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CST: 19/06/2019 10:24:34   

Atlantic Capital Bancshares, Inc. Reports Fourth Quarter 2018 Results

138 Days ago

ATLANTA, Jan. 31, 2019 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced earnings of $8.8 million, or $0.34 per diluted share, for the fourth quarter of 2018, compared to $6.5 million, or $0.25 per diluted share, in the third quarter of 2018.  Net income for 2018 was $28.5 million, or $1.09 per diluted share, compared to a loss of $3.7 million, or ($0.15) per diluted share, for 2017.

On November 14, 2018, Atlantic Capital announced the sale of fourteen branches in Tennessee and northwest Georgia and the mortgage business. This branch divestiture includes the sale of approximately $585 million in deposits and $373 million in loans.  The income and expenses related to these branches are included in discontinued operations and prior period financial information has been retrospectively adjusted for the impact of discontinued operations.  Subject to customary closing conditions, including the receipt of all necessary regulatory approvals, the transaction is expected to be completed during the second quarter of 2019.

“Atlantic Capital’s results in the fourth quarter of 2018 and for all of 2018 reflect continued strength in our core Atlanta and national commercial businesses.  We begin 2019 with solid momentum and good prospects for strong operating performance in our continuing operations,” remarked Douglas Williams, President and Chief Executive Officer.

Fourth Quarter Highlights(1)

  • Return on average assets of 1.21% and return on average equity of 10.90%.
  • Net income from continuing operations totaled $7.5 million, or $0.29 per diluted share, compared to $7.0 million, or $0.27 per diluted share in the third quarter of 2018.
  • Net interest margin from continuing operations was 3.66% compared to 3.48% for the third quarter of 2018.
  • Total loans held for investment increased $65.7 million, or 15.8% annualized, compared to September 30, 2018.
  • Average deposits from continuing operations increased $127.4 million, or 30.8% annualized, compared to the third quarter of 2018.
  • 822,100 shares were repurchased in the fourth quarter totaling $14.2 million.
  • Noninterest income includes a $1.9 million loss on the sale of securities that were sold in the fourth quarter to help fund the cash owed to the buyer at the upcoming closing of the branch sale.
  • Provision for income taxes includes a $996,000 net benefit as a result of the pending transaction. 

2018 Highlights

  • Net income from continuing operations totaled $28.1 million, or $1.07 per diluted share, compared to a loss of $4.8 million, or ($0.19) per diluted share in 2017.
  • Efficiency ratio - continuing operations improved to 57.9% from 70.4% in 2017.
  • Total loans held for investment increased $209.6 million, or 13.8%, compared to December 31, 2017.
  • Average deposits from continuing operations in the fourth quarter of 2018 increased $177 million, or 11.0%, compared to the fourth quarter of 2017.
  • Net charge-offs to average loans totaled 0.02% compared to 0.23% in 2017.

(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 for 2018 and 35% for 2017 and prior. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table.

Income Statement

Taxable equivalent net interest income from continuing operations increased to $21.2 million in the fourth quarter of 2018 from $19.4 million in the third quarter of 2018, primarily as a result of higher loan balances and an increase in loan yields offset by an increase in the cost of interest bearing deposits. Net interest income from continuing operations does not currently reflect the planned decrease in net interest income necessary to fund the cash amount owed to the buyer at the closing of the branch sale in the second quarter of 2019.  The Company anticipates funding the transaction with a combination of brokered deposits and proceeds from sold securities.

Net interest margin from continuing operations was 3.66% in the fourth quarter of 2018, an increase of 18 basis points from the third quarter of 2018, as a result of an increase in loan yields partially offset by higher cost of deposits.  Following the close of the branch transaction in the second quarter of 2019, the Company anticipates the net interest margin to range from 3.50% to 3.55%.

The yield on loans from continuing operations in the fourth quarter of 2018 increased 27 basis points to 5.31% from the third quarter of 2018.  Loan yields benefited from increases in 1 month LIBOR during the fourth quarter of 2018.

The cost of deposits from continuing operations in the fourth quarter of 2018 was 0.93%, an increase of 17 basis points from the third quarter of 2018. The cost of interest bearing deposits from continuing operations increased 24 basis points to 1.40% from the third quarter of 2018, driven by the increase in rates on money market accounts.

The provision for loan losses for continuing operations was $502,000 in the fourth quarter of 2018, a decrease compared to $845,000 in the third quarter of 2018.  The Company recorded negative provision for loan losses totaling $3.1 million included in discontinued operations, primarily due to the classification of $373 million of loans to held for sale.

Noninterest income from continuing operations totaled $164,000 in the fourth quarter of 2018 compared to $2.3 million in the third quarter of 2018. The fourth quarter included a loss of $1.9 million on the sale of $63 million in investment securities to help fund the cash owed to the buyer at the closing of the upcoming branch sale.

SBA income totaled $425,000 in the fourth quarter of 2018, a decrease of $457,000 from the third quarter of 2018, partly as a result of the impact on the sale of SBA loans in December from the shutdown of the Small Business Administration. As of December 31, 2018, loans held for sale included $3.6 million in SBA 7a loans that the Company intends to sell.

Noninterest expense from continuing operations totaled $12.2 million in the fourth quarter of 2018, an increase of $336,000 compared to $11.9 million in the third quarter of 2018. Salaries and employee benefits expense increased by $241,000 from the third quarter of 2018 to $7.6 million in the fourth quarter, primarily from an increase in incentive expense.  Compared to the third quarter of 2018, professional fees increased $151,000 in the fourth quarter due to higher consulting fees.

Income tax expense related to continuing operations totaled $1.1 million in the fourth quarter of 2018, compared to $1.9 million in the third quarter of 2018.  In the fourth quarter of 2018, the Company recorded a $4.5 million favorable reduction of the valuation allowance on Federal deferred tax assets related to the limitations under Section 382 of the Internal Revenue Code.  This reduction was offset by an unfavorable increase of $3.5 million in the valuation allowance related to state net operating losses and carryforwards that are not expected to be utilized.

Balance Sheet

Total loans held for investment were $1.73 billion at December 31, 2018, an increase of $65.7 million, or 15.8% annualized, from September 30, 2018.  This included growth of $66.2 million, or 30.2% annualized, in commercial and industrial and owner occupied commercial real estate loans from September 30, 2018.

At December 31, 2018, the allowance for loan losses was $17.9 million, or 1.03% of loans held for investment, a decrease of $2.6 million from the $20.4 million allowance at September 30, 2018.  This decrease included a $3.1 million reduction in the allowance for loan losses due to the transfer of the branch sale loans to held for sale.

Annualized net charge-offs to average loans were 0.00% in the fourth quarter of 2018, unchanged from the third quarter of 2018. Nonperforming assets from continuing operations totaled $4.1 million, or 0.14% of total assets, as of December 30, 2018, compared to $3.1 million, or 0.11% of total assets, as of September 30, 2018.

Total average deposits from continuing operations were $1.78 billion for the fourth quarter of 2018, an increase of $127.4 million from the third quarter of 2018. This included increases in large, year-end deposits that the Company anticipates will decrease in the first quarter of 2019.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, February 1, 2019, to discuss the financial results for the quarter ended December 31, 2018. Individuals wishing to participate in the conference call may do so by dialing 844.868.8848 from the United States and entering Conference ID 89772886. 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 $2.96 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers banking, treasury management, capital markets and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, and northwest Georgia. Atlantic Capital also provides specialized financial services to 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              
                               
    2018   2017    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
  2018   2017  
INCOME SUMMARY (1)                              
Interest income (2)   $ 26,725     $ 24,114     $ 22,934     $ 21,382     $ 20,383     $ 95,155     $ 76,724    
Interest expense   5,560     4,720     4,392     3,841     3,454     18,513     12,986    
Net interest income   21,165     19,394     18,542     17,541     16,929     76,642     63,738    
Provision for loan losses   502     845     (173 )   772     282     1,946     3,218    
Net interest income after provision for loan losses   20,663     18,549     18,715     16,769     16,647     74,696     60,520    
Noninterest income   164     2,255     4,466     3,162     2,748     10,047     12,179    
Noninterest expense   12,208     11,872     12,623     13,288     15,333     49,991     52,834    
Income from continuing operations before income taxes   8,619     8,932     10,558     6,643     4,062     34,752     19,865    
Income tax expense   1,136     1,934     2,180     1,452     19,370     6,702     24,621    
Net income (loss) from continuing operations   7,483     6,998     8,378     5,191     (15,308 )   28,050     (4,756 )  
Income (loss) from discontinued operations, net of tax   1,347     (485 )   (227 )   (153 )   (29 )   482     1,030    
Net income (loss)   $ 8,830     $ 6,513     $ 8,151     $ 5,038     $ (15,337 )   $ 28,532     $ (3,726 )  
                               
PER SHARE DATA                              
Diluted earnings (loss) per share - continuing operations   $ 0.29     $ 0.27     $ 0.32     $ 0.20     $ (0.60 )   $ 1.07     $ (0.19 )  
Diluted earnings (loss) per share - discontinued operations   0.05     (0.02 )   (0.01 )   (0.01 )       0.02     0.04    
Diluted earnings (loss) per share   0.34     0.25     0.31     0.19     (0.60 )   1.09     (0.15 )  
Book value per share   12.80     12.27     12.14     11.91     11.99     12.80     11.99    
Tangible book value per common share (3)   11.88     11.37     11.23     10.98     11.05     11.88     11.05    
                               
PERFORMANCE MEASURES                              
Return on average equity   10.90   % 8.07   % 10.46   % 6.66   % (18.66 ) % 9.05   % (1.17 ) %
Return on average assets   1.21     0.92     1.20     0.76     (2.24 )   1.03     (0.14 )  
Taxable equivalent net interest margin - continuing operations   3.66     3.48     3.51     3.39     3.23     3.50     3.07    
Efficiency ratio - continuing operations   57.50     55.09     55.10     64.50     78.78     57.93     70.44    
                               
CAPITAL                              
Average equity to average assets   11.11   % 11.41   % 11.50   % 11.34   % 11.99   % 11.34   % 11.72   %
Tangible common equity to tangible assets   10.25     10.38     10.99     10.50     9.91     10.25     9.91    
Tier 1 capital ratio   11.5   (6) 11.8     12.0     11.3     11.2     11.5   (6) 11.2    
Total risk based capital ratio   14.2   (6) 14.7     15.0     14.3     14.1     14.2   (6) 14.1    
Number of common shares outstanding - basic   25,290,419     26,103,666     26,102,217     25,772,208     25,712,909     25,290,419     25,712,909    
Number of common shares outstanding - diluted   25,480,233     26,281,849     26,336,871     26,000,216     25,891,225     25,480,233     25,891,225    
                               
ASSET QUALITY                              
Allowance for loan losses to loans held for investment (4)   1.03   % 1.00   % 1.01   % 1.01   % 1.00   % 1.03   % 1.00   %
Net charge-offs to average loans (5)           0.03     0.05     (0.04 )   0.02     0.23    
Non-performing assets to total assets   0.20     0.13     0.14     0.13     0.14     0.20     0.14    
                               
(1)On November 14, 2018, Atlantic Capital entered into an agreement with FirstBank to sell its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches to be sold to FirstBank are reported as discontinued operations.  Discontinued operations have been reported retrospectively for all periods presented. (2)Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for all periods ending in 2018 and 35% for all periods ending in 2017, reflecting the statutory federal income tax rates.  (3)Excludes effect of acquisition related intangibles.  (4)The fourth quarter 2018 ratio is calculated on a continuing operations basis.  Prior period ratios have not been retroactively adjusted for the impact of discontinued operations.  (5)Annualized.  (6)Amounts are estimates as of 12/31/18.


     
ATLANTIC CAPITAL BANCSHARES, INC.    
Financial Information from Discontinued Operations    
     
Assets and Liabilities from Discontinued Operations    
     
(in thousands)   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   6,290  
Other assets   1,405  
Total assets   $ 392,681  
     
Deposits to be assumed - discontinued operations   $ 585,429  
Securities sold under agreements to repurchase - discontinued operations   6,220  
Total liabilities   $ 591,649  
Net liabilities   $ (198,968 )


                 
Components of Net Income (Loss) from Discontinued Operations                
                             
    2018   2017    For the year ended
December 31,
(in thousands)   Fourth
Quarter
  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
  2018   2017
                             
Net interest income   $ 3,225     $ 3,266     $ 3,570     $ 4,079     $ 4,393     $ 14,140     $ 18,310  
Provision for loan losses   (3,097 )                   (3,097 )    
Net interest income after provision   6,322     3,266     3,570     4,079     4,393     17,237     18,310  
Service charges   483     474     480     485     484     1,922     2,342  
Mortgage income   320     315     363     304     290     1,302     1,255  
Other income   47     22     22     32     46     123     413  
Total noninterest income   850     811     865     821     820     3,347     4,010  
Salaries and employee benefits   2,757     2,820     3,010     3,127     3,300     11,714     12,245  
Occupancy   479     556     511     470     523     2,016     2,073  
Equipment and software   158     217     203     201     193     779     1,108  
Amortization of intangibles   271     296     319     343     367     1,229     1,653  
Communications and data processing   440     381     346     362     394     1,529     1,524  
Divestiture expense   825                     825      
Other noninterest expense   446     453     349     601     484     1,849     2,028  
Total noninterest expense   5,376     4,723     4,738     5,104     5,261     19,941     20,631  
Net income (loss) before provision for income taxes   1,796     (646 )   (303 )   (204 )   (48 )   643     1,689  
Provision (benefit) for income taxes   449     (161 )   (76 )   (51 )   (19 )   161     659  
Net income (loss) from discontinued operations   $ 1,347     $ (485 )   $ (227 )   $ (153 )   $ (29 )   $ 482     $ 1,030  


             
ATLANTIC CAPITAL BANCSHARES, INC.            
Consolidated Balance Sheets (unaudited)            
             
    December 31,   September 30,   December 31,
(in thousands, except share data)   2018   2018   2017
ASSETS            
Cash and due from banks   $ 42,895     $ 28,007     $ 38,086  
Interest-bearing deposits in banks   216,040     140,682     281,247  
Other short-term investments   9,457     20,898     10,681  
Cash and cash equivalents   268,392     189,587     330,014  
Investment securities available-for-sale   402,486     465,756     449,117  
Other investments   29,236     33,021     32,174  
Loans held for sale   5,889     1,886     1,487  
Loans held for sale - discontinued operations(1)   373,030     376,081     415,335  
Loans held for investment(1)   1,728,073     1,662,353     1,518,504  
Less: allowance for loan losses(2)   (17,851 )   (20,443 )   (19,344 )
  Loans held for investment, net   1,710,222     1,641,910     1,499,160  
Premises held for sale - discontinued operations(1)   7,722     7,158     7,958  
Premises and equipment, net(1)   9,779     10,213     4,096  
Bank owned life insurance   65,149     64,769     63,667  
Goodwill - discontinued operations(1)   6,290     6,290     6,310  
Goodwill and intangible assets, net(1)   19,788     20,267     21,323  
Other real estate owned   874     968     1,215  
Other assets   56,583     64,815     59,565  
Total assets   $ 2,955,440     $ 2,882,721     $ 2,891,421  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Deposits:            
Noninterest-bearing demand   $ 602,252     $ 518,155     $ 596,328  
Interest-bearing checking   252,490     407,214     203,113  
Savings   725     698     530  
Money market   987,183     759,583     925,536  
Time   10,623     10,396     10,812  
Brokered deposits   99,241     79,119     128,816  
Deposits to be assumed - discontinued operations(1)   585,429     604,659     585,530  
Total deposits   2,537,943     2,379,824     2,450,665  
Securities sold under agreements to repurchase - discontinued operations(1)   6,220     8,904      
Federal Home Loan Bank borrowings       83,000     45,000  
Long-term debt   49,704     49,662     49,535  
Other liabilities   37,920     41,094     37,796  
Total liabilities   2,631,787     2,562,484     2,582,996  
             
SHAREHOLDERS' EQUITY            
Preferred stock, no par value;  10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018, September 30, 2018, and December 31, 2017            
Common stock, no par value; 100,000,000 shares authorized; 25,290,419, 26,103,666, and 25,712,909 shares issued and outstanding as of December 31, 2018, September 30, 2018, and December 31, 2017, respectively   291,771     305,300     299,474  
Retained earnings   42,187     33,357     12,810  
Accumulated other comprehensive (loss) income   (10,305 )   (18,420 )   (3,859 )
Total shareholders’ equity   323,653     320,237     308,425  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,955,440     $ 2,882,721     $ 2,891,421  
             
(1)Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018, and prior periods have been adjusted retrospectively. (2)The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.


             
ATLANTIC CAPITAL BANCSHARES, INC.            
Consolidated Statements of Income (unaudited) (1)            
                             
(in thousands, except share and per share data)   Three months ended   Year ended
    December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
INTEREST INCOME                            
Loans, including fees   $ 22,752     $ 20,117     $ 19,269     $ 17,972     $ 17,076     $ 80,110     $ 64,436  
Investment securities available-for-sale   2,844     2,789     2,687     2,592     2,510     10,912     9,181  
Interest and dividends on other interest‑earning assets   1,032     1,111     880     715     584     3,738     2,201  
Total interest income   26,628     24,017     22,836     21,279     20,170     94,760     75,818  
                             
INTEREST EXPENSE                            
Interest on deposits   4,185     3,182     2,715     2,424     2,282     12,506     7,934  
Interest on Federal Home Loan Bank advances   487     637     766     509     323     2,399     1,536  
Interest on federal funds purchased and securities sold under agreements to repurchase   60     77     88     79     26     304     222  
Interest on long-term debt   828     824     823     829     823     3,304     3,294  
Total interest expense   5,560     4,720     4,392     3,841     3,454     18,513     12,986  
                             
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES   21,068     19,297     18,444     17,438     16,716     76,247     62,832  
Provision for loan losses   502     845     (173 )   772     282     1,946     3,218  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   20,566     18,452     18,617     16,666     16,434     74,301     59,614  
                             
NONINTEREST  INCOME                            
Service charges   876     804     828     707     722     3,215     2,734  
Gains (losses) on sale of securities   (1,853 )       (2 )       17     (1,855 )   (63 )
Gains (losses) on sale of other assets       58     (166 )   (46 )   (46 )   (154 )   742  
Trust income           507     518     482     1,025     1,814  
Derivatives income   154     20     20     114     94     308     156  
Bank owned life insurance   380     379     378     369     384     1,506     1,530  
SBA lending activities   425     882     997     1,302     843     3,606     4,129  
Gain on sale of trust company           1,681             1,681      
Other noninterest income   182     112     223     198     252     715     1,137  
Total noninterest income   164     2,255     4,466     3,162     2,748     10,047     12,179  
                             
NONINTEREST EXPENSE                            
Salaries and employee benefits   7,573     7,332     7,911     8,950     9,998     31,766     33,130  
Occupancy   655     732     700     885     633     2,972     2,516  
Equipment and software   783     747     701     586     679     2,817     2,341  
Professional services   947     796     943     825     1,205     3,511     4,591  
Postage, printing and supplies   30     55     44     37     84     166     244  
Communications and data processing   772     566     657     681     717     2,676     2,625  
Marketing and business development   224     211     135     140     150     710     798  
FDIC premiums   157     154     143     108     156     562     697  
Merger and conversion costs                           304  
Other noninterest expense   1,067     1,279     1,389     1,076     1,711     4,811     5,588  
Total noninterest expense   12,208     11,872     12,623     13,288     15,333     49,991     52,834  
                             
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES   8,522     8,835     10,460     6,540     3,849     34,357     18,959  
Provision for income taxes   1,039     1,837     2,082     1,349     19,157     6,307     23,715  
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   7,483     6,998     8,378     5,191     (15,308 )   28,050     (4,756 )
DISCONTINUED OPERATIONS                            
Income (loss) from discontinued operations   $ 1,796     $ (646 )   $ (303 )   $ (204 )   $ (48 )   $ 643     $ 1,689  
Provision (benefit) for income taxes   449     (161 )   (76 )   (51 )   (19 )   161     659  
Net income (loss) from discontinued operations   1,347     (485 )   (227 )   (153 )   (29 )   482     1,030  
NET INCOME (LOSS)   $ 8,830     $ 6,513     $ 8,151     $ 5,038     $ (15,337 )   $ 28,532     $ (3,726 )
                             
Net Income (Loss) per Common Share Basic                            
Net income (loss) per common share - continuing operations   $ 0.29     $ 0.27     $ 0.32     $ 0.20     $ (0.60 )   $ 1.08     $ (0.19 )
Net income (loss) per common share - discontinued operations   0.05     (0.02 )   (0.01 )   (0.01 )       0.02     0.04  
Net Income (Loss) per Common Share Basic   $ 0.34     $ 0.25     $ 0.31     $ 0.19     $ (0.60 )   $ 1.10     $ (0.15 )
Net Income (Loss) per Common Share Diluted                            
Net income (loss) per common share - continuing operations   $ 0.29     $ 0.27     $ 0.32     $ 0.20     $ (0.60 )   $ 1.07     $ (0.19 )
Net income (loss) per common share - discontinued operations   0.05     (0.02 )   (0.01 )   (0.01 )       0.02     0.04  
Net Income (Loss) per Common Share Diluted   $ 0.34     $ 0.25     $ 0.31     $ 0.19     $ (0.60 )   $ 1.09     $ (0.15 )
                             
Weighted average shares - basic   25,919,445     26,103,397     26,010,914     25,750,824     25,723,548     25,947,038     25,592,731  
Weighted average shares - diluted   26,043,799     26,254,772     26,200,026     25,945,773     25,888,064     26,111,755     25,822,085  
                             
(1)Discontinued operations have been reported retrospectively for all periods presented.                


           
ATLANTIC CAPITAL BANCSHARES, INC.          
Average Balance Sheets and Net Interest Margin Analysis          
Selected Financial Information          
       
     Three months ended  
    December 31, 2018     September 30, 2018  
(dollars in thousands; taxable equivalent)   Average
Balance
  Interest
Income/
Expense
  Tax
Equivalent
Yield/Rate
    Average
Balance
  Interest
Income/
Expense
  Tax
Equivalent
Yield/Rate
 
       
Assets                            
Interest bearing deposits in other banks   $ 111,988     $ 638     2.26   %   $ 128,248     $ 647     2.00   %
Other short-term investments   19,078     142     2.95       21,985     157     2.83    
Investment securities:                            
Taxable investment securities   376,163     2,362     2.49       385,834     2,315     2.38    
Non-taxable investment securities(1)   74,302     579     3.09       75,514     571     3.00    
Total investment securities   450,465     2,941     2.59       461,348     2,886     2.48    
Loans - continuing operations   1,699,801     22,752     5.31       1,583,459     20,117     5.04    
FHLB and FRB stock   15,985     252     6.25       17,624     307     6.91    
Total interest-earning assets - continuing operations   2,297,317     26,725     4.62       2,212,664     24,114     4.32    
Loans held for sale - discontinued operations   377,052     4,509     4.74       380,358     4,502     4.70    
Total interest-earning assets   2,674,369     31,234     4.63       2,593,022     28,616     4.38    
Non-earning assets   216,958               212,718            
Total assets   $ 2,891,327               $ 2,805,740            
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,079,178     3,601     1.32       1,012,953     2,791     1.09    
Time deposits   10,116     33     1.29       10,406     30     1.14    
Brokered deposits   93,558     551     2.34       67,937     361     2.11    
Total interest-bearing deposits   1,182,852     4,185     1.40       1,091,296     3,182     1.16    
Total borrowings   91,155     547     2.38       134,609     714     2.10    
Total long-term debt   49,677     828     6.61       49,634     824     6.59    
Total interest-bearing liabilities - continuing operations   1,323,684     5,560     1.67       1,275,539     4,720     1.47    
Interest-bearing liabilities - discontinued operations   472,162     1,284     1.08       473,388     1,236     1.04    
Total interest-bearing liabilities   1,795,846     6,844     1.51       1,748,927     5,956     1.35    
Demand deposits   597,240               561,355            
Demand deposits - discontinued operations   135,774               136,572            
Other liabilities   41,120               38,796            
Shareholders' equity   321,347               320,090            
Total liabilities and shareholders' equity   $ 2,891,327               $ 2,805,740            
Net interest spread - continuing operations           2.95   %           2.85   %
Net interest income and net interest margin - continuing operations(2)       $ 21,165     3.66   %       $ 19,394     3.48   %
Net interest income and net interest margin(2)       $ 24,390     3.62   %       $ 22,660     3.47   %
                             
Non-taxable equivalent net interest margin           3.60   %           3.45   %
                             
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rates.  
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.  


ATLANTIC CAPITAL BANCSHARES, INC.          
Average Balance Sheets and Net Interest Margin Analysis          
Selected Financial Information          
       
    Year ended  
    December 31, 2018     December 31, 2017  
(dollars in thousands; taxable equivalent)   Average
Balance
  Interest
Income/
Expense
  Tax
Equivalent
Yield/Rate
    Average
Balance
  Interest
Income/
Expense
  Tax
Equivalent
Yield/Rate
 
       
Assets                            
Interest bearing deposits in other banks   $ 104,145     $ 2,244     2.15   %   $ 85,525     $ 916     1.07   %
Other short-term investments   15,210     426     2.80       14,266     270     1.89    
Investment securities:                            
Taxable investment securities   379,035     9,005     2.38       366,309     7,221     1.97    
Non-taxable investment securities(1)   76,064     2,302     3.03       81,466     2,866     3.52    
Total investment securities   455,099     11,307     2.48       447,775     10,087     2.25    
Loans - continuing operations   1,599,916     80,110     5.01       1,506,862     64,436     4.28    
FHLB and FRB stock   17,710     1,068     6.03       18,528     1,015     5.48    
Total interest-earning assets - continuing operations   2,192,080     95,155     4.34       2,072,956     76,724     3.70    
Loans held for sale - discontinued operations   377,098     18,224     4.83       429,247     20,453     4.76    
Total interest-earning assets   2,569,178     113,379     4.41       2,502,203     97,177     3.88    
Non-earning assets   211,393               217,455            
Total assets   $ 2,780,571               $ 2,719,658            
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,001,025     10,627     1.06       868,999     5,921     0.68    
Time deposits   10,046     115     1.14       11,345     53     0.47    
Brokered deposits   84,105     1,764     2.10       168,685     1,960     1.16    
Total interest-bearing deposits   1,095,176     12,506     1.14       1,049,029     7,934     0.76    
Total borrowings   139,422     2,703     1.94       175,060     1,758     1.00    
Total long-term debt   49,613     3,304     6.66       49,444     3,294     6.66    
Total interest-bearing liabilities - continuing operations   1,284,211     18,513     1.44       1,273,533     12,986     1.02    
Interest-bearing liabilities - discontinued operations   467,101     4,084     0.87       466,777     2,143     0.46    
Total interest-bearing liabilities   1,751,312     22,597     1.29       1,740,310     15,129     0.87    
Demand deposits   538,110               490,495            
Demand deposits - discontinued operations   137,905               140,551            
Other liabilities   37,991               29,497            
Shareholders' equity   315,253               318,805            
Total liabilities and shareholders' equity   $ 2,780,571               $ 2,719,658            
Net interest spread - continuing operations           2.90   %           2.68   %
Net interest income and net interest margin - continuing operations(2)       $ 76,642     3.50   %       $ 63,738     3.07   %
Net interest income and net interest margin(2)       $ 90,782     3.53   %       $ 82,048     3.28   %
                             
Non-taxable equivalent net interest margin           3.52   %           3.24   %
                             
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for the year ended December 31, 2018 and 35% for the year ended December 31, 2017, reflecting the statutory federal income tax rates.  
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.  


             
ATLANTIC CAPITAL BANCSHARES, INC.            
Period End Loans(1)                            
                             
                             
(dollars in thousands)   December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
  Linked
Quarter
Change
  Year Over
Year
Change
                             
Loans held for sale                            
Loans held for sale   $ 5,889     $ 1,886     $ 1,612     $ 835     $ 1,487     $ 4,003     $ 4,402  
Loans held for sale - discontinued operations   373,030     376,081     382,848     397,212     415,335     (3,051 )   (42,305 )
Total loans held for sale   $ 378,919     $ 377,967     $ 384,460     $ 398,047     $ 416,822     $ 952     $ (37,903 )
                             
Loans held for investment                            
Commercial loans:                            
Commercial and industrial   $ 645,374     $ 581,632     $ 546,381     $ 558,536     $ 538,917     $ 63,742     $ 106,457  
Commercial real estate:                            
Multifamily   88,826     108,001     92,013     92,016     91,475     (19,175 )   (2,649 )
Owner occupied   298,291     295,801     265,576     260,270     250,588     2,490     47,703  
Investment   407,711     409,145     386,072     389,410     411,923     (1,434 )   (4,212 )
Construction and land:                            
1-4 family residential construction   1,006         378     287     335     1,006     671  
Other construction, development, and land   155,226     147,114     134,764     131,466     101,466     8,112     53,760  
Mortgage warehouse loans   27,967     27,838     38,352     44,575     39,981     129     (12,014 )
Total commercial loans   1,624,401     1,569,531     1,463,536     1,476,560     1,434,685     54,870     189,716  
                             
Residential:                            
Residential mortgages   32,800     24,904     20,270     19,446     12,960     7,896     19,840  
Home equity   22,822     33,410     32,638     34,673     39,407     (10,588 )   (16,585 )
Total residential loans   55,622     58,314     52,908     54,119     52,367     (2,692 )   3,255  
                             
Consumer   25,851     26,825     25,531     23,214     21,959     (974 )   3,892  
Other   24,712     10,579     12,409     11,769     13,303     14,133     11,409  
    1,730,586     1,665,249     1,554,384     1,565,662     1,522,314     65,337     208,272  
Less net deferred fees and other unearned income   (2,513 )   (2,896 )   (2,921 )   (3,453 )   (3,810 )   383     1,297  
Total loans held for investment   $ 1,728,073     $ 1,662,353     $ 1,551,463     $ 1,562,209     $ 1,518,504     $ 65,720     $ 209,569  
                             
Total loans   $ 2,106,992     $ 2,040,320     $ 1,935,923     $ 1,960,256     $ 1,935,326     $ 66,672     $ 171,666  
                             
(1)Loans held for sale-discontinued operations and loans held for investment have been adjusted retrospectively for all periods presented for the impact of discontinued operations.


ATLANTIC CAPITAL BANCSHARES, INC.                  
Allowance for Loan Losses Activity and Credit Quality                  
                       
    2018   2017  
(dollars in thousands)   Fourth
Quarter
  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
 
                       
Balance at beginning of period   $ 20,443     $ 19,583     $ 19,885     $ 19,344     $ 18,870    
Provision for loan losses   595     758     (173 )   811     312    
Provision for loan losses (reversal of provision) - discontinued operations   (3,097 )                  
Provision for PCI loan losses   (93 )   87         (39 )   (30 )  
Loans charged-off:                      
Commercial and industrial               (126 )      
Commercial real estate           (50 )          
Construction and land                      
Residential mortgages   (5 )           (70 )      
Home equity           (102 )   (58 )      
Consumer   (3 )       (10 )   (3 )   (13 )  
Other                      
Total loans charged-off   (8 )       (162 )   (257 )   (13 )  
Recoveries on loans previously charged-off:                      
Commercial and industrial               19     192    
Commercial real estate           28            
Construction and land                   1    
Residential mortgages   4                    
Home equity                      
Consumer   7     15     5     7     12    
Other                      
Total recoveries   11     15     33     26     205    
Net charge-offs   $ 3     $ 15     $ (129 )   $ (231 )   $ 192    
Balance at period end (1)   $ 17,851     $ 20,443     $ 19,583     $ 19,885     $ 19,344    
                       
Loans                      
Loans held for sale   $ 5,889     $ 1,886     $ 1,612     $ 835     $ 1,487    
Loans held for sale - discontinued operations   373,030     376,081     382,848     397,212     415,335    
Loans held for investment - continuing operations   1,728,073     1,662,353     1,551,463     1,562,209     1,518,504    
Total loans   $ 2,106,992     $ 2,040,320     $ 1,935,923     $ 1,960,256     $ 1,935,326    
                       
Non-performing loans - continuing operations (4)   $ 3,252     $ 2,160     $ 1,697     $ 1,941     $ 1,915    
Non-performing loans - discontinued operations   1,924     556     709     560     997    
Total non-performing loans   5,176     2,716     2,406     2,501     2,912    
Foreclosed properties (OREO)   874     968     1,288     927     1,215    
Total nonperforming assets   $ 6,050     $ 3,684     $ 3,694     $ 3,428     $ 4,127    
                       
Allowance for loan losses to loans held for investment (2)   1.03   % 1.00   % 1.01   % 1.01   % 1.00   %
Net charge-offs to average loans (3)           0.03     0.05     (0.04 )  
                       
Non-performing loans as a percentage of total loans - continuing operations (4)   0.19   % 0.13   % 0.11   % 0.12   % 0.13   %
Non-performing loans as a percentage of total loans - discontinued operations (4)   0.52     0.15     0.19     0.14     0.24    
Non-performing loans as a percentage of total loans (4)   0.25     0.13     0.12     0.13     0.15    
                       
Non-performing assets as a percentage of total assets - continuing operations (4)   0.14   % 0.11   % 0.11   % 0.11   % 0.11   %
Non-performing assets as a percentage of total assets - discontinued operations (4)   0.07     0.02     0.03     0.02     0.03    
Non-performing assets as a percentage of total assets (4)   0.20     0.13     0.14     0.13     0.14    
                       
(1) The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.  (2) The fourth quarter 2018 ratio is calculated on a continuing operations basis.  Prior period ratios have not been retroactively adjusted for the impact of discontinued operations.  (3) Annualized.  (4) Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.        
Period End Deposits        
                             
(dollars in thousands)   December 31, 2018   September 30, 2018   June 30,
  2018
  March 31, 2018   December 31, 2017   Linked
Quarter Change
  Year Over
Year Change
                             
DDA   $ 602,252     $ 518,155     $ 464,282     $ 472,181     $ 596,328     $ 84,097     $ 5,924  
NOW   252,490     407,214     241,461     214,333     203,113     (154,724 )   49,377  
Savings   725     698     951     3,593     530     27     195  
Money market   987,183     759,583     647,247     699,311     925,536     227,600     61,647  
Time   10,623     10,396     10,359     3,074     10,812     227     (189 )
Brokered   99,241     79,119     92,656     112,376     128,816     20,122     (29,575 )
Total deposits - continuing operations   1,952,514     1,775,165     1,456,956     1,504,868     1,865,135     177,349     87,379  
Deposits to be assumed - discontinued operations   585,429     604,659     609,631     591,432     585,530     (19,230 )   (101 )
Total deposits   $ 2,537,943     $ 2,379,824     $ 2,066,587     $ 2,096,300     $ 2,450,665     $ 158,119     $ 87,278  
                             
Payments clients   $ 397,608     $ 258,320     $ 251,748     $ 311,943     $ 405,873     $ 139,288     $ (8,265 )
                             
Average Deposits                            
                             
    2018   2017   Linked
     
(dollars in thousands)   Fourth
Quarter
  Third
Quarter
  Second
Quarter
  First
  Quarter
  Fourth
Quarter
  Quarter
Change
  Q4 2018 vs
Q4 2017
 
                             
DDA   $ 597,239     $ 561,355     $ 489,722     $ 502,829     $ 509,301     $ 35,884     $ 87,938  
NOW   280,449     314,759     287,283     236,796     240,891     (34,310 )   39,558  
Savings   712     616     674     527     436     96     276  
Money market   798,017     697,578     645,034     697,092     713,118     100,439     84,899  
Time   10,117     10,406     9,855     9,800     10,643     (289 )   (526 )
Brokered   93,558     67,937     100,425     117,787     128,594     25,621     (35,036 )
Total deposits - continuing operations   1,780,092     1,652,651     1,532,993     1,564,831     1,602,983     127,441     177,109  
Deposits to be assumed - discontinued operations   600,769     601,421     602,832     589,054     591,866     (652 )   8,903  
Total deposits   $ 2,380,861     $ 2,254,072     $ 2,135,825     $ 2,153,885     $ 2,194,849     $ 126,789     $ 186,012  
                             
Payments clients   $ 263,800     $ 227,029     $ 219,016     $ 256,794     $ 234,558     $ 36,771     $ 29,242  
                             
Noninterest bearing deposits as a
percentage of average deposits - continuing operations
  33.6 %   34.0 %   31.9 %   32.1 %   31.8 %        
Cost of deposits - continuing operations   0.93 %   0.76 %   0.71 %   0.63 %   0.56 %        


ATLANTIC CAPITAL BANCSHARES, INC.        
Discontinued Operations Information        
                     
    Q4 2018
(in thousands, except per share data)   Actual Results
(GAAP)
  Discontinued
Operations
Adjustments(1)
  Loss on Sale
of Securities
  DTA
Adjustment(2)
  Adjusted
Results
(Non-GAAP)
Net interest income   $ 21,068     $     $     $     $ 21,068  
Provision for loan losses   502                 502  
Net interest income after provision for loan losses   20,566                 20,566  
Noninterest income   164         1,853         2,017  
Noninterest expense   12,208                 12,208  
Income from continuing operations before income tax   8,522         1,853         10,375  
Provision for income taxes   1,039         463     996     2,498  
Net income from continuing operations   7,483         1,390     (996 )   7,877  
Income (loss) from discontinued operations   1,347     (1,704 )           (357 )
Net income   $ 8,830     $ (1,704 )   $ 1,390     $ (996 )   $ 7,520  
                     
Diluted earnings per share - continuing operations   $ 0.29                 $ 0.30  
Diluted earnings per share   0.34                 0.29  
                     
(1)Includes negative provision for loan losses and divestiture expenses, net of tax.
(2)Represents a $4.5 million favorable reduction of the valuation allowance on deferred tax assets related to Section 382 limitation offset by an unfavorable increase of $3.5 million in the valuation allowance related to deferred taxes on state net operating loss utilization.


               
ATLANTIC CAPITAL BANCSHARES, INC.              
Non-GAAP Performance and Financial Measures Reconciliation          
                               
                               
    2018   2017    For the year ended
December 31,
 
(in thousands, except share and per share data)   Fourth
Quarter
  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
  2018   2017  
                               
Taxable equivalent interest income reconciliation                              
Interest income - GAAP   $ 26,628     $ 24,017     $ 22,836     $ 21,279     $ 20,170     $ 94,760     $ 75,818    
Taxable equivalent adjustment   97     97     98     103     213     395     906    
Interest income - taxable equivalent   $ 26,725     $ 24,114     $ 22,934     $ 21,382     $ 20,383     $ 95,155     $ 76,724    
                               
Taxable equivalent net interest income reconciliation                              
Net interest income - GAAP   $ 21,068     $ 19,297     $ 18,444     $ 17,438     $ 16,716     $ 76,247     $ 62,832    
Taxable equivalent adjustment   97     97     98     103     213     395     906    
Net interest income - taxable equivalent   $ 21,165     $ 19,394     $ 18,542     $ 17,541     $ 16,929     $ 76,642     $ 63,738    
                               
Taxable equivalent net interest margin reconciliation                              
Net interest margin - GAAP   3.60   % 3.45   % 3.52   % 3.49   % 3.35   % 3.52   % 3.24   %
Impact of taxable equivalent adjustment   0.02     0.02     0.02     0.02     0.04     0.01     0.04    
Net interest margin - taxable equivalent   3.62   % 3.47   % 3.54   % 3.51   % 3.39   % 3.53   % 3.28   %
                               
Income before income taxes reconciliation                              
Income before income taxes - GAAP   $ 8,522     $ 8,835     $ 10,460     $ 6,540     $ 3,849     $ 34,357     $ 18,959    
Taxable equivalent adjustment   97     97     98     103     213     395     906    
Income before income taxes   $ 8,619     $ 8,932     $ 10,558     $ 6,643     $ 4,062     $ 34,752     $ 19,865    
                               
Income tax reconciliation                              
Income tax expense - GAAP   $ 1,039     $ 1,837     $ 2,082     $ 1,349     $ 19,157     $ 6,307     $ 23,715    
Taxable equivalent adjustment   97     97     98     103     213     395     906    
Income tax expense   $ 1,136     $ 1,934     $ 2,180     $ 1,452     $ 19,370     $ 6,702     $ 24,621    
                               
Tangible book value per common share reconciliation                              
Total shareholders’ equity   $ 323,653     $ 320,237     $ 316,770     $ 307,059     $ 308,425     $ 323,653     $ 308,425    
Intangible assets   (23,095 )   (23,367 )   (23,662 )   (24,050 )   (24,393 )   (23,095 )   (24,393 )  
Total tangible common equity   $ 300,558     $ 296,870     $ 293,108     $ 283,009     $ 284,032     $ 300,558     $ 284,032    
Common shares outstanding   25,290,419     26,103,666     26,102,217     25,772,208     25,712,909     25,290,419     25,712,909    
Book value per common share - GAAP   $ 12.80     $ 12.27     $ 12.14     $ 11.91     $ 11.99     $ 12.80     $ 11.99    
Tangible book value   11.88     11.37     11.23     10.98     11.05     11.88     11.05    
                               
Tangible common equity to tangible assets reconciliation                              
Total shareholders’ equity   $ 323,653     $ 320,237     $ 316,770     $ 307,059     $ 308,425     $ 323,653     $ 308,425    
Intangible assets   (23,095 )   (23,367 )   (23,662 )   (24,050 )   (24,393 )   (23,095 )   (24,393 )  
Total tangible common equity   $ 300,558     $ 296,870     $ 293,108     $ 283,009     $ 284,032     $ 300,558     $ 284,032    
                               
Total assets   $ 2,955,440     $ 2,882,721     $ 2,690,674     $ 2,718,665     $ 2,891,421     $ 2,955,440     $ 2,891,421    
Intangible assets   (23,095 )   (23,367 )   (23,662 )   (24,050 )   (24,393 )   (23,095 )   (24,393 )  
Total tangible assets   $ 2,932,345     $ 2,859,354     $ 2,667,012     $ 2,694,615     $ 2,867,028     $ 2,932,345     $ 2,867,028    
Tangible common equity to tangible assets   10.25   % 10.38   % 10.99   % 10.50   % 9.91   % 10.25   % 9.91   %

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