BNC BANCORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - BNC BANCORP	form8-kearnings.htm

Exhibit 99.1

BNC Bancorp Announces Earnings for Fourth Quarter and Fiscal Year 2015

HIGH POINT, N.C., Jan. 25, 2016 - BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the quarter and year ended December 31, 2015. Highlights for the fourth quarter 2015 include the following:


•	Operating earnings for the fourth quarter of 2015 totaled $15.4 million, or $0.39 per diluted share, compared to $15.0 million, or $0.39 per diluted share, for the third quarter of 2015


◦	Per share results for the fourth quarter 2015 were impacted by the public stock offering detailed below;


◦	Diluted earnings per share totaled $0.32, compared to $0.31 for the third quarter of 2015;


◦	Net income for the quarter was $12.7 million, compared to $11.9 million for third quarter of 2015; and


◦	Operating earnings for the year ended December 31, 2015 were $52.7 million, or $1.47 per diluted share, compared to $35.3 million, or $1.21 per diluted share, for the year ended December 31, 2014.


•	Continued balance sheet growth, both organically and through acquisitions, during the fourth quarter


◦	Originated loans increased $128.2 million, or 5.0%, excluding loans that were reclassified from acquired;


◦	Total deposits increased $367.7 million, or 8.4%;


◦	Transactional deposit base increased $218.1 million, or 7.5%; and


◦	Total assets increased $455.5 million, or 8.8%.


•	Continued trend of strong operating performance ratios during fourth quarter of 2015


◦	Operating return of average assets of 1.13%, compared to 1.15% for the third quarter of 2015;


◦	Operating return of average tangible common equity of 15.99%, compared to 16.79% for third quarter 2015; and


◦	Operating efficiency ratio of 54.48%, compared to 55.59% for third quarter 2015.


•	Announced pending acquisition of High Point Bank Corporation


◦	Expected to close during the second quarter of 2016, subject to regulatory approval, approval of High Point Bank Corporation shareholders, and other customary closing conditions.


•	Completed acquisition and conversion of seven branches from CertusBank, N.A.


◦	Expands the Company's presence in attractive Upstate South Carolina markets.


•	Completed public offering of 2.59 million shares of voting common stock


◦	Net proceeds of approximately $57.6 million after underwriting discount and expenses

Financial Performance



		Three Months Ended											Year Ended December 31,
INCOME SUMMARY		Dec. 31, 2015		Sept. 30, 2015		Jun. 30, 2015			Mar. 31, 2015		Dec. 31, 2014		2015		2014
Interest income		(Dollars in thousands)
	Interest and fees on loans	$	50,762	$	48,050	$	40,494		$	39,420	$	38,534	$	178,726	$	140,024
	Investment securities	5,336		5,101		4,421			4,347		4,230		19,205		17,576
	Other	141		162		132			120		151		555		542
Total interest income		56,239		53,313		45,047			43,887		42,915		198,486		158,142
Interest expense
	Interest on deposits	5,852		5,265		4,888			4,442		3,946		20,447		15,139
	Interest on borrowings	1,648		1,789		1,427			1,375		1,508		6,239		4,787
Total interest expense		7,500		7,054		6,315			5,817		5,454		26,686		19,926
Net interest income		48,739		46,259		38,732			38,070		37,461		171,800		138,216
	Provision for loan losses	1,287		198		301			110		1,001		1,896		7,006
Net interest income		47,452		46,061		38,431			37,960		36,460		169,904		131,210
Operating non-interest income (1)
	Mortgage fees	2,226		3,031		2,777			2,499		2,049		10,533		7,689
	Service charges	2,341		2,284		1,810			1,644		1,648		8,079		6,105
	Earnings on bank-owned life insurance	806		705		601			654		634		2,766		2,382
	Other	2,868		2,355		3,509			1,454		3,454		10,186		8,589
Total operating non-interest income		8,241		8,375		8,697			6,251		7,785		31,564		24,765
Operating non-interest expense (1)
	Salaries and employee benefits	17,888		17,543		15,749			15,973		16,423		67,153		58,910
	Occupancy	3,392		3,211		2,618			2,581		2,365		11,802		9,145
	Furniture and equipment	2,426		1,654		1,596			1,627		1,630		7,303		6,448
	Data processing and supply	1,194		1,268		1,073			846		1,053		4,381		3,712
	Advertising and business development	879		493		617			646		625		2,635		2,666
	Insurance, professional and other services	952		1,405		1,079			1,388		1,077		4,824		3,952
	FDIC insurance assessments	883		824		702			735		700		3,144		2,932
	Loan, foreclosure and OREO	1,639		2,352		3,536			2,325		2,632		9,852		8,940
	Other	4,020		3,786		3,185			3,031		3,017		14,022		10,205
Total operating non-interest expenses		33,273		32,536		30,155			29,152		29,522		125,116		106,910
Operating income before income taxes		22,420		21,900		16,973			15,059		14,723		76,352		49,065
Operating income tax expense (1)		6,996		6,902		5,172			4,543		4,426		23,613		13,810
Operating income (non-GAAP)		15,424		14,998		11,801			10,516		10,297		52,739		35,255
	Securities gains (losses), net of tax	28		500		(3		)	31		—		556		(322		)
	Insurance settlement income, net of tax	—		—		—			—		—		—		484
	Transaction-related expenses, net of tax	2,713		3,078		784			1,789		1,406		8,364		5,641
	Loss on extinguishment of debt, net of tax	—		481		—			—		386		481		386
Net income (GAAP)		$	12,739	$	11,939	$	11,014		$	8,758	$	8,505	$	44,450	$	29,390

(1) See Reconciliation of Non-GAAP to GAAP for additional details.

Performance Ratios



	Three Months Ended															Year Ended December 31,
	Dec. 31, 2015			Sept. 30, 2015			Jun. 30, 2015			Mar. 31, 2015			Dec. 31, 2014			2015			2014
Operating earnings per diluted share (1)	$	0.39		$	0.39		$	0.36		$	0.32		$	0.34		$	1.47		$	1.21
Operating return of average assets (1)	1.13		%	1.15		%	1.13		%	1.04		%	1.07		%	1.12		%	0.99		%
Operating return on average tangible common equity (1)	15.99		%	16.79		%	15.58		%	14.41		%	15.08		%	15.77		%	13.70		%
Operating efficiency ratio (1)	54.48		%	55.59		%	59.48		%	61.30		%	61.07		%	57.44		%	61.25		%

Earnings per diluted share - GAAP	$	0.32		$	0.31		$	0.34		$	0.27		$	0.28		$	1.24		$	1.01
Return of average assets - GAAP	0.93		%	0.92		%	1.06		%	0.87		%	0.89		%	0.94		%	0.83		%
Return on average common equity - GAAP	9.13		%	9.15		%	11.05		%	9.01		%	9.59		%	9.52		%	9.09		%
Return on average tangible common equity - GAAP	13.33		%	13.52		%	14.59		%	12.12		%	12.57		%	13.40		%	11.51		%
Efficiency ratio - GAAP	63.75		%	66.59		%	63.71		%	69.19		%	68.63		%	65.70		%	68.12		%

Book value per common share	$	14.52		$	13.70		$	12.38		$	12.20		$	11.98		$	14.52		$	11.98
Tangible book value per common share (1)	10.77			9.86			9.87			9.67			9.41			10.77			9.41

(1) See Reconciliation of Non-GAAP to GAAP for additional details.

Other Selected Financial Data



	Three Months Ended											Year Ended December 31,
	Dec. 31, 2015		Sept. 30, 2015		Jun. 30, 2015			Mar. 31, 2015		Dec. 31, 2014		2015		2014
	(Dollars in thousands)
Securities gains (losses), net	$	45	$	794	$	(4	)	$	49	$	—	$	884	$	(511	)
Loss on extinguishment of debt	—		763		—			—		613		763		613
Fair value accretion	5,599		4,835		5,273			4,809		4,867		20,516		14,879
OREO valuation adjustments, net	348		911		820			814		866		2,893		3,836
Transaction-related expenses	4,307		4,886		1,244			2,839		2,231		13,276		8,954

Richard D. Callicutt, II, President and CEO, stated, "As noted in the highlights above, our Company made significant strides during the quarter towards attaining many of our near term strategic initiatives, all which should propel the Company into the future with greater diversity, momentum and financial strength. Successfully integrating operations of the seven Certus offices in the Upstate of South Carolina during the quarter, while making significant progress in our preparation for our upcoming closing and integration of Southcoast Bank in the Charleston area, is a testament to the outstanding efforts of our internal integration and support teams. We could not be one of the most acquisitive banks in the United States, and also one of the highest in stock price appreciation, if not for the tireless efforts of our integration and support teams. I am humbled each and every day by their dedication, skill, and unrelenting desire for excellence.

Also during the quarter we announced one of the most important events in our history, as High Point Bank agreed to join forces with BNC. High Point Bank has been the benchmark that all other banks have been measured in High Point and the surrounding communities for over 100 years, and both companies are extremely excited about the opportunity for even greater success and service as we come together. Along with the High Point Bank transaction, we announced the closing of a $60 million common equity raise that was extremely beneficial to our existing shareholders as it added over $0.70 to tangible book value. These two announcements, when viewed together, were accretive to future earnings, immediately accretive to tangible book value, grew our already strong capital ratios, and further enhanced our core deposit portfolio, primarily in the checking account areas.

While 2015 was another year of double-digit growth, in earnings, loans and deposits, it was also a year where we gained further depth in each of our six key target regions. The Valley transaction gave us a very efficient and profitable $800 million operation in the Southwest Virginia market, while the Certus and Southcoast transactions will provide over $650 million and eighteen offices in

the two most dynamic markets in South Carolina; Charleston/Mount Pleasant and Greenville/Spartanburg. In the Charlotte and Raleigh/Durham/Chapel-Hill markets, while there were no major announcements, our talent base continued to grow and the loan originations in these two markets totaled over $1 billion in 2015. As we continue our mission to build the most profitable and valuable franchise in the Carolinas and Southwest VA, we are ever aware that our executive management team and staff must manage an ever increasing level of risk in our industry, and a more complex, yet highly convenient, multi-channel delivery platform. This is why our dedication to building a senior team with years of experience in their particular areas, an ability to process information and make good decisions, and a personality and leadership style that promotes teamwork is one of my highest priorities as CEO."

Operating earnings for the fourth quarter of 2015 totaled $15.4 million, or $0.39 per diluted share, compared to $15.0 million, or $0.39 per diluted share, for the third quarter of 2015. Operating earnings exclude non-operating income and expenses, which primarily consists of transaction-related expenses and gain (loss) on sale of investment securities, net of income taxes. The increase was due to increased net interest income, due to continued organic loan growth, as well as loans purchased from CertusBank, N.A. ("Certus"). This increase was partially offset by increased provision for loan losses and increased non-interest expenses.

Net income for the fourth quarter of 2015 totaled $12.7 million, or $0.32 per diluted share, compared to $11.9 million, or $0.31 per diluted share, for the third quarter of 2015.

Total non-interest income was $8.3 million for the fourth quarter of 2015, a decrease from $9.2 million for the third quarter of 2015. Excluding gains on securities sales, non-interest income decreased by $0.1 million from third quarter 2015. Mortgage fees decreased as compared to third quarter of 2015 due to a seasonal reduction in loan closings. Many of the other non-interest income sources, such as income from recoveries on acquired loans, income derived from the sale of loans partially guaranteed by the Small Business Administration and income derived from our investment brokerage services, are volatile and can vary significantly from period to period.

Total non-interest expense was $37.6 million for the fourth quarter of 2015, a decrease from $38.2 million for the third quarter of 2015. Excluding transaction-related expenses and other non-operating items, non-interest expense for the fourth quarter was $33.3 million, as compared to $32.5 million for the third quarter of 2015. The increase is due to additional employees and facilities from the acquired Certus branches, as well as traditional year-end compensation-related expenses. These increased charges were slightly offset by a reduction in loan and other real estate owned ("OREO") expenses during the fourth quarter of 2015.

Selected Balance Sheet Data



	Ending Balance
	Dec. 31, 2015			Sept. 30, 2015			Jun. 30, 2015			Mar. 31, 2015			Dec. 31, 2014
Portfolio loans:	(Dollars in thousands)
Originated loans	$	2,721,216		$	2,587,572		$	2,394,470		$	2,262,601		$	2,116,441
Acquired loans	1,478,655			1,391,061			858,537			913,236			958,657
Allowance for loan and lease losses	(31,647		)	(30,833		)	(30,635		)	(29,351		)	(30,399		)
Portfolio loans, net	4,168,224			3,947,800			3,222,372			3,146,486			3,044,699
Loans held for sale	39,470			37,437			36,315			25,505			37,280
Investment securities	734,557			645,732			557,732			515,325			506,382
Total interest-earning assets	5,131,988			4,689,936			3,886,910			3,778,586			3,669,857
Goodwill	134,686			128,489			69,749			69,749			69,749
Core deposit intangible, net	18,299			18,134			12,273			13,112			13,952
Total assets	$	5,656,638		$	5,201,118		$	4,278,588		$	4,173,463		$	4,072,508

Deposits:
Non-interest bearing deposits	$	776,479		$	738,529		$	621,392		$	544,189		$	534,792
Interest-bearing demand and savings	2,337,978			2,157,801			1,586,967			1,685,200			1,657,931
Time deposits	1,627,750			1,478,161			1,301,616			1,323,537			1,203,674
Total deposits	4,742,207			4,374,491			3,509,975			3,552,926			3,396,397
Borrowings	292,790			267,069			337,711			195,659			261,748
Total interest-bearing liabilities	4,258,518			3,903,031			3,226,294			3,204,395			3,123,353
Shareholders' equity:
Common equity	584,818			515,062			395,215			389,025			380,206
Accumulated other comprehensive income	7,329			7,435			8,368			10,087			10,182
Total shareholders' equity	$	592,147		$	522,497		$	403,583		$	399,112		$	390,388

At December 31, 2015, the Company's total assets were $5.7 billion, an increase from $5.2 billion at September 30, 2015 and from $4.1 billion at December 31, 2014. During the fourth quarter of 2015, originated loans increased $128.2 million, net of loans that were reclassified from acquired. The Company also had increases in investment securities and interest-bearing cash due to the Company's desire to increase its on-balance sheet liquidity. Funding this growth were continued increases in deposits, both organically and from the acquisition of branches from Certus, and from additional short-term borrowings. The Company continues to grow transactional deposits, which increased by $218.1 million during the fourth quarter. Wholesale deposits comprised 27.5% of total deposits at December 31, 2015, as compared to 26.1% at September 30, 2015 and 25.7% at December 31, 2014. Goodwill and net core deposit intangibles increased by $6.4 million during the quarter due to the Certus branch acquisition.

Shareholder's equity increased by $69.7 million during the fourth quarter due to the sale of 2.59 million common shares in a public offering. All of the Bank's and Company's capital ratios exceed the minimum thresholds established for a well-capitalized bank by regulatory measures.

Asset Quality



	Ending Balance
	Dec. 31, 2015			Sept. 30, 2015			Jun. 30, 2015			Mar. 31, 2015			Dec. 31, 2014
	(Dollars in thousands)
Nonaccrual loans - non-acquired	$	6,623		$	5,914		$	12,998		$	14,776		$	8,475
Nonaccrual loans - acquired	12,086			14,322			12,391			13,191			16,248
OREO - non-acquired	15,588			18,791			20,767			21,869			23,989
OREO - acquired	16,973			18,489			12,241			17,558			18,542
90 days past due - non-acquired	—			—			—			—			—
90 days past due - acquired	3			—			14			—			—
Total nonperforming assets	$	51,273		$	57,516		$	58,411		$	67,394		$	67,254

Total nonperforming assets - non-acquired	$	22,211		$	24,705		$	33,765		$	36,645		$	32,464

Net charge-offs (recoveries), QTD	$	352		$	(326	)	$	(1,036	)	$	584		$	940
Annualized net charge-offs (recoveries) to total average portfolio loans	0.03		%	(0.03		)%	(0.13		)%	0.08		%	0.13		%

Ratio of total nonperforming assets to total assets	0.91		%	1.11		%	1.37		%	1.61		%	1.65		%
Ratio of total nonperforming loans to total portfolio loans	0.45		%	0.51		%	0.78		%	0.88		%	0.80		%
Ratio of total allowance for loan losses to total portfolio loans	0.75		%	0.77		%	0.94		%	0.92		%	0.99		%

Excluding acquired
Ratio of nonperforming assets to total loans and OREO	0.81		%	0.95		%	1.40		%	1.60		%	1.52		%
Ratio of nonperforming loans to total loans	0.24		%	0.23		%	0.54		%	0.65		%	0.40		%
Ratio of allowance for loan losses to total loans	1.05		%	1.05		%	1.13		%	1.15		%	1.25		%

Overall asset quality continued to improve during the fourth quarter of 2015, as total nonperforming assets were $51.3 million, or 0.91% of total assets, as compared to $57.5 million, or 1.11% of total assets, at September 30, 2015, and $67.3 million, or 1.65% of total assets, at December 31, 2014.

Excluding nonperforming assets acquired by the Company, nonperforming assets were $22.2 million, or 0.81% of non-acquired loans and OREO at December 31, 2015, as compared to $24.7 million, or 0.95% of non-acquired loans and OREO, at September 30, 2015, and $32.5 million, or 1.52% of non-acquired loans and OREO, at December 31, 2014.

The Company experienced $0.4 million of net charge-offs during the fourth quarter of 2015, compared to net recoveries of $0.3 million during the third quarter of 2015. Gross charge-offs were $1.5 million during the fourth quarter of 2015, a slight increase compared to $1.2 million during the third quarter of 2015.

The allowance for loan losses was $31.6 million at December 31, 2015, an increase from $30.8 million at September 30, 2015 and $30.4 million at December 31, 2014. The Company recorded a provision for loan losses of $1.3 million during the fourth quarter of 2015, as compared to $0.2 million recorded during the third quarter of 2015. The provision for loan losses recorded during the fourth quarter of 2015 was allocated to loans not acquired by the Company. The additional provision was recorded due to the high levels of loan growth in the originated loan portfolio.

Net Interest Income and Margin



	Three Months Ended															Year Ended December 31,
	Dec. 31, 2015			Sept. 30, 2015			Jun. 30, 2015			Mar. 31, 2015			Dec. 31, 2014			2015			2014
Quarterly average balances:	(Dollars in thousands)
Loans	$	4,193,632		$	3,957,846		$	3,238,433		$	3,154,739		$	2,905,305		$	3,639,890		$	2,633,829
Investment securities	656,940			631,407			513,476			495,587			484,092			574,951			495,251
Total interest-earning assets	4,927,105			4,657,454			3,802,696			3,708,252			3,436,018			4,278,267			3,202,958
Total assets	5,428,444			5,154,690			4,180,690			4,097,199			3,809,989			4,720,107			3,561,719
Deposits:
Non-interest bearing	772,831			733,659			573,640			532,348			519,062			653,999			432,181
Interest-bearing	3,784,140			3,539,391			2,902,960			2,930,315			2,667,995			3,292,226			2,579,633
Total deposits	4,556,971			4,273,050			3,476,600			3,462,663			3,187,057			3,946,225			3,011,814
Borrowed funds	288,209			334,584			279,140			216,182			246,229			279,877			203,922
Total interest-bearing liabilities	4,072,349			3,873,975			3,182,100			3,146,497			2,914,224			3,572,103			2,783,555
Shareholders' equity	553,475			517,835			517,835			394,034			351,695			466,881			323,183

Interest Income/Expense (FTE):
Loans	$	50,762		$	48,050		$	40,494		$	39,420		$	38,534		$	178,726		$	140,024
Investment securities, tax	2,069			1,842			1,261			1,166			970			6,338			4,385
Investment securities, non-tax	5,186			5,173			5,016			5,049			5,175			20,424			20,938
Other earning assets	140			162			132			120			151			554			542
Total interest income	58,157			55,227			46,903			45,755			44,830			206,042			165,889
Deposits	5,852			5,265			4,888			4,442			3,946			20,447			15,139
Borrowings	1,647			1,789			1,426			1,375			1,508			6,237			4,787
Total interest expense	7,499			7,054			6,314			5,817			5,454			26,684			19,926
Net interest income	$	50,658		$	48,173		$	40,589		$	39,938		$	39,376		$	179,358		$	145,963

Average Yields and Costs (FTE):
Loans	4.80		%	4.82		%	5.02		%	5.07		%	5.26		%	4.91		%	5.32		%
Investment securities, tax	2.81		%	2.73		%	3.08		%	3.33		%	3.32		%	2.92		%	3.61		%
Investment securities, non-tax	5.63		%	5.64		%	5.76		%	5.79		%	5.58		%	5.71		%	5.60		%
Other interest-earning assets	0.73		%	0.94		%	1.04		%	0.84		%	1.28		%	0.87		%	0.73		%
Total earning assets	4.68		%	4.70		%	4.95		%	5.00		%	5.18		%	4.82		%	5.18		%
Total interest bearing deposits	0.61		%	0.59		%	0.68		%	0.61		%	0.59		%	0.62		%	0.59		%
Borrowed funds	2.27		%	2.12		%	2.05		%	2.58		%	2.43		%	2.23		%	2.35		%
Total interest-bearing liabilities	0.73		%	0.72		%	0.80		%	0.75		%	0.74		%	0.75		%	0.72		%
Cost of funds	0.61		%	0.61		%	0.67		%	0.64		%	0.63		%	0.63		%	0.62		%
Net interest margin	4.08		%	4.10		%	4.28		%	4.37		%	4.55		%	4.19		%	4.56		%

Fully-taxable equivalent (“FTE”) net interest income for the fourth quarter of 2015 was $50.7 million, an increase from $48.2 million for the third quarter of 2015. FTE net interest margin was 4.08% for the fourth quarter of 2015, a slight decrease from 4.10% for the third quarter of 2015. The average yield on interest-earning assets decreased two basis points during the fourth quarter of 2015, while the rate paid on interest-bearing liabilities increased by one basis point. Accretion earned on the Company’s acquired loan portfolio was $5.6 million during the fourth quarter of 2015, an increase as compared to $4.8 million earned in the third quarter of

2015. Excluding accretion, the average yield on loans was 4.27% for the fourth quarter 2015, as compared to 4.33% for the third quarter of 2015.

Average interest-earnings assets for the fourth quarter of 2015 were $4.97 billion, an increase from $4.66 billion for the third quarter of 2015. These increases are primarily due to higher average loan balances from the Certus branch acquisition and organic loan growth in our markets, as well as additional investment securities purchased during the fourth quarter of 2015. Average interest-bearing liabilities were $4.07 billion for the fourth quarter of 2015, an increase from $3.87 billion during the third quarter of 2015. This increase was due to the deposits acquired in the Certus branch acquisition, as well as organic deposit growth and additional borrowings during the fourth quarter.

Loan Portfolio Composition



	Ending Balance
	Dec. 31, 2015		Sept. 30, 2015		Jun. 30, 2015		Mar. 31, 2015		Dec. 31, 2014
	(Dollars in millions)
Residential construction	$	76	$	92	$	84	$	78	$	73
Presold	46		55		58		50		41
Speculative	30		37		26		28		32

Commercial construction	237		233		243		177		203
Residential and commercial A&D	18		18		16		12		13

Land	111		90		86		92		98
Residential buildable lots	34		26		27		27		27
Commercial buildable lots	20		22		24		25		26
Land held for development	34		25		20		24		26
Raw and agricultural land	23		17		16		17		19

Commercial real estate	2,246		2,133		1,721		1,713		1,585
Multi-family	178		165		96		100		83
Farmland	5		5		6		5		5
Owner occupied	785		737		626		615		591
Non-owner occupied	1,277		1,226		993		994		907

Commercial and industrial	419		340		220		199		192
Residential mortgage	1,049		1,029		842		867		872
Consumer	19		19		17		16		16
Leases	27		26		25		22		21
Total portfolio loans	$	4,200	$	3,979	$	3,253	$	3,176	$	3,075

Total portfolio loans were $4.2 billion at December 31, 2015, an increase from $4.0 billion at September 30, 2015 and from $3.1 billion at December 31, 2014. Loans that were originated by the Company, excluding loans that were reclassified from acquired, increased by $128.2 million, or 5.0%, on an annualized basis. The Company has experienced organic loan growth across all loan types, with the majority of loan growth in commercial real estate and commercial and industrial loans.

Acquired Loan Summary



	Ending Balance
	Dec. 31, 2015			Sept. 30, 2015			Jun. 30, 2015			Mar. 31, 2015			Dec. 31, 2014
	(Dollars in thousands)
Performing acquired loans	$	1,363,379		$	1,262,268		$	744,081		$	793,149		$	834,863
Less: remaining FMV adjustments	(27,789		)	(28,990		)	(19,900		)	(23,045		)	(26,280		)
Performing acquired loans, net	1,335,590			1,233,278			724,181			770,104			808,583
FMV adjustment %	2.0		%	2.3		%	2.7		%	2.9		%	3.1		%

Purchase credit impaired loans (PCI)	157,966			176,605			147,372			156,049			164,120
Less: remaining FMV adjustments	(14,901		)	(18,822		)	(13,016		)	(12,917		)	(14,046		)
PCI loans, net	143,065			157,783			134,356			143,132			150,074
FMV adjustment %	9.4		%	10.7		%	26.0		%	23.9		%	24.3		%

Total acquired performing loans	$	1,335,590		$	1,233,278		$	724,181		$	770,104		$	808,583
Total acquired PCI loans	143,065			157,783			134,356			143,132			150,074
Total acquired loans	$	1,478,655		$	1,391,061		$	858,537		$	913,236		$	958,657
FMV adjustment % all acquired loans	(2.8		)%	(3.3		)%	(3.7		)%	(3.8		)%	(4.0		)%

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 total assets of $5.7 billion. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 64 current banking offices in Virginia, North and South Carolina. The Bank’s 19 locations in South Carolina and nine locations in Virginia operate as BNC Bank. Bank of North Carolina is insured by the FDIC and is an equal housing lender. BNC Bancorp’s stock is traded and quoted in the NASDAQ Capital Market under the symbol "BNCN." The Company’s website is www.bncbancorp.com.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States. BNC Bancorp's management uses these "non-GAAP" 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.

Forward Looking Statements

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.

Reconciliation of Non-GAAP to GAAP



	Three Months Ended											Year Ended December 31,
	Dec. 31, 2015		Sept. 30, 2015		Jun. 30, 2015			Mar. 31, 2015		Dec. 31, 2014		2015		2014
	(Dollars in thousands)
Operating Earnings per Share, Diluted (1)
Net income (GAAP)	$	12,739	$	11,939	$	11,014		$	8,758	$	8,505	$	44,450	$	29,390
Transaction-related charges, net of tax	2,713		3,078		784			1,789		1,406		8,364		5,641
Loss on extinguishment of debt, net of tax	—		481		—			—		386		481		386
Insurance settlement income, net of tax	—		—		—							—		484
Securities gains (losses), net of tax	28		500		(3		)	31		—		556		(322		)
Operating earnings (non-GAAP)	15,424		14,998		11,801			10,516		10,297		52,739		35,255
Weighted average fully diluted shares outstanding	39,452		38,165		32,653			32,754		30,599		35,782		29,152
Operating earnings per share, diluted (non-GAAP)	$	0.39	$	0.39	$	0.36		$	0.32	$	0.34	$	1.47	$	1.21

Operating Non-Interest Income (1)
Non-interest income (GAAP)	$	8,286	$	9,169	$	8,693		$	6,300	$	7,785	$	32,448	$	25,022
Securities gains (losses), net	45		794		(4		)	49		—		884		(511		)
Insurance settlement income	—		—		—			—		—		—		768
Operating non-interest income (non-GAAP)	$	8,241	$	8,375	$	8,697		$	6,251	$	7,785	$	31,564	$	24,765

Operating Non-Interest Expense (1)
Non-interest expense (GAAP)	$	37,580	$	38,185	$	31,399		$	31,991	$	32,366	$	139,155	$	116,477
Transaction-related expenses	4,307		4,886		1,244			2,839		2,231		13,276		8,954
Loss on extinguishment of debt	—		763		—			—		613		763		613
Operating non-interest expense (non-GAAP)	$	33,273	$	32,536	$	30,155		$	29,152	$	29,522	$	125,116	$	106,910

Operating Income Tax Expense (1)
Income tax expense - GAAP	$	5,420	$	5,106	$	4,712		$	3,511	$	3,374	$	18,749	$	10,365
Securities gains (losses), tax effect	17		294		(1		)	18		—		328		(189		)
Transaction-related expenses, tax effect	1,559		1,189		461			1,014		825		4,223		2,794
Loss on extinguishment of debt, tax effect	—		313		—			—		227		313		227
Operating income tax expense (non-GAAP)	$	6,996	$	6,902	$	5,172		$	4,543	$	4,426	$	23,613	$	13,197

Tangible Common Book Value per Share (2)
Shareholders' equity (GAAP)	$	592,147	$	522,497	$	403,583		$	399,112	$	390,388	$	592,147	$	390,388
Intangible assets	152,985		146,623		82,022			82,861		83,701		152,985		83,701
Tangible common shareholders equity (non-GAAP)	439,162		375,874		321,561			316,251		306,687		439,162		306,687



Common shares outstanding	40,774			38,138			32,589			32,716			32,599			40,774			32,599
Tangible common book value per share (non-GAAP)	$	10.77		$	9.86		$	9.87		$	9.67		$	9.41		$	10.77		$	9.41

Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	12,739		$	11,939		$	11,014		$	8,758		$	8,505		$	44,450		$	29,390
Amortization of intangibles, net of tax	746			694			529			529			453			2,498			1,474
Tangible net income available to common shareholders (non-GAAP)	13,485			12,633			11,543			9,287			8,958			46,948			30,864
Average common shareholders equity	553,475			517,835			399,868			394,034			351,695			466,881			323,183
Average intangible assets	152,255			147,143			82,431			83,279			68,954			116,548			55,026
Average tangible common shareholders' equity (non-GAAP)	401,220			370,692			317,437			310,755			282,741			350,333			268,157
Return on average tangible common equity (non-GAAP)	13.33		%	13.52		%	14.59		%	12.12		%	12.57		%	13.40		%	11.51		%

Operating Return on Average Assets (1)
Net income (GAAP)	$	12,739		$	11,939		$	11,014		$	8,758		$	8,505		$	44,450		$	29,390
Transaction-related expenses, net of tax	2,713			3,078			784			1,789			1,406			8,364			5,641
Loss on extinguishment of debt, net of tax	—			481			—			—			386			481			386
Insurance settlement income, net of tax	—			—			—			—			—			—			484
Securities gains (losses), net of tax	28			500			(3		)	31			—			556			(322		)
Operating earnings (non-GAAP)	$	15,424		$	14,998		$	11,801		$	10,516		$	10,297		$	52,739		$	35,255
Average assets	5,428,444			5,154,690			4,180,690			4,097,199			3,809,989			4,720,107			3,561,719
Operating return on average assets (non-GAAP)	1.13		%	1.15		%	1.13		%	1.04		%	1.07		%	1.12		%	0.99		%

Operating Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	12,739		$	11,939		$	11,014		$	8,758		$	8,505		$	44,450		$	29,390
Amortization of intangibles, net of tax	746			694			529			529			453			2,498			1,474
Transaction-related expenses, net of tax	2,713			3,078			784			1,789			1,406			8,364			5,641
Loss on extinguishment of debt, net of tax	—			481			—			—			386			481			386
Insurance settlement income, net of tax	—			—			—			—			—			—			484
Securities gains (losses), net of tax	28			500			(3		)	31			—			556			(322		)
Operating tangible net income (non-GAAP)	$	16,170		$	15,692		$	12,330		$	11,045		$	10,750		$	55,237		$	36,729
Average common shareholders equity	553,475			517,835			399,868			394,034			351,695			466,881			323,183
Average intangible assets	152,255			147,143			82,431			83,279			68,954			116,548			55,026
Average tangible common shareholders' equity (non-GAAP)	401,220			370,692			317,437			310,755			282,741			350,333			268,157



Operating return on average tangible common equity (non-GAAP)	15.99		%	16.79		%	15.58		%	14.41		%	15.08		%	15.77		%	13.70		%

Operating Efficiency Ratio (3)
Non-interest expense (GAAP)	$	37,580		$	38,185		$	31,399		$	31,991		$	32,366		$	139,155		$	116,477
Transaction-related expenses	4,307			4,886			1,244			2,839			2,231			13,276			8,954
Loss on extinguishment of debt	—			763			—			—			613			763			613
Amortization of intangible assets	1,184			1,102			840			840			719			3,965			2,340
Operating non-interest expense (non-GAAP)	32,089			31,434			29,315			28,312			28,803			121,151			104,570
Net interest income, FTE	50,658			48,173			40,589			39,938			39,376			179,358			145,963
Non-interest income - GAAP	8,286			9,169			8,693			6,300			7,785			32,448			25,022
Securities gains (losses), net	45			794			(4		)	49			—			884			(511		)
Insurance settlement income	—			—			—			—			—			—			768
Operating efficiency ratio (non-GAAP)	54.48		%	55.59		%	59.48		%	61.30		%	61.07		%	57.44		%	61.25		%

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