Yadkin Financial (YDKN) 10-Q 2016 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2016

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO ___________

Commission File Number 000-52099

 YADKIN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

North Carolina	20-4495993
(State or other jurisdiction of Incorporation	(IRS Employer Identification Number)
or organization)

3600 Glenwood Avenue, Suite 300

Raleigh, North Carolina 27612

(Address of principal executive offices)

(Zip Code)

(919) 659-9000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x        No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes x      No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨No x

Indicate the number of shares outstanding of each of the registrant’s classes of Common Stock, as of the latest practicable date: 51,750,138 shares of Voting Common Stock and 0 shares of Non-Voting Common Stock outstanding as of November 8, 2016.

YADKIN FINANCIAL CORPORATION

TABLE OF CONTENTS

		Page
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015	5
	Consolidated Statement of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2016 and 2015	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	7
	Condensed Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55
Item 4.	Controls and Procedures	56
Part II.	OTHER INFORMATION	57
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
	��
Item 6.	Exhibits	60

Part I. Financial Information

Item 1. Financial Statements

YADKIN FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

As of September 30, 2016 and December 31, 2015

(Dollars in thousands, except share data)	September 30, 2016			December 31, 2015*
Assets
Cash and due from banks	$	96,090		$	60,783
Interest-earning deposits with banks	66,188			50,885
Federal funds sold	—			250
Investment securities available for sale, at fair value	965,960			689,132
Investment securities held to maturity	38,847			39,182
Loans held for sale	85,964			47,287
Loans	5,253,309			3,076,544
Allowance for loan losses	(12,142		)	(9,769		)
Net loans	5,241,167			3,066,775
Purchased accounts receivable	7,907			52,688
Federal Home Loan Bank stock, at cost	41,693			24,844
Premises and equipment, net	108,557			73,739
Bank-owned life insurance	140,125			78,863
Other real estate	31,726			15,346
Deferred tax asset, net	62,303			55,607
Goodwill	339,549			152,152
Other intangible assets, net	29,117			13,579
Accrued interest receivable and other assets	95,887			53,032
Total assets	$	7,351,080		$	4,474,144
Liabilities
Deposits:
Non-interest demand	$	1,149,403		$	744,053
Interest-bearing demand	1,154,447			523,719
Money market and savings	1,609,104			1,024,617
Time	1,397,074			1,017,908
Total deposits	5,310,028			3,310,297
Short-term borrowings	791,721			375,500
Long-term debt	164,215			194,967
Accrued interest payable and other liabilities	71,009			30,831
Total liabilities	6,336,973			3,911,595
Shareholders’ Equity
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued or outstanding	—			—
Common stock, $1.00 par value, 75,000,000 shares authorized; 51,750,138 and 31,726,767 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	51,750			31,727
Common stock warrants	717			717
Additional paid-in capital	907,626			492,828
Retained earnings	57,026			44,794
Accumulated other comprehensive loss	(3,012		)	(7,517		)
Total shareholders' equity	1,014,107			562,549
Total liabilities and shareholders' equity	$	7,351,080		$	4,474,144

See accompanying Notes to Consolidated Financial Statements.

* Derived from the audited consolidated financial statements included in the Company's 2015 Annual Report on Form 10-K.

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YADKIN FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Nine Months Ended September 30, 2016 and 2015

	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands, except per share data)	2016		2015		2016		2015
Interest income
Loans	$	65,980	$	40,300	$	178,296	$	120,500
Investment securities	6,618		3,957		19,962		11,739
Federal funds sold and interest-earning deposits	101		47		285		142
Total interest income	72,699		44,304		198,543		132,381
Interest expense
Deposits	4,803		3,097		12,703		9,059
Short-term borrowings	1,690		437		3,858		1,057
Long-term debt	2,215		1,465		6,457		4,457
Total interest expense	8,708		4,999		23,018		14,573
Net interest income	63,991		39,305		175,525		117,808
Provision for loan losses	2,997		1,576		7,170		3,531
Net interest income after provision for loan losses	60,994		37,729		168,355		114,277
Non-interest income
Service charges and fees on deposit accounts	5,757		3,566		15,764		10,314
Government-guaranteed lending	3,600		3,009		9,352		9,559
Mortgage banking	4,223		1,731		9,696		4,686
Bank-owned life insurance	1,427		470		2,712		1,407
Gain on sales of available for sale securities	—		—		194		85
Gain on sale of trust business	—		—		417		—
Other	1,782		2,022		5,645		4,386
Total non-interest income	16,789		10,798		43,780		30,437
Non-interest expense
Salaries and employee benefits	23,102		14,528		64,081		45,121
Occupancy and equipment	7,041		4,641		19,891		14,077
Data processing	2,779		1,851		7,702		5,668
FDIC deposit insurance premiums	1,473		732		3,064		2,218
Professional services	1,426		1,196		4,081		3,695
Foreclosed asset expenses, net	342		277		790		910
Loan, collection, and repossession expense	1,133		931		3,270		2,717
Merger and conversion costs	7,177		104		24,043		299
Restructuring charges	—		50		46		3,251
Amortization of other intangible assets	1,628		761		4,352		2,353
Other	4,957		3,777		14,747		11,813
Total non-interest expense	51,058		28,848		146,067		92,122
Income before income taxes	26,725		19,679		66,068		52,592
Income tax expense	10,439		7,891		24,578		19,813
Net income	16,286		11,788		41,490		32,779
Dividends on preferred stock	—		—		—		822
Net income available to common shareholders	$	16,286	$	11,788	$	41,490	$	31,957
Net income per common share
Basic	$	0.32	$	0.37	$	0.88	$	1.01
Diluted	0.32		0.37		0.88		1.01
Weighted average common shares outstanding
Basic	51,507,217		31,608,909		46,990,428		31,608,287
Diluted	51,605,620		31,686,150		47,080,186		31,647,866

See accompanying Notes to Consolidated Financial Statements.

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YADKIN FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

For the Three and Nine Months Ended September 30, 2016 and 2015

	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2016			2015			2016			2015
Net income	$	16,286		$	11,788		$	41,490		$	32,779
Other comprehensive income (loss):
Securities available for sale:
Unrealized net gains (losses) on available for sale securities	(3,266		)	4,813			13,276			2,617
Tax effect	1,228			(1,841		)	(5,027		)	(887		)
Reclassification of gains on sales of securities	—			—			(194		)	(85		)
Tax effect	—			—			73			33
Net of tax amount	(2,038		)	2,972			8,128			1,678
Cash flow hedges:
Unrealized net gains (losses) on cash flow hedges	584			(5,156		)	(6,026		)	(5,826		)
Tax effect	(249		)	1,980			2,193			2,238
Reclassification of amounts into interest expense from termination of interest rate swaps	113			35			337			43
Tax effect	(43		)	(14		)	(127		)	(17		)
Net of tax amount	405			(3,155		)	(3,623		)	(3,562		)
Total other comprehensive income (loss)	(1,633		)	(183		)	4,505			(1,884		)
Comprehensive income	$	14,653		$	11,605		$	45,995		$	30,895

See accompanying Notes to Consolidated Financial Statements.

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YADKIN FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the Nine Months Ended September 30, 2016 and 2015

	Preferred Stock					Common Stock					Common Stock Warrants		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
(Dollars in thousands)	Shares		Amount			Shares		Amount
Balance as of December 31, 2014	28,405		$	28,405		31,599,150		$	31,599		$	717	$	492,014		$	7,311		$	(2,244	)	$	557,802
Net income	—		—			—		—			—		—			32,779			—			32,779
Other comprehensive loss	—		—			—		—			—		—			—			(1,884		)	(1,884		)
Restricted stock grants	—		—			103,000		103			—		(103		)	—			—			—
Stock-based compensation	—		—			—		—			—		366			—			—			366
Stock options exercised	—					9,871		10			—		110			—			—			120
Redemption of preferred stock	(28,405	)	(28,405		)	—		—			—		—			—			—			(28,405		)
Preferred stock dividends	—					—		—			—		—			(822		)	—			(822		)
Common stock dividends	—		—			—		—			—		—			(3,159		)	—			(3,159		)
Cancellation of fractional shares	—		—			(120	)	—			—		—			—			—			—
Balance as of September 30, 2015	—		$	—		31,711,901		$	31,712		$	717	$	492,387		$	36,109		$	(4,128	)	$	556,797
Balance as of December 31, 2015	—		$	—		31,726,767		$	31,727		$	717	$	492,828		$	44,794		$	(7,517	)	$	562,549
Net income	—		—			—		—			—		—			41,490			—			41,490
Other comprehensive income	—		—			—		—			—		—			—			4,505			4,505
Restricted stock grants	—		—			100,000		100			—		(100		)	—			—			—
Restricted stock forfeiture	—		—			(10,000	)	(10		)	—		10			—			—			—
Stock-based compensation	—		—			—		—			—		1,083			—			—			1,083
Stock options exercised	—		—			256,053		256			—		2,146			—			—			2,402
Acquisition of NewBridge Bancorp	—		—			19,605,374		19,605			—		411,731			—			—			431,336
Shares issued for restricted stock units	—		—			71,944		72			—		(72		)	—			—			—
Common stock dividends	—		—			—		—			—		—			(29,258		)	—			(29,258		)
Balance as of September 30, 2016	—		$	—		51,750,138		$	51,750		$	717	$	907,626		$	57,026		$	(3,012	)	$	1,014,107

See accompanying Notes to Consolidated Financial Statements.

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YADKIN FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Nine Months Ended September 30, 2016 and 2015

	Nine months ended September 30,
(Dollars in thousands)	2016			2015
Cash flows from operating activities
Net income	$	41,490		$	32,779
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	1,083			366
Provision for loan losses	7,170			3,531
Accretion of acquisition discount on purchased loans	(21,259		)	(18,899		)
Depreciation	6,433			4,646
Amortization of core deposit intangible	4,352			2,353
Amortization of acquisition premium on time deposits	(1,353		)	(2,587		)
Net accretion of acquisition discount on long-term debt	264			388
Gain on mortgage loan commitments	(786		)	(298		)
Gain on sales of loans held for sale	(18,595		)	(13,380		)
Originations of loans held for sale	(384,829		)	(300,605		)
Proceeds from sales of loans held for sale	420,755			296,228
Increase in cash surrender value of bank-owned life insurance	(1,995		)	(1,407		)
Deferred income taxes	13,927			19,740
Change in deferred tax valuation allowance	(19		)	—
Gain on sales of available for sale securities	(194		)	(85		)
Net amortization of premiums on available for sale securities	5,510			4,557
Net gain on disposal of foreclosed assets	(309		)	(144		)
Valuation adjustments on foreclosed assets	580			605
Change in assets and liabilities:
Decrease (increase) in accrued interest receivable	1,307			(431		)
Increase in other assets	(6,123		)	(12,296		)
Decrease in accrued interest payable	(903		)	(785		)
Increase in other liabilities	420			882
Net cash provided by operating activities	66,926			15,158
Cash flows from investing activities
Purchases of investment securities available for sale	(189,408		)	(129,623		)
Proceeds from maturities and repayments of investment securities available for sale	182,760			67,770
Proceeds from sales of investment securities available for sale	180,616			19,169
Net loan (originations) principal collections	(155,495		)	(70,109		)
Net cash received in business combinations	45,143			—
Net proceeds from (purchases of) trade accounts receivables	44,781			(24,562		)
Purchases of premises and equipment	(2,557		)	(1,524		)
Disposals of premises and equipment	2,894			1,727
Proceeds from disposal of foreclosed assets	4,707			5,784
Net redemptions (purchases) of Federal Home Loan Bank stock	4,728			(3,433		)
Net cash provided by (used in) investing activities	118,169			(134,801		)
Cash flows from financing activities
Net increase (decrease) in deposits	10,975			2,992
Net increase in short-term borrowings	8,886			112,500
Net decrease in long-term debt	(127,740		)	(18,193		)
Proceeds from exercise of stock options	2,402			120
Repurchase of preferred stock	—			(28,405		)
Dividends paid on preferred stock	—			(822		)
Dividends paid on common stock	(29,258		)	(3,159		)
Net cash provided by (used in) financing activities	(134,735		)	65,033
Net change in cash and cash equivalents	50,360			(54,610		)
Cash and cash equivalents, beginning of period	111,918			132,365
Cash and cash equivalents, end of period	$	162,278		$	77,755

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	Nine months ended September 30,
(Dollars in thousands)	2016			2015
SUPPLEMENTAL DISCLOSURES:
Cash payments for:
Interest	$	24,219		$	17,557
Income taxes	10,600			—
Noncash investing activities:
Transfers of loans to held for sale	$	42,347		$	—
Transfers of loans to foreclosed assets	13,981			5,147
Change in fair value of securities available for sale, net of tax	8,128			1,678
Change in fair value of cash flow hedge, net of tax	(3,623		)	(3,562		)
Acquisition:
Assets acquired (excluding goodwill)	$	2,778,769		$	—
Liabilities assumed	2,534,830			—
Purchase price	431,336			—
Goodwill recorded	187,397			—

See accompanying Notes to Consolidated Financial Statements.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include the accounts of Yadkin Financial Corporation (the "Company" or "Yadkin") and its wholly-owned subsidiary, Yadkin Bank. The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). They do not include all of the information and footnotes required by such accounting principles for complete financial statements. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and accompanying footnotes of the Company's 2015 Form 10-K.

In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented have been included, and all intercompany transactions have been eliminated in consolidation. Results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2016. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Recently Adopted and Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the Statement of Cash Flows. The new guidance clarifies the classification within the statement of cash flows for certain transactions, including debt extinguishment costs, zero-coupon debt, contingent consideration related to business combinations, insurance proceeds, equity method distributions and beneficial interests in securitizations. The guidance also clarifies that cash flows with aspects of multiple classes of cash flows or that cannot be separated by source or use should be classified based on the activity that is likely to be the predominant source or use of cash flows for the item. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of this guidance is not expected to be material to the consolidated financial statements.

In June 2016, the FASB issued new guidance related to Credit Losses. The new guidance replaces the incurred loss impairment methodology in current GAAP with an expected credit loss methodology and requires consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit impaired loans will receive an allowance account at the acquisition date that represents a component of the purchase price allocation. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses, with such allowance limited to the amount by which fair value is below amortized cost. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

In March 2016, the FASB issued new guidance related to Stock Compensation. The new guidance eliminates the concept of APIC pools for stock-based awards and requires that the related excess tax benefits and tax deficiencies be classified as an operating activity in the statement of cash flows. The new guidance also allows entities to make a one-time policy election to account for forfeitures when they occur, instead of accruing compensation cost based on the number of awards expected to vest. Additionally, the new guidance changes the requirement for an award to qualify for equity classification by permitting tax withholding up to the maximum statutory tax rate instead of the minimum statutory tax rate. This guidance is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. The adoption of this guidance is not expected to be material to the consolidated financial statements.

In March 2016, the FASB issued new guidance related to Derivatives and Hedging. The new guidance clarifies the requirements for assessing whether contingent call or put options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts, which is used to determine whether the embedded derivative should be separated from the host contract and accounted for separately as a derivative. An entity performing the assessment will be required to assess the embedded call or put options solely in accordance with the pre-existing four-step decision sequence. This guidance is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. The adoption of this guidance is not expected to be material to the consolidated financial statements.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

In February 2016, the FASB issued new guidance related to Leases. The new guidance requires lessees to recognize assets and liabilities related to certain operating leases on the balance sheet. The new guidance also requires additional disclosures by lessees and contains targeted changes to accounting by lessors. This guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

In January 2016, the FASB issued new guidance related to the Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance addresses the recognition, measurement, presentation, and disclosure of financial instruments. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

In September 2015, the FASB issued new guidance related to Business Combinations. The new guidance requires acquirers to recognize adjustments to provisional amounts (that are identified during the measurement period) in the reporting period in which the adjustment amounts are determined. The new guidance also requires such amounts to be disclosed in the consolidated financial statements. The Company early-adopted this guidance effective September 30, 2015. The adoption of this guidance was not material to the consolidated financial statements. All measurement period adjustments related to the March 1, 2016 acquisition of NewBridge Bancorp were recorded in the period in which the adjustment was determined.

In May 2015, the FASB issued new guidance related to Fair Value Measurement. The new guidance eliminates the requirement to classify in the fair value hierarchy any investments for which fair value is measured at net asset value per share using the practical expedient. This guidance became effective for interim and annual periods beginning after December 15, 2015. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In April 2015, the FASB issued new guidance related to Debt Issuance Costs. The new guidance requires a reporting entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of that debt liability.  The recognition and measurement guidance for debt issuance costs are not affected by this guidance. This guidance became effective for interim and annual periods beginning after December 15, 2015 and is to be applied retrospectively. As of September 30, 2016, the Company had $536 of debt issuance costs that were included in long-term debt.

In May 2014, the FASB issued new guidance related to Revenue from Contracts with Customers. This guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This guidance is effective for periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

NOTE B – PER SHARE RESULTS

Basic and diluted net income per share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period. Diluted net income per share reflects the dilutive impact of restricted stock as well as the potential dilution that could occur if dilutive common stock options and common stock warrants were exercised, resulting in the issuance of common stock that then shared in the net income of the Company.

Basic and diluted net income per share have been computed based upon net income available to common shareholders as presented in the accompanying consolidated statements of operations divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

	Three months ended September 30,		Nine months ended September 30,
	2016	2015	2016	2015
Weighted average number of common shares	51,507,217	31,608,909	46,990,428	31,608,287
Dilutive effect of stock options, stock warrants and restricted stock	98,403	77,241	89,758	39,579
Weighted average number of common shares and dilutive potential common shares	51,605,620	31,686,150	47,080,186	31,647,866
Anti-dilutive stock options	11,635	33,695	11,635	34,695
Anti-dilutive stock warrants	—	91,178	—	91,178

NOTE C – MERGERS AND ACQUISITIONS

Proposed Merger with F.N.B. Corporation

On July 20, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with F.N.B. Corporation, a Florida corporation (“FNB”). The Merger Agreement provides that, upon the terms and conditions set forth therein, the Company will merge with and into FNB (the “Merger”), with FNB continuing as the surviving corporation. As soon as practicable following consummation of the Merger, the Company’s wholly-owned subsidiary, Yadkin Bank, will merge with and into FNB’s wholly-owned subsidiary, First National Bank of Pennsylvania ("FNB Bank"), with FNB Bank continuing as the surviving entity (the “Bank Merger”).

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, the Company’s shareholders will have the right to receive 2.16 shares of FNB common stock, par value $0.01, for each share of the Company’s common stock. Based on FNB’s closing price of $13.20 as of July 20, 2016, the day before the transaction was announced, the estimated aggregate purchase price was $1,470,000. The transaction is expected to close in the first quarter of 2017, subject to shareholder and regulatory approval and other customary closing conditions.

Acquisition of NewBridge Bancorp

On March 1, 2016, the Company completed its acquisition of NewBridge Bancorp (“NewBridge”), pursuant to an Agreement and Plan of Merger, dated October 12, 2015 (the “NewBridge Merger Agreement”). Pursuant to the NewBridge Merger Agreement, each share of NewBridge Class A common stock and Class B common stock was converted into the right to receive 0.50 shares of the common stock of the Company (the "NewBridge Merger"). Based on the Company's stock price at the closing date of the NewBridge Merger, purchase consideration totaled $431,336. Immediately following the merger of NewBridge into Yadkin, NewBridge Bank, a North Carolina-chartered commercial bank, merged with and into Yadkin Bank, with Yadkin Bank surviving such merger.

The NewBridge Merger was accounted for under the acquisition method of accounting with Yadkin as the legal and accounting acquirer and NewBridge as the legal and accounting acquiree. The assets and liabilities of NewBridge have been recorded at their estimated fair values and added to those of Yadkin for periods following the merger date. The Company may refine its valuations of acquired NewBridge assets and liabilities for up to one year following the merger date. The NewBridge Merger had a significant impact on all aspects of the Company's financial statements, and as a result, financial results after the NewBridge Merger may not be comparable to financial results prior to the merger.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The purchase price is calculated based on the number of Yadkin shares issued multiplied by the share price as shown in the following table. The purchase price also includes cash paid to NewBridge shareholders in lieu of fractional shares as well as the value of stock-base compensation awards assumed on the merger date.

	Purchase Price Calculation
Number of shares of Yadkin common stock issued to NewBridge shareholders	19,605,374
Closing price of Yadkin common stock on February 29, 2016	$	21.65
Value of shares of Yadkin common stock issued to NewBridge shareholders			$	424,456
Cash paid in lieu of fractional shares			27
Stock-based compensation awards assumed from NewBridge:
Restricted stock			2,455
Stock options			4,398
Total purchase price			$	431,336

The following table presents the NewBridge assets acquired and liabilities assumed as of March 1, 2016, the initial fair value adjustments, the measurement period adjustments, the purchase price and calculation of the residual goodwill.

	As Reported by NewBridge			Initial Fair Value Adjustments				Measurement Period Adjustments				As Reported by Yadkin
Assets:
Cash and cash equivalents	$	45,143		$	—			$	—			$	45,143
Investment securities	443,535			(1,948		)	(a)	1,109			(l)	442,696
Loans	2,087,331			(26,195		)	(b)	—				2,061,136
Allowance for loan losses	(21,100		)	21,100			(c)	—				—
Loans held for sale	13,661			—				—				13,661
Federal Home Loan Bank stock, at cost	21,577			—				—				21,577
Premises and equipment, net	43,408			4,371			(d)	254			(m)	48,033
Bank owned life insurance	61,747			—				—				61,747
Other real estate	1,241			—				(55		)	(n)	1,186
Deferred tax asset, net	30,014			(3,490		)	(e)	(2,789		)	(o)	23,735
Other intangibles, net	3,506			16,384			(f)	—				19,890
Other assets	40,375			(271		)	(g)	(139		)	(p)	39,965
Total assets	2,770,438			9,951				(1,620		)		2,778,769
Liabilities:
Deposits	1,990,247			(138		)	(h)	—				1,990,109
Short-term borrowings	471,800			535			(i)	—				472,335
Long-term debt	41,049			(9,325		)	(j)	—				31,724
Other liabilities	34,461			5,983			(k)	218			(q)	40,662
Total liabilities	2,537,557			(2,945		)		218				2,534,830
Net assets acquired	232,881			12,896				(1,838		)		243,939
Purchase price												431,336
Goodwill												$	187,397	(r)

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Explanation of initial fair value adjustments and measurement period adjustments

(a) Adjustment reflects opening fair value of securities portfolio, which was established as the new book basis of the portfolio.

(b) Adjustment reflects fair value discount of $32,589 on the loan portfolio, reversal of $3,450 in net deferred loan costs, and reversal of $9,844 in previously-existing fair value discount recognized by NewBridge in prior acquisitions. The fair value discount was calculated by forecasting cash flows over the expected remaining life of each loan and discounting those cash flows to present value using current market rates for similar loans. Forecasted cash flows include an estimate of lifetime credit losses on the loan portfolio.

(c) Adjustment reflects the elimination of NewBridge's historical allowance for loan losses of $21,100.

(d) Adjustment reflects fair value adjustments on acquired branch and administrative offices.

(e) Adjustment reflects the tax impact of acquisition accounting fair value adjustments.

(f) Adjustment reflects the fair value of the acquired core deposit intangible, net of the reversal of core deposit intangible recorded by NewBridge in prior acquisitions.

(g) Adjustment reflects the impact of fair value adjustments on other assets, which include adjustments related to the elimination of accrued interest on purchased credit-impaired loans, recognition of a servicing asset related to U.S. Small Business Association ("SBA") loans, and termination of certain derivative contracts.

(h) Adjustment reflects the fair value premium on time deposits, which was calculated by discounting future contractual interest payments at a current market interest rate.

(i) Adjustments reflect the fair value adjustments for a short-term repurchase obligation and Federal Home Loan Bank ("FHLB") advances. The repurchase obligation was valued by discounting future contractual interest payments at a current market interest rate for a similar instrument. For FHLB advances, the fair value was calculated by reference to the acquisition date prepayment penalty the FHLB would charge to terminate the advance.

(j) Adjustments reflect fair value adjustments for subordinated debt obligations and junior subordinated debentures related to trust preferred securities outstanding at the acquisition date.

(k) Adjustments reflect compensation obligations, reserve for unfunded commitments, benefit costs for merger-related obligations, and miscellaneous other accrued liabilities.

(l) Adjustment to initial fair value of investment securities.

(m) Adjustments to initial fair values of premises and equipment

(n) Adjustment to initial fair value of other real estate.

(o) Deferred tax adjustment resulting from adjustments (l), (m), (n), (p) and (q)

(p) Adjustment to initial fair value of accrued interest receivable.

(q) Adjustment to initial fair value of accrued liabilities.

(r) Goodwill represents the excess of the purchase price over the fair value of acquired net assets.

Supplemental Pro Forma Information

The table below presents supplemental pro forma information as if the NewBridge Merger had occurred at the beginning of the earliest period presented, which was January 1, 2015. Pro forma results include adjustments for amortization and accretion of fair value adjustments and do not include any projected cost savings or other anticipated benefits of the merger. Therefore, the pro forma financial information is not indicative of the results of operations that would have occurred had the transactions been effected on the assumed date.

			Nine months ended September 30,
	2015		2016		2015
Net interest income	$	63,812	$	192,846	$	142,838
Net income (a)	7,323		57,894		19,644
Net income available to common shareholders (a)	7,323		57,894		18,822
Basic income per common share (a)	0.14		1.08		0.37
Diluted income per common share (a)	0.14		1.08		0.37
Weighted average basic common shares outstanding	50,531,046		53,519,018		50,530,424
Weighted average diluted common shares outstanding	50,853,071		53,608,776		50,814,787

(a) For purposes of the supplemental pro forma information, merger-related expenses of $17,959 that are reflected in the Company's consolidated statement of operations for the nine months ended September 30, 2016 and $3,532 of merger-related expenses that were recorded by NewBridge prior to the merger date were reflected in the pro forma presentation for the nine months ended September 30, 2015. These pro forma merger-related expenses include $7,934 of professional fees paid for investment banking, legal and accounting services, $8,596 of personnel-related expenses, $4,139 of facility and equipment-related expenses, and $821 of other miscellaneous expenses related to the NewBridge Merger.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

NOTE D – INVESTMENT SECURITIES

The following tables summarize the amortized cost, gross unrealized gains and losses, and fair value of investment securities available for sale and held to maturity by major classification.

	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
GSE obligations	$	17,595	$	120	$	—	$	17,715
SBA-guaranteed securities	18,125		207		11		18,321
Mortgage-backed securities issued by GSEs	529,554		5,905		868		534,591
Municipal bonds	129,300		2,061		163		131,198
Corporate bonds	184,954		1,996		1,118		185,832
Collateralized loan obligations	50,511		94		76		50,529
Non-agency CMBS	16,366		36		42		16,360
Certificates of deposit	743		—		—		743
Equity securities	11,109		229		667		10,671
Total securities available for sale	$	958,257	$	10,648	$	2,945	$	965,960
Securities held to maturity:
Municipal bonds	$	38,847	$	1,834	$	—	$	40,681

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
GSE obligations	$	5,980	$	3	$	1	$	5,982
SBA-guaranteed securities	12,114		74		12		12,176
Mortgage-backed securities issued by GSEs	440,654		887		5,916		435,625
Municipal bonds	55,402		504		106		55,800
Corporate bonds	123,669		551		688		123,532
Collateralized loan obligations	50,538		—		55		50,483
Non-agency RMBS	3,528		144		9		3,663
Certificates of deposit	245		—		—		245
Equity securities	2,381		33		788		1,626
Total securities available for sale	$	694,511	$	2,196	$	7,575	$	689,132
Securities held to maturity:
Municipal bonds	$	39,182	$	1,318	$	—	$	40,500

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following tables summarize gross unrealized losses and fair values, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position. 

	Less than 12 months				12 months or more				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2016
Securities available for sale:
SBA-guaranteed securities	$	2,464	$	11	$	—	$	—	$	2,464	$	11
Mortgage-backed securities issued by GSEs	120,411		530		37,302		338		157,713		868
Municipal bonds	19,144		163		—		—		19,144		163
Corporate bonds	41,816		218		22,588		900		64,404		1,118
Collateralized loan obligations	30,909		76		—		—		30,909		76
Non-agency CMBS	9,087		42		—		—		9,087		42
Equity securities	—		—		1,513		667		1,513		667
Total temporarily impaired AFS securities	$	223,831	$	1,040	$	61,403	$	1,905	$	285,234	$	2,945
December 31, 2015
Securities available for sale:
GSE obligations	$	999	$	1	$	—	$	—	$	999	$	1
SBA-guaranteed securities	5,043		12		—		—		5,043		12
Mortgage-backed securities issued by GSEs	208,620		2,453		117,144		3,463		325,764		5,916
Municipal bonds	8,995		106		—		—		8,995		106
Corporate bonds	43,110		577		3,697		111		46,807		688
Collateralized loan obligations	45,471		55		—		—		45,471		55
Non-agency RMBS	—		—		901		9		901		9
Equity securities	1,411		788		—		—		1,411		788
Total temporarily impaired AFS securities	$	313,649	$	3,992	$	121,742	$	3,583	$	435,391	$	7,575

The table below summarizes the number of investment securities in an unrealized loss position.

	September 30, 2016	December 31, 2015
Securities available for sale:
SBA-guaranteed securities	2	1
GSE obligations	—	1
Mortgage-backed securities issued by GSEs	40	83
Municipal bonds	21	9
Corporate bonds	16	15
Collateralized loan obligations	5	8
Non-agency RMBS	—	1
Equity securities	2	3
Total number of investment securities in an unrealized loss position	86	121

As of September 30, 2016, 20 securities had been in an unrealized loss position for more than a twelve month period. The Company had $900 in gross unrealized losses on 6 corporate bonds that had been in unrealized loss positions for more than twelve months as of September 30, 2016. Based on a review of financial statements and other financial data for these corporate issuers, which are all large, investment grade financial institutions, the Company does not believe the unrealized losses on these bonds were due to credit events. Additionally, unrealized losses on equity securities were primarily related to a common stock investment in a publicly-traded business development company that provides financing for lower middle-market companies and financial sponsors. Based on a review of financial statements and other financial data for this business development company, the Company believes the unrealized losses to be temporary. The Company will continue to closely monitor and evaluate this common stock investment for signs of other than temporary impairment in future periods.

Debt securities in an unrealized loss position as of September 30, 2016 continue to perform and are expected to perform through maturity, and the issuers have not experienced significant adverse events that would call into question their ability to repay these debt obligations according to contractual terms. Further, because the Company does not intend to sell these investments and does not believe that it will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, unrealized losses on such securities were not considered to represent other-than-temporary impairment as of September 30, 2016.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

As of September 30, 2016 and December 31, 2015, the Company held no individual investment securities with an aggregate book value greater than 10 percent of total shareholders’ equity. As of September 30, 2016 and December 31, 2015, investment securities with carrying values of $368,522 and $279,953, respectively, were pledged to secure public deposits, borrowings and for other purposes required or permitted by law.

The amortized cost and fair values of securities available for sale, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	September 30, 2016				December 31, 2015
	Amortized cost		Fair value		Amortized cost		Fair value
Securities available for sale:
Due within one year	$	48,991	$	49,115	$	66,591	$	67,163
Due after one year through five years	637,090		643,041		291,298		289,525
Due after five years through ten years	238,278		240,288		309,625		306,420
Due after ten years	22,789		22,845		24,616		24,398
Equity securities	11,109		10,671		2,381		1,626
	$	958,257	$	965,960	$	694,511	$	689,132
Securities held to maturity:
Due within one year	$	1,010	$	1,019	$	—	$	—
Due after one year through five years	30,046		31,136		31,421		32,272
Due after five years through ten years	4,039		4,261		4,072		4,229
Due after ten years	3,752		4,265		3,689		3,999
	$	38,847	$	40,681	$	39,182	$	40,500

The following table summarizes securities gains for the periods presented.

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016			2015
Gross gains on sales of securities available for sale	$	—	$	—	$	286		$	85
Gross losses on sales of securities available for sale	—		—		(92		)	—
Total securities gains	$	—	$	—	$	194		$	85

NOTE E – LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the Company's loans by type.

	September 30, 2016			December 31, 2015
Commercial:
Commercial real estate	$	2,504,456		$	1,451,176
Commercial and industrial	764,320			553,121
Construction and development	439,090			345,304
Consumer:
Residential real estate	665,085			343,648
Construction and development	289,515			46,263
Home equity	526,782			277,900
Other consumer	65,532			60,244
Gross loans	5,254,780			3,077,656
Less:
Deferred loan fees	(1,471		)	(1,112		)
Allowance for loan losses	(12,142		)	(9,769		)
Net loans	$	5,241,167		$	3,066,775

As of September 30, 2016 and December 31, 2015, loans with a recorded investment of$1,796,833 and $948,433, respectively, were pledged to secure borrowings or available lines of credit with correspondent banks.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Purchased Credit-Impaired Loans

Loans for which it is probable at acquisition that all contractually required payments will not be collected are considered purchased credit-impaired ("PCI") loans. The following table relates to NewBridge PCI loans and summarizes the contractually required payments, which includes principal and interest, expected cash flows to be collected, and the fair value of acquired PCI loans at the merger date.

	NewBridge Merger on March 1, 2016
Contractually required payments	$	124,808
Nonaccretable difference	(14,878		)
Cash flows expected to be collected at acquisition	109,930
Accretable yield	(13,995		)
Fair value of PCI loans at acquisition	$	95,935

The following table summarizes changes in accretable yield, or income expected to be collected, related to all of the Company's PCI loans for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	36,756		$	24,100		$	22,309		$	25,181
Additions resulting from acquisitions	—			—			13,995			—
Accretion of income	(3,850		)	(3,246		)	(11,078		)	(10,164		)
Reclassifications from nonaccretable difference	941			606			5,851			4,661
Other, net	684			2,100			3,454			3,882
Balance, end of period	$	34,531		$	23,560		$	34,531		$	23,560

The outstanding balance of PCI loans consists of the undiscounted sum of all amounts, including amounts deemed principal, interest, fees, penalties, and other under the loan, owed by the borrower at the reporting date, whether or not currently due and whether or not any such amounts have been written or charged off. The unpaid principal balance of PCI loans was $207,795 and $160,500 as of September 30, 2016 and December 31, 2015, respectively.

Purchased Non-impaired Loans

Purchased non-impaired loans are also recorded at fair value at acquisition, and the related fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan. The following table relates to acquired NewBridge purchased non-impaired loans and provides the contractually required payments, fair value, and estimate of contractual cash flows not expected to be collected at the merger date.

	NewBridge Merger on March 1, 2016
Contractually required payments	$	2,257,195
Fair value of acquired loans at acquisition	1,965,201
Contractual cash flows not expected to be collected	26,370

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Allowance for Loan Losses

The following tables summarize the activity in the allowance for loan losses for the periods presented.

	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Residential Real Estate			Consumer Construction			Home Equity			Other Consumer			Total
Three months ended September 30, 2016
Beginning balance	$	4,525		$	3,057		$	1,282		$	985		$	289		$	1,119		$	376		$	11,633
Charge-offs	(171		)	(1,661		)	(32		)	(292		)	—			(325		)	(266		)	(2,747		)
Recoveries	33			81			12			74			1			29			29			259
Provision for loan losses	152			1,974			134			296			32			174			235			2,997
Ending balance	$	4,539		$	3,451		$	1,396		$	1,063		$	322		$	997		$	374		$	12,142
Nine months ended September 30, 2016
Beginning balance	$	3,682		$	2,431		$	866		$	1,257		$	237		$	883		$	413		$	9,769
Charge-offs	(262		)	(3,096		)	(147		)	(509		)	—			(667		)	(711		)	(5,392		)
Recoveries	39			158			40			267			1			31			59			595
Provision for loan losses	1,080			3,958			637			48			84			750			613			7,170
Ending balance	$	4,539		$	3,451		$	1,396		$	1,063		$	322		$	997		$	374		$	12,142
Three months ended September 30, 2015
Beginning balance	$	3,137		$	1,960		$	665		$	1,327		$	269		$	775		$	225		$	8,358
Charge-offs	(103		)	(406		)	(134		)	(312		)	—			(475		)	(101		)	(1,531		)
Recoveries	44			429			10			57			—			9			48			597
Provision for loan losses	319			185			201			232			(15		)	593			61			1,576
Ending balance	$	3,397		$	2,168		$	742		$	1,304		$	254		$	902		$	233		$	9,000
Nine months ended September 30, 2015
Beginning balance	$	2,796		$	1,274		$	1,691		$	1,237		$	194		$	546		$	79		$	7,817
Charge-offs	(359		)	(1,377		)	(201		)	(442		)	—			(793		)	(349		)	(3,521		)
Recoveries	56			679			20			109			27			163			119			1,173
Provision for loan losses	904			1,592			(768		)	400			33			986			384			3,531
Ending balance	$	3,397		$	2,168		$	742		$	1,304		$	254		$	902		$	233		$	9,000

The following tables summarize the ending allowance for loans losses and the recorded investment in loans by portfolio segment and impairment method.

	September 30, 2016
	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Residential Real Estate		Consumer Construction		Home Equity		Other Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	154	$	41	$	5	$	34	$	—	$	—	$	—	$	234
Collectively evaluated for impairment	4,127		3,216		1,391		903		322		954		363		11,276
Purchased credit-impaired	258		194		—		126		—		43		11		632
Total	$	4,539	$	3,451	$	1,396	$	1,063	$	322	$	997	$	374	$	12,142
Loans:
Ending balance:
Individually evaluated for impairment	$	7,461	$	3,015	$	370	$	888	$	—	$	583	$	—	$	12,317
Collectively evaluated for impairment	2,416,454		753,235		422,112		605,924		287,561		508,888		65,029		5,059,203
Purchased credit-impaired	80,541		8,070		16,608		58,273		1,954		17,311		503		183,260
Total	$	2,504,456	$	764,320	$	439,090	$	665,085	$	289,515	$	526,782	$	65,532	$	5,254,780

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

	December 31, 2015
	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Residential Real Estate		Consumer Construction		Home Equity		Other Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	314	$	106	$	—	$	—	$	—	$	67	$	—	$	487
Collectively evaluated for impairment	2,976		2,309		704		837		233		542		359		7,960
Purchased credit-impaired	392		16		162		420		4		274		54		1,322
Total	$	3,682	$	2,431	$	866	$	1,257	$	237	$	883	$	413	$	9,769
Loans:
Ending balance:
Individually evaluated for impairment	$	8,449	$	2,623	$	177	$	3,550	$	417	$	337	$	—	$	15,553
Collectively evaluated for impairment	1,354,977		540,685		330,714		315,030		44,630		274,042		59,983		2,920,061
Purchased credit-impaired	87,750		9,813		14,413		25,068		1,216		3,521		261		142,042
Total	$	1,451,176	$	553,121	$	345,304	$	343,648	$	46,263	$	277,900	$	60,244	$	3,077,656

For non-PCI loans, the evaluation of the adequacy of the allowance for loan losses ("ALLL") includes both loans evaluated collectively for impairment and loans evaluated individually for impairment. For loans evaluated collectively for impairment, loans are grouped based on common risk characteristics which include loan type and risk grade. Historical loss rates are calculated based on the historical probability of default ("PD") and loss given default ("LGD") for each loan grouping. PDs represent the likelihood that a loan will default within a one year period of time, and LGDs represent the estimated magnitude of loss the Company will incur if a loan defaults. A loan is considered to be in default if it becomes 90 days or more past due, meets the criteria for nonaccrual status, or incurs a charge-off. Historical loss rates are developed with four years of trailing default and loss data. These historical loss rates are then combined with certain qualitative factors to determine ALLL reserve rates for each loan grouping. Qualitative factors include consideration of certain internal and external factors, such as loan delinquency levels and trends, loan growth, loan portfolio composition and concentrations, local and national economic conditions, the loan review function, and other factors management deems relevant to the ALLL calculation.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans according to credit risk. The Company uses the following general definitions for risk ratings:

• Pass. These loans range from superior quality with minimal credit risk to loans requiring heightened management attention but that are still an acceptable risk and continue to perform as contracted.

• Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. Loans where adverse economic conditions have developed that do not jeopardize liquidation of the debt, but substantially increase the level of risk may also warrant this rating.

• Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

• Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

- 19 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following tables summarize the risk category of loans by class of loans.

	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2016
Non-PCI Loans
Commercial:
Real estate	$	2,354,425	$	45,136	$	24,354	$	—	$	2,423,915
Commercial and industrial	699,009		31,208		26,033		—		756,250
Construction and development	417,174		3,702		1,606		—		422,482
Consumer:
Residential real estate	591,160		8,674		6,978		—		606,812
Construction and development	281,562		5,941		58		—		287,561
Home equity	497,646		4,423		7,402		—		509,471
Other consumer	64,295		315		412		7		65,029
Total	$	4,905,271	$	99,399	$	66,843	$	7	$	5,071,520
PCI Loans
Commercial:
Real estate	$	29,382	$	36,483	$	14,676	$	—	$	80,541
Commercial and industrial	2,351		625		5,091		3		8,070
Construction and development	10,350		2,424		3,834		—		16,608
Consumer:
Residential real estate	39,809		10,069		8,395		—		58,273
Construction and development	532		306		1,116		—		1,954
Home equity	13,017		2,452		1,839		3		17,311
Other consumer	383		98		22		—		503
Total	$	95,824	$	52,457	$	34,973	$	6	$	183,260

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2015
Non-PCI Loans
Commercial:
Real estate	$	1,308,789	$	32,525	$	22,112	$	—	$	1,363,426
Commercial and industrial	523,643		5,436		14,229		—		543,308
Construction and development	326,979		3,298		560		54		330,891
Consumer:
Residential real estate	305,046		5,682		7,852		—		318,580
Construction and development	43,274		666		1,107		—		45,047
Home equity	265,128		4,442		4,809		—		274,379
Other consumer	59,273		233		477		—		59,983
Total	$	2,832,132	$	52,282	$	51,146	$	54	$	2,935,614
PCI Loans
Commercial:
Real estate	$	40,805	$	29,889	$	17,056	$	—	$	87,750
Commercial and industrial	7,913		630		1,270		—		9,813
Construction and development	5,975		3,022		5,416		—		14,413
Consumer:
Residential real estate	11,158		7,134		6,776		—		25,068
Construction and development	314		328		574		—		1,216
Home equity	264		2,016		1,059		182		3,521
Other consumer	8		200		53		—		261
Total	$	66,437	$	43,219	$	32,204	$	182	$	142,042

- 20 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following tables summarize the past due status of non-PCI loans based on contractual terms.

	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total
September 30, 2016
Non-PCI Loans
Commercial:
Real estate	$	12,174	$	3,905	$	16,079	$	2,407,836	$	2,423,915
Commercial and industrial	6,346		11,321		17,667		738,583		756,250
Construction and development	345		1,318		1,663		420,819		422,482
Consumer:
Residential real estate	5,259		2,449		7,708		599,104		606,812
Construction and development	1,459		—		1,459		286,102		287,561
Home equity	7,336		1,718		9,054		500,417		509,471
Other consumer	665		165		830		64,199		65,029
Total	$	33,584	$	20,876	$	54,460	$	5,017,060	$	5,071,520

	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total
December 31, 2015
Non-PCI Loans
Commercial:
Real estate	$	3,205	$	4,503	$	7,708	$	1,355,718	$	1,363,426
Commercial and industrial	6,004		2,599		8,603		534,705		543,308
Construction and development	68		414		482		330,409		330,891
Consumer:
Residential real estate	7,625		2,876		10,501		308,079		318,580
Construction and development	1,495		946		2,441		42,606		45,047
Home equity	3,857		1,877		5,734		268,645		274,379
Other Consumer	1,015		208		1,223		58,760		59,983
Total	$	23,269	$	13,423	$	36,692	$	2,898,922	$	2,935,614

The following table summarizes the recorded investment of non-PCI loans on nonaccrual status and loans greater than 90 days past due and accruing by class.

	September 30, 2016				December 31, 2015
	Nonaccrual		Loans greater than 90 days past due and accruing		Nonaccrual		Loans greater than 90 days past due and accruing
Non-PCI Loans
Commercial:
Commercial real estate	$	6,903	$	—	$	6,130	$	—
Commercial and industrial	12,916		187		4,126		552
Construction and development	805		691		468		—
Consumer:
Residential real estate	5,499		—		5,353		—
Construction and development	58		—		1,324		—
Home equity	4,731		—		3,245		—
Other consumer	288		42		548		—
Total	$	31,200	$	920	$	21,194	$	552

- 21 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following table provides information on impaired loans. This table excludes PCI loans and loans evaluated collectively as a homogeneous group.

	Recorded Investment With a Recorded Allowance		Recorded Investment With no Recorded Allowance		Total		Related Allowance		Unpaid Principal Balance
September 30, 2016
Non-PCI Loans
Commercial:
Commercial real estate	$	988	$	6,473	$	7,461	$	154	$	7,187
Commercial and industrial	130		2,885		3,015		41		9,064
Construction and development	—		370		370		5		175
Consumer:
Residential real estate	888		—		888		34		888
Home equity	—		583		583		—		571
Total	$	2,006	$	10,311	$	12,317	$	234	$	17,885
December 31, 2015
Non-PCI Loans
Commercial:
Commercial real estate	$	1,262	$	7,187	$	8,449	$	314	$	8,515
Commercial and industrial	531		2,092		2,623		106		2,695
Construction and development	—		177		177		—		180
Consumer:
Residential real estate	1,465		2,085		3,550		—		3,568
Construction and development	—		417		417		—		417
Home equity	20		317		337		67		359
Total	$	3,278	$	12,275	$	15,553	$	487	$	15,734

The following table provides the average balance of impaired loans for each period presented and interest income recognized during the period in which the loans were considered impaired.

	Three months ended September 30,								Nine months ended September 30,
	2016				2015				2016				2015
	Average Balance		Interest Income		Average Balance		Interest Income		Average Balance		Interest Income		Average Balance		Interest Income
Non-PCI Loans
Commercial:
Commercial real estate	$	11,154	$	39	$	12,915	$	8	$	9,817	$	124	$	9,734	$	33
Commercial and industrial	3,134		3		3,113		2		2,798		11		2,732		3
Construction and development	628		—		320		—		417		—		686		—
Consumer:
Residential real estate	941		9		3,276		22		1,778		37		2,184		65
Construction and development	—		—		—		—		104		—		—		—
Home equity	292		—		20		—		230		—		213		—
Total	$	16,149	$	51	$	19,644	$	32	$	15,144	$	172	$	15,549	$	101

The Company may modify certain loans under terms that are below market in order to maximize the amount collected from a borrower that is experiencing financial difficulties. These modifications are considered to be troubled debt restructurings ("TDRs"). TDRs are evaluated individually for impairment based on the collateral value, if the loan is determined to be collateral dependent, or discounted expected cash flows, if the loan is not determined to be collateral dependent. The Company has no commitments to lend additional funds to any borrowers that have had a loan modified in a TDR. The following table provides the number and recorded investment of TDRs outstanding.

- 22 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

	September 30, 2016			December 31, 2015
	Recorded Investment		Number	Recorded Investment		Number
TDRs:
Commercial real estate	$	4,472	5	$	4,684	7
Commercial and industrial	1,907		13	795		11
Commercial construction	172		2	177		2
Residential real estate	885		1	1,594		4
Home equity	—		—	20		1
Total	$	7,436	21	$	7,270	25

The following tables provide the number and recorded investment of TDRs modified during the periods presented.

	Three months ended September 30,
	2016			2015
	Recorded Investment		Number	Recorded Investment		Number
TDRs:
Below market interest rate modifications:
Commercial real estate	$	439	1	$	255	5
Commercial and industrial	—		—	196		1
Total	$	439	1	$	451	$	6

	Nine months ended September 30,
	2016			2015
	Recorded Investment		Number	Recorded Investment		Number
TDRs:
Below market interest rate modifications:
Commercial real estate	$	1,160	3	$	902	7
Commercial and industrial	—		—	196		1
Residential real estate	—		—	398		1
Total	$	1,160	3	$	1,496	$	9

One TDR totaling $353 thousand was modified in the twelve months ended September 30, 2016 and subsequently defaulted during the nine months ended September 30, 2016. Two TDRs totaling $343 thousand that were modified in the twelve months ended September 30, 2015 subsequently defaulted during the nine months ended September 30, 2015. The Company does not generally forgive principal or unpaid interest when restructuring loans. Therefore, the recorded investment in TDRs during 2016 and 2015 did not change following the modifications.

NOTE F - PURCHASED ACCOUNTS RECEIVABLE

The Company previously invested in short-term trade accounts receivable, which were purchased on an exchange using qualified intermediaries. Income from purchased accounts receivable, which is recorded in other non-interest income, totaled $292 and $673, respectively, in the nine months ended September 30, 2016 and 2015. The Company suspended its purchased accounts receivable program during 2016 and, except as noted below, all purchased accounts receivable have been repaid as of September 30, 2016.

As of September 30, 2016, purchased accounts receivable includes delinquent short-term receivables of $7,907, which are due from a U.S. bioenergy company that produces ethanol, with the debt guaranteed by its Spanish parent company. The Spanish parent company commenced pre-insolvency proceedings in Spain during November, 2015, which allows a business to restructure its financial creditor debt on a voluntary basis without filing a full insolvency proceeding. The Company is an operational creditor, and its debt and accrued interest are not affected under the Spanish proceedings. Only if the Spanish parent enters into an insolvency proceeding can the debt including interest to the Company be subject to adjustment. The prior agreement between the Spanish Parent and its financial creditors has been renegotiated, and the revised agreement has been presented to and approved by the Spanish Court, with noted exceptions, prior to the expiration of the seven month period from and after March 28, 2016. The Spanish parent has further filed a secondary pre-insolvency proceeding requesting additional relief from its financial creditors.

- 23 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

An involuntary bankruptcy petition was filed against the U.S. subsidiary in the District of Kansas on February 11, 2016. On February 24, 2016, a related U.S. subsidiary of the Spanish parent company filed a voluntary Chapter 11 bankruptcy petition in the Eastern District of Missouri, along with various affiliates, including the U.S. subsidiary, with joint administration requested. On February 29, 2016, the Kansas case for the U.S. subsidiary was converted to a voluntary Chapter 11 case, with venue transferred to the Eastern District of Missouri on March 1, 2016. At this time, management lacks sufficient information to determine the extent of loss on the investment in purchased accounts receivable in the pending bankruptcy case for the U.S. subsidiary. Management similarly lacks sufficient information to determine the extent of recovery possible on the guarantee by the Spanish parent company. Due to uncertainties regarding the probability and amount of any loss, there was no contingency accrual related to this potential exposure as of September 30, 2016.

NOTE G – LOAN SERVICING

Mortgage Loan Servicing

The Company retains the servicing rights on mortgage loans sold. The unpaid principal balance of loans serviced for others was $726,024 and $563,802 as of September 30, 2016 and December 31, 2015, respectively. Mortgage servicing rights ("MSRs") are initially recognized at fair value in other assets on the consolidated balance sheets and are subsequently accounted for at the lower of cost or market. MSRs are amortized in proportion to, and over the estimated period, that net servicing income is expected to be received based on estimates of net cash flows on the loans serviced. The amount and timing of estimated future net cash flows are updated based on actual results and updated projections. Mortgage servicing fees, which are recorded in mortgage banking income in the consolidated statements of operations, totaled $423 and $326, respectively, in the third quarters of 2016 and 2015, and $1,154 and $928, respectively, for the nine months ended September 30, 2016 and September 30, 2015.

The following table summarizes MSR activity for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance at beginning of period before valuation allowance	$	5,349		$	4,368		$	5,037		$	4,284
Additions	1,361			608			2,272			1,003
Repayments	(133		)	(114		)	(324		)	(243		)
Amortization	(236		)	(174		)	(644		)	(356		)
Balance at end of period before valuation allowance	6,341			4,688			6,341			4,688
Valuation allowance at end of period	(18		)	(36		)	(18		)	(36		)
Balance at end of period after valuation allowance	$	6,323		$	4,652		$	6,323		$	4,652

MSRs are separated into pools based on common risk characteristics of the underlying loans, and impairment is evaluated at least quarterly at the pool level. If impairment exists at the pool level, the MSR is written down through a valuation allowance and is charged against mortgage income. Valuation allowances at period end are summarized in the preceding table.

The fair value of MSRs is highly sensitive to changes in assumptions and is determined by estimating the present value of the asset's future cash flows utilizing market-based prepayment rates, discount rates and other assumptions validated through comparison to trade information, industry surveys and with the use of independent third party appraisals. Changes in prepayment speed assumptions have the most significant impact on the fair value of MSRs. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of the MSR. Measurement of fair value is limited to the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different time.

- 24 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The characteristics and sensitivity of the fair value of MSRs to changes in key assumptions is included in the accompanying table.

	September 30, 2016			December 31, 2015
Composition of mortgage loans serviced for others:
Fixed rate loans	99.94		%	99.90		%
Adjustable rate loans	0.06		%	0.10		%
Total	100.00		%	100.00		%
Weighted average life (years)	6.03			6.60
Prepayment speed	11.4		%	9.98		%
Discount rate	9.52		%	9.66		%
Effect on fair value due to change in interest rates:
+ 0.25%	$	401		$	421
+ 0.50%	744			660
- 0.25%	(436		)	(599		)
- 0.50%	(880		)	(1,104		)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the changes in assumptions to fair value may not be linear. Also, in the preceding table, the effects of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumptions. Frequently, changes in one factor would result in another factor changing, which would magnify or contract the effect of the change.

SBA-Guaranteed Loan Servicing

The Company retains the servicing rights on SBA-guaranteed loans sold to investors. The standard sale structure under the SBA Secondary Participation Guaranty Agreement provides for the Company to retain a portion of the cash flow from the interest payment received on the loan, which is commonly known as a servicing spread. The unpaid principal balance of SBA-guaranteed loans serviced for investors was $240,081 and $205,879 as of September 30, 2016 and December 31, 2015, respectively. SBA-guaranteed loan servicing assets are initially recognized at fair value in other assets on the consolidated balance sheets and are subsequently accounted for at the lower of cost or market. SBA servicing assets are amortized over the expected life of the related loans serviced as a reduction to the servicing income recognized from the servicing spread. SBA servicing fees, which are recorded in government-guaranteed lending income in the consolidated statements of operations, totaled $528 and $473, respectively, in the third quarters of 2016 and 2015, and $1,597 and $1,258, respectively, in the nine months ended September 30, 2016 and 2015.

The table below summarizes the activity in the SBA-guaranteed loan servicing asset for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance at beginning of period	$	4,899		$	3,520		$	4,485		$	3,081
Fair value of SBA servicing assets acquired in NewBridge Merger	—			—			16			—
Additions	461			560			1,501			1,095
Amortization	(207		)	(144		)	(849		)	(240		)
Balance at end of period before valuation allowance	5,153			3,936			5,153			3,936
Valuation allowance at end of period	(110		)	—			(110		)	—
Balance at end of period after valuation allowance	$	5,043		$	3,936		$	5,043		$	3,936

The fair value of the servicing asset is compared to the amortized basis when certain triggering events occur. If the amortized basis exceeds the fair value, the asset is considered impaired and is written down to fair value through a valuation allowance on the asset and a charge against SBA income. There was no valuation allowance recorded on the SBA-guaranteed loan servicing asset as of September 30, 2015.

- 25 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

NOTE H – COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the maximum exposure the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit is based on a credit evaluation of the borrower. Collateral obtained varies but may include real estate, equipment, stocks, bonds, and certificates of deposit.

The following table is a summary of the contractual amount of the Company’s exposure to off-balance sheet commitments.

	September 30, 2016		December 31, 2015
Lending commitments:
Commitments to extend credit	$	1,471,606	$	799,058
Commercial letters of credit	22,928		16,342
Other commitments:
Standby letters of credit issued by the FHLB on the Bank's behalf	31,000		10,000

The reserve for unfunded commitments was $1,105 and $603 as of September 30, 2016 and December 31, 2015, respectively, which was recorded in other liabilities on the consolidated balance sheets.

NOTE I – DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to manage its interest rate risk. These instruments carry varying degrees of credit, interest rate, and market or liquidity risks. Derivative instruments are recognized as either assets or liabilities on the balance sheet and are measured at fair value. Subsequent changes in the fair value of derivatives are recognized in other comprehensive income ("OCI") for effective hedges, and changes in fair value are recognized in earnings for all other derivatives.

Interest Rate Swaps

The table below provides a summary of forward starting pay fixed interest rate swaps that are being used to hedge short-term FHLB advances. These interest rate swaps are expected to be highly effective and are accounted for as cash flow hedges with the change in fair value recognized in OCI. The purpose of these cash flow hedges is to reduce the Company's exposure to variability in interest payments attributable to changes in the three-month LIBOR component of three-month FHLB advances. Each three-month FHLB advance will be executed to correspond to the effective dates of the respective interest rate swaps and will continue to be rolled for the full term of each interest rate swap.

Interest Rate Swap	Notional Amount		Effective Start Date	Maturity Date	Pay Fixed Rate		Receive Floating Rate
FHLB Advance Swap 1	$	25,000	February 5, 2016	February 5, 2021	2.703	%	3-Month LIBOR
FHLB Advance Swap 2	50,000		August 5, 2016	August 5, 2021	2.882		3-Month LIBOR
FHLB Advance Swap 3	25,000		October 5, 2017	October 5, 2027	2.540		3-Month LIBOR
FHLB Advance Swap 4	25,000		March 5, 2018	March 5, 2028	2.576		3-Month LIBOR
	$	125,000

The following table provides information on a receive fixed interest rate swap that is being used to hedge certain floating rate loans. This interest rate swap is expected to be highly effective and is accounted for as a cash flow hedge with the change in fair value recognized in OCI. The purpose of this cash flow hedge is to reduce the Company's exposure to variability in interest receipts attributable to changes in one-month LIBOR, which is the index underlying the hedged floating rate loans.

- 26 -

YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Interest Rate Swap	Notional Amount		Effective Start Date	Maturity Date	Receive Fixed Rate		Pay Floating Rate
Loan Swap	$	40,000	October 1, 2015	October 1, 2020	1.23	%	1-Month LIBOR

In 2015, the Company terminated certain pay fixed interest rate swaps. For terminated interest rate swaps, the changes in fair value that were recorded in accumulated other comprehensive income ("AOCI") prior to termination will be amortized to yield over the period the hedged transactions impact earnings. The hedged transactions are currently outstanding and are expected to remain outstanding through the full original term of the interest rate swaps. The following table summarizes information regarding the terminated interest rate swaps.

Terminated Interest Rate Swap	Notional Amount		Original Effective Start Date	Original Maturity Date	Date Terminated	Unamortized Pre-Tax Loss in AOCI as of September 30, 2016
Terminated Swap 1	$	25,000	April 6, 2015	April 5, 2020	March 27, 2015	$	59
Terminated Swap 2	25,000		May 5, 2015	May 5, 2020	March 27, 2015	60
Terminated Swap 3	25,000		June 5, 2015	June 5, 2020	March 27, 2015	61
Terminated Swap 4	25,000		August 5, 2015	August 5, 2020	March 27, 2015	702
Terminated Swap 5	25,000		October 1, 2014	August 31, 2017	October 7, 2015	101
Terminated Swap 6	25,000		October 16, 2014	August 16, 2018	October 7, 2015	272
	$	150,000				$	1,255

Interest Rate Caps

In previous years, the Company purchased interest rate caps that are being used to hedge a floating rate subordinated term loan and certain floating rate trust preferred securities ("TRUPs"). The underlying index for each debt instrument is three-month LIBOR. In the event that the underlying index rate exceeds the strike rate on the respective cap, the counterparty would pay the Company the difference between the underlying index and the strike rate.

These interest rate cap contracts are classified as effective cash flow hedges. Therefore, the changes in fair value of the caps are recognized in OCI. The following table summarizes key terms of each interest rate cap.

Interest Rate Cap	Notional Amount		Effective Start Date	Maturity Date	Strike Rate		Underlying Index of Cap	Variable Rate on Underlying Debt
Cap 1	$	7,500	July 1, 2012	July 1, 2017	0.47	%	3-Month LIBOR	3-Month LIBOR + 4.00%
Cap 2	8,000		July 7, 2012	July 7, 2017	0.47		3-Month LIBOR	3-Month LIBOR + 3.10%
Cap 3	25,000		September 15, 2014	September 15, 2019	1.82		3-Month LIBOR	3-Month LIBOR + 1.32%
Cap 4	10,000		September 30, 2014	September 30, 2019	1.85		3-Month LIBOR	3-Month LIBOR + 2.80%
	$	50,500

Mortgage Loan Commitments

The Company enters into interest rate lock commitments with customers and commitments to sell mortgages to investors. The forward sale commitments are entered into with investors to manage the interest rate risk associated with the customer interest rate lock commitments, and both are considered derivative financial instruments. These derivative instruments are carried at fair value and do not qualify for hedge accounting. The fair value of the interest rate lock commitments is based on the value that can be generated when the underlying loan is sold on the secondary market and is included on the consolidated balance sheets in other assets and on the consolidated statements of operations in mortgage banking income. The fair value of the forward sale commitments is based on changes in the value of the commitment, principally because of changes in interest rates, and is included on the consolidated balance sheets in other assets or other liabilities and on the consolidated statements of operations in mortgage banking income.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following table summarizes the balance sheet location and fair value amounts of derivative instruments grouped by the underlying hedged instrument.

		September 30, 2016				December 31, 2015
	Balance Sheet Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Loans:
Receive fixed interest rate swap	Other assets	$	40,000	$	496	$	—	$	—
	Other liabilities	—		—		40,000		493
FHLB advances:
Interest rate swaps	Other liabilities	125,000		10,687		125,000		3,822
Subordinated term loan:
Interest rate cap	Other assets	7,500		25		7,500		61
TRUPs:
Interest rate caps	Other assets	43,000		104		43,000		482
Mortgage loan commitments:
Interest rate lock commitments	Other assets	60,209		1,194		30,313		408
Forward sale commitments	Other assets	—		—		52,862		106
	Other liabilities	142,745		142		—		—

Activity in AOCI related to cash flow hedges is presented in Note K. If a cash flow hedge ceases to be highly effective or is terminated, then the hedge is dedesignated, and effective changes in value that are recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. If the transaction is no longer probable of occurring during the forecast period or within a short period thereafter, hedge accounting is ceased and any gain or loss in AOCI is reported in earnings immediately.

The Company only transacts with derivative counterparties with strong credit standings and requires liquid collateral to secure credit exposure.

NOTE J – FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received on the measurement date to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants, with a three level valuation input hierarchy. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities. Securities available for sale ("AFS") are recorded at fair value on a recurring basis. Fair value measurements are based upon quoted market exchange prices, if available. If quoted prices are not available, third-party pricing sources are generally utilized to determine fair value. These fair values are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Level 1 securities include securities traded on an active exchange, such as the New York Stock Exchange, or SBA-guaranteed securities where active market pricing is readily available. Level 2 securities generally include GSE securities and mortgage-backed securities issued by GSEs, private label mortgage-backed securities, municipal bonds, corporate debt securities, and collateralized loan obligations. Level 3 securities include one municipal bond and certain corporate debt securities with limited trading activity. The following table provides the components of the change in fair value of Level 3 available for sale securities for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Level 3 AFS securities at beginning of period	$	11,725		$	11,403		$	11,728		$	11,290
Purchases	—			5,390			—			5,390
Sales, calls or maturities	—			—			—			—
Changes in unrealized gains and losses	(88		)	(215		)	(91		)	(102		)
Level 3 AFS securities at end of period	$	11,637		$	16,578		$	11,637		$	16,578

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

SBA-Guaranteed Loans. The Company has elected to account for certain SBA-guaranteed loans at fair value on a recurring basis. Generally, the Company has reached an agreement with an investor to sell the guaranteed portion of these loans, and these amounts are classified in loans held for sale on the consolidated balance sheets until the sale is complete. The unguaranteed retained portion of the loans remains in loans held for investment and continues to be adjusted to fair value over the remaining life of the respective loans. Fair value estimates for these loans are based on observable market data and pricing and are therefore classified as recurring Level 2.

Derivatives. Derivative instruments include interest rate swaps and caps and are valued on a recurring basis using quoted market prices, dealer quotes, or third party pricing models that are primarily sensitive to market observable data. Currently outstanding derivatives, except for mortgage interest rate lock commitments described below, are classified as Level 2 within the fair value hierarchy.

Mortgage Loan Commitments. The fair value of interest rate lock commitments, which are included in derivatives assets and liabilities in the fair value measurement tables below, is based on servicing rate premium, origination income net of origination costs, fall out rates and changes in loan pricing between the commitment date and period end. Interest rate lock commitments are measured at fair value on a recurring basis and are classified as Level 3. The following table provides the components of the change in fair value of interest rate lock commitments for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Interest rate lock commitments at beginning of period	$	1,607		$	483		$	408		$	342
Issuances	3,294			1,824			8,489			4,609
Settlements	(3,707		)	(1,667		)	(7,703		)	(4,311		)
Interest rate lock commitments at end of period	$	1,194		$	640		$	1,194		$	640

The fair value of forward sale commitments, also included in derivative assets and liabilities in the fair value measurement tables below, is based on changes in loan pricing between the commitment date and period end. Forward sale commitments are measured at fair value on a recurring basis and are classified as Level 2. The difference between the interest rate lock commitment issuances and settlements in the preceding table and the change in fair value of forward sale commitments in the period represents the gain on mortgage loan commitments and is included in mortgage banking income on the consolidated statements of operations.

Loans. Loans are not generally recorded at fair value on a recurring basis. However, certain loans are determined to be impaired, and those loans are charged down to estimated fair value. The fair value of impaired loans that are collateral dependent is based on collateral value. For impaired loans that are not collateral dependent, estimated value is based on either an observable market price, if available, or the present value of expected future cash flows. Those impaired loans not requiring a charge-off represent loans for which the estimated fair value exceeds the recorded investments in such loans. When the fair value of an impaired loan is based on an observable market price or a current appraised value with no adjustments, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is not available, or the Company determines the fair value of the collateral is further impaired below the appraised value, and there is no observable market price, the impaired loan is classified as nonrecurring Level 3.

Other Real Estate. Foreclosed assets are adjusted to fair value upon transfer of loans to other real estate. Subsequently, other real estate is carried at lower of cost or net realizable value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Given the lack of observable market prices for identical properties and market discounts applied to appraised values, the Company classifies other real estate as nonrecurring Level 3.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following tables summarize fair value information for assets and liabilities measured on a recurring and nonrecurring basis.

	Total		Level 1		Level 2		Level 3
September 30, 2016
Measured at fair value on a recurring basis:
Securities available for sale:
GSE obligations	$	17,715	$	—	$	17,715	$	—
SBA-guaranteed securities	18,321		18,321		—		—
Mortgage-backed securities issued by GSE	534,591		—		534,591		—
Municipal bonds	131,198		—		130,178		1,020
Corporate bonds	185,832		2,585		172,630		10,617
Collateralized loan obligations	50,529		—		50,529		—
Non-agency CMBS	16,360		—		16,360		—
Certificates of deposit	743		743		—		—
Equity securities	10,671		10,671		—		—
SBA-guaranteed loans held for sale	45,868		—		45,868		—
SBA loans held for investment	35,030		—		35,030		—
Derivative assets	1,819		—		625		1,194
Derivative liabilities	10,829		—		10,829		—
Measured at fair value on a non-recurring basis:
Impaired loans	$	12,084	$	—	$	—	$	12,084
Other real estate	31,726		—		—		31,726

	Total		Level 1		Level 2		Level 3
December 31, 2015
Measured at fair value on a recurring basis:
Securities available for sale:
GSE obligations	$	5,982	$	—	$	5,982	$	—
SBA-guaranteed securities	12,176		12,176		—		—
Mortgage-backed securities issued by GSE	435,625		—		435,625		—
Collateralized loan obligations	50,483		—		50,483		—
Municipal bonds	55,800		—		54,692		1,108
Corporate bonds	123,532		2,485		110,427		11,728
Non-agency RMBS	3,663		—		3,663		—
Certificates of deposit	245		245		—		—
Equity securities	1,626		1,626		—		—
SBA-guaranteed loans held for sale	23,664		—		23,664		—
SBA loans held for investment	20,423		—		20,423		—
Derivative assets	996		—		588		408
Derivative liabilities	4,376		—		4,376		—
Measured at fair value on a non-recurring basis:
Impaired loans	$	15,066	$	—	$	—	$	15,066
Other real estate	15,346		—		—		15,346

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Quantitative Information About Level 3 Fair Value Measurements

The table below outlines the valuation techniques, unobservable inputs, and the range of quantitative inputs used in the valuations.

				Fair Value
	Valuation Technique	Unobservable Input	Range	September 30, 2016		December 31, 2015
Recurring measurements:
Investment securities	Pricing model	Illiquidity or credit factor in discount rates	1-2%	$	11,637	$	11,728
Interest rate lock commitments	Pricing model	Pull through rates	80-95%	1,194		408
Nonrecurring measurements:
Impaired loans	Discounted appraisals	Collateral discounts	15-50%	12,084		15,066
	Discounted expected cash flows	Expected loss rates	0-75%
		Discount rates	2-8%
Other real estate	Discounted appraisals	Collateral discounts	15-50%	31,726		15,346

The significant unobservable input used in the fair value measurement of the Company’s interest rate lock commitments is the closing ratio (or pull through rate), which represents the percentage of loans currently in a lock position which management estimates will ultimately close. Generally, the fair value of an interest rate lock commitment is positive (negative) if the prevailing interest rate is lower (higher) than the interest rate lock commitment rate. Therefore, an increase in the pull through rates (i.e., higher percentage of loans estimated to close) will result in the fair value of the interest rate lock commitments increasing in a gain position, or decreasing in a loss position. The pull through ratio is largely dependent on the loan processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. The pull through rate is computed based on historical internal data and the ratio is periodically reviewed by the Company’s mortgage banking department.

Due to the nature of the Company’s business, a significant portion of its assets and liabilities consist of financial instruments. Accordingly, the estimated fair values of these financial instruments are disclosed. Quoted market prices, if available, are utilized as an estimate of the fair value of financial instruments. The fair value of such instruments has been derived based on assumptions with respect to future economic conditions, the amount and timing of future cash flows and estimated discount rates. Different assumptions could significantly affect these estimates. Accordingly, the net amounts ultimately collected could be materially different from the estimates presented below. In addition, these estimates are only indicative of the values of individual financial instruments and should not be considered an indication of the fair value of the Company taken as a whole.

Cash and Cash Equivalents. The carrying amounts for cash and cash equivalents are a reasonable estimate of fair value.

Investment Securities Available for Sale. A description of fair value estimates for securities available for sale is included in the recurring fair value measurements section above.

Investment Securities Held to Maturity. The fair value of the municipal bonds classified as held to maturity are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. These securities are classified as Level 2 in the fair value hierarchy since the inputs used in the valuation are readily available market inputs.

Loans Held For Sale. The fair value of mortgage loans held for sale is based on commitments on hand from investors within the secondary market. A description of fair value estimates for SBA-guaranteed loans held for sale is included in the recurring fair value measurements section above.

Loans. Expected cash flows are forecasted over the remaining life of each loan and are discounted to present value at current market interest rates for similar loans considering loan collateral type and credit quality.

Federal Home Loan Bank Stock. Given the option to redeem this stock at par through the FHLB, the carrying value of FHLB stock approximates fair value.

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Purchased Accounts Receivable. Purchased accounts receivable, which are classified in other assets on the consolidated balance sheet, are initially recorded at fair value, which is the same as the discounted purchase price, and generally have maturities between 30 and 60 days. Due to the short duration of these assets, the carrying amounts are a reasonable estimate of fair value.

Deposits. The fair value of demand deposits, savings, money market and NOW accounts represents the amount payable on demand. The fair value of time deposits is estimated by calculating the present value of cash flows on the time deposit portfolio discounted using interest rates currently offered for instruments of similar remaining maturities.

Short-term Borrowings and Long-term Debt. The fair value of short-term borrowings and long-term debt are based upon the discounted value when using current rates at which borrowings of similar maturity could be obtained.

Accrued Interest Receivable and Accrued Interest Payable. The carrying amounts of accrued interest receivable and payable approximate fair value due to the short maturities of these instruments.

Derivative Instruments. A description of fair value estimates for derivative instruments is included in the recurring fair value measurements section above.

The following tables summarize the carrying amounts and estimated fair values of the Company's financial instruments.

	September 30, 2016
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	162,278	$	162,278	$	162,278	$	—	$	—
Investment securities available for sale	965,960		965,960		32,320		922,003		11,637
Investment securities held to maturity	38,847		40,681		—		40,681		—
Loans held for sale	85,964		85,964		—		85,964		—
Loans, net	5,241,167		5,297,051		—		35,030		5,262,021
Purchased accounts receivable	7,907		7,907		—		7,907		—
Federal Home Loan Bank stock	41,693		41,693		—		41,693		—
Derivative assets	1,819		1,819		—		625		1,194
Accrued interest receivable	19,519		19,519		—		19,519		—
Financial liabilities:
Deposits	5,310,028		5,313,683		—		5,313,683		—
Short-term borrowings	791,721		791,721		—		—		791,721
Long-term debt	164,215		174,426		—		—		174,426
Derivative liabilities	10,829		10,829		—		10,829		—
Accrued interest payable	2,438		2,438		—		2,438		—

	December 31, 2015
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	111,918	$	111,918	$	111,918	$	—	$	—
Investment securities available for sale	689,132		689,132		16,532		665,872		6,728
Investment securities held to maturity	39,182		40,500		—		40,500		—
Loans held for sale	47,287		47,287		—		47,287		—
Loans, net	3,066,775		3,092,461		—		23,664		3,068,797
Purchased accounts receivable	52,688		52,688		—		52,688		—
Federal Home Loan Bank stock	24,844		24,844		—		24,844		—
Derivative assets	996		996		—		588		408
Accrued interest receivable	12,695		12,695		—		12,695		—
Financial liabilities:
Deposits	3,310,297		3,310,306		—		3,310,306		—
Short-term borrowings	375,500		375,500		—		—		375,500
Long-term debt	194,967		198,928		—		—		198,928
Derivative liabilities	4,376		4,376		—		4,376		—
Accrued interest payable	2,550		2,550		—		2,550		—

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YADKIN FINANCIAL CORPORATION

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

NOTE K - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the activity in accumulated other comprehensive income for the periods presented. All amounts are net of tax.

	Unrealized Net Gains (Losses) on AFS Securities			Unrealized Net Gains (Losses) on Cash Flow Hedges			Total
Balance at July 1, 2016	$	6,845		$	(8,224	)	$	(1,379	)
Other comprehensive income (loss) before reclassifications	(2,041		)	338			(1,703		)
Reclassification of gains on AFS securities	—			—			—
Reclassification of amounts into interest expense from termination of interest rate swaps	—			70			70
Net other comprehensive income (loss) during period	(2,041		)	408			(1,633		)
Balance at September 30, 2016	$	4,804		$	(7,816	)	$	(3,012	)
Balance at July 1, 2015	$	(2,479	)	$	(1,466	)	$	(3,945	)
Other comprehensive income (loss) before reclassifications	2,972			(3,176		)	(204		)
Reclassification of gains on AFS securities	—			—			—
Reclassification of amounts into interest expense from termination of interest rate swaps	—			21			21
Net other comprehensive income (loss) during period	2,972			(3,155		)	(183		)
Balance at September 30, 2015	$	493		$	(4,621	)	$	(4,128	)
Balance at January 1, 2016	$	(3,321	)	$	(4,196	)	(7,517		)
Other comprehensive income (loss) before reclassifications	8,246			(3,830		)	4,416
Reclassification of gains on AFS securities	(121		)	—			(121		)
Reclassification of amounts into interest expense from termination of interest rate swaps	—			210			210
Net other comprehensive income (loss) during period	8,125			(3,620		)	4,505
Balance at September 30, 2016	$	4,804		$	(7,816	)	$	(3,012	)
Balance at January 1, 2015	$	(1,185	)	$	(1,059	)	$	(2,244	)
Other comprehensive loss before reclassifications	1,730			(3,588		)	(1,858		)
Reclassification of gains on AFS securities	(52		)	—			(52		)
Reclassification of amounts into interest expense from termination of interest rate swaps	—			26			26
Net other comprehensive loss during period	1,678			(3,562		)	(1,884		)
Balance at September 30, 2015	$	493		$	(4,621	)	$	(4,128	)

- 33 -

Management's Discussion and Analysis of Financial Condition and Results of Operations

Yadkin Financial Corporation (the “Company” or “Yadkin”) is a bank holding company incorporated under the laws of North Carolina and headquartered in Raleigh, North Carolina. The Company conducts its business operations primarily through its wholly-owned subsidiary, Yadkin Bank, a North-Carolina chartered commercial bank. Yadkin Bank provides banking, mortgage, investment and insurance services to businesses and consumers across the Carolinas.

Management’s discussion and analysis is intended to assist readers in understanding and evaluating the financial condition and consolidated results of operations of the Company. This discussion and analysis includes descriptions of significant transactions, trends and other factors affecting the Company’s operating results for the three- and nine-month periods ended September 30, 2016 and 2015, as well as the financial condition of the Company as of September 30, 2016 and December 31, 2015. This discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and accompanying notes included in this report.

Executive Summary

The following is a summary of the Company’s financial highlights (GAAP basis) in the third quarter of 2016:

• Net income available to common shareholders totaled $16.3 million, or $0.32 per diluted share, in Q3 2016 compared to $0.37 per diluted share in Q3 2015.

• Annualized return on assets was 0.88 percent in Q3 2016 compared to 1.08 percent in Q3 2015.

• Annualized return on average equity was 6.41 percent in Q3 2016 compared to 7.05 percent 8.45 percent in Q3 2015.

• Efficiency ratio, the ratio of expenses to total revenues, was 63.2 percent in Q3 2016, compared to 57.6 percent in Q3 2015.

• Book value per share grew to $19.60 as of September 30, 2016, from $17.56 per share as of September 30, 2015.

The following is a summary of the Company’s operating highlights (non-GAAP basis) in the third quarter of 2016:

• The Company achieved record operating earnings in the quarter as net operating earnings available to common shareholders, which excludes certain non-operating income and expenses, improved to $22.3 million, or $0.43 per diluted share, in Q3 2016 from $0.40 per diluted share in Q3 2015.

• Annualized net operating return on assets improved to a record 1.20 percent in Q3 2016 , compared to 1.15 percent in Q3 2015.

• Annualized return on average tangible common equity was 10.72 percent in Q3 2016 compared to 12.57 percent in Q3 2015. Annualized net operating return on average tangible common equity improved to 14.44 percent in Q3 2016 from 13.34 percent in Q3 2015.

• Operating efficiency ratio improved to 54.3 percent in Q3 2016 from 57.3 percent in Q3 2015 as the Company achieved greater operating scale following the NewBridge Merger.

• Tangible book value per share was $12.47 as of September 30, 2016, compared to $12.31 per share as of September 30, 2015.

Mergers and Acquisitions

Proposed Merger with F.N.B. Corporation.

On July 20, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with F.N.B. Corporation, a Florida corporation (“FNB”). The Merger Agreement provides that the Company will merge with and into FNB (the “Merger”), with FNB continuing as the surviving corporation. As soon as practicable following execution of the Merger Agreement, the Company’s wholly-owned subsidiary, Yadkin Bank, will merge with and into FNB’s wholly-owned subsidiary, First National Bank of Pennsylvania ("FNB Bank"), with FNB Bank continuing as the surviving entity (the “Bank Merger”).

- 34 -

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, the Company’s shareholders will have the right to receive 2.16 shares of FNB common stock, par value $0.01, for each share of the Company’s common stock. Based on FNB’s closing price of $13.20 as of July 20, 2016, the day before the transaction was announced, the estimated aggregate purchase price was $1.47 billion. The transaction is expected to close in the first quarter of 2017, subject to shareholder and regulatory approval and other customary closing conditions.

Acquisition of NewBridge Bancorp

On March 1, 2016, the Company completed its acquisition of NewBridge Bancorp (“NewBridge”), pursuant to an Agreement and Plan of Merger, dated October 12, 2015 (the “NewBridge Merger Agreement”). Pursuant to the NewBridge Merger Agreement, each share of NewBridge Class A common stock and Class B common stock was converted into the right to receive 0.50 shares of the common stock of the Company (the "NewBridge Merger"). Based on the Company's stock price at the closing date of the NewBridge Merger, purchase consideration totaled $431.3 million. Immediately following the merger of NewBridge into Yadkin, NewBridge Bank, a North Carolina-chartered commercial bank, merged with and into Yadkin Bank, with Yadkin Bank surviving such merger.

The NewBridge Merger was accounted for under the acquisition method of accounting with Yadkin as the legal and accounting acquirer and NewBridge as the legal and accounting acquiree. The assets and liabilities of NewBridge have been recorded at their estimated fair values and added to those of Yadkin for periods following the merger date. The Company may refine its valuations of acquired NewBridge assets and liabilities for up to one year following the merger date.

The Company is currently the fourth largest bank headquartered in North Carolina and ranks first by North Carolina deposit market share among community banks. The Company now operates 98 full-service banking locations in its North Carolina and South Carolina banking network and has a significant presence in all major North Carolina markets, including Charlotte, the Raleigh-Durham-Chapel Hill Triangle, the Piedmont Triad, and Wilmington. The previously announced systems integration (originally scheduled for September 2016), will now be completed following the FNB Merger. The NewBridge Merger added $2.1 billion in loans, $2.0 billion in deposits, and resulted in significant changes across most balance sheet categories. The NewBridge Merger, which was effective on March 1, 2016, had a material impact on Company's results of operations. As a result, the Company's 2016 financial results may not be comparable to financial results in prior periods.

Non-GAAP Financial Measures

Statements included in this management's discussion and analysis 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. The Company's management uses these non-GAAP financial measures, including: (i) net operating earnings available to common shareholders; (ii) pre-tax, pre-provision operating earnings, (iii) operating non-interest income, (iv) operating non-interest expense, (v) operating efficiency ratio, (vi) taxable-equivalent net interest income, (vii) taxable-equivalent net interest margin, (viii) core net interest income, (ix) core net interest margin, (x) adjusted allowance for loan losses to loans; and (xi) tangible common equity, in its analysis of the Company's performance. The adjusted allowance for loan losses non-GAAP reconciliation is presented within the allowance for loan losses section below. The tangible common equity non-GAAP reconciliations, which include tangible book value per share and the tangible common equity to tangible assets ratio, are presented within the capital section below.

Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company without regard to transactional activities. 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 the Company's 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 Company's results or financial condition as reported under GAAP. 

- 35 -

	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands, except per share data)	2016			2015			2016			2015
Operating Earnings
Net income	$	16,286		$	11,788		$	41,490		$	32,779
Securities gains	—			—			(194		)	(85		)
Gain on sale of trust business	—			—			(417		)	—
Merger and conversion costs	7,177			104			24,043			299
Restructuring charges	—			50			46			3,251
Income tax effect of adjustments	(1,719		)	(59		)	(5,486		)	(1,267		)
DTA revaluation from reduction in state income tax rates	552			651			552			651
Net operating earnings (Non-GAAP)	22,296			12,534			60,034			35,628
Dividends on preferred stock	—			—			—			822
Net operating earnings available to common shareholders (Non-GAAP)	$	22,296		$	12,534		$	60,034		$	34,806
Net operating earnings per common share:
Basic (Non-GAAP)	$	0.43		$	0.40		$	1.28		$	1.10
Diluted (Non-GAAP)	0.43			0.40			1.28			1.10
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	16,286		$	11,788		$	41,490		$	32,779
Provision for loan losses	2,997			1,576			7,170			3,531
Income tax expense	10,439			7,891			24,578			19,813
Pre-tax, pre-provision income	29,722			21,255			73,238			56,123
Securities gains	—			—			(194		)	(85		)
Gain on sale of trust business	—			—			(417		)	—
Merger and conversion costs	7,177			104			24,043			299
Restructuring charges	—			50			46			3,251
Pre-tax, pre-provision operating earnings (Non-GAAP)	$	36,899		$	21,409		$	96,716		$	59,588
Operating Non-Interest Income
Non-interest income	$	16,789		$	10,798		$	43,780		$	30,437
Securities gains	—			—			(194		)	(85		)
Gain on sale of trust business	—			—			(417		)	—
Operating non-interest income (Non-GAAP)	$	16,789		$	10,798		$	43,169		$	30,352
Operating Non-Interest Expense
Non-interest expense	$	51,058		$	28,848		$	146,067		$	92,122
Merger and conversion costs	(7,177		)	(104		)	(24,043		)	(299		)
Restructuring charges	—			(50		)	(46		)	(3,251		)
Operating non-interest expense (Non-GAAP)	$	43,881		$	28,694		$	121,978		$	88,572
Operating Efficiency Ratio
Efficiency ratio	63.21		%	57.58		%	66.60		%	62.14		%
Effect to adjust for securities gains	—			—			0.06			0.04
Effect to adjust for gain on sale of trust business	—			—			0.13			—
Effect to adjust for restructuring charges	—			(0.10		)	(0.02		)	(2.19		)
Effect to adjust for merger and conversion costs	(8.89		)	(0.21		)	(10.99		)	(0.21		)
Operating efficiency ratio (Non-GAAP)	54.32		%	57.27		%	55.78		%	59.78		%
				��

- 36 -

	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands, except per share data)	2016			2015			2016			2015
Taxable-Equivalent Net Interest Income
Net interest income	$	63,991		$	39,305		$	175,525		$	117,808
Taxable-equivalent adjustment	634			314			1,660			907
Taxable-equivalent net interest income (Non-GAAP)	$	64,625		$	39,619		$	177,185		$	118,715
Core Net Interest Income and Net Interest Margin (Annualized)
Taxable-equivalent net interest income (Non-GAAP)	$	64,625		$	39,619		$	177,185		$	118,715
Acquisition accounting amortization/accretion adjustments:
Loans	(4,744		)	(3,404		)	(13,090		)	(12,192		)
Deposits	(329		)	(713		)	(1,353		)	(2,587		)
Borrowings and debt	85			155			264			388
Income from issuer call of debt security	—			—			(165		)	—
Core net interest income (Non-GAAP)	$	59,637		$	35,657		$	162,841		$	104,324
Divided by: average interest-earning assets	$	6,561,255		$	3,750,223		$	5,954,287		$	3,714,375
Taxable-equivalent net interest margin (Non-GAAP)	3.92		%	4.19		%	3.97		%	4.27		%
Core taxable-equivalent net interest margin (Non-GAAP)	3.62		%	3.77		%	3.65		%	3.76		%

Analysis of Results of Operations

Q3 2016 compared to Q3 2015

Net income available to common shareholders was $16.3 million, or $0.32 per diluted common share, in the third quarter of 2016 compared to $11.8 million, or $0.37 per diluted common share, in the third quarter of 2015. Net operating earnings available to common shareholders, which excludes certain nonrecurring income and expenses, improved to $22.3 million in the third quarter of 2016 from $12.5 million in the comparable period of 2015.

Year-to-Date

Net income available to common shareholders was $41.5 million, or $0.88 per diluted common share, in the first nine months of 2016 compared to $32.0 million, or $1.01 per diluted common share, in the first nine months of 2015. Net operating earnings available to common shareholders, which excludes certain nonrecurring income and expenses, improved to $60.0 million in the first nine months of 2016 from $34.8 million in the comparable period of 2015.

Net Interest Income

Q3 2016 compared to Q3 2015

Net interest income was $64.0 million in the third quarter of 2016, an increase from $39.3 million in the third quarter of 2015. This increase was due to the impact of earning assets acquired in the NewBridge Merger as well as solid organic loan growth. Net interest margin declined from 4.19 percent in the third quarter of 2015 to 3.92 percent in the third quarter of 2016, primarily due to lower-yielding acquired NewBridge loans. Core net interest margin, which excludes the impact of accretion income on net interest income, was 3.62 percent in the third quarter of 2016 compared to 3.77 percent in the third quarter of 2015.

Net accretion income on acquired loans totaled $4.7 million in the third quarter of 2016, which consisted of $1.0 million of net accretion on purchased credit-impaired (“PCI”) loans and $3.7 million of accretion income on purchased non-impaired loans. Net accretion income on acquired loans in the third quarter of 2015 totaled $3.4 million, which included $895 thousand of net accretion on PCI loans and $2.5 million of accretion income on purchased non-impaired loans. Accretion income on purchased non-impaired loans included $1.8 million of accelerated accretion due to principal prepayments in the third quarter of 2016 compared to $978 thousand in the third quarter of 2015.

- 37 -

The following table summarizes the major components of net interest income and the related yields and costs for the quarterly periods presented.

	Three months ended September 30, 2016						Three months ended September 30, 2015
(Dollars in thousands)	Average Balance		Interest*		Yield/Cost*		Average Balance		Interest*		Yield/Cost*
Assets
Loans (1)	$	5,382,434	$	66,122	4.89	%	$	2,985,063	$	40,362	5.36	%
Investment securities (2)	1,127,580		7,110		2.51		709,914		4,209		2.35
Federal funds and other	51,241		101		0.78		55,246		47		0.34
Total interest-earning assets	6,561,255		73,333		4.45	%	3,750,223		44,618		4.72	%
Goodwill	338,108						152,152
Other intangibles, net	30,188						14,763
Other non-interest-earning assets	458,290						400,811
Total assets	$	7,387,841					$	4,317,949
Liabilities and Equity
Interest-bearing demand	$	1,088,490	510		0.19	%	$	487,173	130		0.11	%
Money market and savings	1,639,707		1,336		0.32		996,357		713		0.28
Time	1,387,752		2,957		0.85		1,056,806		2,254		0.85
Total interest-bearing deposits	4,115,949		4,803		0.46		2,540,336		3,097		0.48
Short-term borrowings	781,861		1,690		0.86		349,900		437		0.50
Long-term debt	229,772		2,215		3.84		125,846		1,465		4.62
Total interest-bearing liabilities	5,127,582		8,708		0.68	%	3,016,082		4,999		0.66	%
Noninterest-bearing deposits	1,180,832						718,989
Other liabilities	68,855						29,196
Total liabilities	6,377,269						3,764,267
Shareholders’ equity	1,010,572						553,682
Total liabilities and shareholders' equity	$	7,387,841					$	4,317,949
Net interest income, taxable equivalent			$	64,625					$	39,619
Interest rate spread (3)					3.77	%					4.06	%
Tax equivalent net interest margin (4)					3.92	%					4.19	%
Percentage of average interest-earning assets to average interest-bearing liabilities					127.96	%					124.34	%
* Taxable equivalent basis

(1) Loans include loans held for sale and nonaccrual loans.

(2) Investment securities include investments in FHLB stock. Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a 35.0 percent federal income tax rate and a 4.0 percent state income tax rate. The taxable-equivalent adjustment was $634 thousand and $314 thousand for the 2016 and 2015 periods, respectively.

(3) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized net interest income divided by average interest-earning assets.

- 38 -

Changes in interest income and interest expense can result from variances in both volume and rates. The following table presents the relative impact on tax-equivalent net interest income to changes in the average outstanding balances of interest-earning assets and interest-bearing liabilities and the rates earned and paid on such assets and liabilities.

	Change from Q3 2015 to Q3 2016 due to:
(Dollars in thousands)	Volume			Yield/Cost			Total Change
Interest earning assets:
Loans	$	29,723		$	(3,963	)	$	25,760
Investment securities	2,615			286			2,901
Federal funds and other interest-earning assets	(3		)	57			54
Total interest-earning assets	32,335			(3,620		)	28,715
Interest-bearing liabilities:
Interest-bearing demand	234			146			380
Money market and savings	522			101			623
Time deposits	699			4			703
Total interest-bearing deposits	1,455			251			1,706
Short-term borrowings	789			464			1,253
Long-term debt	1,036			(286		)	750
Total interest-bearing liabilities	3,280			429			3,709
Change in net interest income, taxable equivalent	$	29,055		$	(4,049	)	$	25,006

Year-to-Date

Net interest income was $175.5 million in the first nine months of 2016, an increase from $117.8 million in the first nine months of 2015. This increase was due to the impact of earning assets acquired in the NewBridge Merger and organic loan growth. Net interest margin declined from 4.27 percent in the first nine months of 2015 to 3.97 percent in the first nine months of 2016, primarily due to lower-yielding acquired NewBridge loans. Core net interest margin, which excludes the impact of accretion income on net interest income, was 3.65 percent in the first nine months of 2016 compared to 3.76 percent in the first nine months of 2015.

Net accretion income on acquired loans totaled $13.1 million in the first nine months of 2016, which consisted of $2.9 million of net accretion on purchased credit-impaired (“PCI”) loans and $10.2 million of accretion income on purchased non-impaired loans. Net accretion income on acquired loans in the first nine months of 2015 totaled $11.4 million, which included $2.7 million of net accretion on PCI loans and $8.7 million of accretion income on purchased non-impaired loans. Accretion income on purchased non-impaired loans included $4.5 million of accelerated accretion due to principal prepayments in the first nine months of 2016 compared to $3.4 million in the first nine months of 2015.

- 39 -

The following table summarizes the major components of net interest income and the related yields and costs for the year-to-date periods presented.

	Nine months ended September 30, 2016						Nine months ended September 30, 2015
(Dollars in thousands)	Average Balance		Interest*		Yield/Cost*		Average Balance		Interest*		Yield/Cost*
Assets
Loans(1)	$	4,849,354	$	178,664	4.92	%	$	2,958,768	$	120,686	5.45	%
Investment securities(2)	1,046,847		21,254		2.71		700,866		12,460		2.38
Federal funds and other	58,086		285		0.66		54,741		142		0.35
Total interest-earning assets	5,954,287		200,203		4.49	%	3,714,375		133,288		4.80	%
Goodwill	297,451						152,152
Other intangibles, net	27,339						15,564
Other non-interest-earning assets	484,359						397,641
Total assets	$	6,763,436					$	4,279,732
Liabilities and Equity
Interest-bearing demand	$	990,417	1,350		0.18	%	$	477,879	448		0.13	%
Money market and savings	1,474,898		3,308		0.30		999,081		2,147		0.29
Time	1,344,247		8,045		0.80		1,075,072		6,464		0.80
Total interest-bearing deposits	3,809,562		12,703		0.45		2,552,032		9,059		0.47
Short-term borrowings	683,431		3,858		0.75		304,247		1,057		0.46
Long-term debt	242,582		6,457		3.56		152,842		4,457		3.90
Total interest-bearing liabilities	4,735,575		23,018		0.65	%	3,009,121		14,573		0.65	%
Noninterest-bearing deposits	1,064,228						684,516
Other liabilities	58,974						27,214
Total liabilities	5,858,777						3,720,851
Shareholders’ equity	904,659						558,881
Total liabilities and shareholders' equity	$	6,763,436					$	4,279,732
Net interest income, taxable equivalent			$	177,185					$	118,715
Interest rate spread(3)					3.84	%					4.15	%
Tax equivalent net interest margin(4)					3.97	%					4.27	%
Percentage of average interest-earning assets to average interest-bearing liabilities					125.74	%					123.44	%
* Taxable equivalent basis

(1) Loans include loans held for sale and nonaccrual loans.

(2) Investment securities include investments in FHLB stock. Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a 35.0 percent federal income tax rate and a 4.0 percent state income tax rate. The taxable-equivalent adjustment was $1.7 million and $907 thousand for the 2016 and 2015 periods, respectively.

(3) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized net interest income divided by average interest-earning assets.

- 40 -

Changes in interest income and interest expense can result from variances in both volume and rates. The following table presents the relative impact on tax-equivalent net interest income to changes in the average outstanding balances of interest-earning assets and interest-bearing liabilities and the rates earned and paid on such assets and liabilities.

	Change from YTD 2015 to YTD 2016 due to:
(Dollars in thousands)	Volume		Yield/Cost			Total Change
Interest earning assets:
Loans	$	70,666	$	(12,688	)	$	57,978
Investment securities	6,842		1,952			8,794
Federal funds and other interest-earning assets	9		134			143
Total interest-earning assets	77,517		(10,602		)	66,915
Interest-bearing liabilities:
Interest-bearing demand	648		254			902
Money market and savings	1,061		100			1,161
Time deposits	1,606		(25		)	1,581
Total interest-bearing deposits	3,315		329			3,644
Short-term borrowings	1,869		932			2,801
Long-term debt	2,414		(414		)	2,000
Total interest-bearing liabilities	7,598		847			8,445
Change in net interest income, taxable equivalent	$	69,919	$	(11,449	)	$	58,470

Provision for Loan Losses

Q3 2016 compared to Q3 2015

The following table summarizes the changes in the Company's ALLL for the quarters presented.

(Dollars in thousands)	Non-PCI Loans			PCI Loans			Total
3Q 2016:
Balance at July 1, 2016	$	10,864		$	769		$	11,633
Net charge-offs	(2,483		)	(5		)	(2,488		)
Provision for loan losses	3,129			(132		)	2,997
Balance at September 30, 2016	$	11,510		$	632		$	12,142
3Q 2015:
Balance at July 1, 2015	$	7,000		$	1,358		$	8,358
Net charge-offs	(934		)	—			(934		)
Provision for loan losses	1,536			40			1,576
Balance at September 30, 2015	$	7,602		$	1,398		$	9,000

Provision for loan losses was $3.0 million in the third quarter of 2016 compared to $1.6 million in the third quarter of 2015. The higher provision for loan losses was primarily due to higher net charge-offs among commercial and industrial loans. Total net charge-offs increased to an annualized 0.18 percent of average loans in the third quarter of 2016 compared to an annualized 0.12 percent of average loans in the third quarter of 2015.

Loans acquired with evidence of credit deterioration since origination are accounted for as PCI loans. Subsequent to acquisition of these loans, estimates of cash flows expected to be collected are updated each reporting period based on assumptions regarding default rates, loss severities, and other factors that reflect current market conditions. If the Company has probable decreases in cash flows expected to be collected at the pool level due to credit, the provision for loan losses is charged, resulting in an increase to the allowance for loan losses. Events that would result in probable decreases in expected cash flows include (i) reductions in estimated collateral values for collateral dependent loans, (ii) loans becoming collateral dependent during the period for which there is an estimated collateral shortfall, (iii) non-payment of cash flows expected to be collected in prior re-estimations, and (iv) deterioration in the weighted average credit grade or past due status for loans with cash flows estimated based on these factors.

- 41 -

If there are probable and significant increases in cash flows expected to be collected, the Company will first reverse any previously established ALLL and then increase interest income as a prospective yield adjustment over the remaining life of the loans. Events that would result in probable increases in expected cash flows include (i) increases in estimated collateral values for collateral dependent loans, (ii) loans becoming non-collateral dependent during the period for which there was an estimated collateral shortfall in prior estimations, (iii) actual cash flow collections in excess of prior estimates, and (iv) improvement in the weighted average credit grade or past due status for loans with cash flows estimated based on these factors.

Results of the Company’s cash flow re-estimation for PCI loans in the third quarter of 2016 are summarized below.

(Dollars in thousands)	Provision (Recovery)			Yield Adjustment			Previous Yield		New Yield
Loan pools with cash flow improvement	$	(248	)	$	1,021		8.53	%	9.13	%
Loan pools with cash flow decrease	113			(251		)	6.89		6.48
Non-pooled loans	(2		)	(1		)	19.51		19.56
Total	$	(137	)	$	769		8.02	%	8.27	%

Year-to-Date

The following table summarizes the changes in the Company's ALLL for the year-to-date periods presented.

(Dollars in thousands)	Non-PCI Loans			PCI Loans			Total
2016:
Balance at January 1, 2016	$	8,447		$	1,322		$	9,769
Net charge-offs	(4,792		)	(5		)	(4,797		)
Provision for loan losses	7,855			(685		)	7,170
Balance at September 30, 2016	$	11,510		$	632		$	12,142
2015:
Balance at January 1, 2015	$	6,519		$	1,298		$	7,817
Net charge-offs	(2,348		)	—			(2,348		)
Provision for loan losses	3,431			100			3,531
Balance at September 30, 2015	$	7,602		$	1,398		$	9,000

Provision for loan losses was $7.2 million in the nine months ended September 30, 2016 compared to $3.5 million in the same period of 2015. The higher provision for loan losses reflected higher provision expense on non-PCI loans, net of a provision credit on PCI loans. Provision expense on non-PCI loans was primarily due to higher net charge-offs and originated loan growth. Net charge-offs represented an annualized 0.12 percent of average loans in the nine months ended September 30, 2016, compared to an annualized 0.11 percent of average loans in the same period of 2015. Net charge-offs of commercial and industrial loans increased significantly during 2016, largely due to the impact of the NewBridge loan portfolio. The current period YTD provision credit for PCI loans resulted from improving cash flows on certain of the Company's loan pools during 2016.

Non-Interest Income

The following table provides a summary of non-interest income for the periods presented.

	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2016		2015		2016		2015
Service charges and fees on deposit accounts	$	5,757	$	3,566	$	15,764	$	10,314
Government-guaranteed lending	3,600		3,009		9,352		9,559
Mortgage banking	4,223		1,731		9,696		4,686
Bank-owned life insurance	1,427		470		2,712		1,407
Gains on sales of available for sale securities	—		—		194		85
Gain on sale of trust business	—		—		417		—
Other	1,782		2,022		5,645		4,386
Total non-interest income	$	16,789	$	10,798	$	43,780	$	30,437

- 42 -

Q3 2016 compared to Q3 2015

Non-interest income totaled $16.8 million in the third quarter of 2016, an increase from $10.8 million in the same period of 2015. Service charges and fees on deposit accounts increased by $2.2 million primarily due to the addition of acquired NewBridge deposit accounts. Mortgage banking income improved by $2.5 million as a result of strong local housing markets within the Company's footprint, a favorable interest rate environment for mortgage activity and the addition of NewBridge mortgage bankers. Income from bank-owned life insurance increased $957 thousand during the third quarter of 2016 following the deaths of individuals insured by the Company.

Year-to-Date

Non-interest income totaled $43.8 million in the nine months ended September 30, 2016, an increase from $30.4 million in the same period of 2015. Service charges and fees on deposit accounts increased by $5.5 million primarily due to the addition of acquired NewBridge deposit accounts. Mortgage banking income improved by $5.0 million as a result of strong local housing markets within the Company's footprint, the expansion of that footprint following the NewBridge Merger, a favorable interest rate environment for mortgage activity, and a gain on the sale of certain conforming residential mortgage loans previously held in the NewBridge loan portfolio. Other non-interest income increased $1.3 million, primarily due to improved wealth and brokerage income. Income from bank-owned life insurance increased $1.3 million during 2016 due to the addition of the NewBridge BOLI program and the deaths of individuals insured by the Company.

Non-Interest Expense

The following table provides a summary of non-interest expense for the periods presented.

	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2016		2015		2016		2015
Salaries and employee benefits	$	23,102	$	14,528	$	64,081	$	45,121
Occupancy and equipment	7,041		4,641		19,891		14,077
Data processing	2,779		1,851		7,702		5,668
FDIC deposit insurance premiums	1,473		732		3,064		2,218
Professional services	1,426		1,196		4,081		3,695
Foreclosed asset expense, net	342		277		790		910
Loan, collection, and repossession expense	1,133		931		3,270		2,717
Merger and conversion costs	7,177		104		24,043		299
Restructuring charges	—		50		46		3,251
Amortization of other intangible assets	1,628		761		4,352		2,353
Other	4,957		3,777		14,747		11,813
Total non-interest expense	$	51,058	$	28,848	$	146,067	$	92,122

Q3 2016 compared to Q3 2015

Non-interest expense totaled $51.1 million in the third quarter of 2016, an increase from $28.8 million in the third quarter of 2015. The increase reflected the impact of the NewBridge Merger and included a $7.1 million increase in merger and conversion costs, which include professional fees, personnel costs, technology and facility costs, and other expenses related to the NewBridge Merger and the proposed merger with FNB. Operating non-interest expense, which excludes merger and conversion costs and restructuring charges, increased from $28.7 million in the third quarter of 2015 to $43.9 million in the third quarter of 2016. Salaries and employee benefits, occupancy and equipment, data processing, and other non-interest expense categories all increased as a result of the NewBridge Merger, which added employees, branch and other facilities, and equipment to the Company's expense base.

Operating efficiency ratio, which excludes merger and conversion costs and restructuring charges, improved from 57.3 percent in the third quarter of 2015 to 54.3 percent in the third quarter of 2016. In an effort to improve operating efficiency, the Company closed ten branches in late Q2 2016. The previously announced systems integration to combine the legacy NewBridge systems and Yadkin systems (originally scheduled for September 2016), will now be completed following the FNB Merger.

- 43 -

Year-to-Date

Non-interest expense totaled $146.1 million in the nine months ended September 30, 2016, an increase from $92.1 million the same period of 2015. Merger and conversion costs, which includes professional fees, personnel, facility and technology costs, increased $23.7 million during 2016. Operating non-interest expense, which excludes merger and conversion costs and restructuring charges, increased from $88.6 million in the nine months ended September 30, 2015 to $122.0 million in the same period of 2016, reflecting the impact of the NewBridge Merger. Salaries and employee benefits, occupancy and equipment, data processing, and other non-interest expense categories all increased as a result of the NewBridge Merger, which added employees, branch and other facilities, and equipment to the Company's existing expense base beginning March 1, 2016.

Income Taxes

Q3 2016 compared to Q3 2015

Income tax expense was $10.4 million in the third quarter of 2016 compared to $7.9 million in the third quarter of 2015. The Company's effective tax rate totaled 39.1 percent in the third quarter of 2016 compared to 40.1 percent in the third quarter of 2015. During both periods, the Company recorded additional income tax expense for adjustments to its deferred tax assets and liabilities resulting from anticipated reductions in the North Carolina corporate income tax rate. During the third quarter of 2016, the effective tax rate benefited from renewable energy tax credit investments made in late 2015, which had a favorable impact on income tax expense during 2016.

Year-to-Date

Income tax expense was $24.6 million in the nine months ended September 30, 2016 compared to $19.8 million in the same period of 2015. The Company's effective tax rate totaled 37.2 percent in the nine months ended September 30, 2016 compared to 37.7 percent in the same period of 2015.

Analysis of Financial Condition

The NewBridge Merger significantly impacted each major component of the Company's balance sheet. The following table summarizes the year-to-date changes in major balance sheet components, including and excluding the acquired NewBridge balances.

(Dollars in thousands)	September 30, 2016			December 31, 2015			YTD Change			Acquired NewBridge Balances		YTD Change Excluding Acquired NewBridge Balances
Cash and cash equivalents	$	162,278		$	111,918		$	50,360		$	45,143	$	5,217
Investment securities	1,004,807			728,314			276,493			442,696		(166,203		)
Loans held for sale	85,964			47,287			38,677			13,661		25,016
Loans	5,253,309			3,076,544			2,176,765			2,061,136		115,629
Allowance for loan losses	(12,142		)	(9,769		)	(2,373		)	—		(2,373		)
Other assets	856,864			519,850			337,014			403,530		(66,516		)
Total assets	$	7,351,080		$	4,474,144		$	2,876,936		$	2,966,166	$	(89,230	)
Deposits	$	5,310,028		$	3,310,297		$	1,999,731		$	1,990,109	$	9,622
Short-term borrowings	791,721			375,500			416,221			472,335		(56,114		)
Long-term debt	164,215			194,967			(30,752		)	31,724		(62,476		)
Other liabilities	71,009			30,831			40,178			40,662		(484		)
Total liabilities	6,336,973			3,911,595			2,425,378			2,534,830		(109,452		)
Shareholders' equity	1,014,107			562,549			451,558			431,336		20,222
Total liabilities and shareholders' equity	$	7,351,080		$	4,474,144		$	2,876,936		$	2,966,166	$	(89,230	)

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Investment Activities

The Company's investment portfolio plays a major role in the management of liquidity and interest rate sensitivity and, therefore, is managed in the context of the overall balance sheet. In general, the primary goals of the investment portfolio are: (i) to provide a sufficient margin of liquid assets to meet unanticipated deposit and loan fluctuations and overall funds management objectives; (ii) to provide eligible securities to secure public funds as prescribed by law and other borrowings; (iii) to provide structures and terms to enable proper interest rate risk management; and (iv) to earn the maximum return on funds invested that is commensurate with meeting the requirements of (i), (ii) and (iii). The Company invests in securities as allowable under bank regulations and its investment policy. These securities include obligations of the U.S. Treasury, U.S. government agencies, U.S. government-sponsored entities, including mortgage-backed securities, bank eligible obligations of state or political subdivisions, bank eligible corporate bonds, Volcker Rule-compliant collateralized loan obligations ("CLOs"), privately-issued residential and commercial mortgage-backed securities, limited types of mutual funds, and equity securities.

The amortized cost and fair value of the available-for-sale securities portfolio were $958.3 million and $966.0 million, respectively, as of September 30, 2016, compared to $694.5 million and $689.1 million, respectively, as of December 31, 2015. The amortized cost and fair value of the held-to-maturity securities portfolio was $38.8 million and $40.7 million, respectively, as of September 30, 2016 compared to $39.2 million and $40.5 million, respectively, as of December 31, 2015.

Available-for-sale marketable investment securities are recorded at fair value with unrealized gains and losses reflected in accumulated other comprehensive income. As of September 30, 2016 and December 31, 2015, the available-for-sale securities portfolio had $10.6 million and $2.2 million, respectively, of unrealized gains and $2.9 million and $7.6 million, respectively, of unrealized losses. Marketable investment securities accounted for as held to maturity are recorded at amortized cost.

The securities in an unrealized loss position as of September 30, 2016 continue to perform and are expected to perform through maturity, and the issuers have not experienced significant adverse events that would call into question their ability to repay these debt obligations according to contractual terms. Management concluded that unrealized losses did not represent other-than-temporary impairment as of September 30, 2016.

The following table summarizes the amortized cost and fair value of the securities portfolio.

	September 30, 2016				December 31, 2015
(Dollars in thousands)	Amortized Cost		Fair  Value		Amortized Cost		Fair Value
Securities available for sale:
GSE obligations	$	17,595	$	17,715	$	5,980	$	5,982
SBA-guaranteed securities	18,125		18,321		12,114		12,176
Mortgage-backed securities issued by GSEs	529,554		534,591		440,654		435,625
Municipal bonds	129,300		131,198		55,402		55,800
Corporate bonds	184,954		185,832		123,669		123,532
Collateralized loan obligations	50,511		50,529		50,538		50,483
Non-agency RMBS	—		—		3,528		3,663
Non-agency CMBS	16,366		16,360		—		—
Certificates of deposit	743		743		245		245
Equity securities	11,109		10,671		2,381		1,626
Total securities available for sale	$	958,257	$	965,960	$	694,511	$	689,132
Securities held to maturity:
Municipal bonds	$	38,847	$	40,681	$	39,182	$	40,500

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The table below summarizes the amortized cost of debt securities in the investment portfolio as of September 30, 2016, segregated by major category with ranges of maturitiesand average yields. Mortgage-backed securities, and other similar securities collateralized by loan pools which are not due at a single maturity date, have been included in maturity groupings based on weighted average maturities of the underlying collateral, anticipating future prepayments.

	1 Year or Less				Over 1 to 5 Years				Over 5 to 10 Years				More than 10 Years				Total
(Dollars in thousands)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Securities available for sale:
GSE obligations	$	6,012	1.10	%	$	7,342	1.55	%	$	4,361	2.26	%	$	—	—	%	$	17,715	1.57	%
SBA-guaranteed securities	—		—		3,826		2.70		14,495		2.37		—		—		18,321		2.44
Mortgage-backed securities	3,088		1.28		472,501		1.94		68,026		2.49		7,336		2.51		550,951		2.01
Municipal bonds (1)	7,317		4.23		44,543		2.64		68,347		3.01		10,991		5.92		131,198		3.19
Corporate bonds	31,955		2.85		114,829		3.06		34,530		3.67		4,518		3.67		185,832		3.15
Collateralized loan obligations	—		—		—		—		50,529		2.75		—		—		50,529		2.75
Certificates of deposit	743		0.50		—		—		—		—		—		—		743		0.50
Total debt securities available for sale	$	49,115	2.71	%	$	643,041	2.19	%	$	240,288	2.85	%	$	22,845	4.38	%	$	955,289	2.44	%
Securities held to maturity:
Municipal bonds (1)	$	1,010	3.45	%	$	30,046	3.86	%	$	4,039	4.11	%	$	3,752	5.79	%	$	38,847	4.06	%

(1) Yields are calculated on a taxable equivalent basis using the statutory federal income tax rate of 35 percent. Yields are calculated based on the amortized cost of the securities.

As of September 30, 2016, the weighted average life of the Company's debt securities was 4.6years, and the weighted average effective duration was 2.8years.

The Company owned $41.7 million and $24.8 million of Federal Home Loan Bank ("FHLB") stock as of September 30, 2016 and December 31, 2015, respectively. The FHLB stock is recorded at cost and is classified separately from investment securities on the consolidated balance sheets.

Lending Activities

The primary goal of the Company's lending function is to help clients achieve their financial goals by providing quality loan products that are fair to the client and profitable to the Company. In addition to the importance placed on client knowledge and continuous involvement with clients, the Company's lending process incorporates the standards of a consistent company-wide credit culture and an in-depth knowledge of our local markets. Furthermore, the Company employs strict underwriting criteria governing the degree of assumed risk and the diversity of the loan portfolio. In this context, the Company strives to meet the credit needs of businesses and consumers in its markets while pursuing a balanced strategy of loan profitability, loan growth, and loan quality.

The Company provides a wide range of business and consumer loans in the markets it serves. Its objective is to have a well-diversified and balanced portfolio of business and consumer loans. In order to manage loan portfolio risk, the Company has established concentration limits by borrower, product type, loan structure, and industry. The majority of business loans are secured by business assets and real estate supported in most cases by personal guarantees. Consumer loans are primarily secured with personal assets and real estate. Underwriting is primarily focused on the underlying cash flow of the business or consumer and secondarily on assets securing the loans.

Loans, net of deferred loan fees, totaled $5.25 billion as of September 30, 2016, an increase of $2.18 billion from December 31, 2015. Excluding acquired NewBridge loans, the YTD increase in loan balances was $115.6 million. The following table provides a summary of the Company’s loan portfolio composition by loan type.

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Composition of Loan Portfolio:	September 30, 2016		December 31, 2015
Commercial:
Commercial real estate	47.6	%	46.8	%
Commercial and industrial	14.5		16.2
Construction and development	8.4		12.8
Consumer:
Residential real estate	12.7		12.4
Construction and development	5.5		1.0
Home equity	10.0		9.5
Consumer	1.2		1.3
Total	100.0	%	100.0	%

The following table summarizes the scheduled maturities of loans separated by fixed and variable rate loans.

	September 30, 2016
(Dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction and Development		Residential Real Estate		Consumer Construction		Home Equity		Consumer		Total
Fixed Rate: (1)
1 year or less	$	129,645	$	35,321	$	16,123	$	39,097	$	13,195	$	2,180	$	6,252	$	241,813
1-5 years	1,206,056		183,000		82,592		188,177		70,032		1,494		25,662		1,757,013
After 5 years	536,469		65,418		42,114		181,295		18,454		1,351		25,393		870,494
Total	1,872,170		283,739		140,829		408,569		101,681		5,025		57,307		2,869,320
Variable Rate: (1)
1 year or less	79,428		182,906		212,827		11,319		60,407		17,815		5,515		570,217
1-5 years	400,454		218,431		74,397		24,425		103,358		98,661		965		920,691
After 5 years	152,404		79,244		11,037		220,772		24,069		405,281		1,745		894,552
Total	632,286		480,581		298,261		256,516		187,834		521,757		8,225		2,385,460
Total loans	$	2,504,456	$	764,320	$	439,090	$	665,085	$	289,515	$	526,782	$	65,532	$	5,254,780

(1) Loan maturities are presented based on the final contractual maturity of each loan and do not reflect contractual principal payments prior to maturity on amortizing loans.

Loans acquired with evidence of credit deterioration since origination are accounted for as PCI loans. Where possible, PCI loans with common risk characteristics are grouped into pools at acquisition. For PCI loan pools, the excess of the cash flows initially expected to be collected over the fair value of the loans at the acquisition date (i.e., the accretable yield) is accreted into interest income over the estimated remaining life of the PCI loans using the effective yield method, provided that the timing and the amount of future cash flows is reasonably estimable. Accordingly, such loans are not classified as nonaccrual and they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference. The recorded investment in PCI loans as of September 30, 2016 totaled $183.3 million, of which $182.3 million were grouped into pools and $991 thousand were accounted for on an individual loan basis. The recorded investment in PCI loans as of December 31, 2015 totaled $142.0 million, of which $141.2 million were grouped into pools and $855 thousand were accounted for on an individual loan basis.

Due to the significance of the acquired loan portfolio and related acquisition accounting adjustments, the Company's current period credit metrics and ratios may not be comparable to those in prior periods or to credit metrics and ratios reported by other financial institutions. Specifically, (i) ALLL to total loans, (ii) ALLL to nonperforming loans, (iii) nonperforming loans to total loans, (iv) nonperforming assets to total assets, and (v) net charge-offs to average loans may not be comparable to prior periods or other financial institutions.

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Nonperforming Assets

Loans are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. Loans are generally classified as nonaccrual if they are past due for a period of 90 days or more, unless such loans are well secured and in the process of collection. If a loan or a portion of a loan is classified as doubtful or as partially charged off, the loan is generally classified as nonaccrual. Loans that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal and/or interest is in doubt. Loans may be returned to accrual status when all principal and interest amounts contractually due are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance of interest and principal by the borrower in accordance with the contractual terms.

PCI loans with common risk characteristics are grouped in pools at acquisition. These loans are evaluated for accrual status at the pool level rather than the individual loan level and performance is based on management's ability to reasonably estimate the amount and timing of future cash flows rather than a borrower's ability to repay contractual loan amounts. Since management is able to reasonably estimate the amount and timing of future cash flows on the Company's PCI loan pools, none of these loans have been identified as nonaccrual. However, PCI loans included in pools are identified as nonperforming if they are past due 90 days or more at acquisition or become 90 days or more past due after acquisition. The past due status is determined based on the contractual terms of the individual loans.

While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to the principal outstanding, except in the case of loans with scheduled amortizations where the payment is generally applied to the oldest payment due. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan had been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered.

Assets acquired as a result of foreclosure are recorded at estimated fair value in other real estate (or foreclosed assets). Any excess of cost over estimated fair value at the time of foreclosure is charged to the allowance for loan losses. Valuations are periodically performed on these properties, and any subsequent write-downs are charged to earnings. Routine maintenance and other holding costs are included in non-interest expense.

Loans, excluding pooled PCI loans, are classified as troubled debt restructurings (“TDR”) by the Company when certain modifications are made to the loan terms and concessions are granted to the borrowers due to financial difficulty experienced by those borrowers. The Company grants concessions by (1) reduction of the stated interest rate for the remaining original life of the debt or (2) extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk. The Company does not generally grant concessions through forgiveness of principal or accrued interest. The Company’s policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance. That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is likely. If a borrower was materially delinquent on payments prior to the restructuring but shows the capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual until there is demonstrated performance under new terms. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on non-accrual status. The Company closely monitors these loans and ceases accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms.

PCI loans that were classified as TDRs prior to acquisition are not classified as TDRs by the Company after the acquisition date. Subsequent modification of a PCI loan accounted for in a pool that would otherwise meet the definition of a TDR is not reported, or accounted for, as a TDR since pooled PCI loans are excluded from the scope of TDR accounting. A PCI loan not accounted for in a pool would be reported, and accounted for, as a TDR if modified in a manner that meets the definition of a TDR after the acquisition date.

Other assets, including purchased accounts receivable, are characterized as nonperforming when repayment by the issuer of all amounts due is uncertain.

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Nonperforming loans as a percentage of total loans was 0.77 percent as of September 30, 2016, compared to 1.06 percent as of December 31, 2015 and 1.25 percent as of September 30, 2015. The reduction as of September 30, 2016 reflects the growth in total loans following the NewBridge Merger and the foreclosure of property that was securing a large commercial real estate loan during the third quarter.

Total nonperforming assets as a percentage of total assets was 1.09 percent as of September 30, 2016, compared to 1.07 percent as of December 31, 2015 and 1.12 percent as of September 30, 2015. Acquired PCI loans that are included in loan pools are reclassified at acquisition to accrual status and thus are not included as nonperforming assets unless they are 90 days or greater past due.

The following table summarizes the Company's nonperforming assets as of the dates presented.

(Dollars in thousands)	September 30, 2016		December 31, 2015
Nonaccrual loans
Commercial:
Commercial real estate	$	6,903	$	6,130
Commercial and industrial	12,916		4,126
Construction and development	805		468
Consumer:
Residential real estate	5,499		5,353
Construction and development	58		1,324
Home equity	4,731		3,245
Other consumer	288		548
Total nonaccrual loans	31,200		21,194
Accruing loans past due 90 days or more (1)	9,162		11,337
Total nonperforming loans	40,362		32,531
Nonperforming purchased accounts receivable	7,907		—
Other real estate:
Residential real estate	2,416		1,784
All other real estate	29,310		13,562
Total nonperforming assets	$	79,995	$	47,877
Restructured loans not included above	$	5,585	$	5,609

(1)    Balances include PCI loans past due 90 days or more that are grouped in pools which accrue interest based on pool yields. 

As of September 30, 2016, nonperforming assets includes a $7.9 million purchased accounts receivable. As discussed in Note F, there was no contingency accrual related to this potential exposure as of September 30, 2016. The Company has discontinued its investment in purchased accounts receivable.

Allowance for Loan Losses

The ALLL is a reserve established through a provision for probable loan losses charged to expense. Balances are charged against the ALLL when the collectability of principal is unlikely. Subsequent recoveries, if any, are credited to the ALLL. The ALLL is maintained at a level based on management's best estimate of probable credit losses that are inherent in the loan portfolio. Management evaluates the adequacy of the ALLL on at least a quarterly basis.

For non-PCI loans, the evaluation of the adequacy of ALLL includes both loans evaluated collectively for impairment and loans evaluated individually for impairment. For loans evaluated collectively for impairment, loans are grouped based on common risk characteristics which include loan type and risk grade. Historical loss rates are calculated based on the historical probability of default ("PD") and loss given default ("LGD") for each loan grouping. PDs represent the likelihood that a loan will default within a one year period of time, and LGDs represent the estimated magnitude of loss the Company will incur if a loan defaults. A loan is considered to be in default if it becomes 90 days or more past due, meets the criteria for nonaccrual status, or incurs a charge-off. Historical loss rates are developed with four years of trailing default and loss data. These historical loss rates are then combined with certain qualitative factors to determine ALLL reserve rates for each loan grouping. Qualitative factors include consideration of certain internal and external factors, such as loan delinquency levels and trends, loan growth, loan portfolio composition and concentrations, local and national economic conditions, the loan review function, and other factors management deems relevant to the ALLL calculation.

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A loan, excluding PCI loans, is considered individually impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Reserves, or charge-offs, on individually impaired loans that are collateral dependent are based on the fair value of the underlying collateral, less an estimate of selling costs, while reserves, or charge-offs, on loans that are not collateral dependent are based on either an observable market price, if available, or the present value of expected future cash flows discounted at the historical effective interest rate. PCI loans within pools are not evaluated individually for impairment.

The following table presents the allocation of ALLL for the periods presented.

	September 30, 2016				December 31, 2015
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Commercial:
Commercial real estate	$	4,539	37.3	%	$	3,682	37.7	%
Commercial and industrial	3,451		28.4		2,431		24.9
Construction and development	1,396		11.5		866		8.9
Consumer:
Residential real estate	1,063		8.8		1,257		12.9
Construction and development	322		2.7		237		2.4
Home equity	997		8.2		883		9.0
Consumer	374		3.1		413		4.2
Total allowance for loan losses	$	12,142	100.0	%	$	9,769	100.0	%

The following table summarizes changes in ALLL for the periods presented.

	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2016			2015			2016			2015
ALLL, beginning of period	$	11,633		$	8,358		$	9,769		$	7,817
Charge-offs:
Commercial:
Commercial real estate	171			103			262			359
Commercial and industrial	1,661			406			3,096			1,377
Construction and development	32			134			147			201
Consumer:
Residential real estate	292			312			509			442
Home equity	325			475			667			793
Consumer	266			101			711			349
Total charge-offs	2,747			1,531			5,392			3,521
Recoveries:
Commercial:
Commercial real estate	33			44			39			56
Commercial and industrial	81			429			158			679
Construction and development	12			10			40			20
Consumer:
Residential real estate	74			57			267			109
Construction and development	1			—			1			27
Home equity	29			9			31			163
Consumer	29			48			59			119
Total recoveries	259			597			595			1,173
Net charge-offs	2,488			934			4,797			2,348
Provision for loan losses	2,997			1,576			7,170			3,531
ALLL, end of period	$	12,142		$	9,000		$	12,142		$	9,000
Net charge-offs to average loans (annualized)	0.18		%	0.12		%	0.12		%	0.11		%

The ALLL to total loans ratio was 0.23 percent as of September 30, 2016 compared to 0.20 percent as of December 31, 2015. The higher ALLL ratio was due to origination activity. Adjusted ALLL, which includes ALLL as well as net acquisition fair value adjustments for acquired loans, declined from 2.54 percent of total loans as of December 31, 2015 to 1.29 percent of total loans as of September 30, 2016. Changes in the ALLL and adjusted ALLL were also influenced by decreases in historical loss rates used in the ALLL model and adjustments to the ALLL model's qualitative factors.

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The following non-GAAP reconciliation provides a calculation of the adjusted ALLL and the related adjusted ALLL as a percentage of total loans for the periods presented.

(Dollars in thousands)	September 30, 2016			December 31, 2015
Allowance for loan losses	$	12,142		$	10,231
Net acquisition accounting fair value discounts to loans	55,787			68,063
Adjusted allowance for loan losses (Non-GAAP)	$	67,929		$	78,294
Divided by: total loans	$	5,253,309		$	3,076,544
Adjusted allowance for loan losses to loans (Non-GAAP)	1.29		%	2.54		%

Deposit Activities

Deposits are the primary source of funds for the Company's lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including non-interest bearing checking accounts, interest bearing checking accounts, savings accounts, money market accounts, IRAs and CDs. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company's primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of September 30, 2016 and December 31, 2015, brokered deposits represented 13.6 percent and 13.2 percent, respectively, of total deposits.

Total deposits as of September 30, 2016 were $5.31 billion, which was an increase of $2.00 billion from December 31, 2015. Excluding acquired NewBridge deposits, the increase in deposit balances was $9.6 million. As of September 30, 2016 and December 31, 2015, the Company had outstanding time deposits under $100 thousand of $556.0 million and $335.3 million, respectively, and time deposits over $100 thousand of $841.1 million and $682.6 million, respectively.

The table below provides a summary of the Company’s deposit portfolio by deposit type.

Composition of Deposit Portfolio:	September 30, 2016		December 31, 2015
Non-interest demand	21.6	%	22.5	%
Interest-bearing demand	21.7		15.8
Money market and savings	30.3		31.0
Time deposits	26.4		30.7
Total	100.0	%	100.0	%

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The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the periods presented.

	Three months ended September 30,
	2016						2015
(Dollars in thousands)	Average Balance		% of Total		Average Rate		Average Balance		% of Total		Average Rate
Non-interest demand	$	1,180,832	22.3	%	—	%	$	718,989	22.1	%	—	%
Interest-bearing demand	1,088,490		20.6		0.19		487,173		14.9		0.11
Money market and savings	1,639,707		31.0		0.32		996,357		30.6		0.28
Time deposits	1,387,752		26.1		0.85		1,056,806		32.4		0.85
Total average deposits	$	5,296,781	100.0	%	0.36	%	$	3,259,325	100.0	%	0.38	%
	Nine months ended September 30,
	2016						2015
(Dollars in thousands)	Average Balance		% of Total		Average Rate		Average Balance		% of Total		Average Rate
Non-interest demand	$	1,064,228	21.8	%	—	%	$	684,516	21.1	%	—	%
Interest-bearing demand	990,417		20.3		0.18		477,879		14.8		0.13
Money market and savings	1,474,898		30.3		0.30		999,081		30.9		0.29
Time deposits	1,344,247		27.6		0.80		1,075,072		33.2		0.80
Total average deposits	$	4,873,790	100.0	%	0.35	%	$	3,236,548	100.0	%	0.37	%

The overall mix of deposits has shifted to a higher percentage of interest-bearing demand balances with reductions in the percentage of deposits held in time deposit accounts. The Company believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of deposits was 0.36 percent in the third quarter of 2016 compared to 0.38 percent in the third quarter of 2015, the change resulting from changes in deposit mix and rates.

Borrowings and Long-Term Debt

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital. Short-term borrowings, which consist of FHLB advances maturing within twelve months and a structured repurchase agreement acquired from NewBridge which matures in December 2016, increased by $416.2 million since December 31, 2015. However, excluding acquired NewBridge funds, short-term borrowings decreased by $56.1 million as the Company used deposit growth and cash flows from the investment portfolio to reduce its borrowed funds balances.

Long-term debt decreased by $30.8 million since December 31, 2015, and, excluding acquired NewBridge obligations, long-term debt decreased by $62.5 million. Long-term debt includes FHLB advances maturing beyond one year, subordinated debt, junior subordinated debt to unconsolidated trusts ("TRUPs"), and capital lease obligations. After the NewBridge Merger, the Company began the process of extending and laddering out maturities on certain acquired FHLB advances to better balance the Company's liquidity and interest rate risk profile. All NewBridge FHLB advances at acquisition were set to mature within twelve months.

Shareholders’ Equity

Total shareholders’ equity was $1.01 billion as of September 30, 2016, an increase of $451.6 million from December 31, 2015. The increase was due to $431.3 million of net assets acquired in the NewBridge Merger, $41.5 million of net income earned during 2016, and $4.5 million of net other comprehensive income, partially offset by $29.3 million of common stock dividends.

Liquidity

Liquidity management involves the ability to fund the needs and requirements of depositors and borrowers, fund loan commitments, pay operating expenses, and ensure compliance with regulatory liquidity requirements. To ensure the Company is positioned to meet immediate and future cash demands, management regularly evaluates the Company's deposit mix and trends and relies on various internal analyses of its liquidity, which includes liquidity stress testing as well as short-term and long-term liquidity planning. The Company's liquidity management is governed by its liquidity policy and contingent funding plan which are both approved annually by the Board of Directors.

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Investment portfolio principal payments and maturities, loan principal payments, deposit growth, brokered deposit sources, available borrowings from the FHLB, and various federal funds lines from correspondent banks are the primary sources of liquidity for the Bank. The primary uses of liquidity are repayments of borrowings, deposit maturities and withdrawals, disbursements of loan proceeds, and investment purchases.

The primary sources of liquidity at the holding company are dividend distributions from the Bank. In addition, the holding company maintains a loan agreement with a correspondent bank providing for a revolving loan of up to an aggregate principal amount of $10.0 million. Borrowings under the loan agreement accrue interest at LIBOR plus 4.0 percent. The loan agreement will expire on July 1, 2017. However, the Company may extend the maturity date by twelve months so long as it is not in default under the loan agreement. The obligations of the loan agreement are secured by, among other things, a pledge of all of the capital stock of the Bank. The primary uses of liquidity at the holding company are common stock dividends, debt payments on its subordinated debt and TRUPs, and operating expenses.

As of September 30, 2016, the Company's most liquid assets (which include cash and due from banks, interest-earning deposits with banks, federal funds sold, and investment securities available for sale) totaled $1.13 billion, which represented 15.3 percent of total assets and 21.2 percent of total deposits. Supplementing this on-balance sheet liquidity, the Company had available off-balance sheet liquidity in the form of secured and unsecured lines of credit from various correspondent banks which totaled $555.8 million as of September 30, 2016. As of September 30, 2016, outstanding commitments for undisbursed lines of credit and letters of credit totaled $1.49 billion, and standby letters of credit issued by the FHLB on the Bank's behalf totaled $31.0 million. Management believes that the aggregate liquidity position of the Company is sufficient to meet deposit maturities and withdrawals, borrowing commitments, loan funding requirements, and operating expenses. Core deposits (total deposits less brokered deposits), one of the Company's most stable sources of liquidity, together with common equity capital funded $5.60 billion, or 76 percent, of total assets as of September 30, 2016 compared to $3.43 billion or 77 percent of total assets as of December 31, 2015.

Contractual Obligations

The following table presents the Company's significant fixed and determinable contractual obligations by payment date. The payment amounts represent those amounts contractually due to the recipient. The table excludes liabilities recorded where management cannot reasonably estimate the timing of any payments that may be required in connection with these liabilities.

	September 30, 2016
(Dollars in thousands)	1 Year or Less		Over 1 to 3 Years		Over 3 to 5 Years		More Than 5 Years		Total
Time deposits	$	261,237	$	821,501	$	281,131	$	33,205	$	1,397,074
Short-term borrowings	791,721		—		—		—		791,721
Long-term debt (includes capital leases)	579		54,742		5,000		103,894		164,215
Operating leases	5,744		9,710		3,590		2,257		21,301
Total contractual obligations	$	1,059,281	$	885,953	$	289,721	$	139,356	$	2,374,311

Capital

The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. The Company's principal goals related to the maintenance of capital are to provide adequate capital to support the Company's risk profile, provide financial flexibility to support future growth and client needs, comply with relevant laws, regulations, and supervisory guidance, and provide a competitive return to shareholders.

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The Company's and the Bank’s capital amounts and ratios as of September 30, 2016 are presented in the table below.

(Dollars in thousands)	Actual				Minimum for Capital Adequacy Purposes				Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Yadkin Financial Corporation
Total risk-based capital	$	726,253	11.86	%	$	489,968	8.00	%	N/A		N/A
Tier 1 risk-based capital	655,975		10.71	%	367,476		6.00	%	N/A		N/A
Common equity Tier 1	631,776		10.32	%	275,607		4.50	%	N/A		N/A
Tier 1 leverage capital	655,975		9.40	%	279,042		4.00	%	N/A		N/A
Yadkin Bank
Total risk-based capital	$	722,585	11.87	%	$	487,173	8.00	%	$	608,966	10.00	%
Tier 1 risk-based capital	706,438		11.60	%	365,380		6.00	%	487,173		8.00	%
Common equity Tier 1	706,438		11.60	%	274,035		4.50	%	395,828		6.50	%
Tier 1 leverage capital	706,438		10.12	%	279,146		4.00	%	348,933		5.00	%

On October 19, 2016, the Company's Board of Directors declared a regular quarterly cash dividend of $0.10 per share of its outstanding unrestricted common stock, payable November 17, 2016, to shareholders of record as of November 10, 2016. Similar dividends were declared and paid during the first and second quarters of 2016. Additionally, on February 15, 2016, the Company declared an extraordinary special cash dividend of $0.50 per share of its outstanding unrestricted common stock, which was paid on March 7, 2016 to shareholders of record as of February 29, 2016.

The Company's tangible book value per common share was $12.47 as of September 30, 2016, compared to $12.51 as of December 31, 2015. Tangible common equity to tangible assets was 9.24 percent as of September 30, 2016, compared to 9.21 percent as of December 31, 2015. The following table presents the calculation of tangible book value per common share and tangible common equity to tangible assets, which are both non-GAAP financial metrics.

(Dollars in thousands, except per share amounts)	September 30, 2016			December 31, 2015
Total shareholders' equity	$	1,014,107		$	562,549
Less: Goodwill and other intangible assets, net	368,666			165,731
Tangible common equity (Non-GAAP)	$	645,441		$	396,818
Common shares outstanding	51,750,138			31,726,767
Tangible book value per share (Non-GAAP)	$	12.47		$	12.51
Total assets	$	7,351,080		$	4,474,144
Less: Goodwill and other intangible assets, net	368,666			165,731
Tangible assets (Non-GAAP)	$	6,982,414		$	4,308,413
Tangible common equity to tangible assets (Non-GAAP)	9.24		%	9.21		%

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Forward-Looking Information

This periodic report on Form 10-Q 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, risks related to the proposed merger with F.N.B. Corporation, 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; our ability to achieve the estimated synergies from the NewBridge Acquisition and once integrated, the effects of such business combination on our future financial condition, operating results, strategy and plans; our ability to integrate NewBridge on our schedule and budget;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 periodic report on Form 10-Q speak only as of the date of this periodic report, and the Company does not assume any obligation to update such forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company intends to reach its strategic financial objectives through the effective management of market risk. Like many financial institutions, the Company’s most significant market risk exposure is interest rate risk. The Company's primary goal in managing interest rate risk is to minimize the effect that changes in market interest rates have on earnings and capital. This goal is accomplished through the active management of the balance sheet. The goal of these activities is to structure the maturity and repricing of assets and liabilities to produce stable net interest income despite changing interest rates. The Company's overall interest rate risk position is governed by policies approved by the Board of Directors and guidelines established and monitored by the Bank’s Asset/Liability Committee (“ALCO”).

To measure, monitor, and report on interest rate risk, the Company begins with two models: (1) net interest income ("NII") at risk, which measures the impact on NII over the next twelve and twenty-four months to immediate changes in interest rates and (2) net economic value of equity ("EVE"), which measures the impact on the present value of net assets to immediate changes in interest rates. NII at risk is designed to measure the potential short-term impact of changes in interest rates on NII. EVE is a long-term measure of interest rate risk to the Company's balance sheet, or equity. Gap analysis, which is the difference between the amount of balance sheet assets and liabilities repricing within a specified time period, is used as a secondary measure of the Company's interest rate risk position. All of these models are subject to ALCO guidelines and are monitored regularly.

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In calculating NII at risk, the Company begins with a base amount of NII that is projected over the next twelve and twenty-four months, assuming that the balance sheet is static and the yield curve remains unchanged over the period. The current yield curve is then “shocked,” or moved immediately, ±1.0 percent, ±2.0 percent, ±3.0 percent and ±4.0 percent in a parallel fashion, or at all points along the yield curve. New twelve-month and twenty four-month NII projections are then developed using the same balance sheet but with the new yield curves, and these results are compared to the base scenario. The Company also models other scenarios to evaluate potential NII at risk such as a gradual ramp in interest rates, a flattening yield curve, a steepening yield curve, and others that management deems appropriate.

EVE at risk is based on the change in the present value of all assets and liabilities under different interest rate scenarios. The present value of existing cash flows with the current yield curve serves as the base case. The Company then applies an immediate parallel shock to that yield curve of ±1.0 percent, ±2.0 percent, ±3.0 percent and ±4.0 percent and recalculates the cash flows and related present values.

Key assumptions used in the models described above include the timing of cash flows, the maturity and repricing of assets and liabilities, changes in market conditions, and interest-rate sensitivities of the Company's non-maturity deposits with respect to interest rates paid and the level of balances. These assumptions are inherently uncertain and, as a result, the models cannot precisely calculate future NII or predict the impact of changes in interest rates on NII and EVE. Actual results could differ from simulated results due to the timing, magnitude and frequency of changes in interest rates and market conditions, changes in spreads and management strategies, among other factors. Projections of NII are assessed as part of the Company's forecasting process.

NII and EVE Analysis. The following table presents the estimated exposure to NII for the next twelve months due to immediate changes in interest rates and the estimated exposure to EVE due to immediate changes in interest rates. All information is presented as of September 30, 2016.

	September 30, 2016
(Dollars in thousands)	Estimated Exposure to NII		Estimated Exposure to EVE
Immediate change in interest rates:
+ 4.0%	9.88	%	(3.26	)%
+ 3.0%	7.56		(2.28	)
+ 2.0%	4.92		(1.40	)
+ 1.0%	2.21		(0.67	)
No change	—		—
- 1.0%	(0.05	)	0.31

While the measures presented in the table above are not a prediction of future NII or EVE valuations, they do suggest that if all other variables remained constant, immediate increases in interest rates at all points on the yield curve may produce higher NII in the short term. Other important factors that impact the levels of NII are balance sheet size and mix, interest rate spreads, the slope of the yield curve, the speed of interest rates changes, and management actions taken in response to the preceding conditions.

Item 4. Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(b) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of September 30, 2016. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal controls over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

The Company and Yadkin Bank have been named defendants in legal actions arising from normal business activities in which damages in various amounts are claimed. Although the amount of any unrecorded liability with respect to such matters cannot be determined, in the opinion of management, any additional liability arising from these matters will not have a material effect on Yadkin's consolidated financial statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results.

The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties unknown to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Additionally, factors related to the proposed merger with F.N.B. Corporation and damage resulting from Hurricane Matthew could cause actual results to differ materially from anticipated results. We believe that these factors include, but are not limited to, the following:

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the FNB Merger.

Before the FNB Merger and the FNB Bank Merger may be completed, Yadkin and FNB must obtain approvals from the Federal Reserve Board, the OCC and the North Carolina Commissioner of Banks. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals the regulators consider a variety of factors, including the regulatory standing of each party. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain or a delay in receiving their approval. These regulators may impose conditions on the completion of the FNB Merger or the FNB Bank Merger or require changes to the terms of the FNB Merger or the FNB Bank Merger. Such conditions or changes could delay or prevent completion of the FNB Merger or the FNB Bank Merger or imposing additional costs on or limiting the revenues of the combined company following the FNB Merger and the FNB Bank Merger, any of which might have an adverse effect on the combined company following the FNB Merger.

Combining the two companies may be more difficult, costly or time consuming than expected.

Yadkin and FNB have operated and, until the completion of the FNB Merger, will continue to operate independently. The success of the FNB Merger, including anticipated benefits and cost savings, will depend, in part, on FNB’s ability to successfully combine and integrate the businesses of FNB and Yadkin in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the FNB Merger. The loss of key employees could adversely affect Yadkin’s ability to successfully conduct its business, which could have an adverse effect on Yadkin’s financial results and the value of the Yadkin common stock. If FNB experiences difficulties with the integration process, the anticipated benefits of the FNB Merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause FNB and/or Yadkin to lose customers or cause customers to remove their accounts from FNB and/or Yadkin and move their business to competing financial institutions. Integration efforts will also divert management attention and resources. In addition, the actual cost savings of the FNB Merger could be less than anticipated.

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The FNB Merger is subject to certain closing conditions that, if not satisfied or waived, will result in the FNB Merger not being completed. Termination of the FNB Merger Agreement could negatively impact Yadkin.

The FNB Merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and adoption of the FNB Merger by Yadkin shareholders. If any condition to the FNB Merger is not satisfied or waived, to the extent permitted by law, including the absence of any materially burdensome condition in the regulatory approvals, the FNB Merger will not be completed. In addition, either FNB or Yadkin may terminate the FNB Merger Agreement under certain circumstances even if the FNB Merger is adopted by the Yadkin shareholders, including but not limited to, if the FNB Merger has not been completed on or before May 31, 2017.

If the FNB Merger Agreement is terminated, there may be various consequences. For example, Yadkin’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the FNB Merger, without realizing any of the anticipated benefits of completing the FNB Merger. Additionally, if the FNB Merger Agreement is terminated, the market price of Yadkin’s common stock could decline to the extent that the current market prices reflect a market assumption that the FNB Merger will be completed.

FNB and Yadkin will be subject to business uncertainties and contractual restrictions while the FNB Merger is pending.

The FNB Merger Agreement restricts Yadkin from operating its business other than in the ordinary course and prohibits Yadkin from taking specified actions without FNB’s consent until the FNB Merger occurs. These restrictions may prevent Yadkin from pursuing attractive business opportunities that may arise prior to the completion of the FNB Merger. In addition, uncertainty about the effect of the FNB Merger on employees and customers may have an adverse effect on Yadkin. These uncertainties may impair Yadkin’s ability to attract, retain and motivate key personnel until the FNB Merger is completed, and could cause customers and others that deal with Yadkin to seek to change existing business relationships with Yadkin. Retention of certain employees by Yadkin may be challenging while the FNB Merger is pending, as certain employees may experience uncertainty about their future roles with Yadkin. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Yadkin, Yadkin’s business could be harmed.

The uncertainty caused by the pending FNB Merger could cause Yadkin’s clients and business associates to seek to change their existing business relationships with Yadkin. These uncertainties may impair Yadkin’s ability to attract, retain and grow Yadkin’s client base until the FNB Merger is complete.

The market value of the merger consideration that Yadkin shareholders will receive as a result of the FNB Merger may fluctuate.

If the FNB Merger is completed, each share of the Yadkin common stock will be converted into the right to receive 2.16 shares of FNB common stock, and cash in lieu of any fractional shares.The market value of the merger consideration may vary from the closing price of FNB common stock on the date the FNB Merger was announced, on the date that the proxy statement/prospectus is mailed to the Yadkin shareholders, on the date of the special meeting of the Yadkin shareholders, on the date the FNB Merger is consummated and thereafter. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the respective businesses, operations and prospects, and the regulatory situation of FNB and Yadkin. Many of these factors are beyond the control of Yadkin. Any change in the market price of FNB common stock prior to completion of the FNB Merger will affect the amount of and the market value of the merger consideration that Yadkin shareholders will receive upon completion of the FNB Merger. Accordingly, at the time of the special meeting, the Yadkin shareholders will not know or be able to calculate the amount or the market value of the merger consideration they would receive upon completion of the FNB Merger.

Further, the results of operations of the combined company following the FNB Merger and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of FNB and Yadkin.

If the FNB Merger is not completed, Yadkin will have incurred substantial expenses without realizing the expected benefits of the FNB Merger.

Yadkin has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the FNB Merger Agreement, including a portion of the costs and expenses of filing, printing and mailing the joint proxy statement/prospectus relating to the FNB Merger. If the FNB Merger is not completed, Yadkin would have to recognize its portion of these expenses without realizing the expected benefits of the FNB Merger.

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The FNB Merger Agreement limits Yadkin’s ability to pursue an alternative acquisition proposal and could require Yadkin to pay a termination fee of $45 million under certain circumstances relating to alternative acquisition proposals.

The FNB Merger Agreement prohibits Yadkin from soliciting, initiating or knowingly encouraging certain alternative acquisition proposals with any third party, subject to exceptions set forth in the FNB Merger Agreement. The FNB Merger Agreement also provides for the payment by Yadkin to FNB of a termination fee in the amount of $45 million (and, in some cases, FNB’s documented out-of-pocket expenses incurred in connection with the FNB Merger) in the event that Yadkin or FNB terminates the FNB Merger Agreement for certain specified reasons. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Yadkin from considering or proposing such an acquisition.

Damage resulting from Hurricane Matthew could have a negative impact on the Company's credit risk.

Many communities in Southern and Eastern North Carolina suffered significant damage resulting from Hurricane Matthew. At this time, it is unclear to what extent Yadkin customers have been affected by uninsured business interruption, property destruction and other related losses, and how those events may affect each customer's ability to meet its debt service obligations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Shareholders and other interested parties may initiate communications with the Board, the Chairman, the Lead Independent Director, the Independent Directors as a group or any individual director or directors by writing to our Secretary at: 3600 Glenwood Avenue, Suite 300, Raleigh, North Carolina 27612. You should indicate on the outside of the envelope the intended recipient of your communication (i.e., the full Board, the Independent Directors as a group or any individual director or directors). The Board has instructed our Secretary to review such correspondence and, at her discretion, not to forward items if she deems them to be of a commercial or frivolous nature or otherwise inappropriate for the recipient's consideration.

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Item 6. Exhibits

2.1	Agreement and Plan of Merger between F.N.B. Corporation and Yadkin Financial Corporation, dated as of July 20, 2016 (incorporated by reference to Exhibit 2.1 to Yadkin Financial Corporation's Current Report on Form 8-K filed on July 21, 2016)
31.1	Certification of Principal Executive Officer pursuant to Rule 13a – 14(a).
31.2	Certification of Principal Financial Officer pursuant to Rule 13a – 14(a).
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		YADKIN FINANCIAL CORPORATION
Date:	November 8, 2016	By:	/s/ Scott M. Custer
			Scott M. Custer
			President and Chief Executive Officer
Date:	November 8, 2016	By:	/s/ Terry S. Earley
			Terry S. Earley
			Executive Vice President and Chief Financial Officer

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