BNC Bancorp Announces Earnings for Second Quarter 2015

Jul 22, 2015, 08:45 ET from BNC Bancorp

HIGH POINT, N.C., July 22, 2015 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the three and six months ended June 30, 2015.

Operating earnings for the quarter ended June 30, 2015 totaled $11.8 million, or $0.36 per diluted share, an increase of 12.2% compared to $10.5 million, or $0.32 per diluted share, for the quarter ended March 31, 2015, and an increase of 40.4% from operating earnings of $8.4 million, or $0.29 per diluted share, for the quarter ended June 30, 2014.  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.

Operating earnings for the six months ended June 30, 2015 totaled $22.3 million, or $0.68 per diluted share, an increase of 46.2% compared to operating earnings of $15.3 million, or $0.54 per diluted share, for the comparable period of 2014.

Net income for the quarter ended June 30, 2015 was $11.0 million, or $0.34 per diluted share, an increase of 25.8% from net income of $8.8 million, or $0.27 per diluted share, for the quarter ended March 31, 2015, and an increase of 80.0% from net income of $6.1 million, or $0.21 per diluted share, for the quarter ended June 30, 2014. 

Net income for the six months ended June 30, 2015 was $19.8 million, or $0.60 per diluted share, an increase of 56.7% from net income of $12.6 million, or $0.45 per diluted share, for the six months ended June 30, 2014. 

Total assets at June 30, 2015 were $4.28 billion, an increase of 5.0% as compared to total assets of $4.07 billion at December 31, 2014.

On July 1, 2015, the Company completed the previously announced merger with Valley Financial Corporation ("Valley"). None of the assets acquired, liabilities assumed or results of operations for Valley are included in the financial information as of and for the three and six months ended June 30, 2015.

Highlights for Second Quarter 2015:

  • Entered into definitive agreement to purchase loans, deposits and seven branch locations in South Carolina from CertusBank, N.A. ("Certus"), which is expected to close in the fourth quarter of 2015, subject to customary closing conditions, including regulatory approval;
  • Operating earnings per diluted share of $0.36, compared to $0.32 for the first quarter of 2015;
  • Originated loans increased $131.9 million during the current quarter;
  • Annualized operating return on average assets of 1.13%, compared to 1.04% for the first quarter of 2015;
  • Annualized operating return on tangible common equity ratio of 15.58%, compared to 14.41% for the first quarter of 2015; and
  • Tangible common book value of $9.87 per share, compared to $9.67 at March 31, 2015.

Richard D. Callicutt II, President and CEO, stated, "We are pleased to report another quarter of strong financial results, with core operating earnings per share increasing to $0.36 compared to $0.32 in the previous quarter.  Our strategy over the past five years to expand our franchise into the high growth markets throughout the Carolinas and Virginia is continuing to pay significant dividends for our shareholders, as evidenced by $132 million in organic loan growth and $77 million of growth in non-interest bearing checking accounts during the quarter. 

Another key driver of core earnings power has been a disciplined acquisition strategy, and the second quarter saw several key highlights in this area.  We closed our acquisition of Valley on July 1, and announced an agreement to acquire seven branches from Certus, which, when closed, will provide approximately $200 million of loans and deposits in the highly attractive Upstate area of South Carolina.

While competition continues to intensify for both organic and acquisition growth opportunities, we have positioned our Company to remain highly successful.  We have built a Company with a strong and rich culture, our talent base is deep and highly motivated, and continuing to enhance the customer experience is a daily priority for me personally."

Operating Results

Operating results for the three and six months ended June 30, 2015 include the full impact of the three acquisitions the Company completed during 2014. 

Fully-taxable equivalent ("FTE") net interest income for the quarter ended June 30, 2015 was $40.6 million, a slight increase from $39.9 million for the first quarter of 2015, and an increase of 13.3% from $35.8 million for the second quarter of 2014. 

FTE net interest income was $80.5 million for the six months ended June 30, 2015, an increase of 17.5% from $68.5 million for the six months ended June 30, 2014.

FTE net interest margin was 4.28% for the second quarter of 2015, a decrease from 4.37% for the first quarter of 2015 and 4.54% for the second quarter of 2014.  The decrease is primarily due to a decrease in the yield earned on the Company's portfolio loans, which was 5.03% for the second quarter of 2015, as compared to 5.08% and 5.32% for the first quarter of 2015 and second quarter of 2014, respectively.  The decrease in yield on the portfolio loans was partially offset by increased loan accretion from the acquired loan portfolio. Average interest-earnings assets for the second quarter of 2015 were $3.80 billion, an increase from $3.71 billion for the first quarter of 2015 and $3.17 billion for the second quarter of 2014.  The Company continues to experience high levels of organic loan growth, particularly in metropolitan markets.

FTE net interest margin was 4.32% for the six months ended June 30, 2015, a decrease of 25 basis points from 4.57% for the six months ended June 30, 2014.  Average interest-earning assets were $3.76 billion for the six months ended June 30, 2015, an increase of 24.2% from $3.02 billion for the six months ended June 30, 2014.

The following table is a summary of average yields and costs:

Average Yields / Costs (FTE)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2015

2015

2014

2015

2014

Yield on interest-earning assets

4.95%

5.00%

5.14%

4.98%

5.22%

Cost of interest-bearing liabilities

0.80%

0.75%

0.68%

0.77%

0.74%

Cost of funds

0.67%

0.64%

0.60%

0.66%

0.65%

Net interest spread

4.15%

4.25%

4.46%

4.21%

4.48%

Net interest margin

4.28%

4.37%

4.54%

4.32%

4.57%

Non-interest income was $8.7 million for the quarter ended June 30, 2015, an increase of 38.0% from $6.3 million for the first quarter of 2015, and an increase of 50.0% from $5.8 million for the second quarter of 2014.  Mortgage fees have increased by 11.1% and 42.1%, when compared to the first quarter of 2015 and the second quarter of 2014, respectively.  These increases are due to the Company's continued investment in lenders and resources for the mortgage origination business unit, which has been accomplished through organic growth and acquisitions.

Non-interest income was $15.0 million for the six months ended June 30, 2015, an increase of 37.2% from $10.9 million for the six months ended June 30, 2014.  Excluding the proceeds from an insurance settlement received during the first six months of 2014, non-interest income for the six months ended June 30, 2015 increased by 47.5%.  Many of the non-interest income sources, such as income from recoveries on acquired loans, income derived from the sale of loans partially guaranteed by the SBA and income derived from our investment brokerage services, are volatile and can vary significantly from period to period. 

Non-interest expense was $31.4 million for the quarter ended June 30, 2015, a slight decrease as compared to non-interest expense of $32.0 million for the first quarter of 2015, and an increase from $29.5 million for the second quarter of 2014.  Excluding non-operating expenses, adjusted non-interest expense for the quarter ended June 30, 2015 was $30.2 million, as compared to $29.2 million for the first quarter of 2015 and $25.9 million for the second quarter of 2014.  During the second quarter of 2015, the Company initiated an aggressive disposition strategy by writing down targeted other real estate owned ("OREO") in order to sell these properties.

Non-interest expense was $63.4 million for the six months ended June 30, 2015, an increase of 16.8% from $54.3 million for the six months ended June 30, 2014.  Adjusted non-interest expense was $59.3 million for the six months ended June 30, 2015, an increase of 18.9% from $49.9 million for the six months ended June 30, 2014.

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

Non-Interest Income / Non-Interest Expense

(dollars in thousands; unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2015

2015

2014

2015

2014

Non-interest income

  Mortgage fees

$          2,777

$          2,499

$          1,954

$          5,276

$          3,512

  Service charges

1,810

1,644

1,478

3,454

2,826

  Earnings on bank-owned life insurance

601

654

609

1,255

1,189

  Gain (loss) on sale of investment securities

(4)

49

-

45

(565)

  Gain on sale of SBA loans

588

364

419

952

872

  Other

2,921

1,090

1,345

4,011

3,096

     Total non-interest income

$          8,693

$          6,300

$          5,805

$        14,993

$        10,930

Non-interest expense

  Salaries and employee benefits

$        15,749

$        15,973

$        14,020

$        31,722

$        27,513

  Occupancy 

2,618

2,581

2,062

5,199

4,133

  Furniture and equipment

1,596

1,627

1,569

3,223

3,167

  Data processing and supply

1,073

846

975

1,919

1,879

  Advertising and business development

617

646

685

1,263

1,374

  Insurance, professional and other services

1,079

1,388

1,105

2,467

2,049

  FDIC insurance assessments

702

735

706

1,437

1,411

  Loan, foreclosure and other real estate owned

3,536

2,325

2,359

5,861

3,721

  Transaction-related expense

1,244

2,839

3,601

4,083

4,398

  Other

3,185

3,031

2,430

6,216

4,638

     Total non-interest expense

$        31,399

$        31,991

$        29,512

$        63,390

$        54,283

 

The following is a summary of transaction-related expenses incurred by transaction:

Transaction-Related Expenses

(dollars in thousands; unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

Transaction

2015

2015

2014

2015

2014

  Harbor

$            244

$          2,367

$               57

$          2,611

$               57

  Community First

10

47

742

57

920

  South Street

21

7

2,687

28

3,040

  Randolph

-

-

115

-

381

  Valley

829

418

-

1,247

-

  Certus

140

-

-

140

-

  Total

$         1,244

$          2,839

$          3,601

$          4,083

$          4,398

 

Additional Operating Highlights

Total portfolio loans were $3.25 billion at June 30, 2015, an increase of 5.8% from $3.08 billion at December 31, 2014.  Originated loans increased by $278.0 million, or 13.1%, during the first six months of 2015.  The Company has experienced organic loan growth across all loan types, with the majority of loan growth in commercial construction and commercial real estate loans, which have increased by $68.5 million and $29.4 million, respectively.

The table below outlines the Company's loan portfolio mix between originated and acquired loans for the past five quarters:

Gross Loan Growth

(dollars in thousands; unaudited)

 June 30, 

 March 31, 

December 31,

 September 30, 

 June 30, 

2015

2015

2014

2014

2014

Originated loans

$  2,394,470

$    2,262,601

$ 2,116,441

$ 2,021,792

$  1,865,024

Acquired loans 

858,537

913,236

958,657

741,877

805,275

Total portfolio loans

$  3,253,007

$    3,175,837

$ 3,075,098

$ 2,763,669

$  2,670,299

Change in balance (quarter/quarter):

  Total portfolio loans

2.4%

3.3%

11.3%

3.5%

15.9%

  Originated loans

5.8%

6.9%

4.7%

8.4%

5.7%

  Acquired loans

-6.0%

-4.7%

29.2%

-7.9%

49.4%

 

Total deposits at June 30, 2015 were $3.51 billion, an increase of 3.3% from total deposits of $3.40 billion as of December 31, 2014.  Wholesale deposits were 28.1% of total deposits at June 30, 2015, an increase compared to 25.7% as of December 31, 2014.  Non-interest bearing demand deposits have increased by 14.2% and 33.7% as compared to last quarter and last year quarter, respectively.

The table below outlines the components of deposits for the past five quarters:

Total Deposit Growth

(dollars in thousands; unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Non-interest bearing demand

$      621,392

$        544,189

$    534,792

$       482,859

$        464,682

Interest-bearing demand

1,586,967

1,685,200

1,657,931

1,495,186

1,504,397

Time deposits

1,301,616

1,323,537

1,203,674

1,106,163

1,155,569

Total

$   3,509,975

$     3,552,926

$ 3,396,397

$    3,084,208

$     3,124,648

Change in balance (quarter/quarter)

-1.2%

4.6%

10.1%

-1.3%

13.4%

Annual deposit growth

12.3%

 

Asset Quality

The Company experienced $1.0 million in net recoveries of previously charged-off loans during the three months ended June 30, 2015, compared to net charge-offs of $0.6 million, or 0.08% of average loans during the first quarter of 2015, and net charge-offs of $2.0 million, or 0.32% of average loans, during the second quarter of 2014.  Gross charge-offs were $0.8 million during the three months ended June 30, 2015, as compared to $2.0 million during the first quarter of 2015 and $4.0 million during the second quarter of 2014.

The Company has net recoveries of $0.5 million for the six months ended June 30, 2015, as compared to net charge-offs of $6.6 million, or 0.55% of average loans, for the six months ended June 30, 2014.  Gross charge-offs were $2.7 million during the six months ended June 30, 2015, as compared to $9.6 million during the six months ended June 30, 2014.

During the quarter ended June 30, 2015, the Company recorded a provision for loan losses of $0.3 million, an increase from $0.1 million recorded in the first quarter of 2015, and a decrease of 85.9% from $2.1 million recorded in the second quarter of 2014.  The Company recorded a provision for loan losses of $0.4 million for the six months ended June 30, 2015, a decrease of 91.3% from $4.7 million for the first six months of 2014.

The allowance for loan losses was $30.6 million at June 30, 2015, a slight decrease from $30.4 million at December 31, 2014.  The components of the allowance for loan loss at June 30, 2015 were as follows:

Allowance for Loan Loss Summary

(dollars in thousands; unaudited)

Allowance

Allowance

for 

Net

for Loan

Loans

Loan Losses

Loans

Losses %

Originated loans

$  2,394,470

$       27,130

$ 2,367,340

1.13%

Acquired loans

858,537

3,505

855,032

0.41%

Total portfolio loans

$  3,253,007

$       30,635

$ 3,222,372

0.94%

 

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and OREO, totaled $58.4 million, or 1.37% of total assets, at June 30, 2015, as compared to $67.3 million, or 1.65% of total assets, at December 31, 2014.  Nonperforming assets that were not acquired by the Company totaled $33.8 million at June 30, 2015, an increase from $32.5 million at December 31, 2014. 

The following table details our asset quality information for the past five fiscal quarters:

Asset Quality Information

(dollars in thousands;  unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Nonaccrual loans - Originated

$       12,998

$         14,776

$          8,476

$          9,857

$     14,360

Nonaccrual loans - Acquired

12,391

13,191

16,248

18,135

20,406

OREO - Originated

20,767

21,869

23,989

23,754

23,714

OREO - Acquired

12,241

17,558

18,542

22,718

27,009

90 days past due - Originated

-

-

-

-

-

90 days past due - Acquired

14

-

-

5

738

Total nonperforming assets

$       58,411

$         67,394

$        67,255

$        74,469

$     86,227

Total nonperforming assets - Originated

$       33,765

$         36,645

$        32,465

$        33,611

$     38,074

Total assets

$  4,275,355

$    4,173,463

$   4,072,508

$   3,735,816

$3,683,230

Total portfolio loans

3,253,007

3,175,837

3,075,098

2,763,669

2,670,299

Total originated loans

2,394,470

2,262,601

2,116,441

2,021,792

1,865,024

Net charge-offs (recoveries), QTD

(1,036)

584

940

325

2,026

Loans restructured/modified not included in above,

  (not 90 days past due or on nonaccrual)

14,100

15,168

13,577

15,685

14,948

Ratio of nonperforming assets to total assets

1.37%

1.61%

1.65%

1.99%

2.34%

  Originated nonperforming assets to total assets

0.79%

0.88%

0.80%

0.90%

1.03%

Ratio of nonperforming loans to total portfolio loans

0.78%

0.88%

0.80%

1.01%

1.33%

  Originated nonperforming loans to total portfolio loans

0.40%

0.47%

0.28%

0.36%

0.54%

Ratio of allowance for loan losses to total portfolio loans

0.94%

0.92%

0.99%

1.11%

1.13%

  Allowance for originated loans to total originated loans 

1.13%

1.15%

1.25%

1.32%

1.37%

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

-0.13%

0.08%

0.13%

0.05%

0.32%

 

The following is a rollforward of OREO activity for the three and six months ended June 30, 2015:

Rollforward of OREO

(dollars in thousands; unaudited)

Three Months Ended June 30, 2015

Six Months Ended June 30, 2015

Originated

Acquired

Total

Originated

Acquired

Total

Balance at beginning of period

$          21,869

$          17,558

$          39,427

$    23,989

$    18,542

$    42,531

Foreclosures

2,743

114

2,857

4,534

1,851

6,385

Valuation adjustments

(705)

(316)

(1,021)

(1,308)

(1,183)

(2,491)

Sales

(3,140)

(5,115)

(8,255)

(6,448)

(6,969)

(13,417)

Balance at end of period

$          20,767

$          12,241

$          33,008

$    20,767

$    12,241

$    33,008

 

Capital Position

At June 30, 2015, shareholders' equity was $403.6 million, an increase from $390.4 million as of December 31, 2014. 

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

On July 21, 2015, the Board of Directors of BNC Bancorp declared a $0.05 per share quarterly cash dividend on its common stock, payable August 28, 2015 to shareholders of record on August 14, 2015.

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 in excess of $5.0 billion subsequent to the acquisition of Valley.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 57 current banking offices in Virginia, North and South Carolina.  The Bank's 12 locations in South Carolina operate as BNC Bank.  The nine banking offices of Valley Bank will be operated as branches of BNC under the name of Valley Bank until system conversions are completed. 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.

 

 

PERFORMANCE SUMMARY

BNC BANCORP

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

(Unaudited)

For the Three Months Ended June 30,

SUMMARY INCOME STATEMENTS

2015

2014

% Change

Interest income

$           45,047

$                  38,633

16.6%

Interest expense

6,314

4,732

33.4%

Net interest income

38,733

33,901

14.3%

Provision for loan losses

301

2,140

-85.9%

Net interest income after provision for loan losses

38,432

31,761

21.0%

Non-interest income

8,693

5,805

49.8%

Non-interest expense

31,399

29,512

6.4%

Income before income tax expense

15,726

8,054

95.3%

Income tax expense

4,712

1,921

145.3%

Net income 

$           11,014

$                     6,133

79.6%

PER SHARE DATA

Earnings per share, basic

$               0.34

$                       0.21

Earnings per share, diluted

0.34

0.21

Operating earnings per share, diluted (1)

0.36

0.29

Tangible common book value per share (1)

9.87

8.90

Period-end common shares outstanding

32,589

29,721

Weighted average participating common shares:

Basic

32,585

28,877

Diluted

32,653

29,010

PERFORMANCE RATIOS

Return on average assets

1.06%

0.69%

Operating return on average assets (1)

1.13%

0.95%

Return on average common equity

11.05%

7.31%

Return on average tangible common equity (1)

14.59%

9.21%

Operating return on average tangible common equity (1)

15.58%

12.43%

Net interest margin (FTE)

4.28%

4.54%

Average equity to average assets

9.56%

9.50%

Allowance for loan losses as a % of portfolio loans

0.94%

1.13%

Allowance for originated loans as a % of originated portfolio loans

1.13%

1.37%

Nonperforming assets to total assets, end of period

1.37%

2.34%

Originated nonperforming assets to total assets, end of period

0.79%

1.03%

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

-0.13%

0.32%

SELECTED FINANCIAL DATA

Gain (loss) on sale of investment securities, net

$                   (4)

$                            -

Fair value accretion

5,273

2,981

OREO valuation adjustments, net of FDIC reimbursement

820

1,313

Transaction-related expenses

1,244

3,601

Goodwill and other intangible assets, net

82,022

62,406

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.

 

 

PERFORMANCE SUMMARY

BNC BANCORP

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

(Unaudited)

For the Six Months Ended June 30,

SUMMARY INCOME STATEMENTS

2015

2014

% Change

Interest income

$           88,934

$                  74,351

19.6%

Interest expense

12,131

9,736

24.6%

Net interest income

76,803

64,615

18.9%

Provision for loan losses

411

4,701

-91.3%

Net interest income after provision for loan losses

76,392

59,914

27.5%

Non-interest income

14,993

10,930

37.2%

Non-interest expense

63,390

54,283

16.8%

Income before income tax expense

27,995

16,561

69.0%

Income tax expense

8,223

3,944

108.5%

Net income 

$           19,772

$                  12,617

56.7%

PER SHARE DATA

Earnings per share, basic

$               0.61

$                       0.45

Earnings per share, diluted

0.60

0.45

Operating earnings per share, diluted (1)

0.68

0.54

Tangible common book value per share (1)

9.87

8.90

Period-end common shares outstanding

32,589

29,721

Weighted average participating common shares:

Basic

32,633

28,095

Diluted

32,704

28,232

PERFORMANCE RATIOS

Return on average assets

0.96%

0.76%

Operating return on average assets (1)

1.09%

0.92%

Return on average common equity

10.04%

8.30%

Return on average tangible common equity (1)

13.37%

10.15%

Operating return on average tangible common equity (1)

15.01%

12.18%

Net interest margin (FTE)

4.32%

4.57%

Average equity to average assets

9.59%

9.12%

Allowance for loan losses as a % of portfolio loans

0.94%

1.13%

Allowance for originated loans as a % of originated portfolio loans

1.13%

1.37%

Nonperforming assets to total assets, end of period

1.37%

2.34%

Originated nonperforming assets to total assets, end of period

0.79%

1.03%

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

-0.03%

0.55%

SELECTED FINANCIAL DATA

Gain (loss) on sale of investment securities, net

$                   45

$                      (565)

Fair value accretion

10,082

6,437

OREO valuation adjustments, net of FDIC reimbursement

1,634

1,948

Transaction-related expenses

4,083

4,398

Goodwill and other intangible assets, net

82,022

62,406

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.

 

 

PERFORMANCE SUMMARY

BNC BANCORP

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

(Unaudited)

For the Three Months Ended

SUMMARY INCOME STATEMENTS

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Interest income

$           45,047

$                  43,887

$             42,915

$             40,876

$             38,633

Interest expense

6,314

5,817

5,454

4,736

4,732

Net interest income

38,733

38,070

37,461

36,140

33,901

Provision for loan losses

301

110

1,001

1,304

2,140

Net interest income after provision for loan losses

38,432

37,960

36,460

34,836

31,761

Non-interest income

8,693

6,300

7,785

6,307

5,805

Non-interest expense

31,399

31,991

32,366

29,828

29,512

Income before income tax expense

15,726

12,269

11,879

11,315

8,054

Income tax expense

4,712

3,511

3,374

3,047

1,921

Net income 

$           11,014

$                     8,758

$               8,505

$               8,268

$               6,133

Net interest income, as reported

$           38,733

$                  38,070

$             37,461

$             36,140

$             33,901

Fully taxable-equivalent ("FTE") adjustment 

1,856

1,868

1,915

1,913

1,930

Net interest income, FTE

$           40,589

$                  39,938

$             39,376

$             38,053

$             35,831

PER SHARE DATA

Earnings per share, basic

$               0.34

$                       0.27

$                 0.28

$                 0.28

$                 0.21

Earnings per share, diluted

0.34

0.27

0.28

0.28

0.21

Period-end common shares outstanding

32,589

32,716

32,599

29,475

29,721

Weighted average participating common shares:

Basic

32,585

32,681

30,505

29,472

28,877

Diluted

32,653

32,754

30,599

29,567

29,010

PERFORMANCE RATIOS

Return on average assets

1.06%

0.87%

0.89%

0.89%

0.69%

Operating return on average assets (1)

1.13%

1.04%

1.07%

1.04%

0.95%

Return on average common equity

11.05%

9.01%

9.59%

10.03%

7.31%

Return on average tangible common equity (1)

14.59%

12.12%

12.57%

13.03%

9.21%

Operating return on average tangible common equity (1)

15.58%

14.41%

15.08%

15.17%

12.43%

Net interest margin (FTE)

4.28%

4.37%

4.55%

4.54%

4.54%

Average equity to average assets

9.56%

9.62%

9.23%

8.83%

9.50%

Allowance for loan losses as a % of portfolio loans

0.94%

0.92%

0.99%

1.11%

1.13%

Allowance for originated loans as a % of originated portfolio loans

1.13%

1.15%

1.25%

1.32%

1.37%

Nonperforming assets to total assets, end of period

1.37%

1.61%

1.65%

1.99%

2.34%

Originated nonperforming assets to total assets, end of period

0.79%

0.88%

0.80%

0.90%

1.03%

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

-0.13%

0.08%

0.13%

0.05%

0.32%

SELECTED FINANCIAL DATA

Gain (loss) on sale of investment securities, net

$                   (4)

$                          49

$                      -

$                    54

$                      -

Loss on extinguishment of debt

-

-

613

-

-

Fair value accretion

5,273

4,809

4,867

3,575

2,981

OREO valuation adjustments, net of FDIC reimbursement

820

814

866

1,022

1,313

Transaction-related expenses

1,244

2,839

2,231

2,325

3,601

Goodwill and other intangible assets, net

82,022

82,861

83,701

61,716

62,406

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

As of

SELECTED BALANCE SHEET DATA

June 30, 2015

December 31, 2014

% Change

Portfolio loans:

Originated loans

$     2,394,470

$             2,116,441

13.1%

Acquired loans

858,537

958,657

-10.4%

Allowance for loan losses

(30,635)

(30,399)

0.8%

Net portfolio loans

3,222,372

3,044,699

5.8%

Loans held for sale

36,315

37,280

-2.6%

Investment securities

557,732

506,382

10.1%

Total interest-earning assets

3,886,910

3,669,857

5.9%

Total assets

4,275,355

4,072,508

5.0%

Deposits:

Non-interest bearing deposits

621,392

534,792

16.2%

Interest-bearing demand and savings

1,586,967

1,657,931

-4.3%

Time deposits

1,301,616

1,203,674

8.1%

Total deposits

3,509,975

3,396,397

3.3%

Borrowed funds

337,711

261,748

29.0%

Total interest-bearing liabilities

3,226,294

3,123,353

3.3%

Shareholders' equity:

Common equity

395,215

380,206

3.9%

Accumulated other comprehensive income

8,368

10,182

-17.8%

Total shareholders' equity

403,583

390,388

3.4%

 

As of

SELECTED BALANCE SHEET DATA

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Portfolio loans:

Originated loans

$     2,394,470

$             2,262,601

$       2,116,441

$       2,021,792

$       1,865,024

Acquired loans

858,537

913,236

958,657

741,877

805,275

Allowance for loan losses

(30,635)

(29,351)

(30,399)

(30,722)

(30,129)

Net portfolio loans

3,222,372

3,146,486

3,044,699

2,732,947

2,640,170

Loans held for sale

36,315

25,505

37,280

20,906

23,714

Investment securities

557,732

515,325

506,382

489,263

501,626

Total interest-earning assets

3,886,910

3,778,586

3,669,857

3,354,964

3,282,682

Total assets

4,275,355

4,173,463

4,072,508

3,735,816

3,683,230

Deposits:

Non-interest bearing deposits

621,392

544,189

534,792

482,859

464,682

Interest-bearing demand and savings

1,586,967

1,685,200

1,657,931

1,495,186

1,504,397

Time deposits

1,301,616

1,323,537

1,203,674

1,106,163

1,155,569

Total deposits

3,509,975

3,552,926

3,396,397

3,084,208

3,124,648

Borrowed funds

337,711

195,659

261,748

298,642

209,449

Total interest-bearing liabilities

3,226,294

3,204,395

3,123,353

2,899,990

2,869,415

Shareholders' equity:

Common equity

395,215

389,025

380,206

320,433

318,624

Accumulated other comprehensive income

8,368

10,087

10,182

10,214

8,212

Total shareholders' equity

403,583

399,112

390,388

330,647

326,836

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

For the Three Months Ended

SELECTED AVERAGE BALANCE SHEET DATA

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Portfolio loans

$     3,207,771

$             3,128,992

$       2,877,833

$       2,721,425

$       2,553,931

Investment securities

513,476

495,587

484,092

491,278

496,221

Total interest-earning assets

3,802,696

3,708,252

3,436,018

3,322,970

3,165,865

Total assets

4,180,690

4,097,199

3,809,989

3,705,918

3,540,758

Deposits:

Non-interest bearing deposits

573,640

532,348

519,062

469,712

402,105

Interest-bearing demand and savings

1,604,713

1,654,989

1,545,039

1,513,574

1,457,797

Time deposits

1,298,247

1,275,326

1,122,956

1,126,903

1,163,864

Total deposits

3,476,600

3,462,663

3,187,057

3,110,189

3,023,766

Borrowed funds

279,140

216,182

246,229

244,341

158,288

Total interest-bearing liabilities

3,182,100

3,146,497

2,914,224

2,884,818

2,779,949

Shareholders' equity

399,868

394,034

351,695

327,138

336,297

 For the Six Months Ended June 30,  

SELECTED AVERAGE BALANCE SHEET DATA

2015

2014

Portfolio loans

$     3,168,599

$             2,421,944

Investment securities

504,581

502,943

Total interest-earning assets

3,755,735

3,023,497

Total assets

4,139,175

3,362,233

Deposits:

Non-interest bearing deposits

553,108

368,945

Interest-bearing demand and savings

1,629,712

1,390,932

Time deposits

1,286,850

1,112,862

Total deposits

3,469,670

2,872,739

Borrowed funds

247,835

161,874

Total interest-bearing liabilities

3,164,397

2,665,668

Shareholders' equity

396,967

306,681

 

 

LOAN PORTFOLIO MIX

BNC BANCORP

(Dollars in millions)

(Unaudited)

 As of 

June 30, 2015

March 31, 2015

June 30, 2014

Residential construction

$               84.2

$                       78.0

$                 42.4

Presold

57.9

49.7

23.7

Speculative

26.3

28.3

18.7

Commercial construction

243.0

176.6

140.6

Residential and commercial A&D

15.5

12.2

11.8

Land

86.4

92.3

93.2

Residential buildable lots

26.7

26.9

28.0

Commercial buildable lots

23.9

24.6

19.7

Land held for development

19.6

23.9

24.8

Raw and agricultural land

16.2

16.9

20.7

Commercial real estate

1,721.3

1,713.0

1,445.1

Multi-family

96.4

100.2

77.4

Farmland

5.8

4.6

2.9

Owner occupied

626.4

614.7

522.3

Non-owner occupied

992.7

993.5

842.5

Commercial and industrial

219.6

199.0

170.6

Residential mortgage

842.0

867.0

732.8

Consumer

16.5

16.2

17.1

Leases

24.5

21.5

16.7

Total portfolio loans

$          3,253.0

$                 3,175.8

$            2,670.3

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

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

(Unaudited)

For the Three Months Ended

Operating Earnings per Share, Diluted (1)

June 30, 2015

March 31, 2015

June 30, 2014

Net income (GAAP)

$           11,014

$                     8,758

$               6,133

Add:    Transaction-related charges, net of tax

784

1,789

2,269

Less:  Gain (loss) on sale of investment securities, net of tax

(3)

31

-

Operating earnings (non-GAAP)

11,801

10,516

8,402

Weighted average fully diluted shares outstanding

32,653

32,754

29,010

Operating earnings per share, diluted (non-GAAP)

$               0.36

$                       0.32

$                 0.29

For the Six Months Ended June 30,

Operating Earnings per Share, Diluted (1)

2015

2014

Net income (GAAP)

$           19,772

$                  12,617

Add:    Transaction-related charges, net of tax

2,572

2,771

Less:  Gain (loss) on sale of investment securities, net of tax

28

(356)

Insurance settlement, net of tax

-

484

Operating earnings (non-GAAP)

22,316

15,260

Weighted average fully diluted shares outstanding

32,704

28,232

Operating earnings per share, diluted (non-GAAP)

$               0.68

$                       0.54

For the Three Months Ended

Adjusted Non-interest Expense (1)

June 30, 2015

March 31, 2015

June 30, 2014

Non-interest expense (GAAP)

$           31,399

$                  31,991

$             29,512

Less:  Transaction-related expenses

1,244

2,839

3,601

Adjusted non-interest expense (non-GAAP)

$           30,155

$                  29,152

$             25,911

For the Six Months Ended June 30,

Adjusted Non-interest Expense (1)

2015

2014

Non-interest expense (GAAP)

$           63,390

$                  54,283

Less:  Transaction-related expenses

4,083

4,398

Adjusted non-interest expense (non-GAAP)

$           59,307

$                  49,885

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

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

(Unaudited)

As of June 30,

Tangible Common Book Value per Share (2)

2015

2014

Shareholders' equity (GAAP)

$        403,583

$                326,836

Less: Intangible assets

82,022

62,406

Tangible common shareholders equity (non-GAAP)

321,561

264,430

Common shares outstanding

32,589

29,721

Tangible common book value per share (non-GAAP)

$               9.87

$                       8.90

For the Three Months Ended

Return on Average Tangible Common Equity (2)

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Net income (GAAP)

$           11,014

$                     8,758

$               8,505

$               8,268

$               6,133

Add: Amortization of intangibles, net of tax

529

529

453

435

354

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

11,543

9,287

8,958

8,703

6,487

Average common shareholders equity

399,868

394,034

351,695

327,138

336,297

Less: Average intangible assets

82,431

83,279

68,954

62,101

53,826

Average tangible common shareholders' equity (non-GAAP)

317,437

310,755

282,741

265,037

282,471

Return on average tangible common equity (non-GAAP)

14.59%

12.12%

12.57%

13.03%

9.21%

For the Six Months Ended June 30,

Return on Average Tangible Common Equity (2)

2015

2014

Net income (GAAP)

$           19,772

$                  12,617

Add: Amortization of intangibles, net of tax

1,058

586

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

20,830

13,203

Average common shareholders equity

396,967

306,681

Less: Average intangible assets

82,853

44,353

Average tangible common shareholders' equity (non-GAAP)

314,114

262,328

Return on average tangible common equity (non-GAAP)

13.37%

10.15%

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

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

(Unaudited)

For the Three Months Ended

Operating Return on Average Assets (1)

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Net income (GAAP)

$           11,014

$                     8,758

$               8,505

$               8,268

$               6,133

Add:   Transaction-related expenses, net of tax

784

1,789

1,406

1,464

2,269

Loss on extinguishment of debt, net of tax

-

-

386

-

-

Less:  Gain (loss) on sale of investment securities, net of tax

(3)

31

-

34

-

Operating earnings (non-GAAP)

11,801

10,516

10,297

9,698

8,402

Average assets

4,180,690

4,097,199

3,809,989

3,705,918

3,540,758

Operating return on average assets (non-GAAP)

1.13%

1.04%

1.07%

1.04%

0.95%

For the Six Months Ended June 30,

Operating Return on Average Assets (1)

2015

2014

Net income (GAAP)

$           19,772

$                  12,617

Add:   Transaction-related expenses, net of tax

2,572

2,771

Less:  Gain (loss) on sale of investment securities, net of tax

28

(356)

            Insurance settlement, net of tax

-

484

Operating earnings (non-GAAP)

22,316

15,260

Average assets

4,139,175

3,362,232

Operating return on average assets (non-GAAP)

1.09%

0.92%

For the Three Months Ended

Operating Return on Average Tangible Common Equity (1)

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Net income (GAAP)

$           11,014

$                     8,758

$               8,505

$               8,268

$               6,133

Add:   Amortization of intangibles, net of tax

529

529

453

435

354

            Transaction-related expenses, net of tax

784

1,789

1,406

1,464

2,269

Loss on extinguishment of debt, net of tax

-

-

386

-

-

Less:  Gain (loss) on sale of investment securities, net of tax

(3)

31

-

34

-

Operating tangible net income available to common shareholders (non-GAAP)

12,330

11,045

10,750

10,133

8,756

Average common shareholders equity

399,868

394,034

351,695

327,138

336,297

Less: Average intangible assets

82,431

83,279

68,954

62,101

53,826

Average tangible common shareholders' equity (non-GAAP)

317,437

310,755

282,741

265,037

282,471

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

15.58%

14.41%

15.08%

15.17%

12.43%

For the Six Months Ended June 30,

Operating Return on Average Tangible Common Equity (1)

2015

2014

Net income (GAAP)

$           19,772

$                  12,617

Add:   Amortization of intangibles, net of tax

1,058

586

            Transaction-related expenses, net of tax

2,572

2,771

Loss on extinguishment of debt, net of tax

-

-

Less:  Gain (loss) on sale of investment securities, net of tax

28

(356)

            Insurance settlement, net of tax

-

484

Operating tangible net income available to common shareholders (non-GAAP)

23,374

15,846

Average common shareholders equity

396,967

306,681

Less: Average intangible assets

82,853

44,353

Average tangible common shareholders' equity (non-GAAP)

314,114

262,328

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

15.01%

12.18%

(1)  Management uses these measures in their analysis of the Company's performance and believes these 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.

(2)  Management believes investors use this measure to evaluate the Company's performance.

 

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SOURCE BNC Bancorp



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