Posted On: 10/29/2013 12:51:05 AM
Post# of 94264
BNCCORP, INC. Reports 2013 Third Quarter Net Income Of $487 Thousand, Or $0.05 Per Diluted Share, Book Value Per Share Increa...
BISMARCK, N.D., Oct. 28, 2013 /PRNewswire/ -- BNCCORP, INC. (BNC or the Company) (OTCQB: BNCC), which operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota, and has mortgage banking offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota, today reported net income for the third quarter ended September 30, 2013.
Net income for the 2013 third quarter was $487 thousand, or $0.05 per diluted share. This compared to net income of $15.045 million, or $4.41 per diluted share, in the third quarter of 2012. Major factors contributing to the earnings decrease (as further described below) included the recent impact of higher interest rates on mortgage banking revenues, an impairment charge in the latest quarter related to a strategic decision to consolidate operations, and a sizeable insurance settlement in the year-ago period.
The third quarter of 2013 reflects lower net interest income which was impacted by lower interest rates on most earning assets; lower non-interest income, which includes insurance receipts in 2013 and 2012, as mortgage banking revenues declined due to the recent rapid increase in interest rates; and significantly lower non-interest expenses, which includes impairment charges and non-recurring legal costs in 2013 and 2012, respectively, as operating costs were trimmed when revenues declined. The provisions for credit losses were $0 in the third quarters of 2013 and 2012. Credit quality improved as nonperforming assets decreased to $12.3 million or 1.49% of total assets at September 30, 2013, compared to $15.6 million at December 31, 2012. In the third quarter of 2013 a tax benefit was recorded due to a change in our effective tax rate, primarily relating to the recent impairment charge, while the 2012 third quarter included a large tax benefit due to the reversal of the valuation allowance on deferred tax assets.
Timothy J. Franz, new BNCCORP President and Chief Executive Officer, said, "We had a very eventful quarter. Foremost was the unexpected passing of co-founder and CEO Greg Cleveland, who is deeply missed by all of us. Mr. Cleveland was one of a kind in terms of his vision, larger than life personality and honorable character. Employees, customers and shareholders of BNC will benefit from his legacy as an exceptional business person for many years to come, and we honor Greg by continuing to manage BNC with a commitment to service, prudent growth and integrity."
Mr. Franz continued, "Results for the 2013 third quarter reflected an increase in interest rates, which impacted mortgage banking revenues in particular. While the effect of the higher rates was expected, we could not anticipate the timing or extent of the impact. When mortgage banking revenues contracted this quarter, we moved quickly to reduce our mortgage banking operating costs. The benefits of these decisions will be seen in future periods. In order to further control operating costs, we also consolidated operations in Minnesota this quarter and recognized the cost of contraction with an impairment charge. Throughout these events our employees performed admirably. As a result, we grew loans held for investment, increased deposits, invested opportunistically and increased book value per share. Our shareholders and the communities we serve are the fortunate beneficiaries of our team's efforts."
Third Quarter Results
Net interest income for the third quarter of 2013 was $4.616 million, a decrease of $151 thousand, or 3.2%, from $4.767 million in the same period of 2012. Interest income decreased due to lower interest rates on most assets as the yield on earning assets decreased to 2.94% in the third quarter of 2013, compared to 3.71% in the third quarter of 2012. The impact of lower rates was partially offset by increases in total average earning assets, which were $750.3 million in the third quarter of 2013 compared to $653.8 million in the same quarter of 2012. We have increased the balance of investment securities by $104.8 million and loans held for investment by $5.4 million since the beginning of the year. In the third quarter of 2013 the Company deployed $97 million of cash to invest in securities, to take advantage of interest rates higher than those available in previous periods. On average, loans held for sale decreased by $28.5 million when compared to the third quarter of 2012.
Interest expense decreased despite growth in deposits, as we have been able to lower the rates paid on deposits. The cost of interest bearing liabilities declined to 0.61% in the current quarter, compared to 1.02% in the same period of 2012. The net interest margin for the third quarter decreased to 2.44%, compared to 2.90% in the same period of 2012.
The provision for loan losses was $0 in the third quarters of 2013 and 2012. The absence of provisions for credit losses reflects stabilized risk in our loan portfolio.
Non-interest income for the third quarter of 2013 was $5.001 million compared to $16.826 million in the third quarter of 2012. In the third quarter of 2013 the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in the third quarter of 2012. Excluding the insurance amounts, non-interest income was $3.946 million in the third quarter of 2013 compared to $9.326 million in 2012, a decrease of $5.380 million, or 57.7%. The major factor in this decrease was a decline in 2013 third quarter mortgage banking revenues, which aggregated $2.422 million, compared to $7.787 million in the third quarter of 2012. Mortgage banking revenues have been significantly impacted in 2013 by the increase in interest rates. In response to lower revenues, the Company reduced operations personnel in mortgage banking by more than 20 positions, which is estimated to reduce future compensation by approximately $1.2 million annually. There were $37 thousand of gains on sales of investment securities during the recent quarter, compared to $181 thousand in the third quarter of 2012. The opportunity to sell assets at attractive prices can vary significantly from period to period based on market conditions. The 2013 third quarter included gains on sales of SBA loans of $301 thousand, compared to $245 thousand in the same period of 2012. While the secondary market for SBA loans is currently acquisitive, the recent shut down of federal government operations has prevented us from selling loans early in the fourth quarter of 2013 which may impact earnings as the year ends. Bank fees and service charges were $698 thousand in the third quarter of 2013, an increase of 11.5% compared to the third quarter of 2012. These fees are growing as we continue to grow deposits and open new accounts. Wealth management revenues increased by 13.5% in the third quarter of 2013 compared to the same period in 2012.
Non-interest expense for the third quarter of 2013 was $9.451 million, compared to $12.303 million in the third quarter of 2012. Non-interest expense in the third quarter of 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense declined to $7.951 million in 2013, compared to $9.803 million in 2012, a decrease of $1.852 million, or 18.9%. This decrease primarily relates to certain mortgage banking costs and reduced incentive costs for producers. As economic conditions and organic growth in Minnesota is limited when compared to North Dakota, we consolidated all Minnesota operations to one location to reduce operating costs and decided to sell a branch building that was underutilized. This resulted in an impairment charge of $1.5 million in the third quarter to reflect the fair market value of the property.
In the third quarter of 2013, we recorded a tax benefit of $321 thousand. A tax benefit of $5.755 million was recognized during the third quarter of 2012 primarily related to the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $157 thousand, or $0.05 per diluted share, for the third quarter of 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $330 thousand in the third quarter of 2013 and $369 thousand in the same period of 2012. Net income available to common shareholders in the third quarter of 2012 was $14.676 million, or $4.41 per diluted share.
Nine Months Ended September 30, 2013
Net interest income for the nine month period ended September 30, 2013 was $13.832 million, an increase of $21 thousand or 0.2%, from $13.811 million in the same period of 2012. We grew assets in the first nine months of 2013, as the average balance of earning assets was approximately $738.3 million, compared to approximately $639.8 million in the same period of the prior year. The net interest margin in the recent nine-month period decreased to 2.50%, compared to 2.88% in the same period of 2012. The yield on earning assets was 3.04% in the nine month period ended September 30, 2013, compared to 3.78% in the same period of 2012. The cost of interest bearing liabilities was 0.65% in the first nine months of 2013, compared to 1.13% in the first nine months of 2012.
The provision for credit losses was $700 thousand in the first nine months of 2013, compared to $100 thousand in the first nine months of 2012. Nonperforming loans decreased $383 thousand to $10.1 million at September 30, 2013 from $10.5 million at December 31, 2012. BNC has made positive progress relating to one of our non-performing loan relationships which is recorded at $5.8 million. We anticipate that this loan will return to accrual status in the fourth quarter of 2013.
Non-interest income for the first nine months of 2013 was $24.677 million compared to $33.276 million in the same period of 2012. In 2013, the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in 2012. Excluding the insurance amounts, non-interest income was $23.622 million in the first nine months of 2013 compared to $25.776 million in same period of 2012, a decrease of $2.154 million, or 8.4%. Non-interest income was significantly influenced by mortgage banking revenues in the first nine months of 2013, which aggregated $17.413 million, a decrease of $4.014 million, or 18.7%, compared to the first nine months of 2012. These revenues declined as interest rates rose in 2013. As noted above, we recently reduced our mortgage banking workforce due to lower revenues in this area. Gains on sales of investments were higher in the first nine months of 2013 aggregating $1.247 million, compared to $279 thousand in the same period of 2012. Gains on sales of SBA loans were $1.408 million in the first nine months of 2013, compared to $864 thousand in the same period of 2012. We also experienced an increase in bank fees and service charges of $235 thousand, or 13.4% in the first nine months of 2013, reflecting growth in deposits and new accounts.
Non-interest expense was $27.907 million in the first nine months of 2013, compared to $30.996 million in the same period of 2012. Non-interest expense in 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of non-recurring legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense was $26.407 million in 2013 compared to $28.496 million in 2012 a decrease of $2.089 million or 7.3%. The valuation adjustments on foreclosed assets were $40 thousand in the first nine months of 2013 compared to $1.700 million in the first nine months of 2012. In early 2013 we experienced higher operating costs as mortgage banking revenues were higher relative to early 2012. As 2013 proceeded, mortgage banking costs have decreased when compared to the same period of 2012.
During the nine month period ended September 30, 2013, we recorded tax expense of $3.154 million which resulted in an effective tax rate of 31.85%. A tax benefit of $5.652 million was recognized during the nine month period ended September 30, 2012. The provision for income taxes was lower in 2012 because of the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $5.767 million, or $1.66 per diluted share, for the nine months ended September 30, 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $981 thousand in the first nine months of 2013 and $1.089 million in the same period of 2012. Net income available to common shareholders for the nine months ended September 30, 2012 was $20.554 million, or $6.21 per diluted share.
Assets, Liabilities and Equity
Total assets were $829.2 million at September 30, 2013, an increase of $58.4 million, or 7.6%, compared to $770.8 million at December 31, 2012 and an increase of $86.8 million, or 11.7%, since September 30, 2012. The increases in recent periods have been funded primarily by growing deposits in North Dakota as this region is experiencing robust economic conditions. Accumulated other comprehensive income was an unrealized gain of $363 thousand at September 30, 2013, compared to a net unrealized loss of $1.1 million as of June 30, 2013. Investment securities increased by $62.6 million since June 30, 2013 as we deployed cash reserves early in the third quarter when interest rates increased relative to earlier periods.
Loans held for investment increased by $13.4 million since June 30, 2013 and $5.4 million versus December 31, 2012. We have implemented measures to increase our loans held for investment portfolio with the objective of achieving loan growth (in North Dakota, our loans held for investment grew $23.2 million since September 30, 2012). Loans held for sale have decreased by $60.8 million since December 31, 2012 as production was reduced by the recent increase in interest rates.
Total deposits were $706.5 million at September 30, 2013, increasing by $56.9 million from 2012 year-end, and increasing by $83.5 million, or 13.4% since September 30, 2012. This increase relates primarily to growth in our North Dakota branches. In recent years we have observed that deposit growth can be seasonal as customers utilize their cash in warmer months.
Over recent years we have continued to witness growth in our rural branches located near the Bakken Formation. The table below shows changes since 2010.
Deposits of Rural Branches in Bakken Formation
September 30,
September 30,
Increase (Decrease)
Average Annual Growth
In thousands
2013
2010
$
%
$
%
Total Deposits
$
180,082
$
111,786
$
68,296
61
%
$
22,765
17
%
Book value per common share was $14.75 as of September 30, 2013, compared to $14.35 as of June 30, 2013, $14.49 at December 31, 2012 and $13.60 at September 30, 2012.
At September 30, 2013, tangible common equity of BNC National Bank was 10.55% of total Bank assets.
Trust assets under management or administration increased to $256.2 million at September 30, 2013, compared to $211.5 million at December 31, 2012 as this department is capturing wealth being created by the exceptionally strong economic conditions in North Dakota.
Capital
Banks and their bank holding companies operate under separate regulatory capital requirements.
At September 30, 2013, BNCCORP's tier 1 leverage ratio was 10.99%, the tier 1 risk-based capital ratio was 22.60%, and the total risk-based capital ratio was 24.18%.
At September 30, 2013, BNC National Bank had a tier 1 leverage ratio of 10.70%, a tier 1 risk-based capital ratio of 22.17%, and a total risk-based capital ratio of 23.43%.
At September 30, 2013, BNCCORP's tangible common equity as a percent of assets was 5.92% compared to 6.21% at December 31, 2012 and 6.06% at September 30, 2012. Common shareholder equity at September 30, 2013 was $49.0 million and we had preferred stock and subordinated debentures outstanding which aggregated $43.5 million at September 30, 2013.
In July of 2013, the Federal Reserve issued new regulatory capital standards for community banks which incorporate some of the capital requirements addressed in the Basel III framework and begin to be effective January 1, 2015. Although we believe we are compliant with the fully phased in standards, we have not completed our assessment of the proposed standards. The Company routinely evaluates the need to raise capital to comply with regulatory capital standards and for other corporate purposes. In addition to the new capital standards the regulatory environment for banking entities is increasingly complicated and the cost of complying with regulations will impact earnings for the foreseeable future.
Asset Quality
In recent years, challenging economic conditions have led to elevated credit risk throughout the banking industry. As a result, the Company is carefully monitoring asset quality and taking what it believes to be prudent and appropriate action to reduce credit risk.
Nonperforming assets were $12.3 million at September 30, 2013, down from $13.1 at June 30, 2013 and $15.6 million at December 31, 2012. The ratio of total nonperforming assets to total assets was 1.49% at September 30, 2013 and 2.03% at December 31, 2012. The provision for credit losses and other real estate costs was $40 thousand in the third quarter of 2013 and $0 in the third quarter of 2012.
Nonperforming loans were $10.1 million at September 30, 2013 down from $10.5 million at December 31, 2012. As noted earlier, we expect nonperforming loans to decrease by $5.8 million early in the fourth quarter of 2013. The ratio of the allowance for credit losses to total nonperforming loans as of September 30, 2013 was 98% compared to 96% at December 31, 2012. The provision for credit losses in the third quarters of 2013, and 2012 were $0.
The allowance for credit losses was $9.9 million at September 30, 2013, compared to $10.1 million at December 31, 2012. The allowance for credit losses as a percentage of total loans at September 30, 2013 was 3.01%, compared to 2.62% at December 31, 2012. The allowance for credit losses as a percentage of loans and leases held for investment at September 30, 2013 was 3.36%, compared to 3.49% at December 31, 2012.
At September 30, 2013, BNC had $13.0 million of classified loans, $10.1 million of loans on non-accrual and $2.2 million of other real estate owned. At December 31, 2012, BNC had $13.6 million of classified loans, $10.5 million of loans on non-accrual and $5.1 million of other real estate owned. At September 30, 2012, BNC had $17.4 million of classified loans, $4.8 million of loans on non-accrual and $5.9 million of other real estate owned.
BNCCORP, INC., headquartered in Bismarck, N.D., is a registered bank holding company dedicated to providing banking and wealth management services to businesses and consumers in its local markets. The Company operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota from 14 locations. BNC also conducts mortgage banking from 12 offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota.
This news release may contain "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of BNC. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management are generally identifiable by the use of words such as "expect", "believe", "anticipate", "plan", "intend", "estimate", "may", "will", "would", "could", "should", "future" and other expressions relating to future periods. Examples of forward-looking statements include, among others, statements we make regarding our belief that we have exceptional liquidity, our expectations regarding future market conditions and our ability to capture opportunities and pursue growth strategies, our expected operating results such as revenue growth and earnings, and our expectations of the effects of the regulatory environment on our earnings for the foreseeable future. Forward-looking statements are neither historical facts nor assurances of future performance. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to: the impact of current and future regulation; the risks of loans and investments, including dependence on local and regional economic conditions; competition for our customers from other providers of financial services; possible adverse effects of changes in interest rates, including the effects of such changes on mortgage banking revenues and derivative contracts and associated accounting consequences; risks associated with our acquisition and growth strategies; and other risks which are difficult to predict and many of which are beyond our control. In addition, all statements in this news release, including forward-looking statements, speak only of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
(Financial tables attached)
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands, except per share data)
2013
2012
2013
2012
SELECTED INCOME STATEMENT DATA
Interest income
$
5,560
$
6,095
$
16,769
$
18,130
Interest expense
944
1,328
2,937
4,319
Net interest income
4,616
4,767
13,832
13,811
Provision for credit losses
-
-
700
100
Non-interest income
5,001
16,826
24,677
33,276
Non-interest expense
9,451
12,303
27,907
30,996
Income before income taxes
166
9,290
9,902
15,991
Income tax expense (benefit)
(321)
(5,755)
3,154
(5,652)
Net income
487
15,045
6,748
21,643
Preferred stock costs
(330)
(369)
(981)
(1,089)
Net income available to common shareholders
$
157
$
14,676
$
5,767
$
20,554
EARNINGS PER SHARE DATA
Basic earnings per common share
$
0.05
$
4.46
$
1.75
$
6.24
Diluted earnings per common share
$
0.05
$
4.41
$
1.66
$
6.21
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands, except share data)
2013
2012
2013
2012
ANALYSIS OF NON-INTEREST INCOME
Bank charges and service fees
$
698
$
626
$
1,989
$
1,754
Wealth management revenues
302
266
935
912
Mortgage banking revenues
2,422
7,787
17,413
21,427
Gains on sales of loans, net
301
245
1,408
864
Gains on sales of securities, net
37
181
1,247
279
Other
186
221
630
540
Subtotal non-interest income
3,946
9,326
23,622
25,776
Insurance claim settlement
-
7,500
-
7,500
Life insurance benefit received
1,055
-
1,055
-
Total non-interest income
$
5,001
$
16,826
$
24,677
$
33,276
ANALYSIS OF NON-INTEREST EXPENSE
Salaries and employee benefits
$
3,637
$
4,607
$
12,991
$
12,799
Professional services
861
1,332
2,883
3,403
Data processing fees
717
735
2,218
2,116
Marketing and promotion
718
516
1,927
1,482
Occupancy
597
478
1,765
1,440
Regulatory costs
146
304
680
901
Depreciation and amortization
311
278
928
836
Office supplies and postage
139
166
461
506
Other real estate costs
38
48
164
1,988
Other
787
1,339
2,390
3,025
Subtotal non-interest expense
7,951
9,803
26,407
28,496
Insurance settlement legal fees
-
2,500
-
2,500
Impairment charge
1,500
-
1,500
-
Total non-interest expense
$
9,451
$
12,303
$
27,907
$
30,996
WEIGHTED AVERAGE SHARES
Common shares outstanding (a)
3,299,236
3,291,569
3,299,467
3,291,793
Incremental shares from assumed conversion of options and contingent shares
178,265
37,536
172,731
20,391
Adjusted weighted average shares (b)
3,477,501
3,329,105
3,472,198
3,312,184
(a)
Denominator for basic earnings per common share
(b)
Denominator for diluted earnings per common share
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands, except share, per share and full time equivalent data)
September 30,
2013
December 31,
2012
September 30,
2012
SELECTED BALANCE SHEET DATA
Total assets
$
829,232
$
770,776
$
742,475
Loans held for sale-mortgage banking
34,344
95,095
88,926
Loans and leases held for investment (a)
294,876
289,469
285,472
Total loans
329,220
384,564
374,398
Allowance for credit losses
(9,897)
(10,091)
(10,521)
Investment securities available for sale
405,300
300,549
283,835
Other real estate, net
2,186
5,131
5,859
Earning assets
768,732
698,872
674,197
Total deposits
706,495
649,604
622,997
Core deposits
641,725
584,604
553,067
Other borrowings
44,452
34,130
34,691
Cash and cash equivalents
56,728
40,790
36,520
OTHER SELECTED DATA
Net unrealized gains (losses) in accumulated other comprehensive income
$
363
$
4,961
$
6,625
Trust assets under management or administration
$
256,178
$
211,519
$
212,188
Total common stockholders' equity
$
49,032
$
47,842
$
44,895
Book value per common share
$
14.75
$
14.49
$
13.60
Full time equivalent employees (b)
252
272
265
Common shares outstanding
3,324,584
3,300,652
3,299,969
CAPITAL RATIOS
Tier 1 leverage (Consolidated)
10.99%
11.17%
10.31%
Tier 1 risk-based capital (Consolidated)
22.60%
20.49%
18.60%
Total risk-based capital (Consolidated)
24.18%
22.43%
21.03%
Tangible common equity (Consolidated)
5.92%
6.21%
6.06%
Tier 1 leverage (BNC National Bank)
10.70%
10.68%
11.73%
Tier 1 risk-based capital (BNC National Bank)
22.17%
19.80%
21.14%
Total risk-based capital (BNC National Bank)
23.43%
21.06%
22.41%
Tangible capital (BNC National Bank)
10.55%
10.97%
12.31%
(a)
Included in loans and leases held for investment are $80.8 million of commercial real estate loans as of September 30, 2013, $ 87.3 million at December 31, 2012, and $97.3 million at September 30, 2012.
(b)
September 30, 2013 is adjusted for recent reduction in mortgage banking operating positions.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands)
2013
2012
2013
2012
AVERAGE BALANCES
Total assets
$
810,301
$
719,416
$
799,101
$
700,912
Loans held for sale-mortgage banking
46,872
75,350
62,013
62,013
Loans and leases held for investment
277,257
283,016
283,529
283,529
Total loans
324,129
358,366
345,542
345,542
Investment securities available for sale
362,873
288,120
333,761
266,881
Earning assets
750,340
653,773
738,264
639,838
Total deposits
690,320
605,999
679,246
600,030
Core deposits
625,397
541,522
614,239
538,312
Total equity
68,973
58,064
70,312
49,324
Cash and cash equivalents
80,844
24,380
76,583
44,857
KEY RATIOS
Return on average common stockholders' equity
1.30%
156.76%
15.63%
96.15%
Return on average assets
0.24%
8.32%
1.13%
4.12%
Net interest margin
2.44%
2.90%
2.50%
2.88%
Efficiency ratio
98.27%
56.98%
72.47%
65.83%
Efficiency ratio (Adjusted) (a)
92.86%
69.56%
70.51%
71.98%
Efficiency ratio (BNC National Bank)
92.65%
53.90%
69.36%
62.69%
(a)
Efficiency ratio is adjusted to exclude insurance receipts and impairment charges for the three and nine month period ending September 30, 2013 and insurance receipts and non-recurring legal fees for the three and nine month period ending September 30, 2012.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands)
September 30,
2013
December 31,
2012
September 30,
2012
ASSET QUALITY
Loans 90 days or more delinquent and still accruing interest
$
57
$
12
$
23
Non-accrual loans
10,072
10,500
4,833
Total nonperforming loans
$
10,129
$
10,512
$
4,856
Other real estate, net
2,186
5,131
5,859
Total nonperforming assets
$
12,315
$
15,643
$
10,715
Allowance for credit losses
$
9,897
$
10,091
$
10,521
Troubled debt restructured loans
$
8,654
$
12,368
$
12,499
Ratio of total nonperforming loans to total loans
3.08%
2.73%
1.30%
Ratio of total nonperforming assets to total assets
1.49%
2.03%
1.44%
Ratio of nonperforming loans to total assets
1.22%
1.36%
0.65%
Ratio of allowance for credit losses to loans and leases held for investment
3.36%
3.49%
3.69%
Ratio of allowance for credit losses to total loans
3.01%
2.62%
2.81%
Ratio of allowance for credit losses to nonperforming loans
98%
96%
217%
For the Quarter
For the Nine Months
(In thousands)
Ended September 30,
Ended September 30,
2013
2012
2013
2012
Changes in Nonperforming Loans:
Balance, beginning of period
$
10,183
$
4,893
$
10,512
$
6,169
Additions to nonperforming
74
40
811
74
Charge-offs
(5)
-
(909)
(317)
Reclassified back to performing
(12)
-
(19)
(815)
Principal payments received
(111)
(77)
(242)
(255)
Transferred to repossessed assets
-
-
(24)
-
Transferred to other real estate owned
-
-
-
-
Balance, end of period
$
10,129
$
4,856
$
10,129
$
4,856
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
(In thousands)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
2013
2012
2013
2012
Changes in Allowance for Credit Losses:
Balance, beginning of period
$
9,898
$
10,565
$
10,091
$
10,630
Provision
-
-
700
100
Loans charged off
(16)
(57)
(983)
(383)
Loan recoveries
15
13
89
174
Balance, end of period
$
9,897
$
10,521
$
9,897
$
10,521
Ratio of net charge-offs to average total loans
0.00%
(0.012)%
(0.321)%
(0.060)%
Ratio of net charge-offs to average total loans, annualized
(0.001)%
(0.049)%
(0.518)%
(0.081)%
(In thousands)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
2013
2012
2013
2012
Changes in Other Real Estate:
Balance, beginning of period
$
2,966
$
7,932
$
5,131
$
10,145
Transfers from nonperforming loans
-
-
-
-
Transfers from premises and equipment
800
-
800
-
Real estate sold
(1,540)
(1,971)
(3,705)
(2,458)
Net gains (losses) on sale of assets
-
(102)
-
(128)
Provision
(40)
-
(40)
(1,700)
Balance, end of period
$
2,186
$
5,859
$
2,186
$
5,859
As of
(In thousands)
September 30,
2013
December 31, 2012
September 30,
2012
Other real estate
$
5,120
$
8,146
$
10,349
Valuation allowance
(2,934)
(3,015)
(4,490)
Other real estate, net
$
2,186
$
5,131
$
5,859
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands)
September 30, 2013
December 31, 2012
CREDIT CONCENTRATIONS
North Dakota
Commercial and industrial
$
71,298
$
65,793
Construction
7,838
10,824
Agricultural
17,243
15,047
Land and land development
11,186
12,240
Owner-occupied commercial real estate
28,008
24,107
Commercial real estate
29,608
12,644
Small business administration
2,178
2,428
Consumer
30,957
25,115
Subtotal
$
198,316
$
168,198
Arizona
Commercial and industrial
$
2,187
$
1,421
Construction
-
-
Agricultural
-
-
Land and land development
5,204
5,663
Owner-occupied commercial real estate
647
667
Commercial real estate
16,347
16,699
Small business administration
15,654
12,881
Consumer
2,213
2,884
Subtotal
$
42,252
$
40,215
Minnesota
Commercial and industrial
$
420
$
1,154
Construction
-
-
Agricultural
21
24
Land and land development
583
1,145
Owner-occupied commercial real estate
-
-
Commercial real estate
10,339
14,767
Small business administration
43
62
Consumer
334
409
Subtotal
$
11,743
$
17,561
SOURCE BNCCORP, INC.
Copyright 2013 PR Newswire
BISMARCK, N.D., Oct. 28, 2013 /PRNewswire/ -- BNCCORP, INC. (BNC or the Company) (OTCQB: BNCC), which operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota, and has mortgage banking offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota, today reported net income for the third quarter ended September 30, 2013.
Net income for the 2013 third quarter was $487 thousand, or $0.05 per diluted share. This compared to net income of $15.045 million, or $4.41 per diluted share, in the third quarter of 2012. Major factors contributing to the earnings decrease (as further described below) included the recent impact of higher interest rates on mortgage banking revenues, an impairment charge in the latest quarter related to a strategic decision to consolidate operations, and a sizeable insurance settlement in the year-ago period.
The third quarter of 2013 reflects lower net interest income which was impacted by lower interest rates on most earning assets; lower non-interest income, which includes insurance receipts in 2013 and 2012, as mortgage banking revenues declined due to the recent rapid increase in interest rates; and significantly lower non-interest expenses, which includes impairment charges and non-recurring legal costs in 2013 and 2012, respectively, as operating costs were trimmed when revenues declined. The provisions for credit losses were $0 in the third quarters of 2013 and 2012. Credit quality improved as nonperforming assets decreased to $12.3 million or 1.49% of total assets at September 30, 2013, compared to $15.6 million at December 31, 2012. In the third quarter of 2013 a tax benefit was recorded due to a change in our effective tax rate, primarily relating to the recent impairment charge, while the 2012 third quarter included a large tax benefit due to the reversal of the valuation allowance on deferred tax assets.
Timothy J. Franz, new BNCCORP President and Chief Executive Officer, said, "We had a very eventful quarter. Foremost was the unexpected passing of co-founder and CEO Greg Cleveland, who is deeply missed by all of us. Mr. Cleveland was one of a kind in terms of his vision, larger than life personality and honorable character. Employees, customers and shareholders of BNC will benefit from his legacy as an exceptional business person for many years to come, and we honor Greg by continuing to manage BNC with a commitment to service, prudent growth and integrity."
Mr. Franz continued, "Results for the 2013 third quarter reflected an increase in interest rates, which impacted mortgage banking revenues in particular. While the effect of the higher rates was expected, we could not anticipate the timing or extent of the impact. When mortgage banking revenues contracted this quarter, we moved quickly to reduce our mortgage banking operating costs. The benefits of these decisions will be seen in future periods. In order to further control operating costs, we also consolidated operations in Minnesota this quarter and recognized the cost of contraction with an impairment charge. Throughout these events our employees performed admirably. As a result, we grew loans held for investment, increased deposits, invested opportunistically and increased book value per share. Our shareholders and the communities we serve are the fortunate beneficiaries of our team's efforts."
Third Quarter Results
Net interest income for the third quarter of 2013 was $4.616 million, a decrease of $151 thousand, or 3.2%, from $4.767 million in the same period of 2012. Interest income decreased due to lower interest rates on most assets as the yield on earning assets decreased to 2.94% in the third quarter of 2013, compared to 3.71% in the third quarter of 2012. The impact of lower rates was partially offset by increases in total average earning assets, which were $750.3 million in the third quarter of 2013 compared to $653.8 million in the same quarter of 2012. We have increased the balance of investment securities by $104.8 million and loans held for investment by $5.4 million since the beginning of the year. In the third quarter of 2013 the Company deployed $97 million of cash to invest in securities, to take advantage of interest rates higher than those available in previous periods. On average, loans held for sale decreased by $28.5 million when compared to the third quarter of 2012.
Interest expense decreased despite growth in deposits, as we have been able to lower the rates paid on deposits. The cost of interest bearing liabilities declined to 0.61% in the current quarter, compared to 1.02% in the same period of 2012. The net interest margin for the third quarter decreased to 2.44%, compared to 2.90% in the same period of 2012.
The provision for loan losses was $0 in the third quarters of 2013 and 2012. The absence of provisions for credit losses reflects stabilized risk in our loan portfolio.
Non-interest income for the third quarter of 2013 was $5.001 million compared to $16.826 million in the third quarter of 2012. In the third quarter of 2013 the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in the third quarter of 2012. Excluding the insurance amounts, non-interest income was $3.946 million in the third quarter of 2013 compared to $9.326 million in 2012, a decrease of $5.380 million, or 57.7%. The major factor in this decrease was a decline in 2013 third quarter mortgage banking revenues, which aggregated $2.422 million, compared to $7.787 million in the third quarter of 2012. Mortgage banking revenues have been significantly impacted in 2013 by the increase in interest rates. In response to lower revenues, the Company reduced operations personnel in mortgage banking by more than 20 positions, which is estimated to reduce future compensation by approximately $1.2 million annually. There were $37 thousand of gains on sales of investment securities during the recent quarter, compared to $181 thousand in the third quarter of 2012. The opportunity to sell assets at attractive prices can vary significantly from period to period based on market conditions. The 2013 third quarter included gains on sales of SBA loans of $301 thousand, compared to $245 thousand in the same period of 2012. While the secondary market for SBA loans is currently acquisitive, the recent shut down of federal government operations has prevented us from selling loans early in the fourth quarter of 2013 which may impact earnings as the year ends. Bank fees and service charges were $698 thousand in the third quarter of 2013, an increase of 11.5% compared to the third quarter of 2012. These fees are growing as we continue to grow deposits and open new accounts. Wealth management revenues increased by 13.5% in the third quarter of 2013 compared to the same period in 2012.
Non-interest expense for the third quarter of 2013 was $9.451 million, compared to $12.303 million in the third quarter of 2012. Non-interest expense in the third quarter of 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense declined to $7.951 million in 2013, compared to $9.803 million in 2012, a decrease of $1.852 million, or 18.9%. This decrease primarily relates to certain mortgage banking costs and reduced incentive costs for producers. As economic conditions and organic growth in Minnesota is limited when compared to North Dakota, we consolidated all Minnesota operations to one location to reduce operating costs and decided to sell a branch building that was underutilized. This resulted in an impairment charge of $1.5 million in the third quarter to reflect the fair market value of the property.
In the third quarter of 2013, we recorded a tax benefit of $321 thousand. A tax benefit of $5.755 million was recognized during the third quarter of 2012 primarily related to the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $157 thousand, or $0.05 per diluted share, for the third quarter of 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $330 thousand in the third quarter of 2013 and $369 thousand in the same period of 2012. Net income available to common shareholders in the third quarter of 2012 was $14.676 million, or $4.41 per diluted share.
Nine Months Ended September 30, 2013
Net interest income for the nine month period ended September 30, 2013 was $13.832 million, an increase of $21 thousand or 0.2%, from $13.811 million in the same period of 2012. We grew assets in the first nine months of 2013, as the average balance of earning assets was approximately $738.3 million, compared to approximately $639.8 million in the same period of the prior year. The net interest margin in the recent nine-month period decreased to 2.50%, compared to 2.88% in the same period of 2012. The yield on earning assets was 3.04% in the nine month period ended September 30, 2013, compared to 3.78% in the same period of 2012. The cost of interest bearing liabilities was 0.65% in the first nine months of 2013, compared to 1.13% in the first nine months of 2012.
The provision for credit losses was $700 thousand in the first nine months of 2013, compared to $100 thousand in the first nine months of 2012. Nonperforming loans decreased $383 thousand to $10.1 million at September 30, 2013 from $10.5 million at December 31, 2012. BNC has made positive progress relating to one of our non-performing loan relationships which is recorded at $5.8 million. We anticipate that this loan will return to accrual status in the fourth quarter of 2013.
Non-interest income for the first nine months of 2013 was $24.677 million compared to $33.276 million in the same period of 2012. In 2013, the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in 2012. Excluding the insurance amounts, non-interest income was $23.622 million in the first nine months of 2013 compared to $25.776 million in same period of 2012, a decrease of $2.154 million, or 8.4%. Non-interest income was significantly influenced by mortgage banking revenues in the first nine months of 2013, which aggregated $17.413 million, a decrease of $4.014 million, or 18.7%, compared to the first nine months of 2012. These revenues declined as interest rates rose in 2013. As noted above, we recently reduced our mortgage banking workforce due to lower revenues in this area. Gains on sales of investments were higher in the first nine months of 2013 aggregating $1.247 million, compared to $279 thousand in the same period of 2012. Gains on sales of SBA loans were $1.408 million in the first nine months of 2013, compared to $864 thousand in the same period of 2012. We also experienced an increase in bank fees and service charges of $235 thousand, or 13.4% in the first nine months of 2013, reflecting growth in deposits and new accounts.
Non-interest expense was $27.907 million in the first nine months of 2013, compared to $30.996 million in the same period of 2012. Non-interest expense in 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of non-recurring legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense was $26.407 million in 2013 compared to $28.496 million in 2012 a decrease of $2.089 million or 7.3%. The valuation adjustments on foreclosed assets were $40 thousand in the first nine months of 2013 compared to $1.700 million in the first nine months of 2012. In early 2013 we experienced higher operating costs as mortgage banking revenues were higher relative to early 2012. As 2013 proceeded, mortgage banking costs have decreased when compared to the same period of 2012.
During the nine month period ended September 30, 2013, we recorded tax expense of $3.154 million which resulted in an effective tax rate of 31.85%. A tax benefit of $5.652 million was recognized during the nine month period ended September 30, 2012. The provision for income taxes was lower in 2012 because of the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $5.767 million, or $1.66 per diluted share, for the nine months ended September 30, 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $981 thousand in the first nine months of 2013 and $1.089 million in the same period of 2012. Net income available to common shareholders for the nine months ended September 30, 2012 was $20.554 million, or $6.21 per diluted share.
Assets, Liabilities and Equity
Total assets were $829.2 million at September 30, 2013, an increase of $58.4 million, or 7.6%, compared to $770.8 million at December 31, 2012 and an increase of $86.8 million, or 11.7%, since September 30, 2012. The increases in recent periods have been funded primarily by growing deposits in North Dakota as this region is experiencing robust economic conditions. Accumulated other comprehensive income was an unrealized gain of $363 thousand at September 30, 2013, compared to a net unrealized loss of $1.1 million as of June 30, 2013. Investment securities increased by $62.6 million since June 30, 2013 as we deployed cash reserves early in the third quarter when interest rates increased relative to earlier periods.
Loans held for investment increased by $13.4 million since June 30, 2013 and $5.4 million versus December 31, 2012. We have implemented measures to increase our loans held for investment portfolio with the objective of achieving loan growth (in North Dakota, our loans held for investment grew $23.2 million since September 30, 2012). Loans held for sale have decreased by $60.8 million since December 31, 2012 as production was reduced by the recent increase in interest rates.
Total deposits were $706.5 million at September 30, 2013, increasing by $56.9 million from 2012 year-end, and increasing by $83.5 million, or 13.4% since September 30, 2012. This increase relates primarily to growth in our North Dakota branches. In recent years we have observed that deposit growth can be seasonal as customers utilize their cash in warmer months.
Over recent years we have continued to witness growth in our rural branches located near the Bakken Formation. The table below shows changes since 2010.
Deposits of Rural Branches in Bakken Formation
September 30,
September 30,
Increase (Decrease)
Average Annual Growth
In thousands
2013
2010
$
%
$
%
Total Deposits
$
180,082
$
111,786
$
68,296
61
%
$
22,765
17
%
Book value per common share was $14.75 as of September 30, 2013, compared to $14.35 as of June 30, 2013, $14.49 at December 31, 2012 and $13.60 at September 30, 2012.
At September 30, 2013, tangible common equity of BNC National Bank was 10.55% of total Bank assets.
Trust assets under management or administration increased to $256.2 million at September 30, 2013, compared to $211.5 million at December 31, 2012 as this department is capturing wealth being created by the exceptionally strong economic conditions in North Dakota.
Capital
Banks and their bank holding companies operate under separate regulatory capital requirements.
At September 30, 2013, BNCCORP's tier 1 leverage ratio was 10.99%, the tier 1 risk-based capital ratio was 22.60%, and the total risk-based capital ratio was 24.18%.
At September 30, 2013, BNC National Bank had a tier 1 leverage ratio of 10.70%, a tier 1 risk-based capital ratio of 22.17%, and a total risk-based capital ratio of 23.43%.
At September 30, 2013, BNCCORP's tangible common equity as a percent of assets was 5.92% compared to 6.21% at December 31, 2012 and 6.06% at September 30, 2012. Common shareholder equity at September 30, 2013 was $49.0 million and we had preferred stock and subordinated debentures outstanding which aggregated $43.5 million at September 30, 2013.
In July of 2013, the Federal Reserve issued new regulatory capital standards for community banks which incorporate some of the capital requirements addressed in the Basel III framework and begin to be effective January 1, 2015. Although we believe we are compliant with the fully phased in standards, we have not completed our assessment of the proposed standards. The Company routinely evaluates the need to raise capital to comply with regulatory capital standards and for other corporate purposes. In addition to the new capital standards the regulatory environment for banking entities is increasingly complicated and the cost of complying with regulations will impact earnings for the foreseeable future.
Asset Quality
In recent years, challenging economic conditions have led to elevated credit risk throughout the banking industry. As a result, the Company is carefully monitoring asset quality and taking what it believes to be prudent and appropriate action to reduce credit risk.
Nonperforming assets were $12.3 million at September 30, 2013, down from $13.1 at June 30, 2013 and $15.6 million at December 31, 2012. The ratio of total nonperforming assets to total assets was 1.49% at September 30, 2013 and 2.03% at December 31, 2012. The provision for credit losses and other real estate costs was $40 thousand in the third quarter of 2013 and $0 in the third quarter of 2012.
Nonperforming loans were $10.1 million at September 30, 2013 down from $10.5 million at December 31, 2012. As noted earlier, we expect nonperforming loans to decrease by $5.8 million early in the fourth quarter of 2013. The ratio of the allowance for credit losses to total nonperforming loans as of September 30, 2013 was 98% compared to 96% at December 31, 2012. The provision for credit losses in the third quarters of 2013, and 2012 were $0.
The allowance for credit losses was $9.9 million at September 30, 2013, compared to $10.1 million at December 31, 2012. The allowance for credit losses as a percentage of total loans at September 30, 2013 was 3.01%, compared to 2.62% at December 31, 2012. The allowance for credit losses as a percentage of loans and leases held for investment at September 30, 2013 was 3.36%, compared to 3.49% at December 31, 2012.
At September 30, 2013, BNC had $13.0 million of classified loans, $10.1 million of loans on non-accrual and $2.2 million of other real estate owned. At December 31, 2012, BNC had $13.6 million of classified loans, $10.5 million of loans on non-accrual and $5.1 million of other real estate owned. At September 30, 2012, BNC had $17.4 million of classified loans, $4.8 million of loans on non-accrual and $5.9 million of other real estate owned.
BNCCORP, INC., headquartered in Bismarck, N.D., is a registered bank holding company dedicated to providing banking and wealth management services to businesses and consumers in its local markets. The Company operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota from 14 locations. BNC also conducts mortgage banking from 12 offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota.
This news release may contain "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of BNC. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management are generally identifiable by the use of words such as "expect", "believe", "anticipate", "plan", "intend", "estimate", "may", "will", "would", "could", "should", "future" and other expressions relating to future periods. Examples of forward-looking statements include, among others, statements we make regarding our belief that we have exceptional liquidity, our expectations regarding future market conditions and our ability to capture opportunities and pursue growth strategies, our expected operating results such as revenue growth and earnings, and our expectations of the effects of the regulatory environment on our earnings for the foreseeable future. Forward-looking statements are neither historical facts nor assurances of future performance. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to: the impact of current and future regulation; the risks of loans and investments, including dependence on local and regional economic conditions; competition for our customers from other providers of financial services; possible adverse effects of changes in interest rates, including the effects of such changes on mortgage banking revenues and derivative contracts and associated accounting consequences; risks associated with our acquisition and growth strategies; and other risks which are difficult to predict and many of which are beyond our control. In addition, all statements in this news release, including forward-looking statements, speak only of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
(Financial tables attached)
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands, except per share data)
2013
2012
2013
2012
SELECTED INCOME STATEMENT DATA
Interest income
$
5,560
$
6,095
$
16,769
$
18,130
Interest expense
944
1,328
2,937
4,319
Net interest income
4,616
4,767
13,832
13,811
Provision for credit losses
-
-
700
100
Non-interest income
5,001
16,826
24,677
33,276
Non-interest expense
9,451
12,303
27,907
30,996
Income before income taxes
166
9,290
9,902
15,991
Income tax expense (benefit)
(321)
(5,755)
3,154
(5,652)
Net income
487
15,045
6,748
21,643
Preferred stock costs
(330)
(369)
(981)
(1,089)
Net income available to common shareholders
$
157
$
14,676
$
5,767
$
20,554
EARNINGS PER SHARE DATA
Basic earnings per common share
$
0.05
$
4.46
$
1.75
$
6.24
Diluted earnings per common share
$
0.05
$
4.41
$
1.66
$
6.21
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands, except share data)
2013
2012
2013
2012
ANALYSIS OF NON-INTEREST INCOME
Bank charges and service fees
$
698
$
626
$
1,989
$
1,754
Wealth management revenues
302
266
935
912
Mortgage banking revenues
2,422
7,787
17,413
21,427
Gains on sales of loans, net
301
245
1,408
864
Gains on sales of securities, net
37
181
1,247
279
Other
186
221
630
540
Subtotal non-interest income
3,946
9,326
23,622
25,776
Insurance claim settlement
-
7,500
-
7,500
Life insurance benefit received
1,055
-
1,055
-
Total non-interest income
$
5,001
$
16,826
$
24,677
$
33,276
ANALYSIS OF NON-INTEREST EXPENSE
Salaries and employee benefits
$
3,637
$
4,607
$
12,991
$
12,799
Professional services
861
1,332
2,883
3,403
Data processing fees
717
735
2,218
2,116
Marketing and promotion
718
516
1,927
1,482
Occupancy
597
478
1,765
1,440
Regulatory costs
146
304
680
901
Depreciation and amortization
311
278
928
836
Office supplies and postage
139
166
461
506
Other real estate costs
38
48
164
1,988
Other
787
1,339
2,390
3,025
Subtotal non-interest expense
7,951
9,803
26,407
28,496
Insurance settlement legal fees
-
2,500
-
2,500
Impairment charge
1,500
-
1,500
-
Total non-interest expense
$
9,451
$
12,303
$
27,907
$
30,996
WEIGHTED AVERAGE SHARES
Common shares outstanding (a)
3,299,236
3,291,569
3,299,467
3,291,793
Incremental shares from assumed conversion of options and contingent shares
178,265
37,536
172,731
20,391
Adjusted weighted average shares (b)
3,477,501
3,329,105
3,472,198
3,312,184
(a)
Denominator for basic earnings per common share
(b)
Denominator for diluted earnings per common share
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands, except share, per share and full time equivalent data)
September 30,
2013
December 31,
2012
September 30,
2012
SELECTED BALANCE SHEET DATA
Total assets
$
829,232
$
770,776
$
742,475
Loans held for sale-mortgage banking
34,344
95,095
88,926
Loans and leases held for investment (a)
294,876
289,469
285,472
Total loans
329,220
384,564
374,398
Allowance for credit losses
(9,897)
(10,091)
(10,521)
Investment securities available for sale
405,300
300,549
283,835
Other real estate, net
2,186
5,131
5,859
Earning assets
768,732
698,872
674,197
Total deposits
706,495
649,604
622,997
Core deposits
641,725
584,604
553,067
Other borrowings
44,452
34,130
34,691
Cash and cash equivalents
56,728
40,790
36,520
OTHER SELECTED DATA
Net unrealized gains (losses) in accumulated other comprehensive income
$
363
$
4,961
$
6,625
Trust assets under management or administration
$
256,178
$
211,519
$
212,188
Total common stockholders' equity
$
49,032
$
47,842
$
44,895
Book value per common share
$
14.75
$
14.49
$
13.60
Full time equivalent employees (b)
252
272
265
Common shares outstanding
3,324,584
3,300,652
3,299,969
CAPITAL RATIOS
Tier 1 leverage (Consolidated)
10.99%
11.17%
10.31%
Tier 1 risk-based capital (Consolidated)
22.60%
20.49%
18.60%
Total risk-based capital (Consolidated)
24.18%
22.43%
21.03%
Tangible common equity (Consolidated)
5.92%
6.21%
6.06%
Tier 1 leverage (BNC National Bank)
10.70%
10.68%
11.73%
Tier 1 risk-based capital (BNC National Bank)
22.17%
19.80%
21.14%
Total risk-based capital (BNC National Bank)
23.43%
21.06%
22.41%
Tangible capital (BNC National Bank)
10.55%
10.97%
12.31%
(a)
Included in loans and leases held for investment are $80.8 million of commercial real estate loans as of September 30, 2013, $ 87.3 million at December 31, 2012, and $97.3 million at September 30, 2012.
(b)
September 30, 2013 is adjusted for recent reduction in mortgage banking operating positions.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
(In thousands)
2013
2012
2013
2012
AVERAGE BALANCES
Total assets
$
810,301
$
719,416
$
799,101
$
700,912
Loans held for sale-mortgage banking
46,872
75,350
62,013
62,013
Loans and leases held for investment
277,257
283,016
283,529
283,529
Total loans
324,129
358,366
345,542
345,542
Investment securities available for sale
362,873
288,120
333,761
266,881
Earning assets
750,340
653,773
738,264
639,838
Total deposits
690,320
605,999
679,246
600,030
Core deposits
625,397
541,522
614,239
538,312
Total equity
68,973
58,064
70,312
49,324
Cash and cash equivalents
80,844
24,380
76,583
44,857
KEY RATIOS
Return on average common stockholders' equity
1.30%
156.76%
15.63%
96.15%
Return on average assets
0.24%
8.32%
1.13%
4.12%
Net interest margin
2.44%
2.90%
2.50%
2.88%
Efficiency ratio
98.27%
56.98%
72.47%
65.83%
Efficiency ratio (Adjusted) (a)
92.86%
69.56%
70.51%
71.98%
Efficiency ratio (BNC National Bank)
92.65%
53.90%
69.36%
62.69%
(a)
Efficiency ratio is adjusted to exclude insurance receipts and impairment charges for the three and nine month period ending September 30, 2013 and insurance receipts and non-recurring legal fees for the three and nine month period ending September 30, 2012.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands)
September 30,
2013
December 31,
2012
September 30,
2012
ASSET QUALITY
Loans 90 days or more delinquent and still accruing interest
$
57
$
12
$
23
Non-accrual loans
10,072
10,500
4,833
Total nonperforming loans
$
10,129
$
10,512
$
4,856
Other real estate, net
2,186
5,131
5,859
Total nonperforming assets
$
12,315
$
15,643
$
10,715
Allowance for credit losses
$
9,897
$
10,091
$
10,521
Troubled debt restructured loans
$
8,654
$
12,368
$
12,499
Ratio of total nonperforming loans to total loans
3.08%
2.73%
1.30%
Ratio of total nonperforming assets to total assets
1.49%
2.03%
1.44%
Ratio of nonperforming loans to total assets
1.22%
1.36%
0.65%
Ratio of allowance for credit losses to loans and leases held for investment
3.36%
3.49%
3.69%
Ratio of allowance for credit losses to total loans
3.01%
2.62%
2.81%
Ratio of allowance for credit losses to nonperforming loans
98%
96%
217%
For the Quarter
For the Nine Months
(In thousands)
Ended September 30,
Ended September 30,
2013
2012
2013
2012
Changes in Nonperforming Loans:
Balance, beginning of period
$
10,183
$
4,893
$
10,512
$
6,169
Additions to nonperforming
74
40
811
74
Charge-offs
(5)
-
(909)
(317)
Reclassified back to performing
(12)
-
(19)
(815)
Principal payments received
(111)
(77)
(242)
(255)
Transferred to repossessed assets
-
-
(24)
-
Transferred to other real estate owned
-
-
-
-
Balance, end of period
$
10,129
$
4,856
$
10,129
$
4,856
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
(In thousands)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
2013
2012
2013
2012
Changes in Allowance for Credit Losses:
Balance, beginning of period
$
9,898
$
10,565
$
10,091
$
10,630
Provision
-
-
700
100
Loans charged off
(16)
(57)
(983)
(383)
Loan recoveries
15
13
89
174
Balance, end of period
$
9,897
$
10,521
$
9,897
$
10,521
Ratio of net charge-offs to average total loans
0.00%
(0.012)%
(0.321)%
(0.060)%
Ratio of net charge-offs to average total loans, annualized
(0.001)%
(0.049)%
(0.518)%
(0.081)%
(In thousands)
For the Quarter
Ended September 30,
For the Nine Months
Ended September 30,
2013
2012
2013
2012
Changes in Other Real Estate:
Balance, beginning of period
$
2,966
$
7,932
$
5,131
$
10,145
Transfers from nonperforming loans
-
-
-
-
Transfers from premises and equipment
800
-
800
-
Real estate sold
(1,540)
(1,971)
(3,705)
(2,458)
Net gains (losses) on sale of assets
-
(102)
-
(128)
Provision
(40)
-
(40)
(1,700)
Balance, end of period
$
2,186
$
5,859
$
2,186
$
5,859
As of
(In thousands)
September 30,
2013
December 31, 2012
September 30,
2012
Other real estate
$
5,120
$
8,146
$
10,349
Valuation allowance
(2,934)
(3,015)
(4,490)
Other real estate, net
$
2,186
$
5,131
$
5,859
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
(In thousands)
September 30, 2013
December 31, 2012
CREDIT CONCENTRATIONS
North Dakota
Commercial and industrial
$
71,298
$
65,793
Construction
7,838
10,824
Agricultural
17,243
15,047
Land and land development
11,186
12,240
Owner-occupied commercial real estate
28,008
24,107
Commercial real estate
29,608
12,644
Small business administration
2,178
2,428
Consumer
30,957
25,115
Subtotal
$
198,316
$
168,198
Arizona
Commercial and industrial
$
2,187
$
1,421
Construction
-
-
Agricultural
-
-
Land and land development
5,204
5,663
Owner-occupied commercial real estate
647
667
Commercial real estate
16,347
16,699
Small business administration
15,654
12,881
Consumer
2,213
2,884
Subtotal
$
42,252
$
40,215
Minnesota
Commercial and industrial
$
420
$
1,154
Construction
-
-
Agricultural
21
24
Land and land development
583
1,145
Owner-occupied commercial real estate
-
-
Commercial real estate
10,339
14,767
Small business administration
43
62
Consumer
334
409
Subtotal
$
11,743
$
17,561
SOURCE BNCCORP, INC.
Copyright 2013 PR Newswire
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