-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H5jURzmbf+ZBgXAzyll4wCRgVtaCVsnpvOGdjAtyYao7JBRM2k1KLRrZ9SkwCRuU C2y12L8INkEVe1jDZaVpdg== 0000945434-05-000003.txt : 20050127 0000945434-05-000003.hdr.sgml : 20050127 20050127150135 ACCESSION NUMBER: 0000945434-05-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041231 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20050127 DATE AS OF CHANGE: 20050127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BNCCORP INC CENTRAL INDEX KEY: 0000945434 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 450402816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16527 FILM NUMBER: 05553523 BUSINESS ADDRESS: STREET 1: 322 E MAIN STREET 2: PO BOX 4050 CITY: BISMARCK STATE: ND ZIP: 58501 BUSINESS PHONE: 7012503040 MAIL ADDRESS: STREET 1: 322 E MAIN STREET 2: PO BOX 4050 CITY: BISMARCK STATE: ND ZIP: 58501 8-K 1 form8kqtr4.txt FORM 8K 2004 QTR 4 EARNINGS RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ---------------------------------------- Date of Report (Date of earliest event reported) January 24, 2005 BNCCORP, Inc. (Exact name of registrant as specified in its charter) Delaware 0-26290 45-0402816 (State of incorporation) (Commission File Number) (IRS Employer Identification No.) 322 East Main, Bismarck, North Dakota 58501 (Address of principal executive offices) (Zip Code) (701) 250-3040 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition On January 24, 2005, BNCCORP, Inc. issued a press release announcing its earnings for the quarter ended December 31, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. Item 7.01. Regulation FD Disclosure The disclosures included in Item 2.02 of this Form 8-K are incorporated by reference into this Item 7.01. Item 9.01. Financial Statements and Exhibits (c) Exhibit. 99.1 Press release of BNCCORP, Inc., dated January 24, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BNCCORP, INC. By: /s/ Gregory K. Cleveland ---------------------------------------- Gregory K. Cleveland President Date: January 27, 2005 EX-99.1 2 exhibit99.txt EARNINGS RELEASE QUARTER ENDED 12-31-04 Exhibit 99.1 NEWS RELEASE FOR FURTHER INFORMATION: GREGORY K. CLEVELAND TELEPHONE: (602) 852-3526 BRENDA L. REBEL TELEPHONE: (701) 250-3044 WEBSITE: www.bnccorp.com BNCCORP REPORTS FINANCIAL RESULTS FOR THE 2004 FOURTH QUARTER AND YEAR-END BISMARCK, ND, January 24, 2005 - BNCCORP, Inc. (Nasdaq: BNCC), which operates community banking, insurance and brokerage/trust/financial services businesses in Arizona, Minnesota, North Dakota, Utah and Colorado, today reported net income of $762,000, or $0.25 per share on a diluted basis, for the fourth quarter ended December 31, 2004. For the same quarter of 2003, the Company reported net income of $737,000, or $0.25 per diluted share. For the twelve months ended December 31, 2004, the Company reported net income of $3.40 million, or $1.14 per diluted share, compared with net income of $3.84 million, or $1.35 per diluted share, in the same period of 2003. Results for the full 2004 twelve-month period included an expense of $688,000 related to the previously announced termination of employment of a former officer of the Company's insurance subsidiary. The payment represented the acceleration of the remaining salary due under his multi-year employment contract. "Our level of profitability in 2004 was relatively consistent with 2003, and reflected solid increases in net interest income and noninterest income, offset by higher expenses related to our investments in growth and the termination of a former officer," noted Gregory K. Cleveland, BNCCORP President and Chief Executive Officer. "We are particularly pleased that our investments in new branch locations, business operations and management talent have begun to produce results in terms of deposit growth, loan growth, including mortgage loan and student loan financing business, and rising insurance commission volume." Mr. Cleveland noted that BNCCORP's growth initiatives during 2003 and 2004 included new full service branch offices in Phoenix and Scottsdale, Arizona, and Golden Valley, Minnesota. Additionally, the Company expanded its insurance segment through asset acquisitions in Salt Lake City, Utah; Tucson and Prescott Valley, Arizona; and Denver, Colorado. The Company also acquired a mortgage banking operation based in Tempe, Arizona. Fourth Quarter Review Net interest income for the fourth quarter of 2004 was $4.24 million, up 20.0% from $3.53 million in the same period of 2003. This increase reflected a widening of the net interest margin to 2.90% for the quarter ended December 31, 2004, from 2.58% for the same period in 2003. The 32 basis point improvement in net interest margin reflected a $37.4 million increase in average earning asset volume coupled with a 21 basis point increase in yield on earning assets. Noninterest income was $5.79 million for the 2004 fourth quarter, rising 21.1% from $4.78 million for the year-ago period. Commissions generated by the Company's insurance agency subsidiary, Milne Scali & Company, Inc., were the largest contributor to noninterest income ($4.19 million), rising 17.0% from the year-ago quarter, primarily due to acquisitions. Loan fees more than doubled from the year-ago quarter, to $805,000, from $381,000, due to fees associated with the loans held for sale portfolio, loans originated and sold and some fees for credit line availability. Trust and financial services income and net gain on sales of securities rose slightly compared with the same quarter of 2003, while service charges and brokerage income decreased. Noninterest income represented 57.74% of gross revenues for the recent quarter, versus 57.51% a year ago. Noninterest expense for the fourth quarter of 2004 was $8.85 million, compared with $7.30 million in the same quarter of 2003. This 21.2% increase primarily reflected higher employee, occupancy, depreciation and amortization and other general expenses due to the expansion of the Company's branch offices and insurance agency operations. Twelve Months Review Net interest income was $16.04 million for the twelve-month period ended December 31, 2004, rising 19.9% from $13.38 million in the year-ago period. The net interest margin widened to 2.86% for 2004, from 2.47% for 2003. Net interest income and margin for the twelve-month period ended December 31, 2004 were favorably impacted by the recovery of cash basis interest income of approximately $408,000 on a $4.5 million loan that had been classified as nonaccrual at December 31, 2003 and was paid in full during the first quarter of 2004. Net interest income and margin for the twelve-month period ended December 31, 2003 were negatively impacted by the charge-off of interest income of approximately $287,000 on the same loan. Additionally, net interest income and margin for the twelve-month periods ended December 31, 2004 and 2003 were slightly impacted by derivative contract-related transactions during the periods which decreased net interest income by $55,000 and $80,000, respectively. Without these interest income variances and derivative transactions, net interest margin for the 2004 and 2003 periods would have been 2.80% and 2.54%, respectively. A significant contribution to the improvement in net interest margin for the twelve-month period ended December 31, 2004 was a 35 basis point reduction in the cost of interest-bearing liabilities. An $18.7 million, or 41.7% increase in noninterest-bearing deposits between December 31, 2003 and December 31, 2004 also favorably impacted total funding costs. Noninterest income rose to $23.45 million for the twelve-month period ended December 31, 2004, a 12.7% increase from $20.81 million in the same period of 2003. The increase largely reflected increased insurance commissions. Trust and financial services income decreased from the year-ago period, which included a $488,000 transaction fee generated by the bank's financial services division. Loan fees and brokerage income increased from the year-ago period while service charges and net gain on sales of securities declined. Additionally, a nonrecurring gain of $527,000 from the final resolution of a reinsurance program previously associated with Milne Scali, was reflected in other income during the recent twelve-month period. Noninterest income represented 59.38% of gross revenues for the recent period, compared with 60.87% for the same 2003 period. Noninterest expense for the twelve-month period ended December 31, 2004 was $34.77 million, an increase of 27.4% compared with $27.29 million in the year-ago period, largely due to the previously noted employment contract termination expense and investments in staffing and locations. Loan and Deposit Balances Total assets were $673.7 million at December 31, 2004, rising from $621.5 million at December 31, 2003, and $602.2 million at December 31, 2002. Total loans held for sale from residential mortgage loan and student loan financing programs implemented during 2004 were $60.2 million at December 31, 2004. Total loans held for investment at December 31, 2004, were $293.8 million, compared with $283.6 million at December 31, 2003, and $335.8 million at December 31, 2002. Investment securities available for sale were $235.9 million at December 31, 2004, compared with $262.6 million at December 31, 2003, and $208.1 million at December 31, 2002. Total deposits at December 31, 2004, were $455.3 million, up from $395.9 million at December 31, 2003, and $398.2 million at December 31, 2002. The $59.4 million of deposit growth over the twelve-month period ended December 31, 2004 reflected increases in core deposits, primarily from recently opened branches in Arizona and Golden Valley, Minnesota, and an increase in brokered deposits. Core deposits increased $30.8 million, or 8.4%, over that twelve-month period. Noninterest-bearing deposits increased $18.7 million, or 41.7%, over the same twelve-month period while core certificates of deposit rose $20.0 million, or 19.0%. Brokered and national market certificates of deposit together increased $25.4 million between December 31, 2003 and December 31, 2004, while certificates of deposit in the CDARSSM program (included in core certificates of deposit above), which was initiated during the second half of 2003, totaled $16.8 million at December 31, 2004. Total common stockholders' equity for BNCCORP was $42.6 million at December 31, 2004, equivalent to book value per common share of $14.77 (tangible book value per common share of $4.42). At December 31, 2004, the Company's tier 1 leverage ratio was 4.51% compared with 4.90% at December 31, 2003. The tier 1 risk-based capital ratio was 6.35% at December 31, 2004 versus 7.14% at December 31, 2003. The total risk-based capital ratio was 8.85% at December 31, 2004 versus 10.63% at December 31, 2003. The changes are primarily due to an increase in total risk-weighted assets from $403.7 million at December 31, 2003 to $449.2 million at December 31, 2004. The capital ratios were also impacted by the payment of the remaining earnout amounts related to the Milne Scali acquisition (which increased goodwill by $6.0 million) and the acquisition of three insurance agencies and a mortgage company (which increased goodwill and other intangible assets by approximately $1.6 million). Asset Quality A $175,000 provision for credit losses was required for the 2004 fourth quarter and the 2004 year to date period, versus provisions of $0 for the year-ago fourth quarter and $1.48 million for the twelve months ended December 31, 2003. The ratio of total nonperforming assets to total assets improved significantly to 0.08% at December 31, 2004, compared with 1.28% at December 31, 2003 and 1.27% at December 31, 2002. The ratio of allowance for credit losses to total nonperforming loans was 607% at December 31, 2004, strengthening from 60% at December 31, 2003 and 66% at December 31, 2002. These asset quality related ratios improved during 2004 primarily because of the sharp decrease in nonperforming loans, which declined to $549,000 at December 31, 2004, from $7.95 million at December 31, 2003. This decrease was due primarily to the full payment of a $4.5 million loan and the resolution of a $2.2 million loan that resulted in a charge-off of $1.2 million (of which $975,000 was reserved for at December 31, 2003). The allowance for credit losses as a percentage of total loans was 1.14% at December 31, 2004, compared with 1.68% at December 31, 2003, and 1.49% at December 31, 2002. The ratio at December 31, 2004 reflects $1.9 million of charge-offs over the course of the twelve-month period ended December 31, 2004, as well as the reduced reserve requirement related to the sharp decrease in nonperforming loans during the same period. Outlook "BNCCORP enters the new year with an expanded base of banking offices and financial services operations, the potential for further growth in loans and core deposits, and solid asset quality. We believe this will provide the platform for improved earnings in 2005 as compared with 2004. Going forward, we will continue our initiatives to enhance shareholder value by building on our diversified base of community banking, insurance and brokerage/trust/financial services businesses in attractive, growing regions," Mr. Cleveland stated. BNCCORP, Inc., headquartered in Bismarck, N.D., is a registered bank holding company dedicated to providing a broad range of financial products and superior customer service to businesses and consumers in its local communities. The Company operates 26 locations in Arizona, Minnesota, North Dakota, Utah and Colorado through its subsidiary, BNC National Bank and its subsidiaries Milne Scali & Company, Inc. and BNC Asset Management, Inc., as well as the bank's trust and financial services division which provide a wide array of insurance, brokerage and trust and financial services. The Company offers a variety of traditional and nontraditional financial products and services in order to meet the financial needs of its current customer base, establish new relationships in the markets it serves and expand its business opportunities. Statements included in this news release which are not historical in nature are intended to be, and are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. We caution readers that these forward-looking statements, including without limitation, those relating to our future business prospects, revenues, working capital, liquidity, capital needs, interest costs and income, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements due to several important factors. These factors include, but are not limited to: risks of loans and investments, including dependence on local and regional economic conditions; competition for our customers from other providers of financial services; possible adverse effects of changes in interest rates including the effects of such changes on derivative contracts and associated accounting consequences; risks associated with our acquisition and growth strategies; and other risks which are difficult to predict and many of which are beyond our control. (Financial tables attached) # # #
BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS For the Quarter For the Twelve Months Ended December 31, Ended December 31, ----------------------- ---------------------- (In thousands, except per share data) 2004 2003 2004 2003 - -------------------------------- ----------- ----------- ---------- ----------- SELECTED INCOME STATEMENT DATA (unaudited) Interest income................... $ 7,952 $ 7,179 $ 30,141 $ 28,646 Interest expense.................. 3,714 3,648 14,100 15,268 ----------- ----------- ---------- ----------- Net interest income............... 4,238 3,531 16,041 13,378 Provision for credit losses....... 175 0 175 1,475 Noninterest income................ 5,790 4,780 23,450 20,812 Noninterest expense............... 8,851 7,301 34,768 27,290 ----------- ----------- ---------- ----------- Income before income taxes........ 1,002 1,010 4,548 5,425 Income tax provision.............. 240 273 1,144 1,581 ----------- ----------- ---------- ----------- Net income........................ $ 762 $ 737 $ 3,404 $ 3,844 =========== =========== ========== =========== Dividends on preferred stock...... $ (28) $ (30) $ (93) $ (120) ----------- ----------- ---------- ----------- Net income available to common stockholders.................... $ 734 $ 707 $ 3,311 $ 3,724 =========== =========== ========== =========== EARNINGS PER SHARE DATA BASIC EARNINGS PER COMMON SHARE Basic earnings per common share... $ 0.26 $ 0.26 $ 1.18 $ 1.38 =========== =========== =========== ========== DILUTED EARNINGS PER COMMON SHARE Diluted earnings per common share. $ 0.25 $ 0.25 $ 1.14 $ 1.35 =========== =========== =========== ==========
BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS As of ---------------------------------------- (In thousands, except share, per share December 31, December 31, December 31, and full time equivalent data) 2004 2003 2002 - --------------------------------------- ------------- ------------- ------------ SELECTED BALANCE SHEET DATA Total assets........................... $ 673,710 $ 621,477 $ 602,228 Investment securities available for sale............................. 235,916 262,568 208,072 Loans held for sale.................... 60,197 -- -- Total loans held for investment........ 293,814 283,555 335,794 Allowance for credit losses............ (3,335) (4,763) (5,006) Goodwill............................... 21,779 15,089 12,210 Other intangible assets, net........... 8,075 8,373 8,875 Total deposits......................... 455,343 395,942 398,245 Long term borrowings................... 10,079 8,640 8,561 Notation: Unrealized gains (losses) in investment portfolio, pretax......... $ 106 $ 1,625 $ 4,383 Total common stockholders' equity ..... $ 42,596 $ 38,686 $ 36,223 Book value per common share............ $ 14.77 $ 14.07 $ 13.41 Tangible book value per common share... $ 4.42 $ 5.54 $ 5.60 Effect of net unrealized gains on securities available for sale, net of tax, on book value per common share......................... $ 0.02 $ 0.37 $ 1.01 Full time equivalent employees......... 323 284 270 Common shares outstanding.............. 2,884,876 2,749,196 2,700,929 CAPITAL RATIOS Tier 1 leverage........................ 4.51% 4.90% 4.46% Tier 1 risk-based capital.............. 6.35% 7.14% 5.92% Total risk-based capital............... 8.85% 10.63% 9.53%
BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS For the Quarter For the Twelve Months Ended December 31, Ended December 31, ------------------------ ----------------------- (In thousands) 2004 2003 2004 2003 - ------------------------------- ----------- ------------ ----------- ----------- (unaudited) (unaudited) AVERAGE BALANCES Total assets................... $ 661,555 $ 612,092 $ 636,139 $ 600,668 Loans held for sale............ 40,945 -- 15,818 -- Loans held for investment...... 295,373 280,896 276,652 308,115 Earning assets................. 580,768 543,342 560,601 540,685 Deposits....................... 442,667 388,061 412,643 383,619 Common stockholders' equity.... 42,682 37,428 41,329 37,525 KEY RATIOS Return on average common stockholders' equity ........ 6.84% 7.49% 8.01% 9.92% Return on average assets....... 0.46% 0.48% 0.54% 0.64% Net interest margin............ 2.90% 2.58% 2.86% 2.47% Net interest margin adjusted for cash basis interest income charged off/recovered and impact of derivatives adjustments.................. 2.90% 2.58% 2.80% 2.54% Efficiency ratio .............. 88.26% 87.85% 88.04% 79.82% Noninterest income as a percent of gross revenues.. 57.74% 57.51% 59.38% 60.87%
BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS As of ---------------------------------------- December 31, December 31, December 31, (In thousands) 2004 2003 2002 - -------------------------------------- ------------ -------------- ------------ ASSET QUALITY Loans 90 days or more delinquent and still accruing interest.......... $ 25 $ 38 $ 5,081 Nonaccrual loans...................... 524 7,913 2,549 Restructured loans.................... -- -- -- ------------ -------------- ------------ Total nonperforming loans............. 549 7,951 7,630 Other real estate owned and repossessed assets................... -- -- 8 ------------ -------------- ------------ Total nonperforming assets............ $ 549 $ 7,951 $ 7,638 ============ ============== ============ Allowance for credit losses........... $ 3,335 $ 4,763 $ 5,006 ============ ============== ============ Ratio of total nonperforming loans 0.19% 2.80% 2.27% to total loans....................... Ratio of total nonperforming assets to total assets...................... 0.08% 1.28% 1.27% Ratio of allowance for credit losses to total loans................ 1.14% 1.68% 1.49% Ratio of allowance for credit losses to total nonperforming loans.. 607% 60% 66%
For the Quarter For the Twelve Months Ended December 31, Ended December 31, -------------------------- ------------------------ 2004 2003 2004 2003 ------------- ------------ ----------- ------------ Changes in Allowance for Credit Losses: (unaudited) (unaudited) Balance, beginning of period................... $ 3,424 $ 4,827 $ 4,763 $ 5,006 Provision charged to operations expense....... 175 -- 175 1,475 Loans charged off.......... (287) (95) (1,883) (1,820) Loan recoveries............ 23 31 280 102 ------------- ------------ ----------- ------------ Balance, end of period..... $ 3,335 $ 4,763 $ 3,335 $ 4,763 ============= ============ =========== ============ Ratio of net charge-offs to average total loans.... (0.09)% (0.02)% (0.58)% (0.56)% Ratio of net charge-offs to average total loans, annualized................ (0.36)% (0.09)% (0.58)% (0.56)%
BNCCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS For the Twelve For the Quarter Months Ended December 31, Ended December 31, ----------------------- --------------------- (In thousands, except share data) 2004 2003 2004 2003 - --------------------------------- ----------- ----------- ---------- ---------- ANALYSIS OF NONINTEREST INCOME (unaudited) (unaudited) Insurance commissions............ $ 4,194 $ 3,585 $ 17,490 $ 14,568 Fees on loans.................... 805 381 2,175 2,022 Service charges.................. 192 242 827 909 Trust and financial services..... 108 97 486 1,009 Net gain on sales of securities.. 102 99 269 968 Brokerage income................. 90 129 538 420 Rental income.................... 23 67 109 212 Other............................ 276 180 1,556 704 ----------- ----------- ---------- ---------- Total noninterest income...... $ 5,790 $ 4,780 $ 23,450 $ 20,812 =========== =========== ========== ========== ANALYSIS OF NONINTEREST EXPENSE Salaries and employee benefits... $ 5,468 $ 4,403 $ 21,662 $ 16,478 Occupancy........................ 727 556 2,700 2,306 Depreciation and amortization.... 414 373 1,640 1,458 Office supplies, telephone and postage.................... 362 321 1,414 1,214 Amortization of intangible assets......................... 328 266 1,274 1,063 Professional services............ 320 289 1,471 1,146 Marketing and promotion.......... 315 281 1,098 803 FDIC and other assessments....... 52 49 205 201 Other ........................... 865 763 3,304 2,621 ----------- ----------- ---------- ---------- Total noninterest expense..... $ 8,851 $ 7,301 $ 34,768 $ 27,290 =========== =========== ========== ========== WEIGHTED AVERAGE SHARES Common shares outstanding (a).... 2,863,065 2,711,620 2,813,531 2,705,602 Incremental shares from assumed conversion of options and contingent shares......................... 58,729 92,054 82,710 59,214 ---------- ----------- ---------- ---------- Adjusted weighted average shares (b)..................... 2,921,794 2,803,674 2,896,241 2,764,816 =========== =========== ========== ========== (a) Denominator for Basic Earnings Per Common Share (b) Denominator for Diluted Earnings Per Common Share
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