THOMASVILLE, N.C., Aug. 1 /PRNewswire-FirstCall/ -- BNC Bancorp (Nasdaq:
BNCN) today reported operating results for the quarter and six-month periods
ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030917/BNCLOGO )
Total assets as of June 30, 2008 were $1.2 billion, an increase of 7.4
percent from the $1.13 billion at December 31, 2007, and a 13.4 percent
increase compared with the $1.07 billion as of June 30, 2007. Total loans
were $999.2 million, up 7.1 percent and 14.1 percent compared to total loans
at December 31, 2007 and June 30, 2007, respectively.
For the quarter ended June 30, 2008, the Company reported a decline in net
income of 56.8 percent to $915,000 from $2.1 million a year earlier. Diluted
per-share earnings were $0.12, down 60.0 percent from the $0.30 reported for
the second quarter of 2007. Adjusted for the one time pre-tax charges of
$650,000 relating to the separation of employment settlement with a former
executive officer, net income for the quarter was $1.3 million, or $0.18 per
diluted share, a 36.7 percent and 39.7 percent decline respectively.
For the six-month period ended June 30, 2008, the Company reported net
income of $2.62 million, a decrease of 35.2% when compared to the $4.04
million reported for the first six months of 2007. Diluted earnings per share
decreased to $0.35 for the six-month period, compared to $0.57 reported for
same period in 2007. Adjusted for the $650,000 pre-tax charge outline above,
net income for the first six months of 2008 was $3.04 million, or $0.41 per
diluted share, a 24.6 percent and 28.1 percent decline respectively.
Tax equivalent net interest income for the second quarter of 2008
increased $163,000 or 1.9 percent compared to the same three-month period in
2007. Components of the change in net interest income were: the increase in
earning assets contributed a $1.18 million increase, while the reduction in
net interest margin reduced net interest income by $1.02 million. The
Company reported a tax equivalent net interest margin of 3.19% for the second
quarter of 2008, compared to 3.29% for the first quarter of 2008, and 3.71%
for the second quarter of 2007. The decrease in net interest margin over the
last year resulted from the recent actions by the Federal Reserve to
aggressively reduce key benchmark rates coupled by elevated short-term deposit
rates.
W. Swope Montgomery, Jr., President and Chief Executive Officer, said,
'While the results for the quarter were not on par with historical
expectations, there are many positives, as well as obvious challenges,
highlighted below.'
-- Despite net interest margin declining from 3.71% in the second quarter
of 2007 to 3.19% in the current quarter, tax equivalent net interest income
increased by 1.9 percent when comparing corresponding quarters. The strong
dynamics of our markets and the established following of our talented bankers
continues to propel the growth of our Company despite the economic slowdown.
-- During the first half of 2008, we continued to recruit and attract
seasoned bankers to further fortify and expand our support infrastructure and
market coverage. We moved into a new office in Mooresville, and are preparing
to open our second full-service office in High Point. We expect to open the
new High Point office without additional FTE's; the staff will come from our
existing employee base.
-- Because non-taxable income from municipal bonds and bank owned life
insurance represent a substantially larger portion of income before income
taxes, the effective tax rate for the quarter was 8.4 percent, down from 29.7
percent for the second quarter of 2007 and 29.0 percent for the first quarter
of 2008. The effective tax rate was 23.0 percent for the first six months of
2008, down from 29.7 percent for the same period in 2007.
-- Increases in non-interest expense during the first six months were
abnormally high, with much of the increase related to one-time events, or in
areas where initiatives are underway to produce significant savings going
forward, including the following:
1. One-time separation of employment charges: The Company incurred
one-time contract resolution costs of $558,000, and a one-time post-retirement
split dollar accrual equaled to $92,000. We anticipate this action will
produce annual savings of approximately $400,000 going forward.
2. Legal fees: The Company incurred legal fees during the first half of
2008 of $150,000 more than for the comparable six month period in 2007. Much
of this increase related to several one-time projects.
3. Accounting and Auditing: Expenses in these areas increased
approximately $200,000 versus the first six months of 2007. To address this
increase, BNC has recently added staff to its in-house audit department
sufficient to handle most general and SEC regulatory related audit
responsibilities going forward. We expect this move to result in a net savings
of $200,000 annually in audit related costs. In addition, as a measure of
prudence and caution, $50,000 of the increase in audit costs for the first six
months of 2008 relates to greater third-party credit review and assessment.
We anticipate this additional cost will be ongoing for the remainder of 2008.
4. FDIC insurance: The FDIC began reassessing premiums in the second
quarter of 2007. After exhausting credits we incurred minimal charges in the
first half of 2007, compared to charges for the first six months of 2008 of
approximately $330,000.
5. Other Real Estate: The Company took a one-time charge of $350,000 on a
single family residential property in OREO where structural issues resulted in
the sales price being 40 percent below comparable homes in the subject
neighborhood. Of the remaining $1.8 million in OREO, we currently have
executed contracts at carrying value or above on $1.5 million.
'Despite the challenges facing our industry, management is continuously
evaluating ways to make our Company stronger and more profitable. We are
excited about the many strategic initiatives currently being implemented that
should lead to stronger financial results in future periods. While Ralph
Strayhorn, the President of SterlingSouth Bank prior to our acquisition in
2006, has been very instrumental in uniting our two organizations over the
past two years, the separation was a mutual decision benefiting both parties.
This settlement contributed significantly to an internal goal of identifying
and extracting $1.5 million+ in annual non-interest expense savings. Another
area of significant savings going forward will be from expenses associated
with professional and service related fees. We have primarily utilized an
'out-sourcing' approach for most data processing, audit, and financial
reporting services. We are enhancing our internal infrastructure in certain
of these areas which will provide significant cost savings going forward,'
said Montgomery.
Non-performing assets as a percentage of total assets at June 30, 2008
were at .89 percent, up from .54 percent as of December 31, 2007, and up from
.31 percent at June 30, 2007. The allowance for loan and lease losses has
increased $1.21 million, or 10.8 percent, from a year ago. The allowance for
loan and lease losses of $12.45 million is 1.25 percent of June 30, 2008 total
loans outstanding, up from 1.24 percent at the prior quarter end, and down
from 1.28 percent in the second quarter last year. The second quarter
provision for loan losses expense was $1.15 million, an increase of $500,000
from the same quarter in 2007. Net charge-offs for the quarter were $893,000,
or at an annualized rate of 0.36 percent, an increase compared to the
$155,000, or 0.08 percent level in the second quarter of 2007.
'As anticipated, we did see an increase in non-performing assets (NPA's)
during the quarter and an uptick in the level of net charge-offs relative to
historical averages,' Montgomery continued. 'The increase in NPA's for the
quarter was primarily attributable to one large residential construction and
development relationship of $4.5 million that was placed on non-accrual during
the quarter. Based on recent appraisals and conversations with interested
parties, we are confident that we have allocated sufficient reserves within
our allowance for loan losses to cover potential losses. Our company is
working very diligently during this challenging period to resolve each of the
non-performing relationships and keep our charge-offs at manageable levels,'
Montgomery explained.
Montgomery continued, 'There are challenges that our Company and our
industry are facing which are new to us all. I am very proud of the way our
entire team has rallied around our strategic initiatives, and adapted to the
many changes necessary to continue to elevate performance in this environment.
With capital markets seized up for financial institutions, we are fully aware
that new capital will come primarily from internally generated earnings, and
across our footprint and throughout our team we are committed to making an
already efficient growth company even more so. We are in strong markets with
a wealth of experience on the ground in each of these areas. Despite our
efforts at creating greater efficiency, it's now more than ever we are
delighted to have invested in the experienced and seasoned bankers that
represent our company daily.'
BNC Bancorp is the parent Company of Bank of North Carolina, a $1.2
billion commercial bank that provides a complete line of banking and financial
services to individuals and businesses through full-service banking offices
located in the cities of Thomasville, High Point, Salisbury, Greensboro,
Archdale, Lexington, Kernersville, Harrisburg, Welcome and Oak Ridge, North
Carolina. In addition, the Bank operates limited service banking offices in
Winston-Salem and Mooresville, North Carolina. Bank of North Carolina is
insured by the FDIC and is an equal housing lender. BNC Bancorp's stock is
quoted in the Nasdaq Capital Market under the symbol 'BNCN.'
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
From time to time, we make written and oral forward-looking statements
within the meaning of certain securities laws, including in this press
release, in other filings with the U.S. Securities and Exchange Commission, in
reports to shareholders and in other communications. These forward-looking
statements include, among others, statements with respect to our objectives
for 2008 and beyond, and the medium and long terms strategies to achieve those
objectives, as well as statements with respect to our beliefs, plans,
expectations, anticipations, estimates and intentions.
By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that
predictions, forecasts, projections and other forward-looking statements will
not be achieved. We caution readers not to place undue reliance on these
statements as a number of important factors could cause actual results to
differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements. These factors
include, but are not limited to, the strength of the North Carolina economy in
general and the strength of the local economies within North Carolina in which
we conduct operations; the strength of the United States economy; the effects
of changes in monetary and fiscal policy, including changes in interest rate
policies of the Board of Governors of the Federal Reserve System in the United
States; judicial decisions; the effects of competition in the markets in which
we operate; inflation; the timely development and introduction of new products
and services in receptive markets; the impact of changes in the laws and
regulations regulating financial services (including banking, insurance and
securities); changes in tax laws; technological changes; our ability to
complete strategic acquisitions and to integrate acquisitions; judicial or
regulatory proceedings; changes in consumer spending and saving habits; the
possible impact on our businesses of international conflicts and other
developments including those relating to the war on terrorism; and our
anticipation of and success in managing the risks implicated by the foregoing.
QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands, except per share data)
(Unaudited) For the
Three Months Ended
June 30, June 30,
2008 2007
SUMMARY STATEMENTS OF OPERATIONS
Interest income $17,182 $18,146 -5.3 %
Interest expense 8,983 10,090 (11.0)
Net interest income 8,199 8,056 1.8
Provision for loan losses 1,150 650 76.9
Net interest income after
provision for loan losses 7,049 7,406 (4.8)
Noninterest income 1,625 1,307 24.3
Noninterest expense 7,675 5,700 34.7
Income before income tax expense 999 3,013 (66.8)
Provision for income taxes 84 895 (90.6)
Net income 915 2,118 (56.8)
PER SHARE DATA
Earnings per share, basic $0.13 $0.31 -58.1%
Earnings per share, diluted $0.12 0.30 (60.0)
Weighted average common shares
outstanding:
Basic 7,299,672 6,848,914
Diluted 7,410,722 7,088,178
PERFORMANCE RATIOS
Return on average assets 0.31% 0.84%
Return on average equity 4.20% 11.44%
Return on average tangible equity 6.20% 18.52%
Net yield on earning assets
(taxable equivalent) 3.19% 3.71%
Average equity to average assets 7.29% 7.32%
Ratio of net charge-offs to
average loans, annualized 0.36% 0.08%
QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands, except per share data)
(Unaudited) For the
Six Months Ended
June 30, June 30,
2008 2007 % Change
SUMMARY STATEMENTS OF OPERATIONS
Interest income $35,584 $34,988 1.7 %
Interest expense 19,193 19,272 (0.4)
Net interest income 16,391 15,716 4.3
Provision for loan losses 1,875 1,200 56.3
Net interest income after
provision for loan losses 14,516 14,516 0.0
Noninterest income 3,000 2,511 19.5
Noninterest expense 14,121 11,288 25.1
Income before income tax expense 3,395 5,739 (40.8)
Provision for income taxes 780 1,704 (54.2)
Net income 2,615 4,035 (35.2)
PER SHARE DATA
Earnings per share, basic $0.36 $0.59 -39.0%
Earnings per share, diluted $0.35 $0.57 (38.6)
Weighted average common shares
outstanding:
Basic 7,289,160 6,824,935
Diluted 7,416,912 7,080,921
PERFORMANCE RATIOS
Return on average assets 0.45% 0.82%
Return on average equity 6.05% 11.04%
Return on average tangible equity 8.95% 17.95%
Net yield on earning assets
(taxable equivalent) 3.24% 3.75%
Average equity to average assets 7.36% 7.47%
Allowance for loan losses as a %
of total loans 1.25% 1.28%
Non-performing assets to total
assets, end of period 0.89% 0.31%
Ratio of net charge-offs to
average loans, annualized 0.25% 0.09%
QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands, except per share data)
(Unaudited) For the
Three Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, Dec. 31,
2008 2008 2007 2007 2007 2006
SUMMARY STATEMENTS
OF OPERATIONS
Interest income $17,182 $18,402 $19,262 $19,420 $18,146 $16,616
Interest expense 8,983 10,210 11,003 10,990 10,090 8,509
Net interest
income 8,199 8,192 8,259 8,430 8,056 8,107
Provision for loan
losses 1,150 725 750 1,140 650 780
Net interest income
after provision
for loan losses 7,049 7,467 7,509 7,290 7,406 7,327
Noninterest income 1,625 1,375 1,483 1,255 1,307 1,152
Noninterest
expense 7,675 6,446 6,839 5,941 5,700 5,540
Income before
income tax expense 999 2,396 2,153 2,604 3,013 2,939
Provision for income
taxes 84 696 600 754 895 878
Net income 915 1,700 1,553 1,850 2,118 2,041
Net interest income,
as reported $8,199 $8,192 $8,259 $8,430 $8,056 $8,107
Tax-equivalent
adjustment 421 412 360 422 401 411
Net interest income,
tax-equivalent 8,620 8,604 8,619 8,852 8,457 8,518
PER SHARE DATA
Earnings per
share, basic $ 0.13 $0.23 $0.22 $0.27 $0.31 $0.30
Earnings per
share, diluted 0.12 0.23 0.22 0.26 0.30 0.29
Weighted average
common shares
outstanding:
Basic 7,299,672 7,278,648 6,914,320 6,895,012 6,848,914 6,698,899
Diluted 7,410,722 7,422,815 7,097,902 7,093,801 7,088,178 7,026,623
PERFORMANCE RATIOS
Return on average
assets 0.31% 0.59% 0.56% 0.68% 0.84% 0.88%
Return on average
equity 4.20% 7.90% 7.61% 9.67% 11.44% 11.32%
Return on average
tangible equity 6.20% 11.73% 11.70% 15.44% 18.52% 19.13%
Net yield on
earning assets
(taxable
equivalent) 3.19% 3.29% 3.37% 3.55% 3.71% 4.09%
Average equity to
average assets 7.29% 7.43% 7.29% 7.03% 7.32% 7.77%
QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands)
(Unaudited) As of
June 30, June 30,
2008 2007 % Change
SELECTED BALANCE SHEET DATA
End of period balances
Total loans $999,207 $875,505 14.1 %
Allowance for loan losses 12,455 11,243 10.8
Loans, net of allowance for loan
losses 986,752 864,262 14.2
Securities, available for sale 94,175 79,133 19.0
Total Assets 1,213,817 1,070,615 13.4
Deposits:
Noninterest-bearing
deposits 67,969 71,653 (5.1)
Interest-bearing demand and
savings 191,287 205,170 (6.8)
CD's and other time
deposits 670,070 621,160 7.9
Total deposits 929,326 897,983 3.5
Borrowed Funds 191,849 92,149 108.2
Total interest-bearing liabilities 1,053,206 918,479 14.7
Shareholders' Equity 86,145 74,970 14.9
As of
June 30, March 31, Dec. 31, Sept. 30, June 30, Dec. 31,
2008 2008 2007 2007 2007 2006
SELECTED BALANCE
SHEET DATA
End of period
balances
Total loans $ 999,207 $983,076 $932,562 $905,259 $875,505 $774,664
Allowance for
loan losses 12,455 12,197 11,784 11,479 11,243 10,400
Loans, net of
allowance for
loan losses 986,752 970,879 920,778 893,780 864,262 764,264
Securities,
available for
sale 94,175 88,646 86,683 84,917 79,133 76,700
Total Assets 1,213,817 1,186,172 1,130,112 1,098,263 1,070,615 951,731
Deposits:
Noninterest-
bearing deposits 67,969 72,647 67,552 69,399 71,653 65,932
Interest-bearing
demand and
savings 191,287 208,639 216,896 216,865 205,170 189,624
CD's and other
time deposits 670,070 647,342 570,682 611,674 621,160 531,221
Total Deposits 929,326 928,628 855,130 897,938 897,983 786,777
Borrowed Funds 191,849 163,663 182,641 117,482 92,149 86,386
Total interest-
bearing
liabilities 1,053,206 1,019,644 970,219 946,021 918,479 807,231
Shareholders'
Equity 86,145 86,776 86,392 78,242 74,970 72,523
QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands)
(Unaudited)
For the Three Month Period Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, Dec. 31,
2008 2008 2007 2007 2007 2006
SELECTED BALANCE
SHEET DATA
Quarterly average
balances
Loans, net of
allowance for
loan losses 982,923 949,627 909,571 886,557 824,509 745,829
Securities,
available for
sale 91,068 88,336 81,632 84,064 75,982 72,504
Total earning
assets 1,085,176 1,048,980 1,008,427 990,099 914,527 826,706
Total Assets 1,200,266 1,160,622 1,109,313 1,080,473 1,014,860 922,335
Deposits:
Noninterest-bearing
deposits 70,805 73,139 68,992 68,204 69,438 70,140
Interest-bearing
demand and
savings 197,135 214,563 215,630 215,094 202,839 186,793
CD's and other
time deposits 658,980 592,452 590,648 619,084 563,500 495,338
Total Deposits 926,920 880,154 875,270 902,382 835,777 752,271
Borrowed Funds 180,267 188,195 149,254 96,114 98,548 95,948
Total interest-
bearing
liabilities 1,036,382 995,210 955,532 930,292 864,887 778,079
Shareholders'
Equity 87,518 86,278 80,919 75,931 74,258 71,752
SOURCE BNC Bancorp
