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MERGERS AND ACQUISITIONS (Tables)
 12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable
The equivalent Piedmont market price per share was calculated based on the 6.28597 exchange ratio in the Mergers.
 
 
Calculation of Purchase Price
 
 
 
Equivalent Piedmont market price per share
 
$
122.01

Number of Piedmont shares issued to Yadkin shareholders
 
2,287,654

Purchase price (in thousands)
 
$
279,115

Next, the number of shares Piedmont would have had to issue to give Yadkin and other owners the same percentage ownership in the combined institution is calculated in the table below.
 
 
 
Hypothetical Piedmont Ownership
Shareholder Groups Immediately Prior to Mergers
 
 
Number of Outstanding Piedmont Shares
 
Percentage Ownership
 
 
 
 
 
 
Piedmont shareholders
 
 
1,466,664

 
29.1
%
VantageSouth shareholders (excluding Piedmont)
 
 
1,144,633

 
22.7

Shares issued and held in Rabbi Trust
 
 
136,247

 
2.7

Total Piedmont and VantageSouth shareholders
 
 
2,747,544

 
54.6

Yadkin shareholders
 
 
2,287,654

 
45.4

Total
 
 
5,035,198

 
100.0
%
The table below summarizes, for each shareholder group immediately prior to the Mergers, the ownership of Yadkin common stock immediately following the Mergers as well as the market capitalization of the combined institution using Yadkin’s stock price at the time of the Mergers.
 
 
Yadkin Financial Corporation Ownership and Market Value Table
Shareholder Groups Immediately Prior to Mergers
 
Number of Outstanding YDKN Shares
 
Percentage Ownership
 
Market Value at $19.41 YDKN Share Price
 
 
 
 
 
 
 
Piedmont shareholders
 
9,219,406

 
29.1
%
 
$
178,949

VantageSouth shareholders (excluding Piedmont)
 
7,195,127

 
22.7

 
139,657

Shares issued and held in Rabbi Trust
 
856,447

 
2.7

 
16,624

Total Piedmont and VantageSouth shareholders
 
17,270,980

 
54.6

 
335,230

Yadkin shareholders
 
14,380,127

 
45.4

 
279,118

Total
 
31,651,107

 
100.0
%
 
$
614,348
Schedule of assets acquired, liabilities assumed and other equity interest
The following table presents the ECB assets acquired, liabilities assumed and other equity interests as of April 1, 2013, as well as the related purchase price allocation and calculation of the gain on acquisition.
 
As Reported by ECB at
April 1, 2013
 
Initial
Fair Value Adjustments
 
Measurement Period Adjustments
 
As Reported by the Company at
April 1, 2013
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
24,008

 
$
—

 
$
—

 
$
24,008

Investment securities available for sale
289,058

 
301

(a)
—

 
289,359

Loans held for sale
3,857

 
9,790

(b)
(191
)
(m)
13,456

Loans, net
483,474

 
(30,420
)
(c)
—

 
453,054

Federal Home Loan Bank stock, at cost
3,150

 
—

 
—

 
3,150

Premises and equipment
25,633

 
(1,177
)
(d)
135

(m)
24,591

Bank-owned life insurance
12,249

 
—

 
—

 
12,249

Foreclosed assets
7,090

 
(717
)
(e)
(305
)
(m)
6,068

Deferred tax asset, net
6,986

 
9,082

(f)
540

(m)
16,608

Other intangible assets
—

 
4,307

(g)
—

 
4,307

Accrued interest receivable and other assets
10,423

 
(665
)
(h)
(922
)
(m)
8,836

Total assets
865,928

 
(9,499
)
 
(743
)
 
855,686

Liabilities:
 
 
 
 
 
 
 
Deposits
$
731,926

 
$
4,188

(i)
$
—

 
$
736,114

Short-term borrowings
34,284

 
—

 
—

 
34,284

Long-term debt
16,000

 
460

(j)
—

 
16,460

Accrued interest payable and other liabilities
2,867

 
148

(k)
116

(m)
3,131

Total liabilities
785,077

 
4,796

 
116

 
789,989

Net assets acquired
80,851

 
(14,295
)
 
(859
)
 
65,697

Other equity interests:
 
 
 
 
 
 
 
Preferred stock
17,660

 
(107
)
(l)
—

 
17,553

Common stock warrant
878

 
(745
)
(l)
—

 
133

Total other equity interests
18,538

 
(852
)
 
—

 
17,686

Gain on acquisition
 
 
 
 
 
 
7,382

Purchase price
 
 
 
 
 
 
$
40,629

Explanation of fair value adjustments
(a) Adjustment reflects opening fair value of securities portfolio, which was established as the new book basis of the portfolio.
(b) Adjustment reflect the reclassification of the fair value of certain loans identified by management as being held for sale at acquisition.
(c) Adjustment reflects the elimination of ECB's historical allowance for loan losses and the recording of a fair value discount on the loan portfolio. 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.
(d) Adjustment reflects fair value adjustments on certain acquired branch offices as well as certain software and computer equipment.
(e) Adjustment reflects the write down of certain foreclosed assets based on current estimates of property values given current market conditions and additional discounts based on the Company's planned disposition strategy.
(f) Adjustment reflects the tax impact of acquisition accounting fair value adjustments.
(g) Adjustment reflects the fair value of the acquired core deposit intangible.
(h) Adjustment reflects the impact of fair value adjustments on other assets, which include the write down of certain unusable prepaid expenses and the elimination of accrued interest on purchased credit-impaired loans.
(i) Adjustment reflects the fair value premium on time deposits, which was calculated by discounting future contractual interest payments at a current market interest rate.
(j) Adjustment reflects the fair value premium on long-term FHLB advances, which was calculated by discounting future contractual interest payments at a current market interest rate. This fair value premium is also consistent with the prepayment penalty the FHLB would charge to terminate the advance.
(k) Adjustment reflects the impact of fair value adjustments on other liabilities, which primarily includes the accrual of a preferred stock dividend at acquisition.
(l) Amount reflects the adjustment to record other equity interests at fair value. The fair value of preferred stock issued to Treasury was estimated by discounting future contractual dividend payments at a current market interest rate for preferred stocks of issuers with similar risk. The assumed liquidation date of the preferred stock was February 15, 2014, which was the date the dividend reset from 5 to 9 percent. The fair value of the common stock warrant issued to Treasury was estimated using a Black-Scholes option pricing model assuming a warrant life through the dividend reset date.
(m) Adjustments reflect changes to acquisition date fair values of certain assets based on additional information received post-acquisition within the measurement period. Measurement period adjustments included tax-effected adjustments to reduce the fair value of a non-marketable investment, to dispose of other assets with no value at the merger, to reduce the fair value of certain distressed loans held for sale, to reduce the fair value of certain other real estate owned, to recognize a liability for outstanding ECB employee credit card balances, and to increase the fair value of a bank-owned office.
The following table presents the Yadkin assets acquired, liabilities assumed and other equity interests as of July 4, 2014 as well as the related purchase price allocation and calculation of the residual goodwill.
 
As Reported by Yadkin at
July 4, 2014
 
Initial
Fair Value Adjustments
 
Measurement Period Adjustments
 
As Reported by the Company at
July 4, 2014
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
36,116

 
$
—

 
$
—

 
$
36,116

Investment securities available for sale
259,143

 
(1,488
)
(a)
—

 
257,655

Loans held for sale
15,696

 
—

 
—

 
15,696

Loans, net
1,403,419

 
(30,740
)
(b)
—

 
1,372,679

Federal Home Loan Bank stock, at cost
3,778

 
—

 
—

 
3,778

Premises and equipment
40,204

 
(2,344
)
(c)
—

 
37,860

Bank-owned life insurance
27,306

 
—

 
—

 
27,306

Foreclosed assets
2,271

 
(601
)
(d)
—

 
1,670

Deferred tax asset, net
16,955

 
5,939

(e)
—

 
22,894

Goodwill
—

 
124,172

(f)
657

(n)
124,829

Other intangible assets
1,665

 
10,965

(g)
321

(o)
12,951

Accrued interest receivable and other assets
16,330

 
(2,229
)
(h)
542

(p)
14,643

Total assets
1,822,883

 
103,674

 
1,520

 
1,928,077

Liabilities:
 
 
 
 
 
 
 
Deposits
$
1,509,581

 
$
5,019

(i)
$
—

 
$
1,514,600

Short-term borrowings
72,879

 
—

 
—

 
72,879

Long-term debt
38,217

 
(15,486
)
(j)
—

 
22,731

Accrued interest payable and other liabilities
8,448

 
(338
)
(k)
1,520

(q)
9,630

Total liabilities
1,629,125

 
(10,805
)
 
1,520

 
1,619,840

Net assets acquired
193,758

 
114,479

 
—

 
308,237

Other equity interests:
 
 
 
 
 
 
 
Preferred stock
28,405

 
—

(l)
—

 
28,405

Common stock warrants
1,850

 
(1,133
)
(m)
—

 
717

Total other equity interests
30,255

 
(1,133
)
 
—

 
29,122

Purchase price
 
 
 
 
 
 
$
279,115


Explanation of fair value adjustments
(a) Adjustment reflects opening fair value of securities portfolio, which was established as the new book basis of the portfolio.
(b) Adjustment reflects the elimination of Yadkin's historical allowance for loan losses of $16.4 million and the recording of a fair value discount of $47.2 million on the loan portfolio. 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 fair value adjustments on certain acquired branch offices as well as certain software and computer equipment.
(d) Adjustment reflects the write down of certain foreclosed assets based on current estimates of property values given current market conditions and additional discounts based on the Company's planned disposition strategy.
(e) Adjustment reflects the tax impact of acquisition accounting fair value adjustments.
(f) Goodwill represents the excess of the purchase price over the fair value of acquired net assets.
(g) Adjustment reflects the estimated fair value of the acquired core deposit intangible.
(h) Adjustment reflects the impact of fair value adjustments on other assets, which include mortgage servicing assets, certain unusable prepaid expenses, and the elimination of accrued interest on purchased credit-impaired loans.
(i) Adjustment reflects the fair value premium on time deposits, which was calculated by discounting future contractual interest payments at a current market interest rate.
(j) Adjustments reflect the fair value adjustments for subordinated debt issued to fund trust preferred securities and long-term Federal Home Loan Bank ("FHLB") advances, which were calculated by discounting future contractual interest payments at a current market interest rate for similar instruments. For FHLB advances, the fair value adjustment is consistent with the prepayment penalty the FHLB would charge to terminate the advance.
(k) Adjustments reflect accruals and fair value adjustments for other liabilities, which include the write-off of unearned income, deferred gains, and accrued liabilities that will not be paid.
(l) No fair value adjustments were made to Yadkin's outstanding preferred stock. The current preferred dividend rate of 9.0 percent approximates the current market yield for issuances of similar perpetual preferred stock. The preferred stock is currently redeemable at the liquidation value, and the Company expects the remaining life of this preferred stock to be relatively short.
(m) The fair value of the common stock warrants was estimated using a Black-Scholes option pricing model assuming all 91,178 warrants will remain outstanding through expiration on July 24, 2019. Assumptions and inputs used in the option pricing model included stock price volatility of 48.6 percent, no dividends, a risk free interest rate of 1.74 percent, and an exercise price of $21.90 per common warrant.
(n) Amount reflects adjustments to goodwill resulting from adjustments (o), (p) and (q).
(o) Amount reflects an adjustment to estimated fair value of the acquired core deposit intangible.
Explanation of fair value adjustments (continued)
(p) Amount reflects adjustments to acquired deferred tax assets and the tax impact of adjustments (o) and (q).
(q) Amount reflects the adjustment of change in control obligations existing under various employment agreements that were triggered by the Mergers.
Pro forma information
The table below presents supplemental pro forma information as if the Company's Mergers with VantageSouth and Piedmont as well as the ECB Merger had occurred on January 1, 2013. Pro forma results include adjustments for amortization and accretion of estimated fair value adjustments and do not include any projected cost savings or other anticipated benefits of the Mergers. 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.
 
Year ended December 31,
 
2014
 
2013
 
 
 
 
Total interest and non-interest income
$
212,531

 
$
208,608

 
 
 
 
Net interest income
$
157,805

 
$
153,437

 
 
 
 
Net income
$
34,370

 
$
23,009

 
 
 
 
Net income available to common shareholders
$
31,934

 
$
20,867

 
 
 
 
Basic income per common share
$
1.02

 
$
0.73

 
 
 
 
Diluted income per common share
$
1.02

 
$
0.73

 
 
 
 
Weighted average basic common shares outstanding
31,295,562

 
28,568,000

 
 
 
 
Weighted average diluted common shares outstanding
31,375,585

 
28,640,684