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 “FNB Merger Agreement”) with F.N.B. Corporation, a Florida corporation (“FNB”). The FNB Merger Agreement provides that, upon the terms and conditions set forth therein, the Company will merge with and into FNB (the “FNB Merger”), with FNB continuing as the surviving corporation. As soon as practicable following consummation of the FNB 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 “FNB Bank Merger”).

Subject to the terms and conditions of the FNB Merger Agreement, at the effective time of the FNB 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. Shareholders of both FNB and Yadkin have approved the FNB Merger, and all regulatory approvals have been received. The transaction is expected to close in the first quarter of 2017, subject to 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.

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)	265			(m)	48,044
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				(1,609		)		2,778,780
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				(1,827		)		243,950
Purchase price												431,336
Goodwill												$	187,386	(r)

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.

(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 $3,506 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) and adjustments of other merger-related deferred tax valuations.

(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.



	2016		2015

Net interest income	$	255,403	$	253,737
Net income (a)	74,272		60,512
Net income available to common shareholders (a)	74,272		59,690
Basic income per common share (a)	1.36		1.17
Diluted income per common share (a)	1.36		1.16
Weighted average basic common shares outstanding	54,666,023		51,216,107
Weighted average diluted common shares outstanding	54,765,807		51,301,182

(a) For purposes of the supplemental pro forma information, merger-related expenses of $19,315 that are reflected in the Company's consolidated statement of operations for the year ended December 31, 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 2015. These pro forma merger-related expenses include $7,807 of professional fees paid for investment banking, legal and accounting services, $8,677 of personnel-related expenses, $5,167 of facility and equipment-related expenses, and $1,196 of other miscellaneous expenses related to the NewBridge Merger.