HIGH POINT, N.C., Jan. 25, 2016 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the quarter and year ended December 31, 2015. Highlights for the fourth quarter 2015 include the following:
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-- Operating earnings for the fourth quarter of 2015 totaled $15.4 million,
or $0.39 per diluted share, compared to $15.0 million, or $0.39 per
diluted share, for the third quarter of 2015
-- Per share results for the fourth quarter 2015 were impacted by the
public stock offering detailed below;
-- Diluted earnings per share totaled $0.32, compared to $0.31 for the
third quarter of 2015;
-- Net income for the quarter was $12.7 million, compared to $11.9
million for third quarter of 2015; and
-- Operating earnings for the year ended December 31, 2015 were $52.7
million, or $1.47 per diluted share, compared to $35.3 million, or
$1.21 per diluted share, for the year ended December 31, 2014.
-- Continued balance sheet growth, both organically and through
acquisitions, during the fourth quarter
-- Originated loans increased $128.2 million, or 5.0%, excluding loans
that were reclassified from acquired;
-- Total deposits increased $367.7 million, or 8.4%;
-- Transactional deposit base increased $218.1 million, or 7.5%; and
-- Total assets increased $455.5 million, or 8.8%.
-- Continued trend of strong operating performance ratios during fourth
quarter of 2015
-- Operating return of average assets of 1.13%, compared to 1.15% for
the third quarter of 2015;
-- Operating return of average tangible common equity of 15.99%,
compared to 16.79% for third quarter 2015; and
-- Operating efficiency ratio of 54.48%, compared to 55.59% for third
quarter 2015.
-- Announced pending acquisition of High Point Bank Corporation
-- Expected to close during the second quarter of 2016, subject to
regulatory approval, approval of High Point Bank Corporation
shareholders, and other customary closing conditions.
-- Completed acquisition and conversion of seven branches from CertusBank,
N.A.
-- Expands the Company's presence in attractive Upstate South Carolina
markets.
-- Completed public offering of 2.59 million shares of voting common stock
-- Net proceeds of approximately $57.6 million after underwriting
discount and expenses
Financial Performance
Three Months Ended Year Ended
December 31,
------------
INCOME SUMMARY Dec. 31, 2015 Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 2015 2014
------------- -------------- ------------- ------------- ------------- ---- ----
Interest income (Dollars in thousands)
Interest and fees on loans $50,762 $48,050 $40,494 $39,420 $38,534 $178,726 $140,024
Investment securities 5,336 5,101 4,421 4,347 4,230 19,205 17,576
Other 141 162 132 120 151 555 542
Total interest income 56,239 53,313 45,047 43,887 42,915 198,486 158,142
------ ------ ------ ------ ------ ------- -------
Interest expense
Interest on deposits 5,852 5,265 4,888 4,442 3,946 20,447 15,139
Interest on borrowings 1,648 1,789 1,427 1,375 1,508 6,239 4,787
Total interest expense 7,500 7,054 6,315 5,817 5,454 26,686 19,926
----- ----- ----- ----- ----- ------ ------
Net interest income 48,739 46,259 38,732 38,070 37,461 171,800 138,216
Provision for loan losses 1,287 198 301 110 1,001 1,896 7,006
Net interest income 47,452 46,061 38,431 37,960 36,460 169,904 131,210
------ ------ ------ ------ ------ ------- -------
Operating non-interest income (1)
Mortgage fees 2,226 3,031 2,777 2,499 2,049 10,533 7,689
Service charges 2,341 2,284 1,810 1,644 1,648 8,079 6,105
Earnings on bank-owned life insurance 806 705 601 654 634 2,766 2,382
Other 2,868 2,355 3,509 1,454 3,454 10,186 8,589
Total operating non-interest income 8,241 8,375 8,697 6,251 7,785 31,564 24,765
----- ----- ----- ----- ----- ------ ------
Operating non-interest expense (1)
Salaries and employee benefits 17,888 17,543 15,749 15,973 16,423 67,153 58,910
Occupancy 3,392 3,211 2,618 2,581 2,365 11,802 9,145
Furniture and equipment 2,426 1,654 1,596 1,627 1,630 7,303 6,448
Data processing and supply 1,194 1,268 1,073 846 1,053 4,381 3,712
Advertising and business development 879 493 617 646 625 2,635 2,666
Insurance, professional and other
services 952 1,405 1,079 1,388 1,077 4,824 3,952
FDIC insurance assessments 883 824 702 735 700 3,144 2,932
Loan, foreclosure and OREO 1,639 2,352 3,536 2,325 2,632 9,852 8,940
Other 4,020 3,786 3,185 3,031 3,017 14,022 10,205
Total operating non-interest expenses 33,273 32,536 30,155 29,152 29,522 125,116 106,910
------ ------ ------ ------ ------ ------- -------
Operating income before income taxes 22,420 21,900 16,973 15,059 14,723 76,352 49,065
Operating income tax expense (1) 6,996 6,902 5,172 4,543 4,426 23,613 13,810
----- ----- ----- ----- ----- ------ ------
Operating income (non-GAAP) 15,424 14,998 11,801 10,516 10,297 52,739 35,255
Securities gains (losses), net of tax 28 500 (3) 31 - 556 (322)
Insurance settlement income, net of tax - - - - - - 484
Transaction-related expenses, net of tax 2,713 3,078 784 1,789 1,406 8,364 5,641
Loss on extinguishment of debt, net of
tax - 481 - - 386 481 386
------------------------
Net income (GAAP) $12,739 $11,939 $11,014 $8,758 $8,505 $44,450 $29,390
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(1) See Reconciliation of Non-GAAP to GAAP for additional details.
Performance Ratios
Three Months Ended Year Ended
December 31,
------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2014
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Operating earnings per diluted share (1) $0.39 $0.39 $0.36 $0.32 $0.34 $1.47 $1.21
Operating return of average assets (1) 1.13% 1.15% 1.13% 1.04% 1.07% 1.12% 0.99%
Operating return on average tangible common equity (1) 15.99% 16.79% 15.58% 14.41% 15.08% 15.77% 13.70%
Operating efficiency ratio (1) 54.48% 55.59% 59.48% 61.30% 61.07% 57.44% 61.25%
Earnings per diluted share - GAAP $0.32 $0.31 $0.34 $0.27 $0.28 $1.24 $1.01
Return of average assets - GAAP 0.93% 0.92% 1.06% 0.87% 0.89% 0.94% 0.83%
Return on average common equity - GAAP 9.13% 9.15% 11.05% 9.01% 9.59% 9.52% 9.09%
Return on average tangible common equity - GAAP 13.33% 13.52% 14.59% 12.12% 12.57% 13.40% 11.51%
Efficiency ratio - GAAP 63.75% 66.59% 63.71% 69.19% 68.63% 65.70% 68.12%
Book value per common share $14.52 $13.70 $12.38 $12.20 $11.98 $14.52 $11.98
Tangible book value per common share (1) 10.77 9.86 9.87 9.67 9.41 10.77 9.41
See
Reconciliation
of Non-GAAP
to GAAP for
additional
(1) details.
Other Selected Financial Data
Three Months Ended Year Ended
December 31,
------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2014
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in thousands)
Securities gains (losses), net $45 $794 $(4) $49 $ - $884 $(511)
Loss on extinguishment of debt - 763 - - 613 763 613
Fair value accretion 5,599 4,835 5,273 4,809 4,867 20,516 14,879
OREO valuation adjustments, net 348 911 820 814 866 2,893 3,836
Transaction-related expenses 4,307 4,886 1,244 2,839 2,231 13,276 8,954
Richard D. Callicutt, II, President and CEO, stated, "As noted in the highlights above, our Company made significant strides during the quarter towards attaining many of our near term strategic initiatives, all which should propel the Company into the future with greater diversity, momentum and financial strength. Successfully integrating operations of the seven Certus offices in the Upstate of South Carolina during the quarter, while making significant progress in our preparation for our upcoming closing and integration of Southcoast Bank in the Charleston area, is a testament to the outstanding efforts of our internal integration and support teams. We could not be one of the most acquisitive banks in the United States, and also one of the highest in stock price appreciation, if not for the tireless efforts of our integration and support teams. I am humbled each and every day by their dedication, skill, and unrelenting desire for excellence.
Also during the quarter we announced one of the most important events in our history, as High Point Bank agreed to join forces with BNC. High Point Bank has been the benchmark that all other banks have been measured in High Point and the surrounding communities for over 100 years, and both companies are extremely excited about the opportunity for even greater success and service as we come together. Along with the High Point Bank transaction, we announced the closing of a $60 million common equity raise that was extremely beneficial to our existing shareholders as it added over $0.70 to tangible book value. These two announcements, when viewed together, were accretive to future earnings, immediately accretive to tangible book value, grew our already strong capital ratios, and further enhanced our core deposit portfolio, primarily in the checking account areas.
While 2015 was another year of double-digit growth, in earnings, loans and deposits, it was also a year where we gained further depth in each of our six key target regions. The Valley transaction gave us a very efficient and profitable $800 million operation in the Southwest Virginia market, while the Certus and Southcoast transactions will provide over $650 million and eighteen offices in the two most dynamic markets in South Carolina; Charleston/Mount Pleasant and Greenville/Spartanburg. In the Charlotte and Raleigh/Durham/Chapel-Hill markets, while there were no major announcements, our talent base continued to grow and the loan originations in these two markets totaled over $1 billion in 2015. As we continue our mission to build the most profitable and valuable franchise in the Carolinas and Southwest VA, we are ever aware that our executive management team and staff must manage an ever increasing level of risk in our industry, and a more complex, yet highly convenient, multi-channel delivery platform. This is why our dedication to building a senior team with years of experience in their particular areas, an ability to process information and make good decisions, and a personality and leadership style that promotes teamwork is one of my highest priorities as CEO."
Operating earnings for the fourth quarter of 2015 totaled $15.4 million, or $0.39 per diluted share, compared to $15.0 million, or $0.39 per diluted share, for the third quarter of 2015. Operating earnings exclude non-operating income and expenses, which primarily consists of transaction-related expenses and gain (loss) on sale of investment securities, net of income taxes. The increase was due to increased net interest income, due to continued organic loan growth, as well as loans purchased from CertusBank, N.A. ("Certus"). This increase was partially offset by increased provision for loan losses and increased non-interest expenses.
Net income for the fourth quarter of 2015 totaled $12.7 million, or $0.32 per diluted share, compared to $11.9 million, or $0.31 per diluted share, for the third quarter of 2015.
Total non-interest income was $8.3 million for the fourth quarter of 2015, a decrease from $9.2 million for the third quarter of 2015. Excluding gains on securities sales, non-interest income decreased by $0.1 million from third quarter 2015. Mortgage fees decreased as compared to third quarter of 2015 due to a seasonal reduction in loan closings. Many of the other non-interest income sources, such as income from recoveries on acquired loans, income derived from the sale of loans partially guaranteed by the Small Business Administration and income derived from our investment brokerage services, are volatile and can vary significantly from period to period.
Total non-interest expense was $37.6 million for the fourth quarter of 2015, a decrease from $38.2 million for the third quarter of 2015. Excluding transaction-related expenses and other non-operating items, non-interest expense for the fourth quarter was $33.3 million, as compared to $32.5 million for the third quarter of 2015. The increase is due to additional employees and facilities from the acquired Certus branches, as well as traditional year-end compensation-related expenses. These increased charges were slightly offset by a reduction in loan and other real estate owned ("OREO") expenses during the fourth quarter of 2015.
Selected Balance Sheet Data
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Portfolio loans: (Dollars in thousands)
Originated loans $2,721,216 $2,587,572 $2,394,470 $2,262,601 $2,116,441
Acquired loans 1,478,655 1,391,061 858,537 913,236 958,657
Allowance for loan and lease losses (31,647) (30,833) (30,635) (29,351) (30,399)
------- ------- ------- ------- -------
Portfolio loans, net 4,168,224 3,947,800 3,222,372 3,146,486 3,044,699
Loans held for sale 39,470 37,437 36,315 25,505 37,280
Investment securities 734,557 645,732 557,732 515,325 506,382
Total interest-earning assets 5,131,988 4,689,936 3,886,910 3,778,586 3,669,857
Goodwill 134,686 128,489 69,749 69,749 69,749
Core deposit intangible, net 18,299 18,134 12,273 13,112 13,952
Total assets $5,656,638 $5,201,118 $4,278,588 $4,173,463 $4,072,508
Deposits:
Non-interest bearing deposits $776,479 $738,529 $621,392 $544,189 $534,792
Interest-bearing demand and savings 2,337,978 2,157,801 1,586,967 1,685,200 1,657,931
Time deposits 1,627,750 1,478,161 1,301,616 1,323,537 1,203,674
--------- --------- --------- --------- ---------
Total deposits 4,742,207 4,374,491 3,509,975 3,552,926 3,396,397
Borrowings 292,790 267,069 337,711 195,659 261,748
Total interest-bearing liabilities 4,258,518 3,903,031 3,226,294 3,204,395 3,123,353
Shareholders' equity:
Common equity 584,818 515,062 395,215 389,025 380,206
Accumulated other comprehensive income 7,329 7,435 8,368 10,087 10,182
----- ----- ----- ------ ------
Total shareholders' equity $592,147 $522,497 $403,583 $399,112 $390,388
At December 31, 2015, the Company's total assets were $5.7 billion, an increase from $5.2 billion at September 30, 2015 and from $4.1 billion at December 31, 2014. During the fourth quarter of 2015, originated loans increased $128.2 million, net of loans that were reclassified from acquired. The Company also had increases in investment securities and interest-bearing cash due to the Company's desire to increase its on-balance sheet liquidity. Funding this growth were continued increases in deposits, both organically and from the acquisition of branches from Certus, and from additional short-term borrowings. The Company continues to grow transactional deposits, which increased by $218.1 million during the fourth quarter. Wholesale deposits comprised 27.5% of total deposits at December 31, 2015, as compared to 26.1% at September 30, 2015 and 25.7% at December 31, 2014. Goodwill and net core deposit intangibles increased by $6.4 million during the quarter due to the Certus branch acquisition.
Shareholder's equity increased by $69.7 million during the fourth quarter due to the sale of 2.59 million common shares in a public offering. All of the Bank's and Company's capital ratios exceed the minimum thresholds established for a well-capitalized bank by regulatory measures.
Asset Quality
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in thousands)
Nonaccrual loans - non-acquired $6,623 $5,914 $12,998 $14,776 $8,475
Nonaccrual loans - acquired 12,086 14,322 12,391 13,191 16,248
OREO - non-acquired 15,588 18,791 20,767 21,869 23,989
OREO - acquired 16,973 18,489 12,241 17,558 18,542
90 days past due - non-acquired - - - - -
90 days past due - acquired 3 - 14 - -
--- --- --- --- ---
Total nonperforming assets $51,273 $57,516 $58,411 $67,394 $67,254
======= ======= ======= ======= =======
Total nonperforming assets - non-acquired $22,211 $24,705 $33,765 $36,645 $32,464
======= ======= ======= ======= =======
Net charge-offs (recoveries), QTD $352 $(326) $(1,036) $584 $940
Annualized net charge-offs (recoveries) to total average portfolio loans 0.03% -0.03% -0.13% 0.08% 0.13%
Ratio of total nonperforming assets to total assets 0.91% 1.11% 1.37% 1.61% 1.65%
Ratio of total nonperforming loans to total portfolio loans 0.45% 0.51% 0.78% 0.88% 0.80%
Ratio of total allowance for loan losses to total portfolio loans 0.75% 0.77% 0.94% 0.92% 0.99%
Excluding acquired
Ratio of nonperforming assets to total loans and OREO 0.81% 0.95% 1.40% 1.60% 1.52%
Ratio of nonperforming loans to total loans 0.24% 0.23% 0.54% 0.65% 0.40%
Ratio of allowance for loan losses to total loans 1.05% 1.05% 1.13% 1.15% 1.25%
Overall asset quality continued to improve during the fourth quarter of 2015, as total nonperforming assets were $51.3 million, or 0.91% of total assets, as compared to $57.5 million, or 1.11% of total assets, at September 30, 2015, and $67.3 million, or 1.65% of total assets, at December 31, 2014.
Excluding nonperforming assets acquired by the Company, nonperforming assets were $22.2 million, or 0.81% of non-acquired loans and OREO at December 31, 2015, as compared to $24.7 million, or 0.95% of non-acquired loans and OREO, at September 30, 2015, and $32.5 million, or 1.52% of non-acquired loans and OREO, at December 31, 2014.
The Company experienced $0.4 million of net charge-offs during the fourth quarter of 2015, compared to net recoveries of $0.3 million during the third quarter of 2015. Gross charge-offs were $1.5 million during the fourth quarter of 2015, a slight increase compared to $1.2 million during the third quarter of 2015.
The allowance for loan losses was $31.6 million at December 31, 2015, an increase from $30.8 million at September 30, 2015 and $30.4 million at December 31, 2014. The Company recorded a provision for loan losses of $1.3 million during the fourth quarter of 2015, as compared to $0.2 million recorded during the third quarter of 2015. The provision for loan losses recorded during the fourth quarter of 2015 was allocated to loans not acquired by the Company. The additional provision was recorded due to the high levels of loan growth in the originated loan portfolio.
Net Interest Income and Margin
Three Months Ended Year Ended December 31,
------------------ -----------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2014
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Quarterly average balances: (Dollars in thousands)
Loans $4,193,632 $3,957,846 $3,238,433 $3,154,739 $2,905,305 $3,639,890 $2,633,829
Investment securities 656,940 631,407 513,476 495,587 484,092 574,951 495,251
Total interest-earning assets 4,927,105 4,657,454 3,802,696 3,708,252 3,436,018 4,278,267 3,202,958
Total assets 5,428,444 5,154,690 4,180,690 4,097,199 3,809,989 4,720,107 3,561,719
Deposits:
Non-interest bearing 772,831 733,659 573,640 532,348 519,062 653,999 432,181
Interest-bearing 3,784,140 3,539,391 2,902,960 2,930,315 2,667,995 3,292,226 2,579,633
--------- --------- --------- --------- --------- --------- ---------
Total deposits 4,556,971 4,273,050 3,476,600 3,462,663 3,187,057 3,946,225 3,011,814
Borrowed funds 288,209 334,584 279,140 216,182 246,229 279,877 203,922
Total interest-bearing liabilities 4,072,349 3,873,975 3,182,100 3,146,497 2,914,224 3,572,103 2,783,555
Shareholders' equity 553,475 517,835 517,835 394,034 351,695 466,881 323,183
Interest Income/Expense (FTE):
Loans $50,762 $48,050 $40,494 $39,420 $38,534 $178,726 $140,024
Investment securities, tax 2,069 1,842 1,261 1,166 970 6,338 4,385
Investment securities, non-tax 5,186 5,173 5,016 5,049 5,175 20,424 20,938
Other earning assets 140 162 132 120 151 554 542
--- --- --- --- --- --- ---
Total interest income 58,157 55,227 46,903 45,755 44,830 206,042 165,889
------ ------ ------ ------ ------ ------- -------
Deposits 5,852 5,265 4,888 4,442 3,946 20,447 15,139
Borrowings 1,647 1,789 1,426 1,375 1,508 6,237 4,787
----- ----- ----- ----- ----- ----- -----
Total interest expense 7,499 7,054 6,314 5,817 5,454 26,684 19,926
----- ----- ----- ----- ----- ------ ------
Net interest income $50,658 $48,173 $40,589 $39,938 $39,376 $179,358 $145,963
======= ======= ======= ======= ======= ======== ========
Average Yields and Costs (FTE):
Loans 4.80% 4.82% 5.02% 5.07% 5.26% 4.91% 5.32%
Investment securities, tax 2.81% 2.73% 3.08% 3.33% 3.32% 2.92% 3.61%
Investment securities, non-tax 5.63% 5.64% 5.76% 5.79% 5.58% 5.71% 5.60%
Other interest-earning assets 0.73% 0.94% 1.04% 0.84% 1.28% 0.87% 0.73%
---- ---- ---- ---- ---- ---- ----
Total earning assets 4.68% 4.70% 4.95% 5.00% 5.18% 4.82% 5.18%
---- ---- ---- ---- ---- ---- ----
Total interest bearing deposits 0.61% 0.59% 0.68% 0.61% 0.59% 0.62% 0.59%
Borrowed funds 2.27% 2.12% 2.05% 2.58% 2.43% 2.23% 2.35%
---- ---- ---- ---- ---- ---- ----
Total interest-bearing liabilities 0.73% 0.72% 0.80% 0.75% 0.74% 0.75% 0.72%
Cost of funds 0.61% 0.61% 0.67% 0.64% 0.63% 0.63% 0.62%
Net interest margin 4.08% 4.10% 4.28% 4.37% 4.55% 4.19% 4.56%
Fully-taxable equivalent ("FTE") net interest income for the fourth quarter of 2015 was $50.7 million, an increase from $48.2 million for the third quarter of 2015. FTE net interest margin was 4.08% for the fourth quarter of 2015, a slight decrease from 4.10% for the third quarter of 2015. The average yield on interest-earning assets decreased two basis points during the fourth quarter of 2015, while the rate paid on interest-bearing liabilities increased by one basis point. Accretion earned on the Company's acquired loan portfolio was $5.6 million during the fourth quarter of 2015, an increase as compared to $4.8 million earned in the third quarter of 2015. Excluding accretion, the average yield on loans was 4.27% for the fourth quarter 2015, as compared to 4.33% for the third quarter of 2015.
Average interest-earnings assets for the fourth quarter of 2015 were $4.97 billion, an increase from $4.66 billion for the third quarter of 2015. These increases are primarily due to higher average loan balances from the Certus branch acquisition and organic loan growth in our markets, as well as additional investment securities purchased during the fourth quarter of 2015. Average interest-bearing liabilities were $4.07 billion for the fourth quarter of 2015, an increase from $3.87 billion during the third quarter of 2015. This increase was due to the deposits acquired in the Certus branch acquisition, as well as organic deposit growth and additional borrowings during the fourth quarter.
Loan Portfolio Composition
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in millions)
Residential construction $76 $92 $84 $78 $73
------------------------ --- --- --- --- ---
Presold 46 55 58 50 41
Speculative 30 37 26 28 32
Commercial construction 237 233 243 177 203
Residential and commercial A&D 18 18 16 12 13
Land 111 90 86 92 98
---- --- --- --- --- ---
Residential buildable lots 34 26 27 27 27
Commercial buildable lots 20 22 24 25 26
Land held for development 34 25 20 24 26
Raw and agricultural land 23 17 16 17 19
Commercial real estate 2,246 2,133 1,721 1,713 1,585
---------------------- ----- ----- ----- ----- -----
Multi-family 178 165 96 100 83
Farmland 5 5 6 5 5
Owner occupied 785 737 626 615 591
Non-owner occupied 1,277 1,226 993 994 907
Commercial and industrial 419 340 220 199 192
Residential mortgage 1,049 1,029 842 867 872
Consumer 19 19 17 16 16
Leases 27 26 25 22 21
--- --- --- --- ---
Total portfolio loans $4,200 $3,979 $3,253 $3,176 $3,075
====== ====== ====== ====== ======
Total portfolio loans were $4.2 billion at December 31, 2015, an increase from $4.0 billion at September 30, 2015 and from $3.1 billion at December 31, 2014. Loans that were originated by the Company, excluding loans that were reclassified from acquired, increased by $128.2 million, or 5.0%, on an annualized basis. The Company has experienced organic loan growth across all loan types, with the majority of loan growth in commercial real estate and commercial and industrial loans.
Acquired Loan Summary
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
(Dollars in thousands)
Performing acquired loans $1,363,379 $1,262,268 $744,081 $793,149 $834,863
Less: remaining FMV adjustments (27,789) (28,990) (19,900) (23,045) (26,280)
------- ------- ------- ------- -------
Performing acquired loans, net 1,335,590 1,233,278 724,181 770,104 808,583
FMV adjustment % 2.0% 2.3% 2.7% 2.9% 3.1%
Purchase credit impaired loans (PCI) 157,966 176,605 147,372 156,049 164,120
Less: remaining FMV adjustments (14,901) (18,822) (13,016) (12,917) (14,046)
------- ------- ------- ------- -------
PCI loans, net 143,065 157,783 134,356 143,132 150,074
FMV adjustment % 9.4% 10.7% 26.0% 23.9% 24.3%
Total acquired performing loans $1,335,590 $1,233,278 $724,181 $770,104 $808,583
Total acquired PCI loans 143,065 157,783 134,356 143,132 150,074
------- ------- ------- ------- -------
Total acquired loans $1,478,655 $1,391,061 $858,537 $913,236 $958,657
========== ========== ======== ======== ========
FMV adjustment % all acquired loans -2.8% -3.3% -3.7% -3.8% -4.0%
About BNC Bancorp and Bank of North Carolina
Headquartered in High Point, NC, BNC Bancorp is the parent company of Bank of North Carolina, a commercial bank with total assets of $5.7 billion. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 64 current banking offices in Virginia, North and South Carolina. The Bank's 19 locations in South Carolina and nine locations in Virginia operate as BNC Bank. Bank of North Carolina is insured by the FDIC and is an equal housing lender. BNC Bancorp's stock is traded and quoted in the NASDAQ Capital Market under the symbol "BNCN." The Company's website is www.bncbancorp.com.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States. BNC Bancorp's management uses these "non-GAAP" measures in their analysis of the Company's performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. See the attached tabular disclosures for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.
Forward Looking Statements
This press release contains forward-looking statements relating to the financial condition, results of operations and business of BNC Bancorp and the Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BNC Bancorp, and the information available to management at the time that this press release was prepared. Factors that could cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (i) the economic recovery may face challenges causing its momentum to falter or a further recession; (ii) expected cost savings and other benefits anticipated in connection with our acquisitions may not be fully realized or realized within the expected time frame; (iii) our ability to integrate acquisitions and retain existing customers and attract new ones; and (iv) adverse changes in credit quality trends. Additional factors affecting BNC Bancorp and the Bank are discussed in BNC Bancorp's filings with the Securities and Exchange Commission (the "SEC"), Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Please refer to the Securities and Exchange Commission's website at www.sec.gov where you can review those documents. BNC Bancorp does not undertake a duty to update any forward-looking statements made in this press release.
Reconciliation of Non-GAAP to GAAP
Three Months Ended Year Ended December 31,
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Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2014
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Operating Earnings per Share, Diluted (1)
Net income (GAAP) $12,739 $11,939 $11,014 $8,758 $8,505 $44,450 $29,390
Transaction-related charges, net of tax 2,713 3,078 784 1,789 1,406 8,364 5,641
Loss on extinguishment of debt, net of tax - 481 - - 386 481 386
Insurance settlement income, net of tax - - - - 484
Securities gains (losses), net of tax 28 500 (3) 31 - 556 (322)
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Operating earnings (non-GAAP) 15,424 14,998 11,801 10,516 10,297 52,739 35,255
------ ------ ------ ------ ------ ------ ------
Weighted average fully diluted shares outstanding 39,452 38,165 32,653 32,754 30,599 35,782 29,152
------ ------ ------ ------ ------ ------ ------
Operating earnings per share, diluted (non-GAAP) $0.39 $0.39 $0.36 $0.32 $0.34 $1.47 $1.21
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Operating Non-Interest Income (1)
Non-interest income (GAAP) $8,286 $9,169 $8,693 $6,300 $7,785 $32,448 $25,022
Securities gains (losses), net 45 794 (4) 49 - 884 (511)
Insurance settlement income - - - - - - 768
Operating non-interest income (non-GAAP) $8,241 $8,375 $8,697 $6,251 $7,785 $31,564 $24,765
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Operating Non-Interest Expense (1)
Non-interest expense (GAAP) $37,580 $38,185 $31,399 $31,991 $32,366 $139,155 $116,477
Transaction-related expenses 4,307 4,886 1,244 2,839 2,231 13,276 8,954
Loss on extinguishment of debt - 763 - - 613 763 613
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Operating non-interest expense (non-GAAP) $33,273 $32,536 $30,155 $29,152 $29,522 $125,116 $106,910
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Operating Income Tax Expense (1)
Income tax expense - GAAP $5,420 $5,106 $4,712 $3,511 $3,374 $18,749 $10,365
Securities gains (losses), tax effect 17 294 (1) 18 - 328 (189)
Transaction-related expenses, tax effect 1,559 1,189 461 1,014 825 4,223 2,794
Loss on extinguishment of debt, tax effect - 313 - - 227 313 227
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Operating income tax expense (non-GAAP) $6,996 $6,902 $5,172 $4,543 $4,426 $23,613 $13,197
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Tangible Common Book Value per Share (2)
Shareholders' equity (GAAP) $592,147 $522,497 $403,583 $399,112 $390,388 $592,147 $390,388
Intangible assets 152,985 146,623 82,022 82,861 83,701 152,985 83,701
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Tangible common shareholders equity (non-GAAP) 439,162 375,874 321,561 316,251 306,687 439,162 306,687
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Common shares outstanding 40,774 38,138 32,589 32,716 32,599 40,774 32,599
------ ------ ------ ------ ------ ------ ------
Tangible common book value per share (non-GAAP) $10.77 $9.86 $9.87 $9.67 $9.41 $10.77 $9.41
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Return on Average Tangible Common Equity (2)
Net income (GAAP) $12,739 $11,939 $11,014 $8,758 $8,505 $44,450 $29,390
Amortization of intangibles, net of tax 746 694 529 529 453 2,498 1474
--- --- --- --- ----- ----
Tangible net income available to common shareholders (non-GAAP) 13,485 12,633 11,543 9,287 8,958 46,948 30,864
------ ------ ------ ----- ----- ------ ------
Average common shareholders equity 553,475 517,835 399,868 394,034 351,695 466,881 323,183
Average intangible assets 152,255 147,143 82,431 83,279 68,954 116,548 55,026
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Average tangible common shareholders' equity (non-GAAP) 401,220 370,692 317,437 310,755 282,741 350,333 268,157
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Return on average tangible common equity (non-GAAP) 13.33% 13.52% 14.59% 12.12% 12.57% 13.40% 11.51%
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Operating Return on Average Assets (1)
Net income (GAAP) $12,739 $11,939 $11,014 $8,758 $8,505 $44,450 $29,390
Transaction-related expenses, net of tax 2,713 3,078 784 1,789 1,406 8,364 5,641
Loss on extinguishment of debt, net of tax - 481 - - 386 481 386
Insurance settlement income, net of tax - - - - - - 484
Securities gains (losses), net of tax 28 500 (3) 31 - 556 (322)
--- --- --- --- --- ----
Operating earnings (non-GAAP) $15,424 $14,998 $11,801 $10,516 $10,297 $52,739 $35,255
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Average assets 5,428,444 5,154,690 4,180,690 4,097,199 3,809,989 4,720,107 3,561,719
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Operating return on average assets (non-GAAP) 1.13% 1.15% 1.13% 1.04% 1.07% 1.12% 0.99%
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Three Months Ended Year Ended December 31,
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Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2015 2014
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Operating Return on Average Tangible Common Equity (2)
Net income (GAAP) $12,739 $11,939 $11,014 $8,758 $8,505 $44,450 $29,390
Amortization of intangibles, net of tax 746 694 529 529 453 2,498 1,474
Transaction-related expenses, net of tax 2,713 3,078 784 1,789 1,406 8,364 5,641
Loss on extinguishment of debt, net of tax - 481 - - 386 481 386
Insurance settlement income, net of tax - - - - - - 484
Securities gains (losses), net of tax 28 500 (3) 31 - 556 (322)
--- --- --- --- --- ----
Operating tangible net income (non-GAAP) $16,170 $15,692 $12,330 $11,045 $10,750 $55,237 $36,729
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Average common shareholders equity 553,475 517,835 399,868 394,034 351,695 466,881 323,183
Average intangible assets 152,255 147,143 82,431 83,279 68,954 116,548 55,026
------- ------- ------ ------ ------ ------- ------
Average tangible common shareholders' equity (non-GAAP) 401,220 370,692 317,437 310,755 282,741 350,333 268,157
------- ------- ------- ------- ------- ------- -------
Operating return on average tangible common equity (non-GAAP) 15.99% 16.79% 15.58% 14.41% 15.08% 15.77% 13.70%
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Operating Efficiency Ratio (3)
Non-interest expense (GAAP) $37,580 $38,185 $31,399 $31,991 $32,366 $139,155 $116,477
Transaction-related expenses 4,307 4,886 1,244 2,839 2,231 13,276 8,954
Loss on extinguishment of debt - 763 - - 613 763 613
Amortization of intangible assets 1,184 1,102 840 840 719 3,965 2,340
----- --- --- --- ----- -----
Operating non-interest expense (non-GAAP) 32,089 31,434 29,315 28,312 28,803 121,151 104,570
------ ------ ------ ------ ------ ------- -------
Net interest income, FTE 50,658 48,173 40,589 39,938 39,376 179,358 145,963
Non-interest income - GAAP 8,286 9,169 8,693 6,300 7,785 32,448 25,022
Securities gains (losses), net 45 794 (4) 49 - 884 (511)
Insurance settlement income - - - - - - 768
Operating efficiency ratio (non-GAAP) 54.48% 55.59% 59.48% 61.30% 61.07% 57.44% 61.25%
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(1) Operating earnings per diluted
share, operating non-interest
income, operating non-interest
expense, operating income tax
expense, operating return on
average assets, and operating
return on average tangible common
equity are non-GAAP measures and
exclude the after-tax effect of
transaction-related charges, loss
on extinguishment of debt,
securities gains (losses) and other
one-time charges. Management
believes that non-GAAP operating
measures provide additional useful
information that allows readers to
evaluate the ongoing performance of
the company.
(2) The tangible measures are non-GAAP
measures and exclude the effect of
period end or average balance of
intangible assets. Management
believes that these non-GAAP
tangible measures provide
additional useful information,
particularly since these measures
are widely used by industry
analysts for companies with prior
merger and acquisition activities.
(3) Operating efficiency ratio is
calculated by non-interest
expense, excluding transaction-
related expenses, amortization of
intangible assets, and loss on
extinguishment of debt, divided by
the sum of FTE net interest income
and non-interest income excluding
securities gains (losses) and
insurance settlement income.
Management believes this non-GAAP
operating measure provides
additional useful information that
allows readers to evaluate the
ongoing performance of the company.
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SOURCE BNC Bancorp
