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Atlantic Capital Bancshares, Inc. Reports First Quarter 2019 Results

ATLANTA, April 25, 2019 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (ACBI) announced net income from continuing operations for the quarter ended March 31, 2019 of $6.4 million, or $0.26 per diluted share, compared to $5.2 million, or $0.20 per diluted share, for the first quarter of 2018 and $7.5 million, or $0.29 per diluted share, for the fourth quarter of 2018.

On April 5, 2019, Atlantic Capital closed on the sale (the “branch sale”) of 14 branches in Tennessee and northwest Georgia, including its mortgage business. This branch divestiture included the sale of approximately $589 million in deposits and $385 million in loans. The income and expenses related to these branches are included in discontinued operations, and prior period financial information has been retrospectively adjusted for the impact of discontinued operations.

“We are pleased to report strong and sustained momentum and profit improvement from continuing operations through a period of strategic transition. With the April 5th divestiture of our residential mortgage business and 14 banking offices in Tennessee and northwest Georgia, Atlantic Capital is now fully positioned to pursue its refined strategy centered on the Atlanta market and our national commercial lines of business. We believe this strategy, combined with our continued focus on sound credit quality, disciplined expense management, and strong growth in core deposit funding, will produce improved operating performance and further enhance the value of our company,” remarked Douglas Williams, President and Chief Executive Officer.

First Quarter Highlights(1)

  • Increased tangible book value per share to $12.17, compared to $10.98 at March 31, 2018 and $11.88 at December 31, 2018.

  • Expanded taxable equivalent net interest margin from continuing operations to 3.74% compared to 3.39% in the first quarter of 2018 and 3.66% in the fourth quarter of 2018.

  • Increased commercial and industrial loans held for investment $120.8 million, or 21.6% from March 31, 2018 and $34.1 million, or 21.1% annualized, from December 31, 2018.

  • Increased average deposits from continuing operations $229.0 million, or 14.6%, compared to the first quarter of 2018 and $13.7 million, or 3.1% annualized, compared to the fourth quarter of 2018.

  • Repurchased 957,295 shares in the quarter totaling $17.1 million. Repurchased 1.8 million shares totaling $31.3 million since the announcement of the $85.0 million buyback program in November 2018.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $20.5 million, an increase of $3.0 million, or 17%, from the first quarter of 2018 and a decrease of $640,000 from the fourth quarter of 2018. The decrease in net interest income from the fourth quarter of 2018 was primarily the result of two fewer days in the first quarter of 2019 along with a decrease in the average balance of investment securities.

Atlantic Capital expects net interest income from continuing operations in future periods to be negatively impacted as a result of the $166 million in cash paid to the buyer at the closing of the branch sale. The Company anticipates restructuring the balance sheet following the transaction with a combination of excess cash, proceeds from sold securities, FHLB borrowings and brokered deposits.

Net interest margin from continuing operations was 3.74% in the first quarter of 2019, an increase of 35 basis points from the first quarter of 2018 and an increase of 8 basis points from the fourth quarter of 2018. These increases were the result of higher loan yields partially offset by an increase in deposit rates. Following the closing of the branch sale in the second quarter of 2019, the Company anticipates the net interest margin in future quarters to range from 3.50% to 3.55%.

(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 15.

The yield on loans from continuing operations in the first quarter of 2019 increased 66 basis points to 5.40% from the first quarter of 2018 and increased 9 basis points from the fourth quarter of 2018. Loan yields in the first quarter of 2019 benefited from the increases in short term interest rates during 2018.

The cost of deposits from continuing operations in the first quarter of 2019 was 1.09%, an increase of 46 basis points from the first quarter of 2018 and an increase of 16 basis points from the fourth quarter of 2018. The cost of interest bearing deposits from continuing operations increased 68 basis points to 1.61% from the first quarter of 2018 and 21 basis points from the fourth quarter of 2018. The higher rates on deposits were driven by higher rates on money market accounts as a result of continued competition for deposits and the impact of increases in short term interest rates during 2018.

The provision for loan losses for continuing operations was $814,000 in the first quarter of 2019, an increase of $42,000 compared to $772,000 in the first quarter of 2018 and an increase of $312,000 compared to $502,000 in the fourth quarter of 2018. The increase in the provision was primarily due to net charge-offs. Net charge-offs in the first quarter of 2019 totaled $558,000, including a $330,000 net charge off for a Tennessee commercial loan not included in the branch sale.

Noninterest income from continuing operations totaled $2.3 million in the first quarter of 2019 compared to $3.2 million in the first quarter of 2018 and $164,000 in the fourth quarter of 2018. The first quarter of 2018 included $518,000 in trust income earned prior to the sale of Southeastern Trust Company in the second quarter of 2018. The fourth quarter of 2018 included a loss of $1.9 million on the sale of investment securities to help fund the cash owed to the buyer at the closing of the branch sale.

Noninterest expense from continuing operations totaled $13.8 million in the first quarter of 2019, an increase of $508,000 compared to the first quarter of 2018, and an increase of $1.6 million compared to the fourth quarter of 2018. Salaries and employee benefits expense totaled $9.2 million in the first quarter of 2019, and accounted for most of the increase in expenses relative to both periods. This included severance expense and seasonally higher benefits expense, including payroll taxes, 401k expense and medical insurance expense. We expect quarterly expenses from continuing operations in 2019 to be approximately $13.5 million, as we recognize any additional savings from the branch sale offset by the additional expense from hiring new bankers and opening new locations.

Balance Sheet

Total loans held for investment were $1.73 billion at March 31, 2019, an increase of $172.2 million, or 11.0%, from March 31, 2018 and an increase of $6.5 million, or 1.5% annualized, from December 31, 2018. Commercial and industrial loans increased $120.8 million, or 21.6% from March 31, 2018 and increased $34.1 million, or 21.1% annualized, from December 31, 2018. Multifamily loans decreased $44.9 million from December 31, 2018 due to an increase in loan payoffs during the quarter.

At March 31, 2019, the allowance for loan losses was $18.1 million, or 1.04% of loans held for investment, an increase of $256,000 from December 31, 2018 and a decrease of $1.8 million from March 31, 2018. The decrease from March 31, 2018 to March 31, 2019 included a $3.1 million reduction in the allowance for loan losses in the fourth quarter of 2018 due to the transfer during the fourth quarter of 2018 of the branch sale loans to held for sale.

Non-performing assets from continuing operations totaled 0.34% of total assets, as of March 31, 2019, compared to 0.11% of total assets as of March 31, 2018 and 0.14% of total assets as of December 31, 2018. The increase was primarily due to the Company placing one SBA loan totaling $3.5 million on nonaccrual status during the first quarter of 2019.

Total average deposits from continuing operations were $1.79 billion for the first quarter of 2019, an increase of $229.0 million, or 14.6%, from the first quarter of 2018 and an increase of $13.7 million, or 3.1% annualized, from the fourth quarter of 2018. Noninterest bearing deposits were 32.1% of total average deposits in the first quarter of 2019, compared to 32.1% in the first quarter of 2018 and 33.6% in the fourth quarter of 2018.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, April 26, 2019, to discuss the financial results for the quarter ended March 31, 2019. Individuals wishing to participate in the conference call may do so by dialing 844.868.8848 from the United States and entering Conference ID 89772886. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com.

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) taxable equivalent net interest margin; (iv) taxable equivalent income before income taxes; (v) taxable equivalent income tax expense; (vi) tangible assets; (vii) tangible common equity; and (viii) tangible book value per common share, in its analysis of the Company's performance. Tangible common equity excludes goodwill and other intangible assets 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,” 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, 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 and Quarterly Reports on Form 10-Q. 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 $2.9 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 specialized financial services for select clients nationally.

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

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



ATLANTIC CAPITAL BANCSHARES, INC.

Selected Financial Information

2019

2018

First Quarter
2019 to 2018
Change

(in thousands, except share and per share data; taxable equivalent)

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

INCOME SUMMARY (1)

Interest income (2)

$

26,297

$

26,725

$

24,114

$

22,934

$

21,382

23

%

Interest expense

5,773

5,560

4,720

4,392

3,841

50

Net interest income

20,524

21,165

19,394

18,542

17,541

17

Provision for loan losses

814

502

845

(173

)

772

5

Net interest income after provision for loan losses

19,710

20,663

18,549

18,715

16,769

18

Noninterest income

2,336

164

2,255

4,466

3,162

(26

)

Noninterest expense

13,795

12,208

11,872

12,623

13,288

4

Income from continuing operations before income taxes

8,251

8,619

8,932

10,558

6,643

24

Income tax expense

1,811

1,136

1,934

2,180

1,452

25

Net income from continuing operations

6,440

7,483

6,998

8,378

5,191

24

Income (loss) from discontinued operations, net of tax

(1,063

)

1,347

(485

)

(227

)

(153

)

595

Net income

$

5,377

$

8,830

$

6,513

$

8,151

$

5,038

7

%

PER SHARE DATA

Diluted earnings per share - continuing operations

$

0.26

$

0.29

$

0.27

$

0.32

$

0.20

Diluted earnings (loss) per share - discontinued operations

(0.04

)

0.05

(0.02

)

(0.01

)

(0.01

)

Diluted earnings per share

0.21

0.34

0.25

0.31

0.19

Book value per share

13.10

12.80

12.27

12.14

11.91

Tangible book value per common share (3)

12.17

11.88

11.37

11.23

10.98

PERFORMANCE MEASURES

Return on average equity

6.80

%

10.90

%

8.07

%

10.46

%

6.66

%

Return on average assets

0.77

1.21

0.92

1.20

0.76

Taxable equivalent net interest margin - continuing operations

3.74

3.66

3.48

3.51

3.39

Efficiency ratio - continuing operations

60.61

57.50

55.09

55.10

64.50

CAPITAL

Average equity to average assets

11.34

%

11.11

%

11.41

%

11.50

%

11.34

%

Tangible common equity to tangible assets

10.51

10.25

10.38

10.99

10.50

Tier 1 capital ratio

11.0

(6)

11.5

11.8

12.0

11.3

Total risk based capital ratio

13.7

(6)

14.2

14.7

15.0

14.3

Number of common shares outstanding - basic

24,466,964

25,290,419

26,103,666

26,102,217

25,772,208

Number of common shares outstanding - diluted

24,719,273

25,480,233

26,281,849

26,336,871

26,000,216

ASSET QUALITY

Allowance for loan losses to loans held for investment (4)

1.04

%

1.03

%

1.00

%

1.01

%

1.01

%

Net charge-offs to average loans (5)

0.11

0.03

0.05

Non-performing assets to total assets

0.40

0.20

0.13

0.14

0.13

(1)On April 5, 2019, Atlantic Capital completed the sale to FirstBank of its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches subsequently sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for periods presented prior to December 31, 2018. (2)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. (3)Excludes effect of acquisition related intangibles. (4)The first quarter 2019 and fourth quarter 2018 ratios are calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. (5)Annualized. (6)Amounts are estimates as of 3/31/19.



ATLANTIC CAPITAL BANCSHARES, INC.

Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

(in thousands)

March 31, 2019

December 31, 2018

Cash

$

4,168

$

4,234

Loans held for sale - discontinued operations

384,779

373,030

Premises held for sale - discontinued operations

7,736

7,722

Goodwill - discontinued operations

4,555

4,555

Other assets

1,158

1,405

Total assets

$

402,396

$

390,946

Deposits to be assumed - discontinued operations

$

593,264

$

585,429

Securities sold under agreements to repurchase - discontinued operations

9,821

6,220

Total liabilities

$

603,085

$

591,649

Net liabilities

$

(200,689

)

$

(200,703

)


Components of Net Income (Loss) from Discontinued Operations

2019

2018

(in thousands)

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Net interest income

$

3,125

$

3,225

$

3,266

$

3,570

$

4,079

Provision for loan losses

(3,097

)

Net interest income after provision

3,125

6,322

3,266

3,570

4,079

Service charges

481

483

474

480

485

Mortgage income

288

320

315

363

304

Other income

21

47

22

22

32

Total noninterest income

790

850

811

865

821

Salaries and employee benefits

2,427

2,757

2,820

3,010

3,127

Occupancy

339

479

556

511

470

Equipment and software

123

158

217

203

201

Amortization of intangibles

247

271

296

319

343

Communications and data processing

389

440

381

346

362

Divestiture expense

1,449

825

Other noninterest expense

358

446

453

349

601

Total noninterest expense

5,332

5,376

4,723

4,738

5,104

Net income (loss) before provision for income taxes

(1,417

)

1,796

(646

)

(303

)

(204

)

Provision (benefit) for income taxes

(354

)

449

(161

)

(76

)

(51

)

Net income (loss) from discontinued operations

$

(1,063

)

$

1,347

$

(485

)

$

(227

)

$

(153

)


ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Balance Sheets (unaudited)

March 31,

December 31,

March 31,

(in thousands, except share data)

2019

2018

2018

ASSETS

Cash and due from banks

$

36,992

$

42,895

$

39,985

Interest-bearing deposits in banks

76,720

216,040

62,787

Other short-term investments

29,457

9,457

9,669

Cash and cash equivalents

143,169

268,392

112,441

Investment securities available-for-sale

402,640

402,486

458,730

Other investments

28,844

29,236

37,949

Loans held for sale

1,530

5,889

835

Loans held for sale - discontinued operations(1)

384,779

373,030

397,094

Loans held for investment(1)

1,734,557

1,728,073

1,562,327

Less: allowance for loan losses(2)

(18,107

)

(17,851

)

(19,885

)

Loans held for investment, net

1,716,450

1,710,222

1,542,442

Premises held for sale - discontinued operations(1)

7,736

7,722

7,810

Premises and equipment, net(1)

23,311

9,779

7,665

Bank owned life insurance

65,486

65,149

64,014

Goodwill - discontinued operations(1)

4,555

4,555

4,555

Goodwill and intangible assets, net(1)

21,376

21,523

22,930

Other real estate owned

971

874

927

Other assets

55,040

56,583

61,273

Total assets

$

2,855,887

$

2,955,440

$

2,718,665

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing demand(1)

$

561,829

$

602,252

$

472,181

Interest-bearing checking(1)

233,838

252,490

214,333

Savings(1)

896

725

3,593

Money market(1)

962,741

987,183

699,311

Time(1)

22,069

10,623

3,074

Brokered deposits

65,811

99,241

112,376

Deposits to be assumed - discontinued operations(1)

593,264

585,429

591,432

Total deposits

2,440,448

2,537,943

2,096,300

Federal funds purchased

40,000

Securities sold under agreements to repurchase - discontinued operations(1)

9,821

6,220

7,855

Federal Home Loan Bank borrowings

185,000

Long-term debt

49,746

49,704

49,577

Other liabilities

35,245

37,920

32,874

Total liabilities

2,535,260

2,631,787

2,411,606

SHAREHOLDERS' EQUITY

Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019, December 31, 2018, and March 31, 2018

Common stock, no par value; 100,000,000 shares authorized; 24,466,964, 25,290,419, and 25,772,208 shares issued and outstanding as of March 31, 2019, December 31, 2018, and March 31, 2018, respectively

276,346

291,771

300,893

Retained earnings

47,191

42,187

18,693

Accumulated other comprehensive (loss) income

(2,910

)

(10,305

)

(12,527

)

Total shareholders’ equity

320,627

323,653

307,059

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,855,887

$

2,955,440

$

2,718,665

(1)Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018, and prior periods have been adjusted retrospectively. (2)The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.



ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Statements of Income (unaudited) (1)

(in thousands, except share and per share data)

Three months ended

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

INTEREST INCOME

Loans, including fees

$

22,752

$

22,752

$

20,117

$

19,269

$

17,972

Investment securities available-for-sale

2,631

2,844

2,789

2,687

2,592

Interest and dividends on other interest‑earning assets

814

1,032

1,111

880

715

Total interest income

26,197

26,628

24,017

22,836

21,279

INTEREST EXPENSE

Interest on deposits

4,831

4,185

3,182

2,715

2,424

Interest on Federal Home Loan Bank advances

487

637

766

509

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

118

60

77

88

79

Interest on long-term debt

824

828

824

823

829

Total interest expense

5,773

5,560

4,720

4,392

3,841

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES

20,424

21,068

19,297

18,444

17,438

Provision for loan losses

814

502

845

(173

)

772

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

19,610

20,566

18,452

18,617

16,666

NONINTEREST INCOME

Service charges

794

876

804

828

707

Gains (losses) on sale of securities

(1,853

)

(2

)

Gains (losses) on sale of other assets

(3

)

58

(166

)

(46

)

Trust income

507

518

Derivatives income

(111

)

154

20

20

114

Bank owned life insurance

360

380

379

378

369

SBA lending activities

1,086

425

882

997

1,302

Gain on sale of trust company

1,681

Other noninterest income

210

182

112

223

198

Total noninterest income

2,336

164

2,255

4,466

3,162

NONINTEREST EXPENSE

Salaries and employee benefits

9,213

7,573

7,332

7,911

8,950

Occupancy

639

655

732

700

885

Equipment and software

739

783

747

701

586

Professional services

775

947

796

943

825

Postage, printing and supplies

48

30

55

44

37

Communications and data processing

675

772

566

657

681

Marketing and business development

226

224

211

135

140

FDIC premiums

235

157

154

143

108

Other noninterest expense

1,245

1,067

1,279

1,389

1,076

Total noninterest expense

13,795

12,208

11,872

12,623

13,288

INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES

8,151

8,522

8,835

10,460

6,540

Provision for income taxes

1,711

1,039

1,837

2,082

1,349

NET INCOME FROM CONTINUING OPERATIONS

6,440

7,483

6,998

8,378

5,191

DISCONTINUED OPERATIONS

Income (loss) from discontinued operations

$

(1,417

)

$

1,796

$

(646

)

$

(303

)

$

(204

)

Provision (benefit) for income taxes

(354

)

449

(161

)

(76

)

(51

)

Net income (loss) from discontinued operations

(1,063

)

1,347

(485

)

(227

)

(153

)

NET INCOME

$

5,377

$

8,830

$

6,513

$

8,151

$

5,038

Net Income (Loss) per Common Share Basic

Net income per common share - continuing operations

$

0.26

$

0.29

$

0.27

$

0.32

$

0.20

Net income (loss) per common share - discontinued operations

(0.04

)

0.05

(0.02

)

(0.01

)

(0.01

)

Net Income per Common Share Basic

0.22

0.34

0.25

0.31

0.20

Net Income (Loss) per Common Share Diluted

Net income per common share - continuing operations

$

0.26

$

0.29

$

0.27

$

0.32

$

0.20

Net income (loss) per common share - discontinued operations

(0.04

)

0.05

(0.02

)

(0.01

)

(0.01

)

Net Income per Common Share Diluted

0.21

0.34

0.25

0.31

0.19

Weighted average shares - basic

24,855,171

25,919,445

26,103,397

26,010,914

25,750,824

Weighted average shares - diluted

25,019,384

26,043,799

26,254,772

26,200,026

25,945,773

(1)Discontinued operations have been reported retrospectively for all periods presented.



ATLANTIC CAPITAL BANCSHARES, INC.

Average Balance Sheets and Net Interest Margin Analysis

Selected Financial Information

Three months ended

March 31, 2019

December 31, 2018

(dollars in thousands; taxable equivalent)

Average Balance

Interest Income/ Expense

Tax Equivalent Yield/Rate

Average Balance

Interest Income/ Expense

Tax Equivalent Yield/Rate

Assets

Interest bearing deposits in other banks

$

92,168

$

463

2.04

%

$

111,988

$

638

2.26

%

Other short-term investments

11,680

86

2.99

19,078

142

2.95

Investment securities:

Taxable investment securities

320,089

2,113

2.68

376,163

2,362

2.49

Non-taxable investment securities(1)

80,012

618

3.13

74,302

579

3.09

Total investment securities

400,101

2,731

2.77

450,465

2,941

2.59

Loans - continuing operations

1,707,682

22,752

5.40

1,699,801

22,752

5.31

FHLB and FRB stock

12,528

265

8.58

15,985

252

6.25

Total interest-earning assets - continuing operations

2,224,159

26,297

4.80

2,297,317

26,725

4.62

Loans held for sale - discontinued operations

381,783

4,541

4.82

377,052

4,509

4.74

Total interest-earning assets

2,605,942

30,838

4.80

2,674,369

31,234

4.63

Non-earning assets

223,130

216,958

Total assets

$

2,829,072

$

2,891,327

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,124,350

4,255

1.53

1,079,178

3,601

1.32

Time deposits

12,847

38

1.20

10,116

33

1.29

Brokered deposits

81,141

538

2.69

93,558

551

2.34

Total interest-bearing deposits

1,218,338

4,831

1.61

1,182,852

4,185

1.40

Total borrowings

18,056

118

2.65

91,155

547

2.38

Total long-term debt

49,719

824

6.72

49,677

828

6.61

Total interest-bearing liabilities - continuing operations

1,286,113

5,773

1.82

1,323,684

5,560

1.67

Interest-bearing liabilities - discontinued operations

473,090

1,416

1.21

472,162

1,284

1.08

Total interest-bearing liabilities

1,759,203

7,189

1.66

1,795,846

6,844

1.51

Demand deposits

575,453

597,240

Demand deposits - discontinued operations

128,977

135,774

Other liabilities

44,627

41,120

Shareholders' equity

320,812

321,347

Total liabilities and shareholders' equity

$

2,829,072

$

2,891,327

Net interest spread - continuing operations

2.98

%

2.95

%

Net interest income and net interest margin - continuing operations(2)

$

20,524

3.74

%

$

21,165

3.66

%

Net interest income and net interest margin(2)

$

23,649

3.68

%

$

24,390

3.62

%

Non-taxable equivalent net interest margin

3.66

%

3.60

%

(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 rates.

(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

March 31, 2019

March 31, 2018

(dollars in thousands; taxable equivalent)

Average Balance

Interest Income/ Expense

Tax Equivalent Yield/Rate

Average Balance

Interest Income/ Expense

Tax Equivalent Yield/Rate

Assets

Interest bearing deposits in other banks

$

92,168

$

463

2.04

%

$

78,207

$

397

2.06

%

Other short-term investments

11,680

86

2.99

10,346

63

2.47

Investment securities:

Taxable investment securities

320,089

2,113

2.68

375,771

2,116

2.28

Non-taxable investment securities(1)

80,012

618

3.13

78,146

579

3.00

Total investment securities

400,101

2,731

2.77

453,917

2,695

2.41

Loans - continuing operations

1,707,682

22,752

5.40

1,536,636

17,972

4.74

FHLB and FRB stock

12,528

265

8.58

17,895

255

5.78

Total interest-earning assets - continuing operations

2,224,159

26,297

4.80

2,097,001

21,382

4.14

Loans held for sale - discontinued operations

381,783

4,541

4.82

402,317

4,703

4.74

Total interest-earning assets

2,605,942

30,838

4.80

2,499,318

26,085

4.23

Non-earning assets

223,130

205,504

Total assets

$

2,829,072

$

2,704,822

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,124,350

4,255

1.53

934,415

1,917

0.83

Time deposits

12,847

38

1.20

9,800

28

1.16

Brokered deposits

81,141

538

2.69

117,787

479

1.65

Total interest-bearing deposits

1,218,338

4,831

1.61

1,062,002

2,424

0.93

Total borrowings

18,056

118

2.65

151,946

588

1.57

Total long-term debt

49,719

824

6.72

49,550

829

6.79

Total interest-bearing liabilities - continuing operations

1,286,113

5,773

1.82

1,263,498

3,841

1.23

Interest-bearing liabilities - discontinued operations

473,090

1,416

1.21

458,029

624

0.55

Total interest-bearing liabilities

1,759,203

7,189

1.66

1,721,527

4,465

1.05

Demand deposits

575,453

502,829

Demand deposits - discontinued operations

128,977

135,901

Other liabilities

44,627

37,744

Shareholders' equity

320,812

306,821

Total liabilities and shareholders' equity

$

2,829,072

$

2,704,822

Net interest spread - continuing operations

2.98

%

2.90

%

Net interest income and net interest margin - continuing operations(2)

$

20,524

3.74

%

$

17,541

3.39

%

Net interest income and net interest margin(2)

$

23,649

3.68

%

$

21,620

3.51

%

Non-taxable equivalent net interest margin

3.66

%

3.49

%

(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(1)

(dollars in thousands)

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

Linked Quarter Change

Year Over Year Change

Loans held for sale

Loans held for sale

$

1,530

$

5,889

$

1,886

$

1,612

$

835

$

(4,359

)

$

695

Loans held for sale - discontinued operations

384,779

373,030

375,976

382,732

397,094

11,749

(12,315

)

Total loans held for sale

$

386,309

$

378,919

$

377,862

$

384,344

$

397,929

$

7,390

$

(11,620

)

Loans held for investment

Commercial loans:

Commercial and industrial

$

679,489

$

645,374

$

581,737

$

546,497

$

558,654

$

34,115

$

120,835

Commercial real estate:

Multifamily

43,929

88,826

108,001

92,013

92,016

(44,897

)

(48,087

)

Owner occupied

304,945

298,291

295,801

265,576

260,270

6,654

44,675

Investment

394,087

407,711

409,145

386,072

389,410

(13,624

)

4,677

Construction and land:

1-4 family residential construction

2,067

1,006

378

287

1,061

1,780

Other construction, development, and land

171,818

155,226

147,114

134,764

131,466

16,592

40,352

Mortgage warehouse loans

22,267

27,967

27,838

38,352

44,575

(5,700

)

(22,308

)

Total commercial loans

1,618,602

1,624,401

1,569,636

1,463,652

1,476,678

(5,799

)

141,924

Residential:

Residential mortgages

32,915

32,800

24,904

20,270

19,446

115

13,469

Home equity

23,171

22,822

33,410

32,638

34,673

349

(11,502

)

Total residential loans

56,086

55,622

58,314

52,908

54,119

464

1,967

Consumer

35,203

25,851

26,825

25,531

23,214

9,352

11,989

Other

26,663

24,712

10,579

12,409

11,769

1,951

14,894

1,736,554

1,730,586

1,665,354

1,554,500

1,565,780

5,968

170,774

Less net deferred fees and other unearned income

(1,997

)

(2,513

)

(2,896

)

(2,921

)

(3,453

)

516

1,456

Total loans held for investment

$

1,734,557

$

1,728,073

$

1,662,458

$

1,551,579

$

1,562,327

$

6,484

$

172,230

Total loans

$

2,120,866

$

2,106,992

$

2,040,320

$

1,935,923

$

1,960,256

$

13,874

$

160,610

(1)Loans held for sale-discontinued operations and loans held for investment have been reported retrospectively for all periods prior to December 31, 2018.


ATLANTIC CAPITAL BANCSHARES, INC.

Allowance for Loan Losses Activity and Credit Quality

2019

2018

(dollars in thousands)

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Balance at beginning of period

$

17,851

$

20,443

$

19,583

$

19,885

$

19,344

Provision for loan losses

814

595

758

(173

)

811

Provision for loan losses (reversal of provision) - discontinued operations

(3,097

)

Provision for PCI loan losses

(93

)

87

(39

)

Loans charged-off:

Commercial and industrial

(549

)

(126

)

Commercial real estate

(50

)

Construction and land

Residential mortgages

(9

)

(5

)

(70

)

Home equity

(102

)

(58

)

Consumer

(37

)

(3

)

(10

)

(3

)

Other

Total loans charged-off

(595

)

(8

)

(162

)

(257

)

Recoveries on loans previously charged-off:

Commercial and industrial

14

19

Commercial real estate

28

Construction and land

3

Residential mortgages

7

4

Home equity

1

Consumer

12

7

15

5

7

Other

Total recoveries

37

11

15

33

26

Net charge-offs

$

(558

)

$

3

$

15

$

(129

)

$

(231

)

Balance at period end (1)

$

18,107

$

17,851

$

20,443

$

19,583

$

19,885

Loans

Loans held for sale

$

1,530

$

5,889

$

1,886

$

1,612

$

835

Loans held for sale - discontinued operations

384,779

373,030

375,976

382,732

397,094

Loans held for investment - continuing operations

1,734,557

1,728,073

1,662,458

1,551,579

1,562,327

Total loans

$

2,120,866

$

2,106,992

$

2,040,320

$

1,935,923

$

1,960,256

Non-performing loans - continuing operations (4)

$

8,830

$

3,252

$

2,160

$

1,697

$

1,941

Non-performing loans - discontinued operations (4)

1,506

1,924

556

709

560

Total non-performing loans

10,336

5,176

2,716

2,406

2,501

Foreclosed properties (OREO)

971

874

968

1,288

927

Total nonperforming assets

$

11,307

$

6,050

$

3,684

$

3,694

$

3,428

Allowance for loan losses to loans held for investment (2)

1.04

%

1.03

%

1.00

%

1.01

%

1.01

%

Net charge-offs to average loans (3)

0.11

0.03

0.05

Non-performing loans as a percentage of total loans - continuing operations (4)

0.51

%

0.19

%

0.13

%

0.11

%

0.12

%

Non-performing loans as a percentage of total loans - discontinued operations (4)

0.39

0.52

0.15

0.19

0.14

Non-performing loans as a percentage of total loans (4)

0.49

0.25

0.13

0.12

0.13

Non-performing assets as a percentage of total assets - continuing operations (4)

0.34

%

0.14

%

0.11

%

0.11

%

0.11

%

Non-performing assets as a percentage of total assets - discontinued operations (4)

0.05

0.07

0.02

0.03

0.02

Non-performing assets as a percentage of total assets (4)

0.40

0.20

0.13

0.14

0.13

(1) The allowance for loan losses has not been adjusted retrospectively in periods prior to December 31, 2018. (2) The first quarter 2019 and fourth quarter 2018 ratios are calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. (3) Annualized. (4) Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.

Period End Deposits

(dollars in thousands)

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

Linked Quarter Change

Year Over Year Change

DDA

$

561,829

$

602,252

$

518,155

$

464,282

$

472,181

$

(40,423

)

$

89,648

NOW

233,838

252,490

407,214

241,461

214,333

(18,652

)

19,505

Savings

896

725

698

951

3,593

171

(2,697

)

Money market

962,741

987,183

759,583

647,247

699,311

(24,442

)

263,430

Time

22,069

10,623

10,396

10,359

3,074

11,446

18,995

Brokered

65,811

99,241

79,119

92,656

112,376

(33,430

)

(46,565

)

Total deposits - continuing operations

1,847,184

1,952,514

1,775,165

1,456,956

1,504,868

(105,330

)

342,316

Deposits to be assumed - discontinued operations

593,264

585,429

604,659

609,631

591,432

7,835

1,832

Total deposits

$

2,440,448

$

2,537,943

$

2,379,824

$

2,066,587

$

2,096,300

$

(97,495

)

$

344,148

Payments clients

$

361,192

$

397,608

$

258,320

$

251,748

$

311,943

$

(36,416

)

$

49,249

Average Deposits

2019

2018

Linked Quarter Change

Q1 2019 vs Q1 2018

(dollars in thousands)

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

DDA

$

575,453

$

597,239

$

561,355

$

489,722

$

502,829

$

(21,786

)

$

72,624

NOW

276,212

280,449

314,759

287,283

236,796

(4,237

)

39,416

Savings

884

712

616

674

527

172

357

Money market

847,254

798,017

697,578

645,034

697,092

49,237

150,162

Time

12,847

10,117

10,406

9,855

9,800

2,730

3,047

Brokered

81,141

93,558

67,937

100,425

117,787

(12,417

)

(36,646

)

Total deposits - continuing operations

1,793,791

1,780,092

1,652,651

1,532,993

1,564,831

13,699

228,960

Deposits to be assumed - discontinued operations

593,313

600,769

601,421

602,832

589,054

(7,456

)

4,259

Total deposits

$

2,387,104

$

2,380,861

$

2,254,072

$

2,135,825

$

2,153,885

$

6,243

$

233,219

Payments clients

$

295,059

$

263,800

$

227,029

$

219,016

$

256,794

$

31,259

$

38,265

Noninterest bearing deposits as a percentage of average deposits - continuing operations

32.1

%

33.6

%

34.0

%

31.9

%

32.1

%

Cost of deposits - continuing operations

1.09

%

0.93

%

0.76

%

0.71

%

0.63

%



ATLANTIC CAPITAL BANCSHARES, INC.

Non-GAAP Performance and Financial Measures Reconciliation

2019

2018

(in thousands, except share and per share data)

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Taxable equivalent interest income reconciliation

Interest income - GAAP

$

26,197

$

26,628

$

24,017

$

22,836

$

21,279

Taxable equivalent adjustment

100

97

97

98

103

Interest income - taxable equivalent

$

26,297

$

26,725

$

24,114

$

22,934

$

21,382

Taxable equivalent net interest income reconciliation

Net interest income - GAAP

$

20,424

$

21,068

$

19,297

$

18,444

$

17,438

Taxable equivalent adjustment

100

97

97

98

103

Net interest income - taxable equivalent

$

20,524

$

21,165

$

19,394

$

18,542

$

17,541

Taxable equivalent net interest margin reconciliation

Net interest margin - GAAP

3.66

%

3.60

%

3.45

%

3.52

%

3.49

%

Impact of taxable equivalent adjustment

0.02

0.02

0.02

0.02

0.02

Net interest margin - taxable equivalent

3.68

%

3.62

%

3.47

%

3.54

%

3.51

%

Income before income taxes reconciliation

Income before income taxes - GAAP

$

8,151

$

8,522

$

8,835

$

10,460

$

6,540

Taxable equivalent adjustment

100

97

97

98

103

Income before income taxes

$

8,251

$

8,619

$

8,932

$

10,558

$

6,643

Income tax reconciliation

Income tax expense - GAAP

$

1,711

$

1,039

$

1,837

$

2,082

$

1,349

Taxable equivalent adjustment

100

97

97

98

103

Income tax expense

$

1,811

$

1,136

$

1,934

$

2,180

$

1,452

Tangible book value per common share reconciliation

Total shareholders’ equity

$

320,627

$

323,653

$

320,237

$

316,770

$

307,059

Intangible assets

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(24,050

)

Total tangible common equity

$

297,779

$

300,558

$

296,870

$

293,108

$

283,009

Common shares outstanding

24,466,964

25,290,419

26,103,666

26,102,217

25,772,208

Book value per common share - GAAP

$

13.10

$

12.80

$

12.27

$

12.14

$

11.91

Tangible book value

12.17

11.88

11.37

11.23

10.98

Tangible common equity to tangible assets reconciliation

Total shareholders’ equity

$

320,627

$

323,653

$

320,237

$

316,770

$

307,059

Intangible assets

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(24,050

)

Total tangible common equity

$

297,779

$

300,558

$

296,870

$

293,108

$

283,009

Total assets

$

2,855,887

$

2,955,440

$

2,882,721

$

2,690,674

$

2,718,665

Intangible assets

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(24,050

)

Total tangible assets

$

2,833,039

$

2,932,345

$

2,859,354

$

2,667,012

$

2,694,615

Tangible common equity to tangible assets

10.51

%

10.25

%

10.38

%

10.99

%

10.50

%