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National Commerce picking up niche deposit business with Premier deal

National Commerce Corp.'s planned acquisition of Premier Community Bank of FL sets the Alabama-based company up for further growth in the lucrative Sarasota metro area, executives said on a March 21 call to discuss the deal.

They also said it is an opportunity to gather long-term, low-cost core deposits, via Premier Community's niche business model serving condominium homeowners' associations.

Bradenton, Fla.-based Premier Community will merge with the Birmingham, Ala. company's unit National Bank of Commerce. The deal, valued at an aggregate of $52 million, will give the combined company about $3.4 billion in assets. National Commerce will pick up four branch locations along Florida's west coast, for a total of 35 branches across three states.

President and CEO Richard Murray said Premier Community's new management has "done a great job of setting the bank on a right track and establishing a nice momentum for growth," since recapitalizing about two years ago. He said the bank's relatively small market share provides "a lot of upside for continued growth."

CFO William Matthews said Premier Community's HOA business will provide a "nice growth trajectory" for National Commerce's deposit business. Deposits are generated through members' monthly payment of HOA fees and assessments. Premier entered the business in mid-2017 and posted a $35 million increase in deposits at the end of February from year-end 2017, according to presentation materials. With National Commerce's capital base and additional resources, the company expects the business line to be "highly scalable."

Murray said the deal is an extension of National Commerce's overall M&A strategy, although it is "a little bit smaller than what we've generally articulated." He called the deal a "low-risk step" as National Commerce continues to build out, and said it does not change the bank's appetite or capacity to execute future transactions.

"I think we've talked about $300 million to $600 million in total assets being kind of a sweet spot," Murray said. "And I don't think we really change that opinion at this point in time."

The highly acquisitive company has completed a number of deals over the past five years. It recently closed its acquisition of Jacksonville, Fla.-based FirstAtlantic Financial Holdings Inc. for about $107.7 million.