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CST: 22/11/2019 02:44:44   

Atlantic Capital Bancshares, Inc. Reports Third Quarter 2019 Results

28 Days ago

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

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

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

Third Quarter Highlights (1)

  • Tangible book value per share increased to $13.91, from $11.37 at September 30, 2018 and $13.60 at June 30, 2019.
  • Total loans held for investment increased $173.2 million, or 10.4%, from September 30, 2018 and $45.9 million, or 10.3% annualized, from June 30, 2019.
  • Average deposits from continuing operations increased $297.0 million, or 18.0%, compared to the third quarter of 2018 and $47.6 million, or 10.0% annualized, compared to the second quarter of 2019.
  • Efficiency ratio from continuing operations of 55.7% compared to 55.1% in the third quarter of 2018 and 58.1% in the second quarter of 2019.
  • Taxable equivalent net interest margin from continuing operations was 3.52%, compared to 3.48% in the third quarter of 2018 and 3.61% in the second quarter of 2019.
  • The company repurchased 1.2 million shares in the third quarter totaling $20.1 million, and has repurchased 4.1 million shares totaling $70.9 million since the announcement of the $85.0 million buyback program in November of 2018.

Income Statement                                                                                                                                                       

Taxable equivalent net interest income from continuing operations totaled $20.1 million for the third quarter of 2019, an increase of $694,000, or 4%, from the third quarter of 2018, and an increase of $111,000, or 2% annualized, from the second quarter of 2019.

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

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

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

(1) Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income and net interest margin are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal tax rate. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table on page 14.

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

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

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

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

Balance Sheet

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

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

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

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

Earnings Conference Call

The Company will host a conference call at 9:00 a.m. EST on Friday, October 25, 2019, to discuss the financial results for the quarter ended September 30, 2019. Individuals wishing to participate in the conference call may do so by dialing 866-777-2509 from the United States. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. Atlantic Capital management uses non-GAAP financial measures, including: (i) taxable equivalent interest income; (ii) taxable equivalent net interest income; (iii) taxable equivalent net interest margin; (iv) taxable equivalent income before income taxes; (v) taxable equivalent income tax expense; (vi) tangible assets; (vii) tangible common equity; and (viii) tangible book value per common share, in its analysis of the Company's performance. Tangible common equity excludes goodwill and other intangible assets from shareholders' equity.

Management believes that non-GAAP financial measures provide a greater understanding of ongoing performance and operations, and enhance comparability with prior periods. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as determined in accordance with GAAP, and investors should consider Atlantic Capital’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Non-GAAP financial measures may not be comparable to non-GAAP financial measures presented by other companies.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about Atlantic Capital’s confidence in its strategies and its expectations about financial performance, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $2.4 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

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

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


ATLANTIC
CAPITAL
BANCSHARES, INC.
Selected Financial Information

                                             
                  For the nine months ended  
    2019     2018     September 30,   
  Third   Second   First   Fourth   Third              
(in thousands, except share and per share data; taxable equivalent)   Quarter   Quarter   Quarter   Quarter   Quarter   2019   2018    
INCOME SUMMARY (1)                                            
Interest income (2)   $  26,624   $  26,686   $  26,297     $  26,725   $  24,114     $  79,607   $  68,430    
Interest expense      6,536      6,709      5,773        5,560      4,720        19,018      12,953    
Net interest income      20,088      19,977      20,524        21,165      19,394        60,589      55,477    
Provision for loan losses      413      698      814        502      845        1,925      1,444    
Net interest income after provision for loan losses      19,675      19,279      19,710        20,663      18,549        58,664      54,033    
Noninterest income      2,769      2,941      2,336        164      2,255        8,046      9,883    
Noninterest expense      12,677      13,254      13,795        12,208      11,872        39,726      37,783    
Income from continuing operations before income taxes      9,767      8,966      8,251        8,619      8,932        26,984      26,133    
Income tax expense      2,198      1,957      1,811        1,136      1,934        5,966      5,566    
Net income from continuing operations      7,569      7,009      6,440        7,483      6,998        21,018      20,567    
Income (loss) from discontinued operations, net of tax      617      22,143      (1,063 )      1,347      (485 )      21,697      (865 )  
Net income   $  8,186   $  29,152   $  5,377     $  8,830   $  6,513     $  42,715   $  19,702    
                                             
PER SHARE DATA                                            
Diluted earnings per share - continuing operations   $  0.33   $  0.29   $  0.26     $  0.29   $  0.27     $  0.88   $  0.79    
Diluted earnings (loss) per share - discontinued operations      0.03      0.92      (0.04 )      0.05      (0.02 )      0.91      (0.03 )  
Diluted earnings per share      0.36      1.21      0.21        0.34      0.25        1.78      0.75    
Book value per share      14.81      14.46      13.10        12.80      12.27        14.81      12.27    
Tangible book value per common share (3)      13.91      13.60      12.17        11.88      11.37        13.91      11.37    
                                             
PERFORMANCE MEASURES                                            
Return on average equity      9.77    34.38    6.80      10.90    8.07      17.25    8.41  
Return on average assets      1.32      4.79      0.77        1.21      0.92        2.22      0.96    
Taxable equivalent net interest margin - continuing operations      3.52      3.61      3.74        3.66      3.48        3.66      3.46    
Efficiency ratio - continuing operations      55.72      58.06      60.61        57.50      55.09        58.13      58.07    
                                             
CAPITAL                                            
Average equity to average assets      13.54    13.94    11.34      11.11    11.41      12.87    11.42  
Tangible common equity to tangible assets      12.92      13.37      10.51        10.25      10.38        12.92      10.38    
Tier 1 capital ratio      12.5 (4)    13.4      11.0        11.5      11.8        12.5 (4)    11.8    
Total risk based capital ratio      15.5 (4)    16.5      13.7        14.2      14.7        15.5 (4)    14.7    
Number of common shares outstanding - basic      22,193,761      23,293,465      24,466,964        25,290,419      26,103,666        22,193,761      26,103,666    
Number of common shares outstanding - diluted      22,405,141      23,508,442      24,719,273        25,480,233      26,281,849        22,405,141      26,281,849    
                                             
ASSET QUALITY                                            
Allowance for loan losses to loans held for investment (5)      0.98    1.02    1.04      1.03    1.00      0.98    1.00  
Net charge-offs to average loans (6)      0.11      0.14      0.11        —      —        0.12      0.02    
Non-performing assets to total assets      0.29      0.31      0.40        0.20      0.13        0.29      0.13    
                                             
AVERAGE BALANCES                                            
Total loans - continuing operations   $  1,801,629   $  1,769,803   $  1,707,682     $  1,699,801   $  1,583,563     $  1,739,917   $  1,553,609    
Investment securities      340,872      360,047      400,101        450,465      461,348        366,790      456,660    
Total assets      2,453,438      2,440,502      2,829,072        2,891,327      2,805,740        2,572,961      2,743,247    
Deposits - continuing operations      1,949,657      1,902,076      1,793,791        1,780,092      1,652,651        1,851,674      1,583,859    
Shareholders' equity      332,291      340,119      320,812        321,348      320,090        331,116      313,200    
Number of common shares - basic      22,681,904      23,888,381      24,855,171        25,919,445      26,103,397        23,800,525      25,956,336    
Number of common shares - diluted      22,837,531      24,040,806      25,019,384        26,043,799      26,254,772        23,957,915      26,134,655    
                                             
                                             

(1)On April 5, 2019, Atlantic Capital completed the sale to FirstBank of its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The mortgage business and branches sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for periods presented prior to December 31, 2018. (2)Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate. (3)Excludes effect of acquisition related intangibles. (4)Amounts are estimates as of 9/30/19. (5)The ratios for the first, second and third quarters of 2019 and third and fourth quarter of 2018 are calculated on a continuing operations basis. Prior period ratios have not been retrospectively adjusted for the impact of discontinued operations. (6)Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

                   
(in thousands)   September 30, 2019   June 30, 2019   December 31, 2018
Cash   $  —   $  —   $  4,234  
Loans held for sale - discontinued operations      —      —      373,030  
Premises held for sale - discontinued operations      —      —      7,722  
Goodwill - discontinued operations      —      —      4,555  
Other assets      —      —      1,405  
Total assets   $  —   $  —   $  390,946  
                   
Deposits to be assumed - discontinued operations   $  —   $  —   $  585,429  
Securities sold under agreements to repurchase - discontinued operations      —      —      6,220  
Total liabilities   $  —   $  —   $  591,649  
Net liabilities   $  —   $  —   $  (200,703 )

Components of Net Income (Loss) from Discontinued Operations

                                           
                  For the nine months ended
    2019     2018     September 30, 
    Third   Second   First   Fourth   Third            
(in thousands)   Quarter   Quarter   Quarter   Quarter   Quarter   2019     2018  
Net interest income   $  —     $  (39 )   $  3,125     $  3,225     $  3,266     $  3,086     $  10,915  
Provision for loan losses      —        —        —        (3,097 )      —        —        —  
Net interest income after provision      —        (39 )      3,125        6,322        3,266        3,086        10,915  
Service charges      —        46        481        483        474        527        1,439  
Mortgage income      —        —        288        320        315        288        982  
Gain on sale of branches      —        34,475        —        —        —        34,475        —  
Other income      —        (22 )      21        47        22        (1 )      76  
Total noninterest income      —        34,499        790        850        811        35,289        2,497  
Salaries and employee benefits      —        330        2,427        2,757        2,820        2,757        8,957  
Occupancy      —        71        339        479        556        410        1,537  
Equipment and software      —        8        123        158        217        131        621  
Amortization of intangibles      —        —        247        271        296        247        958  
Communications and data processing      —        197        389        440        381        586        1,089  
Divestiture expense      —        3,646        1,449        825        —        5,095        —  
Other noninterest expense      —        101        358        446        453        459        1,403  
Total noninterest expense      —        4,353        5,332        5,376        4,723        9,685        14,565  
Net income (loss) before provision for income taxes      —        30,107        (1,417 )      1,796        (646 )      28,690        (1,153 )
Provision (benefit) for income taxes      (617 )      7,964        (354 )      449        (161 )      6,993        (288 )
Net income (loss) from discontinued operations   $  617     $  22,143     $  (1,063 )   $  1,347     $  (485 )   $  21,697     $  (865 )


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

                         
    September 30,    June 30,    December 31,    September 30, 
(in thousands, except share data)   2019     2019     2018     2018  
ASSETS                        
Cash and due from banks   $  42,577     $  24,206     $  42,895     $  28,007  
Interest-bearing deposits in banks      27,167        52,932        216,040        140,682  
Other short-term investments      —        —        9,457        20,898  
Cash and cash equivalents      69,744        77,138        268,392        189,587  
Investment securities available for sale      286,785        348,723        402,486        465,756  
Investment securities held to maturity      42,863        —        —        —  
Other investments      31,360        31,912        29,236        33,021  
Loans held for sale      916        —        5,889        1,886  
Loans held for sale - discontinued operations(1)      —        —        373,030        375,976  
Loans held for investment(1)      1,835,673        1,789,740        1,728,073        1,662,458  
Less: allowance for loan losses(2)      (18,080 )      (18,186 )      (17,851 )      (20,443 )
Loans held for investment, net      1,817,593        1,771,554        1,710,222        1,642,015  
Premises held for sale - discontinued operations(1)      —        —        7,722        7,158  
Premises and equipment, net(1)      19,688        20,037        9,779        10,213  
Bank owned life insurance      66,047        65,874        65,149        64,769  
Goodwill - discontinued operations(1)      —        —        4,555        4,555  
Goodwill - continuing operations(1)      19,925        19,925        17,135        17,135  
Other intangibles, net      3,112        3,095        4,388        4,867  
Other real estate owned      278        971        874        968  
Other assets      51,887        50,451        56,583        64,815  
Total assets   $  2,410,198     $  2,389,680     $  2,955,440     $  2,882,721  
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY                        
Deposits:                        
Noninterest-bearing demand(1)   $  599,657     $  569,693     $  602,252     $  518,155  
Interest-bearing checking(1)      240,427        309,709        252,490        407,214  
Savings(1)      1,081        1,090        725        698  
Money market(1)      921,133        802,973        987,183        759,583  
Time(1)      30,782        33,902        10,623        10,396  
Brokered deposits      61,192        134,164        99,241        79,119  
Deposits to be assumed - discontinued operations(1)      —        —        585,429        604,659  
Total deposits      1,854,272        1,851,531        2,537,943        2,379,824  
Federal funds purchased      57,000        35,000        —        —  
Securities sold under agreements to repurchase - discontinued operations(1)      —        —        6,220        8,904  
Federal Home Loan Bank borrowings      76,000        82,000        —        83,000  
Long-term debt      49,831        49,789        49,704        49,662  
Other liabilities      44,384        34,645        37,920        41,094  
Total liabilities      2,081,487        2,052,965        2,631,787        2,562,484  
                         
SHAREHOLDERS’ EQUITY                        
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2019,  June 30, 2019,  December 31, 2018  and September 30, 2018      —        —        —        —  
Common stock, no par value; 100,000,000 shares authorized; 22,193,761, 23,293,465, 25,290,419, and 26,103,666 shares issued and outstanding as of September 30, 2019,  June 30, 2019,  December 31, 2018 and September 30, 2018; respectively      237,687        256,791        291,771        305,300  
Retained earnings      84,529        76,343        42,187        33,357  
Accumulated other comprehensive (loss) income      6,495        3,581        (10,305 )      (18,420 )
Total shareholders’ equity      328,711        336,715        323,653        320,237  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $  2,410,198     $  2,389,680     $  2,955,440     $  2,882,721  

(1)Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018, and prior periods have been adjusted retrospectively. (2)The allowance for loan losses has not been adjusted retrospectively for discontinued operations in periods prior to December 31, 2018.


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited) (1)

                                           
(in thousands, except share and per share data)   Three months ended   Nine months ended
    September 30,    June 30,    March 31,    December 31,    September 30,    September 30,    September 30, 
    2019     2019     2019     2018     2018     2019     2018  
INTEREST INCOME                                          
Loans, including fees   $  23,541     $  23,554     $  22,752     $  22,752     $  20,117     $  69,847     $  57,358  
Investment securities available-for-sale      2,176        2,339        2,631        2,844        2,789        7,146        8,068  
Interest and dividends on other interest‑earning assets      803        705        814        1,032        1,111        2,322        2,706  
Total interest income      26,520        26,598        26,197        26,628        24,017        79,315        68,132  
INTEREST EXPENSE                                          
Interest on deposits      5,223        5,448        4,831        4,185        3,182        15,502        8,321  
Interest on Federal Home Loan Bank advances      390        270        —        487        637        660        1,912  
Interest on federal funds purchased and securities sold under agreements to repurchase      99        168        118        60        77        385        244  
Interest on long-term debt      824        823        824        828        824        2,471        2,476  
Total interest expense      6,536        6,709        5,773        5,560        4,720        19,018        12,953  
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES      19,984        19,889        20,424        21,068        19,297        60,297        55,179  
Provision for loan losses      413        698        814        502        845        1,925        1,444  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      19,571        19,191        19,610        20,566        18,452        58,372        53,735  
NONINTEREST INCOME                                          
Service charges      925        870        794        876        804        2,589        2,339  
Gains (losses) on sale of securities      253        654        —        (1,853 )      —        907        (2 )
Gains (losses) on sale of other assets      140        (10 )      (3 )      —        58        127        (154 )
Trust income      —        —        —        —        —        —        1,025  
Derivatives income      (293 )      (233 )      (111 )      154        20        (637 )      154  
Bank owned life insurance      422        389        360        380        379        1,171        1,126  
SBA lending activities      1,150        1,096        1,086        425        882        3,332        3,181  
Gain on sale of trust company      —        —        —        —        —        —        1,681  
Other noninterest income      172        175        210        182        112        557        533  
Total noninterest income      2,769        2,941        2,336        164        2,255        8,046        9,883  
NONINTEREST EXPENSE                                          
Salaries and employee benefits      8,295        8,529        9,213        7,573        7,332        26,037        24,193  
Occupancy      722        689        639        655        732        2,050        2,317  
Equipment and software      842        753        739        783        747        2,334        2,034  
Professional services      764        792        775        947        796        2,331        2,564  
Postage, printing and supplies      32        29        48        30        55        109        136  
Communications and data processing      796        662        675        772        566        2,133        1,904  
Marketing and business development      243        233        226        224        211        702        486  
FDIC premiums      (193 )      175        235        157        154        217        405  
Other noninterest expense      1,176        1,392        1,245        1,067        1,279        3,813        3,744  
Total noninterest expense      12,677        13,254        13,795        12,208        11,872        39,726        37,783  
                                           
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES      9,663        8,878        8,151        8,522        8,835        26,692        25,835  
Provision for income taxes      2,094        1,869        1,711        1,039        1,837        5,674        5,268  
NET INCOME FROM CONTINUING OPERATIONS      7,569        7,009        6,440        7,483        6,998        21,018        20,567  
DISCONTINUED OPERATIONS                                          
Income (loss) from discontinued operations   $  —     $  30,107     $  (1,417 )   $  1,796     $  (646 )   $  28,690     $  (1,153 )
Provision (benefit) for income taxes      (617 )      7,964        (354 )      449        (161 )      6,993        (288 )
Net income (loss) from discontinued operations      617        22,143        (1,063 )      1,347        (485 )      21,697        (865 )
NET INCOME   $  8,186     $  29,152     $  5,377     $  8,830     $  6,513     $  42,715     $  19,702  
                                           
Net Income (Loss) per Common Share - Basic                                          
Net income per common share - continuing operations   $  0.33     $  0.29     $  0.26     $  0.29     $  0.27     $  0.88     $  0.79  
Net income (loss) per common share - discontinued operations      0.03        0.93        (0.04 )      0.05        (0.02 )      0.91        (0.03 )
Net Income per Common Share - Basic      0.36        1.22        0.22        0.34        0.25        1.79        0.76  
Net Income (Loss) per Common Share - Diluted                                          
Net income per common share - continuing operations   $  0.33     $  0.29     $  0.26     $  0.29     $  0.27     $  0.88     $  0.79  
Net income (loss) per common share - discontinued operations      0.03        0.92        (0.04 )      0.05        (0.02 )      0.91        (0.03 )
Net Income per Common Share - Diluted      0.36        1.21        0.21        0.34        0.25        1.78        0.75  
                                           
Weighted average shares - basic      22,681,904        23,888,381        24,855,171        25,919,445        26,103,397        23,800,525        25,956,336  
Weighted average shares - diluted      22,837,531        24,040,806        25,019,384        26,043,799        26,254,772        23,957,915        26,134,655  

(1)Discontinued operations have been reported retrospectively for all periods presented.


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information

                                   
    Three months ended  
    September 30, 2019   June 30, 2019  
          Interest   Tax         Interest   Tax  
    Average   Income/   Equivalent   Average   Income/   Equivalent  
(dollars in thousands; taxable equivalent)   Balance   Expense   Yield/Rate   Balance   Expense   Yield/Rate  
Assets                                  
Interest bearing deposits in other banks   $  103,954   $  564    2.15 $  70,628   $  450    2.56 %
Other short-term investments      —      —    —      3,993      32    3.21  
Investment securities:                                  
Taxable investment securities      257,005      1,657    2.56      280,639      1,848    2.64  
Non-taxable investment securities(1)      83,867      623    2.95      79,408      579    2.92  
Total investment securities      340,872      2,280    2.65      360,047      2,427    2.70  
Loans - continuing operations      1,801,629      23,541    5.18      1,769,803      23,554    5.34  
FHLB and FRB stock      15,524      239    6.11      14,435      223    6.20  
Total interest-earning assets - continuing operations      2,261,979      26,624    4.67      2,218,906      26,686    4.82  
Loans held for sale - discontinued operations      —      —    —      30,198      47    0.62  
Total interest-earning assets      2,261,979      26,624    4.67      2,249,104      26,733    4.77  
Non-earning assets      191,459                191,398            
Total assets   $  2,453,438             $  2,440,502            
Liabilities                                  
Interest bearing deposits:                                  
NOW, money market, and savings      1,191,293      4,642    1.55      1,175,237      4,733    1.62  
Time deposits      32,409      51    0.62      32,358      50    0.62  
Brokered deposits      88,146      530    2.39      106,524      665    2.50  
Total interest-bearing deposits      1,311,848      5,223    1.58      1,314,119      5,448    1.66  
Total borrowings      85,478      489    2.27      70,770      438    2.48  
Total long-term debt      49,803      824    6.56      49,761      823    6.63  
Total interest-bearing liabilities - continuing operations      1,447,129      6,536    1.79      1,434,650      6,709    1.88  
Interest-bearing liabilities - discontinued operations      —      —    —      36,255      86    0.95  
Total interest-bearing liabilities      1,447,129      6,536    1.79      1,470,905      6,795    1.85  
Demand deposits      637,809                587,957            
Demand deposits - discontinued operations      —                9,851            
Other liabilities      36,209                31,670            
Shareholders’ equity      332,291                340,119            
Total liabilities and shareholders’ equity   $  2,453,438             $  2,440,502            
Net interest spread - continuing operations                2.88              2.94 %
Net interest income and net interest margin - continuing operations(2)         $  20,088    3.52       $  19,977    3.61 %
Net interest income and net interest margin(2)         $  20,088    3.52       $  19,938    3.56 %
                                   
Non-taxable equivalent net interest margin                3.51              3.54 %
                                   

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information

                                   
    Three months ended  
    September 30, 2019   September 30, 2018  
          Interest   Tax         Interest   Tax  
    Average   Income/   Equivalent   Average   Income/   Equivalent  
(dollars in thousands; taxable equivalent)   Balance   Expense   Yield/Rate   Balance   Expense   Yield/Rate  
Assets                                  
Interest bearing deposits in other banks   $  103,954   $  564    2.15 $  128,248   $  647    2.00 %
Other short-term investments      —      —    —      21,985      157    2.83  
Investment securities:                                  
Taxable investment securities      257,005      1,657    2.56      385,834      2,315    2.38  
Non-taxable investment securities(1)      83,867      623    2.95      75,514      571    3.00  
Total investment securities      340,872      2,280    2.65      461,348      2,886    2.48  
Loans - continuing operations      1,801,629      23,541    5.18      1,583,459      20,117    5.04  
FHLB and FRB stock      15,524      239    6.11      17,624      307    6.91  
Total interest-earning assets - continuing operations      2,261,979      26,624    4.67      2,212,664      24,114    4.32  
Loans held for sale - discontinued operations      —      —    —      380,358      4,502    4.70  
Total interest-earning assets      2,261,979      26,624    4.67      2,593,022      28,616    4.38  
Non-earning assets      191,459                212,718            
Total assets   $  2,453,438             $  2,805,740            
Liabilities                                  
Interest bearing deposits:                                  
NOW, money market, and savings      1,191,293      4,642    1.55      1,012,953      2,791    1.09  
Time deposits      32,409      51    0.62      10,406      30    1.14  
Brokered deposits      88,146      530    2.39      67,937      361    2.11  
Total interest-bearing deposits      1,311,848      5,223    1.58      1,091,296      3,182    1.16  
Total borrowings      85,478      489    2.27      134,609      714    2.10  
Total long-term debt      49,803      824    6.56      49,634      824    6.59  
Total interest-bearing liabilities - continuing operations      1,447,129      6,536    1.79      1,275,539      4,720    1.47  
Interest-bearing liabilities - discontinued operations      —      —    —      473,388      1,236    1.04  
Total interest-bearing liabilities      1,447,129      6,536    1.79      1,748,927      5,956    1.35  
Demand deposits      637,809                561,355            
Demand deposits - discontinued operations      —                136,572            
Other liabilities      36,209                38,796            
Shareholders’ equity      332,291                320,090            
Total liabilities and shareholders’ equity   $  2,453,438             $  2,805,740            
Net interest spread - continuing operations                2.88              2.85 %
Net interest income and net interest margin - continuing operations(2)         $  20,088    3.52       $  19,394    3.48 %
Net interest income and net interest margin(2)         $  20,088    3.52       $  22,660    3.47 %
                                   
Non-taxable equivalent net interest margin                3.51              3.45 %

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.

ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information

                                   
    Nine months ended  
    September 30, 2019   September 30, 2018  
          Interest   Tax         Interest   Tax  
    Average   Income/   Equivalent   Average   Income/   Equivalent  
(dollars in thousands; taxable equivalent)   Balance   Expense   Yield/Rate   Balance   Expense   Yield/Rate  
Assets                                  
Interest bearing deposits in other banks   $  88,960   $  1,477    2.22 $  101,502   $  1,606    2.12 %
Other short-term investments      5,181      118    3.05      13,907      284    2.73  
Investment securities:                                  
Taxable investment securities      284,978      5,619    2.64      380,002      6,643    2.34  
Non-taxable investment securities(1)      81,812      1,819    2.97      76,658      1,723    3.01  
Total investment securities      366,790      7,438    2.71      456,660      8,366    2.45  
Loans - continuing operations      1,739,917      69,847    5.37      1,553,609      57,358    4.94  
FHLB and FRB stock      14,173      727    6.86      18,291      816    5.96  
Total interest-earning assets - continuing operations      2,215,021      79,607    4.81      2,143,969      68,430    4.27  
Loans held for sale - discontinued operations      156,060      4,588    3.93      389,760      13,714    4.70  
Total interest-earning assets      2,371,081      84,195    4.75      2,533,729      82,144    4.33  
Non-earning assets      201,880                209,518            
Total assets   $  2,572,961             $  2,743,247            
Liabilities                                  
Interest bearing deposits:                                  
NOW, money market, and savings      1,147,508      13,630    1.59      974,678      7,028    0.96  
Time deposits      18,246      139    1.02      10,075      82    1.09  
Brokered deposits      91,963      1,733    2.52      80,920      1,212    2.00  
Total interest-bearing deposits      1,257,717      15,502    1.65      1,065,673      8,322    1.04  
Total borrowings      57,844      1,045    2.42      155,701      2,155    1.85  
Total long-term debt      49,761      2,471    6.64      49,592      2,476    6.68  
Total interest-bearing liabilities - continuing operations      1,365,322      19,018    1.86      1,270,966      12,953    1.36  
Interest-bearing liabilities - discontinued operations      192,613      1,502    1.04      465,339      2,800    0.80  
Total interest-bearing liabilities      1,557,935      20,520    1.76      1,736,305      15,753    1.21  
Demand deposits      593,957                518,186            
Demand deposits - discontinued operations      52,481                138,621            
Other liabilities      37,472                36,935            
Shareholders’ equity      331,116                313,200            
Total liabilities and shareholders’ equity   $  2,572,961             $  2,743,247            
Net interest spread - continuing operations                2.95              2.91 %
Net interest income and net interest margin - continuing operations(2)         $  60,589    3.66       $  55,477    3.46 %
Net interest income and net interest margin(2)         $  63,675    3.59       $  66,391    3.50 %
                                   
Non-taxable equivalent net interest margin                3.57              3.49 %

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.

ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans (1)

                                           
                        Linked   Year Over
    September 30,   June 30,   March 31,   December 31,   September 30,   Quarter   Year
(dollars in thousands)   2019     2019     2019     2018     2018     Change   Change
Loans held for sale                                          
Loans held for sale   $  916     $  —     $  1,530     $  5,889     $  1,886     $  916     $  (970 )
Loans held for sale - discontinued operations      —        —        384,779        373,030        375,976        —        (375,976 )
Total loans held for sale   $  916     $  —     $  386,309     $  378,919     $  377,862     $  916     $  (376,946 )
                                           
Loans held for investment                                          
Commercial loans:                                          
Commercial and industrial   $  697,412     $  701,566     $  679,489     $  645,374     $  581,737     $  (4,154 )   $  115,675  
Commercial real estate:                                          
Multifamily      60,398        43,907        43,929        88,826        108,001        16,491        (47,603 )
Owner occupied      352,842        313,310        304,945        298,291        295,801        39,532        57,041  
Investment      452,285        409,629        394,087        407,711        409,145        42,656        43,140  
Construction and land:                                          
1‑4 family residential construction      5,186        3,696        2,067        1,006        —        1,490        5,186  
Other construction, development, and land      139,991        195,260        171,818        155,226        147,114        (55,269 )      (7,123 )
Mortgage warehouse loans      23,256        10,665        22,267        27,967        27,838        12,591        (4,582 )
Total commercial loans      1,731,370        1,678,033        1,618,602        1,624,401        1,569,636        53,337        161,734  
                                           
Residential:                                          
Residential mortgages      31,903        31,338        32,915        32,800        24,904        565        6,999  
Home equity      25,638        24,303        23,171        22,822        33,410        1,335        (7,772 )
Total residential loans      57,541        55,641        56,086        55,622        58,314        1,900        (773 )
                                           
Consumer      27,168        34,618        35,203        25,851        26,825        (7,450 )      343  
Other      22,533        24,126        26,663        24,712        10,579        (1,593 )      11,954  
       1,838,612        1,792,418        1,736,554        1,730,586        1,665,354        46,194        173,258  
Less net deferred fees and other unearned income      (2,939 )      (2,678 )      (1,997 )      (2,513 )      (2,896 )      (261 )      (43 )
Total loans held for investment   $  1,835,673     $  1,789,740     $  1,734,557     $  1,728,073     $  1,662,458     $  45,933     $  173,215  
                                           
Total loans   $  1,836,589     $  1,789,740     $  2,120,866     $  2,106,992     $  2,040,320     $  46,849     $  (203,731 )

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


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

                               
    2019     2018
    Third   Second   First   Fourth   Third
(dollars in thousands)   Quarter   Quarter   Quarter   Quarter   Quarter
                               
Balance at beginning of period   $  18,186     $  18,107     $  17,851     $  20,443     $  19,583
Provision for loan losses      413        698        814        595        758
Provision for loan losses (reversal of provision) - discontinued operations      —        —        —        (3,097 )      —
Provision for PCI loan losses      —        —        —        (93 )      87
Loans charged-off:                              
Commercial and industrial      (541 )      (588 )      (549 )      —        —
Commercial real estate      —        (47 )      —        —        —
Construction and land      —        —        —        —        —
Residential mortgages      —        —        (9 )      (5 )      —
Home equity      —        —        —        —        —
Consumer      (2 )      —        (37 )      (3 )      —
Other      —        —        —        —        —
Total loans charged-off      (543 )      (635 )      (595 )      (8 )      —
Recoveries on loans previously charged-off:                              
Commercial and industrial      17        —        14        —        —
Commercial real estate      —        —        —        —        —
Construction and land      1        —        3        —        —
Residential mortgages      —        —        7        4        —
Home equity      —        —        1        —        —
Consumer      6        16        12        7        15
Other      —        —        —        —        —
Total recoveries      24        16        37        11        15
Net charge-offs   $  (519 )   $  (619 )   $  (558 )   $  3     $  15
Balance at period end (1)   $  18,080     $  18,186     $  18,107     $  17,851     $  20,443
                               
Loans                              
Loans held for sale   $  916     $  —     $  1,530     $  5,889     $  1,886
Loans held for sale - discontinued operations      —        —        384,779        373,030        375,976
Loans held for investment - continuing operations      1,835,673        1,789,740        1,734,557        1,728,073        1,662,458
Total loans   $  1,836,589     $  1,789,740     $  2,120,866     $  2,106,992     $  2,040,320
                               
Non-performing loans - continuing operations (4)   $  6,770     $  6,352     $  8,830     $  3,252     $  2,160
Non-performing loans - discontinued operations (4)      —        —        1,506        1,924        556
Total non-performing loans      6,770        6,352        10,336        5,176        2,716
Foreclosed properties (OREO)      278        971        971        874        968
Total nonperforming assets   $  7,048     $  7,323     $  11,307     $  6,050     $  3,684
                               
Allowance for loan losses to loans held for investment (2)      0.98      1.02      1.04        1.03      1.00
Net charge-offs to average loans (3)      0.11        0.14        0.11        —        —
                               
Non-performing loans as a percentage of total loans - continuing operations (4)      0.37      0.35      0.51        0.19      0.13
Non-performing loans as a percentage of total loans - discontinued operations (4)      —        —        0.39        0.52        0.15
Non-performing loans as a percentage of total loans (4)      0.37        0.35        0.49        0.25        0.13
                               
Non-performing assets as a percentage of total assets - continuing operations (4)      0.29      0.31      0.34      0.14      0.11
Non-performing assets as a percentage of total assets - discontinued operations (4)      —        —        0.05        0.07        0.02
Non-performing assets as a percentage of total assets (4)      0.29        0.31        0.40        0.20        0.13

(1) The allowance for loan losses has not been adjusted retrospectively for periods prior to December 31, 2018. (2)The third quarter of 2019, the second quarter of 2019, the first quarter of 2019 and the fourth quarter of 2018 ratios are calculated on a continuing operations basis. Ratios prior to December 31, 2018 have not been retroactively adjusted for the impact of discontinued operations. (3)Annualized. (4)Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

                                           
                                  Linked      
    September 30,    June 30,    March 31,    December 31,    September 30,    Quarter   Year Over
(dollars in thousands)   2019   2019   2019   2018   2018   Change   Year Change
DDA   $  599,657   $  569,693   $  561,829   $  602,252   $  518,155   $  29,964     $  81,502  
NOW      240,427      309,709      233,838      252,490      407,214      (69,282 )      (166,787 )
Savings      1,081      1,090      896      725      698      (9 )      383  
Money market      921,133      802,973      962,741      987,183      759,583      118,160        161,550  
Time      30,782      33,902      22,069      10,623      10,396      (3,120 )      20,386  
Brokered      61,192      134,164      65,811      99,241      79,119      (72,972 )      (17,927 )
Total deposits - continuing operations      1,854,272      1,851,531      1,847,184      1,952,514      1,775,165      2,741        79,107  
Deposits to be assumed - discontinued operations      —      —      593,264      585,429      604,659      —        (604,659 )
Total deposits   $  1,854,272   $  1,851,531   $  2,440,448   $  2,537,943   $  2,379,824   $  2,741     $  (525,552 )
                                           
Payments clients   $  286,373   $  301,413   $  361,192   $  397,608   $  258,320   $  (15,040 )   $  28,053  


Average Deposits

                                           
    2019   2018   Linked    
    Third   Second   First   Fourth   Third   Quarter   Q3 2019 vs
(dollars in thousands)   Quarter   Quarter   Quarter   Quarter   Quarter   Change   Q3 2018
DDA   $  637,809   $  587,957   $  575,453   $  597,239   $  561,355   $  49,852     $  76,454  
NOW      295,106      314,601      276,212      280,449      314,759      (19,495 )      (19,653 )
Savings      1,085      956      884      712      616      129        469  
Money market      895,102      859,680      847,254      798,017      697,578      35,422        197,524  
Time      32,409      32,358      12,847      10,117      10,406      51        22,003  
Brokered      88,146      106,524      81,141      93,558      67,937      (18,378 )      20,209  
Total deposits - continuing operations      1,949,657      1,902,076      1,793,791      1,780,092      1,652,651      47,581        297,006  
Deposits to be assumed - discontinued operations      —      45,350      593,313      600,769      601,421      (45,350 )      (601,421 )
Total deposits   $  1,949,657   $  1,947,426   $  2,387,104   $  2,380,861   $  2,254,072   $  2,231     $  (304,415 )
                                           
Payments clients   $  289,526   $  285,949   $  295,059   $  263,800   $  227,029   $  3,577     $  62,497  
                                           
Noninterest bearing deposits as a percentage of average deposits - continuing operations      32.7    30.9    32.1    33.6    34.0          
Cost of deposits - continuing operations      1.06    1.15    1.09    0.93    0.76          


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

                                             
                                  For the nine months  
    2019 2018 ended September 30,   
    Third   Second   First   Fourth   Third              
(in thousands, except share and per share data)   Quarter   Quarter   Quarter   Quarter   Quarter   2019 2018    
                                             
Taxable equivalent interest income reconciliation                                            
Interest income - GAAP   $  26,520     $  26,598     $  26,197     $  26,628     $  24,017     $  79,315     $  68,132    
Taxable equivalent adjustment      104        88        100        97        97        292        298    
Interest income - taxable equivalent   $  26,624     $  26,686     $  26,297     $  26,725     $  24,114     $  79,607     $  68,430    
                                             
Taxable equivalent net interest income reconciliation                                            
Net interest income - GAAP   $  19,984     $  19,889     $  20,424     $  21,068     $  19,297     $  60,297     $  55,179    
Taxable equivalent adjustment      104        88        100        97        97        292        298    
Net interest income - taxable equivalent   $  20,088     $  19,977     $  20,524     $  21,165     $  19,394     $  60,589     $  55,477    
                                             
Taxable equivalent net interest margin reconciliation - continuing operations