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BNCCorp Inc

BNCCORP, INC. REPORTS THIRD QUARTER NET INCOME OF $2.1 MILLION, OR $0.59 PER DILUTED SHARE

Highlights

  • Net income during the third quarter of 2024 increased $564 thousand or 37.4%, to $2.1 million, or $0.59 per diluted share, from $1.5 million, or $0.42 per diluted share, in the 2023 period.
  • Third quarter 2024 return on average assets of 0.89% compared to 0.65% in the 2023 period.
  • The efficiency ratio improved to 69.02% in the third quarter of 2024 versus 75.50% in the third quarter of 2023.
  • For the quarter, the Community Banking segment reported net income of $2.4 million, or $0.67 per diluted share, compared to net income of $2.2 million, or $0.61 per diluted share, in the same period of 2023.
  • Yield on loans held for investment was 5.58% for the third quarter of 2024 compared to 5.36% in the third quarter of 2023.
  • Loans held for investment have increased $14.4 million, or 2.2%, to $683.2 million at September 30, 2024 from $668.8 million at December 31, 2023.
  • The ratio of loans held for investment-to-deposits increased to 85.8% at September 30, 2024 from 79.9% at December 31, 2023.
  • Allowance for credit losses as of September 30, 2024, increased to 1.40% of loans held for investment compared to 1.39% as of December 31, 2023.

BISMARCK, N.D. , Nov. 1, 2024 /PRNewswire/ --BNCCORP, INC. (BNC or the Company) (OTCQX Markets: BNCC), which operates community banking and wealth management businesses in North Dakota and Arizona, today reported financial results for the third quarter ended September 30, 2024.

Management Commentary

"The Company delivered solid third-quarter results with net income rising by $564 thousand compared to the same period last year, reflecting our ongoing focus on consistent execution and prudent expense management," said Daniel J. Collins, BNC's President and Chief Executive Officer. "While loan growth was tempered by pay-offs during the quarter, we continue to see strong lending pipelines and registered improved yields on loans held for investment, demonstrating resilience in a challenging environment. While the cost of funds has been slowly rising in 2024 the upward pricing pressure has abated somewhat after the Fed's recent actions. We've maintained a strong margin of 3.50% for the quarter and 3.53% for the first nine months of 2024 without compromising growth, liquidity requirements, or the strength of our customer relationships. Importantly, we remain well capitalized with a consolidated tangible common equity capital ratio of 11.65, while maintaining robust liquidity, ensuring we can navigate uncertainties and supporting our clients' needs. Our continued focus on fundamental community banking objectives has contributed to our consistent earnings of $1.7 million, $1.9 million, and $2.1 million sequentially in each of the first three quarters of 2024 despite continued economic uncertainty."

Mr. Collins added, "As we move into the final quarter of 2024, our focus remains on steady growth, disciplined lending, prudent expense control, and strong risk management. Our efficiency ratio also continues to improve, demonstrating our ability to manage costs effectively, which will remain a key focus moving forward. In short, we believe our strategic posture remains sound and our ability to execute on that strategy remains one of our strengths."

2024 Versus 2023 Third Quarter Comparison




SEGMENT DATA

For the Quarter Ended September 30, 2024


(in thousands)

Community

Banking


Mortgage

Banking (a)


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

7,928


$

-


$

(249)


$

-


$

7,679

Provision for credit losses


110



-



-



-



110

Non-interest income


1,492



-



594



(672)



1,414

Non-interest expense


6,222



-



726



(672)



6,276

Income (loss) before taxes


3,088



-



(381)



-



2,707

Income tax expense (benefit)


725



-



(89)



-



636

    Net income (loss)

$

2,363


$

-


$

(292)


$

-


$

2,071

















For the Quarter Ended September 30, 2023



Community

Banking


Mortgage

Banking


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

7,908


$

171


$

(219)


$

-


$

7,860

Provision for credit losses


230



-



-



-



230

Non-interest income


1,578



(381)



559



(638)



1,118

Non-interest expense


6,379



322



715



(638)



6,778

Income (loss) before taxes


2,877



(532)



(375)



-



1,970

Income tax expense (benefit)


683



(132)



(88)



-



463

    Net income (loss)

$

2,194


$

(400)


$

(287)


$

-


$

1,507


(a)     The Company divested the mortgage banking segment in 2023.

The Community Banking Segment reported net income of $2.4 million, or $0.67 per diluted share, for the quarter compared to $2.2 million, or $0.61 per diluted share, in the third quarter of 2023. Interest expense increased by $708 thousand when compared to the 2023 period due to Federal Reserve rate increases and a $5.7 million increase in average interest bearing deposits compared to the prior year period. The increase in interest expense was also offset by $728 thousand higher interest income from loan growth and increased yields on earning assets. The Community Banking Segment reported $86 thousand in lower non-interest income primarily due to a $47 thousand decrease in off balance sheet deposit income and $24 thousand less in interchange income along with lower overdraft fees on deposit accounts. Non-interest expense decreased by $157 thousand in the 2024 period primarily due to a reversal of $150 thousand from the mortgage obligation reserve, at September 30, 2024 there remains $368 thousand of reserves.  The Company reduced expenses in a number of categories, but these reductions were substantially offset by higher data processing fees and increased depreciation expense during the current period. The Company has lowered the number of its full-time equivalent employees by 4.9% since December 31, 2023.

Consolidated net interest income for the third quarter of 2024 was $7.7 million, a decrease of $181 thousand, or 2.3%, from $7.9 million in the third quarter of 2023. Net interest margin was 3.50% in the third quarter of 2024 compared to 3.57% reported in the prior year period. The increase in interest-bearing cash and loans held for investment was more than offset by a lower volume of debt securities, loans held for sale, and a meaningful increase in the cost of deposits.

On a consolidated basis, third-quarter interest income increased $558 thousand, or 5.0%, from $11.1 million in the 2023 period to $11.6 million in 2024. The 5.31% average yield on interest-earning assets in the quarter improved from the 5.04% in the third quarter of 2023 because of a $17.9 million increase in cash and cash equivalents and a $35.9 million year-over-year increase in the average balance of loans held for investment. Those increases were offset by lower debt securities and loans held for sale. The weighted average interest rate on loans held for investment originated in the third quarter of 2024 was 7.63%, compared to 7.46% during the third quarter 2023.

Consolidated interest expense in the third quarter of 2024 was $4.0 million, an increase of $739 thousand from the 2023 period. As a result, the cost of core deposits in the third quarter of 2024 rose modestly to 1.84% versus 1.47% in the third quarter of 2023.

The consolidated average balance of deposits decreased by $1.7 million compared to the third quarter of 2023. The cost of interest-bearing liabilities was 2.45% during the third quarter of 2024, compared to 2.01% in the same period of 2023. The Company has managed its overall cost of deposits at levels well below the prevailing brokered deposit rates offered by national brokerage firms even while staying focused on maintaining strong liquidity levels.

As of September 30, 2024, nonperforming assets were $5.9 million, representing a ratio of nonperforming assets to total assets of 0.64%, an increase from the $3.4 million in nonperforming assets, a 0.35% ratio of nonperforming assets to total assets, held on December 31, 2023. At September 30, 2024, $4.8 million of the $5.9 million in nonperforming loans were SBA loans supported by material government guarantees. When excluding the loan balances covered by government guarantees, the Company's non-forming assets to total assets ratio was 0.23% on September 30, 2024. The Company recorded a $110 thousand provision for credit losses in the third quarter of 2024 compared to a $230 thousand provision in the third quarter of 2023. The allowance for credit losses increased very slightly to 1.40% of loans held for investment as of September 30, 2024 compared to 1.39% on December 31, 2023.

Non-interest income for the Community Banking Segment during the third quarter of 2024 was $1.5 million, compared to $1.6 million in the 2023 third quarter. Bank charges and service fees were $87 thousand lower quarter-over-quarter primarily due to lower deposits held in one-way sell positions. Using an associated banking network, the Company generates fee income on deposits not otherwise deployed by placing those deposits with other financial institutions to meet their liquidity needs. The deposits can be reclaimed for future liquidity use by the Company at any time. Fees derived from the movement of deposits off the balance sheet began late in the first quarter of 2022 and can fluctuate significantly based on our customers' excess funding needs. As of September 30, 2024, off-balance sheet deposits were $20.1 million compared to $34.8 million as of December 31, 2023. Consolidated other income in the third quarter of 2024 decreased by $6 thousand compared to previous year period.

Non-interest expense for the Community Banking Segment during the third quarter of 2024 decreased $157 thousand, or 2.5%, year-over-year, primarily due to a reversal of $150 thousand from the mortgage obligation reserve.  The Company reported increased data processing and depreciation expense, but these increases were more than offset by lower expenses in other categories when compared to the same period of 2023.

In the third quarter of 2024, consolidated income tax expense was $636 thousand, compared to $463 thousand in the third quarter of 2023. Despite this increase, the Company's effective tax rate remained unchanged at 23.5%.

Tangible book value per common share on September 30, 2024, was $30.60, compared to $30.38 at December 31, 2023. The increase in tangible book value per common share was driven by earnings and a decrease in accumulated other comprehensive loss during the period, offset by the $2.25 dividend declared on February 2, 2024 and the repurchase of 50,000 shares of the Company's common stock at a total cost of $1,162,500, or $23.25 per share, excluding the cost of commissions, transaction charges, and taxes. The Company's tangible common equity capital ratio improved to 11.65% as of September 30, 2024, compared to 11.19% on December 31, 2023.

2024 Versus 2023 Nine-Month Comparison


SEGMENT DATA

For the Nine Months Ended September 30, 2024


(in thousands)

Community

Banking


Mortgage

Banking (a)


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

23,851


$

-


$

(716)


$

-


$

23,135

Provision for credit losses


355



-



-



-



355

Non-interest income


4,659



-



1,731



(1,970)



4,420

Non-interest expense


19,464



-



2,293



(1,970)



19,787

Income (loss) before taxes


8,691



-



(1,278)



-



7,413

Income tax expense (benefit)


2,042



-



(300)



-



1,742

    Net income (loss)

$

6,649


$

-


$

(978)


$

-


$

5,671

















For the Nine Months Ended September 30, 2023



Community

Banking


Mortgage

Banking


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

24,519


$

473


$

(648)


$

-


$

24,344

Provision for credit losses


635



-



-



-



635

Non-interest income


5,755



3,638



1,630



(2,562)



8,461

Non-interest expense


19,068



8,781



2,237



(2,562)



27,524

Income (loss) before taxes


10,571



(4,670)



(1,255)



-



4,646

Income tax expense (benefit)


2,545



(1,158)



(295)



-



1,092

    Net income (loss)

$

8,026


$

(3,512)


$

(960)


$

-


$

3,554



(a)

The Company divested the mortgage banking segment in 2023.

The Community Banking Segment reported net income of $6.6 million, or $1.68 per diluted share, in the first nine months of 2024 compared to $8.0 million, or $2.24 per diluted share, in the same period of 2023. Interest expense increased by $3.9 million when compared to the 2023 period because of rate changes made by the Federal Reserve in addition to the $15.6 million increase in average interest bearing deposits when compared to the prior year period. The increase in interest expense during the current period was partially offset by $3.3 million higher interest income from loan growth and increased yields on earning assets. For the first nine months of 2024, the Community Banking Segment reported $1.1 million lower non-interest income compared to the same period of 2023 primarily due to a $421 thousand decrease in off-balance sheet deposit income and $662 thousand less in management fee income from the Mortgage Segment that was partially offset by higher SBIC and BOLI revenues when compared to 2023 period. Non-interest expense was higher in the 2024 period due to the effect of significant inflationary pressures on salaries and benefits, increased data processing fees, regulatory and other expense that were partially offset by lower professional services and marketing expense compared to the same period in 2023. As noted above, the Company has lowered the number of its full-time equivalent employees by 4.9% since December, 31, 2023.

Consolidated net interest income in the first nine months of 2024 was $23.1 million, a decrease of $1.2 million, or 5.0%, from $24.3 million in the first nine months of 2023. Net interest margin was 3.53% in the 2024 nine-month period compared to 3.74% reported in the prior year period. The increase in interest bearing cash and loans held for investment at higher yields was more than offset by a lower volume of debt securities and loans held for sale and a significant increase in the cost of deposits.

On a consolidated basis, the 2024 nine-month period interest income increased $2.8 million, or 8.8%, from $31.8 million to $34.6 million. The 5.28% average yield on interest-earning assets in the first nine months of 2024 was higher than the 4.89% average yield in the first nine months of 2023 because of a $44.1 million year-over-year increase in the average balance of loans held for investment at higher yields and higher yields and balances of cash and cash equivalents. Those increases were partially offset by lower average balances of debt securities and loans held for sale.

Consolidated interest expense in the first nine months of 2024 was $11.4 million, an increase of $4.0 million from the 2023 period. As a result, the cost of core deposits in the first nine months of 2024 rose to 1.77% versus 1.12% in the first nine months of 2023.

The average balance of deposits increased by $2.8 million compared to the first nine months of 2023. The cost of interest-bearing liabilities was 2.38% during the first nine months of 2024, compared to 1.59% in the same period of 2023. The Company has managed its overall cost of deposits at levels well below the prevailing brokered deposit rates offered by national brokerage firms even while staying focused on maintaining strong liquidity levels.

Non-interest income for the Community Banking Segment in the first nine months of 2024 was $4.7 million, compared to $5.8 million in the first nine months of 2023. Bank charges and service fees were $497 thousand lower period-over-period primarily due to lower deposits held in one-way sell positions. Fees derived from the movement of deposits off the balance sheet began late in the first quarter of 2022 and can fluctuate significantly based on our customers' excess funding needs. As of September 30, 2024, off-balance sheet deposits amounted to $20.1 million compared to $34.8 million as of December 31, 2023. Consolidated other income in the first nine months of 2024 increased by $204 thousand compared to the first nine months of 2023 because of a reduction of $142 thousand on losses on sale of fixed assets when compared to the 2023 period along with higher SBIC and BOLI revenue recorded in 2024.

Non-interest expense for the Community Banking Segment in the first nine months of 2024 increased $396 thousand, or 2.1%, year-over-year. The modest increase is a result of expense management efforts that have been largely offset by inflationary pressures on salaries and benefits and data processing expenses.

During the nine-month period ended September 30, 2024, consolidated income tax expense was $1.7 million, compared to $1.1 million in the first nine months of 2023. Even so, the Company's effective tax rate was 23.5% in the first nine months of 2024, unchanged from the same period of 2023.

Assets and Liabilities

At the consolidated level, total assets were $924.4 million at September 30, 2024 versus $968.2 million at December 31, 2023. Total loans held for investment were $683.2 million on September 30, 2024 compared to $668.8 million on December 31, 2023. Debt securities decreased $24.2 million from year-end 2023, primarily due to normal amortization, while cash and cash equivalent balances totaled $69.2 million on September 30, 2024 compared to $102.5 million on December 31, 2023.

Total deposits decreased $41.4 million to $795.8 million as of September 30, 2024, from an elevated balance of $837.2 million on December 31, 2023, a move in line with deposit balances reported during the second and third quarters of 2023. During 2023, the Company experienced higher levels of customers deploying excess deposit balances to national brokered deposits to capture short-term rates offered in the market, most often by non-bank brokerage firms. As the Company experienced during 2023, off-balance sheet deposits can fluctuate significantly as a substantial portion of these deposits moved to higher rate opportunities in the short-term markets. The Company remains committed to cultivating new deposit relationships and prioritizing liquidity.

The following table provides additional detail to the Company's total deposit relationships:

As of

(In thousands)


September 30,

2024


December 31,

2023


September 30,

2023

Deposits:










Non-interest-bearing


$

174,620


$

184,442


$

180,045

Interest-bearing –










Savings, interest checking and money market



540,910



582,855



543,909

Time deposits



80,297



69,906



65,572

Total on balance sheet deposits



795,827



837,203



789,526











Off-balance sheet deposits (1)



20,087



34,792



40,232











Total available deposits


$

815,914


$

871,995


$

829,758



(1)

The off-balance sheet deposits above do not include off-balance sheet time deposits that can be brought back on the balance sheet at various future maturity dates. As of September 30, 2024, the Company managed off-balance sheet time deposit balances of $20.1 million, compared to $18.7 million time deposit balances as of December 31, 2023 and $20.7 million time deposit balances as of September 30, 2023.

The Company remains highly focused on meeting the needs of its customers and ensuring deposit rates reflect changing market conditions. The Company estimates that deposit insurance and other deposit protection programs secure more than 70% of its customers' deposit balances. This fact, combined with our strong balance sheet and sustained management focus on the Company's relationship-focused culture, has contributed to the Company's ability to maintain a significant deposit base.

Off-balance sheet accounts are primarily utilized to accommodate larger business customers with significant deposits who require daily access to funds and desire FDIC insurance coverage. These off-balance sheet deposits were $34.8 million at year-end 2023 and decreased to $20.1 million at September 30, 2024. Off-balance sheet deposits can fluctuate greatly as customers' needs and objectives evolve. The Company earns non-interest income through the associated banking network for the utilization of these funds.

Trust assets under administration increased 9.7%, or $37.8 million, to $426.6 million at September 30, 2024, from $388.8 million at December 31, 2023. During the first nine months of 2024, the Company benefited from material market value increases in trust assets as well as the acquisition of new assets under administration.

Asset Quality

The allowance for credit losses was $9.5 million as of September 30, 2024, versus $9.3 million on December 31, 2023. The allowance as a percentage of loans held for investment on September 30, 2024 increased slightly from 1.39% as of December 31, 2023 to 1.40% at current quarter end.

Past due loans for a period of 31-89 days decreased to $2.5 million as of September 30, 2024, compared to $4.8 million as of December 31, 2023. Nonperforming assets were $5.9 million on September 30, 2024, compared to $3.4 million on December 31, 2023. The increase in nonperforming assets is primarily due to the movement of one large SBA loan to non-accrual status. The ratio of nonperforming assets-to-total-assets was 0.64% at September 30, 2024 versus 0.35% at December 31, 2023. At September 30, 2024, $4.8 million, or 81%, of the $5.9 million in nonperforming loans were SBA loans that are supported by material government guarantees. When excluding the loan balances covered by government guarantees, the Company's non-forming assets to total assets ratio was 0.23% on September 30, 2024. As of September 30, 2024, the Company did not hold any other real estate and held $48 thousand in repossessed assets. As of December 31, 2023, the Company did not hold any other real estate and held $33 thousand in repossessed assets.

As of September 30, 2024, classified loans were $5.2 million compared to year-end 2023 where the Company held $5.3 million of classified loans. As of September 30, 2024 and December 31, 2023, the Company had $14.0 million and $2.4 million, respectively, of potentially problematic loans, which are risk-rated as "watch list".

Significant macroeconomic and geopolitical factors are present and evolving; the Company continues to monitor the possible impact of these factors on the performance of the loan portfolio.

BNC's loans held for investment are geographically concentrated in North Dakota and Arizona, comprising 57% and 22%, respectively, of the Company's total loans held for investment portfolio.

The North Dakota economy is influenced by the energy and agriculture industries. Changes in energy supply and demand have recently caused an increase in oil prices to the benefit of the oil industry and ancillary services. Potential risks to North Dakota's energy industry include the possibility of adverse national legislation and changes in economic conditions that reduce energy production. Depending on the severity of their impact, these factors could present potential challenges to credit quality in North Dakota.

The Arizona economy continues to diversify, but continues to be 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. While the Company's portfolio includes various sized loans spread over a large number of industry sectors, it has meaningful concentrations of loans to the hospitality and commercial real estate industries.

The following table approximately describes the Company's concentrations by industry:

Loans Held for Investment by Industry Sector












(in thousands)

September 30, 2024


December 31, 2023

Non-owner Occupied Commercial Real estate – not otherwise categorized

$

194,287


29

%


$

198,428


30

%

Consumer, not otherwise categorized


103,861


15




99,702


15


Hotels


82,160


12




83,985


13


Agriculture, forestry, fishing and hunting


39,468


6




33,503


5


Retail trade


32,435


5




35,827


5


Transportation and warehousing


29,602


4




27,905


4


Healthcare and social assistance


29,126


4




32,011


5


Art, entertainment and recreation


27,834


4




27,507


4


Non-hotel accommodation and food service


26,107


4




24,637


4


Mining, oil and gas extraction


20,603


3




22,149


3


Real estate and rental and leasing support services


16,341


2




9,804


2


Other service


13,753


2




11,940


2


Construction contractors


12,823


2




16,082


2


Manufacturing


11,755


2




7,801


1


Professional, scientific, and technical services


9,815


2




9,570


1


Finance and insurance


8,957


1




6,781


1


Public administration


7,384


1




7,837


1


Educational services


6,075


1




4,246


1


All other


9,685


1




8,051


1


   Gross loans held for investment

$

682,071


100

%


$

667,766


100

%

The Company's loans to the hospitality industry have shown signs of improved credit quality that are reflected by improved 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 these positive indications, labor shortages limit the ability of the industry to fully capitalize on these trends and the potential for inflationary impacts on travel and leisure activities continue to be closely monitored. As of September 30, 2024, the Company's loans related to office space were 3.41% of loans held for investment, and are primarily concentrated in North Dakota, with only 0.78% within the Arizona market.

Capital

Banks and bank holding companies operate under separate regulatory capital requirements. As of September 30, 2024, the Company's capital ratios exceeded all regulatory capital thresholds, including the capital conservation buffer.

A summary of BNC's capital ratios is presented below:

September 30,

2024


December 31,

2023

BNCCORP, INC. (Consolidated)





   Tier 1 leverage


14.21 %


14.52 %

   Common equity tier 1 risk based capital


14.15 %


14.58 %

   Tier 1 risk based capital


16.05 %


16.49 %

   Total risk based capital


17.24 %


17.64 %

   Tangible common equity


11.65 %


11.19 %






BNC National Bank





   Tier 1 leverage


13.33 %


12.54 %

   Common equity tier 1 risk based capital


15.05 %


14.25 %

   Tier 1 risk based capital


15.05 %


14.25 %

   Total risk based capital


16.24 %


15.40 %

Tangible common equity


12.49 %


10.96 %

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 regularly 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.

The Company made an election at the adoption of BASEL III to exclude changes in accumulated other comprehensive income from the calculation of regulatory ratios.

The decrease in consolidated capital ratios was primarily due to the $2.25 one-time special dividend declared and paid in the first quarter of 2024. The dividend was paid from cash being held at the holding company.

Share Repurchases

In December 2020, our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 175,000 shares of BNCCORP, INC. outstanding common stock. During the first quarter of 2024, the Company repurchased 50,000 shares of common stock for a total cost of $1,162,500, or $23.25 per share, excluding the cost of commissions, transaction charges and taxes. No other share repurchase of common stock were made by the Company during 2024. As of September 30, 2024, there was 125,000 shares remaining under the Board of Directors' current authorized share repurchase program.

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.

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 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 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)


2024


2023


2024


2023

INCOME STATEMENT













Interest income


$

11,644


$

11,086


$

34,572


$

31,789

Interest expense



3,965



3,226



11,437



7,445

Net interest income



7,679



7,860



23,135



24,344

Provision for credit losses



110



230



355



635

Net interest income after provision for credit losses



7,569



7,630



22,780



23,709

Non-interest income













Bank charges and service fees



728



815



2,295



2,792

Wealth management revenues



510



504



1,510



1,474

Mortgage banking revenues



-



(381)



-



3,767

Gains on sales of loans, net



7



5



10



15

Gains on sales of debt securities, net



-



-



-



12

Other



169



175



605



401

Total non-interest income



1,414



1,118



4,420



8,461

Non-interest expense













Salaries and employee benefits



3,569



3,673



11,381



13,677

Professional services



264



529



782



3,115

Data processing fees



898



862



2,605



2,915

Marketing and promotion



212



225



594



2,954

Occupancy



387



382



1,155



1,376

Regulatory costs



137



134



409



334

Depreciation and amortization



276



261



815



838

Office supplies and postage



83



94



281



322

Other



450



618



1,765



1,993

Total non-interest expense



6,276



6,778



19,787



27,524

Income before taxes



2,707



1,970



7,413



4,646

Income tax expense



636



463



1,742



1,092

Net income


$

2,071


$

1,507


$

5,671


$

3,554














WEIGHTED AVERAGE SHARES













Common shares outstanding (a)



3,533,413



3,578,029



3,547,895



3,577,216

Dilutive effect of share-based compensation



1,193



3,193



4,167



2,585

Adjusted weighted average shares (b)



3,534,606



3,581,222



3,552,062



3,579,801














EARNINGS PER SHARE DATA













Basic earnings per common share


$

0.59


$

0.42


$

1.60


$

0.99

Diluted earnings per common share


$

0.59


$

0.42


$

1.60


$

0.99



(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,

2024


December 31,

2023


September 30,

2023

BALANCE SHEET DATA










Cash and cash equivalents


$

69,210


$

102,454


$

51,366

Debt securities available for sale



135,594



159,772



158,016

FRB and FHLB stock



2,387



2,372



2,938

Loans held for sale-mortgage banking



-



-



120

Loans held for investment



683,201



668,808



665,026

Allowance for credit losses



(9,531)



(9,284)



(9,146)

Net loans held for investment



673,670



659,524



655,880

Premises and equipment, net



10,893



10,955



10,951

Operating lease right of use asset



708



938



1,020

Accrued interest receivable



3,951



4,206



3,851

Other



27,994



27,984



29,215

Total assets


$

924,407


$

968,205


$

913,357











Deposits:










Non-interest-bearing


$

174,620


$

184,442


$

180,045

Interest-bearing –










Savings, interest checking and money market



540,910



582,855



543,909

Time deposits



80,297



69,906



65,572

Total deposits



795,827



837,203



789,526

Guaranteed preferred beneficial interest in Company's subordinated debentures



15,464



15,464



15,000

Accrued interest payable



1,236



937



687

Accrued expenses



2,503



4,105



3,630

Operating lease liabilities



799



1,048



1,134

Other



824



1,030



1,133

Total liabilities



816,653



859,787



811,110

Common stock



35



36



36

Capital surplus – common stock



26,882



26,572



26,670

Retained earnings



90,714



93,186



91,035

Treasury stock



(2,687)



(1,528)



(1,665)

Accumulated other comprehensive income, net



(7,190)



(9,848)



(13,829)

Total stockholders' equity



107,754



108,418



102,247

Total liabilities and stockholders' equity


$

924,407


$

968,205


$

913,357











OTHER SELECTED DATA










Trust assets under administration


$

426,639


$

388,829


$

369,377

Core deposits (1)


$

795,827


$

837,203


$

789,526

Tangible book value per common share (2)


$

30.60


$

30.38


$

28.71

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


$

32.64


$

33.13


$

32.59

Full time equivalent employees



137



144



145

Common shares outstanding



3,521,710



3,569,210



3,561,334



(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)


AVERAGE BALANCE, YIELD EARNED, AND COST PAID


For the Quarter Ended

September 30, 2024


For the Quarter Ended

September 30, 2023


Quarter-Over-Quarter

Comparison

(dollars in thousands)


Average Balance


Interest Earned or Paid


Average Yield or Cost


Average Balance


Interest Earned or Paid


Average Yield or Cost


Change Due to












Rate


Volume


Total

Assets


























Interest-bearing due from banks


$

58,888


$

800


5.40 %


$

40,980


$

561


5.44 %


$

(2)


$

241


$

239

FRB and FHLB stock



2,387



38


6.33 %



2,938



36


4.85 %



9



(7)



2

Debt securities available for sale



134,947



1,157


3.41 %



163,192



1,322


3.21 %



77



(242)



(165)

Loans held for sale-mortgage banking



-



-


0.00 %



24,378



384


6.24 %



(192)



(192)



(384)

Loans held for investment



686,015



9,649


5.58 %



650,109



8,783


5.36 %



371



495



866

Allowance for credit losses



(9,441)



-


0.00 %



(8,980)



-


0.00 %



-



-



-

    Total


$

872,796


$

11,644


5.31 %


$

872,617


$

11,086


5.04 %


$

263


$

295


$

558



























Liabilities


























Interest checking and money market


$

506,218


$

2,979


2.33 %


$

515,959


$

2,655


2.04 %


$

278


$

46


$

324

Savings



43,480



12


0.11 %



43,957



12


0.11 %



-



-



-

Time deposits



77,851



706


3.61 %



61,909



296


1.90 %



303



107



410

Short-term borrowings



3



-


0.00 %



-



-


0.00 %



-



-



-

Subordinated debentures



15,464



268


6.90 %



15,000



263


6.95 %



(2)



7



5

    Total


$

643,016


$

3,965


2.45 %


$

636,825


$

3,226


2.01 %


$

579


$

160


$

739

Net Interest Income





$

7,679







$

7,860












Net Interest Spread








2.85 %








3.03 %










Net Interest Margin








3.50 %








3.57 %










 

AVERAGE BALANCE, YIELD EARNED, AND COST PAID


For the Nine Months Ended

September 30, 2024


For the Nine Months Ended

September 30, 2023


Nine Month

Comparison

(dollars in thousands)


Average Balance


Interest Earned or Paid


Average Yield or Cost


Average Balance


Interest Earned or Paid


Average Yield or Cost


Change Due to












Rate


Volume


Total

Assets


























Interest-bearing due from banks


$

63,543


$

2,596


5.46 %


$

36,351


$

1,353


4.98 %


$

142


$

1,101


$

1,243

FRB and FHLB stock



2,383



109


6.11 %



2,984



108


4.84 %



25



(24)



1

Debt securities available for sale



139,848



3,594


3.43 %



169,259



4,060


3.21 %



265



(731)



(466)

Loans held for sale-mortgage banking



-



-


0.00 %



35,724



1,514


5.67 %



(757)



(757)



(1,514)

Loans held for investment



678,529



28,273


5.55 %



634,460



24,754


5.22 %



1,711



1,808



3,519

Allowance for credit losses



(9,385)



-


0.00 %



(8,890)



-


0.00 %



-



-



-

    Total


$

874,918


$

34,572


5.28 %


$

869,888


$

31,789


4.89 %


$

1,380


$

1,403


$

2,783



























Liabilities


























Interest checking and money market


$

511,758


$

8,817


2.30 %


$

507,211


$

6,135


1.62 %


$

1,716


$

966


$

2,682

Savings



43,277



35


0.11 %



48,306



35


0.10 %



4



(4)



-

Time deposits



72,653



1,791


3.29 %



56,620



526


1.24 %



1,050



215



1,265

Short-term borrowings



2



-


6.00 %



333



6


2.41 %



(3)



(3)



(6)

Subordinated debentures



15,464



794


6.86 %



15,000



743


6.62 %



27



24



51

    Total


$

643,154


$

11,437


2.38 %


$

627,470


$

7,445


1.59 %


$

2,794


$

1,198


$

3,992

Net Interest Income





$

23,135







$

24,344












Net Interest Spread








2.90 %








3.29 %










Net Interest Margin








3.53 %








3.74 %










 

BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
 (Unaudited)




For the Quarter

Ended September 30,


For the Nine Months

Ended September 30,

(In thousands)


2024


2023


2024


2023

OTHER AVERAGE BALANCES













Total assets



926,066



926,655



928,579



924,690

Core deposits



799,556



801,292



802,058



799,428

Total equity



104,871



103,762



103,243



103,776

KEY RATIOS













Return on average common stockholders' equity (a)



7.21 %



5.17 %



6.67 %



4.14 %

Return on average assets (b)



0.89 %



0.65 %



0.82 %



0.51 %

Efficiency ratio (Consolidated)



69.02 %



75.50 %



71.81 %



83.90 %

Efficiency ratio (Bank)



66.09 %



72.28 %



68.31 %



80.61 %



(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,

2024


December 31,

2023


September 30,

2023

ASSET QUALITY










Loans 90 days or more delinquent and accruing interest


$

-


$

832


$

-

Non-accrual loans



5,873



2,519



1,405

Total nonperforming loans


$

5,873


$

3,351


$

1,405

Repossessed assets, net



48



33



11

Total nonperforming assets


$

5,921


$

3,384


$

1,416

Allowance for credit losses


$

9,531


$

9,284


$

9,146

Ratio of total nonperforming loans to total loans



0.86 %



0.50 %



0.21 %

Ratio of total nonperforming assets to total assets



0.64 %



0.35 %



0.16 %

Ratio of nonperforming loans to total assets



0.64 %



0.35 %



0.15 %

Ratio of allowance for credit losses to loans held for investment                



1.40 %



1.39 %



1.38 %

Ratio of allowance for credit losses to total loans



1.40 %



1.39 %



1.38 %

Ratio of allowance for credit losses to nonperforming loans



162 %



277 %



651 %

 

For the Quarter

Ended September 30,


For the Nine Months

Ended September 30,

(In thousands)


2024


2023


2024


2023

Changes in Nonperforming Loans:













Balance, beginning of period


$

3,055


$

1,434


$

3,351


$

1,355

Additions to nonperforming



3,279



25



4,862



357

Charge-offs



(42)



(8)



(44)



(95)

Reclassified back to performing



(1)



-



(1,716)



(1)

Principal payments received



(381)



(46)



(511)



(165)

Transferred to repossessed assets



(37)



-



(69)



(46)

Balance, end of period


$

5,873


$

1,405


$

5,873


$

1,405

 

BNCCORP, INC.
CONSOLIDATED FINANCIAL DATA
 (Unaudited)




For the Quarter

Ended September 30,


For the Nine Months

Ended September 30,

(In thousands)


2024


2023


2024


2023

Changes in Allowance for Credit Losses:













Balance, beginning of period


$

9,603


$

9,212


$

9,459


$

8,831

Cumulative effect of CECL adoption



-



-



-



125

Provision



110



230



355



635

Loans charged off



(54)



(103)



(183)



(268)

Loan recoveries



7



4



35



20

Balance, end of period


$

9,666


$

9,343


$

9,666


$

9,343














Components:













Allowance for loan losses


$

9,531


$

9,146


$

9,531


$

9,146

Allowance for unfunded commitments


$

135


$

197


$

135


$

197














Ratio of net charge-offs to average total loans



(0.007) %



(0.015) %



(0.022) %



(0.037) %

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



(0.027) %



(0.059) %



(0.029) %



(0.049) %

 

As of

(In thousands)


September 30,

2024


December 31,

2023


September 30,

2023

CREDIT CONCENTRATIONS










North Dakota










Commercial and industrial


$

61,823


$

62,019


$

61,295

Construction



1,074



5,247



18,582

Agricultural



42,067



35,220



33,272

Land and land development



8,033



7,992



6,505

Owner-occupied commercial real estate



37,545



35,260



32,102

Commercial real estate



127,513



135,858



123,673

Small business administration



18,782



18,046



17,660

Consumer



91,320



88,066



88,863

Subtotal gross loans held for investment


$

388,157


$

387,708


$

381,952

Consolidated










Commercial and industrial


$

98,990


$

93,949


$

93,702

Construction



4,821



21,648



43,612

Agricultural



44,834



37,720



35,795

Land and land development



10,378



8,416



8,129

Owner-occupied commercial real estate



79,991



84,386



80,902

Commercial real estate



248,737



245,939



231,251

Small business administration



76,977



63,836



59,905

Consumer



117,343



111,872



110,572

Total gross loans held for investment


$

682,071


$

667,766


$

663,868

 

 

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SOURCE BNCCORP, INC.