SUMMARY

 

This summary is a brief overview of the key aspects of the merger and the issuance of shares of NCC common stock and cash in the merger. This summary only identifies those aspects of the merger that we believe are most significant to you in your review of this proxy statement-prospectus. It is necessarily general and abbreviated, and it is not intended to be a complete explanation of all of the matters covered in this proxy statement-prospectus. To understand the merger and the issuance of cash and shares of NCC common stock in the merger, please see the more complete and detailed information in the sections that follow this summary, as well as the appendices included in this proxy statement-prospectus. For more information about NCC, see “Where You Can Find More Information” on page 74. We have included page references in this summary to direct you to other places in this proxy statement-prospectus where you can find a more complete description of the topics we have summarized. You are urged to read all of these documents in their entirety prior to returning your proxy or voting at the special meeting.

 

The Companies (See page 56 for NCC and NBC and page 57 for Patriot Bank)

 

National Commerce Corporation and National Bank of Commerce 

 

NCC, a Delaware corporation, is a financial holding company headquartered in Birmingham, Alabama. NCC engages in the business of banking through NBC, its wholly owned banking subsidiary.      

 

NBC provides a broad array of banking and other financial services to businesses, business owners, and professionals. NBC operates seven full-service banking offices in Alabama, located in Birmingham, Huntsville, Auburn-Opelika, and Baldwin County, ten full-service banking offices in Florida, located in Longwood, Winter Park, Orlando, Oviedo, Tavares, Ormond Beach, Port Orange, St. Augustine Beach and Vero Beach (including under the trade names “United Legacy Bank” and “Reunion Bank of Florida”) and two-full service banking offices in Georgia, located in Atlanta (Buckhead) and Decatur (including under the trade names “Private Bank of Buckhead,” “Private Bank of Decatur,” and “PrivatePlus Mortgage” for the mortgage division).

 

NCC engages in the business of factoring commercial receivables through NBC’s ownership of a 70% equity interest in CBI Holding Company, LLC (“CBI”). CBI owns Corporate Billing, LLC (“Corporate Billing”), 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.

 

As of March 31, 2017, NCC had total assets of approximately $2.4 billion, total net loans of approximately $1.8 billion, total deposits of approximately $2.1 billion and total shareholders’ equity of approximately $317.4 million. On June 12, 2017, NCC closed an underwritten public offering of 1,104,000 shares of its common stock at a price to the public of $37.00 per share, resulting in net proceeds of approximately $38.7 million after deducting underwriting discounts and commissions and estimated offering expenses.

 

NCC’s common stock is traded on the Nasdaq Global Select Market under the symbol “NCOM.” NCC’s principal executive office is located at 813 Shades Creek Parkway, Suite 100, Birmingham, Alabama 35209, and its telephone number is (205) 313-8100. NCC does not maintain a standalone website, but additional information about NCC may be found on NBC’s website at www.nationalbankofcommerce.com. Information contained on the website is not part of this proxy statement-prospectus, and is not incorporated by reference herein.

 

Patriot Bank

 

Patriot Bank is a Florida-chartered state nonmember bank which commenced operations in 2004 and is subject to the supervision and regulation of the Florida Office of Financial Regulation (the “FOFR”) and the Federal Deposit Insurance Corporation (the “FDIC”). Patriot Bank is a full service commercial bank, providing a wide range of business and consumer financial services in its target marketplaces. Patriot Bank’s main office is located in Trinity, Florida (Pasco County) and it also operates banking offices in New Port Richey (Pasco County), Clearwater (Pinellas County) and Palm Harbor (Pinellas County).

 

As of March 31, 2017, Patriot Bank had total assets of approximately $156 million, total deposits of approximately $133 million, total net loans of approximately $130 million, and shareholders’ equity of approximately $19 million.

 

The Merger Agreement (See page 40)

 

Under the terms of the merger agreement, Patriot Bank will merge with and into NBC, with NBC as the surviving bank. Both NCC and NBC will continue their existence under Delaware law and the laws of the United States, respectively, while Patriot Bank will cease to exist as a separate banking institution. The merger agreement is attached to this proxy statement-prospectus as Appendix A and is incorporated into this proxy statement-prospectus by reference. You are encouraged to read the entire merger agreement carefully, as it is the legal document that governs the proposed merger.

 

---

Table of Contents

 

What You Will Receive in the Merger (See page 40)

 

If the merger is completed, shareholders of Patriot Bank will receive, for each of their shares of Patriot Bank common stock, (i) 0.1711 shares of NCC common stock, which is referred to herein as the “exchange ratio,” and (ii) $0.725 in cash, without interest. Based on the total number of shares of Patriot Bank common stock outstanding and reserved for issuance under certain stock option plans, NCC could issue a maximum of 772,839 shares of its common stock and pay approximately $3.27 million in cash to Patriot Bank shareholders in the aggregate, upon completion of the merger. Based on the closing price for a share of NCC common stock as of [●], 2017, the most recent practicable trading day before the date of this proxy statement-prospectus, and assuming the payment of the maximum possible consideration in the merger, the aggregate value of the consideration to be received by Patriot Bank shareholders would be approximately $[●] million. Under these circumstances, following the merger, current Patriot Bank shareholders would own approximately 5.2% of the issued and outstanding common stock of NCC.

 

While the amount of the cash consideration paid per share will remain $0.725 per share (subject to potential adjustment as provided for in the merger agreement and as described below), the market value of the stock consideration will fluctuate with the market price of NCC common stock.

 

As described in more detail elsewhere in this proxy statement-prospectus, under the terms of the merger agreement, if the average closing price of NCC common stock over a designated period of time prior to the closing of the merger decreases below certain specified thresholds and other specified conditions are met, the Patriot Bank board of directors would have a right to terminate the merger agreement, unless NCC elects to make a compensating cash payment to Patriot Bank shareholders. For more information regarding these termination rights and the adjustment that may result to the merger consideration, see “The Merger Agreement; Termination of the Merger Agreement; Termination Fee” beginning on page 50.

 

No fractional shares of NCC common stock will be issued in the merger. Instead, NCC will make a cash payment (without interest) to each shareholder of Patriot Bank who would otherwise receive a fractional share of NCC common stock in an amount determined by multiplying the fraction of a share of NCC common stock otherwise issuable by the average closing price (rounded to two decimal places) for a share of NCC common stock as reported by the Nasdaq Global Select Market during the ten (10) consecutive business days ending on the fifth business day prior to the date of the closing of the merger.

 

What Holders of Patriot Bank Stock Options Will Receive (See page 41)

 

Patriot Bank has entered into an option termination agreement with each holder of outstanding options to purchase Patriot Bank common stock. These agreements provide that all outstanding Patriot Bank stock options will be canceled at the time of the merger, but holders of options that have an exercise price of $3.00 per share (and are therefore “in the money”) will receive a cash payment of $4.25 for each share of Patriot Bank common stock subject to such options as consideration for the cancellation. As of the date of this proxy statement-prospectus, there were approximately 385,523 options to purchase Patriot Bank common stock outstanding, of which 374,023 options had an exercise price of $3.00 per share.

 

Your Expected Tax Treatment as a Result of the Merger (See page 37)

 

The obligation of NCC and Patriot Bank to complete the merger is conditioned upon the receipt of an opinion from Maynard, Cooper & Gale, P.C. that for U.S. federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. Assuming the merger is consummated in accordance with the provisions of the merger agreement and as described herein, without waiver of any conditions to the merger described in the merger agreement or herein, and further assuming the accuracy as of the effective time of the merger of certain assumptions and representations as to factual matters by NCC and Patriot Bank, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. Accordingly, a U.S. holder (as defined in “Material United States Federal Income Tax Consequences of the Merger” beginning on page 37) of Patriot Bank common stock will generally recognize gain (but not loss) in an amount equal to the lesser of: (1) the amount of cash treated as received in exchange for Patriot Bank common stock in the merger (excluding any cash received in lieu of fractional shares of NCC common stock) and (2) the excess, if any, of (a) the sum of the amount of cash treated as received in exchange for Patriot Bank common stock in the merger (excluding any cash received in lieu of fractional shares of NCC common stock) plus the fair market value of NCC common stock (including the fair market value of any NCC fractional shares treated as received in the merger) over (b) such U.S. holder’s basis in the Patriot Bank common stock exchanged.

 

The U.S. federal income tax consequences described above may not apply to all holders of Patriot Bank common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you. Under the merger agreement, receipt of the tax opinion may be waived by NCC and Patriot Bank, respectively, prior to the closing of the merger. However, if receipt of such opinion were waived, Patriot Bank would resolicit its shareholders in the event that any change in the tax consequences were material, and would disclose the reasons for the waiver and the change in tax consequences. Such resolicitation would require an amendment to the registration statement on Form S-4, of which this proxy statement–prospectus is a part. See “Material United States Federal Income Tax Consequences of the Merger” beginning on page 37 for additional information.

 

---

Table of Contents

 

Dissenters’ Rights (See page 55)

 

A Patriot Bank shareholder who wishes to exercise dissenters’ rights of appraisal with respect to the merger must (i) either give written notice to Patriot Bank prior to the special meeting that he or she dissents from the plan of merger or vote against the merger proposal at the special meeting and (ii) deliver to NBC a written request for an appraisal of his or her shares, along with any certificates representing such shares, within thirty (30) days after the consummation of the merger. Failure to adhere strictly to the requirements and procedures of the applicable dissenters’ rights provisions may result in the loss, termination or waiver of your right to dissent. The value of your shares determined for this purpose may be more or less than the per-share consideration to be paid in the merger. Pursuant to the merger agreement, NCC’s board of directors may terminate the merger agreement and abandon the merger if dissenters’ rights of appraisal are properly asserted with respect to more than 5.0% of the outstanding shares of Patriot Bank common stock.

 

If you sign and send in your proxy card and do not indicate how you want to vote on the merger proposal, your proxy will be voted FOR the merger proposal and you will effectively waive your appraisal rights. Therefore, a Patriot Bank shareholder who submits a proxy and who also wishes to exercise appraisal rights must either (i) submit a proxy containing instructions to vote against the merger proposal or (ii) abstain from voting on the merger proposal and submit a written notice to Patriot Bank prior to the special meeting of his or her intent to dissent from the merger.

 

Appendix B includes the relevant statutory provisions regarding these rights. See “Dissenters’ Rights” beginning on page 55 for additional information on how to assert dissenters’ rights. In view of the complexity of the procedures specified under applicable law, shareholders who wish to pursue dissenters’ appraisal rights should promptly consult their legal, financial and tax advisors.

 

What NCC Stockholders Will Receive (See page 41)

 

NCC stockholders will not receive any consideration in the merger. After the merger, current NCC stockholders will continue to own the same number of NCC shares owned before the merger.

 

NCC Stock Prices (See page 19)

 

NCC common stock is traded on the Nasdaq Global Select Market under the symbol “NCOM.” The closing price of NCC common stock on [●], 2017, the most recent practicable trading day before the date of this proxy statement-prospectus, was $[●]. The value of the shares of NCC common stock to be issued in the merger will fluctuate between the date of this proxy statement-prospectus and the closing of the merger.

 

NCC Dividends (See page 19)

 

NCC’s board of directors has not declared a dividend since its inception and does not expect to do so in 2017. Future determinations regarding dividend policy will be made at the discretion of NCC’s board of directors based on factors that it deems relevant at that time.

 

NCC’s Reasons for the Merger (See page 26)

 

NCC’s board of directors considered a number of financial and nonfinancial factors in making its decision to merge with Patriot Bank, including its respect for the ability and integrity of the Patriot Bank board of directors, management and staff. The board of directors of NCC believes that expanding NBC’s operations in the market areas where Patriot Bank operates will provide financial and strategic benefits to NBC and Patriot Bank as a combined company.

 

Patriot Bank’s Reasons for the Merger (See page 26)

 

Patriot Bank’s board of directors considered a number of factors, both financial and nonfinancial in nature, as part of its consideration of the proposed merger with NBC. The board of directors of Patriot Bank believes that the proposed acquisition of Patriot Bank by NBC will provide significant value to the shareholders of Patriot Bank and will benefit the customers and communities served by Patriot Bank.

 

See “Proposal No. 1 – The Merger; Reasons for the Merger” beginning on page 26 for additional information.

 

Opinion of Patriot Bank’s Financial Advisor (See page 27)

 

At a meeting of the Patriot Bank board of directors on April 24, 2017, representatives of Raymond James & Associates, Inc. (“Raymond James”) rendered Raymond James’ oral opinion, which was subsequently confirmed by delivery of a written opinion to the Patriot Bank board dated April 24, 2017, as to the fairness, as of such date, from a financial point of view, to the holders of Patriot Bank’s outstanding common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement, based upon and subject to the qualifications, assumptions and other matters considered in connection with the preparation of its opinion.

 

---

Table of Contents

 

The full text of the written opinion of Raymond James, dated April 24, 2017, which sets forth, among other things, the various qualifications, assumptions and limitations on the scope of the review undertaken, is attached as Appendix C to this proxy statement-prospectus. Raymond James provided its opinion for the information and assistance of the Patriot Bank board of directors (solely in its capacity as such) in connection with, and for purposes of, its consideration of the merger and its opinion only addresses whether the merger consideration to be received by the holders of Patriot Bank common stock in the merger pursuant to the merger agreement was fair, from a financial point of view, to such holders. The opinion of Raymond James does not address any other term or aspect of the merger agreement or the merger contemplated thereby. The Raymond James opinion does not constitute a recommendation to the Patriot Bank board or any holder of Patriot Bank common stock as to how the board, such shareholder or any other person should vote or otherwise act with respect to the merger or any other matter. See “Proposal No. 1 – The Merger; Opinion of Patriot Bank’s Financial Advisor” beginning on page 27 for additional information.

 

The Patriot Bank Board of Directors Recommends Shareholder Approval of the Merger Proposal (See page 35)

 

The Patriot Bank board of directors has unanimously approved the merger agreement and believes that the merger is in the best interests of the shareholders of Patriot Bank. The board unanimously recommends that you vote FOR approval of the merger proposal.

 

Information About the Special Meeting of Shareholders (See page 21)

 

A special meeting of the shareholders of Patriot Bank will be held on [●], 2017, at [●] a.m., local time. The special meeting will be held at [●], located at [●]. At the special meeting, the shareholders of Patriot Bank will vote on the merger proposal described herein. If the shareholders approve the merger agreement and the conditions to completing the merger are satisfied, the parties expect to complete the merger as soon as practicable after the special meeting. See “The Patriot Bank Special Meeting” beginning on page 21 for additional information.

 

Quorum and Vote Required at the Special Meeting (See page 21)

 

Shareholders who own Patriot Bank common stock at the close of business on [●], 2017, the record date, will be entitled to vote at the special meeting. A majority of the issued and outstanding shares of Patriot Bank common stock as of the record date for the special meeting must be present in person or by proxy at the special meeting in order for a quorum to be present. If a quorum is not present at the special meeting, the meeting will be adjourned, and no vote will be taken until and unless a quorum is present. Approval of the merger proposal requires the affirmative vote of holders of two-thirds of the shares of Patriot Bank common stock issued and outstanding on the record date. Approval of the adjournment proposal requires the affirmative vote of holders of a majority of the shares represented at the special meeting and entitled to vote on the matter. See “The Patriot Bank Special Meeting; Record Date, Quorum and Vote Required” beginning on page 21 for additional information.

 

Share Ownership of Management (See page 60 for Patriot Bank)

 

Patriot Bank

 

As of the record date for the special meeting, directors and executive officers of Patriot Bank had or shared voting or dispositive power over approximately 18.2% of the issued and outstanding Patriot Bank common stock. Patriot Bank’s directors and executive officers have entered into written agreements with NCC providing that they will vote the shares over which they have voting power, subject to their fiduciary duties, in favor of the merger proposal.

 

The directors and executive officers of NCC do not have or share voting or dispositive power over any of the issued and outstanding shares of Patriot Bank common stock.

 

NCC

 

As of the date of this proxy statement-prospectus, directors and executive officers of NCC have or share voting or dispositive power over approximately 16.2% of the issued and outstanding shares of NCC common stock (or 17.2% after giving effect to vested options held by such individuals as of such date).

 

The directors and executive officers of Patriot Bank do not currently have or share voting or dispositive power over any of the issued and outstanding shares of NCC common stock.

 

---

Table of Contents

 

Structure of the Merger (See page 23)

 

If the shareholders of Patriot Bank approve the merger proposal and the other conditions to the consummation of the merger are satisfied, Patriot Bank will merge with and into NBC, NBC will be the surviving banking institution in the merger and Patriot Bank will cease to exist as a separate entity.

 

Regulatory Approval (See page 35)

 

The proposed merger cannot be completed unless it is approved by the Office of the Comptroller of the Currency (the “OCC”). Although the parties do not know of any reason why the necessary regulatory approval could not be obtained in a timely manner, there can be no certainty as to whether or when such approval will be obtained, or what, if any, conditions may be imposed in connection with such approval. 

 

Conditions to Completing the Merger (See page 43)

 

The merger will only be completed if certain conditions are met, including the following:  

 

•

approval by shareholders of Patriot Bank of the merger proposal by the required vote;

 

•

approval of the merger and the transactions contemplated thereby by applicable regulatory authorities;

 

•

receipt of all third-party consents (other than the regulatory consents described above) necessary to consummate the merger, other than those that would not have a material adverse effect on the party required to obtain the consent if not obtained;

 

•

receipt by Patriot Bank and NCC of an opinion from Maynard, Cooper & Gale, P.C. that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;

 

•

the authorization for listing on the Nasdaq Global Select Market of the shares of NCC common stock to be issued in the merger;

 

•

immediately prior to the merger, Patriot Bank will have a minimum adjusted shareholders’ equity of not less than $18,750,000;

 

•

the repayment by Patriot Bank of all outstanding indebtedness and the release of all liens on its property;

 

•

subject to the materiality standards set forth in the merger agreement, the accuracy of the representations and warranties of Patriot Bank and NCC;

 

•

the absence of a stop order suspending the effectiveness of NCC’s registration statement under the Securities Act and any action, suit, proceeding or investigation for that purpose with respect to the shares of NCC common stock to be issued to shareholders of Patriot Bank; and

 

•

the absence of an order, decree or injunction enjoining or prohibiting completion of the merger, or the initiation of or known threat of any action or proceeding seeking to restrain consummation of the merger, that renders such transactions impossible or inadvisable in the opinion of either party.

 

If these and certain other conditions specific to the respective parties are satisfied, NCC and Patriot Bank expect that they will complete the merger in the third or fourth quarter of 2017. See “The Merger Agreement; Conditions to the Merger” beginning on page 43 for additional information.

 

Termination and Termination Fee (See page 50)

 

The merger agreement may be terminated, either before or after shareholder approval, under certain circumstances described in detail elsewhere in this proxy statement-prospectus. If NCC terminates the merger agreement because Patriot Bank’s board withdraws or changes its recommendation of the merger agreement, cancels the meeting at which the shareholders of Patriot Bank will vote on the merger proposal, allows the acquisition by any person of a majority of Patriot Bank’s outstanding common stock or recommends, approves or announces a transaction for the sale to or merger with an entity other than NCC, or if Patriot Bank terminates the merger agreement because it has received an offer for such an acquisition transaction, then Patriot Bank (or its successor) must pay NCC a termination fee of $950,000.

 

---

Table of Contents

 

Patriot Bank’s board of directors may terminate the merger agreement if the average closing price of NCC common stock over the ten-day period ending on the fifth business day prior to the effective time of the merger is less than $30.32 and if NCC’s common stock underperforms the Nasdaq Bank Index by more than a specified threshold, unless NCC elects to make a compensating cash payment with respect to the shares of Patriot Bank common stock to be converted into shares of NCC common stock.

 

NCC’s board of directors may terminate the merger agreement and abandon the merger if holders of more than 5.0% of the outstanding shares of Patriot Bank common stock exercise dissenters’ rights.

 

Some of Patriot Bank’s Directors and Executive Officers Have Interests in the Merger that Differ from the Interests of Patriot Bank’s Shareholders Generally (See page 52)

 

Some of the executive officers and directors of Patriot Bank have interests in the merger that are different from, or in addition to, those of the shareholders of Patriot Bank generally. These interests and arrangements may create potential conflicts of interest. Patriot Bank’s board of directors was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that Patriot Bank’s shareholders vote in favor of the merger proposal. These interests include the following:   

 

•

Pursuant to the terms of their employment agreements with Patriot Bank, two Patriot Bank executives are entitled to receive change in control payments upon the closing of the merger.

 

•

Pursuant to the merger agreement, Patriot Bank’s executives, along with all full-time employees of Patriot Bank, will be eligible to participate in any benefit plans and arrangements that are made available to NCC and NBC full-time employees, which include health and dental insurance, vision insurance, life insurance and short and long-term disability insurance.

 

•

Under the terms of the merger agreement, NCC has agreed to maintain director and officer liability insurance for the benefit of Patriot Bank’s directors and officers and to indemnify Patriot Bank’s directors and officers against certain liabilities.

 

•

Patriot Bank has entered into an option termination agreement with each holder of outstanding options to purchase Patriot Bank common stock, including certain directors and officers of Patriot Bank. These agreements provide that all outstanding Patriot Bank stock options will be canceled at the time of the merger, but holders of options that have an exercise price of $3.00 per share (and are therefore “in the money”) will receive a cash payment of $4.25 for each share of Patriot Bank common stock subject to such options as consideration for the cancellation. As of the date of this proxy statement-prospectus, there were approximately 385,523 options to purchase Patriot Bank common stock outstanding, of which 374,023 options had an exercise price of $3.00 per share. See “Security Ownership of Certain Beneficial Owners and Management of Patriot Bank” on page 60.

 

•

As of the date of this proxy statement-prospectus, David B. Key, Kurt H. Beste and Thomas J. Wokurka, each of whom is an officer of Patriot Bank, have accepted offers of employment and signed employment agreements with NBC that will take effect as of the effective date of the merger.

 

For a more complete description of these interests, see “The Merger Agreement; Interests of Certain Persons in the Merger” beginning on page 52.

 

Employee Benefits of Patriot Bank Employees after the Merger (See page 50)

 

NCC has agreed to offer to all current employees of Patriot Bank who become NCC or NBC employees as a result of the merger substantially similar employee benefits to those that NCC and NBC offer to employees in similar positions.

 

Differences in Rights of Shareholders of Patriot Bank after the Merger (See page 61)

 

Shareholders of Patriot Bank will become NCC stockholders as a result of the merger. Their rights as stockholders of NCC after the merger will be governed by Delaware law and by NCC’s certificate of incorporation and bylaws. The rights of NCC stockholders are different in certain respects from the rights of shareholders of Patriot Bank. See “Comparison of Rights of NCC Stockholders and Patriot Bank Shareholders” beginning on page 61 for additional information.

 

Risk Factors (See page 12)

 

You should consider all of the information contained in or incorporated by reference into this proxy statement-prospectus in deciding how to vote for the proposals presented in the proxy statement-prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page 12.

 

---

Table of Contents