Market Overview

BNC Bancorp Announces Earnings for Fourth Quarter and Fiscal Year 2016

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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

 

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

 

Financial Performance




Three Months Ended


Year Ended

INCOME SUMMARY


Dec. 31,
2016


Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Dec. 31,
2016


Dec. 31,
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

















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,
2016


Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Dec. 31,
2016


Dec. 31,
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,
2016


Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Dec. 31,
2016


Dec. 31,
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,
2016


Sept. 30,
2016


Jun. 30,
2016


Mar. 31,
2016


Dec. 31,
2015


Dec. 31,
2016


Dec. 31,
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

















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

































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,
2016 


 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
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,
 2016 


 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 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,
 2016 


 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 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,
 2016 


 Sept. 30, 2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
 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












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,
2016 


 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
2015 


 Dec. 31,
2016 


 Dec. 31,
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
















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



 Dec. 31,
2016 


 Sept. 30,
2016 


 Jun. 30,
2016 


 Mar. 31,
2016 


 Dec. 31,
2015 


 Dec. 31,
2016 


 Dec. 31,
2015 

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

Operating earnings (non-GAAP)


21,810


19,736


17,042


15,363


15,424


73,952


52,738

Weighted average fully diluted shares outstanding


50,852


47,360


41,560


40,885


39,452


45,185


35,782

Operating earnings per share, diluted (non-GAAP)


$          0.43


$          0.42


$          0.41


$          0.38


$          0.39


$        1.64


$        1.47
















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

Tangible common shareholders equity (non-GAAP)


641,202


587,392


509,827


451,724


439,162


641,202


439,162

Common shares outstanding


52,177


48,110


45,201


40,806


40,774


52,177


40,774

Tangible common book value per share (non-GAAP)


$        12.29


$        12.21


$        11.28


$        11.07


$        10.77


$      12.29


$      10.77
















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

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


16,579


18,872


15,395


15,163


13,485


66,009


46,948

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

Average tangible common shareholders' equity (non-GAAP)


622,854


561,471


465,837


444,748


401,220


524,165


350,333

Return on average tangible common equity (non-GAAP)


10.59%


13.37%


13.29%


13.71%


13.33%


12.59%


13.40%
















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

Operating earnings (non-GAAP)


$      21,810


$      19,736


$      17,042


$      15,363


$      15,424


$    73,952


$    52,738

Average assets


7,158,393


6,532,517


5,908,341


5,635,137


5,428,444


6,311,531


4,720,107

Operating return on average assets (non-GAAP)


1.21%


1.20%


1.16%


1.10%


1.13%


1.17%


1.12%
















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

Operating tangible net income (non-GAAP)


$      22,698


$      20,468


$      17,790


$      16,091


$      16,170


$    77,048


$    55,236

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

Average tangible common shareholders' equity (non-GAAP)


622,854


561,471


465,837


444,748


401,220


524,165


350,333

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


14.50%


14.50%


15.36%


14.55%


15.99%


14.70%


15.77%
















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

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%
















 

(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.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/bnc-bancorp-announces-earnings-for-fourth-quarter-and-fiscal-year-2016-300394526.html

SOURCE BNC Bancorp

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