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Atlantic Capital Bancshares, Inc. Reports First Quarter 2019 Results

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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