Atlantic Capital Bancshares, Inc. Reports Third Quarter 2019 Results

ATLANTA, Oct. 24, 2019 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (ACBI) announced net income from continuing operations for the quarter ended September 30, 2019 of $7.6 million, or $0.33 per diluted share, compared to $7.0 million, or $0.27 per diluted share, for the third quarter of 2018 and $7.0 million, or $0.29 per diluted share, for the second quarter of 2019.

Diluted earnings per share from continuing operations for the first nine months of 2019 improved to $0.88, an increase of $0.09, or 11%, compared to the first nine months of 2018.

“With solid loan and deposit growth from new and expanded client relationships, disciplined expense management, and sound credit quality, Atlantic Capital recorded another quarter of strong operating results,” remarked Douglas Williams, President and Chief Executive Officer.

Third Quarter Highlights(1)

  • Tangible book value per share increased to $13.91, from $11.37 at September 30, 2018 and $13.60 at June 30, 2019.

  • Total loans held for investment increased $173.2 million, or 10.4%, from September 30, 2018 and $45.9 million, or 10.3% annualized, from June 30, 2019.

  • Average deposits from continuing operations increased $297.0 million, or 18.0%, compared to the third quarter of 2018 and $47.6 million, or 10.0% annualized, compared to the second quarter of 2019.

  • Efficiency ratio from continuing operations of 55.7% compared to 55.1% in the third quarter of 2018 and 58.1% in the second quarter of 2019.

  • Taxable equivalent net interest margin from continuing operations was 3.52%, compared to 3.48% in the third quarter of 2018 and 3.61% in the second quarter of 2019.

  • The company repurchased 1.2 million shares in the third quarter totaling $20.1 million, and has repurchased 4.1 million shares totaling $70.9 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 $20.1 million for the third quarter of 2019, an increase of $694,000, or 4%, from the third quarter of 2018, and an increase of $111,000, or 2% annualized, from the second quarter of 2019.

Net interest margin from continuing operations was 3.52% in the third quarter of 2019, an increase of 4 basis points from the third quarter of 2018 and a decrease of 9 basis points from the second quarter of 2019. The decrease in the third quarter of 2019 compared to the second quarter of 2019 was primarily the result of lower loan yields due to lower short term interest rates, partially offset by a drop in the cost of interest bearing deposits and an increase in noninterest bearing deposits.

The yield on loans from continuing operations in the third quarter of 2019 was 5.18%, an increase of 14 basis points from the third quarter of 2018 and a decrease of 16 basis points from the second quarter of 2019. The linked quarter decrease in loan yields was due primarily to the repricing of our variable rate loans as a result of declines in 1 month LIBOR.

The cost of deposits from continuing operations in the third quarter of 2019 was 1.06%, an increase of 30 basis points from the third quarter of 2018 and a decrease of 9 basis points from the second quarter of 2019. The cost of interest bearing deposits from continuing operations increased 42 basis points to 1.58% from the third quarter of 2018, and decreased 8 basis points from the second quarter of 2019. The linked quarter decrease in the cost of interest bearing deposits reflects the actions taken to reduce deposit costs resulting from the reductions in the fed funds target rate.

(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 14.

The provision for loan losses for continuing operations was $413,000 in the third quarter of 2019 compared to $845,000 in the third quarter of 2018 and $698,000 in the second quarter of 2019. Annualized net charge-offs were 0.11% of average loans in the third quarter of 2019 and 0.12% for the first nine months of 2019.

Noninterest income from continuing operations totaled $2.8 million in the third quarter of 2019 compared to $2.3 million in the third quarter of 2018, and increase of $514,000, or 23%, and $2.9 million in the second quarter of 2019, a decrease of $172,000, or 6%. The third quarter of 2019 included a gain of $253,000 on the sale investment securities compared to a gain of $654,000 in the second quarter of 2019. The third quarter of 2019 also included a gain of $140,000 on the sale of other assets and a loss of $293,000 in derivative income due to the credit valuation adjustment on the customer swap portfolio.

Noninterest expense from continuing operations totaled $12.7 million in the third quarter of 2019, an increase of $805,000, or 7%, compared to the third quarter of 2018, and a decrease of $577,000, or 4% compared to the second quarter of 2019. The FDIC premium expense in the third quarter of 2019 decreased $368,000 compared to the second quarter of 2019 due to an FDIC assessment credit received. Salaries and employee benefits expense decreased $234,000, to $8.3 million in the third quarter of 2019 compared to the second quarter of 2019, partly as a result of lower benefits cost.

The overall effective tax rate from continuing operations was 21.7% for the third quarter of 2019 and 21.3% for the first nine months of 2019.

Balance Sheet

Total loans held for investment were $1.84 billion at September 30, 2019, an increase of $173.2 million, or 10.4%, from September 30, 2018 and an increase of $45.9 million, or 10.3% annualized, from June 30, 2019.

At September 30, 2019, the allowance for loan losses was $18.1 million, or 0.98% of loans held for investment compared to 1.00% at September 30, 2018 and 1.02% at June 30, 2019. Non-performing assets from continuing operations totaled $7.0 million, or 0.29% of total assets, as of September 30, 2019, compared to 0.11% of total assets as of September 30, 2018 and 0.31% of total assets as of June 30, 2019.

Total average deposits from continuing operations were $1.95 billion for the third quarter of 2019, an increase of $297.0 million, or 18.0%, from the third quarter of 2018 and an increase of $47.6 million, or 10.0% annualized, from the second quarter of 2019. Noninterest bearing deposits were 32.7% of total average deposits from continuing operations in the third quarter of 2019, compared to 34.0% in the third quarter of 2018 and 30.9% in the second quarter of 2019.

Tangible common equity to tangible assets was 12.9% at September 30, 2019 compared to 10.4% at September 30, 2018 and 13.4% at June 30, 2019. The total risk based capital ratio was estimated at 15.5% at September 30, 2019 compared to 14.7% at September 30, 2018 and 16.5% at June 30, 2019.

Earnings Conference Call

The Company will host a conference call at 9:00 a.m. EST on Friday, October 25, 2019, to discuss the financial results for the quarter ended September 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

For the nine months ended

2019

2018

September 30,

Third

Second

First

Fourth

Third

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

Quarter

Quarter

Quarter

Quarter

Quarter

2019

2018

INCOME SUMMARY (1)

Interest income (2)

$

26,624

$

26,686

$

26,297

$

26,725

$

24,114

$

79,607

$

68,430

Interest expense

6,536

6,709

5,773

5,560

4,720

19,018

12,953

Net interest income

20,088

19,977

20,524

21,165

19,394

60,589

55,477

Provision for loan losses

413

698

814

502

845

1,925

1,444

Net interest income after provision for loan losses

19,675

19,279

19,710

20,663

18,549

58,664

54,033

Noninterest income

2,769

2,941

2,336

164

2,255

8,046

9,883

Noninterest expense

12,677

13,254

13,795

12,208

11,872

39,726

37,783

Income from continuing operations before income taxes

9,767

8,966

8,251

8,619

8,932

26,984

26,133

Income tax expense

2,198

1,957

1,811

1,136

1,934

5,966

5,566

Net income from continuing operations

7,569

7,009

6,440

7,483

6,998

21,018

20,567

Income (loss) from discontinued operations, net of tax

617

22,143

(1,063

)

1,347

(485

)

21,697

(865

)

Net income

$

8,186

$

29,152

$

5,377

$

8,830

$

6,513

$

42,715

$

19,702

PER SHARE DATA

Diluted earnings per share - continuing operations

$

0.33

$

0.29

$

0.26

$

0.29

$

0.27

$

0.88

$

0.79

Diluted earnings (loss) per share - discontinued operations

0.03

0.92

(0.04

)

0.05

(0.02

)

0.91

(0.03

)

Diluted earnings per share

0.36

1.21

0.21

0.34

0.25

1.78

0.75

Book value per share

14.81

14.46

13.10

12.80

12.27

14.81

12.27

Tangible book value per common share (3)

13.91

13.60

12.17

11.88

11.37

13.91

11.37

PERFORMANCE MEASURES

Return on average equity

9.77

%

34.38

%

6.80

%

10.90

%

8.07

%

17.25

%

8.41

%

Return on average assets

1.32

4.79

0.77

1.21

0.92

2.22

0.96

Taxable equivalent net interest margin - continuing operations

3.52

3.61

3.74

3.66

3.48

3.66

3.46

Efficiency ratio - continuing operations

55.72

58.06

60.61

57.50

55.09

58.13

58.07

CAPITAL

Average equity to average assets

13.54

%

13.94

%

11.34

%

11.11

%

11.41

%

12.87

%

11.42

%

Tangible common equity to tangible assets

12.92

13.37

10.51

10.25

10.38

12.92

10.38

Tier 1 capital ratio

12.5

(4)

13.4

11.0

11.5

11.8

12.5

(4)

11.8

Total risk based capital ratio

15.5

(4)

16.5

13.7

14.2

14.7

15.5

(4)

14.7

Number of common shares outstanding - basic

22,193,761

23,293,465

24,466,964

25,290,419

26,103,666

22,193,761

26,103,666

Number of common shares outstanding - diluted

22,405,141

23,508,442

24,719,273

25,480,233

26,281,849

22,405,141

26,281,849

ASSET QUALITY

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

0.98

%

1.02

%

1.04

%

1.03

%

1.00

%

0.98

%

1.00

%

Net charge-offs to average loans (6)

0.11

0.14

0.11

0.12

0.02

Non-performing assets to total assets

0.29

0.31

0.40

0.20

0.13

0.29

0.13

AVERAGE BALANCES

Total loans - continuing operations

$

1,801,629

$

1,769,803

$

1,707,682

$

1,699,801

$

1,583,563

$

1,739,917

$

1,553,609

Investment securities

340,872

360,047

400,101

450,465

461,348

366,790

456,660

Total assets

2,453,438

2,440,502

2,829,072

2,891,327

2,805,740

2,572,961

2,743,247

Deposits - continuing operations

1,949,657

1,902,076

1,793,791

1,780,092

1,652,651

1,851,674

1,583,859

Shareholders' equity

332,291

340,119

320,812

321,348

320,090

331,116

313,200

Number of common shares - basic

22,681,904

23,888,381

24,855,171

25,919,445

26,103,397

23,800,525

25,956,336

Number of common shares - diluted

22,837,531

24,040,806

25,019,384

26,043,799

26,254,772

23,957,915

26,134,655

(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 9/30/19. (5)The ratios for the first, second and third quarters of 2019 and third 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)

September 30, 2019

June 30, 2019

December 31, 2018

Cash

$

$

$

4,234

Loans held for sale - discontinued operations

373,030

Premises held for sale - discontinued operations

7,722

Goodwill - discontinued operations

4,555

Other assets

1,405

Total assets

$

$

$

390,946

Deposits to be assumed - discontinued operations

$

$

$

585,429

Securities sold under agreements to repurchase - discontinued operations

6,220

Total liabilities

$

$

$

591,649

Net liabilities

$

$

$

(200,703

)

Components of Net Income (Loss) from Discontinued Operations

For the nine months ended

2019

2018

September 30,

Third

Second

First

Fourth

Third

(in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

2019

2018

Net interest income

$

$

(39

)

$

3,125

$

3,225

$

3,266

$

3,086

$

10,915

Provision for loan losses

(3,097

)

Net interest income after provision

(39

)

3,125

6,322

3,266

3,086

10,915

Service charges

46

481

483

474

527

1,439

Mortgage income

288

320

315

288

982

Gain on sale of branches

34,475

34,475

Other income

(22

)

21

47

22

(1

)

76

Total noninterest income

34,499

790

850

811

35,289

2,497

Salaries and employee benefits

330

2,427

2,757

2,820

2,757

8,957

Occupancy

71

339

479

556

410

1,537

Equipment and software

8

123

158

217

131

621

Amortization of intangibles

247

271

296

247

958

Communications and data processing

197

389

440

381

586

1,089

Divestiture expense

3,646

1,449

825

5,095

Other noninterest expense

101

358

446

453

459

1,403

Total noninterest expense

4,353

5,332

5,376

4,723

9,685

14,565

Net income (loss) before provision for income taxes

30,107

(1,417

)

1,796

(646

)

28,690

(1,153

)

Provision (benefit) for income taxes

(617

)

7,964

(354

)

449

(161

)

6,993

(288

)

Net income (loss) from discontinued operations

$

617

$

22,143

$

(1,063

)

$

1,347

$

(485

)

$

21,697

$

(865

)


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)

September 30,

June 30,

December 31,

September 30,

(in thousands, except share data)

2019

2019

2018

2018

ASSETS

Cash and due from banks

$

42,577

$

24,206

$

42,895

$

28,007

Interest-bearing deposits in banks

27,167

52,932

216,040

140,682

Other short-term investments

9,457

20,898

Cash and cash equivalents

69,744

77,138

268,392

189,587

Investment securities available for sale

286,785

348,723

402,486

465,756

Investment securities held to maturity

42,863

Other investments

31,360

31,912

29,236

33,021

Loans held for sale

916

5,889

1,886

Loans held for sale - discontinued operations(1)

373,030

375,976

Loans held for investment(1)

1,835,673

1,789,740

1,728,073

1,662,458

Less: allowance for loan losses(2)

(18,080

)

(18,186

)

(17,851

)

(20,443

)

Loans held for investment, net

1,817,593

1,771,554

1,710,222

1,642,015

Premises held for sale - discontinued operations(1)

7,722

7,158

Premises and equipment, net(1)

19,688

20,037

9,779

10,213

Bank owned life insurance

66,047

65,874

65,149

64,769

Goodwill - discontinued operations(1)

4,555

4,555

Goodwill - continuing operations(1)

19,925

19,925

17,135

17,135

Other intangibles, net

3,112

3,095

4,388

4,867

Other real estate owned

278

971

874

968

Other assets

51,887

50,451

56,583

64,815

Total assets

$

2,410,198

$

2,389,680

$

2,955,440

$

2,882,721

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Noninterest-bearing demand(1)

$

599,657

$

569,693

$

602,252

$

518,155

Interest-bearing checking(1)

240,427

309,709

252,490

407,214

Savings(1)

1,081

1,090

725

698

Money market(1)

921,133

802,973

987,183

759,583

Time(1)

30,782

33,902

10,623

10,396

Brokered deposits

61,192

134,164

99,241

79,119

Deposits to be assumed - discontinued operations(1)

585,429

604,659

Total deposits

1,854,272

1,851,531

2,537,943

2,379,824

Federal funds purchased

57,000

35,000

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

6,220

8,904

Federal Home Loan Bank borrowings

76,000

82,000

83,000

Long-term debt

49,831

49,789

49,704

49,662

Other liabilities

44,384

34,645

37,920

41,094

Total liabilities

2,081,487

2,052,965

2,631,787

2,562,484

SHAREHOLDERS’ EQUITY

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

Common stock, no par value; 100,000,000 shares authorized; 22,193,761, 23,293,465, 25,290,419, and 26,103,666 shares issued and outstanding as of September 30, 2019, June 30, 2019, December 31, 2018 and September 30, 2018; respectively

237,687

256,791

291,771

305,300

Retained earnings

84,529

76,343

42,187

33,357

Accumulated other comprehensive (loss) income

6,495

3,581

(10,305

)

(18,420

)

Total shareholders’ equity

328,711

336,715

323,653

320,237

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

2,410,198

$

2,389,680

$

2,955,440

$

2,882,721

(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 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

Nine months ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2019

2019

2019

2018

2018

2019

2018

INTEREST INCOME

Loans, including fees

$

23,541

$

23,554

$

22,752

$

22,752

$

20,117

$

69,847

$

57,358

Investment securities available-for-sale

2,176

2,339

2,631

2,844

2,789

7,146

8,068

Interest and dividends on other interest‑earning assets

803

705

814

1,032

1,111

2,322

2,706

Total interest income

26,520

26,598

26,197

26,628

24,017

79,315

68,132

INTEREST EXPENSE

Interest on deposits

5,223

5,448

4,831

4,185

3,182

15,502

8,321

Interest on Federal Home Loan Bank advances

390

270

487

637

660

1,912

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

99

168

118

60

77

385

244

Interest on long-term debt

824

823

824

828

824

2,471

2,476

Total interest expense

6,536

6,709

5,773

5,560

4,720

19,018

12,953

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES

19,984

19,889

20,424

21,068

19,297

60,297

55,179

Provision for loan losses

413

698

814

502

845

1,925

1,444

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

19,571

19,191

19,610

20,566

18,452

58,372

53,735

NONINTEREST INCOME

Service charges

925

870

794

876

804

2,589

2,339

Gains (losses) on sale of securities

253

654

(1,853

)

907

(2

)

Gains (losses) on sale of other assets

140

(10

)

(3

)

58

127

(154

)

Trust income

1,025

Derivatives income

(293

)

(233

)

(111

)

154

20

(637

)

154

Bank owned life insurance

422

389

360

380

379

1,171

1,126

SBA lending activities

1,150

1,096

1,086

425

882

3,332

3,181

Gain on sale of trust company

1,681

Other noninterest income

172

175

210

182

112

557

533

Total noninterest income

2,769

2,941

2,336

164

2,255

8,046

9,883

NONINTEREST EXPENSE

Salaries and employee benefits

8,295

8,529

9,213

7,573

7,332

26,037

24,193

Occupancy

722

689

639

655

732

2,050

2,317

Equipment and software

842

753

739

783

747

2,334

2,034

Professional services

764

792

775

947

796

2,331

2,564

Postage, printing and supplies

32

29

48

30

55

109

136

Communications and data processing

796

662

675

772

566

2,133

1,904

Marketing and business development

243

233

226

224

211

702

486

FDIC premiums

(193

)

175

235

157

154

217

405

Other noninterest expense

1,176

1,392

1,245

1,067

1,279

3,813

3,744

Total noninterest expense

12,677

13,254

13,795

12,208

11,872

39,726

37,783

INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES

9,663

8,878

8,151

8,522

8,835

26,692

25,835

Provision for income taxes

2,094

1,869

1,711

1,039

1,837

5,674

5,268

NET INCOME FROM CONTINUING OPERATIONS

7,569

7,009

6,440

7,483

6,998

21,018

20,567

DISCONTINUED OPERATIONS

Income (loss) from discontinued operations

$

$

30,107

$

(1,417

)

$

1,796

$

(646

)

$

28,690

$

(1,153

)

Provision (benefit) for income taxes

(617

)

7,964

(354

)

449

(161

)

6,993

(288

)

Net income (loss) from discontinued operations

617

22,143

(1,063

)

1,347

(485

)

21,697

(865

)

NET INCOME

$

8,186

$

29,152

$

5,377

$

8,830

$

6,513

$

42,715

$

19,702

Net Income (Loss) per Common Share - Basic

Net income per common share - continuing operations

$

0.33

$

0.29

$

0.26

$

0.29

$

0.27

$

0.88

$

0.79

Net income (loss) per common share - discontinued operations

0.03

0.93

(0.04

)

0.05

(0.02

)

0.91

(0.03

)

Net Income per Common Share - Basic

0.36

1.22

0.22

0.34

0.25

1.79

0.76

Net Income (Loss) per Common Share - Diluted

Net income per common share - continuing operations

$

0.33

$

0.29

$

0.26

$

0.29

$

0.27

$

0.88

$

0.79

Net income (loss) per common share - discontinued operations

0.03

0.92

(0.04

)

0.05

(0.02

)

0.91

(0.03

)

Net Income per Common Share - Diluted

0.36

1.21

0.21

0.34

0.25

1.78

0.75

Weighted average shares - basic

22,681,904

23,888,381

24,855,171

25,919,445

26,103,397

23,800,525

25,956,336

Weighted average shares - diluted

22,837,531

24,040,806

25,019,384

26,043,799

26,254,772

23,957,915

26,134,655

(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

September 30, 2019

June 30, 2019

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

$

103,954

$

564

2.15

%

$

70,628

$

450

2.56

%

Other short-term investments

3,993

32

3.21

Investment securities:

Taxable investment securities

257,005

1,657

2.56

280,639

1,848

2.64

Non-taxable investment securities(1)

83,867

623

2.95

79,408

579

2.92

Total investment securities

340,872

2,280

2.65

360,047

2,427

2.70

Loans - continuing operations

1,801,629

23,541

5.18

1,769,803

23,554

5.34

FHLB and FRB stock

15,524

239

6.11

14,435

223

6.20

Total interest-earning assets - continuing operations

2,261,979

26,624

4.67

2,218,906

26,686

4.82

Loans held for sale - discontinued operations

30,198

47

0.62

Total interest-earning assets

2,261,979

26,624

4.67

2,249,104

26,733

4.77

Non-earning assets

191,459

191,398

Total assets

$

2,453,438

$

2,440,502

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,191,293

4,642

1.55

1,175,237

4,733

1.62

Time deposits

32,409

51

0.62

32,358

50

0.62

Brokered deposits

88,146

530

2.39

106,524

665

2.50

Total interest-bearing deposits

1,311,848

5,223

1.58

1,314,119

5,448

1.66

Total borrowings

85,478

489

2.27

70,770

438

2.48

Total long-term debt

49,803

824

6.56

49,761

823

6.63

Total interest-bearing liabilities - continuing operations

1,447,129

6,536

1.79

1,434,650

6,709

1.88

Interest-bearing liabilities - discontinued operations

36,255

86

0.95

Total interest-bearing liabilities

1,447,129

6,536

1.79

1,470,905

6,795

1.85

Demand deposits

637,809

587,957

Demand deposits - discontinued operations

9,851

Other liabilities

36,209

31,670

Shareholders’ equity

332,291

340,119

Total liabilities and shareholders’ equity

$

2,453,438

$

2,440,502

Net interest spread - continuing operations

2.88

%

2.94

%

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

$

20,088

3.52

%

$

19,977

3.61

%

Net interest income and net interest margin(2)

$

20,088

3.52

%

$

19,938

3.56

%

Non-taxable equivalent net interest margin

3.51

%

3.54

%

(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

September 30, 2019

September 30, 2018

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

$

103,954

$

564

2.15

%

$

128,248

$

647

2.00

%

Other short-term investments

21,985

157

2.83

Investment securities:

Taxable investment securities

257,005

1,657

2.56

385,834

2,315

2.38

Non-taxable investment securities(1)

83,867

623

2.95

75,514

571

3.00

Total investment securities

340,872

2,280

2.65

461,348

2,886

2.48

Loans - continuing operations

1,801,629

23,541

5.18

1,583,459

20,117

5.04

FHLB and FRB stock

15,524

239

6.11

17,624

307

6.91

Total interest-earning assets - continuing operations

2,261,979

26,624

4.67

2,212,664

24,114

4.32

Loans held for sale - discontinued operations

380,358

4,502

4.70

Total interest-earning assets

2,261,979

26,624

4.67

2,593,022

28,616

4.38

Non-earning assets

191,459

212,718

Total assets

$

2,453,438

$

2,805,740

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,191,293

4,642

1.55

1,012,953

2,791

1.09

Time deposits

32,409

51

0.62

10,406

30

1.14

Brokered deposits

88,146

530

2.39

67,937

361

2.11

Total interest-bearing deposits

1,311,848

5,223

1.58

1,091,296

3,182

1.16

Total borrowings

85,478

489

2.27

134,609

714

2.10

Total long-term debt

49,803

824

6.56

49,634

824

6.59

Total interest-bearing liabilities - continuing operations

1,447,129

6,536

1.79

1,275,539

4,720

1.47

Interest-bearing liabilities - discontinued operations

473,388

1,236

1.04

Total interest-bearing liabilities

1,447,129

6,536

1.79

1,748,927

5,956

1.35

Demand deposits

637,809

561,355

Demand deposits - discontinued operations

136,572

Other liabilities

36,209

38,796

Shareholders’ equity

332,291

320,090

Total liabilities and shareholders’ equity

$

2,453,438

$

2,805,740

Net interest spread - continuing operations

2.88

%

2.85

%

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

$

20,088

3.52

%

$

19,394

3.48

%

Net interest income and net interest margin(2)

$

20,088

3.52

%

$

22,660

3.47

%

Non-taxable equivalent net interest margin

3.51

%

3.45

%

(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

Nine months ended

September 30, 2019

September 30, 2018

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

$

88,960

$

1,477

2.22

%

$

101,502

$

1,606

2.12

%

Other short-term investments

5,181

118

3.05

13,907

284

2.73

Investment securities:

Taxable investment securities

284,978

5,619

2.64

380,002

6,643

2.34

Non-taxable investment securities(1)

81,812

1,819

2.97

76,658

1,723

3.01

Total investment securities

366,790

7,438

2.71

456,660

8,366

2.45

Loans - continuing operations

1,739,917

69,847

5.37

1,553,609

57,358

4.94

FHLB and FRB stock

14,173

727

6.86

18,291

816

5.96

Total interest-earning assets - continuing operations

2,215,021

79,607

4.81

2,143,969

68,430

4.27

Loans held for sale - discontinued operations

156,060

4,588

3.93

389,760

13,714

4.70

Total interest-earning assets

2,371,081

84,195

4.75

2,533,729

82,144

4.33

Non-earning assets

201,880

209,518

Total assets

$

2,572,961

$

2,743,247

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,147,508

13,630

1.59

974,678

7,028

0.96

Time deposits

18,246

139

1.02

10,075

82

1.09

Brokered deposits

91,963

1,733

2.52

80,920

1,212

2.00

Total interest-bearing deposits

1,257,717

15,502

1.65

1,065,673

8,322

1.04

Total borrowings

57,844

1,045

2.42

155,701

2,155

1.85

Total long-term debt

49,761

2,471

6.64

49,592

2,476

6.68

Total interest-bearing liabilities - continuing operations

1,365,322

19,018

1.86

1,270,966

12,953

1.36

Interest-bearing liabilities - discontinued operations

192,613

1,502

1.04

465,339

2,800

0.80

Total interest-bearing liabilities

1,557,935

20,520

1.76

1,736,305

15,753

1.21

Demand deposits

593,957

518,186

Demand deposits - discontinued operations

52,481

138,621

Other liabilities

37,472

36,935

Shareholders’ equity

331,116

313,200

Total liabilities and shareholders’ equity

$

2,572,961

$

2,743,247

Net interest spread - continuing operations

2.95

%

2.91

%

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

$

60,589

3.66

%

$

55,477

3.46

%

Net interest income and net interest margin(2)

$

63,675

3.59

%

$

66,391

3.50

%

Non-taxable equivalent net interest margin

3.57

%

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)

Linked

Year Over

September 30,

June 30,

March 31,

December 31,

September 30,

Quarter

Year

(dollars in thousands)

2019

2019

2019

2018

2018

Change

Change

Loans held for sale

Loans held for sale

$

916

$

$

1,530

$

5,889

$

1,886

$

916

$

(970

)

Loans held for sale - discontinued operations

384,779

373,030

375,976

(375,976

)

Total loans held for sale

$

916

$

$

386,309

$

378,919

$

377,862

$

916

$

(376,946

)

Loans held for investment

Commercial loans:

Commercial and industrial

$

697,412

$

701,566

$

679,489

$

645,374

$

581,737

$

(4,154

)

$

115,675

Commercial real estate:

Multifamily

60,398

43,907

43,929

88,826

108,001

16,491

(47,603

)

Owner occupied

352,842

313,310

304,945

298,291

295,801

39,532

57,041

Investment

452,285

409,629

394,087

407,711

409,145

42,656

43,140

Construction and land:

1‑4 family residential construction

5,186

3,696

2,067

1,006

1,490

5,186

Other construction, development, and land

139,991

195,260

171,818

155,226

147,114

(55,269

)

(7,123

)

Mortgage warehouse loans

23,256

10,665

22,267

27,967

27,838

12,591

(4,582

)

Total commercial loans

1,731,370

1,678,033

1,618,602

1,624,401

1,569,636

53,337

161,734

Residential:

Residential mortgages

31,903

31,338

32,915

32,800

24,904

565

6,999

Home equity

25,638

24,303

23,171

22,822

33,410

1,335

(7,772

)

Total residential loans

57,541

55,641

56,086

55,622

58,314

1,900

(773

)

Consumer

27,168

34,618

35,203

25,851

26,825

(7,450

)

343

Other

22,533

24,126

26,663

24,712

10,579

(1,593

)

11,954

1,838,612

1,792,418

1,736,554

1,730,586

1,665,354

46,194

173,258

Less net deferred fees and other unearned income

(2,939

)

(2,678

)

(1,997

)

(2,513

)

(2,896

)

(261

)

(43

)

Total loans held for investment

$

1,835,673

$

1,789,740

$

1,734,557

$

1,728,073

$

1,662,458

$

45,933

$

173,215

Total loans

$

1,836,589

$

1,789,740

$

2,120,866

$

2,106,992

$

2,040,320

$

46,849

$

(203,731

)

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


ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Loan Losses Activity and Credit Quality

2019

2018

Third

Second

First

Fourth

Third

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Balance at beginning of period

$

18,186

$

18,107

$

17,851

$

20,443

$

19,583

Provision for loan losses

413

698

814

595

758

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

(3,097

)

Provision for PCI loan losses

(93

)

87

Loans charged-off:

Commercial and industrial

(541

)

(588

)

(549

)

Commercial real estate

(47

)

Construction and land

Residential mortgages

(9

)

(5

)

Home equity

Consumer

(2

)

(37

)

(3

)

Other

Total loans charged-off

(543

)

(635

)

(595

)

(8

)

Recoveries on loans previously charged-off:

Commercial and industrial

17

14

Commercial real estate

Construction and land

1

3

Residential mortgages

7

4

Home equity

1

Consumer

6

16

12

7

15

Other

Total recoveries

24

16

37

11

15

Net charge-offs

$

(519

)

$

(619

)

$

(558

)

$

3

$

15

Balance at period end (1)

$

18,080

$

18,186

$

18,107

$

17,851

$

20,443

Loans

Loans held for sale

$

916

$

$

1,530

$

5,889

$

1,886

Loans held for sale - discontinued operations

384,779

373,030

375,976

Loans held for investment - continuing operations

1,835,673

1,789,740

1,734,557

1,728,073

1,662,458

Total loans

$

1,836,589

$

1,789,740

$

2,120,866

$

2,106,992

$

2,040,320

Non-performing loans - continuing operations (4)

$

6,770

$

6,352

$

8,830

$

3,252

$

2,160

Non-performing loans - discontinued operations (4)

1,506

1,924

556

Total non-performing loans

6,770

6,352

10,336

5,176

2,716

Foreclosed properties (OREO)

278

971

971

874

968

Total nonperforming assets

$

7,048

$

7,323

$

11,307

$

6,050

$

3,684

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

0.98

%

1.02

%

1.04

1.03

%

1.00

Net charge-offs to average loans (3)

0.11

0.14

0.11

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

0.37

%

0.35

%

0.51

0.19

%

0.13

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

0.39

0.52

0.15

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

0.37

0.35

0.49

0.25

0.13

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

0.29

%

0.31

%

0.34

%

0.14

%

0.11

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

0.05

0.07

0.02

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

0.29

0.31

0.40

0.20

0.13

(1) The allowance for loan losses has not been adjusted retrospectively for periods prior to December 31, 2018. (2)The third quarter of 2019, the second quarter of 2019, the first quarter of 2019 and the fourth quarter of 2018 ratios are calculated on a continuing operations basis. Ratios prior to December 31, 2018 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

Linked

September 30,

June 30,

March 31,

December 31,

September 30,

Quarter

Year Over

(dollars in thousands)

2019

2019

2019

2018

2018

Change

Year Change

DDA

$

599,657

$

569,693

$

561,829

$

602,252

$

518,155

$

29,964

$

81,502

NOW

240,427

309,709

233,838

252,490

407,214

(69,282

)

(166,787

)

Savings

1,081

1,090

896

725

698

(9

)

383

Money market

921,133

802,973

962,741

987,183

759,583

118,160

161,550

Time

30,782

33,902

22,069

10,623

10,396

(3,120

)

20,386

Brokered

61,192

134,164

65,811

99,241

79,119

(72,972

)

(17,927

)

Total deposits - continuing operations

1,854,272

1,851,531

1,847,184

1,952,514

1,775,165

2,741

79,107

Deposits to be assumed - discontinued operations

593,264

585,429

604,659

(604,659

)

Total deposits

$

1,854,272

$

1,851,531

$

2,440,448

$

2,537,943

$

2,379,824

$

2,741

$

(525,552

)

Payments clients

$

286,373

$

301,413

$

361,192

$

397,608

$

258,320

$

(15,040

)

$

28,053


Average Deposits

2019

2018

Linked

Third

Second

First

Fourth

Third

Quarter

Q3 2019 vs

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Change

Q3 2018

DDA

$

637,809

$

587,957

$

575,453

$

597,239

$

561,355

$

49,852

$

76,454

NOW

295,106

314,601

276,212

280,449

314,759

(19,495

)

(19,653

)

Savings

1,085

956

884

712

616

129

469

Money market

895,102

859,680

847,254

798,017

697,578

35,422

197,524

Time

32,409

32,358

12,847

10,117

10,406

51

22,003

Brokered

88,146

106,524

81,141

93,558

67,937

(18,378

)

20,209

Total deposits - continuing operations

1,949,657

1,902,076

1,793,791

1,780,092

1,652,651

47,581

297,006

Deposits to be assumed - discontinued operations

45,350

593,313

600,769

601,421

(45,350

)

(601,421

)

Total deposits

$

1,949,657

$

1,947,426

$

2,387,104

$

2,380,861

$

2,254,072

$

2,231

$

(304,415

)

Payments clients

$

289,526

$

285,949

$

295,059

$

263,800

$

227,029

$

3,577

$

62,497

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

32.7

%

30.9

%

32.1

%

33.6

%

34.0

%

Cost of deposits - continuing operations

1.06

%

1.15

%

1.09

%

0.93

%

0.76

%


ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation

For the nine months

2019

2018

ended September 30,

Third

Second

First

Fourth

Third

(in thousands, except share and per share data)

Quarter

Quarter

Quarter

Quarter

Quarter

2019

2018

Taxable equivalent interest income reconciliation

Interest income - GAAP

$

26,520

$

26,598

$

26,197

$

26,628

$

24,017

$

79,315

$

68,132

Taxable equivalent adjustment

104

88

100

97

97

292

298

Interest income - taxable equivalent

$

26,624

$

26,686

$

26,297

$

26,725

$

24,114

$

79,607

$

68,430

Taxable equivalent net interest income reconciliation

Net interest income - GAAP

$

19,984

$

19,889

$

20,424

$

21,068

$

19,297

$

60,297

$

55,179

Taxable equivalent adjustment

104

88

100

97

97

292

298

Net interest income - taxable equivalent

$

20,088

$

19,977

$

20,524

$

21,165

$

19,394

$

60,589

$

55,477

Taxable equivalent net interest margin reconciliation - continuing operations

Net interest margin - GAAP - continuing operations

3.51

%

3.60

%

3.72

%

3.64

%

3.46