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Atlantic Capital Bancshares, Inc. Reports Second Quarter 2017 Results

ATLANTA, July 28, 2017 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) (“Atlantic Capital”) announced results of the quarter ended June 30, 2017.

Second Quarter Highlights

  • Reported net income of $4.3 million, or $0.17 per diluted share, compared to $3.2 million, or $0.13 per diluted share, in the first quarter of 2017.
  • Reported return on average assets of 0.63% and tangible book value per share of $11.47.
  • Increased taxable equivalent net interest margin to 3.26% from 3.20% in the first quarter of 2017.
  • Lowered efficiency ratio to 68.4% from 76.8% in the first quarter of 2017.
  • Increased loans held for investment $60.4 million, or 12.7% annualized, to $1.96 billion from March 31, 2017.
  • Increased average quarterly deposits $47 million, or 8.8% annualized, to $2.16 billion from the first quarter of 2017.

“Atlantic Capital reported improved results for the second quarter of 2017 reflecting strong loan growth, net interest margin expansion, higher non-interest income, and good expense control,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the second quarter of 2017, Atlantic Capital recorded net income of $4.3 million, or $0.17 per diluted share, compared to net income of $3.2 million, or $0.13 per diluted share, in the first quarter of 2017.

Taxable equivalent net interest income improved to $20.7 million in the second quarter of 2017 from $19.5 million the first quarter of 2017. This increase was driven largely by an increase in interest-earning assets and the yield benefit from the Fed Funds rate increase in March 2017. Net accretion income on acquired loans totaled $629,000 and premium amortization on acquired time deposits totaled $86,000 in the second quarter of 2017 for total purchase accounting income of $715,000, a decrease of $106,000 compared to the first quarter of 2017.

Taxable equivalent net interest margin was 3.26% in the second quarter of 2017 compared to 3.20% in the first quarter of 2017. The margin benefitted from the increase in the Fed Funds rate in March 2017. Loan yields increased 21 basis points to 4.37%, while cost of deposits increased 7 basis points to 0.46%. The accretion of the acquired loan discount and amortization of time deposit premium contributed 11 basis points to the net interest margin in the second quarter of 2017 compared to 13 basis points in the first quarter of 2017.

The provision for loan losses was $2.0 million in the second quarter of 2017 compared to $634,000 in the first quarter of 2017. This increase was primarily related to the downgrade of a $7.7 million loan relationship to nonperforming and an additional $1.0 million specific reserve related to this downgrade.

Noninterest income totaled $5.3 million in the second quarter of 2017, an increase of $1.4 million from the first quarter of 2017. This increase included a $302,000 gain on the sale of the Cleveland branch, a $240,000 gain on sale of other real estate, and a $426,000 gain on the sale of a tax credit investment.

Noninterest expense totaled $17.6 million in the second quarter of 2017 compared to $17.7 million in the first quarter of 2017. The second quarter of 2017 included $304,000 in merger expenses related to the rebranding of the legacy First Security branches. Salaries and employee benefits decreased in the second quarter of 2017 by $462,000 to $10.6 million mainly from seasonally higher payroll taxes in the first quarter of 2017.

Total loans were $1.96 billion at June 30, 2017, an increase of $32.9 million from March 31, 2017, after taking into account the sale of $27.9 million in branch loans held for sale in connection with the Cleveland branch sale. Loans held for investment were $1.96 billion at June 30, 2017, an increase of $60.4 million from March 31, 2017. Mortgage warehouse participations decreased $10.4 million in the second quarter to $48.0 million at June 30, 2017, primarily as a result of a reduction in loan participation commitments. Excluding the decrease in mortgage warehouse loans, loans held for investment increased $70.7 million, or 15.3% annualized, in the second quarter of 2017.

At June 30, 2017, the allowance for loan losses was $21.9 million, or 1.11% of loans held for investment, compared to $19.9 million, or 1.05% of loans held for investment as of March 31, 2017. Annualized net charge-offs to average loans in the second quarter of 2017 totaled 0.01% and in the first six months of 2017 totaled 0.14%. Nonperforming assets totaled $14.1 million, or 0.52% of total assets, as of June 30, 2017, compared to $5.9 million, or 0.21% of total assets, as of March 31, 2017.

Total average deposits for the second quarter of 2017 were $2.16 billion, an increase of $46.7 million, or 8.8% annualized, from the first quarter of 2017. Average noninterest bearing deposits increased $6.0 million to $626 million in the second quarter of 2017 and accounted for 29.0% of average total deposits, compared to $620 million, or 29.4%, of average total deposits for the first quarter of 2017. Average deposits associated with our payments business were $244 million in the second quarter of 2017, a decrease of $29.5 million from the first quarter of 2017.

Earnings Conference Call

Atlantic Capital will host a conference call at 10:00 a.m. EDT on Friday, July 28, 2017, to discuss the financial results for the quarter ended June 30, 2017. Individuals wishing to participate in the conference call may do so by dialing 844.868.8848 from the United States and entering Conference ID 89772886. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. Atlantic Capital management uses non-GAAP financial measures, including: (i) operating net income; (ii) operating non-interest expense; (iii) operating non-interest income; (iv) taxable equivalent net interest income; (v) taxable equivalent net interest margin; (vi) efficiency ratio; (vii) operating return on average assets; (viii) operating return on average equity; (ix) tangible common equity; (x) deposits excluding deposits to be assumed in branch sales; (xi) loans held for investment excluding mortgage warehouse loans; and (xii) tangible book value per share, in its analysis of the Company's performance. Operating net income excludes the following from net income available to common shareholders: merger and conversion costs, net gains on branch sales, and the income tax effect of adjustments. Operating non-interest expense excludes merger and conversion costs from non-interest expense as well as costs related to the sale of branches. The efficiency ratio excludes merger and conversion costs. Tangible common equity and tangible book value exclude goodwill and core deposit intangible assets from shareholders' equity and total assets.

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 “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 $2.7 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers banking, treasury management, capital markets, trust, and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, northwest Georgia and Charlotte, North Carolina. Atlantic Capital also provides specialized financial services to select clients nationally.

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information
2017 2016 For the six months ended
June 30,
(in thousands, except share and per share data; taxable equivalent) Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
2017 2016
INCOME SUMMARY
Interest income (1) $24,545 $22,716 $22,530 $22,428 $22,190 $47,261 $43,743
Interest expense 3,833 3,208 3,029 2,941 2,907 7,041 5,539
Net interest income 20,712 19,508 19,501 19,487 19,283 40,220 38,204
Provision for loan losses 1,980 634 2,208 463 777 2,614 1,145
Net interest income after provision for loan losses 18,732 18,874 17,293 19,024 18,506 37,606 37,059
Operating noninterest income (2) 5,287 3,857 4,430 4,002 4,995 9,144 9,415
Operating noninterest expense (3) 17,623 17,744 18,571 16,717 17,428 35,367 34,945
Operating income before income taxes 6,396 4,987 3,152 6,309 6,073 11,383 11,529
Operating income tax expense 2,067 1,757 1,417 2,245 2,381 3,824 4,446
Operating net income (2)(3) 4,329 3,230 1,735 4,064 3,692 7,559 7,083
Merger related expenses, net of income tax 126 356 743 1,203
Net gain on sale of branches, net of income tax 2,198 2,198
Net income - GAAP $4,329 $3,230 $1,609 $3,708 $5,147 $7,559 $8,078
PER SHARE DATA
Diluted earnings per share - GAAP $0.17 $0.13 $0.06 $0.15 $0.20 $0.29 $0.32
Diluted earnings per share - operating (2)(3) 0.17 0.13 0.07 0.16 0.15 0.29 0.28
Book value per share 12.45 12.18 12.10 12.36 12.29 12.45 12.29
Tangible book value per share (4) 11.47 11.16 11.05 11.29 11.15 11.47 11.15
PERFORMANCE MEASURES
Return on average equity - GAAP 5.48 %4.19 %2.09 %4.84 %6.88 %4.88 %5.47 %
Return on average equity - operating (2)(3) 5.48 4.19 2.25 5.30 4.94 4.88 4.79
Return on average assets - GAAP 0.63 0.48 0.24 0.55 0.76 0.56 0.61
Return on average assets - operating (2)(3) 0.63 0.48 0.25 0.60 0.54 0.56 0.53
Taxable equivalent net interest margin 3.26 3.20 3.11 3.12 3.12 3.23 3.18
Efficiency ratio 68.37 76.78 78.33 71.57 72.00 72.35 73.58
CAPITAL
Average equity to average assets 11.47 %11.44 %11.33 %11.28 %11.01 %11.45 %11.07 %
Tangible common equity to tangible assets 11.01 10.27 10.27 10.30 9.93 11.01 9.93
Tier 1 capital ratio 10.8 (6)10.7 10.3 9.7 10.0 10.8 (6)10.0
Total risk based capital ratio 13.9 (6)13.8 13.3 12.5 13.0 13.9 (6)13.0
Number of common shares outstanding - basic 25,654,521 25,535,013 25,093,135 24,950,099 24,750,163 25,654,521 24,750,163
Number of common shares outstanding - diluted 25,931,671 25,836,809 25,673,841 25,342,883 25,267,803 25,931,671 25,267,803
ASSET QUALITY
Allowance for loan losses to loans held for investment 1.11 %1.05 %1.04 %0.92 %0.95 %1.11 %0.95 %
Net charge-offs to average loans (5) 0.01 0.26 0.03 0.06 0.14 0.17
NPAs to total assets 0.52 0.21 0.13 0.09 0.07 0.52 0.07
(1)Interest income has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate. (2)Excludes gain on sale of branches. (3)Excludes merger related and divestiture expenses. (4)Excludes effect of acquisition related intangibles. (5)Annualized. (6)Amounts are estimates as of 6/30/17.


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
June 30, March 31, December 31, June 30,
(in thousands, except share data) 2017 2017 2016 2016
ASSETS
Cash and due from banks $45,008 $34,626 $36,790 $40,309
Interest-bearing deposits in banks 36,171 158,920 118,039 239,387
Other short-term investments 17,459 20,870 10,896 20,548
Cash and cash equivalents 98,638 214,416 165,725 300,244
Investment securities available-for-sale 450,273 456,942 347,705 328,370
Other investments 26,741 28,331 23,806 22,575
Loans held for sale 1,744 29,241 35,219 29,061
Loans held for investment 1,962,091 1,901,724 1,981,330 1,942,137
Less: allowance for loan losses (21,870) (19,939) (20,595) (18,377)
Loans held for investment, net 1,940,221 1,881,785 1,960,735 1,923,760
Branch premises held for sale 2,897 2,995
Premises and equipment, net 11,997 12,308 11,958 21,770
Bank owned life insurance 62,901 62,516 62,160 61,378
Goodwill and intangible assets, net 28,446 29,186 29,567 31,674
Other real estate owned 1,819 1,869 1,872 951
Other assets 79,795 82,587 85,801 88,039
Total assets $2,702,575 $2,802,078 $2,727,543 $2,807,822
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $612,744 $606,386 $643,471 $592,043
Interest-bearing checking 250,254 259,760 264,062 231,091
Savings 30,170 30,756 27,932 30,839
Money market 882,824 916,390 912,493 913,094
Time 142,915 150,867 157,810 178,615
Brokered deposits 195,047 209,385 200,223 212,623
Deposits to be assumed in branch sale 29,495 31,589
Total deposits 2,113,954 2,203,039 2,237,580 2,158,305
Federal funds purchased and securities sold under agreements to repurchase 15,000 14,047
Federal Home Loan Bank borrowings 180,000 217,000 110,000 240,000
Long-term debt 49,451 49,408 49,366 49,281
Other liabilities 24,735 21,664 26,939 42,123
Total liabilities 2,383,140 2,491,111 2,423,885 2,503,756
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2017, March 31, 2017, December 31, 2016, and June 30, 2016
Common stock, no par value; 100,000,000 shares authorized; 25,654,521, 25,535,013, 25,093,135, and 24,750,163 shares issued and outstanding as of June 30, 2017, March 31, 2017, December 31, 2016, and June 30, 2016, respectively 297,610 296,608 292,747 289,353
Retained earnings 24,095 19,766 16,536 11,219
Accumulated other comprehensive income (loss) (2,270) (5,407) (5,625) 3,494
Total shareholders’ equity 319,435 310,967 303,658 304,066
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,702,575 $2,802,078 $2,727,543 $2,807,822


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share data) Three months ended Six months ended
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
June 30,
2017
June 30,
2016
INTEREST INCOME
Loans, including fees $21,361 $19,994 $20,363 $20,511 $20,282 $41,355 $39,907
Investment securities available-for-sale 2,355 2,018 1,477 1,293 1,327 4,373 2,928
Interest and dividends on other interest‑earning assets 606 449 467 491 507 1,055 780
Total interest income 24,322 22,461 22,307 22,295 22,116 46,783 43,615
INTEREST EXPENSE
Interest on deposits 2,481 2,047 1,929 1,956 1,841 4,528 3,514
Interest on Federal Home Loan Bank advances 452 302 234 133 147 754 191
Interest on federal funds purchased and securities sold under agreements to repurchase 76 36 38 37 87 112 154
Interest on long-term debt 824 823 828 815 832 1,647 1,642
Other 38
Total interest expense 3,833 3,208 3,029 2,941 2,907 7,041 5,539
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 20,489 19,253 19,278 19,354 19,209 39,742 38,076
Provision for loan losses 1,980 634 2,208 463 777 2,614 1,145
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,509 18,619 17,070 18,891 18,432 37,128 36,931
NONINTEREST INCOME
Service charges 1,274 1,349 1,327 1,270 1,392 2,623 2,890
Gains on sale of securities available-for-sale 11 44
Gains on sale of other assets 666 78 238 71 31 744 79
Mortgage income 388 257 499 632 447 645 786
Trust income 488 407 350 361 386 895 700
Derivatives income 116 (51) 346 69 98 65 163
Bank owned life insurance 384 378 395 424 398 762 791
SBA lending activities 1,171 1,227 599 959 1,204 2,398 2,084
TriNet lending activities 20 20 357 761 40 1,144
Gains on sale of branches 302 3,885 302 3,885
Other noninterest income 478 192 319 216 267 670 734
Total noninterest income 5,287 3,857 4,430 4,002 8,880 9,144 13,300
NONINTEREST EXPENSE
Salaries and employee benefits 10,603 11,065 11,269 10,059 10,420 21,668 20,975
Occupancy 1,074 1,230 995 1,235 1,274 2,304 2,374
Equipment and software 996 805 694 862 724 1,801 1,410
Professional services 973 904 968 442 760 1,877 1,508
Postage, printing and supplies 78 85 73 61 159 163 328
Communications and data processing 1,069 987 1,064 617 694 2,056 1,610
Marketing and business development 179 270 247 269 317 449 584
FDIC premiums 132 314 262 415 493 446 891
Merger and conversion costs 304 204 579 1,210 304 1,959
Amortization of intangibles 425 470 495 520 668 895 1,430
Foreclosed property/problem asset expense 107 3 666 39 55 110 159
Other noninterest expense 1,683 1,611 1,838 2,198 2,169 3,294 3,981
Total noninterest expense 17,623 17,744 18,775 17,296 18,943 35,367 37,209
INCOME BEFORE PROVISION FOR INCOME TAXES 6,173 4,732 2,725 5,597 8,369 10,905 13,022
Provision for income taxes 1,844 1,502 1,116 1,889 3,222 3,346 4,944
NET INCOME $4,329 $3,230 $1,609 $3,708 $5,147 $7,559 $8,078
Net income per common share ‑ basic $0.17 $0.13 $0.06 $0.15 $0.21 $0.30 $0.33
Net income per common share ‑ diluted $0.17 $0.13 $0.06 $0.15 $0.20 $0.29 $0.32
Weighted average shares - basic 25,621,910 25,320,690 25,027,304 24,891,822 24,644,755 25,472,132 24,565,328
Weighted average shares - diluted 25,831,281 25,672,286 25,407,728 25,260,280 25,158,694 25,753,633 25,082,968


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Three months ended
June 30, 2017 March 31, 2017
(dollars in thousands; taxable equivalent) Average
Balance
Interest
Income/
Expense
Tax
Equivalent
Yield/Rate
Average
Balance
Interest
Income/
Expense
Tax
Equivalent
Yield/Rate
Assets
Interest bearing deposits in other banks $85,935 $233 1.09% $72,494 $165 0.92%
Other short-term investments 23,683 117 1.98 11,052 47 1.72
Investment securities:
Taxable investment securities 373,170 1,862 2.00 339,614 1,523 1.82
Non-taxable investment securities(1) 81,920 716 3.51 79,721 750 3.82
Total investment securities 455,090 2,578 2.27 419,335 2,273 2.20
Total loans 1,962,374 21,361 4.37 1,949,385 19,994 4.16
FHLB and FRB stock 19,352 256 5.31 19,608 237 4.90
Total interest-earning assets 2,546,434 24,545 3.87 2,471,874 22,716 3.73
Non-earning assets 215,955 222,841
Total assets $2,762,389 $2,694,715
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,183,744 1,641 0.56 1,137,088 1,315 0.47
Time deposits 149,898 270 0.72 163,021 272 0.68
Brokered deposits 198,703 570 1.15 191,558 460 0.97
Total interest-bearing deposits 1,532,345 2,481 0.65 1,491,667 2,047 0.56
Total borrowings 214,931 528 0.99 194,478 338 0.70
Total long-term debt 49,423 824 6.69 49,381 823 6.76
Total interest-bearing liabilities 1,796,699 3,833 0.86 1,735,526 3,208 0.75
Demand deposits 626,330 620,325
Other liabilities 22,535 30,603
Shareholders' equity 316,825 308,261
Total liabilities and shareholders' equity $2,762,389 $2,694,715
Net interest spread 3.01% 2.98%
Net interest income and net interest margin(2) $20,712 3.26% $19,508 3.20%
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, 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.


Three months ended
June 30, 2017 March 31, 2017
(dollars in thousands; taxable equivalent) Amount Yield Amount Yield
Reported interest income on loans $21,361 4.37% $19,994 4.16%
Less: accretion of loan acquisition discounts (629) (702)
Core interest income on loans $20,732 4.24% $19,292 4.01%
Amount Net Interest
Margin
Amount Net Interest
Margin
Net interest income / net interest margin $20,712 3.26% $19,508 3.20%
Less:
Accretion of loan acquisition discounts (629) (702)
Accretion of time deposit premium (86) (119)
Net interest income / net interest margin excluding purchase accounting $19,997 3.15% $18,687 3.07%


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Six months ended
June 30, 2017 June 30, 2016
(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 $79,251 $398 1.01% $74,355 $301 0.81%
Other short-term investments 17,402 164 1.90 28,773 183 1.28
Investment securities:
Taxable investment securities 356,485 3,386 1.92 334,059 2,681 1.61
Non-taxable investment securities(1) 80,826 1,465 3.66 24,025 375 3.14
Total investment securities 437,311 4,851 2.24 358,084 3,056 1.72
Total loans 1,955,915 41,355 4.26 1,941,217 39,906 4.13
FHLB and FRB stock 19,479 493 5.10 11,845 297 5.04
Total interest-earning assets 2,509,358 47,261 3.80 2,414,273 43,743 3.64
Non-earning assets 219,381 255,157
Total assets $2,728,739 $2,669,430
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,160,545 2,956 0.51 1,145,205 2,307 0.41
Time deposits 156,423 541 0.70 235,505 413 0.35
Brokered deposits 195,150 1,031 1.07 218,294 794 0.73
Total interest-bearing deposits 1,512,118 4,528 0.60 1,599,003 3,514 0.44
Total borrowings 204,761 866 0.85 151,794 383 0.51
Total long-term debt 49,402 1,647 6.72 49,234 1,642 6.71
Total interest-bearing liabilities 1,766,281 7,041 0.80 1,800,031 5,539 0.62
Demand deposits 623,344 546,485
Other liabilities 26,547 27,427
Shareholders' equity 312,567 295,488
Total liabilities and shareholders' equity $2,728,739 $2,669,430
Net interest spread 3.00% 3.02%
Net interest income and net interest margin(2) $40,220 3.23% $38,204 3.18%
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, 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.


Six months ended
June 30, 2017 June 30, 2016
(dollars in thousands; taxable equivalent) Amount Yield Amount Yield
Reported interest income on loans $41,355 4.26% $39,906 4.13%
Less: accretion of loan acquisition discounts (1,331) (1,411)
Core interest income on loans $40,024 4.13% $38,495 3.99%
Amount Net Interest
Margin
Amount Net Interest
Margin
Net interest income / net interest margin $40,220 3.23% $38,204 3.18%
Less:
Accretion of loan acquisition discounts (1,331) (1,411)
Accretion of time deposit premium (205) (542)
Net interest income / net interest margin excluding purchase accounting $38,684 3.11% $36,251 3.02%


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans
(dollars in thousands) June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Linked
Quarter
Change
Year Over
Year
Change
Loans held for sale
Loans held for sale $1,744 $1,297 $4,302 $46,600 $29,061 $447 $(27,317)
Branch loans held for sale 27,944 30,917 (27,944)
Total loans held for sale $1,744 $29,241 $35,219 $46,600 $29,061 $(27,497) $(27,317)
Loans held for investment
Commercial loans:
Commercial and industrial $578,888 $544,911 $531,061 $533,632 $508,516 $33,977 $70,372
Commercial real estate:
Multifamily 113,571 108,215 68,223 74,881 79,144 5,356 34,427
Owner occupied 351,733 348,888 352,523 337,277 351,419 2,845 314
Investment 517,571 478,485 438,032 451,125 431,633 39,086 85,938
Construction and land:
1-4 family residential construction 11,711 11,799 10,335 11,273 9,611 (88) 2,100
Other construction, development, and land 113,347 123,838 209,017 202,063 199,536 (10,491) (86,189)
Mortgage warehouse loans 47,992 58,357 147,519 171,251 126,108 (10,365) (78,116)
Total commercial loans 1,734,813 1,674,493 1,756,710 1,781,502 1,705,967 60,320 28,846
Residential:
Residential mortgages 101,798 99,665 101,921 100,046 103,313 2,133 (1,515)
Home equity 79,769 81,438 77,358 78,952 80,321 (1,669) (552)
Total residential loans 181,567 181,103 179,279 178,998 183,634 464 (2,067)
Consumer 31,981 32,525 27,338 30,453 29,788 (544) 2,193
Other 18,013 17,611 21,565 20,736 28,168 402 (10,155)
1,966,374 1,905,732 1,984,892 2,011,689 1,947,557 60,642 18,817
Less net deferred fees and other unearned income (4,283) (4,008) (3,562) (3,587) (5,420) (275) 1,137
Total loans held for investment $1,962,091 $1,901,724 $1,981,330 $2,008,102 $1,942,137 $60,367 $19,954
Total loans $1,963,835 $1,930,965 $2,016,549 $2,054,702 $1,971,198 $32,870 $(7,363)


ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Loan Losses Activity and Credit Quality
2017 2016
(dollars in thousands) Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
Balance at beginning of period $19,939 $20,595 $18,534 $18,377 $17,608
Provision for loan losses 2,048 565 2,134 463 777
Provision for PCI loan losses (68) 69 74
Loans charged-off:
Commercial and industrial (781) (61) (5)
Commercial real estate (132) 24 (226)
Residential mortgages (46) (2)
Home equity (8) (9) (23)
Consumer (57) (332) (158) (60) (38)
Other (5)
Total loans charged-off (65) (1,291) (134) (361) (68)
Recoveries on loans previously charged‑off:
Construction and land 7 12
Commercial and industrial 2 2
Commercial real estate (15) 20
Residential mortgages 1 5
Home equity 1 2
Consumer 5 1 2 12 60
Other 2
Total recoveries 16 1 (13) 55 60
Net charge-offs (49) (1,290) (147) (306) (8)
Balance at period end $21,870 $19,939 $20,595 $18,534 $18,377
Loans held for investment
PCI Loans $11,510 $11,841 $15,253 $17,237 $19,733
Non-PCI Loans 1,950,581 1,889,883 1,966,077 1,990,865 1,922,404
$1,962,091 $1,901,724 $1,981,330 $2,008,102 $1,942,137
Non-performing loans - PCI $1,310 $1,684 $2,446 $2,348 $1,082
Non-performing loans - Non-PCI $12,300 $3,983 $1,615 $790 $922
Foreclosed properties (OREO) 1,819 1,869 1,872 1,727 951
Total nonperforming assets $14,119 $5,852 $3,487 $2,517 $1,873
Allowance for loan losses to loans held for investment 1.11 %1.05 %1.04 %0.92 %0.95 %
Net charge-offs to average loans (1) 0.01 0.26 0.03 0.06
Nonperforming loans as a percentage of total loans (2) 0.63 0.21 0.08 0.04 0.05
Nonperforming assets as a percentage of total assets (2) 0.52 0.21 0.13 0.09 0.07
(1)Annualized. (2)Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
(dollars in thousands) June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Linked
Quarter
Change
Year Over
Year Change
DDA $612,744 $606,386 $643,471 $557,783 $592,043 $6,358 $20,701
NOW 250,254 259,760 264,062 260,531 231,091 (9,506) 19,163
Savings 30,170 30,756 27,932 29,658 30,839 (586) (669)
Money Market 882,824 916,390 912,493 974,072 913,094 (33,566) (30,270)
Time 142,915 150,867 157,810 172,348 178,615 (7,952) (35,700)
Brokered 195,047 209,385 200,223 194,464 212,623 (14,338) (17,576)
Deposits to be assumed in branch sale 29,495 31,589 (29,495)
Total Deposits $2,113,954 $2,203,039 $2,237,580 $2,188,856 $2,158,305 $(89,085) $(44,351)
Payments Clients $250,104 $321,899 $347,833 $212,049 $295,440 $(71,795) $(45,336)
Average Deposits(1)
2017 2016 Linked
Quarter
Change
Year Over
Year Change
(dollars in thousands) Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
DDA $626,330 $620,325 $591,166 $555,008 $538,422 $6,005 $87,908
NOW 293,160 290,862 253,187 282,701 272,556 2,298 20,604
Savings 30,468 30,306 29,741 30,692 35,090 162 (4,622)
Money Market 860,116 815,920 853,281 923,435 865,447 44,196 (5,331)
Time 149,898 163,021 169,677 175,135 203,679 (13,123) (53,781)
Brokered 198,703 191,558 197,833 196,598 220,098 7,145 (21,395)
Total Deposits $2,158,675 $2,111,992 $2,094,885 $2,163,569 $2,135,292 $46,683 $23,383
Payments Clients $244,157 $273,630 $211,000 $184,895 $176,474 $(29,473) $67,683
Noninterest bearing deposits as a percentage of average deposits 29.0% 29.4% 28.2% 25.7% 25.2%
Cost of deposits 0.46% 0.39% 0.37% 0.36% 0.35%
(1) Includes average balances of deposits to be assumed in branch sale.


ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation
(in thousands, except share and per share data) 2017 2016 For the six months ended
June 30,
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
2017 2016
Taxable equivalent interest income reconciliation
Interest income - GAAP $24,322 $22,461 $22,307 $22,295 $22,116 $46,783 $43,615
Taxable equivalent adjustment 223 255 223 133 74 478 128
Interest income - taxable equivalent $24,545 $22,716 $22,530 $22,428 $22,190 $47,261 $43,743
Taxable equivalent net interest income reconciliation
Net interest income - GAAP $20,489 $19,253 $19,278 $19,354 $19,209 $39,742 $38,076
Taxable equivalent adjustment 223 255 223 133 74 478 128
Net interest income - taxable equivalent $20,712 $19,508 $19,501 $19,487 $19,283 $40,220 $38,204
Operating noninterest income reconciliation
Noninterest income - GAAP $5,287 $3,857 $4,430 $4,002 $8,880 $9,144 $13,300
Gain on sale of branches (3,885) (3,885)
Operating noninterest income $5,287 $3,857 $4,430 $4,002 $4,995 $9,144 $9,415
Operating noninterest expense reconciliation
Noninterest expense - GAAP $17,623 $17,744 $18,775 $17,296 $18,943 $35,367 $37,209
Merger-related expenses (204) (579) (1,210) (1,959)
Divestiture expenses (305) (305)
Operating noninterest expense $17,623 $17,744 $18,571 $16,717 $17,428 $35,367 $34,945
Operating income before income taxes reconciliation
Income before income taxes - GAAP $6,173 $4,732 $2,725 $5,597 $8,369 $10,905 $13,022
Taxable equivalent adjustment 223 255 223 133 74 478 128
Merger-related expenses 204 579 1,210 1,959
Divestiture expenses 305 305
Gain on sale of branches (3,885) (3,885)
Operating income before income taxes $6,396 $4,987 $3,152 $6,309 $6,073 $11,383 $11,529
Operating income tax reconciliation
Income tax expense - GAAP $1,844 $1,502 $1,116 $1,889 $3,222 $3,346 $4,944
Taxable equivalent adjustment 223 255 223 133 74 478 128
Merger related expenses, tax benefit 78 223 467 756
Divestiture expenses, tax benefit 118 118
Gain on sale of branches, tax expense (1,500) (1,500)
Operating income tax expense $2,067 $1,757 $1,417 $2,245 $2,381 $3,824 $4,446
Operating net income reconciliation
Net income - GAAP $4,329 $3,230 $1,609 $3,708 $5,147 $7,559 $8,078
Merger related expenses, net of income tax 126 356 743 1,203
Divestiture expenses, net of income tax 187 187
Gain on sale of branches, net of income tax (2,385) (2,385)
Operating net income $4,329 $3,230 $1,735 $4,064 $3,692 $7,559 $7,083
Operating diluted earnings per share reconciliation
Diluted earnings per share - GAAP $0.17 $0.13 $0.06 $0.15 $0.20 $0.29 $0.32
Merger related expenses 0.01 0.01 0.03 0.06
Net gain on sale of branches (0.08) (0.10)
Diluted earnings per share - operating $0.17 $0.13 $0.07 $0.16 $0.15 $0.29 $0.28
Tangible book value per common share reconciliation
Total shareholders’ equity $319,435 $310,967 $303,658 $308,463 $304,066 $319,435 $304,066
Intangible assets (25,151) (25,913) (26,383) (26,878) (28,085) (25,151) (28,085)
Total tangible common equity $294,284 $285,054 $277,275 $281,585 $275,981 $294,284 $275,981
Common shares outstanding 25,654,521 25,535,013 25,093,135 24,950,099 24,750,163 25,654,521 24,750,163
Book value per common share - GAAP $12.45 $12.18 $12.10 $12.36 $12.29 $12.45 $12.29
Tangible book value 11.47 11.16 11.05 11.29 11.15 11.47 11.15
Return on average equity reconciliation
Net income - GAAP $4,329 $3,230 $1,609 $3,708 $5,147 $7,559 $8,078
Merger related expenses, net of income tax 126 356 743 1,203
Divestiture expenses, net of income tax 187 187
Gain on sale of branches, net of income tax (2,385) (2,385)
Operating net income $4,329 $3,230 $1,735 $4,064 $3,692 $7,559 $7,083
Average shareholders' equity $316,825 $308,261 $308,588 $306,642 $299,170 $312,567 $295,488
Return on average equity - GAAP 5.48 %4.19 %2.09 %4.84 %6.88 %4.88 %5.47 %
Return on average equity - operating 5.48 4.19 2.25 5.30 4.94 4.88 4.79
Return on average assets reconciliation
Net income - GAAP $4,329 $3,230 $1,609 $3,708 $5,147 $7,559 $8,078
Merger related expenses, net of income tax 126 356 743 1,203
Divestiture expenses, net of income tax 187 187
Gain on sale of branches, net of income tax (2,385) (2,385)
Operating net income $4,329 $3,230 $1,735 $4,064 $3,692 $7,559 $7,083
Average assets $2,762,389 $2,694,715 $2,722,444 $2,717,996 $2,718,110 $2,728,739 $2,669,430
Return on average assets - GAAP 0.63 %0.48 %0.24 %0.55 %0.76 %0.56 %0.61 %
Return on average assets - operating 0.63 0.48 0.25 0.60 0.54 0.56 0.53
Efficiency ratio reconciliation
Noninterest income - GAAP $5,287 $3,857 $4,430 $4,002 $8,880 $9,144 $13,300
Gain on sale of branches (3,885) (3,885)
Operating noninterest income $5,287 $3,857 $4,430 $4,002 $4,995 $9,144 $9,415
Noninterest expense - GAAP $17,623 $17,744 $18,775 $17,296 $18,943 $35,367 $37,209
Merger-related expenses (204) (579) (1,210) (1,959)
Divestiture expenses (305) (305)
Operating noninterest expense $17,623 $17,744 $18,571 $16,717 $17,428 $35,367 $34,945
Net interest income $20,489 $19,253 $19,278 $19,354 $19,209 $39,742 $38,075
Efficiency ratio 68.37 %76.78 %78.33 %71.57 %72.00 %72.35 %73.58 %
Tangible equity to tangible assets reconciliation
Total shareholders’ equity $319,435 $310,967 $303,658 $308,463 $304,066 $319,435 $304,066
Intangible assets (25,151) (25,913) (26,383) (26,878) (28,085) (25,151) (28,085)
Total tangible common equity $294,284 $285,054 $277,275 $281,585 $275,981 $294,284 $275,981
Total assets $2,702,575 $2,802,078 $2,727,543 $2,761,244 $2,807,822 $2,702,575 $2,807,822
Intangible assets (25,151) (25,913) (26,383) (26,878) (28,085) (25,151) (28,085)
Total tangible assets $2,677,424 $2,776,165 $2,701,160 $2,734,366 $2,779,737 $2,677,424 $2,779,737
Tangible common equity to tangible assets 10.99 %10.27 %10.27 %10.30 %9.93 %10.99 %9.93 %
Deposits excluding deposits to be assumed in branch sales
Total deposits $2,113,954 $2,203,039 $2,237,580 $2,188,856 $2,158,305 $2,113,954 $2,158,305
Deposits to be assumed in branch sales (29,495) (31,589)
Deposits excluding deposits to be assumed in branch sales $2,113,954 $2,173,544 $2,205,991 $2,188,856 $2,158,305 $2,113,954 $2,158,305
Loans held for investment excluding mortgage warehouse loans
Total loans held for investment $1,962,091 $1,901,724 $1,981,330 $2,008,102 $1,942,137 $1,962,091 $1,942,137
Mortgage warehouse loans (47,992) (58,357) (147,519) (171,251) (126,108) (47,992) (126,108)
Loans held for investment excluding mortgage warehouse loans $1,914,099 $1,843,367 $1,833,811 $1,836,851 $1,816,029 $1,914,099 $1,816,029


Contact: Douglas L. Williams Chief Executive Officer 404-995-6051 doug.williams@atlcapbank.com Patrick T. Oakes Executive Vice President and CFO 404-995-6079 patrick.oakes@atlcapbank.com

Source:Atlantic Capital Bancshares, Inc.