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Atlantic Capital Bancshares, Inc. Reports Fourth Quarter and Full Year 2017 Results

ATLANTA, Jan. 29, 2018 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) announced a loss of $15.3 million, or ($0.59) per diluted share for the fourth quarter of 2017, compared to net income of $4.0 million, or $0.16 per diluted share, in the third quarter of 2017. The tax reform legislation signed into law on December 22, 2017 resulted in a reduction of the value of our deferred tax asset and an increase in tax expense of $17.4 million, or ($0.67) per diluted share, in the fourth quarter of 2017. Net loss for the full year 2017 was $3.7 million, or ($0.14) per diluted share, compared to net income for the full year 2016 of $13.4 million, or $0.53 per diluted share.

Fourth Quarter Highlights

  • Grew loans held for investment by $28.4 million to $1.93 billion from September 30, 2017.
  • Grew commercial and industrial loans by $52.9 million to $615.4 million from September 30, 2017.
  • Grew total quarterly average deposits by $73.6 million to $2.19 billion from the third quarter of 2017.
  • Reported taxable equivalent net interest margin of 3.39%, an increase of 13 basis points from the third quarter of 2017.
  • Decreased nonperforming assets to 0.14% of total assets from 0.23% in the third quarter of 2017.
  • Recorded expense of $2.2 million related to the previously announced resignation of the President and Chief Operating Officer and a planned reduction of staff.

2017 Highlights

  • Grew commercial and industrial loans by $84.3 million, or 16%, from December 31, 2016.
  • Grew average noninterest bearing deposits by $71.3 million, or 13%, from 2016.
  • Reported taxable equivalent net interest margin of 3.28%, an increase of 16 basis points from 2016.
  • Grew income from SBA lending activities by $487,000, or 13%, from 2016.
  • Completed the sale of our Cleveland Tennessee branch in the first quarter of 2017.

2018 Expectations

  • Anticipate closing on the sale of the Southeast Trust Company in the second quarter of 2018, with an expected gain of approximately $1.7 million.
  • Plan additional severance expense in the first quarter of 2018 from the reduction of staff and the closing of our Charlotte loan production office.
  • Anticipate the consolidation of two branches in Chattanooga, Tennessee during the first quarter of 2018.
  • Estimate the 2018 effective tax rate to be approximately 20%.

“Atlantic Capital’s earnings in the fourth quarter of 2017 were affected not only by the change in tax law, but also by several actions management has taken to drive growth in our core businesses, streamline the structure of our organization, and position the Company for better performance in 2018 and beyond. This disciplined focus on efficiency, alignment, and productivity will continue in our day to day management of the Company,” explained Douglas Williams, President and Chief Executive Officer.

“We are confident as we begin 2018 that the cost saving, restructuring, and new investment decisions we have made will allow us to bring our successful and focused banking strategy to the entire Atlantic Capital footprint, while providing best of class service and solutions to our clients and prospects. Our banking teams are now almost fully staffed and are better aligned for meaningful improvement in performance. Our balance sheet is strong and our credit quality is sound. We are ready for 2018.”

Income Statement

Net interest income increased to $21.1 million in the fourth quarter of 2017 from $20.3 million in the third quarter of 2017, primarily as a result of higher loan and investment yields. Net accretion income on acquired loans totaled $686,000 in the fourth quarter of 2017 compared to $343,000 in the third quarter of 2017.

Taxable equivalent net interest margin was 3.39% in the fourth quarter of 2017, an increase of 13 basis points from the third quarter of 2017. The accretion from the acquired loan discount and amortization of time deposit premium contributed 12 basis points to the net interest margin in the fourth quarter of 2017 compared to 6 basis points in the third quarter of 2017.

Loan yields in the fourth quarter of 2017 increased 20 basis points to 4.61% from the third quarter of 2017 as a result of the December increase in the fed funds rate, an increase in loan fees and an increase in accretion income. Loan fees contributed 25 basis points to the loan yield in the fourth quarter of 2017 compared to 20 basis points in the third quarter of 2017. Accretion income contributed 15 basis points to the loan yield in the fourth quarter of 2017 compared to 7 basis points in the third quarter of 2017.

The cost of total deposits in the fourth quarter of 2017 was 0.52%, an increase of 2 basis points from the third quarter of 2017. The cost of interest bearing deposits increased 1 basis point to 0.73% from the third quarter of 2017.

The provision for loan losses was $282,000 in the fourth quarter of 2017 compared to $322,000 in the third quarter of 2017. Non-performing assets to total assets improved to 0.14% in the fourth quarter of 2017, compared to 0.23% for the third quarter of 2017. The fourth quarter included a recovery of $192,000 on a $7.7 million loan relationship that was charged-off in the third quarter of 2017.

Noninterest income totaled $3.6 million in the fourth quarter of 2017, an increase of $91,000 from the third quarter of 2017. The increase included higher derivatives income of $97,000, and higher trust income of $45,000, resulting from an increase in assets under management. This was offset by a decrease in mortgage income of $30,000 due to lower residential mortgage loan sales and a decrease in SBA income of $45,000 resulting from lower loan sales.

Noninterest expense totaled $20.6 million in the fourth quarter of 2017 compared to $17.5 million in the third quarter of 2017. Salaries and employee benefits expense increased by $2.9 million in the fourth quarter of 2017 to $13.3 million. The fourth quarter salaries and benefits expense included $937,000 in severance expense, $1.3 million in expenses related to the President and Chief Operating Officer’s resignation, and the additional expense of adding new SBA and Tennessee commercial bankers.

Balance Sheet

Total loans were $1.94 billion at December 31, 2017, an increase of $26.6 million from September 30, 2017. Loans held for investment were $1.93 billion at December 31, 2017, an increase of $28.4 million from September 30, 2017, as commercial and industrial loans grew $52.9 million during the quarter due to an increase in new loan originations and increased balances on existing loans. This increase was offset by a $27.7 million decrease in investment commercial real estate and construction and land loans related to the timing of payoffs.

At December 31, 2017, the allowance for loan losses was $19.3 million, or 1.00% of loans held for investment, compared to $18.9 million, or 0.99% of loans held for investment as of September 30, 2017. Annualized net charge-offs to average loans totaled (0.04%) in the fourth third quarter of 2017 and totaled 0.23% for 2017. Nonperforming assets totaled $4.1 million, or 0.14% of total assets, as of December 31, 2017, compared to $6.0 million, or 0.23% of total assets, as of September 30, 2017.

Total average deposits for the fourth quarter of 2017 were $2.19 billion, an increase of $73.6 million from the third quarter of 2017. Average noninterest bearing deposits increased $21.2 million to $649.2 million in the fourth quarter of 2017 and accounted for 29.6% of average total deposits.

Total deposits were $2.45 billion at December 31, 2017, an increase of $347.0 million from September 30, 2017. This increase included higher than normal levels of seasonal volatility at year-end.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Monday, January 29, 2018, to discuss the financial results for the quarter ended December 31, 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; (ix) tangible common equity; and (x) tangible book value, 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 net income also excludes the revaluation of net deferred tax assets. 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, strategic focus, 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 the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections 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 banking, treasury management, capital markets, trust, and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, and northwest Georgia. Atlantic Capital also provides specialized financial services to select clients nationally.

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information
2017 2016 For the year ended
December 31,
(in thousands, except share and per share data; taxable equivalent) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
2017 2016
INCOME SUMMARY
Interest income (1) $25,350 $24,566 $24,545 $22,716 $22,530 $97,177 $88,701
Interest expense 4,028 4,060 3,833 3,208 3,029 15,129 11,509
Net interest income 21,322 20,506 20,712 19,508 19,501 82,048 77,192
Provision for loan losses 282 322 1,980 634 2,208 3,218 3,816
Net interest income after provision for loan losses 21,040 20,184 18,732 18,874 17,293 78,830 73,376
Operating noninterest income (2) 3,568 3,477 5,287 3,857 4,430 16,189 17,847
Operating noninterest expense (3) 20,594 17,504 17,623 17,744 18,571 73,465 70,233
Operating income before income taxes 4,014 6,157 6,396 4,987 3,152 21,554 20,990
Operating income tax expense (4) 1,953 2,105 2,067 1,757 1,417 7,882 8,108
Operating net income (2)(3)(4) 2,061 4,052 4,329 3,230 1,735 13,672 12,882
Merger related expenses, net of income tax 126 1,685
Net gain on sale of branches, net of income tax 2,198
Revaluation of net deferred tax asset 17,398 17,398
Net income (loss) - GAAP $(15,337) $4,052 $4,329 $3,230 $1,609 $(3,726) $13,395
PER SHARE DATA
Diluted earnings (loss) per share - GAAP $(0.59) $0.16 $0.17 $0.13 $0.06 $(0.14) $0.53
Diluted earnings per share - operating (2)(3)(4) 0.08 0.16 0.17 0.13 0.07 0.53 0.51
Book value per share 11.99 12.63 12.45 12.18 12.10 11.99 12.10
Tangible book value per share (5) 11.05 11.67 11.47 11.16 11.05 11.05 11.05
PERFORMANCE MEASURES
Return on average equity - GAAP (18.66)%4.96 %5.48 %4.19 %2.09 %(1.17)%4.44 %
Return on average equity - operating (2)(3)(4) 2.51 4.96 5.48 4.19 2.25 4.29 4.27
Return on average assets - GAAP (2.24) 0.60 0.63 0.48 0.24 (0.14) 0.49
Return on average assets - operating (2)(3)(4) 0.30 0.60 0.63 0.48 0.25 0.50 0.48
Taxable equivalent net interest margin 3.39 3.26 3.26 3.20 3.11 3.28 3.12
Efficiency ratio 83.45 73.65 68.37 76.78 78.33 75.48 74.28
CAPITAL
Average equity to average assets 11.99 %11.99 %11.47 %11.44 %11.33 %11.72 %11.13 %
Tangible common equity to tangible assets 9.91 11.48 10.99 10.27 10.27 9.91 10.27
Tier 1 capital ratio 11.1 (7)11.3 10.9 10.7 10.3 11.1 (7)10.3
Total risk based capital ratio 14.1 (7)14.3 14.0 13.8 13.3 14.1 (7)13.3
Number of common shares outstanding - basic 25,712,909 25,716,418 25,654,521 25,535,013 25,093,135 25,712,909 25,093,135
Number of common shares outstanding - diluted 25,891,225 25,967,575 25,931,671 25,836,809 25,673,841 25,891,225 25,673,841
ASSET QUALITY
Allowance for loan losses to loans held for investment 1.00 %0.99 %1.11 %1.05 %1.04 %1.00 %1.04 %
Net charge-offs to average loans (6) (0.04) 0.68 0.01 0.26 0.03 0.23 0.11
NPAs to total assets 0.14 0.23 0.52 0.21 0.13 0.14 0.13
(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 revaluation of net deferred tax asset. (5)Excludes effect of acquisition related intangibles. (6)Annualized. (7)Amounts are estimates as of 12/31/17.


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
December 31, September 30, December 31,
(in thousands, except share data) 2017 2017 2016
ASSETS
Cash and due from banks $38,086 $35,504 $36,790
Interest-bearing deposits in banks 281,247 40,558 118,039
Other short-term investments 10,681 5,189 10,896
Cash and cash equivalents 330,014 81,251 165,725
Investment securities available-for-sale 449,117 447,005 347,705
Other investments 32,174 35,818 23,806
Loans held for sale 1,487 3,274 35,219
Loans held for investment 1,933,839 1,905,432 1,981,330
Less: allowance for loan losses (19,344) (18,870) (20,595)
Loans held for investment, net 1,914,495 1,886,562 1,960,735
Branch premises held for sale 2,995
Premises and equipment, net 12,054 11,747 11,958
Bank owned life insurance 63,667 63,284 62,160
Goodwill and intangible assets, net 27,633 27,945 29,567
Other real estate owned 1,215 1,494 1,872
Other assets 59,565 80,032 85,801
Total assets $2,891,421 $2,638,412 $2,727,543
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $732,442 $599,292 $643,471
Interest-bearing checking 306,331 270,740 264,062
Savings 26,573 30,131 27,932
Money market 1,117,891 865,238 912,493
Time 138,612 144,250 157,810
Brokered deposits 128,816 193,994 200,223
Deposits to be assumed in branch sale 31,589
Total deposits 2,450,665 2,103,645 2,237,580
Federal Home Loan Bank borrowings 45,000 125,000 110,000
Long-term debt 49,535 49,493 49,366
Other liabilities 37,796 35,520 26,939
Total liabilities 2,582,996 2,313,658 2,423,885
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2017, September 30, 2017, and December 31, 2016
Common stock, no par value; 100,000,000 shares authorized; 25,712,909, 25,716,418, and 25,093,135 shares issued and outstanding as of December 31, 2017, September 30, 2017, and December 31, 2016, respectively 299,474 298,469 292,747
Retained earnings 12,810 28,147 16,536
Accumulated other comprehensive (loss) income (3,859) (1,862) (5,625)
Total shareholders’ equity 308,425 324,754 303,658
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,891,421 $2,638,412 $2,727,543


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share data) Three months ended Year ended
December
31, 2017
September
30, 2017
June 30,
2017
March 31,
2017
December
31, 2016
December
31, 2017
December
31, 2016
INTEREST INCOME
Loans, including fees $22,043 $21,491 $21,361 $19,994 $20,363 $84,889 $80,781
Investment securities available-for-sale 2,510 2,298 2,355 2,018 1,477 9,181 5,698
Interest and dividends on other interest‑earning assets 584 562 606 449 467 2,201 1,738
Total interest income 25,137 24,351 24,322 22,461 22,307 96,271 88,217
INTEREST EXPENSE
Interest on deposits 2,856 2,693 2,481 2,047 1,929 10,077 7,399
Interest on Federal Home Loan Bank advances 323 459 452 302 234 1,536 558
Interest on federal funds purchased and securities sold under agreements to repurchase 26 84 76 36 38 222 229
Interest on long-term debt 823 824 824 823 828 3,294 3,285
Other 38
Total interest expense 4,028 4,060 3,833 3,208 3,029 15,129 11,509
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 21,109 20,291 20,489 19,253 19,278 81,142 76,708
Provision for loan losses 282 322 1,980 634 2,208 3,218 3,816
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 20,827 19,969 18,509 18,619 17,070 77,924 72,892
NONINTEREST INCOME
Service charges 1,206 1,247 1,274 1,349 1,327 5,076 5,487
Gains (losses) on sale of securities 17 (80) (63) 44
Gains (losses) on sale of other assets (46) 44 666 78 238 742 388
Mortgage income 290 320 388 257 499 1,255 1,917
Trust income 482 437 488 407 350 1,814 1,411
Derivatives income 94 (3) 116 (51) 346 156 578
Bank owned life insurance 384 384 384 378 395 1,530 1,610
SBA lending activities 843 888 1,171 1,227 599 4,129 3,642
TriNet lending activities 27 20 20 20 357 87 1,501
Gains on sale of branches 302 302 3,885
Other noninterest income 271 220 478 192 319 1,161 1,269
Total noninterest income 3,568 3,477 5,287 3,857 4,430 16,189 21,732
NONINTEREST EXPENSE
Salaries and employee benefits 13,298 10,409 10,603 11,065 11,269 45,375 42,303
Occupancy 1,156 1,129 1,074 1,230 995 4,589 4,604
Equipment and software 872 776 996 805 694 3,449 2,966
Professional services 1,280 1,595 973 904 968 4,752 2,918
Postage, printing and supplies 114 63 78 85 73 340 462
Communications and data processing 1,111 982 1,069 987 1,064 4,149 3,291
Marketing and business development 225 272 179 270 247 946 1,100
FDIC premiums 212 308 132 314 262 966 1,568
Merger and conversion costs 304 204 304 2,742
Amortization of intangibles 367 391 425 470 495 1,653 2,445
Foreclosed property/problem asset expense 7 7 107 3 666 124 864
Other noninterest expense 1,952 1,572 1,683 1,611 1,838 6,818 8,017
Total noninterest expense 20,594 17,504 17,623 17,744 18,775 73,465 73,280
INCOME BEFORE PROVISION FOR INCOME TAXES 3,801 5,942 6,173 4,732 2,725 20,648 21,344
Provision for income taxes 19,138 1,890 1,844 1,502 1,116 24,374 7,949
NET (LOSS)/INCOME $(15,337) $4,052 $4,329 $3,230 $1,609 $(3,726) $13,395
Net (loss)/income per common share ‑ basic $(0.60) $0.16 $0.17 $0.13 $0.06 $(0.15) $0.54
Net (loss)/income per common share ‑ diluted $(0.59) $0.16 $0.17 $0.13 $0.06 $(0.14) $0.53
Weighted average shares - basic 25,723,548 25,699,179 25,621,910 25,320,690 25,027,304 25,592,731 24,763,522
Weighted average shares - diluted 25,888,064 25,890,779 25,831,281 25,672,286 25,407,728 25,822,085 25,186,680


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Three months ended
December 31, 2017 September 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 $113,553 $302 1.06 % $69,839 $216 1.23 %
Other short-term investments 8,532 40 1.86 13,830 67 1.92
Investment securities:
Taxable investment securities 378,859 2,024 2.12 373,087 1,812 1.93
Non-taxable investment securities(1) 81,410 699 3.41 82,781 701 3.36
Total investment securities 460,269 2,723 2.35 455,868 2,513 2.19
Total loans 1,898,745 22,043 4.61 1,934,505 21,491 4.41
FHLB and FRB stock 16,693 242 5.75 18,494 279 5.99
Total interest-earning assets 2,497,792 25,350 4.03 2,492,536 24,566 3.91
Non-earning assets 222,278 208,851
Total assets $2,720,070 $2,701,387
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,276,116 2,140 0.67 1,192,664 1,886 0.63
Time deposits 140,921 301 0.85 143,862 292 0.81
Brokered deposits 128,594 415 1.28 156,708 515 1.30
Total interest-bearing deposits 1,545,631 2,856 0.73 1,493,234 2,693 0.72
Total borrowings 111,879 349 1.24 179,808 543 1.20
Total long-term debt 49,507 823 6.60 49,465 824 6.61
Total interest-bearing liabilities 1,707,017 4,028 0.94 1,722,507 4,060 0.94
Demand deposits 649,218 628,029
Other liabilities 37,776 27,019
Shareholders' equity 326,059 323,832
Total liabilities and shareholders' equity $2,720,070 $2,701,387
Net interest spread 3.09 % 2.97 %
Net interest income and net interest margin(2) $21,322 3.39 % $20,506 3.26 %
Non-taxable equivalent net interest margin 3.35 % 3.23 %
(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.


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
Year ended
December 31, 2017 December 31, 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 $85,525 $916 1.07 % $92,744 $583 0.63 %
Other short-term investments 14,266 270 1.89 23,134 318 1.37
Investment securities:
Taxable investment securities 366,309 7,221 1.97 310,815 4,755 1.53
Non-taxable investment securities(1) 81,466 2,866 3.52 46,239 1,427 3.09
Total investment securities 447,775 10,087 2.25 357,054 6,182 1.73
Total loans 1,936,109 84,889 4.38 1,986,482 80,781 4.07
FHLB and FRB stock 18,528 1,015 5.48 15,617 837 5.36
Total interest-earning assets 2,502,203 97,177 3.88 2,475,031 88,701 3.58
Non-earning assets 217,455 234,107
Total assets $2,719,658 $2,709,138
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,197,771 6,983 0.58 1,170,879 4,889 0.42
Time deposits 149,350 1,134 0.76 208,800 936 0.45
Brokered deposits 168,685 1,960 1.16 207,543 1,574 0.76
Total interest-bearing deposits 1,515,806 10,077 0.66 1,587,222 7,399 0.47
Total borrowings 175,060 1,758 1.00 176,122 825 0.47
Total long-term debt 49,444 3,294 6.66 49,275 3,285 6.67
Total interest-bearing liabilities 1,740,310 15,129 0.87 1,812,619 11,509 0.63
Demand deposits 631,046 559,762
Other liabilities 29,497 35,314
Shareholders' equity 318,805 301,443
Total liabilities and shareholders' equity $2,719,658 $2,709,138
Net interest spread 3.01 % 2.95 %
Net interest income and net interest margin(2) $82,048 3.28 % $77,192 3.12 %
Non-taxable equivalent net interest margin 3.24 % 3.10 %
(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.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans
(dollars in thousands) December
31, 2017
September
30, 2017
June
30, 2017
March
31, 2017
December
31, 2016
Linked
Quarter
Change
Year Over
Year
Change
Loans held for sale
Loans held for sale $1,487 $3,274 $1,744 $1,297 $4,302 $(1,787) $(2,815)
Branch loans held for sale 27,944 30,917 (30,917)
Total loans held for sale $1,487 $3,274 $1,744 $29,241 $35,219 $(1,787) $(33,732)
Loans held for investment
Commercial loans:
Commercial and industrial $615,359 $562,426 $578,888 $544,911 $531,061 $52,933 $84,298
Commercial real estate:
Multifamily 99,553 91,219 113,571 108,215 68,223 8,334 31,330
Owner occupied 346,746 348,447 351,733 348,888 352,523 (1,701) (5,777)
Investment 494,116 505,188 517,571 478,485 438,032 (11,072) 56,084
Construction and land:
1-4 family residential construction 6,906 9,644 11,711 11,799 10,335 (2,738) (3,429)
Other construction, development, and land 108,589 122,436 113,347 123,838 209,017 (13,847) (100,428)
Mortgage warehouse loans 39,981 41,551 47,992 58,357 147,519 (1,570) (107,538)
Total commercial loans 1,711,250 1,680,911 1,734,813 1,674,493 1,756,710 30,339 (45,460)
Residential:
Residential mortgages 104,484 101,976 101,798 99,665 101,921 2,508 2,563
Home equity 76,244 78,773 79,769 81,438 77,358 (2,529) (1,114)
Total residential loans 180,728 180,749 181,567 181,103 179,279 (21) 1,449
Consumer 29,393 31,750 31,981 32,525 27,338 (2,357) 2,055
Other 16,278 16,106 18,013 17,611 21,565 172 (5,287)
1,937,649 1,909,516 1,966,374 1,905,732 1,984,892 28,133 (47,243)
Less net deferred fees and other unearned income (3,810) (4,084) (4,283) (4,008) (3,562) 274 (248)
Total loans held for investment $1,933,839 $1,905,432 $1,962,091 $1,901,724 $1,981,330 $28,407 $(47,491)
Total loans $1,935,326 $1,908,706 $1,963,835 $1,930,965 $2,016,549 $26,620 $(81,223)


ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Loan Losses Activity and Credit Quality
2017 2016
(dollars in thousands) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Balance at beginning of period $18,870 $21,870 $19,939 $20,595 $18,534
Provision for loan losses 312 314 2,048 565 2,134
Provision for PCI loan losses (30) 8 (68) 69 74
Loans charged-off:
Commercial and industrial (3,292) (781)
Commercial real estate (132) 24
Construction and land (16)
Residential mortgages (46)
Home equity (31) (8)
Consumer (13) (7) (57) (332) (158)
Other
Total loans charged-off (13) (3,346) (65) (1,291) (134)
Recoveries on loans previously charged‑off:
Commercial and industrial 192 1 7
Commercial real estate 2 (15)
Construction and land 1 15
Residential mortgages 1
Home equity 1
Consumer 12 8 5 1 2
Other
Total recoveries 205 24 16 1 (13)
Net charge-offs $192 $(3,322) $(49) $(1,290) $(147)
Balance at period end $19,344 $18,870 $21,870 $19,939 $20,595
Loans held for investment
PCI Loans $11,754 $12,090 $11,510 $11,841 $15,253
Non-PCI Loans 1,922,085 1,893,342 1,950,581 1,889,883 1,966,077
$1,933,839 $1,905,432 $1,962,091 $1,901,724 $1,981,330
Non-performing loans - PCI $1,211 $1,289 $1,310 $1,684 $2,446
Non-performing loans - Non-PCI $2,912 $4,553 $12,300 $3,983 $1,615
Foreclosed properties (OREO) 1,215 1,494 1,819 1,869 1,872
Total nonperforming assets $4,127 $6,047 $14,119 $5,852 $3,487
Allowance for loan losses to loans held for investment 1.00 %0.99 %1.11 %1.05 %1.04 %
Net charge-offs to average loans (1) (0.04) 0.68 0.01 0.26 0.03
Nonperforming loans as a percentage of total loans (2) 0.15 0.24 0.63 0.21 0.08
Nonperforming assets as a percentage of total assets (2) 0.14 0.23 0.52 0.21 0.13
(1)Annualized. (2)Excludes non-performing PCI loans.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
(dollars in thousands) December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
Linked
Quarter
Change
Year Over
Year Change
DDA $732,442 $599,292 $612,744 $606,386 $643,471 $133,150 $88,971
NOW 306,331 270,740 250,254 259,760 264,062 35,591 42,269
Savings 26,573 30,131 30,170 30,756 27,932 (3,558) (1,359)
Money Market 1,117,891 865,238 882,824 916,390 912,493 252,653 205,398
Time 138,612 144,250 142,915 150,867 157,810 (5,638) (19,198)
Brokered 128,816 193,994 195,047 209,385 200,223 (65,178) (71,407)
Deposits to be assumed in branch sale 29,495 31,589 (31,589)
Total Deposits $2,450,665 $2,103,645 $2,113,954 $2,203,039 $2,237,580 $347,020 $213,085
Payments Clients $405,873 $239,079 $250,104 $321,899 $347,833 $166,794 $58,040
Average Deposits(1)
2017 2016 Linked
Quarter
Change
Year Over
Year Change
(dollars in thousands) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
DDA $649,218 $628,029 $626,330 $620,325 $591,166 $21,189 $58,052
NOW 338,741 291,810 293,160 290,862 253,187 46,931 85,554
Savings 29,851 30,236 30,468 30,306 29,741 (385) 110
Money Market 907,524 870,618 860,116 815,920 853,281 36,906 54,243
Time 140,921 143,862 149,898 163,021 169,677 (2,941) (28,756)
Brokered 128,594 156,708 198,703 191,558 197,833 (28,114) (69,239)
Total Deposits $2,194,849 $2,121,263 $2,158,675 $2,111,992 $2,094,885 $73,586 $99,964
Payments Clients $234,558 $209,851 $244,157 $273,630 $211,000 $24,707 $23,558
Noninterest bearing deposits as a percentage of average deposits 29.6% 29.6% 29.0% 29.4% 28.2%
Cost of deposits 0.52% 0.50% 0.46% 0.39% 0.37%
(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 year ended
December 31,
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
2017 2016
Taxable equivalent interest income reconciliation
Interest income - GAAP $25,137 $24,351 $24,322 $22,461 $22,307 $96,271 $88,217
Taxable equivalent adjustment 213 215 223 255 223 906 484
Interest income - taxable equivalent $25,350 $24,566 $24,545 $22,716 $22,530 $97,177 $88,701
Taxable equivalent net interest income reconciliation
Net interest income - GAAP $21,109 $20,291 $20,489 $19,253 $19,278 $81,142 $76,708
Taxable equivalent adjustment 213 215 223 255 223 906 484
Net interest income - taxable equivalent $21,322 $20,506 $20,712 $19,508 $19,501 $82,048 $77,192
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP 3.35 %3.23 %3.23 %3.16 %3.07 %3.24 %3.10 %
Impact of taxable equivalent adjustment 0.04 0.03 0.03 0.04 0.04 0.04 0.02
Net interest margin - taxable equivalent 3.39 %3.26 %3.26 %3.20 %3.11 %3.28 %3.12 %
Operating noninterest income reconciliation
Noninterest income - GAAP $3,568 $3,477 $5,287 $3,857 $4,430 $16,189 $21,732
Gain on sale of branches (3,885)
Operating noninterest income $3,568 $3,477 $5,287 $3,857 $4,430 $16,189 $17,847
Operating noninterest expense reconciliation
Noninterest expense - GAAP $20,594 $17,504 $17,623 $17,744 $18,775 $73,465 $73,280
Merger-related expenses (204) (2,742)
Divestiture expenses (305)
Operating noninterest expense $20,594 $17,504 $17,623 $17,744 $18,571 $73,465 $70,233
Operating income before income taxes reconciliation
Income before income taxes - GAAP $3,801 $5,942 $6,173 $4,732 $2,725 $20,648 $21,344
Taxable equivalent adjustment 213 215 223 255 223 906 484
Merger-related expenses 204 2,742
Divestiture expenses 305
Gain on sale of branches (3,885)
Operating income before income taxes $4,014 $6,157 $6,396 $4,987 $3,152 $21,554 $20,990
Operating income tax reconciliation
Income tax expense - GAAP $19,138 $1,890 $1,844 $1,502 $1,116 $24,374 $7,949
Taxable equivalent adjustment 213 215 223 255 223 906 484
Merger related expenses, tax benefit 78 1,057
Divestiture expenses, tax benefit 118
Gain on sale of branches, tax expense (1,500)
Revaluation of net deferred tax asset (17,398) (17,398)
Operating income tax expense $1,953 $2,105 $2,067 $1,757 $1,417 $7,882 $8,108
Operating net income reconciliation
Net income (loss) - GAAP $(15,337) $4,052 $4,329 $3,230 $1,609 $(3,726) $13,395
Merger related expenses, net of income tax 126 1,685
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Revaluation of net deferred tax asset 17,398 17,398
Operating net income $2,061 $4,052 $4,329 $3,230 $1,735 $13,672 $12,882
Operating diluted earnings per share reconciliation
Diluted earnings (loss) per share - GAAP $(0.59) $0.16 $0.17 $0.13 $0.06 $(0.14) $0.53
Merger related expenses 0.01 0.06
Net gain on sale of branches (0.08)
Revaluation of net deferred tax asset 0.67 0.67
Diluted earnings per share - operating $0.08 $0.16 $0.17 $0.13 $0.07 $0.53 $(0.51)
Tangible book value per common share reconciliation
Total shareholders’ equity $308,425 $324,754 $319,435 $310,967 $303,658 $308,425 $303,658
Intangible assets (24,393) (24,760) (25,151) (25,913) (26,383) (24,393) (26,383)
Total tangible common equity $284,032 $299,994 $294,284 $285,054 $277,275 $284,032 $277,275
Common shares outstanding 25,712,909 25,716,418 25,654,521 25,535,013 25,093,135 25,712,909 25,093,135
Book value per common share - GAAP $11.99 $12.63 $12.45 $12.18 $12.10 $11.99 $12.10
Tangible book value 11.05 11.67 11.47 11.16 11.05 11.05 11.05
Return on average equity reconciliation
Net income (loss) - GAAP $(15,337) $4,052 $4,329 $3,230 $1,609 $(3,726) $13,395
Merger related expenses, net of income tax 126 1,685
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Revaluation of net deferred tax asset 17,398 17,398
Operating net income $2,061 $4,052 $4,329 $3,230 $1,735 $13,672 $12,882
Average shareholders' equity $326,059 $323,832 $316,825 $308,261 $308,588 $318,805 $301,443
Return on average equity - GAAP (18.66)%4.96 %5.48 %4.19 %2.09 %(1.17)%4.44 %
Return on average equity - operating 2.51 4.96 5.48 4.19 2.25 4.29 4.27
Return on average assets reconciliation
Net income (loss) - GAAP $(15,337) $4,052 $4,329 $3,230 $1,609 $(3,726) $13,395
Merger related expenses, net of income tax 126 1,685
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax (2,385)
Revaluation of net deferred tax asset 17,398 17,398
Operating net income $2,061 $4,052 $4,329 $3,230 $1,735 $13,672 $12,882
Average assets $2,720,070 $2,701,387 $2,762,389 $2,694,715 $2,722,444 $2,719,658 $2,709,138
Return on average assets - GAAP (2.24)%0.60 %0.63 %0.48 %0.24 %(0.14)%0.49 %
Return on average assets - operating 0.30 0.60 0.63 0.48 0.25 0.50 0.48
Efficiency ratio reconciliation
Noninterest income - GAAP $3,568 $3,477 $5,287 $3,857 $4,430 $16,189 $21,732
Gain on sale of branches (3,885)
Operating noninterest income $3,568 $3,477 $5,287 $3,857 $4,430 $16,189 $17,847
Noninterest expense - GAAP $20,594 $17,504 $17,623 $17,744 $18,775 $73,465 $73,280
Merger-related expenses (204) (2,742)
Divestiture expenses (305)
Operating noninterest expense $20,594 $17,504 $17,623 $17,744 $18,571 $73,465 $70,233
Net interest income $21,109 $20,291 $20,489 $19,253 $19,278 $81,142 $76,708
Efficiency ratio 83.45 %73.65 %68.37 %76.78 %78.33 %75.48 %74.28 %
Tangible common equity to tangible assets reconciliation
Total shareholders’ equity $308,425 $324,754 $319,435 $310,967 $303,658 $308,425 $303,658
Intangible assets (24,393) (24,760) (25,151) (25,913) (26,383) (24,393) (26,383)
Total tangible common equity $284,032 $299,994 $294,284 $285,054 $277,275 $284,032 $277,275
Total assets $2,891,421 $2,638,412 $2,702,575 $2,802,078 $2,727,543 $2,891,421 $2,727,543
Intangible assets (24,393) (24,760) (25,151) (25,913) (26,383) (24,393) (26,383)
Total tangible assets $2,867,028 $2,613,652 $2,677,424 $2,776,165 $2,701,160 $2,867,028 $2,701,160
Tangible common equity to tangible assets 9.91 %11.48 %10.99 %10.27 %10.27 %9.91 %10.27 %


Contact:Douglas L. WilliamsPatrick T. Oakes
President and Chief Executive OfficerExecutive Vice President and CFO
404-995-6051404-995-6079
doug.williams@atlcapbank.compatrick.oakes@atlcapbank.com

Source:Atlantic Capital Bancshares, Inc.