BNCCORP, INC. 
By
Net income from continuing operations was
BNC's increase in net income from continuing operations in the second quarter of 2008 was primarily driven by higher net interest income, continued growth in loans held for investment, non-interest income from mortgage banking and wealth management revenues, as well as lower non-interest expenses. Losses from continuing operations in the 2007 periods reflected various charges arising from actions taken by BNC to position itself for improved performance in its core businesses following the sale of its former insurance segment.
Net income, which combines results of both continuing and discontinued
operations, was
Second Quarter Continuing Operations
Net interest income for the second quarter of 2008 was
The provision for credit losses in the second quarter of 2008 was
Non-interest income for the second quarter of 2008 was
In the second quarter of 2008, non-interest expense decreased by
The effective tax rate on income from continuing operations during the second quarter of 2008 was 33.0% as compared to 41.2% in the second quarter of 2007.
Overall, net income from continuing operations in the second quarter of
2008 was
Continuing Operations for the Six Months ended
Net interest income was
The provision for credit losses was
Non-interest income for the first half of 2008 was
In the first half of 2008, non-interest expense decreased by
The effective tax rate of income taxes in 2008 was 33.0% while there was a
tax benefit of
Overall, net income from continuing operations in the first half of 2008
was
Discontinued Operations
In the second quarter of 2007, BNC sold substantially all of the assets of
its insurance agency. As a result, discontinued operations in 2008 have only
nominal activity. In the 2007 periods, net income from discontinued operations
was
Assets, Liabilities, Equity and Regulatory Capital
Total assets were
Total liabilities at
Total common stockholders' equity was
In the first half of 2008, the Company repurchased 200,326 shares of its
previously outstanding common stock for approximately
The Company's tier 1 leverage ratio was 9.76% at
At
Trust assets under supervision declined to
Asset Quality
The Company is carefully monitoring asset quality in response to the current economic challenges and expects credit risk to remain elevated for the remainder of 2008 and into 2009. The provision for credit losses in the recent quarter is reflective of the environment, and we anticipated that provisions for credit losses will be elevated for the foreseeable future.
The allowance for credit losses was
At
BNC has concentrations of land and construction loans. At
Outlook
Mr. Cleveland noted, "BNC is fortunate to have a footprint in the stable
BNCCORP, Inc., headquartered in
This news release my contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of BNC. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management are generally identifiable by the use of words such as "expect", "believe", "anticipate", "plan", "intend", "estimate", "may", "will", "would", "could", "should", or other expressions. We caution readers that these forward-looking statements, including, without limitation, those relating to our future business prospects, revenues, working capital, liquidity, capital needs, interest costs and income, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements due to several important factors. These factors include, but are not limited to: risks of loans and investments, including dependence on local and regional economic conditions; competition for our customers from other providers of financial services; possible adverse effects of changes in interest rates, including the effects of such changes on derivative contracts and associated accounting consequences; risks associated with our acquisition and growth strategies; and other risks which are difficult to predict and many of which are beyond our control. In addition, all statements in this news release, including forward-looking statements, speak only of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
(Financial tables attached)
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Six Months
(In thousands, except Ended June 30, Ended June 30,
per share data) 2008 2007 2008 2007
SELECTED INCOME
STATEMENT DATA
Interest income $11,496 $11,133 $22,881 $22,009
Interest expense 4,731 5,773 9,844 11,850
Net interest income 6,765 5,360 13,037 10,159
Provision for credit
losses 2,000 700 2,800 950
Non-interest income
(loss) 3,358 (284) 5,658 1,413
Non-interest expense 7,078 7,739 12,817 13,725
Income (loss) from
continuing operations
before income taxes 1,045 (3,363) 3,078 (3,103)
Income tax provision
(benefit) 345 (1,386) 1,016 (1,387)
Income (loss) from
continuing operations 700 (1,977) 2,062 (1,716)
Discontinued operations:
Income from
discontinued
insurance segment - 6,084 - 8,154
Income tax provision - 2,280 - 3,054
Income from
discontinued
operations - 3,804 - 5,100
Net income $700 $1,827 $2,062 $3,384
For the Quarter For the Six Months
Ended June 30, Ended June 30,
(In thousands, except
per share data) 2008 2007 2008 2007
BASIC EARNINGS PER SHARE
Income (loss) from
continuing operations $0.22 $(0.56) $0.62 $(0.49)
Income from
discontinued
insurance segment,
net of income taxes - 1.08 - 1.45
Basic earnings per
common share $0.22 $0.52 $0.62 $0.96
DILUTED EARNINGS PER SHARE
Income (loss) from
continuing operations $0.21 $(0.56) $0.61 $(0.49)
Income from discontinued
insurance segment, net
of income taxes - 1.08 - 1.45
Diluted earnings per
common share $0.21 $0.52 $0.61 $0.96
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(In thousands, except As of
share, per share and June 30, December 31, June 30,
full time equivalent data) 2008 2007 2007
SELECTED BALANCE SHEET DATA*
Total assets $821,721 $699,580 $623,751
Participating interests in
mortgage loans 25,333 24,357 18,183
Loans and leases held for
investment 525,875 497,556 423,975
Total loans 556,966 521,913 442,399
Allowance for credit losses (7,065) (6,599) (4,308)
Investment securities available
for sale 200,312 122,899 107,306
Other real estate owned and
repossessed assets 5,098 - -
Total deposits 625,339 541,873 503,388
Other borrowings 131,180 89,840 29,468
*From continuing operations
OTHER SELECTED DATA
Off-balance sheet
depository balances $74,798 $11,523 $ 58,461
Net unrealized gains (losses)
in investment portfolio,
pretax $(1,728) $2,278 $(1,069)
Trust assets under supervision $338,062 $358,611 $334,936
Total common stockholders'
equity $56,941 $59,730 $ 60,084
Book value per common share $17.25 $17.11 $16.75
Effect of net unrealized gains
(losses) on securities
available for sale, net of tax,
on book value per common share $(0.32) $0.40 $ (0.18)
Full time equivalent employees 228 169 170
Common shares outstanding 3,301,211 3,491,337 3,587,567
CAPITAL RATIOS
Tier 1 leverage 9.76% 12.01% 12.23%
Tier 1 risk-based capital 11.37% 12.58% 14.99%
Total risk-based capital 12.99% 14.26% 16.23%
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Six Months
Ended June 30, Ended June 30,
(In thousands) 2008 2007 2008 2007
AVERAGE BALANCES*
Total assets $782,001 $640,555 $751,512 $650,253
Participating
interests in
mortgage loans 25,121 29,153 23,914 35,336
Loans and leases held
for investment 520,678 388,012 513,783 369,735
Total loans 550,930 417,874 540,449 405,614
Earning assets 727,412 586,611 696,950 595,794
Deposits 601,915 515,613 574,846 522,327
Common stockholders'
equity 58,602 59,321 59,809 57,877
*From continuing operations
KEY RATIOS*
Return on average common
stockholders' equity 4.81% (13.37)% 6.93% (5.98)%
Return on average assets 0.36% (1.28)% 0.55% (0.53)%
Net interest margin 3.74% 3.66% 3.76% 3.44%
Efficiency ratio 69.92% 152.47% 68.56% 118.61%
*From continuing operations
KEY RATIOS
Return on average common
stockholders' equity - 12.35% - 11.79%
Return on average assets - 1.14% - 1.05%
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
As of
June 30, December 31, June 30,
(In thousands) 2008 2007 2007
ASSET QUALITY*
Loans 90 days or more
delinquent and still
accruing interest $639 $- $1
Non-accrual loans 7,184 5,399 100
Total nonperforming loans $7,823 $5,399 101
Other real estate owned and
repossessed assets 5,098 - -
Total nonperforming assets $12,921 $5,399 $101
Allowance for credit losses $7,065 $6,599 $ 4,308
Ratio of total nonperforming
loans to total loans 1.40% 1.03% 0.02%
Ratio of total nonperforming
assets to total assets 1.57% 0.77% 0.02%
Ratio of allowance for credit
losses to loans and leases held
for investment 1.34% 1.33% 1.02%
Ratio of allowance for credit
losses to total loans 1.27% 1.26% 0.97%
Ratio of allowance for credit
losses to total nonperforming
loans 90% 122% 4,265%
*From continuing operations
For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Changes in Allowance
for Credit Losses:*
Balance, beginning of
period $7,178 $ 3,615 $6,599 $ 3,370
Provision charged to
operations expense 2,000 700 2,800 950
Loans charged off (2,145) (8) (2,377) (14)
Loan recoveries 32 1 43 2
Balance, end of period $7,065 $ 4,308 $7,065 $ 4,308
Ratio of net charge-
offs to average total
loans (0.384)% (0.002)% (0.432)% (0.003)%
Ratio of net charge-
offs to average total
loans, annualized (1.534)% (0.007)% (0.864)% (0.006)%
*From continuing operations
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Six Months
(In thousands, except Ended June 30, Ended June 30,
share data) 2008 2007 2008 2007
ANALYSIS OF NON-
INTEREST INCOME*
Bank charges and service
fees $518 $558 $1,009 $1,099
Wealth management revenues 768 346 1,524 802
Mortgage banking revenues 776 74 750 115
Gains on sales of
commercial loans 253 614 1,039 936
Net gain (loss) on
sales of assets 794 (2,026) 794 (2,026)
Other 249 150 542 487
Total non-interest
income (loss) $3,358 $(284) $5,658 $1,413
*From continuing operations
ANALYSIS OF NON-
INTEREST EXPENSE*
Salaries and employee
benefits $3,938 $3,674 $7,361 $7,114
Occupancy 547 537 989 1,074
Data processing fees 522 565 931 1,166
OREO expense 402 - 402 -
Depreciation and
amortization 327 429 669 890
Professional services 294 226 482 380
Marketing and promotion 267 159 462 349
Office supplies,
telephone and postage 169 122 376 253
FDIC and other assessments 56 59 110 116
Prepayment penalties on
early extinguishment of
FHLB advances - 1,535 - 1,535
Other 556 433 1,035 848
Total non-interest
expense $7,078 $7,739 $12,817 $13,725
*From continuing operations
WEIGHTED AVERAGE SHARES
Common shares
outstanding (a) 3,248,101 3,501,544 3,327,961 3,501,280
Incremental shares
from assumed conversion
of options and
contingent shares 46,458 71,637 44,059 63,405
Adjusted weighted
average shares (b) 3,294,559 3,573,181 3,372,020 3,564,685
(a) Denominator for Basic Earnings Per Common Share
(b) Denominator for Diluted Earnings Per Common Share
SOURCE BNCCORP, Inc.
