Exhibit 99.1

 

 

 

National Commerce Corporation Announces Third Quarter 2018 Earnings

 

BIRMINGHAM, AL (October 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 Lowell Womack, Jr.
President and Chief Financial Officer Director of Financial Reporting
(205) 313-8100 (205) 313-8100

 

 

 

 

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

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

 

   

For the Three Months Ended

 
   

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

%

 

 

 

 

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

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

 

   

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  

 

 

 

 

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,

 

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

    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  

 

 

 

 

NATIONAL COMMERCE CORPORATION

Unaudited Financial Highlights

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

 

   

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)

 

   

September 30, 2018

   

December 31, 2017

 
Assets  

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, 2018

   

June 30, 2018

   

March 31, 2018

   

December 31, 2017

   

September 30, 2017

 

Interest-earning assets

 

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

   

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

   

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

   

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

   

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

 

Loans

  $ 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