Market Overview

BNC Bancorp Announces Earnings for Third Quarter 2016

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HIGH POINT, N.C., Oct. 20, 2016 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the three and nine months ended September 30, 2016.  Highlights for the quarter include the following:

  • Continued solid earnings and returns
                                                              
    • GAAP net income of $18.1 million, or $0.38 per diluted share, compared to $14.6 million, or $0.35 per diluted share, for second quarter of 2016;
    • Operating net income of $19.7 million, or $0.42 per diluted share, compared to $17.0 million, or $0.41 per diluted share, for second quarter of 2016;
    • GAAP return on average assets of 1.10%, compared to 1.00% for second quarter of 2016;
    • Operating return on average assets of 1.20%, compared to 1.16% for second quarter of 2016;
    • Return on average tangible common equity of 13.37%, compared to 13.29% for second quarter of 2016; and
    • Operating return on average tangible common equity of 14.50%, compared to 15.36% for second quarter of 2016.
                                                     
  • Originated loans at September 30, 2016 of $3.46 billion, an increase of $292.3 million compared to June 30, 2016
                                             
    • Loan originations of $630 million, as compared to $627 million during the second quarter of 2016; and
    • Total portfolio loans were $5.00 billion at September 30, 2016, an increase of $183.3 million compared to June 30, 2016.
                                                    
  • Asset quality ratios remain strong
                                                 
  • Completed public offering of common stock with gross proceeds of $63.2 million
                                                     
    • Further strengthened capital ratios and will support continued growth

 

BNC Bancorp logo. BNC Bancorp is a one-bank holding company for Bank of North Carolina.


Financial Performance




Three Months Ended


Nine Months Ended

INCOME SUMMARY


Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Sept. 30,
2015


Sept. 30,
2016


Sept. 30,
2015

Interest income


(Dollars in thousands)


Interest and fees on loans


$  57,824


$  51,978


$  50,302


$  50,762


$   48,050


$160,104


$127,964


Investment securities


6,910


6,202


5,965


5,336


5,101


19,077


13,869


Other


291


228


214


141


162


733


414

Total interest income


65,025


58,408


56,481


56,239


53,313


179,914


142,247

Interest expense
















Interest on deposits 


7,619


6,704


6,241


5,851


5,265


20,564


14,595


Interest on borrowings


1,989


1,774


1,750


1,648


1,789


5,513


4,590

Total interest expense


9,608


8,478


7,991


7,499


7,054


26,077


19,185

Net interest income


55,417


49,930


48,490


48,740


46,259


153,837


123,062


Provision for loan losses


1,865


698


647


1,287


198


3,210


609

Net interest income 


53,552


49,232


47,843


47,453


46,061


150,627


122,453

Non-interest income
















Mortgage lending income


3,134


2,671


2,681


2,226


3,031


8,486


8,307


Service charges


2,644


2,422


2,321


2,341


2,284


7,387


5,738


SBA income


739


1,104


811


467


416


2,654


1,368


Securities gains (losses)


34


4


(39)


45


794


(1)


839


Earnings on bank-owned life insurance


1,254


1,160


758


806


705


3,172


1,960


Other


2,006


1,654


1,430


2,401


1,939


5,090


5,950

Total non-interest income


9,811


9,015


7,962


8,286


9,169


26,788


24,162

Non-interest expense
















Salaries and employee benefits


18,491


18,019


17,803


17,888


17,543


54,313


49,265


Occupancy 


3,154


3,155


3,252


3,392


3,211


9,561


8,410


Furniture and equipment


2,297


1,993


2,073


2,426


1,654


6,363


4,877


Data processing and supply 


1,766


1,491


1,437


1,194


1,268


4,694


3,186


Advertising and business development 


678


923


684


879


493


2,285


1,756


Insurance, professional and other services


1,424


1,494


1,526


952


1,405


4,444


3,872


FDIC insurance assessments


1,071


900


900


883


824


2,871


2,261


Loan, foreclosure and OREO


1,562


856


1,367


1,639


2,352


3,785


8,213


Transaction-related expenses 


2,568


3,808


1,434


4,307


4,886


7,810


8,969


Loss on extinguishment of debt


-


-


-


-


763


-


763


Other


4,824


4,201


4,410


4,020


3,786


13,435


10,003

Total non-interest expenses


37,835


36,840


34,886


37,580


38,185


109,561


101,575

Income before income tax expense


25,528


21,407


20,919


18,159


17,045


67,854


45,040

Income tax expense


7,388


6,760


6,484


5,420


5,106


20,632


13,329

Net income (GAAP)


18,140


14,647


14,435


12,739


11,939


47,222


31,711


Securities gains (losses), net of tax


21


4


(25)


28


500


1


529


Transaction-related charges, net of tax


1,618


2,399


903


2,713


3,078


4,920


5,650


Loss on extinguishment of debt, net of tax

-


-


-


-


481


-


481

Operating net income (non-GAAP)


$  19,736


$  17,042


$  15,363


$  15,424


$   14,998


$  52,141


$  37,313

















Common shares outstanding 


48,110


45,201


40,806


40,774


38,138


48,110


38,138

Weighted average diluted shares
outstanding


47,360


41,560


40,885


39,452


38,165


43,287


34,545

































 

 

Performance Ratios




Three Months Ended


Nine Months Ended



Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Sept. 30,
2015


Sept. 30,
2016


Sept. 30,
2015

Earnings per diluted share 


$    0.38


$    0.35


$    0.35


$    0.32


$    0.31


$    1.09


$    0.92

Return on average assets 


1.10%


1.00%


1.03%


0.93%


0.92%


1.05%


0.95%

Return on average common equity


9.40%


9.43%


9.72%


9.13%


9.15%


9.50%


9.69%

Return on average tangible common equity (1)


13.37%


13.29%


13.71%


13.33%


13.52%


13.45%


13.43%

Efficiency ratio (2)


56.09%


60.51%


59.78%


63.75%


66.59%


58.68%


66.45%
















Operating earnings per diluted share (1)


$    0.42


$    0.41


$    0.38


$    0.39


$    0.39


$    1.20


$    1.08

Operating return on average assets (1)


1.20%


1.16%


1.10%


1.13%


1.15%


1.16%


1.11%

Operating return on average tangible common equity (1)

14.50%


15.36%


14.55%


15.99%


16.79%


14.79%


15.68%

Operating efficiency ratio (1) (2)


52.31%


54.26%


57.28%


56.49%


57.54%


54.50%


60.41%
















Book value per common share


$  16.53


$  15.86


$  14.79


$  14.52


$  13.70


$  16.53


$  13.70

Tangible book value per common share (1)


12.21


11.28


11.07


10.77


9.86


12.21


9.86


(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


Nine Months Ended



Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Sept. 30,
2015


Sept. 30,
2016


Sept. 30,
2015



 (Dollars in thousands) 

 Securities gains (losses), net 


$       34


$         4


$      (39)


$       45


$     794


$        (1)


$     839

 Loss on extinguishment of debt 


-


-


-


-


763


-


763

 Fair value accretion 


5,845


5,276


5,505


5,599


4,835


16,626


14,917

 OREO valuation adjustments, net  


274


222


266


348


911


762


2,245

 Transaction-related expenses 


2,568


3,808


1,434


4,307


4,886


7,810


8,969

 

Richard D. Callicutt, II, President and CEO, stated, "We are pleased to report another quarter of solid financial results, which include strong earnings growth and another quarter of record-setting organic loan originations.  Our fee based businesses continue to grow at a healthy rate and our continued focus on process improvements and operational efficiencies helped to control expenses to where the additional costs incurred during the quarter were all related to the addition of Southcoast Financial's operations.

We are excited that we have received all necessary regulatory approvals for the merger with High Point Bank Corporation and are currently scheduled to close on November 1, 2016.  On November 4, 2016, immediately after the legal closing of the transaction, High Point Bank's systems and signage will be converted to BNC.  With the addition of High Point Bank's Trust and Insurance divisions, as well as the broad array of BNC product offerings, this transaction will greatly enhance the products and services for all customers involved.

During the quarter, the Company successfully accessed the capital markets and raised an additional $63.2 million in common equity.  This capital raise helped to bolster our capital ratios and position our company to continue to pursue growth opportunities that provide outsized value for our shareholders." 

 

Non-interest Income and Expense Data




Three Months Ended


Nine Months Ended



Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Sept. 30,
2015


Sept. 30,
2016


Sept. 30,
2015

Non-interest income


(Dollars in thousands)


Mortgage lending income


$   3,134


$   2,671


$   2,681


$   2,226


$   3,031


$     8,486


$     8,307


Service charges


2,644


2,422


2,321


2,341


2,284


7,387


5,738


SBA income


739


1,104


811


467


416


2,654


1,368


Earnings on bank-owned life insurance


1,254


1,160


758


806


705


3,172


1,960


Other


2,006


1,654


1,430


2,401


1,939


5,090


5,950

Total operating non-interest income - non-GAAP


9,777


9,011


8,001


8,241


8,375


26,789


23,323


Securities gains (losses), net


34


4


(39)


45


794


(1)


839

Total non-interest income - GAAP


$   9,811


$   9,015


$   7,962


$   8,286


$   9,169


$   26,788


$   24,162

















Non-interest expense
















Salaries and employee benefits


$ 18,491


$ 18,019


$ 17,803


$ 17,888


$ 17,543


$   54,313


$   49,265


Occupancy 


3,154


3,155


3,252


3,392


3,211


9,561


8,410


Furniture and equipment


2,297


1,993


2,073


2,426


1,654


6,363


4,877


Data processing and supply 


1,766


1,491


1,437


1,194


1,268


4,694


3,186


Advertising and business development 


678


923


684


879


493


2,285


1,756


Insurance, professional and other services


1,424


1,494


1,526


952


1,405


4,444


3,872


FDIC insurance assessments


1,071


900


900


883


824


2,871


2,261


Loan, foreclosure and OREO


1,562


856


1,367


1,639


2,352


3,785


8,213


Other


4,824


4,201


4,410


4,020


3,786


13,435


10,003

Total operating non-interest expense - non-GAAP

35,267


33,032


33,452


33,273


32,536


101,751


91,843


Transaction-related expenses 


2,568


3,808


1,434


4,307


4,886


7,810


8,969


Loss on extinguishment of debt


-


-


-


-


763


-


763

Total non-interest expense - GAAP


$ 37,835


$ 36,840


$ 34,886


$ 37,580


$ 38,185


$ 109,561


$ 101,575

















Total GAAP and operating non-interest income was $9.8 million for the third quarter of 2016, an increase from $9.0 million for the second quarter of 2016.  Mortgage lending income was $3.1 million for the third quarter of 2016, an increase of $0.5 million as compared to the second quarter of 2016.  Many of the other non-interest income sources, such as income from recoveries on acquired loans and income derived from our investment brokerage services, are volatile and can vary significantly from period to period. 

Total GAAP non-interest expense was $37.8 million for the third quarter of 2016, an increase from $36.8 million for the second quarter of 2016.  Operating non-interest expense for the third quarter of 2016 was $35.3 million, an increase compared to $33.0 million for the second quarter of 2016.  This increase was directly related to the full quarter impact of additional headcount and facilities obtained from the Company's acquisition of Southcoast Financial Corporation ("Southcoast") in June 2016.

 

Selected Balance Sheet Data




 Ending Balance 



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
2015 


 Sept. 30,
2015 

 Portfolio loans: 


 (Dollars in thousands) 

    Originated loans 


$ 3,455,677


$ 3,163,357


$ 2,847,466


$ 2,721,216


$ 2,587,572

    Acquired loans 


1,540,270


1,649,328


1,390,688


1,478,655


1,391,061

    Allowance for loan and lease losses 


(36,366)


(33,841)


(32,548)


(31,647)


(30,833)

 Portfolio loans, net 


4,959,581


4,778,844


4,205,606


4,168,224


3,947,800

 Loans held for sale 


40,441


41,703


33,455


39,470


37,437

 Investment securities 


838,289


803,058


757,248


734,557


645,732

 Total interest-earning assets 


6,128,554


5,790,893


5,126,452


5,131,988


4,689,936

 Goodwill 


189,968


188,220


134,686


134,686


128,489

 Core deposit intangible, net 


17,852


19,014


17,143


18,299


18,134

 Total assets 


$ 6,801,562


$ 6,478,373


$ 5,699,573


$ 5,668,183


$ 5,201,118












 Deposits: 











    Non-interest bearing deposits 


$    917,521


$    889,254


$    794,548


$    776,479


$    738,529

    Interest-bearing demand and savings 


3,080,479


2,652,735


2,431,584


2,366,890


2,157,801

    Time deposits 


1,652,123


1,814,654


1,537,644


1,598,838


1,478,161

 Total deposits 


5,650,123


5,356,643


4,763,776


4,742,207


4,374,491

 Borrowings 


310,609


352,119


282,929


292,790


267,069

 Total interest-bearing liabilities 


5,043,211


4,819,508


4,252,157


4,258,518


3,903,031

 Shareholders' equity: 











    Common equity 


786,625


710,300


598,158


584,818


515,062

    Accumulated other comprehensive income 


8,587


6,761


5,395


7,329


7,435

 Total shareholders' equity 


$    795,212


$    717,061


$    603,553


$    592,147


$    522,497

Total assets at September 30, 2016 were $6.80 billion, an increase of 5.0% as compared to total assets of $6.48 billion at June 30, 2016.  Total portfolio loans were $5.00 billion at September 30, 2016, an increase of 3.8% from $4.81 billion at June 30, 2016.  Loans that were originated by the Company increased by $292.3 million, or 9.2%, during the third quarter of 2016. 

Total deposits were $5.65 billion at September 30, 2016, an increase of $293.5 million, or 5.5%, as compared to June 30, 2016.  Wholesale deposits comprised 27.5% of total deposits at September 30, 2016, an increase from 26.7% of total deposits at June 30, 2016.  The increased level of wholesale funding will be used to repay term wholesale deposits that will be maturing early in the fourth quarter of 2016.  Core deposits increased by $170.0 million, or 4.3%, during the third quarter of 2016.  Total borrowings were $310.6 million at September 30, 2016, a decrease of 11.8% compared to $352.1 million at June 30, 2016.  Total shareholders' equity was $795.2 million at September 30, 2016, an increase of $78.2 million, or 10.9%, as compared to $717.1 million at June 30, 2016.  The increase in equity is primarily due to the issuance of 2.9 million shares of voting common stock during the third quarter of 2016.  At September 30, 2016, both the Bank's and Company's capital ratios exceeded the minimum thresholds established for a well-capitalized bank by regulatory measures. 

On October 17, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on November 25, 2016 to shareholders of record as of November 11, 2016.

 

Loan Portfolio Composition




 Ending Balance 



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 2015 


 Sept. 30,
2015 



 (Dollars in millions) 

Residential construction


$           104


$             98


$             76


$             76


$             92

     Presold


62


59


39


46


55

     Speculative


42


39


37


30


37












Commercial construction


285


294


278


237


233

Residential and commercial A&D


39


33


23


18


18












Land


118


126


118


111


90

     Residential buildable lots


44


44


39


34


26

     Commercial buildable lots


24


24


21


20


22

     Land held for development


23


31


34


34


25

     Raw and agricultural land


27


27


24


23


17












Commercial real estate


2,705


2,500


2,257


2,246


2,133

     Multi-family


240


203


179


178


165

     Farmland


3


4


4


5


5

     Owner occupied


787


817


705


785


737

     Non-owner occupied


1,675


1,476


1,369


1,277


1,226












Commercial and industrial


443


454


400


419


340

Residential mortgage


1,251


1,258


1,039


1,049


1,029

Consumer


22


21


18


19


19

Leases


29


29


29


27


26

Total portfolio loans


$        4,996


$        4,813


$        4,238


$        4,200


$        3,979












 

Acquired Loan Summary




 Ending Balance 



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 2015 


 Sept. 30,
2015 



(Dollars in thousands)

Performing acquired loans


$  1,432,351


$  1,537,650


$  1,278,965


$  1,363,379


$  1,262,268

Less: remaining FMV adjustments


(21,687)


(25,630)


(23,359)


(27,789)


(28,990)

   Performing acquired loans, net


1,410,664


1,512,020


1,255,606


1,335,590


1,233,278

   FMV adjustment %


1.5%


1.7%


1.8%


2.0%


2.3%












Purchase credit impaired loans (PCI)


143,494


152,105


148,459


157,966


176,605

Less: remaining FMV adjustments


(13,888)


(14,797)


(13,377)


(14,901)


(18,822)

   PCI loans, net


129,606


137,308


135,082


143,065


157,783

   FMV adjustment %


9.7%


9.7%


9.0%


9.4%


10.7%












Total acquired performing loans


$  1,410,664


$  1,512,020


$  1,255,606


$  1,335,590


$  1,233,278

Total acquired PCI loans


129,606


137,308


135,082


143,065


157,783

Total acquired loans


$  1,540,270


$  1,649,328


$  1,390,688


$  1,478,655


$  1,391,061

   FMV adjustment % all acquired loans


2.3%


2.4%


2.6%


2.8%


3.3%

 

Asset Quality




 Ending Balance 



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 2015 


 Sept. 30,
2015 



 (Dollars in thousands) 

Nonaccrual loans - non-acquired


$      7,662


$      5,407


$      6,228


$      6,623


$      5,914

Nonaccrual loans - acquired


9,347


11,756


12,706


12,086


14,322

OREO - non-acquired


13,352


15,806


14,987


15,588


18,791

OREO - acquired


14,696


14,708


15,783


16,973


18,489

90 days past due - non-acquired


10


10


-


-


-

90 days past due - acquired


-


-


-


3


-

Total nonperforming assets


$    45,067


$    47,687


$    49,704


$    51,273


$    57,516












Total nonperforming assets - non-acquired


$    21,024


$    21,223


$    21,215


$    22,211


$    24,705












Net charge-offs (recoveries), QTD


$       (660)


$        (594)


$        (202)


$         352


$        (326)

Annualized net charge-offs (recoveries) to total average
portfolio loans


-0.05%


-0.05%


-0.02%


0.03%


-0.03%












Ratio of total nonperforming assets to total assets


0.66%


0.74%


0.87%


0.90%


1.11%

Ratio of total nonperforming loans to total portfolio loans


0.34%


0.36%


0.45%


0.45%


0.51%

Ratio of total allowance for loan losses to total portfolio loans

0.73%


0.70%


0.77%


0.75%


0.77%












Excluding acquired 











Ratio of nonperforming assets to loans and OREO


0.61%


0.67%


0.74%


0.81%


0.95%

Ratio of nonperforming loans to loans


0.22%


0.17%


0.22%


0.24%


0.23%

Ratio of allowance for loan losses to loans


0.97%


0.98%


1.03%


1.05%


1.05%

Overall asset quality continued to improve during the third quarter of 2016, as total nonperforming assets were $45.1 million, or 0.66% of total assets, at September 30, 2016, as compared to $47.7 million, or 0.74% of total assets, at June 30, 2016.  The increase in non-acquired non-accrual loans was due to a small number of higher dollar loans being classified as non-accrual during the third quarter of 2016.

Excluding nonperforming assets acquired by the Company, nonperforming assets were $21.0 million, or 0.61% of non-acquired loans and OREO, at September 30, 2016, as compared to $21.2 million, or 0.67% of non-acquired loans and OREO, at June 30, 2016. 

The Company experienced $0.7 million of net recoveries on previous charge-offs during the third quarter of 2016, compared to net recoveries of $0.6 million during the second quarter of 2016.  Gross charge-offs were $0.9 million during the third quarter of 2016, which is unchanged from the level of gross charge-offs for the second quarter of 2016.

The allowance for loan losses was $36.4 million at September 30, 2016, an increase from $33.8 million at June 30, 2016.  The Company recorded a provision for loan losses of $1.9 million during the third quarter of 2016, as compared to $0.7 million recorded during the second quarter of 2016.  The increase in provision is due to the continued high levels of loan growth in the originated loan portfolio.

 

Net Interest Income and Margin




Three Months Ended


Nine Months Ended



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
2015 


 Sept. 30,
2015 


 Sept. 30,
2016 


 Sept. 30,
2015 

Quarterly average balances:


(Dollars in thousands)

    Loans 


$ 4,893,926


$ 4,437,248


$ 4,241,970


$ 4,193,632


$3,957,846


$ 4,511,524


$ 3,453,281

    Investment securities 


828,144


760,841


737,361


656,940


631,407


789,847


547,321

    Interest-bearing balances and other 

147,763


134,923


139,367


76,533


68,201


140,710


59,009

    Total interest-earning assets 


5,869,833


5,333,012


5,118,698


4,927,105


4,657,454


5,442,081


4,059,611

    Deposits: 















      Non-interest bearing 


907,344


825,148


778,114


772,831


733,659


837,126


613,953

      Interest-bearing 


4,475,901


4,138,466


3,953,668


3,784,140


3,539,391


4,190,391


3,126,453

    Total deposits 


5,383,245


4,963,614


4,731,782


4,556,971


4,273,050


5,027,517


3,740,406

    Borrowed funds 


321,218


272,374


262,880


288,209


334,584


285,621


277,069

    Total interest-bearing liabilities 


4,797,119


4,410,840


4,216,548


4,072,349


3,873,975


4,476,012


3,403,522

    Shareholders' equity 


768,124


625,021


597,127


553,475


517,835


663,806


437,699
















Interest Income/Expense:















   Loans


$      57,824


$      51,978


$      50,302


$      50,762


$     48,050


$    160,104


$    127,964

   Investment securities, tax


3,113


2,908


2,720


2,069


1,842


8,741


4,269

   Investment securities, non-tax (1)

6,027


5,229


5,151


5,186


5,173


16,407


15,238

   Interest-bearing balances and other 

291


228


214


141


162


733


414

   Total interest income


67,255


60,343


58,387


58,158


55,227


185,985


147,885

   Deposits


7,619


6,704


6,241


5,851


5,265


20,564


14,595

   Borrowings


1,989


1,774


1,750


1,648


1,789


5,513


4,590

   Total interest expense


9,608


8,478


7,991


7,499


7,054


26,077


19,185

   Net interest income


$      57,647


$      51,865


$      50,396


$      50,659


$     48,173


$    159,908


$    128,700
















Average Yields and Costs:















   Loans


4.70%


4.71%


4.77%


4.80%


4.82%


4.74%


4.95%

   Investment securities, tax


2.93%


3.01%


2.94%


2.81%


2.73%


2.96%


2.98%

   Investment securities, non-tax (1)

5.91%


5.65%


5.68%


5.63%


5.64%


5.55%


5.73%

   Interest-bearing balances and other 

0.78%


0.68%


0.62%


0.73%


0.94%


0.70%


0.94%

   Total interest-earning assets


4.56%


4.55%


4.59%


4.68%


4.70%


4.57%


4.87%

   Total interest-bearing deposits


0.68%


0.65%


0.63%


0.61%


0.59%


0.66%


0.62%

   Borrowed funds


2.46%


2.62%


2.68%


2.27%


2.12%


2.58%


2.21%

   Total interest-bearing liabilities


0.80%


0.77%


0.76%


0.73%


0.72%


0.78%


0.75%

   Cost of funds


0.67%


0.65%


0.64%


0.61%


0.61%


0.66%


0.64%

   Net interest margin


3.91%


3.91%


3.96%


4.08%


4.10%


3.92%


4.24%


(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 third quarter of 2016 was $57.6 million, an increase from $51.9 million for the second quarter of 2016.  FTE net interest margin was 3.91% for the third quarter of 2016, which remained unchanged from the second quarter of 2016.  The average yield on interest-earning assets remained relatively consistent as compared to the second quarter of 2016, while the rate paid on interest-bearing liabilities increased slightly.  Accretion earned on the Company's acquired loan portfolio was $5.8 million during the third quarter of 2016, as compared to $5.3 million earned in the second quarter of 2016.  Excluding accretion, the average yield on loans was 4.23% for the third quarter 2016, as compared to 4.24% for the second quarter of 2016. 

Average interest-earning assets for the third quarter of 2016 were $5.87 billion, an increase from $5.33 billion for the second quarter of 2016.  The increase was primarily due to the full quarter impact of the acquisition of Southcoast, as well as continued strong levels of organic loan growth throughout our existing markets.  Average interest-bearing liabilities were $4.80 billion for the third quarter of 2016, an increase from $4.41 billion during the second quarter of 2016.   This increase was primarily in interest-bearing deposits, which increased $337.4 million during the third quarter of 2016 due to full quarter impact of the Southcoast 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, a commercial bank with total assets of $6.80 billion.  Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 71 current banking offices in Virginia, North and South Carolina.  The Bank's 26 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" 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 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


Nine Months Ended



 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
2015 


 Sept. 30,
2015 


 Sept. 30,
2016 


 Sept. 30,
2015 

Operating Earnings per Share, Diluted (1)


(Dollars in thousands)

Net income (GAAP)


$      18,140


$      14,647


$      14,435


$      12,739


$      11,939


$    47,222


$    31,711

Transaction-related expenses, net of tax


1,618


2,399


903


2,713


3,078


4,920


5,650

Loss on extinguishment of debt, net of tax


-


-


-


-


481


-


481

Securities gains (losses), net of tax


21


4


(25)


28


500


1


529

Operating earnings (non-GAAP)


19,736


17,042


15,363


15,424


14,998


52,141


37,313

Weighted average fully diluted shares outstanding


47,360


41,560


40,885


39,452


38,165


43,287


34,545

Operating earnings per share, diluted (non-GAAP)


$          0.42


$          0.41


$          0.38


$          0.39


$          0.39


$        1.20


$        1.08
















Tangible Common Book Value per Share (2)















Shareholders' equity (GAAP)


$    795,212


$    717,061


$    603,553


$    592,147


$    522,497


$  795,212


$  522,497

Intangible assets


207,820


207,234


151,829


152,985


146,623


207,820


146,623

Tangible common shareholders equity (non-GAAP)


587,392


509,827


451,724


439,162


375,874


587,392


375,874

Common shares outstanding


48,110


45,201


40,806


40,774


38,138


48,110


38,138

Tangible common book value per share (non-GAAP)


$        12.21


$        11.28


$        11.07


$        10.77


$          9.86


$      12.21


$        9.86
















Return on Average Tangible Common Equity (2)















Net income (GAAP)


$      18,140


$      14,647


$      14,435


$      12,739


$      11,939


$    47,222


$    31,711

Amortization of intangibles, net of tax


732


748


728


746


694


2,208


1,752

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


18,872


15,395


15,163


13,485


12,633


49,430


33,463

Average common shareholders equity


768,124


625,021


597,127


553,475


517,835


663,806


437,699

Average intangible assets


206,653


159,184


152,379


152,255


147,143


172,835


104,519

Average tangible common shareholders' equity (non-GAAP)


561,471


465,837


444,748


401,220


370,692


490,971


333,180

Return on average tangible common equity (non-GAAP)


13.37%


13.29%


13.71%


13.33%


13.52%


13.45%


13.43%
















Operating Return on Average Assets (1)















Net income (GAAP)


$      18,140


$      14,647


$      14,435


$      12,739


$      11,939


$    47,222


$    31,711

Transaction-related expenses, net of tax


1,618


2,399


903


2,713


3,078


4,920


5,650

Loss on extinguishment of debt, net of tax


-


-


-


-


481


-


481

Securities gains (losses), net of tax


21


4


(25)


28


500


1


529

Operating earnings (non-GAAP)


$      19,736


$      17,042


$      15,363


$      15,424


$      14,998


$    52,141


$    37,313

Average assets


6,532,517


5,908,341


5,635,137


5,428,444


5,154,690


6,027,183


4,481,400

Operating return on average assets (non-GAAP)


1.20%


1.16%


1.10%


1.13%


1.15%


1.16%


1.11%
















Operating Return on Average Tangible Common Equity (2)















Net income (GAAP)


$      18,140


$      14,647


$      14,435


$      12,739


$      11,939


$    47,222


$    31,711

Amortization of intangibles, net of tax


732


748


728


746


694


2,208


1,752

Transaction-related expenses, net of tax


1,618


2,399


903


2,713


3,078


4,920


5,650

Loss on extinguishment of debt, net of tax


-


-


-


-


481


-


481

Securities gains (losses), net of tax


21


4


(25)


28


500


1


529

Operating tangible net income (non-GAAP)


$      20,468


$      17,790


$      16,091


$      16,170


$      15,692


$    54,350


$    39,065

Average common shareholders equity


768,124


625,021


597,127


553,475


517,835


663,806


437,699

Average intangible assets


206,653


159,184


152,379


152,255


147,143


172,835


104,519

Average tangible common shareholders' equity (non-GAAP)


561,471


465,837


444,748


401,220


370,692


490,971


333,180

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


14.50%


15.36%


14.55%


15.99%


16.79%


14.79%


15.68%
















Operating Efficiency Ratio (3)















Non-interest expense (GAAP)


$      37,835


$      36,840


$      34,886


$      37,580


$      38,185


$  109,561


$  101,575

Transaction-related expenses


2,568


3,808


1,434


4,307


4,886


7,810


8,969

Loss on extinguishment of debt


-


-


-


-


763


-


763

Operating non-interest expense (non-GAAP)


35,267


33,032


33,452


33,273


32,536


101,751


91,843

Net interest income, FTE


57,647


51,865


50,396


50,659


48,173


159,908


128,700

Non-interest income - GAAP


9,811


9,015


7,962


8,286


9,169


26,788


24,162

Securities gains (losses), net


34


4


(39)


45


794


(1)


839

Operating efficiency ratio (non-GAAP)


52.31%


54.26%


57.28%


56.49%


57.54%


54.50%


60.41%


(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.

Logo - http://photos.prnewswire.com/prnh/20030917/BNCLOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/bnc-bancorp-announces-earnings-for-third-quarter-2016-300348065.html

SOURCE BNC Bancorp

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