BNC Bancorp Announces Earnings for Fourth Quarter and Fiscal Year 2015

Jan 25, 2016, 08:30 ET from BNC Bancorp

HIGH POINT, N.C., Jan. 25, 2016 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the quarter and year ended December 31, 2015.  Highlights for the fourth quarter 2015 include the following:

  • Operating earnings for the fourth quarter of 2015 totaled $15.4 million, or $0.39 per diluted share, compared to $15.0 million, or $0.39 per diluted share, for the third quarter of 2015 
    • Per share results for the fourth quarter 2015 were impacted by the public stock offering detailed below;
    • Diluted earnings per share totaled $0.32, compared to $0.31 for the third quarter of 2015;
    • Net income for the quarter was $12.7 million, compared to $11.9 million for third quarter of 2015; and
    • Operating earnings for the year ended December 31, 2015 were $52.7 million, or $1.47 per diluted share, compared to $35.3 million, or $1.21 per diluted share, for the year ended December 31, 2014.
  • Continued balance sheet growth, both organically and through acquisitions, during the fourth quarter
    • Originated loans increased $128.2 million, or 5.0%, excluding loans that were reclassified from acquired;
    • Total deposits increased $367.7 million, or 8.4%;
    • Transactional deposit base increased $218.1 million, or 7.5%; and
    • Total assets increased $455.5 million, or 8.8%.
  • Continued trend of strong operating performance ratios during fourth quarter of 2015
    • Operating return of average assets of 1.13%, compared to 1.15% for the third quarter of 2015;
    • Operating return of average tangible common equity of 15.99%, compared to 16.79% for third quarter 2015; and
    • Operating efficiency ratio of 54.48%, compared to 55.59% for third quarter 2015.
  • Announced pending acquisition of High Point Bank Corporation
    • Expected to close during the second quarter of 2016, subject to regulatory approval, approval of High Point Bank Corporation shareholders, and other customary closing conditions.
  • Completed acquisition and conversion of seven branches from CertusBank, N.A.
    • Expands the Company's presence in attractive Upstate South Carolina markets.
  • Completed public offering of 2.59 million shares of voting common stock
    • Net proceeds of approximately $57.6 million after underwriting discount and expenses

Financial Performance

Three Months Ended

Year Ended  December 31,

INCOME SUMMARY

Dec. 31, 2015

Sept. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2014

2015

2014

Interest income

(Dollars in thousands)

Interest and fees on loans

$50,762

$48,050

$40,494

$39,420

$38,534

$ 178,726

$ 140,024

Investment securities

5,336

5,101

4,421

4,347

4,230

19,205

17,576

Other

141

162

132

120

151

555

542

Total interest income

56,239

53,313

45,047

43,887

42,915

198,486

158,142

Interest expense

Interest on deposits 

5,852

5,265

4,888

4,442

3,946

20,447

15,139

Interest on borrowings

1,648

1,789

1,427

1,375

1,508

6,239

4,787

Total interest expense

7,500

7,054

6,315

5,817

5,454

26,686

19,926

Net interest income

48,739

46,259

38,732

38,070

37,461

171,800

138,216

Provision for loan losses

1,287

198

301

110

1,001

1,896

7,006

Net interest income 

47,452

46,061

38,431

37,960

36,460

169,904

131,210

Operating non-interest income (1)

Mortgage fees

2,226

3,031

2,777

2,499

2,049

10,533

7,689

Service charges

2,341

2,284

1,810

1,644

1,648

8,079

6,105

Earnings on bank-owned life insurance

806

705

601

654

634

2,766

2,382

Other

2,868

2,355

3,509

1,454

3,454

10,186

8,589

Total operating non-interest income

8,241

8,375

8,697

6,251

7,785

31,564

24,765

Operating non-interest expense (1)

Salaries and employee benefits

17,888

17,543

15,749

15,973

16,423

67,153

58,910

Occupancy 

3,392

3,211

2,618

2,581

2,365

11,802

9,145

Furniture and equipment

2,426

1,654

1,596

1,627

1,630

7,303

6,448

Data processing and supply 

1,194

1,268

1,073

846

1,053

4,381

3,712

Advertising and business development 

879

493

617

646

625

2,635

2,666

Insurance, professional and other services

952

1,405

1,079

1,388

1,077

4,824

3,952

FDIC insurance assessments

883

824

702

735

700

3,144

2,932

Loan, foreclosure and OREO

1,639

2,352

3,536

2,325

2,632

9,852

8,940

Other

4,020

3,786

3,185

3,031

3,017

14,022

10,205

Total operating non-interest expenses

33,273

32,536

30,155

29,152

29,522

125,116

106,910

Operating income before income taxes

22,420

21,900

16,973

15,059

14,723

76,352

49,065

Operating income tax expense (1)

6,996

6,902

5,172

4,543

4,426

23,613

13,810

Operating income (non-GAAP)

15,424

14,998

11,801

10,516

10,297

52,739

35,255

Securities gains (losses), net of tax

28

500

(3)

31

-

556

(322)

Insurance settlement income, net of tax

-

-

-

-

-

-

484

Transaction-related expenses, net of tax

2,713

3,078

784

1,789

1,406

8,364

5,641

Loss on extinguishment of debt, net of tax

-

481

-

-

386

481

386

Net income (GAAP)

$12,739

$11,939

$11,014

$  8,758

$  8,505

$   44,450

$   29,390

(1)

See Reconciliation of Non-GAAP to GAAP for additional details.

 

Performance Ratios

Three Months Ended

Year Ended  December 31,

Dec. 31, 2015

Sept. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2014

2015

2014

Operating earnings per diluted share (1)

$   0.39

$    0.39

$    0.36

$    0.32

$   0.34

$    1.47

$   1.21

Operating return of average assets (1)

1.13%

1.15%

1.13%

1.04%

1.07%

1.12%

0.99%

Operating return on average tangible common equity (1)

15.99%

16.79%

15.58%

14.41%

15.08%

15.77%

13.70%

Operating efficiency ratio (1)

54.48%

55.59%

59.48%

61.30%

61.07%

57.44%

61.25%

Earnings per diluted share - GAAP

$   0.32

$    0.31

$    0.34

$    0.27

$   0.28

$    1.24

$   1.01

Return of average assets - GAAP

0.93%

0.92%

1.06%

0.87%

0.89%

0.94%

0.83%

Return on average common equity - GAAP

9.13%

9.15%

11.05%

9.01%

9.59%

9.52%

9.09%

Return on average tangible common equity - GAAP

13.33%

13.52%

14.59%

12.12%

12.57%

13.40%

11.51%

Efficiency ratio - GAAP

63.75%

66.59%

63.71%

69.19%

68.63%

65.70%

68.12%

Book value per common share

$ 14.52

$  13.70

$  12.38

$  12.20

$ 11.98

$  14.52

$ 11.98

Tangible book value per common share (1)

10.77

9.86

9.87

9.67

9.41

10.77

9.41

(1)

See Reconciliation of Non-GAAP to GAAP for additional details.

 

Other Selected Financial Data

 Three Months Ended 

 Year Ended  December 31, 

 Dec. 31, 2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

2015

2014

 (Dollars in thousands) 

 Securities gains (losses), net 

$         45

$       794

$          (4)

$         49

$            -

$       884

$     (511)

 Loss on extinguishment of debt 

-

763

-

-

613

763

613

 Fair value accretion 

5,599

4,835

5,273

4,809

4,867

20,516

14,879

 OREO valuation adjustments, net  

348

911

820

814

866

2,893

3,836

 Transaction-related expenses 

4,307

4,886

1,244

2,839

2,231

13,276

8,954

 

Richard D. Callicutt, II, President and CEO, stated, "As noted in the highlights above, our Company made significant strides during the quarter towards attaining many of our near term strategic initiatives, all which should propel the Company into the future with greater diversity, momentum and financial strength.  Successfully integrating operations of the seven Certus offices in the Upstate of South Carolina during the quarter, while making significant progress in our preparation for our upcoming closing and integration of Southcoast Bank in the Charleston area, is a testament to the outstanding efforts of our internal integration and support teams.  We could not be one of the most acquisitive banks in the United States, and also one of the highest in stock price appreciation, if not for the tireless efforts of our integration and support teams.  I am humbled each and every day by their dedication, skill, and unrelenting desire for excellence. 

Also during the quarter we announced one of the most important events in our history, as High Point Bank agreed to join forces with BNC.  High Point Bank has been the benchmark that all other banks have been measured in High Point and the surrounding communities for over 100 years, and both companies are extremely excited about the opportunity for even greater success and service as we come together.  Along with the High Point Bank transaction, we announced the closing of a $60 million common equity raise that was extremely beneficial to our existing shareholders as it added over $0.70 to tangible book value. These two announcements, when viewed together, were accretive to future earnings, immediately accretive to tangible book value, grew our already strong capital ratios, and further enhanced our core deposit portfolio, primarily in the checking account areas.    

While 2015 was another year of double-digit growth, in earnings, loans and deposits, it was also a year where we gained further depth in each of our six key target regions.  The Valley transaction gave us a very efficient and profitable $800 million operation in the Southwest Virginia market, while the Certus and Southcoast transactions will provide over $650 million and eighteen offices in the two most dynamic markets in South Carolina; Charleston/Mount Pleasant and Greenville/Spartanburg.  In the Charlotte and Raleigh/Durham/Chapel-Hill markets, while there were no major announcements, our talent base continued to grow and the loan originations in these two markets totaled over $1 billion in 2015.  As we continue our mission to build the most profitable and valuable franchise in the Carolinas and Southwest VA, we are ever aware that our executive management team and staff must manage an ever increasing level of risk in our industry, and a more complex, yet highly convenient, multi-channel delivery platform.  This is why our dedication to building a senior team with years of experience in their particular areas, an ability to process information and make good decisions, and a personality and leadership style that promotes teamwork is one of my highest priorities as CEO."

Operating earnings for the fourth quarter of 2015 totaled $15.4 million, or $0.39 per diluted share, compared to $15.0 million, or $0.39 per diluted share, for the third quarter of 2015.  Operating earnings exclude non-operating income and expenses, which primarily consists of transaction-related expenses and gain (loss) on sale of investment securities, net of income taxes.  The increase was due to increased net interest income, due to continued organic loan growth, as well as loans purchased from CertusBank, N.A. ("Certus").  This increase was partially offset by increased provision for loan losses and increased non-interest expenses. 

Net income for the fourth quarter of 2015 totaled $12.7 million, or $0.32 per diluted share, compared to $11.9 million, or $0.31 per diluted share, for the third quarter of 2015. 

Total non-interest income was $8.3 million for the fourth quarter of 2015, a decrease from $9.2 million for the third quarter of 2015.  Excluding gains on securities sales, non-interest income decreased by $0.1 million from third quarter 2015.  Mortgage fees decreased as compared to third quarter of 2015 due to a seasonal reduction in loan closings.  Many of the other non-interest income sources, such as income from recoveries on acquired loans, income derived from the sale of loans partially guaranteed by the Small Business Administration and income derived from our investment brokerage services, are volatile and can vary significantly from period to period. 

Total non-interest expense was $37.6 million for the fourth quarter of 2015, a decrease from $38.2 million for the third quarter of 2015.  Excluding transaction-related expenses and other non-operating items, non-interest expense for the fourth quarter was $33.3 million, as compared to $32.5 million for the third quarter of 2015.  The increase is due to additional employees and facilities from the acquired Certus branches, as well as traditional year-end compensation-related expenses.  These increased charges were slightly offset by a reduction in loan and other real estate owned ("OREO") expenses during the fourth quarter of 2015.

Selected Balance Sheet Data

 

 Ending Balance 

 Dec. 31, 2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

 Portfolio loans: 

 (Dollars in thousands) 

    Originated loans 

$ 2,721,216

$ 2,587,572

$ 2,394,470

$ 2,262,601

$ 2,116,441

    Acquired loans 

1,478,655

1,391,061

858,537

913,236

958,657

    Allowance for loan and lease losses 

(31,647)

(30,833)

(30,635)

(29,351)

(30,399)

 Portfolio loans, net 

4,168,224

3,947,800

3,222,372

3,146,486

3,044,699

 Loans held for sale 

39,470

37,437

36,315

25,505

37,280

 Investment securities 

734,557

645,732

557,732

515,325

506,382

 Total interest-earning assets 

5,131,988

4,689,936

3,886,910

3,778,586

3,669,857

 Goodwill 

134,686

128,489

69,749

69,749

69,749

 Core deposit intangible, net 

18,299

18,134

12,273

13,112

13,952

 Total assets 

$ 5,656,638

$ 5,201,118

$ 4,278,588

$ 4,173,463

$ 4,072,508

 Deposits: 

    Non-interest bearing deposits 

$    776,479

$    738,529

$    621,392

$    544,189

$    534,792

    Interest-bearing demand and savings 

2,337,978

2,157,801

1,586,967

1,685,200

1,657,931

    Time deposits 

1,627,750

1,478,161

1,301,616

1,323,537

1,203,674

 Total deposits 

4,742,207

4,374,491

3,509,975

3,552,926

3,396,397

 Borrowings 

292,790

267,069

337,711

195,659

261,748

 Total interest-bearing liabilities 

4,258,518

3,903,031

3,226,294

3,204,395

3,123,353

 Shareholders' equity: 

    Common equity 

584,818

515,062

395,215

389,025

380,206

    Accumulated other comprehensive income 

7,329

7,435

8,368

10,087

10,182

 Total shareholders' equity 

$    592,147

$    522,497

$    403,583

$    399,112

$    390,388

At December 31, 2015, the Company's total assets were $5.7 billion, an increase from $5.2 billion at September 30, 2015 and from $4.1 billion at December 31, 2014.  During the fourth quarter of 2015, originated loans increased $128.2 million, net of loans that were reclassified from acquired.  The Company also had increases in investment securities and interest-bearing cash due to the Company's desire to increase its on-balance sheet liquidity.  Funding this growth were continued increases in deposits, both organically and from the acquisition of branches from Certus, and from additional short-term borrowings.  The Company continues to grow transactional deposits, which increased by $218.1 million during the fourth quarter.  Wholesale deposits comprised 27.5% of total deposits at December 31, 2015, as compared to 26.1% at September 30, 2015 and 25.7% at December 31, 2014.  Goodwill and net core deposit intangibles increased by $6.4 million during the quarter due to the Certus branch acquisition. 

Shareholder's equity increased by $69.7 million during the fourth quarter due to the sale of 2.59 million common shares in a public offering.  All of the Bank's and Company's capital ratios exceed the minimum thresholds established for a well-capitalized bank by regulatory measures. 

Asset Quality

 Ending Balance 

 Dec. 31,  2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

 (Dollars in thousands) 

Nonaccrual loans - non-acquired

$       6,623

$       5,914

$     12,998

$     14,776

$       8,475

Nonaccrual loans - acquired

12,086

14,322

12,391

13,191

16,248

OREO - non-acquired

15,588

18,791

20,767

21,869

23,989

OREO - acquired

16,973

18,489

12,241

17,558

18,542

90 days past due - non-acquired

-

-

-

-

-

90 days past due - acquired

3

-

14

-

-

Total nonperforming assets

$     51,273

$     57,516

$     58,411

$     67,394

$     67,254

Total nonperforming assets - non-acquired

$     22,211

$     24,705

$     33,765

$     36,645

$     32,464

Net charge-offs (recoveries), QTD

$          352

$         (326)

$      (1,036)

$          584

$          940

Annualized net charge-offs (recoveries) to total average portfolio loans

0.03%

-0.03%

-0.13%

0.08%

0.13%

Ratio of total nonperforming assets to total assets

0.91%

1.11%

1.37%

1.61%

1.65%

Ratio of total nonperforming loans to total portfolio loans

0.45%

0.51%

0.78%

0.88%

0.80%

Ratio of total allowance for loan losses to total portfolio loans

0.75%

0.77%

0.94%

0.92%

0.99%

Excluding acquired 

Ratio of nonperforming assets to total loans and OREO

0.81%

0.95%

1.40%

1.60%

1.52%

Ratio of nonperforming loans to total loans

0.24%

0.23%

0.54%

0.65%

0.40%

Ratio of allowance for loan losses to total loans

1.05%

1.05%

1.13%

1.15%

1.25%

Overall asset quality continued to improve during the fourth quarter of 2015, as total nonperforming assets were $51.3 million, or 0.91% of total assets, as compared to $57.5 million, or 1.11% of total assets, at September 30, 2015, and $67.3 million, or 1.65% of total assets, at December 31, 2014. 

Excluding nonperforming assets acquired by the Company, nonperforming assets were $22.2 million, or 0.81% of non-acquired loans and OREO at December 31, 2015, as compared to $24.7 million, or 0.95% of non-acquired loans and OREO, at September 30, 2015, and $32.5 million, or 1.52% of non-acquired loans and OREO, at December 31, 2014. 

The Company experienced $0.4 million of net charge-offs during the fourth quarter of 2015, compared to net recoveries of $0.3 million during the third quarter of 2015.  Gross charge-offs were $1.5 million during the fourth quarter of 2015, a slight increase compared to $1.2 million during the third quarter of 2015.

The allowance for loan losses was $31.6 million at December 31, 2015, an increase from $30.8 million at September 30, 2015 and $30.4 million at December 31, 2014.  The Company recorded a provision for loan losses of $1.3 million during the fourth quarter of 2015, as compared to $0.2 million recorded during the third quarter of 2015.  The provision for loan losses recorded during the fourth quarter of 2015 was allocated to loans not acquired by the Company.  The additional provision was recorded due to the high levels of loan growth in the originated loan portfolio.

Net Interest Income and Margin

Three Months Ended

Year Ended December 31,

 Dec. 31, 2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

2015

2014

Quarterly average balances:

(Dollars in thousands)

    Loans 

$4,193,632

$3,957,846

$3,238,433

$3,154,739

$2,905,305

$3,639,890

$2,633,829

    Investment securities 

656,940

631,407

513,476

495,587

484,092

574,951

495,251

    Total interest-earning assets 

4,927,105

4,657,454

3,802,696

3,708,252

3,436,018

4,278,267

3,202,958

    Total assets 

5,428,444

5,154,690

4,180,690

4,097,199

3,809,989

4,720,107

3,561,719

    Deposits: 

      Non-interest bearing 

772,831

733,659

573,640

532,348

519,062

653,999

432,181

      Interest-bearing 

3,784,140

3,539,391

2,902,960

2,930,315

2,667,995

3,292,226

2,579,633

    Total deposits 

4,556,971

4,273,050

3,476,600

3,462,663

3,187,057

3,946,225

3,011,814

    Borrowed funds 

288,209

334,584

279,140

216,182

246,229

279,877

203,922

    Total interest-bearing liabilities 

4,072,349

3,873,975

3,182,100

3,146,497

2,914,224

3,572,103

2,783,555

    Shareholders' equity 

553,475

517,835

517,835

394,034

351,695

466,881

323,183

Interest Income/Expense (FTE):

   Loans

$     50,762

$     48,050

$     40,494

$     39,420

$     38,534

$   178,726

$   140,024

   Investment securities, tax

2,069

1,842

1,261

1,166

970

6,338

4,385

   Investment securities, non-tax

5,186

5,173

5,016

5,049

5,175

20,424

20,938

   Other earning assets

140

162

132

120

151

554

542

   Total interest income

58,157

55,227

46,903

45,755

44,830

206,042

165,889

   Deposits

5,852

5,265

4,888

4,442

3,946

20,447

15,139

   Borrowings

1,647

1,789

1,426

1,375

1,508

6,237

4,787

   Total interest expense

7,499

7,054

6,314

5,817

5,454

26,684

19,926

   Net interest income

$     50,658

$     48,173

$     40,589

$     39,938

$     39,376

$   179,358

$   145,963

Average Yields and Costs (FTE):

   Loans

4.80%

4.82%

5.02%

5.07%

5.26%

4.91%

5.32%

   Investment securities, tax

2.81%

2.73%

3.08%

3.33%

3.32%

2.92%

3.61%

   Investment securities, non-tax

5.63%

5.64%

5.76%

5.79%

5.58%

5.71%

5.60%

   Other interest-earning assets

0.73%

0.94%

1.04%

0.84%

1.28%

0.87%

0.73%

   Total earning assets

4.68%

4.70%

4.95%

5.00%

5.18%

4.82%

5.18%

   Total interest bearing deposits

0.61%

0.59%

0.68%

0.61%

0.59%

0.62%

0.59%

   Borrowed funds

2.27%

2.12%

2.05%

2.58%

2.43%

2.23%

2.35%

   Total interest-bearing liabilities

0.73%

0.72%

0.80%

0.75%

0.74%

0.75%

0.72%

   Cost of funds

0.61%

0.61%

0.67%

0.64%

0.63%

0.63%

0.62%

   Net interest margin

4.08%

4.10%

4.28%

4.37%

4.55%

4.19%

4.56%

Fully-taxable equivalent ("FTE") net interest income for the fourth quarter of 2015 was $50.7 million, an increase from $48.2 million for the third quarter of 2015.  FTE net interest margin was 4.08% for the fourth quarter of 2015, a slight decrease from 4.10% for the third quarter of 2015.  The average yield on interest-earning assets decreased two basis points during the fourth quarter of 2015, while the rate paid on interest-bearing liabilities increased by one basis point.  Accretion earned on the Company's acquired loan portfolio was $5.6 million during the fourth quarter of 2015, an increase as compared to $4.8 million earned in the third quarter of 2015.  Excluding accretion, the average yield on loans was 4.27% for the fourth quarter 2015, as compared to 4.33% for the third quarter of 2015. 

Average interest-earnings assets for the fourth quarter of 2015 were $4.97 billion, an increase from $4.66 billion for the third quarter of 2015.  These increases are primarily due to higher average loan balances from the Certus branch acquisition and organic loan growth in our markets, as well as additional investment securities purchased during the fourth quarter of 2015.  Average interest-bearing liabilities were $4.07 billion for the fourth quarter of 2015, an increase from $3.87 billion during the third quarter of 2015.  This increase was due to the deposits acquired in the Certus branch acquisition, as well as organic deposit growth and additional borrowings during the fourth quarter.

Loan Portfolio Composition

 Ending Balance 

 Dec. 31,  2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

 (Dollars in millions) 

Residential construction

$             76

$             92

$             84

$             78

$             73

     Presold

46

55

58

50

41

     Speculative

30

37

26

28

32

Commercial construction

237

233

243

177

203

Residential and commercial A&D

18

18

16

12

13

Land

111

90

86

92

98

     Residential buildable lots

34

26

27

27

27

     Commercial buildable lots

20

22

24

25

26

     Land held for development

34

25

20

24

26

     Raw and agricultural land

23

17

16

17

19

Commercial real estate

2,246

2,133

1,721

1,713

1,585

     Multi-family

178

165

96

100

83

     Farmland

5

5

6

5

5

     Owner occupied

785

737

626

615

591

     Non-owner occupied

1,277

1,226

993

994

907

Commercial and industrial

419

340

220

199

192

Residential mortgage

1,049

1,029

842

867

872

Consumer

19

19

17

16

16

Leases

27

26

25

22

21

Total portfolio loans

$        4,200

$        3,979

$        3,253

$        3,176

$        3,075

Total portfolio loans were $4.2 billion at December 31, 2015, an increase from $4.0 billion at September 30, 2015 and from $3.1 billion at December 31, 2014.  Loans that were originated by the Company, excluding loans that were reclassified from acquired, increased by $128.2 million, or 5.0%, on an annualized basis.   The Company has experienced organic loan growth across all loan types, with the majority of loan growth in commercial real estate and commercial and industrial loans.

Acquired Loan Summary

 Ending Balance 

 Dec. 31,  2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

(Dollars in thousands)

Performing acquired loans

$  1,363,379

$  1,262,268

$     744,081

$     793,149

$     834,863

Less: remaining FMV adjustments

(27,789)

(28,990)

(19,900)

(23,045)

(26,280)

   Performing acquired loans, net

1,335,590

1,233,278

724,181

770,104

808,583

   FMV adjustment %

2.0%

2.3%

2.7%

2.9%

3.1%

Purchase credit impaired loans (PCI)

157,966

176,605

147,372

156,049

164,120

Less: remaining FMV adjustments

(14,901)

(18,822)

(13,016)

(12,917)

(14,046)

   PCI loans, net

143,065

157,783

134,356

143,132

150,074

   FMV adjustment %

9.4%

10.7%

26.0%

23.9%

24.3%

Total acquired performing loans

$  1,335,590

$  1,233,278

$     724,181

$     770,104

$     808,583

Total acquired PCI loans

143,065

157,783

134,356

143,132

150,074

Total acquired loans

$  1,478,655

$  1,391,061

$     858,537

$     913,236

$     958,657

   FMV adjustment % all acquired loans

-2.8%

-3.3%

-3.7%

-3.8%

-4.0%

About BNC Bancorp and Bank of North Carolina

Headquartered in High Point, NC, BNC Bancorp is the parent company of Bank of North Carolina, a commercial bank with total assets of $5.7 billion.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 64 current banking offices in Virginia, North and South Carolina.  The Bank's 19 locations in South Carolina and nine locations in Virginia operate as BNC Bank.  Bank of North Carolina is insured by the FDIC and is an equal housing lender.  BNC Bancorp's stock is traded and quoted in the NASDAQ Capital Market under the symbol "BNCN."  The Company's website is www.bncbancorp.com.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States.  BNC Bancorp's management uses these "non-GAAP" measures in their analysis of the Company's performance.  Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. See the attached tabular disclosures for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Forward Looking Statements

This press release contains forward-looking statements relating to the financial condition, results of operations and business of BNC Bancorp and the Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BNC Bancorp, and the information available to management at the time that this press release was prepared. Factors that could cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (i) the economic recovery may face challenges causing its momentum to falter or a further recession; (ii) expected cost savings and other benefits anticipated in connection with our acquisitions may not be fully realized or realized within the expected time frame; (iii) our ability to integrate acquisitions and retain existing customers and attract new ones; and (iv) adverse changes in credit quality trends. Additional factors affecting BNC Bancorp and the Bank are discussed in BNC Bancorp's filings with the Securities and Exchange Commission (the "SEC"), Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Please refer to the Securities and Exchange Commission's website at www.sec.gov where you can review those documents. BNC Bancorp does not undertake a duty to update any forward-looking statements made in this press release.

Reconciliation of Non-GAAP to GAAP

Three Months Ended

Year Ended December 31,

 Dec. 31, 2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

2015

2014

Operating Earnings per Share, Diluted (1)

Net income (GAAP)

$    12,739

$    11,939

$    11,014

$      8,758

$      8,505

$    44,450

$    29,390

Transaction-related charges, net of tax

2,713

3,078

784

1,789

1,406

8,364

5,641

Loss on extinguishment of debt, net of tax

-

481

-

-

386

481

386

Insurance settlement income, net of tax

-

-

-

-

484

Securities gains (losses), net of tax

28

500

(3)

31

-

556

(322)

Operating earnings (non-GAAP)

15,424

14,998

11,801

10,516

10,297

52,739

35,255

Weighted average fully diluted shares outstanding

39,452

38,165

32,653

32,754

30,599

35,782

29,152

Operating earnings per share, diluted (non-GAAP)

$        0.39

$        0.39

$        0.36

$        0.32

$        0.34

$        1.47

$        1.21

Operating Non-Interest Income (1)

Non-interest income (GAAP)

$      8,286

$      9,169

$      8,693

$      6,300

$      7,785

$    32,448

$    25,022

Securities gains (losses), net

45

794

(4)

49

-

884

(511)

Insurance settlement income

-

-

-

-

-

-

768

Operating non-interest income (non-GAAP)

$      8,241

$      8,375

$      8,697

$      6,251

$      7,785

$    31,564

$    24,765

Operating Non-Interest Expense (1)

Non-interest expense (GAAP)

$    37,580

$    38,185

$    31,399

$    31,991

$    32,366

$  139,155

$  116,477

Transaction-related expenses

4,307

4,886

1,244

2,839

2,231

13,276

8,954

Loss on extinguishment of debt

-

763

-

-

613

763

613

Operating non-interest expense (non-GAAP)

$    33,273

$    32,536

$    30,155

$    29,152

$    29,522

$  125,116

$  106,910

Operating Income Tax Expense (1)

Income tax expense - GAAP

$      5,420

$      5,106

$      4,712

$      3,511

$      3,374

$    18,749

$    10,365

Securities gains (losses), tax effect

17

294

(1)

18

-

328

(189)

Transaction-related expenses, tax effect

1,559

1,189

461

1,014

825

4,223

2,794

Loss on extinguishment of debt, tax effect

-

313

-

-

227

313

227

Operating income tax expense (non-GAAP)

$      6,996

$      6,902

$      5,172

$      4,543

$      4,426

$    23,613

$    13,197

Tangible Common Book Value per Share (2)

Shareholders' equity (GAAP)

$  592,147

$  522,497

$  403,583

$  399,112

$  390,388

$  592,147

$  390,388

Intangible assets

152,985

146,623

82,022

82,861

83,701

152,985

83,701

Tangible common shareholders equity (non-GAAP)

439,162

375,874

321,561

316,251

306,687

439,162

306,687

Common shares outstanding

40,774

38,138

32,589

32,716

32,599

40,774

32,599

Tangible common book value per share (non-GAAP)

$      10.77

$        9.86

$        9.87

$        9.67

$        9.41

$      10.77

$        9.41

Return on Average Tangible Common Equity (2)

Net income (GAAP)

$    12,739

$    11,939

$    11,014

$      8,758

$      8,505

$    44,450

$    29,390

Amortization of intangibles, net of tax

746

694

529

529

453

2,498

1474

Tangible net income available to common shareholders (non-GAAP)

13,485

12,633

11,543

9,287

8,958

46,948

30,864

Average common shareholders equity

553,475

517,835

399,868

394,034

351,695

466,881

323,183

Average intangible assets

152,255

147,143

82,431

83,279

68,954

116,548

55,026

Average tangible common shareholders' equity (non-GAAP)

401,220

370,692

317,437

310,755

282,741

350,333

268,157

Return on average tangible common equity (non-GAAP)

13.33%

13.52%

14.59%

12.12%

12.57%

13.40%

11.51%

Operating Return on Average Assets (1)

Net income (GAAP)

$    12,739

$    11,939

$    11,014

$      8,758

$      8,505

$    44,450

$    29,390

Transaction-related expenses, net of tax

2,713

3,078

784

1,789

1,406

8,364

5,641

Loss on extinguishment of debt, net of tax

-

481

-

-

386

481

386

Insurance settlement income, net of tax

-

-

-

-

-

-

484

Securities gains (losses), net of tax

28

500

(3)

31

-

556

(322)

Operating earnings (non-GAAP)

$    15,424

$    14,998

$    11,801

$    10,516

$    10,297

$    52,739

$    35,255

Average assets

5,428,444

5,154,690

4,180,690

4,097,199

3,809,989

4,720,107

3,561,719

Operating return on average assets (non-GAAP)

1.13%

1.15%

1.13%

1.04%

1.07%

1.12%

0.99%

Three Months Ended

Year Ended December 31,

 Dec. 31, 2015 

 Sept. 30, 2015 

 Jun. 30, 2015 

 Mar. 31, 2015 

 Dec. 31, 2014 

2015

2014

Operating Return on Average Tangible Common Equity (2)

Net income (GAAP)

$    12,739

$    11,939

$    11,014

$      8,758

$      8,505

$    44,450

$    29,390

Amortization of intangibles, net of tax

746

694

529

529

453

2,498

1,474

Transaction-related expenses, net of tax

2,713

3,078

784

1,789

1,406

8,364

5,641

Loss on extinguishment of debt, net of tax

-

481

-

-

386

481

386

Insurance settlement income, net of tax

-

-

-

-

-

-

484

Securities gains (losses), net of tax

28

500

(3)

31

-

556

(322)

Operating tangible net income (non-GAAP)

$    16,170

$    15,692

$    12,330

$    11,045

$    10,750

$    55,237

$    36,729

Average common shareholders equity

553,475

517,835

399,868

394,034

351,695

466,881

323,183

Average intangible assets

152,255

147,143

82,431

83,279

68,954

116,548

55,026

Average tangible common shareholders' equity (non-GAAP)

401,220

370,692

317,437

310,755

282,741

350,333

268,157

Operating return on average tangible common equity (non-GAAP)

15.99%

16.79%

15.58%

14.41%

15.08%

15.77%

13.70%

Operating Efficiency Ratio (3)

Non-interest expense (GAAP)

$    37,580

$    38,185

$    31,399

$    31,991

$    32,366

$  139,155

$  116,477

Transaction-related expenses

4,307

4,886

1,244

2,839

2,231

13,276

8,954

Loss on extinguishment of debt

-

763

-

-

613

763

613

Amortization of intangible assets

1,184

1,102

840

840

719

3,965

2,340

Operating non-interest expense (non-GAAP)

32,089

31,434

29,315

28,312

28,803

121,151

104,570

Net interest income, FTE

50,658

48,173

40,589

39,938

39,376

179,358

145,963

Non-interest income - GAAP

8,286

9,169

8,693

6,300

7,785

32,448

25,022

Securities gains (losses), net

45

794

(4)

49

-

884

(511)

Insurance settlement income

-

-

-

-

-

-

768

Operating efficiency ratio (non-GAAP)

54.48%

55.59%

59.48%

61.30%

61.07%

57.44%

61.25%

 

(1)

Operating earnings per diluted share, operating non-interest income, operating non-interest expense, operating income tax expense, operating return on average assets, and operating return on average tangible common equity are non-GAAP measures and exclude the after-tax effect of transaction-related charges, loss on extinguishment of debt, securities gains (losses) and other one-time charges.  Management believes that non-GAAP operating measures provide additional useful information that allows readers to evaluate the ongoing performance of the company.

(2)

The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets.  Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities. 

(3)

Operating efficiency ratio is calculated by non-interest expense, excluding transaction-related expenses, amortization of intangible assets, and loss on extinguishment of debt, divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses) and insurance settlement income.  Management believes this non-GAAP operating measure provides additional useful information that allows readers to evaluate the ongoing performance of the company.

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SOURCE BNC Bancorp



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