U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
| x | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2005
| ¨ | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period ended
Commission File Number 000-50128
BNC Bancorp
(Exact name of registrant as specified in its charter)
| North Carolina | 47-0898685 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 831 Julian Avenue Thomasville, North Carolina |
27360 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (336) 476-9200
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Common Stock, No Par Value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether or not the Registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of May 13, 2005, the registrant had outstanding 3,491,821 shares of Common Stock, no par value.
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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| March 31, 2005 (Unaudited) |
December 31, 2004* |
|||||||
| (In thousands, except per share data) | ||||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 8,321 | $ | 6,747 | ||||
| Interest-earning balances |
5,175 | 780 | ||||||
| Securities available for sale |
38,655 | 35,428 | ||||||
| Federal Home Loan Bank stock, at cost |
3,105 | 3,037 | ||||||
| Loans held for sale |
1,578 | 1,894 | ||||||
| Loans |
441,495 | 420,838 | ||||||
| Less allowance for loan losses |
(5,636 | ) | (5,361 | ) | ||||
| Net loans |
435,859 | 415,477 | ||||||
| Accrued interest receivable |
2,004 | 1,868 | ||||||
| Premises and equipment, net |
13,191 | 11,827 | ||||||
| Investment in life insurance |
11,828 | 11,713 | ||||||
| Goodwill |
3,423 | 3,423 | ||||||
| Other assets |
5,039 | 5,355 | ||||||
| Total assets |
$ | 528,178 | $ | 497,549 | ||||
| Liabilities and Shareholders’ Equity |
||||||||
| Deposits: |
||||||||
| Non-interest bearing demand |
$ | 40,954 | $ | 34,485 | ||||
| Interest-bearing demand |
129,199 | 140,485 | ||||||
| Savings |
11,471 | 10,787 | ||||||
| Time deposits of $100,000 and greater |
169,305 | 134,696 | ||||||
| Other time |
77,496 | 71,027 | ||||||
| Total deposits |
428,425 | 391,480 | ||||||
| Short-term borrowings |
22,065 | 28,275 | ||||||
| Long-term debt |
45,496 | 45,496 | ||||||
| Accrued expenses and other liabilities |
2,275 | 3,261 | ||||||
| Total liabilities |
498,261 | 468,512 | ||||||
| Shareholders’ Equity: |
||||||||
| Common stock, no par value; authorized 80,000,000 shares; 3,492,588 and 3,480,548 issued and outstanding at March 31, 2005 and December 31, 2004, respectively |
20,105 | 20,033 | ||||||
| Retained earnings |
9,627 | 8,679 | ||||||
| Accumulated other comprehensive income |
185 | 325 | ||||||
| Total shareholders’ equity |
29,917 | 29,037 | ||||||
| Total liabilities and shareholders’ equity |
$ | 528,178 | $ | 497,549 | ||||
| * | Derived from audited consolidated financial statements. |
See accompanying notes.
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months Ended March 31, | ||||||
| 2005 |
2004 | |||||
| (In thousands, except per share data) | ||||||
| INTEREST INCOME |
||||||
| Interest and fees on loans |
$ | 6,546 | $ | 4,624 | ||
| Interest on U.S. Treasury and agency securities |
18 | 38 | ||||
| Interest on state and municipal securities |
383 | 292 | ||||
| Other interest income |
54 | 33 | ||||
| TOTAL INTEREST INCOME |
7,001 | 4,987 | ||||
| INTEREST EXPENSE |
||||||
| Interest on demand deposits |
552 | 541 | ||||
| Interest on savings deposits |
12 | 5 | ||||
| Interest on time deposits of $100,000 and greater |
1,158 | 391 | ||||
| Interest on other time deposits |
421 | 287 | ||||
| Interest on short-term borrowings |
123 | 12 | ||||
| Interest on long-term debt |
498 | 360 | ||||
| TOTAL INTEREST EXPENSE |
2,764 | 1,597 | ||||
| NET INTEREST INCOME |
4,237 | 3,390 | ||||
| PROVISION FOR LOAN LOSSES |
480 | 120 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
3,756 | 3,270 | ||||
| NON-INTEREST INCOME |
||||||
| Mortgage fee income |
85 | 127 | ||||
| Service charges on deposit accounts |
378 | 360 | ||||
| Investment brokerage fees |
30 | 56 | ||||
| Increase in cash surrender value of life insurance |
115 | 86 | ||||
| Other income |
9 | 6 | ||||
| TOTAL NON-INTEREST INCOME |
617 | 635 | ||||
| NON-INTEREST EXPENSE |
||||||
| Salaries and employee benefits |
1,788 | 1,616 | ||||
| Occupancy expenses |
185 | 159 | ||||
| Furniture and equipment expense |
154 | 152 | ||||
| Data processing and supply expense |
181 | 225 | ||||
| Advertising and business development expenses |
122 | 90 | ||||
| Insurance, professional and other services |
308 | 230 | ||||
| Other operating expenses |
302 | 360 | ||||
| TOTAL NON-INTEREST EXPENSE |
3,040 | 2,832 | ||||
| INCOME BEFORE INCOME TAX EXPENSE |
1,333 | 1,074 | ||||
| INCOME TAX EXPENSE |
375 | 295 | ||||
| NET INCOME |
$ | 958 | $ | 779 | ||
| BASIC NET INCOME PER SHARE |
$ | 0.27 | $ | 0.22 | ||
| DILUTED NET INCOME PER SHARE |
$ | 0.26 | $ | 0.21 | ||
See accompanying notes.
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| (Amounts in thousands) | ||||||||
| Operating Activities |
||||||||
| Net income |
$ | 958 | $ | 779 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
172 | 159 | ||||||
| Amortization of premiums and discounts, net |
(279 | ) | 31 | |||||
| Amortization of core deposit intangible |
5 | — | ||||||
| Provision for loan losses |
480 | 120 | ||||||
| Net increase in cash surrender value of life insurance |
(115 | ) | (86 | ) | ||||
| Loss on sales of foreclosed assets |
18 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| (Increase) decrease in loans held for sale |
316 | (521 | ) | |||||
| Increase in accrued interest receivable |
(136 | ) | (78 | ) | ||||
| Increase in other assets |
(51 | ) | (265 | ) | ||||
| Increase in accrued expenses and other liabilities |
(302 | ) | (12 | ) | ||||
| Net cash provided by operating activities |
1,066 | 127 | ||||||
| Investing Activities |
||||||||
| Purchases of securities available for sale and Federal Home Loan Bank stock |
(4,263 | ) | (1,547 | ) | ||||
| Proceeds from calls and maturities of securities available for sale |
1,027 | 1,746 | ||||||
| Investment in life insurance |
— | (2,573 | ) | |||||
| Net increase in loans |
(21,043 | ) | (33,461 | ) | ||||
| Purchase of premises and equipment |
(1,533 | ) | (388 | ) | ||||
| Proceeds from sales of foreclosed assets |
522 | 504 | ||||||
| Net cash used by investing activities |
(25,290 | ) | (35,719 | ) | ||||
| Financing Activities |
||||||||
| Net increase in deposits |
36,945 | 24,878 | ||||||
| Net increase in short-term borrowings |
(6,210 | ) | (286 | ) | ||||
| Net increase in long-term debt |
— | 10,000 | ||||||
| Proceeds from exercise of stock options |
36 | 7 | ||||||
| Cash dividends paid |
(578 | ) | (501 | ) | ||||
| Net cash provided by financing activities |
30,193 | 34,098 | ||||||
| Net increase (decrease) in cash and cash equivalents |
5,969 | (1,494 | ) | |||||
| Cash and cash equivalents, beginning of period |
7,527 | 11,364 | ||||||
| Cash and cash equivalents, end of period |
$ | 13,496 | $ | 9,870 | ||||
See accompanying notes.
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Notes to Consolidated Financial Statements
NOTE A - BASIS OF PRESENTATION
In management’s opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for the three-month periods ended March 31, 2005 and 2004, in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of BNC Bancorp (the “Company”) and its wholly-owned subsidiaries, Bank of North Carolina (the “Bank”). All significant intercompany transactions and balances have been eliminated in consolidation.
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, as well as the amounts of income and expense during the reporting period. Actual results could differ from those estimates. Operating results for the three-month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005.
The organization and business of the Company, accounting policies followed by the Company and other relevant information are contained in the notes to the consolidated financial statements filed as part of the Company’s 2004 Annual Report on Form 10-KSB for the year ended December 31, 2004. This quarterly report should be read in conjunction with the Annual Report.
NOTE B - COMMITMENTS
At March 31, 2005, loan commitments were as follows (in thousands):
| Commitments to extend credit |
$ | 46,417 | |
| Undisbursed lines of credit |
24,056 | ||
| Letters of credit |
1,404 | ||
| Commitments to sell loans held for sale |
1,578 |
NOTE C - COMPREHENSIVE INCOME
A summary of comprehensive income is as follows:
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| (In thousands) | ||||||||
| Net income |
$ | 958 | $ | 779 | ||||
| Other comprehensive income (loss): |
||||||||
| Unrealized holding gain (losses) on available for sale securities arising during the period |
(220 | ) | 401 | |||||
| Tax effect |
80 | (145 | ) | |||||
| (140 | ) | 256 | ||||||