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Atlantic Capital Bancshares, Inc. Reports Second Quarter 2019 Results

ATLANTA, July 25, 2019 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (ACBI) announced net income from continuing operations for the quarter ended June 30, 2019 of $7.0 million, or $0.29 per diluted share, compared to $8.4 million, or $0.32 per diluted share, for the second quarter of 2018 and $6.4 million, or $0.26 per diluted share, for the first quarter of 2019.

On April 5, 2019, Atlantic Capital completed the sale of 14 branches in Tennessee and northwest Georgia, including its mortgage business to FirstBank (the “branch sale”). This branch sale included the sale of approximately $598 million in deposits and repurchase agreements and approximately $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. Net income from discontinued operations in the second quarter of 2019 included a gain on sale of branches of $34.5 million and divestiture expenses of $3.6 million.

“With strong loan, deposit, and non-interest income growth in the second quarter, Atlantic Capital continued to build on its success in Atlanta and its specialty commercial lines of business. We have invested aggressively in new bankers, support professionals, and offices to address new opportunities in our vibrant and growing markets,” remarked Douglas Williams, President and Chief Executive Officer.

Second Quarter Highlights(1)

  • Tangible book value per share increased to $13.60, compared to $11.23 at June 30, 2018 and $12.17 at March 31, 2019.

  • Taxable equivalent net interest margin from continuing operations was 3.61%, compared to 3.51% in the second quarter of 2018 and 3.74% in the first quarter of 2019.

  • Noninterest expense from continuing operations totaled $13.3 million, compared to $12.6 million in the second quarter of 2018 and $13.8 million in the first quarter of 2019.

  • Commercial and industrial loans held for investment increased $155.1 million, or 28.3% from June 30, 2018 and $22.1 million, or 13.0% annualized, from March 31, 2019.

  • Average deposits from continuing operations increased $369.1 million, or 24.1%, compared to the second quarter of 2018 and $108.3 million, or 24.1% annualized, compared to the first quarter of 2019.

  • The company repurchased 1.1 million shares in the second quarter totaling $19.5 million, and has repurchased 2.9 million shares totaling $50.8 million since the announcement of the $85.0 million buyback program in November of 2018.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $20.0 million for the second quarter of 2019, an increase of $1.4 million, or 8%, from the second quarter of 2018, and a decrease of $547,000 from the first quarter of 2019. The decrease in net interest income from the first quarter of 2019 was primarily the result of a decrease in the average balance of investment securities and an increase in borrowings to help fund the $167 million in cash paid to FirstBank at the closing of the branch sale, along with an increase in the cost of interest bearing deposits.

Net interest margin from continuing operations was 3.61% in the second quarter of 2019, an increase of 10 basis points from the second quarter of 2018 and a decrease of 13 basis points from the first quarter of 2019. The decrease in the second quarter was primarily the result of a decrease in loan yields, higher cost of interest bearing deposits and an increase in borrowings to help fund the cash paid for the branch sale.

The yield on loans from continuing operations in the second quarter of 2019 was 5.34%, an increase of 32 basis points from the second quarter of 2018 and a decrease of 6 basis points from the first quarter of 2019. The linked quarter decrease was primarily a result of decreases in 1 month LIBOR during the quarter.

(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 16.

The cost of deposits from continuing operations in the second quarter of 2019 was 1.15%, an increase of 44 basis points from the second quarter of 2018 and an increase of 6 basis points from the first quarter of 2019. The cost of interest bearing deposits from continuing operations increased 62 basis points to 1.66% from the second quarter of 2018, and increased 5 basis points from the first quarter of 2019.

The provision for loan losses for continuing operations was $698,000 in the second quarter of 2019 compared to ($173,000) in the second quarter of 2018 and $814,000 in the first quarter of 2019. Annualized net charge-offs were 0.14% of average loans in the second quarter of 2019 and 0.12% for the first six months of 2019.

Noninterest income from continuing operations totaled $2.9 million in the second quarter of 2019 compared to $4.5 million in the second quarter of 2018 and $2.3 million in the first quarter of 2019. The second quarter of 2018 included a $1.7 million gain on the sale of the Southeastern Trust Company and $518,000 in trust income earned prior to the sale. The second quarter of 2019 included a gain of $654,000 on the sale of investment securities to help fund the cash owed to the buyer at the closing of the branch sale and a loss of $233,000 in derivative income due to the credit valuation adjustment on the customer swap portfolio.

Noninterest expense from continuing operations totaled $13.3 million in the second quarter of 2019, an increase of $631,000 compared to the second quarter of 2018, and a decrease of $541,000 compared to the first quarter of 2019. Salaries and employee benefits expense totaled $8.5 million in the second quarter of 2019, and accounted for most of the linked quarter decrease in expenses primarily as a result of lower benefits cost.

Balance Sheet

Total loans held for investment were $1.79 billion at June 30, 2019, an increase of $238.2 million, or 15.3%, from June 30, 2018 and an increase of $55.2 million, or 12.7% annualized, from March 31, 2019. Commercial and industrial loans increased $155.1 million, or 28.4%, from June 30, 2018 and increased $22.1 million, or 13.0% annualized, from March 31, 2019. Mortgage warehouse loans decreased $27.7 million from June 30, 2018 and $11.6 million from March 31, 2019.

At June 30, 2019, the allowance for loan losses was $18.2 million, or 1.02% of loans held for investment compared to 1.01%, at June 30, 2018 and 1.04%, at March 31, 2019. Non-performing assets from continuing operations totaled $6.4 million, or 0.31% of total assets, as of June 30, 2019, compared to 0.11% of total assets as of June 30, 2018 and 0.34% of total assets as of March 31, 2019.

Total average deposits from continuing operations were $1.90 billion for the second quarter of 2019, an increase of $369.0 million, or 24.1%, from the second quarter of 2018 and an increase of $108.3 million, or 24.1% annualized, from the first quarter of 2019. Noninterest bearing deposits were 30.9% of total average deposits from continuing operations in the second quarter of 2019, compared to 31.9% in the second quarter of 2018 and 32.1% in the first quarter of 2019.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EDT on Friday, July 26, 2019, to discuss the financial results for the quarter ended June 30, 2019. Individuals wishing to participate in the conference call may do so by dialing 866-777-2509 from the United States. 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 $2.4 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

For the six months ended June 30,

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

Second Quarter

First
Quarter

Fourth Quarter

Third Quarter

Second Quarter

2019

2018

INCOME SUMMARY (1)

Interest income (2)

$

26,686

$

26,297

$

26,725

$

24,114

$

22,934

$

52,983

$

44,316

Interest expense

6,709

5,773

5,560

4,720

4,392

12,482

8,233

Net interest income

19,977

20,524

21,165

19,394

18,542

40,501

36,083

Provision for loan losses

698

814

502

845

(173

)

1,512

599

Net interest income after provision for loan losses

19,279

19,710

20,663

18,549

18,715

38,989

35,484

Noninterest income

2,941

2,336

164

2,255

4,466

5,277

7,628

Noninterest expense

13,254

13,795

12,208

11,872

12,623

27,049

25,911

Income from continuing operations before income taxes

8,966

8,251

8,619

8,932

10,558

17,217

17,201

Income tax expense

1,957

1,811

1,136

1,934

2,180

3,768

3,632

Net income from continuing operations

7,009

6,440

7,483

6,998

8,378

13,449

13,569

Income (loss) from discontinued operations, net of tax

22,143

(1,063

)

1,347

(485

)

(227

)

21,080

(380

)

Net income

$

29,152

$

5,377

$

8,830

$

6,513

$

8,151

$

34,529

$

13,189

PER SHARE DATA

Diluted earnings per share - continuing operations

$

0.29

$

0.26

$

0.29

$

0.27

$

0.32

$

0.55

$

0.52

Diluted earnings (loss) per share - discontinued operations

0.92

(0.04

)

0.05

(0.02

)

(0.01

)

0.86

(0.01

)

Diluted earnings per share

1.21

0.21

0.34

0.25

0.31

1.41

0.51

Book value per share

14.46

13.10

12.80

12.27

12.14

14.46

12.14

Tangible book value per common share (3)

13.60

12.17

11.88

11.37

11.23

13.60

11.23

PERFORMANCE MEASURES

Return on average equity

34.38

%

6.80

%

10.90

%

8.07

%

10.46

%

21.07

%

8.59

%

Return on average assets

4.79

0.77

1.21

0.92

1.20

2.64

0.98

Taxable equivalent net interest margin - continuing operations

3.61

3.74

3.66

3.48

3.51

3.73

3.45

Efficiency ratio - continuing operations

58.06

60.61

57.50

55.09

55.10

59.33

59.55

CAPITAL

Average equity to average assets

13.94

%

11.34

%

11.11

%

11.41

%

11.50

%

12.55

%

11.42

%

Tangible common equity to tangible assets

13.37

10.51

10.25

10.38

10.99

13.37

10.99

Tier 1 capital ratio

13.4

(4)

11.0

11.5

11.8

12.0

13.4

(4)

12.0

Total risk based capital ratio

16.5

(4)

13.7

14.2

14.7

15.0

16.5

(4)

15.0

Number of common shares outstanding - basic

23,293,465

24,466,964

25,290,419

26,103,666

26,102,217

23,293,465

26,102,217

Number of common shares outstanding - diluted

23,508,442

24,719,273

25,480,233

26,281,849

26,336,871

23,508,442

26,336,871

ASSET QUALITY

Allowance for loan losses to loans held for investment (5)

1.02

%

1.04

%

1.03

%

1.00

%

1.01

%

1.02

%

1.01

%

Net charge-offs to average loans (6)

0.14

0.11

0.03

0.12

0.04

Non-performing assets to total assets

0.31

0.40

0.20

0.13

0.14

0.31

0.14

(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 mortgage business and branches 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)Amounts are estimates as of 6/30/19. (5)The ratios for the first and second quarters of 2019 and fourth quarter of 2018 are calculated on a continuing operations basis. Prior period ratios have not been retrospectively adjusted for the impact of discontinued operations. (6)Annualized.


ATLANTIC CAPITAL BANCSHARES, INC.

Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

(in thousands)

June 30, 2019

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

For the six months ended June 30,

(in thousands)

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

2019

2018

Net interest income

$

(39

)

$

3,125

$

3,225

$

3,266

$

3,570

$

3,086

$

7,649

Provision for loan losses

(3,097

)

Net interest income after provision

(39

)

3,125

6,322

3,266

3,570

3,086

7,649

Service charges

46

481

483

474

480

527

965

Mortgage income

288

320

315

363

288

667

Gain on sale of branches

34,475

34,475

Other income

(22

)

21

47

22

22

(1

)

54

Total noninterest income

34,499

790

850

811

865

35,289

1,686

Salaries and employee benefits

330

2,427

2,757

2,820

3,010

2,757

6,137

Occupancy

71

339

479

556

511

410

981

Equipment and software

8

123

158

217

203

131

404

Amortization of intangibles

247

271

296

319

247

662

Communications and data processing

197

389

440

381

346

586

708

Divestiture expense

3,646

1,449

825

5,095

Other noninterest expense

101

358

446

453

349

459

950

Total noninterest expense

4,353

5,332

5,376

4,723

4,738

9,685

9,842

Net income (loss) before provision for income taxes

30,107

(1,417

)

1,796

(646

)

(303

)

28,690

(507

)

Provision (benefit) for income taxes

7,964

(354

)

449

(161

)

(76

)

7,610

(127

)

Net income (loss) from discontinued operations

$

22,143

$

(1,063

)

$

1,347

$

(485

)

$

(227

)

$

21,080

$

(380

)


ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Balance Sheets (unaudited)

June 30,

March 31,

December 31,

June 30,

(in thousands, except share data)

2019

2019

2018

2018

ASSETS

Cash and due from banks

$

24,206

$

36,992

$

42,895

$

55,612

Interest-bearing deposits in banks

52,932

76,720

216,040

42,477

Other short-term investments

29,457

9,457

14,712

Cash and cash equivalents

77,138

143,169

268,392

112,801

Investment securities available-for-sale

348,723

402,640

402,486

453,968

Other investments

31,912

28,844

29,236

36,190

Loans held for sale

1,530

5,889

1,612

Loans held for sale - discontinued operations(1)

384,779

373,030

382,732

Loans held for investment(1)

1,789,740

1,734,557

1,728,073

1,551,579

Less: allowance for loan losses(2)

(18,186

)

(18,107

)

(17,851

)

(19,583

)

Loans held for investment, net

1,771,554

1,716,450

1,710,222

1,531,996

Premises held for sale - discontinued operations(1)

7,736

7,722

7,296

Premises and equipment, net(1)

20,037

23,311

9,779

9,582

Bank owned life insurance

65,874

65,486

65,149

64,391

Goodwill - discontinued operations(1)

4,555

4,555

4,555

Goodwill - continuing operations(1)

19,925

17,135

17,135

17,135

Other intangibles, net

3,095

4,241

4,388

5,322

Other real estate owned

971

971

874

1,288

Other assets

50,451

55,040

56,583

61,806

Total assets

$

2,389,680

$

2,855,887

$

2,955,440

$

2,690,674

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing demand(1)

$

569,693

$

561,829

$

602,252

$

464,282

Interest-bearing checking(1)

309,709

233,838

252,490

241,461

Savings(1)

1,090

896

725

951

Money market(1)

802,973

962,741

987,183

647,247

Time(1)

33,902

22,069

10,623

10,359

Brokered deposits

134,164

65,811

99,241

92,656

Deposits to be assumed - discontinued operations(1)

593,264

585,429

609,631

Total deposits

1,851,531

2,440,448

2,537,943

2,066,587

Federal funds purchased

35,000

65,000

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

9,821

6,220

8,024

Federal Home Loan Bank borrowings

82,000

150,000

Long-term debt

49,789

49,746

49,704

49,620

Other liabilities

34,645

35,245

37,920

34,673

Total liabilities

2,052,965

2,535,260

2,631,787

2,373,904

SHAREHOLDERS' EQUITY

Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2019, March 31, 2019, December 31, 2018, and June 30, 2018

Common stock, no par value; 100,000,000 shares authorized; 23,293,465, 24,466,964, 25,290,419, and 26,102,217 shares issued and outstanding as of June 30, 2019, March 31, 2019, December 31, 2018, and June 30, 2018, respectively

256,791

276,346

291,771

304,793

Retained earnings

76,343

47,191

42,187

26,844

Accumulated other comprehensive (loss) income

3,581

(2,910

)

(10,305

)

(14,867

)

Total shareholders’ equity

336,715

320,627

323,653

316,770

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,389,680

$

2,855,887

$

2,955,440

$

2,690,674

(1)Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of March 31, 2019 and 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 periods prior to December 31, 2018.


ATLANTIC CAPITAL BANCSHARES, INC.

Consolidated Statements of Income (unaudited) (1)

(in thousands, except share and per share data)

Three months ended

Six months ended

June 30,
2019

March 31,
2019

December
31, 2018

September
30, 2018

June 30,
2018

June 30,
2019

June 30,
2018

INTEREST INCOME

Loans, including fees

$

23,554

$

22,752

$

22,752

$

20,117

$

19,269

$

46,306

$

37,241

Investment securities available-for-sale

2,339

2,631

2,844

2,789

2,687

4,970

5,279

Interest and dividends on other interest‑earning assets

705

814

1,032

1,111

880

1,519

1,595

Total interest income

26,598

26,197

26,628

24,017

22,836

52,795

44,115

INTEREST EXPENSE

Interest on deposits

5,448

4,831

4,185

3,182

2,715

10,279

5,139

Interest on Federal Home Loan Bank advances

270

487

637

766

270

1,275

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

168

118

60

77

88

286

167

Interest on long-term debt

823

824

828

824

823

1,647

1,652

Total interest expense

6,709

5,773

5,560

4,720

4,392

12,482

8,233

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES

19,889

20,424

21,068

19,297

18,444

40,313

35,882

Provision for loan losses

698

814

502

845

(173

)

1,512

599

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

19,191

19,610

20,566

18,452

18,617

38,801

35,283

NONINTEREST INCOME

Service charges

870

794

876

804

828

1,664

1,535

Gains (losses) on sale of securities

654

(1,853

)

(2

)

654

(2

)

Gains (losses) on sale of other assets

(10

)

(3

)

58

(166

)

(13

)

(212

)

Trust income

507

1,025

Derivatives income

(233

)

(111

)

154

20

20

(344

)

134

Bank owned life insurance

389

360

380

379

378

749

747

SBA lending activities

1,096

1,086

425

882

997

2,182

2,299

Gain on sale of trust company

1,681

1,681

Other noninterest income

175

210

182

112

223

385

421

Total noninterest income

2,941

2,336

164

2,255

4,466

5,277

7,628

NONINTEREST EXPENSE

Salaries and employee benefits

8,529

9,213

7,573

7,332

7,911

17,742

16,861

Occupancy

689

639

655

732

700

1,328

1,585

Equipment and software

753

739

783

747

701

1,492

1,287

Professional services

792

775

947

796

943

1,567

1,768

Postage, printing and supplies

29

48

30

55

44

77

81

Communications and data processing

662

675

772

566

657

1,337

1,338

Marketing and business development

233

226

224

211

135

459

275

FDIC premiums

175

235

157

154

143

410

251

Other noninterest expense

1,392

1,245

1,067

1,279

1,389

2,637

2,465

Total noninterest expense

13,254

13,795

12,208

11,872

12,623

27,049

25,911

INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES

8,878

8,151

8,522

8,835

10,460

17,029

17,000

Provision for income taxes

1,869

1,711

1,039

1,837

2,082

3,580

3,431

NET INCOME FROM CONTINUING OPERATIONS

7,009

6,440

7,483

6,998

8,378

13,449

13,569

DISCONTINUED OPERATIONS

Income (loss) from discontinued operations

$

30,107

$

(1,417

)

$

1,796

$

(646

)

$

(303

)

$

28,690

$

(507

)

Provision (benefit) for income taxes

7,964

(354

)

449

(161

)

(76

)

7,610

(127

)

Net income (loss) from discontinued operations

22,143

(1,063

)

1,347

(485

)

(227

)

21,080

(380

)

NET INCOME

$

29,152

$

5,377

$

8,830

$

6,513

$

8,151

$

34,529

$

13,189

Net Income (Loss) per Common Share Basic

Net income per common share - continuing operations

$

0.29

$

0.26

$

0.29

$

0.27

$

0.32

$

0.55

$

0.52

Net income (loss) per common share - discontinued operations

0.93

(0.04

)

0.05

(0.02

)

(0.01

)

0.87

(0.01

)

Net Income per Common Share Basic

1.22

0.22

0.34

0.25

0.31

1.42

0.51

Net Income (Loss) per Common Share Diluted

Net income per common share - continuing operations

$

0.29

$

0.26

$

0.29

$

0.27

$

0.32

$

0.55

$

0.52

Net income (loss) per common share - discontinued operations

0.92

(0.04

)

0.05

(0.02

)

(0.01

)

0.86

(0.01

)

Net Income per Common Share Diluted

1.21

0.21

0.34

0.25

0.31

1.41

0.51

Weighted average shares - basic

23,888,381

24,855,171

25,919,445

26,103,397

26,010,914

24,369,106

25,881,587

Weighted average shares - diluted

24,040,806

25,019,384

26,043,799

26,254,772

26,200,026

24,527,392

26,073,602

(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

June 30, 2019

March 31, 2019

(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

$

70,628

$

450

2.56

%

$

92,168

$

463

2.04

%

Other short-term investments

3,993

32

3.21

11,680

86

2.99

Investment securities:

Taxable investment securities

280,639

1,848

2.64

320,089

2,113

2.68

Non-taxable investment securities(1)

79,408

579

2.92

80,012

618

3.13

Total investment securities

360,047

2,427

2.70

400,101

2,731

2.77

Loans - continuing operations

1,769,803

23,554

5.34

1,707,682

22,752

5.40

FHLB and FRB stock

14,435

223

6.20

12,528

265

8.58

Total interest-earning assets - continuing operations

2,218,906

26,686

4.82

2,224,159

26,297

4.80

Loans held for sale - discontinued operations

30,198

47

0.62

381,783

4,541

4.82

Total interest-earning assets

2,249,104

26,733

4.77

2,605,942

30,838

4.80

Non-earning assets

191,398

223,130

Total assets

$

2,440,502

$

2,829,072

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,175,237

4,733

1.62

1,124,350

4,255

1.53

Time deposits

32,358

50

0.62

12,847

38

1.20

Brokered deposits

106,524

665

2.50

81,141

538

2.69

Total interest-bearing deposits

1,314,119

5,448

1.66

1,218,338

4,831

1.61

Total borrowings

70,770

438

2.48

18,056

118

2.65

Total long-term debt

49,761

823

6.63

49,719

824

6.72

Total interest-bearing liabilities - continuing operations

1,434,650

6,709

1.88

1,286,113

5,773

1.82

Interest-bearing liabilities - discontinued operations

36,255

86

0.95

473,090

1,416

1.21

Total interest-bearing liabilities

1,470,905

6,795

1.85

1,759,203

7,189

1.66

Demand deposits

587,957

575,453

Demand deposits - discontinued operations

9,851

128,977

Other liabilities

31,670

44,627

Shareholders' equity

340,119

320,812

Total liabilities and shareholders' equity

$

2,440,502

$

2,829,072

Net interest spread - continuing operations

2.94

%

2.98

%

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

$

19,977

3.61

%

$

20,524

3.74

%

Net interest income and net interest margin(2)

$

19,938

3.56

%

$

23,649

3.68

%

Non-taxable equivalent net interest margin

3.54

%

3.66

%

(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, 2019

June 30, 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

$

70,628

$

450

2.56

%

$

97,501

$

562

2.31

%

Other short-term investments

3,993

32

3.21

9,262

64

2.77

Investment securities:

Taxable investment securities

280,639

1,848

2.64

378,291

2,212

2.35

Non-taxable investment securities(1)

79,408

579

2.92

76,343

573

3.01

Total investment securities

360,047

2,427

2.70

454,634

2,785

2.46

Loans - continuing operations

1,769,803

23,554

5.34

1,540,351

19,269

5.02

FHLB and FRB stock

14,435

223

6.20

19,357

254

5.26

Total interest-earning assets - continuing operations

2,218,906

26,686

4.82

2,121,105

22,934

4.34

Loans held for sale - discontinued operations

30,198

47

0.62

386,712

4,510

4.68

Total interest-earning assets

2,249,104

26,733

4.77

2,507,817

27,444

4.39

Non-earning assets

191,398

210,254

Total assets

$

2,440,502

$

2,718,071

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,175,237

4,733

1.62

932,991

2,222

0.96

Time deposits

32,358

50

0.62

9,855

25

1.02

Brokered deposits

106,524

665

2.50

100,425

468

1.87

Total interest-bearing deposits

1,314,119

5,448

1.66

1,043,271

2,715

1.04

Total borrowings

70,770

438

2.48

180,699

853

1.89

Total long-term debt

49,761

823

6.63

49,592

823

6.66

Total interest-bearing liabilities - continuing operations

1,434,650

6,709

1.88

1,273,562

4,391

1.38

Interest-bearing liabilities - discontinued operations

36,255

86

0.95

464,598

941

0.81

Total interest-bearing liabilities

1,470,905

6,795

1.85

1,738,160

5,332

1.23

Demand deposits

587,957

489,722

Demand deposits - discontinued operations

9,851

143,391

Other liabilities

31,670

34,255

Shareholders' equity

340,119

312,543

Total liabilities and shareholders' equity

$

2,440,502

$

2,718,071

Net interest spread - continuing operations

2.94

%

2.96

%

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

$

19,977

3.61

%

$

18,543

3.51

%

Net interest income and net interest margin(2)

$

19,938

3.56

%

$

22,112

3.54

%

Non-taxable equivalent net interest margin

3.54

%

3.52

%

(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, 2019

June 30, 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

$

81,339

$

913

2.26

%

$

87,907

$

959

2.20

%

Other short-term investments

7,815

118

3.04

9,801

127

2.61

Investment securities:

Taxable investment securities

300,255

3,962

2.66

377,038

4,328

2.31

Non-taxable investment securities(1)

79,709

1,196

3.03

77,239

1,152

3.01

Total investment securities

379,964

5,158

2.74

454,277

5,480

2.43

Loans - continuing operations

1,708,549

46,306

5.47

1,538,504

37,241

4.88

FHLB and FRB stock

13,487

488

7.30

18,630

509

5.51

Total interest-earning assets - continuing operations

2,191,154

52,983

4.88

2,109,119

44,316

4.24

Loans held for sale - discontinued operations

235,384

4,588

3.93

394,471

9,213

4.71

Total interest-earning assets

2,426,538

57,571

4.78

2,503,590

53,529

4.31

Non-earning assets

207,175

207,893

Total assets

$

2,633,713

$

2,711,483

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,125,253

8,988

1.61

933,699

4,139

0.89

Time deposits

11,049

88

1.61

9,828

53

1.09

Brokered deposits

93,903

1,203

2.58

109,058

947

1.75

Total interest-bearing deposits

1,230,205

10,279

1.68

1,052,585

5,139

0.98

Total borrowings

43,798

556

2.56

166,402

1,442

1.75

Total long-term debt

49,740

1,647

6.68

49,571

1,652

6.72

Total interest-bearing liabilities - continuing operations

1,323,743

12,482

1.90

1,268,558

8,233

1.31

Interest-bearing liabilities - discontinued operations

290,515

1,502

1.04

461,331

1,564

0.68

Total interest-bearing liabilities

1,614,258

13,984

1.75

1,729,889

9,797

1.14

Demand deposits

571,669

496,239

Demand deposits - discontinued operations

79,156

139,667

Other liabilities

38,111

35,990

Shareholders' equity

330,519

309,698

Total liabilities and shareholders' equity

$

2,633,713

$

2,711,483

Net interest spread - continuing operations

2.98

%

2.94

%

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

$

40,501

3.73

%

$

36,083

3.45

%

Net interest income and net interest margin(2)

$

43,587

3.62

%

$

43,732

3.52

%

Non-taxable equivalent net interest margin

3.61

%

3.51

%

(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)

June 30,
2019

March 31,
2019

December
31, 2018

September
30, 2018

June 30,
2018

Linked
Quarter
Change

Year Over
Year
Change

Loans held for sale

Loans held for sale

$

$

1,530

$

5,889

$

1,886

$

1,612

$

(1,530

)

$

(1,612

)

Loans held for sale - discontinued operations

384,779

373,030

375,976

382,732

(384,779

)

(382,732

)

Total loans held for sale

$

$

386,309

$

378,919

$

377,862

$

384,344

$

(386,309

)

$

(384,344

)

Loans held for investment

Commercial loans:

Commercial and industrial

$

701,566

$

679,489

$

645,374

$

581,737

$

546,497

$

22,077

$

155,069

Commercial real estate:

Multifamily

43,907

43,929

88,826

108,001

92,013

(22

)

(48,106

)

Owner occupied

313,310

304,945

298,291

295,801

265,576

8,365

47,734

Investment

409,629

394,087

407,711

409,145

386,072

15,542

23,557

Construction and land:

1-4 family residential construction

3,696

2,067

1,006

378

1,629

3,318

Other construction, development, and land

195,260

171,818

155,226

147,114

134,764

23,442

60,496

Mortgage warehouse loans

10,665

22,267

27,967

27,838

38,352

(11,602

)

(27,687

)

Total commercial loans

1,678,033

1,618,602

1,624,401

1,569,636

1,463,652

59,431

214,381

Residential:

Residential mortgages

31,338

32,915

32,800

24,904

20,270

(1,577

)

11,068

Home equity

24,303

23,171

22,822

33,410

32,638

1,132

(8,335

)

Total residential loans

55,641

56,086

55,622

58,314

52,908

(445

)

2,733

Consumer

34,618

35,203

25,851

26,825

25,531

(585

)

9,087

Other

24,126

26,663

24,712

10,579

12,409

(2,537

)

11,717

1,792,418

1,736,554

1,730,586

1,665,354

1,554,500

55,864

237,918

Less net deferred fees and other unearned income

(2,678

)

(1,997

)

(2,513

)

(2,896

)

(2,921

)

(681

)

243

Total loans held for investment

$

1,789,740

$

1,734,557

$

1,728,073

$

1,662,458

$

1,551,579

$

55,183

$

238,161

Total loans

$

1,789,740

$

2,120,866

$

2,106,992

$

2,040,320

$

1,935,923

$

(331,126

)

$

(146,183

)

(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)

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

Balance at beginning of period

$

18,107

$

17,851

$

20,443

$

19,583

$

19,885

Provision for loan losses

698

814

595

758

(173

)

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

(3,097

)

Provision for PCI loan losses

(93

)

87

Loans charged-off:

Commercial and industrial

(588

)

(549

)

Commercial real estate

(47

)

(50

)

Construction and land

Residential mortgages

(9

)

(5

)

Home equity

(102

)

Consumer

(37

)

(3

)

(10

)

Other

Total loans charged-off

(635

)

(595

)

(8

)

(162

)

Recoveries on loans previously charged-off:

Commercial and industrial

14

Commercial real estate

28

Construction and land

3

Residential mortgages

7

4

Home equity

1

Consumer

16

12

7

15

5

Other

Total recoveries

16

37

11

15

33

Net charge-offs

$

(619

)

$

(558

)

$

3

$

15

$

(129

)

Balance at period end (1)

$

18,186

$

18,107

$

17,851

$

20,443

$

19,583

Loans

Loans held for sale

$

$

1,530

$

5,889

$

1,886

$

1,612

Loans held for sale - discontinued operations

384,779

373,030

375,976

382,732

Loans held for investment - continuing operations

1,789,740

1,734,557

1,728,073

1,662,458

1,551,579

Total loans

$

1,789,740

$

2,120,866

$

2,106,992

$

2,040,320

$

1,935,923

Non-performing loans - continuing operations (4)

$

6,352

$

8,830

$

3,252

$

2,160

$

1,697

Non-performing loans - discontinued operations (4)

1,506

1,924

556

709

Total non-performing loans

6,352

10,336

5,176

2,716

2,406

Foreclosed properties (OREO)

971

971

874

968

1,288

Total nonperforming assets

$

7,323

$

11,307

$

6,050

$

3,684

$

3,694

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

1.02

%

1.04

%

1.03

%

1.00

%

1.01

%

Net charge-offs to average loans (3)

0.14

0.11

0.03

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

0.35

%

0.51

%

0.19

%

0.13

%

0.11

%

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

0.39

0.52

0.15

0.19

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

0.35

0.49

0.25

0.13

0.12

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

0.31

%

0.34

%

0.14

%

0.11

%

0.11

%

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

0.05

0.07

0.02

0.03

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

0.31

0.40

0.20

0.13

0.14

(1)The allowance for loan losses has not been adjusted retrospectively in periods prior to December 31, 2018. (2)The second quarter 2019, 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)

June 30,
2019

March 31,
2019

December
31, 2018

September
30, 2018

June 30,
2018

Linked
Quarter
Change

Year Over
Year Change

DDA

$

569,693

$

561,829

$

602,252

$

518,155

$

464,282

$

7,864

$

105,411

NOW

309,709

233,838

252,490

407,214

241,461

75,871

68,248

Savings

1,090

896

725

698

951

194

139

Money market

802,973

962,741

987,183

759,583

647,247

(159,768

)

155,726

Time

33,902

22,069

10,623

10,396

10,359

11,833

23,543

Brokered

134,164

65,811

99,241

79,119

92,656

68,353

41,508

Total deposits - continuing operations

1,851,531

1,847,184

1,952,514

1,775,165

1,456,956

4,347

394,575

Deposits to be assumed - discontinued operations

593,264

585,429

604,659

609,631

(593,264

)

(609,631

)

Total deposits

$

1,851,531

$

2,440,448

$

2,537,943

$

2,379,824

$

2,066,587

$

(588,917

)

$

(215,056

)

Payments clients

$

301,413

$

361,192

$

397,608

$

258,320

$

251,748

$

(59,779

)

$

49,665

Average Deposits

2019

2018

Linked
Quarter
Change

Q2 2019 vs
Q2 2018

(dollars in thousands)

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

DDA

$

587,957

$

575,453

$

597,239

$

561,355

$

489,722

$

12,504

$

98,235

NOW

314,601

276,212

280,449

314,759

287,283

38,389

27,318

Savings

956

884

712

616

674

72

282

Money market

859,680

847,254

798,017

697,578

645,034

12,426

214,646

Time

32,358

12,847

10,117

10,406

9,855

19,511

22,503

Brokered

106,524

81,141

93,558

67,937

100,425

25,383

6,099

Total deposits - continuing operations

1,902,076

1,793,791

1,780,092

1,652,651

1,532,993

108,285

369,083

Deposits to be assumed - discontinued operations

45,350

593,313

600,769

601,421

602,832

(547,963

)

(557,482

)

Total deposits

$

1,947,426

$

2,387,104

$

2,380,861

$

2,254,072

$

2,135,825

$

(439,678

)

$

(188,399

)

Payments clients

$

285,949

$

295,059

$

263,800

$

227,029

$

219,016

$

(9,110

)

$

66,933

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

30.9

%

32.1

%

33.6

%

34.0

%

31.9

%

Cost of deposits - continuing operations

1.15

%

1.09

%

0.93

%

0.76

%

0.71

%


ATLANTIC CAPITAL BANCSHARES, INC.

Non-GAAP Performance and Financial Measures Reconciliation

2019

2018

For the six months ended
June 30,

(in thousands, except share and per share data)

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

2019

2018

Taxable equivalent interest income reconciliation

Interest income - GAAP

$

26,598

$

26,197

$

26,628

$

24,017

$

22,836

$

52,795

$

44,115

Taxable equivalent adjustment

88

100

97

97

98

188

201

Interest income - taxable equivalent

$

26,686

$

26,297

$

26,725

$

24,114

$

22,934

$

52,983

$

44,316

Taxable equivalent net interest income reconciliation

Net interest income - GAAP

$

19,889

$

20,424

$

21,068

$

19,297

$

18,444

$

40,313

$

35,882

Taxable equivalent adjustment

88

100

97

97

98

188

201

Net interest income - taxable equivalent

$

19,977

$

20,524

$

21,165

$

19,394

$

18,542

$

40,501

$

36,083

Taxable equivalent net interest margin reconciliation - continuing operations

Net interest margin - GAAP - continuing operations

3.60

%

3.72

%

3.64

%

3.46

%

3.49

%

3.71

%

3.43

%

Impact of taxable equivalent adjustment

0.01

0.02

0.02

0.02

0.02

0.02

0.02

Net interest margin - taxable equivalent - continuing operations

3.61

%

3.74

%

3.66

%

3.48

%

3.51

%

3.73

%

3.45

%

Taxable equivalent net interest margin reconciliation

Net interest margin - GAAP

3.54

%

3.66

%

3.60

%

3.45

%

3.52

%

3.61

%

3.51

%

Impact of taxable equivalent adjustment

0.02

0.02

0.02

0.02

0.02

0.01

0.01

Net interest margin - taxable equivalent

3.56

%

3.68

%

3.62

%

3.47

%

3.54

%

3.62

%

3.52

%

Income before income taxes reconciliation

Income before income taxes - GAAP

$

8,878

$

8,151

$

8,522

$

8,835

$

10,460

$

17,029

$

17,000

Taxable equivalent adjustment

88

100

97

97

98

188

201

Income before income taxes

$

8,966

$

8,251

$

8,619

$

8,932

$

10,558

$

17,217

$

17,201

Income tax reconciliation

Income tax expense - GAAP

$

1,869

$

1,711

$

1,039

$

1,837

$

2,082

$

3,580

$

3,431

Taxable equivalent adjustment

88

100

97

97

98

188

201

Income tax expense

$

1,957

$

1,811

$

1,136

$

1,934

$

2,180

$

3,768

$

3,632

Tangible book value per common share reconciliation

Total shareholders’ equity

$

336,715

$

320,627

$

323,653

$

320,237

$

316,770

$

336,715

$

316,770

Intangible assets

(19,925

)

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(19,925

)

(23,662

)

Total tangible common equity

$

316,790

$

297,779

$

300,558

$

296,870

$

293,108

$

316,790

$

293,108

Common shares outstanding

23,293,465

24,466,964

25,290,419

26,103,666

26,102,217

23,293,465

26,102,217

Book value per common share - GAAP

$

14.46

$

13.10

$

12.80

$

12.27

$

12.14

$

14.46

$

12.14

Tangible book value

13.60

12.17

11.88

11.37

11.23

13.60

11.23

Tangible common equity to tangible assets reconciliation

Total shareholders’ equity

$

336,715

$

320,627

$

323,653

$

320,237

$

316,770

$

336,715

$

316,770

Intangible assets

(19,925

)

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(19,925

)

(23,662

)

Total tangible common equity

$

316,790

$

297,779

$

300,558

$

296,870

$

293,108

$

316,790

$

293,108

Total assets

$

2,389,680

$

2,855,887

$

2,955,440

$

2,882,721

$

2,690,674

$

2,389,680

$

2,690,674

Intangible assets

(19,925

)

(22,848

)

(23,095

)

(23,367

)

(23,662

)

(19,925

)

(23,662

)

Total tangible assets

$

2,369,755

$

2,833,039

$

2,932,345

$

2,859,354

$

2,667,012

$

2,369,755

$

2,667,012

Tangible common equity to tangible assets

13.37

%

10.51

%

10.25

%

10.38

%

10.99

%

13.37

%

10.99

%