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National Commerce Corporation Announces Fourth Quarter and Fiscal Year End 2016 Earnings

BIRMINGHAM, Ala., Jan. 24, 2017 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (the “Company” or “NCC”), the parent company of National Bank of Commerce, today reported fourth quarter 2016 net income to common shareholders of $4.9 million, compared to $2.9 million for the fourth quarter of 2015. Diluted net earnings per share were $0.44 in the fourth quarter of 2016, compared to $0.43 in the third quarter of 2016 and $0.28 in the fourth quarter of 2015. For the twelve months ended December 31, 2016, NCC earned $17.9 million, or $1.61 in diluted earnings per share, up from $9.6 million, or $1.02 per diluted share, for the year ended December 31, 2015.

“We are pleased to report a good year of growth in the company in 2016, along with expansion in our profitability,” said John H. Holcomb, III, Chairman and Chief Executive Officer of the Company. “Our fourth quarter return on average assets of 1.05% brought the year’s total to 1.00%, and our diluted earnings per share of $1.61 for the year represents a 58% increase over 2015 levels. We are also pleased with our asset quality performance, though, as always, we can never consider ourselves satisfied in this very important area of our business.”

“In 2017, we look forward to building on the foundation of 2016 and prior years, and to doing so with our new colleagues from Private Bank of Buckhead, who joined us on January 1,” continued Holcomb. “Our future success in continuing to create shareowner value is dependent upon our adherence to our core values, with a focus on asset quality and risk management, growth, candor, accountability, and a leadership culture with an appropriate sense of humility.”

Several important measures from the 2016 fourth quarter and full year are as follows:

  • Net Interest Margin (taxable equivalent) of 3.99% for the fourth quarter of 2016 and 4.15% for the year ended December 31, 2016. The fourth quarter 2016 margin decreased 0.19% compared to 4.18% reported for the third quarter of 2016, and was 0.07% below the 2015 fourth quarter’s 4.06%. For the year ended December 31, 2016, the margin increased by 0.02%, compared to the year ended December 31, 2015.
  • Return on Average Assets (“ROAA”) of 1.05% for the fourth quarter of 2016, compared to 0.72% for the fourth quarter of 2015. For the year, ROAA grew to 1.0%, compared to 0.72% in 2015.
  • Return on Average Equity (“ROAE”) of 8.33% for the fourth quarter of 2016, compared to 5.76% for the fourth quarter of 2015. For the year, ROAE was 7.89%, compared to 5.55% in 2015.
  • Return on Average Tangible Common Equity of 10.78% for the fourth quarter of 2016 and 10.32% for the year ended December 31, 2016, compared to 7.48% for the fourth quarter of 2015 and 6.96% for the year ended December 31, 2015.
  • Fourth quarter and full year 2016 loan growth (excluding mortgage loans held-for-sale) of $73.1 million and $166.1 million, respectively; non-acquired loans grew $66.5 million during the fourth quarter of 2016 and $205.7 million for the year ended December 31, 2016. Growth in factored receivables accounted for $13.8 million of the fourth quarter growth and $16.3 million of the full year growth.
  • Increase in deposits of $167.8 million during the 2016 fourth quarter and $153.3 million for the year ended December 31, 2016.
  • $76.0 million in 2016 fourth quarter mortgage production, compared to $58.9 million for the fourth quarter of 2015. For the year ended December 31, 2016, mortgage production volume totaled $322.9 million, up 14.6% from the $281.7 million in mortgage production for the year ended December 31, 2015.
  • $187.7 million in 2016 fourth quarter purchased volume in the factoring division, compared to $172.1 million for the fourth quarter of 2015. Purchase volume of $705.9 million for the full year was down 1.8% compared to the full year of purchase volume of $718.5 million in 2015.
  • Increase in non-acquired non-performing assets to $2.7 million, from $2.4 million at September 30, 2016.
  • Annualized net charge-offs of 0.08% of average loans for the fourth quarter of 2016 and 0.07% for the year ended December 31, 2016.
  • Provision for loan losses of $0.4 million during the fourth quarter of 2016, compared to $0.6 million in the fourth quarter of 2015. Provision for loan losses for the year ended December 31, 2016 totaled $3.2 million, a $2.1 million increase over $1.1 million for the year ended December 31, 2015.
  • Ending tangible book value per share of $16.82.
  • Ending book value per share of $21.68.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on January 25, 2017 to discuss earnings and operating results for the 2016 fourth quarter and full year. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 48550731). A replay of the conference call will be available until January 27, 2017 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.

The Company’s management believes these above 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.

  • “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. This measure is important to investors because it disaggregates the acquired and non-acquired loans and provides a measure that may be more comparable to a bank that has no acquired loans. This measure also excludes the allowance and factored receivable balances at our subsidiary, Corporate Billing, LLC, which is helpful to investors because of the unique nature of that business and the rapid turnover of those receivables, and provides a measure that is more comparable to a bank that does not have a receivables factoring business.
  • “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, ten full-service banking offices in central and northeast Florida (including under the trade names United Legacy Bank and Reunion Bank of Florida) and two full-service banking offices in Atlanta, Georgia (including under the trade names Private Bank of Buckhead, Private Bank of Decatur and PrivatePlus Mortgage). National Bank of Commerce provides a broad array of financial services for commercial and consumer customers.

Additionally, National Bank of Commerce owns a majority stake in Corporate Billing, LLC, a transaction-based finance company headquartered in Decatur, Alabama that provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers throughout the United States and parts of Canada.

National Commerce Corporation files periodic reports with the U.S. Securities and Exchange Commission (the “SEC”). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.nationalbankofcommerce.com. More information about National Commerce Corporation and National Bank of Commerce may be obtained at www.nationalbankofcommerce.com.

Forward-Looking Statements
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements for which NCC claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in NCC’s future filings with the SEC, in press releases and in oral and written statements made by NCC or with NCC’s approval that are not statements of historical fact and that constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of NCC’s plans, objectives and expectations or those of its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to various risks and uncertainties, including those risks and uncertainties described under the heading “Risk Factors” in NCC’s Annual Report on Form 10-K for the year ended December 31, 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
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Earnings Summary
Interest income $ 19,032 $ 18,836 $ 18,382 $ 18,313 $ 16,488
Interest expense 2,042 1,959 1,730 1,650 1,507
Net interest income 16,990 16,877 16,652 16,663 14,981
Provision for loan losses 441 373 901 1,533 631
Other noninterest income (1) 3,472 4,002 3,357 3,125 2,136
Merger/conversion-related expenses 169 160 12 138 395
Other noninterest expense (2) 11,971 12,472 12,242 11,915 11,049
Income before income taxes 7,881 7,874 6,854 6,202 5,042
Income tax expense 2,600 2,639 2,072 2,083 1,667
Net income before minority interest 5,281 5,235 4,782 4,119 3,375
Net income attributable to minority interest 374 422 428 340 437
Net income to common shareholders $ 4,907 $ 4,813 $ 4,354 $ 3,779 $ 2,938
Weighted average common and diluted shares outstanding
Basic 10,930,309 10,890,860 10,866,788 10,855,871 10,345,146
Diluted 11,171,583 11,115,134 11,067,972 11,039,208 10,552,871
Net earnings per common share
Basic $ 0.45 $ 0.44 $ 0.40 $ 0.35 $ 0.28
Diluted $ 0.44 $ 0.43 $ 0.39 $ 0.34 $ 0.28
December 31, September 30, June 30, March 31, December 31,
Selected Performance Ratios 2016 2016 2016 2016 2015
Return on average assets (ROAA) (3) 1.05% 1.08% 1.00% 0.86% 0.72%
Return on average equity (ROAE) 8.33 8.36 7.84 6.95 5.76
Return on average tangible common equity
(ROATCE) 10.78 10.90 10.31 9.21 7.48
Net interest margin - taxable equivalent 3.99 4.18 4.23 4.21 4.06
Efficiency ratio 59.33 60.50 61.24 60.91 66.86
Operating efficiency ratio (2) 58.50 59.73 61.18 60.21 64.55
Noninterest income / average assets (annualized) 0.74 0.90 0.77 0.71 0.52
Noninterest expense / average assets (annualized) 2.60 2.85 2.83 2.76 2.80
Yield on loans 4.95 5.08 5.06 5.17 5.17
Cost of total deposits 0.40% 0.40% 0.40% 0.42% 0.40%
December 31, September 30, June 30, March 31, December 31,
Factoring Metrics 2016 2016 2016 2016 2015
Recourse purchased volume $ 82,923 $ 71,872 $ 68,567 $ 66,554 $ 74,922
Non-recourse purchased volume 104,797 100,486 98,550 112,196 97,142
Total purchased volume $ 187,720 $ 172,358 $ 167,117 $ 178,750 $ 172,064
Average turn (days) 38.35 38.13 39.92 38.16 39.68
Net charge-offs / total purchased volume 0.12% 0.05% 0.07% 0.27% 0.12%
Average discount rate 1.67% 1.70% 1.69% 1.72% 1.73%
December 31, September 30, June 30, March 31, December 31,
Mortgage Metrics 2016 2016 2016 2016 2015
Total production ($) $ 76,028 $ 91,613 $ 91,466 $ 63,802 $ 58,903
Refinance (%) 40.2% 30.4% 17.2% 18.2% 26.0%
Purchases (%) 59.8% 69.6% 82.8% 81.8% 74.0%
As of
December 31, September 30, June 30, March 31, December 31,
Balance Sheet Highlights 2016 2016 2016 2016 2015
Cash and cash equivalents $ 217,293 $ 122,920 $ 86,163 $ 123,853 $ 212,457
Total investment securities 99,709 102,848 89,495 82,954 80,863
Mortgage loans held-for-sale 15,373 7,810 19,468 12,529 15,020
Acquired purchased credit-impaired loans 9,507 9,500 10,382 10,205 10,443
Acquired non-purchased credit-impaired loans 315,867 323,125 346,685 356,305 370,872
Nonacquired loans held for investment (4) 1,076,209 1,009,677 978,836 942,781 870,471
CBI loans (factoring receivables) 83,901 70,066 70,673 74,248 67,628
Total gross loans held for investment 1,485,484 1,412,368 1,406,576 1,383,539 1,319,414
Allowance for loan losses 12,113 11,950 11,642 10,927 9,842
Total intangibles 52,768 52,962 53,154 53,312 53,474
Total assets 1,951,658 1,779,278 1,735,782 1,735,940 1,763,369
Total deposits 1,667,710 1,499,879 1,460,877 1,498,197 1,514,458
FHLB and other borrowings 7,000 7,000 7,000 7,000 22,000
Subordinated debt 24,500 24,487 24,540 - -
Total liabilities 1,714,614 1,547,105 1,509,662 1,514,840 1,546,733
Minority interest 7,309 7,357 7,362 7,275 7,372
Common stock 109 109 109 109 108
Total shareholders' equity 237,044 232,173 226,120 221,100 216,636
Tangible common equity $ 183,901 $ 178,788 $ 172,538 $ 167,447 $ 162,724
End of period common shares outstanding 10,934,541 10,920,423 10,870,033 10,861,487 10,824,969
As of and For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
Asset Quality Analysis 2016 2016 2016 2016 2015
Nonacquired
Nonaccrual loans $ 69 $ 19 $ 248 $ 184 $ 187
Other real estate and repossessed assets 2,068 2,068 2,068 2,792 3,873
Loans past due 90 days or more and still accruing 581 358 406 452 252
Total nonacquired nonperforming assets $ 2,718 $ 2,445 $ 2,722 $ 3,428 $ 4,312
Acquired
Nonaccrual loans $ 2,768 $ 2,982 $ 3,099 $ 3,617 $ 3,508
Other real estate and repossessed assets - 92 92 92 92
Loans past due 90 days or more and still accruing - - - - -
Total acquired nonperforming assets $ 2,768 $ 3,074 $ 3,191 $ 3,709 $ 3,600
Selected asset quality ratios
Nonperforming assets / Assets 0.28% 0.31% 0.34% 0.41% 0.45%
Nonperforming assets / (Loans + OREO + repossessed assets) 0.37 0.39 0.42 0.51 0.60
Net charge-offs (recoveries) to average loans (annualized) 0.08 0.02 0.05 0.13 0.06
Allowance for loan losses to total loans 0.82 0.85 0.83 0.79 0.75
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) (4) 0.25 0.24 0.28 0.36 0.49
Allowance for loan losses to nonacquired nonperforming
loans 1,863.54 3,169.76 1,780.12 1,718.08 2,241.91
Allowance for loan losses to nonacquired loans (4) 1.08% 1.13% 1.14% 1.11% 1.07%
For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
Taxable Equivalent Yields/Rates 2016 2016 2016 2016 2015
Interest income:
Loans 4.95% 5.08% 5.06% 5.17% 5.17%
Mortgage loans held-for-sale 2.99 4.12 3.51 4.40 3.44
Interest on securities:
Taxable 2.52 2.55 1.95 2.68 3.05
Non-taxable 4.90 4.85 4.93 4.90 4.96
Cash balances in other banks 0.63 0.60 0.65 0.58 0.35
Total interest-earning assets 4.47 4.66 4.67 4.63 4.46
Interest expense:
Interest on deposits 0.55 0.54 0.54 0.56 0.54
Interest on FHLB and other borrowings 4.04 4.04 4.08 2.97 2.01
Interest on subordinated debt 6.30 6.32 6.34 - -
Total interest-bearing liabilities 0.69 0.68 0.62 0.58 0.57
Net interest spread 3.78 3.98 4.05 4.05 3.89
Net interest margin 3.99% 4.18% 4.23% 4.21% 4.06%
As of
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio 9.57% 9.74% 9.51% 9.13% 9.68%
Tier 1 Common Capital Ratio 11.46 11.64 11.25 11.18 11.18
Tier 1 Risk-based Capital Ratio 11.46 11.64 11.25 11.18 11.18
Total Risk-based Capital Ratio 13.89 14.19 13.79 11.97 11.91
Equity / Assets 12.15 13.05 13.03 12.74 12.29
Tangible common equity to tangible assets 9.68% 10.36% 10.25% 9.95% 9.52%
Book value per share $ 21.68 $ 21.26 $ 20.80 $ 20.36 $ 20.01
Tangible book value per share $ 16.82 $ 16.37 $ 15.87 $ 15.42 $ 15.03
For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Detail of other noninterest expense
Salaries and employee benefits $ 6,935 $ 6,948 $ 6,907 $ 6,945 $ 6,077
Commission-based compensation 1,076 1,104 1,036 875 844
Occupancy and equipment expense 1,193 1,181 1,131 1,135 1,048
Data processing expenses 568 572 618 667 511
Advertising and marketing expenses 156 198 191 160 19
Legal fees 163 182 179 122 173
FDIC insurance assessments 234 246 257 263 242
Property and casualty insurance premiums 95 90 166 223 169
Accounting and audit expenses 211 252 249 250 332
Consulting and other professional expenses 201 330 184 243 387
Telecommunications expenses 114 146 140 159 132
ORE, Repo asset and other collection expenses 41 142 89 59 256
Core deposit intangible amortization 182 191 192 191 175
Other noninterest expense 971 1,050 915 761 1,079
Total noninterest expense $ 12,140 $ 12,632 $ 12,254 $ 12,053 $ 11,444
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Non-GAAP Reconciliation 2016 2016 2016 2016 2015
Total shareholders' equity $ 237,044 $ 232,173 $ 226,120 $ 221,100 $ 216,636
Less: intangible assets 52,768 52,962 53,154 53,312 53,474
Less: minority interest not included in intangible assets 375 423 428 341 438
Tangible common equity $ 183,901 $ 178,788 $ 172,538 $ 167,447 $ 162,724
Common shares outstanding at year or period end 10,934,541 10,920,423 10,870,033 10,861,487 10,824,969
Tangible book value per share $ 16.82 $ 16.37 $ 15.87 $ 15.42 $ 15.03
Total assets at end of period $ 1,951,658 $ 1,779,278 $ 1,735,782 $ 1,735,940 $ 1,763,369
Less: intangible assets 52,768 52,962 53,154 53,312 53,474
Adjusted total assets at end of period $ 1,898,890 $ 1,726,316 $ 1,682,628 $ 1,682,628 $ 1,709,895
Tangible common equity to tangible assets 9.68% 10.36% 10.25% 9.95% 9.52%
Total allowance for loan losses $ 12,113 $ 11,950 $ 11,642 $ 10,927 $ 9,842
Less: allowance for loan losses attributable to
CBI (factoring receivables) 500 500 500 500 500
Adjusted allowance for loan losses at end of period $ 11,613 $ 11,450 $ 11,142 $ 10,427 $ 9,342
Nonacquired loans held for investment (4) 1,076,209 1,009,677 978,836 942,781 870,471
Allowance for loan losses to nonacquired loans (4) 1.08% 1.13% 1.14% 1.11% 1.07%
For the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
2016 2016 2016 2016 2015
Non-GAAP Reconciliation
Total average shareholders' equity $ 234,249 $ 228,953 $ 223,357 $ 218,730 $ 202,299
Less: average intangible assets 52,871 53,056 53,234 53,388 46,113
Less: average minority interest not included
in intangible assets 262 282 284 231 331
Average tangible common equity $ 181,116 $ 175,615 $ 169,839 $ 165,111 $ 155,855
Net income to common shareholders 4,907 4,813 4,354 3,779 2,938
Return on average tangible common equity (ROATCE) 10.78% 10.90% 10.31% 9.21% 7.48%
Efficiency ratio:
Net interest income $ 16,990 $ 16,877 $ 16,652 $ 16,663 $ 14,981
Total noninterest income 3,472 4,002 3,357 3,125 2,136
Less: gain (loss) on sale of securities - - - - -
Operating revenue $ 20,462 $ 20,879 $ 20,009 $ 19,788 $ 17,117
Expenses:
Total noninterest expenses $ 12,140 $ 12,632 $ 12,254 $ 12,053 $ 11,444
Efficiency ratio 59.33% 60.50% 61.24% 60.91% 66.86%
Operating efficiency ratio:
Net interest income $ 16,990 $ 16,877 $ 16,652 $ 16,663 $ 14,981
Total noninterest income 3,472 4,002 3,357 3,125 2,136
Less: gain (loss) on sale of securities - - - - -
Operating revenue $ 20,462 $ 20,879 $ 20,009 $ 19,788 $ 17,117
Expenses:
Total noninterest expenses $ 12,140 $ 12,632 $ 12,254 $ 12,053 $ 11,444
Less: merger/conversion-related expenses 169 160 12 138 395
Adjusted noninterest expenses $ 11,971 $ 12,472 $ 12,242 $ 11,915 $ 11,049
Operating efficiency ratio 58.50% 59.73% 61.18% 60.21% 64.55%
(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
December 31, 2016
December 31, 2015
Cash and due from banks $ 35,897 $ 27,173
Interest-bearing deposits with banks 181,396 185,284
Cash and cash equivalents 217,293 212,457
Investment securities held-to-maturity (fair value of $25,894 and $27,843 at December 31, 2016
and December 31, 2015, respectively) 26,329 27,458
Investment securities available-for-sale 73,380 53,405
Other investments 7,879 6,235
Mortgage loans held-for-sale 15,373 15,020
Loans, net of unearned income 1,485,484 1,319,414
Less: allowance for loan losses 12,113 9,842
Loans, net 1,473,371 1,309,572
Premises and equipment, net 31,884 31,432
Accrued interest receivable 4,129 3,510
Bank-owned life insurance 28,034 27,223
Other real estate 2,068 3,965
Goodwill 50,736 50,686
Core deposit intangible, net 2,032 2,788
Other assets 19,150 19,618
Total assets $ 1,951,658 $ 1,763,369
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand $ 429,030 $ 382,946
Interest-bearing demand 262,261 202,649
Savings and money market 703,289 611,887
Time 273,130 316,976
Total deposits 1,667,710 1,514,458
Federal Home Loan Bank advances 7,000 22,000
Subordinated debt 24,500 -
Accrued interest payable 829 627
Other liabilities 14,575 9,648
Total liabilities 1,714,614 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, 10,934,541 and 10,824,969
shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively 109 108
Additional paid-in capital 205,372 202,456
Retained earnings 24,005 6,152
Accumulated other comprehensive income 249 548
Total shareholders' equity attributable to National Commerce Corporation 229,735 209,264
Noncontrolling interest 7,309 7,372
Total shareholders' equity 237,044 216,636
Total liabilities and shareholders' equity $ 1,951,658 $ 1,763,369

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except per share data)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
Interest and dividend income:
Interest and fees on loans$ 18,082 $ 15,777 $ 71,225 $ 52,720
Interest and dividends on taxable investment securities 525 370 1,813 1,154
Interest on non-taxable investment securities 201 173 802 466
Interest on interest-bearing deposits and federal funds sold 224 168 723 505
Total interest income 19,032 16,488 74,563 54,845
Interest expense:
Interest on deposits 1,583 1,395 6,127 4,354
Interest on borrowings 71 112 294 442
Interest on subordinated debt 388 - 960 -
Total interest expense 2,042 1,507 7,381 4,796
Net interest income 16,990 14,981 67,182 50,049
Provision for loan losses 441 631 3,248 1,113
Net interest income after provision for loan losses 16,549 14,350 63,934 48,936
Other income:
Service charges and fees on deposit accounts 523 402 2,019 1,288
Mortgage origination and fee income 1,711 1,063 6,975 5,278
Merchant sponsorship revenue 613 365 2,168 861
Income from bank-owned life insurance 196 182 810 433
Wealth management fees 10 10 49 53
Gain (loss) on other real estate (31) - 244 (24)
Other 450 114 1,691 570
Total other income 3,472 2,136 13,956 8,459
Other expense:
Salaries and employee benefits 6,935 6,077 27,735 21,364
Commission-based compensation 1,076 844 4,091 3,744
Occupancy and equipment 1,193 1,048 4,640 3,584
Core deposit intangible amortization 182 175 756 508
Other operating expense 2,754 3,300 11,857 11,045
Total other expense 12,140 11,444 49,079 40,245
Earnings before income taxes 7,881 5,042 28,811 17,150
Income tax expense 2,600 1,667 9,394 5,476
Net earnings 5,281 3,375 19,417 11,674
Less: Net earnings attributable to noncontrolling interest 374 437 1,564 2,069
Net earnings attributable to National Commerce Corporation$ 4,907 $ 2,938 $ 17,853 $ 9,605
Weighted average common and diluted shares outstanding
Basic 10,930,309 10,345,146 10,886,092 9,238,784
Diluted 11,171,583 10,552,871 11,093,987 9,395,741
Basic earnings per common share$ 0.45 $ 0.28 $ 1.64 $ 1.04
Diluted earnings per common share$ 0.44 $ 0.28 $ 1.61 $ 1.02

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
For the Three Months Ended
(Dollars in thousands)December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 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$ 1,446,629$ 18,0124.95%$ 1,399,016$ 17,8535.08%$ 1,391,789$ 17,5235.06%$ 1,352,737$ 17,3735.17%$ 1,204,437$ 15,6995.17%
Mortgage loans held-for-sale 10,366 78 2.99 13,986 145 4.12 17,288 151 3.51 10,503 115 4.40 9,697 84 3.44
Securities:
Taxable securities 82,881 525 2.52 76,787 493 2.55 78,907 383 1.95 61,764 412 2.68 48,097 370 3.05
Tax-exempt securities 25,910 319 4.90 26,029 317 4.85 26,036 319 4.93 26,041 317 4.90 21,982 275 4.96
Cash balances in other banks 140,813 224 0.63 101,422 152 0.60 80,140 129 0.65 151,318 218 0.58 191,077 168 0.35
Total interest-earning assets 1,706,599$19,158 4.47 1,617,240$18,960 4.66 1,594,160$18,505 4.67 1,602,363$18,435 4.63 1,475,290$16,596 4.46
Noninterest-earning assets 149,709 148,275 148,959 156,260 145,791
Total assets$ 1,856,308 $ 1,765,515 $ 1,743,119 $ 1,758,623 $ 1,621,081
Interest-bearing liabilities
Interest-bearing transaction accounts$ 235,340$ 1490.25%$ 214,439$ 1250.23%$ 210,776$ 1240.24%$ 204,339$ 1230.24%$ 196,140$ 1290.26%
Savings and money market deposits 633,765 791 0.50 612,618 713 0.46 603,173 698 0.47 620,429 762 0.49 542,631 612 0.45
Time deposits 273,293 643 0.94 283,022 661 0.93 288,350 654 0.91 306,106 684 0.90 291,399 654 0.89
Federal Home Loan Bank and other borrowed money 7,000 71 4.04 7,000 71 4.04 7,000 71 4.08 10,959 81 2.97 22,104 112 2.01
Subordinated debt 24,494 388 6.30 24,498 389 6.32 11,605 183 6.34 - - - - - -
Total interest-bearing liabilities 1,173,892$ 2,042 0.69 1,141,577$ 1,959 0.68 1,120,904$ 1,730 0.62 1,141,833$ 1,650 0.58 1,052,274$1,507 0.57
Noninterest-bearing deposits 431,253 381,205 388,363 386,674 354,812
Total funding sources 1,605,145 1,522,782 1,509,267 1,528,507 1,407,086
Noninterest-bearing liabilities 16,914 13,780 10,495 11,386 11,696
Shareholders' equity 234,249 228,953 223,357 218,730 202,299
$1,856,308 $1,765,515 $1,743,119 $1,758,623 $1,621,081
Net interest rate spread 3.78% 3.98% 4.05% 4.05% 3.89%
Net interest income/margin (taxable equivalent) 17,1163.99% 17,0014.18% 16,7754.23% 16,7854.21% 15,0894.06%
Tax equivalent adjustment 126 124 123 122 108
Net interest income/margin $ 16,9903.96% $ 16,8774.15% $ 16,6524.20% $ 16,6634.18% $ 14,9814.03%


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

Source:National Commerce Corporation