BNC Bancorp Announces Earnings for Fourth Quarter and Full Year 2013 - WNEM TV 5

BNC Bancorp Announces Earnings for Fourth Quarter and Full Year 2013

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SOURCE BNC Bancorp

HIGH POINT, N.C., Jan. 24, 2014 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the fourth quarter and year ended December 31, 2013.

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

Highlights for 2013:

  • BNC Bancorp's stock was the highest performing bank stock in the Southeast United States based on a recent study provided by Bank Street Partners;
  • Richard D. Callicutt II was named President and Chief Executive Officer, upon the planned retirement of founding President and CEO, W. Swope Montgomery, Jr.;
  • Operating earnings per diluted share of $0.71, compared to $0.00 per diluted share for 2012;
  • Operating earnings of $19.1 million, compared to operating loss of $3.3 million for 2012;
  • Loans not recorded at fair value increased 17.6% during fiscal year 2013;
  • Fully taxable-equivalent net interest margin increased to 4.29%, compared to 3.85% for 2012;
  • Completed acquisition of Randolph Bank & Trust ("Randolph"), increasing our presence in Piedmont Triad area of North Carolina by approximately $250 million; and
  • Announced merger agreements with both South Street Financial Corporation, the parent company of Home Savings Bank, FSB in Albemarle, North Carolina ("South Street"), and Community First Financial Group, Inc. ("Community First"), the parent company of Harrington Bank, FSB in Chapel Hill, North Carolina.

Operating earnings for the quarter ended December 31, 2013 totaled $5.7 million, or $0.21 per diluted share, an increase of 12.7% compared to $5.1 million, or $0.19 per diluted share, for the quarter ended September 30, 2013, and an increase from an operating loss of $0.1 million, or $0.00 per diluted share, for the quarter ended December 31, 2012.  Operating earnings exclude transaction-related expenses, bargain purchase gain on acquisitions, acquisition-related gains, and gain (loss) on sale of securities, and include preferred stock dividends.

Operating earnings for the year ended December 31, 2013 totaled $19.1 million, or $0.71 per diluted share, as compared to an operating loss of $3.3 million, or ($0.19) per diluted share, for the year ended December 31, 2012. 

Net income for the year ended December 31, 2013 was $17.2 million, an increase of 65.0% when compared to net income of $10.5 million for the year ended December 31, 2012.  Net income available to common shareholders for the year ended December 31, 2013 was $16.2 million, or $0.61 per diluted share, an increase of 101.1% compared to net income available to common shareholders of $8.0 million, or $0.48 per diluted share, for the year ended December 31, 2012.  The financial results for the year ended December 31, 2012 include $12.7 million of pre-tax bargain purchase gain the Company recorded on the acquisitions of Carolina Federal Savings Bank ("Carolina Federal") and First Trust Bank ("First Trust"), as well as $3.0 million of pre-tax gains on the sale of investment securities.

Net income for the quarter ended December 31, 2013 was $3.3 million, a decrease of 35.2% compared to net income of $5.0 million for both the quarter ended September 30, 2013 and the quarter ended December 31, 2012.  Net income available to common shareholders for the quarter ended December 31, 2013 was $3.3 million, or $0.12 per diluted share, a decrease of 35.0% compared to net income available to common shareholders of $5.0 million, or $0.19 per diluted share, for the quarter ended September 30, 2013, and a decrease of 26.4% compared to net income available to common shareholders of $4.4 million, or $0.19 per diluted share, for the fourth quarter of 2012.  The financial results for the quarter ended December 31, 2013 include the impact of the acquisition of Randolph, which was completed on October 1, 2013, while the results for the quarter ended December 31, 2012 include $5.0 million of pre-tax bargain purchase gain the Company recorded on the acquisition of First Trust.

Average common shares outstanding increased significantly since the second half of 2012 as a result of the Company's capital raise in June 2012, as well as common stock issued in connection with the acquisitions of KeySource Financial ("KeySource"), First Trust and Randolph.  For the years ended December 31, 2013 and 2012, average fully-diluted shares outstanding were 26.7 million and 17.6 million, respectively.

Total assets at December 31, 2013 were $3.23 billion, an increase of 4.7% as compared to total assets of $3.08 billion at December 31, 2012.  The increase in assets is primarily due to the acquisition of Randolph during the fourth quarter of 2013, offset by the Company's decision to utilize excess liquidity to primarily repay higher cost deposits as they matured.  This deleveraging has helped the Company execute on its strategic initiative to improve capital ratios and net interest margin.  Excess liquidity was also used to purchase higher yielding investment securities, which has also contributed to the improved net interest margin.  

Additional Highlights for 2013:

  • Redeemed all Series A Preferred Stock with non-dilutive term loan;
  • Diluted earnings per share of $0.61, compared to $0.48 per diluted share for 2012;
  • Net income available to common shareholders of $16.2 million, an increase of 101.1% compared to 2012;
  • Nonaccrual loans not covered by loss-share decreased 23.7% during fiscal year 2013;
  • Nonperforming assets decreased 27.1% during fiscal year 2013;
  • Fully taxable-equivalent net interest margin, before hedging costs, increased to 4.66%, compared to 4.21% for 2012;
  • Return on tangible common equity ratio of 7.50%, compared to 6.57% for 2012; and
  • Operating return on tangible common equity ratio of 8.79%, compared to (2.28%) for 2012.

Richard D. Callicutt II, President and CEO, stated, "The fourth quarter and all of 2013 were pivotal in solidifying the core earnings power of our organization.  We saw significant improvement in all of our key credit metrics while growing non-acquired loans by more than 17%.  We successfully completed the integration of the acquisitions from 2012 and began to see those provide a more solid platform for gains in market share.  The Randolph transaction and systems conversion were both completed in late 2013, allowing us to maximize the earnings opportunity in 2014 from that transaction.  Finally, the South Street and Community First announcements, both expected to close during the second quarter of 2014, have created more opportunity to leverage our infrastructure, diversify our deposit base, gain access to a client base that will benefit from an enhanced product offering and provide an additional revenue stream toward our future earnings goals.  Lastly, as of October 2013, all Bank of North Carolina employees are shareholders of our Company.  The ownership mentality as they perform their duties and responsibilities each day is paying off in focus, creativity and enthusiasm."  

Operating Results

Fully taxable-equivalent ("FTE") net interest income for the fourth quarter of 2013 was $31.8 million, an increase of 11.9% from $28.5 million for the third quarter of 2013, and an increase of 24.1% from $25.6 million for the fourth quarter of 2012.  FTE net interest margin was 4.39% for the fourth quarter of 2013, an increase of 13 basis points from 4.26% for the third quarter of 2013, and an increase of 30 basis points from 4.09% for the fourth quarter of 2012.  Without the cash flow hedging expense, FTE net interest margin for the fourth quarter of 2013 was 4.76%, compared to 4.65% for the third quarter of 2013 and 4.43% for the fourth quarter of 2012.  

FTE net interest income for the year ended December 31, 2013 was $115.8 million, an increase of 34.1% from $86.4 million for the year ended December 31, 2012.  FTE net interest margin was 4.29% for the year ended December 31, 2013, an increase of 44 basis points from 3.85% for the year ended December 31, 2012.  Without the cash flow hedging expense, FTE net interest margin for the year ended December 31, 2013 was 4.66%, compared to 4.21% for the comparable period of 2012.  

Average interest-earning assets were $2.88 billion for the fourth quarter of 2013, an increase of 8.6% from $2.65 billion during the third quarter of 2013, and an increase of 15.4% from $2.50 billion for the fourth quarter of 2012.  The increase from the third quarter of 2013 was primarily due to the interest-earning assets acquired from Randolph, along with continued loan growth in our markets and an increase in our investment securities portfolio.

Average interest-earning assets were $2.70 billion for the year ended December 31, 2013, an increase of 20.1% from $2.24 billion for the year ended December 31, 2012.  The increase in average interest-earning assets from 2012 is primarily due to the full year impact of interest-earning assets acquired from Carolina Federal, KeySource and First Trust during 2012, interest-earning assets acquired from Randolph during the fourth quarter of 2013, along with continued loan growth in our markets and an increase in our investment securities portfolio.

The Company's average yield on interest-earning assets was 5.48% for the fourth quarter of 2013, an increase of 12 basis points from 5.36% for the third quarter of 2013, and an increase of 10 basis points from 5.38% for the fourth quarter of 2012.  The increase from third quarter of 2013 was primarily due to the addition of higher yielding loans acquired from Randolph, as well as an increase in loan accretion from the acquired loan portfolio.  The increase from the fourth quarter of 2012 was primarily due to higher loan accretion from the acquired loan portfolio, as well as the addition of higher yielding loans acquired from First Trust and Randolph.  Loan accretion during the fourth quarter of 2013 totaled $4.2 million, an increase of 31.0% from loan accretion of $3.2 million for the third quarter of 2013, and an increase of 36.4% from $3.1 million of accretion recorded in the fourth quarter of 2012.

The Company's average yield on interest-earning assets was 5.41% for the year ended December 31, 2013, an increase of 10 basis points compared to 5.31% for the comparable period of 2012.  The increase from 2012 was primarily due to an increase in loan accretion from the acquired loan portfolio, as well as the addition of higher yielding loans acquired from Carolina Federal, KeySource, First Trust and Randolph.  Loan accretion during the year ended December 31, 2013 totaled $14.4 million, an increase of 116.7% from loan accretion of $6.7 million for the year ended December 31, 2012.  These increases were offset by lower yields earned on investment securities due to the replacement of matured and called investments with lower yielding securities.

Average interest-bearing liabilities were $2.56 billion for the fourth quarter of 2013, an increase of 7.6% from $2.38 billion for the third quarter of 2013, and an increase of 11.6% from $2.30 billion for the fourth quarter of 2012.  The increase from the third quarter of 2013 was due to additional interest-bearing liabilities acquired from Randolph, as well as increased borrowings during the fourth quarter of 2013. 

Average interest-bearing liabilities were $2.43 billion for the year ended December 31, 2013, an increase of 14.2% from $2.13 billion for the year ended December 31, 2012.  The increase in average interest-bearing liabilities from 2012 is primarily due to the full year impact of the acquisitions of Carolina Federal, KeySource and First Trust during 2012, increased borrowings during fiscal year 2013 and the acquisition of Randolph, offset by the Company's use of excess liquidity to primarily repay wholesale and non-core deposits as they matured.

The Company's average cost of interest-bearing liabilities was 1.23% for the fourth quarter of 2013, which is consistent with the third quarter of 2013, and a decrease of 18 basis points from 1.41% for the fourth quarter of 2012.  The decrease was due to the Company's continued effort to reduce exposure to higher cost deposit products, as well as lower interest rates paid on borrowings, which was offset by continued increases in cash flow hedging expense.  For the fourth quarter of 2013, cash flow hedging expenses totaled $2.7 million, compared to $2.6 million for the third quarter of 2013 and $2.1 million for the fourth quarter of 2012. 

The Company's average cost of interest-bearing liabilities was 1.24% for the year ended December 31, 2013, a decrease of 31 basis points from 1.55% for the year ended December 31, 2012.  This decrease was primarily due to the Company's decision to reduce exposure to higher cost deposit products and aggressively reduce deposit rates over the past three quarters, as well as reductions in interest rates paid on borrowings.  These rate decreases were slightly offset by an increase in cash flow hedging expense, which totaled $9.9 million for the year ended December 31, 2013, compared to $7.9 million for the year ended December 31, 2012. 

 

Average Yields / Costs (FTE)

(unaudited)












Year Ended December 31,


Three Months Ended


2013


2012


December 31,

2013


September 30,

2013


December 31,

2012

Yield on interest-earning assets

5.41%


5.31%


5.48%


5.36%


5.38%

Cost of interest-bearing liabilities

1.24%


1.55%


1.23%


1.23%


1.41%

Cost of funds

1.11%


1.42%


1.09%


1.10%


1.28%

Net interest spread

4.17%


3.76%


4.25%


4.13%


3.97%

Net interest margin

4.29%


3.85%


4.39%


4.26%


4.09%











Net interest margin w/o hedging expense

4.66%


4.21%


4.76%


4.65%


4.43%

Non-interest income was $5.2 million for the fourth quarter of 2013, a decrease of 11.1% compared to $5.8 million for the third quarter of 2013, and a decrease of 50.2% from $10.4 million for the fourth quarter of 2012.  Adjusted non-interest income was $5.2 million for the fourth quarter of 2013, a decrease of 3.3% from $5.3 million for the third quarter of 2013, and an increase of 8.3% from $4.8 million for the fourth quarter of 2012.  Adjusted non-interest income excludes bargain purchase gain on acquisition, acquisition-related gains (includes income related to the subsequent settlement of a liability assumed in an acquisition) and gain (loss) on sale of securities.  Service charge income increased by 35.4% from the third quarter of 2013 due to an increased volume of transactions, which was offset by a 29.0% decrease in mortgage fees due to decreases in the mortgage pipeline and reduced gain-on-sale margins. 

For the year ended December 31, 2013, non-interest income was $22.8 million, a decrease of 31.2% compared to non-interest income of $33.1 million for the year ended December 31, 2012.  Adjusted non-interest income was $21.7 million for the year ended December 31, 2013, an increase of 24.4% from $17.4 million for the year ended December 31, 2012.  Adjusted non-interest income excludes bargain purchase gain on acquisitions, acquisition-related gains, gain (loss) on sale of securities and an insurance settlement received during 2013.  The increase was primarily due to increased volume of mortgage originations, as the Company continued to expand commissioned originators across key target markets, as well as an increase in service charge income due to an increased volume of transactions, primarily due to our recent acquisitions.

Non-interest expense was $28.6 million for the fourth quarter of 2013, an increase of 27.6% compared to non-interest expense of $22.4 million for the third quarter of 2013, and an increase of 15.1% from $24.9 million for the fourth quarter of 2012.  Excluding transaction-related costs, adjusted non-interest expense for the fourth quarter of 2013 was $24.7 million, an increase of 13.0% from $21.9 million for the third quarter of 2013, and an increase of 5.5% from $23.5 million for the fourth quarter of 2012.  Transaction-related costs include legal and professional fees, personnel costs, data processing expenses, and other miscellaneous expenses directly attributable to the transaction.  The increase from the third quarter of 2013 was primarily due to additional employees and facilities acquired from Randolph.  The decrease from the fourth quarter of 2012 was primarily due to a reduction in valuation charges recorded on other real estate owned ("OREO") and reduced loan, foreclosure and collection expenses.

Non-interest expense was $97.9 million for the year ended December 31, 2013, an increase of 19.0% from $82.3 million for the year ended December 31, 2012.  Excluding transaction-related costs, adjusted non-interest expense for the year ended December 31, 2013 was $92.2 million, an increase of 19.6% from $77.1 million for the year ended December 31, 2012.  The increase from 2012 was primarily due to the full year impact of the additional employees and facilities purchased in connection with the acquisitions of Carolina Federal, KeySource and First Trust during 2012, as well as the acquisition of Randolph during the fourth quarter of 2013.  The additional expenses were partially offset by a reduction in valuation charges recorded on OREO and reduced loan, foreclosure and collection expenses.

 

Non-Interest Income / Non-Interest Expense

(dollars in thousands; unaudited)












Year Ended December 31, 


Three Months Ended


2013


2012


December 31,

2013


September 30,

2013


December 31,

2012

Non-interest income










  Mortgage fees

$         8,979


$         6,169


$           1,710


$          2,408


$         1,902

  Service charges

4,314


3,149


1,354


1,000


916

  Earnings on bank-owned life insurance

2,318


1,771


646


571


541

  Gain (loss) on sale of securities

(42)


3,026


10


-


651

  Bargain purchase gain on acquisitions

-


12,706


-


-


4,972

  Other

7,237


6,317


1,458


1,845


1,412

     Total non-interest income

$       22,806


$       33,138


$           5,178


$          5,824


$       10,394











Non-interest expense










  Salaries and employee benefits

$       51,080


$       40,861


$         13,613


$        12,399


11,986

  Occupancy 

6,547


4,965


1,691


1,666


1,527

  Furniture and equipment

5,542


4,241


1,552


1,351


1,222

  Data processing and supply

3,219


2,607


922


854


704

  Advertising and business development

2,015


1,709


590


228


489

  Insurance, professional and other
    services

4,655


3,187


1,495


1,111


1,013

  FDIC insurance assessments

2,766


2,166


660


660


457

  Loan, foreclosure and other real
    estate owned

8,949


10,944


2,093


1,962


3,665

  Transaction-related expenses

5,768


5,212


3,884


540


1,406

  Other

7,392


6,380


2,128


1,659


2,402

     Total non-interest expense

$       97,933


$       82,272


$         28,628


$        22,430


$       24,871

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

Transaction-Related Expenses

(dollars in thousands; unaudited)












Year Ended December 31,


Three Months Ended

Transaction

2013


2012


December 31,

2013


September 30,

2013


December 31,

2012

  Previous transactions

$       1,056


$       5,212


$                -


$                 21


$           1,406

  Randolph

4,509


-


3,681


519


-

  Community First/South Street

203


-


203


-


-

  Total

$       5,768


$       5,212


$           3,884


$               540


$           1,406

Additional Operating Highlights

Total portfolio loans were $2.28 billion at December 31, 2013, an increase of 11.9% from $2.04 billion at December 31, 2012.  The increase has primarily been due to the loans acquired from Randolph, as well as organic growth in commercial real estate and commercial construction loans, as the economic outlook in the Company's markets continues to improve.   Loans not recorded at fair value, which includes originated loans and acquired loans no longer required to be recorded at fair value, increased 21.4% during fiscal year 2013 to $1.77 billion.  Included in this is $56.5 million of loans that have transferred from another loan category during 2013.   Excluding these transfers, loans not recorded at fair value increased 17.6% during 2013.  The table below outlines the Company's loan portfolio mix between covered and non-covered loans for the past five quarters.  

 


Gross Loan Growth


(dollars in thousands; unaudited)












 December 31, 


September 30,


June 30,


March 31,


December 31,


2013


2013


2013


2013


2012

Loans covered by loss share, at fair value

$     170,528


$       183,887


$   202,073


$   224,056


248,930

Loans not covered by loss share, at fair value

334,524


219,671


260,542


270,149


327,674

Loans not recorded at fair value (1)

1,771,465


1,696,484


1,586,326


1,536,944


1,458,654

Total portfolio loans

$  2,276,517


$    2,100,042


$2,048,941


$2,031,149


$  2,035,258











(1) Includes $17,133 of loans covered by loss-share agreements not recorded at fair value at December 31, 2013.











Change in balance (quarter/quarter):










  Total portfolio loans

8.4%


2.5%


0.9%


-0.2%


7.1%

  Loans not recorded at fair value

4.4%


6.9%


3.2%


5.4%


0.6%

Annual growth of loans not recorded at fair value

17.6%









Total deposits at December 31, 2013 were $2.71 billion, an increase of 1.9% from total deposits of $2.66 billion as of December 31, 2012.  This increase was primarily due to deposits acquired from Randolph, offset by the Company's decision to utilize excess liquidity and the acquired securities portfolios to repay higher cost deposits as they matured, as well as aggressively reducing time deposit rates.  Wholesale deposits were 32.8% of total deposits at December 31, 2013, an increase compared to 28.4% as of December 31, 2012.  Transactional accounts, which are comprised of non-interest bearing and interest-bearing demand accounts, increased $127.2 million, or 8.5%, over the past twelve months.  At December 31, 2013, time deposits were 40.0% of total deposits, compared to 43.7% at December 31, 2012. 

 


Total Deposit Growth


(dollars in thousands; unaudited)












December 31,


September 30,


June 30,


March 31,


December 31,


2013


2013


2013


2013


2012

Non-interest bearing demand

$      324,532


$        299,670


$    275,984


$       267,458


$        275,605

Interest-bearing demand

1,299,399


1,172,512


1,152,779


1,171,484


1,221,089

Time deposits

1,082,799


963,679


999,552


1,069,207


1,159,615

Total

$   2,706,730


$     2,435,861


$ 2,428,315


$    2,508,149


$     2,656,309











Change in balance (quarter/quarter)

11.1%


0.3%


-3.2%


-5.6%


15.0%











Annual deposit growth

1.9%









 

Total borrowings at December 31, 2013 were $227.1 million, an increase of 88.4% from total borrowings of $120.6 million as of December 31, 2012.  At December 31, 2013, $125.6 million of these borrowings were short-term, while the remaining $101.5 million were long-term.  The increase in borrowings was primarily due to additional borrowings from the Federal Home Loan Bank, which were used to repay higher cost deposits as they matured, as well as a term loan obtained during 2013 for the repurchase of Series A preferred stock.  

Asset Quality

Net loan charge-offs for the fourth quarter of 2013 were $0.4 million, which included $0.5 million on loans not covered under loss-share agreements and net recoveries of $0.1 million on loans covered under loss-share agreements.  The Company incurred $0.5 million in net charge-off losses, which represented 0.08% of average loans for the fourth quarter of 2013, compared to net charge-off losses of $2.9 million, or 0.55% of average loans, for the third quarter of 2013, and net charge-off losses of $3.8 million, or 0.78% of average loans, for the fourth quarter of 2012.  The decrease in net charge-off losses during the fourth quarter of 2013 was due to an increased level of recoveries of previously charged-off loans, both covered under loss-share agreements and not covered.

Net loan charge-offs for the year ended December 31, 2013 were $20.7 million, which included $11.0 million on loans covered under loss-share agreements and $9.7 million on loans not covered under loss-share agreements.  The Company's share of the covered net loan charge-offs for the year ended December 31, 2013 was $2.2 million, with the remainder being reimbursed by the FDIC. Combined with the $9.7 million of non-covered net charge-offs, the Company incurred $11.9 million in net charge-off losses, or 0.57% of average loans, during the year ended December 31, 2013, compared to $19.5 million in net charge-off losses, or 1.09% of average loans, for the year ended December 31, 2012.

During the fourth quarter of 2013, the Company recorded a provision for loan losses of $2.4 million, a decrease of 27.3% from $3.4 million recorded in the third quarter of 2013, and a decrease of 55.9% from $5.5 million recorded during the fourth quarter of 2012.  The Company recorded $2.5 million of provision for loan losses on non-covered loans during the fourth quarter of 2013 and a provision reversal of $(0.1) million on loans covered under loss-share. 

During the year ended December 31, 2013, the Company recorded a provision for loan losses of $12.2 million, a decrease of 46.4% from $22.7 million recorded for the year ended December 31, 2012.  Of the $12.2 million in provision expense, $11.6 million related to non-covered loans.  For the year ended December 31, 2013, the Company recorded a gross provision of $0.6 million on loans covered under loss-share. 

The allowance for loan losses was $32.9 million at December 31, 2013, a decrease of 18.4% from $40.3 million at December 31, 2012.  Loan loss reserves to total portfolio loans were 1.44% and 1.98% at December 31, 2013 and December 31, 2012, respectively.  The allowance for loan loss allocated to loans not recorded at fair value was 1.51% and 1.72% at December 31, 2013 and December 31, 2012, respectively.  The components of the allowance for loan loss as of December 31, 2013 were as follows:

 

Allowance for Loan Loss Summary

(dollars in thousands; unaudited)

At December 31, 2013








Allowance




Allowance




for




for 


Net


Loan Losses


Loans


Loan Losses


Loans


%

Loans covered under loss-share agreements, at fair value

$     170,528


$       (5,925)


$    164,603


3.47%

Loans not covered under loss-share agreements, at fair value

334,524


(153)


334,371


0.05%

Loans not recorded at fair value (1)

1,771,465


(26,797)


1,744,668


1.51%

Total portfolio loans

$  2,276,517


$     (32,875)


$ 2,243,642


1.44%









(1) Includes $17,133 of loans covered by loss-share agreements not recorded at fair value at December 31, 2013.

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and OREO, were 2.74% of total assets at December 31, 2013, compared to 3.93% at December 31, 2012.  Nonperforming assets not covered by loss-share were 1.52% of total assets not covered by loss-share as of December 31, 2013, compared to 1.82% at December 31, 2012.  The covered assets are covered by FDIC loss-share agreements that provide 80% protection on those assets and are being carried at estimated fair value.

 

Asset Quality Information

(dollars in thousands;  unaudited)












December 31,

2013


September 30,

2013


June 30,
2013


March 31,

2013


December 31,

2012

Nonaccrual loans not covered by loss-share

$           17,114


$       21,262


$       22,276


$     27,212


$         22,442

Nonaccrual loans covered by loss-share 

23,745


29,892


44,317


52,274


46,981

OREO not covered by loss-share

28,833


29,271


29,143


31,177


28,811

OREO covered by loss-share 

18,773


18,401


17,668


20,709


23,102

90 days past due not covered by loss-share

-


83


823


-


-

90 days past due covered by loss-share

-


1


-


-


-

Total nonperforming assets

$           88,465


$       98,910


$     114,227


$   131,372


$       121,336

  Nonperforming assets not covered by loss-share

$           45,947


$       50,616


$       52,242


$     58,389


$         51,253











Total assets

$      3,229,576


$  2,968,709


$  2,929,636


$2,929,191


$    3,083,788

Total assets less covered assets

3,023,142


2,748,509


2,692,686


2,670,691


2,811,756











Total portfolio loans

2,276,517


2,100,042


2,048,941


2,031,149


2,035,258

Total accruing loans

2,235,658


2,048,888


1,982,348


1,951,663


1,965,835

Total portfolio loans less fair value loans

1,771,465


1,696,484


1,586,326


1,536,944


1,458,654

Total portfolio loans less covered loans

2,088,856


1,898,243


1,829,659


1,793,358


1,786,328











Total allowance for loan losses

32,875


32,358


32,859


38,148


40,292

Allowance for loans not covered by loss-share

26,797


24,721


24,218


24,966


25,028

Allowance for loans covered by loss-share

5,925


7,403


8,641


13,182


15,264

Allowance for acquired loans not covered by loss-share

153


234


-


-


-











Ratio of nonperforming assets to total assets

2.74%


3.33%


3.90%


4.48%


3.93%

  Not covered by loss-share 

1.52%


1.84%


1.94%


2.19%


1.82%











Ratio of nonperforming loans to total portfolio loans

1.79%


2.44%


3.29%


3.91%


3.41%

  Not covered by loss-share 

0.82%


1.12%


1.26%


1.52%


1.26%











Ratio of allowance for loan losses to total portfolio loans

1.44%


1.54%


1.60%


1.88%


1.98%

Ratio of allowance not covered by loss-share
  to portfolio loans not recorded at fair value

1.51%


1.46%


1.53%


1.62%


1.72%











Net charge-offs, QTD

$                380


$         4,788


$         7,351


$       8,172


$           6,269

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

482


2,876


3,949


4,604


3,792

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










    QTD to average portfolio loans, annualized (1)

0.08%


0.55%


0.78%


0.92%


0.78%











Loans restructured/modified not included in above,










  (not 90 days past due or on nonaccrual)

$           16,770


$       13,802


$       12,639


$     10,896


$         35,889











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

 

Nonaccrual loans not covered by loss-share agreements totaled $17.1 million at December 31, 2013, a decrease of 23.7% from $22.4 million at December 31, 2012.  Excluding loans covered by loss-share agreements, nonperforming loans as a percentage of total loans was 0.82% as of December 31, 2013, as compared to 1.26% as of December 31, 2012.  Nonaccrual loans covered by loss-share agreements totaled $23.7 million as of December 31, 2013, a decrease of 49.5% from $47.0 million at December 31, 2012.  The decrease is due to the Company's sustained efforts in resolving acquired nonperforming loans.   

Troubled debt restructurings ("TDRs") were $18.8 million as of December 31, 2013, of which $2.9 million was covered under loss-share.  Of the $18.8 million of TDRs, $16.8 million are performing under the terms of the restructured agreements, as compared to $44.9 million of TDRs as of December 31, 2012, of which $35.9 million were performing under the terms of the restructured agreements.  The decrease in performing TDRs from December 31, 2012 was primarily due to a significant amount of restructurings that are no longer required to be reported as TDRs due to contractual performance over a passage of time.  The increase in TDRs from September 30, 2013 to December 31, 2013 was due to one large TDR that was previously in nonaccrual status returning to accrual status during the fourth quarter.

OREO at December 31, 2013 totaled $47.6 million, which is a decrease of 8.3% from $51.9 million at December 31, 2012.  At December 31, 2013, the carrying value of OREO covered by loss-share agreements was $18.8 million, a decrease of 18.7% from $23.1 million at December 31, 2012.  OREO not covered by loss-share agreements totaled $28.8 million at December 31, 2013, unchanged from December 31, 2012.  The Company has sold $7.7 million and $32.8 million of OREO properties during the quarter and year ended December 31, 2013, respectively, which was offset by $4.5 million and $31.3 million of additions to OREO.  These additions include $4.2 million of OREO acquired from Randolph.  For the quarter and year ended December 31, 2013, the Company recorded valuation adjustments of $0.7 million and $4.2 million, respectively, a decrease from valuation adjustments of $2.7 million and $7.1 million for the quarter and year ended December 31, 2012, respectively. 

Capital Position

At December 31, 2013, shareholders' equity was $271.3 million, a decrease of 3.9% from shareholders' equity of $282.2 million as of December 31, 2012.  In April 2013, the Company closed on a $30.0 million term loan and used the proceeds to redeem the $31.3 million of Series A preferred stock.  As a result of this redemption, the Company recorded $356,000 of additional discount accretion during the second quarter of 2013.  After this redemption and the conversion of 1,804,566 shares of Series B preferred stock to non-voting common stock in February 2013, the Company no longer has any preferred stock issued or outstanding.  As part of the Randolph acquisition the Company issued 726,634 shares of common stock.

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

About BNC Bancorp and Bank of North Carolina

Headquartered in High Point, NC, BNC Bancorp is the parent company of Bank of North Carolina, a commercial bank with $3.23 billion in assets.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 39 banking offices in North and South Carolina.  The Bank's eight locations in South Carolina operate as BNC Bank.  Bank of North Carolina is insured by the FDIC and is an equal housing lender.  BNC Bancorp's stock is traded and quoted in the NASDAQ Capital Market under the symbol "BNCN."

Non-GAAP Financial Measures

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

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

Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies' anticipated future financial performance.  This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations.   This press release contains forward-looking statements relating to the financial condition, results of operations and business of BNC Bancorp and the Bank.  These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BNC Bancorp, and the information available to management at the time that this press release was prepared.  Factors that could cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (i) 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







December 31,
2013


December 31,
2012


% Change

SUMMARY INCOME STATEMENTS







Interest income

$           37,836


$             32,224


17.4 %


Interest expense

7,964


8,119


(1.9)


Net interest income

29,872


24,105


23.9


Provision for loan losses

2,435


5,520


(55.9)


Net interest income after provision for loan losses

27,437


18,585


47.6


Non-interest income

5,178


10,394


(50.2)


Non-interest expense

28,628


24,871


15.1


Income before income tax expense (benefit)

3,987


4,108


(3.0)


Income tax expense (benefit)

716


(940)


(176.2)


Net income

3,271


5,048


(35.2)


Preferred stock dividends and discount accretion

-


601


(100.0)


Net income available to common shareholders

$             3,271


$               4,447


(26.4)










PER SHARE DATA







Earnings per share, basic

$               0.12


$                 0.19




Earnings per share, diluted

0.12


0.19




Operating earnings per share, diluted (1)

0.21


(0.00)




Tangible common book value per share (1)

8.66


8.20












Weighted average participating common shares:







Basic

27,293


24,272




Diluted

27,382


24,277



Period-end number of shares:







Common

27,303


24,650




Convertible preferred

-


1,805












PERFORMANCE RATIOS







Return on average assets

0.41%


0.63%




Operating return on average assets (1)

0.71%


-0.01%




Return on average common equity

4.79%


8.16%




Return on average tangible common equity (1)

5.90%


9.76%




Operating return on average tangible common equity (1)

9.98%


0.13%




Net interest margin (FTE)

4.39%


4.09%




Net interest margin w/o hedging expense (FTE)

4.76%


4.43%




Average equity to average assets

8.48%


9.43%




Allowance for loan losses as a % of portfolio loans

1.44%


1.98%




     Allowance not covered by loss-share to portfolio loans not recorded at fair value

1.51%


1.72%




Nonperforming assets to total assets, end of period

2.74%


3.93%




     Not covered by loss share

1.52%


1.82%




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







     average total loans, annualized

0.08%


0.78%












SELECTED FINANCIAL DATA







Gain on sale of investment securities, net

$                   10


$                  651




Bargain purchase gain on acquisition

-


4,972




Fair value accretion

4,208


3,086




Hedging instrument expense 

2,700


2,133




OREO valuation adjustments

713


2,734




Transaction-related expenses

3,884


1,406













(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 Year Ended







December 31,
2013


December 31,
2012


% Change

SUMMARY INCOME STATEMENTS







Interest income

$        138,670


$          113,515


22.2 %


Interest expense

30,063


32,891


(8.6)


Net interest income

108,607


80,624


34.7


Provision for loan losses

12,188


22,737


(46.4)


Net interest income after provision for loan losses

96,419


57,887


66.6


Non-interest income

22,806


33,138


(31.2)


Non-interest expense

97,933


82,272


19.0


Income before income tax expense (benefit)

21,292


8,753


143.3


Income tax expense (benefit)

4,045


(1,700)


(337.9)


Net income

17,247


10,453


65.0


Preferred stock dividends and discount accretion

1,060


2,404


(55.9)


Net income available to common shareholders

$           16,187


$               8,049


101.1










PER SHARE DATA







Earnings per share, basic

$               0.61


$                 0.48




Earnings per share, diluted

0.61


0.48




Operating earnings per share, diluted (1)

0.71


(0.19)




Tangible common book value per share (1)

8.66


8.20












Weighted average participating common shares:







Basic

26,683


17,595




Diluted

26,714


17,599



Period-end number of shares:







Common

27,303


24,650




Convertible preferred

-


1,805












PERFORMANCE RATIOS







Return on average assets

0.54%


0.32%




Operating return on average assets (1)

0.63%


-0.13%




Return on average common equity

6.28%


5.11%




Return on average tangible common equity (1)

7.50%


6.57%




Operating return on average tangible common equity (1)

8.79%


-2.28%




Net interest margin (FTE)

4.29%


3.85%




Net interest margin w/o hedging expense (FTE)

4.66%


4.21%




Average equity to average assets

8.94%


8.37%




Allowance for loan losses as a % of portfolio loans

1.44%


1.98%




     Allowance not covered by loss-share to portfolio loans not recorded at fair value

1.51%


1.72%




Nonperforming assets to total assets, end of period

2.74%


3.93%




     Nonperforming assets not covered by loss share

1.52%


1.82%




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







     average total loans

0.57%


1.09%












SELECTED FINANCIAL DATA







Gain (loss) on sale of investment securities, net

$                 (42)


$               3,026




Acquisition-related gain

719


-




Bargain purchase gain on acquisitions

-


12,706




Fair value accretion

14,418


6,654




Additional accretion from redemption of Series A preferred stock

356


-




Hedging instrument expense

9,863


7,940




OREO valuation adjustments

4,175


7,078




Transaction-related expenses

5,768


5,212













(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





December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

SUMMARY INCOME STATEMENTS











Interest income

$           37,836


$             34,008


$             33,675


$             33,151


$             32,224


Interest expense

7,964


7,372


7,364


7,363


8,119


Net interest income

29,872


26,636


26,311


25,788


24,105


Provision for loan losses

2,435


3,350


2,288


4,115


5,520


Net interest income after provision for loan losses

27,437


23,286


24,023


21,673


18,585


Non-interest income

5,178


5,824


5,602


6,202


10,394


Non-interest expense

28,628


22,430


23,759


23,116


24,871


Income before income tax expense (benefit)

3,987


6,680


5,866


4,759


4,108


Income tax expense (benefit)

716


1,650


1,199


480


(940)


Net income

3,271


5,030


4,667


4,279


5,048


Preferred stock dividends and discount accretion

-


-


531


529


601


Net income available to common shareholders

$             3,271


$               5,030


$               4,136


$               3,750


$               4,447















Net interest income, as reported

$           29,872


$             26,636


$             26,311


$             25,788


$             24,105


     Fully Taxable-Equivalent ("FTE") adjustment 

1,956


1,818


1,718


1,673


1,533


Net interest income, FTE

$           31,828


$             28,454


$             28,029


$             27,461


$             25,638














PER SHARE DATA











Earnings per share, basic

$               0.12


$                 0.19


$                 0.16


$                 0.14


$                 0.19


Earnings per share, diluted

0.12


0.19


0.16


0.14


0.19














Weighted average participating common shares:











Basic

27,293


26,502


26,475


26,464


24,272


Diluted

27,382


26,582


26,498


26,476


24,277

Period-end number of shares:











Common

27,303


26,526


26,479


26,472


24,650


Convertible preferred

-


-


-


-


1,805














PERFORMANCE RATIOS











Return on average assets

0.41%


0.68%


0.57%


0.51%


0.63%


Operating return on average assets (1)

0.71%


0.68%


0.58%


0.56%


-0.01%


Return on average common equity

4.79%


7.81%


6.49%


6.12%


8.16%


Return on average tangible common equity (1)

5.90%


9.19%


7.70%


7.33%


9.76%


Operating return on average tangible common equity (1)

9.98%


9.26%


7.85%


7.97%


0.13%


Net interest margin (FTE)

4.39%


4.26%


4.32%


4.20%


4.09%


Net interest margin w/o hedging expense (FTE)

4.76%


4.65%


4.68%


4.54%


4.43%


Average equity to average assets

8.48%


8.67%


9.06%


9.61%


9.43%


Allowance for loan losses as a % of portfolio loans

1.44%


1.54%


1.60%


1.88%


1.98%


     Allowance not covered by loss-share to portfolio loans not recorded at fair value

1.51%


1.46%


1.53%


1.62%


1.72%


Nonperforming assets to total assets, end of period

2.74%


3.33%


3.90%


4.48%


3.93%


     Not covered by loss share

1.52%


1.84%


1.94%


2.19%


1.82%


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











     average total loans, annualized

0.08%


0.55%


0.78%


0.92%


0.78%














SELECTED FINANCIAL DATA











Gain (loss) on sale of investment securities, net

$                   10


$                      -


$                  176


$                 (228)


$                  651


Acquisition-related gain

-


-


-


719


-


Bargain purchase gain on acquisitions

-


-


-


-


4,972


Fair value accretion

4,208


3,213


3,664


3,333


3,086


Additional accretion from redemption of Series A preferred stock

-


-


356


-


-


Hedging instrument expense

2,700


2,625


2,333


2,205


2,133


OREO valuation adjustments

713


1,138


1,539


785


2,734


Transaction-related expenses

3,884


540


309


1,035


1,406















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

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)










As of  







December 31,
2013


December 31,      2012


% Change

SELECTED BALANCE SHEET DATA







Portfolio loans:








Loans not covered by loss share

$     2,088,856


$       1,786,328


16.9 %



Loans covered by loss share

187,661


248,930


(24.6)



Allowance for loan losses

(32,875)


(40,292)


(18.4)



Net portfolio loans

2,243,642


1,994,966


12.5


Loans held for sale

30,899


57,414


(46.2)


Investment securities

517,795


456,344


13.5


Total interest-earning assets

2,908,847


2,747,702


5.9


Total assets

3,229,576


3,083,788


4.7











Deposits:








Non-interest bearing deposits

324,532


275,605


17.8



Interest-bearing demand and savings

1,299,399


1,221,089


6.4



Time deposits

1,082,799


1,159,615


(6.6)



Total deposits

2,706,729


2,656,309


1.9


Borrowed funds

227,102


120,555


88.4


Total interest-bearing liabilities

2,609,299


2,501,259


4.3


Shareholders' equity:








Preferred equity

-


47,878


(100.0)



Common equity

268,024


228,937


17.1



Accumulated other comprehensive income

3,305


5,429


(39.1)



Total shareholders' equity

271,330


282,244


(3.9)

 





As of  





December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

SELECTED BALANCE SHEET DATA











Portfolio loans:












Loans not covered by loss share

$     2,088,856


$       1,898,243


$       1,829,659


$       1,793,358


$       1,786,328



Loans covered by loss share

187,661


201,799


219,282


237,791


248,930



Allowance for loan losses

(32,875)


(32,358)


(32,859)


(38,148)


(40,292)



Net portfolio loans

2,243,642


2,067,684


2,016,082


1,993,001


1,994,966


Loans held for sale

30,899


17,732


39,954


46,134


57,414


Investment securities

517,795


500,449


466,079


476,982


456,344


Total interest-earning assets

2,908,847


2,658,902


2,610,415


2,605,429


2,747,702


Total assets

3,229,576


2,968,709


2,929,636


2,929,191


3,083,788















Deposits:












Non-interest bearing deposits

324,532


299,670


275,984


267,458


275,605



Interest-bearing demand and savings

1,299,399


1,172,512


1,152,779


1,171,484


1,221,089



Time deposits

1,082,799


963,679


999,552


1,069,207


1,159,615



Total deposits

2,706,730


2,435,861


2,428,315


2,508,149


2,656,309


Borrowed funds

227,102


256,554


227,697


117,774


120,555


Total interest-bearing liabilities

2,609,299


2,392,745


2,380,028


2,358,465


2,501,259


Shareholders' equity:












Preferred equity

-


-


-


30,855


47,878



Common equity

268,024


256,048


251,872


248,747


228,937



Accumulated other comprehensive income

3,305


1,745


2,573


4,453


5,429



Total shareholders' equity

271,330


257,793


254,445


284,055


282,244

 

PERFORMANCE SUMMARY






BNC BANCORP






(Dollars in thousands)






(Unaudited)










For the Year Ended







December 31,
2013


December 31,      2012


% Change

SELECTED AVERAGE BALANCE SHEET DATA







Portfolio loans:








Loans not covered by loss share

$     1,885,872


$       1,503,120


25.5 %



Loans covered by loss share

219,093


286,005


(23.4)



Net portfolio loans

2,104,965


1,789,125


17.7


Investment securities

483,984


353,040


37.1


Total interest-earning assets

2,696,475


2,244,423


20.1


Total assets

3,009,367


2,544,718


18.3











Deposits:








Non-interest bearing deposits

290,765


188,569


54.2



Interest-bearing demand and savings

1,197,958


997,951


20.0



Time deposits

1,038,088


1,004,644


3.3



Total deposits

2,526,811


2,191,164


15.3


Borrowed funds

193,771


124,223


56.0


Total interest-bearing liabilities

2,429,817


2,126,818


14.3


Shareholders' equity

269,123


212,955


26.4

 





For the Three Month Period Ended





December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

SELECTED AVERAGE BALANCE SHEET DATA











Loans:












Loans not covered by loss share

$     2,073,442


$       1,862,366


$       1,810,382


$       1,794,323


$       1,673,506



Loans covered by loss share

194,730


210,541


228,536


243,360


267,632



Total loans

2,268,172


2,072,907


2,038,918


2,037,683


1,941,138


Investment securities

515,296


484,959


473,301


461,781


400,482


Total interest-earning assets

2,878,999


2,650,389


2,604,275


2,650,229


2,495,019


Total assets

3,193,141


2,945,832


2,916,204


2,980,654


2,806,031















Deposits:












Non-interest bearing deposits

338,454


288,887


272,088


262,821


225,419



Interest-bearing demand and savings

1,291,291


1,172,608


1,150,213


1,176,740


1,109,651



Time deposits

1,035,759


979,871


1,021,098


1,117,159


1,059,670



Total deposits

2,665,504


2,441,366


2,443,398


2,556,720


2,394,740


Borrowed funds

235,303


228,336


189,308


120,496


126,007


Total interest-bearing liabilities

2,562,353


2,380,815


2,360,618


2,414,395


2,295,328


Shareholders' equity

270,702


255,524


264,201


286,388


264,643

 

LOAN MIX AND STRATIFICATION STATISTICS




BNC BANCORP






(Dollars in millions)






(Unaudited)










 As of 







December 31,
2013


December 31,
2012


% Change

Loans Not Covered Under Loss Share Agreements:







Construction, A&D, and Land

$             261.3


$               196.5


33.0



Residential Construction

32.5


27.3


19.1




Presold

18.2


15.8


15.2




Speculative

14.3


11.5


24.4




  Loan size - over $400,000

1.8


3.7


(51.4)




  Loan size - $200,000 to $400,000

4.8


2.9


65.5




  Loan size - under $200,000

7.7


4.9


57.1












Commercial Construction

132.0


76.1


73.5




Loan size - $5 million and over

25.4


6.7


279.1




Loan size - $3 million to $5 million

28.9


6.7


331.3




Loan size - $1 million to $3 million

54.2


42.7


26.9




Loan size - under $1 million

23.5


20.0


17.5












Residential and Commercial A&D

7.9


18.1


(56.4)




Loan size - $3 million to $5 million

-


4.4


100.0




Loan size - $1 million to $3 million

3.5


9.1


(61.5)




Loan size - under $1 million

4.4


4.6


(4.4)












Land

88.9


75.0


18.5




Residential Buildable Lots

22.1


23.3


(5.2)




Commercial Buildable Lots

11.8


10.2


15.7




Land Held for Development

32.9


24.2


36.0




Raw and Agricultural Land

22.1


17.3


27.8











Commercial Real Estate

$          1,244.0


$               930.9


33.6



Multi-Family

61.6


47.5


29.7



Churches

53.5


42.8


25.0



Retail

911.8


674.3


35.2




Owner Occupied

263.8


196.0


34.6




Investment

648.0


478.3


35.5




  Loan size - $5 million to $9 million

138.5


101.2


36.9




  Loan size - $3 million to $5 million

113.5


79.4


43.0




  Loan size - $1 million to $3 million

250.3


186.6


34.1




  Loan size - under $1 million

145.7


111.1


31.1












Industrial

217.1


166.3


30.6




Owner Occupied

119.0


93.0


28.0




Investment

98.1


73.3


33.8




  Loan size - $5 million and over

6.0


-


100.0




  Loan size - $3 million to $5 million

11.2


4.1


173.2




  Loan size - $1 million to $3 million

40.8


37.6


8.5




  Loan size - under $1 million

40.1


31.6


26.9

 

LOAN MIX AND STRATIFICATION STATISTICS




BNC BANCORP




(Dollars in millions)








(Unaudited)














 Trends 





December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Loans Not Covered Under Loss Share Agreements:











Construction, A&D, and Land

$             261.3


$               225.5


$               211.3


$               232.3


$               196.5



Residential Construction

32.5


28.6


32.6


31.1


27.3




Presold

18.2


16.0


18.7


18.6


15.8




Speculative

14.3


12.6


13.9


12.5


11.5




  Loan size - over $400,000

1.8


2.2


3.3


4.3


3.7




  Loan size - $200,000 to $400,000

4.8


4.9


5.5


3.2


2.9




  Loan size - under $200,000

7.7


5.5


5.1


5.0


4.9
















Commercial Construction

132.0


106.1


76.2


92.9


76.1




Loan size - $5 million and over

25.4


18.1


12.5


12.5


6.7




Loan size - $3 million to $5 million

28.9


15.4


10.7


11.0


6.7




Loan size - $1 million to $3 million

54.2


51.7


33.3


50.0


42.7




Loan size - under $1 million

23.5


20.9


19.7


19.4


20.0
















Residential and Commercial A&D

7.9


9.4


17.6


15.1


18.1




Loan size - $3 million to $5 million

-


-


4.1


-


4.4




Loan size - $1 million to $3 million

3.5


3.6


6.6


8.8


9.1




Loan size - under $1 million

4.4


5.8


6.9


6.3


4.6
















Land

88.9


81.4


84.9


93.2


75.0




Residential Buildable Lots

22.1


20.8


26.1


31.4


23.3




Commercial Buildable Lots

11.8


13.4


17.7


18.9


10.2




Land Held for Development

32.9


25.2


21.9


25.1


24.2




Raw and Agricultural Land

22.1


22.0


19.2


17.8


17.3















Commercial Real Estate

$          1,244.0


$            1,165.2


$            1,109.8


$            1,050.6


$               930.9



Multi-Family

61.6


58.6


59.2


48.6


47.5



Churches

53.5


50.9


51.5


49.6


42.8



Retail

911.8


851.2


804.3


757.2


674.3




Owner Occupied

263.8


243.4


236.9


237.4


196.0




Investment

648.0


607.8


567.4


519.8


478.3




  Loan size - $5 million to $9 million

138.5


135.4


95.1


89.0


101.2




  Loan size - $3 million to $5 million

113.5


98.6


90.3


82.7


79.4




  Loan size - $1 million to $3 million

250.3


238.3


242.4


215.5


186.6




  Loan size - under $1 million

145.7


135.5


139.6


132.6


111.1
















Industrial

217.1


204.5


194.8


195.2


166.3




Owner Occupied

119.0


113.2


101.5


105.2


93.0




Investment

98.1


91.3


93.3


90.0


73.3




  Loan size - $5 million and over

6.0


6.1


6.0


6.2


-




  Loan size - $3 million to $5 million

11.2


8.3


11.5


4.0


4.1




  Loan size - $1 million to $3 million

40.8


38.7


35.8


41.7


37.6




  Loan size - under $1 million

40.1


38.2


40.0


38.1


31.6

 

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 (Loss) per Share, Diluted (2)

December 31, 

2013


September 30, 

2013


December 31, 

2012





Net income available to common shareholders (GAAP)

$             3,271


$               5,030


$               4,447





Add:    Transaction-related charges, net of tax

2,447


340


893





Less:  Insurance settlement, net of tax

-


302


-





            Bargain purchase gain on acquisition (nontaxable)

-


-


4,972





            Gain on sale of investment securities, net of tax

6


-


413





Operating earnings (loss) (non-GAAP)

$             5,712


$               5,068


$                   (45)


















Weighted average fully diluted shares outstanding

27,382


26,582


24,277


















Operating earnings (loss) per share, diluted (non-GAAP)

$               0.21


$                 0.19


$                (0.00)



































For the Year Ended







Operating Earnings (Loss) per Share, Diluted (2)

December 31, 

2013


December 31, 

2012







Net income available to common shareholders (GAAP)

$           16,187


$               8,049







Add:    Transaction-related charges, net of tax

3,634


3,310







Less:  Insurance settlement, net of tax

302


-







            Acquisition-related gain, net of tax

453


-







            Bargain purchase gain on acquisitions (nontaxable)

-


12,706







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

(26)


1,922







Operating earnings (loss) (non-GAAP)

$           19,092


$             (3,269)




















Weighted average fully diluted shares outstanding

26,714


17,599




















Operating earnings (loss) per share, diluted (non-GAAP)

$               0.71


$                (0.19)





































For the Three Months Ended





Adjusted Non-interest Income (2)

December 31, 

2013


September 30, 

2013


December 31, 

2012





Non-interest income (GAAP)

$             5,178


$               5,824


$             10,394





Less:  Insurance settlement

-


479


-





            Bargain purchase gain on acquisitions

-


-


4,972





            Gain on sale of investment securities

10


-


651





Adjusted non-interest income (non-GAAP)

$             5,168


$               5,345


$               4,771
































For the Year Ended







Adjusted Non-interest Income (2)

December 31, 

2013


December 31, 

2012







Non-interest income (GAAP)

$           22,806


$             33,138







Less:  Insurance settlement

479


-







            Acquisition-related gain

719


-







            Bargain purchase gain on acquisitions

-


12,706







            Gain (loss) on sale of investment securities

(42)


3,026







Adjusted non-interest income (non-GAAP)

$           21,650


$             17,406





































For the Three Months Ended





Adjusted Non-interest Expense (2)

December 31, 

2013


September 30, 

2013


December 31,  

2012





Non-interest expense (GAAP)

$           28,628


$             22,430


$             24,871





Less:  Transaction-related expenses

3,884


540


1,406





Adjusted non-interest expense (non-GAAP)

$           24,744


$             21,890


$             23,465
































For the Year Ended







Adjusted Non-interest Expense (2)

December 31, 

2013


December 31, 

2012







Non-interest expense (GAAP)

$           97,933


$             82,272







Less:  Transaction-related expenses

5,768


5,212







Adjusted non-interest expense (non-GAAP)

$           92,165


$             77,060




















RECONCILIATION OF NON-GAAP FINANCIAL MEASURES








BNC BANCORP









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








(Unaudited)























Tangible Common Book Value per Share (3)

December 31, 

2013


December 31, 

2012







Shareholders' equity (GAAP)

$        271,330


$          282,244







Less: Preferred stock

-


47,878







           Intangible assets

34,966


32,193







Tangible common shareholders equity (non-GAAP)

$        236,363


$          202,173




















Common shares outstanding

27,303


24,651




















Tangible common book value per share (non-GAAP)

$               8.66


$                 8.20






































For the Three Months Ended

Return on Average Tangible Common Equity (3)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Net income available to common shareholders (GAAP)

$             3,271


$               5,030


$               4,136


$               3,750


$               4,447

Plus: Amortization of intangibles, net of tax

241


160


160


160


105

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

$             3,512


$               5,190


$               4,296


$               3,910


$               4,552














Average common shareholders equity

$        270,702


$          255,524


$          255,624


$          248,548


$          216,825

Less: Average intangible assets

34,045


31,535


31,798


32,068


31,235

Average tangible common shareholders' equity (non-GAAP)

$        236,657


$          223,988


$          223,826


$          216,480


$          185,590














Return on average tangible common equity (non-GAAP)

5.89%


9.19%


7.70%


7.33%


9.76%































For the Year Ended







Return on Average Tangible Common Equity (3)

December 31,
2013


December 31,
2012







Net income available to common shareholders (GAAP)

$           16,187


$               8,049







Plus: Amortization of intangibles, net of tax

723


348







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

$           16,910


$               8,397




















Average common shareholders equity

$        257,678


$          157,471







Less: Average intangible assets

32,361


29,581







Average tangible common shareholders' equity (non-GAAP)

$        225,317


$          127,890




















Return on average tangible common equity (non-GAAP)

7.50%


6.57%




















(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,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Net income available to common shareholders (GAAP)

$             3,271


$               5,030


$               4,136


$               3,750


$               4,447

Plus:   Transaction-related expenses, net of tax

2,447


340


195


652


893

Less:  Insurance settlement, net of tax

-


302


-


-


-

            Acquisition-related gain, net of tax

-


-


-


453


-

            Bargain purchase gain on acquisition (nontaxable)







-


4,972

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

6


-


111


(144)


413

Operating earnings (loss) (non-GAAP)

$             5,712


$               5,068


$               4,220


$               4,093


$                   (45)














Average assets

$     3,193,141


$       2,945,832


$       2,916,204


$       2,980,654


$       2,806,031














Operating return on average assets (non-GAAP)

0.71%


0.68%


0.58%


0.56%


-0.01%































For the Year Ended







Operating Return on Average Assets (2)

December 31,
2013


December 31,
2012







Net income available to common shareholders (GAAP)

$           16,187


$               8,049







Plus:  Transaction-related expenses, net of tax

3,634


3,310







Less:  Insurance settlement, net of tax

302


-







            Acquisition-related gain, net of tax

453


-







            Bargain purchase gain on acquisitions (nontaxable)

-


12,706







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

(26)


1,922







Operating earnings (loss) (non-GAAP)

$           19,092


$             (3,269)




















Average assets

$     3,009,367


$       2,544,718




















Operating return on average assets (non-GAAP)

0.63%


-0.13%





































For the Three Months Ended

Operating Return on Average Tangible Common Equity (2)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Net income available to common shareholders (GAAP)

$             3,271


$               5,030


$               4,136


$               3,750


$               4,447

Plus:   Amortization of intangibles, net of tax

241


160


160


160


105

            Transaction-related expenses, net of tax

2,447


340


195


652


893

Less:  Insurance settlement, net of tax

-


302


-


-


-

            Acquisition-related gain, net of tax

-


-


-


453


-

            Bargain purchase gain on acquisition (nontaxable)

-


-


-


-


4,972

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

6


-


111


(144)


413

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

$             5,953


$               5,229


$               4,380


$               4,253


$                     59














Average common shareholders equity

$        270,702


$          255,524


$          255,624


$          248,548


$          216,825

Less: Average intangible assets

34,045


31,535


31,798


32,068


31,235

Average tangible common shareholders' equity (non-GAAP)

$        236,657


$          223,989


$          223,826


$          216,480


$          185,590














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

9.98%


9.26%


7.85%


7.97%


0.13%































For the Year Ended







Operating Return on Average Tangible Common Equity (2)

December 31,
2013


December 31,
2012







Net income available to common shareholders (GAAP)

$           16,187


$               8,049







Plus:   Amortization of intangibles, net of tax

723


348







            Transaction-related expenses, net of tax

3,634


3,310







Less:  Insurance settlement, net of tax

302


-







            Acquisition-related gain, net of tax

453


-







            Bargain purchase gain on acquisitions (nontaxable)

-


12,706







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

(26)


1,922







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

$           19,815


$             (2,920)




















Average common shareholders equity

$        257,678


$          157,471







Less: Average intangible assets

32,361


29,581







Average tangible common shareholders' equity (non-GAAP)

$        225,317


$          127,890




















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

8.79%


-2.28%




















(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.

 

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