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National Commerce Corporation Announces Second Quarter 2017 Earnings

BIRMINGHAM, Ala., July 25, 2017 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported second quarter 2017 net income to common shareholders of $6.4 million, compared to $4.4 million for the second quarter of 2016.  Diluted net earnings per share were $0.48 in the second quarter of 2017, compared to $0.45 in the first quarter of 2017 and $0.39 in the second quarter of 2016.

During the second quarter of 2017, the Company successfully completed an underwritten public offering of 1,104,000 shares of its common stock at a price of $37.00 per share and announced the execution of a definitive agreement to acquire Patriot Bank, headquartered in Trinity, Florida.  “We are pleased to report these second quarter results, which reflect the hard work by our team during the quarter,” said President and Chief Executive Officer Richard Murray, IV.  “We also know that the year is only half complete, so we need to stay focused on our work to grow the business while maintaining an emphasis on asset quality.”

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

  • Net Interest Margin (taxable equivalent) of 4.34% for the second quarter of 2017, compared to 4.18% for the first quarter of 2017 and 4.23% for the second quarter of 2016.  The second quarter 2017 margin increased 0.16% compared to the 2017 first quarter due primarily to an increased yield on loans during the second quarter of 2017 compared to the 2017 first quarter.

  • Return on Average Assets of 1.06% for the second quarter of 2017, compared to 1.00% for the second quarter of 2016. 

  • Return on Average Tangible Common Equity of 11.49% for the second quarter of 2017, compared to 10.31% for the second quarter of 2016.

  • Second quarter 2017 loan growth (excluding mortgage loans held-for-sale) of $63.9 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, second quarter 2017 loan growth was approximately $48.8 million.

  • Deposits decreased $75.8 million during the 2017 second quarter, primarily due to a decline in a few large deposit relationships and the maturity of a $25.0 million certificate of deposit.

  • $133.1 million in 2017 second quarter mortgage production, compared to $130.9 million for the first quarter of 2017 and $91.5 million during the 2016 second quarter.  The first and second quarter of 2017 production includes mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.

  • $251.0 million in 2017 second quarter purchased volume in the factoring division, compared to $253.6 million for the first quarter of 2017 and $167.1 million during the second quarter of 2016.

  • A decrease in non-acquired non-performing assets to $1.2 million at June 30, 2017, from $2.5 million at March 31, 2017.

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

  • Provision for loan losses of $1.2 million during the second quarter of 2017, compared to $156 thousand in the 2017 first quarter and $901 thousand in the second quarter of 2016.  The increase during the 2017 second quarter was attributable in part to net charge-offs during the 2017 second quarter and loan growth.

  • Ending tangible book value per share of $18.45.

  • Ending book value per share of $25.82.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on July 26, 2017 to discuss earnings and operating results for the 2017 second quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 55354529).  A replay of the conference call will be available until July 28, 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, allowance for loan losses to nonacquired loans, 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 these above 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.

  • “Allowance for loan losses to nonacquired loans” is defined as the total allowance for loan losses, less the allowance for loan losses attributable to factored receivables, divided by nonacquired loans held for investment, excluding factored receivables at the end of the period.  This measure is important to investors because it disaggregates the acquired and non-acquired loans and provides a measure that may be more comparable to a bank that has no acquired loans.   This measure also excludes the allowance and factored receivable balances at the Company’s subsidiary, Corporate Billing, LLC, which is helpful to investors because of the unique nature of that business and the rapid turnover of those receivables, and provides a measure that is more comparable to a bank that does not have a receivables factoring business.

  • “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, ten full-service banking offices in central and northeast Florida (including under the trade names United Legacy Bank and Reunion Bank of Florida) 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.

Additional Information about the Proposed Merger with Patriot Bank and Where to Find It

NCC has filed with the SEC a proxy statement-prospectus included within a Registration Statement on Form S-4 (File No. 333-218826) in connection with the previously announced proposed merger of Patriot Bank, a Florida banking corporation, with and into NBC. Investors and security holders of Patriot Bank are urged to carefully read the important information contained in the proxy statement-prospectus regarding the proposed transaction. Copies of the proxy statement-prospectus and other relevant documents are available free of charge at the SEC’s website at www.sec.gov, and on NCC’s website at www.nationalbankofcommerce.com under the “Investor Relations” tab. The materials may also be obtained by writing to NCC at: National Commerce Corporation, c/o Investor Relations, 813 Shades Creek Parkway, Suite 100, Birmingham, Alabama 35209, or by calling (205) 313-8100.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Patriot Bank, NCC, NBC and their respective directors, executive officers, employees and agents may be deemed to be participants in the solicitation of proxies from Patriot Bank’s shareholders with respect to the proposed merger. Additional information regarding the interests of such potential participants is included in the proxy statement-prospectus and other relevant documents filed with the SEC.

 
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
    June 30,   March 31,   December 31,   September 30,   June 30,  
      2017     2017       2016     2016     2016  
Earnings Summary                      
Interest income   $ 26,466   $ 24,899     $ 19,032   $ 18,836   $ 18,382  
Interest expense     2,513     2,469       2,042     1,959     1,730  
Net interest income     23,953     22,430       16,990     16,877     16,652  
Provision for loan losses     1,155     156       441     373     901  
Gain on sale of securities     28     -       -     -     -  
Other noninterest income (1)     5,072     5,440       3,472     4,002     3,357  
Merger/conversion-related expenses     344     387       169     160     12  
Other noninterest expense (2)     17,393     18,074       11,971     12,472     12,242  
Income before income taxes     10,161     9,253       7,881     7,874     6,854  
Income tax expense     3,281     2,841       2,600     2,639     2,072  
Net income before minority interest     6,880     6,412       5,281     5,235     4,782  
Net income attributable to minority interest     431     493       374     422     428  
Net income to common shareholders   $ 6,449   $ 5,919     $ 4,907   $ 4,813   $ 4,354  
                       
Weighted average common and diluted shares outstanding                    
Basic     13,190,582     12,901,040       10,930,309     10,890,860     10,866,788  
Diluted     13,551,745     13,283,075       11,173,733     11,115,134     11,067,972  
                       
Net earnings per common share                      
Basic   $ 0.49   $ 0.46     $ 0.45   $ 0.44   $ 0.40  
Diluted   $ 0.48   $ 0.45     $ 0.44   $ 0.43   $ 0.39  
                       
    June 30,   March 31,   December 31,   September 30,   June 30,  
Selected Performance Ratios     2017     2017       2016     2016     2016  
Return on average assets (ROAA) (3)     1.06 %   1.00   %   1.05 %   1.08 %   1.00 %
Return on average equity (ROAE)     7.86     7.67       8.33     8.36     7.84  
Return on average tangible common equity                      
(ROATCE)     11.49     11.45       10.78     10.90     10.31  
Net interest margin - taxable equivalent     4.34     4.18       3.99     4.18     4.23  
Efficiency ratio     61.11     66.24       59.33     60.50     61.24  
Operating efficiency ratio (2)     59.92     64.85       58.50     59.73     61.18  
Noninterest income / average assets (annualized)     0.83     0.92       0.74     0.90     0.77  
Noninterest expense / average assets (annualized)     2.91     3.11       2.60     2.85     2.83  
Yield on loans     5.38     5.29       4.95     5.08     5.06  
Cost of total deposits     0.40 %   0.40   %   0.40 %   0.40 %   0.40 %
                       
    June 30,   March 31,   December 31,   September 30,   June 30,  
Factoring Metrics     2017     2017       2016     2016     2016  
Recourse purchased volume   $ 101,295   $ 127,882     $ 82,923   $ 71,872   $ 68,567  
Non-recourse purchased volume     149,740     125,751       104,797     100,486     98,550  
Total purchased volume   $ 251,035   $ 253,633     $ 187,720   $ 172,358   $ 167,117  
Average turn (days)     38.47     35.61       38.35     38.13     39.92  
Net charge-offs / total purchased volume     0.12 %   0.03   %   0.12 %   0.05 %   0.07 %
Average discount rate     1.52 %   1.44   %   1.67 %   1.70 %   1.69 %
                                   
      June 30,      March 31,        December 31,      September 30,      June 30,   
Mortgage Metrics     2017     2017       2016     2016     2016  
Total production ($)   $ 133,063   $ 130,875     $ 76,028   $ 91,613   $ 91,466  
Refinance (%)     24.0 %   27.4   %   40.2 %   30.4 %   17.2 %
Purchases (%)     76.0 %   72.6   %   59.8 %   69.6 %   82.8 %
                                   
    As of
    June 30,   March 31,   December 31,   September 30,   June 30,  
Balance Sheet Highlights     2017     2017       2016     2016     2016  
Cash and cash equivalents   $ 224,760   $ 318,730     $ 217,293   $ 122,920   $ 86,163  
Total investment securities     101,569     98,390       99,709     102,848     89,495  
Mortgage loans held-for-sale     19,482     19,517       15,373     7,810     19,468  
Acquired purchased credit-impaired loans     21,065     22,465       11,975     11,995     12,900  
Acquired non-purchased credit-impaired loans     490,198     539,056       313,399     320,630     344,167  
Nonacquired loans held for investment (4)     1,252,970     1,153,897       1,076,209     1,009,677     978,836  
CBI loans (factoring receivables)     114,361     99,317       83,901     70,066     70,673  
Total gross loans held for investment     1,878,594     1,814,735       1,485,484     1,412,368     1,406,576  
Allowance for loan losses     13,407     12,565       12,113     11,950     11,642  
Total intangibles     103,270     103,519       52,803     52,962     53,154  
Total assets     2,418,052     2,445,149       1,950,784     1,779,278     1,735,782  
Total deposits     2,004,528     2,080,307       1,667,710     1,499,879     1,460,877  
FHLB and other borrowings     7,000     7,000       7,000     7,000     7,000  
Subordinated debt     24,527     24,513       24,500     24,487     24,540  
Total liabilities     2,054,792     2,127,727       1,713,740     1,547,105     1,509,662  
Minority interest     7,366     7,427       7,309     7,357     7,362  
Common stock     141     129       109     109     109  
Total shareholders' equity     363,260     317,422       237,044     232,173     226,120  
Tangible common equity   $ 259,558   $ 213,410     $ 183,866   $ 178,788   $ 172,538  
End of period common shares outstanding     14,070,528     12,948,778       10,934,541     10,920,423     10,870,033  
                       
    As of and For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,  
Asset Quality Analysis     2017     2017       2016     2016     2016  
Nonacquired                       
Nonaccrual loans   $ 50   $ 68     $ 69   $ 19   $ 248  
Other real estate and repossessed assets     -     1,849       2,068     2,068     2,068  
Loans past due 90 days or more and still accruing     1,172     538       581     358     406  
Total nonacquired nonperforming assets   $ 1,222   $ 2,455     $ 2,718   $ 2,445   $ 2,722  
                       
Acquired                      
Nonaccrual loans   $ 2,827   $ 2,949     $ 2,768   $ 2,982   $ 3,099  
Other real estate and repossessed assets     -     -       -     92     92  
Loans past due 90 days or more and still accruing     -     -       -     -     -  
Total acquired nonperforming assets   $ 2,827   $ 2,949     $ 2,768   $ 3,074   $ 3,191  
                       
Selected asset quality ratios                      
Nonperforming assets / Assets     0.17 %   0.22   %   0.28 %   0.31 %   0.34 %
Nonperforming assets / (Loans + OREO + repossessed assets)   0.22     0.30       0.37     0.39     0.42  
Net charge-offs (recoveries) to average loans (annualized)   0.07     (0.07 )     0.08     0.02     0.05  
Allowance for loan losses to total loans     0.71     0.69       0.82     0.85     0.83  
Nonacquired nonperforming assets / (Nonacquired loans +                    
nonacquired OREO + nonacquired repossessed assets) (4)   0.10     0.21       0.25     0.24     0.28  
Allowance for loan losses to nonacquired nonperforming                      
loans     1,097.14     2,073.43       1,863.54     3,169.76     1,780.12  
Allowance for loan losses to nonacquired loans (4)     1.03 %   1.05   %   1.08 %   1.13 %   1.14 %
                       
    For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,  
Taxable Equivalent Yields/Rates     2017     2017       2016     2016     2016  
Interest income:                      
Loans     5.38 %   5.29   %   4.95 %   5.08 %   5.06 %
Mortgage loans held-for-sale     3.72     4.13       2.99     4.12     3.51  
Interest on securities:                      
Taxable     2.98     2.63       2.52     2.55     1.95  
Non-taxable     4.91     4.98       4.90     4.85     4.93  
Cash balances in other banks     1.09     0.84       0.63     0.60     0.65  
Total interest-earning assets     4.79     4.64       4.47     4.66     4.67  
                       
Interest expense:                      
Interest on deposits     0.57     0.56       0.55     0.54     0.54  
Interest on FHLB and other borrowings     4.01     3.19       4.04     4.04     4.08  
Interest on subordinated debt     6.36     6.42       6.30     6.32     6.34  
Total interest-bearing liabilities     0.68     0.68       0.69     0.68     0.62  
Net interest spread     4.11     3.96       3.78     3.98     4.05  
Net interest margin     4.34 %   4.18   %   3.99 %   4.18 %   4.23 %
                       
    As of
    June 30,   March 31,   December 31,   September 30,   June 30,  
      2017     2017       2016     2016     2016  
Shareholders' Equity and Capital Ratios                      
Tier 1 Leverage Ratio     10.69 %   8.86   %   9.57 %   9.74 %   9.51 %
Tier 1 Common Capital Ratio     13.17     11.06       11.46     11.64     11.25  
Tier 1 Risk-based Capital Ratio     13.17     11.06       11.46     11.64     11.25  
Total Risk-based Capital Ratio     15.18     13.07       13.90     14.19     13.79  
Equity / Assets     15.02     12.98       12.15     13.05     13.03  
Tangible common equity to tangible assets     11.21 %   9.11   %   9.69 %   10.36 %   10.25 %
Book value per share   $ 25.82   $ 24.51     $ 21.68   $ 21.26   $ 20.80  
Tangible book value per share   $ 18.45   $ 16.48     $ 16.82   $ 16.37   $ 15.87  
                       
    For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,  
      2017     2017       2016     2016     2016  
Detail of other noninterest expense                      
Salaries and employee benefits   $ 9,663   $ 10,073     $ 6,935   $ 6,948   $ 6,907  
Commission-based compensation     1,684     1,723       1,076     1,104     1,036  
Occupancy and equipment expense     1,479     1,473       1,193     1,181     1,131  
Data processing expenses     1,007     948       568     572     618  
Advertising and marketing expenses     327     468       156     198     191  
Legal fees     193     233       163     182     179  
FDIC insurance assessments     408     258       234     246     257  
Property and casualty insurance premiums     209     143       95     90     166  
Accounting and audit expenses     294     318       211     252     249  
Consulting and other professional expenses     517     497       201     330     184  
Telecommunications expenses     169     186       114     146     140  
ORE, Repo asset and other collection expenses     49     272       41     142     89  
Core deposit intangible amortization     348     348       182     191     192  
Other noninterest expense     1,390     1,521       971     1,050     915  
Total noninterest expense   $ 17,737   $ 18,461     $ 12,140   $ 12,632   $ 12,254  
                                   
    As of
    June 30,   March 31,   December 31,   September 30,   June 30,  
Non-GAAP Reconciliation     2017     2017       2016     2016     2016  
Total shareholders' equity   $ 363,260   $ 317,422     $ 237,044   $ 232,173   $ 226,120  
Less: intangible assets     103,270     103,519       52,803     52,962     53,154  
Less: minority interest not included in intangible assets     432     493       375     423     428  
Tangible common equity   $ 259,558   $ 213,410     $ 183,866   $ 178,788   $ 172,538  
Common shares outstanding at year or period end     14,070,528     12,948,778       10,934,541     10,920,423     10,870,033  
Tangible book value per share   $ 18.45   $ 16.48     $ 16.82   $ 16.37   $ 15.87  
Total assets at end of period   $ 2,418,052   $ 2,445,149     $ 1,950,784   $ 1,779,278   $ 1,735,782  
Less: intangible assets     103,270     103,519       52,803     52,962     53,154  
Adjusted total assets at end of period   $ 2,314,782   $ 2,341,630     $ 1,897,981   $ 1,726,316   $ 1,682,628  
Tangible common equity to tangible assets     11.21 %   9.11   %   9.69 %   10.36 %   10.25 %
Total allowance for loan losses   $ 13,407   $ 12,565     $ 12,113   $ 11,950   $ 11,642  
Less: allowance for loan losses attributable to                      
CBI (factoring receivables)     500     500       500     500     500  
Adjusted allowance for loan losses at end of period   $ 12,907   $ 12,065     $ 11,613   $ 11,450   $ 11,142  
Nonacquired loans held for investment (4)     1,252,970     1,153,897       1,076,209     1,009,677     978,836  
Allowance for loan losses to nonacquired loans (4)     1.03 %   1.05   %   1.08 %   1.13 %   1.14 %
                                   
    For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,  
      2017     2017       2016     2016     2016  
Non-GAAP Reconciliation                      
Total average shareholders' equity   $ 328,886   $ 312,971     $ 234,249   $ 228,953   $ 223,357  
Less: average intangible assets     103,403     103,004       52,872     53,056     53,234  
Less: average minority interest not included                      
in intangible assets     318     295       262     282     284  
Average tangible common equity   $ 225,165   $ 209,672     $ 181,115   $ 175,615   $ 169,839  
Net income to common shareholders     6,449     5,919       4,907     4,813     4,354  
Return on average tangible common equity (ROATCE)     11.49 %   11.45   %   10.78 %   10.90 %   10.31 %
Efficiency ratio:                                  
Net interest income   $ 23,953   $ 22,430     $ 16,990   $ 16,877   $ 16,652  
Total noninterest income     5,100     5,440       3,472     4,002     3,357  
Less:  gain (loss) on sale of securities     28     -       -     -     -  
Operating revenue   $ 29,025   $ 27,870     $ 20,462   $ 20,879   $ 20,009  
Expenses:                                  
Total noninterest expenses   $ 17,737   $ 18,461     $ 12,140   $ 12,632   $ 12,254  
Efficiency ratio     61.11 %   66.24   %   59.33 %   60.50 %   61.24 %
Operating efficiency ratio:                      
Net interest income   $ 23,953   $ 22,430     $ 16,990   $ 16,877   $ 16,652  
Total noninterest income     5,100     5,440       3,472     4,002     3,357  
Less:  gain (loss) on sale of securities     28     -       -     -     -  
Operating revenue   $ 29,025   $ 27,870     $ 20,462   $ 20,879   $ 20,009  
Expenses:                      
Total noninterest expenses   $ 17,737   $ 18,461     $ 12,140   $ 12,632   $ 12,254  
Less: merger/conversion-related expenses     344     387       169     160     12  
Adjusted noninterest expenses   $ 17,393   $ 18,074     $ 11,971   $ 12,472   $ 12,242  
Operating efficiency ratio     59.92 %   64.85   %   58.50 %   59.73 %   61.18 %
                                   
(1) Excludes securities gains
(2) Excludes merger/conversion-related expenses
(3) Net income to common shareholders / average assets
(4) Excludes CBI loans (factoring receivables)
                       

/EIN News/ --

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
     
Assets
  June 30, 2017
  December 31, 2016
Cash and due from banks $ 27,619   $ 35,897
Interest-bearing deposits with banks   197,141     181,396
Cash and cash equivalents   224,760     217,293
Investment securities held-to-maturity (fair value of $26,288 and $25,894 at June 30, 2017          
and December 31, 2016, respectively)   26,107     26,329
Investment securities available-for-sale   75,462     73,380
Other investments   10,600     7,879
Mortgage loans held-for-sale   19,482     15,373
Loans, net of unearned income   1,878,594     1,485,484
Less: allowance for loan losses   13,407     12,113
Loans, net   1,865,187     1,473,371
Premises and equipment, net   35,141     31,884
Accrued interest receivable   5,082     4,129
Bank-owned life insurance   31,762     28,034
Other real estate   -     2,068
Deferred tax assets, net   14,809     13,486
Goodwill   98,955     50,771
Core deposit intangible, net   4,315     2,032
Other assets   6,390     4,755
Total assets $ 2,418,052   $ 1,950,784
           
Liabilities and Shareholders’ Equity
Deposits:          
Noninterest-bearing demand $ 608,280   $ 429,030
Interest-bearing demand   322,020     262,261
Savings and money market   810,941     703,289
Time   263,287     273,130
Total deposits   2,004,528     1,667,710
Federal Home Loan Bank advances   7,000     7,000
Subordinated debt   24,527     24,500
Accrued interest payable   709     829
Other liabilities   18,028     13,701
Total liabilities   2,054,792     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, 14,070,528 and 10,934,541          
shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively   141     109
Additional paid-in capital   318,932     205,372
Retained earnings   36,373     24,005
Accumulated other comprehensive income   448     249
Total shareholders' equity attributable to National Commerce Corporation   355,894     229,735
Noncontrolling interest   7,366     7,309
Total shareholders' equity   363,260     237,044
Total liabilities and shareholders' equity $ 2,418,052   $ 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 Six Months Ended
  June 30,   June 30,
    2017     2016     2017     2016
Interest and dividend income:                      
Interest and fees on loans $ 24,987   $ 17,669   $ 48,580   $ 35,152
Interest and dividends on taxable investment securities   606     383     1,177     795
Interest on non-taxable investment securities   197     201     397     401
Interest on interest-bearing deposits and federal funds sold   676     129     1,211     347
Total interest income   26,466     18,382     51,365     36,695
Interest expense:                      
Interest on deposits   2,054     1,476     4,064     3,045
Interest on borrowings   70     71     141     152
Interest on subordinated debt   389     183     777     183
Total interest expense   2,513     1,730     4,982     3,380
Net interest income   23,953     16,652     46,383     33,315
Provision for loan losses   1,155     901     1,311     2,434
Net interest income after provision for loan losses   22,798     15,751     45,072     30,881
Other income:                      
Service charges and fees on deposit accounts   640     505     1,307     985
Mortgage origination and fee income   3,154     1,627     6,299     3,019
Merchant sponsorship revenue   602     491     1,346     1,013
Income from bank-owned life insurance   219     204     435     408
Wealth management fees   14     11     24     24
Gain on other real estate   105     119     104     275
Gain on sale of investment securities available-for-sale   28     -     28     -
Other   338     400     997     758
Total other income   5,100     3,357     10,540     6,482
Other expense:                      
Salaries and employee benefits   9,663     6,907     19,736     13,852
Commission-based compensation   1,684     1,036     3,407     1,911
Occupancy and equipment   1,479     1,131     2,952     2,266
Core deposit intangible amortization   348     192     696     383
Other operating expense   4,563     2,988     9,407     5,895
Total other expense   17,737     12,254     36,198     24,307
Earnings before income taxes   10,161     6,854     19,414     13,056
Income tax expense   3,281     2,072     6,122     4,155
Net earnings   6,880     4,782     13,292     8,901
Less: Net earnings attributable to noncontrolling interest   431     428     924     768
Net earnings attributable to National Commerce Corporation $ 6,449   $ 4,354   $ 12,368   $ 8,133
                       
Weighted average common and diluted shares outstanding                      
Basic   13,190,582     10,866,788     13,046,611     10,861,330
Diluted   13,551,745     11,067,972     13,422,704     11,059,906
                       
Basic earnings per common share $ 0.49   $ 0.40   $ 0.95   $ 0.75
Diluted earnings per common share $ 0.48   $ 0.39   $ 0.92   $ 0.74
                       

 

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
 
                               
  For the Three Months Ended
(Dollars in thousands) June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016
Interest-earning assets Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Loans $ 1,849,258   $ 24,823   5.38 % $ 1,793,241   $ 23,377   5.29 % $ 1,446,629   $ 18,012   4.95 % $ 1,399,016   $ 17,853   5.08 % $ 1,391,789   $ 17,523   5.06 %
Mortgage loans held-for-sale   18,321     170   3.72     21,809     222   4.13     10,366     78   2.99     13,986     145   4.12     17,288     151   3.51  
Securities:                                                                                
Taxable securities   81,645     606   2.98     88,062     571   2.63     82,881     525   2.52     76,787     493   2.55     78,907     383   1.95  
Tax-exempt securities   25,573     313   4.91     25,824     317   4.98     25,910     319   4.90     26,029     317   4.85     26,036     319   4.93  
Cash balances in other banks   249,361     676   1.09     258,672     535   0.84     140,813     224   0.63     101,422     152   0.60     80,140     129   0.65  
Total interest-earning assets   2,224,158   $ 26,588   4.79     2,187,608   $ 25,022   4.64     1,706,599   $ 19,158   4.47     1,617,240   $ 18,960   4.66     1,594,160   $ 18,505   4.67  
Noninterest-earning assets   218,088               220,006               149,709               148,275               148,959            
Total assets $ 2,442,246             $ 2,407,614             $ 1,856,308             $ 1,765,515             $ 1,743,119            
                                                                                 
Interest-bearing liabilities                                                                                
Interest-bearing transaction accounts $ 341,238   $ 243   0.29 % $ 332,361   $ 217   0.26 % $ 235,340   $ 149   0.25 % $ 214,439   $ 125   0.23 % $ 210,776   $ 124   0.24 %
Savings and money market deposits   821,130     1,138   0.56     804,537     1,096   0.55     633,765     791   0.50     612,618     713   0.46     603,173     698   0.47  
Time deposits   290,097     673   0.93     306,404     697   0.92     273,293     643   0.94     283,022     661   0.93     288,350     654   0.91  
Federal Home Loan Bank and other borrowed money   7,000     70   4.01     9,016     71   3.19     7,000     71   4.04     7,000     71   4.04     7,000     71   4.08  
Subordinated debt   24,520     389   6.36     24,507     388   6.42     24,494     388   6.30     24,498     389   6.32     11,605     183   6.34  
Total interest-bearing liabilities   1,483,985   $ 2,513   0.68     1,476,825   $ 2,469   0.68     1,173,892   $ 2,042   0.69     1,141,577   $ 1,959   0.68     1,120,904   $ 1,730   0.62  
Noninterest-bearing deposits   612,910               600,897               431,253               381,205               388,363            
Total funding sources   2,096,895               2,077,722               1,605,145               1,522,782               1,509,267            
Noninterest-bearing liabilities   16,465               16,921               16,914               13,780               10,495            
Shareholders' equity   328,886               312,971               234,249               228,953               223,357            
  $ 2,442,246             $ 2,407,614             $ 1,856,308             $ 1,765,515             $ 1,743,119            
Net interest rate spread             4.11 %             3.96 %             3.78 %             3.98 %             4.05 %
Net interest income/margin (taxable equivalent)         24,075   4.34 %         22,553   4.18 %         17,116   3.99 %         17,001   4.18 %         16,775   4.23 %
Tax equivalent adjustment         122             123             126             124             123    
Net interest income/margin       $ 23,953   4.32 %       $ 22,430   4.16 %       $ 16,990   3.96 %       $ 16,877   4.15 %       $ 16,652   4.20 %
                                                                                 


Contact:
                    
                    National Commerce Corporation
                    
                    William E. Matthews, V                                             
                    Vice Chairman and Chief Financial Officer               
                    (205) 313-8122

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