National Commerce Corporation Announces Third Quarter 2018 Earnings


BIRMINGHAM, Ala., Oct. 23, 2018 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq: NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported third quarter 2018 net income to common shareholders of $12.0 million, compared to $6.7 million for the third quarter of 2017.  Diluted net earnings per share were $0.59 in the third quarter of 2018, compared to $0.61 in the second quarter of 2018 and $0.46 in the third quarter of 2017.

“We are pleased to report our third quarter results, including an increase in our loan growth,” said Richard Murray, IV, President and Chief Executive Officer of the Company.  “Loans grew at a 16.4% annualized rate this quarter, excluding loans acquired in the Premier and First Landmark acquisitions.” 

During the third quarter of 2018, the Company closed two previously announced acquisitions.  On July 1, 2018, the Company completed its acquisition of Premier Community Bank of Florida (“Premier”), headquartered in Bradenton, Florida.  On August 1, 2018, the Company completed its acquisition of Landmark Bancshares, Inc. (“Landmark”) and its wholly owned subsidiary, First Landmark Bank, headquartered in Marietta, Georgia.  A majority of the expected reduction in non-interest expense associated with these acquisitions has not been realized, as the core system conversion for Landmark will be completed in October and the Premier conversion is scheduled for the second quarter of 2019.

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

  • Merger and conversion-related expenses during the quarter were $897 thousand, or $752 thousand after taxes, equivalent to $0.04 per diluted share.
     
  • Net Interest Margin (taxable equivalent) of 4.69% for the third quarter of 2018, compared to 4.77% for the second quarter of 2018 and 4.58% for the third quarter of 2017.  Overall loan yields during the third quarter of 2018 were flat with the second quarter of 2018.  The rate paid on interest-bearing liabilities for the third quarter of 2018 was 1.05%, compared to 0.93% for the second quarter of 2018 and 0.70% for the third quarter of 2017.
     
  • Net interest income for the second and third quarters of 2018 includes $1.9 million of loan accretion income.  Excluding accretion income from each period, the net interest margin for the third quarter of 2018 was 4.46%, compared to 4.49% for the second quarter of 2018.
     
  • Core bank loan yields (excluding interest on factored receivables) during the third quarter of 2018 increased 0.09% compared to the second quarter of 2018.  Loan yields, excluding factored receivables and accretion income, increased 0.16% during the third quarter of 2018 compared to the second quarter of 2018. 
     
  • Return on Average Assets (“ROAA”) of 1.23% for the third quarter of 2018, compared to 1.36% for the second quarter of 2018 and 1.08% for the third quarter of 2017.
     
  • ROAA (excluding merger/conversion-related expenses) of 1.31% for the third quarter of 2018, compared to 1.42% for the second quarter of 2018 and 1.14% for the third quarter of 2017.
     
  • Return on Average Tangible Common Equity (“ROATCE”) of 12.09% for the third quarter of 2018, compared to 12.73% for the second quarter of 2018 and 9.94% for the third quarter of 2017.
     
  • ROATCE (excluding merger/conversion-related expenses) of 12.85% for the third quarter of 2018, compared to 13.26% for the second quarter of 2018 and 10.45% for the third quarter of 2017.
     
  • Excluding the acquired loans of Landmark and Premier, loans grew $103.0 million during the third quarter of 2018, representing a 16.4% annualized growth rate.
     
  • Excluding the acquired deposits of Landmark and Premier, deposits grew $2.7 million during the third quarter of 2018, representing a 0.4% annualized growth rate.
     
  • $116.5 million in 2018 third quarter mortgage production, compared to $149.6 million during the second quarter of 2018 and $122.7 million during the third quarter of 2017.   
     
  • $315.3 million in 2018 third quarter purchased volume in the factoring division, compared to $309.5 million for the second quarter of 2018 and $259.5 million for the third quarter of 2017.
     
  • Non-acquired non-performing assets of $1.1 million at September 30, 2018, compared to $1.0 million at June 30, 2018 and $1.9 million at September 30, 2017.
     
  • Annualized net charge-offs of 0.03% of average loans outstanding for the third quarter of 2018, compared to net charge-offs of 0.11% for the second quarter of 2018 and 0.05% for the third quarter of 2017.
     
  • Provision for loan losses of $1.0 million for the third quarter of 2018, compared to $856 thousand for the second quarter of 2018 and $1.1 million for the third quarter of 2017. 
     
  • Ending tangible book value per share of $20.09.
     
  • Ending book value per share of $33.16.
     
  • The Company announced the closure of a branch located in Jacksonville, Florida, which is expected to occur in December of this year.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on October 24, 2018 to discuss earnings and operating results for the 2018 third quarter.  Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 5649689).  A replay of the conference call will be available until October 26, 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 adjusted net earnings per diluted share, return on average assets (excluding merger/conversion related expenses), return on average tangible common equity (excluding merger/conversion-related expenses), 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.

  • “Adjusted net earnings per diluted share” is defined as net income to common share shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by diluted shares outstanding.
     
  • “Return on average assets (excluding merger/conversion-related expenses)” is defined as net income to common share shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by average assets for the period.
     
  • “Return on average tangible common equity (excluding merger/conversion-related expenses)” is defined as net income to common shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by average tangible common equity for the period.

The Company’s management believes that these measures provide useful information to management and investors because they eliminate the impact of merger/conversion-related expenses from each period to provide a meaningful comparison to other periods and other companies that might not have this category of expenses.  The Company’s management believes that it is appropriate to exclude merger/conversion-related expenses in its presentation of these measures because the costs vary based on factors specific to each acquisition and are not indicative of the costs of operating the Company’s core business.

  • “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 these 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 five 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, Premier Community Bank of Florida and First Landmark Bank.

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 
President and Chief Financial Officer 
(205) 313-8100 
Lowell Womack, Jr. 
Director of Financial Reporting
(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
  September 30,  June 30, March 31,  December 31, September 30,  
   2018   2018   2018   2017   2017  
Earnings Summary              
Interest income $46,195  $37,713  $36,320  $30,224  $28,202  
Interest expense  6,174   4,310   3,420   2,824   2,561  
Net interest income  40,021   33,403   32,900   27,400   25,641  
Provision for loan losses   1,001   856   1,318   1,478   1,105  
Gain (loss) on sale of securities   -   2   191   (119)  -  
Other noninterest income (1)  4,768   4,673   4,517   4,744   4,546  
Merger/conversion-related expenses (2)  897   542   2,396   1,172   417  
Other noninterest expense (3)  26,199   22,077   21,579   17,838   17,570  
  Income before income taxes  16,692   14,603   12,315   11,537   11,095  
Income tax expense   4,040   3,303   2,776   3,890   3,828  
Deferred tax asset write-down  -   -   -   6,231   -  
  Total income tax expense  4,040   3,303   2,776   10,121   3,828  
  Net income before minority interest   12,652   11,300   9,539   1,416   7,267  
  Net income attributable to minority interest   676   616   456   413   570  
Net income to common shareholders $11,976  $10,684  $9,083  $1,003  $6,697  
               
Weighted average common and diluted shares outstanding             
  Basic    19,838,772     17,236,525     17,209,551     14,783,597     14,300,974  
  Diluted    20,360,770     17,642,926     17,612,298     15,173,984     14,679,546  
               
Net earnings per common share              
  Basic $  0.60  $  0.62  $  0.53  $  0.07  $  0.47  
  Diluted $  0.59  $  0.61  $  0.52  $  0.07  $  0.46  
               
Adjusted net earnings per diluted share (excluding              
  merger/conversion-related expenses) $  0.63  $  0.63  $  0.62  $  0.12  $  0.48  
               
               
  September 30,  June 30, March 31,  December 31, September 30,  
Selected Performance Ratios  2018   2018   2018   2017   2017  
Return on average assets (ROAA) (4)    1.23 %   1.36 %   1.18 %   0.15 %   1.08 %
ROAA (excluding merger/conversion-related expenses)    1.31     1.42     1.42     0.28     1.14  
Return on average equity (ROAE)    7.40     8.39     7.35     0.99     7.06  
Return on average tangible common equity (ROATCE)    12.09     12.73     11.27     1.41     9.94  
ROATCE (excluding merger/conversion-related expenses)   12.85     13.26     13.54     2.55     10.45  
Net interest margin - taxable equivalent    4.69     4.77     4.80     4.63     4.58  
Efficiency ratio    60.50     59.40     64.08     59.14     59.59  
Operating efficiency ratio (3)    58.49     57.98     57.67     55.49     58.20  
Noninterest income / average assets (annualized)    0.49     0.60     0.59     0.72     0.73  
Noninterest expense / average assets (annualized)    2.78     2.88     3.12     2.88     2.90  
Yield on loans    5.74     5.74     5.66     5.45     5.45  
Cost of total deposits    0.70 %   0.60 %   0.47 %   0.43 %   0.41 %
               
               
  September 30,  June 30, March 31,  December 31, September 30,  
Factoring Metrics  2018   2018   2018   2017   2017  
Recourse purchased volume $  132,531  $  127,680  $  115,970  $  108,628  $  104,304  
Non-recourse purchased volume    182,742     181,835     167,015     158,565     155,157  
Total purchased volume $  315,273  $  309,515  $  282,985  $  267,193  $  259,461  
Average turn (days)    44.56     42.85     42.25     43.59     41.11  
Net charge-offs / total purchased volume    0.03 %   0.06 %   0.14 %   0.18 %   0.05 %
Average discount rate    1.64 %   1.63 %   1.64 %   1.59 %   1.58 %
               
               
  September 30,  June 30, March 31,  December 31, September 30,  
Mortgage Metrics  2018   2018   2018   2017   2017  
Total production ($) $  116,540  $  149,640  $  114,850  $  120,969  $  122,656  
 Refinance (%)    23.4    17.0 % 27.8 % 22.1 % 23.6 %
 Purchases (%)    76.6    83.0 % 72.2 % 77.9 % 76.4 %
               
  As of
  September 30,  June 30, March 31,  December 31, September 30,  
Balance Sheet Highlights  2018   2018   2018   2017   2017  
Cash and cash equivalents $  200,291  $  217,773  $  132,825  $  235,288  $  134,549  
Total investment securities    211,182     161,542     169,868     111,396     111,158  
Mortgage loans held-for-sale    15,533     24,455     21,077     29,191     15,278  
Acquired purchased credit-impaired loans    40,922     26,942     29,359     25,696     26,924  
Acquired non-purchased credit-impaired loans    1,262,636     714,359     783,556     538,276     561,118  
Nonacquired loans held for investment (5)    1,774,835     1,614,376     1,531,475     1,455,376     1,349,254  
CBI loans (factoring receivables)     151,985     141,455     136,194     118,710     119,110  
Total gross loans held for investment    3,230,378     2,497,132     2,480,584     2,138,058     2,056,406  
Allowance for loan losses    16,759     15,997     15,839     14,985     14,264  
Total intangibles     269,297     173,590     174,225     117,849     119,688  
Total assets    4,103,345     3,214,367     3,113,766     2,737,676     2,549,134  
Total deposits    3,331,682     2,643,713     2,551,517     2,285,831     2,097,373  
FHLB advances    2,000     7,000     7,000     7,000     7,000  
Securities sold under agreements to repurchase    18,340     -     -     -     941  
Subordinated debt    37,211     24,580     24,567     24,553     24,540  
Total liabilities     3,418,534     2,697,563     2,608,040     2,337,718     2,150,541  
Minority interest     7,611     7,551     7,391     7,348     7,504  
Common stock    206     172     172     148     148  
Total shareholders' equity    684,811     516,804     505,726     399,958     398,593  
Tangible common equity $  414,837  $  342,597  $  331,044  $  281,695  $  278,335  
End of period common shares outstanding    20,649,948     17,246,659     17,229,043     14,788,436     14,777,230  
               
               
  As of and For the Three Months Ended
  September 30,  June 30, March 31,  December 31, September 30,  
Asset Quality Analysis  2018   2018   2018   2017   2017  
Nonacquired               
Nonaccrual loans $  231  $  294  $  367  $  82  $  70  
Other real estate and repossessed assets    340     340     -     -     150  
Loans past due 90 days or more and still accruing    484     408     723     677     1,690  
Total nonacquired nonperforming assets  $  1,055  $  1,042  $  1,090  $  759  $  1,910  
               
Acquired              
Nonaccrual loans $  4,050  $  2,461  $  2,412  $  2,640  $  2,625  
Other real estate and repossessed assets    999     999     999     1,094     1,021  
Loans past due 90 days or more and still accruing    -     -     -     -     -  
Total acquired nonperforming assets  $  5,049  $  3,460  $  3,411  $  3,734  $  3,646  
               
Selected asset quality ratios              
Nonperforming assets / Assets    0.15 %   0.14 %   0.14 %   0.16 %   0.22 %
Nonperforming assets / (Loans + OREO + repossessed assets)   0.19     0.18     0.18     0.21     0.27  
Net charge-offs (recoveries) to average loans (annualized)   0.03     0.11     0.08     0.14     0.05  
Allowance for loan losses to total loans    0.52     0.64     0.64     0.70     0.69  
Nonacquired nonperforming assets / (Nonacquired loans +             
  nonacquired OREO + nonacquired repossessed assets) (5)   0.06     0.06     0.07     0.05     0.14  
Allowance for loan losses / (Nonacquired nonaccrual loans +              
  nonacquired loans past due 90 days or more and still accruing)    2,343.92     2,278.77     1,453.12     1,974.31     810.45  
               
               
  As of
  September 30,  June 30, March 31,  December 31, September 30,  
Additional Information - Allowance for Loan Losses 2018   2018   2018   2017   2017  
Allowance for loan losses excluding CBI loans (factoring receivables)   16,159     15,397     15,239     14,385     13,764  
Nonacquired loans held for investment (5)    1,774,835     1,614,376     1,531,475     1,455,376     1,349,254  
Allowance for loan losses allocated to CBI loans (factoring receivables)   600     600     600     600     500  
CBI loans (factoring receivables)     151,985     141,455     136,194     118,710     119,110  
               
  For the Three Months Ended
  September 30,  June 30, March 31,  December 31, September 30,  
Taxable Equivalent Yields/Rates  2018   2018   2018   2017   2017  
Interest income:              
  Loans    5.74 %   5.74 %   5.66 %   5.45 %   5.45 %
  Mortgage loans held-for-sale    4.92     3.71     4.85     2.96     3.56  
  Interest on securities:              
  Taxable    3.10     3.14     3.11     3.09     3.03  
  Non-taxable    4.01     4.23     4.06     4.81     4.86  
Cash balances in other banks    2.13     1.80     1.55     1.37     1.32  
Funds sold    -     -     1.38     -     -  
Total interest-earning assets    5.41     5.38     5.29     5.10     5.04  
               
Interest expense:              
  Interest on deposits    0.97     0.84     0.67     0.62     0.59  
  Interest on FHLB advances    3.09     4.13     4.11     4.02     4.08  
  Interest on securities sold under agreements to repurchase                     
    repurchase    1.05     -     -     -     -  
  Interest on subordinated debt    6.47     6.30     6.41     6.27     6.27  
  Total interest-bearing liabilities    1.05     0.93     0.76     0.73     0.70  
  Net interest spread    4.36     4.45     4.53     4.37     4.34  
  Net interest margin    4.69 %   4.77 %   4.80 %   4.63 %   4.58 %
               
  As of
  September 30,  June 30, March 31,  December 31, September 30,  
   2018   2018   2018   2017   2017  
Shareholders' Equity and Capital Ratios              
Tier 1 leverage ratio    11.40 %   11.24 %   10.98 %   10.89 %   11.42 %
Common equity tier 1 capital ratio    13.03     13.43     13.03     12.54     12.78  
Tier 1 risk-based capital ratio    13.03     13.43     13.03     12.54     12.78  
Total risk-based capital ratio    14.74     15.06     14.66     14.37     14.64  
Equity / Assets    16.69     16.08     16.24     14.61     15.64  
Tangible common equity to tangible assets    10.82 %   11.27 %   11.26 %   10.75 %   11.46 %
Book value per share $  33.16  $  29.97  $  29.35  $  27.05  $  26.97  
Tangible book value per share $  20.09  $  19.86  $  19.21  $  19.05  $  18.84  
               
  For the Three Months Ended
  September 30,  June 30, March 31,  December 31, September 30,  
   2018   2018   2018   2017   2017  
Detail of Noninterest Income              
Service charges and fees on deposit accounts $  1,166  $  1,029  $  1,012  $  733  $  671  
Mortgage origination and fee income    1,825     2,262     1,895     2,450     2,780  
Merchant sponsorship revenue    749     675     720     592     622  
Income from bank-owned life insurance    323     276     286     210     210  
Wealth management fees    16     15     15     11     12  
(Loss) gain on sale of other real estate    -     (32)    171     (66)    6  
Gain (loss) on sale of investments    -     2     191     (119)    -  
Other noninterest income    689     448     418     814     245  
  Total noninterest income $  4,768  $  4,675  $  4,708  $  4,625  $  4,546  
               
  For the Three Months Ended
  September 30,  June 30, March 31,  December 31, September 30,  
   2018   2018   2018   2017   2017  
Detail of Noninterest Expense              
Salaries and employee benefits $  14,336  $  12,498  $  12,460  $  10,016  $  9,804  
Commission-based compensation    1,876     1,825     1,501     1,700     1,748  
Occupancy and equipment, net    2,439     2,025     1,994     1,649     1,608  
Data processing expenses    1,820     1,369     3,356     1,437     976  
Advertising and marketing expenses    296     361     268     349     309  
Legal fees    384     496     160     219     204  
FDIC insurance assessments    267     226     281     145     351  
Property and casualty insurance premiums    232     251     224     253     229  
Accounting and audit expenses    388     332     335     209     288  
Consulting and other professional expenses    1,347     568     538     888     510  
Telecommunications expenses    295     227     229     217     203  
ORE, Repo asset and other collection expenses    63     71     69     75     26  
Core deposit intangible amortization    1,306     738     739     393     366  
Other noninterest expense    2,047     1,632     1,821     1,460     1,365  
  Total noninterest expense $  27,096  $  22,619  $  23,975  $  19,010  $  17,987  
   
   
   
  As of
  September 30,  June 30, March 31,  December 31, September 30,  
Non-GAAP Reconciliation  2018   2018   2018   2017   2017  
Total shareholders' equity $  684,811  $  516,804  $  505,726  $  399,958  $  398,593  
Less: intangible assets    269,297     173,590     174,225     117,849     119,688  
Less: minority interest not included in intangible assets    677     617     457     414     570  
Tangible common equity $  414,837  $  342,597  $  331,044  $  281,695  $  278,335  
Common shares outstanding at year or period end     20,649,948     17,246,659     17,229,043     14,788,436     14,777,230  
Tangible book value per share $  20.09  $  19.86  $  19.21  $  19.05  $  18.84  
Total assets at end of period $  4,103,345  $  3,214,367  $  3,113,766  $  2,737,676  $  2,549,134  
Less: intangible assets    269,297     173,590     174,225     117,849     119,688  
Adjusted total assets at end of period $  3,834,048  $  3,040,777  $  2,939,541  $  2,619,827  $  2,429,446  
Tangible common equity to tangible assets    10.82 %   11.27 %   11.26 %   10.75 %   11.46 %
               
               
  For the Three Months Ended
  September 30,  June 30, March 31,  December 31, September 30,  
   2018   2018   2018   2017   2017  
Non-GAAP Reconciliation              
Net income to common shareholders $  11,976  $  10,684  $  9,083  $  1,003  $  6,697  
Plus: merger/conversion-related expenses (net of tax)    752     445     1,826     815     340  
Adjusted net income to common shareholders $  12,728  $  11,129  $  10,909  $  1,818  $  7,037  
Net earnings per common share $  0.59  $  0.61  $  0.52  $  0.07  $  0.46  
Effect to adjust for merger/conversion-related  expenses              
  (net of tax)    0.04     0.02     0.10     0.05     0.02  
Adjusted net earnings per diluted share $  0.63  $  0.63  $  0.62  $  0.12  $  0.48  
Total average shareholders' equity $  642,367  $  510,958  $  500,901  $  402,317  $  376,129  
Less: average intangible assets    248,900     173,953     173,766     119,415     108,553  
Less: average minority interest not included               
  in intangible assets    435     366     326     357     356  
Average tangible common equity $  393,032  $  336,639  $  326,809  $  282,545  $  267,220  
Net income to common shareholders    11,976     10,684     9,083     1,003     6,697  
Return on average tangible common equity (ROATCE)    12.09 %   12.73 %   11.27 %   1.41 %   9.94 %
Return on average tangible common equity    12.09 %   12.73 %   11.27 %   1.41 %   9.94 %
Effect of merger/conversion-related expenses (net of tax)    0.76     0.53     2.27     1.14     0.50  
ROATCE (excluding merger/conversion-related expenses)    12.85 %   13.26 %   13.54 %   2.55 %   10.45 %
Return on average assets    1.23 %   1.36 %   1.18 %   0.15 %   1.08 %
Effect of merger/conversion-related expenses (net of tax)    0.08     0.06     0.24     0.12     0.05  
ROAA (excluding merger/conversion related-expenses)    1.31 %   1.42 %   1.42 %   0.28 %   1.14 %
Efficiency ratio:              
Net interest income $  40,021  $  33,403  $  32,900  $  27,400  $  25,641  
Total noninterest income    4,768     4,675     4,708     4,625     4,546  
Less:  Gain (loss) on sale of securities     -     2     191     (119)    -  
Operating revenue $  44,789  $  38,076  $  37,417  $  32,144  $  30,187  
Expenses:              
Total noninterest expenses $  27,096  $  22,619  $  23,975  $  19,010  $  17,987  
Efficiency ratio    60.50 %   59.40 %   64.08 %   59.14 %   59.59 %
               
Operating efficiency ratio:              
Net interest income $  40,021  $  33,403  $  32,900  $  27,400  $  25,641  
Total noninterest income    4,768     4,675     4,708     4,625     4,546  
Less:  Gain (loss) on sale of securities     -     2     191     (119)    -  
Operating revenue $  44,789  $  38,076  $  37,417  $  32,144  $  30,187  
Expenses:              
Total noninterest expenses $  27,096  $  22,619  $  23,975  $  19,010  $  17,987  
Less: merger/conversion-related expenses    897     542     2,396     1,172     417  
Adjusted noninterest expenses $  26,199  $  22,077  $  21,579  $  17,838  $  17,570  
Operating efficiency ratio    58.49 %   57.98 %   57.67 %   55.49 %   58.20 %
               
               
(1) Excludes securities gains   
(2) After-tax impact of merger/conversion-related expenses of $752, $445, $1,826, $815 and $340, 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
 September 30, 2018 December 31, 2017
 Cash and due from banks $  62,364  $  36,246
 Interest-bearing deposits with banks    137,927     199,042
  Cash and cash equivalents    200,291     235,288
 Investment securities held-to-maturity (fair value of $24,447 and $25,932 at September 30, 2018   
  and December 31, 2017, respectively)    25,203     25,562
 Investment securities available-for-sale    185,979     85,834
 Other investments    13,743     11,350
 Mortgage loans held-for-sale    15,533     29,191
 Loans, net of unearned income    3,230,378     2,138,058
 Less: allowance for loan losses    16,759     14,985
  Loans, net    3,213,619     2,123,073
 Premises and equipment, net    86,811     52,455
 Accrued interest receivable    10,494     6,157
 Bank-owned life insurance    51,573     31,584
 Other real estate    1,339     1,094
 Deferred tax assets, net    18,041     12,041
 Goodwill    249,459     113,394
 Core deposit intangible, net    19,838     4,455
 Other assets    11,422     6,198
  Total assets $  4,103,345  $  2,737,676
   
   
Liabilities and Shareholders’ Equity
 Deposits:   
  Noninterest-bearing demand $  932,089  $  697,144
  Interest-bearing demand    663,155     362,266
  Savings and money market    1,218,215     951,846
  Time    518,223     274,575
  Total deposits    3,331,682     2,285,831
 Federal Home Loan Bank advances    2,000     7,000
 Securities sold under agreements to repurchase    18,340     -
 Subordinated debt    37,211     24,553
 Accrued interest payable    1,790     900
 Other liabilities    27,511     19,434
  Total liabilities    3,418,534     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, 20,649,948 and 14,788,436       
  shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively    206     148
  Additional paid-in capital    604,129     347,999
  Retained earnings    75,732     43,989
  Accumulated other comprehensive (loss) income    (2,867)    474
  Total shareholders' equity attributable to National Commerce Corporation    677,200     392,610
  Noncontrolling interest    7,611     7,348
  Total shareholders' equity    684,811     399,958
  Total liabilities and shareholders' equity $  4,103,345  $  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 Nine Months Ended
 September 30, September 30,
  2018  2017  2018  2017
Interest and dividend income:     
  Interest and fees on loans$  43,691 $  26,780 $  113,827 $  75,360
  Interest and dividends on taxable investment securities   1,496    694    3,878    1,871
  Interest on non-taxable investment securities   190    195    570    592
  Interest on interest-bearing deposits and federal funds sold   818    533    1,953    1,744
            
  Total interest income   46,195    28,202    120,228    79,567
      
Interest expense:     
  Interest on deposits   5,561    2,101    12,374    6,165
  Interest on FHLB advances   27    72    170    212
  Interest on securities sold under agreements to repurchase   49    -    49    1
  Interest on subordinated debt   537    388    1,311    1,165
            
  Total interest expense   6,174    2,561    13,904    7,543
            
  Net interest income   40,021    25,641    106,324    72,024
            
Provision for loan losses   1,001    1,105    3,175    2,416
            
  Net interest income after provision for loan losses   39,020    24,536    103,149    69,608
      
Other income:     
  Service charges and fees on deposit accounts   1,166    671    3,207    1,978
  Mortgage origination and fee income   1,825    2,780    5,982    9,079
  Merchant sponsorship revenue   749    622    2,144    1,968
  Income from bank-owned life insurance   323    210    885    645
  Wealth management fees   16    12    46    36
  Gain (loss) on other real estate   -    6    139    110
  Gain on sale of investment securities available-for-sale   -    -    193    28
  Other   689    245    1,555    1,242
            
  Total other income   4,768    4,546    14,151    15,086
      
Other expense:     
  Salaries and employee benefits   14,336    9,804    39,294    29,540
  Commission-based compensation   1,876    1,748    5,202    5,155
  Occupancy and equipment, net   2,439    1,608    6,458    4,560
  Core deposit intangible amortization   1,306    366    2,783    1,062
  Other operating expense   7,139    4,461    19,953    13,868
            
  Total other expense   27,096    17,987    73,690    54,185
            
  Earnings before income taxes   16,692    11,095    43,610    30,509
            
Income tax expense   4,040    3,828    10,119    9,950
            
  Net earnings    12,652    7,267    33,491    20,559
            
  Less: Net earnings attributable to noncontrolling interest   676    570    1,748    1,494
            
  Net earnings attributable to National Commerce Corporation$  11,976 $  6,697 $  31,743 $  19,065
      
      
Weighted average common and diluted shares outstanding     
  Basic   19,838,772    14,300,974    18,104,834    13,469,327
            
  Diluted   20,360,770    14,679,546    18,561,522    13,854,074
      
Basic earnings per common share$  0.60 $  0.47 $  1.75 $  1.42
            
Diluted earnings per common share$  0.59 $  0.46 $  1.71 $  1.38
            

 

 
NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
 
                
 For the Three Months Ended
(Dollars in thousands)September 30, 2018June 30, 2018March 31, 2018December 31, 2017September 30, 2017
Interest-earning assetsAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
Loans$3,002,640 $43,459 5.74% $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%
Mortgage loans held-for-sale 18,935  235 4.92   23,247  215 3.71   17,402  208 4.85   18,237  136 2.96   16,811  151 3.56 
Securities:               
  Taxable securities 191,157  1,496 3.10   155,062  1,212 3.14   152,748  1,170 3.11   97,175  756 3.09   90,969  694 3.03 
  Tax-exempt securities 25,102  254 4.01   24,393  257 4.23   25,169  252 4.06   25,005  303 4.81   25,286  310 4.86 
Cash balances in other banks 152,715  818 2.13   132,868  596 1.80   138,358  529 1.55   128,606  443 1.37   159,973  533 1.32 
Funds sold -  - 0.00   -  - 0.00   2,946  10 1.38   -  - 0.00   -  - 0.00 
  Total interest-earning assets 3,390,549 $46,262 5.41   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 
Noninterest-earning assets 475,094    333,297    328,605    255,239    228,231  
  Total assets$3,865,643   $3,149,445   $3,116,580   $2,615,705   $2,458,385  
                
Interest-bearing liabilities               
Interest-bearing transaction accounts$644,863 $877 0.54% $517,769 $632 0.49% $423,537 $322 0.31% $331,876 $277 0.33% $314,925 $207 0.26%
Savings and money market deposits 1,162,707  3,114 1.06   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 
Time deposits 470,211  1,570 1.32   342,890  1,038 1.21   327,011  823 1.02   285,669  707 0.98   273,630  661 0.96 
Federal Home Loan Bank 3,467  27 3.09   7,000  72 4.13   7,000  71 4.11   7,000  71 4.02   7,000  72 4.08 
Securities sold under agreements to repurchase 18,457  49 1.05   -  - 0.00   -  - 0.00   381  - 0.00   228  - 0.00 
Subordinated debt 32,950  537 6.47   24,574  386 6.30   24,560  388 6.41   24,547  388 6.27   24,533  388 6.27 
  Total interest-bearing liabilities 2,332,655 $6,174 1.05   1,868,219 $4,310 0.93   1,820,859 $3,420 0.76   1,534,133 $2,824 0.73   1,447,842 $2,561 0.70 
Noninterest-bearing deposits 866,974    746,940    772,358    657,786    615,130  
  Total funding sources 3,199,629    2,615,159    2,593,217    2,191,919    2,062,972  
Noninterest-bearing liabilities 23,647    23,328    22,462    21,469    19,284  
Shareholders' equity 642,367    510,958    500,901    402,317    376,129  
 $3,865,643   $3,149,445   $3,116,580   $2,615,705   $2,458,385  
Net interest rate spread   4.36%   4.45%   4.53%   4.37%   4.34%
Net interest income/margin (taxable equivalent)   40,088 4.69%   33,471 4.77%   32,969 4.80%   27,518 4.63%   25,761 4.58%
Tax equivalent adjustment   67    68    69    118    120 
Net interest income/margin  $40,021 4.68%  $33,403 4.76%  $32,900 4.79%  $27,400 4.61%  $25,641 4.56%
                

 

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
       
 For the Nine Months Ended
(Dollars in thousands, except yields and rates)September 30, 2018September 30, 2017
Interest-earning assetsAverage BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
Loans$2,646,876 $113,180 5.72% $1,860,398 $74,835 5.38%
Mortgage loans held for sale 19,867  658 4.43   18,962  543 3.83 
Securities:      
  Taxable securities 166,463  3,878 3.11   86,903  1,871 2.88 
  Tax-exempt securities 24,888  763 4.10   25,559  940 4.92 
Cash balances in other banks 141,366  1,943 1.84   222,307  1,744 1.05 
Funds sold 971  10 1.38   -  - 0.00 
  Total interest-earning assets 3,000,431 $120,432 5.37   2,214,129 $79,933 4.83 
Non-interest earning assets 379,536    222,139  
  Total assets$3,379,967   $2,436,268  
       
Interest-bearing liabilities      
Interest-bearing transactions accounts$529,534 $1,831 0.46% $329,444 $667 0.27%
Savings and money market deposits 1,059,602  7,112 0.90   817,815  3,467 0.57 
Time deposits 380,562  3,431 1.21   289,924  2,031 0.94 
Federal Home Loan Bank advances 5,809  170 3.91   7,000  212 4.05 
Securities sold under agreements to repurchase 6,220  49 1.05   741  1 0.18 
Subordinated debt 27,392  1,311 6.40   24,520  1,165 6.35 
  Total interest-bearing liabilities 2,009,119 $13,904 0.93   1,469,444 $7,543 0.69 
Non-interest bearing deposits 795,771    609,698  
  Total funding sources 2,804,890    2,079,142  
Non-interest bearing liabilities 23,150    17,566  
Shareholders' equity 551,927    339,560  
 $3,379,967   $2,436,268  
Net interest rate spread   4.44%   4.14%
Net interest income/margin (taxable equivalent)   106,528 4.75%   72,390 4.37%
Tax equivalent adjustment   204    366 
Net interest income/margin  $106,324 4.74%  $72,024 4.35%