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

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8-K - FORM 8-K - National Commerce Corp	ncom20180723_8k.htm

Exhibit 99.1

National Commerce Corporation Announces Second Quarter 2018 Earnings

BIRMINGHAM, AL (July 24, 2018) (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq: NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported second quarter 2018 net income to common shareholders of $10.7 million, compared to $6.4 million for the second quarter of 2017. Diluted net earnings per share were $0.61 in the second quarter of 2018, compared to $0.52 in the first quarter of 2018 and $0.48 in the second quarter of 2017.

“We are pleased to report our second quarter results,” said Richard Murray, IV, President and Chief Executive Officer of the Company. “While we had good earnings performance, higher loan payoffs offset solid loan production during the quarter, resulting in lower overall loan growth. Our 4.8% annualized growth in average loans for the quarter is below our long-term expectation. However, we did have a good quarter of deposit growth. We also remain pleased with our asset quality.”

During the second quarter of 2018, the Company announced the execution of a definitive agreement to acquire Landmark Bancshares, Inc. (“Landmark”) and its wholly owned subsidiary, First Landmark Bank, headquartered in Marietta, Georgia. While all required regulatory approvals with respect to the transaction have been received, the transaction remains subject to the approval of Landmark’s shareholders and the satisfaction or waiver of certain other closing conditions. On July 1, 2018, the Company also successfully completed its previously announced acquisition of Premier Community Bank of Florida (“Premier”), headquartered in Bradenton, Florida. Because the acquisition of Premier occurred after the end of the quarter, the Company’s reported results for the second quarter do not include the results of operations of Premier.

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

●

Net Interest Margin (taxable equivalent) of 4.77% for the second quarter of 2018, compared to 4.80% for the first quarter of 2018 and 4.34% for the second quarter of 2017. The second quarter 2018 margin decreased 0.03% compared to the first quarter of 2018. Loan yields during the second quarter of 2018 were higher due to an increase in interest rates during the second quarter of 2018. Excluding the impact of accretion from both periods, the 2018 second quarter margin would have been 4.50%, and the 2018 first quarter margin would have been 4.45%. The higher loan yields during the second quarter of 2018 compared to the 2018 first quarter were offset by an increase in the rate paid on interest-bearing liabilities of 0.17%.

●

Return on Average Assets (“ROAA”) of 1.36% for the second quarter of 2018, compared to 1.18% for the first quarter of 2018 and 1.06% for the second quarter of 2017.

●

Return on Average Tangible Common Equity (“ROATCE”) of 12.73% for the second quarter of 2018, compared to 11.27% for the first quarter of 2018 and 11.49% for the second quarter of 2017.

●

Second quarter 2018 loan growth (excluding mortgage loans held-for-sale) of $16.5 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, second quarter 2018 loan growth was approximately $11.3 million.

●

Deposits increased $92.2 million during the second quarter of 2018.

●

$149.6 million in 2018 second quarter mortgage production, compared to $114.9 million during the first quarter of 2018 and $133.1 million during the second quarter of 2017.

●

$309.5 million in 2018 second quarter purchased volume in the factoring division, compared to $283.0 million for the first quarter of 2018 and $251.0 million for the second quarter of 2017.

●

Non-acquired non-performing assets of $1.0 million at June 30, 2018, a decrease from $1.1 million at March 31, 2018 and $1.2 million at June 30, 2017.

●

Annualized net charge-offs of 0.11% of average loans outstanding for the second quarter of 2018, compared to net charge-offs of 0.08% for the first quarter of 2018 and 0.07% for the second quarter of 2017.

●

Provision for loan losses of $856 thousand for the second quarter of 2018, compared to $1.3 million for the first quarter of 2018 and $1.2 million for the second quarter of 2017.

●

Ending tangible book value per share of $19.86.

●

Ending book value per share of $29.97.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on July 25, 2018 to discuss earnings and operating results for the 2018 second quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 5084466). A replay of the conference call will be available until July 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. Its wholly-owned subsidiary, National Bank of Commerce, provides a broad array of financial services for commercial and consumer customers through seven full-service banking offices in Alabama, twenty-five full-service banking offices in Florida and two full-service banking offices in the Atlanta, Georgia metro area. National Bank of Commerce conducts business under a number of trade names unique to its local markets, including United Legacy Bank, Reunion Bank of Florida, Private Bank of Buckhead, Private Bank of Decatur, PrivatePlus Mortgage, Patriot Bank, FirstAtlantic Bank and Premier Community Bank of Florida.

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) 313-8100	(205) 313-8100

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,
	2018		2018		2017			2017		2017
Earnings Summary
Interest income	$	37,713	$	36,320	$	30,224		$	28,202	$	26,466
Interest expense		4,310		3,420		2,824			2,561		2,513
Net interest income		33,403		32,900		27,400			25,641		23,953
Provision for loan losses		856		1,318		1,478			1,105		1,155
Gain (loss) on sale of securities		2		191		(119	)		-		28
Other noninterest income⁽¹⁾		4,673		4,517		4,744			4,546		5,072
Merger/conversion-related expenses⁽²⁾		542		2,396		1,172			417		344
Other noninterest expense⁽³⁾		22,077		21,579		17,838			17,570		17,393
Income before income taxes		14,603		12,315		11,537			11,095		10,161
Income tax expense		3,303		2,776		3,890			3,828		3,281
Deferred tax asset write-down		-		-		6,231			-		-
Total income tax expense		3,303		2,776		10,121			3,828		3,281
Net income before minority interest		11,300		9,539		1,416			7,267		6,880
Net income attributable to minority interest		616		456		413			570		431
Net income to common shareholders	$	10,684	$	9,083	$	1,003		$	6,697	$	6,449

Weighted average common and diluted shares outstanding
Basic		17,236,525		17,209,551		14,783,597			14,300,974		13,190,582
Diluted		17,642,926		17,612,298		15,173,984			14,679,546		13,551,745

Net earnings per common share
Basic	$	0.62	$	0.53	$	0.07		$	0.47	$	0.49
Diluted	$	0.61	$	0.52	$	0.07		$	0.46	$	0.48

	June 30,			March 31,			December 31,			September 30,			June 30,
Selected Performance Ratios	2018			2018			2017			2017			2017
Return on average assets (ROAA)⁽⁴⁾		1.36	%		1.18	%		0.15	%		1.08	%		1.06	%
Return on average equity (ROAE)		8.39			7.35			0.99			7.06			7.86
Return on average tangible common equity (ROATCE)		12.73			11.27			1.41			9.94			11.49
Net interest margin - taxable equivalent		4.77			4.80			4.63			4.58			4.34
Efficiency ratio		59.40			64.08			59.14			59.59			61.11
Operating efficiency ratio⁽³⁾		57.98			57.67			55.49			58.20			59.92
Noninterest income / average assets (annualized)		0.60			0.59			0.72			0.73			0.83
Noninterest expense / average assets (annualized)		2.88			3.12			2.88			2.90			2.91
Yield on loans		5.74			5.66			5.45			5.45			5.38
Cost of total deposits		0.60	%		0.47	%		0.43	%		0.41	%		0.40	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Factoring Metrics	2018			2018			2017			2017			2017
Recourse purchased volume	$	127,680		$	115,970		$	108,628		$	104,304		$	101,295
Non-recourse purchased volume		181,835			167,015			158,565			155,157			149,740
Total purchased volume	$	309,515		$	282,985		$	267,193		$	259,461		$	251,035
Average turn (days)		42.85			42.25			43.59			41.11			38.47
Net charge-offs / total purchased volume		0.06	%		0.14	%		0.18	%		0.05	%		0.12	%
Average discount rate		1.63	%		1.64	%		1.59	%		1.58	%		1.52	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Mortgage Metrics	2018			2018			2017			2017			2017
Total production ($)	$	149,640		$	114,850		$	120,969		$	122,656		$	133,063
Refinance (%)		17.0	%		27.8	%		22.1	%		23.6	%		24.0	%
Purchases (%)		83.0	%		72.2	%		77.9	%		76.4	%		76.0	%

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	2018		2018		2017		2017		2017
Cash and cash equivalents	$	217,773	$	132,825	$	235,288	$	134,549	$	224,760
Total investment securities		161,542		169,868		111,396		111,158		101,569
Mortgage loans held-for-sale		24,455		21,077		29,191		15,278		19,482
Acquired purchased credit-impaired loans		26,942		29,359		25,696		26,924		21,065
Acquired non-purchased credit-impaired loans		714,359		783,556		538,276		561,118		490,198
Nonacquired loans held for investment ⁽⁵⁾		1,614,376		1,531,475		1,455,376		1,349,254		1,252,970
CBI loans (factoring receivables)		141,455		136,194		118,710		119,110		114,361
Total gross loans held for investment		2,497,132		2,480,584		2,138,058		2,056,406		1,878,594
Allowance for loan losses		15,997		15,839		14,985		14,264		13,407
Total intangibles		173,590		174,225		117,849		119,688		103,270
Total assets		3,214,367		3,113,766		2,737,676		2,549,134		2,418,052
Total deposits		2,643,713		2,551,517		2,285,831		2,097,373		2,004,528
FHLB and other borrowings		7,000		7,000		7,000		7,941		7,000
Subordinated debt		24,580		24,567		24,553		24,540		24,527
Total liabilities		2,697,563		2,608,040		2,337,718		2,150,541		2,054,792
Minority interest		7,551		7,391		7,348		7,504		7,366
Common stock		172		172		148		148		141
Total shareholders' equity		516,804		505,726		399,958		398,593		363,260
Tangible common equity	$	342,597	$	331,044	$	281,695	$	278,335	$	259,558
End of period common shares outstanding		17,246,659		17,229,043		14,788,436		14,777,230		14,070,528

	As of and For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Asset Quality Analysis	2018			2018			2017			2017			2017
*Nonacquired*
Nonaccrual loans	$	294		$	367		$	82		$	70		$	50
Other real estate and repossessed assets		340			-			-			150			-
Loans past due 90 days or more and still accruing		408			723			677			1,690			1,172
Total nonacquired nonperforming assets	$	1,042		$	1,090		$	759		$	1,910		$	1,222

*Acquired*
Nonaccrual loans	$	2,461		$	2,412		$	2,640		$	2,625		$	2,827
Other real estate and repossessed assets		999			999			1,094			1,021			-
Loans past due 90 days or more and still accruing		-			-			-			-			-
Total acquired nonperforming assets	$	3,460		$	3,411		$	3,734		$	3,646		$	2,827

*Selected asset quality ratios*
Nonperforming assets / Assets		0.14	%		0.14	%		0.16	%		0.22	%		0.17	%
Nonperforming assets / (Loans + OREO + repossessed assets)		0.18			0.18			0.21			0.27			0.22
Net charge-offs (recoveries) to average loans (annualized)		0.11			0.08			0.14			0.05			0.07
Allowance for loan losses to total loans		0.64			0.64			0.70			0.69			0.71
Nonacquired nonperforming assets / (Nonacquired loans + nonacquired OREO + nonacquired repossessed assets) ⁽⁵⁾		0.06			0.07			0.05			0.14			0.10
Allowance for loan losses / (Nonacquired nonaccrual loans + nonacquired loans past due 90 days or more and still accruing)		2,278.77			1,453.12			1,974.31			810.45			1,097.14

	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
Additional Information - Allowance for Loan Losses	2018		2018		2017		2017		2017
Allowance for loan losses excluding CBI loans (factoring receivables)		15,397		15,239		14,385		13,764		12,907
Nonacquired loans held for investment ⁽⁵⁾		1,614,376		1,531,475		1,455,376		1,349,254		1,252,970
Allowance for loan losses allocated to CBI loans (factoring receivables)		600		600		600		500		500
CBI loans (factoring receivables)		141,455		136,194		118,710		119,110		114,361

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,
Taxable Equivalent Yields/Rates	2018			2018			2017			2017			2017
Interest income:
Loans		5.74	%		5.66	%		5.45	%		5.45	%		5.38	%
Mortgage loans held-for-sale		3.71			4.85			2.96			3.56			3.72
Interest on securities:
Taxable		3.14			3.11			3.09			3.03			2.98
Non-taxable		4.23			4.06			4.81			4.86			4.91
Cash balances in other banks		1.80			1.55			1.37			1.32			1.09
Funds sold		-			1.38			-			-			-
Total interest-earning assets		5.38			5.29			5.10			5.04			4.79

Interest expense:
Interest on deposits		0.84			0.67			0.62			0.59			0.57
Interest on FHLB and other borrowings		3.99			4.00			3.82			3.95			4.01
Interest on subordinated debt		6.30			6.41			6.27			6.27			6.36
Total interest-bearing liabilities		0.93			0.76			0.73			0.70			0.68
Net interest spread		4.45			4.53			4.37			4.34			4.11
Net interest margin		4.77	%		4.80	%		4.63	%		4.58	%		4.34	%

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
Shareholders' Equity and Capital Ratios
Tier 1 leverage ratio		11.24	%		10.98	%		10.89	%		11.42	%		10.69	%
Tier 1 common capital ratio		13.44			13.03			12.54			12.78			13.17
Tier 1 risk-based capital ratio		13.44			13.03			12.54			12.78			13.17
Total risk-based capital ratio		15.06			14.66			14.37			14.64			15.18
Equity / Assets		16.08			16.24			14.61			15.64			15.02
Tangible common equity to tangible assets		11.27	%		11.26	%		10.75	%		11.46	%		11.21	%
Book value per share	$	29.97		$	29.35		$	27.05		$	26.97		$	25.82
Tangible book value per share	$	19.86		$	19.21		$	19.05		$	18.84		$	18.45

	For the Three Months Ended
	June 30,			March 31,		December 31,			September 30,		June 30,
	2018			2018		2017			2017		2017
Detail of Noninterest Income
Service charges and fees on deposit accounts	$	1,029		$	1,012	$	733		$	671	$	640
Mortgage origination and fee income		2,262			1,895		2,450			2,780		3,154
Merchant sponsorship revenue		675			720		592			622		602
Income from bank-owned life insurance		276			286		210			210		219
Wealth management fees		15			15		11			12		14
(Loss) gain on sale of other real estate		(32	)		171		(66	)		6		105
Gain (loss) on sale of investments		2			191		(119	)		-		28
Other noninterest income		448			418		814			245		338
Total noninterest income	$	4,675		$	4,708	$	4,625		$	4,546	$	5,100

	For the Three Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
	2018		2018		2017		2017		2017
Detail of Noninterest Expense
Salaries and employee benefits	$	12,498	$	12,460	$	10,016	$	9,804	$	9,663
Commission-based compensation		1,825		1,501		1,700		1,748		1,684
Occupancy and equipment, net		2,025		1,994		1,649		1,608		1,479
Data processing expenses		1,369		3,356		1,437		976		1,007
Advertising and marketing expenses		361		268		349		309		327
Legal fees		496		160		219		204		193
FDIC insurance assessments		226		281		145		351		408
Property and casualty insurance premiums		251		224		253		229		209
Accounting and audit expenses		332		335		209		288		294
Consulting and other professional expenses		568		538		888		510		517
Telecommunications expenses		227		229		217		203		169
ORE, Repo asset and other collection expenses		71		69		75		26		49
Core deposit intangible amortization		738		739		393		366		348
Other noninterest expense		1,632		1,821		1,460		1,365		1,390
Total noninterest expense	$	22,619	$	23,975	$	19,010	$	17,987	$	17,737

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	2018			2018			2017			2017			2017
Total shareholders' equity	$	516,804		$	505,726		$	399,958		$	398,593		$	363,260
Less: intangible assets		173,590			174,225			117,849			119,688			103,270
Less: minority interest not included in intangible assets		617			457			414			570			432
Tangible common equity	$	342,597		$	331,044		$	281,695		$	278,335		$	259,558
Common shares outstanding at year or period end		17,246,659			17,229,043			14,788,436			14,777,230			14,070,528
Tangible book value per share	$	19.86		$	19.21		$	19.05		$	18.84		$	18.45
Total assets at end of period	$	3,214,367		$	3,113,766		$	2,737,676		$	2,549,134		$	2,418,052
Less: intangible assets		173,590			174,225			117,849			119,688			103,270
Adjusted total assets at end of period	$	3,040,777		$	2,939,541		$	2,619,827		$	2,429,446		$	2,314,782
Tangible common equity to tangible assets		11.27	%		11.26	%		10.75	%		11.46	%		11.21	%

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
Non-GAAP Reconciliation
Total average shareholders' equity	$	510,958		$	500,901		$	402,317		$	376,129		$	328,886
Less: average intangible assets		173,953			173,766			119,415			108,553			103,403
Less: average minority interest not included in intangible assets		366			326			357			356			318
Average tangible common equity	$	336,639		$	326,809		$	282,545		$	267,220		$	225,165
Net income to common shareholders		10,684			9,083			1,003			6,697			6,449
Return on average tangible common equity (ROATCE)		12.73	%		11.27	%		1.41	%		9.94	%		11.49	%
Efficiency ratio:
Net interest income	$	33,403		$	32,900		$	27,400		$	25,641		$	23,953
Total noninterest income		4,675			4,708			4,625			4,546			5,100
Less: Gain (loss) on sale of securities		2			191			(119	)		-			28
Operating revenue	$	38,076		$	37,417		$	32,144		$	30,187		$	29,025
Expenses:
Total noninterest expenses	$	22,619		$	23,975		$	19,010		$	17,987		$	17,737
Efficiency ratio		59.40	%		64.08	%		59.14	%		59.59	%		61.11	%
Operating efficiency ratio:
Net interest income	$	33,403		$	32,900		$	27,400		$	25,641		$	23,953
Total noninterest income		4,675			4,708			4,625			4,546			5,100
Less: Gain (loss) on sale of securities		2			191			(119	)		-			28
Operating revenue	$	38,076		$	37,417		$	32,144		$	30,187		$	29,025
Expenses:
Total noninterest expenses	$	22,619		$	23,975		$	19,010		$	17,987		$	17,737
Less: merger/conversion-related expenses		542			2,396			1,172			417			344
Adjusted noninterest expenses	$	22,077		$	21,579		$	17,838		$	17,570		$	17,393
Operating efficiency ratio		57.98	%		57.67	%		55.49	%		58.20	%		59.92	%

(1) Excludes securities gains

(2) After-tax impact of merger conversion-related expenses of $445, $1,826, $815, $340 and $248, 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)


	June 30, 2018			December 31, 2017
Assets

Cash and due from banks	$	51,360		$	36,246
Interest-bearing deposits with banks		166,413			199,042
Cash and cash equivalents		217,773			235,288
Investment securities held-to-maturity (fair value of $24,690 and $25,932 at June 30, 2018 and December 31, 2017, respectively)		24,948			25,562
Investment securities available-for-sale		136,594			85,834
Other investments		13,154			11,350
Mortgage loans held-for-sale		24,455			29,191
Loans, net of unearned income		2,497,132			2,138,058
Less: allowance for loan losses		15,997			14,985
Loans, net		2,481,135			2,123,073
Premises and equipment, net		67,841			52,455
Accrued interest receivable		7,537			6,157
Bank-owned life insurance		42,420			31,584
Other real estate		1,339			1,094
Deferred tax assets, net		14,958			12,041
Goodwill		164,360			113,394
Core deposit intangible, net		9,230			4,455
Other assets		8,623			6,198
Total assets	$	3,214,367		$	2,737,676

Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	802,273		$	697,144
Interest-bearing demand		518,370			362,266
Savings and money market		982,026			951,846
Time		341,044			274,575
Total deposits		2,643,713			2,285,831
Federal Home Loan Bank advances and other borrowings		7,000			7,000
Subordinated debt		24,580			24,553
Accrued interest payable		900			900
Other liabilities		21,370			19,434
Total liabilities		2,697,563			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, 17,246,659 and 14,788,436 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		172			148
Additional paid-in capital		447,061			347,999
Retained earnings		63,756			43,989
Accumulated other comprehensive income		(1,736	)		474
Total shareholders' equity attributable to National Commerce Corporation		509,253			392,610
Noncontrolling interest		7,551			7,348
Total shareholders' equity		516,804			399,958
Total liabilities and shareholders' equity	$	3,214,367		$	2,737,676

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,
	2018			2017		2018		2017
Interest and dividend income:
Interest and fees on loans	$	35,713		$	24,987	$	70,136	$	48,580
Interest and dividends on taxable investment securities		1,212			606		2,382		1,177
Interest on non-taxable investment securities		192			197		380		397
Interest on interest-bearing deposits and federal funds sold		596			676		1,135		1,211
Total interest income		37,713			26,466		74,033		51,365
Interest expense:
Interest on deposits		3,852			2,054		6,813		4,064
Interest on borrowings		72			70		143		141
Interest on subordinated debt		386			389		774		777
Total interest expense		4,310			2,513		7,730		4,982
Net interest income		33,403			23,953		66,303		46,383
Provision for loan losses		856			1,155		2,174		1,311
Net interest income after provision for loan losses		32,547			22,798		64,129		45,072
Other income:
Service charges and fees on deposit accounts		1,029			640		2,041		1,307
Mortgage origination and fee income		2,262			3,154		4,157		6,299
Merchant sponsorship revenue		675			602		1,395		1,346
Income from bank-owned life insurance		276			219		562		435
Wealth management fees		15			14		30		24
Gain (loss) on other real estate		(32	)		105		139		104
Gain on sale of investment securities available-for-sale		2			28		193		28
Other		448			338		866		997
Total other income		4,675			5,100		9,383		10,540
Other expense:
Salaries and employee benefits		12,498			9,663		24,958		19,736
Commission-based compensation		1,825			1,684		3,326		3,407
Occupancy and equipment, net		2,025			1,479		4,019		2,952
Core deposit intangible amortization		738			348		1,477		696
Other operating expense		5,533			4,563		12,814		9,407
Total other expense		22,619			17,737		46,594		36,198
Earnings before income taxes		14,603			10,161		26,918		19,414
Income tax expense		3,303			3,281		6,079		6,122
Net earnings		11,300			6,880		20,839		13,292
Less: Net earnings attributable to noncontrolling interest		616			431		1,072		924
Net earnings attributable to National Commerce Corporation	$	10,684		$	6,449	$	19,767	$	12,368

Weighted average common and diluted shares outstanding
Basic		17,236,525			13,190,582		17,223,112		13,046,611
Diluted		17,642,926			13,551,745		17,633,029		13,422,704

Basic earnings per common share	$	0.62		$	0.49	$	1.15	$	0.95
Diluted earnings per common share	$	0.61		$	0.48	$	1.12	$	0.92

NATIONAL COMMERCE CORPORATION

Average Balance Sheets and Net Interest Analysis

	For the Three Months Ended
(Dollars in thousands)	June 30, 2018							March 31, 2018							December 31, 2017							September 30, 2017							June 30, 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	$	2,480,578	$	35,501		5.74	%	$	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	%
Mortgage loans held-for-sale		23,247		215		3.71			17,402		208		4.85			18,237		136		2.96			16,811		151		3.56			18,321		170		3.72
Securities:
Taxable securities		155,062		1,212		3.14			152,748		1,170		3.11			97,175		756		3.09			90,969		694		3.03			81,645		606		2.98
Tax-exempt securities		24,393		257		4.23			25,169		252		4.06			25,005		303		4.81			25,286		310		4.86			25,573		313		4.91
Cash balances in other banks		132,868		596		1.80			138,358		529		1.55			128,606		443		1.37			159,973		533		1.32			249,361		676		1.09
Funds sold		-		-		0.00			2,946		10		1.38			-		-		0.00			-		-		0.00			-		-		0.00
Total interest-earning assets		2,816,148	$	37,781		5.38			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
Noninterest-earning assets		333,297							328,605							255,239							228,231							218,088
Total assets	$	3,149,445						$	3,116,580						$	2,615,705						$	2,458,385						$	2,442,246

Interest-bearing liabilities
Interest-bearing transaction accounts	$	517,769	$	632		0.49	%	$	423,537	$	322		0.31	%	$	331,876	$	277		0.33	%	$	314,925	$	207		0.26	%	$	341,238	$	243		0.29	%
Savings and money market deposits		975,986		2,182		0.90			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
Time deposits		342,890		1,038		1.21			327,011		823		1.02			285,669		707		0.98			273,630		661		0.96			290,097		673		0.93
Federal Home Loan Bank and other borrowed money		7,243		72		3.99			7,200		71		4.00			7,381		71		3.82			7,228		72		3.95			7,000		70		4.01
Subordinated debt		24,574		386		6.30			24,560		388		6.41			24,547		388		6.27			24,533		388		6.27			24,520		389		6.36
Total interest-bearing liabilities		1,868,462	$	4,310		0.93			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
Noninterest-bearing deposits		746,940							772,358							657,786							615,130							612,910
Total funding sources		2,615,402							2,593,417							2,191,919							2,062,972							2,096,895
Noninterest-bearing liabilities		23,085							22,262							21,469							19,284							16,465
Shareholders' equity		510,958							500,901							402,317							376,129							328,886
	$	3,149,445						$	3,116,580						$	2,615,705						$	2,458,385						$	2,442,246
Net interest rate spread						4.45	%						4.53	%						4.37	%						4.34	%						4.11	%
Net interest income/margin (taxable equivalent)				33,471		4.77	%				32,969		4.80	%				27,518		4.63	%				25,761		4.58	%				24,075		4.34	%
Tax equivalent adjustment				68							69							118							120							122
Net interest income/margin			$	33,403		4.76	%			$	32,900		4.79	%			$	27,400		4.61	%			$	25,641		4.56	%			$	23,953		4.32	%

NATIONAL COMMERCE CORPORATION

Average Balance Sheets and Net Interest Analysis

	For the Six Months Ended
(Dollars in thousands, except yields and rates)	June 30, 2018							June 30, 2017
Interest-earning assets	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Loans	$	2,466,046	$	69,720		5.70	%	$	1,821,404	$	48,201		5.34	%
Mortgage loans held for sale		20,341		423		4.19			20,055		392		3.94
Securities:
Taxable securities		153,912		2,382		3.12			84,836		1,177		2.80
Tax-exempt securities		24,778		508		4.13			25,698		630		4.94
Cash balances in other banks		135,598		1,125		1.67			253,991		1,211		0.96
Funds sold		1,465		10		1.38			-		-		0.00
Total interest-earning assets		2,802,140	$	74,168		5.34			2,205,984	$	51,611		4.72
Non-interest earning assets		330,963							219,041
Total assets	$	3,133,103						$	2,425,025

Interest-bearing liabilities
Interest-bearing transactions accounts	$	470,913	$	954		0.41	%	$	336,824	$	460		0.28	%
Savings and money market deposits		1,007,195		3,998		0.80			812,879		2,234		0.55
Time deposits		334,994		1,861		1.12			298,205		1,370		0.93
Federal Home Loan Bank and other borrowed money		7,222		143		3.99			8,002		141		3.55
Subordinated debt		24,567		774		6.35			24,514		777		6.39
Total interest-bearing liabilities		1,844,891	$	7,730		0.84			1,480,424	$	4,982		0.68
Non-interest bearing deposits		759,579							606,937
Total funding sources		2,604,470							2,087,361
Non-interest bearing liabilities		22,676							16,692
Shareholders' equity		505,957							320,972
	$	3,133,103						$	2,425,025
Net interest rate spread						4.50	%						4.04	%
Net interest income/margin (taxable equivalent)				66,438		4.78	%				46,629		4.26	%
Tax equivalent adjustment				135							246
Net interest income/margin			$	66,303		4.77	%			$	46,383		4.24	%

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

Attached files

National Commerce Corp Reports