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Atlantic Capital Bancshares, Inc. Reports First Quarter 2020 Results

ATLANTA, April 23, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (ACBI) announced net income from continuing operations for the quarter ended March 31, 2020 of $2.1 million, or $0.10 per diluted share, compared to $6.4 million, or $0.26 per diluted share, for the first quarter of 2019 and $7.1 million, or $0.32 per diluted share, for the fourth quarter of 2019. The decrease in net income was predominantly driven by increases in credit reserves in anticipation of the expected impact from the economic slowdown from COVID-19.

“Atlantic Capital entered the COVID-19 crisis in a position of strength with solid first quarter operating results, a fortress balance sheet, and sound business continuity plans. With that strength, our company will provide needed assistance to businesses in our community, add new client relationships, and strive to continue to build meaningful shareholder value through the crisis,” remarked Douglas Williams, President and Chief Executive Officer.

Response to COVID-19

As the COVID-19 pandemic affected all areas of economic and social life, Atlantic Capital responded with measures to protect the health of its community, customers and associates. The Company implemented work-from-home initiatives for employees when possible, ceased non-essential business related travel, and began regular meetings of its executive leadership and incident response teams to direct the Company’s response to the ever-changing environment. Each week, Doug Williams and his executive leadership team host an internal company-wide conference call to communicate the latest developments, answer teammate questions, and gather information from teammates based on the challenges their relationship customers are facing.

In addition, Atlantic Capital has taken the following steps to assist borrowers during these challenging times, consistent with sound banking practice:

  • facilitating approximately $223 million in loan applications for business borrowers through the Paycheck Protection Program;

  • evaluating business segments in our market areas to evaluate areas of need and focus our assessment and management of portfolio risk;

  • offering payment deferrals to existing customers with a streamlined loan modification process when appropriate;

  • communicating with customers in order to assess developing credit situations and needs; and

  • engaging in liquidity planning, including pausing stock repurchases in March.

Our goal is to continue to support our community of customers and prospective customers while maintaining our historically cautious approach to new loan underwriting. With reliable core deposit funding, solid balance sheet liquidity, a strong capital position, and access to significant wholesale funding, Atlantic Capital anticipates adequate funding capacity for future lending needs.

First Quarter Highlights(1)

  • Capital ratios remained strong, with a tangible common equity to tangible assets ratio of 11.6%.

  • Tangible book value per share increased 19.5% from March 31, 2019 to $14.54, and increased 12.8% annualized from December 31, 2019.

  • Net interest margin from continuing operations of 3.41%, compared to 3.74% in the first quarter of 2019 and 3.38% in the fourth quarter of 2019.

  • Average deposits from continuing operations increased $460.7 million, or 25.7%, compared to the first quarter of 2019 and $107.9 million, or 20.1% annualized, compared to the fourth quarter of 2019.

  • Total loans held for investment increased $198.4 million, or 11.4% from March 31, 2019 and $59.4 million, or 12.7% annualized, from December 31, 2019.

  • Annualized net charge-offs to average loans totaled 0.04%, compared 0.11% in the first quarter of 2019 and 0.07% for the fourth quarter of 2019.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $21.2 million for the first quarter of 2020, an increase of $679,000, or 3.3%, from the first quarter of 2019, and an increase of $469,000, or 9.0% annualized, from the fourth quarter of 2019. The linked quarter increase in net interest income was primarily driven by a decrease in the cost of interest bearing liabilities offset by a decrease in loan yields.

Taxable equivalent net interest margin from continuing operations was 3.41% in the first quarter of 2020, a decrease of 33 basis points from the first quarter of 2019 and an increase of 3 basis points from the fourth quarter of 2019. The linked quarter increase was primarily the result of a drop in the cost of interest bearing deposits and an increase in the yield on investment securities. This was partially offset by a decrease in loan yields.

The yield on loans from continuing operations in the first quarter of 2020 was 4.77%, a decrease of 63 basis points from the first quarter of 2019 and a decrease of 18 basis points from the fourth quarter of 2019. The decrease in loan yields was due primarily to the repricing of variable rate loans as a result of declines in short term interest rates during 2019 and 2020.

The taxable equivalent yield on investment securities in the first quarter of 2020 was 2.84%, an increase of 7 basis points from the first quarter of 2019 and an increase of 21 basis points from the fourth quarter of 2019. The increase in taxable equivalent investment portfolio yields was primarily the result of municipal bond purchases in 2019 and 2020, many of which were non-taxable.

The cost of deposits from continuing operations in the first quarter of 2020 was 0.75%, a decrease of 34 basis points from the first quarter of 2019 and a decrease of 15 basis points from the fourth quarter of 2019. The cost of interest bearing deposits from continuing operations decreased 52 basis points to 1.09% from the first quarter of 2019, and decreased 27 basis points from the fourth quarter of 2019.

The provision for credit losses for continuing operations was $8.1 million in the first quarter of 2020 compared to $814,000 in the first quarter of 2019 and $787,000 in the fourth quarter of 2019. The provision for credit losses in the first quarter of 2020 included a $7.4 million provision for loan losses and a $671,000 provision for unfunded commitments. The provision increased primarily as a response to the expected impact from the economic slowdown from COVID-19.

Noninterest income from continuing operations totaled $2.4 million in the first quarter of 2020 compared to $2.3 million in the first quarter of 2019 and $2.7 million in the fourth quarter of 2019. Service charge income in the first quarter of 2020 totaled $1.2 million, an increase of $438,000 or 55.2%, compared to the first quarter of 2019 and an increase of $234,000, or 93.8% annualized, from the fourth quarter of 2019. Continued strong growth in core deposits, particularly in our payments processing businesses, drove the increases in service charge income. SBA income totaled $414,000, a decrease from $1.1 million in the first quarter of 2019 and $846,000 in the fourth quarter of 2019, primarily from lower SBA origination volume and a decrease in loan premiums during the quarter.

Noninterest expense from continuing operations totaled $12.9 million in the first quarter of 2020, a decrease of $918,000 compared to the first quarter of 2019 and $505,000 compared to the fourth quarter of 2019. Salaries and employee benefits totaled $8.5 million in the first quarter of 2020, unchanged from the previous quarter as the higher first quarter benefits costs were offset by lower incentive accruals.

The effective tax rate from continuing operations for the first quarter of 2020 was 13.3% compared to 21.3% for the full year of 2019, and was impacted by lower pretax earnings as well as increased non-taxable securities income from municipal bonds.

(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.

Balance Sheet

Total loans held for investment were $1.93 billion at March 31, 2020, an increase of $198.4 million, or 11.4%, from March 31, 2019 and an increase of $59.4 million, or 12.7% annualized, from December 31, 2019. Commercial and industrial loans were $760.0 million at March 31, 2020, an increase of 11.9% from March 31, 2019 and 31.2% annualized from December 31, 2019. The increase from December 31, 2019 was primarily due to organic growth across different areas of the Company. Mortgage warehouse loan participations decreased to zero as we exited the business during the first quarter of 2020. Consumer loans increased $20.4 million from December 31, 2019 to $58.2 million at March 31, 2020, due to the growth in a partnership with a fintech firm that offers CD-secured loans to its customers.

On January 1, 2020, the Company adopted the CECL accounting standard, which resulted in a day one reduction of $854,000 to the allowance for loan losses offset by an increase of $1.3 million to the allowance for unfunded commitments. The allowance for loan losses totaled $18.5 million as of December 31, 2019, was reduced by $854,000 due to CECL adoption, was increased by $7.4 million related to the first quarter 2020 provision, and ended the quarter at $24.9 million. The allowance for unfunded commitments totaled $892,000 at December 31, 2019, was increased by $1.3 million due to CECL adoption, was increased by $671,000 related to the first quarter 2020 provision, and ended the quarter at $2.8 million. At March 31, 2020, the combined allowance for credit losses for loans and unfunded commitments was $27.7 million, compared to $19.4 million at December 31, 2019.

The allowance for loan losses was 1.29% of total loans held for investment at March 31, 2020, compared to 0.99% at December 31, 2019. The increase reflects the impact of COVID-19 on the economic forecast used in the estimation of expected credit losses. Non-performing assets from continuing operations totaled $7.3 million, or 0.27% of total assets, as of March 31, 2020, compared to 0.34% of total assets as of March 31, 2019 and 0.26% of total assets as of December 31, 2019.

Tangible common equity to tangible assets was 11.6% at March 31, 2020, an increase from 10.6% at December 31, 2019 due to the elevated levels of cash related to year-end deposits at December 31, 2019. The estimated total risk based capital ratio was 14.9% at March 31, 2020 compared to 13.7% at March 31, 2019 and 15.0% at December 31, 2019.

Earnings Conference Call

The Company will host a conference call at 9:30 a.m. EDT on Friday, April 24, 2020, to discuss the financial results for the quarter ended March 31, 2020. Individuals wishing to participate in the conference call may do so by dialing 877-270-2148 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. A presentation will be used during the earnings conference call and is available at http://www.snl.com/IRW/CorporateProfile/4155740.

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,” “strive,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about Atlantic Capital’s confidence in its strategies and its expectations about financial performance, the impact of COVID-19 on operations, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K, as supplemented by our Current Report on Form 8-K filed on April 23, 2020, 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 $2.7 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

2020

2019

(in thousands, except share and per share data;

First

Fourth

Third

Second

First

First Quarter 2020

taxable equivalent)

Quarter

Quarter

Quarter

Quarter

Quarter

to 2019 Change

INCOME SUMMARY (1)

Interest income (2)

$

26,246

$

26,699

$

26,624

$

26,686

$

26,297

(0

)%

Interest expense

5,043

5,965

6,536

6,709

5,773

(13

)

Net interest income

21,203

20,734

20,088

19,977

20,524

3

Provision for credit losses

8,074

787

413

698

814

892

Net interest income after provision for credit losses

13,129

19,947

19,675

19,279

19,710

(33

)

Noninterest income

2,422

2,679

2,769

2,941

2,336

4

Noninterest expense

12,877

13,382

12,677

13,254

13,795

(7

)

Income from continuing operations before income taxes

2,674

9,244

9,767

8,966

8,251

(68

)

Income tax expense

550

2,104

2,198

1,957

1,811

(70

)

Net income from continuing operations(2)(3)

2,124

7,140

7,569

7,009

6,440

(67

)

Income (loss) from discontinued operations, net of tax

617

22,143

(1,063

)

(100

)

Net income

$

2,124

$

7,140

$

8,186

$

29,152

$

5,377

(60

)%

PER SHARE DATA

Diluted earnings per share - continuing operations

$

0.10

$

0.32

$

0.33

$

0.29

$

0.26

Diluted earnings (loss) per share - discontinued operations

0.03

0.92

(0.04

)

Diluted earnings per share

0.10

0.32

0.36

1.21

0.21

Book value per share

15.47

15.01

14.81

14.46

13.10

Tangible book value per common share (3)

14.54

14.09

13.91

13.60

12.17

PERFORMANCE MEASURES

Return on average equity

2.56

%

8.65

%

9.77

%

34.38

%

6.80

%

Return on average assets

0.32

1.08

1.32

4.79

0.77

Taxable equivalent net interest margin - continuing operations

3.41

3.38

3.52

3.61

3.74

Efficiency ratio - continuing operations

55.03

57.57

55.72

58.06

60.61

Average loans to average deposits

83.84

86.54

92.41

93.05

95.20

CAPITAL

Average equity to average assets

12.41

%

12.47

%

13.54

%

13.94

%

11.34

%

Tangible common equity to tangible assets

11.57

10.61

12.92

13.37

10.51

Tier 1 capital ratio

11.7

(4)

12.0

12.5

13.4

11.0

Total risk based capital ratio

14.9

(4)

15.0

15.5

16.5

13.7

SHARES OUTSTANDING

Number of common shares outstanding - basic

21,479,986

21,751,026

22,193,761

23,293,465

24,466,964

Number of common shares outstanding - diluted

21,675,934

21,974,959

22,405,141

23,508,442

24,719,273

Average number of common shares - basic

21,689,038

21,876,487

22,681,904

23,888,381

24,855,171

Average number of common shares - diluted

21,842,175

22,053,907

22,837,531

24,040,806

25,019,384

ASSET QUALITY

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

1.29

%

0.99

%

0.98

%

1.02

%

1.04

%

Net charge-offs to average loans (6)

0.04

0.07

0.11

0.14

0.11

Non-performing assets to total assets

0.27

0.26

0.29

0.31

0.40

AVERAGE BALANCES

Total loans - continuing operations

$

1,890,184

$

1,857,736

$

1,801,629

$

1,769,803

$

1,707,682

Investment securities

417,971

389,667

340,872

360,047

400,101

Total assets

2,686,266

2,626,388

2,453,438

2,440,502

2,829,072

Deposits - continuing operations

2,254,505

2,146,626

1,949,657

1,902,076

1,793,791

Shareholders' equity

333,480

327,543

332,291

340,119

320,812

AT PERIOD END

Loans and loans held for sale

$

1,932,909

$

1,873,524

$

1,836,589

$

1,789,740

$

2,120,866

Investment securities

466,405

399,433

329,648

348,723

402,640

Total assets

2,719,658

2,910,379

2,410,198

2,389,680

2,855,887

Deposits

2,225,119

2,499,046

1,854,272

1,851,531

2,440,448

Shareholders’ equity

332,300

326,495

328,711

336,715

320,627

(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.
(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 March 31, 2020.
(5) The ratios for the first, second, and third quarters of 2019 are calculated on a continuing operations basis.
(6) Annualized.


ATLANTIC CAPITAL BANCSHARES, INC.
Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

(in thousands)

March 31, 2020

December 31, 2019

March 31, 2019

Cash

$

$

$

4,168

Loans held for sale - discontinued operations

384,779

Premises held for sale - discontinued operations

7,736

Goodwill - discontinued operations

4,555

Other assets

1,158

Total assets

$

$

$

402,396

Deposits to be assumed - discontinued operations

$

$

$

593,264

Securities sold under agreements to repurchase - discontinued operations

9,821

Total liabilities

$

$

$

603,085

Net liabilities

$

$

$

(200,689

)

Components of Net Income (Loss) from Discontinued Operations

2020

2019

First

Fourth

Third

Second

First

(in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Net interest income

$

$

$

$

(39

)

$

3,125

Provision for credit losses

Net interest income after provision

(39

)

3,125

Service charges

46

481

Mortgage income

288

Gain on sale of branches

34,475

Other income

(22

)

21

Total noninterest income

34,499

790

Salaries and employee benefits

330

2,427

Occupancy

71

339

Equipment and software

8

123

Amortization of intangibles

247

Communications and data processing

197

389

Divestiture expense

3,646

1,449

Other noninterest expense

101

358

Total noninterest expense

4,353

5,332

Net income (loss) before provision for income taxes

30,107

(1,417

)

Provision (benefit) for income taxes

(617

)

7,964

(354

)

Net income (loss) from discontinued operations

$

$

$

617

$

22,143

$

(1,063

)


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

March 31,

December 31,

March 31,

(in thousands, except share data)

2020

2019

2019

ASSETS

Cash and due from banks

$

27,536

$

45,249

$

36,992

Interest-bearing deposits in banks

114,829

421,079

76,720

Other short-term investments

29,457

Cash and cash equivalents

142,365

466,328

143,169

Securities available for sale

280,390

282,461

402,640

Securities held to maturity, net of allowance for credit losses of $14, $0 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively (fair value of $189,940, $115,291 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively)

186,015

116,972

Other investments

27,140

27,556

28,844

Loans held for sale

370

1,530

Loans held for sale - discontinued operations(1)

384,779

Loans held for investment(1)

1,932,909

1,873,524

1,734,557

Less: allowance for loan losses

(24,896

)

(18,535

)

(18,107

)

Loans held for investment, net

1,908,013

1,854,989

1,716,450

Premises held for sale - discontinued operations(1)

7,736

Premises and equipment, net(1)

22,533

22,536

23,311

Bank owned life insurance

66,761

66,421

65,486

Goodwill - discontinued operations(1)

4,555

Goodwill - continuing operations(1)

19,925

19,925

17,135

Other intangibles, net

2,785

3,027

4,241

Other real estate owned

779

278

971

Other assets

62,952

49,516

2,605,942

30,838

4.80

Non-earning assets

188,260

223,130

Total assets

$

2,686,266

$

2,829,072

Liabilities

Interest bearing deposits:

NOW, money market, and savings

1,393,541

3,767

1.09

1,124,350

4,255

1.53

Time deposits

55,775

52

0.37

12,847

38

1.20

Brokered deposits

92,188

363

1.58

81,141

538

2.69

Total interest-bearing deposits

1,541,504

4,182

1.09

1,218,338

4,831

1.61

Total borrowings

11,703

32

1.10

18,056

118

2.65

Total long-term debt

49,888

829

6.68

49,719

824

6.72

Total interest-bearing liabilities - continuing operations

1,603,095

5,043

1.27

1,286,113

5,773

1.82

Interest-bearing liabilities - discontinued operations

473,090

1,416

1.21

Total interest-bearing liabilities

1,603,095

5,043

1.27

1,759,203

7,189

1.66

Demand deposits

713,001

575,453

Demand deposits - discontinued operations

128,977

Other liabilities

36,690

44,627

Shareholders’ equity

333,480

320,812

Total liabilities and shareholders’ equity

$

2,686,266

$

2,829,072

Net interest spread - continuing operations

2.96

%

2.98

%

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

$

21,203

3.41

%

$

20,524

3.74

%

Net interest income and net interest margin(2)

$

21,203

3.41

%

$

23,649

3.68

%

Non-taxable equivalent net interest margin

3.38

%

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.
Period End Loans

Linked

Year Over

March 31,

December 31,

September 30,

June 30,

March 31,

Quarter

Year

(dollars in thousands)

2020

2019

2019

2019

2019

Change

Change

Loans held for sale

Loans held for sale

$

$

370

$

916

$

$

1,530

$

(370

)

$

(1,530

)

Loans held for sale - discontinued operations

384,779

(384,779

)

Total loans held for sale

$

$

370

$

916

$

$

386,309

$

(370

)

$

(386,309

)

Loans held for investment

Commercial loans:

Commercial and industrial

$

760,062

$

705,115

$

697,412

$

701,566

$

679,489

$

54,947

$

80,573

Commercial real estate:

Multifamily

73,654

98,378

60,398

43,907

43,929

(24,724

)

29,725

Owner occupied

359,026

357,912

352,842

313,310

304,945

1,114

54,081

Investment

477,451

460,038

452,285

409,629

394,087

17,413

83,364

Construction and land:

1‑4 family residential construction

2,706

4,009

5,186

3,696

2,067

(1,303

)

639

Other construction, development, and land

124,116

123,531

139,991

195,260

171,818

585

(47,702

)

Mortgage warehouse loans

13,941

23,256

10,665

22,267

(13,941

)

(22,267

)

Total commercial loans

1,797,015

1,762,924

1,731,370

1,678,033

1,618,602

34,091

178,413

Residential:

Residential mortgages

31,761

31,315

31,903

31,338

32,915

446

(1,154

)

Home equity

23,479

25,002

25,638

24,303

23,171

(1,523

)

308

Total residential loans

55,240

56,317

57,541

55,641

56,086

(1,077

)

(846

)

Consumer

58,164

37,765

27,168

34,618

35,203

20,399

22,961

Other

25,488

19,552

22,533

24,126

26,663

5,936

(1,175

)

1,935,907

1,876,558

1,838,612

1,792,418

1,736,554

59,349

199,353

Less net deferred fees and other unearned income

(2,998

)

(3,034

)

(2,939

)

(2,678

)

(1,997

)

36

(1,001

)

Total loans held for investment

$

1,932,909

$

1,873,524

$

1,835,673

$

1,789,740

$

1,734,557

$

59,385

$

198,352

Total loans

$

1,932,909

$

1,873,894

$

1,836,589

$

1,789,740

$

2,120,866

$

59,015

$

(187,957

)


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

2020

2019

First

Fourth

Third

Second

First

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Allowance for loan losses

Balance at beginning of period

$

18,535

$

18,080

$

18,186

$

18,107

$

17,851

Adoption of ASU 2016-13

(854

)

Provision for loan losses

7,409

787

413

698

814

Loans charged-off:

Commercial and industrial

(18

)

(344

)

(541

)

(588

)

(549

)

Commercial real estate

(78

)

(47

)

Construction and land

Residential mortgages

(9

)

Home equity

(125

)

Consumer

(2

)

(37

)

Other

Total loans charged-off

(221

)

(344

)

(543

)

(635

)

(595

)

Recoveries on loans previously charged-off:

Commercial and industrial

5

17

14

Commercial real estate

18

Construction and land

1

3

Residential mortgages

1

7

7

Home equity

1

Consumer

8

6

16

12

Other

Total recoveries

27

12

24

16

37

Net charge-offs

$

(194

)

$

(332

)

$

(519

)

$

(619

)

$

(558

)

Balance at period end

$

24,896

$

18,535

$

18,080

$

18,186

$

18,107

Allowance for unfunded commitments

Balance at beginning of period

$

892

$

836

$

785

$

631

$

653

Adoption of ASU 2016-13

1,275

Provision for unfunded commitments

671

56

51

154

(22

)

Balance at period end

$

2,838

$

892

$

836

$

785

$

631

Total allowance for credit losses - loans and unfunded commitments

$

27,734

$

19,427

$

18,916

$

18,971

$

18,738

Provision for credit losses under CECL

Provision for loan losses

7,409

787

413

698

814

Provision for securities held to maturity credit losses

(6

)

-

-

-

-

Provision for unfunded commitments(1)

671

-

-

-

-

Total provision for credit losses

$

8,074

$

787

$

413

$

698

$

814

Non-performing loans - continuing operations

$

6,515

$

7,293

$

6,770

$

6,352

$

8,830

Non-performing loans - discontinued operations

1,506

Total nonperforming loans

6,515

7,293

6,770

6,352

10,336

Foreclosed properties (OREO)

779

278

278

971

971

Total nonperforming assets

$

7,294

$

7,571

$

7,048

$

7,323

$

11,307

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

1.29

%

0.99

%

0.98

%

1.02

%

1.04

%

Net charge-offs to average loans (3)

0.04

0.07

0.11

0.14

0.11

Non-performing loans as a percentage of total loans

Continuing operations

0.34

%

0.39

%

0.37

%

0.35

%

0.51

%

Discontinued operations

0.39

Total

0.34

0.39

0.37

0.35

0.49

Non-performing assets as a percentage of total assets

Continuing operations

0.27

%

0.26

%

0.29

%

0.31

%

0.34

%

Discontinued operations

0.05

Total

0.27

0.26

0.29

0.31

0.40

(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $56, $51, $154 and ($22) for the fourth, third, second, and first quarters of 2019, respectively.
(2) The third, second, and first quarters of 2019 ratios are calculated on a continuing operations basis.
(3) Annualized.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

Linked

March 31,

December 31,

September 30,

June 30,

March 31,

Quarter

Year Over

(dollars in thousands)

2020

2019

2019

2019

2019

Change

Year Change

DDA

$

712,919

$

824,646

$

599,657

$

569,693

$

561,829

$

(111,727

)

$

151,090

NOW

368,463

373,727

240,427

309,709

233,838

(5,264

)

134,625

Savings

567

1,219

1,081

1,090

896

(652

)

(329

)

Money market

982,109

1,173,218

921,133

802,973

962,741

(191,109

)

19,368

Time

66,793

44,389

30,782

33,902

22,069

22,404

44,724

Brokered

94,268

81,847

61,192

134,164

65,811

12,421

28,457

Total deposits - continuing operations

2,225,119

2,499,046

1,854,272

1,851,531

1,847,184

(273,927

)

377,935

Deposits to be assumed - discontinued operations

593,264

(593,264

)

Total deposits

$

2,225,119

$

2,499,046

$

1,854,272

$

1,851,531

$

2,440,448

$

(273,927

)

$

(215,329

)

Payments clients

$

483,585

$

567,597

$

286,373

$

301,413

$

361,192

$

(84,012

)

$

122,393

Average Deposits

2020

2019

Linked

First

Fourth

Third

Second

First

Quarter

Q1 2020 vs

(dollars in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

Change

Q1 2019

DDA

$

713,001

$

718,298

$

637,809

$

587,957

$

575,453

$

(5,297

)

$

137,548

NOW

382,178

320,637

295,106

314,601

276,212

61,541

105,966

Savings

650

1,098

1,085

956

884

(448

)

(234

)

Money market

1,010,713

1,006,449

895,102

859,680

847,254

4,264

163,459

Time

55,775

37,388

32,409

32,358

12,847

18,387

42,928

Brokered

92,188

62,757

88,146

106,524

81,141

29,431

11,047

Total deposits - continuing operations

2,254,505

2,146,627

1,949,657

1,902,076

1,793,791

107,878

460,714

Deposits to be assumed - discontinued operations

45,350

593,313

(593,313

)

Total deposits

$

2,254,505

$

2,146,627

$

1,949,657

$

1,947,426

$

2,387,104

$

107,878

$

(132,599

)

Payments clients

$

419,630

$

362,327

$

289,526

$

285,949

$

295,059

$

57,303

$

124,571

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

31.6

%

33.5

%

32.7

%

30.9

%

32.1

%

Cost of interest-bearing deposits - continuing operations

1.09

%

1.36

%

1.58

%

1.66

%

1.61

%

Cost of deposits - continuing operations

0.75

%

0.90

%

1.06

%

1.15

%

1.09

%


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

2020

2019

First

Fourth

Third

Second

First

(in thousands, except share and per share data)

Quarter

Quarter

Quarter

Quarter

Quarter

Taxable equivalent interest income reconciliation

Interest income - GAAP

$

26,023

$

26,532

$

26,520

$

26,598

$

26,197

Taxable equivalent adjustment

223

167

104

88

100

Interest income - taxable equivalent

$

26,246

$

26,699

$

26,624

$

26,686

$

26,297

Taxable equivalent net interest income reconciliation - continuing operations

Net interest income - GAAP

$

20,980

$

20,567

$

19,984

$

19,889

$

20,424

Taxable equivalent adjustment

223

167

104

88

100

Net interest income - taxable equivalent - continuing operations

$

21,203

$

20,734

$

20,088

$

19,977

$

20,524

Taxable equivalent net interest margin reconciliation - continuing operations

Net interest margin - GAAP - continuing operations

3.38

%

3.35

%

3.51

%

3.60

%

3.72

%

Impact of taxable equivalent adjustment

0.03

0.03

0.01

0.01

0.02

Net interest margin - taxable equivalent - continuing operations

3.41

%

3.38

%

3.52

%

3.61

%

3.74

%

Taxable equivalent net interest margin reconciliation

Net interest margin - GAAP

3.38

%

3.35

%

3.51

%

3.54

%

3.66

%

Impact of taxable equivalent adjustment

0.03

0.03

0.01

0.02

0.02

Net interest margin - taxable equivalent

3.41

%

3.38

%

3.52

%

3.56

%

3.68

%

Income before income taxes reconciliation

Income before income taxes - GAAP

$

2,451

$

9,077

$

9,663

$

8,878

$

8,151

Taxable equivalent adjustment

223

167

104

88

100

Income before income taxes

$

2,674

$

9,244

$

9,767

$

8,966

$

8,251

Income tax reconciliation

Income tax expense - GAAP

$

327

$

1,937

$

2,094

$

1,869

$

1,711

Taxable equivalent adjustment

223

167

104

88

100

Income tax expense

$

550

$

2,104

$

2,198

$

1,957

$

1,811

Tangible book value per common share reconciliation

Total shareholders’ equity

$

332,300

$

326,495

$

328,711

$

336,715

$

320,627

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(22,848

)

Total tangible common equity

$

312,375

$

306,570

$

308,786

$

316,790

$

297,779

Common shares outstanding

21,479,986

21,751,026

22,193,761

23,293,465

24,466,964

Book value per common share - GAAP

$

15.47

$

15.01

$

14.81

$

14.46

$

13.10

Tangible book value

14.54

14.09

13.91

13.60

12.17

Tangible common equity to tangible assets reconciliation

Total shareholders’ equity

$

332,300

$

326,495

$

328,711

$

336,715

$

320,627

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(22,848

)

Total tangible common equity

$

312,375

$

306,570

$

308,786

$

316,790

$

297,779

Total assets

$

2,719,658

$

2,910,379

$

2,410,198

$

2,389,680

$

2,855,887

Intangible assets

(19,925

)

(19,925

)

(19,925

)

(19,925

)

(22,848

)

Total tangible assets

$

2,699,733

$

2,890,454

$

2,390,273

$

2,369,755

$

2,833,039

Tangible common equity to tangible assets

11.57

%

10.61

%

12.92

%

13.37

%

10.51

%