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

Attached files

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EX-99.3 - EXHIBIT 99.3 - National Commerce Corp	ex_111002.htm
EX-99.2 - EXHIBIT 99.2 - National Commerce Corp	ex_111001.htm
EX-2.1 - EXHIBIT 2.1 - National Commerce Corp	ex_110999.htm
8-K - FORM 8-K - National Commerce Corp	ncom20180423_8k.htm

Exhibit 99.1

National Commerce Corporation Announces First Quarter 2018 Earnings

BIRMINGHAM, AL (April 24, 2018) (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq: NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported first quarter 2018 net income to common shareholders of $9.1 million, compared to $5.9 million for the first quarter of 2017. Diluted net earnings per share were $0.52 in the first quarter of 2018, compared to $0.45 in the first quarter of 2017.

“We are pleased with our first quarter performance, which provides us with a good start to 2018,” said Richard Murray, IV, President and Chief Executive Officer of the Company. “Our first quarter loan and deposit growth was somewhat muted compared to our very strong fourth quarter 2017 growth, consistent with our prior growth history and some degree of seasonality. We look forward to the remainder of the year.”

During the first quarter of 2018, the Company successfully completed its acquisition of FirstAtlantic Financial Holdings, Inc. (“FirstAtlantic”) through a merger of the companies, followed by the merger of their respective bank subsidiaries, FirstAtlantic Bank and NBC. During the first quarter of 2018, the Company recognized $2.4 million in merger-related expenses ($1.8 million after-tax), reducing diluted net earnings per share by $0.10.

Several important measures from the first quarter of 2018 are as follows:

●

Net Interest Margin (taxable equivalent) of 4.80% for the first quarter of 2018, compared to 4.63% for the fourth quarter of 2017 and 4.18% for the first quarter of 2017. The first quarter 2018 margin increased 0.17% compared to the 2017 fourth quarter due primarily to higher loan yields, which were driven by higher accretion income and an increase in interest rates during the first quarter of 2018. If accretion is excluded from both periods, the 2018 first quarter margin would have been 4.45%, or 0.03% higher than the 2017 fourth quarter margin excluding accretion.

●

Return on Average Assets (“ROAA”) of 1.18% for the first quarter of 2018, compared to 1.00% for the first quarter of 2017.

●

Return on Average Tangible Common Equity (“ROATCE”) of 11.27% for the first quarter of 2018, compared to 11.45% for the first quarter of 2017.

●

First quarter 2018 loan growth (excluding mortgage loans held-for-sale) of $342.5 million, including $303.9 million acquired in the FirstAtlantic transaction. Excluding loans acquired in the FirstAtlantic transaction, first quarter 2018 loan growth was approximately $38.6 million.

●

First quarter 2018 deposit growth of $265.7 million. Excluding $374.3 million in deposits acquired in the FirstAtlantic transaction, deposits declined by $108.6 million, reflecting the loss of some deposits associated with the 2017 fourth quarter’s seasonal deposit growth.

●

2018 first quarter mortgage production volume totaled $114.9 million, compared to $130.9 million for the first quarter of 2017, reflecting a higher interest rate environment.

●

2018 first quarter purchased volume in the factoring division totaled $283.0 million, compared to $253.6 million for the first quarter of 2017.

●

Non-acquired non-performing assets of $1.1 million at March 31, 2018, an increase from $759 thousand at December 31, 2017 and a decrease from $2.5 million at March 31, 2017.

●

Annualized net charge-offs of 0.08% of average loans outstanding for the first quarter of 2018, compared to net recoveries of 0.07% for the first quarter of 2017.

●

Provision for loan losses of $1.3 million for the first quarter of 2018, compared to $1.5 million for the 2017 fourth quarter and $156 thousand for the first quarter of 2017.

●

Ending tangible book value per share of $19.21.

●

Ending book value per share of $29.35.

On March 20, 2018, the Company signed a definitive agreement to acquire Premier Community Bank of Florida (“Premier”), headquartered in Bradenton, Florida, through a merger of Premier with and into NBC. As of March 31, 2018, Premier had total loans and deposits of approximately $161.0 million and $194.3 million, respectively. The acquisition of Premier is currently pending and remains subject to customary regulatory and shareholder approvals; accordingly, Premier’s assets, liabilities and results of operations are not included in the Company’s totals for the first quarter of 2018.

The Company will host a live audio webcast conference call beginning at 8:00 a.m. Central Time on April 25, 2018 to discuss earnings and operating results for the 2018 first quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 2179627). A replay of the conference call will be available until April 27, 2018 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, 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 defined as 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, twenty-two full-service banking offices in Florida (including under the trade names United Legacy Bank, Reunion Bank of Florida, Patriot Bank and FirstAtlantic 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, 2017 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	Lowell Womack, Jr.
Vice Chairman and Chief Financial Officer	Director of Financial Reporting
(205) 313-8122	(205) 313-8147

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
	March 31,		December 31,			September 30,		June 30,		March 31,
	2018		2017			2017		2017		2017
Earnings Summary
Interest income	$	36,320	$	30,224		$	28,202	$	26,466	$	24,899
Interest expense		3,420		2,824			2,561		2,513		2,469
Net interest income		32,900		27,400			25,641		23,953		22,430
Provision for loan losses		1,318		1,478			1,105		1,155		156
Gain (loss) on sale of securities		191		(119	)		-		28		-
Other noninterest income⁽¹⁾		4,793		4,984			4,630		5,072		5,440
Merger/conversion-related expenses⁽²⁾		2,396		1,172			417		344		387
Other noninterest expense⁽³⁾		21,855		18,078			17,654		17,393		18,074
Income before income taxes		12,315		11,537			11,095		10,161		9,253
Income tax expense		2,776		3,890			3,828		3,281		2,841
Deferred tax asset write-down		-		6,231			-		-		-
Total income tax expense		2,776		10,121			3,828		3,281		2,841
Net income before minority interest		9,539		1,416			7,267		6,880		6,412
Net income attributable to minority interest		456		413			570		431		493
Net income to common shareholders	$	9,083	$	1,003		$	6,697	$	6,449	$	5,919

Weighted average common and diluted shares outstanding
Basic		17,209,551		14,783,597			14,300,974		13,190,582		12,901,040
Diluted		17,612,298		15,173,984			14,679,546		13,551,745		13,283,075

Net earnings per common share
Basic	$	0.53	$	0.07		$	0.47	$	0.49	$	0.46
Diluted	$	0.52	$	0.07		$	0.46	$	0.48	$	0.45

	March 31,			December 31,			September 30,			June 30,			March 31,
Selected Performance Ratios	2018			2017			2017			2017			2017
Return on average assets (ROAA)⁽⁴⁾		1.18	%		0.15	%		1.08	%		1.06	%		1.00	%
Return on average equity (ROAE)		7.35			0.99			7.06			7.86			7.67
Return on average tangible common equity (ROATCE)		11.27			1.41			9.94			11.49			11.45
Net interest margin - taxable equivalent		4.80			4.63			4.58			4.34			4.18
Efficiency ratio		64.34			59.44			59.70			61.11			66.24
Operating efficiency ratio⁽³⁾		57.98			55.82			58.32			59.92			64.85
Noninterest income / average assets (annualized)		0.62			0.76			0.75			0.83			0.92
Noninterest expense / average assets (annualized)		3.16			2.92			2.92			2.91			3.11
Yield on loans		5.66			5.45			5.45			5.38			5.29
Cost of total deposits		0.47	%		0.43	%		0.41	%		0.40	%		0.40	%

	March 31,			December 31,			September 30,			June 30,			March 31,
Factoring Metrics	2018			2017			2017			2017			2017
Recourse purchased volume	$	115,970		$	108,628		$	104,304		$	101,295		$	127,882
Non-recourse purchased volume		167,015			158,565			155,157			149,740			125,751
Total purchased volume	$	282,985		$	267,193		$	259,461		$	251,035		$	253,633
Average turn (days)		42.25			43.59			41.11			38.47			35.61
Net charge-offs / total purchased volume		0.14	%		0.18	%		0.05	%		0.12	%		0.03	%
Average discount rate		1.64	%		1.59	%		1.58	%		1.52	%		1.44	%

	March 31,			December 31,			September 30,			June 30,			March 31,
Mortgage Metrics	2018			2017			2017			2017			2017
Total production ($)	$	114,850		$	120,969		$	122,656		$	133,063		$	130,875
Refinance (%)		27.8	%		22.1	%		23.6	%		24.0	%		27.4	%
Purchases (%)		72.2	%		77.9	%		76.4	%		76.0	%		72.6	%

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

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

	As of
	March 31,		December 31,		September 30,		June 30,		March 31,
Balance Sheet Highlights	2018		2017		2017		2017		2017
Cash and cash equivalents	$	132,825	$	235,288	$	134,549	$	224,760	$	318,730
Total investment securities		169,868		111,396		111,158		101,569		98,390
Mortgage loans held-for-sale		21,077		29,191		15,278		19,482		19,517
Acquired purchased credit-impaired loans		29,359		25,696		26,924		21,065		22,465
Acquired non-purchased credit-impaired loans		783,556		538,276		561,118		490,198		539,056
Nonacquired loans held for investment ⁽⁵⁾		1,531,475		1,455,376		1,349,254		1,252,970		1,153,897
CBI loans (factoring receivables)		136,194		118,710		119,110		114,361		99,317
Total gross loans held for investment		2,480,584		2,138,058		2,056,406		1,878,594		1,814,735
Allowance for loan losses		15,839		14,985		14,264		13,407		12,565
Total intangibles		174,225		117,849		119,688		103,270		103,519
Total assets		3,113,766		2,737,676		2,549,134		2,418,052		2,445,149
Total deposits		2,551,517		2,285,831		2,097,373		2,004,528		2,080,307
FHLB and other borrowings		7,000		7,000		7,941		7,000		7,000
Subordinated debt		24,567		24,553		24,540		24,527		24,513
Total liabilities		2,608,040		2,337,718		2,150,541		2,054,792		2,127,727
Minority interest		7,391		7,348		7,504		7,366		7,427
Common stock		172		148		148		141		129
Total shareholders' equity		505,726		399,958		398,593		363,260		317,422
Tangible common equity	$	331,044	$	281,695	$	278,335	$	259,558	$	213,410
End of period common shares outstanding		17,229,043		14,788,436		14,777,230		14,070,528		12,948,778

	As of and For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Asset Quality Analysis	2018			2017			2017			2017			2017
*Nonacquired*
Nonaccrual loans	$	367		$	82		$	70		$	50		$	68
Other real estate and repossessed assets		-			-			150			-			1,849
Loans past due 90 days or more and still accruing		723			677			1,690			1,172			538
Total nonacquired nonperforming assets	$	1,090		$	759		$	1,910		$	1,222		$	2,455

*Acquired*
Nonaccrual loans	$	2,412		$	2,640		$	2,625		$	2,827		$	2,949
Other real estate and repossessed assets		999			1,094			1,021			-			-
Loans past due 90 days or more and still accruing		-			-			-			-			-
Total acquired nonperforming assets	$	3,411		$	3,734		$	3,646		$	2,827		$	2,949

*Selected asset quality ratios*
Nonperforming assets / Assets		0.14	%		0.16	%		0.22	%		0.17	%		0.22	%
Nonperforming assets / (Loans + OREO + repossessed assets)		0.18			0.21			0.27			0.22			0.30
Net charge-offs (recoveries) to average loans (annualized)		0.08			0.14			0.05			0.07			(0.07	)
Allowance for loan losses to total loans		0.64			0.70			0.69			0.71			0.69
Nonacquired nonperforming assets / (Nonacquired loans + nonacquired OREO + nonacquired repossessed assets) ⁽⁵⁾		0.07			0.05			0.14			0.10			0.21
Allowance for loan losses / (Nonacquired nonaccrual loans + nonacquired loans past due 90 days or more and still accruing)		1,453.12			1,974.31			810.45			1,097.14			2,073.43

	As of
	March 31,		December 31,		September 30,		June 30,		March 31,
Additional Information - Allowance for Loan Losses	2018		2017		2017		2017		2017
Allowance for loan losses excluding CBI loans (factoring receivables)		15,239		14,385		13,764		12,907		12,065
Nonacquired loans held for investment ⁽⁵⁾		1,531,475		1,455,376		1,349,254		1,252,970		1,153,897
Allowance for loan losses allocated to CBI loans (factoring receivables)		600		600		500		500		500
CBI loans (factoring receivables)		136,194		118,710		119,110		114,361		99,317

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
	March 31,			December 31,			September 30,			June 30,			March 31,
Taxable Equivalent Yields/Rates	2018			2017			2017			2017			2017
Interest income:
Loans		5.66	%		5.45	%		5.45	%		5.38	%		5.29	%
Mortgage loans held-for-sale		4.85			2.96			3.56			3.72			4.13
Interest on securities:
Taxable		3.11			3.09			3.03			2.98			2.63
Non-taxable		4.06			4.81			4.86			4.91			4.98
Cash balances in other banks		1.55			1.37			1.32			1.09			0.84
Funds sold		1.38			-			-			-			-
Total interest-earning assets		5.29			5.10			5.04			4.79			4.64

Interest expense:
Interest on deposits		0.67			0.62			0.59			0.57			0.56
Interest on FHLB and other borrowings		4.00			3.82			3.95			4.01			3.19
Interest on subordinated debt		6.41			6.27			6.27			6.36			6.42
Total interest-bearing liabilities		0.76			0.73			0.70			0.68			0.68
Net interest spread		4.53			4.37			4.34			4.11			3.96
Net interest margin		4.80	%		4.63	%		4.58	%		4.34	%		4.18	%

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio		10.91	%		10.89	%		11.42	%		10.69	%		8.86	%
Tier 1 Common Capital Ratio		12.93			12.54			12.78			13.17			11.06
Tier 1 Risk-based Capital Ratio		12.93			12.54			12.78			13.17			11.06
Total Risk-based Capital Ratio		14.56			14.37			14.64			15.18			13.07
Equity / Assets		16.24			14.61			15.64			15.02			12.98
Tangible common equity to tangible assets		11.26	%		10.75	%		11.46	%		11.21	%		9.11	%
Book value per share	$	29.35		$	27.05		$	26.97		$	25.82		$	24.51
Tangible book value per share	$	19.21		$	19.05		$	18.84		$	18.45		$	16.48

	For the Three Months Ended
	March 31,		December 31,			September 30,		June 30,		March 31,
	2018		2017			2017		2017		2017
Detail of Noninterest Income
Service charges and fees on deposit accounts	$	1,012	$	733		$	671	$	640	$	667
Mortgage origination and fee income		1,895		2,450			2,780		3,154		3,145
Merchant sponsorship revenue		720		592			622		602		744
Income from bank-owned life insurance		286		210			210		219		216
Rental income		276		240			84		-		-
Wealth management fees		15		11			12		14		10
Gain (loss) on sale of other real estate		171		(66	)		6		105		(1	)
Gain (loss) on sale of investments		191		(119	)		-		28		-
Other noninterest income		418		814			245		338		659
Total noninterest income	$	4,984	$	4,865		$	4,630	$	5,100	$	5,440

	For the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2018		2017		2017		2017		2017
Detail of Noninterest Expense
Salaries and employee benefits	$	12,460	$	10,016	$	9,804	$	9,663	$	10,073
Commission-based compensation		1,501		1,700		1,748		1,684		1,723
Occupancy and equipment expense		2,270		1,889		1,692		1,479		1,473
Data processing expenses		3,356		1,437		976		1,007		948
Advertising and marketing expenses		268		349		309		327		468
Legal fees		160		219		204		193		233
FDIC insurance assessments		281		145		351		408		258
Property and casualty insurance premiums		224		253		229		209		143
Accounting and audit expenses		335		209		288		294		318
Consulting and other professional expenses		538		888		510		517		497
Telecommunications expenses		229		217		203		169		186
ORE, Repo asset and other collection expenses		69		75		26		49		272
Core deposit intangible amortization		739		393		366		348		348
Other noninterest expense		1,821		1,460		1,365		1,390		1,521
Total noninterest expense	$	24,251	$	19,250	$	18,071	$	17,737	$	18,461

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

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

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
Non-GAAP Reconciliation	2018			2017			2017			2017			2017
Total shareholders' equity	$	505,726		$	399,958		$	398,593		$	363,260		$	317,422
Less: intangible assets		174,225			117,849			119,688			103,270			103,519
Less: minority interest not included in intangible assets		457			414			570			432			493
Tangible common equity	$	331,044		$	281,695		$	278,335		$	259,558		$	213,410
Common shares outstanding at year or period end		17,229,043			14,788,436			14,777,230			14,070,528			12,948,778
Tangible book value per share	$	19.21		$	19.05		$	18.84		$	18.45		$	16.48
Total assets at end of period	$	3,113,766		$	2,737,676		$	2,549,134		$	2,418,052		$	2,445,149
Less: intangible assets		174,225			117,849			119,688			103,270			103,519
Adjusted total assets at end of period	$	2,939,541		$	2,619,827		$	2,429,446		$	2,314,782		$	2,341,630
Tangible common equity to tangible assets		11.26	%		10.75	%		11.46	%		11.21	%		9.11	%

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
Non-GAAP Reconciliation
Total average shareholders' equity	$	500,901		$	402,317		$	376,129		$	328,886		$	312,971
Less: average intangible assets		173,766			119,415			108,553			103,403			103,004
Less: average minority interest not included in intangible assets		326			357			356			318			295
Average tangible common equity	$	326,809		$	282,545		$	267,220		$	225,165		$	209,672
Net income to common shareholders		9,083			1,003			6,697			6,449			5,919
Return on average tangible common equity (ROATCE)		11.27	%		1.41	%		9.94	%		11.49	%		11.45	%
Efficiency ratio:
Net interest income	$	32,900		$	27,400		$	25,641		$	23,953		$	22,430
Total noninterest income		4,984			4,865			4,630			5,100			5,440
Less: Gain (loss) on sale of securities		191			(119	)		-			28			-
Operating revenue	$	37,693		$	32,384		$	30,271		$	29,025		$	27,870
Expenses:
Total noninterest expenses	$	24,251		$	19,250		$	18,071		$	17,737		$	18,461
Efficiency ratio		64.34	%		59.44	%		59.70	%		61.11	%		66.24	%
Operating efficiency ratio:
Net interest income	$	32,900		$	27,400		$	25,641		$	23,953		$	22,430
Total noninterest income		4,984			4,865			4,630			5,100			5,440
Less: Gain (loss) on sale of securities		191			(119	)		-			28			-
Operating revenue	$	37,693		$	32,384		$	30,271		$	29,025		$	27,870
Expenses:
Total noninterest expenses	$	24,251		$	19,250		$	18,071		$	17,737		$	18,461
Less: merger/conversion-related expenses		2,396			1,172			417			344			387
Adjusted noninterest expenses	$	21,855		$	18,078		$	17,654		$	17,393		$	18,074
Operating efficiency ratio		57.98	%		55.82	%		58.32	%		59.92	%		64.85	%

(1) Excludes securities gains

(2) After-tax impact of merger conversion-related expenses of $1,826, $815, $340, $248 and $300, 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)

	March 31, 2018			December 31, 2017
Assets
Cash and due from banks	$	26,683		$	36,246
Interest-bearing deposits with banks		106,142			199,042
Cash and cash equivalents		132,825			235,288
Investment securities held-to-maturity (fair value of $25,182 and $25,932 at March 31, 2018 and December 31, 2017, respectively)		25,383			25,562
Investment securities available-for-sale		144,485			85,834
Other investments		12,021			11,350
Mortgage loans held-for-sale		21,077			29,191
Loans, net of unearned income		2,480,584			2,138,058
Less: allowance for loan losses		15,839			14,985
Loans, net		2,464,745			2,123,073
Premises and equipment, net		65,500			52,455
Accrued interest receivable		7,300			6,157
Bank-owned life insurance		42,142			31,584
Other real estate		999			1,094
Deferred tax assets, net		14,834			12,041
Goodwill		164,257			113,394
Core deposit intangible, net		9,968			4,455
Other assets		8,230			6,198
Total assets	$	3,113,766		$	2,737,676

Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	711,278		$	697,144
Interest-bearing demand		520,208			362,266
Savings and money market		953,692			951,846
Time		366,339			274,575
Total deposits		2,551,517			2,285,831
Federal Home Loan Bank advances and other borrowings		7,000			7,000
Subordinated debt		24,567			24,553
Accrued interest payable		1,260			900
Other liabilities		23,696			19,434
Total liabilities		2,608,040			2,337,718

Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding		-			-
Common stock, $0.01 par value, 30,000,000 shares authorized, 17,229,043 and 14,788,436 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		172			148
Additional paid-in capital		446,290			347,999
Retained earnings		53,072			43,989
Accumulated other comprehensive income		(1,199	)		474
Total shareholders' equity attributable to National Commerce Corporation		498,335			392,610
Noncontrolling interest		7,391			7,348
Total shareholders' equity		505,726			399,958
Total liabilities and shareholders' equity	$	3,113,766		$	2,737,676

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except share and per share data)

	For the Three Months Ended
	March 31,
	2018		2017
Interest and dividend income:
Interest and fees on loans	$	34,423	$	23,593
Interest and dividends on taxable investment securities		1,170		571
Interest on non-taxable investment securities		188		200
Interest on interest-bearing deposits and federal funds sold		539		535
Total interest income		36,320		24,899
Interest expense:
Interest on deposits		2,961		2,010
Interest on borrowings		71		71
Interest on subordinated debt		388		388
Total interest expense		3,420		2,469
Net interest income		32,900		22,430
Provision for loan losses		1,318		156
Net interest income after provision for loan losses		31,582		22,274
Other income:
Service charges and fees on deposit accounts		1,012		667
Mortgage origination and fee income		1,895		3,145
Merchant sponsorship revenue		720		744
Income from bank-owned life insurance		286		216
Rental income		276		-
Wealth management fees		15		10
Gain (loss) on other real estate		171		(1	)
Gain on sale of investment securities available-for-sale		191		-
Other		418		659
Total other income		4,984		5,440
Other expense:
Salaries and employee benefits		12,460		10,073
Commission-based compensation		1,501		1,723
Occupancy and equipment		2,270		1,473
Core deposit intangible amortization		739		348
Other operating expense		7,281		4,844
Total other expense		24,251		18,461
Earnings before income taxes		12,315		9,253
Income tax expense		2,776		2,841
Net earnings		9,539		6,412
Less: Net earnings attributable to noncontrolling interest		456		493
Net earnings attributable to National Commerce Corporation	$	9,083	$	5,919

Weighted average common and diluted shares outstanding
Basic		17,209,551		12,901,040
Diluted		17,612,298		13,283,075

Basic earnings per common share	$	0.53	$	0.46
Diluted earnings per common share	$	0.52	$	0.45

NATIONAL COMMERCE CORPORATION

Average Balance Sheets and Net Interest Analysis

	For the Three Months Ended
(Dollars in thousands)	March 31, 2018							December 31, 2017							September 30, 2017							June 30, 2017							March 31, 2017
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	$	2,451,352	$	34,220		5.66	%	$	2,091,443	$	28,704		5.45	%	$	1,937,115	$	26,634		5.45	%	$	1,849,258	$	24,823		5.38	%	$	1,793,241	$	23,377		5.29	%
Mortgage loans held-for-sale		17,402		208		4.85			18,237		136		2.96			16,811		151		3.56			18,321		170		3.72			21,809		222		4.13
Securities:
Taxable securities		152,748		1,170		3.11			97,175		756		3.09			90,969		694		3.03			81,645		606		2.98			88,062		571		2.63
Tax-exempt securities		25,169		252		4.06			25,005		303		4.81			25,286		310		4.86			25,573		313		4.91			25,824		317		4.98
Cash balances in other banks		138,358		529		1.55			128,606		443		1.37			159,973		533		1.32			249,361		676		1.09			258,672		535		0.84
Funds sold		2,946		10		1.38			-		-		0.00			-		-		0.00			-		-		0.00			-		-		0.00
Total interest-earning assets		2,787,975	$	36,389		5.29			2,360,466	$	30,342		5.10			2,230,154	$	28,322		5.04			2,224,158	$	26,588		4.79			2,187,608	$	25,022		4.64
Noninterest-earning assets		328,605							255,239							228,231							218,088							220,006
Total assets	$	3,116,580						$	2,615,705						$	2,458,385						$	2,442,246						$	2,407,614

Interest-bearing liabilities
Interest-bearing transaction accounts	$	423,537	$	322		0.31	%	$	331,876	$	277		0.33	%	$	314,925	$	207		0.26	%	$	341,238	$	243		0.29	%	$	332,361	$	217		0.26	%
Savings and money market deposits		1,038,751		1,816		0.71			884,660		1,381		0.62			827,526		1,233		0.59			821,130		1,138		0.56			804,537		1,096		0.55
Time deposits		327,011		823		1.02			285,669		707		0.98			273,630		661		0.96			290,097		673		0.93			306,404		697		0.92
Federal Home Loan Bank and other borrowed money		7,200		71		4.00			7,381		71		3.82			7,228		72		3.95			7,000		70		4.01			9,016		71		3.19
Subordinated debt		24,560		388		6.41			24,547		388		6.27			24,533		388		6.27			24,520		389		6.36			24,507		388		6.42
Total interest-bearing liabilities		1,821,059	$	3,420		0.76			1,534,133	$	2,824		0.73			1,447,842	$	2,561		0.70			1,483,985	$	2,513		0.68			1,476,825	$	2,469		0.68
Noninterest-bearing deposits		772,358							657,786							615,130							612,910							600,897
Total funding sources		2,593,417							2,191,919							2,062,972							2,096,895							2,077,722
Noninterest-bearing liabilities		22,262							21,469							19,284							16,465							16,921
Shareholders' equity		500,901							402,317							376,129							328,886							312,971
	$	3,116,580						$	2,615,705						$	2,458,385						$	2,442,246						$	2,407,614
Net interest rate spread						4.53	%						4.37	%						4.34	%						4.11	%						3.96	%
Net interest income/margin (taxable equivalent)				32,969		4.80	%				27,518		4.63	%				25,761		4.58	%				24,075		4.34	%				22,553		4.18	%
Tax equivalent adjustment				69							118							120							122							123
Net interest income/margin			$	32,900		4.79	%			$	27,400		4.61	%			$	25,641		4.56	%			$	23,953		4.32	%			$	22,430		4.16	%

National Commerce Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 24, 2018

Attached files

National Commerce Corp Reports