First Quarter 2009 Highlights BISMARCK, N.D., April 30
/PRNewswire-FirstCall/ -- BNCCORP, Inc. (BNC) (Pink Sheets: BNCC),
which operates community banking and wealth management businesses
in Arizona, Minnesota and North Dakota, and mortgage banking
offices in Iowa, Kansas, Missouri and Arizona, today reported
financial results for the first quarter ended March 31, 2009. Net
income was $616 thousand, or $0.11 per diluted common share, for
the first quarter of 2009. This compared to net income of $1.362
million, or $0.39 per diluted common share, in the first quarter of
2008. Gregory K. Cleveland, BNCCORP President and Chief Executive
Officer, stated, "BNC's profitable results for the 2009 first
quarter reflected strong growth in net interest income and
non-interest income, as well as a higher provision for credit
losses due to the difficult economy. In particular, the results
benefitted from our decision to expand mortgage banking operations
in the middle of last year. This action was well-timed, as we had
ample opportunity to integrate the operation before explosive
refinancing activities generated significant revenue in the first
quarter. While we are pleased to have made money in a challenging
period, we know that economic conditions continue to deteriorate.
We are fortunate to have significant regulatory capital and intend
to manage our business prudently, but the current economic trends
cause us to have very modest expectations for the balance of this
year." First Quarter Results Net interest income for the first
quarter of 2009 was $6.882 million, an increase of $610 thousand,
or 9.7%, from $6.272 million in the same period of 2008. The net
interest margin for the current period declined to 3.56% from 3.78%
in the same period of 2008. Asset growth and lower interest rates
on liabilities spurred higher net interest income. These
improvements were partially offset by increases in non-accruing
assets and the decline in interest rates which compressed net
interest margin. The provision for credit losses in the first
quarter of 2009 was $1.700 million compared to $800 thousand in the
first quarter of 2008. The provision for other real estate losses
was $750 thousand in the first quarter of 2009 compared to $0 in
the 2008 first quarter. These charges reflect the deteriorating
economic conditions, the amount and trend of nonperforming assets,
and other factors based on management's regular ongoing evaluation
of the loan portfolio and other real estate. Non-interest income
for the first quarter of 2009 was $3.696 million, an increase of
$1.397 million, up 61% from $2.299 million in the same period of
2008. BNC expanded mortgage banking operations in the second
quarter of 2008 and, as a result, these revenues rose by $1.426
million versus the first quarter of 2008. Gains on sales of
investments were $903 thousand in the first quarter of 2009, while
there were no similar gains in the 2008 first quarter. Gains on
sales of commercial real estate loans were $0 in the first quarter
of 2009 compared to $759 in the 2008 first quarter. The secondary
market for this asset class functioned at minimal levels and is not
anticipated to improve in the near term. Wealth management revenues
decreased $172 thousand from a year ago, to $584 thousand,
primarily due to fewer fees for managing documents for insurance
products sold by others, and as a result, we expect wealth
management revenues to be lower in 2009 than in 2008. In the first
quarter of 2009, non-interest expense increased by $2.321 million
to $8.060 million, from $5.739 million in the same period of 2008.
Costs related to other real estate were $907 thousand in the first
quarter of 2009 while there were no similar costs in the 2008 first
quarter. Non-interest expenses in the mortgage banking operations
were approximately $800 thousand higher in 2009 than in the first
quarter of 2008. Tax expense of $202 thousand resulted in a 24.7%
effective tax rate during the first quarter of 2009. The tax
expense in the first quarter of 2008 was $670 thousand, which
resulted in an effective tax rate of 33.0%. The effective tax rate
is lower in 2009 because more of our pre-tax earnings are from tax
exempt sources. Net income available to common shareholders of $350
thousand in the 2009 first quarter represents amounts available
after dividends paid on preferred stock and amortization of
issuance discounts on the preferred stock. Such dividends and
amortization contributed to the decrease in earnings per common
share in the first quarter of 2009. Assets, Liabilities and Equity
Total assets were $903.0 million at March 31, 2009, an increase of
$41.5 million, or 4.8%, compared to $861.5 million at December 31,
2008. Loans held for sale increased by $15.9 million and investment
securities available for sale were $17.9 million higher than at the
beginning of the year. Organic growth fueled the increase in loans,
while investments increased as a result of leverage strategies
intended to increase net interest income. Total liabilities,
including deposits, at March 31, 2009 increased by $20.6 million to
$828.2 million compared to $807.6 million at December 31, 2008.
Total deposits were $687.9 million at March 31, 2009, increasing by
$12.6 million from 2008 year-end. Core deposits aggregated $570.8
million, $575.6 million and $516.2 million at March 31, 2009,
December 31, 2008 and March 31, 2008, respectively. Wholesale
deposits aggregated $117.1 million at March 31, 2009, an increase
of $17.4 million since the beginning of the year. Wholesale
deposits are utilized to fund BNC's leverage strategies. Total
common stockholders' equity was $54.7 million at March 31, 2009,
compared to $53.9 million at December 31, 2008. The book value per
common share was $16.57 as of March 31, 2009, compared to $16.35 as
of December 31, 2008. Excluding the impact of the unrealized gains
and losses on investments, the book value per common share was
$17.89 as of March 31, 2009, compared to $17.82 as of December 31,
2008. Trust assets under supervision were $321.0 million at March
31, 2009, compared $320.3 million at December 31, 2008. Regulatory
Capital The Company's capital levels significantly exceeded the
regulatory requirements for "well-capitalized" institutions at
March 31, 2009. At that date, the tier 1 leverage ratio was 11.48%,
the tier 1 risk-based capital ratio was 14.68%, and the total
risk-based capital ratio was 15.94%. Our tangible common equity at
March 31, 2009 was 5.98%. At March 31, 2009, the Company's
subsidiary, BNC National Bank, had total risk-based capital of
$103.8 million, which was $35.3 million greater than the $68.5
million required to meet the "well-capitalized" threshold. BNC
National Bank's tangible capital was 8.47% of total assets at March
31, 2009. In January of 2009, the Company issued preferred stock
with an aggregate liquidation preference of approximately $21
million to the U.S. Treasury under its Capital Purchase Program
(CPP). Community banks were encouraged to participate in this
program in order to improve availability of credit. Only
institutions deemed qualified by their primary regulators based
upon criteria established by the Treasury were permitted to
participate in this program. As a sound, well-capitalized
institution, BNC initially decided to participate in the CPP as a
prudent measure to further strengthen our capital, reassure our
customers and enhance our ability to support lending growth at a
time of significant economic uncertainty. However, subsequent
legislation and regulations implementing the CPP have significant
implications on participating institutions, including compensation
programs and corporate governance requirements. It is also possible
that additional restrictions may be imposed on CPP participants. We
believe we are substantially in compliance with the requirements of
CPP currently in effect and will continue to monitor other
requirements as they evolve. Asset Quality The Company is carefully
monitoring asset quality due to present economic conditions and
expects credit risk to remain elevated in 2009 and periods beyond.
Accordingly, provisions for credit and other real estate (ORE)
losses are anticipated to be elevated for the foreseeable future.
The allowance for credit losses was $9.7 million, $8.8 million and
$7.2 million at March 31, 2009, December 31, 2008, and March 31,
2008, respectively. The allowance for credit losses as a percentage
of total loans at March 31, 2009 was 1.68%, compared with 1.50% at
December 31, 2008. The allowance for credit losses as a percentage
of loans and leases held for investment at March 31, 2009 was
1.77%, compared with 1.60% at December 31, 2008. The ratio of total
nonperforming assets to total assets was 4.30% at March 31, 2009,
compared with 3.84% at December 31, 2008. The ratio of the
allowance for credit losses to total nonperforming loans as of
March 31, 2009 was 41%, compared to 38% at December 31, 2008. At
March 31, 2009, BNC had $46.0 million of classified loans, $23.7
million of loans on non-accrual and $15.1 million of other real
estate owned. At December 31, 2008, BNC had $33.1 million of
classified loans, $22.9 million of loans on non-accrual and $10.2
million of other real estate owned. At March 31, 2008, BNC had
$17.4 million of classified loans and $9.6 million of loans on
non-accrual and $0 of other real estate owned. The balances of
classified loans, non-accrual loans and other real estate owned are
higher than they have been in recent years and we expect these
balances to remain elevated for the foreseeable future. BNC has
concentrations of land and construction loans. At March 31, 2009,
the Company had construction loans of $43.5 million and land and
land development loans aggregating $56.2 million. At December 31,
2008, the Company had construction loans of $37.7 million and land
and land development loans aggregating $61.8 million. At March 31,
2008, the Company had construction loans of $51.5 million and land
and land development loans aggregating $68.8 million. Outlook Mr.
Cleveland noted, "BNC continues to serve our customers and
community, while maintaining a wary viewpoint on the economy.
Nationwide, housing and other real estate values are continuing to
decline, workers are concerned about jobs, and businesses are
finding it more difficult generate profits. These circumstances,
among others, create uncertainty and cause businesses and consumers
to be cautious. Government interventions into the financial
services industry may be well intended, but it is important that
these interventions not come with excessive restrictions if they
are to have the desired benefits. All-in-all, this is a very
difficult period for the financial services industry and we do not
see conditions abating in the near term. BNC is fortunate to have a
strong capital position, a sharp focus on our business, and a team
of very talented and competitive people who are committed to long
term success." BNCCORP, Inc., headquartered in Bismarck, N.D., is a
registered bank holding company dedicated to providing banking and
wealth management services to businesses and consumers in its local
markets. The Company operates community banking, mortgage banking
and wealth management businesses in Arizona, Minnesota and North
Dakota from 20 locations. BNC also conducts mortgage banking from
five locations in Iowa, Kansas, Missouri and Arizona. This news
release may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, plans,
objectives, future performance and business of BNC. Forward-looking
statements, which may be based upon beliefs, expectations and
assumptions of our management and on information currently
available to management are generally identifiable by the use of
words such as "expect", "believe", "anticipate", "plan", "intend",
"estimate", "may", "will", "would", "could", "should", or other
expressions. We caution readers that these forward-looking
statements, including, without limitation, those relating to our
future business prospects, revenues, working capital, liquidity,
capital needs, interest costs and income, are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward-looking statements
due to several important factors. These factors include, but are
not limited to: risks of loans and investments, including
dependence on local and regional economic conditions; competition
for our customers from other providers of financial services;
possible adverse effects of changes in interest rates, including
the effects of such changes on derivative contracts and associated
accounting consequences; risks associated with our acquisition and
growth strategies; and other risks which are difficult to predict
and many of which are beyond our control. In addition, all
statements in this news release, including forward-looking
statements, speak only of the date they are made, and the Company
undertakes no obligation to update any statement in light of new
information or future events. (Financial tables attached) BNCCORP,
INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) For the Quarter
(Unaudited and in thousands, Ended March 31, except per share data)
2009 2008 SELECTED INCOME STATEMENT DATA Interest income $10,679
$11,385 Interest expense 3,797 5,113 Net interest income 6,882
6,272 Provision for credit losses 1,700 800 Non-interest income
3,696 2,299 Non-interest expense 8,060 5,739 Income before income
taxes 818 2,032 Income tax expense 202 670 Net income $616 $1,362
Preferred stock costs 266 - Net income available to common
shareholders $350 $1,362 EARNINGS PER SHARE DATA Basic earnings per
common share $0.11 $0.40 Diluted earnings per common share $0.11
$0.39 BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
(In thousands, except share, As of per share and full time March
31, December 31, March 31, equivalent data) 2009 2008 2008 SELECTED
BALANCE SHEET DATA Total assets $903,035 $861,498 $765,423 Loans
held for sale 29,275 13,403 5,065 Participating interests in
mortgage loans 28,843 28,584 26,160 Loans and leases held for
investment 545,438 542,753 516,452 Total loans 603,556 584,740
547,677 Allowance for credit losses (9,674) (8,751) (7,178)
Investment securities available for sale 227,810 209,857 160,452
Other real estate 15,143 10,189 - Earning assets 829,024 791,844
708,202 Total deposits 687,882 675,321 568,214 Core deposits
570,792 575,637 516,239 Other borrowings 131,328 124,369 130,609
OTHER SELECTED DATA Net unrealized gains (losses) in investment
portfolio, pretax $(7,014) $(7,805) $802 Trust assets under
supervision $321,027 $320,340 $321,964 Total common stockholders'
equity $54,667 $53,947 $58,241 Book value per common share $16.57
$16.35 $17.62 Effect of net unrealized gains (losses) on securities
available for sale, net of tax, on book value per common share
$(1.32) $(1.47) $0.15 Book value per common share, excluding effect
of unrealized gains (losses) on securities $17.89 $17.82 $17.47
Full time equivalent employees 285 238 178 Common shares
outstanding 3,299,163 3,299,163 3,305,742 CAPITAL RATIOS Tier 1
leverage (Consolidated) 11.48% 9.01% 10.47% Tier 1 risk-based
capital (Consolidated) 14.68% 11.15% 12.02% Total risk-based
capital (Consolidated) 15.94% 12.95% 13.78% Tangible common equity
(Consolidated) 5.98% 6.21% 7.52% Tier 1 leverage (BNC National
Bank) 9.16% 9.34% 11.42% Tier 1 risk-based capital (BNC National
Bank) 11.71% 11.56% 13.12% Total risk-based capital (BNC National
Bank) 15.16% 12.81% 14.26% Tangible capital (BNC National Bank)
8.47% 8.77% 10.90% BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited) For the Quarter Ended March 31, (In thousands) 2009
2008 AVERAGE BALANCES Total assets $876,472 $721,024 Loans held for
sale 23,335 374 Participating interests in mortgage loans 26,126
22,708 Loans and leases held for investment 549,619 506,886 Total
loans 599,081 529,968 Earning assets 807,256 666,488 Total deposits
663,453 547,777 Core deposits 564,590 512,265 Common stockholders'
equity 55,647 61,016 KEY RATIOS Return on average common
stockholders' equity 2.85% 8.98% Return on average assets 0.29%
0.76% Net interest margin 3.56% 3.78% Efficiency ratio 76.06%
66.96% As of (In thousands) March 31, December 31, March 31, 2009
2008 2008 ASSET QUALITY Loans 90 days or more delinquent and still
accruing interest $- $6 $2 Non-accrual loans 23,728 22,909 9,602
Total nonperforming loans $23,728 $22,915 $9,604 Other real estate
15,143 10,189 - Total nonperforming assets $38,870 $33,104 $9,604
Allowance for credit losses $9,674 $8,751 $7,178 Ratio of total
nonperforming loans to total loans 3.93% 3.92% 1.75% Ratio of total
nonperforming assets to total assets 4.30% 3.84% 1.25% Ratio of
allowance for credit losses to loans and leases held for investment
1.77% 1.61% 1.39% Ratio of allowance for credit losses to total
loans 1.68% 1.50% 1.31% Ratio of allowance for credit losses to
nonperforming loans 41% 38% 75% For the Quarter Ended March 31,
2009 2008 Changes in Allowance for Credit Losses: Balance,
beginning of period $8,751 $6,599 Provision 1,700 800 Loans charged
off (782) (232) Loan recoveries 5 11 Balance, end of period $9,674
$7,178 Ratio of net charge-offs to average total loans (0.130)%
(0.042)% Ratio of net charge-offs to average total loans,
annualized (0.519)% (0.167)% For the Quarter Ended March 31, 2009
2008 Changes in Allowance for Other Real Estate Balance, beginning
of period $- $- Provision 750 - Charged offs - - Recoveries - -
Balance, end of period $750 $- BNCCORP, INC. CONSOLIDATED FINANCIAL
HIGHLIGHTS (Unaudited) For the Quarter Ended March 31, (In
thousands, except share data) 2009 2008 ANALYSIS OF NON-INTEREST
INCOME Bank charges and service fees $579 $491 Wealth management
revenues 584 756 Mortgage banking revenues 1,426 - Gains on sales
of commercial real estate loans - 759 Net gain on sales of
securities 903 - Other 204 293 Total non-interest income $3,696
$2,299 ANALYSIS OF NON-INTEREST EXPENSE Salaries and employee
benefits $3,739 $3,423 Data processing fees 539 506 Occupancy 639
442 Depreciation and amortization 371 342 Marketing and promotion
185 195 Professional services 497 189 FDIC and other assessments
179 54 Office supplies and postage 141 111 Provision for ORE losses
750 - ORE expenses 157 - Other 863 477 Total non-interest expense
$8,060 $5,739 WEIGHTED AVERAGE SHARES Common shares outstanding (a)
3,261,831 3,407,821 Incremental shares from assumed conversion of
options and contingent shares 12,764 41,660 Adjusted weighted
average shares (b) 3,274,595 3,449,481 (a) Denominator for Basic
Earnings Per Common Share (b) Denominator for Diluted Earnings Per
Common Share FOR FURTHER INFORMATION: WEBSITE:
http://www.bnccorp.com/ DATASOURCE: BNCCORP, Inc. CONTACT: Gregory
K. Cleveland, +1-602-852-3526, or Timothy J. Franz,
+1-612-305-2213, both of BNCCORP Web Site: http://www.bnccorp.com/
Copyright
