×

Atlantic Capital Bancshares, Inc. Reports Third Quarter 2017 Results

ATLANTA, Oct. 27, 2017 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) announced results of the quarter ended September 30, 2017.

Third Quarter Highlights

  • Reported net income of $4.1 million, or $0.16 per diluted share, compared to $4.3 million, or $0.17 per diluted share, in the second quarter of 2017.
  • Reported return on average assets of 0.60% and tangible book value per share of $11.67.
  • Excluding the impact of purchase accounting, reported taxable equivalent net interest margin of 3.20%, up 5 basis points from the second quarter of 2017.
  • Lowered noninterest expense to $17.5 million from $17.6 million in the second quarter of 2017.
  • Decreased nonperforming assets to 0.23% of total assets from 0.52% in the second quarter of 2017.

“Atlantic Capital’s earnings this quarter fell short of our expectations for a variety of reasons, including exceptionally large, unanticipated loan repayments and one time expenses related to the secondary offering in August. Our board and new leadership team are working together to develop and implement new revenue and cost savings initiatives designed to accelerate performance improvement in 2018 and beyond,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the third quarter of 2017, Atlantic Capital recorded net income of $4.1 million, or $0.16 per diluted share, compared to net income of $4.3 million, or $0.17 per diluted share, in the second quarter of 2017.

Taxable equivalent net interest income decreased to $20.5 million in the third quarter of 2017 from $20.7 million in the second quarter of 2017. This decrease was driven by lower loan accretion income and an increase in the cost of interest bearing deposits. Net accretion income on acquired loans totaled $343,000 in the third quarter of 2017 compared to $629,000 in the second quarter of 2017.

Taxable equivalent net interest margin was 3.26% in the third quarter of 2017, unchanged from the second quarter of 2017. Excluding the impact of purchase accounting, the margin in the third quarter of 2017 increased 5 basis points to 3.20%, benefiting from the increase in the Fed Funds rate in June 2017. Loan yields, excluding loan accretion income, increased 10 basis points and the cost of deposits increased 4 basis points in the third quarter. The accretion of the acquired loan discount and amortization of time deposit premium contributed 6 basis points to the net interest margin in the third quarter of 2017 compared to 11 basis points in the second quarter of 2017.

The provision for loan losses was $322,000 in the third quarter of 2017 compared to $2.0 million in the second quarter of 2017. The second quarter of 2017 included the downgrade of a $7.7 million loan relationship to nonperforming and an additional $1.0 million specific reserve related to this downgrade. The third quarter included a $3.3 million charge-off of this loan relationship which had a $2.75 million total specific reserve as of June 30, 2017.

Noninterest income totaled $3.5 million in the third quarter of 2017, a decrease of $1.8 million from the second quarter of 2017. The second quarter of 2017 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. In addition, SBA lending activities decreased $283,000 from the second quarter of 2017, to $888,000.

Noninterest expense totaled $17.5 million in the third quarter of 2017 compared to $17.6 million in the second quarter of 2017. The second quarter of 2017 included $304,000 in merger expenses related to rebranding of the legacy First Security branches. The third quarter of 2017 included $395,000 in expenses related to the public offering of common stock by a selling stockholder completed during the quarter. Salaries and employee benefits decreased in the third quarter of 2017 by $194,000 to $10.4 million mainly from a lower incentive accrual.

Total loans were $1.91 billion at September 30, 2017, a decrease of $55.1 million from June 30, 2017. Loans held for investment were $1.91 billion at September 30, 2017, a decrease of $56.7 million from June 30, 2017 mainly as a result of higher loan payoffs and decreases in the balances of existing lines of credit. Mortgage warehouse participations decreased $6.4 million in the third quarter to $41.6 million at September 30, 2017.

At September 30, 2017, the allowance for loan losses was $18.9 million, or 0.99% of loans held for investment, compared to $21.9 million, or 1.11% of loans held for investment as of June 30, 2017. The decrease in the allowance was the result of the $3.3 million charge-off of the $7.7 million loan relationship which had a $2.75 million specific impairment as of June 30, 2017.

Annualized net charge-offs to average loans totaled 0.68% in the third quarter of 2017 and totaled 0.32% the first nine months of 2017. Nonperforming assets totaled $6.0 million, or 0.23% of total assets, as of September 30, 2017, compared to $14.1 million, or 0.52% of total assets, as of June 30, 2017, primarily as a result of the $3.3 million charge-off of the $7.7 million loan relationship.

Total average deposits for the third quarter of 2017 were $2.12 billion, a decrease of $37.4 million from the second quarter of 2017. Average noninterest bearing deposits increased $1.7 million to $628 million in the third quarter of 2017 and accounted for 29.6% of average total deposits. Average deposits associated with our payments business were $210 million in the third quarter of 2017, a decrease of $34.3 million from the second quarter of 2017.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, October 27, 2017, to discuss the financial results for the quarter ended September 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 interest income; (v) taxable equivalent net interest margin; (vi) efficiency ratio; (vii) operating return on average assets; (viii) operating return on average equity; and (ix) tangible common equity, 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 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 “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 $2.6 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 nine months
ended September 30,
(in thousands, except share and per share data; taxable equivalent) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2017 2016
INCOME SUMMARY
Interest income (1) $24,566 $24,545 $22,716 $22,530 $22,428 $71,827 $66,171
Interest expense 4,060 3,833 3,208 3,029 2,941 11,101 8,480
Net interest income 20,506 20,712 19,508 19,501 19,487 60,726 57,691
Provision for loan losses 322 1,980 634 2,208 463 2,936 1,608
Net interest income after provision for loan losses 20,184 18,732 18,874 17,293 19,024 57,790 56,083
Operating noninterest income (2) 3,477 5,287 3,857 4,430 4,002 12,621 13,417
Operating noninterest expense (3) 17,504 17,623 17,744 18,571 16,717 52,871 51,662
Operating income before income taxes 6,157 6,396 4,987 3,152 6,309 17,540 17,838
Operating income tax expense 2,105 2,067 1,757 1,417 2,245 5,929 6,691
Operating net income (2)(3) 4,052 4,329 3,230 1,735 4,064 11,611 11,147
Merger related expenses, net of income tax 126 356 1,559
Net gain on sale of branches, net of income tax 2,198
Net income - GAAP $4,052 $4,329 $3,230 $1,609 $3,708 $11,611 $11,786
PER SHARE DATA
Diluted earnings per share - GAAP $0.16 $0.17 $0.13 $0.06 $0.15 $0.45 $0.47
Diluted earnings per share - operating (2)(3) 0.16 0.17 0.13 0.07 0.16 0.45 0.44
Book value per share 12.63 12.45 12.18 12.10 12.36 12.63 12.36
Tangible book value per share (4) 11.67 11.47 11.16 11.05 11.29 11.67 11.29
PERFORMANCE MEASURES
Return on average equity - GAAP 4.96 %5.48 %4.19 %2.09 %4.84 %4.91 %5.25 %
Return on average equity - operating (2)(3) 4.96 5.48 4.19 2.25 5.30 4.91 4.97
Return on average assets - GAAP 0.60 0.63 0.48 0.24 0.55 0.57 0.58
Return on average assets - operating (2)(3) 0.60 0.63 0.48 0.25 0.60 0.57 0.55
Taxable equivalent net interest margin 3.26 3.26 3.20 3.11 3.12 3.24 3.11
Efficiency ratio 73.65 68.37 76.78 78.33 71.57 72.77 72.92
CAPITAL
Average equity to average assets 11.99 %11.47 %11.44 %11.33 %11.28 %11.63 %11.06 %
Tangible common equity to tangible assets 11.48 10.99 10.27 10.27 10.30 11.48 10.30
Tier 1 capital ratio 11.2 (6)10.9 10.7 10.3 9.7 11.2 (6)9.7
Total risk based capital ratio 14.2 (6)14.0 13.8 13.3 12.5 14.2 (6)12.5
Number of common shares outstanding - basic 25,716,418 25,654,521 25,535,013 25,093,135 24,950,099 25,716,418 24,950,099
Number of common shares outstanding - diluted 25,967,575 25,931,671 25,836,809 25,673,841 25,342,883 25,967,575 25,342,883
ASSET QUALITY
Allowance for loan losses to loans held for investment 0.99 %1.11 %1.05 %1.04 %0.92 %0.99 %0.92 %
Net charge-offs to average loans (5) 0.68 0.01 0.26 0.03 0.06 0.32 0.13
NPAs to total assets 0.23 0.52 0.21 0.13 0.09 0.23 0.09
(1)Interest income 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)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 9/30/17.


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
September 30, June 30, December 31, September 30,
(in thousands, except share data) 2017 2017 2016 2016
ASSETS
Cash and due from banks $35,504 $45,008 $36,790 $44,563
Interest-bearing deposits in banks 40,558 36,171 118,039 75,750
Other short-term investments 5,189 17,459 10,896 23,159
Cash and cash equivalents 81,251 98,638 165,725 143,472
Investment securities available-for-sale 447,005 450,273 347,705 348,484
Other investments 35,818 26,741 23,806 26,370
Loans held for sale 3,274 1,744 35,219 46,600
Loans held for investment 1,905,432 1,962,091 1,981,330 2,008,102
Less: allowance for loan losses (18,870) (21,870) (20,595) (18,534)
Loans held for investment, net 1,886,562 1,940,221 1,960,735 1,989,568
Branch premises held for sale 2,995 5,201
Premises and equipment, net 11,747 11,997 11,958 15,213
Bank owned life insurance 63,284 62,901 62,160 61,766
Goodwill and intangible assets, net 27,945 28,446 29,567 30,071
Other real estate owned 1,494 1,819 1,872 1,727
Other assets 80,032 79,795 85,801 92,772
Total assets $2,638,412 $2,702,575 $2,727,543 $2,761,244
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $599,292 $612,744 $643,471 $557,783
Interest-bearing checking 270,740 250,254 264,062 260,531
Savings 30,131 30,170 27,932 29,658
Money market 865,238 882,824 912,493 974,072
Time 144,250 142,915 157,810 172,348
Brokered deposits 193,994 195,047 200,223 194,464
Deposits to be assumed in branch sale 31,589
Total deposits 2,103,645 2,113,954 2,237,580 2,188,856
Federal funds purchased and securities sold under agreements to repurchase 15,000
Federal Home Loan Bank borrowings 125,000 180,000 110,000 170,000
Long-term debt 49,493 49,451 49,366 49,324
Other liabilities 35,520 24,735 26,939 44,601
Total liabilities 2,313,658 2,383,140 2,423,885 2,452,781
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and
outstanding as of September 30, 2017, June 30, 2017, December 31, 2016, and September 30, 2016
Common stock, no par value; 100,000,000 shares authorized; 25,716,418, 25,654,521,
25,093,135, and 24,950,099 shares issued and outstanding as of September 30, 2017,
June 30, 2017, December 31, 2016, and September 30, 2016, respectively
298,469 297,610 292,747 290,835
Retained earnings 28,147 24,095 16,536 14,927
Accumulated other comprehensive income (loss) (1,862) (2,270) (5,625) 2,701
Total shareholders’ equity 324,754 319,435 303,658 308,463
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,638,412 $2,702,575 $2,727,543 $2,761,244


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share data) Three months ended Nine months ended
September 30,
2017
June 30,
2017
March 31, 2017 December 31,
2016
September 30,
2016
September 30,
2017
September 30,
2016
INTEREST INCOME
Loans, including fees $21,491 $21,361 $19,994 $20,363 $20,511 $62,846 $60,418
Investment securities available-for-sale 2,298 2,355 2,018 1,477 1,293 6,671 4,221
Interest and dividends on other interest‑earning assets 562 606 449 467 491 1,617 1,271
Total interest income 24,351 24,322 22,461 22,307 22,295 71,134 65,910
INTEREST EXPENSE
Interest on deposits 2,693 2,481 2,047 1,929 1,956 7,221 5,470
Interest on Federal Home Loan Bank advances 459 452 302 234 133 1,213 324
Interest on federal funds purchased and securities sold under agreements to repurchase 84 76 36 38 37 196 191
Interest on long-term debt 824 824 823 828 815 2,471 2,457
Other 38
Total interest expense 4,060 3,833 3,208 3,029 2,941 11,101 8,480
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 20,291 20,489 19,253 19,278 19,354 60,033 57,430
Provision for loan losses 322 1,980 634 2,208 463 2,936 1,608
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 19,969 18,509 18,619 17,070 18,891 57,097 55,822
NONINTEREST INCOME
Service charges 1,247 1,274 1,349 1,327 1,270 3,870 4,160
Gains (losses) on sale of securities available-for-sale (80) (80) 44
Gains on sale of other assets 44 666 78 238 71 788 150
Mortgage income 320 388 257 499 632 965 1,418
Trust income 437 488 407 350 361 1,332 1,061
Derivatives income (3) 116 (51) 346 69 62 232
Bank owned life insurance 384 384 378 395 424 1,146 1,215
SBA lending activities 888 1,171 1,227 599 959 3,286 3,043
TriNet lending activities 20 20 20 357 60 1,144
Gains on sale of branches 302 302 3,885
Other noninterest income 220 478 192 319 216 890 950
Total noninterest income 3,477 5,287 3,857 4,430 4,002 12,621 17,302
NONINTEREST EXPENSE
Salaries and employee benefits 10,409 10,603 11,065 11,269 10,059 32,077 31,034
Occupancy 1,129 1,074 1,230 995 1,235 3,433 3,609
Equipment and software 776 996 805 694 862 2,577 2,272
Professional services 1,595 973 904 968 442 3,472 1,950
Postage, printing and supplies 63 78 85 73 61 226 389
Communications and data processing 982 1,069 987 1,064 617 3,038 2,227
Marketing and business development 272 179 270 247 269 721 853
FDIC premiums 308 132 314 262 415 754 1,306
Merger and conversion costs 304 204 579 304 2,538
Amortization of intangibles 391 425 470 495 520 1,286 1,950
Foreclosed property/problem asset expense 7 107 3 666 39 117 198
Other noninterest expense 1,572 1,683 1,611 1,838 2,198 4,866 6,179
Total noninterest expense 17,504 17,623 17,744 18,775 17,296 52,871 54,505
INCOME BEFORE PROVISION FOR INCOME TAXES 5,942 6,173 4,732 2,725 5,597 16,847 18,619
Provision for income taxes 1,890 1,844 1,502 1,116 1,889 5,236 6,833
NET INCOME $4,052 $4,329 $3,230 $1,609 $3,708 $11,611 $11,786
Net income per common share ‑ basic $0.16 $0.17 $0.13 $0.06 $0.15 $0.45 $0.48
Net income per common share ‑ diluted $0.16 $0.17 $0.13 $0.06 $0.15 $0.45 $0.47
Weighted average shares - basic 25,699,179 25,621,910 25,320,690 25,027,304 24,891,822 25,548,646 24,674,953
Weighted average shares - diluted 25,890,779 25,831,281 25,672,286 25,407,728 25,260,280 25,799,851 25,106,250


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Three months ended
September 30, 2017 June 30, 2017
(dollars in thousands; taxable equivalent) Average
Balance
Interest
Income/
Expense
Tax
Equivalent
Yield/Rate
Average
Balance
Interest
Income/
Expense
Tax
Equivalent
Yield/Rate
Assets
Interest bearing deposits in other banks $69,839 $216 1.23 % $85,935 $233 1.09 %
Other short-term investments 13,830 67 1.92 23,683 117 1.98
Investment securities:
Taxable investment securities 373,087 1,812 1.93 373,170 1,862 2.00
Non-taxable investment securities(1) 82,781 701 3.36 81,920 716 3.51
Total investment securities 455,868 2,513 2.19 455,090 2,578 2.27
Total loans 1,934,505 21,491 4.41 1,962,374 21,361 4.37
FHLB and FRB stock 18,494 279 5.99 19,352 256 5.31
Total interest-earning assets 2,492,536 24,566 3.91 2,546,434 24,545 3.87
Non-earning assets 208,851 215,955
Total assets $2,701,387 $2,762,389
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,192,664 1,886 0.63 1,183,744 1,641 0.56
Time deposits 143,862 292 0.81 149,898 270 0.72
Brokered deposits 156,708 515 1.30 198,703 570 1.15
Total interest-bearing deposits 1,493,234 2,693 0.72 1,532,345 2,481 0.65
Total borrowings 179,808 543 1.20 214,931 528 0.99
Total long-term debt 49,465 824 6.61 49,423 824 6.69
Total interest-bearing liabilities 1,722,507 4,060 0.94 1,796,699 3,833 0.86
Demand deposits 628,029 626,330
Other liabilities 27,019 22,535
Shareholders' equity 323,832 316,825
Total liabilities and shareholders' equity $2,701,387 $2,762,389
Net interest spread 2.97 % 3.01 %
Net interest income and net interest margin(2) $20,506 3.26 % $20,712 3.26 %
(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
September 30, 2017 June 30, 2017
(dollars in thousands; taxable equivalent) Amount Yield Amount Yield
Reported interest income on loans $21,491 4.41% $21,361 4.37%
Less: accretion of loan acquisition discounts (343) (629)
Core interest income on loans $21,148 4.34% $20,732 4.24%
Amount Net Interest
Margin
Amount Net Interest
Margin
Net interest income / net interest margin $20,506 3.26% $20,712 3.26%
Less:
Accretion of loan acquisition discounts (343) (629)
Accretion of time deposit premium (75) (86)
Net interest income / net interest margin excluding purchase accounting $20,088 3.20% $19,997 3.15%


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Nine months ended
September 30, 2017 September 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 $76,079 $614 1.08 % $100,279 $481 0.64 %
Other short-term investments 16,198 231 1.91 24,120 244 1.35
Investment securities:
Taxable investment securities 362,080 5,197 1.92 337,263 3,714 1.47
Non-taxable investment securities(1) 81,485 2,167 3.56 34,945 768 2.94
Total investment securities 443,565 7,364 2.22 372,208 4,482 1.61
Total loans 1,948,700 62,846 4.31 1,965,092 60,418 4.11
FHLB and FRB stock 19,147 772 5.39 13,825 546 5.28
Total interest-earning assets 2,503,689 71,827 3.84 2,475,524 66,171 3.57
Non-earning assets 215,830 229,146
Total assets $2,719,519 $2,704,670
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,171,369 4,842 0.55 1,182,520 3,646 0.41
Time deposits 152,190 833 0.73 221,937 654 0.39
Brokered deposits 182,195 1,546 1.13 210,803 1,170 0.74
Total interest-bearing deposits 1,505,754 7,221 0.64 1,615,260 5,470 0.45
Total borrowings 196,352 1,409 0.96 156,148 553 0.47
Total long-term debt 49,423 2,471 6.68 49,254 2,457 6.66
Total interest-bearing liabilities 1,751,529 11,101 0.85 1,820,662 8,480 0.62
Demand deposits 624,923 549,217
Other liabilities 26,706 35,743
Shareholders' equity 316,361 299,048
Total liabilities and shareholders' equity $2,719,519 $2,704,670
Net interest spread 2.99 % 2.95 %
Net interest income and net interest margin(2) $60,726 3.24 % $57,691 3.11 %
(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.


Nine months ended
September 30, 2017 September 30, 2016
(dollars in thousands; taxable equivalent) Amount Yield Amount Yield
Reported interest income on loans $62,846 4.31% $60,418 4.11%
Less: accretion of loan acquisition discounts (1,729) (1,987)
Core interest income on loans $61,117 4.19% $58,431 3.97%
Amount Net Interest
Margin
Amount Net Interest
Margin
Net interest income / net interest margin $60,726 3.24% $57,691 3.11%
Less:
Accretion of loan acquisition discounts (1,729) (1,987)
Accretion of time deposit premium (280) (712)
Net interest income / net interest margin excluding purchase accounting $58,717 3.14% $54,992 2.97%


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans
(dollars in thousands) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Linked
Quarter
Change
Year Over
Year
Change
Loans held for sale
Loans held for sale $3,274 $1,744 $1,297 $4,302 $46,600 $1,530 $(43,326)
Branch loans held for sale 27,944 30,917
Total loans held for sale $3,274 $1,744 $29,241 $35,219 $46,600 $1,530 $(43,326)
Loans held for investment
Commercial loans:
Commercial and industrial $562,426 $578,888 $544,911 $531,061 $533,632 $(16,462) $28,794
Commercial real estate:
Multifamily 91,219 113,571 108,215 68,223 74,881 (22,352) 16,338
Owner occupied 348,447 351,733 348,888 352,523 337,277 (3,286) 11,170
Investment 505,188 517,571 478,485 438,032 451,125 (12,383) 54,063
Construction and land:
1-4 family residential construction 9,644 11,711 11,799 10,335 11,273 (2,067) (1,629)
Other construction, development, and land 122,436 113,347 123,838 209,017 202,063 9,089 (79,627)
Mortgage warehouse loans 41,551 47,992 58,357 147,519 171,251 (6,441) (129,700)
Total commercial loans 1,680,911 1,734,813 1,674,493 1,756,710 1,781,502 (53,902) (100,591)
Residential:
Residential mortgages 101,976 101,798 99,665 101,921 100,046 178 1,930
Home equity 78,773 79,769 81,438 77,358 78,952 (996) (179)
Total residential loans 180,749 181,567 181,103 179,279 178,998 (818) 1,751
Consumer 31,750 31,981 32,525 27,338 30,453 (231) 1,297
Other 16,106 18,013 17,611 21,565 20,736 (1,907) (4,630)
1,909,516 1,966,374 1,905,732 1,984,892 2,011,689 (56,858) (102,173)
Less net deferred fees and other unearned income (4,084) (4,283) (4,008) (3,562) (3,587) 199 (497)
Total loans held for investment $1,905,432 $1,962,091 $1,901,724 $1,981,330 $2,008,102 $(56,659) $(102,670)
Total loans $1,908,706 $1,963,835 $1,930,965 $2,016,549 $2,054,702 $(55,129) $(145,996)


ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Loan Losses Activity and Credit Quality
2017 2016
(dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
Balance at beginning of period $21,870 $19,939 $20,595 $18,534 $18,377
Provision for loan losses 314 2,048 565 2,134 463
Provision for PCI loan losses 8 (68) 69 74
Loans charged-off:
Commercial and industrial (3,292) (781) (61)
Commercial real estate (132) 24 (226)
Construction and land (16)
Residential mortgages (46)
Home equity (31) (8) (9)
Consumer (7) (57) (332) (158) (60)
Other (5)
Total loans charged-off (3,346) (65) (1,291) (134) (361)
Recoveries on loans previously charged‑off:
Construction and land 15 12
Commercial and industrial 1 7 2
Commercial real estate 2 (15) 20
Residential mortgages 1 5
Home equity 1 2
Consumer 8 5 1 2 12
Other 2
Total recoveries 24 16 1 (13) 55
Net charge-offs (3,322) (49) (1,290) (147) (306)
Balance at period end $18,870 $21,870 $19,939 $20,595 $18,534
Loans held for investment
PCI Loans $12,090 $11,510 $11,841 $15,253 $17,237
Non-PCI Loans 1,893,342 1,950,581 1,889,883 1,966,077 1,990,865
$1,905,432 $1,962,091 $1,901,724 $1,981,330 $2,008,102
Non-performing loans - PCI $1,289 $1,310 $1,684 $2,446 $2,348
Non-performing loans - Non-PCI $4,553 $12,300 $3,983 $1,615 $790
Foreclosed properties (OREO) 1,494 1,819 1,869 1,872 1,727
Total nonperforming assets $6,047 $14,119 $5,852 $3,487 $2,517
Allowance for loan losses to loans held for investment 0.99 %1.11 %1.05 %1.04 %0.92 %
Net charge-offs to average loans (1) 0.68 0.01 0.26 0.03 0.06
Nonperforming loans as a percentage of total loans (2) 0.24 0.63 0.21 0.08 0.04
Nonperforming assets as a percentage of total assets (2) 0.23 0.52 0.21 0.13 0.09
(1)Annualized. (2)Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
(dollars in thousands) September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Linked
Quarter
Change
Year Over
Year Change
DDA $599,292 $612,744 $606,386 $643,471 $557,783 $(13,452) $41,509
NOW 270,740 250,254 259,760 264,062 260,531 20,486 10,209
Savings 30,131 30,170 30,756 27,932 29,658 (39) 473
Money Market 865,238 882,824 916,390 912,493 974,072 (17,586) (108,834)
Time 144,250 142,915 150,867 157,810 172,348 1,335 (28,098)
Brokered 193,994 195,047 209,385 200,223 194,464 (1,053) (470)
Deposits to be assumed in branch sale 29,495 31,589
Total Deposits $2,103,645 $2,113,954 $2,203,039 $2,237,580 $2,188,856 $(10,309) $(85,211)
Payments Clients $239,079 $250,104 $321,899 $347,833 $212,049 $(11,025) $27,030
Average Deposits(1)
2017 2016 Linked
Quarter
Change
Year Over
Year Change
(dollars in thousands) Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
DDA $628,029 $626,330 $620,325 $591,166 $555,008 $1,699 $73,021
NOW 291,810 293,160 290,862 253,187 282,701 (1,350) 9,109
Savings 30,236 30,468 30,306 29,741 30,692 (232) (456)
Money Market 870,618 860,116 815,920 853,281 923,435 10,502 (52,817)
Time 143,862 149,898 163,021 169,677 175,135 (6,036) (31,273)
Brokered 156,708 198,703 191,558 197,833 196,598 (41,995) (39,890)
Total Deposits $2,121,263 $2,158,675 $2,111,992 $2,094,885 $2,163,569 $(37,412) $(42,306)
Payments Clients $209,851 $244,157 $273,630 $211,000 $184,895 $(34,306) $24,956
Noninterest bearing deposits as a percentage of average deposits 29.6% 29.0% 29.4% 28.2% 25.7%
Cost of deposits 0.50% 0.46% 0.39% 0.37% 0.36%
(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 nine months
ended September 30,
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
2017 2016
Taxable equivalent interest income reconciliation
Interest income - GAAP $24,351 $24,322 $22,461 $22,307 $22,295 $71,134 $65,910
Taxable equivalent adjustment 215 223 255 223 133 693 261
Interest income - taxable equivalent $24,566 $24,545 $22,716 $22,530 $22,428 $71,827 $66,171
Taxable equivalent net interest income reconciliation
Net interest income - GAAP $20,291 $20,489 $19,253 $19,278 $19,354 $60,033 $57,430
Taxable equivalent adjustment 215 223 255 223 133 693 261
Net interest income - taxable equivalent $20,506 $20,712 $19,508 $19,501 $19,487 $60,726 $57,691
Taxable equivalent net interest margin excluding purchase accounting
Taxable equivalent net interest margin 3.26 %3.26 %3.20 %3.11 %3.12 %3.24 %3.11 %
Impact of purchase accounting (0.06) (0.11) (0.13) (0.12) (0.12) (0.10) (0.14)
Taxable equivalent net interest margin excluding purchase accounting 3.20 %3.15 %3.07 %2.99 %3.00 %3.14 %2.97 %
Operating noninterest income reconciliation
Noninterest income - GAAP $3,477 $5,287 $3,857 $4,430 $4,002 $12,621 $17,302
Gain on sale of branches (3,885)
Operating noninterest income $3,477 $5,287 $3,857 $4,430 $4,002 $12,621 $13,417
Operating noninterest expense reconciliation
Noninterest expense - GAAP $17,504 $17,623 $17,744 $18,775 $17,296 $52,871 $54,505
Merger-related expenses (204) (579) (2,538)
Divestiture expenses (305)
Operating noninterest expense $17,504 $17,623 $17,744 $18,571 $16,717 $52,871 $51,662
Operating income before income taxes reconciliation
Income before income taxes - GAAP $5,942 $6,173 $4,732 $2,725 $5,597 $16,847 $18,619
Taxable equivalent adjustment 215 223 255 223 133 693 261
Merger-related expenses 204 579 2,538
Divestiture expenses 305
Gain on sale of branches (3,885)
Operating income before income taxes $6,157 $6,396 $4,987 $3,152 $6,309 $17,540 $17,838
Operating income tax reconciliation
Income tax expense - GAAP $1,890 $1,844 $1,502 $1,116 $1,889 $5,236 $6,833
Taxable equivalent adjustment 215 223 255 223 133 693 261
Merger related expenses, tax benefit 78 223 979
Divestiture expenses, tax benefit 118
Gain on sale of branches, tax expense (1,500)
Operating income tax expense $2,105 $2,067 $1,757 $1,417 $2,245 $5,929 $6,691
Operating net income reconciliation
Net income - GAAP $4,052 $4,329 $3,230 $1,609 $3,708 $11,611 $11,786
Merger related expenses, net of income tax 126 356 1,559
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Operating net income $4,052 $4,329 $3,230 $1,735 $4,064 $11,611 $11,147
Operating diluted earnings per share reconciliation
Diluted earnings per share - GAAP $0.16 $0.17 $0.13 $0.06 $0.15 $0.45 $0.47
Merger related expenses 0.01 0.01 0.07
Net gain on sale of branches (0.10)
Diluted earnings per share - operating $0.16 $0.17 $0.13 $0.07 $0.16 $0.45 $0.44
Tangible book value per common share reconciliation
Total shareholders’ equity $324,754 $319,435 $310,967 $303,658 $308,463 $324,754 $308,463
Intangible assets (24,760) (25,151) (25,913) (26,383) (26,878) (24,760) (26,878)
Total tangible common equity $299,994 $294,284 $285,054 $277,275 $281,585 $299,994 $281,585
Common shares outstanding 25,716,418 25,654,521 25,535,013 25,093,135 24,950,099 25,716,418 24,950,099
Book value per common share - GAAP $12.63 $12.45 $12.18 $12.10 $12.36 $12.63 $12.36
Tangible book value 11.67 11.47 11.16 11.05 11.29 11.67 11.29
Return on average equity reconciliation
Net income - GAAP $4,052 $4,329 $3,230 $1,609 $3,708 $11,611 $11,786
Merger related expenses, net of income tax 126 356 1,559
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Operating net income $4,052 $4,329 $3,230 $1,735 $4,064 $11,611 $11,147
Average shareholders' equity $323,832 $316,825 $308,261 $308,588 $306,642 $316,361 $299,048
Return on average equity - GAAP 4.96 %5.48 %4.19 %2.09 %4.84 %4.91 %5.25 %
Return on average equity - operating 4.96 5.48 4.19 2.25 5.30 4.91 4.97
Return on average assets reconciliation
Net income - GAAP $4,052 $4,329 $3,230 $1,609 $3,708 $11,611 $11,786
Merger related expenses, net of income tax 126 356 1,559
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Operating net income $4,052 $4,329 $3,230 $1,735 $4,064 $11,611 $11,147
Average assets $2,701,387 $2,762,389 $2,694,715 $2,722,444 $2,717,996 $2,719,519 $2,704,670
Return on average assets - GAAP 0.60 %0.63 %0.48 %0.24 %0.55 %0.57 %0.58 %
Return on average assets - operating 0.60 0.63 0.48 0.25 0.60 0.57 0.55
Efficiency ratio reconciliation
Noninterest income - GAAP $3,477 $5,287 $3,857 $4,430 $4,002 $12,621 $17,302
Gain on sale of branches (3,885)
Operating noninterest income $3,477 $5,287 $3,857 $4,430 $4,002 $12,621 $13,417
Noninterest expense - GAAP $17,504 $17,623 $17,744 $18,775 $17,296 $52,871 $54,505
Merger-related expenses (204) (579) (2,538)
Divestiture expenses (305)
Operating noninterest expense $17,504 $17,623 $17,744 $18,571 $16,717 $52,871 $51,662
Net interest income $20,291 $20,489 $19,253 $19,278 $19,354 $60,033 $57,430
Efficiency ratio 73.65 %68.37 %76.78 %78.33 %71.57 %72.77 %72.92 %
Tangible common equity to tangible assets reconciliation
Total shareholders’ equity $324,754 $319,435 $310,967 $303,658 $308,463 $324,754 $308,463
Intangible assets (24,760) (25,151) (25,913) (26,383) (26,878) (24,760) (26,878)
Total tangible common equity $299,994 $294,284 $285,054 $277,275 $281,585 $299,994 $281,585
Total assets $2,638,412 $2,702,575 $2,802,078 $2,727,543 $2,761,244 $2,638,412 $2,761,244
Intangible assets (24,760) (25,151) (25,913) (26,383) (26,878) (24,760) (26,878)
Total tangible assets $2,613,652 $2,677,424 $2,776,165 $2,701,160 $2,734,366 $2,613,652 $2,734,366
Tangible common equity to tangible assets 11.48 %10.99 %10.27 %10.27 %10.30 %11.48 %10.30 %

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.