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Atlantic Capital Bancshares, Inc. Reports Third Quarter 2019 Results

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

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

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

Third Quarter Highlights(1)

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

Income Statement                                                                                                                                                       

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

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

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

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

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

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

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

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

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

Balance Sheet

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

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

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

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

Earnings Conference Call

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

Non-GAAP Financial Measures

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

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

Forward-Looking Statements

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

About Atlantic Capital Bancshares

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

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

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


ATLANTIC
CAPITAL
BANCSHARES, INC.
Selected Financial Information

                                             
                  For the nine months ended  
    2019     2018     September 30,   
  Third   Second   First   Fourth   Third              
(in thousands, except share and per share data; taxable equivalent)   Quarter   Quarter   Quarter   Quarter   Quarter   2019   2018    
INCOME SUMMARY (1)                                            
Interest income (2)   $  26,624   $  26,686   $  26,297     $  26,725   $  24,114     $  79,607   $  68,430    
Interest expense      6,536      6,709      5,773        5,560      4,720        19,018      12,953    
Net interest income      20,088      19,977      20,524        21,165      19,394        60,589      55,477    
Provision for loan losses      413      698      814        502      845        1,925      1,444    
Net interest income after provision for loan losses      19,675      19,279      19,710  
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