BNCCORP, INC. Reports First Quarter Net Income Of $4.3 Million, Or $1.21 Per Diluted Share

Non-interest expense in the first quarter of 2020 increased by $2.325 million, or 24.0%, when compared to the first quarter of 2019 due to increases in mortgage banking operating costs.

The provision for credit losses was $550 thousand in the first quarter of 2020 and $0 in the first quarter of 2019. The ratio of nonperforming assets to total assets was 0.31% at March 31, 2020, compared to 0.21% at December 31, 2019. The allowance for loan losses was 1.63% of loans and leases held for investment at March 31, 2020, compared to 1.60% at December 31, 2019.

Tangible book value per common share at March 31, 2020 was $29.22, compared to $27.39 at December 31, 2019, an increase of $1.83 per common share.

COVID-19 Pandemic

During the first quarter of 2020, the COVID-19 Coronavirus was declared a global pandemic event.  While it is too early to estimate the full economic impact of this pandemic, we anticipate a significant decline in economic activity affecting a broad array of industries. Community banks like BNC will be impacted by the pandemic. BNC is operating in an environment with more uncertainty, lower interest rates, higher credit risk, and higher unemployment, which may impact banking operations.

Management Comments

Timothy J. Franz, President and Chief Executive Officer, said, "We delivered strong first quarter results with net income of $4.3 million and diluted earnings per share of $1.21, resulting in a 1.78% return on average assets and a 17.59% return on average equity. Delivering these results is positive for BNC's shareholders.  However, as the quarter ended a significant amount of our energy and focus was directed to operating during a global pandemic."

Mr. Franz continued, "With the challenges of the COVID-19 pandemic upon us, BNC is assisting our customers, serving our local communities and operating in a manner that reduces health risks for all. To minimize the spread of COVID-19, we are successfully serving customers with internet and mobile banking products. We are also encouraging customers to use drive-through facilities.  When necessary, access to our branch lobbies has been available by appointment. BNC's active efforts to provide loan deferrals and Paycheck Protection Program (PPP) loans offer respite to customers addressing economic challenges brought about by the pandemic.  I thank our highly dedicated teams on behalf of BNC and our customers for their extraordinary efforts. We are committed to continuing to help our customers and maintaining a healthy work force while we continue to create value for shareholders. We believe that BNC's solid capital position, liquidity, longstanding emphasis on asset quality, and focus on serving our customers, employees and community will be important strengths as we navigate this difficult period."

First Quarter 2020 Comparison to First Quarter 2019

Net interest income for the first quarter of 2020 was $7.424 million, an increase of $469 thousand, or 6.7%, from $6.955 million in the same period of 2019. The increase from the year-ago period primarily reflected the positive impact of deleveraging through deposit reduction and the redemption of subordinated debt in the fourth quarter of 2019.  The net interest margin increased to 3.28% in the first quarter of 2020 compared to 2.99% in the first quarter of 2019.

Interest income decreased $126 thousand, or 1.38%, to $9.002 million in the first quarter of 2020, compared to $9.128 million in the first quarter of 2019, as the impact of  higher average loan balances was offset by reduced interest income from investment securities sold to deleverage the balance sheet and fund elevated mortgage loan activity. The yield on average interest earning assets was 3.98% in the first quarter of 2020, compared to 3.93% in the first quarter of 2019. The average balance of interest earning assets in the first quarter of 2020 decreased by $32.8 million compared to the same period of 2019, primarily due to the decrease in average investment securities partially offset by the increase in average loans. The average balance of loans and leases held for investment increased by $45.5 million, yielding $380 thousand of additional interest income, while the average balance of mortgage loans held for sale was $99.9 million higher than the same period of 2019, resulting in $791 thousand of additional interest income. The average balance of investment securities in the first quarter of 2020 was $251.1 million or $174.7 million lower than in the first quarter of 2019, while the interest income thereon was $1.1 million lower than the prior period.

Interest expense in the first quarter of 2020 was $1.578 million, a decrease of $595 thousand from the same period in 2019. The cost of interest-bearing liabilities was 0.88% in the current quarter, compared to 1.12% in the same period of 2019. Interest expense on deposits decreased as a result of lower balances as the Company deleveraged certain higher cost deposits. The cost of core deposits in the first quarter of 2020 and 2019 was 0.69% and 0.85%, respectively. Interest expense was also $159 thousand lower in the 2020 first quarter due to the redemption of $10 million of subordinated debt in the fourth quarter of 2019.  Based on deposit repricing executed late in the first quarter of 2020, BNC anticipates its cost of deposits will be under 0.50% to start the second quarter. 

At the end of the first quarter 2020, credit metrics remained stable with a 0.31% nonperforming loans to total asset ratio.  Due to the uncertain economic impact the COVID-19 pandemic will have on borrowers, the Company recorded a $550 thousand provision for loan losses in the first quarter 2020. This compares to $0 recorded in the first quarter of 2019.

Non-interest income for the fourth quarter of 2020 was $10.794 million, an increase of $6.292 million, or 139.8%, from $4.502 million in the first quarter of 2019. Mortgage banking revenues were $8.616 million in the first quarter of 2020, an increase of $5.529 million, compared to $3.087 million in the first quarter of 2019, as lower interest rates induced higher mortgage banking origination activity. The fair value of mortgage derivatives decreased late in the quarter as a result of mortgage-backed securities market dislocation and general liquidity concerns by mortgage servicers related to mortgagors being able to defer payments pursuant to the Coronavirus Aid Relief and Economic Security (CARES) Act legislation.  This dislocation appears to have been short-term as mortgage banking originations have been robust in early April and margins have normalized. Gains on sales of debt securities were $975 thousand in the first quarter of 2020, compared to gains of $64 thousand in the same period of 2019.  Debt securities balances can change from period to period depending on shifting liquidity requirements for loan growth or other corporate purposes.  Therefore, gains and losses on sales of assets and earnings from certain investments can vary significantly from period to period. 

Non-interest expense for the first quarter of 2020 increased $2.324 million, or 24.0%, to $12.006 million, from $9.682 million in the first quarter of 2019. The increase is directly attributed to mortgage operations.

In the first quarter of 2020, income tax expense was $1.359 million, compared to $337 thousand in the first quarter of 2019. The effective tax rate was 24.0% in the first quarter of 2020, compared to 19.0% in the same period of 2019.  The increase in the effective tax rate for the full year of 2019 is due to higher pre-tax revenues and lower non-taxable interest income from municipal securities.

Net income was $4.302 million, or $1.21 per diluted share, in the first quarter of 2020. Net income in the first quarter of 2019 was $1.438 million, or $0.40 per diluted share.

Assets and Liabilities

Total assets were $1.042 billion at March 31, 2020, an increase of $76.1 million, compared to $966.8 million at December 31, 2019. This increase is primarily due to increased mortgage loans held for sale balances and increased cash balances resulting from higher deposit balances and the sale of investment securities.  Loans and leases held for investment aggregated $515.9 million at March 31, 2020, an increase of $7.3 million, or 1.4%, since December 31, 2019.  We anticipate loans and leases held for investment will increase in the second quarter as PPP loans are funded.  As of April 24, 2020, BNC had funded 516 PPP loans totaling $86.7 million. In addition, BNC has approximately 150 open applications in various stages ready for the second round of funding that was recently approved by Congress. Loans held for sale as of March 31, 2020 were higher by $39.9 million when compared to December 31, 2019 due to higher mortgage loan funding in 2020.  Investment securities decreased $41.9 million from year-end 2019, while cash and cash equivalent balances increased $54.5 million.

Total deposits increased $76.2 million to $896.7 million at March 31, 2020, from $820.5 million at December 31, 2019. In the first quarter 2020, we asserted our ability to bring back approximately $50 million of deposits previously moved off our balance sheet in the deleveraging activities of the fourth quarter of 2019.  The return of these deposits and sale of investment securities has resulted in cash balances of $65.0 million after increasing loan balances $47.2 million at the end of the first quarter. We anticipate a portion of this cash may be used to fund PPP loans and mortgage loans held for sale as our mortgage banking business remains robust.   Funded PPP loans will increase deposits until borrowers utilize loan proceeds.

The table below shows total deposits since 2016:

At March 31, 2020, the balances of FHLB advances were $0, compared to $17.0 million at December 31, 2019.

As the first quarter of 2020 ended, BNC had a relatively liquid balance sheet.  See a condensed summary of our balance sheet as of March 31, 2020 below:

ASSETS
Cash and cash equivalents	$	64,987
Debt securities available for sale		223,371
Loans held for sale-mortgage banking		177,015
Loans and leases held for investment		515,905
Allowance for credit losses		(8,414)
Other assets		69,956
Total assets	$	1,042,820 Werbung Mehr Nachrichten zur BNC Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 02:00 - PR Newswire FirstGroup Plc - Transaction in Own Shares 02:00 - PR Newswire BlackRock Sustainable American Income Trust Plc - Total Voting Rights 02:00 - PR Newswire Bodycote Plc - Transaction in Own Shares