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Atlantic Capital Bancshares, Inc. Reports Fourth Quarter and Full Year 2019 Results

ATLANTA, Jan. 30, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (ACBI) announced net income from continuing operations for the quarter ended December 31, 2019 of $7.1 million, or $0.32 per diluted share, compared to $7.5 million, or $0.29 per diluted share, for the fourth quarter of 2018 and $7.6 million, or $0.33 per diluted share, for the third quarter of 2019. Diluted earnings per share from continuing operations for 2019 totaled $1.20, an increase of $0.13, or 12%, compared to 2018.

“For the fourth quarter of 2019 and for all of 2019, Atlantic Capital reported strong growth in earnings per share, average core deposits, and loans, while maintaining sound credit quality and a fortress balance sheet. We begin 2020 with strong momentum and tremendous opportunity in all of our businesses,” remarked Douglas Williams, President and Chief Executive Officer.

Highlights(1)

  • Tangible book value per share increased to $14.09, from $11.88 at December 31, 2018 and $13.91 at September 30, 2019.
  • Average deposits from continuing operations increased $366.5 million, or 21%, compared to the fourth quarter of 2018 and $197.0 million, or 40% annualized, compared to the third quarter of 2019.
  • Total loans held for investment increased $145.5 million, or 8% from December 31, 2018 and $37.9 million, or 8% annualized, from September 30, 2019.
  • Net charge-offs to average loans totaled 0.07% for the fourth quarter of 2019 and 0.11% for the full year of 2019.
  • Atlantic Capital repurchased 452,000 shares in the fourth quarter totaling $8.1 million and repurchased 4.5 million shares totaling $79.0 million, or approximately 17% of total shares, since November 2018.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $20.7 million for the fourth quarter of 2019, a decrease of $431,000, or 2%, from the fourth quarter of 2018, and an increase of $646,000, or 13% annualized, from the third quarter of 2019. The linked quarter increase in taxable equivalent net interest income was driven by a combination of growth in loans, deposits, investment securities, and excess cash.

Taxable equivalent net interest margin from continuing operations was 3.38% in the fourth quarter of 2019, a decrease of 28 basis points from the fourth quarter of 2018 and a decrease of 14 basis points from the third quarter of 2019. The decrease in the fourth quarter of 2019 compared to the third quarter of 2019 was primarily the result of an increase in excess cash due to strong deposit growth and lower loan yields due to lower short-term interest rates. This was 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 fourth quarter of 2019 was 4.95%, a decrease of 36 basis points from the fourth quarter of 2018 and a decrease of 23 basis points from the third quarter of 2019. The decrease in loan yields was due primarily to the repricing of our variable rate loans as a result of declines in 1 month LIBOR during 2019.

The cost of deposits from continuing operations in the fourth quarter of 2019 was 0.90%, a decrease of 3 basis points from the fourth quarter of 2018 and a decrease of 16 basis points from the third quarter of 2019. The cost of interest bearing deposits from continuing operations decreased 4 basis points to 1.36% from the fourth quarter of 2018, and decreased 22 basis points from the third quarter of 2019.

(1) Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income and net interest margin are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal tax rate. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table on page 15.

The provision for loan losses from continuing operations was $787,000 in the fourth quarter of 2019 compared to $502,000 in the fourth quarter of 2018 and $413,000 in the third quarter of 2019. Annualized net charge-offs were 0.07% of average loans in the fourth quarter of 2019 and 0.11% for the full year of 2019.

Noninterest income from continuing operations totaled $2.7 million in the fourth quarter of 2019 compared to
$164,000 in the fourth quarter of 2018 and $2.8 million in the third quarter of 2019. Service charge income in the fourth quarter of 2019 totaled $998,000, an increase of $122,000 or 14%, compared to the fourth quarter of 2018 and an increase of $73,000, or 32% annualized, from the third quarter of 2019. This increase was driven by continued growth in our payments and fintech businesses. The fourth quarter of 2018 included a loss of $1.9 million on the sale of $63 million in investment securities to help fund the cash payout for the sale of 14 branches in Tennessee and northwest Georgia that closed in the second quarter of 2019.

Derivatives income totaled $315,000 compared to a loss of $293,000 in the third quarter of 2019 due to credit valuation adjustments on the customer swap portfolio. SBA income totaled $846,000, a decrease from $1.2 million in the third quarter of 2019 primarily as a result of fewer SBA loan sales during the quarter.

Noninterest expense from continuing operations totaled $13.4 million in the fourth quarter of 2019, an increase of
$1.2 million compared to the fourth quarter of 2018, and an increase of $705,000 compared to the third quarter of 2019. Salaries and employee benefits expense increased $205,000, to $8.5 million in the fourth quarter of 2019 compared to the third quarter of 2019, primarily from the full impact of new hires and higher incentive expense. Communications and data processing expense for the fourth quarter of 2019 increased $270,000 compared to the third quarter of 2019, due to a higher volume of transactions in the payments business, as well as non-recurring charges related to vendor negotiations and contract terminations. The FDIC premium expense in the fourth quarter of 2019 increased $193,000 compared to the third quarter of 2019 due to the FDIC assessment credit received in the third quarter.

The overall effective tax rate from continuing operations was 21.3% for the fourth quarter of 2019 and for the full year of 2019.

Balance Sheet

Total loans held for investment were $1.87 billion at December 31, 2019, an increase of $145.5 million, or 8%, from December 31, 2018 and an increase of $37.9 million, or 8% annualized, from September 30, 2019. Mortgage warehouse loan participations decreased $14.0 million from December 31, 2018 and $9.3 million from September 30, 2019. Multifamily loans increased $38.0 million in the fourth quarter of 2019 and included $28.0 million in construction loans that moved to permanent funding.

At December 31, 2019, the allowance for loan losses was $18.5 million, or 0.99% of loans held for investment compared to 1.03% at December 31, 2018 and 0.98% at September 30, 2019. Non-performing assets from continuing operations totaled $7.6 million, or 0.26% of total assets as of December 31, 2019 compared to 0.20% of total assets as of December 31, 2018 and 0.29% of total assets as of September 30, 2019.

Total average deposits from continuing operations were $2.15 billion for the fourth quarter of 2019, an increase of $366.5 million, or 21%, from the fourth quarter of 2018 and an increase of $197.0 million, or 40% annualized, from the third quarter of 2019. This included increases in large, year-end deposits that the Company anticipates to decrease in the first quarter of 2020.

Noninterest bearing deposits were 33.5% of total average deposits from continuing operations in the fourth quarter of 2019, compared to 33.6% in the fourth quarter of 2018 and 32.7% in the third quarter of 2019.

Tangible common equity to tangible assets was 10.6% at December 31, 2019, a decrease from 12.9% at September 30, 2019, due to the balance sheet impact from the increase in year-end deposits. The estimated total risk based capital ratio was 15.0% at December 31, 2019 compared to 14.2% at December 31, 2018 and 15.5% at September 30, 2019.

Earnings Conference Call

The Company will host a conference call at 9:00 a.m. EST on Friday, January 31, 2020, to discuss the financial results for the quarter ended December 31, 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 $2.9 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

Media Contact:

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

Financial Contact:

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


ATLANTIC CAPITAL BANCSHARES, INC.                                  
Selected Financial Information                      Fourth Quarter 2019 to
2018 Change
         YTD
2019 to 2018
Change
 
     2019    2018   For the year ended December 31,  
(in thousands, except share and per share data; taxable equivalent)   Fourth Quarter   Third Quarter Second Quarter   First Quarter   Fourth Quarter     2019      2018  
INCOME SUMMARY(1)                                  
Interest income (2)   $   26,699 $   26,624 $   26,686 $   26,297   $   26,725 (0 ) % $ 106,306   $   95,155 12 %
Interest expense     5,965   6,536   6,709   5,773     5,560 7       24,983     18,513 35  
Net interest income     20,734   20,088   19,977   20,524     21,165 (2 )     81,323     76,642 6  
Provision for loan losses     787   413   698   814     502 57       2,712     1,946 39  
Net interest income after provision for loan losses     19,947   19,675   19,279   19,710     20,663 (3 )     78,611     74,696 5  
Noninterest income     2,679   2,769   2,941   2,336     164 1,534       10,725     10,047 7  
Noninterest expense     13,382   12,677   13,254   13,795     12,208 10       53,108     49,991 6  
Income from continuing operations before income taxes     9,244   9,767   8,966   8,251     8,619 7       36,228     34,752 4  
Income tax expense     2,104   2,198   1,957   1,811     1,136 85       8,070     6,702 20  
Net income from continuing operations (2)(3)     7,140   7,569   7,009   6,440     7,483 (5 )     28,158     28,050 0  
Income (loss) from discontinued operations, net of tax     -   617   22,143   (1,063 )   1,347 (100 )     21,697     482 4,401  
Net income   $   7,140 $   8,186 $   29,152 $   5,377   $   8,830 (19 ) % $   49,855   $   28,532 75 %
PER SHARE DATA                          
Diluted earnings per share - continuing operations   $   0.32 $   0.33 $   0.29 $   0.26   $   0.29     $   1.20   $   1.07    
Diluted earnings (loss) per share - discontinued operations     -   0.03   0.92   (0.04 )   0.05       0.92     0.02    
Diluted earnings per share     0.32   0.36   1.21   0.21     0.34       2.12     1.09    
Book value per share     15.01   14.81   14.46   13.10     12.80       15.01     12.80    
Tangible book value per common share (3)     14.09   13.91   13.60   12.17     11.88       14.09     11.88    
PERFORMANCE MEASURES                                  
Return on average equity     8.65 % 9.77 % 34.38 % 6.80   % 10.90 %     15.10 %   9.05 %  
Return on average assets     1.08   1.32   4.79   0.77     1.21       1.93     1.03    
Taxable equivalent net interest margin - continuing operations     3.38   3.52   3.61   3.74     3.66       3.58     3.50    
Efficiency ratio - continuing operations     57.57   55.72   58.06   60.61     57.50       57.99     57.93    
CAPITAL                                  
Average equity to average assets     12.47 % 13.54 % 13.94 % 11.34   % 11.11 %     12.77 %   11.34 %  
Tangible common equity to tangible assets     10.61   12.92   13.37   10.51     10.25       10.61     10.25    
Tier 1 capital ratio     12.0   (4 ) 12.5   13.4   11.0     11.5       12.0 (4 )   11.5    
Total risk based capital ratio     15.0   (4 ) 15.5   16.5   13.7     14.2       15.0 (4 )   14.2    
Number of common shares outstanding - basic     21,751,026   22,193,761   23,293,465   24,466,964     25,290,419       21,751,026     25,290,419    
Number of common shares outstanding - diluted     21,974,959   22,405,141   23,508,442   24,719,273     25,480,233       21,974,959     25,480,233    
ASSET QUALITY                                  
Allowance for loan losses to loans held for investment (5)     0.99 % 0.98 % 1.02 % 1.04   % 1.03 %     0.99 %   1.03 %  
Net charge-offs to average loans     0.07   0.11   0.14   0.11     -       0.11     0.02    
Non-performing assets to total assets     0.26   0.29   0.31   0.40     0.20       0.26     0.20    
AVERAGE BALANCES                          
Total loans- continuing operations   $ 1,857,736 $ 1,801,629 $ 1,769,803 $ 1,707,682   $ 1,699,801     $ 1,769,613   $ 1,599,916    
Investment securities     389,667   340,872   360,047   400,101     450,465       372,556     455,099    
Total assets     2,626,388   2,453,438     2,440,502   2,829,072     2,891,327       2,586,428     2,780,571    
Deposits - continuing operations     2,146,626   1,949,657     1,902,076   1,793,791     1,780,092       1,805,300     1,633,286    
Shareholders’ equity     327,543   332,291   340,119   320,812     321,348       330,216     315,253    
Number of common shares - basic     21,876,487   22,681,904   23,888,381   24,855,171     25,919,445       23,315,562     25,947,038    
Number of common shares - diluted     22,053,907   22,837,531   24,040,806   25,019,384     26,043,799       23,478,001     26,111,755    
AT PERIOD END                          
Loans and loans held for sale   $ 1,873,894 $ 1,836,589 $ 1,789,740 $ 2,120,866   $ 2,106,992     $ 1,873,894   $ 2,106,992    
Investment securities     399,433   329,648   348,723   402,640     402,486       399,433     402,486    
Total assets     2,910,379   2,410,198     2,389,680   2,855,887     2,955,440       2,910,379     2,955,440    
Deposits     2,499,046   1,854,272     1,851,531   2,440,448     2,544,163       2,499,046     2,544,163    
Shareholders’ equity     326,495   328,711   336,715   320,627     323,653       326,495     323,653    
Number of common shares outstanding     21,751,026   22,193,761   23,293,465   24,466,964     25,290,419       21,751,026     25,290,419    
     
(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 12/31/19.
(5)The ratios for the first, second, and third quarters of 2019 and fourth quarter of 2018 are calculated on a continuing operations basis.
   


ATLANTIC CAPITAL BANCSHARES, INC.                        
Financial Information from Discontinued Operations                        
Assets and Liabilities from Discontinued Operations                        
(in thousands)   December 31, 2019  September 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
                       
      2019    2018   For the year ended December 31,
 

(in thousands)
  Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
  Fourth
Quarter
       

2019
       

2018
 
Net interest income   $ -   $ -   $   (39 ) $ 3,125     $ 3,225       $ 3,086     $ 14,140  
Provision for loan losses     -     -           –         (3,097 )         –         (3,097 )
Net interest income after provision     -     -     (39 )     3,125         6,322           3,086         17,237  
Service charges     -     -     46     481       483         527       1,922  
Mortgage income     -     -         288       320         288       1,302  
Gain on sale of branches     -     -     34,475           -         34,475        
Other income     -     -     (22 )     21         47           (1 )       123  
Total noninterest income     -     -     34,499       790         850           35,289         3,347  
Salaries and employee benefits     -     -     330     2,427       2,757         2,757       11,714  
Occupancy     -     -     71     339       479         410       2,016  
Equipment and software     -     -     8     123       158         131       779  
Amortization of intangibles     -     -         247       271         247       1,229  
Communications and data processing     -     -     197     389       440         586       1,529  
Divestiture expense     -     -     3,646     1,449       825         5,095       825  
Other noninterest expense     -     -     101       358         446           459         1,849  
Total noninterest expense     -     -     4,353       5,332         5,376           9,685         19,941  
Net income (loss) before provision for income taxes     -     -     30,107     (1,417 )     1,796         28,690       643  
Provision (benefit) for income taxes     -     (617 )   7,964       (354 )       449           6,993         161  
Net income (loss) from discontinued operations    $  -   $ 617   $ 22,143   $   (1,063 )    $ 1,347        $ 21,697      $  482  


...
Atlantic Capital Bancshares, Inc.          
Consolidated Balance Sheets (unaudited)          
   

December 31,
   

September 30,
   

December 31,
 (in thousands, except share data)     2019         2019         2018   
ASSETS        
Cash and due from banks $   45,249     $   42,577     $   42,895  
Interest-bearing deposits in banks   421,079       27,167       216,040  
Other short-term investments      –          –          9,457  
Cash and cash equivalents   466,328       69,744       268,392  
Securities available for sale   282,461       286,785       402,486  
Securities held to maturity (fair value of $115,291, $42,740 and $0 at December 31, 2019, September 30, 2019, and December 31, 2018,   116,972       42,863        
Other investments   27,556       31,360       29,236  
Loans held for sale   370       916       5,889  
Loans held for sale - discontinued operations(1)               373,030  
Loans held for investment(1)   1,873,524       1,835,673       1,728,073  
Less: allowance for loan losses      (18,535 )        (18,080 )        (17,851 )
Loans held for investment, net   1,854,989       1,817,593       1,710,222  
Premises held for sale - discontinued operations(1)               7,722  
Premises and equipment, net(1)   22,536       19,688       9,779  
Bank owned life insurance   66,421       66,047       65,149  
Goodwill - discontinued operations(1)               4,555  
Goodwill - continuing operations(1)   19,925       19,925       17,135  
Other intangibles, net   3,027       3,112       4,388  
Other real estate owned   278       278       874  
Other assets      49,516          51,887          56,583  
Total assets $    2,910,379     $    2,410,198     $     2,955,440  
 

LIABILITIES AND SHAREHOLDERS' EQUITY
         
Deposits:          
Noninterest-bearing demand(1) $   824,646     $   599,657     $   602,252  
Interest-bearing checking(1)   373,727       240,427       252,490  
Savings(1)   1,219       1,081       725  
Money market(1)   1,173,218       921,133       987,183  
Time(1)   44,389       30,782       10,623  
Brokered deposits   81,847       61,192       99,241  
Deposits to be assumed - discontinued operations(1)      –          –          585,429  
Total deposits   2,499,046       1,854,272       2,537,943  
Federal funds purchased         57,000        
Securities sold under agreements to repurchase - discontinued operations(1)