EMPLOYEE AND DIRECTOR BENEFIT PLANS

The Yadkin Financial Corporation 2013 Equity Incentive Plan (the “2013 Incentive Plan”) authorized the issuance of incentive stock awards to certain employees, officers, and directors of the Company. As of December 31, 2014, no awards had been granted under the 2013 Incentive Plan. The Yadkin Valley Financial Corporation 2008 Omnibus Stock Ownership and Long Term Incentive Plan (the “2008 Stock Plan”) also authorized the issuance of awards to certain employees, officers, and directors of the Company. The awards may be issued in the form of incentive stock option grants, nonstatutory stock option grants, restricted stock awards, stock appreciation rights, and/or long term incentive compensation units. Option exercise prices are established at market value on the grant date. Vesting provisions for granted stock options and restricted stock are at the discretion of the Nominating, Compensation, and Corporate Governance Committee of the Board of Directors. Upon termination, unexercised options held by employees are forfeited and made available for future grants. The Company funds the option shares and restricted stock from authorized but unissued shares.

Stock Options

In addition to option grants pursuant to the 2008 Stock Plan, the Company has assumed outstanding stock options that had been granted under the stock option plans of acquired companies. Of the total options outstanding as of December 31, 2014, 73,413 acquired options remained exercisable at a weighted average exercise price of $32.25 per share, and 5,054 options granted under the 2008 Stock Plan were exercisable at a weighted average exercise price of $13.77 per share. As of December 31, 2014, 9,621 shares or options remained available for future issuance under the 2008 Stock Plan, and 300,000 options remained available under the 2013 Incentive Plan. There were no options granted during the year ended December 31, 2014.

A summary of stock option activity for the year ended December 31, 2014 is presented below.



	Outstanding Options			Exercisable Options
	Number	Weighted Average Option Price		Number	Weighted Average Option Price

Options outstanding at January 1, 2014	46,744	$	17.79	46,744	$	17.79
Granted	—	—		—	—
Yadkin options assumed in Mergers	50,693	31.03		50,693	31.03
Exercised	11,353	12.56		11,353	12.56
Expired	3,360	15.94		3,360	15.94
Forfeited	4,257	32.01		4,257	32.01
Options outstanding at December 31, 2014	78,467	$	31.06	78,467	$	31.06

The weighted average remaining life of options outstanding and options exercisable was 1.72 years years and 1.55 years years as of December 31, 2014 and 2013, respectively.

The table below provides the range of exercise prices for options outstanding and exercisable as of December 31, 2014.



Range of Exercise Prices	Stock Options Outstanding	Stock Options Exercisable

$9.12 - $10.00	1,722	1,722
$10.01 - $20.00	28,208	28,208
$20.01 - $30.00	4,085	4,085
$30.01 - $40.00	9,717	9,717
$40.01 - $50.00	33,902	33,902
$50.01 - $57.21	833	833
	78,467	78,467

The fair market value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected life of the option grant. Expected volatility is based upon the historical volatility of the Company’s stock price based upon the previous three years trading history. The expected term of the options is based upon the average life of previously issued stock options.

Compensation cost related to stock options was $0 for the years ended December 31, 2014 and 2013 and was $2 for the year ended December 31, 2012. The aggregate intrinsic value of total options outstanding and exercisable options as of December 31, 2014 was $125. As of December 31, 2014, there was no unrecognized compensation cost related to stock options as all options had fully vested.

Restricted Stock

A summary of non-vested restricted stock award activity is included below for the periods presented.



	Shares	Weighted Average Grant Date Fair Value

Non-vested at January 1, 2014	1,250	$	12.51
Granted	—	—
Yadkin restricted stock assumed in Mergers	173,266	6.95
Vested	172,900	6.95
Forfeited	680	12.51
Non-vested at December 31, 2014	936	$	10.68

Compensation cost related to non-vested restricted stock was $336, $8 and $29 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, there was no unrecognized compensation cost related to non-vested restricted stock.

Defined Contribution Plans

The Company sponsors profit-sharing and 401(k) plans for substantially all employees. Participants may make voluntary contributions resulting in salary deferrals in accordance with Section 401(k) of the Internal Revenue Code. The plan provides for employer contribution of up to 4 percent of pre-tax salary contributed by each participant. Employer contributions to the 401(k) plans totaled $1,252, $1,140 and $658 for the years ended December 31, 2014, 2013 and 2012, respectively.

Piedmont Stock Warrant Plan and Phantom Equity Plan

Certain employees, officers, and directors of Piedmont were granted warrants for Piedmont common stock from 2010 to 2013 (the "Piedmont Stock Warrant Plan"). All Piedmont stock warrants had an initial contractual term of ten years. Stock warrants issued in 2010 were granted to two of Piedmont's directors with 25 percent vesting on the grant date and 25 percent vesting on each of the first, second and third anniversaries of the grant date. Stock warrants issued from 2011 to 2013 were granted with 25 percent vesting on each of the first, second, third and fourth anniversaries of the grant date. The initial exercise price of each grant equaled the price of the respective equity offering and was to have increased at an 8 percent annual rate until a required investment return was achieved, at which time the exercise price was to adjust to the initial exercise price. The required investment return was to have been achieved when, and if, Piedmont's Board of Directors determined that the initial investors had realized a return of their capital investment in Piedmont plus a cumulative, non-compounded annual return of at least 8 percent.

The grant date fair value of each Piedmont stock warrant award was determined with a Monte Carlo-based option pricing model. The model assumed that the stock warrants would be exercised at the mid-point of the time to achieve the performance condition and contractual term of ten years, weighted by the probability of a change in control event. There were 146,666 warrants for shares of Piedmont's common stock outstanding as of December 31, 2013. Compensation cost recorded in non-interest expense related to the Piedmont Stock Warrant Plan was $1,145 and $2,235 for the years ended December 31, 2013 and 2012, respectively. Unrecognized compensation cost on these stock warrants totaled $850 as of December 31, 2013. The Piedmont Stock Warrant Plan was replaced by the Piedmont Phantom Equity Plan on January 24, 2014. Due to the nature of this replacement, it was accounted for as a plan modification and not a plan cancellation.

The Piedmont Phantom Equity Plan was established on January 24, 2014. Under the plan, participants in the Piedmont Stock Warrant Plan were granted units (each, a “Unit”). The Units are subject to vesting on dates consistent with the vesting dates under the Piedmont stock warrant plan. Each participant is entitled to receive the aggregate “Unit Value” of the vested portion of his or her account, to be paid to the participant on the earlier of (i) December 31, 2018, or (ii) a “change of control” (as defined in the Piedmont Phantom Equity Plan). In general, Unit Value is determined by subtracting the per-Unit base price for a Unit from the “full” value of such Unit. The “full” value of each Unit is equal to the value of one share of Piedmont stock prior to the Mergers, adjusted to equal the per share consideration that a Piedmont stockholder received for one share of Piedmont common stock (that is, 6.28597 shares of Yadkin voting common stock plus any per share cash merger consideration). Each Unit has a per-Unit base price specific to that Unit (the initial base price), which generally will be increased by 8 percent per year, unless and until certain initial investors in Piedmont realize a return of their capital investment plus a cumulative, non-compounded annual return of 8 percent (the "Investment Hurdle"). Once the Investment Hurdle has been met, the per-Unit base price returns to its initial base price. Any amounts paid to participants will be paid in common stock of Yadkin.

On July 4, 2014, concurrent with the Mergers, Yadkin assumed the obligations represented by the Piedmont Phantom Equity Plan, and Yadkin issued 856,447 shares of Yadkin voting common stock to an irrevocable rabbi trust to assist it in meeting its obligations under the Piedmont Phantom Equity Plan and the Merger Agreement. These shares (i) are issued and outstanding shares of Yadkin voting common stock with all rights of a holder of such shares, including the right to vote and receive dividends, and (ii) are to be used by Yadkin first to make distributions and satisfy all obligations under the Piedmont Phantom Equity Plan and then to distribute any remaining shares of Yadkin voting common stock held by the rabbi trust to the holders of Piedmont common stock that participated in the Mergers.

If as of December 31, 2018 there has not been a “change of control,” then the aggregate Unit Value will be distributed to the plan participants on December 31, 2018. Shares of Yadkin voting common stock that are held in the rabbi trust will be used to satisfy these distribution obligations under the Piedmont Phantom Equity Plan. The principal of the rabbi trust and any earnings thereon will be held separate and apart from other funds of Yadkin and will be used exclusively for the uses and purposes of Piedmont Phantom Equity Plan participants, Piedmont stockholders participating in the Mergers, and general creditors of Yadkin in certain circumstances.

Compensation cost recorded in non-interest expense related to the Piedmont Stock Warrant Plan and Piedmont Phantom Equity Plan was $605 for the year ended December 31, 2014, and unrecognized compensation cost totaled $245 as of December 31, 2014. Employer shares held by a rabbi trust should be treated as treasury stock for earnings per share purposes and excluded from the denominator in the basic and diluted per share calculations. However, the obligation under a deferred compensation arrangement should be reflected in the denominator of the earnings per share calculation. Therefore, since the 856,447 shares of Yadkin common stock held in the rabbi trust pursuant to the Piedmont Phantom Equity Plan are payable to either participants in the plan or Piedmont stockholders participating in the Mergers, there is no net impact to the Company's earnings per share from these shares.