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National Commerce Corporation Announces Third Quarter 2017 Earnings

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

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

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

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

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

  • Net Interest Margin (taxable equivalent) of 4.58% for the third quarter of 2017, compared to 4.34% for the second quarter of 2017 and 4.18% for the third quarter of 2016.  The third quarter 2017 margin increased 0.24% compared to the 2017 second quarter due to a change in the earning asset mix (lower levels of cash and cash equivalents) and a 0.07% increase in loan yields, offset slightly by a 0.01% increase in the cost of deposits.  Interest income on loans for the third quarter of 2017 included $1.1 million in loan accretion income, compared to $1.2 million of loan accretion income for the second quarter of 2017.
     
  • Return on Average Assets of 1.08% for the third quarter of 2017, identical to the third quarter of 2016.  Return on Average Tangible Common Equity of 9.94% for the third quarter of 2017, compared to 10.90% for the third quarter of 2016.  The third quarter of 2017 measure includes the additional common stock issued in the Company’s June 2017 public offering.

  • Third quarter 2017 loan growth (excluding mortgage loans held-for-sale and $121.6 million of loans acquired from Patriot Bank) of $56.2 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, and loans acquired from Patriot Bank, third quarter 2017 loan growth was approximately $51.5 million.

  • Excluding the acquired deposits from Patriot Bank totaling $127.7 million, deposits decreased $34.9 million during the third quarter of 2017, primarily due to a decline in a few large deposit relationships and the maturity of a $9.8 million brokered certificate of deposit.

  • $122.7 million in 2017 third quarter mortgage production, compared to $133.1 million for the second quarter of 2017 and $91.6 million for the third quarter of 2016.  The 2017 second and third quarter production totals include mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.

  • $259.5 million in 2017 third quarter purchased volume in the factoring division, compared to $251.0 million for the second quarter of 2017 and $172.4 million for the third quarter of 2016.

  • An increase in non-acquired non-performing assets to $1.9 million at September 30, 2017, from $1.2 million at June 30, 2017. 

  • Annualized net charge-offs of 0.05% of average loans for the third quarter of 2017, compared to net charge-offs of 0.07% for the second quarter of 2017 and 0.02% for the third quarter of 2016.

  • Provision for loan losses of $1.1 million during the third quarter of 2017, compared to $1.2 million in the second quarter of 2017 and $373 thousand in the third quarter of 2016.  The increase during the third quarter of 2017 was attributable to growth in non-acquired loans.

  • During the third quarter of 2017, the Company recognized merger-related expenses of $417 thousand, for an after-tax impact of approximately $340 thousand (considering the non-deductibility of certain items), representing approximately $0.02 per diluted share.
     
  • Ending tangible book value per share of $18.84.

  • Ending book value per share of $26.97.

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

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

Use of Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

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

About National Commerce Corporation

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

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

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

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

Contact:

National Commerce Corporation

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

 
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages or as otherwise noted)
                     
  For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2017   2017   2017
  2016   2016  
Earnings Summary                    
Interest income $ 28,202   $ 26,466   $ 24,899     $ 19,032     $ 18,836  
Interest expense   2,561     2,513     2,469       2,042       1,959  
Net interest income   25,641     23,953     22,430       16,990       16,877  
Provision for loan losses   1,105     1,155     156       441       373  
Gain on sale of securities   -     28     -       -       -  
Other noninterest income (1)   4,630     5,072     5,440       3,472       4,002  
Merger/conversion-related expenses (2)   417     344     387       169       160  
Other noninterest expense (3)   17,654     17,393     18,074       11,971       12,472  
Income before income taxes   11,095     10,161     9,253       7,881       7,874  
Income tax expense   3,828     3,281     2,841       2,600       2,639  
Net income before minority interest   7,267     6,880     6,412       5,281       5,235  
Net income attributable to minority interest   570     431     493       374       422  
Net income to common shareholders $ 6,697   $ 6,449   $ 5,919     $ 4,907     $ 4,813  
                     
Weighted average common and diluted shares outstanding                    
Basic   14,300,974     13,190,582     12,901,040       10,930,309       10,890,860  
Diluted   14,679,546     13,551,745     13,283,075       11,173,733       11,115,134  
                     
Net earnings per common share                    
Basic $ 0.47   $ 0.49   $ 0.46     $ 0.45     $ 0.44  
Diluted $ 0.46   $ 0.48   $ 0.45     $ 0.44     $ 0.43  
                     
                     
  September 30,   June 30,   March 31,   December 31,   September 30,  
Selected Performance Ratios 2017   2017   2017
  2016
  2016  
Return on average assets (ROAA) (4)   1.08 %   1.06 %   1.00   %   1.05   %   1.08 %
Return on average equity (ROAE)   7.06     7.86     7.67       8.33       8.36  
Return on average tangible common equity                    
(ROATCE)   9.94     11.49     11.45       10.78       10.90  
Net interest margin - taxable equivalent   4.58     4.34     4.18       3.99       4.18  
Efficiency ratio   59.70     61.11     66.24       59.33       60.50  
Operating efficiency ratio (3)   58.32     59.92     64.85       58.50       59.73  
Noninterest income / average assets (annualized)   0.75     0.83     0.92       0.74       0.90  
Noninterest expense / average assets (annualized)   2.92     2.91     3.11       2.60       2.85  
Yield on loans   5.45     5.38     5.29       4.95       5.08  
Cost of total deposits   0.41 %   0.40 %   0.40   %   0.40   %   0.40 %
                     
                     
  September 30,   June 30,   March 31,   December 31,   September 30,  
Factoring Metrics 2017   2017   2017
  2016
  2016  
Recourse purchased volume $ 104,304   $ 101,295   $ 127,882     $ 82,923     $ 71,872  
Non-recourse purchased volume   155,157     149,740     125,751       104,797       100,486  
Total purchased volume $ 259,461   $ 251,035   $ 253,633     $ 187,720     $ 172,358  
Average turn (days)   41.11     38.47     35.61       38.35       38.13  
Net charge-offs / total purchased volume   0.05 %   0.12 %   0.03   %   0.12   %   0.05 %
Average discount rate   1.58 %   1.52 %   1.44   %   1.67   %   1.70 %
                     
                     
  September 30,   June 30,   March 31,   December 31,   September 30,  
Mortgage Metrics 2017   2017   2017
  2016
  2016  
Total production ($) $ 122,656   $ 133,063   $ 130,875     $ 76,028     $ 91,613  
Refinance (%)   23.6 %   24.0 %   27.4   %   40.2   %   30.4 %
Purchases (%)   76.4 %   76.0 %   72.6   %   59.8   %   69.6 %
                     
  As of
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
Balance Sheet Highlights 2017
  2017
  2017
  2016
  2016
 
Cash and cash equivalents $ 134,549   $ 224,760   $ 318,730     $ 217,293     $ 122,920  
Total investment securities   111,158     101,569     98,390       99,709       102,848  
Mortgage loans held-for-sale   15,278     19,482     19,517       15,373       7,810  
Acquired purchased credit-impaired loans   26,924     21,065     22,465       11,975       11,995  
Acquired non-purchased credit-impaired loans   561,118     490,198     539,056       313,399       320,630  
Nonacquired loans held for investment (5)   1,349,254     1,252,970     1,153,897       1,076,209       1,009,677  
CBI loans (factoring receivables)   119,110     114,361     99,317       83,901       70,066  
Total gross loans held for investment   2,056,406     1,878,594     1,814,735       1,485,484       1,412,368  
Allowance for loan losses   14,264     13,407     12,565       12,113       11,950  
Total intangibles   119,688     103,270     103,519       52,803       52,962  
Total assets   2,549,134     2,418,052     2,445,149       1,950,784       1,779,278  
Total deposits   2,097,373     2,004,528     2,080,307       1,667,710       1,499,879  
FHLB and other borrowings   7,941     7,000     7,000       7,000       7,000  
Subordinated debt   24,540     24,527     24,513       24,500       24,487  
Total liabilities   2,150,541     2,054,792     2,127,727       1,713,740       1,547,105  
Minority interest   7,504     7,366     7,427       7,309       7,357  
Common stock   148     141     129       109       109  
Total shareholders' equity   398,593     363,260     317,422       237,044       232,173  
Tangible common equity $ 278,335   $ 259,558   $ 213,410     $ 183,866     $ 178,788  
End of period common shares outstanding   14,777,230     14,070,528     12,948,778       10,934,541       10,920,423  
                     
                     
  As of and For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
Asset Quality Analysis 2017   2017   2017
  2016
  2016  
Nonacquired                    
Nonaccrual loans $ 70   $ 50   $ 68     $ 69     $ 19  
Other real estate and repossessed assets   150     -     1,849       2,068       2,068  
Loans past due 90 days or more and still accruing   1,690     1,172     538       581       358  
Total nonacquired nonperforming assets $ 1,910   $ 1,222   $ 2,455     $ 2,718     $ 2,445  
                     
Acquired                    
Nonaccrual loans $ 2,625   $ 2,827   $ 2,949     $ 2,768     $ 2,982  
Other real estate and repossessed assets   1,021     -     -       -       92  
Loans past due 90 days or more and still accruing   -     -     -       -       -  
Total acquired nonperforming assets $ 3,646   $ 2,827   $ 2,949     $ 2,768     $ 3,074  
                     
Selected asset quality ratios                    
Nonperforming assets / Assets   0.22 %   0.17 %   0.22   %   0.28   %   0.31 %
Nonperforming assets / (Loans + OREO + repossessed assets)   0.27     0.22     0.30       0.37       0.39  
Net charge-offs (recoveries) to average loans (annualized)   0.05     0.07     (0.07 )     0.08       0.02  
Allowance for loan losses to total loans   0.69     0.71     0.69       0.82       0.85  
Nonacquired nonperforming assets / (Nonacquired loans +                    
nonacquired OREO + nonacquired repossessed assets) (5)   0.14     0.10     0.21       0.25       0.24  
Allowance for loan losses to nonacquired nonperforming                    
loans   810.45     1,097.14     2,073.43       1,863.54       3,169.76  
                     
                     
  As of
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
Additional Information - Allowance for Loan Losses 2017   2017   2017
  2016
  2016  
Allowance for loan losses excluding CBI loans (factoring receivables)   13,764     12,907     12,065       11,613       11,450  
Nonacquired loans held for investment (5)   1,349,254     1,252,970     1,153,897       1,076,209       1,009,677  
Allowance for loan losses allocated to CBI loans (factoring receivables)      500     500     500       500       500  
CBI loans (factoring receivables)   119,110     114,361     99,317       83,901       70,066  
                     
  For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
Taxable Equivalent Yields/Rates 2017   2017   2017
  2016
  2016  
Interest income:                    
Loans   5.45 %   5.38 %   5.29   %   4.95   %   5.08 %
Mortgage loans held-for-sale   3.56     3.72     4.13       2.99       4.12  
Interest on securities:                    
Taxable   3.03     2.98     2.63       2.52       2.55  
Non-taxable   4.86     4.91     4.98       4.90       4.85  
Cash balances in other banks   1.32     1.09     0.84       0.63       0.60  
Total interest-earning assets   5.04     4.79     4.64       4.47       4.66  
                     
Interest expense:                    
Interest on deposits   0.59     0.57     0.56       0.55       0.54  
Interest on FHLB and other borrowings   3.95     4.01     3.19       4.04       4.04  
Interest on subordinated debt   6.27     6.36     6.42       6.30       6.32  
Total interest-bearing liabilities   0.70     0.68     0.68       0.69       0.68  
Net interest spread   4.34     4.11     3.96       3.78       3.98  
Net interest margin   4.58 %   4.34 %   4.18   %   3.99   %   4.18 %
                     
  As of
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2017   2017   2017
  2016
  2016  
Shareholders' Equity and Capital Ratios                    
Tier 1 Leverage Ratio   11.42 %   10.69 %   8.86   %   9.57   %   9.74 %
Tier 1 Common Capital Ratio   12.78     13.17     11.06       11.46       11.64  
Tier 1 Risk-based Capital Ratio   12.78     13.17     11.06       11.46       11.64  
Total Risk-based Capital Ratio   14.64     15.18     13.07       13.90       14.19  
Equity / Assets   15.64     15.02     12.98       12.15       13.05  
Tangible common equity to tangible assets   11.46 %   11.21 %   9.11   %   9.69   %   10.36 %
Book value per share $ 26.97   $ 25.82   $ 24.51     $ 21.68     $ 21.26  
Tangible book value per share $ 18.84   $ 18.45   $ 16.48     $ 16.82     $ 16.37  
                     
  For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2017   2017   2017
  2016
  2016  
Detail of noninterest income                    
Service charges and fees on deposit accounts $ 671   $ 640   $ 667     $ 523     $ 511  
Mortgage origination and fee income   2,780     3,154     3,145       1,711       2,245  
Merchant sponsorship revenue   622     602     744       613       542  
Income from bank-owned life insurance   210     219     216       196       206  
Rental income   84     -     -       -       -  
Wealth management fees   12     14     10       10       15  
Gain on sale of other real estate   6     105     (1 )     (31 )     -  
Gain on sale of investments   -     28     -       -       -  
Other noninterest income   245     338     659       450       483  
Total noninterest income $ 4,630   $ 5,100   $ 5,440     $ 3,472     $ 4,002  
                     
  For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2017   2017   2017
  2016
  2016  
Detail of noninterest expense                    
Salaries and employee benefits $ 9,804   $ 9,663   $ 10,073     $ 6,935     $ 6,948  
Commission-based compensation   1,748     1,684     1,723       1,076       1,104  
Occupancy and equipment expense   1,692     1,479     1,473       1,193       1,181  
Data processing expenses   976     1,007     948       568       572  
Advertising and marketing expenses   309     327     468       156       198  
Legal fees   204     193     233       163       182  
FDIC insurance assessments   351     408     258       234       246  
Property and casualty insurance premiums   229     209     143       95       90  
Accounting and audit expenses   288     294     318       211       252  
Consulting and other professional expenses   510     517     497       201       330  
Telecommunications expenses   203     169     186       114       146  
ORE, Repo asset and other collection expenses   26     49     272       41       142  
Core deposit intangible amortization   366     348     348       182       191  
Other noninterest expense   1,365     1,390     1,521       971       1,050  
Total noninterest expense $ 18,071   $ 17,737   $ 18,461     $ 12,140     $ 12,632  
                     
  As of
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
Non-GAAP Reconciliation 2017   2017   2017
  2016
  2016  
Total shareholders' equity $ 398,593   $ 363,260   $ 317,422     $ 237,044     $ 232,173  
Less: intangible assets   119,688     103,270     103,519       52,803       52,962  
Less: minority interest not included in intangible assets   570     432     493       375       423  
Tangible common equity $ 278,335   $ 259,558   $ 213,410     $ 183,866     $ 178,788  
Common shares outstanding at year or period end   14,777,230     14,070,528     12,948,778       10,934,541       10,920,423  
Tangible book value per share $ 18.84   $ 18.45   $ 16.48     $ 16.82     $ 16.37  
Total assets at end of period $ 2,549,134   $ 2,418,052   $ 2,445,149     $ 1,950,784     $ 1,779,278  
Less: intangible assets   119,688     103,270     103,519       52,803       52,962  
Adjusted total assets at end of period $ 2,429,446   $ 2,314,782   $ 2,341,630     $ 1,897,981     $ 1,726,316  
Tangible common equity to tangible assets   11.46 %   11.21 %   9.11   %   9.69   %   10.36 %
                     
  For the Three Months Ended
 
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2017   2017   2017
  2016
  2016  
Non-GAAP Reconciliation                    
Total average shareholders' equity $ 376,129   $ 328,886   $ 312,971     $ 234,249     $ 228,953  
Less: average intangible assets   108,553     103,403     103,004       52,872       53,056  
Less: average minority interest not included                    
in intangible assets   356     318     295       262       282  
Average tangible common equity $ 267,220   $ 225,165   $ 209,672     $ 181,115     $ 175,615  
Net income to common shareholders   6,697     6,449     5,919       4,907       4,813  
Return on average tangible common equity (ROATCE)   9.94 %   11.49 %   11.45   %   10.78   %   10.90 %
Efficiency ratio:                    
Net interest income $ 25,641   $ 23,953   $ 22,430     $ 16,990     $ 16,877  
Total noninterest income   4,630     5,100     5,440       3,472       4,002  
Less:  gain (loss) on sale of securities   -     28     -       -       -  
Operating revenue $ 30,271   $ 29,025   $ 27,870     $ 20,462     $ 20,879  
Expenses:                    
Total noninterest expenses $ 18,071   $ 17,737   $ 18,461     $ 12,140     $ 12,632  
Efficiency ratio   59.70 %   61.11 %   66.24   %   59.33   %   60.50 %
Operating efficiency ratio:                    
Net interest income $ 25,641   $ 23,953   $ 22,430     $ 16,990     $ 16,877  
Total noninterest income   4,630     5,100     5,440       3,472       4,002  
Less:  gain (loss) on sale of securities   -     28     -       -       -  
Operating revenue $ 30,271   $ 29,025   $ 27,870     $ 20,462     $ 20,879  
Expenses:                    
Total noninterest expenses $ 18,071   $ 17,737   $ 18,461     $ 12,140     $ 12,632  
Less: merger/conversion-related expenses   417     344     387       169       160  
Adjusted noninterest expenses $ 17,654   $ 17,393   $ 18,074     $ 11,971     $ 12,472  
Operating efficiency ratio   58.32 %   59.92 %   64.85   %   58.50   %   59.73 %
                     
(1) Excludes securities gains
(2) After-tax impact of merger conversion-related exenses of $340, $248, $300, $168, $154, respectively, for the periods presented
(3) Excludes merger/conversion-related expenses
(4) Net income to common shareholders / average assets
(5) Excludes CBI loans (factoring receivables)
                     

/EIN News/ --

 

NATIONAL COMMERCE CORPORATION  
Unaudited Consolidated Balance Sheets  
(In thousands, except share and per share data)  
       
Assets  
  September 30, 2017     December 31, 2016  
Cash and due from banks $ 44,111   $ 35,897  
Interest-bearing deposits with banks   90,438     181,396  
Cash and cash equivalents   134,549     217,293  
Investment securities held-to-maturity (fair value of $26,076 and $25,894 at September 30, 2017      
and December 31, 2016, respectively)   25,820     26,329  
Investment securities available-for-sale   85,338     73,380  
Other investments   10,740     7,879  
Mortgage loans held-for-sale   15,278     15,373  
Loans, net of unearned income   2,056,406     1,485,484  
Less: allowance for loan losses   14,264     12,113  
Loans, net   2,042,142     1,473,371  
Premises and equipment, net   52,593     31,884  
Accrued interest receivable   5,781     4,129  
Bank-owned life insurance   31,973     28,034  
Other real estate   1,171     2,068  
Deferred tax assets, net   17,739     13,486  
Goodwill   114,840     50,771  
Core deposit intangible, net   4,848     2,032  
Other assets   6,322     4,755  
Total assets $ 2,549,134   $ 1,950,784  
       
Liabilities and Shareholders’ Equity  
Deposits:      
Noninterest-bearing demand $ 621,916   $ 429,030  
Interest-bearing demand   322,273     262,261  
Savings and money market   863,421     703,289  
Time   289,763     273,130  
Total deposits   2,097,373     1,667,710  
Federal Home Loan Bank advances and other borrowings   7,941     7,000  
Subordinated debt   24,540     24,500  
Accrued interest payable   1,136     829  
Other liabilities   19,551     13,701  
   Total liabilities   2,150,541     1,713,740  
       
Shareholders’ equity:      
Preferred stock, 250,000 shares authorized, no shares issued or outstanding   -     -  
Common stock, $0.01 par value, 30,000,000 shares authorized, 14,777,230 and 10,934,541      
shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively   148     109  
Additional paid-in capital   347,371     205,372  
Retained earnings   43,070     24,005  
Accumulated other comprehensive income   500     249  
Total shareholders' equity attributable to National Commerce Corporation   391,089     229,735  
Noncontrolling interest   7,504     7,309  
   Total shareholders' equity   398,593     237,044  
   Total liabilities and shareholders' equity $ 2,549,134   $ 1,950,784  
       


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


NATIONAL COMMERCE CORPORATION  
Average Balance Sheets and Net Interest Analysis  
   
                                 
  For the Three Months Ended  
(Dollars in thousands) September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016  
Interest-earning assets Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate  
Loans $ 1,937,115   $ 26,634 5.45 %   $ 1,849,258   $ 24,823 5.38 %   $ 1,793,241   $ 23,377 5.29 %   $ 1,446,629   $ 18,012 4.95 %   $ 1,399,016   $ 17,853 5.08 %  
Mortgage loans held-for-sale   16,811     151 3.56       18,321     170 3.72       21,809     222 4.13       10,366     78 2.99       13,986     145 4.12    
Securities:                                
Taxable securities   90,969     694 3.03       81,645     606 2.98       88,062     571 2.63       82,881     525 2.52       76,787     493 2.55    
Tax-exempt securities   25,286     310 4.86       25,573     313 4.91       25,824     317 4.98       25,910     319 4.90       26,029     317 4.85    
Cash balances in other banks   159,973     533 1.32       249,361     676 1.09       258,672     535 0.84       140,813     224 0.63       101,422     152 0.60    
Total interest-earning assets   2,230,154   $ 28,322 5.04       2,224,158   $ 26,588 4.79       2,187,608   $ 25,022 4.64       1,706,599   $ 19,158 4.47       1,617,240   $ 18,960 4.66    
Noninterest-earning assets   228,231         218,088         220,006         149,709         148,275      
Total assets $ 2,458,385       $ 2,442,246       $ 2,407,614       $ 1,856,308       $ 1,765,515      
                                 
Interest-bearing liabilities                                
Interest-bearing transaction accounts $ 314,925   $ 207 0.26 %   $ 341,238   $ 243 0.29 %   $ 332,361   $ 217 0.26 %   $ 235,340   $ 149 0.25 %   $ 214,439   $ 125 0.23 %  
Savings and money market deposits   827,526     1,233 0.59       821,130     1,138 0.56       804,537     1,096 0.55       633,765     791 0.50       612,618     713 0.46    
Time deposits   273,630     661 0.96       290,097     673 0.93       306,404     697 0.92       273,293     643 0.94       283,022     661 0.93    
Federal Home Loan Bank and other borrowed money   7,228     72 3.95       7,000     70 4.01       9,016     71 3.19       7,000     71 4.04       7,000     71 4.04    
Subordinated debt   24,533     388 6.27       24,520     389 6.36       24,507     388 6.42       24,494     388 6.30       24,498     389 6.32    
Total interest-bearing liabilities   1,447,842   $ 2,561 0.70       1,483,985   $ 2,513 0.68       1,476,825   $ 2,469 0.68       1,173,892   $ 2,042 0.69       1,141,577   $ 1,959 0.68    
Noninterest-bearing deposits   615,130         612,910         600,897         431,253         381,205      
Total funding sources   2,062,972         2,096,895         2,077,722         1,605,145         1,522,782      
Noninterest-bearing liabilities   19,284         16,465         16,921         16,914         13,780      
Shareholders' equity   376,129         328,886         312,971         234,249         228,953      
  $ 2,458,385       $ 2,442,246       $ 2,407,614       $ 1,856,308       $ 1,765,515      
Net interest rate spread     4.34 %     4.11 %     3.96 %     3.78 %     3.98 %  
Net interest income/margin (taxable equivalent)       25,761 4.58 %       24,075 4.34 %       22,553 4.18 %       17,116 3.99 %       17,001 4.18 %  
Tax equivalent adjustment       120         122         123         126         124    
Net interest income/margin     $ 25,641 4.56 %     $ 23,953 4.32 %     $ 22,430 4.16 %     $ 16,990 3.96 %     $ 16,877 4.15 %  
                                 

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