BNCCORP : Quarterly Report

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Quarterly Report

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For the quarter ended March 31, 2023

BNCCORP, INC.

(OTCQX: BNCC)

322 East Main Avenue

Bismarck, North Dakota 58501

[phone]

BNCCORP, INC.

INDEX TO QUARTERLY REPORT

March 31, 2023

TABLE OF CONTENTS

	Page
Financial Statements (Interim periods are unaudited)
Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022	3
Consolidated Statements of Income for the Three Months Ended March 31, 2023, and 2022	4
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31,
2023, and 2022	5
Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2023, and
2022	6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023, and 2022	7
Notes to Consolidated Financial Statements	9
Management's Discussion and Analysis of Financial Condition and Results of Operations
Comparison of Results for the Three Months Ended March 31, 2023, and 2022	31
Comparison of Financial Condition as of March 31, 2023, and December 31, 2022	36
Quantitative and Qualitative Disclosures about Market Risk	43
Legal Proceedings	45

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Financial Statements

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (In thousands, except share data)

			March 31,			December 31,
			2023			2022
ASSETS		(unaudited)
Cash and cash equivalents	$	15,902	$	73,968
Debt securities available for sale		172,507			174,876
Federal Reserve Bank and Federal Home Loan Bank stock		2,938			3,063
Loans held for sale-mortgage banking		39,599			37,764
Loans held for investment		630,209			616,645
Allowance for credit losses (1)		(8,936)			(8,831)
Net loans held for investment		621,273			607,814
Premises and equipment, net		11,527			11,764
Operating lease right of use asset		1,393			1,521
Accrued interest receivable		3,180			3,312
Other		28,971			29,239
Total assets	$	897,290	$	943,321
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest-bearing	$	195,125	$	207,232
Interest-bearing -
Savings, interest checking and money market		525,644			554,577
Time deposits		51,609			57,775
Total deposits		772,378			819,584
Short-term borrowings		9			-
Guaranteed preferred beneficial interest in Company's subordinated
debentures		15,000			15,000
Accrued interest payable		380			312
Accrued expenses		3,801			5,482
Operating lease liabilities		1,525			1,660
Other		427			937
Total liabilities		793,520			842,975
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value - Authorized 11,300,000 shares; 3,561,334
and 3,559,334 shares issued and outstanding		36			36
Capital surplus - common stock		26,599			26,399
Retained earnings		88,954			87,575
Treasury stock (107,319 and 109,319 shares, respectively)		(1,664)			(1,622)
Accumulated other comprehensive loss		(10,155)			(12,042)
Total stockholders' equity		103,770			100,346
Total liabilities and stockholders' equity		$	897,290		$	943,321

1. The Company adopted ASU 2016-13 as of January 1, 2023. The prior year amounts presented are calculated under the prior accounting standard.
   See accompanying notes to consolidated financial statements.

3

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

For the Three Months Ended March 31, (In thousands, except per share data, unaudited)

		2023				2022
INTEREST INCOME:
Interest and fees on loans	$	8,159	$	6,167
Interest and dividends on investments
Taxable		1,792			1,040
Tax-exempt		19			58
Dividends		36			36
Total interest income		10,006			7,301
INTEREST EXPENSE:
Deposits		1,328			333
Federal Home Loan Bank advances		6			-
Subordinated debentures		231			59
Total interest expense		1,565			392
Net interest income		8,441			6,909
PROVISION (CREDIT) FOR CREDIT LOSSES:		240			(550)
Net interest income after provision for credit losses		8,201			7,459
NON-INTEREST INCOME:
Bank charges and service fees		1,092			600
Wealth management revenues		487			536
Mortgage banking revenues, net		1,856			4,142
Gains on sales of loans, net		8			20
Gains on sales of debt securities, net		12			-
Other		176			214
Total non-interest income		3,631			5,512
NON-INTEREST EXPENSE:
Salaries and employee benefits		4,943			5,941
Professional services		897			950
Data processing fees		989			973
Marketing and promotion		1,369			1,355
Occupancy		512			583
Regulatory costs		106			119
Depreciation and amortization		293			311
Office supplies and postage		96			110
Other		701			703
Total non-interest expense		9,906			11,045
Income before income taxes		1,926			1,926
Income tax expense		453			453
NET INCOME	$	1,473		$	1,473
Basic earnings per common share	$	0.41		$	0.41
Diluted earnings per common share		$	0.41		$	0.41

See accompanying notes to consolidated financial statements.

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BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income

For the Three Months Ended March 31,

	(In thousands, unaudited)
		2023				2022
NET INCOME		$	1,473			$	1,473
Unrealized gain (loss) on debt securities
available for sale	$	2,515				$	(8,980)
Reclassification adjustment for gains included
in net income		(12)						-
Other comprehensive income (loss) before
tax		2,503						(8,980)
Income tax (expense) benefit related to items of
other comprehensive income (loss)		(616)						2,408
Other comprehensive income (loss)	$	1,887			1,887	$	(6,572)			(6,572)
TOTAL COMPREHENSIVE INCOME (LOSS)			$	3,360				$	(5,099)

See accompanying notes to consolidated financial statements.

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