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National Commerce Corporation Announces First Quarter 2015 Earnings

BIRMINGHAM, Ala., April 28, 2015 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (the "Company") today reported first quarter 2015 net income to common shareholders of $1.9 million, compared with $1.0 million for the first quarter of 2014. Diluted net earnings per share were $0.25 for the first quarter of 2015, compared with $0.18 for the first quarter of 2014, representing a 36% increase.

"We are pleased with our start to the year," said John H. Holcomb, III, Chairman and CEO of the Company. "We accomplished several important tasks during the quarter, including the successful conversion of United Legacy Bank to our core operating system and the Company's initial public offering. While our first quarter performance is on schedule, our team knows that we have a lot of work ahead of us to continue to achieve our goals."

Highlights from the first quarter of 2015 include:

  • Net Interest Margin (tax-effected) of 4.25%, compared with 3.14% for the first quarter of 2014.
  • Return on Average Assets of 0.67%, compared with 0.56% for the first quarter of 2014.
  • Return on Average Tangible Common Equity of 7.15%, compared with 4.72% for the first quarter of 2014.
  • First quarter 2015 loan growth (excluding mortgage loans held for sale) of $32.0 million, representing a 14.6% annualized growth rate. Excluding factoring receivables, loans grew $45.1 million, representing a 22.7% annualized growth rate.
  • First quarter 2015 deposit growth of $29.2 million, representing a 12.2% annualized growth rate. Note that, due to the December 15, 2014 acquisition of United Group Banking Company of Florida, Inc., comparisons of average loan and deposit growth are less meaningful.
  • $55.7 million in mortgage production, compared with $41.3 million for the first quarter of 2014.
  • $175 million in purchased volume in the factoring division. Note that, because the Company entered the factoring business in the third quarter of 2014, no comparable figure is available for the first quarter of 2014.
  • Reduction in non-acquired non-performing assets to $2.3 million from $3.3 million at December 31, 2014 and $4.2 million at March 31, 2014.
  • Annualized net charge-offs of 0.20%, compared to (0.03%) in net recoveries for the first quarter of 2014.
  • Ending tangible book value per share of $14.98.
  • Ending book value per share of $18.24.
  • The successful completion of the system conversion at United Legacy Bank, a division of National Bank of Commerce, in March of 2015.
  • The successful completion of the Company's initial public offering in March of 2015.

"I am pleased with the Company's momentum, and I look forward to the remainder of the year," continued Holcomb. "We have added several new owners to our Company, and we will strive to perform and grow long-term value for all of our fellow shareowners."

The Company will host a live audio webcast conference call beginning at 9:30 a.m. Eastern Time on April 29, 2015 to discuss first quarter 2015 results. Investors may call in (toll free) by dialing (855) 871-0559 (conference ID 32484825). A replay of the call will be available for 30 days and can be accessed by dialing (855) 859-2056 or (404) 537-3406 (conference ID 32484825).

The live webcast can also be accessed at www.nationalbankofcommerce.com/investor-relations.htm. A replay of the webcast will be available on the Company's website for 30 days. A copy of this press release is available on the Company's website.

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. Our management uses the non-GAAP financial measures set forth below in its analysis of the Company's performance.

  • "Tangible common equity" is total shareholders' equity less goodwill, other intangible assets and minority interest not included in intangible assets.
  • "Average tangible common equity" is defined as the average of our 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.
  • "Efficiency ratio" is defined as noninterest expense divided by our 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 our productivity measured by the amount of revenue generated for each dollar spent.
  • "Operating efficiency ratio" is defined as noninterest expense divided by our operating revenue, excluding one-time gains and losses on sales of securities and one-time gains and expenses related to merger and acquisition-related activities. This measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

We believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they 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 ("NCC") is a bank holding company headquartered in Birmingham, Alabama. Through its subsidiary bank, National Bank of Commerce, NCC provides a broad array of financial services to businesses, business owners and professionals through eight full-service banking offices in Alabama and seven full-service banking offices in Central Florida. The company also owns a majority stake in 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 nationwide.

NCC 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 NCC 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, 2014 and described in any subsequent reports that NCC has filed with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. You should not rely upon forward-looking statements 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.

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
For the Three Months Ended
March 31, March 31, Percentage
2015 2014 Change
Earnings Summary
Interest income $ 12,193 $ 6,208 96.41%
Interest expense 1,027 659 55.84
Net interest income 11,166 5,549 101.23
Provision for loan losses 161 -- NM
Gain (loss) on sale of securities -- -- --
Other noninterest income (1) 1,764 967 82.42
Merger related expenses 32 8 300.00
Other noninterest expense (2) 9,258 4,873 89.99
Income before income taxes 3,479 1,635 112.78
Income tax expense 1,092 592 84.46
Net income before minority interest 2,387 1,043 128.86
Net income attributable to minority interest 466 -- NM
Net income to common shareholders $ 1,921 $ 1,043 84.18%
Weighted average common and diluted shares outstanding
Basic 7,701,663 5,730,780
Diluted 7,801,577 5,775,800
Net earnings per common share (3)
Basic $ 0.25 $ 0.18 37.05%
Diluted $ 0.25 $ 0.18 36.36%
March 31, March 31,
Selected Performance Ratios 2015 2014
Return on average assets (ROAA) (4) 0.67% 0.56%
Return on average equity (ROAE) 5.58 4.72
Return on average tangible common equity (ROATCE) 7.15 4.72
Net interest margin (NIM) 4.24 3.13
Efficiency ratio 71.85 74.91
Operating efficiency ratio (2) 71.60 74.79
Noninterest income / average assets (annualized) 0.62 0.52
Noninterest expense / average assets (annualized) 3.24 2.64
Yield on loans 5.26 4.19
Cost of total deposits 0.38% 0.35%
March 31, March 31,
Factoring Metrics 2015 2014
Recourse purchased volume $ 84,725 N/A
Non-recourse purchased volume 90,402 N/A
Total purchased volume $ 175,127 N/A
Average turn (days) 41.57 N/A
Net charge-offs / total purchased volume 0.37% N/A
Average discount rate 1.65% N/A
March 31, March 31,
Mortgage Metrics 2015 2014
Total production ($) $ 55,731 $ 41,286
Refinance (%) 26.92% 17.18%
Purchases (%) 73.08% 82.82%
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
As of
March 31, December 31, Percentage
Balance Sheet Highlights 2015 2014 Change
Cash and cash equivalents $ 149,907 $ 123,435 21.45%
Total securities 37,631 34,932 7.73
Mortgage loans held for sale 13,804 9,329 47.97
Acquired purchased credit impaired loans 8,852 9,077 (2.48)
Acquired non-purchased credit impaired loans 138,040 143,981 (4.13)
Nonacquired loans held for investment (5) 704,307 653,063 7.85
CBI loans (factoring receivables) 69,541 82,600 (15.81)
Total gross loans held for investment 920,740 888,721 3.60
Total intangibles 30,560 30,591 (0.10)
Total assets 1,206,667 1,138,426 5.99
Total deposits 1,000,217 971,060 3.00
Borrowings 22,000 22,000 --
Total liabilities 1,034,495 1,002,265 3.22
Minority interest 7,166 7,239 (1.01)
Common stock 94 75 25.33
Total shareholders' equity 172,172 136,161 26.45
Tangible common equity $ 141,380 $ 105,265 34.31
End of period common shares outstanding 9,438,541 7,541,541 25.15%
As of / For the Three Months Ended
March 31, December 31, March 31,
Asset Quality Analysis 2015 2014 2014
Nonacquired
Nonaccrual loans $ 618 $ 2,276 $ 3,317
Other real estate and repossesed assets 1,494 823 845
Loans past due 90 days or more and still accruing 168 217 --
Total nonacquired nonperforming assets $ 2,280 $ 3,316 $ 4,162
Acquired
Nonaccrual loans $ 2,576 $ 2,589 $ --
Other real estate and repossesed assets 542 557 --
Loans past due 90 days or more and still accruing -- 80 --
Total acquired nonperforming assets $ 3,118 $ 3,226 $ --
Selected asset quality ratios
Nonperforming assets / Assets 0.45% 0.57% 0.55%
Nonperforming assets / Loans + OREO + repossessed assets 0.59 0.74 0.75
Net charge-offs (recoveries) to average loans (annualized) 0.20 0.02 (0.03)
Allowance for loan losses to total loans 1.03 1.10 1.64
Nonacquired nonperforming assets / Nonacquired loans + nonacquired OREO + nonacquired repossessed assets 0.32 0.51 0.75
Allowance for loan losses to nonacquired nonperforming loans 1,211.45 393.18 276.21
Allowance for loan losses to nonacquired loans 1.35% 1.50% 1.64%
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
For the Three Months Ended
March 31, December 31, March 31,
Taxable Equivalent Yields/Rates 2015 2014 2014
Interest income:
Loans 5.26% 5.37% 4.19%
Mortgage loans held for sale 3.63 4.32 4.48
Interest on securities:
Taxable 2.92 3.17 2.69
Non-taxable 5.80 5.73 6.25
Cash balances in other banks 0.36 0.26 0.24
Total interest earning assets 4.64 4.97 3.51
Interest expense:
Interest on deposits 0.49 0.46 0.45
Interest on FHLB & other borrowings 2.01 2.02 2.01
Total interest bearing liabilities 0.53 0.52 0.51
Net interest spread 4.11 4.45 3.00
Net interest margin 4.25% 4.58% 3.14%
As of
March 31, December 31,
2015 2014
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio 11.41% 10.68%
Tier 1 Common Capital Ratio 13.54 10.66
Tier 1 Risk -based Capital Ratio 13.54 10.66
Total Risk Based Capital Ratio 14.55 11.75
Equity / Assets 14.27 11.96
Tangible common equity to tangible assets 12.02% 9.50%
Book value per share $ 18.24 $ 18.05
Tangible book value per share $ 14.98 $ 13.96
For the Three Months Ended
March 31, March 31, Percentage
2015 2014 Change
Detail of other noninterest expense
Salaries and employee benefits $ 4,987 $ 2,996 66.46%
Commission-based compensation 796 306 160.13
Occupancy and equipment expense 836 436 91.74
Data processing expenses 425 289 47.06
Advertising and marketing expenses 173 76 127.63
Legal fees 167 62 169.35
FDIC insurance assessments 206 107 92.52
Accounting and audit expenses 223 95 134.74
Consulting and other professional expenses 105 35 200.00
Telecommunications expenses 128 62 106.45
ORE, Repo asset and other collection expenses 122 -- NM
Core deposit intangible amortization 111 -- NM
Other noninterest expense 1,011 417 142.45
Total noninterest expense $ 9,290 $ 4,881 90.33%
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
As of
March 31, December 31,
Non-GAAP Reconciliation 2015 2014
Total shareholders' equity $ 172,172 $ 136,161
Less: Intangible assets 30,560 30,591
Less: minority interest not included in intangible assets 232 305
Tangible common equity $ 141,380 $ 105,265
Common shares outstanding at year or period end 9,438,541 7,541,541
Tangible book value per share $ 14.98 $ 13.96
Total assets at end of period $ 1,206,667 $ 1,138,426
Less: Intangible assets 30,560 30,591
Adjusted total assets at end of period $ 1,176,107 $ 1,107,835
Tangible common equity to tangible assets 12.02% 9.50%
For the Three Months Ended
March 31, March 31,
2015 2014
Non-GAAP Reconciliation
Total average shareholders' equity $ 139,618 $ 89,615
Less: Average intangible assets 30,553 --
Less: average minority interest not included in intangible assets 46 --
Average tangible common equity $ 109,019 $ 89,615
Net income to common shareholders 1,921 1,043
Return on average tangible common equity (ROATCE) 7.15% 4.72%
Efficiency ratio:
Net interest income $ 11,166 $ 5,549
Total noninterest income 1,764 967
Less: gain (loss) on sale of securities -- --
Operating revenue $ 12,930 $ 6,516
Expenses:
Total noninterest expenses $ 9,290 $ 4,881
Efficiency ratio 71.85% 74.91%
Operating efficiency ratio:
Net interest income $ 11,166 $ 5,549
Total noninterest income 1,764 967
Less: gain (loss) on sale of securities -- --
Operating revenue $ 12,930 $ 6,516
Expenses:
Total noninterest expenses $ 9,290 $ 4,881
Less: merger expenses 32 8
Adjusted noninterest expenses $ 9,258 $ 4,873
Operating efficiency ratio 71.60% 74.79%
NM - Not meaningful
(1) Excludes securities gains
(2) Excludes merger related expenses
(3) Percentage change calculated on actual (not rounded) values
(4) Net income to common shareholders / average assets
(5) Excludes CBI loans
NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
Assets
March 31, 2015 December 31, 2014
Cash and due from banks $ 15,696 $ 14,236
Interest-bearing deposits with banks 134,211 109,199
Cash and cash equivalents 149,907 123,435
Investment securities held to maturity 5,730 --
Investment securities available-for-sale 31,901 34,932
Other investments 5,844 5,421
Mortgage loans held-for-sale 13,804 9,329
Loans, net of unearned income 920,740 888,721
Less: allowance for loan losses 9,522 9,802
Loans, net 911,218 878,919
Premises and equipment, net 27,509 27,560
Accrued interest receivable 2,200 2,193
Bank owned life insurance 11,762 10,641
Other real estate 1,665 1,008
Deferred tax assets, net 11,472 11,444
Goodwill 28,914 28,834
Core deposit intangible, net 1,646 1,757
Other assets 3,095 2,953
Total assets $ 1,206,667 $ 1,138,426
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand $ 232,655 $ 217,643
Interest-bearing demand 158,512 154,816
Savings and money market 403,568 392,394
Time 205,482 206,207
Total deposits 1,000,217 971,060
Federal Home Loan Bank advances 22,000 22,000
Accrued interest payable 496 431
Other liabilities 11,782 8,774
Total liabilities 1,034,495 1,002,265
Commitments
Shareholders' equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding -- --
Common stock, at March 31, 2015, $0.01 par value, 30,000,000 shares authorized and 9,438,541 shares issued and outstanding; at December 31, 2014, $0.01 par value, 12,500,000 shares authorized and 7,541,541 shares issued and outstanding 94 75
Additional paid-in capital 165,561 131,455
Accumulated deficit (1,532) (3,453)
Accumulated other comprehensive income 883 845
Total shareholders' equity attributable to National Commerce Corporation 165,006 128,922
Noncontrolling interest 7,166 7,239
Total shareholders' equity 172,172 136,161
Total liabilities and shareholders' equity $ 1,206,667 $ 1,138,426
NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except per share data)
March 31, 2015 March 31, 2014
Interest and dividend income:
Interest and fees on loans $ 11,792 $ 5,786
Interest and dividends on taxable investment securities 256 317
Interest on non-taxable investment securities 42 42
Interest on interest-bearing deposits and federal funds sold 103 63
Total interest income 12,193 6,208
Interest expense:
Interest on deposits 918 550
Interest on borrowings 109 109
Total interest expense 1,027 659
Net interest income 11,166 5,549
Provision for loan losses 161 --
Net interest income after provision for loan losses 11,005 5,549
Other income:
Service charges and fees on deposit accounts 267 166
Mortgage origination and fee income 1,271 705
Income from bank owned life insurance 79 60
Wealth management fees 19 14
(Loss) gain on other real estate (13) 5
(Loss) gain on sale of investment securities available-for-sale -- --
Other 141 17
Total other income 1,764 967
Other expense:
Salaries and employee benefits 4,987 2,996
Commission-based compensation 796 306
Occupancy and equipment 836 436
Core deposit intangible amortization 111 --
Other operating expense 2,560 1,143
Total other expense 9,290 4,881
Earnings before income taxes 3,479 1,635
Income tax expense 1,092 592
Net earnings 2,387 1,043
Less: Net earnings attributable to noncontrolling interest 466 --
Net earnings attributable to National Commerce Corporation $ 1,921 $ 1,043
Basic earnings per common share $ 0.25 $ 0.18
Diluted earnings per common share $ 0.25 $ 0.18
NATIONAL COMMERCE CORPORATION
Average Balance Sheets & Net Interest Analysis
For the Three Months Ended
(Dollars in thousands) March 31, 2015 December 31, 2014 March 31, 2014
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
Loans $ 903,563 $ 11,709 5.26% $ 748,373 $ 10,124 5.37% $ 553,818 $ 5,720 4.19%
Mortgage loans held for sale 9,487 85 3.63 9,914 108 4.32 6,332 70 4.48
Securities:
Taxable securities 35,604 256 2.92 34,366 275 3.17 47,745 317 2.69
Tax-exempt securities 4,686 67 5.80 4,640 67 5.73 4,348 67 6.25
Cash balances in other banks 114,579 103 0.36 48,646 32 0.26 107,689 63 0.24
Total interest earning assets 1,067,919 $ 12,220 4.64 845,939 $ 10,606 4.97 719,932 $ 6,237 3.51
Non-interest earning assets 94,118 96,203 28,772
Total assets $ 1,162,037 $ 942,142 $ 748,704
Interest bearing liabilities
Interest bearing transactions accounts $ 159,706 $ 99 0.25% $ 135,882 $ 96 0.28% $ 113,991 $ 73 0.26%
Savings & money market deposits 391,321 377 0.39 330,459 309 0.37 282,099 254 0.37
Time deposits 209,016 442 0.86 161,368 329 0.81 103,273 223 0.88
Federal Home Loan Bank & other borrowed money 22,000 109 2.01 22,027 112 2.02 22,000 109 2.01
Total interest-bearing liabilities 782,043 $ 1,027 0.53 649,736 $ 846 0.52 521,363 $ 659 0.51
Non-interest bearing deposits 232,497 172,290 135,244
Total funding sources 1,014,540 822,026 656,607
Non-interest bearing liabilities 7,879 9,261 2,482
Shareholders' equity 139,618 110,855 89,615
$ 1,162,037 $ 942,142 $ 748,704
Net interest rate spread 4.11% 4.45% 3.00%
Net interest income/margin (Taxable equivalent) 11,193 4.25% 9,760 4.58% 5,578 3.14%
Tax equivalent adjustment 27 28 29
Net interest income/margin $ 11,166 4.24% $ 9,732 4.56% $ 5,549 3.13%

CONTACT: National Commerce Corporation Will Matthews Vice Chairman and Chief Financial Officer (205) 313-8122

Source:National Commerce Corporation