North Dakota-based BNCCORP Inc. reported net income of $102,000, or $0.03 per common share on a diluted basis, for the second quarter ended June 30, 2002 compared with net income of $691,000, or $0.28 per share for the same quarter of 2001. BNCCORP is a bank holding company that provides a wide array of insurance and brokerage services through subsidiaries BNC Insurance Inc., Milne Scali & Company and BNC Asset Management Inc.
Results for the recent quarter primarily reflected a decrease in net interest income, along with higher noninterest expenses associated with the company’s expanding market presence in Arizona. These factors were partly offset by increased noninterest income, especially from insurance activities. The Arizona operations include three banking and loan generation offices, as well as the Milne Scali & Company insurance agency headquartered in Phoenix and acquired on April 16, 2002.
Net interest income was approximately $3.6 million for the latest three months, compared with $4.1 million for the second quarter of 2001, with much of the difference attributable to a write-down of interest rate hedging instruments in the recent period. Noninterest income rose to nearly $4.2 million for the 2002 second quarter, compared with $2.5 million in the same period of 2001, largely due to a sharp rise in insurance commissions generated as a result of the Milne Scali acquisition. Noninterest expense was $7.5 million for the second quarter of 2002, up from $5.0 million for the year-ago quarter, for the reasons discussed above.
“Our investments in building an Arizona franchise have begun to generate results, although we are far from satisfied with the Company’s quarterly performance,” noted BNCCORP President and CEO Gregory Cleveland. “Our Arizona banking operations have been excellent sources of loan and deposit growth, and the Milne Scali insurance agency is profitable. Over time, we look forward to more significant contributions from this attractive market.”