BNCCORP, INC. Reports Third Quarter Net Income Of $4.7 Million, Or $1.32 Per Diluted Share

Published: Oct. 28, 2021 at 6:00 AM CDT

BISMARCK, N.D., Oct. 28, 2021 /PRNewswire/ --

BNCCORP Logo (PRNewsfoto/BNCCORP, INC.)
BNCCORP Logo (PRNewsfoto/BNCCORP, INC.)

Highlights

  • Net income in the third quarter of 2021 was $4.7 million, or $1.32 per diluted share, compared to $13.7 million, or $3.84 per diluted share during the same period of 2020.
  • Mortgage revenue, as anticipated, decreased from unprecedented historic highs to $8.2 million in the third quarter of 2021, compared to $23.9 million during the same period of 2020.
  • Return on assets and return on equity were 1.75% and 14.62%, respectively, for the quarter ended September 30, 2021, compared to 4.99% and 44.88% during the same period of 2020.
  • Tangible book value per share increased $4.57 to $37.96 at September 30, 2021, from $33.39 at December 31, 2020. The tangible common equity ratio increased to 12.61% at September 30, 2021, from 11.01% at December 31, 2020.
  • As disclosed today in a separate press release, the Company announced a special dividend of $6.00 per share on the Company's common stock with a payment date of December 15, 2021, to holders of record on November 24, 2021. This will be the Company's second special cash dividend paid in 2021.
  • Allowance for credit losses at September 30, 2021, was 2.05% of loans held for investment, excluding $31.6 million of Small Business Administration (SBA) Paycheck Protection Program (PPP) loans, compared to 1.98% at December 31, 2020.
  • Nonperforming assets were $2.5 million at September 30, 2021 compared to $2.6 million at December 31, 2020. Nonperforming assets to total assets were 0.24% at September 30, 2021 and December 31, 2020.

BNCCORP, INC. (BNC or the Company) (OTCQX Markets: BNCC), which operates community banking and wealth management businesses in North Dakota and Arizona, and has mortgage banking offices in Illinois, Kansas, Missouri, Michigan, Arizona, and North Dakota, today reported financial results for the third quarter ended September 30, 2021.

Overview of Quarter

Net income in the third quarter of 2021, was $4.7 million, compared to $13.7 million in the same period of 2020. Third quarter 2021 earnings per diluted share were $1.32, versus $3.84 in the third quarter 2020. The year-over-year decrease was primarily due to lower mortgage revenues and lower net interest income, partially offset by lower non-interest expense and a reduction in provision for credit losses.

"Throughout 2020, we saw unprecedented levels of mortgage refinance activity that drove record results in our mortgage business," said Daniel J. Collins, BNC's Interim President and Chief Executive Officer. "This historic performance makes year-over-year comparisons challenging. As the industry returns to more normalized mortgage origination levels in 2021, and we transition from mortgage refinancing to purchase loan origination activity, we are very pleased with the performance of our mortgage business, as well as the overall performance, progress and health of BNC."

Third quarter 2021 net interest income decreased by $436 thousand to $7.5 million, or 5.5%, from the comparable 2020 quarter. Interest income decreased by $810 thousand, or 9.3%, from the 2020 third quarter due to lower balances and yields on loans partially offset by accretion of PPP fees. Third quarter 2021 interest expense decreased by $374 thousand, or 45.2%, due to a reduction in the cost of deposits, and a reduction in certificates of deposit balances.

Non-interest income in the third quarter of 2021 decreased by $15.4 million, from the same period in 2020. In the third quarter of 2021, mortgage banking revenues were $8.2 million, $15.7 million lower than the same period a year ago, during which the Company experienced a combination of historically high originations and margins. Wealth management revenues increased $106 thousand, or 22.8%, due to an increase in assets under administration.

Non-interest expense in the 2021 third quarter decreased by $3.4 million, or 23.5%, versus the third quarter of 2020 due to decreases in mortgage banking operations of $1.8 million, as well as a $1.6 million reduction in community banking and holding company expenses.

Nonperforming assets were $2.5 million at September 30, 2021, and $2.6 million at December 31, 2020. The ratio of nonperforming assets-to-total-assets was 0.24% for both periods. The Company did not record a provision for credit losses in the 2021 third quarter compared to $350 thousand in the third quarter of 2020. The allowance for credit losses increased to 2.05% of loans held for investment (excluding $31.6 million of PPP loans) at September 30, 2021, compared to 1.98% at December 31, 2020. The Company continues to monitor key industry data and will prudently adjust its allowance for credit losses as appropriate.

At September 30, 2021, the Company did not have any loans modified under Section 4013 of the CARES Act.

Tangible book value per common share at September 30, 2021, was $37.96, compared to $33.39 at December 31, 2020, an increase of 13.7%, or $4.57 per common share. The Company's tangible common equity capital ratio increased to 12.61% at September 30, 2021, from 11.01% at December 31, 2020.

In a separate press release issued today, the Company announced that its Board of Directors has declared a special cash dividend of $6.00 per share on the Company's common stock. The dividend is payable on December 15, 2021 to holder of record on November 24, 2021. This is the Company's second special cash dividend to be paid in 2021 as the Company paid an $8.00 per share special cash dividend on February 1, 2021.

Total assets were $1.1 billion at September 30, 2021, consistent with the level at December 31, 2020. Total deposits were $908.4 million at September 30, 2021, compared to $853.2 million at December 31, 2020.

Management Commentary

Collins continued, "We continued to manage our business through key transitions in the third quarter, delivering solid performance, managing expenses and building sequentially on the second quarter. As our mortgage business successfully transitions to more normalized performance and margins, we have adjusted our focus to a purchase loan model.

"While economic unpredictability persists and commercial lending competition remains high, we're seeing momentum among businesses and communities that is creating opportunities for loan growth.  Our superior customer service and support give us confidence in our ability to meet a broad range of financing needs. To this end, our focus is on building relationships and maintaining sensible lending practices, and continuing to enhance our strong, stable and forward-looking marketplace position.

"Additionally, our organization is committed to improving financial and operational performance. We're supported by BNC's strong balance sheet, and our commitment to exercising fiscal prudence while maximizing opportunity. As demonstrated by the special cash dividend we announced today, we also remain steadfast in our capital management philosophy that returns capital to shareholders. The special dividend demonstrates our continuing confidence in our financial strength."

2021 Versus 2020 Third Quarter Comparison

Net interest income for the third quarter of 2021 was $7.5 million, a decrease of $436 thousand, or 5.5%, from $7.9 million in the third quarter of 2020. The decrease primarily reflected lower loan balances and yields, partially offset accretion of PPP fees, lower cost of deposits, and a reduction in certificates of deposit. Net interest margin decreased to 2.93% in the 2021 third quarter, compared to 3.09% in the year-earlier period.

Third quarter interest income decreased $810 thousand, or 9.3%, to $7.9 million in 2021, compared to $8.7 million in the third quarter of 2020. The decrease is the result of lower loan balances, primarily lower balances of loans held for sale and PPP loans, in addition to lower yields on loans held for sale and loans held for investment. The yield on average interest-earning assets was 3.10% in the third quarter of 2021, compared to 3.42% in the 2020 third quarter.

The average balance of interest-earning assets in the 2021 third quarter decreased by $3.4 million versus the same period of 2020, primarily due to $139.3 million and $6.4 million increases in interest-bearing cash and debt securities, respectively, more than offset by decreases in average loans held for sale and loans held for investment including PPP loans. Interest income for loans held for investment decreased $260 thousand including the impact of $239 thousand in accretion of PPP fees. The average balance of loans held for investment decreased by $63.4 million with PPP loans accounting for $47.8 million of the decrease. The average balance of mortgage loans held for sale was $103.2 million, $85.1 million lower than the same period of 2020. Interest income from loans held for sale decreased $593 thousand due to lower average balances and a lower average yield on loans held for sale. The average balance of debt securities in the third quarter of 2021 was $194.4 million, $6.4 million higher than in the third quarter of 2020. Interest income from debt securities was $19 thousand lower compared to the same period of 2020 due a lower yield.

Interest expense in the third quarter of 2021 was $453 thousand, a decrease of $374 thousand, or 45.2%, from the 2020 period. The cost of interest-bearing liabilities was 0.25% during the quarter, compared to 0.43% in the same period of 2020. The cost of core deposits in the third quarters of 2021 and 2020 was 0.17% and 0.33%, respectively.

At September 30, 2021, credit metrics remained stable with $2.5 million of nonperforming assets, representing a 0.24% nonperforming assets-to-total-asset ratio, unchanged from December 31, 2020. The Company did not record a provision for credit losses in the third quarter of 2021, compared to a $350 thousand provision recorded in the third quarter of 2020.

Non-interest income for the third quarter of 2021 was $9.8 million, down $15.4 million, from $25.2 million in the 2020 third quarter. The decrease was driven by mortgage banking revenues of $8.2 million in the third quarter of 2021, versus $23.9 million in the prior-year period. As previously stated, the Company's mortgage business is managing through the ongoing cyclical transition to a lower level of originations compared to the historically high level of refinance activity and margins in the prior-year period. In the third quarter of 2021, BNC funded 1,376 mortgage loans with combined balances of $524.1 million, compared to 2,345 mortgage loans with combined balances of $831.6 million in the third quarter of 2020. Wealth management revenues increased $106 thousand, or 22.8%, as assets under administration increased relative to the 2020 period.  The sale of SBA loans resulted in gains on sales of loans of $175 thousand in the third quarter of 2021.

Non-interest expense for the third quarter of 2021 decreased $3.4 million, or 23.5%, to $11.2 million, from $14.6 million in the third quarter of 2020. Non-interest expenses related to lower mortgage operations activity decreased by $1.8 million, or 23.7%, as management continues to adjust the scale of operations based on the marketplace opportunity. Full-time equivalent employees related to mortgage operations were 141 at September 30, 2021, compared to 166 at December 31, 2020. Combined expenses for community banking and the holding company decreased by $1.6 million, or 23.3%, compared to the 2020 period primarily due to reduced severance and legal expense and an impairment charge on property recorded in the 2020 period.

In the third quarter of 2021, income tax expense was $1.4 million, compared to $4.4 million in the third quarter of 2020. The effective tax rate was 23.0% in the third quarter of 2021, compared to 24.5% in the same period of 2020.

Net income was $4.7 million, or $1.32 per diluted share, in the third quarter of 2021, versus $13.7 million, or $3.84 per diluted share, in the third quarter of 2020.

2021 Versus 2020 Nine-Month Comparison

Net interest income in the first nine months of 2021 was $23.9 million, an increase of $159 thousand, or 0.7%, from $23.8 million in 2020. Net interest income was stable as the impact of lower balances and yields on loans and debt securities was offset by accretion of PPP fees, higher balances of interest-bearing cash, reduced cost of deposits and borrowings and reduced certificates of deposit balances. Net interest margin decreased to 3.06% in the 2021 nine-month period, compared to 3.22% in 2020.

Interest income decreased $1.6 million, or 6.0%, to $25.7 million for the nine-month period of 2021, compared to $27.3 million in 2020. The decrease is the result of the impact of lower average balances and yields of loans and debt securities offset by an increase in PPP fees and balances of interest- bearing cash. The yield on average interest-earning assets was 3.29% in the 2021 nine-month period, compared to 3.70% in 2020. Interest expense in the first nine months of 2021 was $1.7 million, a decrease of $1.8 million, or 51.0%, from the 2020 period. The cost of interest-bearing liabilities was 0.30% in the first nine months, compared to 0.62% in the same period of 2020. The cost of core deposits in the first nine months of 2021 and 2020 was 0.22% and 0.47%, respectively.

The average balance of interest-earning assets in the first nine months of 2021 increased by $58.3  million versus the same period of 2020, primarily due to an increase in interest-bearing cash offset by decreased average debt securities, loans held for sale and loans held for investment. The average balance of loans held for investment decreased by $5.9 million, driven by customer liquidity and the sale of the Company's Golden Valley, Minnesota branch location. PPP loan fees increased $1.5 million during the 2021 nine-month period compared to the same period in 2020. The average balance of mortgage loans held for sale was $139.8 million, $7.5 million lower than the same period of 2020. Interest income from loans held for sale decreased $642 thousand due to the lower average balance and average yield. The average balance of debt securities in the first nine months of 2021 was $181.2 million, $33.6 million lower than in the first nine months of 2020. Combined with lower average yields, this resulted in a $1.2 million decrease in interest income.

Credit metrics remained stable with $2.5 million of nonperforming assets, representing a 0.24% nonperforming assets-to-total-assets ratio at September 30, 2021, and December 31, 2020. The Company did not record a provision for credit losses in the first nine months of 2021, compared to a $2.4 million provision recorded in the first nine months of 2020.

Non-interest income for the 2021 nine months was $37.0 million, compared to $62.3 million in 2020. Mortgage banking revenues were $32.1 million in the first nine months of 2021, a decrease of $25.5 million, or 44.3%, compared to $57.6 million in the first nine months of 2020. The decrease was largely due to lower margins, relative to the historically high margins of the prior year, and the decrease in the mortgage pipeline during 2021 as refinance activity decreased and production shifted to home purchase originations. In the first nine months of 2021, BNC funded 5,301 mortgage loans with combined balances of $1.9 billion, compared to 5,774 mortgage loans with combined balances of $2.1 billion in the first nine months of 2020. Wealth management revenues increased $337 thousand, or 25.5%, as assets under administration increased relative to the 2020 period. There were no gains on sales of debt securities in the 2021 period, compared to gains of $1.1 million in 2020. The sale of SBA loans resulted in gains on sales of loans of $271 thousand, while other non-interest income increased $854 thousand as the Company recorded a gain on the sale of its Golden Valley, Minnesota, branch during the nine months and received Small Business Investment Company (SBIC) profit distributions. Gains on sales of assets and distributions from SBIC's can vary significantly from period to period.

Non-interest expense for the first nine months of 2021 decreased $4.7 million, or 11.5%, to $36.4 million, from $41.1 million in 2020. Non-interest expenses related to mortgage operations decreased by $1.4 million while combined expenses for the community banking and holding company segments decreased by $3.3 million, or 16.4%, compared to the 2020 period.

During the nine-month period ended September 30, 2021, income tax expense was $5.9 million, compared to $10.4 million in the first nine months of 2020. The effective tax rate was 24.0% in the first nine months of 2021, compared to 24.5% in the same period of 2020.

Net income was $18.7 million, or $5.22 per diluted share, for the nine months ended September 30, 2021, versus $32.2 million, or $9.02 per diluted share in the first nine months of 2020.

Assets and Liabilities

Total assets were $1.1 billion at September 30, 2021, and December 31, 2020.

Total loans held for investment were $530.7 million at September 30, 2021. PPP loan balances, included in loans held for investment, were $31.6 million at September 30, 2021. PPP loans remaining from 2020 originations totaled $786 thousand. The Company continues to actively assist its customers in successfully navigating the forgiveness process. PPP loan balances originated in 2021 were $30.8 million at September 30, 2021. Loans held for sale at September 30, 2021, were $103.2 million, a decrease of $146.9 million when compared to December 31, 2020. Debt securities increased $23.3 million from year-end 2020 while cash and cash equivalent balances totaled $187.2 million at September 30, 2021, compared to $12.4 million at December 31, 2020.

Total deposits increased $55.2 million to $908.4 million at September 30, 2021, from $853.2 million at December 31, 2020. Deposit growth has been supported by the maintenance of customer liquidity, offset by a reduction of certificates of deposit.

At September 30, 2021, there were no FHLB advances outstanding, compared to $30.9 million at December 31, 2020.

Trust assets under administration increased 6.8%, or $26.3 million, to $410.9 million at September 30, 2021, from $384.6 million at December 31, 2020.

Asset Quality

The allowance for credit losses was $10.2 million at September 30, 2021, and $10.3 million at December 31, 2020. The allowance as a percentage of loans held for investment at September 30, 2021, increased to 1.93% from 1.81% at December 31, 2020. Excluding $31.6 million of PPP loans, which are 100% guaranteed by the SBA, the allowance for credit losses as a percentage of loans held for investment at September 30, 2021, increased to 2.05% compared to 1.98% at December 31, 2020.

Nonperforming assets, consisting of loans, were $2.5 million at September 30, 2021, and $2.6 million at December 31, 2020. The ratio of nonperforming assets-to-total-assets was 0.24% at September 30, 2021, and December 31, 2020. The Company did not hold any other real estate owned or repossessed assets at September 30, 2021, or at December 31, 2020.

At September 30, 2021, BNC had $9.4 million of classified loans and $2.5 million of loans on non-accrual. At December 31, 2020, BNC had $7.3 million of classified loans and $2.6 million of loans on non-accrual. BNC had $6.6 million of potentially problematic loans, which are risk rated "watch list", at September 30, 2021, compared with $9.1 million as of December 31, 2020.

The Company continues to monitor the effects of the pandemic and its potential impact on customers. BNC considers the pandemic, along with other factors, when monitoring the performance of its loan portfolio and adjusting its allowance for credit losses.

At September 30, 2021, the Company did not have any loans modified under Section 4013 of the CARES Act.

BNC's loans held for investment are concentrated geographically in North Dakota and Arizona which comprise 60% and 26% of the Company's total loan portfolio, respectively. The North Dakota economy is influenced by the energy and agriculture industries. Energy supply and demand factors have recently increased oil prices, benefiting the oil industry and ancillary services.  Legislation and economic conditions remain potential risks to energy markets and production activity and can present potential challenges to credit quality in North Dakota. Drought conditions are the primary risk facing the North Dakota agriculture industry in the 2021 operating year and entering 2022.  North Dakota livestock and grain operators face challenges that require close monitoring and could have an adverse impact on the state overall. The Arizona economy is influenced by the leisure and travel industries. Positive trends in both industries have been noted, but an extended slowdown in these industries may negatively impact credit quality in Arizona. BNC's portfolio is constructed of various sized loans spread over a large number of industry sectors, although the Company manages meaningful concentrations of loans in hospitality and commercial real estate.

The following table approximates the Company's significant concentrations by industry, excluding PPP loans of $31.6 million, as of September 30, 2021 (in thousands):

Loans Held for Investment by Industry Sector













September 30, 2021


December 31, 2020

Non-owner occupied commercial real estate – not otherwise categorized

$

150,127


30

%


$

143,361


28

%

Consumer, not otherwise categorized


76,972


15




76,363


15


Hotels


75,508


15




76,335


15


Healthcare and social assistance


34,741


7




37,632


7


Agriculture, forestry, fishing and hunting


30,775


6




27,321


5


Retail trade


22,696


5




26,129


5


Transportation and warehousing


22,007


4




24,897


5


Non-hotel accommodation and food service


20,481


4




23,530


5


Manufacturing


12,542


3




11,139


2


Mining, oil and gas extraction


11,366


2




20,223


4


Construction contractors


11,004


2




12,235


2


Other service


6,120


1




8,394


2


Arts, entertainment and recreation


4,847


1




7,279


1


Real estate and rental and leasing support services


4,332


1




7,735


1


Finance and insurance


3,985


1




676


-


All other


11,513


3




17,298


3


   Gross loans held for investment (excluding PPP loans)

$

499,016


100

%


$

520,547


100

%

The hospitality industry is still in the process of recovering from the economic effects of the COVID-19 pandemic with a primary focus on hotel occupancy and restaurant utilization trends. Hotel operators in BNC's loan portfolio are reporting positive trends, and in some cases stronger balance sheets. Despite positive trends within hospitality, caution remains as labor shortages limit capacity in some cases, and government and financial institution support is expiring.

The lasting impact of the pandemic remains uncertain. Vaccination efforts and relaxed government restrictions appear to be having a positive impact on economic activity. However, potential virus variants along with the potential for government mandated employee vaccinations create uncertainty and adverse impacts on the economy.  The Company's loan portfolio and credit risk could still experience adversity from pandemic related risks, and this potential risk remains qualitatively captured in the Company's allowance for credit losses.

Capital

Banks and bank holding companies operate under separate regulatory capital requirements. At September 30, 2021, the Company's capital ratios exceeded all regulatory capital thresholds, including the capital conservation buffer.

A summary of BNC's capital ratios at September 30, 2021, and December 31, 2020, is presented below:



September 30,

2021


December 31,

2020

BNCCORP, INC. (Consolidated)





   Tier 1 leverage


13.43%


11.74%

   Common equity tier 1 risk based capital


19.56%


14.65%

   Tier 1 risk based capital


21.82%


16.63%

   Total risk based capital


23.07%


17.88%

   Tangible common equity


12.61%


11.01%






BNC National Bank





   Tier 1 leverage


10.33%


10.92%

   Common equity tier 1 risk based capital


16.79%


15.47%

   Tier 1 risk based capital


16.79%


15.47%

   Total risk based capital


18.04%


16.72%

The Common Equity Tier 1 ratio, which is generally a comparison of a bank's core equity capital to its total risk weighted assets, is a measure of the current risk profile of the Bank's asset base from a regulatory perspective. The Tier 1 leverage ratio, which is based on average assets, does not consider the mix of risk-weighted assets.

The Company routinely evaluates the sufficiency of its capital to ensure compliance with regulatory capital standards and to serve as a source of strength for the Bank. The Company manages capital by assessing the composition of capital and the amounts available for growth, risk, or other purposes. During the third quarter of 2021, BNC National Bank paid a dividend of $15.0 million to the Holding Company to provide partial support of the $6.00 per share special cash dividend that the Company also announced today.

About BNCCORP, INC.

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 North Dakota and Arizona from 11 locations. BNC also conducts mortgage banking from 11 locations in Illinois, Kansas, Missouri, Michigan, Arizona and North Dakota.

This news release may contain "forward-looking statements" within the meaning of the safe harbor provisions 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", "at the present time". "plan", "optimistic", "intend", "estimate", "may", "will", "would", "could", "should", "future" and other expressions relating to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations regarding future market conditions and our ability to capture opportunities and pursue growth strategies, our expected operating results such as revenue growth and earnings and our expectations of the effects of the regulatory environment or current or future pandemics on our earnings for the foreseeable future. Forward-looking statements are neither historical facts nor assurances of future performance. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to: the impact of pandemics, the impact of current and future regulation; the 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 mortgage banking revenues and 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.

This press release contains references to financial measures, which are not defined in GAAP. Such non-GAAP financial measures include tangible common equity to total period end assets ratio. These non-GAAP financial measures have been included as the Company believes they are helpful for investors to analyze and evaluate the Company's financial condition.

(Financial tables attached)

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter
Ended September 30,


For the Nine Months
Ended September 30,

(In thousands, except per share data)


2021


2020


2021


2020

SELECTED INCOME STATEMENT DATA













Interest income


$

7,925


$

8,735


$

25,672


$

27,308

Interest expense



453



827



1,727



3,522

Net interest income



7,472



7,908



23,945



23,786

Provision for credit losses



-



350



-



2,400

Non-interest income



9,837



25,191



36,958



62,318

Non-interest expense



11,171



14,603



36,356



41,101

Income before income taxes



6,138



18,146



24,547



42,603

Income tax expense



1,410



4,446



5,887



10,438

Net income


$

4,728


$

13,700


$

18,660


$

32,165

EARNINGS PER SHARE DATA













Basic earnings per common share


$

1.32


$

3.84


$

5.22


$

9.03

Diluted earnings per common share


$

1.32


$

3.84


$

5.22


$

9.02

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter
Ended September 30,


For the Nine Months
Ended September 30,

(In thousands, except share data)


2021


2020


2021


2020

ANALYSIS OF NON-INTEREST INCOME













Bank charges and service fees


$

572


$

581


$

1,697


$

1,761

Wealth management revenues



570



464



1,656



1,319

Mortgage banking revenues



8,249



23,913



32,096



57,627

Gains on sales of loans, net



175



96



271



99

Gains on sales of debt securities, net



-



-



-



1,128

Other



271



137



1,238



384

Total non-interest income


$

9,837


$

25,191


$

36,958


$

62,318

ANALYSIS OF NON-INTEREST EXPENSE













Salaries and employee benefits


$

5,551


$

7,228


$

19,170


$

21,500

Professional services



1,226



2,140



4,565



5,260

Data processing fees



1,135



1,200



3,374



3,523

Marketing and promotion



1,251



998



3,227



3,967

Occupancy



547



522



1,621



1,580

Regulatory costs



119



77



352



182

Depreciation and amortization



312



352



956



1,066

Office supplies and postage



109



111



355



361

Other



921



1,975



2,736



3,662

Total non-interest expense


$

11,171


$

14,603


$

36,356


$

41,101

WEIGHTED AVERAGE SHARES













Common shares outstanding (a)



3,571,192



3,567,980



3,571,615



3,563,204

Dilutive effect of share-based compensation



648



439



535



2,018

Adjusted weighted average shares (b)



3,571,840



3,568,419



3,572,150



3,565,222



(a)   

Denominator for basic earnings per common share

(b)  

Denominator for diluted earnings per common share

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




As of

(In thousands, except share, per-share and full-time equivalent data)


September 30,

2021


December 31,

2020


September 30,

2020

SELECTED BALANCE SHEET DATA










Total assets


$

1,069,691


$

1,074,131


$

1,100,998

Loans held for sale-mortgage banking



103,171



250,083



239,033

Loans held for investment



530,702



570,890



606,429

Total loans



633,873



820,973



845,462

Allowance for credit losses



(10,249)



(10,324)



(10,005)

Cash and cash equivalents



187,189



12,443



9,421

Debt securities available for sale



207,044



183,717



186,535

Earning assets



1,013,183



999,473



1,028,812

Total deposits



908,388



853,158



880,982

Core deposits (1)



908,539



859,543



887,187

Other borrowings



15,153



52,289



65,809

Dividends payable



-



28,680



-

OTHER SELECTED DATA










Net unrealized gains in accumulated other comprehensive income


$

4,970


$

7,182


$

7,961

Trust assets under administration



410,913



384,588



358,872

Total common stockholders' equity



134,937



118,229



135,214

Tangible book value per common share (2)



37.96



33.39



38.19

Tangible book value per common share excluding accumulated other comprehensive income, net



36.56



31.36



35.94

Full time equivalent employees



284



319



313

Common shares outstanding



3,554,983



3,540,522



3,540,650

CAPITAL RATIOS










Tier 1 leverage (Consolidated)



13.43%



11.74%



12.94%

Common equity Tier 1 risk-based capital (Consolidated)



19.56%



14.65%



17.04%

Tier 1 risk-based capital (Consolidated)



21.82%



16.63%



19.05%

Total risk-based capital (Consolidated)



23.07%



17.88%



20.30%

Tangible common equity (Consolidated)



12.61%



11.01%



12.28%











Tier 1 leverage (Bank)



10.33%



10.92%



10.88%

Common equity Tier 1 risk-based capital (Bank)



16.79%



15.47%



16.01%

Tier 1 risk-based capital (Bank)



16.79%



15.47%



16.01%

Total risk-based capital (Bank)



18.04%



16.72%



17.26%

Tangible common equity (Bank)



10.91%



11.62%



11.62%













(1)

Core deposits consist of all deposits and repurchase agreements with customers.

(2)

Tangible book value per common share is equal to book value per common share.

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter
Ended September 30,


For the Nine Months
Ended September 30,

(In thousands)


2021


2020


2021


2020

AVERAGE BALANCES













Total assets


$

1,071,024


$

1,092,390


$

1,106,707


$

1,057,051

Loans held for sale-mortgage banking



103,197



188,311



139,828



147,323

Loans and leases held for investment



541,113



604,513



562,638



568,555

Total loans



644,310



792,824



702,466



715,878

Cash and cash equivalents



190,228



50,959



177,127



69,525

Debt securities available for sale



194,391



188,026



181,198



214,823

Earning assets



1,013,248



1,016,600



1,044,527



986,270

Total deposits



910,165



918,214



940,955



900,447

Core deposits



910,524



925,178



943,466



906,906

Total equity



134,484



128,022



130,878



113,812

KEY RATIOS













Return on average common stockholders' equity (a)



14.62%



44.88%



20.02%



39.40%

Return on average assets (b)



1.75%



4.99%



2.25%



4.06%

Net interest margin



2.93%



3.09%



3.06%



3.22%

Efficiency ratio (Consolidated)



64.54%



44.12%



59.70%



47.73%

Efficiency ratio (Bank)



63.94%



42.20%



58.93%



46.11%



(a)   

Return on average common stockholders' equity is calculated by using net income as the numerator and average common equity (less accumulated other comprehensive income (loss)) as the denominator.

(b)  

Return on average assets is calculated by using net income as the numerator and average total assets as the denominator.

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




As of

(In thousands)


September 30,

2021


December 31,

2020


September 30,

2020

ASSET QUALITY










Loans 90 days or more delinquent and accruing interest


$

1


$

1


$

-

Non-accrual loans



2,521



2,611



3,708

Total nonperforming loans


$

2,522


$

2,612


$

3,708

Total nonperforming assets


$

2,522


$

2,612


$

3,708

Allowance for credit losses


$

10,249


$

10,324


$

10,005

Troubled debt restructured loans


$

1,920


$

1,966


$

2,882

Ratio of total nonperforming loans to total loans



0.40%



0.32%



0.44%

Ratio of total nonperforming assets to total assets



0.24%



0.24%



0.34%

Ratio of nonperforming loans to total assets



0.24%



0.24%



0.34%

Ratio of allowance for credit losses to loans held for investment                



1.93%



1.81%



1.65%

Ratio of allowance for credit losses to total loans



1.62%



1.26%



1.18%

Ratio of allowance for credit losses to nonperforming loans



406%



395%



270%



For the Quarter
Ended September 30,


For the Nine Months
Ended September 30,

(In thousands)


2021


2020


2021


2020

Changes in Nonperforming Loans:













Balance, beginning of period


$

2,601


$

4,163


$

2,612


$

2,033

Additions to nonperforming



42



-



154



2,528

Charge-offs



(45)



-



(128)



(235)

Reclassified back to performing



-



(349)



-



(349)

Principal payments received



(76)



(106)



(116)



(264)

Transferred to repossessed assets



-



-



-



(5)

Balance, end of period


$

2,522


$

3,708


$

2,522


$

3,708

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter
Ended September 30,


For the Nine Months
Ended September 30,

(In thousands)


2021


2020


2021


2020

Changes in Allowance for Credit Losses:













Balance, beginning of period


$

10,293


$

9,680


$

10,324


$

8,141

Provision



-



350



-



2,400

Loans charged off



(50)



(32)



(119)



(556)

Loan recoveries



6



7



44



20

Balance, end of period


$

10,249


$

10,005


$

10,249


$

10,005














Ratio of net charge-offs to average total loans



(0.007)%



(0.003)%



(0.011)%



(0.075)%

Ratio of net charge-offs to average total loans, annualized



(0.027)%



(0.013)%



(0.014)%



(0.100)%



As of

(In thousands)


September 30,

2021


December 31,

2020


September 30,

2020

CREDIT CONCENTRATIONS










North Dakota










Commercial and industrial


$

40,470


$

48,745


$

49,601

Construction



5,736



4,355



2,809

Agricultural



30,663



26,899



29,289

Land and land development



6,581



5,676



6,258

Owner-occupied commercial real estate



36,376



37,185



35,578

Commercial real estate



103,844



100,456



101,872

Small business administration



22,279



36,111



51,195

Consumer



71,608



72,397



76,089

Subtotal gross loans held for investment


$

317,557


$

331,824


$

352,691

Consolidated










Commercial and industrial


$

56,454


$

71,503


$

72,790

Construction



20,708



21,748



19,113

Agricultural



30,816



27,092



29,634

Land and land development



8,086



8,603



9,630

Owner-occupied commercial real estate



64,962



67,399



58,975

Commercial real estate



196,329



190,939



196,646

Small business administration



71,771



102,064



135,306

Consumer



81,536



81,783



85,430

Total gross loans held for investment


$

530,662


$

571,131


$

607,524

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SOURCE BNCCORP, INC.

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