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National Commerce Corporation Announces First Quarter 2016 Earnings

BIRMINGHAM, Ala., April 20, 2016 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (the “Company” or “NCC”), the parent company of National Bank of Commerce, today reported first quarter 2016 net income to common shareholders of $3.8 million, compared to $1.9 million for the first quarter of 2015. Diluted net earnings per share were $0.34 in the first quarter of 2016, compared to $0.28 in the fourth quarter of 2015 and $0.25 in the first quarter of 2015.

“We are pleased with the start to the year, and our improving profitability metrics give us some encouragement about the direction in which we are headed,” said John H. Holcomb, III, Chairman and Chief Executive Officer of the Company. “We are also excited about the opening of our Atlanta loan production office in April, and we are enthusiastic about the team that has joined us there.”

During the first quarter of 2016, the Company successfully completed the system integration of Reunion Bank of Florida, a division of National Bank of Commerce, to its core system. “We are glad to have had a successful system conversion with Reunion, and I want to personally thank all of our colleagues who worked so hard to make that conversion a success. We will continue our focus on asset quality, customer service and growing our profitability, and we look forward to the remainder of 2016,” said Holcomb.

Several important measures from the first quarter of 2016 are as follows:

  • Net Interest Margin (taxable equivalent) of 4.21%, down slightly from 4.25% for the first quarter of 2015. The margin increased 0.15% compared to the 2015 fourth quarter due to the earning asset mix, with an increase in average loans outstanding and lower levels of cash on hand.
  • Return on Average Assets of 0.86%, compared to 0.67% for the first quarter of 2015.
  • Return on Average Tangible Common Equity of 9.21%, compared to 7.15% for the first quarter of 2015.
  • First quarter 2016 loan growth (excluding mortgage loans held-for-sale) of $68.3 million.
  • Decrease in deposits of $16.3 million, reflecting many deposits that were temporarily inflated at year end 2015, including deposits from tax collecting authorities.
  • $63.8 million in mortgage production, compared to $55.7 million for the first quarter of 2015.
  • $184.7 million in purchased volume in the factoring division, compared to $175.1 million for the first quarter of 2015.
  • A decrease in non-acquired non-performing assets to $3.4 million from $4.3 million at December 31, 2015.
  • Annualized net charge-offs of 0.13%, compared to 0.20% for the first quarter of 2015.
  • Provision for loan losses of $1.5 million, compared with $631 thousand in the 2015 fourth quarter and $161 thousand in the first quarter of 2015. The increase was attributable in part to $83 million in growth in non-acquired loans during the first quarter of 2016, net charge-offs of $448 thousand during the first quarter of 2016 and general economic factors.
  • Ending tangible book value per share of $15.42.
  • Ending book value per share of $20.36.

The Company will host a live audio webcast conference call beginning at 8:00 a.m. Central Time on April 21, 2016 to discuss earnings and operating results for the first quarter of 2016. Investors may call in (toll free) by dialing (855) 871-0559 (conference ID 90642241). A replay of the conference call will be available beginning two hours after the completion of the call until 10:59 p.m. Central Time on April 23, 2016 and can be accessed by dialing (855) 859-2056.

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

Use of Non-GAAP Financial Measures

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

  • “Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and minority interest not included in intangible assets.
  • “Average tangible common equity” is defined as the average of tangible common equity for the applicable period.
  • “Return on average tangible common equity,” or ROATCE, is defined as net income available to common shareholders divided by average tangible common equity.
  • “Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding. This measure is important to investors interested in changes from period to period in book value per share exclusive of changes in intangible assets.
  • “Allowance for loan losses to nonacquired loans” is defined as the total allowance for loan losses, less the allowance for loan losses attributable to factored receivables, divided by nonacquired loans held for investment, excluding factored receivables at the end of the period.
  • “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 NCC’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, NCC acknowledges that the non-GAAP financial measures have a number of limitations. As such, NCC cautions readers that these disclosures should not be viewed as a substitute for results determined in accordance with GAAP, and that these disclosures are not necessarily comparable to non-GAAP financial measures that other companies use. These non-GAAP financial measures exclude various items detailed in the attached “Non-GAAP Reconciliation.”

About National Commerce Corporation

National Commerce Corporation (Nasdaq:NCOM), a Delaware corporation, is a financial holding company headquartered in Birmingham, Alabama. Substantially all of the operations of National Commerce Corporation are conducted through the company’s wholly owned subsidiary, National Bank of Commerce. National Bank of Commerce currently operates seven full-service banking offices in Alabama (in Birmingham, Huntsville, Auburn-Opelika, and Baldwin County) and ten full-service banking offices in Central Florida (in Vero Beach through National Bank of Commerce; in Longwood, Winter Park, Orlando, and Oviedo through United Legacy Bank, a division of National Bank of Commerce; and in Tavares, Port Orange, St. Augustine, and Ormond Beach through Reunion Bank of Florida, a division of National Bank of Commerce), as well as a loan production office in the Atlanta, Georgia market area. National Bank of Commerce provides a broad array of financial services for commercial and consumer customers.

Additionally, National Bank of Commerce owns a majority stake in Corporate Billing, LLC, a transaction-based finance company based 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, 2015 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.

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, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Earnings Summary
Interest income$18,313 $16,488 $13,450 $12,714 $12,193
Interest expense 1,650 1,507 1,191 1,071 1,027
Net interest income 16,663 14,981 12,259 11,643 11,166
Provision for loan losses 1,533 631 201 120 161
Other noninterest income (1) 3,125 2,136 2,353 2,206 1,764
Merger/conversion-related expenses 138 395 122 168 79
Other noninterest expense (2) 11,915 11,049 9,773 9,448 9,211
Income before income taxes 6,202 5,042 4,516 4,113 3,479
Income tax expense 2,083 1,667 1,453 1,264 1,092
Net income before minority interest 4,119 3,375 3,063 2,849 2,387
Net income attributable to minority interest 340 437 573 593 466
Net income to common shareholders$3,779 $2,938 $2,490 $2,256 $1,921
Weighted average common and diluted shares outstanding
Basic 10,855,871 10,345,146 9,438,541 9,438,541 7,701,663
Diluted 11,039,208 10,552,871 9,594,472 9,569,695 7,801,577
Net earnings per common share
Basic$0.35 $0.28 $0.26 $0.24 $0.25
Diluted$0.34 $0.28 $0.26 $0.24 $0.25
March 31, December 31, September 30, June 30, March 31,
Selected Performance Ratios 2016 2015 2015 2015 2015
Return on average assets (ROAA) (3) 0.86 % 0.72 % 0.75 % 0.75 % 0.67 %
Return on average equity (ROAE) 6.95 5.76 5.62 5.22 5.58
Return on average tangible common equity
(ROATCE) 9.21 7.48 6.85 6.35 7.15
Net interest margin - taxable equivalent 4.21 4.06 4.02 4.22 4.25
Efficiency ratio 60.91 66.86 67.72 69.43 71.85
Operating efficiency ratio (2) 60.21 64.55 66.88 68.22 71.24
Noninterest income / average assets (annualized) 0.71 0.52 0.71 0.73 0.62
Noninterest expense / average assets (annualized) 2.75 2.80 2.99 3.19 3.24
Yield on loans 5.16 5.17 5.13 5.15 5.26
Cost of total deposits 0.42 % 0.40 % 0.39 % 0.38 % 0.38 %
March 31, December 31, September 30, June 30, March 31,
Factoring Metrics 2016 2015 2015 2015 2015
Recourse purchased volume$66,554 $74,922 $82,661 $89,009 $84,725
Non-recourse purchased volume 118,132 97,142 100,055 99,614 90,402
Total purchased volume$184,686 $172,064 $182,716 $188,623 $175,127
Average turn (days) 38.16 39.68 37.97 37.66 41.57
Net charge-offs / total purchased volume 0.26 % 0.12 % 0.06 % (0.04) % 0.09 %
Average discount rate 1.72 % 1.73 % 1.74 % 1.67 % 1.65 %
March 31, December 31, September 30, June 30, March 31,
Mortgage Metrics 2016 2015 2015 2015 2015
Total production ($)$63,802 $58,903 $82,276 $84,796 $55,731
Refinance (%) 18.2 % 26.0 % 19.1 % 18.6 % 26.9 %
Purchases (%) 81.8 % 74.0 % 80.9 % 81.4 % 73.1 %
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
As of
March 31, December 31, September 30, June 30, March 31,
Balance Sheet Highlights 2016 2015 2015 2015 2015
Cash and cash equivalents$123,853 $212,457 $192,882 $142,393 $149,907
Total securities 82,954 80,863 45,911 42,586 37,631
Mortgage loans held-for-sale 12,529 15,020 7,926 13,750 13,804
Acquired purchased credit-impaired loans 10,205 10,443 5,615 5,724 8,852
Acquired non-purchased credit-impaired loans 356,305 370,872 123,730 131,953 138,040
Nonacquired loans held for investment (4) 942,781 870,471 811,011 757,976 704,307
CBI loans (factoring receivables) 78,414 67,628 74,780 75,000 69,541
Total gross loans held for investment 1,387,705 1,319,414 1,015,136 970,653 920,740
Allowance for loan losses 10,927 9,842 9,391 9,274 9,522
Total intangibles 53,312 53,474 31,291 31,310 30,560
Total assets 1,740,106 1,763,369 1,350,781 1,256,614 1,206,667
Total deposits 1,498,197 1,514,458 1,141,837 1,051,483 1,000,217
Borrowings 7,000 22,000 22,000 22,000 22,000
Total liabilities 1,519,006 1,546,733 1,173,358 1,081,985 1,034,495
Minority interest 7,275 7,372 7,508 7,527 7,166
Common stock 109 108 94 94 94
Total shareholders' equity 221,100 216,636 177,423 174,629 172,172
Tangible common equity$167,447 $162,724 $145,558 $142,726 $141,380
End of period common shares outstanding 10,861,487 10,824,969 9,438,541 9,438,541 9,438,541
As of and For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
Asset Quality Analysis 2016 2015 2015 2015 2015
Nonacquired
Nonaccrual loans$184 $187 $829 $2,688 $618
Other real estate and repossessed assets 2,792 3,873 3,562 1,494 1,494
Loans past due 90 days or more and still accruing 473 252 148 44 168
Total nonacquired nonperforming assets$3,449 $4,312 $4,539 $4,226 $2,280
Acquired
Nonaccrual loans$3,617 $3,508 $2,829 $2,795 $2,576
Other real estate and repossessed assets 92 92 72 142 542
Loans past due 90 days or more and still accruing - - - - -
Total acquired nonperforming assets$3,709 $3,600 $2,901 $2,937 $3,118
Selected asset quality ratios
Nonperforming assets / Assets 0.41 % 0.45 % 0.55 % 0.57 % 0.45 %
Nonperforming assets / (Loans + OREO + repossessed assets) 0.51 0.60 0.73 0.74 0.58
Net charge-offs (recoveries) to average loans (annualized) 0.13 0.06 0.03 0.16 0.20
Allowance for loan losses to total loans 0.79 0.75 0.93 0.96 1.03
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) (4) 0.36 0.49 0.56 0.56 0.32
Allowance for loan losses to nonacquired nonperforming
loans 1663.17 2241.91 961.21 339.46 1211.45
Allowance for loan losses to nonacquired loans (4) 1.11 % 1.07 % 1.10 % 1.13 % 1.22 %
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
Taxable Equivalent Yields/Rates 2016 2015 2015 2015 2015
Interest income:
Loans 5.16 % 5.17 % 5.13 % 5.15 % 5.26 %
Mortgage loans held-for-sale 4.40 3.44 4.17 4.02 3.63
Interest on securities:
Taxable 2.68 3.05 3.30 3.33 2.92
Non-taxable 4.90 4.96 4.99 5.08 5.72
Cash balances in other banks 0.58 0.35 0.31 0.38 0.36
Total interest-earning assets 4.62 4.46 4.41 4.60 4.64
Interest expense:
Interest on deposits 0.56 0.54 0.50 0.50 0.49
Interest on FHLB and other borrowings 2.97 2.01 2.00 2.01 2.01
Total interest-bearing liabilities 0.58 0.57 0.54 0.54 0.53
Net interest spread 4.04 3.89 3.87 4.06 4.11
Net interest margin 4.21 % 4.06 % 4.02 % 4.22 % 4.25 %
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
As of
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio 9.12 % 9.68 % 10.39 % 11.09 % 11.41 %
Tier 1 Common Capital Ratio 11.15 11.18 12.88 12.86 13.54
Tier 1 Risk-based Capital Ratio 11.15 11.18 12.88 12.86 13.54
Total Risk-based Capital Ratio 11.93 11.91 13.79 13.78 14.55
Equity / Assets 12.71 12.29 13.13 13.90 14.27
Tangible common equity to tangible assets 9.93 % 9.52 % 11.03 % 11.65 % 12.02 %
Book value per share$20.36 $20.01 $18.80 $18.50 $18.24
Tangible book value per share$15.42 $15.03 $15.42 $15.12 $14.98
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Detail of other noninterest expense
Salaries and employee benefits$6,945 $6,077 $5,186 $5,114 $4,987
Commission-based compensation 875 844 1,048 1,056 796
Occupancy and equipment expense 1,135 1,048 871 829 836
Data processing expenses 667 511 464 487 425
Advertising and marketing expenses 160 19 124 125 173
Legal fees 122 173 177 135 167
FDIC insurance assessments 263 242 205 152 206
Accounting and audit expenses 250 332 211 212 223
Consulting and other professional expenses 243 387 238 164 105
Telecommunications expenses 159 132 144 135 128
ORE, Repo asset and other collection expenses 59 256 79 71 122
Core deposit intangible amortization 191 175 111 111 111
Other noninterest expense 984 1,248 1,037 1,025 1,011
Total noninterest expense$12,053 $11,444 $9,895 $9,616 $9,290
NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)
As of
March 31, December 31, September 30, June 30, March 31,
Non-GAAP Reconciliation 2016 2015 2015 2015 2015
Total shareholders' equity$221,100 $216,636 $177,423 $174,629 $172,172
Less: intangible assets 53,312 53,474 31,291 31,310 30,560
Less: minority interest not included in intangible assets 341 438 574 593 232
Tangible common equity$167,447 $162,724 $145,558 $142,726 $141,380
Common shares outstanding at year or period end 10,861,487 10,824,969 9,438,541 9,438,541 9,438,541
Tangible book value per share$15.42 $15.03 $15.42 $15.12 $14.98
Total assets at end of period$1,740,106 $1,763,369 $1,350,781 $1,256,614 $1,206,667
Less: intangible assets 53,312 53,474 31,291 31,310 30,560
Adjusted total assets at end of period$1,686,794 $1,709,895 $1,319,490 $1,225,304 $1,176,107
Tangible common equity to tangible assets 9.93 % 9.52 % 11.03 % 11.65 % 12.02 %
Total allowance for loan losses$10,927 $9,842 $9,391 $9,274 $9,522
Less: allowance for loan losses attributable to
CBI (factoring receivables) 500 500 500 715 956
Adjusted allowance for loan losses at end of period$10,427 $9,342 $8,891 $8,559 $8,566
Nonacquired loans held for investment (4) 942,781 870,471 811,011 757,976 704,307
Allowance for loan losses to nonacquired loans (4) 1.11 % 1.07 % 1.10 % 1.13 % 1.22 %
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2016 2015 2015 2015 2015
Non-GAAP Reconciliation
Total average shareholders' equity$218,730 $202,299 $175,821 $173,354 $139,618
Less: average intangible assets 53,388 46,113 31,158 30,555 30,553
Less: average minority interest not included
in intangible assets 231 331 371 315 46
Average tangible common equity$165,111 $155,855 $144,292 $142,484 $109,019
Net income to common shareholders 3,779 2,938 2,490 2,256 1,921
Return on average tangible common equity (ROATCE) 9.21 % 7.48 % 6.85 % 6.35 % 7.15 %
Efficiency ratio:
Net interest income$16,663 $14,981 $12,259 $11,643 $11,166
Total noninterest income 3,125 2,136 2,353 2,206 1,764
Less: gain (loss) on sale of securities - - - - -
Operating revenue$19,788 $17,117 $14,612 $13,849 $12,930
Expenses:
Total noninterest expenses$12,053 $11,444 $9,895 $9,616 $9,290
Efficiency ratio 60.91 % 66.86 % 67.72 % 69.43 % 71.85 %
Operating efficiency ratio:
Net interest income$16,663 $14,981 $12,259 $11,643 $11,166
Total noninterest income 3,125 2,136 2,353 2,206 1,764
Less: gain (loss) on sale of securities - - - - -
Operating revenue$19,788 $17,117 $14,612 $13,849 $12,930
Expenses:
Total noninterest expenses$12,053 $11,444 $9,895 $9,616 $9,290
Less: merger/conversion-related expenses 138 395 122 168 79
Adjusted noninterest expenses$11,915 $11,049 $9,773 $9,448 $9,211
Operating efficiency ratio 60.21 % 64.55 % 66.88 % 68.22 % 71.24 %
(1) Excludes securities gains
(2) Excludes merger/conversion-related expenses
(3) Net income to common shareholders / average assets
(4) Excludes CBI loans


NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
Assets
March 31, 2016December 31, 2015
Cash and due from banks$15,018 $27,173
Interest-bearing deposits with banks 108,835 185,284
Cash and cash equivalents 123,853 212,457
Investment securities held-to-maturity (fair value of $27,910 and $27,843 at March 31, 2016
and December 31, 2015, respectively) 27,284 27,458
Investment securities available-for-sale 55,670 53,405
Other investments 6,106 6,235
Mortgage loans held-for-sale 12,529 15,020
Loans, net of unearned income 1,387,705 1,319,414
Less: allowance for loan losses 10,927 9,842
Loans, net 1,376,778 1,309,572
Premises and equipment, net 31,897 31,432
Accrued interest receivable 3,637 3,510
Bank-owned life insurance 27,426 27,223
Other real estate 2,884 3,965
Deferred tax assets, net 13,937 14,190
Goodwill 50,715 50,686
Core deposit intangible, net 2,597 2,788
Other assets 4,793 5,428
Total assets$1,740,106 $1,763,369
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand$382,642 $382,946
Interest-bearing demand 222,271 202,649
Savings and money market 597,179 611,887
Time 296,105 316,976
Total deposits 1,498,197 1,514,458
Federal Home Loan Bank advances 7,000 22,000
Accrued interest payable 644 627
Other liabilities 13,165 9,648
Total liabilities 1,519,006 1,546,733
Commitments and contingencies
Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding - -
Common stock, $0.01 par value, 30,000,000 shares authorized, 10,861,487 and 10,824,969 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively 109 108
Additional paid-in capital 202,971 202,456
Retained earnings 9,931 6,152
Accumulated other comprehensive income 814 548
Total shareholders' equity attributable to National Commerce Corporation 213,825 209,264
Noncontrolling interest 7,275 7,372
Total shareholders' equity 221,100 216,636
Total liabilities and shareholders' equity$1,740,106 $1,763,369

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except per share data)
For the Three Months Ended
March 31,
2016 2015
Interest and dividend income:
Interest and fees on loans $17,483 $11,792
Interest and dividends on taxable investment securities 412 256
Interest on non-taxable investment securities 200 42
Interest on interest-bearing deposits and federal funds sold 218 103
Total interest income 18,313 12,193
Interest expense:
Interest on deposits 1,569 918
Interest on borrowings 81 109
Total interest expense 1,650 1,027
Net interest income 16,663 11,166
Provision for loan losses 1,533 161
Net interest income after provision for loan losses 15,130 11,005
Other income:
Service charges and fees on deposit accounts 480 267
Mortgage origination and fee income 1,392 1,271
Merchant sponsorship revenue 522 -
Income from bank owned life insurance 204 79
Wealth management fees 13 19
Gain (loss) on other real estate 156 (13)
Other 358 141
Total other income 3,125 1,764
Other expense:
Salaries and employee benefits 6,945 4,987
Commission-based compensation 875 796
Occupancy and equipment 1,135 836
Core deposit intangible amortization 191 111
Other operating expense 2,907 2,560
Total other expense 12,053 9,290
Earnings before income taxes 6,202 3,479
Income tax expense 2,083 1,092
Net earnings 4,119 2,387
Less: Net earnings attributable to noncontrolling interest 340 466
Net earnings attributable to National Commerce Corporation $3,779 $1,921
Weighted average common and diluted shares outstanding
Basic 10,855,871 7,701,663
Diluted 11,039,208 7,801,577
Basic earnings per common share $0.35 $0.25
Diluted earnings per common share $0.34 $0.25

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
For the Three Months Ended
(Dollars in thousands)March 31, 2016December 31, 2015September 30, 2015June 30, 2015March 31, 2015
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$1,354,368 $17,373 5.16%$1,204,437 $15,699 5.17%$992,223 $12,826 5.13%$944,373 $12,116 5.15%$903,563 $11,709 5.26%
Mortgage loans held-for-sale 10,503 115 4.40 9,697 84 3.44 9,890 104 4.17 11,180 112 4.02 9,487 85 3.63
Securities:
Taxable securities 61,764 412 2.68 48,097 370 3.05 31,132 259 3.30 32,402 269 3.33 35,540 256 2.92
Tax-exempt securities 26,041 317 4.90 21,982 275 4.96 17,245 217 4.99 14,297 181 5.08 4,750 67 5.72
Cash balances in other banks 151,318 217 0.58 191,077 168 0.35 166,715 129 0.31 112,081 105 0.38 114,579 103 0.36
Total interest-earning assets 1,603,994 $ 18,434 4.62 1,475,290 $ 16,596 4.46 1,217,205 $ 13,535 4.41 1,114,333 $ 12,783 4.60 1,067,919 $ 12,220 4.64
Noninterest-earning assets 156,260 145,791 96,824 95,949 94,118
Total assets$ 1,760,254 $ 1,621,081 $ 1,314,029 $ 1,210,282 $ 1,162,037
Interest-bearing liabilities
Interest-bearing transaction accounts$204,339 $123 0.24%$196,140 $129 0.26%$182,056 $118 0.26%$157,261 $97 0.25%$159,706 $99 0.25%
Savings and money market deposits 620,429 762 0.49 542,631 612 0.45 443,306 486 0.43 408,117 417 0.41 391,321 377 0.39
Time deposits 306,106 684 0.90 291,399 654 0.89 228,298 476 0.83 208,388 447 0.86 209,016 442 0.86
Federal Home Loan Bank and other borrowed money 10,959 81 2.97 22,104 112 2.01 22,000 111 2.00 22,000 110 2.01 22,000 109 2.01
Total interest-bearing liabilities 1,141,833 $ 1,650 0.58 1,052,274 $ 1,507 0.57 875,660 $ 1,191 0.54 795,766 $ 1,071 0.54 782,043 $ 1,027 0.53
Noninterest-bearing deposits 386,674 354,812 254,402 233,136 232,497
Total funding sources 1,528,507 1,407,086 1,130,062 1,028,902 1,014,540
Noninterest-bearing liabilities 13,017 11,696 8,146 8,026 7,879
Shareholders' equity 218,730 202,299 175,821 173,354 139,618
$ 1,760,254 $ 1,621,081 $ 1,314,029 $ 1,210,282 $ 1,162,037
Net interest rate spread 4.04% 3.89% 3.87% 4.06% 4.11%
Net interest income/margin (taxable equivalent) 16,784 4.21% 15,089 4.06% 12,344 4.02% 11,712 4.22% 11,193 4.25%
Tax equivalent adjustment 121 108 85 69 27
Net interest income/margin $ 16,663 4.18% $ 14,981 4.03% $ 12,259 4.00% $ 11,643 4.19% $ 11,166 4.24%

Contact: National Commerce Corporation William E. Matthews, V Vice Chairman and Chief Financial Officer (205) 313-8122

Source:National Commerce Corporation