HIGH POINT, N.C., Jan. 22, 2017 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the fourth quarter and fiscal year ended December 31, 2016. Highlights for the fourth quarter of 2016 include the following:
-- Net income of $15.7 million, or $0.31 per diluted share, compared to
$18.1 million, or $0.38 per diluted share, for third quarter of 2016
-- Return on average assets of 0.87%, compared to 1.10% for third
quarter of 2016
-- Return on average tangible common equity of 10.59%, compared to
13.37% for third quarter of 2016
-- Operating net income of $21.8 million, or $0.43 per diluted share,
compared to $19.7 million, or $0.42 per diluted share, for third quarter
of 2016
-- Operating return on average assets of 1.21%, compared to 1.20% for
third quarter of 2016
-- Operating return on average tangible common equity of 14.50%,
unchanged from third quarter of 2016
-- Originated loans at December 31, 2016 of $3.65 billion, an increase of
$190.0 million compared to September 30, 2016
-- Total portfolio loans were $5.46 billion at December 31, 2016, an
increase of $459.8 million compared to September 30, 2016
-- Loan originations of $535 million, as compared to $630 million
during the third quarter of 2016
-- Asset quality ratios remain strong
-- Completed acquisition and conversion of High Point Bank Corporation
-- Increased presence in the Piedmont Triad area of North Carolina
-- Added insurance and trust services to suite of product offerings
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Financial Performance
Three Months Ended Year Ended
------------------ ----------
INCOME SUMMARY Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
Interest income (Dollars in thousands)
Interest and fees on loans $61,992 $57,824 $51,978 $50,302 $50,762 $222,096 $178,726
Investment securities 6,974 6,910 6,202 5,965 5,336 26,051 19,205
Other 305 291 228 214 141 1,038 555
Total interest income 69,271 65,025 58,408 56,481 56,239 249,185 198,486
------ ------ ------ ------ ------ ------- -------
Interest expense
Interest on deposits 7,935 7,619 6,704 6,241 5,851 28,499 20,447
Interest on borrowings 2,009 1,989 1,774 1,750 1,648 7,522 6,237
Total interest expense 9,944 9,608 8,478 7,991 7,499 36,021 26,684
----- ----- ----- ----- ----- ------ ------
Net interest income 59,327 55,417 49,930 48,490 48,740 213,164 171,802
Provision for loan losses 1,455 1,865 698 647 1,287 4,665 1,896
Net interest income 57,872 53,552 49,232 47,843 47,453 208,499 169,906
------ ------ ------ ------ ------ ------- -------
Non-interest income
Mortgage lending income 2,830 3,134 2,671 2,681 2,226 11,316 10,533
Service charges 2,937 2,644 2,422 2,321 2,341 10,324 8,079
SBA income 579 739 1,104 811 467 3,233 1,835
Trust/wealth income 1,086 307 366 436 533 2,195 1,714
Securities gains (losses) 6 34 4 (39) 45 5 884
Earnings on bank-owned life insurance 1,360 1,254 1,160 758 806 4,532 2,766
Other 2,898 1,699 1,288 994 1,868 6,879 6,637
Total non-interest income 11,696 9,811 9,015 7,962 8,286 38,484 32,448
------ ----- ----- ----- ----- ------ ------
Non-interest expense
Salaries and employee benefits 20,922 18,491 18,019 17,803 17,888 75,235 67,153
Occupancy 3,622 3,154 3,155 3,252 3,392 13,183 11,802
Furniture and equipment 2,303 2,297 1,993 2,073 2,426 8,666 7,303
Data processing and supply 1,805 1,766 1,491 1,437 1,194 6,499 4,380
Advertising and business development 869 678 923 684 879 3,154 2,635
Insurance, professional and other services 1,309 1,424 1,494 1,526 952 5,753 4,824
FDIC insurance assessments 1,240 1,071 900 900 883 4,111 3,144
Loan, foreclosure and OREO 1,233 1,562 856 1,367 1,639 5,018 9,852
Transaction-related expenses 9,121 2,568 3,808 1,434 4,307 16,931 13,276
Loss on extinguishment of debt 598 - - - - 598 763
Other 4,543 4,824 4,201 4,410 4,020 17,978 14,023
Total non-interest expenses 47,565 37,835 36,840 34,886 37,580 157,126 139,155
------ ------ ------ ------ ------ ------- -------
Income before income tax expense 22,003 25,528 21,407 20,919 18,159 89,857 63,199
Income tax expense 6,312 7,388 6,760 6,484 5,420 26,944 18,749
----- ----- ----- ----- ----- ------ ------
Net income (GAAP) 15,691 18,140 14,647 14,435 12,739 62,913 44,450
Securities gains (losses), net of tax 4 21 4 (25) 28 4 557
Transaction-related charges, net of tax 5,746 1,618 2,399 903 2,713 10,666 8,364
Loss on extinguishment of debt, net
of tax 377 - - - - 377 481
----------
Operating net income (non-GAAP) $21,810 $19,736 $17,042 $15,363 $15,424 $73,952 $52,738
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Common shares outstanding 52,177 48,110 45,201 40,806 40,774 52,177 40,774
Weighted average diluted shares outstanding 50,852 47,360 41,560 40,885 39,452 45,185 35,782
Performance Ratios
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
Earnings per diluted share $0.31 $0.38 $0.35 $0.35 $0.32 $1.39 $1.24
Return on average assets 0.87% 1.10% 1.00% 1.03% 0.93% 1.00% 0.94%
Return on average common equity 7.22% 9.40% 9.43% 9.72% 9.13% 8.81% 9.52%
Return on average tangible common equity (1) 10.59% 13.37% 13.29% 13.71% 13.33% 12.59% 13.40%
Efficiency ratio (2) 65.02% 56.09% 60.51% 59.78% 63.75% 60.47% 65.70%
Operating earnings per diluted share (1) $0.43 $0.42 $0.41 $0.38 $0.39 $1.64 $1.47
Operating return on average assets (1) 1.21% 1.20% 1.16% 1.10% 1.13% 1.17% 1.12%
Operating return on average tangible common equity (1) 14.50% 14.50% 15.36% 14.55% 15.99% 14.70% 15.77%
Operating efficiency ratio (1) (2) 51.74% 52.31% 54.26% 57.28% 56.49% 53.72% 59.32%
Book value per common share $17.29 $16.53 $15.86 $14.79 $14.52 $17.29 $14.52
Tangible book value per common share (1) 12.29 12.21 11.28 11.07 10.77 12.29 10.77
(1) See Reconciliation of Non-GAAP
Financial Measures for additional
details.
(2) Calculated on a fully-taxable
equivalent ("FTE") basis.
Other Selected Financial Data
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands)
Securities gains (losses), net $6 $34 $4 $(39) $45 $5 $884
Loss on extinguishment of debt 598 - - - - 598 763
Fair value accretion 5,841 5,845 5,276 5,505 5,599 22,467 20,516
OREO valuation adjustments, net 503 274 222 266 348 1,265 2,893
Transaction-related expenses 9,121 2,568 3,808 1,434 4,307 16,931 13,276
Richard D. Callicutt, II, President and CEO, stated, "We are extremely pleased to report record results for both the fourth quarter and full year of 2016. During the fourth quarter, after adjusting for all the transaction-related expenses, operating earnings increased a healthy 10.5%, while operating earnings per share increased to $0.43. Operating return on average assets was a healthy 1.21%, up slightly from the prior quarter, while operating return on average tangible common equity remained at 14.50%.
For the year, we are pleased to report a 40.2% increase in operating earnings, a $1.52, or 14.1%, increase in tangible book value, an 11.6% increase in operating earnings per share, and return on average tangible common equity of a robust 14.70%. While these performance highlights are the metrics which many people refer to when discussing our valuation, it continues to be our ability to attract exceptional people throughout a footprint that is highly concentrated in the best growth markets across the Carolinas and Virginia that enables us to produce such results.
As we look to the future, the challenges will continue to be digesting higher regulatory costs and transitioning our resources from a commercial real estate focused strategy, which has served us extremely well over our 25 year history, into one of greater balance as we build out the underwriting, monitoring, and risk management capabilities of our C&I businesses and related treasury support functions."
Non-interest Income and Expense Data
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
Non-interest income (Dollars in thousands)
Mortgage lending income $2,830 $3,134 $2,671 $2,681 $2,226 $11,316 $10,533
Service charges 2,937 2,644 2,422 2,321 2,341 10,324 8,079
SBA income 579 739 1,104 811 467 3,233 1,835
Trust/wealth income 1,086 307 366 436 533 2,195 1,714
Earnings on bank-owned life insurance 1,360 1,254 1,160 758 806 4,532 2,766
Other 2,898 1,699 1,288 994 1,868 6,879 6,637
Total operating non-interest income - non-GAAP 11,690 9,777 9,011 8,001 8,241 38,479 31,564
Securities gains (losses), net 6 34 4 (39) 45 5 884
Total non-interest income - GAAP $11,696 $9,811 $9,015 $7,962 $8,286 $38,484 $32,448
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Non-interest expense
Salaries and employee benefits $20,922 $18,491 $18,019 $17,803 $17,888 $75,235 $67,153
Occupancy 3,622 3,154 3,155 3,252 3,392 13,183 11,802
Furniture and equipment 2,303 2,297 1,993 2,073 2,426 8,666 7,303
Data processing and supply 1,805 1,766 1,491 1,437 1,194 6,499 4,381
Advertising and business development 869 678 923 684 879 3,154 2,635
Insurance, professional and other services 1,309 1,424 1,494 1,526 952 5,753 4,824
FDIC insurance assessments 1,240 1,071 900 900 883 4,111 3,144
Loan, foreclosure and OREO 1,233 1,562 856 1,367 1,639 5,018 9,852
Other 4,543 4,824 4,201 4,410 4,020 17,978 14,022
Total operating non-interest expense - non-GAAP 37,846 35,267 33,032 33,452 33,273 139,597 125,116
------ ------ ------ ------ ------ ------- -------
Transaction-related expenses 9,121 2,568 3,808 1,434 4,307 16,931 13,276
Loss on extinguishment of debt 598 - - - - 598 763
Total non-interest expense - GAAP $47,565 $37,835 $36,840 $34,886 $37,580 $157,126 $139,155
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Total GAAP and operating non-interest income was $11.7 million for the fourth quarter of 2016, an increase from $9.8 million for the third quarter of 2016. The increase in non-interest income was primarily due to the addition of High Point Bank Corporation ("High Point"), which generated additional deposit fees and additional trust and wealth services income. These increases were slightly offset by a seasonal decrease in mortgage lending income. Many of the other non-interest income sources, such as income from recoveries on acquired loans and income derived from trust/wealth services, are volatile and can vary significantly from period to period.
Total GAAP non-interest expense was $47.6 million for the fourth quarter of 2016, an increase from $37.8 million for the third quarter of 2016. The results for the fourth quarter of 2016 include $9.1 million of transaction-related expenses and a $0.6 million loss on the extinguishment of debt. Excluding these charges, operating non-interest expense for the fourth quarter of 2016 was $37.8 million, an increase compared to $35.3 million for the third quarter of 2016. This increase was directly related to the additional headcount and facilities obtained from the Company's acquisition of High Point.
Selected Balance Sheet Data
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Portfolio loans: (Dollars in thousands)
Originated loans $3,645,687 $3,455,677 $3,163,357 $2,847,466 $2,721,216
Acquired loans 1,810,023 1,540,270 1,649,328 1,390,688 1,478,655
Allowance for loan and lease losses (37,501) (36,366) (33,841) (32,548) (31,647)
------- ------- ------- ------- -------
Portfolio loans, net 5,418,209 4,959,581 4,778,844 4,205,606 4,168,224
Loans held for sale 43,731 40,441 41,703 33,455 39,470
Investment securities 896,786 838,289 803,058 757,248 734,557
Total interest-earning assets 6,589,774 6,128,554 5,790,893 5,126,452 5,131,988
Goodwill 234,769 189,968 188,220 134,686 134,686
Other intangible assets, net 25,911 17,852 19,014 17,143 18,299
Total assets 7,401,691 6,801,562 6,478,373 5,699,573 5,668,183
Deposits:
Non-interest bearing deposits 1,113,878 917,521 889,254 794,548 776,479
Interest-bearing demand and savings 3,405,036 3,080,479 2,652,735 2,431,584 2,366,890
Time deposits 1,564,063 1,652,123 1,814,654 1,537,644 1,598,838
--------- --------- --------- --------- ---------
Total deposits 6,082,977 5,650,123 5,356,643 4,763,776 4,742,207
Borrowings 369,952 310,609 352,119 282,929 292,790
Total interest-bearing liabilities 5,339,051 5,043,211 4,819,508 4,252,157 4,258,518
Shareholders' equity:
Common equity 900,044 786,625 710,300 598,158 584,818
Accumulated other comprehensive income 1,838 8,587 6,761 5,395 7,329
----- ----- ----- ----- -----
Total shareholders' equity 901,882 795,212 717,061 603,553 592,147
Total assets at December 31, 2016 were $7.40 billion, an increase of 8.8% as compared to total assets of $6.80 billion at September 30, 2016. Total portfolio loans were $5.46 billion at December 31, 2016, an increase of 9.2% from $5.00 billion at September 30, 2016. Loans that were originated by the Company increased by $190.0 million, or 5.5%, during the fourth quarter of 2016.
Total deposits were $6.08 billion at December 31, 2016, an increase of $432.9 million, or 7.7%, as compared to September 30, 2016. Wholesale deposits comprised 21.3% of total deposits at December 31, 2016, a decrease from 27.5% of total deposits at September 30, 2016. Transactional deposits increased by $520.9 million, or 13.0%, at December 31, 2016, as compared to September 30, 2016. Total borrowings were $370.0 million at December 31, 2016, an increase of 19.1% compared to $310.6 million at September 30, 2016. Total shareholders' equity was $901.9 million at December 31, 2016, an increase of $106.7 million, or 13.4%, as compared to $795.2 million at September 30, 2016. The increase in equity is primarily due to the issuance of 4.0 million shares of voting common stock in connection with the acquisition of High Point. At December 31, 2016, both the Bank's and Company's capital ratios exceeded the minimum thresholds established for a well-capitalized bank by regulatory measures.
On January 17, 2017, the Board of Directors announced the declaration of a quarterly cash dividend on its common stock of $0.05 per share. This dividend is payable on February 24, 2017 to shareholders of record as of February 10, 2017. The $0.05 per share dividend rate is consistent with the rate declared in previous quarters.
Loan Portfolio Composition
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
(Dollars in millions)
Residential construction $115 $104 $98 $76 $76
------------------------ ---- ---- --- --- ---
Presold 58 62 59 39 46
Speculative 57 42 39 37 30
Commercial construction 401 285 294 278 237
Residential and commercial A&D 42 39 33 23 18
Land 120 118 126 118 111
---- --- --- --- --- ---
Residential buildable lots 51 44 44 39 34
Commercial buildable lots 23 24 24 21 20
Land held for development 26 23 31 34 34
Raw and agricultural land 20 27 27 24 23
Commercial real estate 2,917 2,705 2,500 2,257 2,246
---------------------- ----- ----- ----- ----- -----
Multi-family 213 240 203 179 178
Farmland 3 3 4 4 5
Owner occupied 884 787 817 705 785
Non-owner occupied 1,817 1,675 1,476 1,369 1,277
Commercial and industrial 482 443 454 400 419
Residential mortgage 1,326 1,251 1,258 1,039 1,049
Consumer 24 22 21 18 19
Leases 29 29 29 29 27
--- --- --- --- ---
Total portfolio loans $5,456 $4,996 $4,813 $4,238 $4,200
====== ====== ====== ====== ======
Acquired Loan Summary
Ending Balance
--------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
(Dollars in thousands)
Performing acquired loans $1,710,008 $1,432,351 $1,537,650 $1,278,965 $1,363,379
Less: remaining FMV adjustments (27,846) (21,687) (25,630) (23,359) (27,789)
------- ------- ------- ------- -------
Performing acquired loans, net 1,682,162 1,410,664 1,512,020 1,255,606 1,335,590
FMV adjustment % 1.6% 1.5% 1.7% 1.8% 2.0%
Purchase credit impaired loans (PCI) 143,530 143,494 152,105 148,459 157,966
Less: remaining FMV adjustments (15,669) (13,888) (14,797) (13,377) (14,901)
------- ------- ------- ------- -------
PCI loans, net 127,861 129,606 137,308 135,082 143,065
FMV adjustment % 10.9% 9.7% 9.7% 9.0% 9.4%
Total acquired performing loans $1,682,162 $1,410,664 $1,512,020 $1,255,606 $1,335,590
Total acquired PCI loans 127,861 129,606 137,308 135,082 143,065
------- ------- ------- ------- -------
Total acquired loans $1,810,023 $1,540,270 $1,649,328 $1,390,688 $1,478,655
========== ========== ========== ========== ==========
FMV adjustment % all acquired loans 2.3% 2.3% 2.4% 2.6% 2.8%
Asset Quality
Ending Balance
--------------
Dec. 31, Sept. 30, 2016 Jun. 30, Mar. 31, Dec. 31,
2016 2016 2016 2015
---- ---- ---- ----
(Dollars in thousands)
Nonaccrual loans - non-acquired $6,647 $7,662 $5,407 $6,228 $6,623
Nonaccrual loans - acquired 7,989 9,347 11,756 12,706 12,086
OREO - non-acquired 13,109 13,352 15,806 14,987 15,588
OREO - acquired 13,380 14,696 14,708 15,783 16,973
90 days past due - non-acquired 115 10 10 - -
90 days past due - acquired - - - - 3
--- --- --- --- ---
Total nonperforming assets $41,240 $45,067 $47,687 $49,704 $51,273
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Total nonperforming assets - non-acquired $19,871 $21,024 $21,223 $21,215 $22,211
======= ======= ======= ======= =======
Net charge-offs (recoveries), QTD $320 $(660) $(594) $(202) $352
Annualized net charge-offs (recoveries) to total average portfolio loans 0.02% -0.05% -0.05% -0.02% 0.03%
Ratio of total nonperforming assets to total assets 0.56% 0.66% 0.74% 0.87% 0.90%
Ratio of total nonperforming loans to total portfolio loans 0.27% 0.34% 0.36% 0.45% 0.45%
Ratio of total allowance for loan losses to total portfolio loans 0.69% 0.73% 0.70% 0.77% 0.75%
Excluding acquired
Ratio of nonperforming assets to loans and OREO 0.54% 0.61% 0.67% 0.74% 0.81%
Ratio of nonperforming loans to loans 0.19% 0.22% 0.17% 0.22% 0.24%
Ratio of allowance for loan losses to loans 0.95% 0.97% 0.98% 1.03% 1.05%
Overall asset quality continued to improve during the fourth quarter of 2016, as total nonperforming assets were $41.2 million, or 0.56% of total assets, at December 31, 2016, as compared to $45.1 million, or 0.66% of total assets, at September 30, 2016. Excluding nonperforming assets acquired by the Company, nonperforming assets were $19.9 million, or 0.54% of non-acquired loans and OREO, at December 31, 2016, as compared to $21.0 million, or 0.61% of non-acquired loans and OREO, at September 30, 2016.
The Company experienced $0.3 million of net charge-offs during the fourth quarter of 2016, compared to net recoveries of $0.7 million during the third quarter of 2016. Gross charge-offs were $1.2 million during the fourth quarter of 2016, an increase compared to gross charge-offs of $0.9 million for the third quarter of 2016.
The allowance for loan losses was $37.5 million at December 31, 2016, an increase from $36.4 million at September 30, 2016. The Company recorded a provision for loan losses of $1.5 million during the fourth quarter of 2016, compared to $1.9 million recorded during the third quarter of 2016, as the Company continues to experience strong growth in the originated loan portfolio.
Net Interest Income and Margin
Three Months Ended Year Ended
------------------ ----------
Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
---- ---- ---- ---- ---- ---- ----
Quarterly average balances: (Dollars in thousands)
Loans $5,410,066 $4,893,926 $4,437,248 $4,241,970 $4,193,632 $4,737,387 $3,639,890
Investment securities 835,235 828,144 760,841 737,361 656,940 801,256 574,951
Interest-bearing balances and other 181,678 147,763 134,923 139,367 76,533 151,008 63,426
------- ------- ------- ------- ------ ------- ------
Total interest-earning assets 6,426,979 5,869,833 5,333,012 5,118,698 4,927,105 5,689,651 4,278,267
Deposits:
Non-interest bearing 1,056,507 907,344 825,148 778,114 772,831 892,271 653,999
Interest-bearing 4,862,443 4,475,901 4,138,466 3,953,668 3,784,140 4,359,322 3,292,226
--------- --------- --------- --------- --------- --------- ---------
Total deposits 5,918,950 5,383,245 4,963,614 4,731,782 4,556,971 5,251,593 3,946,225
Borrowed funds 315,828 321,218 272,374 262,880 288,209 293,214 279,877
Total interest-bearing liabilities 5,178,271 4,797,119 4,410,840 4,216,548 4,072,349 4,652,536 3,572,103
Shareholders' equity 864,656 768,124 625,021 597,127 553,475 714,293 466,881
Interest Income/Expense:
Loans $61,992 $57,824 $51,978 $50,302 $50,762 $222,096 $178,726
Investment securities, tax 3,352 3,113 2,908 2,720 2,069 12,093 6,338
Investment securities, non-tax (1) 5,749 6,027 5,229 5,151 5,186 22,156 20,424
Interest-bearing balances and other 305 291 228 214 141 1,038 555
--- --- --- --- --- ---
Total interest income 71,398 67,255 60,343 58,387 58,158 257,383 206,043
------ ------ ------ ------ ------ ------- -------
Deposits 7,935 7,619 6,704 6,241 5,851 28,499 20,447
Borrowings 2,009 1,989 1,774 1,750 1,648 7,522 6,237
----- ----- ----- ----- ----- -----
Total interest expense 9,944 9,608 8,478 7,991 7,499 36,021 26,684
----- ----- ----- ----- ----- ------ ------
Net interest income $61,454 $57,647 $51,865 $50,396 $50,659 $221,362 $179,359
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Average Yields and Costs:
Loans 4.56% 4.70% 4.71% 4.77% 4.80% 4.69% 4.91%
Investment securities, tax 2.96% 2.93% 3.01% 2.94% 2.81% 2.96% 2.92%
Investment securities, non-tax (1) 5.94% 5.91% 5.65% 5.68% 5.63% 5.64% 5.71%
Interest-bearing balances and other 0.67% 0.78% 0.68% 0.62% 0.73% 0.69% 0.88%
---- ---- ---- ---- ---- ---- ----
Total interest-earning assets 4.42% 4.56% 4.55% 4.59% 4.68% 4.52% 4.82%
---- ---- ---- ---- ---- ---- ----
Total interest-bearing deposits 0.65% 0.68% 0.65% 0.63% 0.61% 0.65% 0.62%
Borrowed funds 2.53% 2.46% 2.62% 2.68% 2.27% 2.57% 2.23%
---- ---- ---- ---- ---- ---- ----
Total interest-bearing liabilities 0.76% 0.80% 0.77% 0.76% 0.73% 0.77% 0.75%
Cost of funds 0.63% 0.67% 0.65% 0.64% 0.61% 0.65% 0.63%
Net interest margin 3.80% 3.91% 3.91% 3.96% 4.08% 3.89% 4.19%
(1) Interest income and average
yields on non-taxable loans
investment securities are
computed on a FTE basis for
comparison with taxable
investment securities.
FTE net interest income for the fourth quarter of 2016 was $61.5 million, an increase from $57.6 million for the third quarter of 2016. FTE net interest margin was 3.80% for the fourth quarter of 2016, as compared to 3.91% for the third quarter of 2016. The average yield on interest-earning assets decreased 14 basis points to 4.42% for the fourth quarter of 2016, while the rate paid on interest-bearing liabilities decreased slightly to 0.65%. Accretion earned on the Company's acquired loan portfolio was $5.8 million during the fourth quarter of 2016, unchanged from the amount earned during the third quarter of 2016. Excluding accretion, the average yield on loans was 4.13% for the fourth quarter 2016, as compared to 4.23% for the third quarter of 2016.
Average interest-earning assets for the fourth quarter of 2016 were $6.43 billion, an increase from $5.87 billion for the third quarter of 2016. The increase was primarily due to the acquisition of High Point, as well as continued organic loan growth throughout our existing markets. Average interest-bearing liabilities were $5.18 billion for the fourth quarter of 2016, an increase from $4.80 billion during the third quarter of 2016. This increase was primarily in interest-bearing deposits, which increased $386.5 million during the fourth quarter of 2016 due to the High Point acquisition.
About BNC Bancorp and Bank of North Carolina
Headquartered in High Point, North Carolina, BNC Bancorp is the parent company of Bank of North Carolina d/b/a BNC Bank, a commercial bank with total assets of $7.40 billion. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 76 current banking offices in Virginia, North and South Carolina. 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" financial measures in its 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 financial measures to the most directly comparable GAAP measure.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "project," "expect," "intend," "plan," or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about the Company's confidence in its strategies and its expectations about financial performance, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on the Company's expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company's control. The Company undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Report on Form 10-Q for the periods ended September 30, 2016, June 30, 2016, and March 31, 2016, respectively. Please refer to the SEC's website at www.sec.gov where you can review those documents.
Reconciliation of Non-GAAP Financial Measures
Three Months Ended Year Ended
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Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
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Operating Earnings per Share, Diluted (1) (Dollars in thousands)
Net income (GAAP) $15,691 $18,140 $14,647 $14,435 $12,739 $62,913 $44,450
Transaction-related expenses, net of tax 5,746 1,618 2,399 903 2,713 10,666 8,364
Loss on extinguishment of debt, net of tax 377 - - - - 377 481
Securities gains (losses), net of tax 4 21 4 (25) 28 4 557
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Operating earnings (non-GAAP) 21,810 19,736 17,042 15,363 15,424 73,952 52,738
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Weighted average fully diluted shares outstanding 50,852 47,360 41,560 40,885 39,452 45,185 35,782
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Operating earnings per share, diluted (non-GAAP) $0.43 $0.42 $0.41 $0.38 $0.39 $1.64 $1.47
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Tangible Common Book Value per Share (2)
Shareholders' equity (GAAP) $901,882 $795,212 $717,061 $603,553 $592,147 $901,882 $592,147
Intangible assets 260,680 207,820 207,234 151,829 152,985 260,680 152,985
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Tangible common shareholders equity (non-GAAP) 641,202 587,392 509,827 451,724 439,162 641,202 439,162
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Common shares outstanding 52,177 48,110 45,201 40,806 40,774 52,177 40,774
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Tangible common book value per share (non-GAAP) $12.29 $12.21 $11.28 $11.07 $10.77 $12.29 $10.77
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Return on Average Tangible Common Equity (2)
Net income (GAAP) $15,691 $18,140 $14,647 $14,435 $12,739 $62,913 $44,450
Amortization of intangibles, net of tax 888 732 748 728 745.92 3,096 2,498
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Tangible net income available to common shareholders (non-GAAP) 16,579 18,872 15,395 15,163 13,485 66,009 46,948
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Average common shareholders equity 864,656 768,124 625,021 597,127 553,475 714,293 466,881
Average intangible assets 241,802 206,653 159,184 152,379 152,255 190,128 116,548
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Average tangible common shareholders' equity (non-GAAP) 622,854 561,471 465,837 444,748 401,220 524,165 350,333
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Return on average tangible common equity (non-GAAP) 10.59% 13.37% 13.29% 13.71% 13.33% 12.59% 13.40%
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Operating Return on Average Assets (1)
Net income (GAAP) $15,691 $18,140 $14,647 $14,435 $12,739 $62,913 $44,450
Transaction-related expenses, net of tax 5,746 1,618 2,399 903 2,713 10,666 8,364
Loss on extinguishment of debt, net of tax 377 - - - - 377 481
Securities gains (losses), net of tax 4 21 4 (25) 28 4 557
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Operating earnings (non-GAAP) $21,810 $19,736 $17,042 $15,363 $15,424 $73,952 $52,738
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Average assets 7,158,393 6,532,517 5,908,341 5,635,137 5,428,444 6,311,531 4,720,107
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Operating return on average assets (non-GAAP) 1.21% 1.20% 1.16% 1.10% 1.13% 1.17% 1.12%
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Operating Return on Average Tangible Common Equity (2)
Net income (GAAP) $15,691 $18,140 $14,647 $14,435 $12,739 $62,913 $44,450
Amortization of intangibles, net of tax 888 732 748 728 746 3,096 2,498
Transaction-related expenses, net of tax 5,746 1,618 2,399 903 2,713 10,666 8,364
Loss on extinguishment of debt, net of tax 377 - - - - 377 481
Securities gains (losses), net of tax 4 21 4 (25) 28 4 557
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Operating tangible net income (non-GAAP) $22,698 $20,468 $17,790 $16,091 $16,170 $77,048 $55,236
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Average common shareholders equity 864,656 768,124 625,021 597,127 553,475 714,293 466,881
Average intangible assets 241,802 206,653 159,184 152,379 152,255 190,128 116,548
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Average tangible common shareholders' equity (non-GAAP) 622,854 561,471 465,837 444,748 401,220 524,165 350,333
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Operating return on average tangible common equity (non-GAAP) 14.50% 14.50% 15.36% 14.55% 15.99% 14.70% 15.77%
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Operating Efficiency Ratio (3)
Non-interest expense (GAAP) $47,565 $37,835 $36,840 $34,886 $37,580 $157,126 $139,155
Transaction-related expenses 9,121 2,568 3,808 1,434 4,307 16,931 13,276
Loss on extinguishment of debt 598 - - - - 598 763
Operating non-interest expense (non-GAAP) 37,846 35,267 33,032 33,452 33,273 139,597 125,116
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Net interest income, FTE 61,454 57,647 51,865 50,396 50,659 221,362 179,359
Non-interest income - GAAP 11,696 9,811 9,015 7,962 8,286 38,484 32,448
Securities gains (losses), net 6 34 4 (39) 45 5 884
Operating efficiency ratio (non-GAAP) 51.74% 52.31% 54.26% 57.28% 56.49% 53.72% 59.32%
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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 financial
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 these non-
GAAP performance measures provide
additional useful information that
allows readers to evaluate the
ongoing performance of the company.
(2) The tangible measures are non-GAAP
financial 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, and loss on
extinguishment of debt, divided by
the sum of FTE net interest income
and non-interest income excluding
securities gains (losses).
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
