BNC Bancorp (BNCN)

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BNC Bancorp Announces Earnings for Second Quarter 2014 (7/24/14)

HIGH POINT, N.C., July 24, 2014 /PRNewswire/ -- BNC Bancorp (NASDAQ: BNCN) ("Company"), parent company for Bank of North Carolina ("Bank"), today reported financial results for the quarter and six months ended June 30, 2014.

Operating earnings for the quarter ended June 30, 2014 totaled $8.4 million, or $0.29 per diluted share, an increase of 22.5% compared to $6.9 million, or $0.25 per diluted share, for the quarter ended March 31, 2014, and an increase of 99.1% from operating earnings of $4.2 million, or $0.16 per diluted share, for the quarter ended June 30, 2013. Operating earnings exclude transaction-related expenses, acquisition-related gains, one-time income and expense items, and gain (loss) on sale of investment securities.

Net income for the quarter ended June 30, 2014 was $6.1 million, or $0.21 per diluted share, a decrease of 5.4% compared to net income of $6.5 million, or $0.24 per diluted share, for the quarter ended March 31, 2014, and an increase of 48.3% from net income available to common shareholders of $4.1 million, or $0.16 per diluted share, for the quarter ended June 30, 2013. The decrease in net income from first quarter 2014 is primarily due to a $2.8 million increase in transaction-related expenses incurred during the second quarter.

Operating earnings for the six months ended June 30, 2014 totaled $15.3 million, or $0.54 per diluted share, an increase of 83.5% compared to operating earnings of $8.3 million, or $0.31 per diluted share, for the six months ended June 30, 2013.

Net income for the six months ended June 30, 2014 was $12.6 million, or $0.45 per diluted share, an increase of 60.0% from net income available to common shareholders of $7.9 million, or $0.30 per diluted share, for the six months ended June 30, 2013.

During the second quarter of 2014, the Company completed the previously announced acquisitions of South Street Financial Corporation in Albemarle, North Carolina ("South Street") and Community First Financial Group, Inc. in Chapel Hill, North Carolina ("Community First"), respectively. The acquisition of South Street closed on April 1, 2014 and the acquisition of Community First was completed on June 1, 2014. As a result, average fully-diluted common shares outstanding increased from 27.5 million for the first quarter of 2014 to 29.0 million for the second quarter of 2014.

Total assets at June 30, 2014 were $3.68 billion, an increase of 13.8% as compared to total assets of $3.23 billion at December 31, 2013.

Highlights for Second Quarter 2014:

•Completed acquisitions of South Street and Community First, adding greater depth in the Charlotte and Triangle regions of North Carolina;

•Signed Agreement and Plan of Merger with Harbor Bank Group, Inc., the holding company for Harbor National Bank, which has approximately $306 million is assets and expands the Company's presence in the attractive Charleston and Mount Pleasant, South Carolina areas;

•Net income of $6.1 million, an increase of 48.3% compared to second quarter of 2013;

•Diluted earnings per share of $0.21, compared to $0.16 per diluted share for second quarter of 2013;

•Return on tangible common equity ratio of 9.21%, compared to 7.70% for second quarter 2013;

•Operating earnings of $8.4 million, compared to $4.2 million for second quarter of 2013;

•Operating earnings per diluted share of $0.29, compared to $0.16 per diluted share for second quarter 2013;

•Operating return on average assets of 0.95%, compared to 0.58% for second quarter of 2013; and

•Operating return on tangible common equity ratio of 12.43%, compared to 7.85% for second quarter 2013.

Richard D. Callicutt II, President and CEO, stated, "I am delighted to report another strong quarter highlighted by the continued ramp in our operating earnings per share, which excludes transaction-related expenses, to $0.29, up from $0.25 in the previous quarter. In addition to growing trends in profitability, growth within the franchise was another major highlight for the second quarter as we closed two acquisitions which provided greater market penetration in the attractive Charlotte and Triangle regions of North Carolina, and announced an agreement to acquire Harbor National in the dynamic Charleston, South Carolina market. While acquisitions are a key part of our strategic initiative to gain market share in the high growth markets in the Carolinas, we are just as focused and proud of the organic growth obtained during the quarter. Excluding acquired or covered loans, the originated loan portfolio grew by $100 million, or 5.6% during the quarter, highlighted by significant growth in the HELOC portfolio, as well as commercial growth in both the Triangle and Charlotte markets."

Mr. Callicutt continued, "While our mortgage area showed improvement compared to the first quarter, we did not realize as much of an increase in revenues as expected. We see encouraging signs for the third quarter, with the addition of originators from Community First, and a growing level of applications taken and loans closings.

I want to once again, thank our team for their tireless efforts in the integration of the South Street and Community First employees and customers into our BNC family. While many view the system conversion as the cornerstone of integration success, we know that it's about our culture and gaining these new employees' and customers' trust and loyalty of the Cardinal and BNC brand."

Operating Results

Fully-taxable equivalent ("FTE") net interest income for the second quarter of 2014 was $35.8 million, an increase of 9.6% from $32.7 million for the first quarter of 2014, and an increase of 27.8% from $28.0 million for the second quarter of 2013. FTE net interest margin was 4.54% for the second quarter of 2014, a decrease of 7 basis points from 4.61% for the first quarter of 2014, and an increase of 22 basis points from 4.32% for the second quarter of 2013. The decrease in net interest margin from the first quarter of 2014 was primarily due to a $0.5 million decrease in fair value accretion recorded on the acquired loan portfolio.

FTE net interest income for the six months ended June 30, 2014 was $68.5 million, an increase of 23.5% from $55.5 million for the six months ended June 30, 2013. FTE net interest margin was 4.57% for the six months ended June 30, 2014, an increase of 31 basis points from 4.26% for the comparable period of 2013.

Average interest-earning assets were $3.17 billion for the second quarter of 2014, an increase of 9.9% from $2.88 billion for the first quarter of 2014, and an increase of 21.6% from $2.60 billion for the second quarter of 2013. Average interest-earning assets were $3.02 billion for the six months ended June 30, 2014, an increase of 15.1% from $2.63 billion for the first six months of 2013.

Average interest-bearing liabilities were $2.78 billion for the second quarter of 2014, an increase of 9.0% from $2.55 billion for the first quarter of 2014, and an increase of 17.8% from $2.36 billion for the second quarter of 2013. Average interest-bearing liabilities were $2.67 billion for the six months ended June 30, 2014, an increase of 11.7% from $2.39 billion for the six months ended June 30, 2013.

The above increases were primarily due to the acquisitions of South Street and Community First during the second quarter of 2014, as well as the acquisition of Randolph Bank & Trust ("Randolph") during the fourth quarter of 2013.

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