BNCCORP, INC. REPORTS FOURTH QUARTER NET INCOME OF $2.2 MILLION, OR $0.62 PER DILUTED SHARE

"Following an elevated level of loan prepayments in the third quarter, we were pleased to see net loan growth return in the fourth quarter, supported by continued customer demand across our markets. We also experienced significant deposit growth during 2025, further strengthening an already strong liquidity position and providing a stable foundation to support future growth and customer needs."

"As we move forward, we remain confident in the overall quality of our loan portfolio and the strength of our balance sheet. Our strong capital position, ample liquidity, and relationship-focused business model position us well to navigate ongoing economic and geopolitical uncertainty while continuing to serve our customers and communities effectively."

2025 Versus 2024 Fourth Quarter Comparison

The Company reported net income of $2.2 million, or $0.62 per diluted share, for the quarter compared to $2.3 million, or $0.64 per diluted share, in the fourth quarter of 2024.

Fourth quarter interest income increased $1.7 million, or 14.2%, to $13.6 million from $11.9 million in the fourth quarter of 2024. Average yield on interest-earning assets in the quarter improved to 5.50% from 5.36% in the fourth quarter of 2024 driven by a $45.7 million period-over-period increase in the average balance of loans held for investment and higher origination yields as well as a $67.8 million higher average of cash and cash equivalent balances. Those increases were partially offset by lower yields on cash and cash equivalents and lower average balances and yields on debt securities during the quarter.

Interest expense in the fourth quarter of 2025 was $4.6 million, an increase of $629 thousand from the 2024 period. The cost of core deposits in the fourth quarter of 2025 rose to 1.92% versus 1.83% in the fourth quarter of 2024. The average balance of deposits increased by $98.7 million compared to the fourth quarter of 2024. The cost of interest-bearing liabilities was 2.46% during the fourth quarter of 2025, compared to 2.42% in the same period of 2024.

Net interest income for the fourth quarter of 2025 was $9.0 million, an increase of $1.1 million, or 13.4%, from the fourth quarter of 2024. Net interest margin was 3.64% in the fourth quarter of 2025 compared to 3.57% reported in the prior year period.

Non-interest income during the fourth quarter of 2025 was $1.5 million, relatively unchanged from the fourth quarter of 2024. Bank charges and service fees were $5 thousand lower period-over-period due to lower fees on lines of credit and reduced fee income from deposits held in one-way sell positions. Those reductions were partially offset by higher servicing revenue and overdraft charges. Other income during the fourth quarter of 2025 was higher than the prior period due to lower losses on the sale of fixed assets in the fourth quarter of 2025 compared to the same period of 2024.

Non-interest expense during the fourth quarter of 2025 increased $275 thousand, or 4.4%, period-over-period, primarily due to a $178 thousand increase in salary and employee benefit expenses, an increase of $78 thousand in data processing fees, and an increase in other expense of $70 thousand. Salary and employee benefit expense increased due to higher incentive compensation accrued on a period-over-period basis. The increase in data processing fees was primarily due to higher subscription services, data circuit costs, and consulting expense. The increase in other expense is primarily due to a $32 thousand change in the reversal of mortgage reserves, and $48 thousand higher fees in ICS accounts correspondent bank charges, which were partially offset by loan workout costs.

During the fourth quarter of 2025, the Company recorded a provision for credit losses of $1.1 million, compared to $280 thousand in the fourth quarter of 2024.  The increase in provision period-over-period is primarily attributed to recording specific reserves against one loan relationship within the transportation industry. 

In the fourth quarter of 2025, consolidated income tax expense was $645 thousand, compared to $594 thousand in the fourth quarter of 2024. The Company reported an effective tax rate of 22.8% in the fourth quarter of 2025, compared to 20.8% in the same period of 2024.

Tangible book value per common share on December 31, 2025 was $30.26, compared to $26.60 at December 31, 2024. The Company's tangible common equity capital ratio was 9.68% as of December 31, 2025 as it was on December 31, 2024.

2025 Versus 2024 Year End Comparison

The Company reported net income of $8.8 million, or $2.48 per diluted share, in 2025 compared to $7.9 million, or $2.23 per diluted share in 2024.

Interest income increased $5.0 million, or 10.8%, to $51.5 million in 2025 from $46.5 million in 2024. Average yield on interest-earning assets improved to 5.50% in 2025 from 5.30% in 2024 driven by a $39.3 million period-over-period increase in the average balance of loans held for investment and higher origination yields and higher balances of cash and cash equivalents. Those increases were partially offset by lower yields on cash and cash equivalents and a lower average balance and yields on debt securities during the period.

Interest expense in 2025 was $17.3 million, an increase of $1.9 million from the 2024 period. The cost of core deposits in 2025 rose to 1.90% versus 1.79% in 2024. The average balance of deposits increased by $62.6 million compared to 2024. The cost of interest-bearing liabilities was 2.44% during 2025, compared to 2.39% in the same period of 2024.

Net interest income for 2025 was $34.2 million, an increase of $3.1 million, or 10.0%, from 2024. Net interest margin was 3.65% in 2025 compared to 3.54% reported in the prior year period.

Non-interest income in 2025 was $5.7 million compared to $5.9 million in 2024. Bank charges and service fees were $233 thousand lower period-over-period primarily due to lower fees on lines of credit and interchange income, and a reduction in deposits held in one-way sell positions. These reductions were partially offset by higher servicing income and deposit account service charges. During 2025, the Company recorded a one-time gain of $114 thousand on the sale of loans. Gains on sales of loans may vary period-over-period. Other income is lower than the prior period due to reduced revenues from SBIC investments and other miscellaneous items that were partially offset by higher gains on the sale of repossessed assets.

Non-interest expense during 2025 increased $768 thousand, or 2.9%, compared to 2024, primarily due to a $181 thousand increase in professional services expense and higher salary and employee benefit expense. The Company reported a modest increase in salary and employee benefits of $513 thousand, or 3.4% year-over-year. Merit-based and inflationary increases in salaries and employee benefits were partially offset by a lower headcount.

In 2025, consolidated income tax expense was $2.7 million, compared to $2.3 million in 2024. The Company maintained an effective tax rate of 23.3% in 2025, compared to 22.8% in 2024.

Assets and Liabilities

Total assets were $1.1 billion at December 31, 2025 versus $966.7 million at December 31, 2024. Total loans held for investment were $738.7 million on December 31, 2025 compared to $698.7 million on December 31, 2024. Debt securities decreased $14.9 million from year-end 2024, primarily due to normal amortization, while cash and cash equivalent balances totaled $211.5 million on December 31, 2025 compared to $100.8 million on December 31, 2024.

Total deposits increased $134.3 million to $971.8 million as of December 31, 2025, versus a balance of $837.5 million on December 31, 2024. The Company also maintains off-balance sheet transactional deposit accounts and off-balance sheet time deposit accounts. Off-balance sheet deposits can fluctuate significantly as customers' cash sources or uses change. The Company remains committed to cultivating new deposit relationships and prioritizing liquidity.

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

The Company remains highly focused on meeting the needs of its customers and ensuring deposit rates reflect market conditions. The Company estimates that deposit insurance and other deposit protection programs secure approximately 75% of its customers' deposit balances. This fact, combined with the Company's strong balance sheet and management's sustained focus on fostering a relationship-focused culture, has allowed the Company to maintain a significant deposit base.

Trust assets under administration increased 12.4%, or $52.9 million, to $480.9 million at December 31, 2025, from $428.0 million at December 31, 2024. The Company experienced elevated distributions during 2025, but benefited from significant increases in the market value of financial assets.

Asset Quality

The allowance for credit losses on loans was $10.3 million as of December 31, 2025 versus $9.2 million as of December 31, 2024. The allowance for credit losses on loans as a percentage of loans held for investment on December 31, 2025 increased to 1.40% from 1.32% as of December 31, 2024. The increase in the allowance to loans ratio was largely due to increased reserves related to specific problem credits.

Past due loans of 31-89 days decreased to $664 thousand as of December 31, 2025, compared to $1.2 million as of December 31, 2024. Nonperforming assets were $9.2 million on December 31, 2025, compared to $6.3 million on December 31, 2024. The ratio of nonperforming assets-to-total-assets was 0.83% at December 31, 2025 compared to 0.65% as of December 31, 2024. As of December 31, 2025, $4.8 million, or 52%, of the $9.2 million in nonperforming loans were SBA loans supported by material government guarantees. Excluding loan balances covered by government guarantees, the Company's non-performing assets-to-total-assets ratio was 0.49% on December 31, 2025.

The Company continues to monitor the evolving macroeconomic and geopolitical environment for possible impacts to its loan portfolio. As of December 31, 2025, classified loans increased to $5.7 million from $4.7 million as of December 31, 2024. During 2025, the Company experienced an increase in classified loans related to the transportation industry. While the Company's overall exposure to the transportation industry is estimated to be $11.5 million at December 31, 2025, the Company does not believe that its remaining transportation portfolio is currently exposed to further credit deterioration. As of December 31, 2025 and December 31, 2024, the Company had $5.4 million and $12.2 million, respectively, of potentially problematic loans, which are risk-rated as "special mention." As of December 31, 2025, $2.8 million of the special mention loan balances are secured by hotels, compared to $3.9 million as of September 30, 2025. While the Company has experienced elevated levels of special mention loans for this industry, the loans are not concentrated in a geographical location or specific property type. The remainder of the loans within the hotel industry are pass rated as of December 31, 2025.

BNC's loans held for investment are geographically concentrated in North Dakota and Arizona, comprising 53% and 26%, 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, along with market sentiment have recently caused a decrease in oil prices that, if prolonged, could have a negative impact on the oil industry and ancillary services. Potential risks to North Dakota's energy and agriculture industries include the possibility of adverse national legislation, potential effects of trade policy, and changes in economic conditions. 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 remains influenced by the leisure and travel industries. Positive trends in both industries have been noted, but an extended slowdown in these industries could 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:

Capital

Banks and bank holding companies operate under separate regulatory capital requirements. As of December 31, 2025, the Company's capital ratios exceeded all regulatory capital thresholds, including the capital conservation buffer.

A summary of the Company's and the Bank's capital ratios is presented below:

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.

Share Repurchases

In December 2020, the Company's Board of Directors approved a share repurchase program authorizing the repurchase of 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 $1.2 million, or approximately $23.25 per share. The Company has made no subsequent share repurchases of common stock. As of December 31, 2025, there were 125,000 shares remaining under the current authorized share repurchase program.

About BNCCORP, INC.

BNCCORP, INC., headquartered in Bismarck, ND, 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 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; risks associated with our acquisition and growth strategies; and other risks, including the potential impact of the imposition of tariffs or retaliatory tariffs, 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, including period end ratios, that are not defined in GAAP. Such non-GAAP financial measures include, without limitation, a 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.

FOR FURTHER INFORMATION:
WEBSITE: www.bnccorp.com

(Financial tables attached)