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BNC Bancorp Announces Record Earnings for Fourth Quarter and Full Year 2014

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BNC Bancorp

Jan 26, 2015, 08:45 ET

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HIGH POINT, N.C., Jan. 26, 2015 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the fourth quarter and fiscal year ended December 31, 2014.

Operating earnings for the quarter ended December 31, 2014 totaled $10.3 million, or $0.34 per diluted share, an increase of 6.2% compared to $9.7 million, or $0.33 per diluted share, for the quarter ended September 30, 2014, and an increase of 80.3% from operating earnings of $5.7 million, or $0.21 per diluted share, for the quarter ended December 31, 2013.  Operating earnings exclude non-operating income and expenses, which include transaction-related expenses, acquisition-related gains, one-time income and expense items, and gain (loss) on sale of investment securities.

Operating earnings for the fiscal year ended December 31, 2014 totaled $35.3 million, or $1.21 per diluted share, an increase of 84.7% compared to operating earnings of $19.1 million, or $0.71 per diluted share, for the fiscal year ended December 31, 2013. 

Net income for the quarter ended December 31, 2014 was $8.5 million, or $0.28 per diluted share, a slight increase compared to net income of $8.3 million, or $0.28 per diluted share, for the quarter ended September 30, 2014, and an increase of 160.0% from net income of $3.3 million, or $0.12 per diluted share, for the quarter ended December 31, 2013. 

Net income for the fiscal year ended December 31, 2014 was $29.4 million, or $1.01 per diluted share, an increase of 81.6% from net income available to common shareholders of $16.2 million, or $0.61 per diluted share, for the fiscal year ended December 31, 2013.  The increase in net income from 2013 is primarily due to the significant increase in interest-earning assets due to the acquisitions of South Street Financial Corporation ("South Street") and Community First Financial Group, Inc. ("Community First"), respectively, during 2014, as well as the acquisition of Harbor Bank Group ("Harbor"), which closed on December 1, 2014. 

Total assets at December 31, 2014 were $4.07 billion, an increase of 26.1% as compared to total assets of $3.23 billion at December 31, 2013.

Highlights for Fourth Quarter 2014:

  • Operating earnings per diluted share of $0.34 for the fourth quarter of 2014, compared to $0.21 for the fourth quarter of 2013;
  • Diluted earnings per share of $0.28 for the fourth quarter of 2014, compared to $0.12 for the fourth quarter of 2013;
  • Completed acquisition of Harbor, which increased our presence in the attractive Charleston, South Carolina market;
  • Announced merger agreement with Valley Financial Corporation ("Valley"), which will mark the Company's initial entrance in Virginia with nine branches in Roanoke and Salem, Virginia;
  • Annualized operating return on average assets of 1.07%, compared to 0.71% for the fourth quarter of 2013;
  • Annualized operating return on tangible common equity ratio of 15.08%, compared to 9.98% for the fourth quarter of 2013;
  • Operating earnings per diluted share of $1.21 for fiscal year 2014, compared to $0.71 for the fiscal year 2013;
  • Operating return on average assets of 0.99% for fiscal year 2014, compared to 0.63% for fiscal year 2013;
  • Operating return on tangible common equity ratio of 13.70% for fiscal year 2014, compared to 8.79% for fiscal year 2013; and
  • Non-accrual loans that were not acquired by the Company have decreased by 40.4% as compared to December 31, 2013.

Richard D. Callicutt II, President and CEO, stated, "We are pleased to report record earnings for both the fourth quarter and full year 2014.  These results have been accomplished by maintaining a disciplined two-pronged and complimentary approach to our organic and acquisition growth initiatives, along with a talented and dedicated team to execute this vision.  The ability to successfully execute such a strategy continues to allow us to achieve industry leading growth in both earnings and scale throughout the key markets in the Carolinas. 

As we have detailed in the past, the early part of this decade was spent expanding our franchise into the key growth markets in the Carolinas, while the past several years has been about creating greater market penetration and leveraging our infrastructure to drive greater operating leverage and net income growth.   Just in 2014 alone, the acquisitions of Harbor, South Street and Community First added over $700 million of combined deposits in the high-growth Triangle, Metro-Charlotte, and Charleston markets. Reporting $1.21 in operating earnings per share for 2014, a 70% increase from 2013, provides further evidence that these investments in organic and acquired growth in key markets are paying dividends for our shareholders.

In the fourth quarter, we announced the acquisition of Valley Financial in Roanoke, representing our largest acquisition to date and our initial entry into Virginia.  We are extremely excited about Ellis Gutshall, the Valley CEO, and his team joining the BNC family, and I personally look forward to working closely with him to grow and leverage our brand in Southern Virginia. 

As we look ahead to 2015, the expected ramp in earnings power will provide the best opportunity in our history to grow capital and tangible book value, and make further advances on our mission to position our Company on balance in terms of capital, earnings, and growth.  With economic conditions improving, we remain keenly focused on recruiting exceptional talent, delivering seamless and successful integrations of the Harbor and Valley franchises, and continuing to evaluate growth opportunities that enhance franchise and shareholder value."

Operating Results

Fully-taxable equivalent ("FTE") net interest income for the fourth quarter of 2014 was $39.4 million, an increase of 3.5% from $38.1 million for the third quarter of 2014, and an increase of 23.7% from $31.8 million for the fourth quarter of 2013.  FTE net interest margin was 4.55% for the fourth quarter of 2014, a slight increase from 4.54% for the third quarter of 2014, and an increase of 16 basis points from 4.39% for the fourth quarter of 2013.  The increase from third quarter 2014 was primarily due to an additional $1.3 million of loan accretion from the acquired loan portfolio, which was offset by additional interest expense due to the issuance of $60 million of 5.50% Fixed to Floating Subordinated Notes.  The increase from the fourth quarter of 2013 was primarily driven by a $2.3 million reduction in interest expense associated with our interest rate hedging instrument, which matured in February 2014.

FTE net interest income for the year ended December 31, 2014 was $146.0 million, an increase of 26.1% from $115.8 million for the year ended December 31, 2013.  FTE net interest margin was 4.56% for the year ended December 31, 2014, an increase of 27 basis points from 4.29% for fiscal year 2013.  This increase was primarily driven by a $9.2 million reduction in interest expense associated with our interest rate hedging instrument, which matured in February 2014.  Yield on loans, less accretion from the acquired loan portfolio, was 4.61% for the fourth quarter of 2014, compared to 4.75% for the third quarter of 2014 and 5.04% for the fourth quarter of 2013.

Average interest-earning assets were $3.44 billion for the fourth quarter of 2014, an increase of 3.4% from $3.32 billion for the third quarter of 2014, and an increase of 19.3% from $2.88 billion for the fourth quarter of 2013.  Average interest-earning assets were $3.20 billion for the year ended December 31, 2014, an increase of 18.8% from $2.70 billion for the year ended December 31, 2013.  

Average interest-bearing liabilities were $2.91 billion for the fourth quarter of 2014, a slight increase from $2.88 billion for the third quarter of 2014, and an increase of 13.7% from $2.56 billion for the fourth quarter of 2013.  Average interest-bearing liabilities were $2.78 billion for the year ended December 31, 2014, an increase of 14.6% from $2.43 billion for the year ended December 31, 2013. 

The above increases were due to recent acquisitions and continued loan growth across the Company's markets.

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

Average Yields / Costs (FTE)

(unaudited)












Three Months Ended


Fiscal Year Ended


December 31,


September 30,


December 31,


December 31,


December 31,


2014


2014


2013


2014


2013

Yield on interest-earning assets

5.18%


5.11%


5.48%


5.18%


5.41%

Cost of interest-bearing liabilities

0.74%


0.65%


1.23%


0.72%


1.24%

Cost of funds

0.63%


0.56%


1.09%


0.62%


1.11%

Net interest spread

4.44%


4.46%


4.25%


4.46%


4.17%

Net interest margin

4.55%


4.54%


4.39%


4.56%


4.29%











Non-interest income was $7.8 million for the fourth quarter of 2014, an increase of 23.4% from $6.3 million for the third quarter of 2014, and an increase of 50.3% from $5.2 million for the fourth quarter of 2013.  Adjusted non-interest income, which excludes acquisition-related gains, one-time income arising from insurance settlements and gain (loss) on sale of investment securities, was $7.8 million for fourth quarter of 2014, an increase of 50.6% from the fourth quarter of 2013.  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, income derived from our investment brokerage services, income derived from our CRA equity investments and income received from the Federal Deposit Insurance Corporation related to our acquired loan portfolio, are volatile and can vary significantly from period to period. 

Non-interest income was $25.0 million for the year ended December 31, 2014, an increase of 9.7% from $22.8 million for fiscal year 2013.  Adjusted non-interest income was $24.8 million for the year ended December 31, 2014, an increase of 14.4% from $21.7 million for the year ended December 31, 2013.  The increase from 2013 was primarily due to an increase in investment brokerage income, income derived from the sale of loans partially guaranteed by the SBA and income from CRA equity investments.

Non-interest expense was $32.4 million for the three months ended December 31, 2014, an increase of 8.5% compared to non-interest expense of $29.8 million for the third quarter of 2014, and an increase of 13.1% from $28.6 million for the fourth quarter of 2013.  Excluding non-operating expenses, adjusted non-interest expense for the fourth quarter of 2014 was $29.5 million, an increase of 7.3% from $27.5 million for the third quarter of 2014, and an increase of 19.3% from $24.7 million for the fourth quarter of 2013.  The increase from the third quarter of 2014 is due to seasonally higher fringe benefit expenses, as well as severance payments, additional headcount and facilities charges related to the acquisition of Harbor.

Non-interest expense was $116.5 million for the year ended December 31, 2014, an increase of 18.9% from $97.9 million for the year ended December 31, 2013.  Excluding non-operating expenses, adjusted non-interest expense for the year ended December 31, 2014 was $106.9 million, an increase of 16.0% from $92.2 million for the year ended December 31, 2013.  The increase from 2013 is primarily due recent acquisitions, as well as overall growth.

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


Fiscal Year Ended


December 31,


September 30,


December 31,


December 31,


December 31,


2014


2014


2013


2014


2013

Non-interest income










  Mortgage fees

$          2,049


$          2,128


$          1,710


$          7,689


$          8,979

  Service charges

1,648


1,631


1,354


6,105


4,314

  Earnings on bank-owned life insurance

634


559


646


2,382


2,318

  Gain (loss) on sale of securities

-


54


10


(511)


(42)

  Insurance settlement

-


-


-


768


479

  Acquisition-related gain

-


-


-


-


719

  Other

3,454


1,935


1,458


8,589


6,039

     Total non-interest income

$          7,785


$          6,307


$          5,178


$        25,022


$        22,806











Non-interest expense










  Salaries and employee benefits

$        16,423


$        14,974


$        13,613


$        58,910


$        51,080

  Occupancy 

2,365


2,647


1,691


9,145


6,547

  Furniture and equipment

1,630


1,651


1,552


6,448


5,542

  Data processing and supply

1,053


780


922


3,712


3,219

  Advertising and business development

625


667


590


2,666


2,015

  Insurance, professional and other services

1,077


826


1,495


3,952


4,655

  FDIC insurance assessments

700


821


660


2,932


2,766

  Loan, foreclosure and other real estate owned

2,632


2,586


2,093


8,940


8,949

  Transaction-related expenses

2,231


2,325


3,884


8,954


5,768

  Other

3,630


2,551


2,128


10,818


7,392

     Total non-interest expense

$        32,366


$        29,828


$        28,628


$      116,477


$        97,933

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

Transaction-Related Expenses

(dollars in thousands; unaudited)












Three Months Ended


Fiscal Year Ended


December 31,


September 30,


December 31,


December 31,


December 31,

Transaction

2014


2014


2013


2014


2013

  Previous transactions

$                -


$                -


$                -


$                -


$          1,056

  Harbor

1,210


982


-


2,246


-

  Community First

585


1,089


83


2,593


83

  South Street

55


244


120


3,314


120

  Randolph

-


10


3,681


391


4,509

  Valley & Other

381


-


-


410


-

  Total

$          2,231


$          2,325


$          3,884


$          8,954


$          5,768

Additional Operating Highlights

Total portfolio loans were $3.08 billion at December 31, 2014, an increase of 35.1% from $2.28 billion at December 31, 2013.  Originated loans have increased by $94.6 million, or 4.7%, during the fourth quarter of 2014 and 24.1% during fiscal year 2014.  In addition to the recent acquisitions, the Company has also experienced continued growth in commercial real estate and commercial construction loans.

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)
















December 31,


September 30,


 June 30, 


 March 31, 


 December 31, 


2014


2014


2014


2014


2013

Originated loans

$  2,116,441


$    2,021,792


$ 1,865,024


$ 1,765,248


$  1,704,876

Acquired loans 

958,657


741,877


805,275


538,827


571,641

Total portfolio loans

$  3,075,098


$    2,763,669


$ 2,670,299


$ 2,304,075


$  2,276,517





















Change in balance (quarter/quarter):










  Total portfolio loans

11.3%


3.5%


15.9%


1.2%


8.4%

  Originated loans

4.7%


8.4%


5.7%


3.5%


4.6%

  Acquired loans

29.2%


-7.9%


49.4%


-5.7%


21.4%

Total deposits at December 31, 2014 were $3.40 billion, an increase of 25.5% from total deposits of $2.71 billion as of December 31, 2013.  Wholesale deposits were 25.5% of total deposits at December 31, 2014, a decrease compared to 32.8% as of December 31, 2013.  Transactional accounts, which are comprised of non-interest bearing and interest-bearing demand accounts, increased 35.0% during 2014.  At December 31, 2014, time deposits were 35.4% of total deposits, compared to 40.0% at December 31, 2013. 

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

Total Deposit Growth

(dollars in thousands; unaudited)












December 31,


September 30,


June 30,


March 31,


December 31,


2014


2014


2014


2014


2013

Non-interest bearing demand

$      534,792


$        482,859


$    464,682


$       350,415


$        324,532

Interest-bearing demand

1,657,931


1,495,186


1,504,397


1,362,454


1,299,399

Time deposits

1,203,674


1,106,163


1,155,569


1,043,457


1,082,799

Total

$   3,396,397


$     3,084,208


$ 3,124,648


$    2,756,326


$     2,706,730











Change in balance (quarter/quarter)

10.1%


-1.3%


13.4%


1.8%


11.1%











Annual deposit growth

25.5%









Total borrowings at December 31, 2014 were $261.7 million, an increase of 15.3% from total borrowings of $227.1 million as of December 31, 2013.  At December 31, 2014, $127.9 million of these borrowings were classified as short-term, while the remaining $133.8 million were classified as long-term. 

Asset Quality

The Company incurred $0.8 million in net charge-offs, which represented 0.12% of average loans, for the fourth quarter of 2014, compared to net charge-offs of $0.3 million, or 0.05% of average loans for the third quarter of 2014, and net charge-off losses of $0.4 million, or 0.07% of average loans, for the fourth quarter of 2013.  The Company experienced a significant level of recoveries during the third quarter of 2014, which led to a lower level of net charge-offs. 

The Company incurred $7.8 million in net charge-offs, which represented 0.30% of average loans, for the year ended December 31, 2014, compared to net charge-offs of $20.7 million, or 0.98% of average loans, for the year ended December 31, 2013. 

During the fourth quarter of 2014, the Company recorded a provision for loan losses of $1.0 million, a decrease of 23.2% from $1.3 million recorded in the third quarter of 2014, and a decrease of 58.9% from $2.4 million recorded during the fourth quarter of 2013.  The Company recorded a provision for loan losses of $7.0 million for the year ended December 31, 2014, a decrease of 42.5% from $12.2 million recorded during fiscal year 2013. 

The allowance for loan losses was $30.4 million at December 31, 2014, a decrease of 7.5% from $32.9 million at December 31, 2013.  The components of the allowance for loan loss at December 31, 2014 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

$  2,116,441


$       26,433


$ 2,090,008


1.25%

Acquired loans

958,657


3,966


954,691


0.41%

Total portfolio loans

$  3,075,098


$       30,399


$ 3,044,699


0.99%

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and OREO, totaled $67.3 million, or 1.65% of total assets, at December 31, 2014, a decrease from $88.5 million, or 2.74% of total assets, at December 31, 2013.  Nonperforming assets that were not acquired by the Company totaled $32.5 million at December 31, 2014, a decrease of 13.6% from $37.6 million at December 31, 2013. 

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

Asset Quality Information

(dollars in thousands;  unaudited)












December 31,


September 30,


June 30,


March 31,


December 31,


2014


2014


2014


2014


2013

Nonaccrual loans - Originated

$         8,476


$           9,857


$        14,360


$        11,285


$     14,229

Nonaccrual loans - Acquired

16,248


18,135


20,406


23,758


26,630

OREO - Originated

23,989


23,754


23,714


25,996


23,348

OREO - Acquired

18,542


22,718


27,009


18,910


24,258

90 days past due - Originated

-


-


-


-


-

90 days past due - Acquired

-


5


738


-


-

Total nonperforming assets

$       67,255


$         74,469


$        86,227


$        79,949


$     88,465

Total nonperforming assets - Originated

$       32,465


$         33,611


$        38,074


$        37,281


$     37,577











Total assets

$  4,072,508


$    3,735,816


$   3,683,230


$   3,205,951


$3,229,576

Total portfolio loans

3,075,098


2,763,669


2,670,299


2,304,075


2,276,517

Total originated loans

2,116,441


2,021,792


1,865,024


1,765,248


1,704,876

Net charge-offs, QTD

844


325


2,026


4,615


380

Loans restructured/modified not included in above,










  (not 90 days past due or on nonaccrual)

13,577


15,685


14,948


17,924


16,770











Ratio of nonperforming assets to total assets

1.65%


1.99%


2.34%


2.49%


2.74%

  Originated nonperforming assets to total assets

0.80%


0.90%


1.03%


1.16%


1.16%











Ratio of nonperforming loans to total portfolio loans

0.80%


1.01%


1.33%


1.52%


1.79%

  Originated nonperforming loans to total portfolio loans

0.28%


0.36%


0.54%


0.49%


0.63%











Ratio of allowance for loan losses to total portfolio loans

0.99%


1.11%


1.13%


1.34%


1.44%

  Allowance for originated loans to total originated loans 

1.25%


1.32%


1.37%


1.47%


1.57%











Annualized net charge-offs to average portfolio loans

0.12%


0.05%


0.32%


0.82%


0.07%











 The following is a rollforward of OREO activity for the quarter and year ended December 31, 2014:

Rollforward of OREO

(dollars in thousands; unaudited)














Three Months Ended December 31, 2014


Year Ended December 31, 2014


Originated


Acquired


Total


Originated


Acquired


Total

Balance at beginning of period

$       23,259


$       23,213


$       46,472


$       24,978


$       22,628


$       47,606

Foreclosures

4,711


2,657


7,368


14,213


11,166


25,379

Transfer to fixed assets

-


-


-


(1,633)


-


(1,633)

Acquired 

-


11


11


-


9,729


9,729

Valuation adjustments

(704)


(260)


(964)


(2,725)


(2,160)


(4,885)

Sales

(3,277)


(7,079)


(10,356)


(10,844)


(22,821)


(33,665)

Balance at end of period

$       23,989


$       18,542


$       42,531


$       23,989


$       18,542


$       42,531

Capital Position

At December 31, 2014, shareholders' equity was $390.4 million, an increase of 43.9% from shareholders' equity of $271.3 million as of December 31, 2013.  In addition to net income, the increase in shareholders' equity was due to the issuance of 5.4 million shares of common stock during 2014 related to the recent acquisitions.

All of the Bank's and Company's capital ratios exceed the minimum thresholds established for a well-capitalized bank by regulatory measures.  The issuance of the Notes also served to increase the Company's total capital ratio.

On January 20, 2015, the Board of Directors of BNC Bancorp declared a $0.05 per share quarterly cash dividend on its common stock, payable February 27, 2015 to shareholders of record on February 13, 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 $4.07 billion in assets.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 50 banking offices in North and South Carolina.  The Bank's 14 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."  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



SUMMARY INCOME STATEMENTS

December 31,
2014


December 31,
2013


% Change


Interest income

$           42,915


$             37,836


13.4%


Interest expense

5,454


7,964


-31.5%


Net interest income

37,461


29,872


25.4%


Provision for loan losses

1,001


2,435


-58.9%


Net interest income after provision for loan losses

36,460


27,437


32.9%


Non-interest income

7,785


5,178


50.3%


Non-interest expense

32,366


28,628


13.1%


Income before income tax expense

11,879


3,987


197.9%


Income tax expense

3,374


716


371.2%


Net income 

$             8,505


$               3,271


160.0%








PER SHARE DATA







Earnings per share, basic

$               0.28


$                 0.12




Earnings per share, diluted

0.28


0.12




Operating earnings per share, diluted (1)

0.34


0.21




Tangible common book value per share (1)

9.41


8.66










Period-end common shares outstanding

32,599


27,303



Weighted average participating common shares:







Basic

30,505


27,293




Diluted

30,599


27,382










PERFORMANCE RATIOS







Return on average assets

0.89%


0.41%




Operating return on average assets (1)

1.07%


0.71%




Return on average common equity

9.59%


4.79%




Return on average tangible common equity (1)

12.57%


5.89%




Operating return on average tangible common equity (1)

15.08%


9.98%




Net interest margin (FTE)

4.55%


4.39%




Average equity to average assets

9.23%


8.48%




Allowance for loan losses as a % of portfolio loans

0.99%


1.44%




   Allowance for originated loans as a % of originated portfolio loans

1.25%


1.57%




Nonperforming assets to total assets, end of period

1.65%


2.74%




   Originated nonperforming assets to total assets, end of period

0.80%


1.16%




Annualized net charge-offs to total average portfolio loans

0.12%


0.07%










SELECTED FINANCIAL DATA







Gain (loss) on sale of investment securities, net

$                    -


$                     10




Loss on extinguishment of debt

613


-




Fair value accretion

4,867


4,208




Hedging instrument expense 

431


2,700




OREO valuation adjustments, net of FDIC reimbursement

866


713




Transaction-related expenses

2,231


3,884




Goodwill and other intangible assets, net

83,701


34,966











(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




Year Ended



SUMMARY INCOME STATEMENTS

December 31,
2014


December 31,
2013


% Change


Interest income

$        158,142


$          138,670


14.0%


Interest expense

19,926


30,063


-33.7%


Net interest income

138,216


108,607


27.3%


Provision for loan losses

7,006


12,188


-42.5%


Net interest income after provision for loan losses

131,210


96,419


36.1%


Non-interest income

25,022


22,806


9.7%


Non-interest expense

116,477


97,933


18.9%


Income before income tax expense

39,755


21,292


86.7%


Income tax expense

10,365


4,045


156.2%


Net income

29,390


17,247


70.4%


Preferred stock dividends and discount accretion

-


1,060


-100.0%


Net income available to common shareholders

$           29,390


$             16,187


81.6%







PER SHARE DATA







Earnings per share, basic

$               1.01


$                 0.61




Earnings per share, diluted

1.01


0.61




Operating earnings per share, diluted (1)

1.21


0.71




Tangible common book value per share (1)

9.41


8.66









Period-end common shares outstanding

32,599


27,303



Weighted average participating common shares:







Basic

29,050


26,683




Diluted

29,152


26,714









PERFORMANCE RATIOS







Return on average assets

0.83%


0.54%




Operating return on average assets (1)

0.99%


0.63%




Return on average common equity

9.09%


6.28%




Return on average tangible common equity (1)

11.51%


7.50%




Operating return on average tangible common equity (1)

13.70%


8.79%




Net interest margin (FTE)

4.56%


4.29%




Average equity to average assets

9.07%


8.94%




Allowance for loan losses as a % of portfolio loans

0.99%


1.44%




     Allowance for originated loans as a % of originated portfolio loans

1.25%


1.57%




Nonperforming assets to total assets, end of period

1.65%


2.74%




     Originated nonperforming assets to total assets, end of period

0.80%


1.16%




Annualized net charge-offs to total average portfolio loans

0.30%


0.98%









SELECTED FINANCIAL DATA







Gain (loss) on sale of investment securities, net

$               (511)


$                   (42)




Loss on extinguishment of debt

613


-




Insurance settlement income

768


479




Acquisition related gain

-


719




Fair value accretion

14,879


14,418




Additional accretion from redemption of Series A preferred stock

-


356




Hedging instrument expense 

665


9,863




OREO valuation adjustments, net of FDIC reimbursement

3,836


4,175




Transaction-related expenses

8,954


5,768




Goodwill and other intangible assets, net

83,701


34,966












(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

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013


Interest income

$           42,915


$             40,876


$             38,633


$             35,718


$             37,836


Interest expense

5,454


4,736


4,732


5,004


7,964


Net interest income

37,461


36,140


33,901


30,714


29,872


Provision for loan losses

1,001


1,304


2,140


2,561


2,435


Net interest income after provision for loan losses

36,460


34,836


31,761


28,153


27,437


Non-interest income

7,785


6,307


5,805


5,125


5,178


Non-interest expense

32,366


29,828


29,512


24,771


28,628


Income before income tax expense

11,879


11,315


8,054


8,507


3,987


Income tax expense

3,374


3,047


1,921


2,023


716


Net income 

$             8,505


$               8,268


$               6,133


$               6,484


$               3,271













Net interest income, as reported

$           37,461


$             36,140


$             33,901


$             30,714


$             29,872


   Fully taxable-equivalent ("FTE") adjustment 

1,915


1,913


1,930


1,990


1,956


Net interest income, FTE

$           39,376


$             38,053


$             35,831


$             32,704


$             31,828












PER SHARE DATA











Earnings per share, basic

$               0.28


$                 0.28


$                 0.21


$                 0.24


$                 0.12


Earnings per share, diluted

0.28


0.28


0.21


0.24


0.12












Period-end common shares outstanding

32,599


29,475


29,721


27,324


27,303

Weighted average participating common shares:











Basic

30,505


29,472


28,877


27,317


27,293


Diluted

30,599


29,567


29,010


27,460


27,382












PERFORMANCE RATIOS











Return on average assets

0.89%


0.89%


0.69%


0.83%


0.41%


Operating return on average assets (1)

1.07%


1.04%


0.95%


0.87%


0.71%


Return on average common equity

9.59%


10.03%


7.31%


9.70%


4.79%


Return on average tangible common equity (1)

12.57%


13.03%


9.21%


11.53%


5.89%


Operating return on average tangible common equity (1)

15.08%


15.17%


12.43%


12.17%


9.98%


Net interest margin (FTE)

4.55%


4.54%


4.54%


4.61%


4.39%


Average equity to average assets

9.23%


8.83%


9.50%


8.70%


8.48%


Allowance for loan losses as a % of portfolio loans

0.99%


1.11%


1.13%


1.34%


1.44%


   Allowance for originated loans as a % of originated portfolio loans

1.25%


1.32%


1.37%


1.47%


1.57%


Nonperforming assets to total assets, end of period

1.65%


1.99%


2.34%


2.49%


2.74%


   Originated nonperforming assets to total assets, end of period

0.80%


0.90%


1.03%


1.16%


1.16%


Annualized net charge-offs to total average portfolio loans

0.12%


0.05%


0.32%


0.82%


0.07%












SELECTED FINANCIAL DATA











Gain (loss) on sale of investment securities, net

$                    -


$                     54


$                      -


$                 (565)


$                     10


Loss on extinguishment of debt

613


-


-


-


-


Insurance settlement income

-


-


-


768


-


Fair value accretion

4,867


3,575


2,981


3,456


4,208


Hedging instrument expense

431


71


-


163


2,700


OREO valuation adjustments, net of FDIC reimbursement

866


1,022


1,313


635


713


Transaction-related expenses

2,231


2,325


3,601


797


3,884


Goodwill and other intangible assets, net

83,701


61,716


62,406


34,597


34,966













(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

December 31,
2014


December 31,
2013


% Change






Portfolio loans:












Originated loans

$     2,116,441


$       1,704,876


24.1%







Acquired loans

958,657


571,641


67.7%







Allowance for loan losses

(30,399)


(32,875)


-7.5%







Net portfolio loans

3,044,699


2,243,642


35.7%






Loans held for sale

37,280


30,899


20.7%






Investment securities

506,382


517,795


-2.2%






Total interest-earning assets

3,669,857


2,908,847


26.2%






Total assets

4,072,508


3,229,576


26.1%



















Deposits:












Non-interest bearing deposits

534,792


324,532


64.8%







Interest-bearing demand and savings

1,657,931


1,299,399


27.6%







Time deposits

1,203,674


1,082,799


11.2%







Total deposits

3,396,397


2,706,730


25.5%






Borrowed funds

261,748


227,101


15.3%






Total interest-bearing liabilities

3,123,353


2,609,299


19.7%






Shareholders' equity:












Common equity

380,206


268,024


41.9%







Accumulated other comprehensive income

10,182


3,306


208.0%







Total shareholders' equity

390,388


271,330


43.9%



































As of

SELECTED BALANCE SHEET DATA

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013


Portfolio loans:












Originated loans

$     2,116,441


$       2,021,792


$       1,865,024


$       1,765,248


$       1,704,876



Acquired loans

958,657


741,877


805,275


538,827


571,641



Allowance for loan losses

(30,399)


(30,722)


(30,129)


(30,880)


(32,875)



Net portfolio loans

3,044,699


2,732,947


2,640,170


2,273,195


2,243,642


Loans held for sale

37,280


20,906


23,714


18,895


30,899


Investment securities

506,382


489,263


501,626


487,905


517,795


Total interest-earning assets

3,669,857


3,354,964


3,282,682


2,888,886


2,908,847


Total assets

4,072,508


3,735,816


3,683,230


3,205,951


3,229,576















Deposits:












Non-interest bearing deposits

534,792


482,859


464,682


350,415


324,532



Interest-bearing demand and savings

1,657,931


1,495,186


1,504,397


1,362,454


1,299,399



Time deposits

1,203,674


1,106,163


1,155,569


1,043,457


1,082,799



Total deposits

3,396,397


3,084,208


3,124,648


2,756,326


2,706,730


Borrowed funds

261,748


298,642


209,449


149,491


227,101


Total interest-bearing liabilities

3,123,353


2,899,990


2,869,415


2,555,402


2,609,299


Shareholders' equity:












Common equity

380,206


320,433


318,624


273,690


268,024



Accumulated other comprehensive income

10,182


10,214


8,212


6,818


3,306



Total shareholders' equity

390,388


330,647


326,836


280,508


271,330














PERFORMANCE SUMMARY



BNC BANCORP



(Dollars in thousands)



(Unaudited)







For the Three Months Ended

SELECTED AVERAGE BALANCE SHEET DATA

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013


Portfolio loans

$     2,877,833


$       2,721,425


$       2,553,931


$       2,288,490


$       2,268,172


Investment securities

484,092


491,278


496,221


509,740


515,296


Total interest-earning assets

3,436,018


3,322,970


3,165,865


2,879,546


2,878,999


Total assets

3,809,989


3,705,918


3,540,758


3,181,723


3,193,141












Deposits:












Non-interest bearing deposits

519,062


469,712


402,105


335,416


338,454



Interest-bearing demand and savings

1,545,039


1,513,574


1,457,797


1,323,324


1,291,291



Time deposits

1,122,956


1,126,903


1,163,864


1,061,294


1,035,759



Total deposits

3,187,057


3,110,189


3,023,766


2,720,034


2,665,504


Borrowed funds

246,229


244,341


158,288


165,499


235,303


Total interest-bearing liabilities

2,914,224


2,884,818


2,779,949


2,550,117


2,562,353


Shareholders' equity

351,695


327,138


336,297


276,736


270,702






















For the Year Ended








December 31,
2014


December 31,
2013








Portfolio loans

$     2,612,339


$       2,104,965








Investment securities

495,251


483,984








Total interest-earning assets

3,202,958


2,696,475








Total assets

3,561,719


3,009,367











Deposits:












Non-interest bearing deposits

432,181


290,765









Interest-bearing demand and savings

1,460,688


1,197,958









Time deposits

1,118,945


1,038,088









Total deposits

3,011,814


2,526,811








Borrowed funds

203,922


193,771








Total interest-bearing liabilities

2,783,554


2,429,817








Shareholders' equity

323,183


269,123







LOAN PORTFOLIO MIX






BNC BANCORP






(Dollars in millions)






(Unaudited)










 As of 





December 31,
2014


September 30,
2014


December 31,
2013



Residential construction

$               73.2


$                 46.7


$                 32.4




Presold

41.0


29.9


18.1




Speculative

32.2


16.8


14.3












Commercial construction

203.1


154.4


130.5



Residential and commercial A&D

13.3


14.5


8.5



Land

98.2


89.8


105.6




Residential buildable lots

27.4


28.9


32.9




Commercial buildable lots

25.9


18.7


12.3




Land held for development

25.6


23.4


34.5




Raw and agricultural land

19.3


18.8


25.9



Commercial real estate

1,585.1


1,494.7


1,332.7




Multi-family

82.6


82.7


64.7




Farmland

5.2


4.5


1.0




Owner occupied

590.6


537.7


472.5




Non-owner occupied

906.7


869.8


794.5



Commercial and industrial

192.3


170.1


168.9



Residential mortgage

872.4


755.3


467.9



Consumer

16.4


20.9


13.9



Leases

21.1


17.3


16.1



Total portfolio loans

$          3,075.1


$            2,763.7


$            2,276.5

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 (2)

December 31,
2014


September 30,
2014


December 31,
2013

Net income (GAAP)

$             8,505


$               8,268


$               3,271

Add:    Transaction-related charges, net of tax

1,406


1,464


2,447

            Loss on extinguishment of debt, net of tax

386


-


-

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

-


34


6

Operating earnings (non-GAAP)

10,297


9,698


5,712







Weighted average fully diluted shares outstanding

30,599


29,567


27,382







Operating earnings per share, diluted (non-GAAP)

$               0.34


$                 0.33


$                 0.21














For the Year Ended



Operating Earnings per Share, Diluted (2)

December 31,
2014


December 31,
2013



Net income available to common shareholders (GAAP)

$           29,390


$             16,187



Add:    Transaction-related charges, net of tax

5,641


3,634



            Loss on extinguishment of debt, net of tax

386


-



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

(322)


(26)



            Insurance settlement, net of tax

484


302



            Acquisition-related gain, net of tax

-


453



Operating earnings (non-GAAP)

35,255


19,092









Weighted average fully diluted shares outstanding

29,152


26,714









Operating earnings per share, diluted (non-GAAP)

$               1.21


$                 0.71
















For the Three Months Ended

Adjusted Non-interest Income (2)

December 31,
2014


September 30,
2014


December 31,
2013

Non-interest income (GAAP)

$             7,785


$               6,307


$               5,178

Less:  Gain (loss) on sale of investment securities

-


54


10

Adjusted non-interest income (non-GAAP)

$             7,785


$               6,253


$               5,168









For the Year Ended



Adjusted Non-interest Income (2)

December 31,
2014


December 31,
2013



Non-interest income (GAAP)

$           25,022


$             22,806



Less:  Gain (loss) on sale of investment securities

(511)


(42)



            Insurance settlement

768


479



            Acquisition-related gain

-


719



Adjusted non-interest income (non-GAAP)

$           24,765


$             21,650
















For the Three Months Ended

Adjusted Non-interest Expense (2)

December 31,
2014


September 30,
2014


December 31,
2013

Non-interest expense (GAAP)

$           32,366


$             29,828


$             28,628

Less:  Transaction-related expenses

2,231


2,325


3,884

           Loss on extinguishment of debt

613


-


-

Adjusted non-interest expense (non-GAAP)

$           29,522


$             27,503


$             24,744














For the Year Ended



Adjusted Non-interest Expense (2)

December 31,
2014


December 31,
2013



Non-interest expense (GAAP)

$        116,477


$             97,933



Less:  Transaction-related expenses

8,954


5,768



            Loss on extinguishment of debt

613


-



Adjusted non-interest expense (non-GAAP)

$        106,910


$             92,165












RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

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

(Unaudited)


As of







Tangible Common Book Value per Share (3)

December 31,
2014


December 31,
2013







Shareholders' equity (GAAP)

$        390,388


$          271,330







Less: Intangible assets

83,701


34,966







Tangible common shareholders equity (non-GAAP)

306,687


236,364

















Common shares outstanding

32,599


27,303

















Tangible common book value per share (non-GAAP)

$               9.41


$                 8.66





























For the Three Months Ended

Return on Average Tangible Common Equity (3)

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013

Net income (GAAP)

$             8,505


$               8,268


$               6,133


$               6,484


$               3,271

Plus: Amortization of intangibles, net of tax

453


435


354


232


241

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

8,958


8,703


6,487


6,716


3,512














Average common shareholders equity

351,695


327,138


336,297


271,061


270,702

Less: Average intangible assets

68,954


62,101


53,826


34,775


34,045

Average tangible common shareholders' equity (non-GAAP)

282,741


265,037


282,471


236,286


236,657














Return on average tangible common equity (non-GAAP)

12.57%


13.03%


9.21%


11.53%


5.89%






















For the Year Ended







Return on Average Tangible Common Equity (3)

December 31,
2014


December 31,
2013







Net income available to common shareholders (GAAP)

$           29,390


$             16,187







Plus: Amortization of intangibles, net of tax

1,474


723







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

30,864


16,910




















Average common shareholders equity

323,183


257,678







Less: Average intangible assets

55,026


32,361







Average tangible common shareholders' equity (non-GAAP)

268,157


225,317




















Return on average tangible common equity (non-GAAP)

11.51%


7.50%




















(2)  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.

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














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 (2)

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013

Net income (GAAP)

$             8,505


$               8,268


$               6,133


$               6,484


$               3,271

Plus:   Transaction-related expenses, net of tax

1,406


1,464


2,269


502


2,447

            Loss on extinguishment of debt, net of tax

386


-


-


-


-

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

-


34


-


(356)


6

            Insurance settlement, net of tax

-


-


-


484


-

Operating earnings (non-GAAP)

10,297


9,698


8,402


6,858


5,712











Average assets

3,809,989


3,705,918


3,540,758


3,181,723


3,193,141











Operating return on average assets (non-GAAP)

1.07%


1.04%


0.95%


0.87%


0.71%































For the Year Ended







Operating Return on Average Assets (2)

December 31,
2014


December 31,
2013







Net income available to common shareholders (GAAP)

$           29,390


$             16,187







Plus:   Transaction-related expenses, net of tax

5,641


3,634







           Loss on extinguishment of debt, net of tax

386


-







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

(322)


(26)







            Insurance settlement, net of tax

484


302







            Acquisition-related gain, net of tax

-


453







Operating earnings (non-GAAP)

35,255


19,092

















Average assets

3,561,719


3,009,367

















Operating return on average assets (non-GAAP)

0.99%


0.63%




























For the Three Months Ended

Operating Return on Average Tangible Common Equity (2)

December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2013

Net income (GAAP)

$             8,505


$               8,268


$               6,133


$               6,484


$               3,271

Plus:   Amortization of intangibles, net of tax

453


435


354


232


241

            Transaction-related expenses, net of tax

1,406


1,464


2,269


502


2,447

            Loss on extinguishment of debt, net of tax

386


-


-


-


-

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

-


34


-


(356)


6

            Insurance settlement, net of tax

-


-


-


484


-

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

10,750


10,133


8,756


7,090


5,953











Average common shareholders equity

351,695


327,138


336,297


271,061


270,702

Less: Average intangible assets

68,954


62,101


53,826


34,775


34,045

Average tangible common shareholders' equity (non-GAAP)

282,741


265,037


282,471


236,286


236,657











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

15.08%


15.17%


12.43%


12.17%


9.98%

















For the Year Ended







Operating Return on Average Tangible Common Equity (2)

December 31,
2014


December 31,
2013







Net income available to common shareholders (GAAP)

$           29,390


$             16,187







Plus:   Amortization of intangibles, net of tax

1,474


723







            Transaction-related expenses, net of tax

5,641


3,634







            Loss on extinguishment of debt, net of tax

386


-







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

(322)


(26)







            Insurance settlement, net of tax

484


302







            Acquisition-related gain, net of tax

-


453







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

36,729


19,815

















Average common shareholders equity

323,183


257,678







Less: Average intangible assets

55,026


32,361







Average tangible common shareholders' equity (non-GAAP)

268,157


225,317

















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

13.70%


8.79%

















(2)  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.














Logo - http://photos.prnewswire.com/prnh/20030917/BNCLOGO

SOURCE BNC Bancorp

Related Links

http://www.bankofnc.com

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