BNC Bancorp Announces Earnings for Fourth Quarter and Fiscal Year 2016

News provided by

BNC Bancorp

Jan 22, 2017, 17:59 ET

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

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.

SOURCE BNC Bancorp

Related Links

http://www.bncbanking.com

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