Press Release

 

Source:	BNC Bancorp
Contact:	Richard D. Callicutt II
	President and CEO
	336-869-9200

 

BNC Bancorp Announces Earnings for Fourth Quarter and Full Year 2013

 

High Point, NC – BNC Bancorp (NASDAQ: BNCN) (“Company”), parent company for Bank of North Carolina (“Bank”), today reported financial results for the fourth quarter and year ended December 31, 2013.

 

Highlights for 2013:

 

·

BNC Bancorp’s stock was the highest performing bank stock in the Southeast United States based on a recent study provided by Bank Street Partners;

 

·

Richard D. Callicutt II was named President and Chief Executive Officer, upon the planned retirement of founding President and CEO, W. Swope Montgomery, Jr.;

 

·

Operating earnings per diluted share of $0.71, compared to $0.00 per diluted share for 2012;

 

·

Operating earnings of $19.1 million, compared to operating loss of $3.3 million for 2012;

 

·

Loans not recorded at fair value increased 17.6% during fiscal year 2013;

 

·

Fully taxable-equivalent net interest margin increased to 4.29%, compared to 3.85% for 2012;

 

·

Completed acquisition of Randolph Bank & Trust (“Randolph”), increasing our presence in Piedmont Triad area of North Carolina by approximately $250 million; and

 

·

Announced merger agreements with both South Street Financial Corporation, the parent company of Home Savings Bank, FSB in Albemarle, North Carolina ("South Street"), and Community First Financial Group, Inc. ("Community First"), the parent company of Harrington Bank, FSB in Chapel Hill, North Carolina.

 

Operating earnings for the quarter ended December 31, 2013 totaled $5.7 million, or $0.21 per diluted share, an increase of 12.7% compared to $5.1 million, or $0.19 per diluted share, for the quarter ended September 30, 2013, and an increase from an operating loss of $0.1 million, or $0.00 per diluted share, for the quarter ended December 31, 2012. Operating earnings exclude transaction-related expenses, bargain purchase gain on acquisitions, acquisition-related gains, and gain (loss) on sale of securities, and include preferred stock dividends.

 

Operating earnings for the year ended December 31, 2013 totaled $19.1 million, or $0.71 per diluted share, as compared to an operating loss of $3.3 million, or ($0.19) per diluted share, for the year ended December 31, 2012.

 

 

Net income for the year ended December 31, 2013 was $17.2 million, an increase of 65.0% when compared to net income of $10.5 million for the year ended December 31, 2012. Net income available to common shareholders for the year ended December 31, 2013 was $16.2 million, or $0.61 per diluted share, an increase of 101.1% compared to net income available to common shareholders of $8.0 million, or $0.48 per diluted share, for the year ended December 31, 2012. The financial results for the year ended December 31, 2012 include $12.7 million of pre-tax bargain purchase gain the Company recorded on the acquisitions of Carolina Federal Savings Bank (“Carolina Federal”) and First Trust Bank (“First Trust”), as well as $3.0 million of pre-tax gains on the sale of investment securities.

 

Net income for the quarter ended December 31, 2013 was $3.3 million, a decrease of 35.2% compared to net income of $5.0 million for both the quarter ended September 30, 2013 and the quarter ended December 31, 2012. Net income available to common shareholders for the quarter ended December 31, 2013 was $3.3 million, or $0.12 per diluted share, a decrease of 35.0% compared to net income available to common shareholders of $5.0 million, or $0.19 per diluted share, for the quarter ended September 30, 2013, and a decrease of 26.4% compared to net income available to common shareholders of $4.4 million, or $0.19 per diluted share, for the fourth quarter of 2012. The financial results for the quarter ended December 31, 2013 include the impact of the acquisition of Randolph, which was completed on October 1, 2013, while the results for the quarter ended December 31, 2012 include $5.0 million of pre-tax bargain purchase gain the Company recorded on the acquisition of First Trust.

 

Average common shares outstanding increased significantly since the second half of 2012 as a result of the Company’s capital raise in June 2012, as well as common stock issued in connection with the acquisitions of KeySource Financial (“KeySource”), First Trust and Randolph. For the years ended December 31, 2013 and 2012, average fully-diluted shares outstanding were 26.7 million and 17.6 million, respectively.

 

Total assets at December 31, 2013 were $3.23 billion, an increase of 4.7% as compared to total assets of $3.08 billion at December 31, 2012. The increase in assets is primarily due to the acquisition of Randolph during the fourth quarter of 2013, offset by the Company’s decision to utilize excess liquidity to primarily repay higher cost deposits as they matured. This deleveraging has helped the Company execute on its strategic initiative to improve capital ratios and net interest margin. Excess liquidity was also used to purchase higher yielding investment securities, which has also contributed to the improved net interest margin.

 

Additional Highlights for 2013:

 

·

Redeemed all Series A Preferred Stock with non-dilutive term loan;

 

·

Diluted earnings per share of $0.61, compared to $0.48 per diluted share for 2012;

 

·

Net income available to common shareholders of $16.2 million, an increase of 101.1% compared to 2012;

 

·

Nonaccrual loans not covered by loss-share decreased 23.7% during fiscal year 2013;

 

·

Nonperforming assets decreased 27.1% during fiscal year 2013;

 

·

Fully taxable-equivalent net interest margin, before hedging costs, increased to 4.66%, compared to 4.21% for 2012;

 

·

Return on tangible common equity ratio of 7.50%, compared to 6.57% for 2012; and

 

·

Operating return on tangible common equity ratio of 8.79%, compared to (2.28%) for 2012.

 

Richard D. Callicutt II, President and CEO, stated, “The fourth quarter and all of 2013 were pivotal in solidifying the core earnings power of our organization.  We saw significant improvement in all of our key credit metrics while growing non-acquired loans by more than 17%.  We successfully completed the integration of the acquisitions from 2012 and began to see those provide a more solid platform for gains in market share.  The Randolph transaction and systems conversion were both completed in late 2013, allowing us to maximize the earnings opportunity in 2014 from that transaction.  Finally, the South Street and Community First announcements, both expected to close during the second quarter of 2014, have created more opportunity to leverage our infrastructure, diversify our deposit base, gain access to a client base that will benefit from an enhanced product offering and provide an additional revenue stream toward our future earnings goals.  Lastly, as of October 2013, all Bank of North Carolina employees are shareholders of our Company.  The ownership mentality as they perform their duties and responsibilities each day is paying off in focus, creativity and enthusiasm.”

 

 

Operating Results

 

Fully taxable-equivalent (“FTE”) net interest income for the fourth quarter of 2013 was $31.8 million, an increase of 11.9% from $28.5 million for the third quarter of 2013, and an increase of 24.1% from $25.6 million for the fourth quarter of 2012. FTE net interest margin was 4.39% for the fourth quarter of 2013, an increase of 13 basis points from 4.26% for the third quarter of 2013, and an increase of 30 basis points from 4.09% for the fourth quarter of 2012. Without the cash flow hedging expense, FTE net interest margin for the fourth quarter of 2013 was 4.76%, compared to 4.65% for the third quarter of 2013 and 4.43% for the fourth quarter of 2012.

 

FTE net interest income for the year ended December 31, 2013 was $115.8 million, an increase of 34.1% from $86.4 million for the year ended December 31, 2012. FTE net interest margin was 4.29% for the year ended December 31, 2013, an increase of 44 basis points from 3.85% for the year ended December 31, 2012. Without the cash flow hedging expense, FTE net interest margin for the year ended December 31, 2013 was 4.66%, compared to 4.21% for the comparable period of 2012.

 

Average interest-earning assets were $2.88 billion for the fourth quarter of 2013, an increase of 8.6% from $2.65 billion during the third quarter of 2013, and an increase of 15.4% from $2.50 billion for the fourth quarter of 2012. The increase from the third quarter of 2013 was primarily due to the interest-earning assets acquired from Randolph, along with continued loan growth in our markets and an increase in our investment securities portfolio.

 

Average interest-earning assets were $2.70 billion for the year ended December 31, 2013, an increase of 20.1% from $2.24 billion for the year ended December 31, 2012. The increase in average interest-earning assets from 2012 is primarily due to the full year impact of interest-earning assets acquired from Carolina Federal, KeySource and First Trust during 2012, interest-earning assets acquired from Randolph during the fourth quarter of 2013, along with continued loan growth in our markets and an increase in our investment securities portfolio.

 

The Company’s average yield on interest-earning assets was 5.48% for the fourth quarter of 2013, an increase of 12 basis points from 5.36% for the third quarter of 2013, and an increase of 10 basis points from 5.38% for the fourth quarter of 2012. The increase from third quarter of 2013 was primarily due to the addition of higher yielding loans acquired from Randolph, as well as an increase in loan accretion from the acquired loan portfolio. The increase from the fourth quarter of 2012 was primarily due to higher loan accretion from the acquired loan portfolio, as well as the addition of higher yielding loans acquired from First Trust and Randolph. Loan accretion during the fourth quarter of 2013 totaled $4.2 million, an increase of 31.0% from loan accretion of $3.2 million for the third quarter of 2013, and an increase of 36.4% from $3.1 million of accretion recorded in the fourth quarter of 2012.

 

The Company’s average yield on interest-earning assets was 5.41% for the year ended December 31, 2013, an increase of 10 basis points compared to 5.31% for the comparable period of 2012. The increase from 2012 was primarily due to an increase in loan accretion from the acquired loan portfolio, as well as the addition of higher yielding loans acquired from Carolina Federal, KeySource, First Trust and Randolph. Loan accretion during the year ended December 31, 2013 totaled $14.4 million, an increase of 116.7% from loan accretion of $6.7 million for the year ended December 31, 2012. These increases were offset by lower yields earned on investment securities due to the replacement of matured and called investments with lower yielding securities.

 

Average interest-bearing liabilities were $2.56 billion for the fourth quarter of 2013, an increase of 7.6% from $2.38 billion for the third quarter of 2013, and an increase of 11.6% from $2.30 billion for the fourth quarter of 2012. The increase from the third quarter of 2013 was due to additional interest-bearing liabilities acquired from Randolph, as well as increased borrowings during the fourth quarter of 2013.

 

Average interest-bearing liabilities were $2.43 billion for the year ended December 31, 2013, an increase of 14.2% from $2.13 billion for the year ended December 31, 2012. The increase in average interest-bearing liabilities from 2012 is primarily due to the full year impact of the acquisitions of Carolina Federal, KeySource and First Trust during 2012, increased borrowings during fiscal year 2013 and the acquisition of Randolph, offset by the Company’s use of excess liquidity to primarily repay wholesale and non-core deposits as they matured.

 

The Company’s average cost of interest-bearing liabilities was 1.23% for the fourth quarter of 2013, which is consistent with the third quarter of 2013, and a decrease of 18 basis points from 1.41% for the fourth quarter of 2012. The decrease was due to the Company’s continued effort to reduce exposure to higher cost deposit products, as well as lower interest rates paid on borrowings, which was offset by continued increases in cash flow hedging expense. For the fourth quarter of 2013, cash flow hedging expenses totaled $2.7 million, compared to $2.6 million for the third quarter of 2013 and $2.1 million for the fourth quarter of 2012.

 

 

The Company’s average cost of interest-bearing liabilities was 1.24% for the year ended December 31, 2013, a decrease of 31 basis points from 1.55% for the year ended December 31, 2012. This decrease was primarily due to the Company’s decision to reduce exposure to higher cost deposit products and aggressively reduce deposit rates over the past three quarters, as well as reductions in interest rates paid on borrowings. These rate decreases were slightly offset by an increase in cash flow hedging expense, which totaled $9.9 million for the year ended December 31, 2013, compared to $7.9 million for the year ended December 31, 2012.

 

Average Yields / Costs (FTE)

(unaudited)

  

		Year Ended December 31,								Three Months Ended
		2013				2012				December 31, 2013				September 30, 2013				December 31, 2012
Yield on interest-earning assets			5.41	%			5.31	%			5.48	%			5.36	%			5.38	%
Cost of interest-bearing liabilities			1.24	%			1.55	%			1.23	%			1.23	%			1.41	%
Cost of funds			1.11	%			1.42	%			1.09	%			1.10	%			1.28	%
Net interest spread			4.17	%			3.76	%			4.25	%			4.13	%			3.97	%
Net interest margin			4.29	%			3.85	%			4.39	%			4.26	%			4.09	%
Net interest margin w/o hedging expense			4.66	%			4.21	%			4.76	%			4.65	%			4.43	%

 

Non-interest income was $5.2 million for the fourth quarter of 2013, a decrease of 11.1% compared to $5.8 million for the third quarter of 2013, and a decrease of 50.2% from $10.4 million for the fourth quarter of 2012. Adjusted non-interest income was $5.2 million for the fourth quarter of 2013, a decrease of 3.3% from $5.3 million for the third quarter of 2013, and an increase of 8.3% from $4.8 million for the fourth quarter of 2012. Adjusted non-interest income excludes bargain purchase gain on acquisition, acquisition-related gains (includes income related to the subsequent settlement of a liability assumed in an acquisition) and gain (loss) on sale of securities. Service charge income increased by 35.4% from the third quarter of 2013 due to an increased volume of transactions, which was offset by a 29.0% decrease in mortgage fees due to decreases in the mortgage pipeline and reduced gain-on-sale margins.

 

For the year ended December 31, 2013, non-interest income was $22.8 million, a decrease of 31.2% compared to non-interest income of $33.1 million for the year ended December 31, 2012. Adjusted non-interest income was $21.7 million for the year ended December 31, 2013, an increase of 24.4% from $17.4 million for the year ended December 31, 2012. Adjusted non-interest income excludes bargain purchase gain on acquisitions, acquisition-related gains, gain (loss) on sale of securities and an insurance settlement received during 2013. The increase was primarily due to increased volume of mortgage originations, as the Company continued to expand commissioned originators across key target markets, as well as an increase in service charge income due to an increased volume of transactions, primarily due to our recent acquisitions.

 

Non-interest expense was $28.6 million for the fourth quarter of 2013, an increase of 27.6% compared to non-interest expense of $22.4 million for the third quarter of 2013, and an increase of 15.1% from $24.9 million for the fourth quarter of 2012. Excluding transaction-related costs, adjusted non-interest expense for the fourth quarter of 2013 was $24.7 million, an increase of 13.0% from $21.9 million for the third quarter of 2013, and an increase of 5.5% from $23.5 million for the fourth quarter of 2012. Transaction-related costs include legal and professional fees, personnel costs, data processing expenses, and other miscellaneous expenses directly attributable to the transaction. The increase from the third quarter of 2013 was primarily due to additional employees and facilities acquired from Randolph. The decrease from the fourth quarter of 2012 was primarily due to a reduction in valuation charges recorded on other real estate owned (“OREO”) and reduced loan, foreclosure and collection expenses.

 

Non-interest expense was $97.9 million for the year ended December 31, 2013, an increase of 19.0% from $82.3 million for the year ended December 31, 2012. Excluding transaction-related costs, adjusted non-interest expense for the year ended December 31, 2013 was $92.2 million, an increase of 19.6% from $77.1 million for the year ended December 31, 2012. The increase from 2012 was primarily due to the full year impact of the additional employees and facilities purchased in connection with the acquisitions of Carolina Federal, KeySource and First Trust during 2012, as well as the acquisition of Randolph during the fourth quarter of 2013. The additional expenses were partially offset by a reduction in valuation charges recorded on OREO and reduced loan, foreclosure and collection expenses.

 

 

Non-Interest Income / Non-Interest Expense

(dollars in thousands; unaudited)

                   

		Year Ended December 31,								Three Months Ended
		2013				2012				December 31, 2013				September 30, 2013				December 31, 2012
Non-interest income
Mortgage fees		$	8,979			$	6,169			$	1,710			$	2,408			$	1,902
Service charges			4,314				3,149				1,354				1,000				916
Earnings on bank-owned life insurance			2,318				1,771				646				571				541
Gain (loss) on sale of securities			(42	)			3,026				10				-				651
Bargain purchase gain on acquisitions			-				12,706				-				-				4,972
Other			7,237				6,317				1,458				1,845				1,412
Total non-interest income		$	22,806			$	33,138			$	5,178			$	5,824			$	10,394
Non-interest expense
Salaries and employee benefits		$	51,080			$	40,861			$	13,613			$	12,399				11,986
Occupancy			6,547				4,965				1,691				1,666				1,527
Furniture and equipment			5,542				4,241				1,552				1,351				1,222
Data processing and supply			3,219				2,607				922				854				704
Advertising and business development			2,015				1,709				590				228				489
Insurance, professional and other     services			4,655				3,187				1,495				1,111				1,013
FDIC insurance assessments			2,766				2,166				660				660				457
Loan, foreclosure and other real     estate owned			8,949				10,944				2,093				1,962				3,665
Transaction-related expenses			5,768				5,212				3,884				540				1,406
Other			7,392				6,380				2,128				1,659				2,402
Total non-interest expense		$	97,933			$	82,272			$	28,628			$	22,430			$	24,871

 

The following is a summary of transaction-related expenses incurred by transaction:

 

Transaction-Related Expenses

(dollars in thousands; unaudited)

  

		Year Ended December 31,								Three Months Ended
Transaction		2013				2012				December 31, 2013				September 30, 2013				December 31, 2012
Previous transactions		$	1,056			$	5,212			$	-			$	21			$	1,406
Randolph			4,509				-				3,681				519				-
Community First/South Street			203				-				203				-				-
Total		$	5,768			$	5,212			$	3,884			$	540			$	1,406

 

* - Costs associated with auction of CPP preferred stock and repurchase of warrant from U.S. Treasury.

 

Additional Operating Highlights

 

Total portfolio loans were $2.28 billion at December 31, 2013, an increase of 11.9% from $2.04 billion at December 31, 2012. The increase has primarily been due to the loans acquired from Randolph, as well as organic growth in commercial real estate and commercial construction loans, as the economic outlook in the Company’s markets continues to improve. Loans not recorded at fair value, which includes originated loans and acquired loans no longer required to be recorded at fair value, increased 21.4% during fiscal year 2013 to $1.77 billion. Included in this is $56.5 million of loans that have transferred from another loan category during 2013. Excluding these transfers, loans not recorded at fair value increased 17.6% during 2013. The table below outlines the Company’s loan portfolio mix between covered and non-covered loans for the past five quarters.

 

 

		Gross Loan Growth
		(dollars in thousands; unaudited)
		December 31,				September 30,				June 30,				March 31,				December 31,
		2013				2013				2013				2013				2012
Loans covered by loss share, at fair value		$	170,528			$	183,887			$	202,073			$	224,056			$	248,930
Loans not covered by loss share, at fair value			334,524				219,671				260,542				270,149				327,674
Loans not recorded at fair value (1)			1,771,465				1,696,484				1,586,326				1,536,944				1,458,654
Total portfolio loans		$	2,276,517			$	2,100,042			$	2,048,941			$	2,031,149			$	2,035,258

 

(1) Includes $17,133 of loans covered by loss-share agreements not recorded at fair value at December 31, 2013.

 

Change in balance (quarter/quarter):
Total portfolio loans			8.4	%			2.5	%			0.9	%			-0.2	%			7.1	%
Loans not recorded at fair value			4.4	%			6.9	%			3.2	%			5.4	%			0.6	%
Annual growth of loans not recorded at fair value			17.6	%

 

Total deposits at December 31, 2013 were $2.71 billion, an increase of 1.9% from total deposits of $2.66 billion as of December 31, 2012. This increase was primarily due to deposits acquired from Randolph, offset by the Company’s decision to utilize excess liquidity and the acquired securities portfolios to repay higher cost deposits as they matured, as well as aggressively reducing time deposit rates. Wholesale deposits were 32.8% of total deposits at December 31, 2013, an increase compared to 28.4% as of December 31, 2012. Transactional accounts, which are comprised of non-interest bearing and interest-bearing demand accounts, increased $127.2 million, or 8.5%, over the past twelve months. At December 31, 2013, time deposits were 40.0% of total deposits, compared to 43.7% at December 31, 2012.

 

		Total Deposit Growth
		(dollars in thousands; unaudited)
		December 31,				September 30,				June 30,				March 31,				December 31,
		2013				2013				2013				2013				2012
Non-interest bearing demand		$	324,532			$	299,670			$	275,984			$	267,458			$	275,605
Interest-bearing demand			1,299,399				1,172,512				1,152,779				1,171,484				1,221,089
Time deposits			1,082,799				963,679				999,552				1,069,207				1,159,615
Total		$	2,706,730			$	2,435,861			$	2,428,315			$	2,508,149			$	2,656,309
Change in balance (quarter/quarter)			11.1	%			0.3	%			-3.2	%			-5.6	%			15.0	%
Annual deposit growth			1.9	%

 

Total borrowings at December 31, 2013 were $227.1 million, an increase of 88.4% from total borrowings of $120.6 million as of December 31, 2012. At December 31, 2013, $125.6 million of these borrowings were short-term, while the remaining $101.5 million were long-term. The increase in borrowings was primarily due to additional borrowings from the Federal Home Loan Bank, which were used to repay higher cost deposits as they matured, as well as a term loan obtained during 2013 for the repurchase of Series A preferred stock.

 

Asset Quality

 

Net loan charge-offs for the fourth quarter of 2013 were $0.4 million, which included $0.5 million on loans not covered under loss-share agreements and net recoveries of $0.1 million on loans covered under loss-share agreements. The Company incurred $0.5 million in net charge-off losses, which represented 0.08% of average loans for the fourth quarter of 2013, compared to net charge-off losses of $2.9 million, or 0.55% of average loans, for the third quarter of 2013, and net charge-off losses of $3.8 million, or 0.78% of average loans, for the fourth quarter of 2012. The decrease in net charge-off losses during the fourth quarter of 2013 was due to an increased level of recoveries of previously charged-off loans, both covered under loss-share agreements and not covered.

 

 

Net loan charge-offs for the year ended December 31, 2013 were $20.7 million, which included $11.0 million on loans covered under loss-share agreements and $9.7 million on loans not covered under loss-share agreements. The Company’s share of the covered net loan charge-offs for the year ended December 31, 2013 was $2.2 million, with the remainder being reimbursed by the FDIC. Combined with the $9.7 million of non-covered net charge-offs, the Company incurred $11.9 million in net charge-off losses, or 0.57% of average loans, during the year ended December 31, 2013, compared to $19.5 million in net charge-off losses, or 1.09% of average loans, for the year ended December 31, 2012.

 

During the fourth quarter of 2013, the Company recorded a provision for loan losses of $2.4 million, a decrease of 27.3% from $3.4 million recorded in the third quarter of 2013, and a decrease of 55.9% from $5.5 million recorded during the fourth quarter of 2012. The Company recorded $2.5 million of provision for loan losses on non-covered loans during the fourth quarter of 2013 and a provision reversal of $(0.1) million on loans covered under loss-share.

 

During the year ended December 31, 2013, the Company recorded a provision for loan losses of $12.2 million, a decrease of 46.4% from $22.7 million recorded for the year ended December 31, 2012. Of the $12.2 million in provision expense, $11.6 million related to non-covered loans. For the year ended December 31, 2013, the Company recorded a gross provision of $0.6 million on loans covered under loss-share.

 

The allowance for loan losses was $32.9 million at December 31, 2013, a decrease of 18.4% from $40.3 million at December 31, 2012. Loan loss reserves to total portfolio loans were 1.44% and 1.98% at December 31, 2013 and December 31, 2012, respectively. The allowance for loan loss allocated to loans not recorded at fair value was 1.51% and 1.72% at December 31, 2013 and December 31, 2012, respectively. The components of the allowance for loan loss as of December 31, 2013 were as follows:

 

Allowance for Loan Loss Summary

(dollars in thousands; unaudited)

At December 31, 2013

 

														Allowance
						Allowance								for
						for				Net				Loan Losses
		Loans				Loan Losses				Loans				%
Loans covered under loss-share agreements, at fair value		$	170,528			$	(5,925	)		$	164,603			3.47%
Loans not covered under loss-share agreements, at fair value			334,524				(153	)			334,371			0.05%
Loans not recorded at fair value (1)			1,771,465				(26,797	)			1,744,668			1.51%
Total portfolio loans		$	2,276,517			$	(32,875	)		$	2,243,642			1.44%

 

(1) Includes $17,133 of loans covered by loss-share agreements not recorded at fair value at December 31, 2013.

 

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and OREO, were 2.74% of total assets at December 31, 2013, compared to 3.93% at December 31, 2012. Nonperforming assets not covered by loss-share were 1.52% of total assets not covered by loss-share as of December 31, 2013, compared to 1.82% at December 31, 2012. The covered assets are covered by FDIC loss-share agreements that provide 80% protection on those assets and are being carried at estimated fair value.

 

 

Asset Quality Information

(dollars in thousands;  unaudited)

 

		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Nonaccrual loans not covered by loss-share		$	17,114			$	21,262			$	22,276			$	27,212			$	22,442
Nonaccrual loans covered by loss-share			23,745				29,892				44,317				52,274				46,981
OREO not covered by loss-share			28,833				29,271				29,143				31,177				28,811
OREO covered by loss-share			18,773				18,401				17,668				20,709				23,102
90 days past due not covered by loss-share			-				83				823				-				-
90 days past due covered by loss-share			-				1				-				-				-
Total nonperforming assets		$	88,465			$	98,910			$	114,227			$	131,372			$	121,336
Nonperforming assets not covered by loss-share		$	45,947			$	50,616			$	52,242			$	58,389			$	51,253
Total assets		$	3,229,576			$	2,968,709			$	2,929,636			$	2,929,191			$	3,083,788
Total assets less covered assets			3,023,142				2,748,509				2,692,686				2,670,691				2,811,756
Total portfolio loans			2,276,517				2,100,042				2,048,941				2,031,149				2,035,258
Total accruing loans			2,235,658				2,048,888				1,982,348				1,951,663				1,965,835
Total portfolio loans less fair value loans			1,771,465				1,696,484				1,586,326				1,536,944				1,458,654
Total portfolio loans less covered loans			2,088,856				1,898,243				1,829,659				1,793,358				1,786,328
Total allowance for loan losses			32,875				32,358				32,859				38,148				40,292
Allowance for loans not covered by loss-share			26,797				24,721				24,218				24,966				25,028
Allowance for loans covered by loss-share			5,925				7,403				8,641				13,182				15,264
Allowance for acquired loans not covered by loss-share			153				234				-				-				-
Ratio of nonperforming assets to total assets			2.74	%			3.33	%			3.90	%			4.48	%			3.93	%
Not covered by loss-share			1.52	%			1.84	%			1.94	%			2.19	%			1.82	%
Ratio of nonperforming loans to total portfolio loans			1.79	%			2.44	%			3.29	%			3.91	%			3.41	%
Not covered by loss-share			0.82	%			1.12	%			1.26	%			1.52	%			1.26	%
Ratio of allowance for loan losses to total portfolio loans			1.44	%			1.54	%			1.60	%			1.88	%			1.98	%
Ratio of allowance not covered by loss-share   to portfolio loans not recorded at fair value			1.51	%			1.46	%			1.53	%			1.62	%			1.72	%
Net charge-offs, QTD		$	380			$	4,788			$	7,351			$	8,172			$	6,269
Net charge-offs, non-covered portion, QTD (1)			482				2,876				3,949				4,604				3,792
Ratio of net charge-offs, non-covered portion,
QTD to average portfolio loans, annualized (1)			0.08	%			0.55	%			0.78	%			0.92	%			0.78	%
Loans restructured/modified not included in above,
(not 90 days past due or on nonaccrual)		$	16,770			$	13,802			$	12,639			$	10,896			$	35,889

 

(1) Non-covered portion represents the Company's non-covered charge-offs and the 20% portion of the charge-offs relating to loans  covered under loss-share agreements.

 

Nonaccrual loans not covered by loss-share agreements totaled $17.1 million at December 31, 2013, a decrease of 23.7% from $22.4 million at December 31, 2012. Excluding loans covered by loss-share agreements, nonperforming loans as a percentage of total loans was 0.82% as of December 31, 2013, as compared to 1.26% as of December 31, 2012. Nonaccrual loans covered by loss-share agreements totaled $23.7 million as of December 31, 2013, a decrease of 49.5% from $47.0 million at December 31, 2012. The decrease is due to the Company’s sustained efforts in resolving acquired nonperforming loans.

 

Troubled debt restructurings (“TDRs”) were $18.8 million as of December 31, 2013, of which $2.9 million was covered under loss-share. Of the $18.8 million of TDRs, $16.8 million are performing under the terms of the restructured agreements, as compared to $44.9 million of TDRs as of December 31, 2012, of which $35.9 million were performing under the terms of the restructured agreements. The decrease in performing TDRs from December 31, 2012 was primarily due to a significant amount of restructurings that are no longer required to be reported as TDRs due to contractual performance over a passage of time. The increase in TDRs from September 30, 2013 to December 31, 2013 was due to one large TDR that was previously in nonaccrual status returning to accrual status during the fourth quarter.

 

 

OREO at December 31, 2013 totaled $47.6 million, which is a decrease of 8.3% from $51.9 million at December 31, 2012. At December 31, 2013, the carrying value of OREO covered by loss-share agreements was $18.8 million, a decrease of 18.7% from $23.1 million at December 31, 2012. OREO not covered by loss-share agreements totaled $28.8 million at December 31, 2013, unchanged from December 31, 2012. The Company has sold $7.7 million and $32.8 million of OREO properties during the quarter and year ended December 31, 2013, respectively, which was offset by $4.5 million and $31.3 million of additions to OREO. These additions include $4.2 million of OREO acquired from Randolph. For the quarter and year ended December 31, 2013, the Company recorded valuation adjustments of $0.7 million and $4.2 million, respectively, a decrease from valuation adjustments of $2.7 million and $7.1 million for the quarter and year ended December 31, 2012, respectively.

 

Capital Position

 

At December 31, 2013, shareholders’ equity was $271.3 million, a decrease of 3.9% from shareholders’ equity of $282.2 million as of December 31, 2012. In April 2013, the Company closed on a $30.0 million term loan and used the proceeds to redeem the $31.3 million of Series A preferred stock. As a result of this redemption, the Company recorded $356,000 of additional discount accretion during the second quarter of 2013. After this redemption and the conversion of 1,804,566 shares of Series B preferred stock to non-voting common stock in February 2013, the Company no longer has any preferred stock issued or outstanding. As part of the Randolph acquisition the Company issued 726,634 shares of common stock.

 

All of the Bank’s and Company’s capital ratios are estimated to exceed the minimum thresholds established for a well-capitalized bank by regulatory measures.

 

About BNC Bancorp and Bank of North Carolina

 

Headquartered in High Point, NC, BNC Bancorp is the parent company of Bank of North Carolina, a commercial bank with $3.23 billion in assets. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 39 banking offices in North and South Carolina. The Bank’s eight locations in South Carolina 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."

 

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" measures in their 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 measures to the most directly comparable GAAP measure.

 

“SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

 

Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies' anticipated future financial performance.  This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations.   This press release contains forward-looking statements relating to the financial condition, results of operations and business of BNC Bancorp and the Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BNC Bancorp, and the information available to management at the time that this press release was prepared. Factors that could cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (i) the economic recovery may face challenges causing its momentum to falter or a further recession; (ii) expected cost savings and other benefits anticipated in connection with our acquisitions may not be fully realized or realized within the expected time frame; (iii) our ability to integrate acquisitions and retain existing customers and attract new ones; and (iv) adverse changes in credit quality trends. Additional factors affecting BNC Bancorp and the Bank are discussed in BNC Bancorp’s filings with the Securities and Exchange Commission (the “SEC”), Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Please refer to the Securities and Exchange Commission’s website at www.sec.gov where you can review those documents. BNC Bancorp does not undertake a duty to update any forward-looking statements made in this press release.

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

 

		For the
		Three Months Ended
		December 31, 2013				December 31, 2012				% Change
SUMMARY INCOME STATEMENTS
Interest income		$	37,836			$	32,224				17.4	%
Interest expense			7,964				8,119				(1.9	)
Net interest income			29,872				24,105				23.9
Provision for loan losses			2,435				5,520				(55.9	)
Net interest income after provision for loan losses			27,437				18,585				47.6
Non-interest income			5,178				10,394				(50.2	)
Non-interest expense			28,628				24,871				15.1
Income before income tax expense (benefit)			3,987				4,108				(3.0	)
Income tax expense (benefit)			716				(940	)			(176.2	)
Net income			3,271				5,048				(35.2	)
Preferred stock dividends and discount accretion			-				601				(100.0	)
Net income available to common shareholders		$	3,271			$	4,447				(26.4	)
PER SHARE DATA
Earnings per share, basic		$	0.12			$	0.19
Earnings per share, diluted			0.12				0.19
Operating earnings per share, diluted (1)			0.21				(0.00	)
Tangible common book value per share (1)			8.66				8.20
Weighted average participating common shares:
Basic			27,293				24,272
Diluted			27,382				24,277
Period-end number of shares:
Common			27,303				24,650
Convertible preferred			-				1,805
PERFORMANCE RATIOS
Return on average assets			0.41	%			0.63	%
Operating return on average assets (1)			0.71	%			-0.01	%
Return on average common equity			4.79	%			8.16	%
Return on average tangible common equity (1)			5.90	%			9.76	%
Operating return on average tangible common equity (1)			9.98	%			0.13	%
Net interest margin (FTE)			4.39	%			4.09	%
Net interest margin w/o hedging expense (FTE)			4.76	%			4.43	%
Average equity to average assets			8.48	%			9.43	%
Allowance for loan losses as a % of portfolio loans			1.44	%			1.98	%
Allowance not covered by loss-share to portfolio loans not recorded at fair value			1.51	%			1.72	%
Nonperforming assets to total assets, end of period			2.74	%			3.93	%
Not covered by loss share			1.52	%			1.82	%
Ratio of net charge-offs, with covered portion, to
average total loans, annualized			0.08	%			0.78	%
SELECTED FINANCIAL DATA
Gain on sale of investment securities, net		$	10			$	651
Bargain purchase gain on acquisition			-				4,972
Fair value accretion			4,208				3,086
Hedging instrument expense			2,700				2,133
OREO valuation adjustments			713				2,734
Transaction-related expenses			3,884				1,406

 

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.                        

 

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

 

 

		For the Year Ended
		December 31, 2013				December 31, 2012				% Change
SUMMARY INCOME STATEMENTS
Interest income		$	138,670			$	113,515				22.2	%
Interest expense			30,063				32,891				(8.6	)
Net interest income			108,607				80,624				34.7
Provision for loan losses			12,188				22,737				(46.4	)
Net interest income after provision for loan losses			96,419				57,887				66.6
Non-interest income			22,806				33,138				(31.2	)
Non-interest expense			97,933				82,272				19.0
Income before income tax expense (benefit)			21,292				8,753				143.3
Income tax expense (benefit)			4,045				(1,700	)			(337.9	)
Net income			17,247				10,453				65.0
Preferred stock dividends and discount accretion			1,060				2,404				(55.9	)
Net income available to common shareholders		$	16,187			$	8,049				101.1
PER SHARE DATA
Earnings per share, basic		$	0.61			$	0.48
Earnings per share, diluted			0.61				0.48
Operating earnings per share, diluted (1)			0.71				(0.19	)
Tangible common book value per share (1)			8.66				8.20
Weighted average participating common shares:
Basic			26,683				17,595
Diluted			26,714				17,599
Period-end number of shares:
Common			27,303				24,650
Convertible preferred			-				1,805
PERFORMANCE RATIOS
Return on average assets			0.54	%			0.32	%
Operating return on average assets (1)			0.63	%			-0.13	%
Return on average common equity			6.28	%			5.11	%
Return on average tangible common equity (1)			7.50	%			6.57	%
Operating return on average tangible common equity (1)			8.79	%			-2.28	%
Net interest margin (FTE)			4.29	%			3.85	%
Net interest margin w/o hedging expense (FTE)			4.66	%			4.21	%
Average equity to average assets			8.94	%			8.37	%
Allowance for loan losses as a % of portfolio loans			1.44	%			1.98	%
Allowance not covered by loss-share to portfolio loans not recorded at fair value			1.51	%			1.72	%
Nonperforming assets to total assets, end of period			2.74	%			3.93	%
Nonperforming assets not covered by loss share			1.52	%			1.82	%
Ratio of net charge-offs, with covered portion, to
average total loans			0.57	%			1.09	%
SELECTED FINANCIAL DATA
Gain (loss) on sale of investment securities, net		$	(42	)		$	3,026
Acquisition-related gain			719				-
Bragain purchase gain on acquisitions			-				12,706
Fair value accretion			14,418				6,654
Additional accretion from redemption of Series A preferred stock			356				-
Hedging instrument expense			9,863				7,940
OREO valuation adjustments			4,175				7,078
Transaction-related expenses			5,768				5,212

 

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.                        

 

 

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

 

 

		Three Months Ended
		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
SUMMARY INCOME STATEMENTS
Interest income		$	37,836			$	34,008			$	33,675			$	33,151			$	32,224
Interest expense			7,964				7,372				7,364				7,363				8,119
Net interest income			29,872				26,636				26,311				25,788				24,105
Provision for loan losses			2,435				3,350				2,288				4,115				5,520
Net interest income after provision for loan losses			27,437				23,286				24,023				21,673				18,585
Non-interest income			5,178				5,824				5,602				6,202				10,394
Non-interest expense			28,628				22,430				23,759				23,116				24,871
Income before income tax expense (benefit)			3,987				6,680				5,866				4,759				4,108
Income tax expense (benefit)			716				1,650				1,199				480				(940	)
Net income			3,271				5,030				4,667				4,279				5,048
Preferred stock dividends and discount accretion			-				-				531				529				601
Net income available to common shareholders		$	3,271			$	5,030			$	4,136			$	3,750			$	4,447
Net interest income, as reported		$	29,872			$	26,636			$	26,311			$	25,788			$	24,105
Fully Taxable-Equivalent ("FTE") adjustment			1,956				1,818				1,718				1,673				1,533
Net interest income, FTE		$	31,828			$	28,454			$	28,029			$	27,461			$	25,638
PER SHARE DATA
Earnings per share, basic		$	0.12			$	0.19			$	0.16			$	0.14			$	0.19
Earnings per share, diluted			0.12				0.19				0.16				0.14				0.19
Weighted average participating common shares:
Basic			27,293				26,502				26,475				26,464				24,272
Diluted			27,382				26,582				26,498				26,476				24,277
Period-end number of shares:
Common			27,303				26,526				26,479				26,472				24,650
Convertible preferred			-				-				-				-				1,805
PERFORMANCE RATIOS
Return on average assets			0.41	%			0.68	%			0.57	%			0.51	%			0.63	%
Operating return on average assets (1)			0.71	%			0.68	%			0.58	%			0.56	%			-0.01	%
Return on average common equity			4.79	%			7.81	%			6.49	%			6.12	%			8.16	%
Return on average tangible common equity (1)			5.90	%			9.19	%			7.70	%			7.33	%			9.76	%
Operating return on average tangible common equity (1)			9.98	%			9.26	%			7.85	%			7.97	%			0.13	%
Net interest margin (FTE)			4.39	%			4.26	%			4.32	%			4.20	%			4.09	%
Net interest margin w/o hedging expense (FTE)			4.76	%			4.65	%			4.68	%			4.54	%			4.43	%
Average equity to average assets			8.48	%			8.67	%			9.06	%			9.61	%			9.43	%
Allowance for loan losses as a % of portfolio loans			1.44	%			1.54	%			1.60	%			1.88	%			1.98	%
Allowance not covered by loss-share to portfolio loans not recorded at fair value			1.51	%			1.46	%			1.53	%			1.62	%			1.72	%
Nonperforming assets to total assets, end of period			2.74	%			3.33	%			3.90	%			4.48	%			3.93	%
Not covered by loss share			1.52	%			1.84	%			1.94	%			2.19	%			1.82	%
Ratio of net charge-offs, with covered portion, to
average total loans, annualized			0.08	%			0.55	%			0.78	%			0.92	%			0.78	%
SELECTED FINANCIAL DATA
Gain (loss) on sale of investment securities, net		$	10			$	-			$	176			$	(228	)		$	651
Acquisition-related gain			-				-				-				719				-
Bargain purchase gain on acquisitions			-				-				-				-				4,972
Fair value accretion			4,208				3,213				3,664				3,333				3,086
Additional accretion from redemption of Series A preferred stock			-				-				356				-				-
Hedging instrument expense			2,700				2,625				2,333				2,205				2,133
OREO valuation adjustments			713				1,138				1,539				785				2,734
Transaction-related expenses			3,884				540				309				1,035				1,406

 

(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.                                        

 

 

  

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

 

 

		As of
		December 31, 2013				December 31,      2012				% Change
SELECTED BALANCE SHEET DATA
Portfolio loans:
Loans not covered by loss share		$	2,088,856			$	1,786,328				16.9	%
Loans covered by loss share			187,661				248,930				(24.6	)
Allowance for loan losses			(32,875	)			(40,292	)			(18.4	)
Net portfolio loans			2,243,642				1,994,966				12.5
Loans held for sale			30,899				57,414				(46.2	)
Investment securities			517,795				456,344				13.5
Total interest-earning assets			2,908,847				2,747,702				5.9
Total assets			3,229,576				3,083,788				4.7
Deposits:
Non-interest bearing deposits			324,532				275,605				17.8
Interest-bearing demand and savings			1,299,399				1,221,089				6.4
Time deposits			1,082,799				1,159,615				(6.6	)
Total deposits			2,706,729				2,656,309				1.9
Borrowed funds			227,102				120,555				88.4
Total interest-bearing liabilities			2,609,299				2,501,259				4.3
Shareholders' equity:
Preferred equity			-				47,878				(100.0	)
Common equity			268,024				228,937				17.1
Accumulated other comprehensive income			3,305				5,429				(39.1	)
Total shareholders' equity			271,330				282,244				(3.9	)

 

 

		As of
		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
SELECTED BALANCE SHEET DATA
Portfolio loans:
Loans not covered by loss share		$	2,088,856			$	1,898,243			$	1,829,659			$	1,793,358			$	1,786,328
Loans covered by loss share			187,661				201,799				219,282				237,791				248,930
Allowance for loan losses			(32,875	)			(32,358	)			(32,859	)			(38,148	)			(40,292	)
Net portfolio loans			2,243,642				2,067,684				2,016,082				1,993,001				1,994,966
Loans held for sale			30,899				17,732				39,954				46,134				57,414
Investment securities			517,795				500,449				466,079				476,982				456,344
Total interest-earning assets			2,908,847				2,658,902				2,610,415				2,605,429				2,747,702
Total assets			3,229,576				2,968,709				2,929,636				2,929,191				3,083,788
Deposits:
Non-interest bearing deposits			324,532				299,670				275,984				267,458				275,605
Interest-bearing demand and savings			1,299,399				1,172,512				1,152,779				1,171,484				1,221,089
Time deposits			1,082,799				963,679				999,552				1,069,207				1,159,615
Total deposits			2,706,730				2,435,861				2,428,315				2,508,149				2,656,309
Borrowed funds			227,102				256,554				227,697				117,774				120,555
Total interest-bearing liabilities			2,609,299				2,392,745				2,380,028				2,358,465				2,501,259
Shareholders' equity:
Preferred equity			-				-				-				30,855				47,878
Common equity			268,024				256,048				251,872				248,747				228,937
Accumulated other comprehensive income			3,305				1,745				2,573				4,453				5,429
Total shareholders' equity			271,330				257,793				254,445				284,055				282,244

 

 

 

PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)

 

 

		For the Year Ended
		December 31, 2013				December 31,      2012				% Change
SELECTED AVERAGE BALANCE SHEET DATA
Portfolio loans:
Loans not covered by loss share		$	1,885,872			$	1,503,120				25.5	%
Loans covered by loss share			219,093				286,005				(23.4	)
Net portfolio loans			2,104,965				1,789,125				17.7
Investment securities			483,984				353,040				37.1
Total interest-earning assets			2,696,475				2,244,423				20.1
Total assets			3,009,367				2,544,718				18.3
Deposits:
Non-interest bearing deposits			290,765				188,569				54.2
Interest-bearing demand and savings			1,197,958				997,951				20.0
Time deposits			1,038,088				1,004,644				3.3
Total deposits			2,526,811				2,191,164				15.3
Borrowed funds			193,771				124,223				56.0
Total interest-bearing liabilities			2,429,817				2,126,818				14.3
Shareholders' equity			269,123				212,955				26.4

 

 

		For the Three Month Period Ended
		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
SELECTED AVERAGE BALANCE SHEET DATA
Loans:
Loans not covered by loss share		$	2,073,442			$	1,862,366			$	1,810,382			$	1,794,323			$	1,673,506
Loans covered by loss share			194,730				210,541				228,536				243,360				267,632
Total loans			2,268,172				2,072,907				2,038,918				2,037,683				1,941,138
Investment securities			515,296				484,959				473,301				461,781				400,482
Total interest-earning assets			2,878,999				2,650,389				2,604,275				2,650,229				2,495,019
Total assets			3,193,141				2,945,832				2,916,204				2,980,654				2,806,031
Deposits:
Non-interest bearing deposits			338,454				288,887				272,088				262,821				225,419
Interest-bearing demand and savings			1,291,291				1,172,608				1,150,213				1,176,740				1,109,651
Time deposits			1,035,759				979,871				1,021,098				1,117,159				1,059,670
Total deposits			2,665,504				2,441,366				2,443,398				2,556,720				2,394,740
Borrowed funds			235,303				228,336				189,308				120,496				126,007
Total interest-bearing liabilities			2,562,353				2,380,815				2,360,618				2,414,395				2,295,328
Shareholders' equity			270,702				255,524				264,201				286,388				264,643

 

 

  

LOAN MIX AND STRATIFICATION STATISTICS

BNC BANCORP

(Dollars in millions)

(Unaudited)

 

 

		As of
		December 31, 2013				December 31, 2012				% Change
Loans Not Covered Under Loss Share Agreements:
Construction, A&D, and Land		$	261.3			$	196.5				33.0
Residential Construction			32.5				27.3				19.1
Presold			18.2				15.8				15.2
Speculative			14.3				11.5				24.4
Loan size - over $400,000			1.8				3.7				(51.4	)
Loan size - $200,000 to $400,000			4.8				2.9				65.5
Loan size - under $200,000			7.7				4.9				57.1
Commercial Construction			132.0				76.1				73.5
Loan size - $5 million and over			25.4				6.7				279.1
Loan size - $3 million to $5 million			28.9				6.7				331.3
Loan size - $1 million to $3 million			54.2				42.7				26.9
Loan size - under $1 million			23.5				20.0				17.5
Residential and Commercial A&D			7.9				18.1				(56.4	)
Loan size - $3 million to $5 million			-				4.4				100.0
Loan size - $1 million to $3 million			3.5				9.1				(61.5	)
Loan size - under $1 million			4.4				4.6				(4.4	)
Land			88.9				75.0				18.5
Residential Buildable Lots			22.1				23.3				(5.2	)
Commercial Buildable Lots			11.8				10.2				15.7
Land Held for Development			32.9				24.2				36.0
Raw and Agricultural Land			22.1				17.3				27.8
Commercial Real Estate		$	1,244.0			$	930.9				33.6
Multi-Family			61.6				47.5				29.7
Churches			53.5				42.8				25.0
Retail			911.8				674.3				35.2
Owner Occupied			263.8				196.0				34.6
Investment			648.0				478.3				35.5
Loan size - $5 million to $9 million			138.5				101.2				36.9
Loan size - $3 million to $5 million			113.5				79.4				43.0
Loan size - $1 million to $3 million			250.3				186.6				34.1
Loan size - under $1 million			145.7				111.1				31.1
Industrial			217.1				166.3				30.6
Owner Occupied			119.0				93.0				28.0
Investment			98.1				73.3				33.8
Loan size - $5 million and over			6.0				-				100.0
Loan size - $3 million to $5 million			11.2				4.1				173.2
Loan size - $1 million to $3 million			40.8				37.6				8.5
Loan size - under $1 million			40.1				31.6				26.9

 

 

  

LOAN MIX AND STRATIFICATION STATISTICS

BNC BANCORP

(Dollars in millions)

(Unaudited)

 

 

		Trends
		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Loans Not Covered Under Loss Share Agreements:
Construction, A&D, and Land		$	261.3			$	225.5			$	211.3			$	232.3			$	196.5
Residential Construction			32.5				28.6				32.6				31.1				27.3
Presold			18.2				16.0				18.7				18.6				15.8
Speculative			14.3				12.6				13.9				12.5				11.5
Loan size - over $400,000			1.8				2.2				3.3				4.3				3.7
Loan size - $200,000 to $400,000			4.8				4.9				5.5				3.2				2.9
Loan size - under $200,000			7.7				5.5				5.1				5.0				4.9
Commercial Construction			132.0				106.1				76.2				92.9				76.1
Loan size - $5 million and over			25.4				18.1				12.5				12.5				6.7
Loan size - $3 million to $5 million			28.9				15.4				10.7				11.0				6.7
Loan size - $1 million to $3 million			54.2				51.7				33.3				50.0				42.7
Loan size - under $1 million			23.5				20.9				19.7				19.4				20.0
Residential and Commercial A&D			7.9				9.4				17.6				15.1				18.1
Loan size - $3 million to $5 million			-				-				4.1				-				4.4
Loan size - $1 million to $3 million			3.5				3.6				6.6				8.8				9.1
Loan size - under $1 million			4.4				5.8				6.9				6.3				4.6
Land			88.9				81.4				84.9				93.2				75.0
Residential Buildable Lots			22.1				20.8				26.1				31.4				23.3
Commercial Buildable Lots			11.8				13.4				17.7				18.9				10.2
Land Held for Development			32.9				25.2				21.9				25.1				24.2
Raw and Agricultural Land			22.1				22.0				19.2				17.8				17.3
Commercial Real Estate		$	1,244.0			$	1,165.2			$	1,109.8			$	1,050.6			$	930.9
Multi-Family			61.6				58.6				59.2				48.6				47.5
Churches			53.5				50.9				51.5				49.6				42.8
Retail			911.8				851.2				804.3				757.2				674.3
Owner Occupied			263.8				243.4				236.9				237.4				196.0
Investment			648.0				607.8				567.4				519.8				478.3
Loan size - $5 million to $9 million			138.5				135.4				95.1				89.0				101.2
Loan size - $3 million to $5 million			113.5				98.6				90.3				82.7				79.4
Loan size - $1 million to $3 million			250.3				238.3				242.4				215.5				186.6
Loan size - under $1 million			145.7				135.5				139.6				132.6				111.1
Industrial			217.1				204.5				194.8				195.2				166.3
Owner Occupied			119.0				113.2				101.5				105.2				93.0
Investment			98.1				91.3				93.3				90.0				73.3
Loan size - $5 million and over			6.0				6.1				6.0				6.2				-
Loan size - $3 million to $5 million			11.2				8.3				11.5				4.0				4.1
Loan size - $1 million to $3 million			40.8				38.7				35.8				41.7				37.6
Loan size - under $1 million			40.1				38.2				40.0				38.1				31.6

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

  

 

		For the Three Months Ended
Operating Earnings (Loss) per Share, Diluted (2)		December 31, 2013				September 30, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	3,271			$	5,030			$	4,447
Add:    Transaction-related charges, net of tax			2,447				340				893
Less:  Insurance settlement, net of tax			-				302				-
Bargain purchase gain on acquisition (nontaxable)			-				-				4,972
Gain on sale of investment securities, net of tax			6				-				413
Operating earnings (loss) (non-GAAP)		$	5,712			$	5,068			$	(45	)
Weighted average fully diluted shares outstanding			27,382				26,582				24,277
Operating earnings (loss) per share, diluted (non-GAAP)		$	0.21			$	0.19			$	(0.00	)
			For the Year Ended
Operating Earnings (Loss) per Share, Diluted (2)			December 31, 2013				December 31,  2012
Net income available to common shareholders (GAAP)		$	16,187			$	8,049
Add:    Transaction-related charges, net of tax			3,634				3,310
Less:  Insurance settlement, net of tax			302				-
Acquisition-related gain, net of tax			453				-
Bargain purchase gain on acquisitions (nontaxable)			-				12,706
Gain (loss) on sale of investment securities, net of tax			(26	)			1,922
Operating earnings (loss) (non-GAAP)		$	19,092			$	(3,269	)
Weighted average fully diluted shares outstanding			26,714				17,599
Operating earnings (loss) per share, diluted (non-GAAP)		$	0.71			$	(0.19	)
			For the Three Months Ended
Adjusted Non-interest Income (2)			December 31,  2013				September 30, 2013				December 31,  2012
Non-interest income (GAAP)		$	5,178			$	5,824			$	10,394
Less:  Insurance settlement			-				479				-
Bargain purchase gain on acquisitions			-				-				4,972
Gain on sale of investment securities			10				-				651
Adjusted non-interest income (non-GAAP)		$	5,168			$	5,345			$	4,771
			For the Year Ended
Adjusted Non-interest Income (2)			December 31, 2013				December 31, 2012
Non-interest income (GAAP)		$	22,806			$	33,138
Less:  Insurance settlement			479				-
Acquisition-related gain			719				-
Bargain purchase gain on acquisitions			-				12,706
Gain (loss) on sale of investment securities			(42	)			3,026
Adjusted non-interest income (non-GAAP)		$	21,650			$	17,406
			For the Three Months Ended
Adjusted Non-interest Expense (2)			December 31, 2013				September 30,  2013				December 31, 2012
Non-interest expense (GAAP)		$	28,628			$	22,430			$	24,871
Less:  Transaction-related expenses			3,884				540				1,406
Adjusted non-interest expense (non-GAAP)		$	24,744			$	21,890			$	23,465
			For the Year Ended
Adjusted Non-interest Expense (2)			December 31, 2013				December 31, 2012
Non-interest expense (GAAP)		$	97,933			$	82,272
Less:  Transaction-related expenses			5,768				5,212
Adjusted non-interest expense (non-GAAP)		$	92,165			$	77,060

  

  

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

 

 

Tangible Common Book Value per Share (3)		December 31,      2013				December 31,      2012
Shareholders' equity (GAAP)		$	271,330			$	282,244
Less: Preferred stock			-				47,878
Intangible assets			34,966				32,193
Tangible common shareholders equity (non-GAAP)		$	236,363			$	202,173
Common shares outstanding			27,303				24,651
Tangible common book value per share (non-GAAP)		$	8.66			$	8.20
			For the Three Months Ended
Return on Average Tangible Common Equity (3)			December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	3,271			$	5,030			$	4,136			$	3,750			$	4,447
Plus: Amortization of intangibles, net of tax			241				160				160				160				105
Tangible net income available to common shareholders (non-GAAP)		$	3,512			$	5,190			$	4,296			$	3,910			$	4,552
Average common shareholders equity		$	270,702			$	255,524			$	255,624			$	248,548			$	216,825
Less: Average intangible assets			34,045				31,535				31,798				32,068				31,235
Average tangible common shareholders' equity (non-GAAP)		$	236,657			$	223,988			$	223,826			$	216,480			$	185,590
Return on average tangible common equity (non-GAAP)			5.89	%			9.19	%			7.70	%			7.33	%			9.76	%
			For the Year Ended
Return on Average Tangible Common Equity (3)			December 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	16,187			$	8,049
Plus: Amortization of intangibles, net of tax			723				348
Tangible net income available to common shareholders (non-GAAP)		$	16,910			$	8,397
Average common shareholders equity		$	257,678			$	157,471
Less: Average intangible assets			32,361				29,581
Average tangible common shareholders' equity (non-GAAP)		$	225,317			$	127,890
Return on average tangible common equity (non-GAAP)			7.50	%			6.57	%

 

 

(2)  Management uses these measures in their analysis of the Company's performance and believes these 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.

(3)  Management believes investors use this measure to evaluate the Company's performance.

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

BNC BANCORP

(Dollars in thousands, except per share data, shares in thousands)

(Unaudited)

  

		For the Three Months Ended
Operating Return on Average Assets (2)		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	3,271			$	5,030			$	4,136			$	3,750			$	4,447
Plus:   Transaction-related expenses, net of tax			2,447				340				195				652				893
Less:  Insurance settlement, net of tax			-				302				-				-				-
Acquisition-related gain, net of tax			-				-				-				453				-
Bargain purchase gain on acquisition (nontaxable)															-				4,972
Gain (loss) on sale of investment securities, net of tax			6				-				111				(144	)			413
Operating earnings (loss) (non-GAAP)		$	5,712			$	5,068			$	4,220			$	4,093			$	(45	)
Average assets		$	3,193,141			$	2,945,832			$	2,916,204			$	2,980,654			$	2,806,031
Operating return on average assets (non-GAAP)			0.71	%			0.68	%			0.58	%			0.56	%			-0.01	%
			For the Year Ended
Operating Return on Average Assets (2)			December 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	16,187			$	8,049
Plus:  Transaction-related expenses, net of tax			3,634				3,310
Less:  Insurance settlement, net of tax			302				-
Acquisition-related gain, net of tax			453				-
Bargain purchase gain on acquisitions (nontaxable)			-				12,706
Gain (loss) on sale of investment securities, net of tax			(26	)			1,922
Operating earnings (loss) (non-GAAP)		$	19,092			$	(3,269	)
Average assets		$	3,009,367			$	2,544,718
Operating return on average assets (non-GAAP)			0.63	%			-0.13	%
			For the Three Months Ended
Operating Return on Average Tangible Common Equity (2)			December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	3,271			$	5,030			$	4,136			$	3,750			$	4,447
Plus:   Amortization of intangibles, net of tax			241				160				160				160				105
Transaction-related expenses, net of tax			2,447				340				195				652				893
Less:  Insurance settlement, net of tax			-				302				-				-				-
Acquisition-related gain, net of tax			-				-				-				453				-
Bargain purchase gain on acquisition (nontaxable)			-				-				-				-				4,972
Gain (loss) on sale of investment securities, net of tax			6				-				111				(144	)			413
Operating tangible net income available to common shareholders (non-GAAP)		$	5,953			$	5,229			$	4,380			$	4,253			$	59
Average common shareholders equity		$	270,702			$	255,524			$	255,624			$	248,548			$	216,825
Less: Average intangible assets			34,045				31,535				31,798				32,068				31,235
Average tangible common shareholders' equity (non-GAAP)		$	236,657			$	223,989			$	223,826			$	216,480			$	185,590
Operating return on average tangible common equity (non-GAAP)			9.98	%			9.26	%			7.85	%			7.97	%			0.13	%
			For the Year Ended
Operating Return on Average Tangible Common Equity (2)			December 31, 2013				December 31, 2012
Net income available to common shareholders (GAAP)		$	16,187			$	8,049
Plus:   Amortization of intangibles, net of tax			723				348
Transaction-related expenses, net of tax			3,634				3,310
Less:  Insurance settlement, net of tax			302				-
Acquisition-related gain, net of tax			453				-
Bargain purchase gain on acquisitions (nontaxable)			-				12,706
Gain (loss) on sale of investment securities, net of tax			(26	)			1,922
Operating tangible net income (loss) available to common shareholders (non-GAAP)		$	19,815			$	(2,920	)
Average common shareholders equity		$	257,678			$	157,471
Less: Average intangible assets			32,361				29,581
Average tangible common shareholders' equity (non-GAAP)		$	225,317			$	127,890
Operating return on average tangible common equity (non-GAAP)			8.79	%			-2.28	%

  

(2)  Management uses these measures in their analysis of the Company's performance and believes these 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.