BNC Bancorp (BNNC) 8-K BNC Bancorp Reports 12 Percent Increase in Net Income for Third Quarter 2007

Press Release

Source: BNC Bancorp

Contact:	W. Swope Montgomery, Jr.
	President and CEO
	336-476-9200

BNC Bancorp Reports 12 Percent Increase in Net Income for Third Quarter 2007

THOMASVILLE, N.C., / -- BNC Bancorp (NASDAQ: BNCN), parent of Bank of North Carolina, today reported that net income in the third quarter of 2007 rose 12.0 percent to $1.85 million from $1.65 million a year earlier. Per-share earnings (diluted) were $0.26, up 4.0 percent from $0.25 a year earlier. Return on average tangible equity for the third quarter was 15.44 percent.  

For the nine-month period ended September 30, 2007, the Company reported net income of $5.89 million, an increase of 42.5 percent when compared to the $4.13 million reported for the first nine months of 2006. Diluted earnings per share increased to $0.83 for the nine-month period, a 12.2 percent increase compared to $0.74 reported for same period in 2006.

W. Swope Montgomery, Jr., President and Chief Executive Officer, said, "As we enter the fourth quarter of 2007, our Company and our entire industry is faced with many challenges, including a slowing housing market, an anticipated economic slowdown and the Federal Reserve rate cuts. Despite these obstacles, which have taken a heavy toll on many of our peers, we are pleased to report another quarter of strong relative performance. For the quarter, net income reached $1.85 million, a 12% increase compared to year ago levels, while diluted earnings per share increased 4.0% to $0.26.”

Mr. Montgomery continued “Diluted earnings per share were down compared to the first two quarters of 2007 due to a higher provision for loan losses, continued pressure on net interest margin, increased regulatory costs due to FDIC insurance, Sarbanes Oxley compliance and expenses associated with the new administrative office facility. During the quarter, we recognized an impairment in one of our long-standing loan relationships. The events leading to the deterioration of the credit were unrelated to the recent economic slowdown; however, the current conditions did impact the impairment charge relating to a devaluation of the collateral value. The credit has been evaluated, written-down to appropriate levels, and is currently in a workout status. As is our practice, particularly given the current lending environments in our respective markets, we are continuously evaluating our credit underwriting and review processes to better preserve our standards of performance while continuing to successfully serve our customers’ needs.”

“After a thorough evaluation of our housing related portfolio, we are cautiously optimistic that this charge was an isolated incident, and while slightly higher than normal charge-offs can be expected industry-wide in this economic environment, we believe our credit losses will stay within our historical range in the coming quarters. We are very fortunate that the real estate markets within North Carolina in which our Company operates have historically been much more stable and predictable than those grabbing recent headlines for price volatility. As many within our industry are forced to focus internally to correct asset quality issues, we view this period as an opportunity to strategically and prudently expand our brand of truly responsive, high service banking to attractive areas within and outside our current footprint”, said Montgomery.

Total assets as of September 30, 2007 were $1.1 billion, an increase of 21.9 percent compared to the $901 million as of September 30, 2006. Total loans on September 30, 2007 were $905 million, an increase of 22.7 percent from the $738 million reported as of September 30, 2006. Deposits increased 24.7 percent over the same one-year period. Compared to balances at December 31, 2006, total loans increased $131 million, or 16.9 percent during the first nine months of 2007.

“Despite the one problem relationship mentioned earlier, asset quality, our number one priority, continues to be strong, with non-performing assets increasing slightly to 0.52 percent from 0.46 percent of total assets a year earlier. As of September 30, 2007, non-accrual loans, other real estate owned, and loans 90 days past due and still accruing interest totaled $5.7 million compared to $4.1 million one year earlier, an increase of 39.0 percent, only slightly higher than the 22.7 percent increase in total loans over that same period. Net charge-offs to average loans for the first nine months were at an annualized rate of 0.20 percent compared to 0.14 percent in the year ago quarter”, said Montgomery.

BNC Bancorp is the parent Company of Bank of North Carolina, a $1.10 billion commercial bank that provides a complete line of banking and financial services to individuals and businesses through full-service banking offices located in the cities of Thomasville, High Point, Salisbury, Greensboro, Archdale, Lexington, Kernersville, Harrisburg, Northern Davidson County and Oak Ridge, North Carolina. In addition, the Bank operates a commercial and mortgage loan production office in Winston-Salem, North Carolina. Bank of North Carolina is insured by the FDIC and is an equal housing lender. BNC Bancorp’s stock is quoted in the NASDAQ Capital Market under the symbol “BNCN.”

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

From time to time, we make written and oral forward-looking statements within the meaning of certain securities laws, including in this press release, in other filings with the U.S. Securities and Exchange Commission (www.sec.gov), in reports to shareholders and in other communications. These forward-looking statements include, among others, statements with respect to our objectives for 2007 and beyond, and the medium and long terms strategies to achieve those objectives, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the North Carolina economy in general and the strength of the local economies within North Carolina in which we conduct operations; the strength of the United States economy; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Board of Governors of the Federal Reserve System in the United States; judicial decisions; the effects of competition in the markets in which we operate; inflation; the timely development and introduction of new products and services in receptive markets; the impact of changes in the laws and regulations regulating financial services (including banking, insurance and securities); changes in tax laws; technological changes; our ability to complete strategic acquisitions and to integrate acquisitions; judicial or regulatory proceedings; changes in consumer spending and saving habits; the possible impact on our businesses of international conflicts and other developments including those relating to the war on terrorism; and our anticipation of and success in managing the risks implicated by the foregoing.

QUARTERLY PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data)

(Unaudited)	For the
	Three Months Ended
	September 30, 2007			September 30, 2006
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	19,420		$	15,026		29.2	%
Interest expense		10,990			7,548		45.6
Net interest income		8,430			7,478		12.7
Provision for loan losses		1,140			645		76.7
Net interest income after provision for loan losses		7,290			6,833		6.7
Noninterest income		1,255			1,051		19.4
Noninterest expense		5,941			5,522		7.6
Income before income tax expense		2,604			2,362		10.3
Provision for income taxes		754			710		6.2
Net income		1,850			1,652		12.0
PER SHARE DATA
Earnings per share, basic	$	0.27		$	0.26		3.9	%
Earnings per share, diluted	$	0.26			0.25		4.0
Weighted average common shares outstanding:
Basic		6,895,012			6,269,752
Diluted		7,093,801			6,580,289
PERFORMANCE RATIOS
Return on average assets		0.68	%		0.81	%
Return on average equity		9.67	%		10.72	%
Return on average tangible equity		15.44	%		17.39	%
Net yield on earning assets (taxable equivalent)		3.55	%		4.08	%
Average equity to average assets		7.03	%		7.56	%

QUARTERLY PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data)

(Unaudited)	For the
	Nine Months Ended
	September 30, 2007			September 30, 2006			% Change
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	54,408		$	36,595			48.7	%
Interest expense		30,262			17,972			68.4
Net interest income		24,146			18,623			29.7
Provision for loan losses		2,340			1,875			24.8
Net interest income after provision for loan losses		21,806			16,748			30.2
Noninterest income		3,766			2,669			41.1
Noninterest expense		17,229			13,570			27.0
Income before income tax expense		8,343			5,847			42.7
Provision for income taxes		2,458			1,718			43.1
Net income		5,885			4,129			42.5
PER SHARE DATA
Earnings per share, basic	$	0.86		$	0.78			10.3	%
Earnings per share, diluted	$	0.83		$	0.74			12.2
Weighted average common shares outstanding:
Basic		6,848,714			5,307,484
Diluted		7,085,877			5,596,818
PERFORMANCE RATIOS
Return on average assets		0.77	%		0.80	%
Return on average equity		10.57	%		13.40	%
Return on average tangible equity		17.07	%		17.83	%
Net yield on earning assets (taxable equivalent)		3.68	%		4.07	%
Average equity to average assets		7.31	%		7.56	%
Allowance for loan losses as a % of total loans		1.27	%		1.35	%
Non-performing assets to total assets, end of period		0.52	%		0.46	%
Net charge-offs to average loans outstanding, annualized		0.20	%		0.14	%

QUARTERLY PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands, except per share data)

(Unaudited)	For the
	Three Months Ended
	September 30, 2007			June 30, 2007			March 31, 2007			December 31, 2006			September 30, 2006			December 31, 2005
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	19,420		$	18,146		$	16,842		$	16,616		$	15,026		$	9,652
Interest expense		10,990			10,090			9,182			8,509			7,548			4,343
Net interest income		8,430			8,056			7,660			8,107			7,478			5,308
Provision for loan losses		1,140			650			550			780			645			900
Net interest income after provision for loan losses		7,290			7,406			7,110			7,327			6,833			4,408
Noninterest income		1,255			1,307			1,204			1,152			1,051			904
Noninterest expense		5,941			5,700			5,588			5,540			5,522			3,622
Income before income tax expense		2,604			3,013			2,726			2,939			2,362			1,690
Provision for income taxes		754			895			809			878			710			470
Net income		1,850			2,118			1,917			2,041			1,652			1,220
Net interest income, as reported	$	8,430		$	8,056		$	7,660		$	8,107		$	7,478		$	5,308
Tax-equivalent adjustment		422			401			386			411			348			249
Net interest income, tax-equivalent		8,852			8,457			8,046			8,518			7,826			5,557
PER SHARE DATA
Earnings per share, basic	$	0.27		$	0.31		$	0.28		$	0.30		$	0.26		$	0.25
Earnings per share, diluted		0.26			0.30			0.27			0.29			0.25			0.24
Weighted average common shares outstanding:
Basic		6,895,012			6,849,403			6,800,690			6,698,899			6,269,752			4,803,706
Diluted		7,093,801			7,090,473			7,074,287			7,026,623			6,580,289			5,104,670
PERFORMANCE RATIOS
Return on average assets		0.68	%		0.84	%		0.81	%		0.88	%		0.81	%		0.83	%
Return on average equity		9.67	%		11.44	%		10.63	%		11.32	%		10.72	%		15.43	%
Return on average tangible equity		15.44	%		18.52	%		17.38	%		19.13	%		17.39	%		17.33	%
Net yield on earning assets (taxable equivalent)		3.55	%		3.71	%		3.79	%		4.09	%		4.08	%		4.15	%
Average equity to average assets		7.03	%		7.32	%		7.62	%		7.77	%		7.56	%		5.40	%

QUARTERLY PERFORMANCE SUMMARY

BNC BANCORP

(Dollars in thousands)

(Unaudited)	As of
	September 30, 2007		September 30, 2006		% Change
SELECTED BALANCE SHEET DATA
End of period balances
Total loans	$	905,259	$	737,633		22.7	%
Allowance for loan losses		11,479		9,956		15.3
Loans, net of allowance for loan losses		893,780		727,677		22.8
Securities, available for sale		84,917		75,443		12.6
Total Assets		1,098,263		900,995		21.9
Deposits:
Noninterest-bearing deposits		69,399		62,773		10.6
Interest-bearing demand and savings		216,865		183,585		18.1
CD's and other time deposits		611,674		473,822		29.1
Total deposits		897,938		720,180		24.7
Borrowed Funds		117,482		104,030		12.9
Total interest-bearing liabilities		946,021		761,437		24.2
Shareholders' Equity		78,242		70,458		11.1

	As of
	September 30, 2007		June 30, 2007		March 31, 2007		December 31, 2006		September 30, 2006		December 31, 2005
SELECTED BALANCE SHEET DATA
End of period balances
Total loans	$	905,259	$	875,515	$	805,519	$	774,664	$	737,633	$	499,247
Allowance for loan losses		11,479		11,243		10,747		10,400		9,956		6,140
Loans, net of allowance for loan losses		893,780		864,272		794,772		764,264		727,677		493,107
Securities, available for sale		84,917		79,133		77,918		76,700		75,443		42,489
Total Assets		1,098,263		1,070,633		984,802		951,731		900,995		594,550
Deposits:
Noninterest-bearing deposits		69,399		71,653		70,660		65,932		62,773		39,573
Interest-bearing demand and savings		216,865		205,170		195,788		189,624		183,585		128,303
CD's and other time deposits		611,674		621,160		545,505		531,221		473,822		323,016
Total Deposits		897,938		897,983		811,953		786,777		720,180		490,892
Borrowed Funds		117,482		92,149		93,010		86,386		104,030		66,557
Total interest-bearing liabilities		946,021		918,479		834,303		807,231		761,437		517,876
Shareholders' Equity		78,242		74,970		73,875		72,523		70,458		33,114

QUARTERLY PERFORMANCE SUMMARY
BNC BANCORP
(Dollars in thousands)
(Unaudited)
	For the Three Month Period Ended
	September 30, 2007		June 30, 2007		March 31, 2007		December 31, 2006		September 30, 2006		December 31, 2005
SELECTED BALANCE SHEET DATA
Quarterly average balances
Loans, net of allowance for loan losses		886,557		824,509		776,447		745,829		679,963		481,074
Securities, available for sale		84,064		75,982		77,230		72,504		72,519		42,486
Total earning assets		990,099		914,527		861,971		826,706		760,742		530,994
Total Assets		1,080,473		1,014,860		959,426		922,335		817,209		581,361
Deposits:
Noninterest-bearing deposits		68,204		69,438		64,462		70,140		49,965		42,778
Interest-bearing demand and savings		215,094		202,839		191,505		186,793		168,840		125,631
CD's and other time deposits		619,084		563,500		532,720		495,338		452,157		308,531
Total Deposits		902,382		835,777		788,687		752,271		670,962		476,940
Borrowed Funds		96,114		98,548		91,844		95,948		87,133		67,750
Total interest-bearing liabilities		930,292		864,887		816,069		778,079		708,130		501,912
Shareholders' Equity		75,931		74,258		73,152		71,752		61,819		31,379