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CST: 18/06/2018 06:03:23   

National Commerce Corporation Announces First Quarter 2018 Earnings

54 Days ago

BIRMINGHAM, Ala., 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                                                               
Vice Chairman and Chief Financial Officer
(205) 313-8122
                                    Lowell Womack, Jr.
Director of Financial Reporting
(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 %
                                 


    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
                   


    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  
                                   


    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)
     
Assets
  March 31, 2018 December 31, 2017
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  
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 %