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National Commerce Corporation Announces First Quarter 2017 Earnings

BIRMINGHAM, Ala., April 24, 2017 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported first quarter 2017 net income to common shareholders of $5.9 million, compared to $3.8 million for the first quarter of 2016. Diluted net earnings per share were $0.45 in the first quarter of 2017, compared to $0.44 in the fourth quarter of 2016 and $0.34 in the first quarter of 2016.

“We are pleased with our first quarter performance, which provides us with a good start to 2017,” said John H. Holcomb, III, Chairman and Chief Executive Officer of the Company. “We look forward to the remainder of the year.”

During the first quarter of 2017, the Company successfully completed its acquisition of Private Bancshares, Inc. through a merger of the companies, followed by the merger of their respective bank subsidiaries, Private Bank of Buckhead and NBC. In March 2017, the Company completed the system integration of Private Bank of Buckhead to NBC’s core operating system. “We are glad to have had a successful system conversion with Private Bank, 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 2017,” said Richard Murray, IV, President and Chief Operating Officer of the Company.

Several important measures from the first quarter of 2017 are as follows:

  • Net Interest Margin (taxable equivalent) of 4.18% for the first quarter of 2017, compared to 3.99% for the fourth quarter of 2016 and 4.21% for the first quarter of 2016. The first quarter 2017 margin increased 0.19% compared to the 2016 fourth quarter due primarily to a change in funding mix, with higher levels of noninterest-bearing deposits in the 2017 first quarter compared to the 2016 fourth quarter.
  • Return on Average Assets of 1.00% for the first quarter of 2017, compared to 0.86% for the first quarter of 2016.
  • Return on Average Tangible Common Equity of 11.45% for the first quarter of 2017, compared to 9.21% for the first quarter of 2016.
  • First quarter 2017 loan growth (excluding mortgage loans held-for-sale) of $329 million, including $261 million acquired in the Private Bancshares, Inc. transaction. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, and loans acquired in the Private Bancshares, Inc. transaction, first quarter 2017 loan growth was approximately $53 million.
  • First quarter 2017 deposit growth of $413 million. Excluding $286 million in deposits acquired in the Private Bancshares, Inc. transaction, deposits grew by $126 million.
  • $131 million in 2017 first quarter mortgage production, compared to $64 million for the first quarter of 2016. The first quarter 2017 production includes mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.
  • $254 million in 2017 first quarter purchased volume in the factoring division, compared to $179 million for the first quarter of 2016.
  • A decrease in non-acquired non-performing assets to $2.5 million, from $2.7 million at December 31, 2016.
  • Annualized net recoveries of 0.07% of average loans for the first quarter of 2017, compared to net charge-offs of 0.13% for the first quarter of 2016.
  • Provision for loan losses of $156 thousand during the first quarter of 2017, compared to $441 thousand in the 2016 fourth quarter and $1.5 million in the first quarter of 2016. The decrease during the 2017 first quarter was attributable in part to net recoveries during the 2017 first quarter, general improvement in problem assets, and general economic factors.
  • Ending tangible book value per share of $16.48.
  • Ending book value per share of $24.51.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on April 25, 2017 to discuss earnings and operating results for the 2017 first quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 3350814). A replay of the conference call will be available until April 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 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 the Company’s 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, 2016 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 or as otherwise noted)
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Earnings Summary
Interest income $ 24,899 $ 19,032 $ 18,836 $ 18,382 $ 18,313
Interest expense 2,469 2,042 1,959 1,730 1,650
Net interest income 22,430 16,990 16,877 16,652 16,663
Provision for loan losses 156 441 373 901 1,533
Other noninterest income (1) 5,440 3,472 4,002 3,357 3,125
Merger/conversion-related expenses 387 169 160 12 138
Other noninterest expense (2) 18,074 11,971 12,472 12,242 11,915
Income before income taxes 9,253 7,881 7,874 6,854 6,202
Income tax expense 2,841 2,600 2,639 2,072 2,083
Net income before minority interest 6,412 5,281 5,235 4,782 4,119
Net income attributable to minority interest 493 374 422 428 340
Net income to common shareholders $ 5,919 $ 4,907 $ 4,813 $ 4,354 $ 3,779
Weighted average common and diluted shares outstanding
Basic 12,901,040 10,930,309 10,890,860 10,866,788 10,855,871
Diluted 13,283,075 11,173,733 11,115,134 11,067,972 11,039,208
Net earnings per common share
Basic $ 0.46 $ 0.45 $ 0.44 $ 0.40 $ 0.35
Diluted $ 0.45 $ 0.44 $ 0.43 $ 0.39 $ 0.34
March 31, December 31, September 30, June 30, March 31,
Selected Performance Ratios 2017 2016 2016 2016 2016
Return on average assets (ROAA) (3) 1.00 % 1.05% 1.08% 1.00% 0.86%
Return on average equity (ROAE) 7.67 8.33 8.36 7.84 6.95
Return on average tangible common equity
(ROATCE) 11.45 10.78 10.90 10.31 9.21
Net interest margin - taxable equivalent 4.18 3.99 4.18 4.23 4.21
Efficiency ratio 66.24 59.33 60.50 61.24 60.91
Operating efficiency ratio (2) 64.85 58.50 59.73 61.18 60.21
Noninterest income / average assets (annualized) 0.92 0.74 0.90 0.77 0.71
Noninterest expense / average assets (annualized) 3.11 2.60 2.85 2.83 2.76
Yield on loans 5.29 4.95 5.08 5.06 5.17
Cost of total deposits 0.40 % 0.40% 0.40% 0.40% 0.42%
March 31, December 31, September 30, June 30, March 31,
Factoring Metrics 2017 2016 2016 2016 2016
Recourse purchased volume $ 127,882 $ 82,923 $ 71,872 $ 68,567 $ 66,554
Non-recourse purchased volume 125,751 104,797 100,486 98,550 112,196
Total purchased volume $ 253,633 $ 187,720 $ 172,358 $ 167,117 $ 178,750
Average turn (days) 35.61 38.35 38.13 39.92 38.16
Net charge-offs / total purchased volume 0.03 % 0.12% 0.05% 0.07% 0.27%
Average discount rate 1.44 % 1.67% 1.70% 1.69% 1.72%
March 31, December 31, September 30, June 30, March 31,
Mortgage Metrics 2017 2016 2016 2016 2016
Total production ($) $ 130,875 $ 76,028 $ 91,613 $ 91,466 $ 63,802
Refinance (%) 27.4 % 40.2 % 30.4 % 17.2 % 18.2%
Purchases (%) 72.6 % 59.8 % 69.6 % 82.8 % 81.8%
As of
March 31, December 31, September 30, June 30, March 31,
Balance Sheet Highlights 2017 2016 2016 2016 2016
Cash and cash equivalents $ 318,730 $ 217,293 $ 122,920 $ 86,163 $ 123,853
Total investment securities 98,390 99,709 102,848 89,495 82,954
Mortgage loans held-for-sale 19,517 15,373 7,810 19,468 12,529
Acquired purchased credit-impaired loans 20,012 9,507 9,500 10,382 10,205
Acquired non-purchased credit-impaired loans 541,509 315,867 323,125 346,685 356,305
Nonacquired loans held for investment (4) 1,153,897 1,076,209 1,009,677 978,836 942,781
CBI loans (factoring receivables) 99,317 83,901 70,066 70,673 74,248
Total gross loans held for investment 1,814,735 1,485,484 1,412,368 1,406,576 1,383,539
Allowance for loan losses 12,565 12,113 11,950 11,642 10,927
Total intangibles 103,519 52,803 52,962 53,154 53,312
Total assets 2,445,149 1,950,784 1,779,278 1,735,782 1,735,940
Total deposits 2,080,307 1,667,710 1,499,879 1,460,877 1,498,197
FHLB and other borrowings 7,000 7,000 7,000 7,000 7,000
Subordinated debt 24,513 24,500 24,487 24,540 -
Total liabilities 2,127,727 1,713,740 1,547,105 1,509,662 1,514,840
Minority interest 7,427 7,309 7,357 7,362 7,275
Common stock 129 109 109 109 109
Total shareholders' equity 317,422 237,044 232,173 226,120 221,100
Tangible common equity $ 213,410 $ 183,866 $ 178,788 $ 172,538 $ 167,447
End of period common shares outstanding 12,948,778 10,934,541 10,920,423 10,870,033 10,861,487
As of and For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
Asset Quality Analysis 2017 2016 2016 2016 2016
Nonacquired
Nonaccrual loans $ 68 $ 69 $ 19 $ 248 $ 184
Other real estate and repossessed assets 1,849 2,068 2,068 2,068 2,792
Loans past due 90 days or more and still accruing 538 581 358 406 452
Total nonacquired nonperforming assets $ 2,455 $ 2,718 $ 2,445 $ 2,722 $ 3,428
Acquired
Nonaccrual loans $ 2,949 $ 2,768 $ 2,982 $ 3,099 $ 3,617
Other real estate and repossessed assets - - 92 92 92
Loans past due 90 days or more and still accruing - - - - -
Total acquired nonperforming assets $ 2,949 $ 2,768 $ 3,074 $ 3,191 $ 3,709
Selected asset quality ratios
Nonperforming assets / Assets 0.22 % 0.28% 0.31% 0.34% 0.41%
Nonperforming assets / (Loans + OREO + repossessed assets)
Net charge-offs (recoveries) to average loans (annualized) (0.07) 0.08 0.02 0.05 0.13
Allowance for loan losses to total loans 0.69 0.82 0.85 0.83 0.79
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) (4) 0.21 0.25 0.24 0.28 0.36
Allowance for loan losses to nonacquired nonperforming
loans 2,073.43 1,863.54 3,169.76 1,780.12 1,718.08
Allowance for loan losses to nonacquired loans (4) 1.05 % 1.08% 1.13% 1.14% 1.11%
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
Taxable Equivalent Yields/Rates 2017 2016 2016 2016 2016
Interest income:
Loans 5.29 % 4.95% 5.08% 5.06% 5.17%
Mortgage loans held-for-sale 4.13 2.99 4.12 3.51 4.40
Interest on securities:
Taxable 2.63 2.52 2.55 1.95 2.68
Non-taxable 4.98 4.90 4.85 4.93 4.90
Cash balances in other banks 0.84 0.63 0.60 0.65 0.58
Total interest-earning assets 4.64 4.47 4.66 4.67 4.63
Interest expense:
Interest on deposits 0.56 0.55 0.54 0.54 0.56
Interest on FHLB and other borrowings 3.19 4.04 4.04 4.08 2.97
Interest on subordinated debt 6.42 6.30 6.32 6.34 -
Total interest-bearing liabilities 0.68 0.69 0.68 0.62 0.58
Net interest spread 3.96 3.78 3.98 4.05 4.05
Net interest margin 4.18 % 3.99% 4.18% 4.23% 4.21%
As of
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio 8.86 % 9.57% 9.74% 9.51% 9.13%
Tier 1 Common Capital Ratio 11.06 11.46 11.64 11.25 11.18
Tier 1 Risk-based Capital Ratio 11.06 11.46 11.64 11.25 11.18
Total Risk-based Capital Ratio 13.07 13.90 14.19 13.79 11.97
Equity / Assets 12.98 12.15 13.05 13.03 12.74
Tangible common equity to tangible assets 9.11 % 9.69% 10.36% 10.25% 9.95%
Book value per share $ 24.51 $ 21.68 $ 21.26 $ 20.80 $ 20.36
Tangible book value per share $ 16.48 $ 16.82 $ 16.37 $ 15.87 $ 15.42
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Detail of other noninterest expense
Salaries and employee benefits $ 10,073 $ 6,935 $ 6,948 $ 6,907 $ 6,945
Commission-based compensation 1,723 1,076 1,104 1,036 875
Occupancy and equipment expense 1,473 1,193 1,181 1,131 1,135
Data processing expenses 948 568 572 618 667
Advertising and marketing expenses 468 156 198 191 160
Legal fees 233 163 182 179 122
FDIC insurance assessments 258 234 246 257 263
Property and casualty insurance premiums 143 95 90 166 223
Accounting and audit expenses 318 211 252 249 250
Consulting and other professional expenses 497 201 330 184 243
Telecommunications expenses 186 114 146 140 159
ORE, Repo asset and other collection expenses 272 41 142 89 59
Core deposit intangible amortization 348 182 191 192 191
Other noninterest expense 1,521 971 1,050 915 761
Total noninterest expense $ 18,461 $ 12,140 $ 12,632 $ 12,254 $ 12,053
As of
March 31, December 31, September 30, June 30, March 31,
Non-GAAP Reconciliation 2017 2016 2016 2016 2016
Total shareholders' equity $ 317,422 $ 237,044 $ 232,173 $ 226,120 $ 221,100
Less: intangible assets 103,519 52,803 52,962 53,154 53,312
Less: minority interest not included in intangible assets 493 375 423 428 341
Tangible common equity $ 213,410 $ 183,866 $ 178,788 $ 172,538 $ 167,447
Common shares outstanding at year or period end 12,948,778 10,934,541 10,920,423 10,870,033 10,861,487
Tangible book value per share $ 16.48 $ 16.82 $ 16.37 $ 15.87 $ 15.42
Total assets at end of period $ 2,445,149 $ 1,950,784 $ 1,779,278 $ 1,735,782 $ 1,735,940
Less: intangible assets 103,519 52,803 52,962 53,154 53,312
Adjusted total assets at end of period $ 2,341,630 $ 1,897,981 $ 1,726,316 $ 1,682,628 $ 1,682,628
Tangible common equity to tangible assets 9.11 % 9.69% 10.36% 10.25% 9.95%
Total allowance for loan losses $ 12,565 $ 12,113 $ 11,950 $ 11,642 $ 10,927
Less: allowance for loan losses attributable to
CBI (factoring receivables) 500 500 500 500 500
Adjusted allowance for loan losses at end of period $ 12,065 $ 11,613 $ 11,450 $ 11,142 $ 10,427
Nonacquired loans held for investment (4) 1,153,897 1,076,209 1,009,677 978,836 942,781
Allowance for loan losses to nonacquired loans (4) 1.05 % 1.08% 1.13% 1.14% 1.11%
For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Non-GAAP Reconciliation
Total average shareholders' equity $ 312,971 $ 234,249 $ 228,953 $ 223,357 $ 218,730
Less: average intangible assets 103,004 52,872 53,056 53,234 53,388
Less: average minority interest not included
in intangible assets 295 262 282 284 231
Average tangible common equity $ 209,672 $ 181,115 $ 175,615 $ 169,839 $ 165,111
Net income to common shareholders 5,919 4,907 4,813 4,354 3,779
Return on average tangible common equity (ROATCE) 11.45 % 10.78% 10.90% 10.31% 9.21%
Efficiency ratio:
Net interest income $ 22,430 $ 16,990 $ 16,877 $ 16,652 $ 16,663
Total noninterest income 5,440 3,472 4,002 3,357 3,125
Less: gain (loss) on sale of securities - - - - -
Operating revenue $ 27,870 $ 20,462 $ 20,879 $ 20,009 $ 19,788
Expenses:
Total noninterest expenses $ 18,461 $ 12,140 $ 12,632 $ 12,254 $ 12,053
Efficiency ratio 66.24 % 59.33% 60.50% 61.24% 60.91%
Operating efficiency ratio:
Net interest income $ 22,430 $ 16,990 $ 16,877 $ 16,652 $ 16,663
Total noninterest income 5,440 3,472 4,002 3,357 3,125
Less: gain (loss) on sale of securities - - - - -
Operating revenue $ 27,870 $ 20,462 $ 20,879 $ 20,009 $ 19,788
Expenses:
Total noninterest expenses $ 18,461 $ 12,140 $ 12,632 $ 12,254 $ 12,053
Less: merger/conversion-related expenses 387 169 160 12 138
Adjusted noninterest expenses $ 18,074 $ 11,971 $ 12,472 $ 12,242 $ 11,915
Operating efficiency ratio 64.85 % 58.50% 59.73% 61.18% 60.21%
(1) Excludes securities gains
(2) Excludes merger/conversion-related expenses
(3) Net income to common shareholders / average assets
(4) Excludes CBI loans (factoring receivables)


NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)
Assets
March 31, 2017 December 31, 2016
Cash and due from banks$40,237$35,897
Interest-bearing deposits with banks 278,493 181,396
Cash and cash equivalents 318,730 217,293
Investment securities held-to-maturity (fair value of $25,823 and $25,894 at March 31, 2017
and December 31, 2016, respectively) 26,057 26,329
Investment securities available-for-sale 72,333 73,380
Other investments 8,338 7,879
Mortgage loans held-for-sale 19,517 15,373
Loans, net of unearned income 1,814,735 1,485,484
Less: allowance for loan losses 12,565 12,113
Loans, net 1,802,170 1,473,371
Premises and equipment, net 35,148 31,884
Accrued interest receivable 4,790 4,129
Bank-owned life insurance 31,544 28,034
Other real estate 1,849 2,068
Deferred tax assets, net 14,842 13,486
Goodwill 98,856 50,771
Core deposit intangible, net 4,663 2,032
Other assets 6,312 4,755
Total assets$2,445,149$1,950,784
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand$617,851$429,030
Interest-bearing demand 345,602 262,261
Savings and money market 820,206 703,289
Time 296,648 273,130
Total deposits 2,080,307 1,667,710
Federal Home Loan Bank advances 7,000 7,000
Subordinated debt 24,513 24,500
Accrued interest payable 860 829
Other liabilities 15,047 13,701
Total liabilities 2,127,727 1,713,740
Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding - -
Common stock, $0.01 par value, 30,000,000 shares authorized, 12,948,778 and 10,934,541
shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively 129 109
Additional paid-in capital 279,618 205,372
Retained earnings 29,924 24,005
Accumulated other comprehensive income 324 249
Total shareholders' equity attributable to National Commerce Corporation 309,995 229,735
Noncontrolling interest 7,427 7,309
Total shareholders' equity 317,422 237,044
Total liabilities and shareholders' equity$2,445,149$1,950,784

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except share and per share data)
For the Three Months Ended
March 31,
2017 2016
Interest and dividend income:
Interest and fees on loans$23,593 $17,483
Interest and dividends on taxable investment securities 571 412
Interest on non-taxable investment securities 200 200
Interest on interest-bearing deposits and federal funds sold 535 218
Total interest income 24,899 18,313
Interest expense:
Interest on deposits 2,010 1,569
Interest on borrowings 71 81
Interest on subordinated debt 388 -
Total interest expense 2,469 1,650
Net interest income 22,430 16,663
Provision for loan losses 156 1,533
Net interest income after provision for loan losses 22,274 15,130
Other income:
Service charges and fees on deposit accounts 667 480
Mortgage origination and fee income 3,145 1,392
Merchant sponsorship revenue 744 522
Income from bank-owned life insurance 216 204
Wealth management fees 10 13
Gain (loss) on other real estate (1) 156
Other 659 358
Total other income 5,440 3,125
Other expense:
Salaries and employee benefits 10,073 6,945
Commission-based compensation 1,723 875
Occupancy and equipment 1,473 1,135
Core deposit intangible amortization 348 191
Other operating expense 4,844 2,907
Total other expense 18,461 12,053
Earnings before income taxes 9,253 6,202
Income tax expense 2,841 2,083
Net earnings 6,412 4,119
Less: Net earnings attributable to noncontrolling interest 493 340
Net earnings attributable to National Commerce Corporation$5,919 $3,779
Weighted average common and diluted shares outstanding
Basic 12,901,040 10,855,871
Diluted 13,283,075 11,039,208
Basic earnings per common share$0.46 $0.35
Diluted earnings per common share$0.45 $0.34

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
For the Three Months Ended
(Dollars in thousands)March 31, 2017December 31, 2016September 30, 2016June 30, 2016March 31, 2016
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$ 1,793,241$ 23,3775.29%$ 1,446,629$ 18,0124.95%$ 1,399,016$ 17,8535.08%$ 1,391,789$ 17,5235.06%$ 1,352,737$ 17,3735.17%
Mortgage loans held-for-sale 21,809 222 4.13 10,366 78 2.99 13,986 145 4.12 17,288 151 3.51 10,503 115 4.40
Securities:
Taxable securities 88,062 571 2.63 82,881 525 2.52 76,787 493 2.55 78,907 383 1.95 61,764 412 2.68
Tax-exempt securities 25,824 317 4.98 25,910 319 4.90 26,029 317 4.85 26,036 319 4.93 26,041 317 4.90
Cash balances in other banks 258,672 535 0.84 140,813 224 0.63 101,422 152 0.60 80,140 129 0.65 151,318 218 0.58
Total interest-earning assets 2,187,608$ 25,022 4.64 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
Noninterest-earning assets 220,006 149,709 148,275 148,959 156,260
Total assets$ 2,407,614 $ 1,856,308 $ 1,765,515 $ 1,743,119 $ 1,758,623
Interest-bearing liabilities
Interest-bearing transaction accounts$ 332,361$ 2170.26%$ 235,340$ 1490.25%$ 214,439$ 1250.23%$ 210,776$ 1240.24%$ 204,339$ 1230.24%
Savings and money market deposits 804,537 1,096 0.55 633,765 791 0.50 612,618 713 0.46 603,173 698 0.47 620,429 762 0.49
Time deposits 306,404 697 0.92 273,293 643 0.94 283,022 661 0.93 288,350 654 0.91 306,106 684 0.90
Federal Home Loan Bank and other borrowed money 9,016 71 3.19 7,000 71 4.04 7,000 71 4.04 7,000 71 4.08 10,959 81 2.97
Subordinated debt 24,507 388 6.42 24,494 388 6.30 24,498 389 6.32 11,605 183 6.34 - - -
Total interest-bearing liabilities 1,476,825$ 2,469 0.68 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
Noninterest-bearing deposits 600,897 431,253 381,205 388,363 386,674
Total funding sources 2,077,722 1,605,145 1,522,782 1,509,267 1,528,507
Noninterest-bearing liabilities 16,921 16,914 13,780 10,495 11,386
Shareholders' equity 312,971 234,249 228,953 223,357 218,730
$ 2,407,614 $ 1,856,308 $ 1,765,515 $ 1,743,119 $ 1,758,623
Net interest rate spread 3.96% 3.78% 3.98% 4.05% 4.05%
Net interest income/margin (taxable equivalent) 22,5534.18% 17,1163.99% 17,0014.18% 16,7754.23% 16,7854.21%
Tax equivalent adjustment 123 126 124 123 122
Net interest income/margin $ 22,4304.16% $ 16,9903.96% $ 16,8774.15% $ 16,6524.20% $ 16,6634.18%

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

Source:National Commerce Corporation