National Commerce Corporation Announces First Quarter 2016 Earnings

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

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

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

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

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

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

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

Use of Non-GAAP Financial Measures

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

• “Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and minority interest not included in intangible assets.
• “Average tangible common equity” is defined as the average of tangible common equity for the applicable period.
• “Return on average tangible common equity,” or ROATCE, is defined as net income available to common shareholders divided by average tangible common equity.
• “Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding.  This measure is important to investors interested in changes from period to period in book value per share exclusive of changes in intangible assets.
• “Allowance for loan losses to nonacquired loans” is defined as the total allowance for loan losses, less the allowance for loan losses attributable to factored receivables, divided by nonacquired loans held for investment, excluding factored receivables at the end of the period.
• “Efficiency ratio” is defined as noninterest expense divided by operating revenue (which is equal to net interest income plus noninterest income), excluding one-time gains and losses on sales of securities.  This measure is important to investors looking for a measure of efficiency in productivity based on the amount of revenue generated for each dollar spent.
• “Operating efficiency ratio” is defined as noninterest expense divided by operating revenue, excluding one-time gains and losses on sales of securities and one-time gains and expenses related to merger and acquisition activities.  This measure is important to investors looking for a measure of efficiency in productivity based on the amount of revenue generated for each dollar spent.

The Company’s management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to NCC’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, NCC acknowledges that the non-GAAP financial measures have a number of limitations.  As such, NCC cautions readers that these disclosures should not be viewed as a substitute for results determined in accordance with GAAP, and that these disclosures are not necessarily comparable to non-GAAP financial measures that other companies use.  These non-GAAP financial measures exclude various items detailed in the attached “Non-GAAP Reconciliation.”

About National Commerce Corporation

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

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

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

Forward-Looking Statements
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements for which NCC claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such.  In addition, certain statements may be contained in NCC’s future filings with the SEC, in press releases and in oral and written statements made by NCC or with NCC’s approval that are not statements of historical fact and that constitute forward-looking statements within the meaning of the Act.  Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of NCC’s plans, objectives and expectations or those of its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.  Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Forward-looking statements are subject to various risks and uncertainties, including those risks and uncertainties described under the heading “Risk Factors” in NCC’s Annual Report on Form 10-K for the year ended December 31, 2015 and described in any subsequent reports that NCC has filed with the SEC.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements, and these statements should not be relied upon as predictions of future events.  NCC undertakes no obligation to update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.  In that respect, NCC cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.