INVESTOR RELATIONS

Press Release

National Commerce Corporation Announces First Quarter 2018 Earnings

Company Release - 4/24/2018 4:30 PM ET

BIRMINGHAM, Ala., April 24, 2018 (GLOBE NEWSWIRE) --

National Commerce Corporation (Nasdaq:NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported first quarter 2018 net income to common shareholders of $9.1 million, compared to $5.9 million for the first quarter of 2017.  Diluted net earnings per share were $0.52 in the first quarter of 2018, compared to $0.45 in the first quarter of 2017.

“We are pleased with our first quarter performance, which provides us with a good start to 2018,” said Richard Murray, IV, President and Chief Executive Officer of the Company. “Our first quarter loan and deposit growth was somewhat muted compared to our very strong fourth quarter 2017 growth, consistent with our prior growth history and some degree of seasonality.  We look forward to the remainder of the year.”  

During the first quarter of 2018, the Company successfully completed its acquisition of FirstAtlantic Financial Holdings, Inc. (“FirstAtlantic”) through a merger of the companies, followed by the merger of their respective bank subsidiaries, FirstAtlantic Bank and NBC.   During the first quarter of 2018, the Company recognized $2.4 million in merger-related expenses ($1.8 million after-tax), reducing diluted net earnings per share by $0.10.

Several important measures from the first quarter of 2018 are as follows:

  • Net Interest Margin (taxable equivalent) of 4.80% for the first quarter of 2018, compared to 4.63% for the fourth quarter of 2017 and 4.18% for the first quarter of 2017.  The first quarter 2018 margin increased 0.17% compared to the 2017 fourth quarter due primarily to higher loan yields, which were driven by higher accretion income and an increase in interest rates during the first quarter of 2018.  If accretion is excluded from both periods, the 2018 first quarter margin would have been 4.45%, or 0.03% higher than the 2017 fourth quarter margin excluding accretion.
     
  • Return on Average Assets (“ROAA”) of 1.18% for the first quarter of 2018, compared to 1.00% for the first quarter of 2017. 
     
  • Return on Average Tangible Common Equity (“ROATCE”) of 11.27% for the first quarter of 2018, compared to 11.45% for the first quarter of 2017.
     
  • First quarter 2018 loan growth (excluding mortgage loans held-for-sale) of $342.5 million, including $303.9 million acquired in the FirstAtlantic transaction.  Excluding loans acquired in the FirstAtlantic transaction, first quarter 2018 loan growth was approximately $38.6 million.
     
  • First quarter 2018 deposit growth of $265.7 million.  Excluding $374.3 million in deposits acquired in the FirstAtlantic transaction, deposits declined by $108.6 million, reflecting the loss of some deposits associated with the 2017 fourth quarter’s seasonal deposit growth.
     
  • 2018 first quarter mortgage production volume totaled $114.9 million, compared to $130.9 million for the first quarter of 2017, reflecting a higher interest rate environment. 
     
  • 2018 first quarter purchased volume in the factoring division totaled $283.0 million, compared to $253.6 million for the first quarter of 2017.
     
  • Non-acquired non-performing assets of $1.1 million at March 31, 2018, an increase from $759 thousand at December 31, 2017 and a decrease from $2.5 million at March 31, 2017.
     
  • Annualized net charge-offs of 0.08% of average loans outstanding for the first quarter of 2018, compared to net recoveries of 0.07% for the first quarter of 2017.
     
  • Provision for loan losses of $1.3 million for the first quarter of 2018, compared to $1.5 million for the 2017 fourth quarter and $156 thousand for the first quarter of 2017. 
     
  • Ending tangible book value per share of $19.21.
     
  • Ending book value per share of $29.35.

On March 20, 2018, the Company signed a definitive agreement to acquire Premier Community Bank of Florida (“Premier”), headquartered in Bradenton, Florida, through a merger of Premier with and into NBC.  As of March 31, 2018, Premier had total loans and deposits of approximately $161.0 million and $194.3 million, respectively.  The acquisition of Premier is currently pending and remains subject to customary regulatory and shareholder approvals; accordingly, Premier’s assets, liabilities and results of operations are not included in the Company’s totals for the first quarter of 2018.

The Company will host a live audio webcast conference call beginning at 8:00 a.m. Central Time on April 25, 2018 to discuss earnings and operating results for the 2018 first quarter.  Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 2179627).  A replay of the conference call will be available until April 27, 2018 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 then 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 defined as 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, twenty-two full-service banking offices in Florida (including under the trade names United Legacy Bank, Reunion Bank of Florida, Patriot Bank and FirstAtlantic 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, 2017 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
                                   Lowell Womack, Jr.
Director of Financial Reporting
(205) 313-8147
   

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
  March 31, December 31, September 30, June 30, March 31, 
  2018 2017  2017 2017 2017 
Earnings Summary           
Interest income $  36,320 $  30,224  $  28,202 $  26,466 $  24,899 
Interest expense    3,420    2,824     2,561    2,513    2,469 
Net interest income    32,900    27,400     25,641    23,953    22,430 
Provision for loan losses    1,318    1,478     1,105    1,155    156 
Gain (loss) on sale of securities    191    (119)    -    28    - 
Other noninterest income (1)    4,793    4,984     4,630    5,072    5,440 
Merger/conversion-related expenses (2)    2,396    1,172     417    344    387 
Other noninterest expense (3)    21,855    18,078     17,654    17,393    18,074 
Income before income taxes    12,315    11,537     11,095    10,161    9,253 
Income tax expense    2,776    3,890     3,828    3,281    2,841 
Deferred tax asset write-down    -    6,231     -    -    - 
Total income tax expense    2,776    10,121     3,828    3,281    2,841 
Net income before minority interest    9,539    1,416     7,267    6,880    6,412 
Net income attributable to minority interest    456    413     570    431    493 
Net income to common shareholders $  9,083 $  1,003  $  6,697 $  6,449 $  5,919 
            
Weighted average common and diluted shares outstanding          
Basic    17,209,551    14,783,597     14,300,974    13,190,582    12,901,040 
Diluted    17,612,298    15,173,984     14,679,546    13,551,745    13,283,075 
            
Net earnings per common share           
Basic $  0.53 $  0.07  $  0.47 $  0.49 $  0.46 
Diluted $  0.52 $  0.07  $  0.46 $  0.48 $  0.45 
                  


  March 31, December 31, September 30, June 30, March 31, 
Selected Performance Ratios 2018 2017 2017 2017 2017 
Return on average assets (ROAA) (4)   1.18%  0.15%  1.08%  1.06%  1.00%
Return on average equity (ROAE)   7.35   0.99   7.06   7.86   7.67 
Return on average tangible common equity           
  (ROATCE)   11.27   1.41   9.94   11.49   11.45 
Net interest margin - taxable equivalent   4.80   4.63   4.58   4.34   4.18 
Efficiency ratio   64.34   59.44   59.70   61.11   66.24 
Operating efficiency ratio (3)   57.98   55.82   58.32   59.92   64.85 
Noninterest income / average assets (annualized)   0.62   0.76   0.75   0.83   0.92 
Noninterest expense / average assets (annualized)   3.16   2.92   2.92   2.91   3.11 
Yield on loans   5.66   5.45   5.45   5.38   5.29 
Cost of total deposits   0.47%  0.43%  0.41%  0.40%  0.40%
            


  March 31, December 31, September 30, June 30, March 31, 
Factoring Metrics 2018 2017 2017 2017 2017 
Recourse purchased volume $  115,970 $  108,628 $  104,304 $  101,295 $  127,882 
Non-recourse purchased volume    167,015    158,565    155,157    149,740    125,751 
Total purchased volume $  282,985 $  267,193 $  259,461 $  251,035 $  253,633 
Average turn (days)    42.25    43.59    41.11    38.47    35.61 
Net charge-offs / total purchased volume    0.14%   0.18%   0.05%   0.12%   0.03%
Average discount rate    1.64%   1.59%   1.58%   1.52%   1.44%
                 


  March 31, December 31, September 30, June 30, March 31, 
Mortgage Metrics 2018 2017 2017 2017 2017 
Total production ($) $  114,850 $  120,969 $  122,656 $  133,063 $  130,875 
Refinance (%)    27.8%   22.1%   23.6%   24.0%   27.4%
Purchases (%)    72.2%   77.9%   76.4%   76.0%   72.6%
                 


  As of
  March 31, December 31, September 30, June 30, March 31, 
Balance Sheet Highlights 2018 2017 2017 2017  2017 
Cash and cash equivalents $  132,825 $  235,288 $  134,549 $  224,760 $  318,730 
Total investment securities    169,868    111,396    111,158    101,569    98,390 
Mortgage loans held-for-sale    21,077    29,191    15,278    19,482    19,517 
Acquired purchased credit-impaired loans    29,359    25,696    26,924    21,065    22,465 
Acquired non-purchased credit-impaired loans    783,556    538,276    561,118    490,198    539,056 
Nonacquired loans held for investment (5)    1,531,475    1,455,376    1,349,254    1,252,970    1,153,897 
CBI loans (factoring receivables)    136,194    118,710    119,110    114,361    99,317 
Total gross loans held for investment    2,480,584    2,138,058    2,056,406    1,878,594    1,814,735 
Allowance for loan losses    15,839    14,985    14,264    13,407    12,565 
Total intangibles    174,225    117,849    119,688    103,270    103,519 
Total assets    3,113,766    2,737,676    2,549,134    2,418,052    2,445,149 
Total deposits    2,551,517    2,285,831    2,097,373    2,004,528    2,080,307 
FHLB and other borrowings    7,000    7,000    7,941    7,000    7,000 
Subordinated debt    24,567    24,553    24,540    24,527    24,513 
Total liabilities    2,608,040    2,337,718    2,150,541    2,054,792    2,127,727 
Minority interest    7,391    7,348    7,504    7,366    7,427 
Common stock    172    148    148    141    129 
Total shareholders' equity    505,726    399,958    398,593    363,260    317,422 
Tangible common equity $  331,044 $  281,695 $  278,335 $  259,558 $  213,410 
End of period common shares outstanding    17,229,043    14,788,436    14,777,230    14,070,528    12,948,778 
                 


  As of and For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
 
Asset Quality Analysis 2018 2017 2017 2017  2017 
Nonacquired           
Nonaccrual loans $  367 $  82 $  70 $  50 $  68 
Other real estate and repossessed assets    -    -    150    -    1,849 
Loans past due 90 days or more and still accruing    723    677    1,690    1,172    538 
Total nonacquired nonperforming assets $  1,090 $  759 $  1,910 $  1,222 $  2,455 
           
Acquired          
Nonaccrual loans $  2,412 $  2,640 $  2,625 $  2,827 $  2,949 
Other real estate and repossessed assets    999    1,094    1,021    -    - 
Loans past due 90 days or more and still accruing    -    -    -    -    - 
Total acquired nonperforming assets $  3,411 $  3,734 $  3,646 $  2,827 $  2,949 
           
Selected asset quality ratios          
Nonperforming assets / Assets    0.14%   0.16%   0.22%   0.17%   0.22%
Nonperforming assets / (Loans + OREO + repossessed assets)   0.18    0.21    0.27    0.22    0.30 
Net charge-offs (recoveries) to average loans (annualized)   0.08    0.14    0.05    0.07    (0.07)
Allowance for loan losses to total loans    0.64    0.70    0.69    0.71    0.69 
Nonacquired nonperforming assets / (Nonacquired loans +         
  nonacquired OREO + nonacquired repossessed assets) (5)   0.07    0.05    0.14    0.10    0.21 
Allowance for loan losses / (Nonacquired nonaccrual loans +          
  nonacquired loans past due 90 days or more and still accruing)    1,453.12    1,974.31    810.45    1,097.14    2,073.43 
                 


 As of
 March 31, December 31, September 30, June 30, March 31,
Additional Information - Allowance for Loan Losses2018 2017 2017 2017 2017
Allowance for loan losses excluding CBI loans (factoring receivables)  15,239   14,385   13,764   12,907   12,065
Nonacquired loans held for investment (5)  1,531,475   1,455,376   1,349,254   1,252,970   1,153,897
Allowance for loan losses allocated to CBI loans (factoring receivables)  600   600   500   500   500
CBI loans (factoring receivables)  136,194   118,710   119,110   114,361   99,317
          


  For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31, 
Taxable Equivalent Yields/Rates 2018 2017 2017 2017 2017 
Interest income:           
Loans   5.66%  5.45%  5.45%  5.38%  5.29%
Mortgage loans held-for-sale   4.85   2.96   3.56   3.72   4.13 
Interest on securities:           
Taxable   3.11   3.09   3.03   2.98   2.63 
Non-taxable   4.06   4.81   4.86   4.91   4.98 
Cash balances in other banks   1.55   1.37   1.32   1.09   0.84 
Funds sold   1.38   -   -   -   - 
Total interest-earning assets   5.29   5.10   5.04   4.79   4.64 
            
Interest expense:           
Interest on deposits   0.67   0.62   0.59   0.57   0.56 
Interest on FHLB and other borrowings   4.00   3.82   3.95   4.01   3.19 
Interest on subordinated debt   6.41   6.27   6.27   6.36   6.42 
Total interest-bearing liabilities   0.76   0.73   0.70   0.68   0.68 
Net interest spread   4.53   4.37   4.34   4.11   3.96 
Net interest margin   4.80%  4.63%  4.58%  4.34%  4.18%
            


  As of
  March 31, December 31, September 30, June 30, March 31, 
  2018 2017 2017 2017 2017 
Shareholders' Equity and Capital Ratios           
Tier 1 Leverage Ratio    10.91%   10.89%   11.42%   10.69%   8.86%
Tier 1 Common Capital Ratio    12.93    12.54    12.78    13.17    11.06 
Tier 1 Risk-based Capital Ratio    12.93    12.54    12.78    13.17    11.06 
Total Risk-based Capital Ratio    14.56    14.37    14.64    15.18    13.07 
Equity / Assets    16.24    14.61    15.64    15.02    12.98 
Tangible common equity to tangible assets    11.26%   10.75%   11.46%   11.21%   9.11%
Book value per share $  29.35 $  27.05 $  26.97 $  25.82 $  24.51 
Tangible book value per share $  19.21 $  19.05 $  18.84 $  18.45 $  16.48 
                 

  For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2018 2017  2017  2017  2017 
Detail of Noninterest Income          
Service charges and fees on deposit accounts $  1,012 $   733  $  671 $  640 $  667 
Mortgage origination and fee income    1,895    2,450     2,780    3,154    3,145 
Merchant sponsorship revenue    720    592     622    602    744 
Income from bank-owned life insurance    286    210     210    219    216 
Rental income    276    240     84    -    - 
Wealth management fees    15    11     12    14    10 
Gain (loss) on sale of other real estate    171    (66)    6    105    (1)
Gain (loss) on sale of investments    191    (119)    -    28    - 
Other noninterest income    418     814      245      338     659  
Total noninterest income $  4,984  $  4,865   $  4,630  $  5,100  $  5,440  
               
  For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2018 2017  2017 2017 2017 
Detail of Noninterest Expense          
Salaries and employee benefits $  12,460 $  10,016  $  9,804 $  9,663 $  10,073 
Commission-based compensation    1,501    1,700     1,748    1,684    1,723 
Occupancy and equipment expense    2,270    1,889     1,692    1,479    1,473 
Data processing expenses    3,356    1,437      976    1,007    948 
Advertising and marketing expenses    268    349     309    327     468 
Legal fees    160    219     204    193    233 
FDIC insurance assessments    281    145     351    408    258 
Property and casualty insurance premiums    224    253     229    209     143 
Accounting and audit expenses    335    209     288    294    318 
Consulting and other professional expenses     538    888     510    517    497 
Telecommunications expenses    229    217     203    169    186 
ORE, Repo asset and other collection expenses    69    75     26    49     272 
Core deposit intangible amortization    739    393     366    348    348 
Other noninterest expense    1,821     1,460      1,365     1,390     1,521  
Total noninterest expense $  24,251  $  19,250   $  18,071  $  17,737  $   18,461  
                  


  As of
  March 31, December 31, September 30, June 30, March 31, 
Non-GAAP Reconciliation 2018 2017 2017 2017 2017 
Total shareholders' equity $  505,726 $  399,958 $  398,593 $  363,260 $  317,422 
Less: intangible assets    174,225    117,849    119,688    103,270    103,519 
Less: minority interest not included in intangible assets    457     414     570     432     493  
Tangible common equity $  331,044 $  281,695 $  278,335 $  259,558 $  213,410 
Common shares outstanding at year or period end    17,229,043    14,788,436    14,777,230    14,070,528    12,948,778 
Tangible book value per share $  19.21  $  19.05  $  18.84  $  18.45  $  16.48  
Total assets at end of period $  3,113,766 $  2,737,676 $  2,549,134 $  2,418,052 $  2,445,149 
Less: intangible assets    174,225     117,849     119,688     103,270     103,519  
Adjusted total assets at end of period $  2,939,541 $  2,619,827 $  2,429,446 $  2,314,782 $  2,341,630 
Tangible common equity to tangible assets    11.26 %   10.75 %   11.46 %   11.21 %   9.11 %
                 


  For the Three Months Ended
  March 31, December 31,September 30, June 30, March 31, 
  2018 2017 2017 2017 2017 
Non-GAAP Reconciliation          
Total average shareholders' equity $  500,901 $  402,317 $  376,129 $  328,886 $  312,971 
Less: average intangible assets    173,766    119,415    108,553    103,403    103,004 
Less: average minority interest not included          
  in intangible assets    326     357     356     318     295  
Average tangible common equity $  326,809 $  282,545 $  267,220 $  225,165 $  209,672 
Net income to common shareholders    9,083    1,003    6,697    6,449    5,919 
Return on average tangible common equity (ROATCE)    11.27 %   1.41 %   9.94 %   11.49 %   11.45 %
Efficiency ratio:            
Net interest income $  32,900 $  27,400 $  25,641 $  23,953 $  22,430 
Total noninterest income    4,984    4,865    4,630    5,100    5,440 
Less:  Gain (loss) on sale of securities    191     (119)   -     28     -  
Operating revenue $  37,693  $  32,384  $  30,271  $  29,025  $  27,870  
Expenses:            
Total noninterest expenses $  24,251  $  19,250  $  18,071  $  17,737  $  18,461  
Efficiency ratio    64.34 %   59.44 %   59.70 %   61.11 %   66.24 %
Operating efficiency ratio:            
Net interest income $  32,900 $  27,400 $  25,641 $  23,953 $  22,430 
Total noninterest income    4,984    4,865    4,630    5,100    5,440 
Less:  Gain (loss) on sale of securities    191     (119)   -     28     -  
Operating revenue $  37,693  $  32,384  $  30,271  $  29,025  $  27,870  
Expenses:            
Total noninterest expenses $  24,251 $  19,250 $  18,071 $  17,737 $  18,461 
Less: merger/conversion-related expenses    2,396     1,172     417     344     387  
Adjusted noninterest expenses $  21,855  $  18,078  $  17,654  $  17,393  $  18,074  
Operating efficiency ratio    57.98 %   55.82 %   58.32 %   59.92 %   64.85 %
                 


(1) Excludes securities gains
(2) After-tax impact of merger conversion-related expenses of $1,826, $815, $340, $248 and $300, 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
 March 31, 2018December 31, 2017
Cash and due from banks$  26,683 $  36,246
Interest-bearing deposits with banks   106,142     199,042
Cash and cash equivalents   132,825    235,288
Investment securities held-to-maturity (fair value of $25,182 and $25,932 at March 31, 2018  
and December 31, 2017, respectively)   25,383    25,562
Investment securities available-for-sale   144,485    85,834
Other investments   12,021    11,350
Mortgage loans held-for-sale   21,077    29,191
Loans, net of unearned income   2,480,584    2,138,058
Less: allowance for loan losses   15,839     14,985
Loans, net   2,464,745    2,123,073
Premises and equipment, net   65,500    52,455
Accrued interest receivable   7,300    6,157
Bank-owned life insurance   42,142    31,584
Other real estate   999    1,094
Deferred tax assets, net   14,834    12,041
Goodwill   164,257    113,394
Core deposit intangible, net   9,968     4,455
Other assets   8,230     6,198
Total assets$  3,113,766  $  2,737,676
     
 Liabilities and Shareholders’ Equity
Deposits:  
Noninterest-bearing demand$  711,278 $  697,144
Interest-bearing demand   520,208    362,266
Savings and money market   953,692    951,846
Time   366,339     274,575
Total deposits   2,551,517    2,285,831
Federal Home Loan Bank advances and other borrowings   7,000    7,000
Subordinated debt   24,567    24,553
Accrued interest payable   1,260    900
Other liabilities   23,696     19,434
Total liabilities   2,608,040     2,337,718
     
Shareholders’ equity:  
Preferred stock, 250,000 shares authorized, no shares issued or outstanding   -    -
Common stock, $0.01 par value, 30,000,000 shares authorized, 17,229,043 and 14,788,436   
shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   172    148
Additional paid-in capital   446,290    347,999
Retained earnings   53,072    43,989
Accumulated other comprehensive income   (1,199)   474
Total shareholders' equity attributable to National Commerce Corporation   498,335    392,610
Noncontrolling interest   7,391     7,348
Total shareholders' equity   505,726     399,958
Total liabilities and shareholders' equity$  3,113,766  $  2,737,676
      


NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except share and per share data)
   
 For the Three Months Ended
 March 31,
 20182017 
Interest and dividend income:  
Interest and fees on loans$  34,423 $  23,593 
Interest and dividends on taxable investment securities   1,170    571 
Interest on non-taxable investment securities   188    200 
Interest on interest-bearing deposits and federal funds sold   539     535  
Total interest income   36,320    24,899 
Interest expense:  
Interest on deposits   2,961    2,010 
Interest on borrowings   71    71 
Interest on subordinated debt   388     388  
Total interest expense   3,420     2,469  
Net interest income   32,900    22,430 
Provision for loan losses   1,318     156  
Net interest income after provision for loan losses   31,582    22,274 
Other income:  
Service charges and fees on deposit accounts   1,012    667 
Mortgage origination and fee income   1,895    3,145 
Merchant sponsorship revenue    720    744 
Income from bank-owned life insurance   286    216 
Rental income   276    - 
Wealth management fees   15    10 
Gain (loss) on other real estate   171    (1)
Gain on sale of investment securities available-for-sale   191    - 
Other   418     659  
Total other income   4,984     5,440  
Other expense:  
Salaries and employee benefits   12,460    10,073 
Commission-based compensation   1,501    1,723 
Occupancy and equipment   2,270    1,473 
Core deposit intangible amortization   739    348 
Other operating expense   7,281     4,844  
Total other expense   24,251     18,461  
Earnings before income taxes   12,315    9,253 
Income tax expense   2,776     2,841  
Net earnings   9,539    6,412 
Less: Net earnings attributable to noncontrolling interest   456     493  
Net earnings attributable to National Commerce Corporation$  9,083  $  5,919  
   
Weighted average common and diluted shares outstanding  
Basic   17,209,551    12,901,040 
Diluted   17,612,298    13,283,075 
   
Basic earnings per common share$  0.53 $  0.46 
Diluted earnings per common share$  0.52 $  0.45 
       


NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
 
                
 For the Three Months Ended
(Dollars in thousands)March 31, 2018December 31, 2017September 30, 2017June 30, 2017March 31, 2017
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$  2,451,352 $  34,2205.66%$  2,091,443 $  28,7045.45% $  1,937,115 $  26,6345.45% $  1,849,258 $  24,8235.38% $  1,793,241 $  23,3775.29%
Mortgage loans held-for-sale   17,402    208 4.85     18,237    136 2.96      16,811    151 3.56      18,321    170 3.72      21,809    222 4.13  
Securities:               
  Taxable securities   152,748    1,170 3.11     97,175    756 3.09      90,969    694 3.03      81,645    606 2.98      88,062    571 2.63  
  Tax-exempt securities   25,169    252 4.06     25,005    303 4.81      25,286    310 4.86      25,573    313 4.91      25,824    317 4.98  
Cash balances in other banks   138,358    529 1.55     128,606    443 1.37      159,973    533 1.32      249,361    676 1.09      258,672    535 0.84  
Funds sold   2,946     10  1.38     -     -  0.00      -     -  0.00      -     -  0.00      -     -  0.00  
  Total interest-earning assets   2,787,975 $  36,389  5.29     2,360,466 $  30,342  5.10      2,230,154 $  28,322  5.04      2,224,158 $  26,588  4.79      2,187,608 $  25,022  4.64  
Noninterest-earning assets   328,605      255,239       228,231       218,088       220,006   
  Total assets$  3,116,580   $  2,615,705    $  2,458,385    $  2,442,246    $  2,407,614   
                
Interest-bearing liabilities               
Interest-bearing transaction accounts$  423,537 $  3220.31%$  331,876 $  2770.33% $  314,925 $  2070.26% $  341,238 $  2430.29% $  332,361 $  2170.26%
Savings and money market deposits   1,038,751    1,816 0.71     884,660    1,381 0.62      827,526    1,233 0.59      821,130    1,138 0.56      804,537    1,096 0.55  
Time deposits   327,011    823 1.02     285,669    707 0.98      273,630    661 0.96      290,097    673 0.93      306,404    697 0.92  
Federal Home Loan Bank and other borrowed money       7,200    71   4.00   7,381     71   3.82   7,228     72   3.95   7,000     70   4.01   9,016 
Subordinated debt   24,560     388  6.41     24,547     388  6.27      24,533     388  6.27      24,520     389  6.36      24,507     388  6.42  
  Total interest-bearing liabilities   1,821,059 $  3,420  0.76     1,534,133 $  2,824  0.73      1,447,842 $  2,561  0.70      1,483,985 $  2,513  0.68      1,476,825 $  2,469  0.68  
Noninterest-bearing deposits   772,358      657,786       615,130       612,910       600,897   
  Total funding sources   2,593,417     2,191,919      2,062,972      2,096,895      2,077,722  
Noninterest-bearing liabilities   22,262     21,469      19,284      16,465      16,921  
Shareholders' equity   500,901      402,317       376,129       328,886       312,971   
 $  3,116,580   $  2,615,705    $  2,458,385    $  2,442,246    $  2,407,614   
Net interest rate spread  4.53%  4.37%  4.34%  4.11%  3.96%
Net interest income/margin (taxable equivalent)     32,9694.80%     27,5184.63%     25,7614.58%     24,0754.34%     22,5534.18%
Tax equivalent adjustment     69       118       120       122       123  
Net interest income/margin  $  32,900 4.79%  $  27,400 4.61%  $  25,641 4.56%  $  23,953 4.32%  $  22,430 4.16%
                               


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Source: National Commerce Corporation