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

Press Release

Source: BNC Bancorp

Contact: Richard D. Callicutt II David B. Spencer

President and CEO Senior Executive Vice President and CFO

336-869-9200 336-869-9200

BNC Bancorp Announces Earnings for Third Quarter 2016

High Point, N.C., Oct. 20, 2016 - BNC Bancorp (NASDAQ: BNCN) (“Company”), parent company for Bank of North Carolina (“Bank”), today reported financial results for the three and nine months ended September 30, 2016. Highlights for the quarter include the following:


•	Continued solid earnings and returns


◦	GAAP net income of $18.1 million, or $0.38 per diluted share, compared to $14.6 million, or $0.35 per diluted share, for second quarter of 2016;


◦	Operating net income of $19.7 million, or $0.42 per diluted share, compared to $17.0 million, or $0.41 per diluted share, for second quarter of 2016;


◦	GAAP return on average assets of 1.10%, compared to 1.00% for second quarter of 2016;


◦	Operating return on average assets of 1.20%, compared to 1.16% for second quarter of 2016;


◦	Return on average tangible common equity of 13.37%, compared to 13.29% for second quarter of 2016; and


◦	Operating return on average tangible common equity of 14.50%, compared to 15.36% for second quarter of 2016.


•	Originated loans at September 30, 2016 of $3.46 billion, an increase of $292.3 million compared to June 30, 2016


◦	Loan originations of $630 million, as compared to $627 million during the second quarter of 2016; and


◦	Total portfolio loans were $5.00 billion at September 30, 2016, an increase of $183.3 million compared to June 30, 2016.


•	Asset quality ratios remain strong


•	Completed public offering of common stock with gross proceeds of $63.2 million


◦	Further strengthened capital ratios and will support continued growth

Financial Performance



		Three Months Ended											Nine Months Ended
INCOME SUMMARY		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016			Dec. 31, 2015		Sept. 30, 2015		Sept. 30, 2016			Sept. 30, 2015
Interest income		(Dollars in thousands)
	Interest and fees on loans	$	57,824	$	51,978	$	50,302		$	50,762	$	48,050	$	160,104		$	127,964
	Investment securities	6,910		6,202		5,965			5,336		5,101		19,077			13,869
	Other	291		228		214			141		162		733			414
Total interest income		65,025		58,408		56,481			56,239		53,313		179,914			142,247
Interest expense
	Interest on deposits	7,619		6,704		6,241			5,851		5,265		20,564			14,595
	Interest on borrowings	1,989		1,774		1,750			1,648		1,789		5,513			4,590
Total interest expense		9,608		8,478		7,991			7,499		7,054		26,077			19,185
Net interest income		55,417		49,930		48,490			48,740		46,259		153,837			123,062
	Provision for loan losses	1,865		698		647			1,287		198		3,210			609
Net interest income		53,552		49,232		47,843			47,453		46,061		150,627			122,453
Non-interest income
	Mortgage lending income	3,134		2,671		2,681			2,226		3,031		8,486			8,307
	Service charges	2,644		2,422		2,321			2,341		2,284		7,387			5,738
	SBA income	739		1,104		811			467		416		2,654			1,368
	Securities gains (losses)	34		4		(39		)	45		794		(1		)	839
	Earnings on bank-owned life insurance	1,254		1,160		758			806		705		3,172			1,960
	Other	2,006		1,654		1,430			2,401		1,939		5,090			5,950
Total non-interest income		9,811		9,015		7,962			8,286		9,169		26,788			24,162
Non-interest expense
	Salaries and employee benefits	18,491		18,019		17,803			17,888		17,543		54,313			49,265
	Occupancy	3,154		3,155		3,252			3,392		3,211		9,561			8,410
	Furniture and equipment	2,297		1,993		2,073			2,426		1,654		6,363			4,877
	Data processing and supply	1,766		1,491		1,437			1,194		1,268		4,694			3,186
	Advertising and business development	678		923		684			879		493		2,285			1,756
	Insurance, professional and other services	1,424		1,494		1,526			952		1,405		4,444			3,872
	FDIC insurance assessments	1,071		900		900			883		824		2,871			2,261
	Loan, foreclosure and OREO	1,562		856		1,367			1,639		2,352		3,785			8,213
	Transaction-related expenses	2,568		3,808		1,434			4,307		4,886		7,810			8,969
	Loss on extinguishment of debt	—		—		—			—		763		—			763
	Other	4,824		4,201		4,410			4,020		3,786		13,435			10,003
Total non-interest expenses		37,835		36,840		34,886			37,580		38,185		109,561			101,575
Income before income tax expense		25,528		21,407		20,919			18,159		17,045		67,854			45,040
Income tax expense		7,388		6,760		6,484			5,420		5,106		20,632			13,329
Net income (GAAP)		18,140		14,647		14,435			12,739		11,939		47,222			31,711
	Securities gains (losses), net of tax	21		4		(25		)	28		500		1			529
	Transaction-related charges, net of tax	1,618		2,399		903			2,713		3,078		4,920			5,650
	Loss on extinguishment of debt, net of tax	—		—		—			—		481		—			481
Operating net income (non-GAAP)		$	19,736	$	17,042	$	15,363		$	15,424	$	14,998	$	52,141		$	37,313



Common shares outstanding	48,110	45,201	40,806	40,774	38,138	48,110	38,138
Weighted average diluted shares outstanding	47,360	41,560	40,885	39,452	38,165	43,287	34,545

Performance Ratios



	Three Months Ended															Nine Months Ended
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015			Sept. 30, 2016			Sept. 30, 2015
Earnings per diluted share	$	0.38		$	0.35		$	0.35		$	0.32		$	0.31		$	1.09		$	0.92
Return on average assets	1.10		%	1.00		%	1.03		%	0.93		%	0.92		%	1.05		%	0.95		%
Return on average common equity	9.40		%	9.43		%	9.72		%	9.13		%	9.15		%	9.50		%	9.69		%
Return on average tangible common equity (1)	13.37		%	13.29		%	13.71		%	13.33		%	13.52		%	13.45		%	13.43		%
Efficiency ratio (2)	56.09		%	60.51		%	59.78		%	63.75		%	66.59		%	58.68		%	66.45		%

Operating earnings per diluted share (1)	42.00		%	41.00		%	38.00		%	39.00		%	39.00		%	120.00		%	108.00		%
Operating return on average assets (1)	1.20		%	1.16		%	1.10		%	1.13		%	1.15		%	1.16		%	1.11		%
Operating return on average tangible common equity (1)	14.50		%	15.36		%	14.55		%	15.99		%	16.79		%	14.79		%	15.68		%
Operating efficiency ratio (1) (2)	52.31		%	54.26		%	57.28		%	56.49		%	57.54		%	54.50		%	60.41		%

Book value per common share	$	16.53		$	15.86		$	14.79		$	14.52		$	13.70		$	16.53		$	13.70
Tangible book value per common share (1)	12.21			11.28			11.07			10.77			9.86			12.21			9.86

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

(2) Calculated on a fully-taxable equivalent (“FTE”) basis.

Other Selected Financial Data



	Three Months Ended											Nine Months Ended
	Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016			Dec. 31, 2015		Sept. 30, 2015		Sept. 30, 2016			Sept. 30, 2015
	(Dollars in thousands)
Securities gains (losses), net	$	34	$	4	$	(39	)	$	45	$	794	$	(1	)	$	839
Loss on extinguishment of debt	—		—		—			—		763		—			763
Fair value accretion	5,845		5,276		5,505			5,599		4,835		16,626			14,917
OREO valuation adjustments, net	274		222		266			348		911		762			2,245
Transaction-related expenses	2,568		3,808		1,434			4,307		4,886		7,810			8,969

Richard D. Callicutt, II, President and CEO, stated, ”We are pleased to report another quarter of solid financial results, which include strong earnings growth and another quarter of record-setting organic loan originations. Our fee based businesses continue to grow at a healthy rate and our continued focus on process improvements and operational efficiencies helped to control expenses to where the additional costs incurred during the quarter were all related to the addition of Southcoast Financial’s operations.

We are excited that we have received all necessary regulatory approvals for the merger with High Point Bank Corporation and are currently scheduled to close on November 1, 2016. On November 4, 2016, immediately after the legal closing of the transaction, High Point Bank’s systems and signage will be converted to BNC. With the addition of High Point Bank’s Trust and Insurance divisions, as well as the broad array of BNC product offerings, this transaction will greatly enhance the products and services for all customers involved.

During the quarter, the Company successfully accessed the capital markets and raised an additional $63.2 million in common equity. This capital raise helped to bolster our capital ratios and position our company to continue to pursue growth opportunities that provide outsized value for our shareholders.”

Non-interest Income and Expense Data



		Three Months Ended											Nine Months Ended
		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016			Dec. 31, 2015		Sept. 30, 2015		Sept. 30, 2016			Sept. 30, 2015
Non-interest income		(Dollars in thousands)
	Mortgage lending income	$	3,134	$	2,671	$	2,681		$	2,226	$	3,031	$	8,486		$	8,307
	Service charges	2,644		2,422		2,321			2,341		2,284		7,387			5,738
	SBA income	739		1,104		811			467		416		2,654			1,368
	Earnings on bank-owned life insurance	1,254		1,160		758			806		705		3,172			1,960
	Other	2,006		1,654		1,430			2,401		1,939		5,090			5,950
Total operating non-interest income - non-GAAP		9,777		9,011		8,001			8,241		8,375		26,789			23,323
	Securities gains (losses), net	34		4		(39		)	45		794		(1		)	839
Total non-interest income - GAAP		$	9,811	$	9,015	$	7,962		$	8,286	$	9,169	$	26,788		$	24,162

Non-interest expense
	Salaries and employee benefits	$	18,491	$	18,019	$	17,803		$	17,888	$	17,543	$	54,313		$	49,265
	Occupancy	3,154		3,155		3,252			3,392		3,211		9,561			8,410
	Furniture and equipment	2,297		1,993		2,073			2,426		1,654		6,363			4,877
	Data processing and supply	1,766		1,491		1,437			1,194		1,268		4,694			3,186
	Advertising and business development	678		923		684			879		493		2,285			1,756
	Insurance, professional and other services	1,424		1,494		1,526			952		1,405		4,444			3,872
	FDIC insurance assessments	1,071		900		900			883		824		2,871			2,261
	Loan, foreclosure and OREO	1,562		856		1,367			1,639		2,352		3,785			8,213
	Other	4,824		4,201		4,410			4,020		3,786		13,435			10,003
Total operating non-interest expense - non-GAAP		35,267		33,032		33,452			33,273		32,536		101,751			91,843
	Transaction-related expenses	2,568		3,808		1,434			4,307		4,886		7,810			8,969
	Loss on extinguishment of debt	—		—		—			—		763		—			763
Total non-interest expense - GAAP		$	37,835	$	36,840	$	34,886		$	37,580	$	38,185	$	109,561		$	101,575

Total GAAP and operating non-interest income was $9.8 million for the third quarter of 2016, an increase from $9.0 million for the second quarter of 2016. Mortgage lending income was $3.1 million for the third quarter of 2016, an increase of $0.5 million as compared to the second quarter of 2016. Many of the other non-interest income sources, such as income from recoveries on acquired loans and income derived from our investment brokerage services, are volatile and can vary significantly from period to period.

Total GAAP non-interest expense was $37.8 million for the third quarter of 2016, an increase from $36.8 million for the second quarter of 2016. Operating non-interest expense for the third quarter of 2016 was $35.3 million, an increase compared to $33.0 million for the second quarter of 2016. This increase was directly related to the full quarter impact of additional headcount and facilities obtained from the Company’s acquisition of Southcoast Financial Corporation (“Southcoast”) in June 2016.

Selected Balance Sheet Data



	Ending Balance
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015
Portfolio loans:	(Dollars in thousands)
Originated loans	$	3,455,677		$	3,163,357		$	2,847,466		$	2,721,216		$	2,587,572
Acquired loans	1,540,270			1,649,328			1,390,688			1,478,655			1,391,061
Allowance for loan and lease losses	(36,366		)	(33,841		)	(32,548		)	(31,647		)	(30,833		)
Portfolio loans, net	4,959,581			4,778,844			4,205,606			4,168,224			3,947,800
Loans held for sale	40,441			41,703			33,455			39,470			37,437
Investment securities	838,289			803,058			757,248			734,557			645,732
Total interest-earning assets	6,128,554			5,790,893			5,126,452			5,131,988			4,689,936
Goodwill	189,968			188,220			134,686			134,686			128,489
Core deposit intangible, net	17,852			19,014			17,143			18,299			18,134
Total assets	$	6,801,562		$	6,478,373		$	5,699,573		$	5,668,183		$	5,201,118

Deposits:
Non-interest bearing deposits	$	917,521		$	889,254		$	794,548		$	776,479		$	738,529
Interest-bearing demand and savings	3,080,479			2,652,735			2,431,584			2,366,890			2,157,801
Time deposits	1,652,123			1,814,654			1,537,644			1,598,838			1,478,161
Total deposits	5,650,123			5,356,643			4,763,776			4,742,207			4,374,491
Borrowings	310,609			352,119			282,929			292,790			267,069
Total interest-bearing liabilities	5,043,211			4,819,508			4,252,157			4,258,518			3,903,031
Shareholders' equity:
Common equity	786,625			710,300			598,158			584,818			515,062
Accumulated other comprehensive income	8,587			6,761			5,395			7,329			7,435
Total shareholders' equity	$	795,212		$	717,061		$	603,553		$	592,147		$	522,497

Total assets at September 30, 2016 were $6.80 billion, an increase of 5.0% as compared to total assets of $6.48 billion at June 30, 2016. Total portfolio loans were $5.00 billion at September 30, 2016, an increase of 3.8% from $4.81 billion at June 30, 2016. Loans that were originated by the Company increased by $292.3 million, or 9.2%, during the third quarter of 2016.

Total deposits were $5.65 billion at September 30, 2016, an increase of $293.5 million, or 5.5%, as compared to June 30, 2016. Wholesale deposits comprised 27.5% of total deposits at September 30, 2016, an increase from 26.7% of total deposits at June 30, 2016. The increased level of wholesale funding will be used to repay term wholesale deposits that will be maturing early in the fourth quarter of 2016. Core deposits increased by $170.0 million, or 4.3%, during the third quarter of 2016. Total borrowings were $310.6 million at September 30, 2016, a decrease of 11.8% compared to $352.1 million at June 30, 2016. Total shareholders’ equity was $795.2 million at September 30, 2016, an increase of $78.2 million, or 10.9%, as compared to $717.1 million at June 30, 2016. The increase in equity is primarily due to the issuance of 2.9 million shares of voting common stock during the third quarter of 2016. At September 30, 2016, both the Bank's and Company's capital ratios exceeded the minimum thresholds established for a well-capitalized bank by regulatory measures.

On October 17, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on November 25, 2016 to shareholders of record as of November 11, 2016.

Loan Portfolio Composition



	Ending Balance
	Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016		Dec. 31, 2015		Sept. 30, 2015
	(Dollars in millions)
Residential construction	$	104	$	98	$	76	$	76	$	92
Presold	62		59		39		46		55
Speculative	42		39		37		30		37

Commercial construction	285		294		278		237		233
Residential and commercial A&D	39		33		23		18		18

Land	118		126		118		111		90
Residential buildable lots	44		44		39		34		26
Commercial buildable lots	24		24		21		20		22
Land held for development	23		31		34		34		25
Raw and agricultural land	27		27		24		23		17

Commercial real estate	2,705		2,500		2,257		2,246		2,133
Multi-family	240		203		179		178		165
Farmland	3		4		4		5		5
Owner occupied	787		817		705		785		737
Non-owner occupied	1,675		1,476		1,369		1,277		1,226

Commercial and industrial	443		454		400		419		340
Residential mortgage	1,251		1,258		1,039		1,049		1,029
Consumer	22		21		18		19		19
Leases	29		29		29		27		26
Total portfolio loans	$	4,996	$	4,813	$	4,238	$	4,200	$	3,979

Acquired Loan Summary



	Ending Balance
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015
	(Dollars in thousands)
Performing acquired loans	$	1,432,351		$	1,537,650		$	1,278,965		$	1,363,379		$	1,262,268
Less: remaining FMV adjustments	(21,687		)	(25,630		)	(23,359		)	(27,789		)	(28,990		)
Performing acquired loans, net	1,410,664			1,512,020			1,255,606			1,335,590			1,233,278
FMV adjustment %	1.5		%	1.7		%	1.8		%	2.0		%	2.3		%

Purchase credit impaired loans (PCI)	143,494			152,105			148,459			157,966			176,605
Less: remaining FMV adjustments	(13,888		)	(14,797		)	(13,377		)	(14,901		)	(18,822		)
PCI loans, net	129,606			137,308			135,082			143,065			157,783
FMV adjustment %	9.7		%	9.7		%	9.0		%	9.4		%	10.7		%

Total acquired performing loans	$	1,410,664		$	1,512,020		$	1,255,606		$	1,335,590		$	1,233,278
Total acquired PCI loans	129,606			137,308			135,082			143,065			157,783
Total acquired loans	$	1,540,270		$	1,649,328		$	1,390,688		$	1,478,655		$	1,391,061
FMV adjustment % all acquired loans	2.3		%	2.4		%	2.6		%	2.8		%	3.3		%

Asset Quality



	Ending Balance
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015
	(Dollars in thousands)
Nonaccrual loans - non-acquired	$	7,662		$	5,407		$	6,228		$	6,623		$	5,914
Nonaccrual loans - acquired	9,347			11,756			12,706			12,086			14,322
OREO - non-acquired	13,352			15,806			14,987			15,588			18,791
OREO - acquired	14,696			14,708			15,783			16,973			18,489
90 days past due - non-acquired	10			10			—			—			—
90 days past due - acquired	—			—			—			3			—
Total nonperforming assets	$	45,067		$	47,687		$	49,704		$	51,273		$	57,516

Total nonperforming assets - non-acquired	$	21,024		$	21,223		$	21,215		$	22,211		$	24,705

Net charge-offs (recoveries), QTD	$	(660	)	$	(594	)	$	(202	)	$	352		$	(326	)
Annualized net charge-offs (recoveries) to total average portfolio loans	(0.05		)%	(0.05		)%	(0.02		)%	0.03		%	(0.03		)%

Ratio of total nonperforming assets to total assets	0.66		%	0.74		%	0.87		%	0.90		%	1.11		%
Ratio of total nonperforming loans to total portfolio loans	0.34		%	0.36		%	0.45		%	0.45		%	0.51		%
Ratio of total allowance for loan losses to total portfolio loans	0.73		%	0.70		%	0.77		%	0.75		%	0.77		%

Excluding acquired
Ratio of nonperforming assets to loans and OREO	0.61		%	0.67		%	0.74		%	0.81		%	0.95		%
Ratio of nonperforming loans to loans	0.22		%	0.17		%	0.22		%	0.24		%	0.23		%
Ratio of allowance for loan losses to loans	0.97		%	0.98		%	1.03		%	1.05		%	1.05		%

Overall asset quality continued to improve during the third quarter of 2016, as total nonperforming assets were $45.1 million, or 0.66% of total assets, at September 30, 2016, as compared to $47.7 million, or 0.74% of total assets, at June 30, 2016. The increase in non-acquired non-accrual loans was due to a small number of higher dollar loans being classified as non-accrual during the third quarter of 2016.

Excluding nonperforming assets acquired by the Company, nonperforming assets were $21.0 million, or 0.61% of non-acquired loans and OREO, at September 30, 2016, as compared to $21.2 million, or 0.67% of non-acquired loans and OREO, at June 30, 2016.

The Company experienced $0.7 million of net recoveries on previous charge-offs during the third quarter of 2016, compared to net recoveries of $0.6 million during the second quarter of 2016. Gross charge-offs were $0.9 million during the third quarter of 2016, which is unchanged from the level of gross charge-offs for the second quarter of 2016.

The allowance for loan losses was $36.4 million at September 30, 2016, an increase from $33.8 million at June 30, 2016. The Company recorded a provision for loan losses of $1.9 million during the third quarter of 2016, as compared to $0.7 million recorded during the second quarter of 2016. The increase in provision is due to the continued high levels of loan growth in the originated loan portfolio.

Net Interest Income and Margin



	Three Months Ended															Nine Months Ended
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015			Sept. 30, 2016			Sept. 30, 2015
Quarterly average balances:	(Dollars in thousands)
Loans	$	4,893,926		$	4,437,248		$	4,241,970		$	4,193,632		$	3,957,846		$	4,511,524		$	3,453,281
Investment securities	828,144			760,841			737,361			656,940			631,407			789,847			547,321
Interest-bearing balances and other	147,763			134,923			139,367			76,533			68,201			140,710			59,009
Total interest-earning assets	5,869,833			5,333,012			5,118,698			4,927,105			4,657,454			5,442,081			4,059,611
Deposits:
Non-interest bearing	907,344			825,148			778,114			772,831			733,659			837,126			613,953
Interest-bearing	4,475,901			4,138,466			3,953,668			3,784,140			3,539,391			4,190,391			3,126,453
Total deposits	5,383,245			4,963,614			4,731,782			4,556,971			4,273,050			5,027,517			3,740,406
Borrowed funds	321,218			272,374			262,880			288,209			334,584			285,621			277,069
Total interest-bearing liabilities	4,797,119			4,410,840			4,216,548			4,072,349			3,873,975			4,476,012			3,403,522
Shareholders' equity	768,124			625,021			597,127			553,475			517,835			663,806			437,699

Interest Income/Expense:
Loans	$	57,824		$	51,978		$	50,302		$	50,762		$	48,050		$	160,104		$	127,964
Investment securities, tax	3,113			2,908			2,720			2,069			1,842			8,741			4,269
Investment securities, non-tax (1)	6,027			5,229			5,151			5,186			5,173			16,407			15,238
Interest-bearing balances and other	291			228			214			141			162			733			414
Total interest income	67,255			60,343			58,387			58,158			55,227			185,985			147,885
Deposits	7,619			6,704			6,241			5,851			5,265			20,564			14,595
Borrowings	1,989			1,774			1,750			1,648			1,789			5,513			4,590
Total interest expense	9,608			8,478			7,991			7,499			7,054			26,077			19,185
Net interest income	$	57,647		$	51,865		$	50,396		$	50,659		$	48,173		$	159,908		$	128,700

Average Yields and Costs:
Loans	4.70		%	4.71		%	4.77		%	4.80		%	4.82		%	4.74		%	4.95		%
Investment securities, tax	2.93		%	3.01		%	2.94		%	2.81		%	2.73		%	2.96		%	2.98		%
Investment securities, non-tax (1)	5.91		%	5.65		%	5.68		%	5.63		%	5.64		%	5.55		%	5.73		%
Interest-bearing balances and other	0.78		%	0.68		%	0.62		%	0.73		%	0.94		%	0.70		%	0.94		%
Total interest-earning assets	4.56		%	4.55		%	4.59		%	4.68		%	4.70		%	4.57		%	4.87		%
Total interest-bearing deposits	0.68		%	0.65		%	0.63		%	0.61		%	0.59		%	0.66		%	0.62		%
Borrowed funds	2.46		%	2.62		%	2.68		%	2.27		%	2.12		%	2.58		%	2.21		%
Total interest-bearing liabilities	0.80		%	0.77		%	0.76		%	0.73		%	0.72		%	0.78		%	0.75		%
Cost of funds	0.67		%	0.65		%	0.64		%	0.61		%	0.61		%	0.66		%	0.64		%
Net interest margin	3.91		%	3.91		%	3.96		%	4.08		%	4.10		%	3.92		%	4.24		%

(1) Interest income and average yields on non-taxable loans investment securities are computed on a FTE basis for comparison with taxable investment securities.

FTE net interest income for the third quarter of 2016 was $57.6 million, an increase from $51.9 million for the second quarter of 2016. FTE net interest margin was 3.91% for the third quarter of 2016, which remained unchanged from the second quarter of 2016. The average yield on interest-earning assets remained relatively consistent as compared to

the second quarter of 2016, while the rate paid on interest-bearing liabilities increased slightly. Accretion earned on the Company’s acquired loan portfolio was $5.8 million during the third quarter of 2016, as compared to $5.3 million earned in the second quarter of 2016. Excluding accretion, the average yield on loans was 4.23% for the third quarter 2016, as compared to 4.24% for the second quarter of 2016.

Average interest-earning assets for the third quarter of 2016 were $5.87 billion, an increase from $5.33 billion for the second quarter of 2016. The increase was primarily due to the full quarter impact of the acquisition of Southcoast, as well as continued strong levels of organic loan growth throughout our existing markets. Average interest-bearing liabilities were $4.80 billion for the third quarter of 2016, an increase from $4.41 billion during the second quarter of 2016. This increase was primarily in interest-bearing deposits, which increased $337.4 million during the third quarter of 2016 due to full quarter impact of the Southcoast acquisition.

About BNC Bancorp and Bank of North Carolina

Headquartered in High Point, North Carolina, BNC Bancorp is the parent company of Bank of North Carolina, a commercial bank with total assets of $6.80 billion. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 71 current banking offices in Virginia, North and South Carolina. The Bank’s 26 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" financial measures in its 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 financial measures to the most directly comparable GAAP measure.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about the Company’s confidence in its strategies and its expectations about financial performance, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. The Company undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Report on Form 10-Q for the periods ended June 30, 2016 and March 31, 2016, respectively. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

Reconciliation of Non-GAAP Financial Measures



	Three Months Ended															Nine Months Ended
	Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016			Dec. 31, 2015			Sept. 30, 2015			Sept. 30, 2016			Sept. 30, 2015
Operating Earnings per Share, Diluted (1)	(Dollars in thousands)
Net income (GAAP)	$	18,140		$	14,647		$	14,435		$	12,739		$	11,939		$	47,222		$	31,711
Transaction-related expenses, net of tax	1,618			2,399			903			2,713			3,078			4,920			5,650
Loss on extinguishment of debt, net of tax	—			—			—			—			481			—			481
Securities gains (losses), net of tax	21			4			(25		)	28			500			1			529
Operating earnings (non-GAAP)	19,736			17,042			15,363			15,424			14,998			52,141			37,313
Weighted average fully diluted shares outstanding	47,360			41,560			40,885			39,452			38,165			43,287			34,545
Operating earnings per share, diluted (non-GAAP)	$	0.42		$	0.41		$	0.38		$	0.39		$	0.39		$	1.20		$	1.08

Tangible Common Book Value per Share (2)
Shareholders' equity (GAAP)	$	795,212		$	717,061		$	603,553		$	592,147		$	522,497		$	795,212		$	522,497
Intangible assets	207,820			207,234			151,829			152,985			146,623			207,820			146,623
Tangible common shareholders equity (non-GAAP)	587,392			509,827			451,724			439,162			375,874			587,392			375,874
Common shares outstanding	48,110			45,201			40,806			40,774			38,138			48,110			38,138
Tangible common book value per share (non-GAAP)	$	12.21		$	11.28		$	11.07		$	10.77		$	9.86		$	12.21		$	9.86

Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	18,140		$	14,647		$	14,435		$	12,739		$	11,939		$	47,222		$	31,711
Amortization of intangibles, net of tax	732			748			728			746			694			2,208			1,752
Tangible net income available to common shareholders (non-GAAP)	18,872			15,395			15,163			13,485			12,633			49,430			33,463
Average common shareholders equity	768,124			625,021			597,127			553,475			517,835			663,806			437,699
Average intangible assets	206,653			159,184			152,379			152,255			147,143			172,835			104,519
Average tangible common shareholders' equity (non-GAAP)	561,471			465,837			444,748			401,220			370,692			490,971			333,180
Return on average tangible common equity (non-GAAP)	13.37		%	13.29		%	13.71		%	13.33		%	13.52		%	13.45		%	13.43		%

Operating Return on Average Assets (1)
Net income (GAAP)	$	18,140		$	14,647		$	14,435		$	12,739		$	11,939		$	47,222		$	31,711
Transaction-related expenses, net of tax	1,618			2,399			903			2,713			3,078			4,920			5,650
Loss on extinguishment of debt, net of tax	—			—			—			—			481			—			481
Securities gains (losses), net of tax	21			4			(25		)	28			500			1			529
Operating earnings (non-GAAP)	19,736			17,042			15,363			15,424			14,998			52,141			37,313
Average assets	6,532,517			5,908,341			5,635,137			5,428,444			5,154,690			6,027,183			4,481,400
Operating return on average assets (non-GAAP)	1.20		%	1.16		%	1.10		%	1.13		%	1.15		%	1.16		%	1.11		%

Operating Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	18,140		$	14,647		$	14,435		$	12,739		$	11,939		$	47,222		$	31,711
Amortization of intangibles, net of tax	732			748			728			746			694			2,208			1,752
Transaction-related expenses, net of tax	1,618			2,399			903			2,713			3,078			4,920			5,650
Loss on extinguishment of debt, net of tax	—			—			—			—			481			—			481
Securities gains (losses), net of tax	21			4			(25		)	28			500			1			529
Operating tangible net income (non-GAAP)	20,468			17,790			16,091			16,170			15,692			54,350			39,065
Average common shareholders equity	768,124			625,021			597,127			553,475			517,835			663,806			437,699
Average intangible assets	206,653			159,184			152,379			152,255			147,143			172,835			104,519



Average tangible common shareholders' equity (non-GAAP)	561,471			465,837			444,748			401,220			370,692			490,971			333,180
Operating return on average tangible common equity (non-GAAP)	14.50		%	15.36		%	14.55		%	15.99		%	16.79		%	14.79		%	15.68		%

Operating Efficiency Ratio (3)
Non-interest expense (GAAP)	$	37,835		$	36,840		$	34,886		$	37,580		$	38,185		$	109,561		$	101,575
Transaction-related expenses	2,568			3,808			1,434			4,307			4,886			7,810			8,969
Loss on extinguishment of debt	—			—			—			—			763			—			763
Operating non-interest expense (non-GAAP)	35,267			33,032			33,452			33,273			32,536			101,751			91,843
Net interest income, FTE	57,647			51,865			50,396			50,659			48,173			159,908			128,700
Non-interest income - GAAP	9,811			9,015			7,962			8,286			9,169			26,788			24,162
Securities gains (losses), net	34			4			(39		)	45			794			(1		)	839
Operating efficiency ratio (non-GAAP)	52.31		%	54.26		%	57.28		%	56.49		%	57.54		%	54.50		%	60.41		%

(1)

Operating earnings per diluted share, operating non-interest income, operating non-interest expense, operating income tax expense, operating return on average assets, and operating return on average tangible common equity are non-GAAP measures and exclude the after-tax effect of transaction-related charges, loss on extinguishment of debt, securities gains (losses) and other one-time charges. Management believes that non-GAAP operating measures provide additional useful information that allows readers to evaluate the ongoing performance of the company.


(2)	The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities.

(3)

Operating efficiency ratio is calculated by non-interest expense, excluding transaction-related expenses, amortization of intangible assets, and loss on extinguishment of debt, divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses) and insurance settlement income. Management believes this non-GAAP operating measure provides additional useful information that allows readers to evaluate the ongoing performance of the company.

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