National Commerce Corporation Announces Second Quarter 2016

BIRMINGHAM, Ala., July 26, 2016 (GLOBE NEWSWIRE) -- National Commerce Corporation (Nasdaq:NCOM) (the “Company” or “NCC”), the parent company of National Bank of Commerce, today reported second quarter 2016 net income to common shareholders of $4.4 million, compared to $2.3 million for the second quarter of 2015. Diluted net earnings per share were $0.39 in the second quarter of 2016, compared to $0.34 in the first quarter of 2016 and $0.24 in the second quarter of 2015.

“National Commerce had a good second quarter and first six months of 2016,” said John H. Holcomb, III, Chairman and Chief Executive Officer of the Company. “This quarter was the first quarter for us to achieve a Return on Average Assets of 1.0%, and we are pleased to achieve that milestone. With our consistent focus on asset quality, we are glad to see nice improvement in our asset quality metrics, though we remind ourselves that we need to continue to maintain focus in that area.”

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

Net Interest Margin (taxable equivalent) of 4.23%, up 0.01% from the 4.22% reported for the second quarter of 2015. The margin increased 0.02% compared to the 2016 first quarter.
Return on Average Assets of 1.00%, compared to 0.75% for the second quarter of 2015 and 0.86% for the first quarter of 2016.
Return on Average Equity of 7.84%, compared to 5.22% for the second quarter of 2015 and 6.95% for the first quarter of 2016.
Return on Average Tangible Common Equity of 10.31%, compared to 6.35% for the second quarter of 2015 and 9.21% for the first quarter of 2016.
Second quarter 2016 loan growth (excluding mortgage loans held-for-sale) of $23.0 million.
Decrease in deposits of $37.3 million.
$91.5 million in mortgage production, compared to $84.8 million for the second quarter of 2015.
$167.1 million in purchased volume in the factoring division, compared to $188.6 million for the second quarter of 2015.
Decrease in non-acquired non-performing assets to $2.7 million from $3.4 million at March 31, 2016.
Annualized net charge-offs of 0.05% of average loans, compared to 0.16% for the second quarter of 2015.
Provision for loan losses of $0.9 million, compared to $120 thousand in the second quarter of 2015 and $1.5 million in the first quarter of 2016.
Ending tangible book value per share of $15.87.
Ending book value per share of $20.80.

The Company will host a live audio webcast conference call beginning at 8:00 a.m. Central Time on July 27, 2016 to discuss earnings and operating results for the second quarter of 2016. Investors may call in (toll free) by dialing (855) 871-0559 (conference ID 46508527). A replay of the conference call will be available until July 29, 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 Atlanta, Georgia. 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.

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Earnings Summary
Interest income	$	18,382		$	18,313		$	16,488		$	13,450		$	12,714
Interest expense		1,730			1,650			1,507			1,191			1,071
Net interest income		16,652			16,663			14,981			12,259			11,643
Provision for loan losses		901			1,533			631			201			120
Other noninterest income⁽¹⁾		3,357			3,125			2,136			2,353			2,206
Merger/conversion-related expenses		12			138			395			122			168
Other noninterest expense⁽²⁾		12,242			11,915			11,049			9,773			9,448
Income before income taxes		6,854			6,202			5,042			4,516			4,113
Income tax expense		2,072			2,083			1,667			1,453			1,264
Net income before minority interest		4,782			4,119			3,375			3,063			2,849
Net income attributable to minority interest		428			340			437			573			593
Net income to common shareholders	$	4,354		$	3,779		$	2,938		$	2,490		$	2,256

Weighted average common and diluted shares outstanding
Basic		10,866,788			10,855,871			10,345,146			9,438,541			9,438,541
Diluted		11,067,972			11,039,208			10,552,871			9,594,472			9,569,695

Net earnings per common share
Basic	$	0.40		$	0.35		$	0.28		$	0.26		$	0.24
Diluted	$	0.39		$	0.34		$	0.28		$	0.26		$	0.24

	June 30,			March 31,			December 31,			September 30,			June 30,
Selected Performance Ratios	2016			2016			2015			2015			2015
Return on average assets (ROAA)⁽³⁾		1.00	%		0.86	%		0.72	%		0.75	%		0.75	%
Return on average equity (ROAE)		7.84			6.95			5.76			5.62			5.22
Return on average tangible common equity
(ROATCE)		10.31			9.21			7.48			6.85			6.35
Net interest margin - taxable equivalent		4.23			4.21			4.06			4.02			4.22
Efficiency ratio		61.24			60.91			66.86			67.72			69.43
Operating efficiency ratio⁽²⁾		61.18			60.21			64.55			66.88			68.22
Noninterest income / average assets (annualized)		0.77			0.71			0.52			0.71			0.73
Noninterest expense / average assets (annualized)		2.83			2.76			2.80			2.99			3.19
Yield on loans		5.06			5.17			5.17			5.13			5.15
Cost of total deposits		0.40	%		0.42	%		0.40	%		0.39	%		0.38	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Factoring Metrics	2016			2016			2015			2015			2015
Recourse purchased volume	$	68,567		$	66,554		$	74,922		$	82,661		$	89,009
Non-recourse purchased volume		98,550			112,196			97,142			100,055			99,614
Total purchased volume	$	167,117		$	178,750		$	172,064		$	182,716		$	188,623
Average turn (days)		39.92			38.16			39.68			37.97			37.66
Net charge-offs / total purchased volume		0.07	%		0.27	%		0.12	%		0.06	%		(0.04	)%
Average discount rate		1.69	%		1.72	%		1.73	%		1.74	%		1.67	%

	June 30,			March 31,			December 31,			September 30,			June 30,
Mortgage Metrics	2016			2016			2015			2015			2015
Total production ($)	$	91,466		$	63,802		$	58,903		$	82,276		$	84,796
Refinance (%)		17.2	%		18.2	%		26.0	%		19.1	%		18.6	%
Purchases (%)		82.8	%		81.8	%		74.0	%		80.9	%		81.4	%

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
Balance Sheet Highlights	2016			2016			2015			2015			2015
Cash and cash equivalents	$	86,163		$	123,853		$	212,457		$	192,882		$	142,393
Total securities		89,495			82,954			80,863			45,911			42,586
Mortgage loans held-for-sale		19,468			12,529			15,020			7,926			13,750
Acquired purchased credit-impaired loans		10,382			10,205			10,443			5,615			5,724
Acquired non-purchased credit-impaired loans		346,685			356,305			370,872			123,730			131,953
Nonacquired loans held for investment ⁽⁴⁾		978,836			942,781			870,471			811,011			757,976
CBI loans (factoring receivables)		70,673			74,248			67,628			74,780			75,000
Total gross loans held for investment		1,406,576			1,383,539			1,319,414			1,015,136			970,653
Allowance for loan losses		11,642			10,927			9,842			9,391			9,274
Total intangibles		53,154			53,312			53,474			31,291			31,310
Total assets		1,735,782			1,735,940			1,763,369			1,350,781			1,256,614
Total deposits		1,460,877			1,498,197			1,514,458			1,141,837			1,051,483
FHLB and other borrowings		7,000			7,000			22,000			22,000			22,000
Subordinated debt		24,540			-			-			-			-
Total liabilities		1,509,662			1,514,840			1,546,733			1,173,358			1,081,985
Minority interest		7,362			7,275			7,372			7,508			7,527
Common stock		109			109			108			94			94
Total shareholders' equity		226,120			221,100			216,636			177,423			174,629
Tangible common equity	$	172,538		$	167,447		$	162,724		$	145,558		$	142,726
End of period common shares outstanding		10,870,033			10,861,487			10,824,969			9,438,541			9,438,541

	As of and For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Asset Quality Analysis	2016			2016			2015			2015			2015
Nonacquired
Nonaccrual loans	$	248		$	184		$	187		$	829		$	2,688
Other real estate and repossessed assets		2,068			2,792			3,873			3,562			1,494
Loans past due 90 days or more and still accruing		406			452			252			148			44
Total nonacquired nonperforming assets	$	2,722		$	3,428		$	4,312		$	4,539		$	4,226

Acquired
Nonaccrual loans	$	3,099		$	3,617		$	3,508		$	2,829		$	2,795
Other real estate and repossessed assets		92			92			92			72			142
Loans past due 90 days or more and still accruing		-			-			-			-			-
Total acquired nonperforming assets	$	3,191		$	3,709		$	3,600		$	2,901		$	2,937

Selected asset quality ratios
Nonperforming assets / Assets		0.34	%		0.41	%		0.45	%		0.55	%		0.57	%
Nonperforming assets / (Loans + OREO + repossessed assets)		0.42			0.51			0.60			0.73			0.74
Net charge-offs (recoveries) to average loans (annualized)		0.05			0.13			0.06			0.03			0.16
Allowance for loan losses to total loans		0.83			0.79			0.75			0.93			0.96
Nonacquired nonperforming assets / (Nonacquired loans +
nonacquired OREO + nonacquired repossessed assets) ⁽⁴⁾		0.28			0.36			0.49			0.56			0.56
Allowance for loan losses to nonacquired nonperforming
loans		1,780.12			1,718.08			2,241.91			961.21			339.46
Allowance for loan losses to nonacquired loans⁽⁴⁾		1.14	%		1.11	%		1.07	%		1.10	%		1.13	%

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Taxable Equivalent Yields/Rates	2016			2016			2015			2015			2015
Interest income:
Loans		5.06	%		5.17	%		5.17	%		5.13	%		5.15	%
Mortgage loans held-for-sale		3.51			4.40			3.44			4.17			4.02
Interest on securities:
Taxable		1.94			2.68			3.05			3.30			3.33
Non-taxable		5.01			4.90			4.96			4.99			5.08
Cash balances in other banks		0.65			0.58			0.35			0.31			0.38
Total interest-earning assets		4.67			4.63			4.46			4.41			4.60

Interest expense:
Interest on deposits		0.54			0.56			0.54			0.50			0.50
Interest on FHLB and other borrowings		4.08			2.97			2.01			2.00			2.01
Interest on subordinated debt		6.34			-			-			-			-
Total interest-bearing liabilities		0.62			0.58			0.57			0.54			0.54
Net interest spread		4.05			4.05			3.89			3.87			4.06
Net interest margin		4.23	%		4.21	%		4.06	%		4.02	%		4.22	%

NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Shareholders' Equity and Capital Ratios
Tier 1 Leverage Ratio		9.51	%		9.13	%		9.68	%		10.39	%		11.09	%
Tier 1 Common Capital Ratio		11.25			11.18			11.18			12.88			12.86
Tier 1 Risk-based Capital Ratio		11.25			11.18			11.18			12.88			12.86
Total Risk-based Capital Ratio		13.79			11.97			11.91			13.79			13.78
Equity / Assets		13.03			12.74			12.29			13.13			13.90
Tangible common equity to tangible assets		10.25	%		9.95	%		9.52	%		11.03	%		11.65	%
Book value per share	$	20.80		$	20.36		$	20.01		$	18.80		$	18.50
Tangible book value per share	$	15.87		$	15.42		$	15.03		$	15.42		$	15.12

	For the Three Months Ended

	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Detail of other noninterest expense
Salaries and employee benefits	$	6,907		$	6,945		$	6,077		$	5,186		$	5,114
Commission-based compensation		1,036			875			844			1,048			1,056
Occupancy and equipment expense		1,131			1,135			1,048			871			829
Data processing expenses		618			667			511			464			487
Advertising and marketing expenses		191			160			19			124			125
Legal fees		179			122			173			177			135
FDIC insurance assessments		257			263			242			205			152
Property and casualty insurance premiums		166			223			169			143			146
Accounting and audit expenses		249			250			332			211			212
Consulting and other professional expenses		184			243			387			238			164
Telecommunications expenses		140			159			132			144			135
ORE, Repo asset and other collection expenses		89			59			256			79			71
Core deposit intangible amortization		192			191			175			111			111
Other noninterest expense		915			761			1,079			894			879
Total noninterest expense	$	12,254		$	12,053		$	11,444		$	9,895		$	9,616


NATIONAL COMMERCE CORPORATION
Unaudited Financial Highlights
(In thousands, except share and per share amounts and percentages)

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
Non-GAAP Reconciliation	2016			2016			2015			2015			2015
Total shareholders' equity	$	226,120		$	221,100		$	216,636		$	177,423		$	174,629
Less: intangible assets		53,154			53,312			53,474			31,291			31,310
Less: minority interest not included in intangible assets		428			341			438			574			593
Tangible common equity	$	172,538		$	167,447		$	162,724		$	145,558		$	142,726
Common shares outstanding at year or period end		10,870,033			10,861,487			10,824,969			9,438,541			9,438,541
Tangible book value per share	$	15.87		$	15.42		$	15.03		$	15.42		$	15.12
Total assets at end of period	$	1,735,782		$	1,735,940		$	1,763,369		$	1,350,781		$	1,256,614
Less: intangible assets		53,154			53,312			53,474			31,291			31,310
Adjusted total assets at end of period	$	1,682,628		$	1,682,628		$	1,709,895		$	1,319,490		$	1,225,304
Tangible common equity to tangible assets		10.25	%		9.95	%		9.52	%		11.03	%		11.65	%
Total allowance for loan losses	$	11,642		$	10,927		$	9,842		$	9,391		$	9,274
Less: allowance for loan losses attributable to
CBI (factoring receivables)		500			500			500			500			715
Adjusted allowance for loan losses at end of period	$	11,142		$	10,427		$	9,342		$	8,891		$	8,559
Nonacquired loans held for investment ⁽⁴⁾		978,836			942,781			870,471			811,011			757,976
Allowance for loan losses to nonacquired loans⁽⁴⁾		1.14	%		1.11	%		1.07	%		1.10	%		1.13	%

	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Non-GAAP Reconciliation
Total average shareholders' equity	$	223,357		$	218,730		$	202,299		$	175,821		$	173,354
Less: average intangible assets		53,234			53,388			46,113			31,158			30,555
Less: average minority interest not included
in intangible assets		284			231			331			371			315
Average tangible common equity	$	169,839		$	165,111		$	155,855		$	144,292		$	142,484
Net income to common shareholders		4,354			3,779			2,938			2,490			2,256
Return on average tangible common equity (ROATCE)		10.31	%		9.21	%		7.48	%		6.85	%		6.35	%
Efficiency ratio:
Net interest income	$	16,652		$	16,663		$	14,981		$	12,259		$	11,643
Total noninterest income		3,357			3,125			2,136			2,353			2,206
Less: gain (loss) on sale of securities		-			-			-			-			-
Operating revenue	$	20,009		$	19,788		$	17,117		$	14,612		$	13,849
Expenses:
Total noninterest expenses	$	12,254		$	12,053		$	11,444		$	9,895		$	9,616
Efficiency ratio		61.24	%		60.91	%		66.86	%		67.72	%		69.43	%
Operating efficiency ratio:
Net interest income	$	16,652		$	16,663		$	14,981		$	12,259		$	11,643
Total noninterest income		3,357			3,125			2,136			2,353			2,206
Less: gain (loss) on sale of securities		-			-			-			-			-
Operating revenue	$	20,009		$	19,788		$	17,117		$	14,612		$	13,849
Expenses:
Total noninterest expenses	$	12,254		$	12,053		$	11,444		$	9,895		$	9,616
Less: merger/conversion-related expenses		12			138			395			122			168
Adjusted noninterest expenses	$	12,242		$	11,915		$	11,049		$	9,773		$	9,448
Operating efficiency ratio		61.18	%		60.21	%		64.55	%		66.88	%		68.22	%

(1) Excludes securities gains
(2) Excludes merger/conversion-related expenses
(3) Net income to common shareholders / average assets
(4) Excludes CBI loans

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

Assets
	June 30, 2016		December 31, 2015
Cash and due from banks	$	27,283	$	27,173
Interest-bearing deposits with banks		58,880		185,284
Cash and cash equivalents		86,163		212,457
Investment securities held-to-maturity (fair value of $28,215 and $27,843 at June 30, 2016
and December 31, 2015, respectively)		26,993		27,458
Investment securities available-for-sale		62,502		53,405
Other investments		7,715		6,235
Mortgage loans held-for-sale		19,468		15,020
Loans, net of unearned income		1,406,576		1,319,414
Less: allowance for loan losses		11,642		9,842
Loans, net		1,394,934		1,309,572
Premises and equipment, net		32,496		31,432
Accrued interest receivable		3,690		3,510
Bank-owned life insurance		27,631		27,223
Other real estate		2,160		3,965
Deferred tax assets, net		13,853		14,190
Goodwill		50,748		50,686
Core deposit intangible, net		2,406		2,788
Other assets		5,023		5,428
Total assets	$	1,735,782	$	1,763,369

Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	384,854	$	382,946
Interest-bearing demand		207,673		202,649
Savings and money market		584,347		611,887
Time		284,003		316,976
Total deposits		1,460,877		1,514,458
Federal Home Loan Bank advances		7,000		22,000
Subordinated debt		24,540		-
Accrued interest payable		671		627
Other liabilities		16,574		9,648
Total liabilities		1,509,662		1,546,733
Commitments and contingencies
Shareholders’ equity:
Preferred stock, 250,000 shares authorized, no shares issued or outstanding		-		-
Common stock, $0.01 par value, 30,000,000 shares authorized, 10,870,033 and 10,824,969
shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		109		108
Additional paid-in capital		203,370		202,456
Retained earnings		14,285		6,152
Accumulated other comprehensive income		994		548
Total shareholders' equity attributable to National Commerce Corporation		218,758		209,264
Noncontrolling interest		7,362		7,372
Total shareholders' equity		226,120		216,636
Total liabilities and shareholders' equity	$	1,735,782	$	1,763,369

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

	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
Interest and dividend income:
Interest and fees on loans	$	17,669	$	12,226		$	35,152	$	24,018
Interest and dividends on taxable investment securities		380		269			792		525
Interest on non-taxable investment securities		204		114			404		156
Interest on interest-bearing deposits and federal funds sold		129		105			347		208
Total interest income		18,382		12,714			36,695		24,907
Interest expense:
Interest on deposits		1,476		961			3,045		1,879
Interest on borrowings		71		110			152		219
Interest on subordinated debt		183		-			183		-
Total interest expense		1,730		1,071			3,380		2,098
Net interest income		16,652		11,643			33,315		22,809
Provision for loan losses		901		120			2,434		281
Net interest income after provision for loan losses		15,751		11,523			30,881		22,528
Other income:
Service charges and fees on deposit accounts		505		308			985		575
Mortgage origination and fee income		1,627		1,505			3,019		2,776
Merchant sponsorship revenue		491		191			1,013		191
Income from bank-owned life insurance		204		86			408		165
Wealth management fees		11		13			24		32
Gain (loss) on other real estate		119		(11	)		275		(24	)
Other		400		114			758		255
Total other income		3,357		2,206			6,482		3,970
Other expense:
Salaries and employee benefits		6,907		5,114			13,852		10,101
Commission-based compensation		1,036		1,056			1,911		1,852
Occupancy and equipment		1,131		829			2,266		1,665
Core deposit intangible amortization		192		111			383		222
Other operating expense		2,988		2,506			5,895		5,066
Total other expense		12,254		9,616			24,307		18,906
Earnings before income taxes		6,854		4,113			13,056		7,592
Income tax expense		2,072		1,264			4,155		2,356
Net earnings		4,782		2,849			8,901		5,236
Less: Net earnings attributable to noncontrolling interest		428		593			768		1,059
Net earnings attributable to National Commerce Corporation	$	4,354	$	2,256		$	8,133	$	4,177

Weighted average common and diluted shares outstanding
Basic		10,866,788		9,438,541			10,861,330		8,574,900
Diluted		11,067,972		9,569,695			11,059,906		8,687,986

Basic earnings per common share	$	0.40	$	0.24		$	0.75	$	0.49
Diluted earnings per common share	$	0.39	$	0.24		$	0.74	$	0.48

NATIONAL COMMERCE CORPORATION
Average Balance Sheets and Net Interest Analysis


	For the Three Months Ended
(Dollars in thousands)	June 30, 2016							March 31, 2016							December 31, 2015							September 30, 2015							June 30, 2015
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	$	1,391,789	$	17,523		5.06	%	$	1,352,737	$	17,373		5.17	%	$	1,204,437	$	15,699		5.17	%	$	992,223	$	12,826		5.13	%	$	944,373	$	12,116		5.15	%
Mortgage loans held-for-sale		17,288		151		3.51			10,503		115		4.40			9,697		84		3.44			9,890		104		4.17			11,180		112		4.02
Securities:
Taxable securities		78,907		380		1.94			61,764		412		2.68			48,097		370		3.05			31,132		259		3.30			32,402		269		3.33
Tax-exempt securities		26,036		324		5.01			26,041		317		4.90			21,982		275		4.96			17,245		217		4.99			14,297		181		5.08
Cash balances in other banks		80,140		129		0.65			151,318		218		0.58			191,077		168		0.35			166,715		129		0.31			112,081		105		0.38
Total interest-earning assets		1,594,160	$	18,507		4.67			1,602,363	$	18,435		4.63			1,475,290	$	16,596		4.46			1,217,205	$	13,535		4.41			1,114,333	$	12,783		4.60
Noninterest-earning assets		148,959							156,260							145,791							96,824							95,949
Total assets	$	1,743,119						$	1,758,623						$	1,621,081						$	1,314,029						$	1,210,282

Interest-bearing liabilities
Interest-bearing transaction accounts	$	210,776	$	124		0.24	%	$	204,339	$	123		0.24	%	$	196,140	$	129		0.26	%	$	182,056	$	118		0.26	%	$	157,261	$	97		0.25	%
Savings and money market deposits		603,173		698		0.47			620,429		762		0.49			542,631		612		0.45			443,306		486		0.43			408,117		417		0.41
Time deposits		288,350		654		0.91			306,106		684		0.90			291,399		654		0.89			228,298		476		0.83			208,388		447		0.86
Federal Home Loan Bank and other borrowed money		7,000		71		4.08			10,959		81		2.97			22,104		112		2.01			22,000		111		2.00			22,000		110		2.01
Subordinated debt		11,605		183		6.34			-		-		-			-		-		-			-		-		-			-		-		-
Total interest-bearing liabilities		1,120,904	$	1,730		0.62			1,141,833	$	1,650		0.58			1,052,274	$	1,507		0.57			875,660	$	1,191		0.54			795,766	$	1,071		0.54
Noninterest-bearing deposits		388,363							386,674							354,812							254,402							233,136
Total funding sources		1,509,267							1,528,507							1,407,086							1,130,062							1,028,902
Noninterest-bearing liabilities		10,495							11,386							11,696							8,146							8,026
Shareholders' equity		223,357							218,730							202,299							175,821							173,354
	$	1,743,119						$	1,758,623						$	1,621,081						$	1,314,029						$	1,210,282
Net interest rate spread						4.05	%						4.05	%						3.89	%						3.87	%						4.06	%
Net interest income/margin (taxable equivalent)				16,777		4.23	%				16,785		4.21	%				15,089		4.06	%				12,344		4.02	%				11,712		4.22	%
Tax equivalent adjustment				125							122							108							85							69
Net interest income/margin			$	16,652		4.20	%			$	16,663		4.18	%			$	14,981		4.03	%			$	12,259		4.00	%			$	11,643		4.19	%

National Commerce Corporation Announces Second Quarter 2016 Earnings

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