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BNC Bancorp Reports Operating Results (10-K)

March 15, 2011 | About:

BNC Bancorp (NASDAQ:BNCN) filed Annual Report for the period ended 2010-12-31.

Bnc Bancorp has a market cap of $71.2 million; its shares were traded at around $7.88 with and P/S ratio of 0.6. The dividend yield of Bnc Bancorp stocks is 0.6%. Bnc Bancorp had an annual average earning growth of 8.5% over the past 10 years.

Highlight of Business Operations:

The Company targets business professionals and small to mid-size business customers with superior customer service, excellent branch locations and long-term, experienced bankers. The Company believes that the markets it operates in provide a unique opportunity for the Bank, as the Company is able to target customers with credit relationships in the $250,000 to $5 million range that are too small for regional community banks but too large for smaller community banks with lower legal lending limits. The Company has been able to grow assets, deposits and loans while maintaining above peer asset quality with non-performing assets to total assets, excluding assets covered under loss share agreements of 2.75% and 2.04% at December 31, 2010 and 2009, respectively. Including assets covered by loss share agreements, the nonperforming assets to total assets ratio was 6.29%. In large part, the Company s superior asset quality relative to peers is due to our strong team of lenders and asset quality management; most of our asset quality personnel have been in the banking industry for more than 20 years and several members of our senior credit team have experienced several economic and real estate cycles during their banking careers.

The Company s primary sources of revenue are interest and fee income from its lending and investing activities, primarily consisting of making business loans for small- to medium-sized businesses, and, to a lesser extent, from its investment portfolio. In prior years, investments have not been a primary source of income for the Company. In November and December of 2008, the Company purchased $265 million in government agency sponsored mortgage-backed securities and an additional $76 million of bank-qualified municipal government securities during the fourth quarter of 2008 and first quarter of 2009, to leverage the $31.3 million of proceeds from the U.S. Department of the Treasury (“UST”) Capital Purchase Program (“CPP”). Under the CPP, the Company sold shares of preferred stock and issued a warrant to purchase common stock to the UST. During the first quarter of 2009, the Company negotiated an unsecured $250 million money market funding arrangement and interest rate swap agreement resulting in a five-year interest cost of 2.95%. This leverage transaction has provided sufficient net interest income to offset the cost of dividends on the CPP preferred stock and provide additional operational income to the Company. The major expenses of the Company are interest paid on deposits and borrowings and general administrative expenses such as salaries, employee benefits, advertising and office occupancy.

On June 14, 2010, the Company entered into an Investment Agreement (the “Investment Agreement”) with Aquiline BNC Holdings LLC, a Delaware limited liability company (“Aquiline”). Pursuant to the Investment Agreement, Aquiline purchased 892,799 shares of the Company s common stock, no par value per share, at $10.00 per share and 1,804,566 shares of the Company s Mandatorily Convertible Non-Voting Preferred Stock, Series B (the “Series B Preferred Stock”) at $10.00 per share. The purchase of common stock and Series B Preferred Stock by Aquiline was part of a $35 million private placement that closed on June 14, 2010 (the “Private Placement”). In addition to Aquiline, other investors, including certain directors of the Company, purchased 802,635 shares of the Company s common stock at $10.00 per share (collectively, with Aquiline, the “Investors”) as a part of the Private Placement on June 14, 2010. The Investors, other than Aquiline, entered into Subscription and Registration Rights Agreements with the Company in connection with their investment in the Company s common stock in the Private Placement.

The Bank has experienced steady growth over its twenty-year history. The Company s assets totaled $2.15 billion and $1.63 billion as of December 31, 2010 and 2009, respectively. Net income for the year ended December 31, 2010 was $7.7 million compared to $6.5 million for the year ended December 31, 2009. Net income available to common shareholders for the year ended December 31, 2010 totaled $5.5 million, or $0.61 per diluted common share, as compared to $4.6 million, or $0.62 per diluted common share, for the year ended December 31, 2009.

Deposit Insurance. The deposit accounts of the Bank are insured by the Deposit Insurance Fund (the “DIF”) of the FDIC. Pursuant to EESA and ARRA, the maximum deposit insurance amount per depositor was temporarily increased from $100,000 to $250,000. The Dodd-Frank Act permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2009. The Dodd-Frank Act also provides unlimited deposit insurance for non-interest bearing transaction accounts through December 31, 2013.

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