10 bagger Thursday, June 07, 2012 8:52:33 PM Re: None Post # of 21
BNCC.. $02.10.. as promised.. This small bank is a gem but still has 9,200,000 shares to released for trading sometime this summer.. I'm sure some of the locked in money will move on causing a lid on BNCC stock until that occurs.. BTW the branch they have in Stanley was built on thier own land and they had it built themselves.. Small Town Banking at it's best form.. Know your town and your future customers.. Give them an Opp. to build your office building and you have a customer for life..
BNCC has a moderate to high efficency rate of .78 which places it in the top efficeny range of small banks that I follow.. It as an inverse number that gages the cost of funds Vrs. Rtns. expected in the first full year.. The lower the number the less costly it is for the bank to put money on the books in relationship to the earns spread avil, on those funds.. But with the inital capitol that they raised IMO they should be able to expand and advertise and get this number down to the .55 to .60 range with in the next 18 mo's....
Rtn on assets is 0.935% but that has been hampered much by the lack of capitol due again to the fraud.. Normal circomstances and the growth opp. that are in the ND area should bring the Rtn. on assets above 1.22% within the next 2 years
Rtn on Stkhldrs equity is a great 21.51% but I would expect that number to fall to 16.0% when the new capitol hits the balance sheet.. I rate BNCC a buy at any price below $2.25 because the overhang of stock from the $1.85 offering could be with us until late summer or early fall..
Earnings this year should approach $0.46 to $0.55 fully diluted and taken into account for the additional underwriting shares.. I think a 6 Mult.. is what the market will give it IMO and if plans for expansion and the boom lasts another year in the building trades next year I expect the bank to have assets in the range of one billion with a 1.1% return.. On those assets I think a per share EPS projection of $0.88 is possible.. That should get us to at least $6.50 some time late next year..
Fraud Loss on Assets Serviced by Others.. This was where I went first.. The total amount has been written off and APROX. $200,000.00 each Qtr, will be spent on getting a settlement with the Insurance company in the future.. I gage the chance of some settlement at 30% while I don't give it much chance getting more than 45% under any circumstances.. The Sale of 9,200,000 shares at a price of $1.85 per share is completed w/o the use of any undertaker in the process.. Sandler O'Neill gave guidance in the deal but the bank sold all it's shares by themselves.. Quite a feat with just having a write off almost equal the total amount of the offering.. They have the money in escrow and are waiting regulatory permission to use it.. ======================================= Notes from BNCC PR's
As previously reported, the Company discovered fraudulent activity in April of 2010 by an external company that was servicing residential mortgage loans for BNC. Subsequently, the Company and its advisors have been diligently addressing this matter. Our internal and external investigations have confirmed that this fraudulent activity was limited to this external servicing company and that no bank employees were involved in, or were aware of, this wrongful conduct by the servicing company.
In 2010, we submitted claims under our fidelity insurance policies seeking to recover the insured portion of these losses. The policies together provide for total coverage of $15 million. However, in the fourth quarter of 2010, our insurance carriers commenced a declaratory judgment action against the Company in an Arizona federal court seeking a judicial determination that the losses associated with the servicing fraud are not covered by the policies. We have subsequently countersued the insurance carriers for failure to honor the policies and for acting in bad faith. We intend to vigorously pursue our claims to recover amounts due under the insurance policies and for losses incurred as a result of the carriers acting in bad faith. While management believes we have strong claims, there can be no assurances as to the outcome of this litigation, or if we will recover all or any portion of the insured amounts.
The Company is providing adjusted earnings in addition to reported results prepared in accordance with generally accepted accounting principles in order to present financial information without the impact of the fraud loss on assets serviced by others. The following table reconciles the net income available to common shareholders as prepared in accordance with generally accepted accounting principles to our determination of adjusted earnings: -------
Asset Quality is the best part of BNCC's operation.. They classify suspect loans into three categorys and monitor them on a regular basis.. I think they do a fine job that was spurred not only by good banking but the need to have good loans on the books after the Fraud above..
They are suspect,, possible problem and delinquent.. Suspect may be no more than a person loosing thier job,, known illness in the family or act of god.. All these loans could be performing at present and not be in any laspe of payments but have reasons for the bank to momitor,, High credit cards ,, late payments to others and reports from credit agencys are monitored.. The reason to monitor is to help before the customer needs it and not wait wntil it falls into the next category...
Possible problems are indicated by late payments or natural weather occurances.. Farmers fall the most into this category but since all loans to farmers are lent against land they are well secured and just become work out's due to market conditions.. Frost and flood are the main causes of these loans.. One example was a developer that had land high and dry above a river that flooded.. His lots could not be sold because of the bad press of the flood and during the next sping half were sold making the loan again good on the books..
Delinquent are just that and all possible means are used to collect and are written down to prices that a resonable person would pay..
From the BNCC Release...........
Challenging economic conditions have led to elevated credit risk throughout the banking industry. As a result, the Company is carefully monitoring asset quality and taking what it believes to be prudent and appropriate action to strengthen its credit metrics.
Nonperforming assets declined to $14.5 million at March 31, 2012, from $16.3 million at December 31, 2011 and $32.4 million at March 31, 2011. The ratio of total nonperforming assets to total assets was 2.09% at March 31, 2012, 2.45% at December 31, 2011 and 4.73% at March 31, 2011. The provision for credit losses and other real estate costs was $800 thousand in the first quarter of 2012 and the first quarter of 2011.
Nonperforming loans declined to $5.0 million at March 31, 2012, from $6.2 million at December 31, 2011 and $19.8 million at March 31, 2011. The ratio of the allowance for credit losses to total nonperforming loans as of March 31, 2012 was 210%, compared with 172% at December 31, 2011 and 71% at March 31, 2011. The provision for credit losses decreased to $100 thousand in the first quarter of 2012, compared to $600 thousand the first quarter of 2011 due to the decline of problem loans.
The allowance for credit losses was $10.5 million at March 31, 2012, $10.6 million at December 31, 2011 and $14.2 million at March 31, 2011. The allowance for credit losses as a percentage of total loans at March 31, 2012 was 3.13%, compared with 2.94% at December 31, 2011 and 4.10% at March 31, 2011. The allowance for credit losses as a percentage of loans and leases held for investment at March 31, 2012 was 3.84%, compared with 3.63% at December 31, 2011 and 4.38% at March 31, 2011.
At March 31, 2012, BNC had $21.1 million of classified loans, $5.0 million of loans on non-accrual and $9.4 million of other real estate owned. At December 31, 2011, BNC had $24.2 million of classified loans, $6.2 million of loans on non-accrual and $10.1 million of other real estate owned. At March 31, 2011, BNC had $43.3 million of classified loans, $19.5 million of loans on non-accrual and $12.5 million of other real estate owned.
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 and wealth management businesses in Arizona, Minnesota and North Dakota from 14 locations. BNC also conducts mortgage banking from 14 locations in Illinois, Kansas, Nebraska, Missouri, Minnesota, Arizona and North Dakota.
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