Press Release

 

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

 

BNC Bancorp Announces Increase in Earnings for Second Quarter 2013

 

High Point, NC – BNC Bancorp (NASDAQ: BNCN) (“Company”), parent company for Bank of North Carolina (“Bank”), today reported financial results for the quarter ended June 30, 2013.

 

For the quarter ended June 30, 2013, net income totaled $4.7 million, an increase of $2.4 million, or 103.7%, compared to net income of $2.3 million for the second quarter of 2012. Net income available to common shareholders for the quarter ended June 30, 2013 was $4.1 million, or $0.16 per diluted share, an increase of $2.4 million, or 144.7%, compared to net income available to common shareholders of $1.7 million, or $0.13 per diluted share, for the second quarter of 2012. Included in the financial results for the second quarter of 2012 was $7.7 million of bargain purchase gain the Company recorded on the acquisition of Carolina Federal Savings Bank (“Carolina Federal”).

 

For the six months ended June 30, 2013, net income totaled $8.9 million, an increase of $4.9 million, or 122.8%, when compared to net income of $4.0 million for the six months ended June 30, 2012. Net income available to common shareholders for the six months ended June 30, 2013 was $7.9 million, or $0.30 per diluted share, an increase of $5.1 million, or 180.2%, compared to net income available to common shareholders of $2.8 million, or $0.24 per diluted share, for the six months ended June 30, 2012. As stated above, the financial results for the six months ended June 30, 2012 include $7.7 million of bargain purchase gain the Company recorded on the acquisition of Carolina Federal.

 

Average common shares outstanding increased significantly from June 30, 2012 as a result of the $72.5 million capital raise in the second quarter of 2012 and the acquisitions of both KeySource Financial (“KeySource”) and First Trust Bank (“First Trust”) during the second half of 2012. For the quarters ended June 30, 2013 and 2012, average fully-diluted shares outstanding were 26.5 million and 13.6 million, respectively.

 

Total assets at June 30, 2013 were $2.93 billion, an increase of $486.8 million, or 19.9%, compared to total assets of $2.44 billion at June 30, 2012. The increase was due to continued growth in our North Carolina franchise, along with the acquisition and integration of First Trust, KeySource, and, to a lesser extent, two branches that were acquired from The Bank of Hampton Roads (“BHR”) during the second half of 2012.

 

Total assets at June 30, 2013 decreased by $154.2 million, or 5.0%, as compared to total assets of $3.08 billion at December 31, 2012. As part of the KeySource and First Trust acquisitions, management’s intention was to utilize excess liquidity and the acquired securities portfolios to repay wholesale and non-core deposits as they matured. The Company has been successful at reducing this inefficient component of the acquired balance sheets, and thus has experienced a decline in total assets during the first half of 2013. This deleveraging has helped the Company execute on its strategic initiative to improve capital ratios and net interest margin.

 

 

Highlights for Quarter Ended June 30, 2013:

 

·

Announced agreement to acquire Randolph Bank and Trust Company (“Randolph”), a commercial bank with $302 million in assets serving small businesses and professionals in the Piedmont-Triad area of North Carolina;

 

·

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

 

·

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

 

·

Diluted earnings per share of $0.16, an increase of 23.1% compared to the second quarter of 2012;

 

·

Net income available to common shareholders of $4.1 million, an increase of 144.7% compared to the second quarter of 2012;

 

·

Fully taxable-equivalent net interest margin increased to 4.32%, compared to 3.71% for the second quarter of 2012;

 

·

Fully taxable-equivalent net interest margin, before hedging costs, increased to 4.68%, compared to 4.08% for the second quarter of 2012; and

 

·

Tangible common equity ratio of 7.69% at June 30, 2013, compared to 3.84% at June 30, 2012.

  

Richard D. Callicutt II, President and CEO, stated, “First, I want to thank my dear friend and founding CEO, Swope Montgomery, who retired in June, for his leadership of our Company for the past 22 years. He has slowly given me the reigns over the past ten years as he groomed me for this important transition as his successor. I am thrilled he will remain involved as our Vice-Chairman, and I look forward to working with him and our Board to take this Company to even greater heights.”

 

“I am pleased to report another strong quarter, with earnings per share of $0.16 on a GAAP basis, and $0.17 on a Non-GAAP or core basis. We continue to see credit metrics improve, our non-acquired loan portfolio grow at a double-digit rate, our mortgage department remains healthy and growing despite an industry-wide slowdown in refinancing activity, and we remain diligent in our pursuit of integration efficiencies and cost savings associated with our recent completed acquisitions. The recently announced agreement to acquire Asheboro based Randolph Bank & Trust is another step in our strategic initiative to expand within our existing markets and provide further leverage of our support infrastructure, enhance overall operating efficiency, and create meaningful earnings accretion for our shareholders.

 

Our net interest margin, with and without fair value accretion, is up significantly from year ago levels, due to an aggressive re-pricing of deposit accounts and a more efficient earning asset base. With the Charlotte and Triangle real estate markets recovering more rapidly than anticipated, the resolutions of purchase credit impaired loans above carrying value is continuing to result in elevated fair value accretion, adding further to net interest margin.

 

Also, during the quarter we closed on a $30.0 million term loan at the holding company level and used the proceeds to redeem $31.3 million of Series A preferred stock. This transaction had minimal impact on Bank-level capital ratios, and will save the Company approximately $1.0 million after-tax annually from current levels,” said Rick Callicutt.

 

Operating Results

 

Fully taxable-equivalent (“FTE”) net interest income for the second quarter of 2013 was $28.0 million, an increase of $500,000, or 2.1%, from $27.5 million for the first quarter of 2013, and an increase of $8.4 million, or 42.8%, from $19.6 million for the second quarter of 2012. FTE net interest margin was 4.32% for the second quarter of 2013, an increase of 12 basis points from 4.20% for the first quarter of 2013, and an increase of 61 basis points from 3.71% for the second quarter of 2012.

 

 

FTE net interest income for the six months ended June 30, 2013 was $55.5 million, an increase of $15.9 million, or 40.1%, from $39.6 million for the six months ended June 30, 2012. FTE net interest margin was 4.26% for the first six months of 2013, an increase of 51 basis points from 3.75% for the comparable period of 2012.

 

Average interest-earning assets were $2.60 billion for the second quarter of 2013, a decrease of $46.0 million, or 1.7%, from $2.65 billion during the first quarter of 2013, and an increase of $479.3 million, or 22.6%, from $2.12 billion for the second quarter of 2012. The decrease from the first quarter of 2013 was a continued reduction in interest-earning balances at other financial institutions, as the Company continued repaid wholesale and certain high cost deposits as they mature. Average interest-earning assets were $2.63 billion for the six months ended June 30, 2013, an increase of $505.5 million, or 23.8%, from $2.12 billion for the six months ended June 30, 2012. The increase in average interest-earning assets from 2012 is primarily due to the interest-earning assets acquired from First Trust, KeySource and, to a lesser extent, BHR during the second half of 2012.

 

The Company’s average yield on interest-earning assets increased 12 basis points from 5.33% for the first quarter of 2013 to 5.45% for the second quarter of 2013, and increased 19 basis points from 5.26% for the second quarter of 2012. The increase from first quarter of 2013 was due to a significant reduction of interest-bearing deposits with other institutions, consistent with the Company’s strategy for deleveraging the balance sheet. The increase from the second quarter of 2012 was due to increased volume of portfolio loans, primarily obtained from the acquisitions of First Trust, KeySource and Carolina Federal, as well as increased level of accretion of yield and fair value discounts on the acquired loan portfolios. Loan accretion during the second quarter of 2013 totaled $3.7 million, an increase from loan accretion of $3.3 million for the first quarter of 2013, and an increase of $2.7 million, or 256.4%, from $1.0 million of accretion recorded in the second quarter of 2012.

 

The Company’s average yield on interest-earning assets was 5.39% for the six months ended June 30, 2013, compared to 5.34% for the comparable period of 2012. The increase from 2012 was due to increased volume of portfolio loans, primarily obtained from the acquisitions of First Trust, KeySource and Carolina Federal, as well as increased level of accretion of yield and fair value discounts on the acquired loan portfolios. Loan accretion during the six months ended June 30, 2013 totaled $7.0 million, an increase of $4.5 million, or 179.9%, from loan accretion of $2.5 million for the six months ended June 30, 2012.

 

Average interest-bearing liabilities were $2.36 billion for the second quarter of 2013, a decrease of $53.8 million, or 2.2%, from $2.41 billion for the first quarter of 2013, and an increase of $316.6 million, or 15.5%, from $2.04 billion for the second quarter of 2012. The decrease from the first quarter of 2013 was due to the continued repayment of higher rate time and transaction deposits and replacement of these deposits at lower rates, offset by increased borrowings entered into during the second quarter of 2013. Average interest-bearing liabilities were $2.39 billion for the six months ended June 30, 2013, an increase of $317.1 million, or 15.3%, from $2.07 billion for the comparable period of 2012. The increase in average interest-bearing liabilities from 2012 is primarily due to the acquisitions of First Trust, KeySource, and BHR during the second half of 2012.

 

The Company’s average cost of interest-bearing liabilities was 1.25% for the second quarter of 2013, a slight increase from 1.24% for the first quarter of 2013, and a decrease of 35 basis points from 1.60% for the second quarter of 2012. This increase from first quarter of 2013 was due to increased borrowings that were entered into during the second quarter of 2013, offset by the Company’s decision to reduce exposure to higher cost deposit products and aggressively reduce deposit rates. The Company continued to experience an increase in cash flow hedging expense, which totaled $2.3 million for the second quarter of 2013, compared to $2.2 million for the first quarter of 2013 and $1.9 million for the second quarter of 2012. Without the cash flow hedging expense, FTE net interest margin for the second quarter of 2013 was 4.68%, compared to 4.54% for the first quarter of 2013 and 4.08% for the second quarter of 2012.

 

The Company’s average cost of interest-bearing liabilities was 1.24% for the six months ended June 30, 2013, a decrease of 38 basis points from 1.62% for the comparable period of 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. Decreases in the average cost of deposits were slightly offset by an increase in cash flow hedging expense, which totaled $4.5 million for the six months ended June 30, 2013, compared to $3.8 million for the comparable period of 2012. Without the cash flow hedging expense, FTE net interest margin for the six months ended June 30, 2013 was 4.61%, compared to 4.11% for the comparable period of 2012.

 

 

		Average Yields / Costs (FTE)
		(unaudited)
		Three Months Ended												Six Months Ended
		6/30/2013				3/31/2013				6/30/2012				6/30/2013				6/30/2012
Earning asset yield			5.45	%			5.33	%			5.26	%			5.39	%			5.34	%
Cost of interest-bearing liabilities			1.25	%			1.24	%			1.60	%			1.24	%			1.62	%
Cost of funds			1.12	%			1.12	%			1.47	%			1.12	%			1.50	%
Net interest spread			4.20	%			4.09	%			3.66	%			4.15	%			3.72	%
Net interest margin			4.32	%			4.20	%			3.71	%			4.26	%			3.75	%
Net interest margin w/o hedging expense			4.68	%			4.54	%			4.08	%			4.61	%			4.11	%

 

Non-interest income was $5.6 million for the second quarter of 2013, a decrease of $600,000, or 9.7%, compared to $6.2 million for the first quarter of 2013, and a decrease of $6.1 million, or 52.0%, from $11.7 million for the second quarter of 2012. Excluding bargain purchase gains on acquisitions, FDIC-related income and gain (loss) on sale of securities, adjusted non-interest income was $5.1 million for the second quarter of 2013, an increase of $170,000, or 3.4%, from $5.0 million for the first quarter of 2013, and an increase of $1.4 million, or 38.5%, from $3.7 million for the second quarter of 2012.

 

For the six months ended June 30, 2013, non-interest income was $11.8 million, a decrease of $5.7 million, or 32.5%, compared to non-interest income of $17.5 million for the six months ended June 30, 2012. Excluding bargain purchase gains on acquisitions, FDIC-related income and gain (loss) on sale of securities, adjusted non-interest income was $10.1 million for the six months ended June 30, 2013, an increase of $3.4 million, 49.8%, from $6.7 million for the comparable period of 2012. The increase was primarily due to increased volume of mortgage originations, as the Company continued to expand commissioned originators across key target markets.

 

Non-interest expense was $23.8 million for the second quarter of 2013, an increase of $700,000, or 2.8%, compared to non-interest expense of $23.1 million for the first quarter of 2013, and an increase of $4.6 million, or 23.9%, from $19.2 million for the second quarter of 2012. Excluding transaction-related costs, adjusted non-interest expense for the second quarter of 2013 was $23.5 million, an increase of $1.4 million, or 6.2%, from $22.1 million for the first quarter of 2013, and an increase of $5.4 million, or 29.7%, from $18.1 million for the second quarter of 2012. The increase from the first quarter of 2013 was primarily due to a $750,000 increase in valuation adjustments for other real estate owned (“OREO”). The increase from the second quarter of 2012 was primarily due to an increased number of employees and facilities purchased through the acquisitions of First Trust, KeySource, BHR and Carolina Federal.

 

Non-interest expense was $46.9 million for the first six months of 2013, an increase of $9.9 million, or 26.7%, from $37.0 million for the first six months of 2012. Excluding transaction-related costs, adjusted non-interest expense for the six months ended June 30, 2013 was $45.5 million, an increase of $10.4 million, or 29.9%, from $35.1 million for the six months ended June 30, 2012. The increase from 2012 was primarily due to an increased number of employees and facilities purchased through the acquisitions of First Trust, KeySource, BHR and Carolina Federal.

 

  

		Non-Interest Income / Non-Interest Expense
		(dollars in thousands; unaudited)
		Three Months Ended												Six Months Ended
		6/30/2013				3/31/2013				6/30/2012				6/30/2013				6/30/2012
Non-interest income
Mortgage fees		$	2,480			$	2,381			$	1,378			$	4,861			$	2,494
Service charges			1,034				926				749				1,960				1,487
SBA income			250				353				669				603				897
Earnings on bank-owned life insurance			542				559				395				1,101				805
Gain (loss) on sale of securities			176				(228	)			-				(52	)			1,619
Gain on acquisitions			-				719				7,734				719				7,734
Other			1,120				1,492				757				2,612				2,455
Total non-interest income		$	5,602			$	6,202			$	11,682			$	11,804			$	17,491
Non-interest expense
Salaries and employee benefits		$	12,728			$	12,805			$	9,692			$	25,533			$	19,593
Occupancy			1,507				1,683				1,078				3,190				2,198
Furniture and equipment			1,260				1,379				952				2,639				2,026
Data processing and supply			720				723				696				1,443				1,393
Advertising and business development			610				587				375				1,197				763
Insurance, professional and other services			1,457				1,458				1,221				2,915				2,566
FDIC insurance assessments			780				666				500				1,446				1,100
Loan, foreclosure and other real estate owned			2,876				2,018				3,145				4,894				4,621
Other			1,821				1,797				1,518				3,618				2,742
Total non-interest expense		$	23,759			$	23,116			$	19,177			$	46,875			$	37,002

 

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

 

		Transaction Related Expenses
		(dollars in thousands; unaudited)
		Three Months Ended												Six Months Ended
Transaction		6/30/2013				3/31/2013				6/30/2012				6/30/2013				6/30/2012
Blue Ridge Savings Bank		$	-			$	-			$	206			$	-			$	744
Regent Bank			-				-				119				-				428
Carolina Federal			-				111				186				111				186
KeySource			-				76				388				76				388
BHR			-				-				31				-				31
First Trust			-				848				168				848				168
Randolph			309				-				-				309				-
Total		$	309			$	1,035			$	1,098			$	1,344			$	1,945

 

 

Additional Operating Highlights

 

Total portfolio loans increased by $13.7 million, or 0.7%, from December 31, 2012 to $2.05 billion as of June 30, 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)
		6/30/2013				3/31/2013				12/31/2012				9/30/2012				6/30/2012
Loans covered by loss share, at fair value		$	202,073			$	224,056			$	248,930				269,388			$	284,579
Loans not covered by loss share, at fair value			260,542				270,149				327,674				180,989				50,498
Loans, other			1,586,326				1,536,944				1,458,654				1,450,015				1,425,210
Total portfolio loans		$	2,048,941			$	2,031,149			$	2,035,258			$	1,900,392			$	1,760,287
Change in balance (quarter/quarter):
Total portfolio loans			0.9	%			-0.2	%			7.1	%			8.0	%			2.1	%
Loans, other			3.2	%			5.4	%			0.6	%			1.7	%			2.7	%
Annual growth of loans not covered under loss-share			25.2	%

 

Total deposits at June 30, 2013 were $2.43 billion, a decrease of $228.0 million, or 8.6%, from total deposits of $2.66 billion as of December 31, 2012. This decrease was primarily due to the Company’s decision to utilize excess liquidity and the acquired securities portfolios to repay wholesale and non-core deposits as they matured, as well as aggressively reducing deposit rates over the past three fiscal quarters. Wholesale deposits were 32.4% of total deposits at June 30, 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 $287.9 million, or 25.2%, over the past twelve months. At June 30, 2013, time deposits were 41.2% of total deposits, compared to 43.7% at December 31, 2012.

 

		Total Deposit Growth
		(dollars in thousands; unaudited)
		6/30/2013				3/31/2013				12/31/2012				9/30/2012				6/30/2012
Non-interest bearing demand		$	275,984			$	267,458			$	275,605			$	207,928			$	180,238
Interest-bearing demand			1,152,779				1,171,484				1,221,089				1,067,855				960,597
Time deposits			999,552				1,069,207				1,159,615				1,033,304				948,658
Total		$	2,428,315			$	2,508,149			$	2,656,309			$	2,309,087			$	2,089,493
Change in balance (quarter/quarter)			-3.2	%			-5.6	%			15.0	%			10.5	%			-1.3	%
Annual deposit growth			16.2	%

 

Total borrowings at June 30, 2013 were $227.7 million, an increase of $107.1 million, or 88.9%, from total borrowings of $120.6 million as of December 31, 2012. At June 30, 2013, $112.1 million of these borrowings were short-term, while the remaining $115.6 million were long-term. The increase in borrowings was primarily due to $73.4 million of additional short-term borrowings from the Federal Home Loan Bank, which were used to repay wholesale and non-core deposits as part of the Company’s deleveraging strategy, as well as a $30.0 million term loan obtained from Synovus Bank for the repurchase of Series A preferred stock. Upon closing of the announced acquisition of Randolph Bank & Trust, the Company intends to utilize approximately $100.0 million of liquid assets to repay the short-term borrowings from the Federal Home Loan Bank.

 

 

Asset Quality

 

Net loan charge-offs for the second quarter of 2013 were $7.4 million, which included $4.3 million on loans covered under loss-share agreements and $3.1 million on loans not covered under loss-share agreements. The Company’s share of the covered net loan charge-offs was $851,000, with the remainder being reimbursed by the FDIC. Combined with the $3.1 million of non-covered net charge-offs, the Company incurred $4.0 million in net charge-off losses, or 0.78% of average loans, during the second quarter of 2013, compared to $4.6 million, or 0.92% of average loans, for the first quarter of 2013, and $5.1 million, or 1.17% of average loans, for the second quarter of 2012.

 

Net loan charge-offs for the six months ended June 30, 2013 were $15.5 million, which included $8.7 million on loans covered under loss-share agreements and $6.8 million on loans not covered under loss-share agreements. The Company’s share of the covered net loan charge-offs for the six months ended June 30, 2013 was $1.8 million, with the remainder being reimbursed by the FDIC. Combined with the $6.8 million of non-covered net charge-offs, the Company incurred $8.6 million in net charge-off losses, or 0.85% of average loans, during the six months ended June 30, 2013, compared to $8.8 million, or 1.03% of average loans, for the comparable period of 2012.

 

During the second quarter of 2013, the Company recorded a provision for loan losses of $2.3 million, a decrease of $1.8 million, or 44.4%, from $4.1 million recorded in the first quarter of 2013, and a decrease of $6.0 million, or 72.5%, from $8.3 million recorded during the second quarter of 2012. The entire $2.3 million in provision expense recorded during the second quarter of 2013 related to legacy non-covered loans.

 

During the first six months of 2013, the Company recorded a provision for loan losses of $6.4 million, a decrease of $7.1 million, or 52.6%, from $13.5 million recorded in the first six months of 2012. Of the $6.4 million in provision expense, $6.0 million related to legacy non-covered loans. During the six months ended June 30, 2013, the Company recorded a gross provision of $2.0 million for loss-share loans, of which $1.6 million was recorded through a FDIC indemnification asset and the remaining $400,000 was recorded through the Company’s provision expense.

 

The allowance for loan losses was $32.9 million at June 30, 2013, a decrease of $7.4 million, or 18.4%, from $40.3 million at December 31, 2012. Loan loss reserves to total portfolio loans were 1.60% and 1.98% at June 30, 2013 and December 31, 2012, respectively. The allowance for loan loss allocated to loans not marked to fair value was 1.53% and 1.72% at June 30, 2013 and December 31, 2012, respectively. The components of the allowance for loan loss as of June 30, 2013 were as follows:

 

		Allowance for Loan Loss Summary
		(dollars in thousands; unaudited)
		At June 30, 2013
														Allowance
						Allowance								for
						for				Net				Loan Losses
		Loans				Loan Losses				Loans				%
Loans covered under loss-share agreements, at fair value		$	202,073			$	(8,641	)		$	193,432				4.28	%
Loans not covered under loss-share agreements, at fair value			260,542				-				260,542				-
Loans, other (1)			1,586,326				(24,218	)			1,562,108				1.53	%
Total portfolio loans		$	2,048,941			$	(32,859	)		$	2,016,082				1.60	%

 

(1) Includes $17,209 of loans covered by loss-share agreements not recorded at fair value at June 30, 2013

 

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and OREO, were 3.90% of total assets at June 30, 2013, compared to 3.93% at December 31, 2012. Nonperforming assets not covered by loss-share were 1.94% of total assets not covered by loss-share as of June 30, 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)
		6/30/2013				3/31/2013				12/31/2012				9/30/2012				6/30/2012
Nonaccrual loans not covered by loss-share		$	22,276			$	27,212			$	22,442			$	25,220			$	25,351
Nonaccrual loans covered by loss-share			44,317				52,274				46,981				54,427				61,695
OREO not covered by loss-share			29,143				31,177				28,811				25,589				23,655
OREO covered by loss-share			17,668				20,709				23,102				30,077				35,105
90 days past due not covered by loss-share			823				-				-				4,137				-
90 days past due covered by loss-share			-				-				-				1				5
Total nonperforming assets		$	114,227			$	131,372			$	121,336			$	139,451			$	145,811
Nonperforming assets not covered by loss-share		$	52,242			$	58,389			$	51,253			$	54,946			$	49,006
Total assets		$	2,929,636			$	2,929,191			$	3,083,788			$	2,711,173			$	2,442,815
Total assets less covered assets			2,692,686				2,670,691				2,811,756				2,411,708				2,123,131
Total portfolio loans			2,048,941				2,031,149				2,035,258				1,900,392				1,760,287
Total accruing loans			1,982,348				1,951,663				1,965,835				1,820,851				1,673,241
Total portfolio loans less fair value loans			1,586,326				1,536,944				1,458,654				1,450,015				1,425,210
Total portfolio loans less covered loans			1,829,659				1,793,358				1,786,328				1,631,004				1,475,708
Total allowance for loan losses			32,859				38,148				40,292				34,823				40,856
Allowance for loans not covered by loss-share			24,218				24,966				25,028				24,831				27,284
Allowance for loans covered by loss-share			8,641				13,182				15,264				9,992				13,572
Ratio of nonperforming assets to total assets			3.90	%			4.48	%			3.93	%			5.14	%			5.97	%
Not covered by loss-share			1.94	%			2.19	%			1.82	%			2.28	%			2.31	%
Ratio of nonperforming loans to total portfolio loans			3.29	%			3.91	%			3.41	%			4.41	%			4.95	%
Not covered by loss-share			1.26	%			1.52	%			1.26	%			1.80	%			1.72	%
Ratio of allowance for loan losses to total portfolio loans			1.60	%			1.88	%			1.98	%			1.83	%			2.32	%
Total portfolio loans less fair value loans to allowance not covered by loss-share			1.53	%			1.62	%			1.72	%			1.71	%			1.91	%
Net charge-offs, QTD		$	7,351			$	8,172			$	6,269			$	10,099			$	9,077
Net charge-offs, non-covered portion, QTD (1)			3,949				4,604				3,792				6,883				5,053
Ratio of net charge-offs, non-covered portion,
QTD to average portfolio loans, annualized (1)			0.78	%			0.92	%			0.78	%			1.54	%			1.17	%
Loans restructured/modified not included in above, (not 90 days past due or on nonaccrual)		$	12,639			$	10,896			$	35,889			$	34,195			$	34,061

 

(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 $22.3 million at June 30, 2013, a slight decrease from $22.4 million at December 31, 2012. Excluding loans covered by loss-share agreements, nonperforming loans as a percentage of total loans was 1.26% as of June 30, 2013, consistent with the level as of December 31, 2012. Nonaccrual loans covered by loss-share agreements totaled $44.3 million as of June 30, 2013, a decrease 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 $21.3 million as of June 30, 2013, of which $4.2 million was covered under loss-share. Of the $21.3 million of TDRs, $12.6 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 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.

 

OREO at June 30, 2013 totaled $46.8 million, which is a decrease of $5.1 million from $51.9 million at December 31, 2012. At June 30, 2013, the carrying value of OREO covered by loss-share agreements was $17.7 million, a decrease of $5.4 million from $23.1 million at December 31, 2012. OREO not covered by loss-share agreements totaled $29.1 million at June 30, 2013, a slight increase from $28.8 million at December 31, 2012. Of the $29.1 million in non-covered OREO at June 30, 2013, $2.8 million was acquired from First Trust or KeySource. The Company has sold $18.4 million of OREO properties during the six months ended June 30, 2013, which was offset by $14.1 million of additions to OREO. For the three and six months ended June 30, 2013, the Company recorded valuation adjustments of $1.5 million and $2.3 million, respectively, a decrease from valuation adjustments of $2.0 million and $2.7 million for the three and six months ended June 30, 2012, respectively.

  

 

Capital Position

 

On June 30, 2013, shareholders’ equity was $254.4 million, a decrease of $27.8 million, or 9.8%, 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 shares issued or outstanding.

 

All of the Bank’s and Company’s capital ratios exceeded 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 $2.93 billion in assets. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 32 banking offices in North and South Carolina. The Bank’s seven 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
		June 30, 2013				June 30, 2012				% Change
SUMMARY STATEMENTS OF OPERATIONS
Interest income		$	33,675			$	26,298				28.1	%
Interest expense			7,364				8,142				(9.6	)
Net interest income			26,311				18,156				44.9
Provision for loan losses			2,288				8,330				(72.5	)
Net interest income after provision for loan losses			24,023				9,826				144.5
Non-interest income			5,602				11,682				(52.1	)
Non-interest expense			23,759				19,177				23.9
Income before income tax expense			5,866				2,331				151.7
Income tax expense			1,199				40				2,897.5
Net income			4,667				2,291				103.7
Preferred stock dividends and discount accretion			531				601				(11.7	)
Net income available to common shareholders		$	4,136			$	1,690				144.7
PER SHARE DATA
Earnings per share, basic		$	0.16			$	0.13				20.2
Earnings per share, diluted			0.16				0.13				20.1
Tangible common book value per share (1)			8.41				10.12				(16.9	)
Weighted average participating common shares:
Basic			26,475				13,549
Diluted			26,498				13,556
Period-end number of shares:
Common			26,479				9,154
Convertible preferred			-				1,877
PERFORMANCE RATIOS
Return on average assets			0.57	%			0.29	%
Return on average common equity			6.49	%			5.63	%
Return on average tangible common equity (1)			7.70	%			7.89	%
Net interest margin (FTE)			4.32	%			3.71	%
Net interest margin w/o hedging expense (FTE)			4.68	%			4.08	%
Average equity to average assets			9.06	%			7.69	%
Allowance for loan losses as a % of portfolio loans			1.60	%			2.32	%
Total portfolio loans less fair value loans to allowance not covered by loss-share			1.53	%			1.91	%
Nonperforming assets to total assets, end of period			3.90	%			5.97	%
Not covered by loss share			1.94	%			2.31	%
Ratio of net charge-offs, with covered portion, to
average total loans, annualized			0.78	%			1.17	%
SELECTED FINANCIAL DATA
Gain on sale of investment securities, net		$	176			$	-
Acquisition gains			-				7,734
Fair value accretion			3,664				1,028
Additional accretion from redemption of Series A preferred stock			356				-
FDIC related income			288				238
Hedging instrument expense			2,333				1,874
OREO valuation adjustments			1,539				2,038
Merger related expenses			309				1,098
(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 Six Months Ended
		June 30, 2013				June 30, 2012				% Change
SUMMARY STATEMENTS OF OPERATIONS
Interest income		$	66,826			$	53,477				25.0	%
Interest expense			14,727				16,709				(11.9	)
Net interest income			52,099				36,768				41.7
Provision for loan losses			6,403				13,509				(52.6	)
Net interest income after provision for loan losses			45,696				23,259				96.5
Non-interest income			11,804				17,491				(32.5	)
Non-interest expense			46,875				37,002				26.7
Income before income tax expense (benefit)			10,625				3,748				183.5
Income tax expense (benefit)			1,679				(268	)			(726.5	)
Net income			8,946				4,016				122.8
Preferred stock dividends and discount accretion			1,060				1,202				(11.8	)
Net income available to common shareholders		$	7,886			$	2,814				180.2
PER SHARE DATA
Earnings per share, basic		$	0.30			$	0.24				24.1
Earnings per share, diluted			0.30				0.24				24.1
Tangible common book value per share (1)			8.41				10.12				(16.9	)
Weighted average participating common shares:
Basic			26,470				12,230
Diluted			26,486				12,238
Period-end number of shares:
Common			26,479				9,154
Convertible preferred			-				1,877
PERFORMANCE RATIOS
Return on average assets			0.54	%			0.23	%
Return on average common equity			6.31	%			4.89	%
Return on average tangible common equity (1)			7.51	%			6.97	%
Net interest margin (FTE)			4.26	%			3.75	%
Net interest margin w/o hedging expense (FTE)			4.61	%			4.11	%
Average equity to average assets			9.34	%			7.12	%
Allowance for loan losses as a % of portfolio loans			1.60	%			2.32	%
Total portfolio loans less fair value loans to allowance not covered by loss-share			1.53	%			1.91	%
Nonperforming assets to total assets, end of period			3.90	%			5.97	%
Nonperforming assets not covered by loss share			1.94	%			2.31	%
Ratio of net charge-offs, with covered portion, to
average total loans			0.85	%			1.03	%
SELECTED FINANCIAL DATA
Gain (loss) on sale of investment securities, net		$	(52	)		$	1,619
Acquisition gains			719				7,734
Fair value accretion			6,997				2,500
Additional accretion from redemption of Series A preferred stock			356				-
FDIC related income			1,031				1,390
Hedging instrument expense			4,538				3,793
OREO valuation adjustments			2,324				2,741
Merger related expenses			1,344				1,945
(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
		Three Months Ended
		June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
SUMMARY STATEMENTS OF OPERATIONS
Interest income		$	33,675			$	33,151			$	32,224			$	27,814			$	26,298
Interest expense			7,364				7,363				8,119				8,063				8,142
Net interest income			26,311				25,788				24,105				19,751				18,156
Provision for loan losses			2,288				4,115				5,520				3,708				8,330
Net interest income after provision for loan losses			24,023				21,673				18,585				16,043				9,826
Non-interest income			5,602				6,202				10,394				5,253				11,682
Non-interest expense			23,759				23,116				24,871				20,399				19,177
Income before income tax expense (benefit)			5,866				4,759				4,108				897				2,331
Income tax expense (benefit)			1,199				480				(940	)			(492	)			40
Net income			4,667				4,279				5,048				1,389				2,291
Preferred stock dividends and discount accretion			531				529				601				601				601
Net income available to common shareholders		$	4,136			$	3,750			$	4,447			$	788			$	1,690
Net interest income, as reported		$	26,311			$	25,788			$	24,105			$	19,751			$	18,156
Tax-equivalent adjustment			1,718				1,673				1,533				1,349				1,467
Net interest income, tax-equivalent		$	28,029			$	27,461			$	25,638			$	21,100			$	19,623
PER SHARE DATA
Earnings per share, basic		$	0.16			$	0.14			$	0.19			$	0.04			$	0.13
Earnings per share, diluted			0.16				0.14				0.19				0.04				0.13
Weighted average participating common shares:
Basic			26,475				26,464				24,272				21,645				13,550
Diluted			26,498				26,476				24,277				21,646				13,556
Period-end number of shares:
Common			26,479				26,472				24,650				21,359				9,154
Convertible preferred			-				-				1,805				1,805				1,877
PERFORMANCE RATIOS
Return on average assets			0.57	%			0.51	%			0.63	%			0.12	%			0.29	%
Return on average common equity			6.49	%			6.12	%			8.16	%			1.75	%			5.63	%
Return on average tangible common equity (1)			7.70	%			7.33	%			9.76	%			2.30	%			7.89	%
Net interest margin (FTE)			4.32	%			4.20	%			4.09	%			3.75	%			3.71	%
Net interest margin w/o hedging expense (FTE)			4.68	%			4.54	%			4.43	%			4.11	%			4.08	%
Average equity to average assets			9.06	%			9.61	%			9.43	%			9.55	%			7.69	%
Allowance for loan losses as a % of portfolio loans			1.60	%			1.88	%			1.98	%			1.83	%			2.32	%
Total portfolio loans less fair value loans to allowance not covered by loss-share			1.53	%			1.62	%			1.72	%			1.71	%			1.91	%
Nonperforming assets to total assets, end of period			3.90	%			4.48	%			3.93	%			5.14	%			5.97	%
Not covered by loss share			1.94	%			2.19	%			1.82	%			2.28	%			2.31	%
Ratio of net charge-offs, with covered portion, to
average total loans, annualized			0.78	%			0.92	%			0.78	%			1.54	%			1.17	%
SELECTED FINANCIAL DATA
Gain (loss) on sale of investment securities, net		$	176			$	(228	)		$	651			$	756			$	-
Acquisition gains			-				719				4,972				-				7,734
Fair value accretion			3,664				3,333				3,086				1,068				1,028
Additional accretion from redemption of Series A preferred stock			356				-				-				-				-
FDIC related income			288				743				403				673				238
Hedging instrument expense			2,333				2,205				2,133				2,014				1,874
OREO valuation adjustments			1,539				785				2,734				1,603				2,038
Merger related expenses			309				1,035				1,406				1,861				1,098
(1)  See Reconciliation of Non-GAAP Financial Measures table for additional details.

 

 

PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands)
(Unaudited)
		As of
		June 30, 2013				December 31,      2012				% Change
SELECTED BALANCE SHEET DATA
End of period balances
Portfolio loans:
Loans not covered by loss share		$	1,829,659			$	1,786,328				2.4	%
Loans covered by loss share			219,282				248,930				(11.9	)
Allowance for loan losses			(32,859	)			(40,292	)			(18.5	)
Net portfolio loans			2,016,082				1,994,966				1.1
Loans held for sale			39,954				57,414				(30.4	)
Investment securities			466,079				456,344				2.1
Total interest-earning assets			2,610,415				2,747,702				(5.0	)
Total assets			2,929,636				3,083,788				(5.0	)
Deposits:
Non-interest bearing deposits			275,984				275,605				0.1
Interest-bearing demand and savings			1,152,779				1,221,089				(5.6	)
Time deposits			999,552				1,159,615				(13.8	)
Total deposits			2,428,315				2,656,309				(8.6	)
Borrowed funds			227,697				120,555				88.9
Total interest-bearing liabilities			2,380,028				2,501,259				(4.9	)
Shareholders' equity:
Preferred equity			-				47,878				(100.0	)
Common equity			251,872				228,937				10.0
Accumulated other comprehensive income			2,573				5,429				(52.6	)
Total shareholders' equity			254,445				282,244				(9.9	)
		As of
		June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
SELECTED BALANCE SHEET DATA
End of period balances
Portfolio loans:
Loans not covered by loss share		$	1,829,659			$	1,793,358			$	1,786,328			$	1,631,004			$	1,475,708
Loans covered by loss share			219,282				237,791				248,930				269,388				284,579
Allowance for loan losses			(32,859	)			(38,148	)			(40,292	)			(34,823	)			(40,856	)
Net portfolio loans			2,016,082				1,993,001				1,994,966				1,865,569				1,719,431
Loans held for sale			39,954				46,134				57,414				29,883				17,793
Investment securities			466,079				476,982				456,344				360,678				334,382
Total interest-earning assets			2,610,415				2,605,429				2,747,702				2,424,949				2,166,586
Total assets			2,929,636				2,929,191				3,083,788				2,711,173				2,442,815
Deposits:
Non-interest bearing deposits			275,984				267,458				275,605				207,928				180,238
Interest-bearing demand and savings			1,152,779				1,171,484				1,221,089				1,067,855				960,597
Time deposits			999,552				1,069,207				1,159,615				1,033,304				948,658
Total deposits			2,428,315				2,508,149				2,656,309				2,309,087				2,089,493
Borrowed funds			227,697				117,774				120,555				136,895				106,184
Total interest-bearing liabilities			2,380,028				2,358,465				2,501,259				2,238,054				2,015,439
Shareholders' equity:
Preferred equity			-				30,855				47,878				47,758				115,946
Common equity			251,872				248,747				228,937				199,200				117,843
Accumulated other comprehensive income			2,573				4,453				5,429				5,222				3,750
Total shareholders' equity			254,445				284,055				282,244				252,180				237,539

 

 

PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands)
(Unaudited)
		For the Three Month Period Ended
		June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
SELECTED BALANCE SHEET DATA
Quarterly average balances
Loans:
Loans not covered by loss share		$	1,810,382			$	1,794,323			$	1,673,506			$	1,501,953			$	1,434,426
Loans covered by loss share			228,536				243,360				267,632				276,984				295,838
Total loans			2,038,918				2,037,683				1,941,138				1,778,937				1,730,264
Investment securities			473,301				461,781				400,482				336,353				324,010
Total interest-earning assets			2,604,275				2,650,229				2,495,019				2,236,808				2,124,972
Total assets			2,916,204				2,980,654				2,806,031				2,523,287				2,431,193
Deposits:
Non-interest bearing deposits			272,088				262,821				225,419				194,006				181,983
Interest-bearing demand and savings			1,150,213				1,176,740				1,109,651				991,293				952,747
Time deposits			1,021,098				1,117,159				1,059,670				955,657				969,292
Total deposits			2,443,398				2,556,720				2,394,740				2,140,956				2,104,022
Borrowed funds			189,308				120,496				126,007				123,325				121,946
Total interest-bearing liabilities			2,360,618				2,414,395				2,295,328				2,070,275				2,043,985
Shareholders' equity			264,201				286,388				264,643				241,041				186,987

 

 

LOAN MIX AND STRATIFICATION STATISTICS
BNC BANCORP
(Dollars in millions)
(Unaudited)
		As of
		June 30, 2013				June 30, 2012				% Change
Loans Not Covered Under Loss Share Agreements:
Construction, A&D, and Land		$	211.3			$	189.2				11.7
Residential Construction			32.6				22.1				47.5
Presold			18.7				12.6				48.4
Speculative			13.9				9.5				46.3
Loan size - over $400,000			12.9				2.4				437.5
Loan size - $200,000 to $400,000			9.7				2.2				340.9
Loan size - under $200,000			10.0				4.9				104.1
Commercial Construction			76.2				71.3				6.9
Loan size - $5 million and over			12.5				9.5				31.6
Loan size - $3 million to $5 million			10.7				8.4				27.4
Loan size - $1 million to $3 million			33.3				36.9				(9.8	)
Loan size - under $1 million			19.7				16.5				19.4
Residential and Commercial A&D			17.6				15.0				17.3
Loan size - $3 million to $5 million			4.1				3.1				100.0
Loan size - $1 million to $3 million			6.6				7.4				(10.8	)
Loan size - under $1 million			6.9				4.5				53.3
Land			84.9				80.8				5.1
Residential Buildable Lots			26.1				25.6				2.0
Commercial Buildable Lots			17.7				13.3				33.1
Land Held for Development			21.9				25.2				(13.1	)
Raw and Agricultural Land			19.2				16.7				15.0
Commercial Real Estate		$	1,109.8			$	803.5				38.1
Multi-Family			59.2				43.2				37.0
Churches			51.5				36.8				40.0
Retail			804.3				585.1				37.5
Owner Occupied			236.9				179.3				32.1
Investment			567.4				405.8				39.8
Loan size - $5 million to $9 million			95.1				74.2				28.2
Loan size - $3 million to $5 million			90.3				57.7				56.5
Loan size - $1 million to $3 million			242.4				163.3				48.4
Loan size - under $1 million			139.6				110.6				26.2
Industrial			194.8				138.4				40.8
Owner Occupied			101.5				69.6				45.8
Investment			93.3				68.8				35.6
Loan size - $5 million and over			6.0				-				100.0
Loan size - $3 million to $5 million			11.5				4.2				173.8
Loan size - $1 million to $3 million			35.8				37.2				(3.8	)
Loan size - under $1 million			40.0				27.4				46.0

 

 

LOAN MIX AND STRATIFICATION STATISTICS
BNC BANCORP
(Dollars in millions)
(Unaudited)
		Trends
		June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
Loans Not Covered Under Loss Share Agreements:
Construction, A&D, and Land		$	211.3			$	232.3			$	196.5			$	200.3			$	189.2
Residential Construction			32.6				31.1				27.3				25.7				22.1
Presold			18.7				18.6				15.8				17.8				12.6
Speculative			13.9				12.5				11.5				7.9				9.5
Loan size - over $400,000			12.9				4.3				3.7				1.5				2.4
Loan size - $200,000 to $400,000			9.7				3.2				2.9				1.9				2.2
Loan size - under $200,000			10.0				5.0				4.9				4.5				4.9
Commercial Construction			76.2				92.9				76.1				78.7				71.3
Loan size - $5 million and over			12.5				12.5				6.7				14.5				9.5
Loan size - $3 million to $5 million			10.7				11.0				6.7				3.2				8.4
Loan size - $1 million to $3 million			33.3				50.0				42.7				43.9				36.9
Loan size - under $1 million			19.7				19.4				20.0				17.1				16.5
Residential and Commercial A&D			17.6				15.1				18.1				19.7				15.0
Loan size - $3 million to $5 million			4.1				-				4.4				4.0				3.1
Loan size - $1 million to $3 million			6.6				8.8				9.1				10.2				7.4
Loan size - under $1 million			6.9				6.3				4.6				5.5				4.5
Land			84.9				93.2				75.0				76.2				80.8
Residential Buildable Lots			26.1				31.4				23.3				25.0				25.6
Commercial Buildable Lots			17.7				18.9				10.2				11.3				13.3
Land Held for Development			21.9				25.1				24.2				22.0				25.2
Raw and Agricultural Land			19.2				17.8				17.3				17.9				16.7
Commercial Real Estate		$	1,109.8			$	1,050.6			$	930.9			$	910.2			$	803.5
Multi-Family			59.2				48.6				47.5				43.7				43.2
Churches			51.5				49.6				42.8				43.9				36.8
Retail			804.3				757.2				674.3				662.6				585.1
Owner Occupied			236.9				237.4				196.0				204.1				179.3
Investment			567.4				519.8				478.3				458.5				405.8
Loan size - $5 million to $9 million			95.1				89.0				101.2				102.0				74.2
Loan size - $3 million to $5 million			90.3				82.7				79.4				64.8				57.7
Loan size - $1 million to $3 million			242.4				215.5				186.6				182.8				163.3
Loan size - under $1 million			139.6				132.6				111.1				108.9				110.6
Industrial			194.8				195.2				166.3				160.0				138.4
Owner Occupied			101.5				105.2				93.0				86.9				69.6
Investment			93.3				90.0				73.3				73.1				68.8
Loan size - $5 million and over			6.0				6.2				-				-				-
Loan size - $3 million to $5 million			11.5				4.0				4.1				4.2				4.2
Loan size - $1 million to $3 million			35.8				41.7				37.6				39.5				37.2
Loan size - under $1 million			40.0				38.1				31.6				29.4				27.4

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
BNC BANCORP
(Dollars in thousands, except per share data, shares in thousands)
(Unaudited)
		For the Three Months Ended
Adjusted Non-interest Income (2)		June 30, 2013				March 31, 2013				June 30, 2012
Non-interest income (GAAP)		$	5,602			$	6,202			$	11,682
Less:  Bargain purchase gains on acquisitions (GAAP)			-				719				7,734
Gain (loss) on sale of investment securities (GAAP)			176				(228	)			-
FDIC income (GAAP)			288				743				238
Adjusted non-interest income (non-GAAP)		$	5,138			$	4,968			$	3,710
			For the Six Months Ended
Adjusted Non-interest Income (2)			June 30, 2013				June 30, 2012
Non-interest income (GAAP)		$	11,804			$	17,491
Less:  Bargain purchase gains on acquisitions (GAAP)			719				7,734
Gain (loss) on sale of investment securities (GAAP)			(52	)			1,619
FDIC income (GAAP)			1,031				1,390
Adjusted non-interest income (non-GAAP)		$	10,106			$	6,748
			For the Three Months Ended
Adjusted Non-interest Expense (2)			June 30, 2013				March 31, 2013				June 30, 2012
Non-interest expense (GAAP)		$	23,759			$	23,116			$	19,177
Less:  Transaction-related expenses (GAAP)			309				1,035				1,098
Adjusted non-interest expense (non-GAAP)		$	23,450			$	22,081			$	18,079
			For the Six Months Ended
Adjusted Non-interest Expense (2)			June 30, 2013				June 30, 2012
Non-interest expense (GAAP)		$	46,875			$	37,002
Less:  Transaction-related expenses (GAAP)			1,344				1,945
Adjusted non-interest expense (non-GAAP)		$	45,531			$	35,057

 

 

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 (2)		June 30, 2013				June 30, 2012
Shareholders' equity (GAAP)		$	254,445			$	237,539
Less: Preferred stock (GAAP)			-				115,946
Intangible assets (GAAP)			31,671				28,943
Tangible common shareholders equity (non-GAAP)		$	222,774			$	92,650
Common shares outstanding			26,479				9,154
Tangible common book value per share (non-GAAP)		$	8.41			$	10.12
			For the Three Months Ended
Return on Average Tangible Common Equity (2)			June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
Net income available to common shareholders (GAAP)		$	4,136			$	3,750			$	4,447			$	788			$	1,690
Plus: Amortization of intangibles, net of tax (GAAP)			160				160				105				80				112
Tangible net income available to common shareholders (non-GAAP)		$	4,296			$	3,910			$	4,552			$	868			$	1,802
Average common shareholders equity (non-GAAP)		$	255,624			$	248,548			$	216,825			$	179,255			$	120,785
Less: Average intangible assets (GAAP)			31,798				32,161				31,235				29,173				28,935
Average tangible common shareholders' equity (non-GAAP)		$	223,826			$	216,387			$	185,590			$	150,082			$	91,850
Return on average tangible common equity (non-GAAP)			7.70	%			7.33	%			9.76	%			2.30	%			7.89	%
			For the Six Months Ended
Return on Average Tangible Common Equity (2)			June 30, 2013				June 30, 2012
Net income available to common shareholders (GAAP)		$	7,886			$	2,814
Plus: Amortization of intangibles, net of tax (GAAP)			321				195
Tangible net income available to common shareholders (non-GAAP)		$	8,207			$	3,009
Average common shareholders equity (non-GAAP)		$	252,153			$	115,719
Less: Average intangible assets (GAAP)			31,933				28,957
Average tangible common shareholders' equity (non-GAAP)		$	220,220			$	86,762
Return on average tangible common equity (non-GAAP)			7.51	%			6.97	%
(2)  BNC Bancorp management uses this measure to evaluate the Company's performance.