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Edited Transcript of ACBI earnings conference call or presentation 26-Jul-19 2:00pm GMT

Q2 2019 Atlantic Capital Bancshares Inc Earnings Call

Jul 31, 2019 (Thomson StreetEvents) -- Edited Transcript of Atlantic Capital Bancshares Inc earnings conference call or presentation Friday, July 26, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Douglas L. Williams

Atlantic Capital Bancshares, Inc. - President, CEO & Director

* Gary G. Fleming

Atlantic Capital Bancshares, Inc. - Executive VP & Chief Risk Officer

* Patrick Timothy Oakes

Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO

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Conference Call Participants

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* Nancy Avans Bush

NAB Research, LLC, Research Division - Research Analyst

* Stephen Stone

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Steven Comery

G. Research, LLC - Research Analyst

* William Jefferson Wallace

Raymond James & Associates, Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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Good morning and welcome to the Atlantic Capital Bank Second Quarter 2019 Earnings Conference Call. (Operator Instructions)

I would now like to turn the conference over to Gray Fleming, Chief Risk Officer. Mr. Fleming, please go ahead.

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Gary G. Fleming, Atlantic Capital Bancshares, Inc. - Executive VP & Chief Risk Officer [2]

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Thank you, Anita, and thank you all for joining us for our second quarter 2019 earnings call. With me today to discuss our results are Doug Williams, Chief Executive Officer; and Patrick Oakes, Chief Financial Officer. Also with us are Rich Oglesby, General Banking Executive; and Kurt Shreiner, our Corporate Financial Services Executive.

As a reminder, the Atlantic Capital earnings release is available in the Investor Relations section of our website. Wish to caution you that we will be making forward-looking statements during this call and that actual results may differ materially. We encourage you to review the disclaimer and the earnings release dealing with forward-looking information. This disclaimer applies equally to statements made in this call. In addition, some discussions may include references to non-GAAP financial measures. Information about those measures, including reconciliation to GAAP measures, may be found in our SEC filings and in our earnings release.

With that, I'll turn the call over to the CEO of Atlantic Capital, Doug Williams.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [3]

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Thank you, and good morning. As you know, Atlantic Capital completed a key element of its strategic transition early in the second quarter. With the divestiture of our underperforming Tennessee operations, we're now fully engaged in building our sustainably sound, growing and established Atlanta and specialty commercial businesses.

Our company is changing to address some significant opportunities we are already seeing as a result of the M&A-induced turmoil in the Atlanta market.

We've added 25 people to our company this year, including 12 new producing bankers, 7 new credit officers and 6 new people in key operational service delivery roles.

We've substantially increased our capacity to grow new and expanded client relationships. Our new teammates joined and engaged an energetic company recently named by the Atlanta Business Chronicle as the best place to work, aligned with our purpose to fuel prosperity for our clients, teammates and shareholders. This sound cultural foundation is the reason behind the distinctive competitive posture and sustained momentum in our Atlanta in specialty commercial businesses.

Over the last 3.5 years, Atlantic Capital has grown commercial and industrial and owner-occupied commercial real estate loans at a compound average rate of 20%. Core relationship deposits have grown at a compound annual rate of 16%. Average noninterest-bearing deposits have grown at a compound rate of 18% per year and have averaged around 30% or more of total deposits.

Our results in the second quarter continue these trends and are further evidence of our progress. As you've seen, Atlantic Capital announced net income from continuing operations of $7 million or $0.29 per share with strong loan, deposit and noninterest income growth and good expense control while investing in expanded capacity to address new opportunities in Atlanta in our specialty commercial businesses.

C&I and owner-occupied real estate loans were up 12.4% linked quarter annualized and grew 25% year-over-year. Average deposits from continuing operations increased 24% linked quarter annualized and 24% compared to the second quarter of 2018. Average noninterest-bearing deposits were up -- were 31% of total average deposits during the second quarter and grew 9% annualized from the first quarter despite our normal seasonal decline and increased 20% compared to the second quarter of 2018. Core noninterest income increased 13% annualized from the first quarter.

Now Pat Oakes will review the financials in more detail and then I'll return to discuss our progress on our priorities for the year and the outlook for our business.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [4]

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Thanks, Doug. Before I provide details on the financials for our continuing operations, let me briefly discuss overall performance for the company in the second quarter.

We reported consolidated net income of $29.2 million, which included net income of $22.1 million for discontinuing operations, as we booked a gain of $34.5 million on the branch sale. This gain includes intangible impairments of $2 million and will leave $20 million in goodwill remaining on our balance sheet.

The gain on sale, along with quarterly earnings and improvements in other comprehensive income, led to an increase in tangible book value per share of $1.43 to $13.60.

Capital ratio has also significantly improved with the TCE ratio of 13.37 and total risk-based capital of 16.5, even after the repurchase of shares during the quarter.

The bank purchased 1.1 million shares totaling $20 million during the quarter and 2.9 million shares totaling $51 million since the share repurchase program was put in place during the fourth quarter of 2018.

Now let me provide more details on continuing operations. The net interest margin from continuing operations in the second quarter was $361 million, a 13 basis point decline from the 3.74% margin in the first quarter. The main drivers of this quarterly decrease were related to lower loan yields due to decline in 1-month LIBOR, increased borrowings and broker deposits to fund the branch sale and rising deposit costs.

In our previous earnings call, we communicated a decline in the net interest margin from 3.50% to 3.55%. The margin outperformed this guidance mainly due to the positive impact of the sale of investment securities, along with stronger deposit growth than forecasted, which led to less borrowings than anticipated. In fact, borrowings were down $110 million compared with second quarter of 2018.

Seasonality is a significant dynamic in our deposit base and, typically, the second quarter marks our low point for the year. This year, second quarter average deposits were actually up $108 million compared to the first quarter. It illustrates success of the bank's commercial deposit gathering strategy in a competitive environment.

Overall, we are still comfortable with our previous guidance for the third quarter, but based on the likelihood of a decrease in the Fed funds rate next week, we anticipate a lower margin in the fourth quarter.

The bank remains asset sensitive with almost 2/3 of our loan book floating rate. This will put pressure on the margin with lower rates.

We are actively working with our bankers to ensure we can quickly reduce deposit costs as much as competition will allow. This includes market index deposits, which totaled about 25% of total deposits and will price down fairly quickly.

Provision expense for the second quarter was $698,000 and included $619,000 in net charge-offs. Our credit quality remains solid with annualized net charge-offs of 14 basis points in the second quarter and 12 basis points year-to-date.

Nonperforming loans to total loans were 35 basis points, a decrease from 51 basis point in the first quarter.

Noninterest income from continuing operations improved to $2.9 million in the second quarter compared to $2.3 million in the prior quarter. The strong growth in the quarter included improvement in service charge income, primarily driven by continued strong growth in our payments business and solid gain income from our SBA business. The quarter also included a gain of $654,000 on the sale of $54 million in securities to help fund the branch sale and a loss of $233,000 from a market value adjustment on our customer swap portfolio.

Second quarter expenses from continuing operations decreased $541,000 from the first quarter to $13.3 million. The lower expenses helped our efficiency ratio improve to 58% in the quarter. This improvement was primarily driven by a decrease in salary and benefits of $684,000 from lower benefits expense. Salary and benefits also included approximately $300,000 expenses from the new hiring that Doug mentioned earlier.

We are still comfortable with our guidance that the quarterly run rate for expenses in the second half of 2019 should be approximately $13.5 million. This includes a full impact of our recent new hires and our new offices in Atlanta.

Now I will turn it back over to Doug.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [5]

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Thank you, Pat. During our calls in January and April, we shared these 2019 priorities with you: number one, complete the divestiture of our Tennessee and Northwest Georgia business; number two, invest in growth capacity for our Atlanta and specialty commercial businesses; three, focus on deposit growth by building treasury management services-based relationships; and four, maintain best-in-class asset quality. We also expect to continue our $85 million share repurchase program.

As you know, we closed the divestiture of our Tennessee and Northwest Georgia operations on April 5 and booked a significant gain to complete the strategic pivot through opportunities in Atlanta and our specialty commercial businesses. Atlanta is the 9th largest metropolitan market in the U.S. with a population of 5.9 million, more than 221,000 business enterprises and an estimated gross domestic product over $385 billion.

Among the top 10 metropolitan markets in the U.S., Atlanta ranked fourth in net job creation in 2016 and '17 and ranked second in expected population growth through 2020. With a diversified regional economy, we expect the expansion in Atlanta to extend beyond that of the rest of the U.S.

With several mergers recently announced, now consummated and the truest deal scheduled to close this fall, Atlantic Capital will become Atlanta's largest publicly held banking company and, as we advertise, Atlanta's only hometown business bank.

Our specialty commercial lines of business continue to grow at a rapid pace. Deposits and fee income in our treasury management-oriented payments and financial technology banking business are growing 20% to 25% per year, and Atlantic Capital now ranks 44th nationally in ACH origination. Our SBA and franchise finance businesses are growing at a sound and sustainable pace.

We are investing in growth capacity in Atlanta in our specialty commercial lines of business by adding new bankers and opening new offices.

As noted earlier, we've added 25 new teammates this year in production and production support roles. With an attractive culture, a distinctive competitive presence and an established record of success in our markets and businesses, we are winning the war for talent.

While we do not anticipate replicating the first half hiring pace in the second half of the year, we continue to actively recruit and may opportunistically add new bankers and support professionals over the course of the year.

Our loan production office in Cobb County officially opened in March. Our new banking office in Athens opens next week, and we will open a new private banking office in Atlanta's Buckhead neighborhood later this year.

Core client deposit growth remains strong, sustained by the treasury management focus and expertise of our bankers and deployment of Atlantic Capital Exchange for ACE for Treasury and ACE for Business, our next-generation treasury management platforms.

With our focus on building treasury management, relationships in our Atlanta commercial and payments and financial technology banking businesses, core deposits and related noninterest income should continue to grow at an annual pace in the mid-teen percentages or better.

We're pleased with the performance of our borrowing clients and the overall condition of our loan portfolio. While charge-offs have been higher in the first half of 2019 compared to last year's unusually low level, we believe this is a normalized late cycle level of charge-offs, and criticized assets and nonperforming assets are trending down.

Our borrowers are optimistic about their prospects and are making new investments, which should result in solid loan production during the next quarter. With the balance of the year, we expect to sustain commercial, industrial and owner-occupied loan growth generally consistent with our established multi-year trend. Commercial real estate loans, including the acquired and amortizing TriNet portfolio are likely to decline at a moderate pace this year due to a heavy calendar of repayments. These repayments are being replaced by construction commitments, which we'll fund over time. Taken all together, we still expect consolidated loan growth in the high single-digit percentages this year.

Our results and progress in the first half of the year have been consistent with our expectations and have established a trajectory generally indicative of the guidance we've provided to you.

Now we'll be happy to answer your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question today comes from Jennifer Demba with SunTrust.

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Stephen Stone, SunTrust Robinson Humphrey, Inc., Research Division - Associate [2]

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It's actually Steve on for Jennifer. Just wanted to kind of go over some of -- some kind of credit stuff. I know your portfolio looks pretty good, but are you seeing any yellow flags or anything that you're starting to deemphasize as we move a little later in the cycle?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [3]

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Generally, no. We are seeing, as I mentioned, sort of what we think as a normalized level of late cycle charge-offs. And this is really -- what you -- I've been doing this for 39 years and been through several cycles, and this is often what you see late in cycles. You have a prolonged period of success where management teams are increasingly confident and bold and willing to take riskier steps in terms of investment and M&A activity and that sort of thing and that can often create problems in performance. And so I think that's what we're seeing. I think that's what you're seeing sort of across the industry in the series of one-offs that you've noticed. And I think this is just sort of late-cycle behavior, and I think charge-offs here at Atlantic Capital and elsewhere are indicative of that.

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Stephen Stone, SunTrust Robinson Humphrey, Inc., Research Division - Associate [4]

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Okay. So there's nothing you're deemphasizing particularly right now?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [5]

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I think we are a little bit more defensive in our commercial real estate business than we have been earlier in the cycle. But we continue to produce loans there and that's sort of generally designed to replace runoff. And we see good opportunities, but I think we are being a little more defensive in that sector than we are elsewhere.

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Stephen Stone, SunTrust Robinson Humphrey, Inc., Research Division - Associate [6]

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Okay. And the guidance you kind of talked about on margin, that was 1 rate cut. I mean if we get the 2, if we get kind of a July and September cut, what would kind of the impact be on you guys?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [7]

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Well, so we had previously given guidance of 3.50% to 3.55%, which assumed no rate cuts. We're still kind of -- we're still comfortable with that range for the third quarter. If we get the rate cut as expected next week, that margin will drop below in that range. I think it would be difficult to hold onto a 3.50%. Hard to say where it's going to fall out with -- how quickly we can drop deposit rates. So we'll have to see how it shakes out, but it will be below that range.

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Stephen Stone, SunTrust Robinson Humphrey, Inc., Research Division - Associate [8]

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Okay. And what have you seen in the deposit rate environment so far in Atlanta? Are you seeing people kind of start to lower rates, things starting to peak out or people already starting to cut?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [9]

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So they've peaked out. I mean a little bit of -- I wouldn't say a lot of cutting yet. I think most people are waiting to see what happens next week like us. I think some of our competitors are still aggressive and others probably are a little bit less aggressive. So I think it's all over the board. For us, it's a commercial bank, right? A lot of these deposit rates are based on relationships and are negotiated. So it's really case-by-case situation.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [10]

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And our bankers have been preparing their clients for a prospect of lower rates. So our hope is that we can respond quickly in a disciplined fashion in lowering rates wherever possible. So we'll just have to see what -- how much success we have on that and how quickly we can lower rates and that will have a big impact on the margin. That and the growth in noninterest-bearing deposits, which has been very good, as I mentioned, it's been 18% over the last 3.5 years, and we've had good growth in the first half of this year as well. So we'll see what the pace of growth is second half of the year and how much of that can offset margin compression that will come from lower yields on loans.

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Operator [11]

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Our next question comes from William Wallace with Raymond James.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [12]

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Maybe 2. Just continuing on the discussion of net interest margin, can you remind us what portion of your portfolio floats? And what portion of that is tied to LIBOR versus prime?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [13]

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Yes. So it's about 2/3 that are floating rate, and I would say about 50% of our portfolio is tied to LIBOR and a little more than that.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [14]

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Okay. And then on the funding side, how much of your funding is contractual? And would price -- like public funds or whatever would price down immediately on new prime?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [15]

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So about 25% of our deposits are indexed to some market rate. They may not -- some of them will price down immediately, some of them probably over a few months period, but they were all priced down, those 25%. It's just a matter of the timing associated with that, whether it's index directed to a rate or broker deposits or some other things. And then the rest is either offer rate sheets or negotiated rates.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [16]

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Okay. And then outside of deposits, do you have any borrowings that are short term that could replace or reprice? Or do you have any borrowings that you could replace?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [17]

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So we have a small amount of borrowings. We had average about $70 million last quarter and, obviously, that's typically done 1 month or less.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [18]

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Okay. So in the third quarter, if I look at it on a continuing basis, you're saying NIM is down 6 to 11 basis points from the second quarter without a Fed move next week?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [19]

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Well, look -- so LIBOR has been down, right? LIBOR is now at 2.23%, 2.24%. So we've seen the impact of a lot of LIBOR already and that's factored in...

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [20]

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Can you quantify -- so that's why I'm surprised that your margin held up so well in the second quarter because of the LIBOR pressure.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [21]

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Yes. We're seeing more of that this quarter. Margin held up so well it's because we've seen a lot more deposit growth than we anticipated, right? So we were borrowing a lot less money than we thought. That's helped the margin.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [22]

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Okay. Okay. All right. Great. And that's actually great. That's a great segue to another question I had is, on the deposit growth side, you say you're still comfortable with high single-digit growth on the loans. What about deposits for the year or for the back half of the year maybe is a better way to think about it?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [23]

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We normally have stronger seasonal growth in deposits in the second half of the year than we do in the first half of the year. We're pleased that we saw a good solid growth in deposits in the first half of the year. So if our normal pattern holds, we should see good growth in the second half of the year. And as I mentioned earlier, we have grown core relationship deposits over the last 3.5 years at a compound average rate of 16%. We don't see anything that would suggest that it will be materially different in the second half of this year.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [24]

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But with our deposit base, there is volatility. So it can move around quarter-by-quarter.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [25]

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There is a lot of volatility in both loan and deposit balances, given concentrations, which is reflective of our customer base.

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William Jefferson Wallace, Raymond James & Associates, Inc., Research Division - Research Analyst [26]

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With the 12 bankers that you've hired, how -- can you kind of give us a sense of the progression of the timing of those on-boards during the first half of the year?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [27]

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Yes. Most of them are in the second quarter. And they are sort of equally distributed among our various banking teams, some of which have a heavier deposit focus, some of which have a heavier loan focus and some of which have a sort of more comprehensive relationship development focus. So we've expanded the production capacity in terms of numbers of production bankers by about 20% in the first half of the year, and that would necessarily translate into an expectation of 20% additional loan growth. Of course, again, it's just -- the emphasis of those different bankers is pretty well distributed across our business, and the focus is on increasing banking relationships. And of course, that shows up in both loan and deposits over time. We're sort of on a trajectory right now that would suggest that deposit growth in the second half of the year could be stronger than loan growth, which has been one of our priorities for the year. So...

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Operator [28]

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Next question comes from Nancy Bush with NAB Research.

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Nancy Avans Bush, NAB Research, LLC, Research Division - Research Analyst [29]

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A couple of questions. First one for you, Doug. I mean you evinced pretty strong confidence in growth through your relationships. You said your customers are confident, they're investing, et cetera, et cetera. We're coming to the end of the second quarter earnings season here and that question about business confidence has gotten answers that were all over the board. I think yesterday, we heard one of your regional competitors say that there has been a big drop in confidence among their customers and blah, blah, blah. So I mean what is it you think about your particular base? Is it just more Atlanta-centric? Is it not as impacted by trade issues? Can you just talk about this -- the confidence that you have in your customers' own confidence?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [30]

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Yes. You're certainly right that the data has indicated that business confidence is weaker. You saw the GDP print this morning with the lower levels -- with this investment in the second quarter. And I think a lot of this is related to trade policy and slower growth abroad. I think our client base is more domestically oriented. I think there is still a lot of confidence and optimism among these Atlanta area-based companies about their prospects for the future. So the anecdotal feedback we're getting from our clients is still -- is positive and is still much more positive than the data would indicate. So we -- as I mentioned, we think the economic expansion in Atlanta is likely to extend beyond that of the country as a whole. So we see a lot of confidence out there. We see good opportunities over the next 12 to 18 months. And of course, that view is subject to change as time goes on. But I think there is a difference there.

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Nancy Avans Bush, NAB Research, LLC, Research Division - Research Analyst [31]

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Secondly, your treasury management business and the businesses are allied with that and you're -- that you're starting and you're growing. What is -- how do you think about investment into these businesses? Is there sort of a set investment goal that you have? Or is this more opportunistic. I mean now that you've shed Tennessee -- I guess my bigger question is now that you've shed Tennessee, what is your opportunity to invest and grow these businesses?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [32]

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We've invested consistently along the way in our treasury management platforms and a lot of that -- the more heavier portion of that investment, I think, is behind us at this point, and I don't see a need for substantial investment for the next couple of years. But there is investment in new capabilities. We're looking at real-time payments. We're looking at card payments -- cards-based payments. So there are a number of opportunities in front of us that would require some investment, but nothing as significant as a new treasury management platform or anything like that.

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Operator [33]

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(Operator Instructions) Your next question comes from Steve Comery with G. Research.

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Steven Comery, G. Research, LLC - Research Analyst [34]

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I was just wondering if you could kind of just, given the decline in LIBOR during the quarter, give us an indication as to where the loan yields were coming on the book during the quarter, even if it's just a directional indication.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [35]

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Since we're doing so many floating rate loans, I don't expect to change much. I think it's fair to say that we're not seeing a lot of pressure besides the pressure from LIBOR moving.

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Steven Comery, G. Research, LLC - Research Analyst [36]

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Okay. So competition is pretty much steady as it goes then, fair to say?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [37]

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I think that's fair to say.

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Steven Comery, G. Research, LLC - Research Analyst [38]

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Okay. And then on the consumer books -- the consumer and the residential books both, it doesn't look like there was really any growth in those this quarter. I was just wondering if I could have some kind of updated thoughts on -- do you guys have thoughts on those 2 businesses?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [39]

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Yes. We're really not -- we're not consumer lenders, we're business lenders. The consumer loans on our books are really mostly private banking loans that are related to the principles of the commercial enterprise, we bank almost as accommodations or a part of those relationships, and we really don't anticipate any significant growth in those categories going forward.

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Steven Comery, G. Research, LLC - Research Analyst [40]

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Okay. Yes. Fair enough. And then on the margin, generally, we've talked to you on the previous calls, like, how much of the book floats. Do you guys have any sort of general thoughts on the potential decreasing the bank's overall asset sensitivity going forward? Is that something you'd be interested in? And then if so, under what conditions?

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Operator [41]

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We've had a disconnect with the speakers. If you could please stay on the line.

(technical difficulty)

Thank you for your patience. Mr. Williams, please go ahead.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [42]

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Thank you, Anita. I believe for some reason, we were -- the call was dropped, but if there's still more questions out there, we're happy to entertain them. Steve, you were in the middle of a question.

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Steven Comery, G. Research, LLC - Research Analyst [43]

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Yes. Am I on?

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [44]

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You are.

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Steven Comery, G. Research, LLC - Research Analyst [45]

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Yes. My question was just if you guys had any thoughts about reducing the asset sensitivity of the bank in light of the fact that interest rates appear to be moving down from here.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [46]

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So we started that process earlier this year and, currently, we have about $175 million of hedges on the balance sheet. But pricing has moved away from us at this point. It's just too expensive to put any additional hedging on where pricing is. So we've kind of stopped at this point.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [47]

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Yes. I think there's, obviously, opportunity to mitigate the compression of the margin going forward with strong revenue growth and strong growth in noninterest-bearing deposits. And we think we have some opportunity to do that. We do expect continued good revenue growth and continued good deposit growth. And so we'll have to see how this sort of develops.

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [48]

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Yes. If pricing improved, we're happy to put more hedging on. We're consistently watching it.

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [49]

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Steve?

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Steven Comery, G. Research, LLC - Research Analyst [50]

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Kind of once you guys discipline on repurchases, is it dependent on the stock price or you guys try to be opportunistic? Or you're going to try to use the authorization while you have it?

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Patrick Timothy Oakes, Atlantic Capital Bancshares, Inc. - Executive VP, Secretary, Treasurer & CFO [51]

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So it's -- we're buying pretty consistently every day. A lot that's -- the amount of shares we're purchasing is really dictated by where the stock price is, so we try to be optimistic around that.

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Operator [52]

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(Operator Instructions)

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Douglas L. Williams, Atlantic Capital Bancshares, Inc. - President, CEO & Director [53]

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Operator, it looks like we don't have any more questions. All right. We appreciate you dialing in this morning. We had a good quarter, good strong growth in loans, deposits and noninterest income. Good expense control. We're optimistic about the second half of the year despite the potential compression in our net interest margin. We look forward to talking to you again after the third quarter. Good morning.

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Operator [54]

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Conference has concluded. Thank you for attending today's presentation. You may now disconnect.