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

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8-K - FORM 8-K - National Commerce Corp	ncom20170724_8k.htm

Exhibit 99.1

National Commerce Corporation Announces Second Quarter 2017 Earnings

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

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

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

●

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

●

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

●

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

●

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

●

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

●

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

●

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

●

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

●

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

●

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

●

Ending tangible book value per share of $18.45.

●

Ending book value per share of $25.82.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on July 26, 2017 to discuss earnings and operating results for the 2017 second quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 55354529). A replay of the conference call will be available until July 28, 2017 and can be accessed by dialing (855) 859-2056.

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

Use of Non-GAAP Financial Measures

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

●

“Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and minority interest not included in intangible assets.

●

“Average tangible common equity” is defined as the average of tangible common equity for the applicable period.

●

“Return on average tangible common equity,” or ROATCE, is defined as net income available to common shareholders divided by average tangible common equity.

●

“Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding. This measure is important to investors interested in changes from period to period in book value per share exclusive of changes in intangible assets.

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

●

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

●

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

●

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

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

About National Commerce Corporation

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

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

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

Forward-Looking Statements

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

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

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

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

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

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
	June 30,		March 31,		December 31,		September 30,		June 30,
	2017		2017		2016		2016		2016
Earnings Summary
Interest income	$	26,466	$	24,899	$	19,032	$	18,836	$	18,382
Interest expense		2,513		2,469		2,042		1,959		1,730
Net interest income		23,953		22,430		16,990		16,877		16,652
Provision for loan losses		1,155		156		441		373		901
Gain on sale of securities		28		-		-		-		-
Other noninterest income⁽¹⁾		5,072		5,440		3,472		4,002		3,357
Merger/conversion-related expenses		344		387		169		160		12
Other noninterest expense⁽²⁾		17,393		18,074		11,971		12,472		12,242
Income before income taxes		10,161		9,253		7,881		7,874		6,854
Income tax expense		3,281		2,841		2,600		2,639		2,072
Net income before minority interest		6,880		6,412		5,281		5,235		4,782
Net income attributable to minority interest		431		493		374		422		428
Net income to common shareholders	$	6,449	$	5,919	$	4,907	$	4,813	$	4,354

Weighted average common and diluted shares outstanding
Basic		13,190,582		12,901,040		10,930,309		10,890,860		10,866,788
Diluted		13,551,745		13,283,075		11,173,733		11,115,134		11,067,972

Net earnings per common share
Basic	$	0.49	$	0.46	$	0.45	$	0.44	$	0.40
Diluted	$	0.48	$	0.45	$	0.44	$	0.43	$	0.39

	June 30,			March 31,			December 31,			September 30,			June 30,
Selected Performance Ratios	2017			2017			2016			2016			2016
Return on average assets (ROAA)⁽³⁾		1.06	%		1.00	%		1.05	%		1.08	%		1.00	%
Return on average equity (ROAE)		7.86			7.67			8.33			8.36			7.84
Return on average tangible common equity
(ROATCE)		11.49			11.45			10.78			10.90			10.31
Net interest margin - taxable equivalent		4.34			4.18			3.99			4.18			4.23
Efficiency ratio		61.11			66.24			59.33			60.50			61.24
Operating efficiency ratio⁽²⁾		59.92			64.85			58.50			59.73			61.18
Noninterest income / average assets (annualized)		0.83			0.92			0.74			0.90			0.77
Noninterest expense / average assets (annualized)		2.91			3.11			2.60			2.85			2.83
Yield on loans		5.38			5.29			4.95			5.08			5.06
Cost of total deposits		0.40	%		0.40	%		0.40	%		0.40	%		0.40	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Factoring Metrics	2017			2017			2016			2016			2016
Recourse purchased volume	$	101,295		$	127,882		$	82,923		$	71,872		$	68,567
Non-recourse purchased volume		149,740			125,751			104,797			100,486			98,550
Total purchased volume	$	251,035		$	253,633		$	187,720		$	172,358		$	167,117
Average turn (days)		38.47			35.61			38.35			38.13			39.92
Net charge-offs / total purchased volume		0.12	%		0.03	%		0.12	%		0.05	%		0.07	%
Average discount rate		1.52	%		1.44	%		1.67	%		1.70	%		1.69	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Mortgage Metrics	2017			2017			2016			2016			2016
Total production ($)	$	133,063		$	130,875		$	76,028		$	91,613		$	91,466
Refinance (%)		24.0	%		27.4	%		40.2	%		30.4	%		17.2	%
Purchases (%)		76.0	%		72.6	%		59.8	%		69.6	%		82.8	%

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

(In thousands, except share and per share amounts and percentages or as otherwise noted)

	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
Balance Sheet Highlights	2017		2017		2016		2016		2016
Cash and cash equivalents	$	224,760	$	318,730	$	217,293	$	122,920	$	86,163
Total investment securities		101,569		98,390		99,709		102,848		89,495
Mortgage loans held-for-sale		19,482		19,517		15,373		7,810		19,468
Acquired purchased credit-impaired loans		21,065		22,465		11,975		11,995		12,900
Acquired non-purchased credit-impaired loans		490,198		539,056		313,399		320,630		344,167
Nonacquired loans held for investment ⁽⁴⁾		1,252,970		1,153,897		1,076,209		1,009,677		978,836
CBI loans (factoring receivables)		114,361		99,317		83,901		70,066		70,673
Total gross loans held for investment		1,878,594		1,814,735		1,485,484		1,412,368		1,406,576
Allowance for loan losses		13,407		12,565		12,113		11,950		11,642
Total intangibles		103,270		103,519		52,803		52,962		53,154
Total assets		2,418,052		2,445,149		1,950,784		1,779,278		1,735,782
Total deposits		2,004,528		2,080,307		1,667,710		1,499,879		1,460,877
FHLB and other borrowings		7,000		7,000		7,000		7,000		7,000
Subordinated debt		24,527		24,513		24,500		24,487		24,540
Total liabilities		2,054,792		2,127,727		1,713,740		1,547,105		1,509,662
Minority interest		7,366		7,427		7,309		7,357		7,362
Common stock		141		129		109		109		109
Total shareholders' equity		363,260		317,422		237,044		232,173		226,120
Tangible common equity	$	259,558	$	213,410	$	183,866	$	178,788	$	172,538
End of period common shares outstanding		14,070,528		12,948,778		10,934,541		10,920,423		10,870,033

	As of and For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Asset Quality Analysis	2017			2017			2016			2016			2016
*Nonacquired*
Nonaccrual loans	$	50		$	68		$	69		$	19		$	248
Other real estate and repossessed assets		-			1,849			2,068			2,068			2,068
Loans past due 90 days or more and still accruing		1,172			538			581			358			406
Total nonacquired nonperforming assets	$	1,222		$	2,455		$	2,718		$	2,445		$	2,722
*Acquired*
Nonaccrual loans	$	2,827		$	2,949		$	2,768		$	2,982		$	3,099
Other real estate and repossessed assets		-			-			-			92			92
Loans past due 90 days or more and still accruing		-			-			-			-			-
Total acquired nonperforming assets	$	2,827		$	2,949		$	2,768		$	3,074		$	3,191
*Selected asset quality ratios*
Nonperforming assets / Assets		0.17	%		0.22	%		0.28	%		0.31	%		0.34	%
Nonperforming assets / (Loans + OREO + repossessed assets)		0.22			0.30			0.37			0.39			0.42
Net charge-offs (recoveries) to average loans (annualized)		0.07			(0.07	)		0.08			0.02			0.05
Allowance for loan losses to total loans		0.71			0.69			0.82			0.85			0.83
Nonacquired nonperforming assets / (Nonacquired loans + nonacquired OREO + nonacquired repossessed assets) ⁽⁴⁾		0.10			0.21			0.25			0.24			0.28
Allowance for loan losses to nonacquired nonperforming loans		1,097.14			2,073.43			1,863.54			3,169.76			1,780.12
Allowance for loan losses to nonacquired loans⁽⁴⁾		1.03	%		1.05	%		1.08	%		1.13	%		1.14	%

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Taxable Equivalent Yields/Rates	2017			2017			2016			2016			2016
Interest income:
Loans		5.38	%		5.29	%		4.95	%		5.08	%		5.06	%
Mortgage loans held-for-sale		3.72			4.13			2.99			4.12			3.51
Interest on securities:
Taxable		2.98			2.63			2.52			2.55			1.95
Non-taxable		4.91			4.98			4.90			4.85			4.93
Cash balances in other banks		1.09			0.84			0.63			0.60			0.65
Total interest-earning assets		4.79			4.64			4.47			4.66			4.67

Interest expense:
Interest on deposits		0.57			0.56			0.55			0.54			0.54
Interest on FHLB and other borrowings		4.01			3.19			4.04			4.04			4.08
Interest on subordinated debt		6.36			6.42			6.30			6.32			6.34
Total interest-bearing liabilities		0.68			0.68			0.69			0.68			0.62
Net interest spread		4.11			3.96			3.78			3.98			4.05
Net interest margin		4.34	%		4.18	%		3.99	%		4.18	%		4.23	%

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

(In thousands, except share and per share amounts and percentages or as otherwise noted)

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio		10.69	%		8.86	%		9.57	%		9.74	%		9.51	%
Tier 1 Common Capital Ratio		13.17			11.06			11.46			11.64			11.25
Tier 1 Risk-based Capital Ratio		13.17			11.06			11.46			11.64			11.25
Total Risk-based Capital Ratio		15.18			13.07			13.90			14.19			13.79
Equity / Assets		15.02			12.98			12.15			13.05			13.03
Tangible common equity to tangible assets		11.21	%		9.11	%		9.69	%		10.36	%		10.25	%
Book value per share	$	25.82		$	24.51		$	21.68		$	21.26		$	20.80
Tangible book value per share	$	18.45		$	16.48		$	16.82		$	16.37		$	15.87

	For the Three Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
	2017		2017		2016		2016		2016
Detail of other noninterest expense
Salaries and employee benefits	$	9,663	$	10,073	$	6,935	$	6,948	$	6,907
Commission-based compensation		1,684		1,723		1,076		1,104		1,036
Occupancy and equipment expense		1,479		1,473		1,193		1,181		1,131
Data processing expenses		1,007		948		568		572		618
Advertising and marketing expenses		327		468		156		198		191
Legal fees		193		233		163		182		179
FDIC insurance assessments		408		258		234		246		257
Property and casualty insurance premiums		209		143		95		90		166
Accounting and audit expenses		294		318		211		252		249
Consulting and other professional expenses		517		497		201		330		184
Telecommunications expenses		169		186		114		146		140
ORE, Repo asset and other collection expenses		49		272		41		142		89
Core deposit intangible amortization		348		348		182		191		192
Other noninterest expense		1,390		1,521		971		1,050		915
Total noninterest expense	$	17,737	$	18,461	$	12,140	$	12,632	$	12,254

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

(In thousands, except share and per share amounts and percentages or as otherwise noted)

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
Non-GAAP Reconciliation	2017			2017			2016			2016			2016
Total shareholders' equity	$	363,260		$	317,422		$	237,044		$	232,173		$	226,120
Less: intangible assets		103,270			103,519			52,803			52,962			53,154
Less: minority interest not included in intangible assets		432			493			375			423			428
Tangible common equity	$	259,558		$	213,410		$	183,866		$	178,788		$	172,538
Common shares outstanding at year or period end		14,070,528			12,948,778			10,934,541			10,920,423			10,870,033
Tangible book value per share	$	18.45		$	16.48		$	16.82		$	16.37		$	15.87
Total assets at end of period	$	2,418,052		$	2,445,149		$	1,950,784		$	1,779,278		$	1,735,782
Less: intangible assets		103,270			103,519			52,803			52,962			53,154
Adjusted total assets at end of period	$	2,314,782		$	2,341,630		$	1,897,981		$	1,726,316		$	1,682,628
Tangible common equity to tangible assets		11.21	%		9.11	%		9.69	%		10.36	%		10.25	%
Total allowance for loan losses	$	13,407		$	12,565		$	12,113		$	11,950		$	11,642
Less: allowance for loan losses attributable to CBI (factoring receivables)		500			500			500			500			500
Adjusted allowance for loan losses at end of period	$	12,907		$	12,065		$	11,613		$	11,450		$	11,142
Nonacquired loans held for investment ⁽⁴⁾		1,252,970			1,153,897			1,076,209			1,009,677			978,836
Allowance for loan losses to nonacquired loans⁽⁴⁾		1.03	%		1.05	%		1.08	%		1.13	%		1.14	%

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
Non-GAAP Reconciliation
Total average shareholders' equity	$	328,886		$	312,971		$	234,249		$	228,953		$	223,357
Less: average intangible assets		103,403			103,004			52,872			53,056			53,234
Less: average minority interest not included in intangible assets		318			295			262			282			284
Average tangible common equity	$	225,165		$	209,672		$	181,115		$	175,615		$	169,839
Net income to common shareholders		6,449			5,919			4,907			4,813			4,354
Return on average tangible common equity (ROATCE)		11.49	%		11.45	%		10.78	%		10.90	%		10.31	%
Efficiency ratio:
Net interest income	$	23,953		$	22,430		$	16,990		$	16,877		$	16,652
Total noninterest income		5,100			5,440			3,472			4,002			3,357
Less: gain (loss) on sale of securities		28			-			-			-			-
Operating revenue	$	29,025		$	27,870		$	20,462		$	20,879		$	20,009
Expenses:
Total noninterest expenses	$	17,737		$	18,461		$	12,140		$	12,632		$	12,254
Efficiency ratio		61.11	%		66.24	%		59.33	%		60.50	%		61.24	%
Operating efficiency ratio:
Net interest income	$	23,953		$	22,430		$	16,990		$	16,877		$	16,652
Total noninterest income		5,100			5,440			3,472			4,002			3,357
Less: gain (loss) on sale of securities		28			-			-			-			-
Operating revenue	$	29,025		$	27,870		$	20,462		$	20,879		$	20,009
Expenses:
Total noninterest expenses	$	17,737		$	18,461		$	12,140		$	12,632		$	12,254
Less: merger/conversion-related expenses		344			387			169			160			12
Adjusted noninterest expenses	$	17,393		$	18,074		$	11,971		$	12,472		$	12,242
Operating efficiency ratio		59.92	%		64.85	%		58.50	%		59.73	%		61.18	%

(1) Excludes securities gains

(2) Excludes merger/conversion-related expenses

(3) Net income to common shareholders / average assets

(4) Excludes CBI loans (factoring receivables)

NATIONAL COMMERCE CORPORATION

Unaudited Consolidated Balance Sheets

(In thousands, except share and per share data)

Assets
	June 30, 2017		December 31, 2016
Cash and due from banks	$	27,619	$	35,897
Interest-bearing deposits with banks		197,141		181,396
Cash and cash equivalents		224,760		217,293
Investment securities held-to-maturity (fair value of $26,288 and $25,894 at June 30, 2017 and December 31, 2016, respectively)		26,107		26,329
Investment securities available-for-sale		75,462		73,380
Other investments		10,600		7,879
Mortgage loans held-for-sale		19,482		15,373
Loans, net of unearned income		1,878,594		1,485,484
Less: allowance for loan losses		13,407		12,113
Loans, net		1,865,187		1,473,371
Premises and equipment, net		35,141		31,884
Accrued interest receivable		5,082		4,129
Bank-owned life insurance		31,762		28,034
Other real estate		-		2,068
Deferred tax assets, net		14,809		13,486
Goodwill		98,955		50,771
Core deposit intangible, net		4,315		2,032
Other assets		6,390		4,755
Total assets	$	2,418,052	$	1,950,784

Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	608,280	$	429,030
Interest-bearing demand		322,020		262,261
Savings and money market		810,941		703,289
Time		263,287		273,130
Total deposits		2,004,528		1,667,710
Federal Home Loan Bank advances		7,000		7,000
Subordinated debt		24,527		24,500
Accrued interest payable		709		829
Other liabilities		18,028		13,701
Total liabilities		2,054,792		1,713,740

Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding		-		-
Common stock, $0.01 par value, 30,000,000 shares authorized, 14,070,528 and 10,934,541 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		141		109
Additional paid-in capital		318,932		205,372
Retained earnings		36,373		24,005
Accumulated other comprehensive income		448		249
Total shareholders' equity attributable to National Commerce Corporation		355,894		229,735
Noncontrolling interest		7,366		7,309
Total shareholders' equity		363,260		237,044
Total liabilities and shareholders' equity	$	2,418,052	$	1,950,784

NATIONAL COMMERCE CORPORATION

Unaudited Consolidated Statements of Earnings

(In thousands, except share and per share data)

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Interest and dividend income:
Interest and fees on loans	$	24,987	$	17,669	$	48,580	$	35,152
Interest and dividends on taxable investment securities		606		383		1,177		795
Interest on non-taxable investment securities		197		201		397		401
Interest on interest-bearing deposits and federal funds sold		676		129		1,211		347
Total interest income		26,466		18,382		51,365		36,695
Interest expense:
Interest on deposits		2,054		1,476		4,064		3,045
Interest on borrowings		70		71		141		152
Interest on subordinated debt		389		183		777		183
Total interest expense		2,513		1,730		4,982		3,380
Net interest income		23,953		16,652		46,383		33,315
Provision for loan losses		1,155		901		1,311		2,434
Net interest income after provision for loan losses		22,798		15,751		45,072		30,881
Other income:
Service charges and fees on deposit accounts		640		505		1,307		985
Mortgage origination and fee income		3,154		1,627		6,299		3,019
Merchant sponsorship revenue		602		491		1,346		1,013
Income from bank-owned life insurance		219		204		435		408
Wealth management fees		14		11		24		24
Gain on other real estate		105		119		104		275
Gain on sale of investment securities available-for-sale		28		-		28		-
Other		338		400		997		758
Total other income		5,100		3,357		10,540		6,482
Other expense:
Salaries and employee benefits		9,663		6,907		19,736		13,852
Commission-based compensation		1,684		1,036		3,407		1,911
Occupancy and equipment		1,479		1,131		2,952		2,266
Core deposit intangible amortization		348		192		696		383
Other operating expense		4,563		2,988		9,407		5,895
Total other expense		17,737		12,254		36,198		24,307
Earnings before income taxes		10,161		6,854		19,414		13,056
Income tax expense		3,281		2,072		6,122		4,155
Net earnings		6,880		4,782		13,292		8,901
Less: Net earnings attributable to noncontrolling interest		431		428		924		768
Net earnings attributable to National Commerce Corporation	$	6,449	$	4,354	$	12,368	$	8,133

Weighted average common and diluted shares outstanding
Basic		13,190,582		10,866,788		13,046,611		10,861,330
Diluted		13,551,745		11,067,972		13,422,704		11,059,906

Basic earnings per common share	$	0.49	$	0.40	$	0.95	$	0.75
Diluted earnings per common share	$	0.48	$	0.39	$	0.92	$	0.74

NATIONAL COMMERCE CORPORATION

Average Balance Sheets and Net Interest Analysis

	For the Three Months Ended
(Dollars in thousands)	June 30, 2017							March 31, 2017							December 31, 2016							September 30, 2016							June 30, 2016
Interest-earning assets	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Loans	$	1,849,258	$	24,823		5.38	%	$	1,793,241	$	23,377		5.29	%	$	1,446,629	$	18,012		4.95	%	$	1,399,016	$	17,853		5.08	%	$	1,391,789	$	17,523		5.06	%
Mortgage loans held-for-sale		18,321		170		3.72			21,809		222		4.13			10,366		78		2.99			13,986		145		4.12			17,288		151		3.51
Securities:
Taxable securities		81,645		606		2.98			88,062		571		2.63			82,881		525		2.52			76,787		493		2.55			78,907		383		1.95
Tax-exempt securities		25,573		313		4.91			25,824		317		4.98			25,910		319		4.90			26,029		317		4.85			26,036		319		4.93
Cash balances in other banks		249,361		676		1.09			258,672		535		0.84			140,813		224		0.63			101,422		152		0.60			80,140		129		0.65
Total interest-earning assets		2,224,158	$	26,588		4.79			2,187,608	$	25,022		4.64			1,706,599	$	19,158		4.47			1,617,240	$	18,960		4.66			1,594,160	$	18,505		4.67
Noninterest-earning assets		218,088							220,006							149,709							148,275							148,959
Total assets	$	2,442,246						$	2,407,614						$	1,856,308						$	1,765,515						$	1,743,119

Interest-bearing liabilities
Interest-bearing transaction accounts	$	341,238	$	243		0.29	%	$	332,361	$	217		0.26	%	$	235,340	$	149		0.25	%	$	214,439	$	125		0.23	%	$	210,776	$	124		0.24	%
Savings and money market deposits		821,130		1,138		0.56			804,537		1,096		0.55			633,765		791		0.50			612,618		713		0.46			603,173		698		0.47
Time deposits		290,097		673		0.93			306,404		697		0.92			273,293		643		0.94			283,022		661		0.93			288,350		654		0.91
Federal Home Loan Bank and other borrowed money		7,000		70		4.01			9,016		71		3.19			7,000		71		4.04			7,000		71		4.04			7,000		71		4.08
Subordinated debt		24,520		389		6.36			24,507		388		6.42			24,494		388		6.30			24,498		389		6.32			11,605		183		6.34
Total interest-bearing liabilities		1,483,985	$	2,513		0.68			1,476,825	$	2,469		0.68			1,173,892	$	2,042		0.69			1,141,577	$	1,959		0.68			1,120,904	$	1,730		0.62
Noninterest-bearing deposits		612,910							600,897							431,253							381,205							388,363
Total funding sources		2,096,895							2,077,722							1,605,145							1,522,782							1,509,267
Noninterest-bearing liabilities		16,465							16,921							16,914							13,780							10,495
Shareholders' equity		328,886							312,971							234,249							228,953							223,357
	$	2,442,246						$	2,407,614						$	1,856,308						$	1,765,515						$	1,743,119
Net interest rate spread						4.11	%						3.96	%						3.78	%						3.98	%						4.05	%
Net interest income/margin (taxable equivalent)				24,075		4.34	%				22,553		4.18	%				17,116		3.99	%				17,001		4.18	%				16,775		4.23	%
Tax equivalent adjustment				122							123							126							124							123
Net interest income/margin			$	23,953		4.32	%			$	22,430		4.16	%			$	16,990		3.96	%			$	16,877		4.15	%			$	16,652		4.20	%

National Commerce Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 25, 2017

Attached files

National Commerce Corp Reports