National Commerce Corporation Announces Third Quarter 2018 Earnings

BIRMINGHAM, Ala., Oct. 23, 2018 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq: NCOM) (“NCC” or the “Company”), the parent company of National Bank of Commerce (“NBC”), today reported third quarter 2018 net income to common shareholders of $12.0 million, compared to $6.7 million for the third quarter of 2017. Diluted net earnings per share were $0.59 in the third quarter of 2018, compared to $0.61 in the second quarter of 2018 and $0.46 in the third quarter of 2017.

“We are pleased to report our third quarter results, including an increase in our loan growth,” said Richard Murray, IV, President and Chief Executive Officer of the Company. “Loans grew at a 16.4% annualized rate this quarter, excluding loans acquired in the Premier and First Landmark acquisitions.”

During the third quarter of 2018, the Company closed two previously announced acquisitions. On July 1, 2018, the Company completed its acquisition of Premier Community Bank of Florida (“Premier”), headquartered in Bradenton, Florida. On August 1, 2018, the Company completed its acquisition of Landmark Bancshares, Inc. (“Landmark”) and its wholly owned subsidiary, First Landmark Bank, headquartered in Marietta, Georgia. A majority of the expected reduction in non-interest expense associated with these acquisitions has not been realized, as the core system conversion for Landmark will be completed in October and the Premier conversion is scheduled for the second quarter of 2019.

Several important measures from the third quarter of 2018 are as follows:

Merger and conversion-related expenses during the quarter were $897 thousand, or $752 thousand after taxes, equivalent to $0.04 per diluted share.
Net Interest Margin (taxable equivalent) of 4.69% for the third quarter of 2018, compared to 4.77% for the second quarter of 2018 and 4.58% for the third quarter of 2017. Overall loan yields during the third quarter of 2018 were flat with the second quarter of 2018. The rate paid on interest-bearing liabilities for the third quarter of 2018 was 1.05%, compared to 0.93% for the second quarter of 2018 and 0.70% for the third quarter of 2017.
Net interest income for the second and third quarters of 2018 includes $1.9 million of loan accretion income. Excluding accretion income from each period, the net interest margin for the third quarter of 2018 was 4.46%, compared to 4.49% for the second quarter of 2018.
Core bank loan yields (excluding interest on factored receivables) during the third quarter of 2018 increased 0.09% compared to the second quarter of 2018. Loan yields, excluding factored receivables and accretion income, increased 0.16% during the third quarter of 2018 compared to the second quarter of 2018.
Return on Average Assets (“ROAA”) of 1.23% for the third quarter of 2018, compared to 1.36% for the second quarter of 2018 and 1.08% for the third quarter of 2017.
ROAA (excluding merger/conversion-related expenses) of 1.31% for the third quarter of 2018, compared to 1.42% for the second quarter of 2018 and 1.14% for the third quarter of 2017.
Return on Average Tangible Common Equity (“ROATCE”) of 12.09% for the third quarter of 2018, compared to 12.73% for the second quarter of 2018 and 9.94% for the third quarter of 2017.
ROATCE (excluding merger/conversion-related expenses) of 12.85% for the third quarter of 2018, compared to 13.26% for the second quarter of 2018 and 10.45% for the third quarter of 2017.
Excluding the acquired loans of Landmark and Premier, loans grew $103.0 million during the third quarter of 2018, representing a 16.4% annualized growth rate.
Excluding the acquired deposits of Landmark and Premier, deposits grew $2.7 million during the third quarter of 2018, representing a 0.4% annualized growth rate.
$116.5 million in 2018 third quarter mortgage production, compared to $149.6 million during the second quarter of 2018 and $122.7 million during the third quarter of 2017.
$315.3 million in 2018 third quarter purchased volume in the factoring division, compared to $309.5 million for the second quarter of 2018 and $259.5 million for the third quarter of 2017.
Non-acquired non-performing assets of $1.1 million at September 30, 2018, compared to $1.0 million at June 30, 2018 and $1.9 million at September 30, 2017.
Annualized net charge-offs of 0.03% of average loans outstanding for the third quarter of 2018, compared to net charge-offs of 0.11% for the second quarter of 2018 and 0.05% for the third quarter of 2017.
Provision for loan losses of $1.0 million for the third quarter of 2018, compared to $856 thousand for the second quarter of 2018 and $1.1 million for the third quarter of 2017.
Ending tangible book value per share of $20.09.
Ending book value per share of $33.16.
The Company announced the closure of a branch located in Jacksonville, Florida, which is expected to occur in December of this year.

The Company will host a live audio webcast conference call beginning at 8:30 a.m. Central Time on October 24, 2018 to discuss earnings and operating results for the 2018 third quarter. Investors may call in (toll free) by dialing (844) 296-8205 (conference ID 5649689). A replay of the conference call will be available until October 26, 2018 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 adjusted net earnings per diluted share, return on average assets (excluding merger/conversion related expenses), return on average tangible common equity (excluding merger/conversion-related expenses), tangible common equity, return on average tangible common equity, tangible book value per share, 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.

“Adjusted net earnings per diluted share” is defined as net income to common share shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by diluted shares outstanding.
“Return on average assets (excluding merger/conversion-related expenses)” is defined as net income to common share shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by average assets for the period.
“Return on average tangible common equity (excluding merger/conversion-related expenses)” is defined as net income to common shareholders adjusted for the after-tax effect of merger/conversion-related expenses during the period divided by average tangible common equity for the period.

The Company’s management believes that these measures provide useful information to management and investors because they eliminate the impact of merger/conversion-related expenses from each period to provide a meaningful comparison to other periods and other companies that might not have this category of expenses. The Company’s management believes that it is appropriate to exclude merger/conversion-related expenses in its presentation of these measures because the costs vary based on factors specific to each acquisition and are not indicative of the costs of operating the Company’s core business.

“Tangible common equity” is defined as 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 that these 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.

“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 these 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. Its wholly-owned subsidiary, National Bank of Commerce, provides a broad array of financial services for commercial and consumer customers through seven full-service banking offices in Alabama, twenty-five full-service banking offices in Florida and five full-service banking offices in the Atlanta, Georgia metro area. National Bank of Commerce conducts business under a number of trade names unique to its local markets, including United Legacy Bank, Reunion Bank of Florida, Private Bank of Buckhead, Private Bank of Decatur, PrivatePlus Mortgage, Patriot Bank, FirstAtlantic Bank, Premier Community Bank of Florida and First Landmark Bank.

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, 2017 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.

Contact:

National Commerce Corporation

William E. Matthews, V President and Chief Financial Officer (205) 313-8100	Lowell Womack, Jr. Director of Financial Reporting (205) 313-8100


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
	September 30,			June 30,				March 31,			December 31,				September 30,
		2018			2018				2018			2017				2017
Earnings Summary
Interest income	$	46,195		$	37,713			$	36,320		$	30,224			$	28,202
Interest expense		6,174			4,310				3,420			2,824				2,561
Net interest income		40,021			33,403				32,900			27,400				25,641
Provision for loan losses		1,001			856				1,318			1,478				1,105
Gain (loss) on sale of securities		-			2				191			(119	)			-
Other noninterest income ⁽¹⁾		4,768			4,673				4,517			4,744				4,546
Merger/conversion-related expenses ⁽²⁾		897			542				2,396			1,172				417
Other noninterest expense ⁽³⁾		26,199			22,077				21,579			17,838				17,570
Income before income taxes		16,692			14,603				12,315			11,537				11,095
Income tax expense		4,040			3,303				2,776			3,890				3,828
Deferred tax asset write-down		-			-				-			6,231				-
Total income tax expense		4,040			3,303				2,776			10,121				3,828
Net income before minority interest		12,652			11,300				9,539			1,416				7,267
Net income attributable to minority interest		676			616				456			413				570
Net income to common shareholders	$	11,976		$	10,684			$	9,083		$	1,003			$	6,697

Weighted average common and diluted shares outstanding
Basic		19,838,772			17,236,525				17,209,551			14,783,597				14,300,974
Diluted		20,360,770			17,642,926				17,612,298			15,173,984				14,679,546

Net earnings per common share
Basic	$	0.60		$	0.62			$	0.53		$	0.07			$	0.47
Diluted	$	0.59		$	0.61			$	0.52		$	0.07			$	0.46

Adjusted net earnings per diluted share (excluding
merger/conversion-related expenses)	$	0.63		$	0.63			$	0.62		$	0.12			$	0.48


	September 30,			June 30,				March 31,			December 31,				September 30,
Selected Performance Ratios		2018			2018				2018			2017				2017
Return on average assets (ROAA) ⁽⁴⁾		1.23	%		1.36		%		1.18	%		0.15		%		1.08	%
ROAA (excluding merger/conversion-related expenses)		1.31			1.42				1.42			0.28				1.14
Return on average equity (ROAE)		7.40			8.39				7.35			0.99				7.06
Return on average tangible common equity (ROATCE)		12.09			12.73				11.27			1.41				9.94
ROATCE (excluding merger/conversion-related expenses)		12.85			13.26				13.54			2.55				10.45
Net interest margin - taxable equivalent		4.69			4.77				4.80			4.63				4.58
Efficiency ratio		60.50			59.40				64.08			59.14				59.59
Operating efficiency ratio ⁽³⁾		58.49			57.98				57.67			55.49				58.20
Noninterest income / average assets (annualized)		0.49			0.60				0.59			0.72				0.73
Noninterest expense / average assets (annualized)		2.78			2.88				3.12			2.88				2.90
Yield on loans		5.74			5.74				5.66			5.45				5.45
Cost of total deposits		0.70	%		0.60		%		0.47	%		0.43		%		0.41	%


	September 30,			June 30,				March 31,			December 31,				September 30,
Factoring Metrics		2018			2018				2018			2017				2017
Recourse purchased volume	$	132,531		$	127,680			$	115,970		$	108,628			$	104,304
Non-recourse purchased volume		182,742			181,835				167,015			158,565				155,157
Total purchased volume	$	315,273		$	309,515			$	282,985		$	267,193			$	259,461
Average turn (days)		44.56			42.85				42.25			43.59				41.11
Net charge-offs / total purchased volume		0.03	%		0.06		%		0.14	%		0.18		%		0.05	%
Average discount rate		1.64	%		1.63		%		1.64	%		1.59		%		1.58	%


	September 30,			June 30,				March 31,			December 31,				September 30,
Mortgage Metrics		2018			2018				2018			2017				2017
Total production ($)	$	116,540		$	149,640			$	114,850		$	120,969			$	122,656
Refinance (%)		23.4	%		17.0		%		27.8	%		22.1		%		23.6	%
Purchases (%)		76.6	%		83.0		%		72.2	%		77.9		%		76.4	%

	As of
	September 30,			June 30,				March 31,			December 31,				September 30,
Balance Sheet Highlights		2018			2018				2018			2017				2017
Cash and cash equivalents	$	200,291		$	217,773			$	132,825		$	235,288			$	134,549
Total investment securities		211,182			161,542				169,868			111,396				111,158
Mortgage loans held-for-sale		15,533			24,455				21,077			29,191				15,278
Acquired purchased credit-impaired loans		40,922			26,942				29,359			25,696				26,924
Acquired non-purchased credit-impaired loans		1,262,636			714,359				783,556			538,276				561,118
Nonacquired loans held for investment ⁽⁵⁾		1,774,835			1,614,376				1,531,475			1,455,376				1,349,254
CBI loans (factoring receivables)		151,985			141,455				136,194			118,710				119,110
Total gross loans held for investment		3,230,378			2,497,132				2,480,584			2,138,058				2,056,406
Allowance for loan losses		16,759			15,997				15,839			14,985				14,264
Total intangibles		269,297			173,590				174,225			117,849				119,688
Total assets		4,103,345			3,214,367				3,113,766			2,737,676				2,549,134
Total deposits		3,331,682			2,643,713				2,551,517			2,285,831				2,097,373
FHLB advances		2,000			7,000				7,000			7,000				7,000
Securities sold under agreements to repurchase		18,340			-				-			-				941
Subordinated debt		37,211			24,580				24,567			24,553				24,540
Total liabilities		3,418,534			2,697,563				2,608,040			2,337,718				2,150,541
Minority interest		7,611			7,551				7,391			7,348				7,504
Common stock		206			172				172			148				148
Total shareholders' equity		684,811			516,804				505,726			399,958				398,593
Tangible common equity	$	414,837		$	342,597			$	331,044		$	281,695			$	278,335
End of period common shares outstanding		20,649,948			17,246,659				17,229,043			14,788,436				14,777,230


	As of and For the Three Months Ended
	September 30,			June 30,				March 31,			December 31,				September 30,
Asset Quality Analysis		2018			2018				2018			2017				2017
*Nonacquired*
Nonaccrual loans	$	231		$	294			$	367		$	82			$	70
Other real estate and repossessed assets		340			340				-			-				150
Loans past due 90 days or more and still accruing		484			408				723			677				1,690
Total nonacquired nonperforming assets	$	1,055		$	1,042			$	1,090		$	759			$	1,910

*Acquired*
Nonaccrual loans	$	4,050		$	2,461			$	2,412		$	2,640			$	2,625
Other real estate and repossessed assets		999			999				999			1,094				1,021
Loans past due 90 days or more and still accruing		-			-				-			-				-
Total acquired nonperforming assets	$	5,049		$	3,460			$	3,411		$	3,734			$	3,646

*Selected asset quality ratios*
Nonperforming assets / Assets		0.15	%		0.14		%		0.14	%		0.16		%		0.22	%
Nonperforming assets / (Loans + OREO + repossessed assets)		0.19			0.18				0.18			0.21				0.27
Net charge-offs (recoveries) to average loans (annualized)		0.03			0.11				0.08			0.14				0.05
Allowance for loan losses to total loans		0.52			0.64				0.64			0.70				0.69
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) ⁽⁵⁾		0.06			0.06				0.07			0.05				0.14
Allowance for loan losses / (Nonacquired nonaccrual loans +
nonacquired loans past due 90 days or more and still accruing)		2,343.92			2,278.77				1,453.12			1,974.31				810.45


	As of
	September 30,			June 30,				March 31,			December 31,				September 30,
Additional Information - Allowance for Loan Losses		2018			2018				2018			2017				2017
Allowance for loan losses excluding CBI loans (factoring receivables)		16,159			15,397				15,239			14,385				13,764
Nonacquired loans held for investment ⁽⁵⁾		1,774,835			1,614,376				1,531,475			1,455,376				1,349,254
Allowance for loan losses allocated to CBI loans (factoring receivables)		600			600				600			600				500
CBI loans (factoring receivables)		151,985			141,455				136,194			118,710				119,110

	For the Three Months Ended
	September 30,			June 30,				March 31,			December 31,				September 30,
Taxable Equivalent Yields/Rates		2018			2018				2018			2017				2017
Interest income:
Loans		5.74	%		5.74		%		5.66	%		5.45		%		5.45	%
Mortgage loans held-for-sale		4.92			3.71				4.85			2.96				3.56
Interest on securities:
Taxable		3.10			3.14				3.11			3.09				3.03
Non-taxable		4.01			4.23				4.06			4.81				4.86
Cash balances in other banks		2.13			1.80				1.55			1.37				1.32
Funds sold		-			-				1.38			-				-
Total interest-earning assets		5.41			5.38				5.29			5.10				5.04

Interest expense:
Interest on deposits		0.97			0.84				0.67			0.62				0.59
Interest on FHLB advances		3.09			4.13				4.11			4.02				4.08
Interest on securities sold under agreements to repurchase
repurchase		1.05			-				-			-				-
Interest on subordinated debt		6.47			6.30				6.41			6.27				6.27
Total interest-bearing liabilities		1.05			0.93				0.76			0.73				0.70
Net interest spread		4.36			4.45				4.53			4.37				4.34
Net interest margin		4.69	%		4.77		%		4.80	%		4.63		%		4.58	%

	As of
	September 30,			June 30,				March 31,			December 31,				September 30,
		2018			2018				2018			2017				2017
Shareholders' Equity and Capital Ratios
Tier 1 leverage ratio		11.40	%		11.24		%		10.98	%		10.89		%		11.42	%
Common equity tier 1 capital ratio		13.03			13.43				13.03			12.54				12.78
Tier 1 risk-based capital ratio		13.03			13.43				13.03			12.54				12.78
Total risk-based capital ratio		14.74			15.06				14.66			14.37				14.64
Equity / Assets		16.69			16.08				16.24			14.61				15.64
Tangible common equity to tangible assets		10.82	%		11.27		%		11.26	%		10.75		%		11.46	%
Book value per share	$	33.16		$	29.97			$	29.35		$	27.05			$	26.97
Tangible book value per share	$	20.09		$	19.86			$	19.21		$	19.05			$	18.84

	For the Three Months Ended
	September 30,			June 30,				March 31,			December 31,				September 30,
		2018			2018				2018			2017				2017
Detail of Noninterest Income
Service charges and fees on deposit accounts	$	1,166		$	1,029			$	1,012		$	733			$	671
Mortgage origination and fee income		1,825			2,262				1,895			2,450				2,780
Merchant sponsorship revenue		749			675				720			592				622
Income from bank-owned life insurance		323			276				286			210				210
Wealth management fees		16			15				15			11				12
(Loss) gain on sale of other real estate		-			(32	)			171			(66	)			6
Gain (loss) on sale of investments		-			2				191			(119	)			-
Other noninterest income		689			448				418			814				245
Total noninterest income	$	4,768		$	4,675			$	4,708		$	4,625			$	4,546

	For the Three Months Ended
	September 30,			June 30,				March 31,			December 31,				September 30,
		2018			2018				2018			2017				2017
Detail of Noninterest Expense
Salaries and employee benefits	$	14,336		$	12,498			$	12,460		$	10,016			$	9,804
Commission-based compensation		1,876			1,825				1,501			1,700				1,748
Occupancy and equipment, net		2,439			2,025				1,994			1,649				1,608
Data processing expenses		1,820			1,369				3,356			1,437				976
Advertising and marketing expenses		296			361				268			349				309
Legal fees		384			496				160			219				204
FDIC insurance assessments		267			226				281			145				351
Property and casualty insurance premiums		232			251				224			253				229
Accounting and audit expenses		388			332				335			209				288
Consulting and other professional expenses		1,347			568				538			888				510
Telecommunications expenses		295			227				229			217				203
ORE, Repo asset and other collection expenses		63			71				69			75				26
Core deposit intangible amortization		1,306			738				739			393				366
Other noninterest expense		2,047			1,632				1,821			1,460				1,365
Total noninterest expense	$	27,096		$	22,619			$	23,975		$	19,010			$	17,987



	As of
	September 30,			June 30,				March 31,			December 31,				September 30,
Non-GAAP Reconciliation		2018			2018				2018			2017				2017
Total shareholders' equity	$	684,811		$	516,804			$	505,726		$	399,958			$	398,593
Less: intangible assets		269,297			173,590				174,225			117,849				119,688
Less: minority interest not included in intangible assets		677			617				457			414				570
Tangible common equity	$	414,837		$	342,597			$	331,044		$	281,695			$	278,335
Common shares outstanding at year or period end		20,649,948			17,246,659				17,229,043			14,788,436				14,777,230
Tangible book value per share	$	20.09		$	19.86			$	19.21		$	19.05			$	18.84
Total assets at end of period	$	4,103,345		$	3,214,367			$	3,113,766		$	2,737,676			$	2,549,134
Less: intangible assets		269,297			173,590				174,225			117,849				119,688
Adjusted total assets at end of period	$	3,834,048		$	3,040,777			$	2,939,541		$	2,619,827			$	2,429,446
Tangible common equity to tangible assets		10.82	%		11.27		%		11.26	%		10.75		%		11.46	%


	For the Three Months Ended
	September 30,			June 30,				March 31,			December 31,				September 30,
		2018			2018				2018			2017				2017
Non-GAAP Reconciliation
Net income to common shareholders	$	11,976		$	10,684			$	9,083		$	1,003			$	6,697
Plus: merger/conversion-related expenses (net of tax)		752			445				1,826			815				340
Adjusted net income to common shareholders	$	12,728		$	11,129			$	10,909		$	1,818			$	7,037
Net earnings per common share	$	0.59		$	0.61			$	0.52		$	0.07			$	0.46
Effect to adjust for merger/conversion-related expenses
(net of tax)		0.04			0.02				0.10			0.05				0.02
Adjusted net earnings per diluted share	$	0.63		$	0.63			$	0.62		$	0.12			$	0.48
Total average shareholders' equity	$	642,367		$	510,958			$	500,901		$	402,317			$	376,129
Less: average intangible assets		248,900			173,953				173,766			119,415				108,553
Less: average minority interest not included
in intangible assets		435			366				326			357				356
Average tangible common equity	$	393,032		$	336,639			$	326,809		$	282,545			$	267,220
Net income to common shareholders		11,976			10,684				9,083			1,003				6,697
Return on average tangible common equity (ROATCE)		12.09	%		12.73		%		11.27	%		1.41		%		9.94	%
Return on average tangible common equity		12.09	%		12.73		%		11.27	%		1.41		%		9.94	%
Effect of merger/conversion-related expenses (net of tax)		0.76			0.53				2.27			1.14				0.50
ROATCE (excluding merger/conversion-related expenses)		12.85	%		13.26		%		13.54	%		2.55		%		10.45	%
Return on average assets		1.23	%		1.36		%		1.18	%		0.15		%		1.08	%
Effect of merger/conversion-related expenses (net of tax)		0.08			0.06				0.24			0.12				0.05
ROAA (excluding merger/conversion related-expenses)		1.31	%		1.42		%		1.42	%		0.28		%		1.14	%
Efficiency ratio:
Net interest income	$	40,021		$	33,403			$	32,900		$	27,400			$	25,641
Total noninterest income		4,768			4,675				4,708			4,625				4,546
Less: Gain (loss) on sale of securities		-			2				191			(119	)			-
Operating revenue	$	44,789		$	38,076			$	37,417		$	32,144			$	30,187
Expenses:
Total noninterest expenses	$	27,096		$	22,619			$	23,975		$	19,010			$	17,987
Efficiency ratio		60.50	%		59.40		%		64.08	%		59.14		%		59.59	%

Operating efficiency ratio:
Net interest income	$	40,021		$	33,403			$	32,900		$	27,400			$	25,641
Total noninterest income		4,768			4,675				4,708			4,625				4,546
Less: Gain (loss) on sale of securities		-			2				191			(119	)			-
Operating revenue	$	44,789		$	38,076			$	37,417		$	32,144			$	30,187
Expenses:
Total noninterest expenses	$	27,096		$	22,619			$	23,975		$	19,010			$	17,987
Less: merger/conversion-related expenses		897			542				2,396			1,172				417
Adjusted noninterest expenses	$	26,199		$	22,077			$	21,579		$	17,838			$	17,570
Operating efficiency ratio		58.49	%		57.98		%		57.67	%		55.49		%		58.20	%


(1) Excludes securities gains
(2) After-tax impact of merger/conversion-related expenses of $752, $445, $1,826, $815 and $340, respectively, for the periods presented
(3) Excludes merger/conversion-related expenses
(4) Net income to common shareholders / average assets
(5) Excludes CBI loans (factoring receivables)


NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data)

Assets
	September 30, 2018			December 31, 2017
Cash and due from banks	$	62,364		$	36,246
Interest-bearing deposits with banks		137,927			199,042
Cash and cash equivalents		200,291			235,288
Investment securities held-to-maturity (fair value of $24,447 and $25,932 at September 30, 2018
and December 31, 2017, respectively)		25,203			25,562
Investment securities available-for-sale		185,979			85,834
Other investments		13,743			11,350
Mortgage loans held-for-sale		15,533			29,191
Loans, net of unearned income		3,230,378			2,138,058
Less: allowance for loan losses		16,759			14,985
Loans, net		3,213,619			2,123,073
Premises and equipment, net		86,811			52,455
Accrued interest receivable		10,494			6,157
Bank-owned life insurance		51,573			31,584
Other real estate		1,339			1,094
Deferred tax assets, net		18,041			12,041
Goodwill		249,459			113,394
Core deposit intangible, net		19,838			4,455
Other assets		11,422			6,198
Total assets	$	4,103,345		$	2,737,676


Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	932,089		$	697,144
Interest-bearing demand		663,155			362,266
Savings and money market		1,218,215			951,846
Time		518,223			274,575
Total deposits		3,331,682			2,285,831
Federal Home Loan Bank advances		2,000			7,000
Securities sold under agreements to repurchase		18,340			-
Subordinated debt		37,211			24,553
Accrued interest payable		1,790			900
Other liabilities		27,511			19,434
Total liabilities		3,418,534			2,337,718

Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding		-			-
Common stock, $0.01 par value, 30,000,000 shares authorized, 20,649,948 and 14,788,436
shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		206			148
Additional paid-in capital		604,129			347,999
Retained earnings		75,732			43,989
Accumulated other comprehensive (loss) income		(2,867	)		474
Total shareholders' equity attributable to National Commerce Corporation		677,200			392,610
Noncontrolling interest		7,611			7,348
Total shareholders' equity		684,811			399,958
Total liabilities and shareholders' equity	$	4,103,345		$	2,737,676


NATIONAL COMMERCE CORPORATION
Unaudited Consolidated Statements of Earnings
(In thousands, except share and per share data)

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
		2018		2017		2018		2017
Interest and dividend income:
Interest and fees on loans	$	43,691	$	26,780	$	113,827	$	75,360
Interest and dividends on taxable investment securities		1,496		694		3,878		1,871
Interest on non-taxable investment securities		190		195		570		592
Interest on interest-bearing deposits and federal funds sold		818		533		1,953		1,744

Total interest income		46,195		28,202		120,228		79,567

Interest expense:
Interest on deposits		5,561		2,101		12,374		6,165
Interest on FHLB advances		27		72		170		212
Interest on securities sold under agreements to repurchase		49		-		49		1
Interest on subordinated debt		537		388		1,311		1,165

Total interest expense		6,174		2,561		13,904		7,543

Net interest income		40,021		25,641		106,324		72,024

Provision for loan losses		1,001		1,105		3,175		2,416

Net interest income after provision for loan losses		39,020		24,536		103,149		69,608

Other income:
Service charges and fees on deposit accounts		1,166		671		3,207		1,978
Mortgage origination and fee income		1,825		2,780		5,982		9,079
Merchant sponsorship revenue		749		622		2,144		1,968
Income from bank-owned life insurance		323		210		885		645
Wealth management fees		16		12		46		36
Gain (loss) on other real estate		-		6		139		110
Gain on sale of investment securities available-for-sale		-		-		193		28
Other		689		245		1,555		1,242

Total other income		4,768		4,546		14,151		15,086

Other expense:
Salaries and employee benefits		14,336		9,804		39,294		29,540
Commission-based compensation		1,876		1,748		5,202		5,155
Occupancy and equipment, net		2,439		1,608		6,458		4,560
Core deposit intangible amortization		1,306		366		2,783		1,062
Other operating expense		7,139		4,461		19,953		13,868

Total other expense		27,096		17,987		73,690		54,185

Earnings before income taxes		16,692		11,095		43,610		30,509

Income tax expense		4,040		3,828		10,119		9,950

Net earnings		12,652		7,267		33,491		20,559

Less: Net earnings attributable to noncontrolling interest		676		570		1,748		1,494

Net earnings attributable to National Commerce Corporation	$	11,976	$	6,697	$	31,743	$	19,065


Weighted average common and diluted shares outstanding
Basic		19,838,772		14,300,974		18,104,834		13,469,327

Diluted		20,360,770		14,679,546		18,561,522		13,854,074

Basic earnings per common share	$	0.60	$	0.47	$	1.75	$	1.42

Diluted earnings per common share	$	0.59	$	0.46	$	1.71	$	1.38


NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis


	For the Three Months Ended
(Dollars in thousands)	September 30, 2018								June 30, 2018									March 31, 2018									December 31, 2017									September 30, 2017
Interest-earning assets	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			Average Balance			Interest Income/ Expense			Average Yield/ Rate
Loans	$	3,002,640		$	43,459		5.74	%		$	2,480,578		$	35,501		5.74	%		$	2,451,352		$	34,220		5.66	%		$	2,091,443		$	28,704		5.45	%		$	1,937,115		$	26,634		5.45	%
Mortgage loans held-for-sale		18,935			235		4.92				23,247			215		3.71				17,402			208		4.85				18,237			136		2.96				16,811			151		3.56
Securities:
Taxable securities		191,157			1,496		3.10				155,062			1,212		3.14				152,748			1,170		3.11				97,175			756		3.09				90,969			694		3.03
Tax-exempt securities		25,102			254		4.01				24,393			257		4.23				25,169			252		4.06				25,005			303		4.81				25,286			310		4.86
Cash balances in other banks		152,715			818		2.13				132,868			596		1.80				138,358			529		1.55				128,606			443		1.37				159,973			533		1.32
Funds sold		-			-		0.00				-			-		0.00				2,946			10		1.38				-			-		0.00				-			-		0.00
Total interest-earning assets		3,390,549		$	46,262		5.41				2,816,148		$	37,781		5.38				2,787,975		$	36,389		5.29				2,360,466		$	30,342		5.10				2,230,154		$	28,322		5.04
Noninterest-earning assets		475,094									333,297									328,605									255,239									228,231
Total assets	$	3,865,643								$	3,149,445								$	3,116,580								$	2,615,705								$	2,458,385

Interest-bearing liabilities
Interest-bearing transaction accounts	$	644,863		$	877		0.54	%		$	517,769		$	632		0.49	%		$	423,537		$	322		0.31	%		$	331,876		$	277		0.33	%		$	314,925		$	207		0.26	%
Savings and money market deposits		1,162,707			3,114		1.06				975,986			2,182		0.90				1,038,751			1,816		0.71				884,660			1,381		0.62				827,526			1,233		0.59
Time deposits		470,211			1,570		1.32				342,890			1,038		1.21				327,011			823		1.02				285,669			707		0.98				273,630			661		0.96
Federal Home Loan Bank		3,467			27		3.09				7,000			72		4.13				7,000			71		4.11				7,000			71		4.02				7,000			72		4.08
Securities sold under agreements to repurchase		18,457			49		1.05				-			-		0.00				-			-		0.00				381			-		0.00				228			-		0.00
Subordinated debt		32,950			537		6.47				24,574			386		6.30				24,560			388		6.41				24,547			388		6.27				24,533			388		6.27
Total interest-bearing liabilities		2,332,655		$	6,174		1.05				1,868,219		$	4,310		0.93				1,820,859		$	3,420		0.76				1,534,133		$	2,824		0.73				1,447,842		$	2,561		0.70
Noninterest-bearing deposits		866,974									746,940									772,358									657,786									615,130
Total funding sources		3,199,629									2,615,159									2,593,217									2,191,919									2,062,972
Noninterest-bearing liabilities		23,647									23,328									22,462									21,469									19,284
Shareholders' equity		642,367									510,958									500,901									402,317									376,129
	$	3,865,643								$	3,149,445								$	3,116,580								$	2,615,705								$	2,458,385
Net interest rate spread							4.36	%								4.45	%								4.53	%								4.37	%								4.34	%
Net interest income/margin (taxable equivalent)					40,088		4.69	%						33,471		4.77	%						32,969		4.80	%						27,518		4.63	%						25,761		4.58	%
Tax equivalent adjustment					67									68									69									118									120
Net interest income/margin				$	40,021		4.68	%					$	33,403		4.76	%					$	32,900		4.79	%					$	27,400		4.61	%					$	25,641		4.56	%

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis

	For the Nine Months Ended
(Dollars in thousands, except yields and rates)	September 30, 2018								September 30, 2017
Interest-earning assets	Average Balance		Interest Income/ Expense			Average Yield/ Rate			Average Balance			Interest Income/ Expense			Average Yield/ Rate
Loans	$	2,646,876		$	113,180		5.72	%		$	1,860,398		$	74,835		5.38	%
Mortgage loans held for sale		19,867			658		4.43				18,962			543		3.83
Securities:
Taxable securities		166,463			3,878		3.11				86,903			1,871		2.88
Tax-exempt securities		24,888			763		4.10				25,559			940		4.92
Cash balances in other banks		141,366			1,943		1.84				222,307			1,744		1.05
Funds sold		971			10		1.38				-			-		0.00
Total interest-earning assets		3,000,431		$	120,432		5.37				2,214,129		$	79,933		4.83
Non-interest earning assets		379,536									222,139
Total assets	$	3,379,967								$	2,436,268

Interest-bearing liabilities
Interest-bearing transactions accounts	$	529,534		$	1,831		0.46	%		$	329,444		$	667		0.27	%
Savings and money market deposits		1,059,602			7,112		0.90				817,815			3,467		0.57
Time deposits		380,562			3,431		1.21				289,924			2,031		0.94
Federal Home Loan Bank advances		5,809			170		3.91				7,000			212		4.05
Securities sold under agreements to repurchase		6,220			49		1.05				741			1		0.18
Subordinated debt		27,392			1,311		6.40				24,520			1,165		6.35
Total interest-bearing liabilities		2,009,119		$	13,904		0.93				1,469,444		$	7,543		0.69
Non-interest bearing deposits		795,771									609,698
Total funding sources		2,804,890									2,079,142
Non-interest bearing liabilities		23,150									17,566
Shareholders' equity		551,927									339,560
	$	3,379,967								$	2,436,268
Net interest rate spread							4.44	%								4.14	%
Net interest income/margin (taxable equivalent)					106,528		4.75	%						72,390		4.37	%
Tax equivalent adjustment					204									366
Net interest income/margin				$	106,324		4.74	%					$	72,024		4.35	%