RECLASSIFICATIONS
2012 2011 Number Weighted Number Weighted
Restricted Average Restricted Average
Stock Grant Date Stock Grant Date Shares Fair Value Shares Fair Value
Nonvested, beginning of year 9,100 $ 4.47 20,500 $ 4.42
Granted - - - -
Vested (5,800) 6.16 (11,400) 4.39
Forfeited - - - -
Nonvested, end of year 3,300 1.50 9,100 4.47
The Company granted 240,000 stock options on March 17, 2010. The stock options have a two year vesting period and a ten year contractual term. The exercise price is equal to the market price on grant date, which was $3.00. The fair value of each share option is estimated on the date of grant using a Black-Scholes methodology with the assumptions noted below:
Expected volatility 32.56%
Dividend yield 0.00%
Risk-free interest rate – seven year treasury yield 3.201%
Expected life of stock option 7 years
The Company recognized share-based compensation expense of $29,000 and $140,000 for the years ended December 31, 2012 and 2011, respectively, related to share options. At December 31, 2012, the Company had $0 of unamortized compensation cost related to non-vested stock options granted.
The Company is permitted to issue shares from treasury shares already held when options are exercised. Following is a summary of vested stock options and options expected to vest as of December 31, 2012:
Stock Options Stock Options Stock Options Currently Vested and
Outstanding Exercisable Expected to Vest
Number 228,000 228,000 228,000
Weighted-average exercise price $3.00 $3.00 $3.00
Weighted-average remaining contractual term 7.3 years 7.3 years 7.3 years
Following is a summary of stock option transactions for the years ended December 31:
2012 2011
Options to Weighted Options to Weighted
Purchase Average Purchase Average Shares Exercise Price Shares Exercise Price
Outstanding, beginning of year 236,500 $ 3.14 269,700 $ 3.49
Granted - $ - - $ -
Exercised (8,500) $ 7.00 - $ -
Forfeited - $ - (33,200) $ 5.99
Outstanding, end of year 228,000 $ 3.00 236,500 $ 3.14
Exercisable, end of year 228,000 $ 3.00 122,500 $ 3.28
Weighted average fair value of
Granted $ - $ -
Exercised $ 3.76 $ -
Forfeited $ - $ 2.82
Following is a summary of the status of options outstanding at December 31, 2012:
Outstanding Options Exercisable Options Weighted Average Weighted Weighted
Remaining Average Average
Number Contractual Life Exercise Price Number Exercise Price
Options with exercise
prices of:
$3.00 to $3.00 228,000 7.3 years $ 3.00 228,000 $ 3.00
Following is a summary of restricted stock activities for the years ended December 31:
2012 2011 Number Weighted Number Weighted Restricted Average Restricted Average
Stock Grant Date Stock Grant Date Shares Fair Value Shares Fair Value
Nonvested, beginning of year 9,100 $ 4.47 20,500 $ 4.42
Granted - - - -
Vested (5,800) 6.16 (11,400) 4.39
Forfeited - - - -
Nonvested, end of year 3,300 1.50 9,100 4.47
The Company granted 240,000 stock options on March 17, 2010. The stock options have a two year vesting period and a ten year contractual term. The exercise price is equal to the market price on grant date, which was $3.00. The fair value of each share option is estimated on the date of grant using a Black-Scholes methodology with the assumptions noted below:
Expected volatility 32.56%
Dividend yield 0.00%
Risk-free interest rate – seven year treasury yield 3.201%
Expected life of stock option 7 years
The Company recognized share-based compensation expense of $29,000 and $140,000 for the years ended December 31, 2012 and 2011, respectively, related to share options. At December 31, 2012, the Company had $0 of unamortized compensation cost related to non-vested stock options granted.
The Company is permitted to issue shares from treasury shares already held when options are exercised. Following is a summary of vested stock options and options expected to vest as of December 31, 2012:
Stock Options Stock Options Stock Options Currently Vested and
Outstanding Exercisable Expected to Vest
Number 228,000 228,000 228,000
Weighted-average exercise price $3.00 $3.00 $3.00
Weighted-average remaining contractual term 7.3 years 7.3 years 7.3 years
Following is a summary of stock option transactions for the years ended December 31:
2012 2011
Options to Weighted Options to Weighted
Purchase Average Purchase Average Shares Exercise Price Shares Exercise Price
Outstanding, beginning of year 236,500 $ 3.14 269,700 $ 3.49
Granted - $ - - $ -
Exercised (8,500) $ 7.00 - $ -
Forfeited - $ - (33,200) $ 5.99
Outstanding, end of year 228,000 $ 3.00 236,500 $ 3.14
Exercisable, end of year 228,000 $ 3.00 122,500 $ 3.28
Weighted average fair value of
Granted $ - $ -
Exercised $ 3.76 $ -
Forfeited $ - $ 2.82
Following is a summary of the status of options outstanding at December 31, 2012:
Outstanding Options Exercisable Options Weighted Average Weighted Weighted
Remaining Average Average
Number Contractual Life Exercise Price Number Exercise Price
Options with exercise
prices of:
$3.00 to $3.00 228,000 7.3 years $ 3.00 228,000 $ 3.00
NOTE 28. Condensed Financial Information-Parent Company Only
Condensed financial information of BNCCORP, INC. on a parent company only basis is as follows:
Parent Company Only
Condensed Balance Sheets As of December 31
(In thousands, except per share data)
2012 2011
Assets:
Cash and cash equivalents $ 12,630 $ 3,242 Investment securities available for sale - -
Investment in subsidiaries 78,961 63,129 Receivable from subsidiaries 1,179 155
Other 2,337 241
Total assets $ 95,107 $ 66,767 Liabilities and stockholders’ equity:
Subordinated debentures $ 22,430 $ 22,427 Payable to subsidiaries 54 42
Accrued expenses and other liabilities 9,305 6,396 Total liabilities 31,789 28,865 Preferred stock, $.01 par value. Authorized 2,000,000 shares:
Preferred Stock - 5% Series A 20,093 shares issued and outstanding; 19,859 19,635 Preferred Stock - 9% Series B 1,005 shares issued and outstanding; 1,029 1,052 Common stock, $.01 par value – Authorized 35,000,000 shares 3,300,652 and 3,301,007 shares issued and outstanding 33 33
Capital surplus – common stock 27,257 27,217 Retained earnings 20,655 (4,508) Treasury stock (368,001 and 367,646 shares, respectively) (5,064) (5,076) Accumulated other comprehensive loss, net of income taxes (451) (451)
Total stockholders’ equity 63,318 37,902 Total liabilities and stockholders’ equity $ 95,107 $ 66,767 Parent Company Only Condensed Statements of Operations For the Years Ended December 31 (In thousands) 2012 2011 Income:
Management fee income $ 1,652 $ 1,661 Interest 8 6
Gain on sale of securities - -
Other 38 38
Total income 1,698 1,705 Expenses:
Interest 1,631 1,402 Salaries and benefits 856 748
Legal and other professional 618 517
Depreciation and amortization 1 1
Other 887 831
Total expenses 3,993 3,499 Loss before income tax expense (benefit) and equity in income of subsidiaries (2,295) (1,794) Income tax expense (benefit) 3,089 (16)
Income (loss) before equity in income of subsidiaries 794 (1,810)
Equity in earnings of subsidiaries 25,830 6,018
NOTE 28. Condensed Financial Information-Parent Company Only
Condensed financial information of BNCCORP, INC. on a parent company only basis is as follows:
Parent Company Only
Condensed Balance Sheets As of December 31
(In thousands, except per share data)
2012 2011
Assets:
Cash and cash equivalents $ 12,630 $ 3,242 Investment securities available for sale - -
Investment in subsidiaries 78,961 63,129 Receivable from subsidiaries 1,179 155
Other 2,337 241
Total assets $ 95,107 $ 66,767 Liabilities and stockholders’ equity:
Subordinated debentures $ 22,430 $ 22,427 Payable to subsidiaries 54 42
Accrued expenses and other liabilities 9,305 6,396 Total liabilities 31,789 28,865 Preferred stock, $.01 par value. Authorized 2,000,000 shares:
Preferred Stock - 5% Series A 20,093 shares issued and outstanding; 19,859 19,635 Preferred Stock - 9% Series B 1,005 shares issued and outstanding; 1,029 1,052 Common stock, $.01 par value – Authorized 35,000,000 shares 3,300,652 and 3,301,007 shares issued and outstanding 33 33
Capital surplus – common stock 27,257 27,217 Retained earnings 20,655 (4,508) Treasury stock (368,001 and 367,646 shares, respectively) (5,064) (5,076) Accumulated other comprehensive loss, net of income taxes (451) (451)
Total stockholders’ equity 63,318 37,902 Total liabilities and stockholders’ equity $ 95,107 $ 66,767 Parent Company Only Condensed Statements of Operations For the Years Ended December 31 (In thousands) 2012 2011 Income:
Management fee income $ 1,652 $ 1,661 Interest 8 6
Gain on sale of securities - -
Other 38 38
Total income 1,698 1,705 Expenses:
Interest 1,631 1,402 Salaries and benefits 856 748
Legal and other professional 618 517
Depreciation and amortization 1 1
Other 887 831
Total expenses 3,993 3,499 Loss before income tax expense (benefit) and equity in income of subsidiaries (2,295) (1,794) Income tax expense (benefit) 3,089 (16)
Income (loss) before equity in income of subsidiaries 794 (1,810)
Equity in earnings of subsidiaries 25,830 6,018
NOTE 29. Subsequent Events
The Company has evaluated subsequent events from the balance sheet date through March 28, 2013, the date at which the financial statements were available to be issued, and determined there are no other items to disclose.
Parent Company Only
Condensed Statements of Cash Flows For the Years Ended December 31
(In thousands)
2012 2011
Operating activities:
Net income $ 26,624 $ 4,208 Adjustments to reconcile net income to net cash provided by (used in) operating activities -
Equity in undistributed income of subsidiaries (25,830) (6,018) Depreciation and amortization 3 3
Share based compensation 40 181
Change in prepaid expenses and other receivables (3,109) 953
Net realized gain on sale of investment securities - -
Change in accrued expenses and other liabilities 1,660 1,538 Net cash provided by (used in) operating activities (612) 865
Investing activities:
Dividend paid by subsidiaries 10,000 -
Proceeds from sale of investment securities - -
Net cash provided by (used in) investing activities 10,000 -
Financing activities: Proceeds from issuance of preferred stock - -
Payment of preferred stock dividends - -
Net cash provided by (used in) financing activities - -
Net increase (decrease) in cash and cash equivalents 9,388 865
Cash and cash equivalents, beginning of year 3,242 2,377 Cash and cash equivalents, end of year $ 12,630 $ 3,242 Supplemental cash flow information: Interest paid $ 3,259 $ -
NOTE 29. Subsequent Events
The Company has evaluated subsequent events from the balance sheet date through March 28, 2013, the date at which the financial statements were available to be issued, and determined there are no other items to disclose.
Parent Company Only
Condensed Statements of Cash Flows For the Years Ended December 31
(In thousands)
2012 2011
Operating activities:
Net income $ 26,624 $ 4,208 Adjustments to reconcile net income to net cash provided by (used in) operating activities -
Equity in undistributed income of subsidiaries (25,830) (6,018) Depreciation and amortization 3 3
Share based compensation 40 181
Change in prepaid expenses and other receivables (3,109) 953
Net realized gain on sale of investment securities - -
Change in accrued expenses and other liabilities 1,660 1,538 Net cash provided by (used in) operating activities (612) 865
Investing activities:
Dividend paid by subsidiaries 10,000 -
Proceeds from sale of investment securities - -
Net cash provided by (used in) investing activities 10,000 -
Financing activities: Proceeds from issuance of preferred stock - -
Payment of preferred stock dividends - -
Net cash provided by (used in) financing activities - -
Net increase (decrease) in cash and cash equivalents 9,388 865
Cash and cash equivalents, beginning of year 3,242 2,377 Cash and cash equivalents, end of year $ 12,630 $ 3,242 Supplemental cash flow information:
Interest paid $ 3,259 $ -