National Commerce Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - National Commerce Corp	ncom20171023_8k.htm

Exhibit 99.1

National Commerce Corporation Announces Third Quarter 2017 Earnings

BIRMINGHAM, AL (October 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 Ratios	2017			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 Metrics	2017			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 Metrics	2017			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	%

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages or as otherwise noted)

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
Balance Sheet Highlights	2017		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 Analysis	2017			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 Losses	2017		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


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,
Taxable Equivalent Yields/Rates	2017			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

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages or as otherwise noted)

	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
Non-GAAP Reconciliation	2017			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)

	September 30, 2017		December 31, 2016
Assets
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, 2017							June 30, 2017							March 31, 2017							December 31, 2016							September 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	$	1,937,115	$	26,634		5.45	%	$	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	%
Mortgage loans held-for-sale		16,811		151		3.56			18,321		170		3.72			21,809		222		4.13			10,366		78		2.99			13,986		145		4.12
Securities:
Taxable securities		90,969		694		3.03			81,645		606		2.98			88,062		571		2.63			82,881		525		2.52			76,787		493		2.55
Tax-exempt securities		25,286		310		4.86			25,573		313		4.91			25,824		317		4.98			25,910		319		4.90			26,029		317		4.85
Cash balances in other banks		159,973		533		1.32			249,361		676		1.09			258,672		535		0.84			140,813		224		0.63			101,422		152		0.60
Total interest-earning assets		2,230,154	$	28,322		5.04			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
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	$	207		0.26	%	$	341,238	$	243		0.29	%	$	332,361	$	217		0.26	%	$	235,340	$	149		0.25	%	$	214,439	$	125		0.23	%
Savings and money market deposits		827,526		1,233		0.59			821,130		1,138		0.56			804,537		1,096		0.55			633,765		791		0.50			612,618		713		0.46
Time deposits		273,630		661		0.96			290,097		673		0.93			306,404		697		0.92			273,293		643		0.94			283,022		661		0.93
Federal Home Loan Bank and other borrowed money		7,228		72		3.95			7,000		70		4.01			9,016		71		3.19			7,000		71		4.04			7,000		71		4.04
Subordinated debt		24,533		388		6.27			24,520		389		6.36			24,507		388		6.42			24,494		388		6.30			24,498		389		6.32
Total interest-bearing liabilities		1,447,842	$	2,561		0.70			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
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)				25,761		4.58	%				24,075		4.34	%				22,553		4.18	%				17,116		3.99	%				17,001		4.18	%
Tax equivalent adjustment				120							122							123							126							124
Net interest income/margin			$	25,641		4.56	%			$	23,953		4.32	%			$	22,430		4.16	%			$	16,990		3.96	%			$	16,877		4.15	%

National Commerce Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 24, 2017

Attached files

National Commerce Corp Reports