10-K/A 1 ka10.txt FORM 10 K/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2003 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-26290 BNCCORP, INC. (Exact name of registrant as specified in its charter) Delaware 45-0402816 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 322 East Main Avenue 58501 Bismarck, North Dakota (Zip Code) (Address of principal executive office) Registrant's telephone number, including area code: (701) 250-3040 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Common Stock, $.01 par value Preferred Stock Purchase Rights (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No _X_ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the price at which the common equity was last sold, as of the last business day of the Registrant's most recently completed second fiscal quarter was $21,069,000. The number of shares of the Registrant's common stock outstanding on April 26, 2004 was 2,788,604. Documents incorporated by reference. None EXPLANATORY NOTE We are filing this Amendment No. 1 on Form 10-K/A to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the "Report") to amend and supplement the following items of Part III of the Report to read in their entirety as follows: PART III Item 10. Directors and Executive Officers of the Registrant The following table provides certain information, as of April 15, 2004 with respect to each director and executive officer of BNCCORP, Inc. and subsidiaries (collectively, the "Company"). Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years.
Principal Occupation, Period of Service as a Director, Business Experience and Board Committee Name and Age Other Information Memberships ------------------------------------------------------------------------------------------------------------------------------------ DIRECTORS Cleveland, Gregory K. 56 Mr. Cleveland, a Certified Public Accountant, has served as an executive officer Member of and director of BNCCORP, Inc. ("BNC") since he and Tracy Scott founded BNC in Executive 1987. He has served as President of BNC since March 1995 and as Chief Executive Committee Officer since November 2000. He served as Chief Financial Officer of BNC from February 1994 to January 1998 and as Chief Operating Officer from January 1998 to November 2000. Mr. Cleveland's term on the BNC Board of Directors (the "Board") will expire in June 2004. Scott, Tracy J. 56 Mr. Scott, a Certified Public Accountant, has served as Chairman of the Board and Member of a director of BNC since 1987. Mr. Scott served as Chief Executive Officer of BNC Executive until November 2000. Mr. Scott's term on the Board will expire in June 2004. Committee Hipp, John A., M.D. 57 Dr. Hipp, who has been a director of BNC since 1988, has practiced medicine in Member of Bismarck since 1980 as a principal in Pathology Consultants, a professional Compensation corporation specializing in medical laboratory and computer consulting services. Committee and Dr. Hipp is board certified in anatomic and clinical pathology by the American Audit Committee Board of Pathology. Dr. Hipp's term on the Board will expire in June 2004. Rebel, Brenda L. 45 Ms. Rebel, a Certified Public Accountant, has been a director since September N/A 1999 and has served as Chief Financial Officer and Senior Vice President since January 1998. She served as Vice President - Corporate Controller from August 1995 to January 1998 and as Vice President - Regulatory Compliance from June 1991 to July 1995. Ms. Rebel's term on the Board will expire in 2006. Ghylin, Gaylen 56 Mr. Ghylin, a Certified Public Accountant, has been a director since June 2003 Member of and has served as Executive Vice President, Secretary and Chief Financial Officer Compensation of Tiller Corporation d/b/a Barton Sand & Gravel Co., Commercial Asphalt Co. and Committee and Barton Enterprises, Inc., since 1979, and as a director of the Tiller Corporation Audit Committee since 1980. Mr. Ghylin also serves on the Boards of National Asphalt Pavement Association and Friendship Ventures. Mr. Ghylin's term on the Board will expire in 2006. Scali, Terrence M. 44 Mr. Scali has been a director since July 2002. Mr. Scali has served as President N/A of Milne Scali & Company since 1995 and as Executive Vice President of BNC since January 2004. Milne Scali & Company was acquired by BNC's bank subsidiary, BNC National Bank in April 2002. Mr. Scali's term on the Board will expire in 2006. Forte-Pathroff, Denise, 47 Dr. Forte-Pathroff has been a director since November 2000. She had previously Member of M.D. served as a director of BNC National Bank from April 1994 to November 2000. Dr. Compensation Forte-Pathroff is a board certified dermatologist. She is an Assistant Clinical Committee and Professor of Medicine at the University of North Dakota School of Medicine, a Nominating member of the North Dakota Board of Medical Examiners, chairwoman of the board of Committee Medcenter One School of Nursing and a member of the Advisory Board to the Burleigh County Extension Service. She is President of DFP, Inc., a cosmetics company that develops and markets skin care products, and Headspin, Inc., which markets a patented child anti-abduction system. Dr. Forte-Pathroff's term on the Board will expire in 2005. Johnsen, Richard M., Jr. 59 Mr. Johnsen, who has been a director of BNC since June 1995, has served since Member of 1979 as Chairman of the Board and Chief Executive Officer of Johnsen Trailer Nominating Sales, Inc., which sells and services semi-trailers in Bismarck and Fargo, North Committee and Dakota. Since 1990, Mr. Johnsen has also been a partner in Johnsen Real Estate Audit Committee Partnership, which owns and operates rental property in Bismarck and Fargo, North Dakota. Mr. Johnsen's term on the Board will expire in 2005. Woodcox, Jerry R. 61 Mr. Woodcox, who has been a director of BNC since June 1995, has served since Member of 1970 as President of Arrowhead Cleaners and Laundry, Inc., a laundry and dry Nominating cleaning services business operating in Bismarck, North Dakota. Mr. Woodcox has Committee also served as a Burleigh County (North Dakota) Commissioner since his election to the Commission in February 2001. Mr. Woodcox's term on the Board will expire in 2005. OTHER EXECUTIVE OFFICERS: Cleveland Goll, Shawn 35 Ms. Cleveland Goll, a Certified Public Accountant and a Certified Regulatory N/A Compliance Manager, has served as Chief Operating Officer of BNC National Bank since September 1999 and as Compliance Officer since July 1995. She is the daughter of Gregory K. Cleveland. Ms. Cleveland Goll serves on BNC National Bank's Board of Directors. Milne, Jr., Richard W. 49 Mr. Milne has served as Chairman and Vice President of Milne Scali & Company for N/A the past five years. Mr. Milne serves on BNC National Bank's Board of Directors. Peiler, Mark E. 33 Mr. Peiler, who holds the Chartered Financial Analyst designation, has served as N/A Investment Officer for BNC since May 1998 and as Vice President - Investment Officer since November 2000. Brozen, Neil M. 50 Mr. Brozen, a Certified Public Accountant, has served as Senior Vice President of N/A BNC National Bank's Trust and Financial Services division since September 2003. Mr. Brozen began NMB Associates ("NMB"), a management consulting practice, in November 1993. He operated NMB until January 2001 when he accepted the position of Senior Vice President with Media Technology Source, an audio-visual integrator. Mr. Brozen served in that position until June 2003, at which time he returned to NMB until August 2003. Roman, Jess 54 Mr. Roman joined BNC in November 2003 as President of BNC National Bank's Arizona N/A market. Mr. Roman has been in the banking industry since 1990 during which time he held business development positions with Heritage Bank (February 1995 through May 2002), Desert Hills Bank (January 2000 through May 2002) and First Community Financial (June 2002 through November 2003). Mr. Roman serves on BNC National Bank's Board of Directors. Zelinsky, David A. 51 Mr. Zelinsky joined BNC in December 2003 as President of BNC National Bank's N/A Minnesota market. Mr. Zelinsky has been employed in banking for the past 27 years, most recently serving as President and Chief Executive Officer of First Commercial Bank in Bloomington, MN. Between 1998 and 2002, Mr. Zelinsky served as Regional President with Marquette Bank N.A. Mr. Zelinsky serves on BNC National Bank's Board of Directors. Renk, Jerry D. 55 Mr. Renk joined BNC in February 2004 as President of BNC National Bank's North N/A Dakota market. Mr. Renk has 30 years of experience in the banking industry. Prior to joining BNC he served as Director of Banking Industry Relations for RSM McGladrey, Inc. from April 1999 to January 2004. Mr. Renk was President and Chief Executive Officer of Bank West in St. Francis, KS from May 1987 through March 1999. Mr. Renk serves on BNC National Bank's Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires BNC's executive officers, directors, and persons who own more than 10 percent of the common stock of BNC, $0.01 par value (the "Common Stock") to file reports of ownership and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission ("SEC"). The Company believes that all of its directors and executive officers timely complied with their Section 16(a) filing requirements in 2003. In 2003, Mr. Kenneth Hilton Johnson, a stockholder who has reported in filings made with the SEC that he owns more than 10 percent of the Common Stock, was late in filing his initial Form 3, reporting his acquisition of over 10 percent of the Common Stock. Mr. Johnson also made eight late Form 4 filings, reporting 141 separate purchases and two sales of Common Stock. On December 23, 2003, BNC filed suit against Mr. Johnson for recovery of $98,179.45 in "short-swing" profits made by Mr. Johnson in connection with profitable, purchase-and-sale transactions of BNC Common Stock within the same six-month period in violation of Section 16(b) of the Exchange Act. Mr. Johnson has tendered to BNC a check in the amount of his "short-swing" profits, and the Company plans to settle the lawsuit upon confirmation that the funds have been cleared. Code of Ethics The Company has adopted a code of ethics and business conduct that applies to each of its employees, officers and directors including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Company's code of ethics and business conduct is available on BNC's website at www.bnccorp.com. Amendments to the code of ethics and business conduct and any grant of a waiver from a provision of the code requiring disclosure under applicable SEC rules will also be disclosed on BNC's website. Audit Committee The Board has established a separately designated standing Audit Committee for the purposes of overseeing the Company's accounting and financial reporting processes and the audits of the Company's financial statements. Messrs. Ghylin and Johnsen and Dr. Hipp are the members of the committee. The Board has determined that Mr. Ghylin meets the requirements for an "audit committee financial expert" as defined by SEC rulemaking. Item 11. Executive Compensation The following table summarizes the compensation that the Company paid to its CEO and each of its four other most highly compensated executive officers for the year ended December 31, 2003.
Long-Term Compensation ----------------------------------------- Annual Compensation Awards Payouts ---------------------------------- -------------------------- ------------- Long-Term Other Restricted Securities Incentive All Other Name and Principal Annual Stock Underlying Plan Compensation Position Year Salary Bonus Compensation Awards ($) Options (#) Payouts ($) (1)(2) --------------------------- ------- --------- --------- ------------- ------------ ----------- ------------ -------------- Tracy J. Scott........... 2003 $200,000 - - - - - $10,654 Chairman of the Board 2002 200,000 - - - - - 10,282 2001 200,000 - - - 8,000 - 9,700 Gregory K. Cleveland..... 2003 200,000 - - - - - 10,654 President and Chief 2002 200,000 - - - - - 10,282 Executive Officer 2001 200,000 - - - 24,000 - 9,697 Richard W. Milne, Jr..... 2003 250,000 2,473 - - - - 6,186 Chairman, Milne Scali & 2002 177,084 - - - - - 3,566 Company (3) Terrence M. Scali........ 2003 250,000 1,603 - - - - 6,186 President, Milne Scali 2002 177,084 - - - - - 3,096 & Company (4) Mark E. Peiler........... 2003 120,000 - - - 10,000 - 6,190 Vice President - 2002 100,000 - - - - - 5,171 Investment Officer 2001 84,000 - - - 3,000 - 4,379 -------------------- (1) (1) Consists of (i) the Company's matching contributions to the Company's 401(k) Savings Plan in the following amounts: Mr. Scott ($6,000 in 2003, $5,500 in 2002 and $5,250 in 2001), Mr. Cleveland ($6,000 in 2003, $5,500 in 2002 and $5,250 in 2001), Mr. Milne ($6,000 in 2003 and $2,500 in 2002), Mr. Scali ($6,000 in 2003 and $2,500 in 2002) and Mr. Peiler ($6,000 in 2003, $5,000 in 2002 and $4,200 in 2001) (ii) premium payments for life insurance policies providing death benefits to the executive officers' beneficiaries in the following amounts: Mr. Scott ($3,253 in 2003, $3,382 in 2002 and $3,049 in 2001), Mr. Cleveland ($3,253 in 2003, $3,382 in 2002 and $3,046 in 2001), Mr. Milne ($186 in 2003 and $1,066 in 2002), Mr. Scali ($186 in 2003 and $596 in 2002) and Mr. Peiler ($190 in 2003, $171 in 2002, and $179 in 2001) and (iii) payments to allow executives to purchase long-term disability insurance: Mr. Scott ($1,401 in 2003, $1,401 in 2002 and $1,401 in 2001) and Mr. Cleveland ($1,401 in 2003, $1,401 in 2002 and $1,401 in 2001). (2) Perquisites and other personal benefits are not included because the aggregate amount of such compensation does not exceed the lesser of $50,000 or 10 percent of the total of annual salary and bonus reported for the named executive officers. (3) Mr. Milne joined the Company in April 2002. (4) Mr. Scali joined the Company in April 2002.
Options/SAR Grants During 2003 There were no stock options or stock appreciation rights granted during the year ended December 31, 2003 to any of the named executive officers, other than Mr. Peiler who received 10,000 stock options. Aggregated Option/SAR Exercises in Last Fiscal Year And Yearend Option/SAR Values The number and value of unexercised stock options held by each of the named executive officers is set forth in the following table. The Company has never granted any stock appreciation rights. No stock options were exercised by these individuals during the year ended December 31, 2003.
Value of Unexercised Number of Unexercised Options In-the-Money Options at December 31, 2003 at December 31, 2003 (1) ------------------------------- ------------------------------ Name Exercisable Unexercisable Exercisable Unexercisable ------------------------------- --------------- -------------- ------------ --------------- Gregory K. Cleveland 39,257 14,400 $ 188,958 $ 175,104 Tracy J. Scott 21,234 4,800 100,987 58,368 Richard W. Milne, Jr. - - - - Terrence M. Scali - - - - Mark E. Peiler 3,200 9,800 36,792 110,688 -------------------- (1) Calculated based on the market price at December 31, 2003, less the share price to be paid upon exercise.
Employment Agreements The Company has employment agreements with Tracy J. Scott and Gregory K. Cleveland. Milne Scali & Company, Inc. ("Milne Scali"), a subsidiary of the Company, has employment agreements with Richard W. Milne, Jr. and Terrence M. Scali. Each of these employment agreements provides for a minimum annual salary and an annual incentive bonus as may, from time to time, be fixed by the Board or a committee of the Board of the Company or Milne Scali, as applicable. The employment agreements with Messrs. Scott and Cleveland, each entered into in May 1995, provide for minimum annual salaries of $156,000 and $128,000, respectively, and an initial term of three years. For the year ended December 31, 2003, each of Messrs. Scott's and Cleveland's annual base salary was $200,000. Since the expiration of their initial terms, each of those agreements automatically renews for consecutive one-year terms unless either the Company or the executive terminates the agreement upon 90 days' notice prior to such automatic renewal. Under their employment agreements, Messrs. Scott and Cleveland are entitled to the benefits and perquisites maintained by the Company for its employees in general, or senior executives in particular, on the same basis and subject to the same requirements and limitations as applicable to other senior executives of the Company. If either Mr. Scott's or Mr. Cleveland's employment is terminated for any reason other than death, disability, or cause (as defined in their agreements), or if they terminate their employment for good reason (as defined in their agreements), or following a change in control (as defined in their agreements), then the Company must pay them a lump-sum amount equal to three times the sum of their current annual base salary and all cash bonuses paid to them during the most recent 12-month period ending before the date of termination. Mr. Scott and Mr. Cleveland have agreed not to compete with the Company for a period of two years following a termination by them of their respective employment with the Company for any reason other than good reason (as defined in their agreements). Further, Messrs. Scott and Cleveland have agreed not to solicit any customers of the Company or otherwise disrupt any previously established relationship existing between a customer and the Company. The employment agreements with Messrs. Milne and Scali, each entered into in April 2002, provide for minimum annual salaries of $250,000 and an initial term of five years. After the expiration of their initial terms, employment under those agreements converts to a month-to-month, at-will relationship otherwise subject to the terms of those agreements that is terminable by either Milne Scali or the executive upon 90 days' prior written notice. Under their employment agreements, Messrs. Milne and Scali are entitled to participate in or receive benefits under any employee benefit plan or fringe benefit arrangement made available to similarly situated employees of Milne Scali. Messrs. Milne and Scali have agreed to hold in confidence all confidential information known to them concerning Milne Scali's business and not generally known to persons engaged in a business similar to that engaged by Milne Scali. In addition, Messrs. Milne and Scali have agreed not to compete with Milne Scali until the later of five years after the date of their employment agreements and the date of termination of their employment with Milne Scali and all of its affiliates if their employment is terminated for cause (as defined in their agreements) or other than by reason of death or disability. Further, Messrs. Milne and Scali have agreed not to solicit the customers or employees of Milne Scali and its affiliates until the later of five years after the date of their employment agreements and two years after the date of termination of their employment with Milne Scali and all of its affiliates. Director Compensation Each director who is not an employee of BNC is paid a director's fee of $12,000 per year and fees of $500 for each committee meeting attended. Additionally, each director who is not an employee of BNC is paid $100 for each monthly informal Board meeting of the Company and $500 for each quarterly Board meeting. Directors are reimbursed for expenses incurred in attending Board and committee meetings. Compensation Committee Interlocks and Insider Participation in Compensation Decisions No executive officer of the Company served in 2003 as a director, or member of the compensation committee, of another entity one of whose executive officers served as a director, or on the Compensation Committee, of the Company. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth, as of April 15, 2004, certain information regarding beneficial ownership of the Common Stock by (i) each stockholder known by BNC to be the beneficial owner of more than 5 percent of the outstanding Common Stock, (ii) each continuing director and director nominee of BNC, (iii) each executive officer of BNC listed in the Summary Compensation Table set forth elsewhere herein, and (iv) all of BNC's continuing directors and executive officers as a group. Unless otherwise indicated, BNC believes that the stockholders listed below have sole investment and voting power with respect to their shares based on information furnished to BNC by such owners.
Percent of Number of Shares Outstanding Name of Beneficial Owner Beneficially Owned Common Stock ------------------------ --------------------- ---------------- Tracy J. Scott............................. 138,213 (2)(3)(4) 4.92% Gregory K. Cleveland....................... 122,537 (3)(5) 4.33% Richard W. Milne, Jr....................... 133,782 4.80% Terrence M. Scali (1)...................... 236,190 (2) 8.47% Brenda L. Rebel............................ 13,941 (2)(3) * Mark E. Peiler............................. 7,142 (2)(3) * Denise Forte-Pathroff, M.D................. 53,411 (3)(6) 1.92% John A. Hipp, M.D.......................... 65,650 (3)(7) 2.36% Richard M. Johnsen, Jr..................... 6,650 (3) * Jerry R. Woodcox........................... 8,012 (3) * Gaylen A. Ghylin........................... -- -- BNC National Bank, as Trustee (the "Trustee") of the BNCCORP, Inc. 401(k) Savings Plan (8) (9)............. 180,940 6.49% All directors and executive officers as a group (16 persons)................. 815,008 (2)(3) 28.38% Kenneth H. Johnson......................... 371,482 (10) 13.28% -------------------- *Less than 1 percent. (1) The address of Mr. Scali is c/o BNCCORP, Inc., 322 East Main Avenue, Bismarck, North Dakota 58501. (2) Includes the following number of shares allocated to such individual's account as of April 15, 2004 under the Company's 401(k) Savings Plan: Mr. Scott (24,046), Mr. Scali (2,308), Ms. Rebel (6,836), Mr. Peiler (942) and all directors and executive officers as a group (38,817). (3) Includes shares that may be acquired within 60 days through exercise of stock options: Mr. Scott (22,834), Mr. Cleveland (44,057), Ms. Rebel (6,905), Mr. Peiler (5,800), Dr. Forte-Pathroff (650), Dr. Hipp (650), Mr. Johnsen (650), Mr. Woodcox (650) and all directors and executive officers as a group (88,196). (4) Includes 1,000 shares owned by Mr. Scott's children and 658 shares owned by Mr. Scott's family trust. (5) Includes 78,480 shares owned by Mr. Cleveland's wife. (6) Includes 25,873 shares under Robert A. Pathroff, M.D. P.C. Profit Sharing Plan and 68 shares owned by Dr. Forte-Pathroff's children. (7) Includes 65,000 shares owned by John A. Hipp and Barbara K. Hipp LLP#1, a limited liability limited partnership. (8) Each participant of the Company's 401(k) Savings Plan is entitled to direct the Trustee as to the manner in which to vote the shares allocated to the participant's account. (9) The address of the Trustee is 322 East Main Avenue, Bismarck, North Dakota 58501. (10) Based solely on information contained in Mr. Johnson's filings with the SEC. According to SEC reports, Mr. Johnson's address is 1331 South Federal, Chicago, Illinois 60605.
Item 13. Certain Relationships and Related Transactions The executive officers and directors of the Company and members of their immediate families and businesses in which they hold controlling interests are customers of BNC National Bank (the "Bank"), and it is anticipated that such parties will continue to be customers of the Bank in the future. All outstanding loans and extensions of credit by the Bank to these parties were made in the ordinary course of business in accordance with applicable laws and regulations and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons, and in the opinion of management do not involve more than the normal risk of collectibility or present other unfavorable features. At December 31, 2003, the aggregate balance of the Bank's loans and advances under existing lines of credit to these parties, exclusive of loans to any such persons, which in the aggregate did not exceed $60,000, was approximately $1.1 million or 0.39 percent of the Bank's total loans. During the first quarter of 2003, the Bank purchased the Milne Scali building at 1750 East Glendale Avenue, Phoenix, Arizona. The Bank purchased the building from Milne Scali Properties LLC. Milne Scali Properties LLC is a limited liability company whose members are Richard W. Milne, Jr. and Terrance M. Scali, executive officers of the Company. The purchase price for the building was the appraised amount of $3.9 million, which was funded through cash generated from operations. An independent party completed the appraisal. In October 2003, related to the Company's 2002 acquisition of Milne & Company Insurance, Inc., the Company purchased from Milne Scali Properties LLC one share of common stock and one share of preferred stock of Mountain View Indemnity, Ltd., a Bermuda limited liability company ("MVI") for $65,000 in cash. Under the by-laws of MVI, share value is established using stockholders' equity plus retained earnings divided by the number of stockholders. This methodology was used for purposes of valuing the shares purchased by the Company. During 2003, BNC paid to each of Richard W. Milne, Jr. and Terrence M. Scali, executive officers of the Company, $60,000 in dividends related to BNC's noncumulative preferred stock, $0.01 par value per share, of which each holds 75 shares. The dividends were paid on a quarterly basis in accordance with the Certificate of Designations for the noncumulative preferred stock, which provides that holders of noncumulative preferred stock are entitled to receive preferential noncumulative dividends at an annual rate of 8% of the "preferred liquidation value" of $10,000 per share. Item 14. Principal Accountant Fees and Services Independent Auditor's Fees. The following table shows the fees paid or accrued by the Company for the audit services provided by KPMG LLP during 2003 and 2002:
2003 2002 --------------- -------------- Audit Fees................ $ 132,000 (a) $ 175,000 (b) Audit-Related Fees........ 18,000 (c) 41,000 (d) Tax....................... -- -- All Other Fees............ 25,000 (e) -- --------------- -------------- Total................. $ 175,000 $ 216,000 =============== ============== (a) Includes 2003 quarterly reviews and audit. (b) Includes 2002 quarterly reviews and audit ($95,000) and reaudits of 2001 and 2000 ($80,000). (c) Includes audits of the BNCCORP, Inc. 401(k) Savings Plan ($6,000) and the BNC Global Balanced Collective Investment Fund ($12,000). (d) Includes audits of the BNCCORP, Inc. 401(k) Savings Plan ($5,000), the BNC Global Balanced Collective Investment Fund ($9,500) and the BNC U.S. Opportunities Fund ($10,500) and work related to the acquisition of Milne Scali and associated SEC filings ($16,000). (e) Fee for program related to deposit reclassification for regulatory reporting purposes.
Preapproval of Audit and Non-Audit Services. The services performed by the independent auditor in 2003 were pre-approved by the Audit Committee. The Audit Committee has established, and the Board has ratified, a policy to pre-approve all audit and non-audit services provided by our independent auditor. Under the policy, the Audit Committee annually approves the engagement of the Company's independent auditor, the terms of the engagement and the proposed fees. The policy also lists specific audit, audit-related, tax and permissible non-audit services that may be provided by the independent auditor without the specific pre-approval of the Audit Committee, provided that the total cost of the engagement of the auditor to perform the listed services does not exceed certain specified amounts. All requests or applications for services to be provided by the independent auditor are first submitted to the Company's Chief Financial Officer, who determines whether the services: (1) have been previously pre-approved in connection with the independent auditor's annual engagement letter, (2) are included within the list of services that have received the general pre-approval of the Audit Committee or (3) require specific Audit Committee pre-approval. All audit, audit-related, tax and permissible non-audit services which are not listed as being "pre-approved" in the policy or which have not been previously approved in connection with the independent auditor's annual engagement letter for the applicable year, must be specifically pre-approved by the Audit Committee. The Audit Committee has delegated specific pre-approval authority to its Chairman, provided that the estimated fees for any such proposed pre-approval service does not exceed $25,000. The Chairman must report any pre-approval decisions made by him to the full Committee at its next scheduled meeting. SIGNATURE In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized. BNCCORP, INC. By: /s/ Gregory K. Cleveland ---------------------------- President and Chief Executive Officer April 29, 2004 INDEX TO EXHIBITS Exhibit No. 31.1 - Chief Executive Officer's Certification Under Rule 13a-14(a) of the Securities Exchange Act of 1934 31.2 - Chief Financial Officer's Certification Under Rule 13a-14(a) of the Securities Exchange Act of 1934 32.1 - Chief Executive Officer and Chief Financial Officer Certifications Under Rule 13a-14(b) of the Securities Exchange Act of 1934