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Atlantic Capital Bancshares, Inc. Reports First Quarter 2019 Results

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ATLANTA, April 25, 2019 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) announced net income from continuing operations for the quarter ended March 31, 2019 of $6.4 million, or $0.26 per diluted share, compared to $5.2 million, or $0.20 per diluted share, for the first quarter of 2018 and $7.5 million, or $0.29 per diluted share, for the fourth quarter of 2018.

On April 5, 2019, Atlantic Capital closed on the sale (the "branch sale") of 14 branches in Tennessee and northwest Georgia, including its mortgage business. This branch divestiture included the sale of approximately $589 million in deposits and $385 million in loans. The income and expenses related to these branches are included in discontinued operations, and prior period financial information has been retrospectively adjusted for the impact of discontinued operations.

"We are pleased to report strong and sustained momentum and profit improvement from continuing operations through a period of strategic transition. With the April 5th divestiture of our residential mortgage business and 14 banking offices in Tennessee and northwest Georgia, Atlantic Capital is now fully positioned to pursue its refined strategy centered on the Atlanta market and our national commercial lines of business. We believe this strategy, combined with our continued focus on sound credit quality, disciplined expense management, and strong growth in core deposit funding, will produce improved operating performance and further enhance the value of our company," remarked Douglas Williams, President and Chief Executive Officer.

First Quarter Highlights(1)

  • Increased tangible book value per share to $12.17, compared to $10.98 at March 31, 2018 and $11.88 at December 31, 2018. 
  • Expanded taxable equivalent net interest margin from continuing operations to 3.74% compared to 3.39% in the first quarter of 2018 and 3.66% in the fourth quarter of 2018.
  • Increased commercial and industrial loans held for investment $120.8 million, or 21.6% from March 31, 2018 and $34.1 million, or 21.1% annualized, from December 31, 2018. 
  • Increased average deposits from continuing operations $229.0 million, or 14.6%, compared to the first quarter of 2018 and $13.7 million, or 3.1% annualized, compared to the fourth quarter of 2018.
  • Repurchased 957,295 shares in the quarter totaling $17.1 million. Repurchased 1.8 million shares totaling $31.3 million since the announcement of the $85.0 million buyback program in November 2018.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $20.5 million, an increase of $3.0 million, or 17%, from the first quarter of 2018 and a decrease of $640,000 from the fourth quarter of 2018. The decrease in net interest income from the fourth quarter of 2018 was primarily the result of two fewer days in the first quarter of 2019 along with a decrease in the average balance of investment securities.

Atlantic Capital expects net interest income from continuing operations in future periods to be negatively impacted as a result of the $166 million in cash paid to the buyer at the closing of the branch sale. The Company anticipates restructuring the balance sheet following the transaction with a combination of excess cash, proceeds from sold securities, FHLB borrowings and brokered deposits.

Net interest margin from continuing operations was 3.74% in the first quarter of 2019, an increase of 35 basis points from the first quarter of 2018 and an increase of 8 basis points from the fourth quarter of 2018. These increases were the result of higher loan yields partially offset by an increase in deposit rates. Following the closing of the branch sale in the second quarter of 2019, the Company anticipates the net interest margin in future quarters to range from 3.50% to 3.55%.

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

The yield on loans from continuing operations in the first quarter of 2019 increased 66 basis points to 5.40% from the first quarter of 2018 and increased 9 basis points from the fourth quarter of 2018. Loan yields in the first quarter of 2019 benefited from the increases in short term interest rates during 2018.

The cost of deposits from continuing operations in the first quarter of 2019 was 1.09%, an increase of 46 basis points from the first quarter of 2018 and an increase of 16 basis points from the fourth quarter of 2018. The cost of interest bearing deposits from continuing operations increased 68 basis points to 1.61% from the first quarter of 2018 and 21 basis points from the fourth quarter of 2018. The higher rates on deposits were driven by higher rates on money market accounts as a result of continued competition for deposits and the impact of increases in short term interest rates during 2018.

The provision for loan losses for continuing operations was $814,000 in the first quarter of 2019, an increase of $42,000 compared to $772,000 in the first quarter of 2018 and an increase of $312,000 compared to $502,000 in the fourth quarter of 2018. The increase in the provision was primarily due to net charge-offs. Net charge-offs in the first quarter of 2019 totaled $558,000, including a $330,000 net charge off for a Tennessee commercial loan not included in the branch sale.

Noninterest income from continuing operations totaled $2.3 million in the first quarter of 2019 compared to $3.2 million in the first quarter of 2018 and $164,000 in the fourth quarter of 2018. The first quarter of 2018 included $518,000 in trust income earned prior to the sale of Southeastern Trust Company in the second quarter of 2018. The fourth quarter of 2018 included a loss of $1.9 million on the sale of investment securities to help fund the cash owed to the buyer at the closing of the branch sale.

Noninterest expense from continuing operations totaled $13.8 million in the first quarter of 2019, an increase of $508,000 compared to the first quarter of 2018, and an increase of $1.6 million compared to the fourth quarter of 2018. Salaries and employee benefits expense totaled $9.2 million in the first quarter of 2019, and accounted for most of the increase in expenses relative to both periods. This included severance expense and seasonally higher benefits expense, including payroll taxes, 401k expense and medical insurance expense. We expect quarterly expenses from continuing operations in 2019 to be approximately $13.5 million, as we recognize any additional savings from the branch sale offset by the additional expense from hiring new bankers and opening new locations.

Balance Sheet

Total loans held for investment were $1.73 billion at March 31, 2019, an increase of $172.2 million, or 11.0%, from March 31, 2018 and an increase of $6.5 million, or 1.5% annualized, from December 31, 2018. Commercial and industrial loans increased $120.8 million, or 21.6% from March 31, 2018 and increased $34.1 million, or 21.1% annualized, from December 31, 2018. Multifamily loans decreased $44.9 million from December 31, 2018 due to an increase in loan payoffs during the quarter.

At March 31, 2019, the allowance for loan losses was $18.1 million, or 1.04% of loans held for investment, an increase of $256,000 from December 31, 2018 and a decrease of $1.8 million from March 31, 2018. The decrease from March 31, 2018 to March 31, 2019 included a $3.1 million reduction in the allowance for loan losses in the fourth quarter of 2018 due to the transfer during the fourth quarter of 2018 of the branch sale loans to held for sale.

Non-performing assets from continuing operations totaled 0.34% of total assets, as of March 31, 2019, compared to 0.11% of total assets as of March 31, 2018 and 0.14% of total assets as of December 31, 2018. The increase was primarily due to the Company placing one SBA loan totaling $3.5 million on nonaccrual status during the first quarter of 2019.

Total average deposits from continuing operations were $1.79 billion for the first quarter of 2019, an increase of $229.0 million, or 14.6%, from the first quarter of 2018 and an increase of $13.7 million, or 3.1% annualized, from the fourth quarter of 2018. Noninterest bearing deposits were 32.1% of total average deposits in the first quarter of 2019, compared to 32.1% in the first quarter of 2018 and 33.6% in the fourth quarter of 2018.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, April 26, 2019, to discuss the financial results for the quarter ended March 31, 2019. Individuals wishing to participate in the conference call may do so by dialing 844.868.8848 from the United States and entering Conference ID 89772886. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com.

Non-GAAP Financial Measures

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

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

Forward-Looking Statements

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

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $2.9 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

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

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



ATLANTIC CAPITAL BANCSHARES, INC.      
Selected Financial Information      
                           
    2019   2018   First Quarter
2019 to 2018
Change
 
(in thousands, except share and per share data; taxable equivalent)   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter    
INCOME SUMMARY (1)                          
Interest income (2)   $ 26,297     $ 26,725     $ 24,114     $ 22,934     $ 21,382     23   %
Interest expense   5,773     5,560     4,720     4,392     3,841     50    
Net interest income   20,524     21,165     19,394     18,542     17,541     17    
Provision for loan losses   814     502     845     (173 )   772     5    
Net interest income after provision for loan losses   19,710     20,663     18,549     18,715     16,769     18    
Noninterest income   2,336     164     2,255     4,466     3,162     (26 )  
Noninterest expense   13,795     12,208     11,872     12,623     13,288     4    
Income from continuing operations before income taxes   8,251     8,619     8,932     10,558     6,643     24    
Income tax expense   1,811     1,136     1,934     2,180     1,452     25    
Net income from continuing operations   6,440     7,483     6,998     8,378     5,191     24    
Income (loss) from discontinued operations, net of tax   (1,063 )   1,347     (485 )   (227 )   (153 )   595    
Net income   $ 5,377     $ 8,830     $ 6,513     $ 8,151     $ 5,038     7   %
                           
PER SHARE DATA                          
Diluted earnings per share - continuing operations   $ 0.26     $ 0.29     $ 0.27     $ 0.32     $ 0.20        
Diluted earnings (loss) per share - discontinued operations   (0.04 )   0.05     (0.02 )   (0.01 )   (0.01 )      
Diluted earnings per share   0.21     0.34     0.25     0.31     0.19        
Book value per share   13.10     12.80     12.27     12.14     11.91        
Tangible book value per common share (3)   12.17     11.88     11.37     11.23     10.98        
                           
PERFORMANCE MEASURES                          
Return on average equity   6.80   % 10.90   % 8.07   % 10.46   % 6.66   %    
Return on average assets   0.77     1.21     0.92     1.20     0.76        
Taxable equivalent net interest margin - continuing operations   3.74     3.66     3.48     3.51     3.39        
Efficiency ratio - continuing operations   60.61     57.50     55.09     55.10     64.50        
                           
CAPITAL                          
Average equity to average assets   11.34   % 11.11   % 11.41   % 11.50   % 11.34   %    
Tangible common equity to tangible assets   10.51     10.25     10.38     10.99     10.50        
Tier 1 capital ratio   11.0   (6) 11.5     11.8     12.0     11.3        
Total risk based capital ratio   13.7   (6) 14.2     14.7     15.0     14.3        
Number of common shares outstanding - basic   24,466,964     25,290,419     26,103,666     26,102,217     25,772,208        
Number of common shares outstanding - diluted   24,719,273     25,480,233     26,281,849     26,336,871     26,000,216        
                           
ASSET QUALITY                          
Allowance for loan losses to loans held for investment (4)   1.04   % 1.03   % 1.00   % 1.01   % 1.01   %    
Net charge-offs to average loans (5)   0.11             0.03     0.05        
Non-performing assets to total assets   0.40     0.20     0.13     0.14     0.13        
                           
(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 banking business and branches subsequently 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)The first quarter 2019 and fourth quarter 2018 ratios are calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. (5)Annualized. (6)Amounts are estimates as of 3/31/19.



ATLANTIC CAPITAL BANCSHARES, INC.        
Financial Information from Discontinued Operations        
         
Assets and Liabilities from Discontinued Operations        
         
(in thousands)   March 31, 2019   December 31, 2018
Cash   $ 4,168     $ 4,234  
Loans held for sale - discontinued operations   384,779     373,030  
Premises held for sale - discontinued operations   7,736     7,722  
Goodwill - discontinued operations   4,555     4,555  
Other assets   1,158     1,405  
Total assets   $ 402,396     $ 390,946  
         
Deposits to be assumed - discontinued operations   $ 593,264     $ 585,429  
Securities sold under agreements to repurchase - discontinued operations   9,821     6,220  
Total liabilities   $ 603,085     $ 591,649  
Net liabilities   $ (200,689 )   $ (200,703 )


Components of Net Income (Loss) from Discontinued Operations    
                     
    2019   2018
(in thousands)   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter
                     
Net interest income   $ 3,125     $ 3,225     $ 3,266     $ 3,570     $ 4,079  
Provision for loan losses     (3,097 )            
Net interest income after provision   3,125     6,322     3,266     3,570     4,079  
Service charges   481     483     474     480     485  
Mortgage income   288     320     315     363     304  
Other income   21     47     22     22     32  
Total noninterest income   790     850     811     865     821  
Salaries and employee benefits   2,427     2,757     2,820     3,010     3,127  
Occupancy   339     479     556     511     470  
Equipment and software   123     158     217     203     201  
Amortization of intangibles   247     271     296     319     343  
Communications and data processing   389     440     381     346     362  
Divestiture expense   1,449     825              
Other noninterest expense   358     446     453     349     601  
Total noninterest expense   5,332     5,376     4,723     4,738     5,104  
Net income (loss) before provision for income taxes   (1,417 )   1,796     (646 )   (303 )   (204 )
Provision (benefit) for income taxes   (354 )   449     (161 )   (76 )   (51 )
Net income (loss) from discontinued operations   $ (1,063 )   $ 1,347     $ (485 )   $ (227 )   $ (153 )


ATLANTIC CAPITAL BANCSHARES, INC.            
Consolidated Balance Sheets (unaudited)            
             
    March 31,   December 31,   March 31,
(in thousands, except share data)   2019   2018   2018
ASSETS            
Cash and due from banks   $ 36,992     $ 42,895     $ 39,985  
Interest-bearing deposits in banks   76,720     216,040     62,787  
Other short-term investments   29,457     9,457     9,669  
Cash and cash equivalents   143,169     268,392     112,441  
Investment securities available-for-sale   402,640     402,486     458,730  
Other investments   28,844     29,236     37,949  
Loans held for sale   1,530     5,889     835  
Loans held for sale - discontinued operations(1)   384,779     373,030     397,094  
Loans held for investment(1)   1,734,557     1,728,073     1,562,327  
Less: allowance for loan losses(2)   (18,107 )   (17,851 )   (19,885 )
  Loans held for investment, net   1,716,450     1,710,222     1,542,442  
Premises held for sale - discontinued operations(1)   7,736     7,722     7,810  
Premises and equipment, net(1)   23,311     9,779     7,665  
Bank owned life insurance   65,486     65,149     64,014  
Goodwill - discontinued operations(1)   4,555     4,555     4,555  
Goodwill and intangible assets, net(1)   21,376     21,523     22,930  
Other real estate owned   971     874     927  
Other assets   55,040     56,583     61,273  
Total assets   $ 2,855,887     $ 2,955,440     $ 2,718,665  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Deposits:            
Noninterest-bearing demand(1)   $ 561,829     $ 602,252     $ 472,181  
Interest-bearing checking(1)   233,838     252,490     214,333  
Savings(1)   896     725     3,593  
Money market(1)   962,741     987,183     699,311  
Time(1)   22,069     10,623     3,074  
Brokered deposits   65,811     99,241     112,376  
Deposits to be assumed - discontinued operations(1)   593,264     585,429     591,432  
Total deposits   2,440,448     2,537,943     2,096,300  
Federal funds purchased           40,000  
Securities sold under agreements to repurchase - discontinued operations(1)   9,821     6,220     7,855  
Federal Home Loan Bank borrowings           185,000  
Long-term debt   49,746     49,704     49,577  
Other liabilities   35,245     37,920     32,874  
Total liabilities   2,535,260     2,631,787     2,411,606  
             
SHAREHOLDERS' EQUITY            
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019, December 31, 2018, and March 31, 2018            
Common stock, no par value; 100,000,000 shares authorized; 24,466,964, 25,290,419, and 25,772,208 shares issued and outstanding as of March 31, 2019, December 31, 2018, and March 31, 2018, respectively   276,346     291,771     300,893  
Retained earnings   47,191     42,187     18,693  
Accumulated other comprehensive (loss) income   (2,910 )   (10,305 )   (12,527 )
Total shareholders' equity   320,627     323,653     307,059  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,855,887     $ 2,955,440     $ 2,718,665  
             
(1)Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018, and prior periods have been adjusted retrospectively. (2)The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.



ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited) (1)
                     
(in thousands, except share and per share data)   Three months ended
    March 31, 2019   December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018
INTEREST INCOME                    
Loans, including fees   $ 22,752     $ 22,752     $ 20,117     $ 19,269     $ 17,972  
Investment securities available-for-sale   2,631     2,844     2,789     2,687     2,592  
Interest and dividends on other interest‑earning assets   814     1,032     1,111     880     715  
Total interest income   26,197     26,628     24,017     22,836     21,279  
                     
INTEREST EXPENSE                    
Interest on deposits   4,831     4,185     3,182     2,715     2,424  
Interest on Federal Home Loan Bank advances       487     637     766     509  
Interest on federal funds purchased and securities sold under agreements to repurchase   118     60     77     88     79  
Interest on long-term debt   824     828     824     823     829  
Total interest expense   5,773     5,560     4,720     4,392     3,841  
                     
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES   20,424     21,068     19,297     18,444     17,438  
Provision for loan losses   814     502     845     (173 )   772  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   19,610     20,566     18,452     18,617     16,666  
                     
NONINTEREST INCOME                    
Service charges   794     876     804     828     707  
Gains (losses) on sale of securities       (1,853 )       (2 )    
Gains (losses) on sale of other assets   (3 )       58     (166 )   (46 )
Trust income               507     518  
Derivatives income   (111 )   154     20     20     114  
Bank owned life insurance   360     380     379     378     369  
SBA lending activities   1,086     425     882     997     1,302  
Gain on sale of trust company               1,681      
Other noninterest income   210     182     112     223     198  
Total noninterest income   2,336     164     2,255     4,466     3,162  
                     
NONINTEREST EXPENSE                    
Salaries and employee benefits   9,213     7,573     7,332     7,911     8,950  
Occupancy   639     655     732     700     885  
Equipment and software   739     783     747     701     586  
Professional services   775     947     796     943     825  
Postage, printing and supplies   48     30     55     44     37  
Communications and data processing   675     772     566     657     681  
Marketing and business development   226     224     211     135     140  
FDIC premiums   235     157     154     143     108  
Other noninterest expense   1,245     1,067     1,279     1,389     1,076  
Total noninterest expense   13,795     12,208     11,872     12,623     13,288  
                     
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES   8,151     8,522     8,835     10,460     6,540  
Provision for income taxes   1,711     1,039     1,837     2,082     1,349  
NET INCOME FROM CONTINUING OPERATIONS   6,440     7,483     6,998     8,378     5,191  
DISCONTINUED OPERATIONS                    
Income (loss) from discontinued operations   $ (1,417 )   $ 1,796     $ (646 )   $ (303 )   $ (204 )
Provision (benefit) for income taxes   (354 )   449     (161 )   (76 )   (51 )
Net income (loss) from discontinued operations   (1,063 )   1,347     (485 )   (227 )   (153 )
NET INCOME   $ 5,377     $ 8,830     $ 6,513     $ 8,151     $ 5,038  
                     
Net Income (Loss) per Common Share Basic                    
Net income per common share - continuing operations   $ 0.26     $ 0.29     $ 0.27     $ 0.32     $ 0.20  
Net income (loss) per common share - discontinued operations   (0.04 )   0.05     (0.02 )   (0.01 )   (0.01 )
Net Income per Common Share Basic   0.22     0.34     0.25     0.31     0.20  
Net Income (Loss) per Common Share Diluted                    
Net income per common share - continuing operations   $ 0.26     $ 0.29     $ 0.27     $ 0.32     $ 0.20  
Net income (loss) per common share - discontinued operations   (0.04 )   0.05     (0.02 )   (0.01 )   (0.01 )
Net Income per Common Share Diluted   0.21     0.34     0.25     0.31     0.19  
                     
Weighted average shares - basic   24,855,171     25,919,445     26,103,397     26,010,914     25,750,824  
Weighted average shares - diluted   25,019,384     26,043,799     26,254,772     26,200,026     25,945,773  
                     
(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  
    March 31, 2019     December 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   $ 92,168     $ 463     2.04   %   $ 111,988     $ 638     2.26   %
Other short-term investments   11,680     86     2.99       19,078     142     2.95    
Investment securities:                            
Taxable investment securities   320,089     2,113     2.68       376,163     2,362     2.49    
Non-taxable investment securities(1)   80,012     618     3.13       74,302     579     3.09    
Total investment securities   400,101     2,731     2.77       450,465     2,941     2.59    
Loans - continuing operations   1,707,682     22,752     5.40       1,699,801     22,752     5.31    
FHLB and FRB stock   12,528     265     8.58       15,985     252     6.25    
Total interest-earning assets - continuing operations   2,224,159     26,297     4.80       2,297,317     26,725     4.62    
Loans held for sale - discontinued operations   381,783     4,541     4.82       377,052     4,509     4.74    
Total interest-earning assets   2,605,942     30,838     4.80       2,674,369     31,234     4.63    
Non-earning assets   223,130               216,958            
Total assets   $ 2,829,072               $ 2,891,327            
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,124,350     4,255     1.53       1,079,178     3,601     1.32    
Time deposits   12,847     38     1.20       10,116     33     1.29    
Brokered deposits   81,141     538     2.69       93,558     551     2.34    
Total interest-bearing deposits   1,218,338     4,831     1.61       1,182,852     4,185     1.40    
Total borrowings   18,056     118     2.65       91,155     547     2.38    
Total long-term debt   49,719     824     6.72       49,677     828     6.61    
Total interest-bearing liabilities - continuing operations   1,286,113     5,773     1.82       1,323,684     5,560     1.67    
Interest-bearing liabilities - discontinued operations   473,090     1,416     1.21       472,162     1,284     1.08    
Total interest-bearing liabilities   1,759,203     7,189     1.66       1,795,846     6,844     1.51    
Demand deposits   575,453               597,240            
Demand deposits - discontinued operations   128,977               135,774            
Other liabilities   44,627               41,120            
Shareholders' equity   320,812               321,347            
Total liabilities and shareholders' equity   $ 2,829,072               $ 2,891,327            
Net interest spread - continuing operations           2.98   %           2.95   %
Net interest income and net interest margin - continuing operations(2)       $ 20,524     3.74   %       $ 21,165     3.66   %
Net interest income and net interest margin(2)       $ 23,649     3.68   %       $ 24,390     3.62   %
                             
Non-taxable equivalent net interest margin           3.66   %           3.60   %
                             
(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          
       
    Three months ended  
    March 31, 2019     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   $ 92,168     $ 463     2.04   %   $ 78,207     $ 397     2.06   %
Other short-term investments   11,680     86     2.99       10,346     63     2.47    
Investment securities:                            
Taxable investment securities   320,089     2,113     2.68       375,771     2,116     2.28    
Non-taxable investment securities(1)   80,012     618     3.13       78,146     579     3.00    
Total investment securities   400,101     2,731     2.77       453,917     2,695     2.41    
Loans - continuing operations   1,707,682     22,752     5.40       1,536,636     17,972     4.74    
FHLB and FRB stock   12,528     265     8.58       17,895     255     5.78    
Total interest-earning assets - continuing operations   2,224,159     26,297     4.80       2,097,001     21,382     4.14    
Loans held for sale - discontinued operations   381,783     4,541     4.82       402,317     4,703     4.74    
Total interest-earning assets   2,605,942     30,838     4.80       2,499,318     26,085     4.23    
Non-earning assets   223,130               205,504            
Total assets   $ 2,829,072               $ 2,704,822            
Liabilities                            
Interest bearing deposits:                            
NOW, money market, and savings   1,124,350     4,255     1.53       934,415     1,917     0.83    
Time deposits   12,847     38     1.20       9,800     28     1.16    
Brokered deposits   81,141     538     2.69       117,787     479     1.65    
Total interest-bearing deposits   1,218,338     4,831     1.61       1,062,002     2,424     0.93    
Total borrowings   18,056     118     2.65       151,946     588     1.57    
Total long-term debt   49,719     824     6.72       49,550     829     6.79    
Total interest-bearing liabilities - continuing operations   1,286,113     5,773     1.82       1,263,498     3,841     1.23    
Interest-bearing liabilities - discontinued operations   473,090     1,416     1.21       458,029     624     0.55    
Total interest-bearing liabilities   1,759,203     7,189     1.66       1,721,527     4,465     1.05    
Demand deposits   575,453               502,829            
Demand deposits - discontinued operations   128,977               135,901            
Other liabilities   44,627               37,744            
Shareholders' equity   320,812               306,821            
Total liabilities and shareholders' equity   $ 2,829,072               $ 2,704,822            
Net interest spread - continuing operations           2.98   %           2.90   %
Net interest income and net interest margin - continuing operations(2)       $ 20,524     3.74   %       $ 17,541     3.39   %
Net interest income and net interest margin(2)       $ 23,649     3.68   %       $ 21,620     3.51   %
                             
Non-taxable equivalent net interest margin           3.66   %           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)                            
                             
                             
(dollars in thousands)   March 31, 2019   December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018   Linked Quarter Change   Year Over Year Change
                             
Loans held for sale                            
Loans held for sale   $ 1,530     $ 5,889     $ 1,886     $ 1,612     $ 835     $ (4,359 )   $ 695  
Loans held for sale - discontinued operations   384,779     373,030     375,976     382,732     397,094     11,749     (12,315 )
Total loans held for sale   $ 386,309     $ 378,919     $ 377,862     $ 384,344     $ 397,929     $ 7,390     $ (11,620 )
                             
Loans held for investment                            
Commercial loans:                            
Commercial and industrial   $ 679,489     $ 645,374     $ 581,737     $ 546,497     $ 558,654     $ 34,115     $ 120,835  
Commercial real estate:                            
Multifamily   43,929     88,826     108,001     92,013     92,016     (44,897 )   (48,087 )
Owner occupied   304,945     298,291     295,801     265,576     260,270     6,654     44,675  
Investment   394,087     407,711     409,145     386,072     389,410     (13,624 )   4,677  
Construction and land:                            
1-4 family residential construction   2,067     1,006         378     287     1,061     1,780  
Other construction, development, and land   171,818     155,226     147,114     134,764     131,466     16,592     40,352  
Mortgage warehouse loans   22,267     27,967     27,838     38,352     44,575     (5,700 )   (22,308 )
Total commercial loans   1,618,602     1,624,401     1,569,636     1,463,652     1,476,678     (5,799 )   141,924  
                             
Residential:                            
Residential mortgages   32,915     32,800     24,904     20,270     19,446     115     13,469  
Home equity   23,171     22,822     33,410     32,638     34,673     349     (11,502 )
Total residential loans   56,086     55,622     58,314     52,908     54,119     464     1,967  
                             
Consumer   35,203     25,851     26,825     25,531     23,214     9,352     11,989  
Other   26,663     24,712     10,579     12,409     11,769     1,951     14,894  
    1,736,554     1,730,586     1,665,354     1,554,500     1,565,780     5,968     170,774  
Less net deferred fees and other unearned income   (1,997 )   (2,513 )   (2,896 )   (2,921 )   (3,453 )   516     1,456  
Total loans held for investment   $ 1,734,557     $ 1,728,073     $ 1,662,458     $ 1,551,579     $ 1,562,327     $ 6,484     $ 172,230  
                             
Total loans   $ 2,120,866     $ 2,106,992     $ 2,040,320     $ 1,935,923     $ 1,960,256     $ 13,874     $ 160,610  
                             
(1)Loans held for sale-discontinued operations and loans held for investment have been reported retrospectively for all periods prior to December 31, 2018.


ATLANTIC CAPITAL BANCSHARES, INC.              
Allowance for Loan Losses Activity and Credit Quality              
                       
    2019   2018  
(dollars in thousands)   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter  
                       
Balance at beginning of period   $ 17,851     $ 20,443     $ 19,583     $ 19,885     $ 19,344    
Provision for loan losses   814     595     758     (173 )   811    
Provision for loan losses (reversal of provision) - discontinued operations       (3,097 )              
Provision for PCI loan losses       (93 )   87         (39 )  
Loans charged-off:                      
Commercial and industrial   (549 )               (126 )  
Commercial real estate               (50 )      
Construction and land                      
Residential mortgages   (9 )   (5 )           (70 )  
Home equity               (102 )   (58 )  
Consumer   (37 )   (3 )       (10 )   (3 )  
Other                      
Total loans charged-off   (595 )   (8 )       (162 )   (257 )  
Recoveries on loans previously charged-off:                      
Commercial and industrial   14                 19    
Commercial real estate               28        
Construction and land   3                    
Residential mortgages   7     4                
Home equity   1                    
Consumer   12     7     15     5     7    
Other                      
Total recoveries   37     11     15     33     26    
Net charge-offs   $ (558 )   $ 3     $ 15     $ (129 )   $ (231 )  
Balance at period end (1)   $ 18,107     $ 17,851     $ 20,443     $ 19,583     $ 19,885    
                       
Loans                      
Loans held for sale   $ 1,530     $ 5,889     $ 1,886     $ 1,612     $ 835    
Loans held for sale - discontinued operations   384,779     373,030     375,976     382,732     397,094    
Loans held for investment - continuing operations   1,734,557     1,728,073     1,662,458     1,551,579     1,562,327    
Total loans   $ 2,120,866     $ 2,106,992     $ 2,040,320     $ 1,935,923     $ 1,960,256    
                       
Non-performing loans - continuing operations (4)   $ 8,830     $ 3,252     $ 2,160     $ 1,697     $ 1,941    
Non-performing loans - discontinued operations (4)   1,506     1,924     556     709     560    
Total non-performing loans   10,336     5,176     2,716     2,406     2,501    
Foreclosed properties (OREO)   971     874     968     1,288     927    
Total nonperforming assets   $ 11,307     $ 6,050     $ 3,684     $ 3,694     $ 3,428    
                       
Allowance for loan losses to loans held for investment (2)   1.04   % 1.03   % 1.00   % 1.01   % 1.01   %
Net charge-offs to average loans (3)   0.11             0.03     0.05    
                       
Non-performing loans as a percentage of total loans - continuing operations (4)   0.51   % 0.19   % 0.13   % 0.11   % 0.12   %
Non-performing loans as a percentage of total loans - discontinued operations (4)   0.39     0.52     0.15     0.19     0.14    
Non-performing loans as a percentage of total loans (4)   0.49     0.25     0.13     0.12     0.13    
                       
Non-performing assets as a percentage of total assets - continuing operations (4)   0.34   % 0.14   % 0.11   % 0.11   % 0.11   %
Non-performing assets as a percentage of total assets - discontinued operations (4)   0.05     0.07     0.02     0.03     0.02    
Non-performing assets as a percentage of total assets (4)   0.40     0.20     0.13     0.14     0.13    
                       
(1) The allowance for loan losses has not been adjusted retrospectively in periods prior to December 31, 2018. (2) The first quarter 2019 and fourth quarter 2018 ratios are calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. (3) Annualized. (4) Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.                    
Period End Deposits                            
                             
(dollars in thousands)   March 31, 2019   December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018   Linked Quarter Change   Year Over Year Change
                             
DDA   $ 561,829     $ 602,252     $ 518,155     $ 464,282     $ 472,181     $ (40,423 )   $ 89,648  
NOW   233,838     252,490     407,214     241,461     214,333     (18,652 )   19,505  
Savings   896     725     698     951     3,593     171     (2,697 )
Money market   962,741     987,183     759,583     647,247     699,311     (24,442 )   263,430  
Time   22,069     10,623     10,396     10,359     3,074     11,446     18,995  
Brokered   65,811     99,241     79,119     92,656     112,376     (33,430 )   (46,565 )
Total deposits - continuing operations   1,847,184     1,952,514     1,775,165     1,456,956     1,504,868     (105,330 )   342,316  
Deposits to be assumed - discontinued operations   593,264     585,429     604,659     609,631     591,432     7,835     1,832  
Total deposits   $ 2,440,448     $ 2,537,943     $ 2,379,824     $ 2,066,587     $ 2,096,300     $ (97,495 )   $ 344,148  
                             
Payments clients   $ 361,192     $ 397,608     $ 258,320     $ 251,748     $ 311,943     $ (36,416 )   $ 49,249  
                             
Average Deposits                            
                             
    2019   2018   Linked Quarter Change   Q1 2019 vs Q1 2018
(dollars in thousands)   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter    
                             
DDA   $ 575,453     $ 597,239     $ 561,355     $ 489,722     $ 502,829     $ (21,786 )   $ 72,624  
NOW   276,212     280,449     314,759     287,283     236,796     (4,237 )   39,416  
Savings   884     712     616     674     527     172     357  
Money market   847,254     798,017     697,578     645,034     697,092     49,237     150,162  
Time   12,847     10,117     10,406     9,855     9,800     2,730     3,047  
Brokered   81,141     93,558     67,937     100,425     117,787     (12,417 )   (36,646 )
Total deposits - continuing operations   1,793,791     1,780,092     1,652,651     1,532,993     1,564,831     13,699     228,960  
Deposits to be assumed - discontinued operations   593,313     600,769     601,421     602,832     589,054     (7,456 )   4,259  
Total deposits   $ 2,387,104     $ 2,380,861     $ 2,254,072     $ 2,135,825     $ 2,153,885     $ 6,243     $ 233,219  
                             
Payments clients   $ 295,059     $ 263,800     $ 227,029     $ 219,016     $ 256,794     $ 31,259     $ 38,265  
                             
Noninterest bearing deposits as a percentage of average deposits - continuing operations   32.1 %   33.6 %   34.0 %   31.9 %   32.1 %        
Cost of deposits - continuing operations   1.09 %   0.93 %   0.76 %   0.71 %   0.63 %        



ATLANTIC CAPITAL BANCSHARES, INC.  
Non-GAAP Performance and Financial Measures Reconciliation  
                       
                       
    2019   2018  
(in thousands, except share and per share data)   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First Quarter  
                       
Taxable equivalent interest income reconciliation                      
Interest income - GAAP   $ 26,197     $ 26,628     $ 24,017     $ 22,836     $ 21,279    
Taxable equivalent adjustment   100     97     97     98     103    
Interest income - taxable equivalent   $ 26,297     $ 26,725     $ 24,114     $ 22,934     $ 21,382    
                       
Taxable equivalent net interest income reconciliation                      
Net interest income - GAAP   $ 20,424     $ 21,068     $ 19,297     $ 18,444     $ 17,438    
Taxable equivalent adjustment   100     97     97     98     103    
Net interest income - taxable equivalent   $ 20,524     $ 21,165     $ 19,394     $ 18,542     $ 17,541    
                       
Taxable equivalent net interest margin reconciliation                      
Net interest margin - GAAP   3.66   % 3.60   % 3.45   % 3.52   % 3.49   %
Impact of taxable equivalent adjustment   0.02     0.02     0.02     0.02     0.02    
Net interest margin - taxable equivalent   3.68   % 3.62   % 3.47   % 3.54   % 3.51   %
                       
Income before income taxes reconciliation                      
Income before income taxes - GAAP   $ 8,151     $ 8,522     $ 8,835     $ 10,460     $ 6,540    
Taxable equivalent adjustment   100     97     97     98     103    
Income before income taxes   $ 8,251     $ 8,619     $ 8,932     $ 10,558     $ 6,643    
                       
Income tax reconciliation                      
Income tax expense - GAAP   $ 1,711     $ 1,039     $ 1,837     $ 2,082     $ 1,349    
Taxable equivalent adjustment   100     97     97     98     103    
Income tax expense   $ 1,811     $ 1,136     $ 1,934     $ 2,180     $ 1,452    
                       
Tangible book value per common share reconciliation                      
Total shareholders' equity   $ 320,627     $ 323,653     $ 320,237     $ 316,770     $ 307,059    
Intangible assets   (22,848 )   (23,095 )   (23,367 )   (23,662 )   (24,050 )  
Total tangible common equity   $ 297,779     $ 300,558     $ 296,870     $ 293,108     $ 283,009    
Common shares outstanding   24,466,964     25,290,419     26,103,666     26,102,217     25,772,208    
Book value per common share - GAAP   $ 13.10     $ 12.80     $ 12.27     $ 12.14     $ 11.91    
Tangible book value   12.17     11.88     11.37     11.23     10.98    
                       
Tangible common equity to tangible assets reconciliation                      
Total shareholders' equity   $ 320,627     $ 323,653     $ 320,237     $ 316,770     $ 307,059    
Intangible assets   (22,848 )   (23,095 )   (23,367 )   (23,662 )   (24,050 )  
Total tangible common equity   $ 297,779     $ 300,558     $ 296,870     $ 293,108     $ 283,009    
                       
Total assets   $ 2,855,887     $ 2,955,440     $ 2,882,721     $ 2,690,674     $ 2,718,665    
Intangible assets   (22,848 )   (23,095 )   (23,367 )   (23,662 )   (24,050 )  
Total tangible assets   $ 2,833,039     $ 2,932,345     $ 2,859,354     $ 2,667,012     $ 2,694,615    
Tangible common equity to tangible assets   10.51   % 10.25   % 10.38   % 10.99   % 10.50   %

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