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National Commerce Corporation Announces Third Quarter 2016 Earnings

/EIN News/ -- BIRMINGHAM, Ala., Oct. 25, 2016 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (the “Company” or “NCC”), the parent company of National Bank of Commerce, today reported third quarter 2016 net income to common shareholders of $4.8 million, compared to $2.5 million for the third quarter of 2015.  Diluted net earnings per share were $0.43 in the third quarter of 2016, compared to $0.39 in the second quarter of 2016 and $0.26 in the third quarter of 2015.  For the nine months ended September 30, 2016, NCC earned $12.9 million, or $1.17 in diluted earnings per share, up from $6.7 million, or $0.74 per diluted share, for the nine months ended September 30, 2015.

“I am pleased with the continued growth in our profitability in 2016, with another quarter of Return on Average Assets above 1.0% and year-to-date diluted earnings per share growth of 58%,” said John H. Holcomb, III, Chairman and Chief Executive Officer of the Company.  “Our asset quality, which is very important to the company’s ability to achieve its long term goals, also remains good, though we can never lose our focus on continued vigilance in that very critical component of our business.  Our third quarter loan growth was below our long term expectations for ourselves, in part due to some expected payoffs, so we need to continue our focus on attracting additional high quality customer relationships to our bank.”

Several important measures from the third quarter of 2016 are as follows:

  • Net Interest Margin (taxable equivalent) of 4.18%, up 0.16% from the 4.02% reported for the third quarter of 2015.  The margin decreased 0.05% compared to the 2016 second quarter.
  • Return on Average Assets of 1.08%, compared to 0.75% for the third quarter of 2015 and 1.00% for the second quarter of 2016. 
  • Return on Average Equity of 8.36%, compared to 5.62% for the third quarter of 2015 and 7.84% for the second quarter of 2016.
  • Return on Average Tangible Common Equity of 10.90%, compared to 6.85% for the third quarter of 2015 and 10.31% for the 2016 second quarter.
  • Third quarter 2016 loan growth (excluding mortgage loans held-for-sale) of $5.8 million; non-acquired loans grew $30.8 million in the quarter.   
  • Increase in deposits of $39.0 million.
  • $91.6 million in mortgage production, compared to $82.3 million for the third quarter of 2015.
  • $172.4 million in purchased volume in the factoring division, compared to $182.7 million for the third quarter of 2015.
  • Decrease in non-acquired non-performing assets to $2.4 million, from $2.7 million at June 30, 2016.
  • Annualized net charge-offs of 0.02% of average loans, compared to 0.03% for the third quarter of 2015.
  • Provision for loan losses of $0.4 million, compared to $0.9 million in the 2016 second quarter and $0.2 million in the third quarter of 2015. 
  • Ending tangible book value per share of $16.37.
  • Ending book value per share of $21.26.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on October 26, 2016 to discuss earnings and operating results for the third quarter of 2016.  Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 90904212).  A replay of the conference call will be available until October 28, 2016 and can be accessed by dialing (855) 859-2056.

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

Use of Non-GAAP Financial Measures

Some of the financial measures presented in this press release and included in the accompanying unaudited financial statements are not measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).  These non-GAAP financial measures include tangible common equity, return on average tangible common equity, tangible book value per share, 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 our Corporate Billing subsidiary, which is helpful to investors because of the somewhat unique nature of that business and the very 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 NCC’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, NCC acknowledges that the non-GAAP financial measures have a number of limitations.  As such, NCC 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 (in Birmingham, Huntsville, Auburn-Opelika, and Baldwin County) and ten full-service banking offices in central Florida (in Vero Beach through National Bank of Commerce; in Longwood, Winter Park, Orlando, and Oviedo through United Legacy Bank, a division of National Bank of Commerce; and in Tavares, Port Orange, St. Augustine, and Ormond Beach through Reunion Bank of Florida, a division of National Bank of Commerce), as well as a loan production office in Atlanta, Georgia.  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 based 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, 2015 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.


NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
                       
    For the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,  
      2016       2016       2016       2015       2015    
Earnings Summary                                          
Interest income   $ 18,836     $ 18,382     $ 18,313     $ 16,488     $ 13,450    
Interest expense     1,959       1,730       1,650       1,507       1,191    
Net interest income     16,877       16,652       16,663       14,981       12,259    
Provision for loan losses     373       901       1,533       631       201    
Other noninterest income (1)     4,002       3,357       3,125       2,136       2,353    
Merger/conversion-related expenses     160       12       138       395       122    
Other noninterest expense (2)     12,472       12,242       11,915       11,049       9,773    
Income before income taxes     7,874       6,854       6,202       5,042       4,516    
Income tax expense     2,639       2,072       2,083       1,667       1,453    
Net income before minority interest     5,235       4,782       4,119       3,375       3,063    
Net income attributable to minority interest     422       428       340       437       573    
Net income to common shareholders   $ 4,813     $ 4,354     $ 3,779     $ 2,938     $ 2,490    
                       
Weighted average common and diluted shares outstanding                    
Basic     10,890,860       10,866,788       10,855,871       10,345,146       9,438,541    
Diluted     11,115,134       11,067,972       11,039,208       10,552,871       9,594,472    
                       
Net earnings per common share                      
Basic   $ 0.44     $ 0.40     $ 0.35     $ 0.28     $ 0.26    
Diluted   $ 0.43     $ 0.39     $ 0.34     $ 0.28     $ 0.26    
                       
    September 30,   June 30,   March 31,   December 31,   September 30,  
Selected Performance Ratios     2016       2016       2016       2015       2015    
Return on average assets (ROAA) (3)     1.08   %   1.00   %   0.86   %   0.72   %   0.75   %
Return on average equity (ROAE)     8.36       7.84       6.95       5.76       5.62    
Return on average tangible common equity                      
(ROATCE)     10.90       10.31       9.21       7.48       6.85    
Net interest margin - taxable equivalent     4.18       4.23       4.21       4.06       4.02    
Efficiency ratio     60.50       61.24       60.91       66.86       67.72    
Operating efficiency ratio (2)     59.73       61.18       60.21       64.55       66.88    
Noninterest income / average assets (annualized)     0.90       0.77       0.71       0.52       0.71    
Noninterest expense / average assets (annualized)     2.85       2.83       2.76       2.80       2.99    
Yield on loans     5.08       5.06       5.17       5.17       5.13    
Cost of total deposits     0.40   %   0.40   %   0.42   %   0.40   %   0.39   %
                       
    September 30,   June 30,   March 31,   December 31,   September 30,  
Factoring Metrics     2016       2016       2016       2015       2015    
Recourse purchased volume   $ 71,872     $ 68,567     $ 66,554     $ 74,922     $ 82,661    
Non-recourse purchased volume     100,486       98,550       112,196       97,142       100,055    
Total purchased volume   $ 172,358     $ 167,117     $ 178,750     $ 172,064     $ 182,716    
Average turn (days)     38.13       39.92       38.16       39.68       37.97    
Net charge-offs / total purchased volume     0.05   %   0.07   %   0.27   %   0.12   %   0.06   %
Average discount rate     1.70   %   1.69   %   1.72   %   1.73   %   1.74   %
                       
    September 30,   June 30,   March 31,   December 31,   September 30,  
Mortgage Metrics     2016       2016       2016       2015       2015    
Total production ($)   $ 91,613     $ 91,466     $ 63,802     $ 58,903     $ 82,276    
Refinance (%)     30.4   %   17.2   %   18.2   %   26.0   %   19.1   %
Purchases (%)     69.6   %   82.8   %   81.8   %   74.0   %   80.9   %
                       
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
 
    As of
    September 30,   June 30,   March 31,   December 31,   September 30,  
Balance Sheet Highlights     2016       2016       2016       2015       2015    
Cash and cash equivalents   $ 122,920     $ 86,163     $ 123,853     $ 212,457     $ 192,882    
Total securities     102,848       89,495       82,954       80,863       45,911    
Mortgage loans held-for-sale     7,810       19,468       12,529       15,020       7,926    
Acquired purchased credit-impaired loans     9,500       10,382       10,205       10,443       5,615    
Acquired non-purchased credit-impaired loans     323,125       346,685       356,305       370,872       123,730    
Nonacquired loans held for investment (4)     1,009,677       978,836       942,781       870,471       811,011    
CBI loans (factoring receivables)     70,066       70,673       74,248       67,628       74,780    
Total gross loans held for investment     1,412,368       1,406,576       1,383,539       1,319,414       1,015,136    
Allowance for loan losses     11,950       11,642       10,927       9,842       9,391    
Total intangibles     52,962       53,154       53,312       53,474       31,291    
Total assets     1,779,278       1,735,782       1,735,940       1,763,369       1,350,781    
Total deposits     1,499,879       1,460,877       1,498,197       1,514,458       1,141,837    
FHLB and other borrowings     7,000       7,000       7,000       22,000       22,000    
Subordinated debt     24,487       24,540       -       -       -    
Total liabilities     1,547,105       1,509,662       1,514,840       1,546,733       1,173,358    
Minority interest     7,357       7,362       7,275       7,372       7,508    
Common stock     109       109       109       108       94    
Total shareholders' equity     232,173       226,120       221,100       216,636       177,423    
Tangible common equity   $ 178,788     $ 172,538     $ 167,447     $ 162,724     $ 145,558    
End of period common shares outstanding     10,920,423       10,870,033       10,861,487       10,824,969       9,438,541    
                       
    As of and For the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,  
Asset Quality Analysis     2016       2016       2016       2015       2015    
Nonacquired                                           
Nonaccrual loans   $ 19     $ 248     $ 184     $ 187     $ 829    
Other real estate and repossessed assets     2,068       2,068       2,792       3,873       3,562    
Loans past due 90 days or more and still accruing     358       406       452       252       148    
Total nonacquired nonperforming assets   $ 2,445     $ 2,722     $ 3,428     $ 4,312     $ 4,539    
                       
Acquired                      
Nonaccrual loans   $ 2,982     $ 3,099     $ 3,617     $ 3,508     $ 2,829    
Other real estate and repossessed assets     92       92       92       92       72    
Loans past due 90 days or more and still accruing     -       -       -       -       -    
Total acquired nonperforming assets   $ 3,074     $ 3,191     $ 3,709     $ 3,600     $ 2,901    
                       
Selected asset quality ratios                      
Nonperforming assets / Assets     0.31   %   0.34   %   0.41   %   0.45   %   0.55   %
Nonperforming assets / (Loans + OREO + repossessed assets)   0.39       0.42       0.51       0.60       0.73    
Net charge-offs (recoveries) to average loans (annualized)   0.02       0.05       0.13       0.06       0.03    
Allowance for loan losses to total loans     0.85       0.83       0.79       0.75       0.93    
Nonacquired nonperforming assets / (Nonacquired loans +                    
nonacquired OREO + nonacquired repossessed assets) (4)   0.24       0.28       0.36       0.49       0.56    
Allowance for loan losses to nonacquired nonperforming                      
loans     3,169.76       1,780.12       1,718.08       2,241.91       961.21    
Allowance for loan losses to nonacquired loans (4)     1.13   %   1.14   %   1.11   %   1.07   %   1.10   %
                       
    For the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,  
Taxable Equivalent Yields/Rates     2016       2016       2016       2015       2015    
Interest income:                                          
Loans     5.08   %   5.06   %   5.17   %   5.17   %   5.13   %
Mortgage loans held-for-sale     4.12       3.51       4.40       3.44       4.17    
Interest on securities:                      
Taxable     2.55       1.95       2.68       3.05       3.30    
Non-taxable     4.85       4.93       4.90       4.96       4.99    
Cash balances in other banks     0.60       0.65       0.58       0.35       0.31    
Total interest-earning assets     4.66       4.67       4.63       4.46       4.41    
                       
Interest expense:                      
Interest on deposits     0.54       0.54       0.56       0.54       0.50    
Interest on FHLB and other borrowings     4.04       4.08       2.97       2.01       2.00    
Interest on subordinated debt     6.32       6.34       -       -       -    
Total interest-bearing liabilities     0.68       0.62       0.58       0.57       0.54    
Net interest spread     3.98       4.05       4.05       3.89       3.87    
Net interest margin     4.18   %   4.23   %   4.21   %   4.06   %   4.02   %
                       
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
 
    As of
    September 30,   June 30,   March 31,   December 31,   September 30,  
      2016       2016       2016       2015       2015    
Shareholders' Equity and Capital Ratios                                          
Tier 1 Leverage Ratio     9.74   %   9.51   %   9.13   %   9.68   %   10.39   %
Tier 1 Common Capital Ratio     11.63       11.25       11.18       11.18       12.88    
Tier 1 Risk-based Capital Ratio     11.63       11.25       11.18       11.18       12.88    
Total Risk-based Capital Ratio     14.18       13.79       11.97       11.91       13.79    
Equity / Assets     13.05       13.03       12.74       12.29       13.13    
Tangible common equity to tangible assets     10.36   %   10.25   %   9.95   %   9.52   %   11.03   %
Book value per share   $ 21.26     $ 20.80     $ 20.36     $ 20.01     $ 18.80    
Tangible book value per share   $ 16.37     $ 15.87     $ 15.42     $ 15.03     $ 15.42    
                       
    For the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,  
      2016       2016       2016       2015       2015    
Detail of other noninterest expense                                          
Salaries and employee benefits   $ 6,948     $ 6,907     $ 6,945     $ 6,077     $ 5,186    
Commission-based compensation     1,104       1,036       875       844       1,048    
Occupancy and equipment expense     1,181       1,131       1,135       1,048       871    
Data processing expenses     572       618       667       511       464    
Advertising and marketing expenses     198       191       160       19       124    
Legal fees     182       179       122       173       177    
FDIC insurance assessments     246       257       263       242       205    
Property and casualty insurance premiums     90       166       223       169       143    
Accounting and audit expenses     252       249       250       332       211    
Consulting and other professional expenses     330       184       243       387       238    
Telecommunications expenses     146       140       159       132       144    
ORE, Repo asset and other collection expenses     142       89       59       256       79    
Core deposit intangible amortization     191       192       191       175       111    
Other noninterest expense       1,050         915         761         1,079         894    
Total noninterest expense   $   12,632     $   12,254     $   12,053     $   11,444     $   9,895    
                                           
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
 
    As of
    September 30,   June 30,   March 31,   December 31,   September 30,  
Non-GAAP Reconciliation     2016       2016       2016       2015       2015    
Total shareholders' equity   $ 232,173     $ 226,120     $ 221,100     $ 216,636     $ 177,423    
Less: intangible assets     52,962       53,154       53,312       53,474       31,291    
Less: minority interest not included in intangible assets       423         428         341         438         574    
Tangible common equity   $ 178,788     $ 172,538     $ 167,447     $ 162,724     $ 145,558    
Common shares outstanding at year or period end     10,920,423       10,870,033       10,861,487       10,824,969       9,438,541    
Tangible book value per share   $   16.37     $   15.87     $   15.42     $   15.03     $   15.42    
Total assets at end of period   $ 1,779,278     $ 1,735,782     $ 1,735,940     $ 1,763,369     $ 1,350,781    
Less: intangible assets       52,962         53,154         53,312         53,474         31,291    
Adjusted total assets at end of period   $ 1,726,316     $ 1,682,628     $ 1,682,628     $ 1,709,895     $ 1,319,490    
Tangible common equity to tangible assets       10.36   %     10.25   %     9.95   %     9.52   %     11.03   %
Total allowance for loan losses   $ 11,950     $ 11,642     $ 10,927     $ 9,842     $ 9,391    
Less: allowance for loan losses attributable to                      
CBI (factoring receivables)       500         500         500         500         500    
Adjusted allowance for loan losses at end of period   $ 11,450     $ 11,142     $ 10,427     $ 9,342     $ 8,891    
Nonacquired loans held for investment (4)     1,009,677       978,836       942,781       870,471       811,011    
Allowance for loan losses to nonacquired loans (4)       1.13   %     1.14   %     1.11   %     1.07   %     1.10   %
                                           
    For the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,  
      2016       2016       2016       2015       2015    
Non-GAAP Reconciliation                                          
Total average shareholders' equity   $ 228,953     $ 223,357     $ 218,730     $ 202,299     $ 175,821    
Less: average intangible assets     53,056       53,234       53,388       46,113       31,158    
Less: average minority interest not included                      
in intangible assets       282         284         231         331         371    
Average tangible common equity   $ 175,615     $ 169,839     $ 165,111     $ 155,855     $ 144,292    
Net income to common shareholders     4,813       4,354       3,779       2,938       2,490    
Return on average tangible common equity (ROATCE)     10.90   %     10.31   %     9.21   %     7.48   %     6.85   %
Efficiency ratio:                                          
Net interest income   $ 16,877     $ 16,652     $ 16,663     $ 14,981     $ 12,259    
Total noninterest income     4,002       3,357       3,125       2,136       2,353    
Less:  gain (loss) on sale of securities       -         -         -         -         -    
Operating revenue   $   20,879     $   20,009     $   19,788     $   17,117     $   14,612    
Expenses:                                          
Total noninterest expenses   $   12,632     $   12,254     $   12,053     $   11,444     $   9,895    
Efficiency ratio       60.50   %     61.24   %     60.91   %     66.86   %     67.72   %
Operating efficiency ratio:                                          
Net interest income   $ 16,877     $ 16,652     $ 16,663     $ 14,981     $ 12,259    
Total noninterest income     4,002       3,357       3,125       2,136       2,353    
Less:  gain (loss) on sale of securities       -         -         -         -         -    
Operating revenue   $   20,879     $   20,009     $   19,788     $   17,117     $   14,612    
Expenses:                                          
Total noninterest expenses   $ 12,632     $ 12,254     $ 12,053     $ 11,444     $ 9,895    
Less: merger/conversion-related expenses       160         12         138         395         122    
Adjusted noninterest expenses   $   12,472     $   12,242     $   11,915     $   11,049     $   9,773    
Operating efficiency ratio       59.73   %     61.18   %     60.21   %     64.55   %     66.88   %
                                           
(1) Excludes securities gains                      
(2) Excludes merger/conversion-related expenses                      
(3) Net income to common shareholders / average assets                    
(4) Excludes CBI loans                      
                       

 

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
     
Assets
  September 30, 2016
  December 31, 2015
 
Cash and due from banks $ 27,187   $ 27,173  
Interest-bearing deposits with banks     95,733       185,284  
Cash and cash equivalents   122,920     212,457  
Investment securities held-to-maturity (fair value of $27,594 and $27,843 at September 30, 2016    
and December 31, 2015, respectively)   26,666     27,458  
Investment securities available-for-sale   76,182     53,405  
Other investments   7,715     6,235  
Mortgage loans held-for-sale   7,810     15,020  
Loans, net of unearned income   1,412,368     1,319,414  
Less: allowance for loan losses     11,950       9,842  
Loans, net   1,400,418     1,309,572  
Premises and equipment, net   32,158     31,432  
Accrued interest receivable   3,442     3,510  
Bank-owned life insurance   27,837     27,223  
Other real estate   2,160     3,965  
Deferred tax assets, net   13,820     14,190  
Goodwill   50,748     50,686  
Core deposit intangible, net   2,214     2,788  
Other assets     5,188       5,428  
Total assets $   1,779,278   $   1,763,369  
             
 Liabilities and Shareholders’ Equity 
Deposits:    
Noninterest-bearing demand $ 382,924   $ 382,946  
Interest-bearing demand   220,488     202,649  
Savings and money market   618,040     611,887  
Time     278,427       316,976  
Total deposits   1,499,879     1,514,458  
Federal Home Loan Bank advances   7,000     22,000  
Subordinated debt   24,487     -  
Accrued interest payable   1,083     627  
Other liabilities     14,656       9,648  
Total liabilities     1,547,105       1,546,733  
Commitments and contingencies            
Shareholders’ equity:    
Preferred stock, 250,000 shares authorized, no shares issued or outstanding   -     -  
Common stock, $0.01 par value, 30,000,000 shares authorized, 10,870,033 and 10,824,969    
shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively   109     108  
Additional paid-in capital   204,551     202,456  
Retained earnings   19,098     6,152  
Accumulated other comprehensive income     1,058       548  
Total shareholders' equity attributable to National Commerce Corporation   224,816     209,264  
Noncontrolling interest     7,357       7,372  
Total shareholders' equity     232,173       216,636  
Total liabilities and shareholders' equity $   1,779,278   $   1,763,369  
             

 

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except per share data)
           
  For the Three Months Ended   For the Nine Months Ended
  September 30,   September 30,
    2016     2015       2016     2015  
Interest and dividend income:                          
Interest and fees on loans $ 17,991   $ 12,925     $ 53,143   $ 36,943  
Interest and dividends on taxable investment securities   493     259       1,288     784  
Interest on non-taxable investment securities   200     137       601     293  
Interest on interest-bearing deposits and federal funds sold     152       129         499       337  
Total interest income   18,836     13,450       55,531     38,357  
Interest expense:          
Interest on deposits   1,499     1,080       4,544     2,959  
Interest on borrowings   71     111       223     330  
Interest on subordinated debt     389       -         572       -  
Total interest expense     1,959       1,191         5,339       3,289  
Net interest income   16,877     12,259       50,192     35,068  
Provision for loan losses     373       201         2,807       482  
Net interest income after provision for loan losses   16,504     12,058       47,385     34,586  
Other income:          
Service charges and fees on deposit accounts   511     311       1,496     886  
Mortgage origination and fee income   2,245     1,439       5,264     4,215  
Merchant sponsorship revenue   542     305       1,555     496  
Income from bank-owned life insurance   206     86       614     251  
Wealth management fees   15     11       39     43  
Gain (loss) on other real estate   -     -       275     (24 )
Other     483       201         1,241       456  
Total other income     4,002       2,353         10,484       6,323  
Other expense:                          
Salaries and employee benefits   6,948     5,186       20,800     15,287  
Commission-based compensation   1,104     1,048       3,015     2,900  
Occupancy and equipment   1,181     871       3,447     2,536  
Core deposit intangible amortization   191     111       574     333  
Other operating expense     3,208       2,679         9,103       7,745  
Total other expense     12,632       9,895         36,939       28,801  
Earnings before income taxes   7,874     4,516       20,930     12,108  
Income tax expense     2,639       1,453         6,794       3,809  
Net earnings   5,235     3,063       14,136     8,299  
Less: Net earnings attributable to noncontrolling interest     422       573         1,190       1,632  
Net earnings attributable to National Commerce Corporation $   4,813   $   2,490     $   12,946   $   6,667  
                           
Weighted average common and diluted shares outstanding          
Basic   10,890,860     9,438,541       10,871,245     8,865,944  
Diluted   11,115,134     9,594,472       11,080,746     9,002,885  
           
Basic earnings per common share $ 0.44   $ 0.26     $ 1.19   $ 0.75  
Diluted earnings per common share $ 0.43   $ 0.26     $ 1.17   $ 0.74  
           

 

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
 
                               
  For the Three Months Ended
(Dollars in thousands) September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015
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 $ 1,399,016   $ 17,853     5.08 % $ 1,391,789   $ 17,523     5.06 % $ 1,352,737   $ 17,373     5.17 % $ 1,204,437   $ 15,699     5.17 % $ 992,223   $ 12,826     5.13 %
Mortgage loans held-for-sale   13,986     145     4.12     17,288     151     3.51     10,503     115     4.40     9,697     84     3.44     9,890     104     4.17  
Securities:                              
Taxable securities   76,787     493     2.55     78,907     383     1.95     61,764     412     2.68     48,097     370     3.05     31,132     259     3.30  
Tax-exempt securities   26,029     317     4.85     26,036     319     4.93     26,041     317     4.90     21,982     275     4.96     17,245     217     4.99  
Cash balances in other banks     101,422       152     0.60       80,140       129     0.65       151,318       218     0.58       191,077       168     0.35       166,715       129     0.31  
Total interest-earning assets   1,617,240   $ 18,960     4.66     1,594,160   $ 18,505     4.67     1,602,363   $ 18,435     4.63     1,475,290   $ 16,596     4.46     1,217,205   $ 13,535     4.41  
Noninterest-earning assets     148,275               148,959               156,260               145,791               96,824          
Total assets $ 1,765,515       $ 1,743,119       $ 1,758,623       $ 1,621,081       $ 1,314,029      
                                                   
Interest-bearing liabilities                              
Interest-bearing transaction accounts $ 214,439   $ 125     0.23 % $ 210,776   $ 124     0.24 % $ 204,339   $ 123     0.24 % $ 196,140   $ 129     0.26 % $ 182,056   $ 118     0.26 %
Savings and money market deposits   612,618     713     0.46     603,173     698     0.47     620,429     762     0.49     542,631     612     0.45     443,306     486     0.43  
Time deposits   283,022     661     0.93     288,350     654     0.91     306,106     684     0.90     291,399     654     0.89     228,298     476     0.83  
Federal Home Loan Bank and other borrowed money   7,000     71     4.04     7,000     71     4.08     10,959     81     2.97     22,104     112     2.01     22,000     111     2.00  
Subordinated debt     24,498       389     6.32       11,605       183     6.34       -       -     -       -       -     -       -       -     -  
Total interest-bearing liabilities   1,141,577   $ 1,959     0.68     1,120,904   $ 1,730     0.62     1,141,833   $ 1,650     0.58     1,052,274   $   1,507     0.57     875,660   $ 1,191     0.54  
Noninterest-bearing deposits     381,205               388,363               386,674               354,812               254,402          
Total funding sources   1,522,782         1,509,267         1,528,507         1,407,086         1,130,062      
Noninterest-bearing liabilities   13,780         10,495         11,386         11,696         8,146      
Shareholders' equity     228,953           223,357           218,730           202,299           175,821      
  $ 1,765,515       $ 1,743,119       $ 1,758,623       $ 1,621,081       $ 1,314,029      
Net interest rate spread           3.98 %           4.05 %           4.05 %           3.89 %           3.87 %
Net interest income/margin (taxable equivalent)     17,001     4.18 %     16,775     4.23 %     16,785     4.21 %     15,089     4.06 %     12,344     4.02 %
Tax equivalent adjustment     124         123         122         108         85    
Net interest income/margin   $ 16,877     4.15 %   $ 16,652     4.20 %   $ 16,663     4.18 %   $ 14,981     4.03 %   $ 12,259     4.00 %
                                                       
Contact:
National Commerce Corporation
William E. Matthews, V				
Vice Chairman and Chief Financial Officer		
(205) 313-8122

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