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BNCCORP, INC. REPORTS SECOND QUARTER NET INCOME OF $1.9 MILLION, OR $0.53 PER DILUTED SHARE

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BNCCORP, INC. (OTCQX Markets: BNCC) reported a significant rise in net income for the second quarter of 2024, reaching $1.9 million or $0.53 per diluted share, up from $574 thousand or $0.16 per share in the same period of 2023. The net interest margin improved to 3.58%, and the efficiency ratio slightly improved to 72.86%. The Community Banking segment reported net income of $2.2 million.

However, net interest income fell by 5.5% to $7.6 million from $8.0 million in the second quarter of 2023. Loans held for investment increased $18.2 million to $687 million. Interest expense rose by $973 thousand due to Federal Reserve rate hikes. Non-interest income for the Community Banking segment dropped by $401 thousand.

Nonperforming assets decreased to $3.1 million. Deposits decreased by $44.8 million to $792.4 million. Consolidated expenses increased by $319 thousand year-over-year.

BNCCORP, INC. (Mercati OTCQX: BNCC) ha riportato un significativo aumento del reddito netto per il secondo trimestre del 2024, raggiungendo 1,9 milioni di dollari o 0,53 dollari per azione diluita, rispetto ai 574 mila dollari o 0,16 dollari per azione nello stesso periodo del 2023. Il margine di interesse netto è migliorato al 3,58%, e il rapporto di efficienza è leggermente migliorato al 72,86%. Il segmento Banca Comunitaria ha registrato un reddito netto di 2,2 milioni di dollari.

Tuttavia, il reddito da interessi netti è diminuito del 5,5% a 7,6 milioni di dollari rispetto agli 8,0 milioni di dollari del secondo trimestre del 2023. I prestiti detenuti per investimento sono aumentati di 18,2 milioni di dollari arrivando a 687 milioni di dollari. Le spese per interessi sono aumentate di 973 mila dollari a causa degli aumenti dei tassi della Federal Reserve. Il reddito non da interessi del segmento Banca Comunitaria è diminuito di 401 mila dollari.

Gli atti non performanti sono diminuiti a 3,1 milioni di dollari. I depositi sono diminuiti di 44,8 milioni di dollari a 792,4 milioni di dollari. Le spese consolidate sono aumentate di 319 mila dollari rispetto all'anno precedente.

BNCCORP, INC. (Mercados OTCQX: BNCC) reportó un aumento significativo en el ingreso neto para el segundo trimestre de 2024, alcanzando 1.9 millones de dólares o 0.53 dólares por acción en circulación, en comparación con 574 mil dólares o 0.16 dólares por acción en el mismo período de 2023. El margen de interés neto mejoró al 3.58%, y el ratio de eficiencia mejoró ligeramente al 72.86%. El segmento de Banca Comunitaria reportó un ingreso neto de 2.2 millones de dólares.

Sin embargo, los ingresos por intereses netos cayeron un 5.5% a 7.6 millones de dólares desde 8.0 millones de dólares en el segundo trimestre de 2023. Los préstamos mantenidos para inversión aumentaron 18.2 millones de dólares alcanzando 687 millones de dólares. Los gastos por intereses aumentaron en 973 mil dólares debido a los aumentos de tasas de la Reserva Federal. Los ingresos no por intereses del segmento de Banca Comunitaria cayeron en 401 mil dólares.

Los activos no productivos disminuyeron a 3.1 millones de dólares. Los depósitos disminuyeron en 44.8 millones de dólares a 792.4 millones de dólares. Los gastos consolidados aumentaron en 319 mil dólares en comparación con el año anterior.

BNCCORP, INC. (OTCQX 마켓: BNCC)는 2024년 2분기 순이익190만 달러 또는 희석 주당 0.53 달러에 달하며, 2023년 같은 기간의 57.4만 달러 또는 주당 0.16 달러에서 상승했다고 보고했습니다. 순이자 마진3.58%로 개선되었고, 효율성 비율은 약간 개선되어 72.86%에 도달했습니다. 커뮤니티 뱅킹 부문의 순이익은 220만 달러로 보고되었습니다.

그러나 순이자 수익은 2023년 2분기의 800만 달러에서 5.5% 감소한 760만 달러로 줄었습니다. 투자를 위한 대출1820만 달러 증가하여 6억 8700만 달러가 되었습니다. 이자 비용은 연방준비제도(Federal Reserve) 금리 인상으로 인해 97.3만 달러 증가했습니다. 커뮤니티 뱅킹 부문의 비이자 수익40.1만 달러 감소했습니다.

부실 자산310만 달러로 감소했습니다. 예금4480만 달러 감소하여 7억 9240만 달러가 되었습니다. 연결 비용은 전년 대비 31.9만 달러 증가했습니다.

BNCCORP, INC. (Marchés OTCQX : BNCC) a annoncé une augmentation significative de son revenu net pour le deuxième trimestre de 2024, atteignant 1,9 million de dollars ou 0,53 dollar par action diluée, contre 574 000 dollars ou 0,16 dollar par action durant la même période de 2023. La marge d'intérêt nette s'est améliorée à 3,58%, et le taux d'efficacité s'est légèrement amélioré à 72,86%. Le segment de Banque Communautaire a rapporté un revenu net de 2,2 millions de dollars.

Cependant, le revenu d'intérêts nets a chuté de 5,5% à 7,6 millions de dollars, contre 8,0 millions de dollars au deuxième trimestre de 2023. Les prêts détenus pour investissement ont augmenté de 18,2 millions de dollars pour atteindre 687 millions de dollars. Les dépenses d'intérêts ont augmenté de 973 000 dollars en raison des hausses de taux de la Réserve fédérale. Les revenus non d'intérêts pour le segment de Banque Communautaire ont diminué de 401 000 dollars.

Les actifs non performants ont diminué à 3,1 millions de dollars. Les dépôts ont diminué de 44,8 millions de dollars pour atteindre 792,4 millions de dollars. Les dépenses consolidées ont augmenté de 319 000 dollars par rapport à l'année précédente.

BNCCORP, INC. (OTCQX Märkte: BNCC) hat im zweiten Quartal 2024 einen signifikanten Anstieg des Nettoeinkommens gemeldet, welches 1,9 Millionen Dollar oder 0,53 Dollar pro verwässerter Aktie erreichte, im Vergleich zu 574 Tausend Dollar oder 0,16 Dollar pro Aktie im gleichen Zeitraum 2023. Die Nettozinsspanne verbesserte sich auf 3,58%, und das Effizienzverhältnis verbesserte sich leicht auf 72,86%. Das Segment Community Banking meldete ein Nettoeinkommen von 2,2 Millionen Dollar.

Allerdings fiel das Nettozinsinkommen um 5,5% auf 7,6 Millionen Dollar von 8,0 Millionen Dollar im zweiten Quartal 2023. Investitionsdarlehen stiegen um 18,2 Millionen Dollar auf 687 Millionen Dollar. Zinsaufwendungen stiegen um 973 Tausend Dollar aufgrund der Zinserhöhungen der Federal Reserve. Das Nichteinkommen im Segment Community Banking fiel um 401 Tausend Dollar.

Problematische Vermögenswerte sanken auf 3,1 Millionen Dollar. Einlagen sanken um 44,8 Millionen Dollar auf 792,4 Millionen Dollar. Konsolidierte Ausgaben stiegen im Jahresvergleich um 319 Tausend Dollar.

Positive
  • Net income increased to $1.9 million, a 224% rise.
  • Net interest margin improved to 3.58%.
  • Efficiency ratio improved to 72.86%.
  • Loans held for investment increased by $18.2 million.
  • Nonperforming assets decreased to $3.1 million.
Negative
  • Net interest income decreased by 5.5% to $7.6 million.
  • Non-interest income for the Community Banking segment decreased by $401 thousand.
  • Deposits decreased by $44.8 million.
  • Consolidated expenses increased by $319 thousand.

Highlights

  • Net income during the second quarter of 2024 increased $1.3 million, or 224.0%, to $1.9 million, or $0.53 per diluted share, from $574 thousand, or $0.16 per diluted share, in the 2023 period.
  • Second quarter 2024 return on average assets of 0.82% compared to 0.25% in the 2023 period.
  • Net interest margin increased to 3.58% in the second quarter of 2024 compared to 3.52% in the first quarter of 2024.
  • Efficiency ratio improved to 72.86% during the second quarter of 2024 compared to 73.50% in the first quarter of 2024.
  • For the quarter, the Community Banking segment reported net income of $2.2 million, or $0.62 per diluted share, compared to net income of $2.8 million, or $0.79 per diluted share, in the same period of 2023.
  • Yields on loans held for investment was 5.59% for the second quarter of 2024 compared to 5.23% in the second quarter of 2023.
  • During the quarter, loans held for investment increased by $9.1 million compared to the first quarter of 2024, or 1.3%. As a result, loans held for investment have increased $18.2 million, or 2.7%, to $687.0 million from $668.8 million at December 31, 2023.
  • The ratio of loans held for investment-to-deposits increased to 86.7% at June 30, 2024 from 79.9% at December 31, 2023.
  • Allowance for credit losses as of June 30, 2024, decreased to 1.38% of loans held for investment compared to 1.39% as of December 31, 2023.

BISMARCK, N.D., July 31, 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 second quarter ended June 30, 2024.

Management Commentary

"Year-to-date results reflect a more stable earnings stream than a year ago, allowing greater focus on critical core banking objectives that build incremental shareholder value over time. During the quarter, we expanded loans held for investment by $9.1 million, continuing the trend from the first quarter of 2024. We maintained relationship deposit balances, with only a marginal increase in our cost of funds when compared to the first quarter of 2024, and continued our focus of managing expenses. Our attention to these fundamental community banking objectives has given rise to more consistent earnings of $1.7 million and $1.9 million sequentially in each of the first two quarters of 2024 despite continued economic uncertainty," said Daniel J. Collins, BNC's President and Chief Executive Officer.

Mr. Collins added, "We strive for sustainable quality loan growth, while supporting this goal with a conservative credit culture. The second quarter loan originations' average yield of 7.93% was slightly ahead of the 7.60% yield achieved in the first quarter. This steady approach to lending and providing high-quality service to our customers will continue to be the compass that helps us navigate a dynamic economic landscape."

"Consistent with prior quarters, our strategy remains to deliver sustainable growth, anchored by strong risk management practices and a culture of building strong customer relationships that have weathered the extreme volatility experienced in recent years."

2024 Versus 2023 Second Quarter Comparison

SEGMENT DATA

For the Quarter Ended June 30, 2024

(in thousands)

Community

Banking


Mortgage

Banking (a)


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

7,842


$

-


$

(245)


$

-


$

7,597

Provision for credit losses


30



-



-



-



30

Non-interest income


1,549



-



596



(677)



1,468

Non-interest expense


6,497



-



784



(677)



6,604

Income (loss) before taxes


2,864



-



(433)



-



2,431

Income tax expense (benefit)


673



-



(102)



-



571

    Net income (loss)

$

2,191


$

-


$

(331)


$

-


$

1,860

















For the Quarter Ended June 30, 2023


Community

Banking


Mortgage

Banking


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

8,114


$

147


$

(218)


$

-


$

8,043

Provision for credit losses


165



-



-



-



165

Non-interest income


1,950



2,172



521



(931)



3,712

Non-interest expense


6,178



4,845



748



(931)



10,840

Income (loss) before taxes


3,721



(2,526)



(445)



-



750

Income tax expense (benefit)


907



(626)



(105)



-



176

    Net income (loss)

$

2,814


$

(1,900)


$

(340)


$

-


$

574

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

The Community Banking Segment reported net income of $2.2 million, or $0.62 per diluted share, for the quarter compared to $2.8 million, or $0.79 per diluted share, in the second quarter of 2023. Interest expense increased by $973 thousand when compared to the 2023 period because of rate increases made by the Federal Reserve, an impact partially offset by a $7.0 million decrease in average interest bearing deposits compared to the prior year period. The increase in interest expense was also offset by $701 thousand higher interest income from loan growth and increased yields on earning assets. The Community Banking Segment reported $401 thousand in lower non-interest income primarily due to a $74 thousand decrease in off balance sheet deposit income and $319 thousand less in management fee income from the Mortgage Segment. Non-interest expense was slightly higher in the 2024 period due to normal inflationary pressures on salaries and benefits, data processing fees, regulatory costs, and other expense, an increase that was partially offset by lower cost for professional services, marketing, occupancy, and office supplies and postage compared to the same period in 2023. Additional savings have been realized as the Company has lowered the number of its full-time equivalent employees by 3.5% since December 31, 2023.

Consolidated net interest income for the second quarter of 2024 was $7.6 million, a decrease of $446 thousand, or 5.5%, from $8.0 million in the second quarter of 2023. Net interest margin was 3.58% in the second quarter of 2024 compared to 3.68% 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 loans held for sale and a significant increase in the cost of deposits.

On a consolidated basis, second-quarter interest income increased $554 thousand, or 5.2%, from $10.7 million to $11.3 million. The 5.30% average yield on interest-earning assets in the quarter improved from the 4.90% average yield in the second quarter of 2023 because of higher yields on interest-earning assets, a $47.7 million year-over-year increase in the average balance of loans held for investment and higher yields and balances of cash and cash equivalents. Those increases were offset by lower debt securities and loans held for sale. It is noteworthy that the Company's variable rate assets have continued to re-price upward to coincide with the rising interest rate environment. The weighted average interest rate on loans held for investment originated in the second quarter of 2024 was 7.93%, compared to 6.27% during the second quarter 2023.

Consolidated interest expense in the second quarter of 2024 was $3.7 million, an increase of $1.0 million from the 2023 period. As a result, the cost of core deposits in the second quarter of 2024 rose to 1.74% versus 1.20% in the second quarter of 2023.

The consolidated average balance of deposits decreased by $19.7 million compared to the second quarter of 2023. The cost of interest-bearing liabilities was 2.34% during the second quarter of 2024, compared to 1.68% 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 June 30, 2024, nonperforming assets were $3.1 million, representing a ratio of nonperforming assets to total assets of 0.33%. These results are a reduction from the $3.4 million in nonperforming assets, a 0.35% ratio of nonperforming assets to total assets, held on December 31, 2023. At June 30, 2024, $1.7 million of the nonperforming loans were SBA loans supported by material government guarantees. The Company recorded a $30 thousand provision for credit losses in the second quarter of 2024 compared to a $165 thousand provision in the second quarter of 2023. The allowance for credit losses decreased slightly to 1.38% of loans held for investment as of June 30, 2024 compared to 1.39% on December 31, 2023.

Non-interest income for the Community Banking Segment during the second quarter of 2024 was $1.5 million, compared to $2.0 million in the 2023 second quarter. Bank charges and service fees were $111 thousand lower quarter-over-quarter primarily due to lower deposits held in one-way sell positions. Using an associated banking network, the Company is able to generate 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 June 30, 2024, off-balance sheet deposits amounted to $16.8 million compared to $34.8 million as of December 31, 2023. Consolidated other income in the second quarter of 2024 increased by $139 thousand compared to previous year period as the Company realized lower losses on the sale of fixed assets of $116 thousand compared to the 2023 period as well as higher SBIC and BOLI revenue year-over-year.

Non-interest expense for the Community Banking Segment during the second quarter of 2024 increased $319 thousand, or 5.2%, year-over-year. The increase is primarily due to higher salaries and benefits, data processing fees, regulatory costs, and other expense which were partially offset by lower costs for professional services, marketing, occupancy, office supplies and postage versus the same period of 2023.

In the second quarter of 2024, consolidated income tax expense was $571 thousand, compared to $176 thousand in the second quarter of 2023. Despite this increase, the Company's effective tax rate remained unchanged at 23.5% for both periods.

Tangible book value per common share on June 30, 2024, was $29.05, compared to $30.38 at December 31, 2023. The decrease in tangible book value per common share was driven by the $2.25 dividend declared on February 2, 2024 and an increase in accumulated other comprehensive loss. This was offset by earnings during the period and capital management activities. During the first quarter of 2024, the Company repurchased 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 was 11.16% on June 30, 2024, compared to 11.19% on December 31, 2023.

2024 Versus 2023 Six-Month Comparison

SEGMENT DATA

For the Six Months Ended June 30, 2024

(in thousands)

Community

Banking


Mortgage

Banking (a)


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

15,923


$

-


$

(467)


$

-


$

15,456

Provision for credit losses


245



-



-



-



245

Non-interest income


3,167



-



1,137



(1,298)



3,006

Non-interest expense


13,242



-



1,567



(1,298)



13,511

Income (loss) before taxes


5,603



-



(897)



-



4,706

Income tax expense (benefit)


1,317



-



(211)



-



1,106

    Net income (loss)

$

4,286


$

-


$

(686)


$

-


$

3,600

















For the Six Months Ended June 30, 2023


Community

Banking


Mortgage

Banking


Holding

Company


Intercompany

Eliminations


BNCCORP

Consolidated

Net interest income (expense)

$

16,611


$

302


$

(429)


$

-


$

16,484

Provision for credit losses


405



-



-



-



405

Non-interest income


4,177



4,019



1,071



(1,924)



7,343

Non-interest expense


12,689



8,459



1,522



(1,924)



20,746

Income (loss) before taxes


7,694



(4,138)



(880)



-



2,676

Income tax expense (benefit)


1,862



(1,026)



(207)



-



629

    Net income (loss)

$

5,832


$

(3,112)


$

(673)


$

-


$

2,047

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

The Community Banking Segment reported net income of $4.3 million, or $1.20 per diluted share, in the first six months of 2024 compared to $5.8 million in the same period of 2023. Interest expense increased by $3.2 million when compared to the 2023 period because of rate changes made by the Federal Reserve in addition to the $20.5 million increase in average interest bearing deposits when compared to the prior year period. The increase in interest expense was partially offset by $2.5 million higher interest income from loan growth and increased yields on earning assets. For the first six months of 2024, the Community Banking Segment reported $1.0 million lower non-interest income over the same period of 2023 primarily due to a $373 thousand decrease in off balance sheet deposit income and $664 thousand less in management fee income from the Mortgage Segment that was partially offset by higher SBIC revenues when compared to 2023. Non-interest expense was higher in the 2024 period due to normal inflationary pressures on salaries and benefits, increased data processing fees, regulatory and other expense that was partially offset by lower professional services, marketing, and depreciation compared to the same period in 2023. As noted above, the Company has lowered the number of its full-time equivalent employees by 3.5% since December, 31, 2023.

Consolidated net interest income in the first half of 2024 was $15.5 million, a decrease of $1.0 million, or 6.2%, from $16.5 million in the first half of 2023. Net interest margin was 3.55% in the 2024 six-month period compared to 3.83% 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 loans held for sale and a significant increase in the cost of deposits.

On a consolidated basis, the six-month period interest income increased $2.2 million, or 10.7%, from $20.7 million to $22.9 million. The 5.26% average yield on interest-earning assets in the first half of 2024 was higher than the 4.81% average yield in the first half of 2023 because of higher yields on interest-earning assets, a $48.2 million year-over-year increase in the average balance of loans held for investment and higher yields and balances of cash and cash equivalents. Those increases were offset by lower average balances of debt securities and loans held for sale. It is noteworthy that the Company's variable rate assets have continued to re-price upward to coincide with the rising interest rate environment.

Consolidated interest expense in the first half of 2024 was $7.5 million, an increase of $3.3 million from the 2023 period. As a result, the cost of core deposits in the first six months of 2024 rose to 1.74% versus 0.94% in the first six months of 2023.

The average balance of deposits increased by $5.1 million compared to the first half of 2023. The cost of interest-bearing liabilities was 2.34% during the first six months of 2024, compared to 1.37% 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 six months of 2024 was $3.2 million, compared to $4.2 million in the first six months of 2023. Bank charges and service fees were $410 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 June 30, 2024, off-balance sheet deposits amounted to $16.8 million compared to $34.8 million as of December 31, 2023. Consolidated other income in the first six months of 2024 increased by $210 thousand compared to the first six months of 2023 because of a reduction of $127 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 six months of 2024 increased $553 thousand, or 4.4%, year-over-year. The increase is primarily due to higher salaries, data processing fees, regulatory costs, and other expenses being partially offset by lower professional service, marketing, and depreciation expense.

During the six-month period ended June 30, 2024, consolidated income tax expense was $1.1 million, compared to $629 thousand in the first half of 2023. Even so, the Company's effective tax rate was 23.5% in the first half of 2024, unchanged from the same period of 2023.

Assets and Liabilities

At the consolidated level, total assets were $915.8 million at June 30, 2024 versus $968.2 million at December 31, 2023. Total loans held for investment were $687.0 million on June 30, 2024 compared to $668.8 million on December 31, 2023. Debt securities decreased $24.7 million from year-end 2023, primarily due to normal amortization, while cash and cash equivalent balances totaled $56.1 million on June 30, 2024 compared to $102.5 million on December 31, 2023.

Total deposits decreased $44.8 million to $792.4 million as of June 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 continues to focus on developing new deposit relationships and is keenly focused on the importance of liquidity.

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



As of

(In thousands)


June 30,

2024


December 31,

2023


June 30,

2023

Deposits:










Non-interest-bearing


$

171,112


$

184,442


$

181,508

Interest-bearing –










Savings, interest checking and money market



546,080



582,855



563,878

Time deposits



75,173



69,906



59,111

Total on balance sheet deposits



792,365



837,203



804,497











Off-balance sheet deposits (1)



16,814



34,792



4,808











Total available deposits


$

809,179


$

871,995


$

809,305

(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 June 30, 2024, the Company managed off-balance sheet time deposit balances of $24.5 million,
compared to $18.7 million time deposit balances as of December 31, 2023 and $34.7 million time deposit balances as of June 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 $16.8 million at June 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 3.9%, or $15.0 million, to $403.8 million at June 30, 2024, from $388.8 million at December 31, 2023. During the first half of 2024, the Company benefited from material market value increases coupled with the acquisition of new assets under administration.

Asset Quality

The allowance for credit losses was $9.4 million as of June 30, 2024, versus $9.3 million on December 31, 2023. The allowance as a percentage of loans held for investment on June 30, 2024 decreased slightly from 1.39% as of December 31, 2023 to 1.38% at current quarter end.

Past due loans for a period of 31-89 days decreased to $364 thousand as of June 30, 2024, compared to $4.8 million as of December 31, 2023, as these loans migrated back to a current status. Nonperforming assets were $3.1 million on June 30, 2024, compared to $3.4 million on December 31, 2023. The ratio of nonperforming assets-to-total-assets was 0.33% at June 30, 2024 versus 0.35% at December 31, 2023. At June 30, 2024, $1.7 million of the nonperforming loans were SBA loans that are supported by material government guarantees. As of June 30, 2024, the Company did not hold any other real estate and held $11 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 June 30, 2024, classified loans were $5.4 million with $3.0 million of the balance on non-accrual. These results compare to year-end 2023 where the Company held $5.3 million of classified loans with $2.5 million of those loans on non-accrual. As of June 30, 2024 and December 31, 2023, the Company had $11.8 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 and the Company continues to monitor their possible impact on the performance of the loan portfolio.

BNC's loans held for investment are geographically concentrated in North Dakota and Arizona, comprising 57% and 23%, 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:

Loans Held for Investment by Industry Sector












(in thousands)

June 30, 2024


December 31, 2023

Non-owner Occupied Commercial Real estate – not otherwise categorized

$

193,127


28

%


$

198,428


30

%

Consumer, not otherwise categorized


103,451


15




99,702


15


Hotels


82,704


12




83,985


13


Retail trade


36,171


5




35,827


5


Healthcare and social assistance


39,798


6




32,011


5


Agriculture, forestry, fishing and hunting


36,622


5




33,503


5


Transportation and warehousing


29,694


4




27,905


4


Art, entertainment and recreation


28,122


4




27,507


4


Non-hotel accommodation and food service


25,515


4




24,637


4


Mining, oil and gas extraction


21,483


3




22,149


3


Other service


13,775


2




11,940


2


Construction contractors


12,073


2




16,082


2


Professional, scientific, and technical services


11,585


2




9,570


1


Real estate and rental and leasing support services


9,761


2




9,804


2


Manufacturing


9,665


2




7,801


1


Finance and insurance


9,141


1




6,781


1


Public administration


7,365


1




7,837


1


Educational services


6,339


1




4,246


1


All other


9,504


1




8,051


1


   Gross loans held for investment

$

685,895


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 June 30, 2024, the Company's loans related to office space were 2.90% of loans held for investment, and are primarily concentrated in North Dakota, with only 0.27% within the Arizona market.

Capital

Banks and bank holding companies operate under separate regulatory capital requirements. As of June 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:



June 30,

2024


December 31,

2023

BNCCORP, INC. (Consolidated)





   Tier 1 leverage


14.30 %


14.52 %

   Common equity tier 1 risk based capital


13.81 %


14.58 %

   Tier 1 risk based capital


15.71 %


16.49 %

   Total risk based capital


16.87 %


17.64 %

   Tangible common equity


11.16 %


11.19 %






BNC National Bank





   Tier 1 leverage


13.36 %


12.54 %

   Common equity tier 1 risk based capital


14.68 %


14.25 %

   Tier 1 risk based capital


14.68 %


14.25 %

   Total risk based capital


15.84 %


15.40 %

Tangible common equity


11.98 %


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 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 June 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 June 30,


For the Six Months

Ended June 30,

(In thousands, except per share data)


2024


2023


2024


2023

INCOME STATEMENT













Interest income


$

11,251


$

10,697


$

22,928


$

20,703

Interest expense



3,654



2,654



7,472



4,219

Net interest income



7,597



8,043



15,456



16,484

Provision for credit losses



30



165



245



405

Net interest income after provision for credit losses



7,567



7,878



15,211



16,079

Non-interest income













Bank charges and service fees



774



885



1,567



1,977

Wealth management revenues



502



483



1,000



970

Mortgage banking revenues



-



2,292



-



4,148

Gains on sales of loans, net



3



2



3



10

Gains on sales of debt securities, net



-



-



-



12

Other



189



50



436



226

Total non-interest income



1,468



3,712



3,006



7,343

Non-interest expense













Salaries and employee benefits



3,769



5,061



7,812



10,004

Professional services



263



1,689



518



2,586

Data processing fees



862



1,064



1,707



2,053

Marketing and promotion



194



1,360



382



2,729

Occupancy



378



482



768



994

Regulatory costs



137



94



272



200

Depreciation and amortization



273



284



539



577

Office supplies and postage



102



132



198



228

Other



626



674



1,315



1,375

Total non-interest expense



6,604



10,840



13,511



20,746

Income before taxes



2,431



750



4,706



2,676

Income tax expense



571



176



1,106



629

Net income


$

1,860


$

574


$

3,600


$

2,047














WEIGHTED AVERAGE SHARES













Common shares outstanding (a)



3,533,359



3,578,029



3,555,215



3,576,803

Dilutive effect of share-based compensation



5,793



2,244



5,516



2,281

Adjusted weighted average shares (b)



3,539,152



3,580,273



3,560,731



3,579,084














EARNINGS PER SHARE DATA













Basic earnings per common share


$

0.53


$

0.16


$

1.01


$

0.57

Diluted earnings per common share


$

0.53


$

0.16


$

1.01


$

0.57



(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)


June 30,

2024


December 31,

2023


June 30,

2023

BALANCE SHEET DATA










Cash and cash equivalents


$

56,104


$

102,454


$

16,640

Debt securities available for sale



135,082



159,772



165,745

FRB and FHLB stock



2,387



2,372



2,938

Loans held for sale-mortgage banking



-



-



67,228

Loans held for investment



687,009



668,808



640,989

Allowance for credit losses



(9,448)



(9,284)



(9,000)

Net loans held for investment



677,561



659,524



631,989

Premises and equipment, net



11,102



10,955



11,247

Operating lease right of use asset



771



938



867

Accrued interest receivable



4,299



4,206



3,458

Other



28,513



27,984



29,661

Total assets


$

915,819


$

968,205


$

929,773











Deposits:










Non-interest-bearing


$

171,112


$

184,442


$

181,508

Interest-bearing –










Savings, interest checking and money market



546,080



582,855



563,878

Time deposits



75,173



69,906



59,111

Total deposits



792,365



837,203



804,497

Guaranteed preferred beneficial interest in Company's subordinated debentures



15,464



15,464



15,000

Accrued interest payable



1,095



937



451

Accrued expenses



2,856



4,105



4,987

Operating lease liabilities



870



1,048



986

Other



854



1,030



1,026

Total liabilities



813,504



859,787



826,947

Common stock



35



36



36

Capital surplus – common stock



26,841



26,572



26,634

Retained earnings



88,643



93,186



89,528

Treasury stock



(2,687)



(1,528)



(1,664)

Accumulated other comprehensive income, net



(10,517)



(9,848)



(11,708)

Total stockholders' equity



102,315



108,418



102,826

Total liabilities and stockholders' equity


$

915,819


$

968,205


$

929,773











OTHER SELECTED DATA










Trust assets under administration


$

403,839


$

388,829


$

380,422

Core deposits (1)


$

792,365


$

837,203


$

804,497

Tangible book value per common share (2)


$

29.05


$

30.38


$

28.87

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


$

32.04


$

33.13


$

32.16

Full time equivalent employees



139



144



207

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

June 30, 2024


For the Quarter Ended

June 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


$

46,258


$

631


5.48 %


$

27,829


$

358


5.15 %


$

24


$

249


$

273

FRB and FHLB stock



2,387



38


6.40 %



2,938



36


4.91 %



7



(5)



2

Debt securities available for sale



136,806



1,173


3.45 %



170,176



1,361


3.21 %



96



(284)



(188)

Loans held for sale-mortgage banking



-



-


0.00 %



53,857



732


5.45 %



(366)



(366)



(732)

Loans held for investment



677,454



9,409


5.59 %



629,712



8,210


5.23 %



557



642



1,199

Allowance for credit losses



(9,431)



-


0.00 %



(8,922)



-


0.00 %



-



-



-

    Total


$

853,474


$

11,251


5.30 %


$

875,590


$

10,697


4.90 %


$

318


$

236


$

554



























Liabilities


























Interest checking and money market


$

497,882


$

2,803


2.26 %


$

516,489


$

2,238


1.74 %


$

463


$

102


$

565

Savings



43,278



12


0.11 %



48,099



13


0.11 %



-



(1)



(1)

Time deposits



70,535



575


3.28 %



54,150



154


1.14 %



360



61



421

Short-term borrowings



-



-


0.00 %



212



-


0.00 %



-



-



-

Subordinated debentures



15,464



264


6.86 %



15,000



249


6.67 %



7



8



15

    Total


$

627,159


$

3,654


2.34 %


$

633,950


$

2,654


1.68 %


$

830


$

170


$

1,000

Net Interest Income





$

7,597







$

8,043












Net Interest Spread








2.96 %








3.22 %










Net Interest Margin








3.58 %








3.68 %











AVERAGE BALANCE, YIELD EARNED, AND COST PAID


For the Six Months Ended

June 30, 2024


For the Six Months Ended

June 30, 2023


Six 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


$

65,896


$

1,796


5.48 %


$

33,998


$

793


4.70 %


$

151


$

852


$

1,003

FRB and FHLB stock



2,380



71


6.00 %



3,008



72


4.83 %



11



(12)



(1)

Debt securities available for sale



142,325



2,437


3.44 %



172,871



2,737


3.19 %



189



(489)



(300)

Loans held for sale-mortgage banking



-



-


0.00 %



41,492



1,130


5.49 %



(565)



(565)



(1,130)

Loans held for investment



674,745



18,624


5.55 %



626,507



15,971


5.14 %



1,342



1,311



2,653

Allowance for credit losses



(9,357)



-


0.00 %



(8,844)



-


0.00 %



-



-



-

    Total


$

875,989


$

22,928


5.26 %


$

869,032


$

20,703


4.81 %


$

1,128


$

1,097


$

2,225



























Liabilities


























Interest checking and money market


$

514,559


$

5,838


2.28 %


$

502,764


$

3,478


1.40 %


$

1,403


$

957


$

2,360

Savings



43,174



23


0.11 %



50,517



24


0.09 %



3



(4)



(1)

Time deposits



70,025



1,085


3.12 %



53,933



231


0.86 %



764



90



854

Short-term borrowings



-



-


0.00 %



501



6


2.42 %



(3)



(3)



(6)

Subordinated debentures



15,464



526


6.84 %



15,000



480


6.45 %



30



16



46

    Total


$

643,222


$

7,472


2.34 %


$

622,715


$

4,219


1.37 %


$

2,197


$

1,056


$

3,253

Net Interest Income





$

15,456







$

16,484












Net Interest Spread








2.93 %








3.44 %










Net Interest Margin








3.55 %








3.83 %










 

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter

Ended June 30,


For the Six Months

Ended June 30,

(In thousands)


2024


2023


2024


2023

OTHER AVERAGE BALANCES













Total assets



907,476



930,674



929,850



923,692

Core deposits



784,981



804,922



803,323



798,482

Total equity



101,024



104,780



102,420



103,782

KEY RATIOS













Return on average common stockholders' equity (a)



6.67 %



2.00 %



6.39 %



3.61 %

Return on average assets (b)



0.82 %



0.25 %



0.78 %



0.45 %

Efficiency ratio (Consolidated)



72.86 %



92.22 %



73.18 %



87.07 %

Efficiency ratio (Bank)



69.22 %



88.71 %



69.40 %



83.78 %



(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)


June 30,

2024


December 31,

2023


June 30,

2023

ASSET QUALITY










Loans 90 days or more delinquent and accruing interest


$

85


$

832


$

-

Non-accrual loans



2,970



2,519



1,434

Total nonperforming loans


$

3,055


$

3,351


$

1,434

Repossessed assets, net



11



33



42

Total nonperforming assets


$

3,066


$

3,384


$

1,476

Allowance for credit losses


$

9,448


$

9,284


$

9,000

Ratio of total nonperforming loans to total loans



0.44 %



0.50 %



0.20 %

Ratio of total nonperforming assets to total assets



0.33 %



0.35 %



0.16 %

Ratio of nonperforming loans to total assets



0.33 %



0.35 %



0.15 %

Ratio of allowance for credit losses to loans held for investment                



1.38 %



1.39 %



1.40 %

Ratio of allowance for credit losses to total loans



1.38 %



1.39 %



1.27 %

Ratio of allowance for credit losses to nonperforming loans



309 %



277 %



628 %

 



For the Quarter

Ended June 30,


For the Six Months

Ended June 30,

(In thousands)


2024


2023


2024


2023

Changes in Nonperforming Loans:













Balance, beginning of period


$

3,433


$

1,469


$

3,351


$

1,355

Additions to nonperforming



617



121



1,583



332

Charge-offs



(1)



(80)



(2)



(87)

Reclassified back to performing



(883)



-



(1,715)



(1)

Principal payments received



(97)



(45)



(130)



(119)

Transferred to repossessed assets



(14)



(31)



(32)



(46)

Balance, end of period


$

3,055


$

1,434


$

3,055


$

1,434

 

BNCCORP, INC.

CONSOLIDATED FINANCIAL DATA

(Unaudited)




For the Quarter

Ended June 30,


For the Six Months

Ended June 30,

(In thousands)


2024


2023


2024


2023

Changes in Allowance for Credit Losses:













Balance, beginning of period


$

9,623


$

9,145


$

9,459


$

8,831

Cumulative effect of CECL adoption



-



-



-



125

Provision



30



165



245



405

Loans charged off



(74)



(108)



(129)



(165)

Loan recoveries



24



10



28



16

Balance, end of period


$

9,603


$

9,212


$

9,603


$

9,212














Components:













Allowance for loan losses


$

9,448


$

9,000


$

9,448


$

9,000

Allowance for unfunded commitments


$

155


$

212


$

155


$

212














Ratio of net charge-offs to average total loans



(0.007) %



(0.014) %



(0.015) %



(0.022) %

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



(0.030) %



(0.057) %



(0.030) %



(0.045) %

 



As of

(In thousands)


June 30,

2024


December 31,

2023


June 30,

2023

CREDIT CONCENTRATIONS










North Dakota










Commercial and industrial


$

63,168


$

62,019


$

63,052

Construction



1,420



5,247



16,550

Agricultural



38,701



35,220



31,062

Land and land development



8,507



7,992



6,225

Owner-occupied commercial real estate



36,596



35,260



31,637

Commercial real estate



134,852



135,858



124,619

Small business administration



18,843



18,046



17,782

Consumer



91,974



88,066



84,891

Subtotal gross loans held for investment


$

394,061


$

387,708


$

375,818

Consolidated










Commercial and industrial


$

95,577


$

93,949


$

97,856

Construction



8,474



21,648



34,821

Agricultural



41,702



37,720



33,587

Land and land development



10,689



8,416



7,862

Owner-occupied commercial real estate



86,706



84,386



75,225

Commercial real estate



250,784



245,939



232,222

Small business administration



75,030



63,836



55,862

Consumer



116,933



111,872



102,476

Total gross loans held for investment


$

685,895


$

667,766


$

639,911

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/bnccorp-inc-reports-second-quarter-net-income-of-1-9-million-or-0-53-per-diluted-share-302210344.html

SOURCE BNCCORP, INC.

FAQ

What was BNCC's net income in Q2 2024?

BNCC reported a net income of $1.9 million or $0.53 per diluted share for Q2 2024.

How did BNCC's net interest margin perform in Q2 2024?

The net interest margin improved to 3.58% in Q2 2024.

What was the change in BNCC's loans held for investment in Q2 2024?

Loans held for investment increased by $18.2 million, reaching $687 million in Q2 2024.

How did BNCC's nonperforming assets change in Q2 2024?

Nonperforming assets decreased to $3.1 million in Q2 2024.

What was the change in BNCC's deposits in Q2 2024?

BNCC's deposits decreased by $44.8 million, totaling $792.4 million by the end of Q2 2024.

How did BNCC's net interest income change in Q2 2024?

Net interest income decreased by 5.5% to $7.6 million in Q2 2024.

What was the trend in BNCC's efficiency ratio in Q2 2024?

The efficiency ratio improved to 72.86% in Q2 2024.

How did non-interest income for BNCC's Community Banking segment perform in Q2 2024?

Non-interest income for the Community Banking segment decreased by $401 thousand in Q2 2024.

What was the impact of Federal Reserve rate hikes on BNCC in Q2 2024?

Federal Reserve rate hikes increased BNCC's interest expense by $973 thousand in Q2 2024.

How did BNCC's consolidated expenses change in Q2 2024?

BNCC's consolidated expenses increased by $319 thousand year-over-year in Q2 2024.

BNCCORP INC

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