BNC Bancorp Announces Earnings for Fourth Quarter and Full Year 2012

Jan 30, 2013, 09:05 ET from BNC Bancorp

HIGH POINT, N.C., Jan. 30, 2013 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the fourth quarter and year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20030917/BNCLOGO )

For the quarter ended December 31, 2012 net income totaled $5.0 million, an increase of 261.4%, when compared to net income of $1.4 million for the comparable period in 2011.  Net income available to common shareholders for the fourth quarter of 2012 was $4.4 million, or $0.19 per diluted share, compared to $796,000, or $0.08 per diluted share, for the fourth quarter of 2011.    

Net income totaled $10.5 million for the full year 2012, an increase of 50.8% compared to $6.9 million for 2011.  Net income available to common shareholders was $8.0 million for 2012, or $0.48 per diluted share, an increase of 77.8% compared to the $4.5 million, or $0.45 per diluted share, reported for 2011. 

Total assets at December 31, 2012 were $3.08 billion, an increase of $628.9 million, or 25.6%, compared to $2.45 billion at December 31, 2011.  The increase was due to continued growth in our North Carolina franchise, along with the acquisition and integration of First Trust Bank ("First Trust"), KeySource Financial ("KeySource"), Carolina Federal Savings Bank ("Carolina Federal") and, to a lesser extent, two branches that were acquired from The Bank of Hampton Roads ("BHR") during 2012.

Included in the financial results for the quarters ended December 31, 2012 and 2011 are $5.0 million and $7.8 million, respectively, of acquisition gains and $1.4 million and $723,000, respectively, of transaction related expenses. Results for the years ended December 31, 2012 and 2011 include $12.7 million and $7.8 million, respectively, of acquisition gains and $5.2 million and $1.1 million, respectively, of transaction related expenses.

Average shares outstanding increased significantly in 2012 due to a common equity raise and stock issued as consideration for both the KeySource and First Trust acquisitions.  For the quarters ended December 31, 2012 and 2011, average fully-diluted shares outstanding were 24.3 million and 10.9 million, respectively.  For the years ended December 31, 2012 and 2011, average fully-diluted shares were 17.6 million and 10.9 million, respectively.    

Highlights for 2012:

  • Total assets at year end were $3.08 billion, up from $2.45 billion at the end of 2011.
  • Wholesale deposits, as a percentage of total assets, declined from 37% to 27% during 2012. 
  • Classified assets to capital declined from 76% to 44% during 2012.
  • Net interest margin, before hedging costs, remained strong at 4.21% versus 4.19% for 2011.
  • The Company continued its history of reporting a profit in every year since 1994.
  • Fully-diluted market capitalization increased to $212 million from $79 million.
  • Acquired First Trust in Charlotte, expanding our presence in Charlotte by $376 million.
  • Acquired KeySource in Durham, expanding our presence in the Triangle by $174 million.
  • Acquired Chapel Hill and Cary offices from BHR, increasing our Triangle presence by approximately $30 million.
  • Acquired Carolina Federal in Charleston, expanding our Coastal South Carolina presence by $51 million and recognizing a $7.8 million bargain purchase gain.
  • Marketed and closed a $72.5 million capital raise to some of the highest quality institutional investors in the financial institution space.
  • Through a strategic initiative to close unproductive offices, despite increasing assets by $629 million the Company's branch network increased by one office in 2012.
  • Marketed and completed the auction of preferred stock issued under the U.S Treasury Capital Purchase Program to private investors.
  • Successfully converted core systems on Blue Ridge, Regent, Carolina Federal, BHR, and KeySource in 2012. 
  • Added seasoned functional leaders in the areas of: Enterprise Risk Management, Human Resources, and Deposit Operations.  All leaders are from quality institutions of $8 billion or larger.
  • Mortgage Company finished the year with originations of over $250 million and mortgage fees of $6.2 million.

W. Swope Montgomery, Jr., President and CEO, stated, "We are very proud of our Company's many achievements in 2012, as we continued to make significant progress in fortifying our balance sheet and creating franchise value for our shareholders.  Over the past four years we expanded our footprint throughout the Carolinas by acquisition and organic expansion allowing us to significantly grow our core deposit base and reduce our reliance on wholesale sources of funding while creating greater geographic diversity in both loan originations and our loan portfolio mix.  Also during the past four years we have raised over $107 million of common equity, the most significant being a $72.5 million raise in June of 2012.  Credit quality metrics have continued to improve, evidenced by the reduction of our classified assets to capital ratio to 44% at the end of 2012.  Throughout this period we have continued to recruit exceptionally experienced and proven leaders to oversee the various functional areas of our Company, as well as expanded our product and service offerings to include Treasury Management, SBA Lending, and a much more robust mortgage operation.   

While our successes have been plentiful, our strategic vision and execution plans are far from finished.   The expansions to date have been necessary and strategic, greatly enhancing the soundness and franchise value of our Company, however they have been expensive.  While we are pleased to report earnings of $0.19 in the fourth quarter, a net interest margin of 4.09% and significant gains in core non-interest income sources, there is still much work to be done on areas such as operating leverage, efficiency, credit costs, and overall profitability.  While we are excited about the results of 2012, we are just as excited about the opportunities to tackle the identified areas that will provide even greater value for our shareholders in the future." 

Operating Results

Net interest income for the fourth quarter of 2012 was $24.1 million, an increase of $4.0 million from the $20.1 million earned in the fourth quarter of 2011.  Fully taxable-equivalent ("FTE") net interest margin was 4.09% for the fourth quarter of 2012, a decrease of 9 basis points from 4.18% for the comparable period of 2011.  This decrease is a result of lower interest rates on interest-earning assets and higher hedging costs, partially offset by lower core funding costs. 

Average interest-earning assets were $2.50 billion for the fourth quarter of 2012, an increase of $454.3 million from $2.04 billion for 2011.  The Company's average yield on interest-earning assets decreased 42 basis points from 5.80% in the fourth quarter of 2011 to 5.38% in the fourth quarter of 2012.  Loan accretion during the fourth quarter of 2012 totaled $3.1 million, which was consistent with the amount recorded during the comparable period of 2011. 

Average interest-bearing liabilities were $2.30 billion for the fourth quarter of 2012, an increase of $257.8 million from $2.04 billion for the fourth quarter of 2011.  The Company's average cost of interest-bearing liabilities was 1.41% for the fourth quarter of 2012, a decrease of 21 basis points, compared to 1.62% for the fourth quarter of 2011.  Decreases in the average cost of deposits were offset by an increase in cash flow hedging expense, which totaled $2.1 million for the fourth quarter of 2012 and $1.7 million for the comparable period of 2011.  Without the cash flow hedging expense, net interest margin (FTE) for the fourth quarter of 2012 was 4.43%, compared to 4.51% for the fourth quarter of 2011.  

Net interest income for 2012 was $80.6 million, an increase of $10.2 million from the $70.4 million earned in 2011.  Fully taxable-equivalent ("FTE") net interest margin was 3.85% for 2012, a decrease of 8 basis points from 3.93% for 2011.  This decrease is a result of lower interest rates on interest-earning assets and higher hedging costs, partially offset by lower core funding costs. 

Average interest-earning assets were $2.24 billion for 2012, an increase of $308.4 million from $1.94 billion for 2011.  During 2012, the Company's average yield on interest-earning assets decreased 32 basis points from 5.63% in 2011 to 5.31%.  Loan accretion during 2012 totaled $6.7 million, which was consistent with the amount recorded during 2011. 

Average interest-bearing liabilities were $2.13 billion for 2012, an increase of $212.6 million from $1.91 billion for 2011.  The Company's average cost of interest-bearing liabilities was 1.55% for 2012, a decrease of 17 basis points, compared to 1.72% for 2011.  Decreases in the average cost of deposits were offset by an increase in cash flow hedging expense, which totaled $7.9 million for 2012 and $5.1 million for 2011.  Without the cash flow hedging expense, net interest margin (FTE) for 2012 was 4.21%, compared to 4.19% for 2011.  

Average Yields / Costs (FTE)

(unaudited)

Year Ended December 31,

Three Months Ended

2012

2011

12/31/2012

9/30/2012

12/31/2011

Earning asset yield

5.31%

5.63%

5.38%

5.19%

5.80%

Cost of interest-bearing liabilities

1.55%

1.72%

1.41%

1.55%

1.62%

Cost of funds

1.42%

1.61%

1.28%

1.42%

1.52%

Net interest spread

3.76%

3.91%

3.97%

3.64%

4.18%

Net interest margin

3.85%

3.93%

4.09%

3.75%

4.18%

Net interest margin w/o hedging expense

4.21%

4.19%

4.43%

4.11%

4.51%

Non-interest income was $10.4 million for the fourth quarter of 2012, a decrease of $1.8 million compared to non-interest income of $12.2 million for the fourth quarter of 2011.  Excluding non-recurring sources of income, which includes acquisition gains, FDIC-related income, and gain on sale of securities, non-interest income was $4.4 million for the fourth quarter of 2012, an increase of $1.3 million from the $3.0 million in the comparable period of 2011.  This increase is primarily due to increased volume of mortgage originations that stem from the Company's enhanced mortgage origination platform.

Non-interest income was $33.2 million for 2012, an increase of 59.4% compared to non-interest income of $20.8 million for 2011.  The increase was driven by a $4.9 million increase in acquisition gains and a $3.9 million increase in mortgage origination income.  Excluding non-recurring sources of income, non-interest income was $14.9 million for 2012, an increase of 45.6% from the $10.3 million in 2011.  This increase is due to the increased volume of mortgage originations and SBA loan premiums during 2012.

Non-interest expense was $24.9 million for the fourth quarter of 2012, compared to non-interest expense of $23.5 million for the fourth quarter of 2011.  These increases were due to the addition of full-time equivalent employees and facilities, as well as transaction related expenses, incurred as a result of the strategic acquisitions that have been made since the fourth quarter of 2011.  These increases were slightly offset by a $3.8 million reduction in valuation adjustments for other real estate owned ("OREO") during the fourth quarter of 2012 as compared to the fourth quarter of 2011. 

Non-interest expense was $82.3 million for 2012, an increase of $14.4 million compared to $67.9 million for 2011.  These increases were due to the addition of full-time equivalent employees and facilities, as well as transaction related expenses, incurred as a result of the acquisitions that have been made since the fourth quarter of 2011.  These personnel additions are expected to contribute to our long-term focus on driving both top line and fee income growth.  These increases were slightly offset by a $2.4 million reduction in valuation adjustments for OREO during full year 2012 as compared to 2011.

The following table represents the components of non-interest income and non-interest expense:

Non-Interest Income / Non-Interest Expense

(dollars in thousands; unaudited)

Year Ended December 31,

Three Months Ended

2012

2011

12/31/2012

9/30/2012

12/31/2011

Non-interest income

  Mortgage fees

$            6,169

$            2,230

$            1,902

$           1,773

$           1,044

  Service charges

3,149

3,190

916

746

751

  Investment brokerage fees

922

945

247

206

204

  Earnings on bank-owned life insurance

1,771

1,688

541

425

429

  Gain on sale of securities

3,042

1,202

667

756

34

  Gain on acquisitions

12,706

7,800

4,972

-

7,800

  Other

5,395

3,747

1,165

1,347

1,905

     Total non-interest income

$          33,154

$          20,802

$          10,410

$           5,253

$         12,167

Non-interest expense

  Salaries and employee benefits

$          42,200

$          31,810

$          12,316

$         10,291

$           8,796

  Occupancy 

4,965

3,859

1,527

1,240

1,107

  Furniture and equipment

4,241

2,761

1,222

993

837

  Data processing and supply

2,773

2,291

761

619

613

  Advertising/business development

1,761

1,733

489

509

481

  Insurance, professional and other     services

6,685

4,166

1,983

2,136

1,628

  FDIC insurance assessments

2,166

2,433

457

609

488

  Loan, foreclosure and other real     estate owned

10,944

14,072

3,665

2,658

8,105

  Other

6,553

4,739

2,467

1,344

1,469

     Total non-interest expense

82,288

67,864

24,887

20,399

23,524

Less:  Transaction related expenses

5,212

1,091

1,406

1,861

723

     Total adjusted non-interest expense

$          77,076

$          66,773

$          23,481

$         18,538

$         22,801

The following is a summary of transaction related expenses incurred by transaction, as well as an estimate of future costs to be incurred:

Transaction Related Expenses

(dollars in thousands; unaudited)

Year Ended December 31,

Three Months Ended

Transaction

2012

2011

12/31/2012

9/30/2012

12/31/2011

Anticipated Future Costs

  Blue Ridge 

$         809

$         501

$             -

$           75

$            501

$                -

  Regent

392

423

-

1

55

-

  Carolina Federal

847

-

309

352

-

-

  KeySource

1,554

167

215

950

167

-

  BHR

169

-

33

105

-

-

  First Trust

1,154

-

823

141

-

475

  CPP/TARP*

287

-

26

237

-

-

  Total

$      5,212

$      1,091

$       1,406

$      1,861

$            723

$             475

* - Costs associated with auction of CPP Preferred Stock and repurchase of related warrants from the United States Treasury

Additional Operating Highlights

Since December 31, 2011, total portfolio loans have increased $325.8 million, or 23.5%, to $2.04 billion as of December 31, 2012.  At December 31, 2012, the Company's loan portfolio included $269.4 million in loans covered under loss-share agreements and $1.63 billion of non-covered loans.  The Company's acquisition of First Trust, KeySource and Carolina Federal increased loans not covered by loss-share agreements by $339.0 million.  Loans acquired in connection with these transactions are reported at fair value and shown net of any related credit and yield adjustments, from acquisition date. 

Gross Loan Growth

(dollars in thousands; unaudited)

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

Loans covered by loss-share, at fair value

$       248,930

$    257,103

273,509

$    307,097

$    320,033

Loans not covered by loss-share, at fair value

340,129

193,274

61,568

30,074

31,734

Loans, other (1)

1,446,199

1,450,015

1,425,210

1,387,455

1,357,716

Total portfolio loans

$    2,035,258

$ 1,900,392

$ 1,760,287

$ 1,724,626

$ 1,709,483

Loan growth (quarter/quarter):

  Total portfolio loans

7.1%

8.0%

2.1%

0.9%

8.7%

  Loans not covered by loss-share

8.7%

10.5%

4.9%

2.0%

6.1%

Annual growth of non-covered loans

29.9%

(1) Includes $12,455 of loans covered by loss-share agreement not recorded at fair value as of December 31, 2012

Total deposits at December 31, 2012 were $2.66 billion, an increase of $538.1 million from total deposits of $2.12 billion as of December 31, 2011.  This increase was due to the $553.1 million of deposits assumed from the acquisitions of First Trust, KeySource, Carolina Federal and, to a lesser extent, the branches acquired from BHR.  This increase was partially offset by a $144.6 million decrease in wholesale deposits from December 31, 2011.  Wholesale deposits represent 30.5% of total deposits as of December 31, 2012, a decrease from 42.5% as of December 31, 2011.  While overall deposit growth continues to be an emphasis, more important is the increase in transactional account deposits.  Over the one-year period, transactional accounts, which are comprised of non-interest bearing and interest-bearing demand accounts, increased $441.6 million, or 41.9%.  At December 31, 2012, time deposits were 43.7% of total deposits, compared to 50.2% at December 31, 2011. 

Total Deposit Growth

(dollars in thousands; unaudited)

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

Non-interest bearing demand

$        275,605

$        207,928

$        180,238

$       162,857

$        145,688

Interest-bearing demand

1,221,089

1,067,855

960,597

956,784

909,402

Time deposits

1,159,615

1,033,304

948,658

996,831

1,063,097

Total

$     2,656,309

$     2,309,087

$     2,089,493

$    2,116,472

$     2,118,187

Deposit growth (quarter/quarter)

15.0%

10.5%

-1.3%

-0.1%

15.4%

Annual deposit growth

25.4%

Asset Quality

Net loan charge-offs for the fourth quarter of 2012 were $6.3 million, which included $3.1 million on loans covered under loss-share agreements and $3.2 million on loans not covered under loss-share agreements.  The Company's cost for the covered net loan charge-offs was $619,000, with the remainder being reimbursed by the FDIC. Combined with the $3.2 million of non-covered charge-offs, the Company incurred $3.8 million in charge-off losses, or 0.92% of average loans, during the fourth quarter of 2012, compared to $7.0 million, or 1.70% for the fourth quarter of 2011.

Net loan charge-offs for 2012 were $31.2 million, which included $14.5 million on loans covered under loss-share agreements and $16.5 million on loans not covered under loss-share agreements, compared to $20.7 million for 2011, which included $3.8 million on loans covered under loss-share agreements and $16.9 million on loans not covered under loss-share agreements The Company's cost for the covered net loan charge-offs for 2012 was $2.9 million, with the remainder being reimbursed by the FDIC. Combined with the $16.5 million of non-covered charge-offs, the Company incurred $19.5 million in charge-off losses, or 1.09% of average loans, during 2012, compared to $17.7 million, or 1.14% for 2011.

Nonperforming assets were 3.93% of total assets at December 31, 2012, compared to 6.57% at December 31, 2011.  Nonperforming assets not covered by loss-share were 1.68% of total assets not covered by loss-share as of December 31, 2012, compared to 1.93% at December 31, 2011.  The covered assets are covered by FDIC loss-share agreements that provide 80% protection on those assets and are being carried at estimated fair value.

Asset Quality Information

(dollars in thousands;  unaudited)

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

Nonaccrual loans not covered by loss-share

$       22,442

$       25,220

$       25,351

$       17,481

$       19,443

Nonaccrual loans covered by loss-share 

46,981

54,427

61,695

69,797

67,854

OREO not covered by loss-share

24,865

25,589

23,655

25,212

20,927

OREO covered by loss-share 

27,048

30,077

35,105

43,603

47,577

90 days past due not covered by loss-share

-

4,137

-

-

-

90 days past due covered by loss-share

-

1

5

652

5,425

Total nonperforming assets

$     121,336

$     139,345

$     145,811

$     156,745

$     161,226

  Nonperforming assets not covered by loss-share

$       47,307

$       54,840

$       49,006

$       42,693

$       40,370

Total assets

$  3,083,788

$  2,711,173

$  2,442,815

$  2,408,890

$  2,454,930

Total assets less covered assets

2,807,810

2,411,708

2,123,131

2,058,190

2,087,320

Total portfolio loans

2,035,258

1,900,392

1,760,287

1,724,626

1,709,483

Total accruing loans

1,965,835

1,820,851

1,673,241

1,637,348

1,622,186

Total portfolio loans less fair value loans

1,458,654

1,450,015

1,425,210

1,387,455

1,357,716

Total portfolio loans less covered loans

1,786,328

1,631,004

1,475,708

1,417,529

1,389,450

Total allowance for loan losses

40,292

34,823

40,856

36,722

31,008

Allowance for loans not covered by loss-share

25,028

24,831

27,284

24,290

25,599

Allowance for loans covered by loss-share

15,264

9,992

13,572

12,432

5,409

Ratio of nonperforming assets to total assets

3.93%

5.14%

5.97%

6.51%

6.57%

  Not covered by loss-share 

1.68%

2.27%

2.31%

2.07%

1.93%

Ratio of nonperforming loans to total portfolio loans

3.41%

4.40%

4.95%

5.10%

5.42%

  Not covered by loss-share 

1.26%

1.79%

1.72%

1.23%

1.40%

Ratio of allowance for loan losses to total portfolio loans

1.98%

1.83%

2.32%

2.13%

1.81%

  Total portfolio loans less fair value loans to allowance not 

    covered by loss-share

1.72%

1.71%

1.91%

1.75%

1.89%

Net charge-offs, QTD

$         6,269

$       10,099

$         9,077

$         5,723

$       10,036

Net charge-offs, non-covered portion, QTD (1)

3,792

6,882

5,053

3,779

7,015

  Ratio of net charge-offs, non-covered portion, 

    QTD to average portfolio loans, annualized (1)

0.92%

1.54%

1.17%

0.89%

1.70%

Loans restructured/modified not included in above,

  (not 90 days past due or on nonaccrual)

$       36,376

$       38,239

$       34,061

$       29,617

$       41,515

(1) Non-covered portion represents the Company's non-covered charge-offs and the 20% portion of the charge-offs relating to loans 

     covered under loss-share agreements.

During the fourth quarter of 2012, the Company recorded a provision for loan losses of $5.5 million, a decrease from the $8.2 million recorded during the fourth quarter of 2011.  For the full year ended December 31, 2012, the Company recorded a provision for loan losses of $22.7 million, an increase from the $18.2 million recorded during 2011.  Of the $22.7 million in provision expense, $17.8 million related to legacy non-covered loans.  During 2012, the Company recorded a gross provision of $19.0 million for loss-share loans, of which $14.0 million was recorded through a FDIC indemnification asset and the remaining $5.0 million was recorded through the Company's provision expense.  

The allowance for loan losses was $40.3 million at December 31, 2012, an increase of $9.3 million from the $31.0 million at December 31, 2011.  Loan loss reserves to total portfolio loans were 1.98% and 1.81% at December 31, 2012 and 2011, respectively.  The allowance for loan loss allocated to loans not marked to fair value declined from 1.89% at December 31, 2011 to 1.72% at December 31, 2012.  The components of the allowance for loan loss as of December 31, 2012 are as follows:

Allowance for Loan Loss Summary

(dollars in thousands; unaudited)

At December 31, 2012

Allowance

Allowance

for

for 

Net

Loan Losses

Loans

Loan Losses

Loans

%

Loans covered by loss-share, at fair value

$        236,475

$       (15,264)

$        221,211

6.45%

Loans not covered, at fair value

340,129

-

340,129

-

Loans, other (1)

1,458,654

(25,028)

1,433,626

1.72%

Total portfolio loans

$     2,035,258

$       (40,292)

$     1,994,966

1.98%

(1) Includes $12,455 of loans covered by loss share agreement not recorded at fair value as of December 31, 2012

Nonaccrual loans not covered by loss-share agreements totaled $22.4 million at December 31, 2012, an increase from $19.4 million at December 31, 2011.  Nonaccrual loans covered by loss-share agreements totaled $47.0 million, a decrease of $20.9 million compared to $67.9 million at December 31, 2011. 

Troubled debt restructurings ("TDRs") were $45.6 million as of December 31, 2012, of which $7.1 million is covered under loss-share.  This is a decrease from $46.3 million of TDRs as of December 31, 2011.  The decrease is primarily due to charge-offs and movement of restructurings to OREO.

OREO at December 31, 2012 totaled $51.9 million, a decrease of $16.6 million from $68.5 million as December 31, 2011.  At December 31, 2012, the carrying value of loans and OREO covered by loss-share agreements was $248.9 million and $27.0 million, respectively, with a corresponding indemnification receivable from the FDIC of $53.5 million.  OREO not covered by loss-share agreements totaled $24.9 million at December 31, 2012, an increase of $4.0 million from the $20.9 million reported at December 31, 2011. 

Capital Position

On December 31, 2012, shareholders' equity was $282.2 million, an increase of $118.4 million from shareholders' equity of $163.9 million as of December 31, 2011.  During the second quarter of 2012, the Company successfully closed a $72.5 million private capital raise.  Proceeds from the capital raise, after deducting issuance costs, totaled $68.3 million.  The Company issued convertible preferred stock at the time of closing the capital raise.  On July 17, 2012, shareholders of the Company approved the conversion of the preferred stock into common stock.  Also included in this increase was additional capital acquired from the KeySource and First Trust transactions in the amount of $13.9 million and $26.3 million, respectively.

During the third quarter of 2012, the Treasury completed the auction to private investors of the Company's preferred stock that was issued to the Treasury in 2008 under the Capital Purchase Program.  No proceeds were received in connection with this auction.  Subsequent to the auction, the Company repurchased from the Treasury the Company's outstanding warrant to purchase shares of the Company's common stock in the amount of $940,000.  This warrant has been cancelled.

All of the Bank's and Company's capital ratios exceeded the minimum thresholds established for a well-capitalized bank by regulatory measures. 

On January 22, 2013, the Board of Directors of BNC Bancorp declared a $0.05 per share quarterly cash dividend on its common stock and Series B Preferred stock, payable February 22, 2013 to shareholders of record on February 8, 2013.

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 $3.08 billion in assets.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 35 banking offices in North and South Carolina.  The Bank's eight locations in South Carolina 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."

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.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies' anticipated future financial performance.  This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations.   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) general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; (ii) expected cost savings and other benefits anticipated in connection with our acquisitions of First Trust, KeySource, Carolina Federal, Beach First, Regent, and Blue Ridge may not be fully realized or realized within the expected time frame; (iii) the performance of our mortgage and SBA division; and (iv) anticipated acquisition opportunities may be available on terms acceptable to BNC Bancorp or at all.  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. 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

For the

Three Months Ended

December 31, 2012

December 31, 2011

% Change

SUMMARY STATEMENTS OF OPERATIONS

Interest income

$           32,224

$             28,449

13.3 %

Interest expense

8,119

8,338

(2.6)

Net interest income

24,105

20,111

19.9

Provision for loan losses

5,520

8,158

(32.3)

Net interest income after provision for loan losses

18,585

11,953

55.5

Non-interest income

10,410

12,167

(14.4)

Non-interest expense

24,887

23,524

5.8

Income before income tax benefit

4,108

596

589.3

Income tax benefit

(940)

(801)

17.4

Net income

5,048

1,397

261.4

Preferred stock dividends and discount accretion

601

601

0.0

Net income available to common shareholders

$             4,447

$                  796

458.7

PER SHARE DATA

Earnings per share, basic

$               0.19

$                 0.08

133.7

Earnings per share, diluted

0.19

0.08

138.2

Tangible common book value per share

8.20

9.60

(14.5)

Fully converted tangible common book value per share

8.29

9.58

(13.5)

Weighted average participating common shares:

Basic

24,272

10,895

Diluted

24,277

10,914

Period-end number of shares:

Common

24,650

9,101

Convertible preferred

1,805

1,805

PERFORMANCE RATIOS

Return on average assets

0.72%

0.24%

Return on average common equity

8.16%

2.78%

Return on average tangible common equity

9.76%

4.32%

Net interest margin (FTE)

4.09%

4.18%

Net interest margin w/o hedging expense (FTE)

4.43%

4.51%

Average equity to average assets

9.43%

6.83%

Allowance for loan losses as a % of portfolio loans

1.98%

1.81%

Nonperforming assets to total assets, end of period

3.93%

6.57%

       Nonperforming assets not covered by loss share

1.68%

1.93%

Ratio of net charge-offs, with covered portion, to

       average total loans, annualized

0.92%

1.70%

SELECTED FINANCIAL DATA

Gain on sale of investment securities, net

$                667

$                     34

Acquisition gains

4,972

7,800

Fair value accretion

3,086

3,113

FDIC related income

403

1,286

Hedging instrument expense

2,134

1,699

OREO valuation adjustments

2,734

6,549

Merger related expenses

1,406

723

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

For the Year Ended

December 31, 2012

December 31, 2011

% Change

SUMMARY STATEMENTS OF OPERATIONS

Interest income

$        113,515

$          103,343

9.8 %

Interest expense

32,891

32,920

(0.1)

Net interest income

80,624

70,423

14.5

Provision for loan losses

22,737

18,214

24.8

Net interest income after provision for loan losses

57,887

52,209

10.9

Non-interest income

33,154

20,802

59.4

Non-interest expense

82,288

67,864

21.3

Income before income tax benefit

8,753

5,147

70.1

Income tax benefit

(1,700)

(1,783)

(4.7)

Net income

10,453

6,930

50.8

Preferred stock dividends and discount accretion

2,404

2,404

0.0

Net income available to common shareholders

$             8,049

$               4,526

77.8

PER SHARE DATA

Earnings per share, basic

$               0.48

$                 0.45

6.2

Earnings per share, diluted

0.48

0.45

6.2

Tangible common book value per share

8.20

9.60

(14.5)

Fully converted tangible common book value per share

8.29

9.58

(13.5)

Weighted average participating common shares:

Basic

17,595

10,878

Diluted

17,599

10,894

Period-end number of shares:

Common

24,650

9,101

Convertible preferred

1,805

1,805

PERFORMANCE RATIOS

Return on average assets

0.41%

0.31%

Return on average common equity

5.11%

4.12%

Return on average tangible common equity

6.57%

5.88%

Net interest margin (FTE)

3.85%

3.93%

Net interest margin w/o hedging expense (FTE)

4.21%

4.19%

Average equity to average assets

8.37%

7.11%

Allowance for loan losses as a % of portfolio loans

1.98%

1.81%

Nonperforming assets to total assets, end of period

3.93%

6.57%

      Nonperforming assets not covered by loss share

1.68%

1.93%

Ratio of net charge-offs, with covered portion, to

        average total loans

1.09%

1.14%

SELECTED FINANCIAL DATA

Gain on sale of investment securities, net

$             3,042

$               1,202

Acquisition gains

12,706

7,800

Fair value accretion

6,654

6,658

FDIC related income

2,466

1,536

Hedging instrument expense

7,941

5,118

OREO valuation adjustments

7,078

9,517

Merger related expenses

5,212

1,091

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

For the

Three Months Ended

December 31, 2012

September 30, 2012

June 30, 2012

March 31,  2012

December 31, 2011

SUMMARY STATEMENTS OF OPERATIONS

Interest income

$           32,224

$             27,814

$             26,298

$             27,179

$             28,449

Interest expense

8,119

8,063

8,142

8,567

8,338

Net interest income

24,105

19,751

18,156

18,612

20,111

Provision for loan losses

5,520

3,708

8,330

5,179

8,158

Net interest income after provision for loan losses

18,585

16,043

9,826

13,433

11,953

Non-interest income

10,410

5,253

11,682

5,809

12,167

Non-interest expense

24,887

20,399

19,177

17,825

23,524

Income before income tax expense (benefit)

4,108

897

2,331

1,417

596

Income tax expense (benefit)

(940)

(492)

40

(308)

(801)

Net income

5,048

1,389

2,291

1,725

1,397

Preferred stock dividends and discount accretion

601

601

601

601

601

Net income available to common shareholders

$             4,447

$                  788

$               1,690

$               1,124

$                  796

Net interest income, as reported

$           24,105

$             19,751

$             18,156

$             18,612

$             20,111

       Tax-equivalent adjustment 

1,533

1,349

1,467

1,365

1,406

Net interest income, tax-equivalent

$           25,638

$             21,100

$             19,623

$             19,977

$             21,517

PER SHARE DATA

Earnings per share, basic

$               0.19

$                 0.04

$                 0.13

$                 0.11

$                 0.08

Earnings per share, diluted

0.19

0.04

0.13

0.11

0.08

Weighted average participating common shares:

Basic

24,272

21,645

13,550

10,911

10,895

Diluted

24,277

21,646

13,556

10,920

10,914

Period-end number of shares:

Common

24,650

21,359

9,154

9,114

9,101

Convertible preferred

1,805

1,805

1,877

1,805

1,805

PERFORMANCE RATIOS

Return on average assets

0.72%

0.22%

0.38%

0.29%

0.24%

Return on average common equity

8.16%

1.75%

5.63%

4.09%

2.78%

Return on average tangible common equity

9.76%

2.30%

7.89%

5.93%

4.32%

Net interest margin (FTE)

4.09%

3.75%

3.71%

3.80%

4.18%

Net interest margin w/o hedging expense (FTE)

4.43%

4.11%

4.08%

4.17%

4.51%

Average equity to average assets

9.43%

9.55%

7.69%

6.55%

6.83%

Allowance for loan losses as a % of portfolio loans

1.98%

1.83%

2.32%

2.13%

1.81%

Nonperforming assets to total assets, end of period

3.93%

5.14%

5.97%

6.51%

6.57%

       Nonperforming assets not covered by loss share

1.68%

2.27%

2.31%

2.07%

1.93%

Ratio of net charge-offs, with covered portion, to

       average total loans, annualized

0.92%

1.54%

1.17%

0.89%

1.70%

SELECTED FINANCIAL DATA

Gain on sale of investment securities, net

$                667

$                  756

$                      -

$               1,619

$                     34

Acquisition gains

4,972

-

7,734

-

7,800

Fair value accretion

3,086

1,068

1,028

1,472

3,113

FDIC related income

403

673

238

1,152

1,286

Hedging instrument expense

2,134

2,014

1,874

1,919

1,699

OREO valuation adjustments

2,734

1,603

2,038

703

6,549

Merger related expenses

1,406

1,861

1,098

847

723

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

As of  

December 31, 2012

December 31,  2011

% Change

SELECTED BALANCE SHEET DATA

End of period balances

Portfolio loans:

Loans not covered by loss share

$     1,786,328

$       1,389,450

28.6 %

Loans covered by loss share

248,930

320,033

(22.2)

Allowance for loan losses

(40,292)

(31,008)

29.9

Net portfolio loans

1,994,966

1,678,475

18.9

Loans held for sale

57,414

9,596

498.3

Investment securities

457,098

379,210

20.5

Total interest-earning assets

2,747,702

2,148,801

27.9

Total assets

3,083,788

2,454,930

25.6

Deposits:

Non-interest bearing deposits

275,605

145,688

89.2

Interest-bearing demand and savings

1,221,089

909,402

34.3

Time deposits

1,159,615

1,063,097

9.1

Total deposits

2,656,309

2,118,187

25.4

Borrowed funds

120,555

163,924

(26.5)

Total interest-bearing liabilities

2,501,259

2,136,423

17.1

Shareholders' equity:

Preferred equity

47,877

47,398

1.0

Common equity

228,937

115,447

98.3

Accumulated other comprehensive income

5,429

1,010

437.5

Total shareholders' equity

282,243

163,855

72.3

As of  

December 31, 2012

September 30, 2012

June 30, 2012

March 31,    2012

December 31, 2011

SELECTED BALANCE SHEET DATA

End of period balances

Portfolio loans:

Loans not covered by loss share

$     1,786,328

$       1,631,004

$       1,475,708

$       1,417,529

$       1,389,450

Loans covered by loss share

248,930

269,388

284,579

307,097

320,033

Allowance for loan losses

(40,292)

(34,823)

(40,856)

(36,722)

(31,008)

Net portfolio loans

1,994,966

1,865,569

1,719,431

1,687,904

1,678,475

Loans held for sale

57,414

29,883

17,793

19,967

9,596

Investment securities

457,098

360,678

334,382

342,739

379,210

Total interest-earning assets

2,747,702

2,424,949

2,166,586

2,132,068

2,148,801

Total assets

3,083,788

2,711,173

2,442,815

2,408,890

2,454,930

Deposits:

Non-interest bearing deposits

275,605

207,928

180,238

162,857

145,688

Interest-bearing demand and savings

1,221,089

1,067,855

960,597

956,784

909,402

Time deposits

1,159,615

1,033,304

948,658

996,831

1,063,097

Total deposits

2,656,309

2,309,087

2,089,493

2,116,472

2,118,187

Borrowed funds

120,555

136,895

106,184

117,844

163,924

Total interest-bearing liabilities

2,501,259

2,238,054

2,015,439

2,071,459

2,136,423

Shareholders' equity:

Preferred equity

47,877

47,758

115,946

47,518

47,398

Common equity

228,937

199,200

117,843

116,284

115,447

Accumulated other comprehensive income

5,429

5,222

3,750

1,561

1,010

Total shareholders' equity

282,243

252,180

237,539

165,363

163,855

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

For the Three Month Period Ended

December 31, 2012

September 30, 2012

June 30, 2012

March 31,      2012

December 31,  2011

SELECTED BALANCE SHEET DATA

Quarterly average balances

Loans:

Loans not covered by loss share

$     1,372,417

$       1,501,953

$       1,453,521

$       1,406,611

$       1,358,455

Loans covered by loss share

267,632

276,984

295,838

313,339

291,353

Total loans

1,640,049

1,778,937

1,749,359

1,719,950

1,649,808

Investment securities

400,482

336,353

324,010

346,192

345,613

Total interest-earning assets

2,495,019

2,236,808

2,124,972

2,112,991

2,040,766

Total assets

2,806,031

2,523,287

2,431,193

2,415,639

2,359,374

Deposits:

Non-interest bearing deposits

225,419

194,006

181,983