BISMARCK, N.D., Jan. 24 /PRNewswire-FirstCall/ -- BNCCORP, Inc.
(Nasdaq: BNCC), which operates community banking, insurance and
brokerage/trust/financial services businesses in Arizona, Minnesota, North
Dakota, Utah and Colorado, today reported net income of $762,000, or $0.25 per
share on a diluted basis, for the fourth quarter ended December 31, 2004. For
the same quarter of 2003, the Company reported net income of $737,000, or
$0.25 per diluted share.
For the twelve months ended December 31, 2004, the Company reported net
income of $3.40 million, or $1.14 per diluted share, compared with net income
of $3.84 million, or $1.35 per diluted share, in the same period of 2003.
Results for the full 2004 twelve-month period included an expense of
$688,000 related to the previously announced termination of employment of a
former officer of the Company's insurance subsidiary. The payment represented
the acceleration of the remaining salary due under his multi-year employment
contract.
"Our level of profitability in 2004 was relatively consistent with 2003,
and reflected solid increases in net interest income and noninterest income,
offset by higher expenses related to our investments in growth and the
termination of a former officer," noted Gregory K. Cleveland, BNCCORP
President and Chief Executive Officer. "We are particularly pleased that our
investments in new branch locations, business operations and management talent
have begun to produce results in terms of deposit growth, loan growth,
including mortgage loan and student loan financing business, and rising
insurance commission volume."
Mr. Cleveland noted that BNCCORP's growth initiatives during 2003 and 2004
included new full service branch offices in Phoenix and Scottsdale, Arizona,
and Golden Valley, Minnesota. Additionally, the Company expanded its insurance
segment through asset acquisitions in Salt Lake City, Utah; Tucson and
Prescott Valley, Arizona; and Denver, Colorado. The Company also acquired a
mortgage banking operation based in Tempe, Arizona.
Fourth Quarter Review
Net interest income for the fourth quarter of 2004 was $4.24 million, up
20.0% from $3.53 million in the same period of 2003. This increase reflected a
widening of the net interest margin to 2.90% for the quarter ended December
31, 2004, from 2.58% for the same period in 2003. The 32 basis point
improvement in net interest margin reflected a $37.4 million increase in
average earning asset volume coupled with a 21 basis point increase in yield
on earning assets.
Noninterest income was $5.79 million for the 2004 fourth quarter, rising
21.1% from $4.78 million for the year-ago period. Commissions generated by the
Company's insurance agency subsidiary, Milne Scali & Company, Inc., were the
largest contributor to noninterest income ($4.19 million), rising 17.0% from
the year-ago quarter, primarily due to acquisitions. Loan fees more than
doubled from the year-ago quarter, to $805,000, from $381,000, due to fees
associated with the loans held for sale portfolio, loans originated and sold
and some fees for credit line availability. Trust and financial services
income and net gain on sales of securities rose slightly compared with the
same quarter of 2003, while service charges and brokerage income decreased.
Noninterest income represented 57.74% of gross revenues for the recent
quarter, versus 57.51% a year ago.
Noninterest expense for the fourth quarter of 2004 was $8.85 million,
compared with $7.30 million in the same quarter of 2003. This 21.2% increase
primarily reflected higher employee, occupancy, depreciation and amortization
and other general expenses due to the expansion of the Company's branch
offices and insurance agency operations.
Twelve Months Review
Net interest income was $16.04 million for the twelve-month period ended
December 31, 2004, rising 19.9% from $13.38 million in the year-ago period.
The net interest margin widened to 2.86% for 2004, from 2.47% for 2003. Net
interest income and margin for the twelve-month period ended December 31, 2004
were favorably impacted by the recovery of cash basis interest income of
approximately $408,000 on a $4.5 million loan that had been classified as
nonaccrual at December 31, 2003 and was paid in full during the first quarter
of 2004. Net interest income and margin for the twelve-month period ended
December 31, 2003 were negatively impacted by the charge-off of interest
income of approximately $287,000 on the same loan. Additionally, net interest
income and margin for the twelve-month periods ended December 31, 2004 and
2003 were slightly impacted by derivative contract-related transactions during
the periods which decreased net interest income by $55,000 and $80,000,
respectively. Without these interest income variances and derivative
transactions, net interest margin for the 2004 and 2003 periods would have
been 2.80% and 2.54%, respectively. A significant contribution to the
improvement in net interest margin for the twelve-month period ended December
31, 2004 was a 35 basis point reduction in the cost of interest-bearing
liabilities. An $18.7 million, or 41.7% increase in noninterest-bearing
deposits between December 31, 2003 and December 31, 2004 also favorably
impacted total funding costs.
Noninterest income rose to $23.45 million for the twelve-month period
ended December 31, 2004, a 12.7% increase from $20.81 million in the same
period of 2003. The increase largely reflected increased insurance
commissions. Trust and financial services income decreased from the year-ago
period, which included a $488,000 transaction fee generated by the bank's
financial services division. Loan fees and brokerage income increased from the
year-ago period while service charges and net gain on sales of securities
declined. Additionally, a nonrecurring gain of $527,000 from the final
resolution of a reinsurance program previously associated with Milne Scali,
was reflected in other income during the recent twelve-month period.
Noninterest income represented 59.38% of gross revenues for the recent period,
compared with 60.87% for the same 2003 period.
Noninterest expense for the twelve-month period ended December 31, 2004
was $34.77 million, an increase of 27.4% compared with $27.29 million in the
year-ago period, largely due to the previously noted employment contract
termination expense and investments in staffing and locations.
Loan and Deposit Balances
Total assets were $673.7 million at December 31, 2004, rising from
$621.5 million at December 31, 2003, and $602.2 million at December 31, 2002.
Total loans held for sale from residential mortgage loan and student loan
financing programs implemented during 2004 were $60.2 million at December 31,
2004. Total loans held for investment at December 31, 2004, were
$293.8 million, compared with $283.6 million at December 31, 2003, and
$335.8 million at December 31, 2002. Investment securities available for sale
were $235.9 million at December 31, 2004, compared with $262.6 million at
December 31, 2003, and $208.1 million at December 31, 2002. Total deposits at
December 31, 2004, were $455.3 million, up from $395.9 million at December 31,
2003, and $398.2 million at December 31, 2002. The $59.4 million of deposit
growth over the twelve-month period ended December 31, 2004 reflected
increases in core deposits, primarily from recently opened branches in Arizona
and Golden Valley, Minnesota, and an increase in brokered deposits. Core
deposits increased $30.8 million, or 8.4%, over that twelve-month period.
Noninterest-bearing deposits increased $18.7 million, or 41.7%, over the same
twelve-month period while core certificates of deposit rose $20.0 million, or
19.0%. Brokered and national market certificates of deposit together increased
$25.4 million between December 31, 2003 and December 31, 2004, while
certificates of deposit in the CDARS(SM) program (included in core
certificates of deposit above), which was initiated during the second half of
2003, totaled $16.8 million at December 31, 2004.
Total common stockholders' equity for BNCCORP was $42.6 million at
December 31, 2004, equivalent to book value per common share of $14.77
(tangible book value per common share of $4.42).
At December 31, 2004, the Company's tier 1 leverage ratio was 4.51%
compared with 4.90% at December 31, 2003. The tier 1 risk-based capital ratio
was 6.35% at December 31, 2004 versus 7.14% at December 31, 2003. The total
risk-based capital ratio was 8.85% at December 31, 2004 versus 10.63% at
December 31, 2003. The changes are primarily due to an increase in total risk-
weighted assets from $403.7 million at December 31, 2003 to $449.2 million at
December 31, 2004. The capital ratios were also impacted by the payment of the
remaining earnout amounts related to the Milne Scali acquisition (which
increased goodwill by $6.0 million) and the acquisition of three insurance
agencies and a mortgage company (which increased goodwill and other intangible
assets by approximately $1.6 million).
Asset Quality
A $175,000 provision for credit losses was required for the 2004 fourth
quarter and the 2004 year to date period, versus provisions of $0 for the
year-ago fourth quarter and $1.48 million for the twelve months ended December
31, 2003. The ratio of total nonperforming assets to total assets improved
significantly to 0.08% at December 31, 2004, compared with 1.28% at December
31, 2003 and 1.27% at December 31, 2002. The ratio of allowance for credit
losses to total nonperforming loans was 607% at December 31, 2004,
strengthening from 60% at December 31, 2003 and 66% at December 31, 2002.
These asset quality related ratios improved during 2004 primarily because of
the sharp decrease in nonperforming loans, which declined to $549,000 at
December 31, 2004, from $7.95 million at December 31, 2003. This decrease was
due primarily to the full payment of a $4.5 million loan and the resolution of
a $2.2 million loan that resulted in a charge-off of $1.2 million (of which
$975,000 was reserved for at December 31, 2003). The allowance for credit
losses as a percentage of total loans was 1.14% at December 31, 2004, compared
with 1.68% at December 31, 2003, and 1.49% at December 31, 2002. The ratio at
December 31, 2004 reflects $1.9 million of charge-offs over the course of the
twelve-month period ended December 31, 2004, as well as the reduced reserve
requirement related to the sharp decrease in nonperforming loans during the
same period.
Outlook
"BNCCORP enters the new year with an expanded base of banking offices and
financial services operations, the potential for further growth in loans and
core deposits, and solid asset quality. We believe this will provide the
platform for improved earnings in 2005 as compared with 2004. Going forward,
we will continue our initiatives to enhance shareholder value by building on
our diversified base of community banking, insurance and
brokerage/trust/financial services businesses in attractive, growing regions,"
Mr. Cleveland stated.
BNCCORP, Inc., headquartered in Bismarck, N.D., is a registered bank
holding company dedicated to providing a broad range of financial products and
superior customer service to businesses and consumers in its local
communities. The Company operates 26 locations in Arizona, Minnesota, North
Dakota, Utah and Colorado through its subsidiary, BNC National Bank and its
subsidiaries Milne Scali & Company, Inc. and BNC Asset Management, Inc., as
well as the bank's trust and financial services division which provide a wide
array of insurance, brokerage and trust and financial services. The Company
offers a variety of traditional and nontraditional financial products and
services in order to meet the financial needs of its current customer base,
establish new relationships in the markets it serves and expand its business
opportunities.
Statements included in this news release which are not historical in
nature are intended to be, and are hereby identified as "forward-looking
statements" for purposes of the safe harbor provided by Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. 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.
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Twelve Months
(In thousands, except Ended December 31, Ended December 31,
per share data) 2004 2003 2004 2003
SELECTED INCOME STATEMENT DATA (unaudited)
Interest income $7,952 $ 7,179 $30,141 $28,646
Interest expense 3,714 3,648 14,100 15,268
Net interest income 4,238 3,531 16,041 13,378
Provision for credit losses 175 0 175 1,475
Noninterest income 5,790 4,780 23,450 20,812
Noninterest expense 8,851 7,301 34,768 27,290
Income before income taxes 1,002 1,010 4,548 5,425
Income tax provision 240 273 1,144 1,581
Net income $762 $737 $3,404 $3,844
Dividends on preferred stock $(28) $(30) $(93) $ (120)
Net income available to
common stockholders $734 $707 $3,311 $3,724
EARNINGS PER SHARE DATA
BASIC EARNINGS PER COMMON SHARE
Basic earnings per common share $0.26 $0.26 $1.18 $1.38
DILUTED EARNINGS PER COMMON SHARE
Diluted earnings per common share $0.25 $0.25 $1.14 $1.35
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(In thousands, except share,
per share and full time As of
equivalent data) December 31, December 31, December 31,
2004 2003 2002
SELECTED BALANCE SHEET DATA
Total assets $673,710 $621,477 $602,228
Investment securities available
for sale 235,916 262,568 208,072
Loans held for sale 60,197 -- --
Total loans held for investment 293,814 283,555 335,794
Allowance for credit losses (3,335) (4,763) (5,006)
Goodwill 21,779 15,089 12,210
Other intangible assets, net 8,075 8,373 8,875
Total deposits 455,343 395,942 398,245
Long term borrowings 10,079 8,640 8,561
Notation:
Unrealized gains (losses) in
investment portfolio, pretax $106 $1,625 $4,383
Total common stockholders' equity $42,596 $38,686 $36,223
Book value per common share $14.77 $14.07 $13.41
Tangible book value per common share $4.42 $5.54 $5.60
Effect of net unrealized gains on
securities available for sale,
net of tax, on book value per
common share $0.02 $0.37 $1.01
Full time equivalent employees 323 284 270
Common shares outstanding 2,884,876 2,749,196 2,700,929
CAPITAL RATIOS
Tier 1 leverage 4.51% 4.90% 4.46%
Tier 1 risk-based capital 6.35% 7.14% 5.92%
Total risk-based capital 8.85% 10.63% 9.53%
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Twelve Months
Ended December 31, Ended December 31,
(In thousands) 2004 2003 2004 2003
(unaudited) (unaudited)
AVERAGE BALANCES
Total assets $661,555 $612,092 $636,139 $600,668
Loans held for sale 40,945 -- 15,818 --
Loans held for investment 295,373 280,896 276,652 308,115
Earning assets 580,768 543,342 560,601 540,685
Deposits 442,667 388,061 412,643 383,619
Common stockholders' equity 42,682 37,428 41,329 37,525
KEY RATIOS
Return on average common
stockholders' equity 6.84% 7.49% 8.01% 9.92%
Return on average assets 0.46% 0.48% 0.54% 0.64%
Net interest margin 2.90% 2.58% 2.86% 2.47%
Net interest margin adjusted
for cash basis interest
income charged off/recovered
and impact of derivatives
adjustments 2.90% 2.58% 2.80% 2.54%
Efficiency ratio 88.26% 87.85% 88.04% 79.82%
Noninterest income as a
percent of gross revenues 57.74% 57.51% 59.38% 60.87%
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
As of
December 31, December 31, December 31,
(In thousands) 2004 2003 2002
ASSET QUALITY
Loans 90 days or more
delinquent and still
accruing interest $25 $38 $5,081
Nonaccrual loans 524 7,913 2,549
Restructured loans -- -- --
Total nonperforming loans 549 7,951 7,630
Other real estate owned
and repossessed assets -- -- 8
Total nonperforming assets $549 $7,951 $7,638
Allowance for credit losses $3,335 $4,763 $5,006
Ratio of total nonperforming
loans to total loans 0.19% 2.80% 2.27%
Ratio of total nonperforming
assets to total assets 0.08% 1.28% 1.27%
Ratio of allowance for credit
losses to total loans 1.14% 1.68% 1.49%
Ratio of allowance for credit
losses to total nonperforming
loans 607% 60% 66%
For the Quarter For the Twelve Months
Ended December 31, Ended December 31,
Changes in Allowance for 2004 2003 2004 2003
Credit Losses: (unaudited) (unaudited)
Balance, beginning of period $3,424 $4,827 $4,763 $5,006
Provision charged to
operations expense 175 -- 175 1,475
Loans charged off (287) (95) (1,883) (1,820)
Loan recoveries 23 31 280 102
Balance, end of period $3,335 $4,763 $3,335 $4,763
Ratio of net charge-offs to
average total loans (0.09)% (0.02)% (0.58)% (0.56)%
Ratio of net charge-offs to
average total loans,
annualized (0.36)% (0.09)% (0.58)% (0.56)%
BNCCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the Quarter For the Twelve Months
(In thousands, except Ended December 31, Ended December 31,
share data) 2004 2003 2004 2003
ANALYSIS OF NONINTEREST INCOME (unaudited)(unaudited)
Insurance commissions $4,194 $3,585 $17,490 $14,568
Fees on loans 805 381 2,175 2,022
Service charges 192 242 827 909
Trust and financial services 108 97 486 1,009
Net gain on sales of securities 102 99 269 968
Brokerage income 90 129 538 420
Rental income 23 67 109 212
Other 276 180 1,556 704
Total noninterest income $5,790 $4,780 $23,450 $20,812
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits $5,468 $4,403 $21,662 $16,478
Occupancy 727 556 2,700 2,306
Depreciation and amortization 414 373 1,640 1,458
Office supplies, telephone
and postage 362 321 1,414 1,214
Amortization of intangible assets 328 266 1,274 1,063
Professional services 320 289 1,471 1,146
Marketing and promotion 315 281 1,098 803
FDIC and other assessments 52 49 205 201
Other 865 763 3,304 2,621
Total noninterest expense $8,851 $7,301 $34,768 $27,290
WEIGHTED AVERAGE SHARES
Common shares outstanding (a) 2,863,065 2,711,620 2,813,531 2,705,602
Incremental shares from
assumed conversion of
options and contingent shares 58,729 92,054 82,710 59,214
Adjusted weighted average
shares (b) 2,921,794 2,803,674 2,896,241 2,764,816
(a) Denominator for Basic Earnings Per Common Share
(b) Denominator for Diluted Earnings Per Common Share
SOURCE BNCCORP, Inc.
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Related links:
http://www.bnccorp.com
CONTACT:
Gregory K. Cleveland, +1-602-852-3526, or
Brenda L. Rebel, +1-701-250-3044, both of BNCCORP, Inc.
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