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National Commerce Corporation Announces Second Quarter 2017 Earnings

BIRMINGHAM, Ala., July 25, 2017 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported second quarter 2017 net income to common shareholders of $6.4 million, compared to $4.4 million for the second quarter of 2016. Diluted net earnings per share were $0.48 in the second quarter of 2017, compared to $0.45 in the first quarter of 2017 and $0.39 in the second quarter of 2016.

During the second quarter of 2017, the Company successfully completed an underwritten public offering of 1,104,000 shares of its common stock at a price of $37.00 per share and announced the execution of a definitive agreement to acquire Patriot Bank, headquartered in Trinity, Florida. “We are pleased to report these second quarter results, which reflect the hard work by our team during the quarter,” said President and Chief Executive Officer Richard Murray, IV. “We also know that the year is only half complete, so we need to stay focused on our work to grow the business while maintaining an emphasis on asset quality.”

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

  • Net Interest Margin (taxable equivalent) of 4.34% for the second quarter of 2017, compared to 4.18% for the first quarter of 2017 and 4.23% for the second quarter of 2016. The second quarter 2017 margin increased 0.16% compared to the 2017 first quarter due primarily to an increased yield on loans during the second quarter of 2017 compared to the 2017 first quarter.

  • Return on Average Assets of 1.06% for the second quarter of 2017, compared to 1.00% for the second quarter of 2016.

  • Return on Average Tangible Common Equity of 11.49% for the second quarter of 2017, compared to 10.31% for the second quarter of 2016.

  • Second quarter 2017 loan growth (excluding mortgage loans held-for-sale) of $63.9 million. Excluding factored receivables in the Company’s factoring subsidiary, Corporate Billing, LLC, second quarter 2017 loan growth was approximately $48.8 million.

  • Deposits decreased $75.8 million during the 2017 second quarter, primarily due to a decline in a few large deposit relationships and the maturity of a $25.0 million certificate of deposit.

  • $133.1 million in 2017 second quarter mortgage production, compared to $130.9 million for the first quarter of 2017 and $91.5 million during the 2016 second quarter. The first and second quarter of 2017 production includes mortgages closed by the mortgage division that the Company acquired in the Private Bancshares, Inc. transaction.

  • $251.0 million in 2017 second quarter purchased volume in the factoring division, compared to $253.6 million for the first quarter of 2017 and $167.1 million during the second quarter of 2016.

  • A decrease in non-acquired non-performing assets to $1.2 million at June 30, 2017, from $2.5 million at March 31, 2017.

  • Annualized net charge-offs of 0.07% of average loans for the second quarter of 2017, compared to net charge-offs of 0.05% for the second quarter of 2016.

  • Provision for loan losses of $1.2 million during the second quarter of 2017, compared to $156 thousand in the 2017 first quarter and $901 thousand in the second quarter of 2016. The increase during the 2017 second quarter was attributable in part to net charge-offs during the 2017 second quarter and loan growth.

  • Ending tangible book value per share of $18.45.

  • Ending book value per share of $25.82.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on July 26, 2017 to discuss earnings and operating results for the 2017 second quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 55354529). A replay of the conference call will be available until July 28, 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 the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, the Company acknowledges that the non-GAAP financial measures have a number of limitations. As such, the Company cautions readers that these disclosures should not be viewed as a substitute for results determined in accordance with GAAP, and that these disclosures are not necessarily comparable to non-GAAP financial measures that other companies use. These non-GAAP financial measures exclude various items detailed in the attached “Non-GAAP Reconciliation.”

About National Commerce Corporation

National Commerce Corporation (Nasdaq:NCOM), a Delaware corporation, is a financial holding company headquartered in Birmingham, Alabama. 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.

Additional Information about the Proposed Merger with Patriot Bank and Where to Find It

NCC has filed with the SEC a proxy statement-prospectus included within a Registration Statement on Form S-4 (File No. 333-218826) in connection with the previously announced proposed merger of Patriot Bank, a Florida banking corporation, with and into NBC. Investors and security holders of Patriot Bank are urged to carefully read the important information contained in the proxy statement-prospectus regarding the proposed transaction. Copies of the proxy statement-prospectus and other relevant documents are available free of charge at the SEC’s website at www.sec.gov, and on NCC’s website at www.nationalbankofcommerce.com under the “Investor Relations” tab. The materials may also be obtained by writing to NCC at: National Commerce Corporation, c/o Investor Relations, 813 Shades Creek Parkway, Suite 100, Birmingham, Alabama 35209, or by calling (205) 313-8100.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Patriot Bank, NCC, NBC and their respective directors, executive officers, employees and agents may be deemed to be participants in the solicitation of proxies from Patriot Bank’s shareholders with respect to the proposed merger. Additional information regarding the interests of such potential participants is included in the proxy statement-prospectus and other relevant documents filed with the SEC.

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
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Earnings Summary
Interest income $26,466 $24,899 $19,032 $18,836 $18,382
Interest expense 2,513 2,469 2,042 1,959 1,730
Net interest income 23,953 22,430 16,990 16,877 16,652
Provision for loan losses 1,155 156 441 373 901
Gain on sale of securities 28 - - - -
Other noninterest income (1) 5,072 5,440 3,472 4,002 3,357
Merger/conversion-related expenses 344 387 169 160 12
Other noninterest expense (2) 17,393 18,074 11,971 12,472 12,242
Income before income taxes 10,161 9,253 7,881 7,874 6,854
Income tax expense 3,281 2,841 2,600 2,639 2,072
Net income before minority interest 6,880 6,412 5,281 5,235 4,782
Net income attributable to minority interest 431 493 374 422 428
Net income to common shareholders $6,449 $5,919 $4,907 $4,813 $4,354
Weighted average common and diluted shares outstanding
Basic 13,190,582 12,901,040 10,930,309 10,890,860 10,866,788
Diluted 13,551,745 13,283,075 11,173,733 11,115,134 11,067,972
Net earnings per common share
Basic $0.49 $0.46 $0.45 $0.44 $0.40
Diluted $0.48 $0.45 $0.44 $0.43 $0.39
June 30, March 31, December 31, September 30, June 30,
Selected Performance Ratios 2017 2017 2016 2016 2016
Return on average assets (ROAA) (3) 1.06% 1.00 % 1.05% 1.08% 1.00%
Return on average equity (ROAE) 7.86 7.67 8.33 8.36 7.84
Return on average tangible common equity
(ROATCE) 11.49 11.45 10.78 10.90 10.31
Net interest margin - taxable equivalent 4.34 4.18 3.99 4.18 4.23
Efficiency ratio 61.11 66.24 59.33 60.50 61.24
Operating efficiency ratio (2) 59.92 64.85 58.50 59.73 61.18
Noninterest income / average assets (annualized) 0.83 0.92 0.74 0.90 0.77
Noninterest expense / average assets (annualized) 2.91 3.11 2.60 2.85 2.83
Yield on loans 5.38 5.29 4.95 5.08 5.06
Cost of total deposits 0.40% 0.40 % 0.40% 0.40% 0.40%
June 30, March 31, December 31, September 30, June 30,
Factoring Metrics 2017 2017 2016 2016 2016
Recourse purchased volume $101,295 $127,882 $82,923 $71,872 $68,567
Non-recourse purchased volume 149,740 125,751 104,797 100,486 98,550
Total purchased volume $251,035 $253,633 $187,720 $172,358 $167,117
Average turn (days) 38.47 35.61 38.35 38.13 39.92
Net charge-offs / total purchased volume 0.12% 0.03 % 0.12% 0.05% 0.07%
Average discount rate 1.52% 1.44 % 1.67% 1.70% 1.69%
June 30, March 31, December 31, September 30, June 30,
Mortgage Metrics 2017 2017 2016 2016 2016
Total production ($) $133,063 $130,875 $76,028 $91,613 $91,466
Refinance (%) 24.0% 27.4 % 40.2% 30.4% 17.2%
Purchases (%) 76.0% 72.6 % 59.8% 69.6% 82.8%
As of
June 30, March 31, December 31, September 30, June 30,
Balance Sheet Highlights 2017 2017 2016 2016 2016
Cash and cash equivalents $224,760 $318,730 $217,293 $122,920 $86,163
Total investment securities 101,569 98,390 99,709 102,848 89,495
Mortgage loans held-for-sale 19,482 19,517 15,373 7,810 19,468
Acquired purchased credit-impaired loans 21,065 22,465 11,975 11,995 12,900
Acquired non-purchased credit-impaired loans 490,198 539,056 313,399 320,630 344,167
Nonacquired loans held for investment (4) 1,252,970 1,153,897 1,076,209 1,009,677 978,836
CBI loans (factoring receivables) 114,361 99,317 83,901 70,066 70,673
Total gross loans held for investment 1,878,594 1,814,735 1,485,484 1,412,368 1,406,576
Allowance for loan losses 13,407 12,565 12,113 11,950 11,642
Total intangibles 103,270 103,519 52,803 52,962 53,154
Total assets 2,418,052 2,445,149 1,950,784 1,779,278 1,735,782
Total deposits 2,004,528 2,080,307 1,667,710 1,499,879 1,460,877
FHLB and other borrowings 7,000 7,000 7,000 7,000 7,000
Subordinated debt 24,527 24,513 24,500 24,487 24,540
Total liabilities 2,054,792 2,127,727 1,713,740 1,547,105 1,509,662
Minority interest 7,366 7,427 7,309 7,357 7,362
Common stock 141 129 109 109 109
Total shareholders' equity 363,260 317,422 237,044 232,173 226,120
Tangible common equity $259,558 $213,410 $183,866 $178,788 $172,538
End of period common shares outstanding 14,070,528 12,948,778 10,934,541 10,920,423 10,870,033
As of and For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Asset Quality Analysis 2017 2017 2016 2016 2016
Nonacquired
Nonaccrual loans $50 $68 $69 $19 $248
Other real estate and repossessed assets - 1,849 2,068 2,068 2,068
Loans past due 90 days or more and still accruing 1,172 538 581 358 406
Total nonacquired nonperforming assets $1,222 $2,455 $2,718 $2,445 $2,722
Acquired
Nonaccrual loans $2,827 $2,949 $2,768 $2,982 $3,099
Other real estate and repossessed assets - - - 92 92
Loans past due 90 days or more and still accruing - - - - -
Total acquired nonperforming assets $2,827 $2,949 $2,768 $3,074 $3,191
Selected asset quality ratios
Nonperforming assets / Assets 0.17% 0.22 % 0.28% 0.31% 0.34%
Nonperforming assets / (Loans + OREO + repossessed assets) 0.22 0.30 0.37 0.39 0.42
Net charge-offs (recoveries) to average loans (annualized) 0.07 (0.07) 0.08 0.02 0.05
Allowance for loan losses to total loans 0.71 0.69 0.82 0.85 0.83
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) (4) 0.10 0.21 0.25 0.24 0.28
Allowance for loan losses to nonacquired nonperforming
loans 1,097.14 2,073.43 1,863.54 3,169.76 1,780.12
Allowance for loan losses to nonacquired loans (4) 1.03% 1.05 % 1.08% 1.13% 1.14%
For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Taxable Equivalent Yields/Rates 2017 2017 2016 2016 2016
Interest income:
Loans 5.38% 5.29 % 4.95% 5.08% 5.06%
Mortgage loans held-for-sale 3.72 4.13 2.99 4.12 3.51
Interest on securities:
Taxable 2.98 2.63 2.52 2.55 1.95
Non-taxable 4.91 4.98 4.90 4.85 4.93
Cash balances in other banks 1.09 0.84 0.63 0.60 0.65
Total interest-earning assets 4.79 4.64 4.47 4.66 4.67
Interest expense:
Interest on deposits 0.57 0.56 0.55 0.54 0.54
Interest on FHLB and other borrowings 4.01 3.19 4.04 4.04 4.08
Interest on subordinated debt 6.36 6.42 6.30 6.32 6.34
Total interest-bearing liabilities 0.68 0.68 0.69 0.68 0.62
Net interest spread 4.11 3.96 3.78 3.98 4.05
Net interest margin 4.34% 4.18 % 3.99% 4.18% 4.23%
As of
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio 10.69% 8.86 % 9.57% 9.74% 9.51%
Tier 1 Common Capital Ratio 13.17 11.06 11.46 11.64 11.25
Tier 1 Risk-based Capital Ratio 13.17 11.06 11.46 11.64 11.25
Total Risk-based Capital Ratio 15.18 13.07 13.90 14.19 13.79
Equity / Assets 15.02 12.98 12.15 13.05 13.03
Tangible common equity to tangible assets 11.21% 9.11 % 9.69% 10.36% 10.25%
Book value per share $25.82 $24.51 $21.68 $21.26 $20.80
Tangible book value per share $18.45 $16.48 $16.82 $16.37 $15.87
For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Detail of other noninterest expense
Salaries and employee benefits $9,663 $10,073 $6,935 $6,948 $6,907
Commission-based compensation 1,684 1,723 1,076 1,104 1,036
Occupancy and equipment expense 1,479 1,473 1,193 1,181 1,131
Data processing expenses 1,007 948 568 572 618
Advertising and marketing expenses 327 468 156 198 191
Legal fees 193 233 163 182 179
FDIC insurance assessments 408 258 234 246 257
Property and casualty insurance premiums 209 143 95 90 166
Accounting and audit expenses 294 318 211 252 249
Consulting and other professional expenses 517 497 201 330 184
Telecommunications expenses 169 186 114 146 140
ORE, Repo asset and other collection expenses 49 272 41 142 89
Core deposit intangible amortization 348 348 182 191 192
Other noninterest expense 1,390 1,521 971 1,050 915
Total noninterest expense $17,737 $18,461 $12,140 $12,632 $12,254
As of
June 30, March 31, December 31, September 30, June 30,
Non-GAAP Reconciliation 2017 2017 2016 2016 2016
Total shareholders' equity $363,260 $317,422 $237,044 $232,173 $226,120
Less: intangible assets 103,270 103,519 52,803 52,962 53,154
Less: minority interest not included in intangible assets 432 493 375 423 428
Tangible common equity $259,558 $213,410 $183,866 $178,788 $172,538
Common shares outstanding at year or period end 14,070,528 12,948,778 10,934,541 10,920,423 10,870,033
Tangible book value per share $18.45 $16.48 $16.82 $16.37 $15.87
Total assets at end of period $2,418,052 $2,445,149 $1,950,784 $1,779,278 $1,735,782
Less: intangible assets 103,270 103,519 52,803 52,962 53,154
Adjusted total assets at end of period $2,314,782 $2,341,630 $1,897,981 $1,726,316 $1,682,628
Tangible common equity to tangible assets 11.21% 9.11 % 9.69% 10.36% 10.25%
Total allowance for loan losses $13,407 $12,565 $12,113 $11,950 $11,642
Less: allowance for loan losses attributable to
CBI (factoring receivables) 500 500 500 500 500
Adjusted allowance for loan losses at end of period $12,907 $12,065 $11,613 $11,450 $11,142
Nonacquired loans held for investment (4) 1,252,970 1,153,897 1,076,209 1,009,677 978,836
Allowance for loan losses to nonacquired loans (4) 1.03% 1.05 % 1.08% 1.13% 1.14%
For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Non-GAAP Reconciliation
Total average shareholders' equity $328,886 $312,971 $234,249 $228,953 $223,357
Less: average intangible assets 103,403 103,004 52,872 53,056 53,234
Less: average minority interest not included
in intangible assets 318 295 262 282 284
Average tangible common equity $225,165 $209,672 $181,115 $175,615 $169,839
Net income to common shareholders 6,449 5,919 4,907 4,813 4,354
Return on average tangible common equity (ROATCE) 11.49% 11.45 % 10.78% 10.90% 10.31%
Efficiency ratio:
Net interest income $23,953 $22,430 $16,990 $16,877 $16,652
Total noninterest income 5,100 5,440 3,472 4,002 3,357
Less: gain (loss) on sale of securities 28 - - - -
Operating revenue $29,025 $27,870 $20,462 $20,879 $20,009
Expenses:
Total noninterest expenses $17,737 $18,461 $12,140 $12,632 $12,254
Efficiency ratio 61.11% 66.24 % 59.33% 60.50% 61.24%
Operating efficiency ratio:
Net interest income $23,953 $22,430 $16,990 $16,877 $16,652
Total noninterest income 5,100 5,440 3,472 4,002 3,357
Less: gain (loss) on sale of securities 28 - - - -
Operating revenue $29,025 $27,870 $20,462 $20,879 $20,009
Expenses:
Total noninterest expenses $17,737 $18,461 $12,140 $12,632 $12,254
Less: merger/conversion-related expenses 344 387 169 160 12
Adjusted noninterest expenses $17,393 $18,074 $11,971 $12,472 $12,242
Operating efficiency ratio 59.92% 64.85 % 58.50% 59.73% 61.18%
(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
June 30, 2017
December 31, 2016
Cash and due from banks$27,619 $35,897
Interest-bearing deposits with banks 197,141 181,396
Cash and cash equivalents 224,760 217,293
Investment securities held-to-maturity (fair value of $26,288 and $25,894 at June 30, 2017
and December 31, 2016, respectively) 26,107 26,329
Investment securities available-for-sale 75,462 73,380
Other investments 10,600 7,879
Mortgage loans held-for-sale 19,482 15,373
Loans, net of unearned income 1,878,594 1,485,484
Less: allowance for loan losses 13,407 12,113
Loans, net 1,865,187 1,473,371
Premises and equipment, net 35,141 31,884
Accrued interest receivable 5,082 4,129
Bank-owned life insurance 31,762 28,034
Other real estate - 2,068
Deferred tax assets, net 14,809 13,486
Goodwill 98,955 50,771
Core deposit intangible, net 4,315 2,032
Other assets 6,390 4,755
Total assets$2,418,052 $1,950,784
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand$608,280 $429,030
Interest-bearing demand 322,020 262,261
Savings and money market 810,941 703,289
Time 263,287 273,130
Total deposits 2,004,528 1,667,710
Federal Home Loan Bank advances 7,000 7,000
Subordinated debt 24,527 24,500
Accrued interest payable 709 829
Other liabilities 18,028 13,701
Total liabilities 2,054,792 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, 14,070,528 and 10,934,541
shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively 141 109
Additional paid-in capital 318,932 205,372
Retained earnings 36,373 24,005
Accumulated other comprehensive income 448 249
Total shareholders' equity attributable to National Commerce Corporation 355,894 229,735
Noncontrolling interest 7,366 7,309
Total shareholders' equity 363,260 237,044
Total liabilities and shareholders' equity$2,418,052 $1,950,784

NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except share and per share data)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Interest and dividend income:
Interest and fees on loans$24,987 $17,669 $48,580 $35,152
Interest and dividends on taxable investment securities 606 383 1,177 795
Interest on non-taxable investment securities 197 201 397 401
Interest on interest-bearing deposits and federal funds sold 676 129 1,211 347
Total interest income 26,466 18,382 51,365 36,695
Interest expense:
Interest on deposits 2,054 1,476 4,064 3,045
Interest on borrowings 70 71 141 152
Interest on subordinated debt 389 183 777 183
Total interest expense 2,513 1,730 4,982 3,380
Net interest income 23,953 16,652 46,383 33,315
Provision for loan losses 1,155 901 1,311 2,434
Net interest income after provision for loan losses 22,798 15,751 45,072 30,881
Other income:
Service charges and fees on deposit accounts 640 505 1,307 985
Mortgage origination and fee income 3,154 1,627 6,299 3,019
Merchant sponsorship revenue 602 491 1,346 1,013
Income from bank-owned life insurance 219 204 435 408
Wealth management fees 14 11 24 24
Gain on other real estate 105 119 104 275
Gain on sale of investment securities available-for-sale 28 - 28 -
Other 338 400 997 758
Total other income 5,100 3,357 10,540 6,482
Other expense:
Salaries and employee benefits 9,663 6,907 19,736 13,852
Commission-based compensation 1,684 1,036 3,407 1,911
Occupancy and equipment 1,479 1,131 2,952 2,266
Core deposit intangible amortization 348 192 696 383
Other operating expense 4,563 2,988 9,407 5,895
Total other expense 17,737 12,254 36,198 24,307
Earnings before income taxes 10,161 6,854 19,414 13,056
Income tax expense 3,281 2,072 6,122 4,155
Net earnings 6,880 4,782 13,292 8,901
Less: Net earnings attributable to noncontrolling interest 431 428 924 768
Net earnings attributable to National Commerce Corporation$6,449 $4,354 $12,368 $8,133
Weighted average common and diluted shares outstanding
Basic 13,190,582 10,866,788 13,046,611 10,861,330
Diluted 13,551,745 11,067,972 13,422,704 11,059,906
Basic earnings per common share$0.49 $0.40 $0.95 $0.75
Diluted earnings per common share$0.48 $0.39 $0.92 $0.74

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis
For the Three Months Ended
(Dollars in thousands)June 30, 2017March 31, 2017December 31, 2016September 30, 2016June 30, 2016
Interest-earning assetsAverage
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/ Rate
Loans$1,849,258 $24,823 5.38%$1,793,241 $23,377 5.29%$1,446,629 $18,012 4.95%$1,399,016 $17,853 5.08%$1,391,789 $17,523 5.06%
Mortgage loans held-for-sale 18,321 170 3.72 21,809 222 4.13 10,366 78 2.99 13,986 145 4.12 17,288 151 3.51
Securities:
Taxable securities 81,645 606 2.98 88,062 571 2.63 82,881 525 2.52 76,787 493 2.55 78,907 383 1.95
Tax-exempt securities 25,573 313 4.91 25,824 317 4.98 25,910 319 4.90 26,029 317 4.85 26,036 319 4.93
Cash balances in other banks 249,361 676 1.09 258,672 535 0.84 140,813 224 0.63 101,422 152 0.60 80,140 129 0.65
Total interest-earning assets 2,224,158 $26,588 4.79 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
Noninterest-earning assets 218,088 220,006 149,709 148,275 148,959
Total assets$2,442,246 $2,407,614 $1,856,308 $1,765,515 $1,743,119
Interest-bearing liabilities
Interest-bearing transaction accounts$341,238 $243 0.29%$332,361 $217 0.26%$235,340 $149 0.25%$214,439 $125 0.23%$210,776 $124 0.24%
Savings and money market deposits 821,130 1,138 0.56 804,537 1,096 0.55 633,765 791 0.50 612,618 713 0.46 603,173 698 0.47
Time deposits 290,097 673 0.93 306,404 697 0.92 273,293 643 0.94 283,022 661 0.93 288,350 654 0.91
Federal Home Loan Bank and other borrowed money 7,000 70 4.01 9,016 71 3.19 7,000 71 4.04 7,000 71 4.04 7,000 71 4.08
Subordinated debt 24,520 389 6.36 24,507 388 6.42 24,494 388 6.30 24,498 389 6.32 11,605 183 6.34
Total interest-bearing liabilities 1,483,985 $2,513 0.68 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
Noninterest-bearing deposits 612,910 600,897 431,253 381,205 388,363
Total funding sources 2,096,895 2,077,722 1,605,145 1,522,782 1,509,267
Noninterest-bearing liabilities 16,465 16,921 16,914 13,780 10,495
Shareholders' equity 328,886 312,971 234,249 228,953 223,357
$2,442,246 $2,407,614 $1,856,308 $1,765,515 $1,743,119
Net interest rate spread 4.11% 3.96% 3.78% 3.98% 4.05%
Net interest income/margin (taxable equivalent) 24,075 4.34% 22,553 4.18% 17,116 3.99% 17,001 4.18% 16,775 4.23%
Tax equivalent adjustment 122 123 126 124 123
Net interest income/margin $23,953 4.32% $22,430 4.16% $16,990 3.96% $16,877 4.15% $16,652 4.20%


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

Source:National Commerce Corporation