INVESTOR RELATIONS

Press Release

National Commerce Corporation Announces Third Quarter 2017 Earnings

Company Release - 10/24/2017 6:15 PM ET

BIRMINGHAM, Ala., Oct. 24, 2017 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported third quarter 2017 net income to common shareholders of $6.7 million, compared to $4.8 million for the third quarter of 2016.  Diluted net earnings per share were $0.46 in the third quarter of 2017, compared to $0.48 in the second quarter of 2017 and $0.43 in the third quarter of 2016. In connection with the Company’s June 2017 public offering of common stock, the Company issued 1,104,000 additional shares that were outstanding for the entire third quarter of 2017, increasing the diluted share count and thereby decreasing diluted net earnings per share by approximately $0.04.

“We are pleased with the Company’s growth, profitability, and asset quality in the third quarter,” said President and Chief Executive Officer Richard Murray, IV.  “With continued focus and hard work, we believe that we are in position to have a strong year in 2017.”

As previously announced, the Company closed the acquisition of Patriot Bank on August 31, 2017.  Accordingly, the third quarter results include Patriot Bank’s operations for one month.  In connection with the acquisition, the Company issued 706,702 shares of its common stock and approximately $3.0 million in cash to Patriot Bank shareholders for all of the outstanding shares of Patriot Bank common stock.

“We welcome the Patriot Bank shareowners, customers, and team members to our Company,” said Murray.  “We are excited about our future growth in the greater Tampa Bay market under the leadership of David Key and his team.”

Several important measures from the third quarter of 2017 are as follows:

  • Net Interest Margin (taxable equivalent) of 4.58% for the third quarter of 2017, compared to 4.34% for the second quarter of 2017 and 4.18% for the third quarter of 2016.  The third quarter 2017 margin increased 0.24% compared to the 2017 second quarter due to a change in the earning asset mix (lower levels of cash and cash equivalents) and a 0.07% increase in loan yields, offset slightly by a 0.01% increase in the cost of deposits.  Interest income on loans for the third quarter of 2017 included $1.1 million in loan accretion income, compared to $1.2 million of loan accretion income for the second quarter of 2017.
     
  • Return on Average Assets of 1.08% for the third quarter of 2017, identical to the third quarter of 2016.  Return on Average Tangible Common Equity of 9.94% for the third quarter of 2017, compared to 10.90% for the third quarter of 2016.  The third quarter of 2017 measure includes the additional common stock issued in the Company’s June 2017 public offering.

  • Third quarter 2017 loan growth (excluding mortgage loans held-for-sale and $121.6 million of loans acquired from Patriot Bank) of $56.2 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, and loans acquired from Patriot Bank, third quarter 2017 loan growth was approximately $51.5 million.

  • Excluding the acquired deposits from Patriot Bank totaling $127.7 million, deposits decreased $34.9 million during the third quarter of 2017, primarily due to a decline in a few large deposit relationships and the maturity of a $9.8 million brokered certificate of deposit.

  • $122.7 million in 2017 third quarter mortgage production, compared to $133.1 million for the second quarter of 2017 and $91.6 million for the third quarter of 2016.  The 2017 second and third quarter production totals include mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.

  • $259.5 million in 2017 third quarter purchased volume in the factoring division, compared to $251.0 million for the second quarter of 2017 and $172.4 million for the third quarter of 2016.

  • An increase in non-acquired non-performing assets to $1.9 million at September 30, 2017, from $1.2 million at June 30, 2017. 

  • Annualized net charge-offs of 0.05% of average loans for the third quarter of 2017, compared to net charge-offs of 0.07% for the second quarter of 2017 and 0.02% for the third quarter of 2016.

  • Provision for loan losses of $1.1 million during the third quarter of 2017, compared to $1.2 million in the second quarter of 2017 and $373 thousand in the third quarter of 2016.  The increase during the third quarter of 2017 was attributable to growth in non-acquired loans.

  • During the third quarter of 2017, the Company recognized merger-related expenses of $417 thousand, for an after-tax impact of approximately $340 thousand (considering the non-deductibility of certain items), representing approximately $0.02 per diluted share.
     
  • Ending tangible book value per share of $18.84.

  • Ending book value per share of $26.97.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on October 25, 2017 to discuss earnings and operating results for the 2017 third quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 96826435).  A replay of the conference call will be available until October 27, 2017 and can be accessed by dialing (855) 859-2056.

Investors who plan to participate in the live webcast of the conference call should access the webcast by visiting www.nationalbankofcommerce.com and clicking on the “Investor Relations” link under the “Learn More” tab located on that webpage.  A replay of the webcast will be available on the website for one year.  A copy of the news release will also be available at the same location.

Use of Non-GAAP Financial Measures

Some of the financial measures presented in this press release and included in the accompanying unaudited financial statements are not measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).  These non-GAAP financial measures include tangible common equity, return on average tangible common equity, tangible book value per share, efficiency ratio and operating efficiency ratio.  The Company’s management uses the non-GAAP financial measures set forth below in its analysis of the Company’s performance.

  • “Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and minority interest not included in intangible assets. 

  • “Average tangible common equity” is defined as the average of tangible common equity for the applicable period.

  • “Return on average tangible common equity,” or ROATCE, is defined as net income available to common shareholders divided by average tangible common equity.

  • “Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding.  This measure is important to investors interested in changes from period to period in book value per share exclusive of changes in intangible assets.

The Company’s management believes that these measures, each of which utilizes the concept of tangible common equity rather than total common equity, provide useful information to management and investors because they eliminate the impact of goodwill and other intangible assets created in an acquisition.  These measures are commonly used by investors when assessing financial institutions.

  •  “Efficiency ratio” is defined as noninterest expense divided by operating revenue (which is equal to net interest income plus noninterest income), excluding one-time gains and losses on sales of securities.  This measure is important to investors looking for a measure of efficiency in productivity based on the amount of revenue generated for each dollar spent.

  • “Operating efficiency ratio” is defined as noninterest expense divided by operating revenue, excluding one-time gains and losses on sales of securities and one-time gains and expenses related to merger and acquisition activities.  This measure is important to investors looking for a measure of efficiency in productivity based on the amount of revenue generated for each dollar spent.    

The Company’s management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, the Company acknowledges that the non-GAAP financial measures have a number of limitations.  As such, the Company cautions readers that these disclosures should not be viewed as a substitute for results determined in accordance with GAAP, and that these disclosures are not necessarily comparable to non-GAAP financial measures that other companies use.  These non-GAAP financial measures exclude various items detailed in the attached “Non-GAAP Reconciliation.”

About National Commerce Corporation

National Commerce Corporation (Nasdaq: NCOM), a Delaware corporation, is a financial holding company headquartered in Birmingham, Alabama.  Substantially all of the operations of National Commerce Corporation are conducted through the Company’s wholly owned subsidiary, National Bank of Commerce.  National Bank of Commerce currently operates seven full-service banking offices in Alabama, fourteen full-service banking offices in central and northeast Florida (including under the trade names United Legacy Bank, Reunion Bank of Florida and Patriot Bank) and two full-service banking offices in Atlanta, Georgia (including under the trade names Private Bank of Buckhead, Private Bank of Decatur and PrivatePlus Mortgage).  National Bank of Commerce provides a broad array of financial services for commercial and consumer customers.

Additionally, National Bank of Commerce owns a majority stake in Corporate Billing, LLC, a transaction-based finance company headquartered in Decatur, Alabama that provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers throughout the United States and parts of Canada.

National Commerce Corporation files periodic reports with the U.S. Securities and Exchange Commission (the “SEC”).  Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.nationalbankofcommerce.com.  More information about National Commerce Corporation and National Bank of Commerce may be obtained at www.nationalbankofcommerce.com.

Forward-Looking Statements
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements for which NCC claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such.  In addition, certain statements may be contained in NCC’s future filings with the SEC, in press releases and in oral and written statements made by NCC or with NCC’s approval that are not statements of historical fact and that constitute forward-looking statements within the meaning of the Act.  Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of NCC’s plans, objectives and expectations or those of its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.  Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Forward-looking statements are subject to various risks and uncertainties, including those risks and uncertainties described under the heading “Risk Factors” in NCC’s Annual Report on Form 10-K for the year ended December 31, 2016 and described in any subsequent reports that NCC has filed with the SEC.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements, and these statements should not be relied upon as predictions of future events.  NCC undertakes no obligation to update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.  In that respect, NCC cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

Contact:

National Commerce Corporation

William E. Matthews, V 
Vice Chairman and Chief Financial Officer 
(205) 313-8122 

 
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages or as otherwise noted)
           
 For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
 2017 2017 2017
 2016 2016 
Earnings Summary          
Interest income$28,202 $26,466 $24,899  $19,032  $18,836 
Interest expense 2,561  2,513  2,469   2,042   1,959 
Net interest income 25,641  23,953  22,430   16,990   16,877 
Provision for loan losses 1,105  1,155  156   441   373 
Gain on sale of securities -  28  -   -   - 
Other noninterest income (1) 4,630  5,072  5,440   3,472   4,002 
Merger/conversion-related expenses (2) 417  344  387   169   160 
Other noninterest expense (3) 17,654  17,393  18,074   11,971   12,472 
Income before income taxes 11,095  10,161  9,253   7,881   7,874 
Income tax expense 3,828  3,281  2,841   2,600   2,639 
Net income before minority interest 7,267  6,880  6,412   5,281   5,235 
Net income attributable to minority interest 570  431  493   374   422 
Net income to common shareholders$6,697 $6,449 $5,919  $4,907  $4,813 
           
Weighted average common and diluted shares outstanding          
Basic 14,300,974  13,190,582  12,901,040   10,930,309   10,890,860 
Diluted 14,679,546  13,551,745  13,283,075   11,173,733   11,115,134 
           
Net earnings per common share          
Basic$0.47 $0.49 $0.46  $0.45  $0.44 
Diluted$0.46 $0.48 $0.45  $0.44  $0.43 
           
           
 September 30, June 30, March 31, December 31, September 30, 
Selected Performance Ratios2017 2017 2017
 2016
 2016 
Return on average assets (ROAA) (4) 1.08% 1.06% 1.00 % 1.05 % 1.08%
Return on average equity (ROAE) 7.06  7.86  7.67   8.33   8.36 
Return on average tangible common equity          
(ROATCE) 9.94  11.49  11.45   10.78   10.90 
Net interest margin - taxable equivalent 4.58  4.34  4.18   3.99   4.18 
Efficiency ratio 59.70  61.11  66.24   59.33   60.50 
Operating efficiency ratio (3) 58.32  59.92  64.85   58.50   59.73 
Noninterest income / average assets (annualized) 0.75  0.83  0.92   0.74   0.90 
Noninterest expense / average assets (annualized) 2.92  2.91  3.11   2.60   2.85 
Yield on loans 5.45  5.38  5.29   4.95   5.08 
Cost of total deposits 0.41% 0.40% 0.40 % 0.40 % 0.40%
           
           
 September 30, June 30, March 31, December 31, September 30, 
Factoring Metrics2017 2017 2017
 2016
 2016 
Recourse purchased volume$104,304 $101,295 $127,882  $82,923  $71,872 
Non-recourse purchased volume 155,157  149,740  125,751   104,797   100,486 
Total purchased volume$259,461 $251,035 $253,633  $187,720  $172,358 
Average turn (days) 41.11  38.47  35.61   38.35   38.13 
Net charge-offs / total purchased volume 0.05% 0.12% 0.03 % 0.12 % 0.05%
Average discount rate 1.58% 1.52% 1.44 % 1.67 % 1.70%
           
           
 September 30, June 30, March 31, December 31, September 30, 
Mortgage Metrics2017 2017 2017
 2016
 2016 
Total production ($)$122,656 $133,063 $130,875  $76,028  $91,613 
Refinance (%) 23.6% 24.0% 27.4 % 40.2 % 30.4%
Purchases (%) 76.4% 76.0% 72.6 % 59.8 % 69.6%
           
 As of
 
 September 30, June 30, March 31, December 31, September 30, 
Balance Sheet Highlights2017
 2017
 2017
 2016
 2016
 
Cash and cash equivalents$134,549 $224,760 $318,730  $217,293  $122,920 
Total investment securities 111,158  101,569  98,390   99,709   102,848 
Mortgage loans held-for-sale 15,278  19,482  19,517   15,373   7,810 
Acquired purchased credit-impaired loans 26,924  21,065  22,465   11,975   11,995 
Acquired non-purchased credit-impaired loans 561,118  490,198  539,056   313,399   320,630 
Nonacquired loans held for investment (5) 1,349,254  1,252,970  1,153,897   1,076,209   1,009,677 
CBI loans (factoring receivables) 119,110  114,361  99,317   83,901   70,066 
Total gross loans held for investment 2,056,406  1,878,594  1,814,735   1,485,484   1,412,368 
Allowance for loan losses 14,264  13,407  12,565   12,113   11,950 
Total intangibles 119,688  103,270  103,519   52,803   52,962 
Total assets 2,549,134  2,418,052  2,445,149   1,950,784   1,779,278 
Total deposits 2,097,373  2,004,528  2,080,307   1,667,710   1,499,879 
FHLB and other borrowings 7,941  7,000  7,000   7,000   7,000 
Subordinated debt 24,540  24,527  24,513   24,500   24,487 
Total liabilities 2,150,541  2,054,792  2,127,727   1,713,740   1,547,105 
Minority interest 7,504  7,366  7,427   7,309   7,357 
Common stock 148  141  129   109   109 
Total shareholders' equity 398,593  363,260  317,422   237,044   232,173 
Tangible common equity$278,335 $259,558 $213,410  $183,866  $178,788 
End of period common shares outstanding 14,777,230  14,070,528  12,948,778   10,934,541   10,920,423 
           
           
 As of and For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
Asset Quality Analysis2017 2017 2017
 2016
 2016 
Nonacquired          
Nonaccrual loans$70 $50 $68  $69  $19 
Other real estate and repossessed assets 150  -  1,849   2,068   2,068 
Loans past due 90 days or more and still accruing 1,690  1,172  538   581   358 
Total nonacquired nonperforming assets$1,910 $1,222 $2,455  $2,718  $2,445 
           
Acquired          
Nonaccrual loans$2,625 $2,827 $2,949  $2,768  $2,982 
Other real estate and repossessed assets 1,021  -  -   -   92 
Loans past due 90 days or more and still accruing -  -  -   -   - 
Total acquired nonperforming assets$3,646 $2,827 $2,949  $2,768  $3,074 
           
Selected asset quality ratios          
Nonperforming assets / Assets 0.22% 0.17% 0.22 % 0.28 % 0.31%
Nonperforming assets / (Loans + OREO + repossessed assets) 0.27  0.22  0.30   0.37   0.39 
Net charge-offs (recoveries) to average loans (annualized) 0.05  0.07  (0.07)  0.08   0.02 
Allowance for loan losses to total loans 0.69  0.71  0.69   0.82   0.85 
Nonacquired nonperforming assets / (Nonacquired loans +          
nonacquired OREO + nonacquired repossessed assets) (5) 0.14  0.10  0.21   0.25   0.24 
Allowance for loan losses to nonacquired nonperforming          
loans 810.45  1,097.14  2,073.43   1,863.54   3,169.76 
           
           
 As of
 
 September 30, June 30, March 31, December 31, September 30, 
Additional Information - Allowance for Loan Losses2017 2017 2017
 2016
 2016 
Allowance for loan losses excluding CBI loans (factoring receivables) 13,764  12,907  12,065   11,613   11,450 
Nonacquired loans held for investment (5) 1,349,254  1,252,970  1,153,897   1,076,209   1,009,677 
Allowance for loan losses allocated to CBI loans (factoring receivables)    500  500  500   500   500 
CBI loans (factoring receivables) 119,110  114,361  99,317   83,901   70,066 
           
 For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
Taxable Equivalent Yields/Rates2017 2017 2017
 2016
 2016 
Interest income:          
Loans 5.45% 5.38% 5.29 % 4.95 % 5.08%
Mortgage loans held-for-sale 3.56  3.72  4.13   2.99   4.12 
Interest on securities:          
Taxable 3.03  2.98  2.63   2.52   2.55 
Non-taxable 4.86  4.91  4.98   4.90   4.85 
Cash balances in other banks 1.32  1.09  0.84   0.63   0.60 
Total interest-earning assets 5.04  4.79  4.64   4.47   4.66 
           
Interest expense:          
Interest on deposits 0.59  0.57  0.56   0.55   0.54 
Interest on FHLB and other borrowings 3.95  4.01  3.19   4.04   4.04 
Interest on subordinated debt 6.27  6.36  6.42   6.30   6.32 
Total interest-bearing liabilities 0.70  0.68  0.68   0.69   0.68 
Net interest spread 4.34  4.11  3.96   3.78   3.98 
Net interest margin 4.58% 4.34% 4.18 % 3.99 % 4.18%
           
 As of
 
 September 30, June 30, March 31, December 31, September 30, 
 2017 2017 2017
 2016
 2016 
Shareholders' Equity and Capital Ratios          
Tier 1 Leverage Ratio 11.42% 10.69% 8.86 % 9.57 % 9.74%
Tier 1 Common Capital Ratio 12.78  13.17  11.06   11.46   11.64 
Tier 1 Risk-based Capital Ratio 12.78  13.17  11.06   11.46   11.64 
Total Risk-based Capital Ratio 14.64  15.18  13.07   13.90   14.19 
Equity / Assets 15.64  15.02  12.98   12.15   13.05 
Tangible common equity to tangible assets 11.46% 11.21% 9.11 % 9.69 % 10.36%
Book value per share$26.97 $25.82 $24.51  $21.68  $21.26 
Tangible book value per share$18.84 $18.45 $16.48  $16.82  $16.37 
           
 For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
 2017 2017 2017
 2016
 2016 
Detail of noninterest income          
Service charges and fees on deposit accounts$671 $640 $667  $523  $511 
Mortgage origination and fee income 2,780  3,154  3,145   1,711   2,245 
Merchant sponsorship revenue 622  602  744   613   542 
Income from bank-owned life insurance 210  219  216   196   206 
Rental income 84  -  -   -   - 
Wealth management fees 12  14  10   10   15 
Gain on sale of other real estate 6  105  (1)  (31)  - 
Gain on sale of investments -  28  -   -   - 
Other noninterest income 245  338  659   450   483 
Total noninterest income$4,630 $5,100 $5,440  $3,472  $4,002 
           
 For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
 2017 2017 2017
 2016
 2016 
Detail of noninterest expense          
Salaries and employee benefits$9,804 $9,663 $10,073  $6,935  $6,948 
Commission-based compensation 1,748  1,684  1,723   1,076   1,104 
Occupancy and equipment expense 1,692  1,479  1,473   1,193   1,181 
Data processing expenses 976  1,007  948   568   572 
Advertising and marketing expenses 309  327  468   156   198 
Legal fees 204  193  233   163   182 
FDIC insurance assessments 351  408  258   234   246 
Property and casualty insurance premiums 229  209  143   95   90 
Accounting and audit expenses 288  294  318   211   252 
Consulting and other professional expenses 510  517  497   201   330 
Telecommunications expenses 203  169  186   114   146 
ORE, Repo asset and other collection expenses 26  49  272   41   142 
Core deposit intangible amortization 366  348  348   182   191 
Other noninterest expense 1,365  1,390  1,521   971   1,050 
Total noninterest expense$18,071 $17,737 $18,461  $12,140  $12,632 
           
 As of
 
 September 30, June 30, March 31, December 31, September 30, 
Non-GAAP Reconciliation2017 2017 2017
 2016
 2016 
Total shareholders' equity$398,593 $363,260 $317,422  $237,044  $232,173 
Less: intangible assets 119,688  103,270  103,519   52,803   52,962 
Less: minority interest not included in intangible assets 570  432  493   375   423 
Tangible common equity$278,335 $259,558 $213,410  $183,866  $178,788 
Common shares outstanding at year or period end 14,777,230  14,070,528  12,948,778   10,934,541   10,920,423 
Tangible book value per share$18.84 $18.45 $16.48  $16.82  $16.37 
Total assets at end of period$2,549,134 $2,418,052 $2,445,149  $1,950,784  $1,779,278 
Less: intangible assets 119,688  103,270  103,519   52,803   52,962 
Adjusted total assets at end of period$2,429,446 $2,314,782 $2,341,630  $1,897,981  $1,726,316 
Tangible common equity to tangible assets 11.46% 11.21% 9.11 % 9.69 % 10.36%
           
 For the Three Months Ended
 
 September 30, June 30, March 31, December 31, September 30, 
 2017 2017 2017
 2016
 2016 
Non-GAAP Reconciliation          
Total average shareholders' equity$376,129 $328,886 $312,971  $234,249  $228,953 
Less: average intangible assets 108,553  103,403  103,004   52,872   53,056 
Less: average minority interest not included          
in intangible assets 356  318  295   262   282 
Average tangible common equity$267,220 $225,165 $209,672  $181,115  $175,615 
Net income to common shareholders 6,697  6,449  5,919   4,907   4,813 
Return on average tangible common equity (ROATCE) 9.94% 11.49% 11.45 % 10.78 % 10.90%
Efficiency ratio:          
Net interest income$25,641 $23,953 $22,430  $16,990  $16,877 
Total noninterest income 4,630  5,100  5,440   3,472   4,002 
Less:  gain (loss) on sale of securities -  28  -   -   - 
Operating revenue$30,271 $29,025 $27,870  $20,462  $20,879 
Expenses:          
Total noninterest expenses$18,071 $17,737 $18,461  $12,140  $12,632 
Efficiency ratio 59.70% 61.11% 66.24 % 59.33 % 60.50%
Operating efficiency ratio:          
Net interest income$25,641 $23,953 $22,430  $16,990  $16,877 
Total noninterest income 4,630  5,100  5,440   3,472   4,002 
Less:  gain (loss) on sale of securities -  28  -   -   - 
Operating revenue$30,271 $29,025 $27,870  $20,462  $20,879 
Expenses:          
Total noninterest expenses$18,071 $17,737 $18,461  $12,140  $12,632 
Less: merger/conversion-related expenses 417  344  387   169   160 
Adjusted noninterest expenses$17,654 $17,393 $18,074  $11,971  $12,472 
Operating efficiency ratio 58.32% 59.92% 64.85 % 58.50 % 59.73%
           
(1) Excludes securities gains
(2) After-tax impact of merger conversion-related exenses of $340, $248, $300, $168, $154, respectively, for the periods presented
(3) Excludes merger/conversion-related expenses
(4) Net income to common shareholders / average assets
(5) Excludes CBI loans (factoring receivables)
           


 

NATIONAL COMMERCE CORPORATION 
Unaudited Consolidated Balance Sheets 
(In thousands, except share and per share data) 
    
Assets 
 September 30, 2017  December 31, 2016 
Cash and due from banks$44,111 $35,897 
Interest-bearing deposits with banks 90,438  181,396 
Cash and cash equivalents 134,549  217,293 
Investment securities held-to-maturity (fair value of $26,076 and $25,894 at September 30, 2017   
and December 31, 2016, respectively) 25,820  26,329 
Investment securities available-for-sale 85,338  73,380 
Other investments 10,740  7,879 
Mortgage loans held-for-sale 15,278  15,373 
Loans, net of unearned income 2,056,406  1,485,484 
Less: allowance for loan losses 14,264  12,113 
Loans, net 2,042,142  1,473,371 
Premises and equipment, net 52,593  31,884 
Accrued interest receivable 5,781  4,129 
Bank-owned life insurance 31,973  28,034 
Other real estate 1,171  2,068 
Deferred tax assets, net 17,739  13,486 
Goodwill 114,840  50,771 
Core deposit intangible, net 4,848  2,032 
Other assets 6,322  4,755 
Total assets$2,549,134 $1,950,784 
    
Liabilities and Shareholders’ Equity 
Deposits:   
Noninterest-bearing demand$621,916 $429,030 
Interest-bearing demand 322,273  262,261 
Savings and money market 863,421  703,289 
Time 289,763  273,130 
Total deposits 2,097,373  1,667,710 
Federal Home Loan Bank advances and other borrowings 7,941  7,000 
Subordinated debt 24,540  24,500 
Accrued interest payable 1,136  829 
Other liabilities 19,551  13,701 
   Total liabilities 2,150,541  1,713,740 
    
Shareholders’ equity:   
Preferred stock, 250,000 shares authorized, no shares issued or outstanding -  - 
Common stock, $0.01 par value, 30,000,000 shares authorized, 14,777,230 and 10,934,541   
shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 148  109 
Additional paid-in capital 347,371  205,372 
Retained earnings 43,070  24,005 
Accumulated other comprehensive income 500  249 
Total shareholders' equity attributable to National Commerce Corporation 391,089  229,735 
Noncontrolling interest 7,504  7,309 
   Total shareholders' equity 398,593  237,044 
   Total liabilities and shareholders' equity$2,549,134 $1,950,784 
    


NATIONAL COMMERCE CORPORATION 
Unaudited Consolidated Statements of Earnings 
(In thousands, except share and per share data) 
       
 For the Three Months Ended For the Nine Months Ended 
 September 30, September 30, 
  2017  2016  2017  2016 
Interest and dividend income:      
Interest and fees on loans$  26,780 $  17,991 $  75,360 $  53,143 
Interest and dividends on taxable investment securities   694    493    1,871    1,288 
Interest on non-taxable investment securities   195    200    592    601 
Interest on interest-bearing deposits and federal funds sold   533    152    1,744    499 
             
Total interest income   28,202    18,836    79,567    55,531 
             
Interest expense:      
Interest on deposits   2,101    1,499    6,165    4,544 
Interest on borrowings   72    71    213    223 
Interest on subordinated debt   388    389    1,165    572 
             
Total interest expense   2,561    1,959    7,543    5,339 
             
Net interest income   25,641    16,877    72,024    50,192 
             
Provision for loan losses   1,105    373    2,416    2,807 
             
Net interest income after provision for loan losses   24,536    16,504    69,608    47,385 
             
Other income:      
Service charges and fees on deposit accounts   671    511    1,978    1,496 
Mortgage origination and fee income   2,780    2,245    9,079    5,264 
Merchant sponsorship revenue   622    542    1,968    1,555 
Income from bank-owned life insurance   210    206    645    614 
Rental income   84    -    84    - 
Wealth management fees   12    15    36    39 
Gain on other real estate   6    -    110    275 
Gain on sale of investment securities available-for-sale   -    -    28    - 
Other   245    483    1,242    1,241 
             
Total other income   4,630    4,002    15,170    10,484 
       
Other expense:      
Salaries and employee benefits   9,804    6,948    29,540    20,800 
Commission-based compensation   1,748    1,104    5,155    3,015 
Occupancy and equipment   1,692    1,181    4,644    3,447 
Core deposit intangible amortization   366    191    1,062    574 
Other operating expense   4,461    3,208    13,868    9,103 
             
Total other expense   18,071    12,632    54,269    36,939 
             
Earnings before income taxes   11,095    7,874    30,509    20,930 
             
Income tax expense   3,828    2,639    9,950    6,794 
             
Net earnings   7,267    5,235    20,559    14,136 
             
Less: Net earnings attributable to noncontrolling interest   570    422    1,494    1,190 
             
Net earnings attributable to National Commerce Corporation   $  6,697 $  4,813 $  19,065 $  12,946 
       
Weighted average common and diluted shares outstanding      
Basic   14,300,974    10,890,860    13,469,327    10,871,245 
Diluted   14,679,546    11,115,134    13,854,074    11,080,746 
       
Basic earnings per common share$  0.47 $  0.44 $  1.42 $  1.19 
Diluted earnings per common share$  0.46 $  0.43 $  1.38 $  1.17 
       


NATIONAL COMMERCE CORPORATION 
Average Balance Sheets and Net Interest Analysis 
  
                 
 For the Three Months Ended 
(Dollars in thousands)September 30, 2017June 30, 2017March 31, 2017December 31, 2016September 30, 2016 
Interest-earning assetsAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate 
Loans$1,937,115 $26,6345.45% $1,849,258 $24,8235.38% $1,793,241 $23,3775.29% $1,446,629 $18,0124.95% $1,399,016 $17,8535.08% 
Mortgage loans held-for-sale 16,811  1513.56   18,321  1703.72   21,809  2224.13   10,366  782.99   13,986  1454.12  
Securities:                
Taxable securities 90,969  6943.03   81,645  6062.98   88,062  5712.63   82,881  5252.52   76,787  4932.55  
Tax-exempt securities 25,286  3104.86   25,573  3134.91   25,824  3174.98   25,910  3194.90   26,029  3174.85  
Cash balances in other banks 159,973  5331.32   249,361  6761.09   258,672  5350.84   140,813  2240.63   101,422  1520.60  
Total interest-earning assets 2,230,154 $28,3225.04   2,224,158 $26,5884.79   2,187,608 $25,0224.64   1,706,599 $19,1584.47   1,617,240 $18,9604.66  
Noninterest-earning assets 228,231    218,088    220,006    149,709    148,275   
Total assets$2,458,385   $2,442,246   $2,407,614   $1,856,308   $1,765,515   
                 
Interest-bearing liabilities                
Interest-bearing transaction accounts$314,925 $2070.26% $341,238 $2430.29% $332,361 $2170.26% $235,340 $1490.25% $214,439 $1250.23% 
Savings and money market deposits 827,526  1,2330.59   821,130  1,1380.56   804,537  1,0960.55   633,765  7910.50   612,618  7130.46  
Time deposits 273,630  6610.96   290,097  6730.93   306,404  6970.92   273,293  6430.94   283,022  6610.93  
Federal Home Loan Bank and other borrowed money 7,228  723.95   7,000  704.01   9,016  713.19   7,000  714.04   7,000  714.04  
Subordinated debt 24,533  3886.27   24,520  3896.36   24,507  3886.42   24,494  3886.30   24,498  3896.32  
Total interest-bearing liabilities 1,447,842 $2,5610.70   1,483,985 $2,5130.68   1,476,825 $2,4690.68   1,173,892 $2,0420.69   1,141,577 $1,9590.68  
Noninterest-bearing deposits 615,130    612,910    600,897    431,253    381,205   
Total funding sources 2,062,972    2,096,895    2,077,722    1,605,145    1,522,782   
Noninterest-bearing liabilities 19,284    16,465    16,921    16,914    13,780   
Shareholders' equity 376,129    328,886    312,971    234,249    228,953   
 $2,458,385   $2,442,246   $2,407,614   $1,856,308   $1,765,515   
Net interest rate spread  4.34%  4.11%  3.96%  3.78%  3.98% 
Net interest income/margin (taxable equivalent)   25,7614.58%   24,0754.34%   22,5534.18%   17,1163.99%   17,0014.18% 
Tax equivalent adjustment   120    122    123    126    124  
Net interest income/margin  $25,6414.56%  $23,9534.32%  $22,4304.16%  $16,9903.96%  $16,8774.15% 
                 

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Source: National Commerce Corporation


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