By Vanessa Mambrino, Senior Consultant, Capital Performance Group LLC, Washington, DC, a firm providing advisory, planning, analytic, and project management support to the financial services industry.
BNCCORP, Inc., of Bismarck, ND, was founded in 1987 by Greg Cleveland, the current CEO, and Tracy Scott, who is now chairman. The bank has offices in North Dakota, Arizona, and Minnesota, and it became the #3-ranked non-subchapter-S corporation with total assets of between $100 million and $1 billion through a set of strategies as diverse as its markets.
In 1995, BNCCORP used the proceeds of its IPO to purchase several branches in North Dakota and capitalize a charter in Minneapolis. The branches in North Dakota turned out to be "right smack dab in the center" of the Bakken Oil Fields in the northwestern part of the state. This market has since become core growth corridor of BNCCORP's C&I lending division
. Just over 52% of the holding company's loan portfolio is in either C&I or CRE loans, compared to 42% of the average top performing large non-S-corp's loan portfolio and 43% of the average non-S-corp's loan portfolio. The strong North Dakota economy has both good and not-so-good implications for 2013, says Cleveland. The C&I pipeline is "robust," however, "we're in a race to put on new loans before the old ones can be paid off," he says.
In 2001, BNCCORP chartered a bank in Arizona to enter the Phoenix market (all charters have since been consolidated). The bank has developed an SBA focus in Phoenix that has helped it to collect fee income via gains on loan sales. It should be noted that BNCCORP offers SBA products in all of its markets, but promotes them most heavily in Phoenix. "The SBA secondary markets have been very acquisitive and we have been seeing good premiums," notes Tim Franz, CFO. Revenue from SBA loan sales was $1.1 million in 2012.
In 2008, the bank began to invest in its mortgage banking unit. This line of business ramped up production in '08, '09, and '10 as BNCCORP built a network of producers and an online platform for originations. The bank now has mortgage-only offices throughout the Midwest and generated $1.1 billion in originations in 2012. Mortgage banking revenues were $29.6 million in 2012 compared to $11.3 million in 2011. Finally, the bank also benefited from a favorable litigation settlement in 2012.
In 2013, BNCCORP plans to expand its resources and its branch presence in North Dakota and to continue to constantly evaluate its business model and capital position. "All community banks have to answer the question: what do you want to be when you grow up? You can either sell or be aggressive on acquisitions to continue to remain independent," says Cleveland. In the meantime, both Cleveland and Franz believe that we can expect to see BNCCORP back among the top performers next year.