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Atlantic Capital Bancshares, Inc. Reports Second Quarter 2018 Results

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ATLANTA, July 25, 2018 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) announced net income of $8.2 million, or $0.31 per diluted share, for the second quarter of 2018, compared to $5.0 million, or $0.19 per diluted share, in the first quarter of 2018. Operating net income for the second quarter of 2018, excluding the gain on sale of Southeastern Trust Company, was $6.9 million, or $0.26 per diluted share, compared to $5.0 million, or $0.19 per diluted share, in the first quarter of 2018.

Second Quarter Highlights(1)

  • Reported return on average assets of 1.20% and return on average equity of 10.46%.
  • Reported net interest margin of 3.54%, an increase of 3 basis points from the first quarter of 2018.
  • Reported nonperforming assets to total assets of 0.14% and annualized net charge-offs to average loans of 0.03%.
  • Closed on the sale of Southeastern Trust Company in the second quarter of 2018 and recorded a net gain of $1.7 million. 
  • Decreased noninterest expense $1.0 million to $17.4 million compared to the first quarter of 2018.
  • Improved efficiency ratio to 67.7% compared to 72.1% in the first quarter of 2018.

"As a result of higher loan yields, excellent credit quality, disciplined expense control, and good growth in our Atlanta market and specialty businesses, Atlantic Capital reported record earnings for the second quarter of 2018," explained Douglas Williams, President and Chief Executive Officer.

Income Statement

Net interest income increased to $22.1 million in the second quarter of 2018 from $21.6 million in the first quarter of 2018, primarily as a result of higher loan yields from increases in short term interest rates. Net accretion income on acquired loans totaled $331,000 in the second quarter of 2018 compared to $448,000 in the first quarter of 2018.

Net interest margin was 3.54% in the second quarter of 2018, an increase of 3 basis points from the first quarter of 2018. The accretion from the acquired loan discount and amortization of time deposit premium contributed 7 basis points to the net interest margin in the second quarter of 2018 compared to 9 basis points in the first quarter of 2018.

Loan yields in the second quarter of 2018 increased 21 basis points to 4.95% from the first quarter of 2018 as a result of the increases in the federal funds rate and 1 month LIBOR, offset by a decrease in accretion income. Accretion income contributed 7 basis points to the loan yield in the second quarter of 2018 compared to 9 basis points in the first quarter of 2018.

The cost of total deposits in the second quarter of 2018 was 0.69%, an increase of 12 basis points from the first quarter of 2018. The cost of interest bearing deposits increased 16 basis points to 0.97% from the first quarter of 2018, driven by an increase in short term interest rates and increases in our deposit rates.

The provision for loan losses was ($173,000) in the second quarter of 2018 compared to $772,000 in the first quarter of 2018, primarily as a result of a decrease in loan balances, a lower level of net charge-offs, and improved credit quality.

Noninterest income totaled $5.3 million in the second quarter of 2018, an increase of $1.3 million from the first quarter of 2018. The second quarter included a gain of $1.7 million from the sale of Southeastern Trust Company and a loss of $169,000 from the disposal and sale of fixed assets related to the relocation of our Atlanta headquarters.

(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 beginning on page 12.

Service charges increased $116,000 primarily from an increase in account analysis and other fees.  SBA income decreased $305,000 from $1.3 million in the first quarter of 2018.

Noninterest expense totaled $17.4 million in the second quarter of 2018 compared to $18.4 million in the first quarter of 2018. Salaries and employee benefits expense decreased by $1.2 million to $10.9 million, primarily from a decrease in severance related expense. This was offset by an increase of $128,000 in professional fees, mainly related to the sale of the trust company. In addition, other noninterest expense in the second quarter of 2018 included a $228,000 impairment on an SBIC investment.

Balance Sheet

Total loans were $1.94 billion at June 30, 2018, a decrease of $24.3 million from March 31, 2018, as commercial and industrial loans decreased $26.2 million during the quarter, primarily due to decreases in the Tennessee commercial market and an accelerated level of syndicated loan payoffs.

At June 30, 2018, the allowance for loan losses was $19.6 million, or 1.01% of loans held for investment, compared to $19.9 million, or 1.01% of loans held for investment as of March 31, 2018. Annualized net charge-offs to average loans totaled 0.03% in the second quarter of 2018 compared to 0.05% in the first quarter of 2018. Nonperforming assets totaled $3.7 million, or 0.14% of total assets, as of June 30, 2018, compared to $3.4 million, or 0.13% of total assets, as of March 31, 2018.

Total average deposits for the second quarter of 2018 were $2.14 billion, a decrease of $18.1 million from the first quarter of 2018. This decrease was the result of seasonal volatility in deposits for our Payments business along with a decrease in brokered deposits.  Average transaction deposits, which includes DDA and NOW accounts, increased $29.6 million in the second quarter of 2018, compared to the first quarter.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Thursday, July 26, 2018, to discuss the financial results for the quarter ended June 30, 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) operating net income; (ii) operating noninterest income; (iii) taxable equivalent interest income; (iv) taxable equivalent net interest income; (v) taxable equivalent net interest margin; (vi) operating income before taxes; (vii) operating income tax expense; (viii) operating return on average assets; (ix) operating return on average equity; (x) tangible common equity; (xi) tangible book value per common share; (xii) efficiency ratio; and (xiii) operating diluted earnings per share, in its analysis of the Company's performance. Operating net income excludes the net gain on the sale of the trust company and the revaluation of net deferred tax assets. 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 $2.69 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 six months ended
June 30,
 
(in thousands, except share and per share data;
taxable equivalent)
  Second Quarter       First Quarter   Fourth Quarter     Third Quarter   Second Quarter   2018   2017  
INCOME SUMMARY                                    
Interest income (1)   $ 27,444   $ 26,085   $ 25,350     $ 24,566   $ 24,545   $ 53,529   $ 47,261  
Interest expense   5,332       4,465   4,028     4,060   3,833   9,797   7,041  
Net interest income   22,112       21,620   21,322     20,506   20,712   43,732   40,220  
Provision for loan losses   (173 )     772   282     322   1,980   599   2,614  
Net interest income after provision for loan losses   22,285       20,848   21,040     20,184   18,732   43,133   37,606  
Operating noninterest income (2)   3,650   3,983   3,568     3,477   5,287   7,633   9,144  
Noninterest expense   17,361         18,392   20,594     17,504   17,623   35,753   35,367  
Operating income before income taxes (2)   8,574       6,439   4,014     6,157   6,396   15,013   11,383  
Operating income tax expense (3)   1,684       1,401   1,953     2,105   2,067   3,085   3,824  
Operating net income (2)(3)   6,890       5,038   2,061     4,052   4,329   11,928   7,559  
Net gain on sale of trust company, net of income tax   1,261             1,261    
Revaluation of net deferred tax asset           17,398              
Net income (loss) - GAAP   $ 8,151       $ 5,038   $ (15,337 )   $ 4,052   $ 4,329   $ 13,189   $ 7,559  
                                     
PER SHARE DATA                                
Diluted earnings (loss) per share - GAAP   $ 0.31   $ 0.19   $ (0.60 )   $ 0.16   $ 0.17   $ 0.51   $ 0.29  
Diluted earnings per share - operating (2)(3)   0.26   0.19   0.08     0.16   0.17   0.46   0.29  
Book value per share   12.14   11.91   11.99     12.63   12.45   12.14   12.45  
Tangible book value per common share (4)   11.23   10.98   11.05     11.67   11.47   11.23   11.47  
                                 
PERFORMANCE MEASURES                                
Return on average equity - GAAP   10.46 % 6.66 % (18.66 )%   4.96 % 5.48 % 8.59 % 4.88 %
Return on average equity - operating (2)(3)   8.84   6.66   2.51     4.96   5.48   7.77   4.88  
Return on average assets - GAAP   1.20   0.76   (2.24 )   0.60   0.63   0.98   0.56  
Return on average assets - operating (2)(3)   1.02   0.76   0.30     0.60   0.63   0.89   0.56  
Taxable equivalent net interest margin   3.54   3.51   3.39     3.26   3.26   3.52   3.23  
Efficiency ratio   67.65   72.13   83.45     73.65   68.37   69.88   72.35  
                                 
CAPITAL                                
Average equity to average assets   11.50 % 11.34 % 11.99 %   11.99 % 11.47 % 11.42 % 11.45 %
Tangible common equity to tangible assets   10.99   10.50   9.91     11.48   10.99   10.99   10.99  
Tier 1 capital ratio   11.9 (6 ) 11.3   11.2     11.3   10.9   11.9 (6 ) 10.9  
Total risk based capital ratio   14.9 (6 ) 14.3   14.1     14.3   14.0   14.9 (6 ) 14.0  
Number of common shares outstanding - basic   26,102,217   25,772,208   25,712,909     25,716,418   25,654,521   26,102,217   25,654,521  
Number of common shares outstanding - diluted   26,336,871   26,000,216   25,891,225     25,967,575   25,931,671   26,336,871   25,931,671  
                                 
ASSET QUALITY                                
Allowance for loan losses to loans held for investment   1.01 % 1.01 % 1.00 %   0.99 % 1.11 % 1.01 % 1.11 %
Net charge-offs to average loans (5)   0.03   0.05   (0.04 )   0.68   0.01   0.04   0.14  
Non-performing assets to total assets   0.14   0.13   0.14     0.23   0.52   0.14   0.52  
                                 
(1)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. (2)Excludes gain on sale of trust company. (3)Excludes revaluation of net deferred tax asset. (4)Excludes effect of acquisition related intangibles. (5)Annualized. (6)Amounts are estimates as of 6/30/18.


                 
ATLANTIC CAPITAL BANCSHARES, INC.                
Consolidated Balance Sheets (unaudited)                
                 
    June 30,   March 31,   December 31,   June 30,
(in thousands, except share data)   2018   2018   2017   2017
ASSETS                
Cash and due from banks   $ 55,612     $ 39,985     $ 38,086     $ 45,008  
Interest-bearing deposits in banks   42,477     62,787     281,247     36,171  
Other short-term investments   14,712     9,669     10,681     17,459  
Cash and cash equivalents   112,801     112,441     330,014     98,638  
Investment securities available-for-sale   453,968     458,730     449,117     450,273  
Other investments   36,190     37,949     32,174     26,741  
Loans held for sale   1,612     835     1,487     1,744  
Loans held for investment   1,934,311     1,959,421     1,933,839     1,962,091  
Less: allowance for loan losses   (19,583 )   (19,885 )   (19,344 )   (21,870 )
  Loans held for investment, net   1,914,728     1,939,536     1,914,495     1,940,221  
Premises and equipment, net   16,878     15,475     12,054     11,997  
Bank owned life insurance   64,391     64,014     63,667     62,901  
Goodwill and intangible assets, net   27,012     27,485     27,633     28,446  
Other real estate owned   1,288     927     1,215     1,819  
Other assets   61,806     61,273     59,565     79,795  
Total assets   $ 2,690,674     $ 2,718,665     $ 2,891,421     $ 2,702,575  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Deposits:                
Noninterest-bearing demand   $ 595,867     $ 599,838     $ 732,442     $ 612,744  
Interest-bearing checking   332,481     302,636     306,331     250,254  
Savings   27,559     29,407     26,573     30,170  
Money market   865,913     911,449     1,117,891     882,824  
Time   152,111     140,594     138,612     142,915  
Brokered deposits   92,656     112,376     128,816     195,047  
Total deposits   2,066,587     2,096,300     2,450,665     2,113,954  
Federal funds purchased and securities sold under agreements to repurchase   73,024     47,855         15,000  
Federal Home Loan Bank borrowings   150,000     185,000     45,000     180,000  
Long-term debt   49,620     49,577     49,535     49,451  
Other liabilities   34,673     32,874     37,796     24,735  
Total liabilities   2,373,904     2,411,606     2,582,996     2,383,140  
                 
SHAREHOLDERS' EQUITY                
Preferred stock, no par value;  10,000,000 shares authorized;
no shares issued and outstanding as of June 30, 2018, March 31, 2018,
December 31, 2017, and June 30, 2017
               
                         
Common stock, no par value; 100,000,000 shares authorized;
26,102,217, 25,772,208, 25,712,909, and 25,654,521 shares issued
and outstanding as of June 30, 2018, March 31, 2018, December 31, 2017,
and June 30, 2017, respectively
  304,793     300,893     299,474     297,610  
Retained earnings   26,844     18,693     12,810     24,095  
Accumulated other comprehensive (loss) income   (14,867 )   (12,527 )   (3,859 )   (2,270 )
Total shareholders' equity   316,770     307,059     308,425     319,435  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,690,674     $ 2,718,665     $ 2,891,421     $ 2,702,575  


                     
ATLANTIC CAPITAL BANCSHARES, INC.                    
Consolidated Statements of Income (unaudited)                    
                             
(in thousands, except share and per share data)   Three months ended   Six months ended
    June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   June 30, 2018   June 30, 2017
INTEREST INCOME                            
Loans, including fees   $ 23,779     $ 22,675     $ 22,043     $ 21,491     $ 21,361     $ 46,454     $ 41,355  
Investment securities available-for-sale   2,687     2,592     2,510     2,298     2,355     5,279     4,373  
Interest and dividends on other interest‑earning assets   880     715     584     562     606     1,595     1,055  
Total interest income   27,346     25,982     25,137     24,351     24,322     53,328     46,783  
                             
INTEREST EXPENSE                            
Interest on deposits   3,651     3,044     2,856     2,693     2,481     6,695     4,528  
Interest on Federal Home Loan Bank advances   766     509     323     459     452     1,275     754  
Interest on federal funds purchased and securities sold under agreements to repurchase   92     83     26     84     76     175     112  
Interest on long-term debt   823     829     823     824     824     1,652     1,647  
Total interest expense   5,332     4,465     4,028     4,060     3,833     9,797     7,041  
                             
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES   22,014     21,517     21,109     20,291     20,489     43,531     39,742  
Provision for loan losses   (173 )   772     282     322     1,980     599     2,614  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   22,187     20,745     20,827     19,969     18,509     42,932     37,128  
                             
NONINTEREST  INCOME                            
Service charges   1,308     1,192     1,206     1,247     1,274     2,500     2,623  
Gains (losses) on sale of securities   (2 )       17     (80 )       (2 )    
Gains (losses) on sale of other assets   (166 )   (46 )   (46 )   44     666     (212 )   744  
Mortgage income   363     304     290     320     388     667     645  
Trust income   507     518     482     437     488     1,025     895  
Derivatives income   20     114     94     (3 )   116     134     65  
Bank owned life insurance   378     369     384     384     384     747     762  
SBA lending activities   997     1,302     843     888     1,171     2,299     2,398  
Gains on sale of branches                   302         302  
Gain on sale of trust company   1,681                     1,681      
Other noninterest income   245     230     298     240     498     475     710  
Total noninterest income   5,331     3,983     3,568     3,477     5,287     9,314     9,144  
                             
NONINTEREST EXPENSE                            
Salaries and employee benefits   10,921     12,077     13,298     10,409     10,603     22,998     21,668  
Occupancy   1,211     1,355     1,156     1,129     1,074     2,566     2,304  
Equipment and software   904     787     872     776     996     1,691     1,801  
Professional services   960     832     1,280     1,595     973     1,792     1,877  
Postage, printing and supplies   61     58     114     63     78     119     163  
Communications and data processing   1,003     1,043     1,111     982     1,069     2,046     2,056  
Marketing and business development   191     190     225     272     179     381     449  
FDIC premiums   197     147     212     308     132     344     446  
Merger and conversion costs                   304         304  
Amortization of intangibles   319     343     367     391     425     662     895  
Foreclosed property/problem asset expense   2     282     7     7     107     284     110  
Other noninterest expense   1,592     1,278     1,952     1,572     1,683     2,870     3,294  
Total noninterest expense   17,361     18,392     20,594     17,504     17,623     35,753     35,367  
                             
INCOME BEFORE PROVISION FOR INCOME TAXES   10,157     6,336     3,801     5,942     6,173     16,493     10,905  
Provision for income taxes   2,006     1,298     19,138     1,890     1,844     3,304     3,346  
NET INCOME (LOSS)   $ 8,151     $ 5,038     $ (15,337 )   $ 4,052     $ 4,329     $ 13,189     $ 7,559  
Net income (loss) per common share ‑ basic   $ 0.31     $ 0.20     $ (0.60 )   $ 0.16     $ 0.17     $ 0.51     $ 0.30  
Net income (loss) per common share ‑ diluted   $ 0.31     $ 0.19     $ (0.60 )   $ 0.16     $ 0.17     $ 0.51     $ 0.29  
Weighted average shares - basic   26,010,914     25,750,824     25,723,548     25,699,179     25,621,910     25,881,587     25,472,132  
Weighted average shares - diluted   26,200,026     25,945,773     25,888,064     25,890,779     25,831,281     26,073,602     25,753,633  


           
ATLANTIC CAPITAL BANCSHARES, INC.          
Average Balance Sheets and Net Interest Margin Analysis          
Selected Financial Information          
       
     Three months ended  
    June 30, 2018     March 31, 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   $ 97,501   $ 562   2.31 %   $ 78,207     $ 397   2.06 %
Other short-term investments   9,262   64   2.77     10,346     63   2.47  
Investment securities:                            
  Taxable investment securities   378,291   2,212   2.35     375,771     2,116   2.28  
  Non-taxable investment securities(1)   76,343   573   3.01     78,146     579   3.00  
Total investment securities   454,634   2,785   2.46     453,917     2,695   2.41  
Total loans   1,927,063   23,779   4.95     1,938,953     22,675   4.74  
FHLB and FRB stock   19,357   254   5.26     17,895     255   5.78  
  Total interest-earning assets   2,507,817   27,444   4.39     2,499,318     26,085   4.23  
Non-earning assets   210,254             205,504            
  Total assets   $ 2,718,071             $ 2,704,822            
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,254,153   2,798   0.89     1,257,580     2,251   0.73  
Time deposits   148,134   385   1.04     139,788     314   0.91  
Brokered deposits   100,425   468   1.87     117,787     479   1.65  
Total interest-bearing deposits   1,502,712   3,651   0.97     1,515,155     3,044   0.81  
Total borrowings   185,856   858   1.85     156,822     592   1.53  
Total long-term debt   49,592   823   6.66     49,550     829   6.79  
  Total interest-bearing liabilities   1,738,160   5,332   1.23     1,721,527     4,465   1.05  
Demand deposits   633,113             638,730            
Other liabilities   34,255             37,744            
Shareholders' equity   312,543             306,821            
  Total liabilities and shareholders' equity   $ 2,718,071             $ 2,704,822            
Net interest spread           3.16 %           3.18 %
Net interest income and net interest margin(2)       $ 22,112   3.54 %       $ 21,620   3.51 %
Non-taxable equivalent net interest margin           3.52 %           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 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          
       
    Six months ended  
    June 30, 2018     June 30, 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   $ 87,907   $ 959   2.20 %   $ 79,251   $ 398   1.01 %
Other short-term investments   9,801   127   2.61     17,402   164   1.90  
Investment securities:                            
  Taxable investment securities   377,038   4,328   2.31     356,485   3,386   1.92  
  Non-taxable investment securities(1)   77,239   1,152   3.01     80,826   1,465   3.66  
Total investment securities   454,277   5,480   2.43     437,311   4,851   2.24  
Total loans   1,932,975   46,454   4.85     1,955,915   41,355   4.26  
FHLB and FRB stock   18,630   509   5.51     19,479   493   5.10  
  Total interest-earning assets   2,503,590   53,529   4.31     2,509,358   47,261   3.80  
Non-earning assets   207,893             219,381          
  Total assets   $ 2,711,483             $ 2,728,739          
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,255,857   5,049   0.81     1,160,545   2,956   0.51  
Time deposits   143,984   699   0.98     156,423   541   0.70  
Brokered deposits   109,058   947   1.75     195,150   1,031   1.07  
Total interest-bearing deposits   1,508,899   6,695   0.89     1,512,118   4,528   0.60  
Total borrowings   171,419   1,450   1.71     204,761   866   0.85  
Total long-term debt   49,571   1,652   6.72     49,402   1,647   6.72  
  Total interest-bearing liabilities   1,729,889   9,797   1.14     1,766,281   7,041   0.80  
Demand deposits   635,906             623,344          
Other liabilities   35,990             26,547          
Shareholders' equity   309,698             312,567          
  Total liabilities and shareholders' equity   $ 2,711,483             $ 2,728,739          
Net interest spread           3.17 %           3.00 %
Net interest income and net interest margin(2)       $ 43,732   3.52 %       $ 40,220   3.23 %
Non-taxable equivalent net interest margin           3.51 %           3.19 %
                             
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for the six months ended June 30, 2018 and 35% for the six months ended June 30, 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                            
                             
                             
(dollars in thousands)   June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
  Linked
Quarter
Change
  Year Over
Year
Change
                             
Loans held for sale                            
Loans held for sale   $ 1,612     $ 835     $ 1,487     $ 3,274     $ 1,744     $ 777     $ (132 )
Total loans held for sale   $ 1,612     $ 835     $ 1,487     $ 3,274     $ 1,744     $ 777     $ (132 )
                             
Loans held for investment                            
Commercial loans:                            
Commercial and industrial   $ 610,024     $ 636,181     $ 615,359     $ 562,426     $ 578,888     $ (26,157 )   $ 31,136  
Commercial real estate:                            
Multifamily   99,140     99,227     99,553     91,219     113,571     (87 )   (14,431 )
Owner occupied   367,441     353,235     346,746     348,447     351,733     14,206     15,708  
Investment   455,401     461,638     494,116     505,188     517,571     (6,237 )   (62,170 )
Construction and land:                            
1-4 family residential construction   6,178     6,571     6,906     9,644     11,711     (393 )   (5,533 )
Other construction, development, and land   140,026     139,333     108,589     122,436     113,347     693     26,679  
Mortgage warehouse loans   38,352     44,575     39,981     41,551     47,992     (6,223 )   (9,640 )
Total commercial loans   1,716,562     1,740,760     1,711,250     1,680,911     1,734,813     (24,198 )   (18,251 )
                             
Residential:                            
Residential mortgages   103,468     105,255     104,484     101,976     101,798     (1,787 )   1,670  
Home equity   66,974     70,712     76,244     78,773     79,769     (3,738 )   (12,795 )
Total residential loans   170,442     175,967     180,728     180,749     181,567     (5,525 )   (11,125 )
                             
Consumer   32,231     30,966     29,393     31,750     31,981     1,265     250  
Other   17,997     15,181     16,278     16,106     18,013     2,816     (16 )
    1,937,232     1,962,874     1,937,649     1,909,516     1,966,374     (25,642 )   (29,142 )
Less net deferred fees and other unearned income   (2,921 )   (3,453 )   (3,810 )   (4,084 )   (4,283 )   532     1,362  
Total loans held for investment   $ 1,934,311     $ 1,959,421     $ 1,933,839     $ 1,905,432     $ 1,962,091     $ (25,110 )   $ (27,780 )
                             
Total loans   $ 1,935,923     $ 1,960,256     $ 1,935,326     $ 1,908,706     $ 1,963,835     $ (24,333 )   $ (27,912 )
                             


   
ATLANTIC CAPITAL BANCSHARES, INC.  
Allowance for Loan Losses Activity and Credit Quality  
                       
    2018   2017  
(dollars in thousands)   Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
  Second
Quarter
 
                       
Balance at beginning of period   $ 19,885     $ 19,344     $ 18,870     $ 21,870     $ 19,939    
Provision for loan losses   (173 )   811     312     314     2,048    
Provision for PCI loan losses       (39 )   (30 )   8     (68 )  
Loans charged-off:                      
Commercial and industrial       (126 )       (3,292 )      
Commercial real estate   (50 )                  
Construction and land               (16 )      
Residential mortgages       (70 )              
Home equity   (102 )   (58 )       (31 )   (8 )  
Consumer   (10 )   (3 )   (13 )   (7 )   (57 )  
Other                      
Total loans charged-off   (162 )   (257 )   (13 )   (3,346 )   (65 )  
Recoveries on loans previously charged-off:                      
Commercial and industrial       19     192     1     7    
Commercial real estate   28                 2    
Construction and land           1     15        
Residential mortgages                   1    
Home equity                   1    
Consumer   5     7     12     8     5    
Other                      
Total recoveries   33     26     205     24     16    
Net charge-offs   $ (129 )   $ (231 )   $ 192     $ (3,322 )   $ (49 )  
Balance at period end   $ 19,583     $ 19,885     $ 19,344     $ 18,870     $ 21,870    
                       
Loans held for investment                      
PCI Loans   $ 10,620     $ 11,837     $ 11,754     $ 12,090     $ 11,510    
Non-PCI Loans   1,923,691     1,947,584     1,922,085     1,893,342     1,950,581    
    $ 1,934,311     $ 1,959,421     $ 1,933,839     $ 1,905,432     $ 1,962,091    
                       
Non-performing loans - PCI   $ 969     $ 1,217     $ 1,211     $ 1,289     $ 1,310    
                       
Non-performing loans - Non-PCI   $ 2,406     $ 2,501     $ 2,912     $ 4,553     $ 12,300    
Foreclosed properties (OREO)   1,288     927     1,215     1,494     1,819    
Total nonperforming assets   $ 3,694     $ 3,428     $ 4,127     $ 6,047     $ 14,119    
                       
Allowance for loan losses to loans held for investment   1.01 %   1.01 %   1.00 %   0.99 %   1.11 %  
Net charge-offs to average loans (1)   0.03     0.05     (0.04 )   0.68     0.01    
Nonperforming loans as a percentage of total loans (2)   0.12     0.13     0.15     0.24     0.63    
Nonperforming assets as a percentage of total assets (2)   0.14     0.13     0.14     0.23     0.52    
                       
(1)Annualized.  (2)Excludes non-performing PCI loans.  


                 
ATLANTIC CAPITAL BANCSHARES, INC.                
Period End Deposits                
                             
(dollars in thousands)   June 30,
2018
  March 31, 2018   December 31, 2017   September 30, 2017   June 30, 
2017
  Linked
Quarter
Change
  Year Over
Year Change
                             
DDA   $ 595,867     $ 599,838     $ 732,442     $ 599,292     $ 612,744     $ (3,971 )   $ (16,877 )
NOW   332,481     302,636     306,331     270,740     250,254     29,845     82,227  
Savings   27,559     29,407     26,573     30,131     30,170     (1,848 )   (2,611 )
Money Market   865,913     911,449     1,117,891     865,238     882,824     (45,536 )   (16,911 )
Time   152,111     140,594     138,612     144,250     142,915     11,517     9,196  
Brokered   92,656     112,376     128,816     193,994     195,047     (19,720 )   (102,391 )
Total Deposits   $ 2,066,587     $ 2,096,300     $ 2,450,665     $ 2,103,645     $ 2,113,954     $ (29,713 )   $ (47,367 )
                             
Payments Clients   $ 251,748     $ 311,943     $ 405,873     $ 239,079     $ 250,104     $ (60,195 )   $ 1,644  
                             
Average Deposits(1)                            
                             
    2018   2017   Linked
Quarter Change
  Year Over
Year Change
(dollars in thousands)   Second Quarter   First
Quarter
  Fourth
Quarter
  Third
Quarter
  Second Quarter    
                             
DDA   $ 633,113     $ 638,730     $ 649,218     $ 628,029     $ 626,330     $ (5,617 )   $ 6,783  
NOW   364,362     329,171     338,741     291,810     293,160     35,191     71,202  
Savings   28,239     29,609     29,851     30,236     30,468     (1,370 )   (2,229 )
Money Market   861,552     898,800     907,524     870,618     860,116     (37,248 )   1,436  
Time   148,134     139,788     140,921     143,862     149,898     8,346     (1,764 )
Brokered   100,425     117,787     128,594     156,708     198,703     (17,362 )   (98,278 )
Total Deposits   $ 2,135,825     $ 2,153,885     $ 2,194,849     $ 2,121,263     $ 2,158,675     $ (18,060 )   $ (22,850 )
                             
Payments Clients   $ 219,016     $ 256,794     $ 234,558     $ 209,851     $ 244,157     $ (37,778 )   $ (25,141 )
                             
Noninterest bearing deposits as a percentage of average deposits   29.6 %   29.7 %   29.6 %   29.6 %   29.0 %        
Cost of deposits   0.69 %   0.57 %   0.52 %   0.50 %   0.46 %        
                             
(1) Includes average balances of deposits to be assumed in branch sale.            


                       
ATLANTIC CAPITAL BANCSHARES, INC.                      
Non-GAAP Performance and Financial Measures Reconciliation                  
                               
    2018   2017    For the six months ended
June 30,
 
(in thousands, except share and per share data)   Second Quarter   First
Quarter
  Fourth Quarter   Third Quarter   Second Quarter   2018   2017  
                               
Taxable equivalent interest income reconciliation                              
Interest income - GAAP   $ 27,346     $ 25,982     $ 25,137     $ 24,351     $ 24,322     $ 53,328     $ 46,783    
Taxable equivalent adjustment   98     103     213     215     223     201     478    
Interest income - taxable equivalent   $ 27,444     $ 26,085     $ 25,350     $ 24,566     $ 24,545     $ 53,529     $ 47,261    
                               
Taxable equivalent net interest income reconciliation                              
Net interest income - GAAP   $ 22,014     $ 21,517     $ 21,109     $ 20,291     $ 20,489     $ 43,531     $ 39,742    
Taxable equivalent adjustment   98     103     213     215     223     201     478    
Net interest income - taxable equivalent   $ 22,112     $ 21,620     $ 21,322     $ 20,506     $ 20,712     $ 43,732     $ 40,220    
                               
Taxable equivalent net interest margin reconciliation                              
Net interest margin - GAAP   3.52   % 3.49   % 3.35   % 3.23   % 3.23   % 3.51   % 3.19   %
Impact of taxable equivalent adjustment   0.02     0.02     0.04     0.03     0.03     0.01     0.04    
Net interest margin - taxable equivalent   3.54   % 3.51   % 3.39   % 3.26   % 3.26   % 3.52   % 3.23   %
                               
Operating noninterest income reconciliation                              
Noninterest income - GAAP   $ 5,331     $ 3,983     $ 3,568     $ 3,477     $ 5,287     $ 9,314     $ 9,144    
Gain on sale of trust company   (1,681 )                   (1,681 )      
Operating noninterest income   $ 3,650     $ 3,983     $ 3,568     $ 3,477     $ 5,287     $ 7,633     $ 9,144    
                               
Operating income before income taxes reconciliation                              
Income before income taxes - GAAP   $ 10,157     $ 6,336     $ 3,801     $ 5,942     $ 6,173     $ 16,493     $ 10,905    
Taxable equivalent adjustment   98     103     213     215     223     201     478    
Gain on sale of trust company   (1,681 )                   (1,681 )      
Operating income before income taxes   $ 8,574     $ 6,439     $ 4,014     $ 6,157     $ 6,396     $ 15,013     $ 11,383    
                               
Operating income tax reconciliation                              
Income tax expense - GAAP   $ 2,006     $ 1,298     $ 19,138     $ 1,890     $ 1,844     $ 3,304     $ 3,346    
Taxable equivalent adjustment   98     103     213     215     223     201     478    
Gain on sale of trust company, tax expense   (420 )                   (420 )      
Revaluation of net deferred tax asset           (17,398 )                  
Operating income tax expense   $ 1,684     $ 1,401     $ 1,953     $ 2,105     $ 2,067     $ 3,085     $ 3,824    
                               
Operating net income reconciliation                              
Net income (loss) - GAAP   $ 8,151     $ 5,038     $ (15,337 )   $ 4,052     $ 4,329     $ 13,189     $ 7,559    
Gain on sale of trust company, net of income tax   (1,261 )                   (1,261 )      
Revaluation of net deferred tax asset           17,398                    
Operating net income   $ 6,890     $ 5,038     $ 2,061     $ 4,052     $ 4,329     $ 11,928     $ 7,559    
                               
Operating diluted earnings per share reconciliation                              
Diluted earnings (loss) per share - GAAP   $ 0.31     $ 0.19     $ (0.60 )   $ 0.16     $ 0.17     $ 0.51     $ 0.29    
Net gain on sale of trust company   (0.05 )                   (0.05 )      
Revaluation of net deferred tax asset           0.68                    
Diluted earnings per share - operating   $ 0.26     $ 0.19     $ 0.08     $ 0.16     $ 0.17     $ 0.46     $ 0.29    
                               
 
ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation
                               
(in thousands, except share and per share data) 2018   2017    For the six months ended
June 30,
 
    Second Quarter   First
Quarter
  Fourth Quarter   Third Quarter   Second Quarter   2018   2017  
                               
Tangible book value per common share reconciliation                              
Total shareholders' equity   $ 316,770     $ 307,059     $ 308,425     $ 324,754     $ 319,435     $ 316,770     $ 319,435    
Intangible assets   (23,662 )   (24,050 )   (24,393 )   (24,760 )   (25,151 )   (23,662 )   (25,151 )  
Total tangible common equity   $ 293,108     $ 283,009     $ 284,032     $ 299,994     $ 294,284     $ 293,108     $ 294,284    
Common shares outstanding   26,102,217     25,772,208     25,712,909     25,716,418     25,654,521     26,102,217     25,654,521    
Book value per common share - GAAP   $ 12.14     $ 11.91     $ 11.99     $ 12.63     $ 12.45     $ 12.14     $ 12.45    
Tangible book value   11.23     10.98     11.05     11.67     11.47     11.23     11.47    
                               
Return on average equity reconciliation                              
Net income (loss) - GAAP   $ 8,151     $ 5,038     $ (15,337 )   $ 4,052     $ 4,329     $ 13,189     $ 7,559    
Gain on sale of trust company, net of income tax   (1,261 )                   (1,261 )      
Revaluation of net deferred tax asset           17,398                    
Operating net income   $ 6,890     $ 5,038     $ 2,061     $ 4,052     $ 4,329     $ 11,928     $ 7,559    
Average shareholders' equity   $ 312,543     $ 306,821     $ 326,059     $ 323,832     $ 316,825     $ 309,698     $ 312,567    
Return on average equity - GAAP   10.46 %   6.66 %   (18.66 )%   4.96 %   5.48 %   8.59 %   4.88 %  
Return on average equity - operating   8.84     6.66     2.51     4.96     5.48     7.77     4.88    
                               
Return on average assets reconciliation                              
Net income (loss) - GAAP   $ 8,151     $ 5,038     $ (15,337 )   $ 4,052     $ 4,329     $ 13,189     $ 7,559    
Gain on sale of trust company, net of income tax   (1,261 )                   (1,261 )      
Revaluation of net deferred tax asset           17,398                    
Operating net income   $ 6,890     $ 5,038     $ 2,061     $ 4,052     $ 4,329     $ 11,928     $ 7,559    
Average assets   $ 2,718,071     $ 2,704,822     $ 2,720,070     $ 2,701,387     $ 2,762,389     $ 2,711,483     $ 2,728,739    
Return on average assets - GAAP   1.20 %   0.76 %   (2.24 )%   0.60 %   0.63 %   0.98 %   0.56 %  
Return on average assets - operating   1.02     0.76     0.30     0.60     0.63     0.89     0.56    
                               
Efficiency ratio reconciliation                              
Noninterest income - GAAP   $ 5,331     $ 3,983     $ 3,568     $ 3,477     $ 5,287     $ 9,314     $ 9,144    
Gain on sale of trust company   (1,681 )                   (1,681 )      
Operating noninterest income   $ 3,650     $ 3,983     $ 3,568     $ 3,477     $ 5,287     $ 7,633     $ 9,144    
Noninterest expense - GAAP   $ 17,361     $ 18,392     $ 20,594     $ 17,504     $ 17,623     $ 35,753     $ 35,367    
Net interest income   $ 22,014     $ 21,517     $ 21,109     $ 20,291     $ 20,489     $ 43,531     $ 39,742    
Efficiency ratio   67.65 %   72.13 %   83.45 %   73.65 %   68.37 %   69.88 %   72.35 %  
                               
Tangible common equity to tangible assets reconciliation                              
Total shareholders' equity   $ 316,770     $ 307,059     $ 308,425     $ 324,754     $ 319,435     $ 316,770     $ 319,435    
Intangible assets   (23,662 )   (24,050 )   (24,393 )   (24,760 )   (25,151 )   (23,662 )   (25,151 )  
Total tangible common equity   $ 293,108     $ 283,009     $ 284,032     $ 299,994     $ 294,284     $ 293,108     $ 294,284    
                               
Total assets   $ 2,690,674     $ 2,718,665     $ 2,891,421     $ 2,638,412     $ 2,702,575     $ 2,690,674     $ 2,702,575    
Intangible assets   (23,662 )   (24,050 )   (24,393 )   (24,760 )   (25,151 )   (23,662 )   (25,151 )  
Total tangible assets   $ 2,667,012     $ 2,694,615     $ 2,867,028     $ 2,613,652     $ 2,677,424     $ 2,667,012     $ 2,677,424    
Tangible common equity to tangible assets   10.99 %   10.50 %   9.91 %   11.48 %   10.99 %   10.99 %   10.99 %  

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