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

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

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

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

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

• Net Interest Margin (taxable equivalent) of 4.58% for the third quarter of 2017, compared to 4.34% for the second quarter of 2017 and 4.18% for the third quarter of 2016.  The third quarter 2017 margin increased 0.24% compared to the 2017 second quarter due to a change in the earning asset mix (lower levels of cash and cash equivalents) and a 0.07% increase in loan yields, offset slightly by a 0.01% increase in the cost of deposits.  Interest income on loans for the third quarter of 2017 included $1.1 million in loan accretion income, compared to $1.2 million of loan accretion income for the second quarter of 2017.
   
• Return on Average Assets of 1.08% for the third quarter of 2017, identical to the third quarter of 2016.  Return on Average Tangible Common Equity of 9.94% for the third quarter of 2017, compared to 10.90% for the third quarter of 2016.  The third quarter of 2017 measure includes the additional common stock issued in the Company’s June 2017 public offering.
  
  
• Third quarter 2017 loan growth (excluding mortgage loans held-for-sale and $121.6 million of loans acquired from Patriot Bank) of $56.2 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, and loans acquired from Patriot Bank, third quarter 2017 loan growth was approximately $51.5 million.
  
  
• Excluding the acquired deposits from Patriot Bank totaling $127.7 million, deposits decreased $34.9 million during the third quarter of 2017, primarily due to a decline in a few large deposit relationships and the maturity of a $9.8 million brokered certificate of deposit.
  
  
• $122.7 million in 2017 third quarter mortgage production, compared to $133.1 million for the second quarter of 2017 and $91.6 million for the third quarter of 2016.  The 2017 second and third quarter production totals include mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.
  
  
• $259.5 million in 2017 third quarter purchased volume in the factoring division, compared to $251.0 million for the second quarter of 2017 and $172.4 million for the third quarter of 2016.
  
  
• An increase in non-acquired non-performing assets to $1.9 million at September 30, 2017, from $1.2 million at June 30, 2017. 
  
  
• Annualized net charge-offs of 0.05% of average loans for the third quarter of 2017, compared to net charge-offs of 0.07% for the second quarter of 2017 and 0.02% for the third quarter of 2016.
  
  
• Provision for loan losses of $1.1 million during the third quarter of 2017, compared to $1.2 million in the second quarter of 2017 and $373 thousand in the third quarter of 2016.  The increase during the third quarter of 2017 was attributable to growth in non-acquired loans.
  
  
• During the third quarter of 2017, the Company recognized merger-related expenses of $417 thousand, for an after-tax impact of approximately $340 thousand (considering the non-deductibility of certain items), representing approximately $0.02 per diluted share.
   
• Ending tangible book value per share of $18.84.
  
  
• Ending book value per share of $26.97.

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

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

Use of Non-GAAP Financial Measures

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

• “Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and minority interest not included in intangible assets. 
  
  
• “Average tangible common equity” is defined as the average of tangible common equity for the applicable period.
  
  
• “Return on average tangible common equity,” or ROATCE, is defined as net income available to common shareholders divided by average tangible common equity.
  
  
• “Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding.  This measure is important to investors interested in changes from period to period in book value per share exclusive of changes in intangible assets.

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

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

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

About National Commerce Corporation

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

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

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

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

Contact:

National Commerce Corporation

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

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages or as otherwise noted)
	For the Three Months Ended
	September 30,			June 30,			March 31,				December 31,				September 30,
	2017			2017			2017				2016				2016
Earnings Summary
Interest income	$	28,202		$	26,466		$	24,899			$	19,032			$	18,836
Interest expense		2,561			2,513			2,469				2,042				1,959
Net interest income		25,641			23,953			22,430				16,990				16,877
Provision for loan losses		1,105			1,155			156				441				373
Gain on sale of securities		-			28			-				-				-
Other noninterest income (1)		4,630			5,072			5,440				3,472				4,002
Merger/conversion-related expenses (2)		417			344			387				169				160
Other noninterest expense (3)		17,654			17,393			18,074				11,971				12,472
Income before income taxes		11,095			10,161			9,253				7,881				7,874
Income tax expense		3,828			3,281			2,841				2,600				2,639
Net income before minority interest		7,267			6,880			6,412				5,281				5,235
Net income attributable to minority interest		570			431			493				374				422
Net income to common shareholders	$	6,697		$	6,449		$	5,919			$	4,907			$	4,813
Weighted average common and diluted shares outstanding
Basic		14,300,974			13,190,582			12,901,040				10,930,309				10,890,860
Diluted		14,679,546			13,551,745			13,283,075				11,173,733				11,115,134
Net earnings per common share
Basic	$	0.47		$	0.49		$	0.46			$	0.45			$	0.44
Diluted	$	0.46		$	0.48		$	0.45			$	0.44			$	0.43
	September 30,			June 30,			March 31,				December 31,				September 30,
Selected Performance 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	%
	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
	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
	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)
Assets
	September 30, 2017				December 31, 2016
Cash and due from banks	$	44,111		$	35,897
Interest-bearing deposits with banks		90,438			181,396
Cash and cash equivalents		134,549			217,293
Investment securities held-to-maturity (fair value of $26,076 and $25,894 at September 30, 2017
and December 31, 2016, respectively)		25,820			26,329
Investment securities available-for-sale		85,338			73,380
Other investments		10,740			7,879
Mortgage loans held-for-sale		15,278			15,373
Loans, net of unearned income		2,056,406			1,485,484
Less: allowance for loan losses		14,264			12,113
Loans, net		2,042,142			1,473,371
Premises and equipment, net		52,593			31,884
Accrued interest receivable		5,781			4,129
Bank-owned life insurance		31,973			28,034
Other real estate		1,171			2,068
Deferred tax assets, net		17,739			13,486
Goodwill		114,840			50,771
Core deposit intangible, net		4,848			2,032
Other assets		6,322			4,755
Total assets	$	2,549,134		$	1,950,784
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	621,916		$	429,030
Interest-bearing demand		322,273			262,261
Savings and money market		863,421			703,289
Time		289,763			273,130
Total deposits		2,097,373			1,667,710
Federal Home Loan Bank advances and other borrowings		7,941			7,000
Subordinated debt		24,540			24,500
Accrued interest payable		1,136			829
Other liabilities		19,551			13,701
Total liabilities		2,150,541			1,713,740
Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding		-			-
Common stock, $0.01 par value, 30,000,000 shares authorized, 14,777,230 and 10,934,541
shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		148			109
Additional paid-in capital		347,371			205,372
Retained earnings		43,070			24,005
Accumulated other comprehensive income		500			249
Total shareholders' equity attributable to National Commerce Corporation		391,089			229,735
Noncontrolling interest		7,504			7,309
Total shareholders' equity		398,593			237,044
Total liabilities and shareholders' equity	$	2,549,134		$	1,950,784

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

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
	For the Three Months Ended
(Dollars in thousands)	September 30, 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	%

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