | 3,778,936 | 3,701,259 | 3,710,232 | 3,639,510 | 1,893,414 | ||||||||||||||
Shareholders' equity | |||||||||||||||||||
Preferred stock | — | 28,405 | 28,405 | 28,405 | — | ||||||||||||||
Common stock | 31,712 | 31,609 | 31,599 | 31,599 | 9,219 | ||||||||||||||
Common stock warrant | 717 | 717 | 717 | 717 | — | ||||||||||||||
Additional paid-in capital | 492,151 | 492,194 | 492,014 | 491,864 | 146,471 | ||||||||||||||
Retained earnings (accumulated deficit) | 27,481 | 16,922 | 7,311 | (7,361 | ) | (7,679 | ) | ||||||||||||
Accumulated other comprehensive loss | (3,945 | ) | (2,028 | ) | (2,244 | ) | (2,894 | ) | (670 | ) | |||||||||
Shareholders' equity before non-controlling interests | 548,116 | 567,819 | 557,802 | 542,330 | 147,341 | ||||||||||||||
Non-controlling interests | — | — | — | — | 98,393 | ||||||||||||||
Total shareholders' equity | 548,116 | 567,819 | 557,802 | 542,330 | 245,734 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 4,327,052 | $ | 4,269,078 | $ | 4,268,034 | $ | 4,181,840 | $ | 2,139,148 | |||||||||
QUARTERLY NET INTEREST MARGIN ANALYSIS
Three months ended June 30, 2015 | Three months ended March 31, 2015 | Three months ended June 30, 2014 | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest* | Yield/Cost* | Average Balance | Interest* | Yield/Cost* | Average Balance | Interest* | Yield/Cost* | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Loans | $ | 2,966,953 | $ | 40,468 | 5.47 | % | $ | 2,924,287 | $ | 39,796 | 5.52 | % | $ | 1,391,884 | $ | 19,817 | 5.71 | % | ||||||||||||||
Investment securities | 685,796 | 4,024 | 2.35 | 706,888 | 4,229 | 2.43 | 409,967 | 2,002 | 1.96 | |||||||||||||||||||||||
Federal funds and other | 49,407 | 45 | 0.37 | 59,572 | 50 | 0.34 | 53,110 | 26 | 0.20 | |||||||||||||||||||||||
Total interest-earning assets | 3,702,156 | 44,537 | 4.83 | % | 3,690,747 | 44,075 | 4.84 | % | 1,854,961 | 21,845 | 4.72 | % | ||||||||||||||||||||
Goodwill | 152,152 | 152,152 | 26,254 | |||||||||||||||||||||||||||||
Other intangibles, net | 15,570 | 16,359 | 5,542 | |||||||||||||||||||||||||||||
Other non-interest-earning assets | 401,690 | 391,489 | 235,758 | |||||||||||||||||||||||||||||
Total assets | $ | 4,271,568 | $ | 4,250,747 | $ | 2,122,515 | ||||||||||||||||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 475,546 | $ | 158 | 0.13 | % | $ | 470,919 | $ | 160 | 0.14 | % | $ | 348,379 | $ | 150 | 0.17 | % | ||||||||||||||
Money market and savings | 997,732 | 718 | 0.29 | 1,003,156 | 716 | 0.29 | 469,363 | 313 | 0.27 | |||||||||||||||||||||||
Time | 1,078,460 | 2,197 | 0.82 | 1,089,950 | 2,013 | 0.75 | 630,571 | 1,194 | 0.76 | |||||||||||||||||||||||
Total interest-bearing deposits | 2,551,738 | 3,073 | 0.48 | 2,564,025 | 2,889 | 0.46 | 1,448,313 | 1,657 | 0.46 | |||||||||||||||||||||||
Short-term borrowings | 320,694 | 331 | 0.41 | 288,000 | 289 | 0.41 | 156,943 | 96 | 0.25 | |||||||||||||||||||||||
Long-term debt | 136,377 | 1,504 | 4.42 | 150,450 | 1,488 | 4.01 | 53,720 | 1,029 | 7.68 | |||||||||||||||||||||||
Total interest-bearing liabilities | 3,008,809 | 4,908 | 0.65 | % | 3,002,475 | 4,666 | 0.63 | % | 1,658,976 | 2,782 | 0.67 | % | ||||||||||||||||||||
Non-interest-bearing deposits | 676,858 | 657,702 | 211,182 | |||||||||||||||||||||||||||||
Other liabilities | 27,090 | 26,425 | 11,074 | |||||||||||||||||||||||||||||
Total liabilities | 3,712,757 | 3,686,602 | 1,881,232 | |||||||||||||||||||||||||||||
Shareholders’ equity | 558,811 | 564,145 | 241,283 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,271,568 | $ | 4,250,747 | $ | 2,122,515 | ||||||||||||||||||||||||||
Net interest income, taxable equivalent | $ | 39,629 | $ | 39,409 | $ | 19,063 | ||||||||||||||||||||||||||
Interest rate spread | 4.18 | % | 4.21 | % | 4.05 | % | ||||||||||||||||||||||||||
Tax equivalent net interest margin | 4.29 | % | 4.33 | % | 4.12 | % | ||||||||||||||||||||||||||
Percentage of average interest-earning assets to average interest-bearing liabilities | 123.04 | % | 122.92 | % | 111.81 | % | ||||||||||||||||||||||||||
* Taxable equivalent basis | ||||||||||||||||||||||||||||||||
APPENDIX - RECONCILIATION OF NON-GAAP MEASURES
As of and for the three months ended | |||||||||||||||||||
(Dollars in thousands, except per share data) | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | ||||||||||||||
Operating Earnings | |||||||||||||||||||
Net income (GAAP) | $ | 10,741 | $ | 10,250 | $ | 15,311 | $ | 949 | $ | 3,210 | |||||||||
Securities (gains) losses | (84 | ) | (1 | ) | (4 | ) | 96 | (218 | ) | ||||||||||
Gain on sale of branch | — | — | — | (415 | ) | — | |||||||||||||
Merger and conversion costs | (25 | ) | 220 | 1,589 | 17,270 | 2,068 | |||||||||||||
Restructuring charges | 2,294 | 907 | 33 | 180 | 93 | ||||||||||||||
Income tax effect of adjustments | (836 | ) | (431 | ) | (601 | ) | (6,075 | ) | (425 | ) | |||||||||
DTA valuation allowance reversal | — | — | (4,706 | ) | — | — | |||||||||||||
Net operating earnings (Non-GAAP) | 12,090 | 10,945 | 11,622 | 12,005 | 4,728 | ||||||||||||||
Dividends on preferred stock | 183 | 639 | 639 | 630 | — | ||||||||||||||
Net income attributable to non-controlling interests | — | — | — | — | 1,476 | ||||||||||||||
Allocation of adjustments to non-controlling interests | — | — | — | — | 632 | ||||||||||||||
Net operating earnings available to common shareholders (Non-GAAP) | $ | 11,907 | $ | 10,306 | $ | 10,983 | $ | 11,375 | $ | 2,620 | |||||||||
Net operating earnings per common share: | |||||||||||||||||||
Basic (Non-GAAP) | $ | 0.38 | $ | 0.33 | $ | 0.35 | $ | 0.36 | $ | 0.28 | |||||||||
Diluted (Non-GAAP) | 0.38 | 0.33 | 0.35 | 0.36 | 0.28 | ||||||||||||||
Pre-Tax, Pre-Provision Operating Earnings | |||||||||||||||||||
Net income (GAAP) | $ | 10,741 | $ | 10,250 | $ | 15,311 | $ | 949 | $ | 3,210 | |||||||||
Provision for loan losses | 994 | 961 | 843 | 816 | 464 | ||||||||||||||
Income tax expense | 6,076 | 5,846 | 607 | 621 | 2,504 | ||||||||||||||
Pre-tax, pre-provision income | 17,811 | 17,057 | 16,761 | 2,386 | 6,178 | ||||||||||||||
Securities (gains) losses | (84 | ) | (1 | ) | (4 | ) | 96 | (218 | ) | ||||||||||
Gain on sale of branch | — | — | — | (415 | ) | — | |||||||||||||
Merger and conversion costs | (25 | ) | 220 | 1,589 | 17,270 | 2,068 | |||||||||||||
Restructuring charges | 2,294 | 907 | 33 | 180 | 93 | ||||||||||||||
Pre-tax, pre-provision operating earnings (Non-GAAP) | $ | 19,996 | $ | 18,183 | $ | 18,379 | $ | 19,517 | $ | 8,121 | |||||||||
Operating Non-Interest Income | |||||||||||||||||||
Non-interest income (GAAP) | $ | 10,800 | $ | 8,839 | $ | 9,562 | $ | 9,061 | $ | 5,264 | |||||||||
Gain on sale of branch | — | — | — | (415 | ) | — | |||||||||||||
Securities (gains) losses | (84 | ) | (1 | ) | (4 | ) | 96 | (218 | ) | ||||||||||
Operating non-interest income (Non-GAAP) | $ | 10,716 | $ | 8,838 | $ | 9,558 | $ | 8,742 | $ | 5,046 | |||||||||
Operating Non-Interest Expense | |||||||||||||||||||
Non-interest expense (GAAP) | $ | 32,316 | $ | 30,958 | $ | 33,592 | $ | 48,187 | $ | 18,139 | |||||||||
Merger and conversion costs | 25 | (220 | ) | (1,589 | ) | (17,270 | ) | (2,068 | ) | ||||||||||
Restructuring charges | (2,294 | ) | (907 | ) | (33 | ) | (180 | ) | (93 | ) | |||||||||
Operating non-interest expense (Non-GAAP) | $ | 30,047 | $ | 29,831 | $ | 31,970 | $ | 30,737 | $ | 15,978 | |||||||||
Operating Efficiency Ratio | |||||||||||||||||||
Efficiency ratio (GAAP) | 64.47 | % | 64.48 | % | 66.71 | % | 95.28 | % | 74.59 | % | |||||||||
Effect to adjust for securities gains (losses) | 0.11 | — | 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 | 0.04 | (0.46 | ) | (3.15 | ) | (34.37 | ) | (8.58 | ) | ||||||||||
Effect to adjust for restructuring costs | (4.58 | ) | (1.89 | ) | (0.07 | ) | (0.36 | ) | (0.39 | ) | |||||||||
Operating efficiency ratio (Non-GAAP) | 60.04 | % | 62.13 | % | 63.50 | % | 61.16 | % | 66.30 | % | |||||||||
Adjusted Allowance for Loan Losses | |||||||||||||||||||
Allowance for loan losses (GAAP) | $ | 8,358 | $ | 8,284 | $ | 7,817 | $ | 7,641 | $ | 7,451 | |||||||||
Net acquisition accounting fair value discounts to loans | 47,160 | 51,125 | 55,166 | 62,969 | 25,624 | ||||||||||||||
Adjusted allowance for loan losses (Non-GAAP) | $ | 55,518 | $ | 59,409 | $ | 62,983 | $ | 70,610 | $ | 33,075 | |||||||||
Loans | $ | 2,955,771 | $ | 2,913,859 | $ | 2,898,266 | $ | 2,827,426 | $ | 1,368,568 | |||||||||
Adjusted allowance for loan losses to loans (Non-GAAP) | 1.88 | % | 2.04 | % | 2.17 | % | 2.50 | % | 2.42 | % | |||||||||
Tangible Common Equity | |||||||||||||||||||
Shareholders' equity (GAAP) | $ | 548,116 | $ | 567,819 | $ | 557,802 | $ | 542,330 | $ | 147,341 | |||||||||
Less preferred stock | — | 28,405 | 28,405 | 28,405 | — | ||||||||||||||
Less goodwill and other intangible assets | 167,237 | 168,014 | 168,829 | 169,690 | 18,489 | ||||||||||||||
Tangible common equity (non-GAAP) | $ | 380,879 | $ | 371,400 | $ | 360,568 | $ | 344,235 | $ | 128,852 | |||||||||