BNCCORP which operates community banking and wealth management businesses in North Dakota and Arizona as well as mortgage banking offices in Illinois, Kansas, Arizona, and North Dakota, reported financial results for the first quarter ended March 31, 2023.
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Net income in the first quarter of 2023 was $1.5 million, unchanged from the same period of 2022.
First quarter earnings per diluted share was unchanged year-over-year at $0.41 per share.
The first quarter of 2023 produced higher net interest income, higher bank charges and service fees, and lower non-interest expense compared to the same period of 2022.
Results were offset by lower mortgage banking revenue and an increased provision for credit losses when compared to the 2022 period.
Net interest income for the first quarter of 2023 was $8.4 million, an increase of $1.5 million, or 22.2%, from $6.9 million in the first quarter of 2022.
The year-over-year increase was primarily driven by growth in loans held for investment and overall higher yields that were partially offset by an increase in the cost of deposits and subordinated debentures.
Net interest margin increased to 3.97% in the 2023 first quarter from 2.80% in the year-earlier period.
First quarter interest income increased by $2.7 million, or 37.0%, to $10.0 million in 2023, compared to $7.3 million in the first quarter of 2022.
The increase is the result of higher yields on interest-earning assets and a $63.1 million quarter-over-quarter increase in average loan balances.
As a result of these improvements, the yield on average interest-earning assets improved to 4.71% in the first quarter of 2023, compared to 2.96% in the 2022 first quarter.
It is noteworthy that the Company's variable rate assets have started to re-price in step with interest rate movements by the Federal Reserve as well as in response to higher yields on new loan originations.
The average balance of interest-earning assets in the first quarter of 2023 decreased by $138.0 million versus the same period of 2022, primarily due to a $171.4 million decrease in interest-bearing cash, a $31.0 million decrease in debt securities, and a $31.0 million decrease in average loans held for sale.
These decreases were partially offset by a $94.1 million increase in average loans held for investment.
Interest income from loans held for investment increased $2.0 million on a quarter-over-quarter basis.
Interest income from loans held for sale decreased $25 thousand primarily due to lower average balances, partially offset by a 2.72% increase in yield.
Interest income from debt securities was $365 thousand higher compared to the same period of 2022 as yields increased by 1.19% quarter-over-quarter.
Interest expense in the first quarter of 2023 was $1.6 million, an increase of $1.2 million from the 2022 period.
The 2023 first quarter average balance of deposits decreased by $123.8 million when compared to first quarter 2022.
The primary driver of the decrease in average balances was the movement of deposits off the balance sheet at the end of the first quarter of 2022 through the use of an associated banking network.
The cost of interest-bearing liabilities was 1.04% during the first quarter of 2023, compared to 0.21% in the same period of 2022.
The cost of core deposits in the first quarters of 2023 and 2022 was 0.68% and 0.15%, respectively, as the Company continues to manage its overall cost of deposits while staying focused on maintaining liquidity. ■