Atlantic Capital Bancshares, Inc. Reports Second Quarter 2021 Results

Atlantic Capital Bancshares, Inc.
17 min read
0

ATLANTA, July 23, 2021 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income for the quarter ended June 30, 2021 of $11.8 million, or $0.58 per diluted share, compared to $1.8 million, or $0.09 per diluted share, for the second quarter of 2020 and $13.4 million, or $0.65 per diluted share, for the first quarter of 2021.

“Atlantic Capital recorded another quarter of strong and sustainable growth in loans, deposits, and revenue. Our new business pipelines remain robust, our banking teams are executing at a high level, and we expect solid growth through the balance of 2021 and into 2022,” remarked Douglas Williams, President and Chief Executive Officer.

Second Quarter Highlights(1)

  • Total assets were $3.8 billion, compared to $3.7 billion at March 31, 2021 and $2.9 billion at June 30, 2020.

  • Loans held for investment, excluding Paycheck Protection Program (“PPP”) loans, increased $77.2 million, or 15% annualized, from March 31, 2021 and increased $208.6 million, or 11%, from June 30, 2020.

  • Quarterly average deposits increased $150.7 million, or 19% annualized, compared to the first quarter of 2021 and increased $897.6 million, or 37%, compared to the second quarter of 2020.

  • Cost of deposits decreased to 0.10% from 0.12% in the first quarter of 2021 and from 0.22% in the second quarter of 2020.

  • Tangible book value per common share increased to $16.40 from $15.74 at March 31, 2021 and from $14.72 at June 30, 2020.

  • Annualized net charge-offs to average loans totaled 0.10% for the second quarter of 2021 and 0.07% for the full year 2021. Non-performing assets to total assets were 0.14% at June 30, 2021.

  • The allowance for credit losses was 1.27% of total loans held for investment at June 30, 2021, compared to 1.31% at March 31, 2021 and 1.61% at June 30, 2020.

  • 50,000 shares were repurchased in the second quarter of 2021 totaling $1.3 million at an average price of $25.71. As of June 30, 2021, approximately $1.8 million remained from our $25 million share repurchase program.

Income Statement

Taxable equivalent net interest income totaled $26.0 million for the second quarter of 2021, an increase of $4.1 million, or 18%, from the second quarter of 2020, and an increase of $2.3 million, or 39% annualized, from the first quarter of 2021. The second quarter of 2021 included $3.0 million in PPP loan income compared to $696,000 in the second quarter of 2020 and $2.2 million in the first quarter of 2021. The second quarter of 2021 also included $671,000 in interest income related to the receipt of an investment prepayment penalty and the accelerated accretion of a loan discount upon payoff.

Taxable equivalent net interest margin was 2.91% in the second quarter of 2021, compared to 3.23% in the second quarter of 2020 and 2.81% in the first quarter of 2021. The tax equivalent net interest margin excluding PPP loans was 2.70%, unchanged from the first quarter of 2021.

The yield on loans in the second quarter of 2021 was 4.19%, an increase of 32 basis points from the second quarter of 2020 and an increase of 30 basis points from the first quarter of 2021. Excluding PPP loans, the second quarter of 2021 loan yield was 3.95%, an increase of 12 basis points compared to the first quarter of 2021. In addition, loan interest income for the second quarter of 2021 included $405,000 in previously mentioned accelerated discount accretion.

The cost of deposits in the second quarter of 2021 was 0.10%, a decrease of 12 basis points from the second quarter of 2020 and a decrease of 2 basis points from the first quarter of 2021. The cost of interest bearing deposits decreased 16 basis points to 0.17% from the second quarter of 2020, and decreased 2 basis points from the first quarter of 2021.

In the second quarter of 2021, we recorded a negative provision for credit losses of $933,000 compared to a provision for credit losses of $8.9 million in the second quarter of 2020 and a negative provision for credit losses of $4.5 million in the first quarter of 2021. The second quarter of 2021 provision for credit losses included a negative provision for loan losses of $814,000 and a negative provision for unfunded commitments of $118,000.

Noninterest income totaled $3.6 million in the second quarter of 2021 compared to $2.3 million in the second quarter of 2020 and unchanged from the first quarter of 2021. Service charge income in the second quarter of 2021 totaled $1.7 million, an increase of $646,000 compared to the second quarter of 2020, and an increase of $64,000 from the first quarter of 2021. The increase in service charge income was primarily due to growth in our payments and fintech businesses.

Noninterest expense totaled $15.2 million in the second quarter of 2021, compared to $12.9 million in the second quarter of 2020 and $15.1 million in the first quarter of 2021. Salaries and employee benefits expense totaled $10.4 million in the second quarter of 2021, unchanged compared to the first quarter of 2021.

(1) Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income and net interest margin are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal tax rate. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table on page 13.

Balance Sheet

Total loans held for investment were $2.3 billion at June 30, 2021, an increase of $80.2 million from June 30, 2020 and a decrease of $35.9 million from March 31, 2021. Loans held for investment, excluding PPP loans, increased $77.2 million, or 15% annualized, from March 31, 2021 and increased $208.6 million, or 11%, from June 30, 2020.

The allowance for credit losses was 1.27% of total loans held for investment at June 30, 2021, compared to 1.31% at March 31, 2021. The decrease in the allowance was a result of an improvement in our current expected credit losses, or CECL, economic forecast along with credit rating upgrades for certain criticized and classified loans. Excluding the impact of PPP loans, the allowance for credit losses at June 30, 2021 was 1.33%, compared to 1.45% at March 31, 2021.

Total average deposits were $3.3 billion for the second quarter of 2021, an increase of $897.6 million, or 37%, from the second quarter of 2020 and an increase of $150.7 million, or 19% annualized, from the first quarter of 2021. Average noninterest bearing deposits were $1.3 billion for the second quarter of 2021, an increase of $480.4 million, or 59%, from the second quarter of 2020 and an increase of $159.2 million, or 56% annualized, from the first quarter of 2021. Noninterest bearing deposits were 39.2% of total average deposits in the second quarter of 2021, compared to 33.8% in the second quarter of 2020 and 36.0% in the first quarter of 2021.

Subsequent Event

As announced and further described in a separate press release issued by Atlantic Capital today, Atlantic Capital and South State Corporation, have entered into a merger agreement under which South State will acquire Atlantic Capital in an all stock merger transaction.

Conference Call

In light of the announcement earlier today of our entry into a merger agreement with South State Corporation, Atlantic Capital and South State will host a joint conference call at 8:00 a.m. ET on Friday, July 23, 2021, to discuss the transaction and the financial results for the quarter ended June 30, 2021. Individuals wishing to participate in the conference call may do so by dialing 1-877-506-9272 from the United States. The call will also be available live via webcast at https://services.choruscall.com/links/ssb210723.html.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. Atlantic Capital management uses non-GAAP financial measures, including: (i) taxable equivalent interest income; (ii) taxable equivalent net interest income; (iii) loans held for investment excluding PPP loans; (iv) loan yield excluding PPP loans; (v) taxable equivalent net interest margin; (vi) taxable equivalent net interest margin excluding PPP loans; (vii) taxable equivalent income before income taxes; (viii) taxable equivalent income tax expense; (ix) tangible common equity to tangible assets; (x) tangible book value per common share, and (xi) allowance for credit losses to loans held for investment excluding PPP loans, in our analysis of the Company's performance. Tangible common equity excludes goodwill from shareholders' equity.

Management believes that non-GAAP financial measures provide a greater understanding of ongoing performance and operations and enhance comparability with prior periods. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as determined in accordance with GAAP, and investors should consider Atlantic Capital’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Non-GAAP financial measures may not be comparable to non-GAAP financial measures presented by other companies.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” “strive,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about Atlantic Capital’s confidence in its strategies and its expectations about financial performance, the impact of COVID-19 on operations, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $3.8 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as payments and other specialized financial services for select clients nationally.

Media Contact:
Ashley Carson
Email: ashley.carson@atlcapbank.com
Phone: 404-995-6050
(ACB-ER)

Financial Contact:
Patrick Oakes
Email: patrick.oakes@atlcapbank.com
Phone: 404-995-6050

ATLANTIC CAPITAL BANCSHARES, INC.

Selected Financial Information

For the six months ended

2021

2020

June 30,

(in thousands, except share and per share data;

Second

First

Fourth

Third

Second

taxable equivalent)

Quarter

Quarter

Quarter

Quarter

Quarter

2021

2020

INCOME SUMMARY

Interest income - taxable equivalent (1)

$

27,993

$

25,775

$

25,288

$

24,578

$

24,151

$

53,768

$

50,397

Interest expense

1,958

2,065

2,299

2,515

2,166

4,023

7,209

Net interest income - taxable equivalent

26,035

23,710

22,989

22,063

21,985

49,745

43,188

Provision for credit losses

(933

)

(4,519

)

481

28

8,863

(5,452

)

16,937

Net interest income after provision for credit losses

26,968

28,229

22,508

22,035

13,122

55,197

26,251

Noninterest income

3,584

3,562

3,016

2,504

2,343

7,146

4,765

Noninterest expense

15,197

15,149

13,164

13,713

12,904

30,346

25,781

Income before income taxes

15,355

16,642

12,360

10,826

2,561

31,997

5,235

Income tax expense

3,539

3,280

2,410

2,208

712

6,819

1,262

Net income(1)(2)

$

11,816

$

13,362

$

9,950

$

8,618

$

1,849

$

25,178

$

3,973

PER SHARE DATA

Diluted earnings per share

$

0.58

$

0.65

$

0.48

$

0.40

$

0.09

$

1.23

$

0.18

Book value per share

17.38

16.72

16.60

16.05

15.64

17.38

15.64

Tangible book value per common share (2)

16.40

15.74

15.62

15.11

14.72

16.40

14.72

PERFORMANCE MEASURES

Return on average equity

13.60

%

15.99

%

11.68

%

10.05

%

2.20

%

14.77

%

2.38

%

Return on average assets

1.26

1.50

1.19

1.15

0.25

1.38

0.28

Taxable equivalent net interest margin

2.91

2.81

2.91

3.14

3.23

2.86

3.32

Taxable equivalent net interest margin excluding PPP loans

2.70

2.70

2.81

3.18

3.35

2.70

3.38

Efficiency ratio

51.97

56.30

51.30

56.61

53.82

54.04

54.42

Average loans to average deposits

67.54

71.93

76.81

88.65

88.46

69.67

86.23

CAPITAL

Average equity to average assets

9.24

%

9.39

%

10.18

%

11.45

%

11.53

%

9.31

%

11.95

%

Tangible common equity to tangible assets

8.86

8.63

8.86

11.03

11.01

8.86

11.01

Leverage ratio

8.4

(3)

8.4

8.9

9.9

9.9

8.5

(4)

10.3

Total risk based capital ratio

16.0

(3)

16.4

16.1

16.9

14.8

16.0

(4)

14.8

SHARES OUTSTANDING

Number of common shares outstanding - basic

20,319,429

20,354,077

20,394,912

21,202,783

21,477,631

20,319,429

21,477,631

Number of common shares outstanding - diluted

20,595,812

20,617,188

20,492,542

21,298,098

21,569,050

20,595,812

21,569,050

Average number of common shares - basic

20,332,503

20,380,066

20,711,089

21,500,735

21,472,462

20,356,153

21,580,855

Average number of common shares - diluted

20,516,478

20,502,184

20,795,332

21,543,805

21,535,040

20,509,370

21,688,712

ASSET QUALITY

Allowance for credit losses to loans held for investment

1.27

%

1.31

%

1.55

%

1.59

%

1.61

%

1.27

%

1.61

%

Net charge-offs to average loans (4)

0.10

0.04

0.05

0.06

0.29

0.07

0.17

Non-performing assets to total assets

0.14

0.06

0.13

0.20

0.24

0.14

0.24

AVERAGE BALANCES

Total loans

$

2,233,906

$

2,270,660

$

2,207,956

$

2,191,669

$

2,131,847

$

2,252,182

$

2,011,016

Investment securities

656,507

579,547

491,134

453,382

462,850

618,239

440,410

Total assets

3,771,970

3,611,417

3,328,719

2,977,444

2,932,716

3,692,133

2,809,491

Deposits

3,307,601

3,156,906

2,874,402

2,472,218

2,409,958

3,232,669

2,332,231

Shareholders' equity

348,416

338,990

338,948

341,017

338,027

343,725

335,754

AT PERIOD END

Loans and loans held for sale

$

2,264,899

$

2,302,661

$

2,249,036

$

2,188,894

$

2,185,847

$

2,264,899

$

2,185,847

Investment securities

714,065

613,236

535,579

446,706

457,749

714,065

457,749

Total assets

3,780,445

3,732,668

3,615,617

2,923,977

2,890,622

3,780,445

2,890,622

Deposits

3,306,224

3,277,692

3,161,508

2,468,722

2,407,631

3,306,224

2,407,631

Shareholders’ equity

353,185

340,328

338,586

340,309

335,980

353,185

335,980

(1)Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.

(2)Excludes effect of acquisition related intangibles.

(3)Amounts are estimates as of June 30, 2021.

(4)Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Balance Sheets (unaudited)

June 30,

March 31,

December 31,

June 30,

(in thousands, except share data)

2021

2021

2020

2020

ASSETS

Cash and due from banks

$

35,530

$

32,850

$

16,865

$

33,759

Interest-bearing deposits in banks

593,195

612,966

636,537

33,038

Cash and cash equivalents

628,725

645,816

653,402

66,797

Investment securities available for sale

480,518

390,701

335,423

271,829

Investment securities held to maturity, net of allowance for credit losses of $13, $14, $14, and $13 at June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively

233,547

222,535

200,156

185,920

Other investments

24,293

24,709

25,892

28,811

Loans held for sale

—

1,847

—

1,153

Loans held for investment

2,264,899

2,300,814

2,249,036

2,184,694

Less: allowance for loan losses

(26,123

)

(27,506

)

(31,818

)

(31,605

)

Loans held for investment, net

2,238,776

2,273,308

2,217,218

2,153,089

Premises and equipment, net

19,643

20,633

21,589

22,494

Bank owned life insurance

73,610

73,223

72,856

67,127

Goodwill

19,925

19,925

19,925

19,925

Other intangibles, net

2,637

2,688

2,731

2,731

Other real estate owned

16

16

16

779

Other assets

58,755

57,267

66,409

69,967

Total assets

$

3,780,445

$

3,732,668

$

3,615,617

$

2,890,622

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Noninterest-bearing demand

$

1,374,018

$

1,280,524

$

1,033,765

$

883,662

Interest-bearing checking

536,677

485,540

760,638

449,737

Savings

676

562

625

583

Money market

1,026,239

1,142,361

1,030,753

879,863

Time

283,656

294,129

241,328

131,353

Brokered deposits

84,958

74,576

94,399

62,433

Total deposits

3,306,224

3,277,692

3,161,508

2,407,631

Federal funds purchased

—

—

—

6,000

Federal Home Loan Bank borrowings

—

—

—

50,000

Long-term debt

73,953

73,878

73,807

49,958

Other liabilities

47,083

40,770

41,716

41,053

Total liabilities

3,427,260

3,392,340

3,277,031

2,554,642

SHAREHOLDERS’ EQUITY

Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020

—

—

—

—

Common stock, no par value; 100,000,000 shares authorized; 20,319,429, 20,354,077, 20,394,912, and 21,477,631 shares issued and outstanding as of June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively

206,619

207,047

209,942

224,520

Retained earnings

139,315

127,499

114,137

95,570

Accumulated other comprehensive income

7,251

5,782

14,507

15,890

Total shareholders’ equity

353,185

340,328

338,586

335,980

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

3,780,445

$

3,732,668

$

3,615,617

$

2,890,622

ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Statements of Income (unaudited)

(in thousands, except share and per share data)

Three months ended

Six months ended

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2021

2021

2020

2020

2020

2021

2020

INTEREST INCOME

Loans, including fees

$

23,352

$

21,769

$

21,609

$

21,049

$

20,496

$

45,121

$

42,922

Investment securities

3,900

3,374

3,000

2,910

3,041

7,274

5,773

Interest and dividends on other interest‑earning assets

366

267

334

274

260

633

1,125

Total interest income

27,618

25,410

24,943

24,233

23,797

53,028

49,820

INTEREST EXPENSE

Interest on deposits

851

971

1,188

1,151

1,299

1,822

5,481

Interest on Federal Home Loan Bank advances

—

—

—

16

38

—

38

Interest on federal funds purchased and securities sold under agreements to repurchase

—

—

—

3

6

—

38

Interest on long-term debt

1,107

1,094

1,111

1,345

823

2,201

1,652

Total interest expense

1,958

2,065

2,299

2,515

2,166

4,023

7,209

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES

25,660

23,345

22,644

21,718

21,631

49,005

42,611

Provision for credit losses

(933

)

(4,519

)

481

28

8,863

(5,452

)

16,937

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

26,593

27,864

22,163

21,690

12,768

54,457

25,674

NONINTEREST INCOME

Service charges

1,727

1,663

1,341

1,217

1,081

3,390

2,313

Gains (losses) on sale of securities

—

2

(23

)

—

—

2

—

(Losses) gains on sale of other assets

—

—

(6

)

(145

)

—

—

5

Derivatives (loss) income

(7

)

47

11

10

(10

)

40

236

Bank owned life insurance

388

391

368

363

367

779

729

SBA lending activities

1,231

1,225

1,015

893

782

2,456

1,196

Other noninterest income

245

234

310

166

123

479

286

Total noninterest income

3,584

3,562

3,016

2,504

2,343

7,146

4,765

NONINTEREST EXPENSE

Salaries and employee benefits

10,362

10,421

8,437

8,850

8,466

20,783

16,942

Occupancy

778

734

767

739

883

1,512

1,677

Equipment and software

819

774

969

826

763

1,593

1,542

Professional services

723

922

686

562

792

1,645

1,497

Communications and data processing

869

792

789

757

670

1,661

1,567

Marketing and business development

138

108

144

141

79

246

232

Travel, meals and entertainment

47

10

14

39

34

57

174

FDIC premiums

421

275

241

213

175

696

175

Other noninterest expense

1,040

1,113

1,117

1,586

1,042

2,153

1,975

Total noninterest expense

15,197

15,149

13,164

13,713

12,904

30,346

25,781

INCOME BEFORE PROVISION FOR INCOME TAXES

14,980

16,277

12,015

10,481

2,207

31,257

4,658

Provision for income taxes

3,164

2,915

2,065

1,863

358

6,079

685

NET INCOME

$

11,816

$

13,362

$

9,950

$

8,618

$

1,849

$

25,178

$

3,973

Net income per common share - basic

$

0.58

$

0.66

$

0.48

$

0.40

$

0.09

$

1.24

$

0.18

Net income per common share - diluted

$

0.58

$

0.65

$

0.48

$

0.40

$

0.09

$

1.23

$

0.18

Weighted average shares - basic

20,332,503

20,380,066

20,711,089

21,500,735

21,472,462

20,356,153

21,580,855

Weighted average shares - diluted

20,516,478

20,502,184

20,795,332

21,543,805

21,535,040

20,509,370

21,688,712

ATLANTIC CAPITAL BANCSHARES, INC.

Average Balance Sheets and Net Interest Margin Analysis

Selected Financial Information

Three months ended

June 30, 2021

March 31, 2021

Interest

Tax

Interest

Tax

Average

Income/

Equivalent

Average

Income/

Equivalent

(dollars in thousands; taxable equivalent)

Balance

Expense

Yield/Rate

Balance

Expense

Yield/Rate

Assets

Interest bearing deposits in other banks

$

687,795

$

201

0.12

%

$

561,809

$

168

0.12

%

Investment securities:

Taxable investment securities

426,634

2,382

2.24

356,250

1,898

2.16

Non-taxable investment securities (1)

229,873

1,893

3.30

223,297

1,841

3.34

Total investment securities

656,507

4,275

2.61

579,547

3,739

2.62

Loans

2,233,906

23,352

4.19

2,270,660

21,769

3.89

FHLB and FRB stock

11,931

165

5.55

12,701

99

3.17

Total interest-earning assets

3,590,139

27,993

3.13

3,424,717

25,775

3.05

Non-earning assets

181,831

186,700

Total assets

$

3,771,970

$

3,611,417

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,637,374

725

0.18

1,662,097

834

0.20

Time deposits

290,331

68

0.09

273,615

74

0.11

Brokered deposits

84,168

58

0.28

84,663

63

0.30

Total interest-bearing deposits

2,011,873

851

0.17

2,020,375

971

0.19

Total borrowings

89

—

—

—

—

—

Total long-term debt

73,904

1,107

6.01

73,830

1,094

6.01

Total interest-bearing liabilities

2,085,866

1,958

0.38

2,094,205

2,065

0.40

Demand deposits

1,295,728

1,136,531

Other liabilities

41,960

41,691

Shareholders’ equity

348,416

338,990

Total liabilities and shareholders’ equity

$

3,771,970

$

3,611,417

Net interest spread

2.75

%

2.65

%

Net interest income and net interest margin (2)

$

26,035

2.91

%

$

23,710

2.81

%

Non-taxable equivalent net interest margin

2.87

%

2.76

%

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.

(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.

ATLANTIC CAPITAL BANCSHARES, INC.

Average Balance Sheets and Net Interest Margin Analysis

Selected Financial Information

Three months ended

June 30, 2021

June 30, 2020

Interest

Tax

Interest

Tax

Average

Income/

Equivalent

Average

Income/

Equivalent

(dollars in thousands; taxable equivalent)

Balance

Expense

Yield/Rate

Balance

Expense

Yield/Rate

Assets

Interest bearing deposits in other banks

$

687,795

$

201

0.12

%

$

129,989

$

23

0.07

%

Investment securities:

Taxable investment securities

426,634

2,382

2.24

247,668

1,581

2.57

Non-taxable investment securities (1)

229,873

1,893

3.30

215,182

1,814

3.39

Total investment securities

656,507

4,275

2.61

462,850

3,395

2.95

Loans

2,233,906

23,352

4.19

2,131,847

20,496

3.87

FHLB and FRB stock

11,931

165

5.55

16,842

237

5.66

Total interest-earning assets

3,590,139

27,993

3.13

2,741,528

24,151

3.54

Non-earning assets

181,831

191,188

Total assets

$

3,771,970

$

2,932,716

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,637,374

725

0.18

1,415,069

1,115

0.32

Time deposits

290,331

68

0.09

96,362

58

0.24

Brokered deposits

84,168

58

0.28

83,228

126

0.61

Total interest-bearing deposits

2,011,873

851

0.17

1,594,659

1,299

0.33

Total borrowings

89

—

—

97,769

44

0.18

Total long-term debt

73,904

1,107

6.01

49,930

823

6.63

Total interest-bearing liabilities

2,085,866

1,958

0.38

1,742,358

2,166

0.50

Demand deposits

1,295,728

815,299

Other liabilities

41,960

37,032

Shareholders’ equity

348,416

338,027

Total liabilities and shareholders’ equity

$

3,771,970

$

2,932,716

Net interest spread

2.75

%

3.04

%

Net interest income and net interest margin (2)

$

26,035

2.91

%

$

21,985

3.23

%

Non-taxable equivalent net interest margin

2.87

%

3.17

%

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.

(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.

ATLANTIC CAPITAL BANCSHARES, INC.

Average Balance Sheets and Net Interest Margin Analysis

Selected Financial Information

Six months ended

June 30, 2021

June 30, 2020

Interest

Tax

Interest

Tax

Average

Income/

Equivalent

Average

Income/

Equivalent

(dollars in thousands; taxable equivalent)

Balance

Expense

Yield/Rate

Balance

Expense

Yield/Rate

Assets

Interest bearing deposits in other banks

$

625,503

$

369

0.12

%

$

153,526

$

691

0.91

%

Other short-term investments

—

—

—

55

—

—

Investment securities:

Taxable investment securities

391,636

4,280

2.20

250,802

3,261

2.61

Non-taxable investment securities (1)

226,603

3,734

3.32

189,608

3,089

3.28

Total investment securities

618,239

8,014

2.61

440,410

6,350

2.90

Loans

2,252,182

45,121

4.04

2,011,016

42,922

4.29

FHLB and FRB stock

12,310

264

4.32

14,760

434

5.91

Total interest-earning assets

3,508,234

53,768

3.09

2,619,767

50,397

3.87

Non-earning assets

183,899

189,724

Total assets

$

3,692,133

$

2,809,491

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,649,667

1,559

0.19

1,404,305

4,882

0.70

Time deposits

282,019

142

0.10

76,068

111

0.29

Brokered deposits

84,414

121

0.29

87,708

488

1.12

Total interest-bearing deposits

2,016,100

1,822

0.18

1,568,081

5,481

0.70

Total borrowings

45

—

—

54,736

76

0.28

Total long-term debt

73,867

2,201

6.01

49,909

1,652

6.66

Total interest-bearing liabilities

2,090,012

4,023

0.39

1,672,726

7,209

0.87

Demand deposits

1,216,569

764,150

Other liabilities

41,827

36,861

Shareholders’ equity

343,725

335,754

Total liabilities and shareholders’ equity

$

3,692,133

$

2,809,491

Net interest spread

2.70

%

3.00

%

Net interest income and net interest margin (2)

$

49,745

2.86

%

$

43,188

3.32

%

Non-taxable equivalent net interest margin

2.82

%

3.27

%

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.

(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.

ATLANTIC CAPITAL BANCSHARES, INC.

Period End Loans

Linked

Year Over

June 30,

March 31,

December 31,

September 30,

June 30,

Quarter

Year

(dollars in thousands)

2021

2021

2020

2020

2020

Change

Change

Loans held for sale

Loans held for sale

$

—

$

1,847

$

—

$

859

$

1,153

$

(1,847

)

$

(1,153

)

Total loans held for sale

$

—

$

1,847

$

—

$

859

$

1,153

$

(1,847

)

$

(1,153

)

Loans held for investment

Commercial loans:

Commercial and industrial - other

$

767,646

$

735,287

$

760,645

$

712,567

$

739,769

$

32,359

$

27,877

Commercial and industrial - PPP

105,684

218,766

192,160

231,834

234,049

(113,082

)

(128,365

)

Commercial real estate:

Multifamily

58,632

80,507

66,262

58,336

58,909

(21,875

)

(277

)

Owner occupied

392,108

381,018

373,689

364,170

366,847

11,090

25,261

Investment

506,230

480,566

469,150

458,279

474,565

25,664

31,665

Construction and land:

1‑4 family residential construction

2,074

1,578

1,171

—

11

496

2,063

Other construction, development, and land

178,423

141,218

144,424

139,836

128,980

37,205

49,443

Total commercial loans

2,010,797

2,038,940

2,007,501

1,965,022

2,003,130

(28,143

)

7,667

Residential:

Residential mortgages

45,207

31,817

33,783

29,460

32,327

13,390

12,880

Home equity

24,972

26,293

25,443

24,528

23,689

(1,321

)

1,283

Total residential loans

70,179

58,110

59,226

53,988

56,016

12,069

14,163

Consumer

184,203

203,176

176,066

154,916

113,149

(18,973

)

71,054

Other

5,234

7,689

13,897

22,777

22,160

(2,455

)

(16,926

)

2,270,413

2,307,915

2,256,690

2,196,703

2,194,455

(37,502

)

75,958

Less net deferred fees and other unearned income

(5,514

)

(7,101

)

(7,654

)

(8,668

)

(9,761

)

1,587

4,247

Total loans held for investment

$

2,264,899

$

2,300,814

$

2,249,036

$

2,188,035

$

2,184,694

$

(35,915

)

$

80,205

Total loans

$

2,264,899

$

2,302,661

$

2,249,036

$

2,188,894

$

2,185,847

$

(37,762

)

$

79,052

Total unfunded commitments

$

804,784

$

789,869

$

813,757

$

764,247

$

749,321

$

14,915

$

55,463

ATLANTIC CAPITAL BANCSHARES, INC.

Allowance for Credit Losses Activity and Credit Quality

2021

2020

Second

First

Fourth

Third

Second

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Allowance for loan losses

Balance at beginning of period

$

27,506

$

31,818

$

31,894

$

31,605

$

24,896

Provision for loan losses

(814

)

(4,074

)

225

636

8,222

Loans charged-off:

Commercial and industrial

(386

)

(288

)

(401

)

(404

)

(1,479

)

Commercial real estate

—

—

—

—

—

Construction and land

—

—

—

—

—

Residential mortgages

(223

)

—

—

—

(36

)

Home equity

—

—

—

—

—

Consumer

—

—

—

—

—

Other

—

—

—

—

—

Total loans charged-off

(609

)

(288

)

(401

)

(404

)

(1,515

)

Recoveries on loans previously charged-off:

Commercial and industrial

6

50

37

56

1

Commercial real estate

—

—

44

—

—

Construction and land

—

—

18

—

—

Residential mortgages

32

—

—

—

—

Home equity

—

—

—

—

—

Consumer

2

—

1

1

1

Other

—

—

—

—

—

Total recoveries

40

50

100

57

2

Net charge-offs

$

(569

)

$

(238

)

$

(301

)

$

(347

)

$

(1,513

)

Balance at period end

$

26,123

$

27,506

$

31,818

$

31,894

$

31,605

Allowance for unfunded commitments

Balance at beginning of period

$

2,683

$

3,128

$

2,871

$

3,480

$

2,838

Provision for unfunded commitments

(118

)

(445

)

257

(609

)

642

Balance at period end

$

2,565

$

2,683

$

3,128

$

2,871

$

3,480

Total allowance for credit losses - loans and unfunded commitments

$

28,688

$

30,189

$

34,946

$

34,765

$

35,085

Provision for credit losses under CECL

Provision for loan losses

(814

)

(4,074

)

225

636

8,222

Provision for securities held to maturity credit losses

(1

)

-

(1

)

1

(1

)

Provision for unfunded commitments

(118

)

(445

)

257

(609

)

642

Total provision for credit losses

$

(933

)

$

(4,519

)

$

481

$

28

$

8,863

Non-performing loans

$

5,194

$

2,056

$

4,862

$

5,421

$

6,265

Foreclosed properties (OREO)

16

16

16

563

779

Total nonperforming assets

$

5,210

$

2,072

$

4,878

$

5,984

$

7,044

Allowance for loan losses to loans held for investment

1.15

%

1.20

%

1.41

%

1.46

%

1.45

%

Allowance for credit losses to loans held for investment

1.27

%

1.31

%

1.55

%

1.59

%

1.61

%

Allowance for credit losses to loans held for investment excluding PPP loans

1.33

%

1.45

%

1.70

%

1.78

%

1.80

%

Net charge-offs to average loans (1)

0.10

0.04

0.05

0.06

0.29

Non-performing loans as a percentage of total loans

0.23

%

0.09

%

0.22

%

0.25

%

0.29

%

Non-performing assets as a percentage of total assets

0.14

%

0.06

%

0.13

%

0.20

%

0.24

%

(1)Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.

Period End Deposits

Linked

June 30,

March 31,

December 31,

September 30,

June 30,

Quarter

Year Over

(dollars in thousands)

2021

2021

2020

2020

2020

Change

Year Change

DDA

$

1,374,018

$

1,280,524

$

1,033,765

$

843,656

$

883,662

$

93,494

$

490,356

NOW

536,677

485,540

760,638

387,858

449,737

51,137

86,940

Savings

676

562

625

568

583

114

93

Money market

1,026,239

1,142,361

1,030,753

945,834

879,863

(116,122

)

146,376

Time

283,656

294,129

241,328

196,343

131,353

(10,473

)

152,303

Brokered

84,958

74,576

94,399

94,463

62,433

10,382

22,525

Total deposits

$

3,306,224

$

3,277,692

$

3,161,508

$

2,468,722

$

2,407,631

$

28,532

$

898,593

Average Deposits

2021

2020

Linked

Second

First

Fourth

Third

Second

Quarter

Q2 2021 vs

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Change

Q2 2020

DDA

$

1,295,728

$

1,136,531

$

977,009

$

854,715

$

815,299

$

159,197

$

480,429

NOW

548,358

618,701

558,967

440,734

462,051

(70,343

)

86,307

Savings

593

587

614

586

574

6

19

Money market

1,088,423

1,042,809

1,026,347

942,062

952,444

45,614

135,979

Time

290,331

273,615

221,792

166,019

96,362

16,716

193,969

Brokered

84,168

84,663

89,673

68,102

83,228

(495

)

940

Total deposits

$

3,307,601

$

3,156,906

$

2,874,402

$

2,472,218

$

2,409,958

$

150,695

$

897,643

Noninterest bearing deposits as a percentage of average deposits

39.2

%

36.0

%

34.0

%

34.6

%

33.8

%

Cost of interest-bearing deposits

0.17

%

0.19

%

0.25

%

0.28

%

0.33

%

Cost of deposits

0.10

%

0.12

%

0.16

%

0.19

%

0.22

%

ATLANTIC CAPITAL BANCSHARES, INC.

Non-GAAP Performance and Financial Measures Reconciliation

For the six months

2021

2020

ended June 30,

Second

First

Fourth

Third

Second

(in thousands, except share and per share data)

Quarter

Quarter

Quarter

Quarter

Quarter

2021

2020

Taxable equivalent interest income reconciliation

Interest income - GAAP

$

27,618

$

25,410

$

24,943

$

24,233

$

23,797

$

53,028

$

49,820

Taxable equivalent adjustment

375

365

345

345

354

740

577

Interest income - taxable equivalent

$

27,993

$

25,775

$

25,288

$

24,578

$

24,151

$

53,768

$

50,397

Taxable equivalent net interest income reconciliation

Net interest income - GAAP

$

25,660

$

23,345

$

22,644

$

21,718

$

21,631

$

49,005

$

42,611

Taxable equivalent adjustment

375

365

345

345

354

740

577

Net interest income - taxable equivalent

$

26,035

$

23,710

$

22,989

$

22,063

$

21,985

$

49,745

$

43,188

Loan yield excluding PPP loans reconciliation

Loan yield - GAAP

4.19

%

3.89

%

3.89

%

3.82

%

3.87

%

4.04

%

4.29

%

Impact of PPP loans

(0.24

)

(0.06

)

(0.03

)

0.13

0.22

(0.15

)

0.14

Loan yield excluding PPP loans

3.95

%

3.83

%

3.86

%

3.95

%

4.09

%

3.89

%

4.43

%

Taxable equivalent net interest margin reconciliation

Net interest margin - GAAP

2.87

%

2.76

%

2.86

%

3.09

%

3.17

%

2.82

%

3.27

%

Impact of taxable equivalent adjustment

0.04

0.05

0.05

0.05

0.06

0.04

0.05

Net interest margin - taxable equivalent

2.91

%

2.81

%

2.91

%

3.14

%

3.23

%

2.86

%

3.32

%

Taxable equivalent net interest margin excluding PPP loans reconciliation

Net interest margin - taxable equivalent

2.91

%

2.81

%

2.91

%

3.14

%

3.23

%

2.86

%

3.32

%

Impact of PPP loans

(0.21

)

(0.11

)

(0.10

)

0.04

0.12

(0.16

)

0.06

Net interest margin - taxable equivalent excluding PPP loans

2.70

%

2.70

%

2.81

%

3.18

%

3.35

%

2.70

%

3.38

%

Taxable equivalent income before income taxes reconciliation

Income before income taxes - GAAP

$

14,980

$

16,277

$

12,015

$

10,481

$

2,207

$

31,257

$

4,658

Taxable equivalent adjustment

375

365

345

345

354

740

577

Income before income taxes

$

15,355

$

16,642

$

12,360

$

10,826

$

2,561

$

31,997

$

5,235

Taxable equivalent income tax expense reconciliation

Income tax expense - GAAP

$

3,164

$

2,915

$

2,065

$

1,863

$

358

$

6,079

$

685

Taxable equivalent adjustment

375

365

345

345

354

740

577

Income tax expense

$

3,539

$

3,280

$

2,410

$

2,208

$

712

$

6,819

$

1,262

Tangible book value per common share reconciliation

Total shareholders’ equity

$

353,185

$

340,328

$

338,586

$

340,309

$

335,980

$

353,185

$

335,980

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

Total tangible common equity

$

333,260

$

320,403

$

318,661

$

320,384

$

316,055

$

333,260

$

316,055

Common shares outstanding

20,319,429

20,354,077

20,394,912

21,202,783

21,477,631

20,319,429

21,477,631

Book value per common share - GAAP

$

17.38

$

16.72

$

16.60

$

16.05

$

15.64

$

17.38

$

15.64

Tangible book value

16.40

15.74

15.62

15.11

14.72

16.40

14.72

Tangible common equity to tangible assets reconciliation

Total shareholders’ equity

$

353,185

$

340,328

$

338,586

$

340,309

$

335,980

$

353,185

$

335,980

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

Total tangible common equity

$

333,260

$

320,403

$

318,661

$

320,384

$

316,055

$

333,260

$

316,055

Total assets

$

3,780,445

$

3,732,668

$

3,615,617

$

2,923,977

$

2,890,622

$

3,780,445

$

2,890,622

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(19,925

)

Total tangible assets

$

3,760,520

$

3,712,743

$

3,595,692

$

2,904,052

$

2,870,697

$

3,760,520

$

2,870,697

Tangible common equity to tangible assets

8.86

%

8.63

%

8.86

%

11.03

%

11.01

%

8.86

%

11.01

%

Allowance for credit losses to loans held for investment reconciliation

Total loans held for investment

$

2,264,899

$

2,300,814

$

2,249,036

$

2,188,035

$

2,184,694

$

2,264,899

$

2,184,694

PPP loans

(105,684

)

(218,766

)

(192,160

)

(231,834

)

(234,049

)

(105,684

)

(234,049

)

Total loans held for investment excluding PPP loans

$

2,159,215

$

2,082,048

$

2,056,876

$

1,956,201

$

1,950,645

$

2,159,215

$

1,950,645

Allowance for credit losses to loans held for investment

1.27

%

1.31

%

1.55

%

1.59

%

1.61

%

1.27

%

1.61

%

Allowance for credit losses to loans held for investment excluding PPP loans

1.33

%

1.45

%

1.70

%

1.78

%

1.80

%

1.33

%

1.80

%



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