BNCCORP, INC. 
By BISMARCK, N.D., Oct. 28, 2013 /PRNewswire/ -- BNCCORP, INC. (BNC or the Company) (OTCQB: BNCC), which operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota, and has mortgage banking offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota, today reported net income for the third quarter ended September 30, 2013.
Net income for the 2013 third quarter was $487 thousand, or $0.05 per diluted share. This compared to net income of $15.045 million, or $4.41 per diluted share, in the third quarter of 2012. Major factors contributing to the earnings decrease (as further described below) included the recent impact of higher interest rates on mortgage banking revenues, an impairment charge in the latest quarter related to a strategic decision to consolidate operations, and a sizeable insurance settlement in the year-ago period.
The third quarter of 2013 reflects lower net interest income which was impacted by lower interest rates on most earning assets; lower non-interest income, which includes insurance receipts in 2013 and 2012, as mortgage banking revenues declined due to the recent rapid increase in interest rates; and significantly lower non-interest expenses, which includes impairment charges and non-recurring legal costs in 2013 and 2012, respectively, as operating costs were trimmed when revenues declined. The provisions for credit losses were $0 in the third quarters of 2013 and 2012. Credit quality improved as nonperforming assets decreased to $12.3 million or 1.49% of total assets at September 30, 2013, compared to $15.6 million at December 31, 2012. In the third quarter of 2013 a tax benefit was recorded due to a change in our effective tax rate, primarily relating to the recent impairment charge, while the 2012 third quarter included a large tax benefit due to the reversal of the valuation allowance on deferred tax assets.
Timothy J. Franz, new BNCCORP President and Chief Executive Officer, said, "We had a very eventful quarter. Foremost was the unexpected passing of co-founder and CEO Greg Cleveland, who is deeply missed by all of us. Mr. Cleveland was one of a kind in terms of his vision, larger than life personality and honorable character. Employees, customers and shareholders of BNC will benefit from his legacy as an exceptional business person for many years to come, and we honor Greg by continuing to manage BNC with a commitment to service, prudent growth and integrity."
Mr. Franz continued, "Results for the 2013 third quarter reflected an increase in interest rates, which impacted mortgage banking revenues in particular. While the effect of the higher rates was expected, we could not anticipate the timing or extent of the impact. When mortgage banking revenues contracted this quarter, we moved quickly to reduce our mortgage banking operating costs. The benefits of these decisions will be seen in future periods. In order to further control operating costs, we also consolidated operations in Minnesota this quarter and recognized the cost of contraction with an impairment charge. Throughout these events our employees performed admirably. As a result, we grew loans held for investment, increased deposits, invested opportunistically and increased book value per share. Our shareholders and the communities we serve are the fortunate beneficiaries of our team's efforts."
Third Quarter Results
Net interest income for the third quarter of 2013 was $4.616 million, a decrease of $151 thousand, or 3.2%, from $4.767 million in the same period of 2012. Interest income decreased due to lower interest rates on most assets as the yield on earning assets decreased to 2.94% in the third quarter of 2013, compared to 3.71% in the third quarter of 2012. The impact of lower rates was partially offset by increases in total average earning assets, which were $750.3 million in the third quarter of 2013 compared to $653.8 million in the same quarter of 2012. We have increased the balance of investment securities by $104.8 million and loans held for investment by $5.4 million since the beginning of the year. In the third quarter of 2013 the Company deployed $97 million of cash to invest in securities, to take advantage of interest rates higher than those available in previous periods. On average, loans held for sale decreased by $28.5 million when compared to the third quarter of 2012.
Interest expense decreased despite growth in deposits, as we have been able to lower the rates paid on deposits. The cost of interest bearing liabilities declined to 0.61% in the current quarter, compared to 1.02% in the same period of 2012. The net interest margin for the third quarter decreased to 2.44%, compared to 2.90% in the same period of 2012.
The provision for loan losses was $0 in the third quarters of 2013 and 2012. The absence of provisions for credit losses reflects stabilized risk in our loan portfolio.
Non-interest income for the third quarter of 2013 was $5.001 million compared to $16.826 million in the third quarter of 2012. In the third quarter of 2013 the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in the third quarter of 2012. Excluding the insurance amounts, non-interest income was $3.946 million in the third quarter of 2013 compared to $9.326 million in 2012, a decrease of $5.380 million, or 57.7%. The major factor in this decrease was a decline in 2013 third quarter mortgage banking revenues, which aggregated $2.422 million, compared to $7.787 million in the third quarter of 2012. Mortgage banking revenues have been significantly impacted in 2013 by the increase in interest rates. In response to lower revenues, the Company reduced operations personnel in mortgage banking by more than 20 positions, which is estimated to reduce future compensation by approximately $1.2 million annually. There were $37 thousand of gains on sales of investment securities during the recent quarter, compared to $181 thousand in the third quarter of 2012. The opportunity to sell assets at attractive prices can vary significantly from period to period based on market conditions. The 2013 third quarter included gains on sales of SBA loans of $301 thousand, compared to $245 thousand in the same period of 2012. While the secondary market for SBA loans is currently acquisitive, the recent shut down of federal government operations has prevented us from selling loans early in the fourth quarter of 2013 which may impact earnings as the year ends. Bank fees and service charges were $698 thousand in the third quarter of 2013, an increase of 11.5% compared to the third quarter of 2012. These fees are growing as we continue to grow deposits and open new accounts. Wealth management revenues increased by 13.5% in the third quarter of 2013 compared to the same period in 2012.
Non-interest expense for the third quarter of 2013 was $9.451 million, compared to $12.303 million in the third quarter of 2012. Non-interest expense in the third quarter of 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense declined to $7.951 million in 2013, compared to $9.803 million in 2012, a decrease of $1.852 million, or 18.9%. This decrease primarily relates to certain mortgage banking costs and reduced incentive costs for producers. As economic conditions and organic growth in Minnesota is limited when compared to North Dakota, we consolidated all Minnesota operations to one location to reduce operating costs and decided to sell a branch building that was underutilized. This resulted in an impairment charge of $1.5 million in the third quarter to reflect the fair market value of the property.
In the third quarter of 2013, we recorded a tax benefit of $321 thousand. A tax benefit of $5.755 million was recognized during the third quarter of 2012 primarily related to the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $157 thousand, or $0.05 per diluted share, for the third quarter of 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $330 thousand in the third quarter of 2013 and $369 thousand in the same period of 2012. Net income available to common shareholders in the third quarter of 2012 was $14.676 million, or $4.41 per diluted share.
Nine Months Ended September 30, 2013
Net interest income for the nine month period ended September 30, 2013 was $13.832 million, an increase of $21 thousand or 0.2%, from $13.811 million in the same period of 2012. We grew assets in the first nine months of 2013, as the average balance of earning assets was approximately $738.3 million, compared to approximately $639.8 million in the same period of the prior year. The net interest margin in the recent nine-month period decreased to 2.50%, compared to 2.88% in the same period of 2012. The yield on earning assets was 3.04% in the nine month period ended September 30, 2013, compared to 3.78% in the same period of 2012. The cost of interest bearing liabilities was 0.65% in the first nine months of 2013, compared to 1.13% in the first nine months of 2012.
The provision for credit losses was $700 thousand in the first nine months of 2013, compared to $100 thousand in the first nine months of 2012. Nonperforming loans decreased $383 thousand to $10.1 million at September 30, 2013 from $10.5 million at December 31, 2012. BNC has made positive progress relating to one of our non-performing loan relationships which is recorded at $5.8 million. We anticipate that this loan will return to accrual status in the fourth quarter of 2013.
Non-interest income for the first nine months of 2013 was $24.677 million compared to $33.276 million in the same period of 2012. In 2013, the Company recognized a life insurance benefit of $1.055 million while an insurance settlement of $7.5 million was recognized in 2012. Excluding the insurance amounts, non-interest income was $23.622 million in the first nine months of 2013 compared to $25.776 million in same period of 2012, a decrease of $2.154 million, or 8.4%. Non-interest income was significantly influenced by mortgage banking revenues in the first nine months of 2013, which aggregated $17.413 million, a decrease of $4.014 million, or 18.7%, compared to the first nine months of 2012. These revenues declined as interest rates rose in 2013. As noted above, we recently reduced our mortgage banking workforce due to lower revenues in this area. Gains on sales of investments were higher in the first nine months of 2013 aggregating $1.247 million, compared to $279 thousand in the same period of 2012. Gains on sales of SBA loans were $1.408 million in the first nine months of 2013, compared to $864 thousand in the same period of 2012. We also experienced an increase in bank fees and service charges of $235 thousand, or 13.4% in the first nine months of 2013, reflecting growth in deposits and new accounts.
Non-interest expense was $27.907 million in the first nine months of 2013, compared to $30.996 million in the same period of 2012. Non-interest expense in 2013 included an impairment charge of $1.5 million while the same period in 2012 included $2.5 million of non-recurring legal expenses associated with the insurance settlement received in the period. When these expenses are excluded, non-interest expense was $26.407 million in 2013 compared to $28.496 million in 2012 a decrease of $2.089 million or 7.3%. The valuation adjustments on foreclosed assets were $40 thousand in the first nine months of 2013 compared to $1.700 million in the first nine months of 2012. In early 2013 we experienced higher operating costs as mortgage banking revenues were higher relative to early 2012. As 2013 proceeded, mortgage banking costs have decreased when compared to the same period of 2012.
During the nine month period ended September 30, 2013, we recorded tax expense of $3.154 million which resulted in an effective tax rate of 31.85%. A tax benefit of $5.652 million was recognized during the nine month period ended September 30, 2012. The provision for income taxes was lower in 2012 because of the reversal of the valuation allowance on deferred tax assets.
Net income available to common shareholders was $5.767 million, or $1.66 per diluted share, for the nine months ended September 30, 2013 after accounting for dividends accrued on preferred stock and the amortization of issuance discounts on preferred stock. These costs aggregated $981 thousand in the first nine months of 2013 and $1.089 million in the same period of 2012. Net income available to common shareholders for the nine months ended September 30, 2012 was $20.554 million, or $6.21 per diluted share.
Assets, Liabilities and Equity
Total assets were $829.2 million at September 30, 2013, an increase of $58.4 million, or 7.6%, compared to $770.8 million at December 31, 2012 and an increase of $86.8 million, or 11.7%, since September 30, 2012. The increases in recent periods have been funded primarily by growing deposits in North Dakota as this region is experiencing robust economic conditions. Accumulated other comprehensive income was an unrealized gain of $363 thousand at September 30, 2013, compared to a net unrealized loss of $1.1 million as of June 30, 2013. Investment securities increased by $62.6 million since June 30, 2013 as we deployed cash reserves early in the third quarter when interest rates increased relative to earlier periods.
Loans held for investment increased by $13.4 million since June 30, 2013 and $5.4 million versus December 31, 2012. We have implemented measures to increase our loans held for investment portfolio with the objective of achieving loan growth (in North Dakota, our loans held for investment grew $23.2 million since September 30, 2012). Loans held for sale have decreased by $60.8 million since December 31, 2012 as production was reduced by the recent increase in interest rates.
Total deposits were $706.5 million at September 30, 2013, increasing by $56.9 million from 2012 year-end, and increasing by $83.5 million, or 13.4% since September 30, 2012. This increase relates primarily to growth in our North Dakota branches. In recent years we have observed that deposit growth can be seasonal as customers utilize their cash in warmer months.
Over recent years we have continued to witness growth in our rural branches located near the Bakken Formation. The table below shows changes since 2010.
Deposits of Rural Branches in Bakken Formation
September 30, September 30, Increase
(Decrease) Average Annual Growth
----------- ---------------------
In thousands 2013 2010 $ % $ %
------------ ---- ---- --- --- --- ---
Total
Deposits $180,082 $111,786 $68,296 61% $22,765 17%
Book value per common share was $14.75 as of September 30, 2013, compared to $14.35 as of June 30, 2013, $14.49 at December 31, 2012 and $13.60 at September 30, 2012.
At September 30, 2013, tangible common equity of BNC National Bank was 10.55% of total Bank assets.
Trust assets under management or administration increased to $256.2 million at September 30, 2013, compared to $211.5 million at December 31, 2012 as this department is capturing wealth being created by the exceptionally strong economic conditions in North Dakota.
Capital
Banks and their bank holding companies operate under separate regulatory capital requirements.
At September 30, 2013, BNCCORP's tier 1 leverage ratio was 10.99%, the tier 1 risk-based capital ratio was 22.60%, and the total risk-based capital ratio was 24.18%.
At September 30, 2013, BNC National Bank had a tier 1 leverage ratio of 10.70%, a tier 1 risk-based capital ratio of 22.17%, and a total risk-based capital ratio of 23.43%.
At September 30, 2013, BNCCORP's tangible common equity as a percent of assets was 5.92% compared to 6.21% at December 31, 2012 and 6.06% at September 30, 2012. Common shareholder equity at September 30, 2013 was $49.0 million and we had preferred stock and subordinated debentures outstanding which aggregated $43.5 million at September 30, 2013.
In July of 2013, the Federal Reserve issued new regulatory capital standards for community banks which incorporate some of the capital requirements addressed in the Basel III framework and begin to be effective January 1, 2015. Although we believe we are compliant with the fully phased in standards, we have not completed our assessment of the proposed standards. The Company routinely evaluates the need to raise capital to comply with regulatory capital standards and for other corporate purposes. In addition to the new capital standards the regulatory environment for banking entities is increasingly complicated and the cost of complying with regulations will impact earnings for the foreseeable future.
Asset Quality
In recent years, challenging economic conditions have led to elevated credit risk throughout the banking industry. As a result, the Company is carefully monitoring asset quality and taking what it believes to be prudent and appropriate action to reduce credit risk.
Nonperforming assets were $12.3 million at September 30, 2013, down from $13.1 at June 30, 2013 and $15.6 million at December 31, 2012. The ratio of total nonperforming assets to total assets was 1.49% at September 30, 2013 and 2.03% at December 31, 2012. The provision for credit losses and other real estate costs was $40 thousand in the third quarter of 2013 and $0 in the third quarter of 2012.
Nonperforming loans were $10.1 million at September 30, 2013 down from $10.5 million at December 31, 2012. As noted earlier, we expect nonperforming loans to decrease by $5.8 million early in the fourth quarter of 2013. The ratio of the allowance for credit losses to total nonperforming loans as of September 30, 2013 was 98% compared to 96% at December 31, 2012. The provision for credit losses in the third quarters of 2013, and 2012 were $0.
The allowance for credit losses was $9.9 million at September 30, 2013, compared to $10.1 million at December 31, 2012. The allowance for credit losses as a percentage of total loans at September 30, 2013 was 3.01%, compared to 2.62% at December 31, 2012. The allowance for credit losses as a percentage of loans and leases held for investment at September 30, 2013 was 3.36%, compared to 3.49% at December 31, 2012.
At September 30, 2013, BNC had $13.0 million of classified loans, $10.1 million of loans on non-accrual and $2.2 million of other real estate owned. At December 31, 2012, BNC had $13.6 million of classified loans, $10.5 million of loans on non-accrual and $5.1 million of other real estate owned. At September 30, 2012, BNC had $17.4 million of classified loans, $4.8 million of loans on non-accrual and $5.9 million of other real estate owned.
BNCCORP, INC., headquartered in Bismarck, N.D., is a registered bank holding company dedicated to providing banking and wealth management services to businesses and consumers in its local markets. The Company operates community banking and wealth management businesses in North Dakota, Arizona and Minnesota from 14 locations. BNC also conducts mortgage banking from 12 offices in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota.
This news release may contain "forward-looking statements" within the meaning of the safe harbor provisions 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", "future" and other expressions relating to future periods. Examples of forward-looking statements include, among others, statements we make regarding our belief that we have exceptional liquidity, our expectations regarding future market conditions and our ability to capture opportunities and pursue growth strategies, our expected operating results such as revenue growth and earnings, and our expectations of the effects of the regulatory environment on our earnings for the foreseeable future. Forward-looking statements are neither historical facts nor assurances of future performance. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to: the impact of current and future regulation; the 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 mortgage banking revenues and 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 DATA
(Unaudited)
For the For the Nine
Quarter Months
Ended Ended
September September 30,
30,
---------- --------------
(In
thousands,
except
per
share
data) 2013 2012 2013 2012
---------- ---- ---- ---- ----
SELECTED
INCOME
STATEMENT
DATA
Interest
income $5,560 $6,095 $16,769 $18,130
Interest
expense 944 1,328 2,937 4,319
--- ----- ----- -----
Net
interest
income 4,616 4,767 13,832 13,811
Provision
for
credit
losses - - 700 100
Non-
interest
income 5,001 16,826 24,677 33,276
Non-
interest
expense 9,451 12,303 27,907 30,996
----- ------ ------ ------
Income
before
income
taxes 166 9,290 9,902 15,991
Income
tax
expense
(benefit) (321) (5,755) 3,154 (5,652)
---- ------ ----- ------
Net
income 487 15,045 6,748 21,643
Preferred
stock
costs (330) (369) (981) (1,089)
----
Net
income
available
to
common
shareholders $157 $14,676 $5,767 $20,554
==== ======= ====== =======
EARNINGS
PER
SHARE
DATA
Basic
earnings
per
common
share $0.05 $4.46 $1.75 $6.24
Diluted
earnings
per
common
share $0.05 $4.41 $1.66 $6.21
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
(In
thousands,
except
share data) 2013 2012 2013 2012
------------ ---- ---- ---- ----
ANALYSIS OF
NON-
INTEREST
INCOME
Bank charges
and service
fees $698 $626 $1,989 $1,754
Wealth
management
revenues 302 266 935 912
Mortgage
banking
revenues 2,422 7,787 17,413 21,427
Gains on
sales of
loans, net 301 245 1,408 864
Gains on
sales of
securities,
net 37 181 1,247 279
Other 186 221 630 540
--- --- --- ---
Subtotal
non-
interest
income 3,946 9,326 23,622 25,776
Insurance
claim
settlement - 7,500 - 7,500
Life
insurance
benefit
received 1,055 - 1,055 -
Total non-
interest
income $5,001 $16,826 $24,677 $33,276
====== ======= ======= =======
ANALYSIS OF
NON-
INTEREST
EXPENSE
Salaries and
employee
benefits $3,637 $4,607 $12,991 $12,799
Professional
services 861 1,332 2,883 3,403
Data
processing
fees 717 735 2,218 2,116
Marketing
and
promotion 718 516 1,927 1,482
Occupancy 597 478 1,765 1,440
Regulatory
costs 146 304 680 901
Depreciation
and
amortization 311 278 928 836
Office
supplies
and postage 139 166 461 506
Other real
estate
costs 38 48 164 1,988
Other 787 1,339 2,390 3,025
--- ----- ----- -----
Subtotal
non-
interest
expense 7,951 9,803 26,407 28,496
Insurance
settlement
legal fees - 2,500 - 2,500
Impairment
charge 1,500 - 1,500 -
Total non-
interest
expense $9,451 $12,303 $27,907 $30,996
====== ======= ======= =======
WEIGHTED
AVERAGE
SHARES
Common
shares
outstanding
(a) 3,299,236 3,291,569 3,299,467 3,291,793
Incremental
shares from
assumed
conversion
of options
and
contingent
shares 178,265 37,536 172,731 20,391
------- ------ ------- ------
Adjusted
weighted
average
shares (b) 3,477,501 3,329,105 3,472,198 3,312,184
========= ========= ========= =========
(a) Denominator for basic
earnings per common share
(b) Denominator for diluted
earnings per common share
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
-----
(In thousands, September December September
except share, 30, 31, 30,
per share and
full time
equivalent
data)
2013 2012 2012
--- ---- ---- ----
SELECTED BALANCE
SHEET DATA
Total assets $829,232 $770,776 $742,475
Loans held for
sale-mortgage
banking 34,344 95,095 88,926
Loans and leases
held for
investment (a) 294,876 289,469 285,472
Total loans 329,220 384,564 374,398
Allowance for
credit losses (9,897) (10,091) (10,521)
Investment
securities
available for
sale 405,300 300,549 283,835
Other real
estate, net 2,186 5,131 5,859
Earning assets 768,732 698,872 674,197
Total deposits 706,495 649,604 622,997
Core deposits 641,725 584,604 553,067
Other borrowings 44,452 34,130 34,691
Cash and cash
equivalents 56,728 40,790 36,520
OTHER SELECTED
DATA
Net unrealized
gains (losses)
in accumulated
other
comprehensive
income $363 $4,961 $6,625
Trust assets
under
management or
administration $256,178 $211,519 $212,188
Total common
stockholders'
equity $49,032 $47,842 $44,895
Book value per
common share $14.75 $14.49 $13.60
Full time
equivalent
employees (b) 252 272 265
Common shares
outstanding 3,324,584 3,300,652 3,299,969
CAPITAL RATIOS
Tier 1 leverage
(Consolidated) 10.99% 11.17% 10.31%
Tier 1 risk-
based capital
(Consolidated) 22.60% 20.49% 18.60%
Total risk-
based capital
(Consolidated) 24.18% 22.43% 21.03%
Tangible common
equity
(Consolidated) 5.92% 6.21% 6.06%
Tier 1 leverage
(BNC National
Bank) 10.70% 10.68% 11.73%
Tier 1 risk-
based capital
(BNC National
Bank) 22.17% 19.80% 21.14%
Total risk-
based capital
(BNC National
Bank) 23.43% 21.06% 22.41%
Tangible capital
(BNC National
Bank) 10.55% 10.97% 12.31%
(a) Included in loans and
leases held for
investment are $80.8
million of commercial
real estate loans as of
September 30, 2013, $
87.3 million at
December 31, 2012, and
$97.3 million at
September 30, 2012.
(b) September 30, 2013 is
adjusted for recent
reduction in mortgage
banking operating
positions.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
For the Quarter For the Nine
Months
Ended September Ended September
30, 30,
(In
thousands) 2013 2012 2013 2012
----------- ---- ---- ---- ----
AVERAGE
BALANCES
Total
assets $810,301 $719,416 $799,101 $700,912
Loans
held for
sale-
mortgage
banking 46,872 75,350 62,013 62,013
Loans and
leases
held for
investment 277,257 283,016 283,529 283,529
Total
loans 324,129 358,366 345,542 345,542
Investment
securities
available
for sale 362,873 288,120 333,761 266,881
Earning
assets 750,340 653,773 738,264 639,838
Total
deposits 690,320 605,999 679,246 600,030
Core
deposits 625,397 541,522 614,239 538,312
Total
equity 68,973 58,064 70,312 49,324
Cash and
cash
equivalents 80,844 24,380 76,583 44,857
KEY
RATIOS
Return on
average
common
stockholders'
equity 1.30% 156.76% 15.63% 96.15%
Return on
average
assets 0.24% 8.32% 1.13% 4.12%
Net
interest
margin 2.44% 2.90% 2.50% 2.88%
Efficiency
ratio 98.27% 56.98% 72.47% 65.83%
Efficiency
ratio
(Adjusted)
(a) 92.86% 69.56% 70.51% 71.98%
Efficiency
ratio
(BNC
National
Bank) 92.65% 53.90% 69.36% 62.69%
(a) Efficiency ratio is
adjusted to exclude
insurance receipts and
impairment charges for
the three and nine
month period ending
September 30, 2013 and
insurance receipts and
non-recurring legal
fees for the three and
nine month period
ending September 30,
2012.
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
-----
(In thousands) September 30, December September
31, 30,
2013 2012 2012
--- ---- ---- ----
ASSET QUALITY
Loans 90 days
or more
delinquent and
still accruing
interest $57 $12 $23
Non-accrual
loans 10,072 10,500 4,833
Total
nonperforming
loans $10,129 $10,512 $4,856
Other real
estate, net 2,186 5,131 5,859
----- ----- -----
Total
nonperforming
assets $12,315 $15,643 $10,715
======= =======
Allowance for
credit losses $9,897 $10,091 $10,521
====== ======= =======
Troubled debt
restructured
loans $8,654 $12,368 $12,499
====== ======= =======
Ratio of total
nonperforming
loans to total
loans 3.08% 2.73% 1.30%
Ratio of total
nonperforming
assets to
total assets 1.49% 2.03% 1.44%
Ratio of
nonperforming
loans to total
assets 1.22% 1.36% 0.65%
Ratio of
allowance for
credit losses
to loans and
leases held
for investment 3.36% 3.49% 3.69%
Ratio of
allowance for
credit losses
to total loans 3.01% 2.62% 2.81%
Ratio of
allowance for
credit losses
to
nonperforming
loans 98% 96% 217%
For the For the Nine
Quarter Months
(In Ended Ended
thousands) September September
30, 30,
----------- ---------- ----------
2013 2012 2013 2012
---- ---- ---- ----
Changes
in
Nonperforming
Loans:
Balance,
beginning
of
period $10,183 $4,893 $10,512 $6,169
Additions
to
nonperforming 74 40 811 74
Charge-
offs (5) - (909) (317)
Reclassified
back
to
performing (12) - (19) (815)
Principal
payments
received (111) (77) (242) (255)
Transferred
to
repossessed
assets - - (24) -
Transferred
to
other
real
estate
owned - - - -
--- --- --- ---
Balance,
end
of
period $10,129 $4,856 $10,129 $4,856
======= ====== ======= ====
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
(In thousands) For the Quarter For the Nine
Months
Ended September Ended September
30, 30,
--- ---------------- ----------------
2013 2012 2013 2012
---- ---- ---- ----
Changes in
Allowance for
Credit Losses:
Balance,
beginning of
period $9,898 $10,565 $10,091 $10,630
Provision - - 700 100
Loans charged
off (16) (57) (983) (383)
Loan recoveries 15 13 89 174
Balance, end of
period $9,897 $10,521 $9,897 $10,521
====== ======= ====== =======
Ratio of net
charge-offs
to average
total loans 0.00% (0.012)% (0.321)% (0.060)%
Ratio of net
charge-offs
to average
total loans,
annualized (0.001)% (0.049)% (0.518)% (0.081)%
(In thousands) For the Quarter For the Nine
Months
Ended September Ended September
30, 30,
--- ----------------
2013 2012 2013 2012
---- ---- ---- ----
Changes in
Other Real
Estate:
Balance,
beginning of
period $2,966 $7,932 $5,131 $10,145
Transfers from
nonperforming
loans - - - -
Transfers from
premises and
equipment 800 - 800 -
Real estate
sold (1,540) (1,971) (3,705) (2,458)
Net gains
(losses) on
sale of assets - (102) - (128)
Provision (40) - (40) (1,700)
--- --- --- ------
Balance, end of
period $2,186 $5,859 $2,186 $5,859
====== ====== ====== ======
As of
-----
(In thousands) September December September
30, 31, 2012 30,
2013 2012
--- ---- ----
Other real estate $5,120 $8,146 $10,349
Valuation allowance (2,934) (3,015) (4,490)
------ ------ ------
Other real estate, net $2,186 $5,131 $5,859
====== ====== ======
BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
(Unaudited)
As of
-----
(In thousands) September December
30, 2013 31, 2012
---------- ---------
CREDIT CONCENTRATIONS
North Dakota
Commercial and industrial $71,298 $65,793
Construction 7,838 10,824
Agricultural 17,243 15,047
Land and land development 11,186 12,240
Owner-occupied commercial real
estate 28,008 24,107
Commercial real estate 29,608 12,644
Small business administration 2,178 2,428
Consumer 30,957 25,115
------ ------
Subtotal $198,316 $168,198
-------- --------
Arizona
Commercial and industrial $2,187 $1,421
Construction - -
Agricultural - -
Land and land development 5,204 5,663
Owner-occupied commercial real
estate 647 667
Commercial real estate 16,347 16,699
Small business administration 15,654 12,881
Consumer 2,213 2,884
----- -----
Subtotal $42,252 $40,215
------- -------
Minnesota
Commercial and industrial $420 $1,154
Construction - -
Agricultural 21 24
Land and land development 583 1,145
Owner-occupied commercial real
estate - -
Commercial real estate 10,339 14,767
Small business administration 43 62
Consumer 334 409
--- ---
Subtotal $11,743 $17,561
------- -------
SOURCE BNCCORP, INC.
