ACBI
$10.66
Atlantic Capital
$.04
.38%
Earnings Details
1st Quarter March 2020
Thursday, April 23, 2020 4:05:00 PM
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Summary

Atlantic Capital (ACBI) Recent Earnings

Atlantic Capital (ACBI) reported 1st Quarter March 2020 earnings of $0.10 per share on revenue of $28.7 million. The consensus earnings estimate was $0.25 per share on revenue of $22.7 million. Revenue grew 0.5% on a year-over-year basis.

Results
Reported Earnings
$0.10
Earnings Whisper
-
Consensus Estimate
$0.25
Reported Revenue
$28.7 Mil
Revenue Estimate
$22.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Atlantic Capital Bancshares, Inc. Reports First Quarter 2020 Results

ATLANTA, April 23, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income from continuing operations for the quarter ended March 31, 2020 of $2.1 million, or $0.10 per diluted share, compared to $6.4 million, or $0.26 per diluted share, for the first quarter of 2019 and $7.1 million, or $0.32 per diluted share, for the fourth quarter of 2019. The decrease in net income was predominantly driven by increases in credit reserves in anticipation of the expected impact from the economic slowdown from COVID-19.

“Atlantic Capital entered the COVID-19 crisis in a position of strength with solid first quarter operating results, a fortress balance sheet, and sound business continuity plans. With that strength, our company will provide needed assistance to businesses in our community, add new client relationships, and strive to continue to build meaningful shareholder value through the crisis,” remarked Douglas Williams, President and Chief Executive Officer.

Response to COVID-19

As the COVID-19 pandemic affected all areas of economic and social life, Atlantic Capital responded with measures to protect the health of its community, customers and associates. The Company implemented work-from-home initiatives for employees when possible, ceased non-essential business related travel, and began regular meetings of its executive leadership and incident response teams to direct the Company’s response to the ever-changing environment. Each week, Doug Williams and his executive leadership team host an internal company-wide conference call to communicate the latest developments, answer teammate questions, and gather information from teammates based on the challenges their relationship customers are facing.

In addition, Atlantic Capital has taken the following steps to assist borrowers during these challenging times, consistent with sound banking practice:

  • facilitating approximately $223 million in loan applications for business borrowers through the Paycheck Protection Program;

  • evaluating business segments in our market areas to evaluate areas of need and focus our assessment and management of portfolio risk;

  • offering payment deferrals to existing customers with a streamlined loan modification process when appropriate;

  • communicating with customers in order to assess developing credit situations and needs; and

  • engaging in liquidity planning, including pausing stock repurchases in March.

Our goal is to continue to support our community of customers and prospective customers while maintaining our historically cautious approach to new loan underwriting. With reliable core deposit funding, solid balance sheet liquidity, a strong capital position, and access to significant wholesale funding, Atlantic Capital anticipates adequate funding capacity for future lending needs.

First Quarter Highlights(1)

  • Capital ratios remained strong, with a tangible common equity to tangible assets ratio of 11.6%.
  • Tangible book value per share increased 19.5% from March 31, 2019 to $14.54, and increased 12.8% annualized from December 31, 2019.
  • Net interest margin from continuing operations of 3.41%, compared to 3.74% in the first quarter of 2019 and 3.38% in the fourth quarter of 2019.
  • Average deposits from continuing operations increased $460.7 million, or 25.7%, compared to the first quarter of 2019 and $107.9 million, or 20.1% annualized, compared to the fourth quarter of 2019.
  • Total loans held for investment increased $198.4 million, or 11.4% from March 31, 2019 and $59.4 million, or 12.7% annualized, from December 31, 2019.
  • Annualized net charge-offs to average loans totaled 0.04%, compared 0.11% in the first quarter of 2019 and 0.07% for the fourth quarter of 2019.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $21.2 million for the first quarter of 2020, an increase of $679,000, or 3.3%, from the first quarter of 2019, and an increase of $469,000, or 9.0% annualized, from the fourth quarter of 2019. The linked quarter increase in net interest income was primarily driven by a decrease in the cost of interest bearing liabilities offset by a decrease in loan yields. 

Taxable equivalent net interest margin from continuing operations was 3.41% in the first quarter of 2020, a decrease of 33 basis points from the first quarter of 2019 and an increase of 3 basis points from the fourth quarter of 2019. The linked quarter increase was primarily the result of a drop in the cost of interest bearing deposits and an increase in the yield on investment securities. This was partially offset by a decrease in loan yields.

The yield on loans from continuing operations in the first quarter of 2020 was 4.77%, a decrease of 63 basis points from the first quarter of 2019 and a decrease of 18 basis points from the fourth quarter of 2019. The decrease in loan yields was due primarily to the repricing of variable rate loans as a result of declines in short term interest rates during 2019 and 2020.

The taxable equivalent yield on investment securities in the first quarter of 2020 was 2.84%, an increase of 7 basis points from the first quarter of 2019 and an increase of 21 basis points from the fourth quarter of 2019. The increase in taxable equivalent investment portfolio yields was primarily the result of municipal bond purchases in 2019 and 2020, many of which were non-taxable.

The cost of deposits from continuing operations in the first quarter of 2020 was 0.75%, a decrease of 34 basis points from the first quarter of 2019 and a decrease of 15 basis points from the fourth quarter of 2019. The cost of interest bearing deposits from continuing operations decreased 52 basis points to 1.09% from the first quarter of 2019, and decreased 27 basis points from the fourth quarter of 2019.

The provision for credit losses for continuing operations was $8.1 million in the first quarter of 2020 compared to $814,000 in the first quarter of 2019 and $787,000 in the fourth quarter of 2019. The provision for credit losses in the first quarter of 2020 included a $7.4 million provision for loan losses and a $671,000 provision for unfunded commitments. The provision increased primarily as a response to the expected impact from the economic slowdown from COVID-19.

Noninterest income from continuing operations totaled $2.4 million in the first quarter of 2020 compared to $2.3 million in the first quarter of 2019 and $2.7 million in the fourth quarter of 2019. Service charge income in the first quarter of 2020 totaled $1.2 million, an increase of $438,000 or 55.2%, compared to the first quarter of 2019 and an increase of $234,000, or 93.8% annualized, from the fourth quarter of 2019. Continued strong growth in core deposits, particularly in our payments processing businesses, drove the increases in service charge income. SBA income totaled $414,000, a decrease from $1.1 million in the first quarter of 2019 and $846,000 in the fourth quarter of 2019, primarily from lower SBA origination volume and a decrease in loan premiums during the quarter.

Noninterest expense from continuing operations totaled $12.9 million in the first quarter of 2020, a decrease of $918,000 compared to the first quarter of 2019 and $505,000 compared to the fourth quarter of 2019. Salaries and employee benefits totaled $8.5 million in the first quarter of 2020, unchanged from the previous quarter as the higher first quarter benefits costs were offset by lower incentive accruals.

The effective tax rate from continuing operations for the first quarter of 2020 was 13.3% compared to 21.3% for the full year of 2019, and was impacted by lower pretax earnings as well as increased non-taxable securities income from municipal bonds.

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

Balance Sheet

Total loans held for investment were $1.93 billion at March 31, 2020, an increase of $198.4 million, or 11.4%, from March 31, 2019 and an increase of $59.4 million, or 12.7% annualized, from December 31, 2019. Commercial and industrial loans were $760.0 million at March 31, 2020, an increase of 11.9% from March 31, 2019 and 31.2% annualized from December 31, 2019. The increase from December 31, 2019 was primarily due to organic growth across different areas of the Company. Mortgage warehouse loan participations decreased to zero as we exited the business during the first quarter of 2020. Consumer loans increased $20.4 million from December 31, 2019 to $58.2 million at March 31, 2020, due to the growth in a partnership with a fintech firm that offers CD-secured loans to its customers. 

On January 1, 2020, the Company adopted the CECL accounting standard, which resulted in a day one reduction of $854,000 to the allowance for loan losses offset by an increase of $1.3 million to the allowance for unfunded commitments. The allowance for loan losses totaled $18.5 million as of December 31, 2019, was reduced by $854,000 due to CECL adoption, was increased by $7.4 million related to the first quarter 2020 provision, and ended the quarter at $24.9 million. The allowance for unfunded commitments totaled $892,000 at December 31, 2019, was increased by $1.3 million due to CECL adoption, was increased by $671,000 related to the first quarter 2020 provision, and ended the quarter at $2.8 million. At March 31, 2020, the combined allowance for credit losses for loans and unfunded commitments was $27.7 million, compared to $19.4 million at December 31, 2019.

The allowance for loan losses was 1.29% of total loans held for investment at March 31, 2020, compared to 0.99% at December 31, 2019. The increase reflects the impact of COVID-19 on the economic forecast used in the estimation of expected credit losses. Non-performing assets from continuing operations totaled $7.3 million, or 0.27% of total assets, as of March 31, 2020, compared to 0.34% of total assets as of March 31, 2019 and 0.26% of total assets as of December 31, 2019.

Tangible common equity to tangible assets was 11.6% at March 31, 2020, an increase from 10.6% at December 31, 2019 due to the elevated levels of cash related to year-end deposits at December 31, 2019. The estimated total risk based capital ratio was 14.9% at March 31, 2020 compared to 13.7% at March 31, 2019 and 15.0% at December 31, 2019.

Earnings Conference Call

The Company will host a conference call at 9:30 a.m. EDT on Friday, April 24, 2020, to discuss the financial results for the quarter ended March 31, 2020. Individuals wishing to participate in the conference call may do so by dialing 877-270-2148 from the United States. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com. A presentation will be used during the earnings conference call and is available at http://www.snl.com/IRW/CorporateProfile/4155740.

Non-GAAP Financial Measures

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

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

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” “strive,” 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, the impact of COVID-19 on operations, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K, as supplemented by our Current Report on Form 8-K filed on April 23, 2020, 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 commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

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

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


ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information

                   
  2020 2019    
(in thousands, except share and per share data; First Fourth Third Second First First Quarter 2020
taxable equivalent) Quarter Quarter Quarter Quarter Quarter to 2019 Change
INCOME SUMMARY (1)                  
Interest income (2) $26,246 $26,699 $26,624 $26,686 $26,297   (0)%
Interest expense  5,043  5,965  6,536  6,709  5,773   (13)
Net interest income  21,203  20,734  20,088  19,977  20,524   3 
Provision for credit losses  8,074  787  413  698  814   892 
Net interest income after provision for credit losses  13,129  19,947  19,675  19,279  19,710   (33)
Noninterest income  2,422  2,679  2,769  2,941  2,336   4 
Noninterest expense  12,877  13,382  12,677  13,254  13,795   (7)
Income from continuing operations before income taxes  2,674  9,244  9,767  8,966  8,251   (68)
Income tax expense  550  2,104  2,198  1,957  1,811   (70)
Net income from continuing operations(2)(3)   2,124   7,140   7,569   7,009   6,440    (67)
Income (loss) from discontinued operations, net of tax      617  22,143  (1,063)  (100)
Net income $ 2,124 $ 7,140 $ 8,186 $ 29,152 $ 5,377    (60)%
                   
PER SHARE DATA                  
Diluted earnings per share - continuing operations $0.10 $0.32 $0.33 $0.29 $0.26    
Diluted earnings (loss) per share - discontinued operations      0.03  0.92  (0.04)   
Diluted earnings per share  0.10  0.32  0.36  1.21  0.21    
Book value per share  15.47  15.01  14.81  14.46  13.10    
Tangible book value per common share (3)  14.54  14.09  13.91  13.60  12.17    
                   
PERFORMANCE MEASURES                  
Return on average equity  2.56% 8.65% 9.77% 34.38% 6.80%   
Return on average assets  0.32  1.08  1.32  4.79  0.77    
Taxable equivalent net interest margin - continuing operations  3.41  3.38  3.52  3.61  3.74    
Efficiency ratio - continuing operations  55.03  57.57  55.72  58.06  60.61    
Average loans to average deposits  83.84  86.54  92.41  93.05  95.20    
                   
CAPITAL                  
Average equity to average assets  12.41% 12.47% 13.54% 13.94% 11.34%   
Tangible common equity to tangible assets  11.57  10.61  12.92  13.37  10.51    
Tier 1 capital ratio  11.7(4) 12.0  12.5  13.4  11.0    
Total risk based capital ratio  14.9(4) 15.0  15.5  16.5  13.7    
                   
SHARES OUTSTANDING                  
Number of common shares outstanding - basic  21,479,986  21,751,026  22,193,761  23,293,465  24,466,964    
Number of common shares outstanding - diluted  21,675,934  21,974,959  22,405,141  23,508,442  24,719,273    
Average number of common shares - basic  21,689,038  21,876,487  22,681,904  23,888,381  24,855,171    
Average number of common shares - diluted  21,842,175  22,053,907  22,837,531  24,040,806  25,019,384    
                   
ASSET QUALITY                  
Allowance for loan losses to loans held for investment (5)  1.29% 0.99% 0.98% 1.02% 1.04%   
Net charge-offs to average loans (6)  0.04  0.07  0.11  0.14  0.11    
Non-performing assets to total assets  0.27  0.26  0.29  0.31  0.40    
                   
AVERAGE BALANCES                  
Total loans - continuing operations $1,890,184 $1,857,736 $1,801,629 $1,769,803 $1,707,682    
Investment securities  417,971  389,667  340,872  360,047  400,101    
Total assets  2,686,266  2,626,388  2,453,438  2,440,502  2,829,072    
Deposits - continuing operations  2,254,505  2,146,626  1,949,657  1,902,076  1,793,791    
Shareholders' equity  333,480  327,543  332,291  340,119  320,812    
                   
AT PERIOD END                  
Loans and loans held for sale $1,932,909 $1,873,524 $1,836,589 $1,789,740 $2,120,866    
Investment securities  466,405  399,433  329,648  348,723  402,640    
Total assets  2,719,658  2,910,379  2,410,198  2,389,680  2,855,887    
Deposits  2,225,119  2,499,046  1,854,272  1,851,531  2,440,448    
Shareholders’ equity  332,300  326,495  328,711  336,715  320,627    

(1) On April 5, 2019, Atlantic Capital completed the sale to FirstBank of its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The mortgage business and branches sold to FirstBank are reported as discontinued operations.
(2) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(3) Excludes effect of acquisition related intangibles.
(4) Amounts are estimates as of March 31, 2020.
(5) The ratios for the first, second, and third quarters of 2019 are calculated on a continuing operations basis.
(6) Annualized.


ATLANTIC CAPITAL BANCSHARES, INC.
Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

       
(in thousands) March 31, 2020 December 31, 2019 March 31, 2019
Cash $ $ $4,168 
Loans held for sale - discontinued operations      384,779 
Premises held for sale - discontinued operations      7,736 
Goodwill - discontinued operations      4,555 
Other assets      1,158 
Total assets $ $ $402,396 
          
Deposits to be assumed - discontinued operations $ $ $593,264 
Securities sold under agreements to repurchase - discontinued operations      9,821 
Total liabilities $ $ $603,085 
Net liabilities $ $ $(200,689)

Components of Net Income (Loss) from Discontinued Operations

      
  2020 2019 
  First Fourth Third Second First
(in thousands) Quarter Quarter Quarter Quarter Quarter
Net interest income $ $ $  $(39) $3,125 
Provision for credit losses             
Net interest income after provision         (39)  3,125 
Service charges         46   481 
Mortgage income            288 
Gain on sale of branches         34,475    
Other income         (22)  21 
Total noninterest income         34,499   790 
Salaries and employee benefits         330   2,427 
Occupancy         71   339 
Equipment and software         8   123 
Amortization of intangibles            247 
Communications and data processing         197   389 
Divestiture expense         3,646   1,449 
Other noninterest expense         101   358 
Total noninterest expense         4,353   5,332 
Net income (loss) before provision for income taxes         30,107   (1,417)
Provision (benefit) for income taxes      (617)  7,964   (354)
Net income (loss) from discontinued operations $ $ $617  $22,143  $(1,063)


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)

          
  March 31 December 31 March 31
(in thousands, except share data) 2020  2019  2019 
ASSETS         
Cash and due from banks $27,536  $45,249  $36,992 
Interest-bearing deposits in banks  114,829   421,079   76,720 
Other short-term investments        29,457 
Cash and cash equivalents  142,365   466,328   143,169 
Securities available for sale  280,390   282,461   402,640 
Securities held to maturity, net of allowance for credit losses of $14, $0 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively (fair value of $189,940, $115,291 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively)  186,015   116,972    
Other investments  27,140   27,556   28,844 
Loans held for sale     370   1,530 
Loans held for sale - discontinued operations(1)        384,779 
Loans held for investment(1)  1,932,909   1,873,524   1,734,557 
Less: allowance for loan losses  (24,896)  (18,535)  (18,107)
Loans held for investment, net  1,908,013   1,854,989   1,716,450 
Premises held for sale - discontinued operations(1)        7,736 
Premises and equipment, net(1)  22,533   22,536   23,311 
Bank owned life insurance  66,761   66,421   65,486 
Goodwill - discontinued operations(1)        4,555 
Goodwill - continuing operations(1)  19,925   19,925   17,135 
Other intangibles, net  2,785   3,027   4,241 
Other real estate owned  779   278   971 
Other assets  62,952   49,516   55,040 
Total assets $2,719,658  $2,910,379  $2,855,887 
          
LIABILITIES AND SHAREHOLDERS’ EQUITY         
Deposits:         
Noninterest-bearing demand(1) $712,919  $824,646  $561,829 
Interest-bearing checking(1)  368,463   373,727   233,838 
Savings(1)  567   1,219   896 
Money market(1)  982,109   1,173,218   962,741 
Time(1)  66,793   44,389   22,069 
Brokered deposits  94,268   81,847   65,811 
Deposits to be assumed - discontinued operations(1)        593,264 
Total deposits  2,225,119   2,499,046   2,440,448 
Federal funds purchased  75,000       
Securities sold under agreements to repurchase - discontinued operations(1)        9,821 
Long-term debt  49,916   49,873   49,746 
Other liabilities  37,323   34,965   35,245 
Total liabilities  2,387,358   2,583,884   2,535,260 
          
SHAREHOLDERS’ EQUITY         
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2020, December 31, 2019, and March 31, 2019         
Common stock, no par value; 100,000,000 shares authorized; 21,479,986, 21,751,026, and 24,466,964 shares issued and outstanding as of March 31, 2020, December 31, 2019, and March 31, 2019; respectively  224,233   230,265   276,346 
Retained earnings  93,721   91,669   47,191 
Accumulated other comprehensive income (loss)  14,346   4,561   (2,910)
Total shareholders’ equity  332,300   326,495   320,627 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,719,658  $2,910,379  $2,855,887 

1) Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of March 31, 2019.


ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)

                
(in thousands, except share and per share data) Three months ended
  March 31 December 31 September 30 June 30 March 31
  2020 2019 2019
 2019
 2019
INTEREST INCOME               
Loans, including fees $22,426 $23,175 $23,541  $23,554  $22,752 
Investment securities  2,732  2,413  2,176   2,339   2,631 
Interest and dividends on other interest-earning assets  865  944  803   705   814 
Total interest income  26,023  26,532  26,520   26,598   26,197 
INTEREST EXPENSE               
Interest on deposits  4,182  4,890  5,223   5,448   4,831 
Interest on Federal Home Loan Bank advances    157  390   270    
Interest on federal funds purchased and securities sold under agreements to repurchase  32  94  99   168   118 
Interest on long-term debt  829  824  824   823   824 
Total interest expense  5,043  5,965  6,536   6,709   5,773 
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES  20,980  20,567  19,984   19,889   20,424 
Provision for credit losses  8,074  787  413   698   814 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES  12,906  19,780  19,571   19,191   19,610 
NONINTEREST INCOME               
Service charges  1,232  998  925   870   794 
Gains (losses) on sale of securities      253   654    
Gains (losses) on sale of other assets  5    140   (10)  (3)
Derivatives income  246  315  (293)  (233)  (111)
Bank owned life insurance  362  375  422   389   360 
SBA lending activities  414  846  1,150   1,096   1,086 
Other noninterest income  163  145  172   175   210 
Total noninterest income  2,422  2,679  2,769   2,941   2,336 
NONINTEREST EXPENSE               
Salaries and employee benefits  8,476  8,500  8,295   8,529   9,213 
Occupancy  794  838  722   689   639 
Equipment and software  779  769  842   753   739 
Professional services  705  577  764   792   775 
Communications and data processing  897  1,066  796   662   675 
Marketing and business development  153  143  243   233   226 
Travel, meals and entertainment  140  175  152   186   166 
FDIC premiums      (193)  175   235 
Other noninterest expense  933  1,314  1,056   1,235   1,127 
Total noninterest expense  12,877  13,382  12,677   13,254   13,795 
                
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES  2,451  9,077  9,663   8,878   8,151 
Provision for income taxes  327  1,937  2,094   1,869   1,711 
NET INCOME FROM CONTINUING OPERATIONS  2,124  7,140  7,569   7,009   6,440 
DISCONTINUED OPERATIONS               
Income (loss) from discontinued operations $ $ $  $30,107  $(1,417)
Provision (benefit) for income taxes      (617)  7,964   (354)
Net income (loss) from discontinued operations      617   22,143   (1,063)
NET INCOME $2,124 $7,140 $8,186  $29,152  $5,377 
                
Net Income (Loss) per Common Share - Basic               
Net income per common share - continuing operations $0.10 $0.33 $0.33  $0.29  $0.26 
Net income (loss) per common share - discontinued operations      0.03   0.93   (0.04)
Net Income per Common Share - Basic  0.10  0.33  0.36   1.22   0.22 
Net Income (Loss) per Common Share - Diluted               
Net income per common share - continuing operations $0.10 $0.32 $0.33  $0.29  $0.26 
Net income (loss) per common share - discontinued operations      0.03   0.92   (0.04)
Net Income per Common Share - Diluted  0.10  0.32  0.36   1.21   0.21 
                
Weighted average shares - basic  21,689,038  21,876,487  22,681,904   23,888,381   24,855,171 
Weighted average shares - diluted  21,842,175  22,053,907  22,837,531   24,040,806   25,019,384 


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information

                   
  Three months ended  
  March 31, 2020  December 31, 2019 
     Interest Tax     Interest Tax 
  Average Income/ Equivalent  Average Income/ Equivalent 
(dollars in thousands; taxable equivalent) Balance Expense Yield/Rate  Balance Expense Yield/Rate 
Assets                  
Interest bearing deposits in other banks $177,063 $668 1.52% $174,589 $733 1.67%
Other short-term investments  110          
Investment securities:                  
Taxable investment securities  253,937  1,680 2.66   242,175  1,570 2.57 
Non-taxable investment securities(1)  164,034  1,275 3.13   147,492  1,010 2.72 
Total investment securities  417,971  2,955 2.84   389,667  2,580 2.63 
Loans  1,890,184  22,426 4.77   1,857,736  23,175 4.95 
FHLB and FRB stock  12,678  197 6.25   14,106  211 5.93 
Total interest-earning assets  2,498,006  26,246 4.23   2,436,098  26,699 4.35 
Non-earning assets  188,260        190,290      
Total assets $2,686,266       $2,626,388      
Liabilities                  
Interest bearing deposits:                  
NOW, money market, and savings  1,393,541  3,767 1.09   1,328,184  4,525 1.35 
Time deposits  55,775  52 0.37   37,388  52 0.55 
Brokered deposits  92,188  363 1.58   62,757  313 1.98 
Total interest-bearing deposits  1,541,504  4,182 1.09   1,428,329  4,890 1.36 
Total borrowings  11,703  32 1.10   54,706  252 1.83 
Total long-term debt  49,888  829 6.68   49,845  823 6.55 
Total interest-bearing liabilities  1,603,095  5,043 1.27   1,532,880  5,965 1.54 
Demand deposits  713,001        718,297      
Other liabilities  36,690        47,668      
Shareholders’ equity  333,480        327,543      
Total liabilities and shareholders’ equity $2,686,266       $2,626,388      
Net interest spread       2.96%       2.80%
Net interest income and net interest margin(2)    $21,203 3.41%    $20,734 3.38%
                   
Non-taxable equivalent net interest margin       3.38%       3.35%

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.


ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information

                   
  Three months ended  
  March 31, 2020  March 31, 2019 
     Interest Tax     Interest Tax 
  Average Income/ Equivalent  Average Income/ Equivalent 
(dollars in thousands; taxable equivalent) Balance Expense Yield/Rate  Balance Expense Yield/Rate 
Assets                  
Interest bearing deposits in other banks $177,063 $668 1.52% $92,168 $463 2.04%
Other short-term investments  110      11,680  86 2.99 
Investment securities:                  
Taxable investment securities  253,937  1,680 2.66   320,089  2,113 2.68 
Non-taxable investment securities(1)  164,034  1,275 3.13   80,012  618 3.13 
Total investment securities  417,971  2,955 2.84   400,101  2,731 2.77 
Loans - continuing operations  1,890,184  22,426 4.77   1,707,682  22,752 5.40 
FHLB and FRB stock  12,678  197 6.25   12,528  265 8.58 
Total interest-earning assets - continuing operations  2,498,006  26,246 4.23   2,224,159  26,297 4.80 
Loans held for sale - discontinued operations        381,783  4,541 4.82 
Total interest-earning assets  2,498,006  26,246 4.23   2,605,942  30,838 4.80 
Non-earning assets  188,260        223,130      
Total assets $2,686,266       $2,829,072      
Liabilities                  
Interest bearing deposits:                  
NOW, money market, and savings  1,393,541  3,767 1.09   1,124,350  4,255 1.53 
Time deposits  55,775  52 0.37   12,847  38 1.20 
Brokered deposits  92,188  363 1.58   81,141  538 2.69 
Total interest-bearing deposits  1,541,504  4,182 1.09   1,218,338  4,831 1.61 
Total borrowings  11,703  32 1.10   18,056  118 2.65 
Total long-term debt  49,888  829 6.68   49,719  824 6.72 
Total interest-bearing liabilities - continuing operations  1,603,095  5,043 1.27   1,286,113  5,773 1.82 
Interest-bearing liabilities - discontinued operations        473,090  1,416 1.21 
Total interest-bearing liabilities  1,603,095  5,043 1.27   1,759,203  7,189 1.66 
Demand deposits  713,001        575,453      
Demand deposits - discontinued operations          128,977      
Other liabilities  36,690        44,627      
Shareholders’ equity  333,480        320,812      
Total liabilities and shareholders’ equity $2,686,266       $2,829,072      
Net interest spread - continuing operations       2.96%       2.98%
Net interest income and net interest margin - continuing operations(2)    $21,203 3.41%    $20,524 3.74%
Net interest income and net interest margin(2)    $21,203 3.41%    $23,649 3.68%
                   
Non-taxable equivalent net interest margin       3.38%       3.66%

(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans

                  
               Linked Year Over
  March 31, December 31,  September 30,  June 30, March 31, Quarter Year
(dollars in thousands) 2020
 2019
 2019
 2019
 2019
 Change Change
Loans held for sale                     
Loans held for sale $  $370  $916  $  $1,530  $(370) $(1,530)
Loans held for sale - discontinued operations              384,779      (384,779)
Total loans held for sale $  $370  $916  $  $386,309  $(370) $(386,309)
                      
Loans held for investment                     
Commercial loans:                     
Commercial and industrial $760,062  $705,115  $697,412  $701,566  $679,489  $54,947  $80,573 
Commercial real estate:                     
Multifamily  73,654   98,378   60,398   43,907   43,929   (24,724)  29,725 
Owner occupied  359,026   357,912   352,842   313,310   304,945   1,114   54,081 
Investment  477,451   460,038   452,285   409,629   394,087   17,413   83,364 
Construction and land:                     
1-4 family residential construction  2,706   4,009   5,186   3,696   2,067   (1,303)  639 
Other construction, development, and land  124,116   123,531   139,991   195,260   171,818   585   (47,702)
Mortgage warehouse loans     13,941   23,256   10,665   22,267   (13,941)  (22,267)
Total commercial loans  1,797,015   1,762,924   1,731,370   1,678,033   1,618,602   34,091   178,413 
                      
Residential:                     
Residential mortgages  31,761   31,315   31,903   31,338   32,915   446   (1,154)
Home equity  23,479   25,002   25,638   24,303   23,171   (1,523)  308 
Total residential loans  55,240   56,317   57,541   55,641   56,086   (1,077)  (846)
                      
Consumer  58,164   37,765   27,168   34,618   35,203   20,399   22,961 
Other  25,488   19,552   22,533   24,126   26,663   5,936   (1,175)
   1,935,907   1,876,558   1,838,612   1,792,418   1,736,554   59,349   199,353 
Less net deferred fees and other unearned income  (2,998)  (3,034)  (2,939)  (2,678)  (1,997)  36   (1,001)
Total loans held for investment $1,932,909  $1,873,524  $1,835,673  $1,789,740  $1,734,557  $59,385  $198,352 
                      
Total loans $1,932,909  $1,873,894  $1,836,589  $1,789,740  $2,120,866  $59,015  $(187,957)


ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Credit Losses Activity and Credit Quality

      
  2020
 2019
  First Fourth Third Second First
(dollars in thousands) Quarter Quarter Quarter Quarter Quarter
Allowance for loan losses                
Balance at beginning of period $18,535  $18,080  $18,186  $18,107  $17,851  
Adoption of ASU 2016-13  (854)             
Provision for loan losses  7,409   787   413   698   814  
Loans charged-off:                
Commercial and industrial  (18)  (344)  (541)  (588)  (549) 
Commercial real estate  (78)        (47)    
Construction and land                
Residential mortgages              (9) 
Home equity  (125)             
Consumer        (2)     (37) 
Other                
Total loans charged-off  (221)  (344)  (543)  (635)  (595) 
Recoveries on loans previously charged-off:                
Commercial and industrial     5   17      14  
Commercial real estate  18              
Construction and land        1      3  
Residential mortgages  1   7         7  
Home equity              1  
Consumer  8      6   16   12  
Other                
Total recoveries  27   12   24   16   37  
Net charge-offs $(194) $(332) $(519) $(619) $(558) 
Balance at period end $24,896  $18,535  $18,080  $18,186  $18,107  
                 
Allowance for unfunded commitments                
Balance at beginning of period $892  $836  $785  $631  $653  
Adoption of ASU 2016-13  1,275              
Provision for unfunded commitments  671   56   51   154   (22) 
Balance at period end $2,838  $892  $836  $785  $631  
                 
Total allowance for credit losses - loans and unfunded commitments $27,734  $19,427  $18,916  $18,971  $18,738  
                 
Provision for credit losses under CECL                
Provision for loan losses  7,409   787   413   698   814  
Provision for securities held to maturity credit losses  (6)  -   -   -   -  
Provision for unfunded commitments(1)  671   -   -   -   -  
Total provision for credit losses $8,074  $787  $413  $698  $814  
                 
Non-performing loans - continuing operations $6,515  $7,293  $6,770  $6,352  $8,830  
Non-performing loans - discontinued operations              1,506  
Total nonperforming loans  6,515   7,293   6,770   6,352   10,336  
Foreclosed properties (OREO)  779   278   278   971   971  
Total nonperforming assets $7,294  $7,571  $7,048  $7,323  $11,307  
                 
Allowance for loan losses to loans held for investment (2)  1.29%  0.99  0.98  1.02  1.04% 
Net charge-offs to average loans (3)  0.04   0.07   0.11   0.14   0.11  
                 
Non-performing loans as a percentage of total loans                
Continuing operations  0.34  0.39  0.37%  0.35  0.51% 
Discontinued operations              0.39  
Total  0.34   0.39   0.37   0.35   0.49  
                 
Non-performing assets as a percentage of total assets                
Continuing operations  0.27  0.26%  0.29  0.31%  0.34 
Discontinued operations              0.05  
Total  0.27   0.26   0.29   0.31   0.40  

(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $56, $51, $154 and ($22) for the fourth, third, second, and first quarters of 2019, respectively.
(2) The third, second, and first quarters of 2019 ratios are calculated on a continuing operations basis.
(3) Annualized.


ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

                     
                 Linked   
  March 31 December 31 September 30 June 30 March 31 Quarter Year Over
(dollars in thousands) 2020 2019 2019 2019 2019 Change Year Change
DDA $712,919 $824,646 $599,657 $569,693 $561,829 $(111,727) $151,090 
NOW  368,463  373,727  240,427  309,709  233,838  (5,264)  134,625 
Savings  567  1,219  1,081  1,090  896  (652)  (329)
Money market  982,109  1,173,218  921,133  802,973  962,741  (191,109)  19,368 
Time  66,793  44,389  30,782  33,902  22,069  22,404   44,724 
Brokered  94,268  81,847  61,192  134,164  65,811  12,421   28,457 
Total deposits - continuing operations  2,225,119  2,499,046  1,854,272  1,851,531  1,847,184  (273,927)  377,935 
Deposits to be assumed - discontinued operations          593,264     (593,264)
Total deposits $2,225,119 $2,499,046 $1,854,272 $1,851,531 $2,440,448 $(273,927) $(215,329)
                      
Payments clients $483,585 $567,597 $286,373 $301,413 $361,192 $(84,012) $122,393 

Average Deposits

         
  2020 2019 Linked  
  First Fourth Third Second First Quarter Q1 2020 vs
(dollars in thousands) Quarter Quarter Quarter Quarter Quarter Change Q1 2019
DDA $713,001 $718,298 $637,809 $587,957 $575,453 $(5,297) $137,548 
NOW  382,178  320,637  295,106  314,601  276,212  61,541   105,966 
Savings  650  1,098  1,085  956  884  (448)  (234)
Money market  1,010,713  1,006,449  895,102  859,680  847,254  4,264   163,459 
Time  55,775  37,388  32,409  32,358  12,847  18,387   42,928 
Brokered  92,188  62,757  88,146  106,524  81,141  29,431   11,047 
Total deposits - continuing operations  2,254,505  2,146,627  1,949,657  1,902,076  1,793,791  107,878   460,714 
Deposits to be assumed - discontinued operations        45,350  593,313     (593,313)
Total deposits $2,254,505 $2,146,627 $1,949,657 $1,947,426 $2,387,104 $107,878  $(132,599)
                      
Payments clients $419,630 $362,327 $289,526 $285,949 $295,059 $57,303  $124,571 
                      
Noninterest bearing deposits as a percentage of average deposits - continuing operations  31.6% 33.5% 32.7% 30.9% 32.1%     
Cost of interest-bearing deposits - continuing operations  1.09% 1.36% 1.58% 1.66% 1.61%     
Cost of deposits - continuing operations  0.75% 0.90% 1.06% 1.15% 1.09%     


ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation

      
  2020
 2019
 
  First Fourth Third Second First 
(in thousands, except share and per share data) Quarter Quarter Quarter Quarter Quarter 
                 
Taxable equivalent interest income reconciliation                
Interest income - GAAP $26,023  $26,532  $26,520  $26,598  $26,197  
Taxable equivalent adjustment  223   167   104   88   100  
Interest income - taxable equivalent $26,246  $26,699  $26,624  $26,686  $26,297  
                 
Taxable equivalent net interest income reconciliation - continuing operations                
Net interest income - GAAP $20,980  $20,567  $19,984  $19,889  $20,424  
Taxable equivalent adjustment  223   167   104   88   100  
Net interest income - taxable equivalent - continuing operations $21,203  $20,734  $20,088  $19,977  $20,524  
                 
Taxable equivalent net interest margin reconciliation - continuing operations                
Net interest margin - GAAP - continuing operations  3.38  3.35  3.51  3.60  3.72 
Impact of taxable equivalent adjustment  0.03   0.03   0.01   0.01   0.02  
Net interest margin - taxable equivalent - continuing operations  3.41%  3.38%  3.52  3.61  3.74 
                 
Taxable equivalent net interest margin reconciliation                
Net interest margin - GAAP  3.38  3.35  3.51  3.54  3.66 
Impact of taxable equivalent adjustment  0.03   0.03   0.01   0.02   0.02  
Net interest margin - taxable equivalent  3.41  3.38  3.52  3.56  3.68 
                 
Income before income taxes reconciliation                
Income before income taxes - GAAP $2,451  $9,077  $9,663  $8,878  $8,151  
Taxable equivalent adjustment  223   167   104   88   100  
Income before income taxes $2,674  $9,244  $9,767  $8,966  $8,251  
                 
Income tax reconciliation                
Income tax expense - GAAP $327  $1,937  $2,094  $1,869  $1,711  
Taxable equivalent adjustment  223   167   104   88   100  
Income tax expense $550  $2,104  $2,198  $1,957  $1,811  
                 
Tangible book value per common share reconciliation                
Total shareholders’ equity $332,300  $326,495  $328,711  $336,715  $320,627  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (22,848) 
Total tangible common equity $312,375  $306,570  $308,786  $316,790  $297,779  
Common shares outstanding  21,479,986   21,751,026   22,193,761   23,293,465   24,466,964  
Book value per common share - GAAP $15.47  $15.01  $14.81  $14.46  $13.10  
Tangible book value  14.54   14.09   13.91   13.60   12.17  
                 
Tangible common equity to tangible assets reconciliation                
Total shareholders’ equity $332,300  $326,495  $328,711  $336,715  $320,627  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (22,848) 
Total tangible common equity $312,375  $306,570  $308,786  $316,790  $297,779  
                 
Total assets $2,719,658  $2,910,379  $2,410,198  $2,389,680  $2,855,887  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (22,848) 
Total tangible assets $2,699,733  $2,890,454  $2,390,273  $2,369,755  $2,833,039  
Tangible common equity to tangible assets  11.57%  10.61  12.92  13.37  10.51 

ACB_Logo_CMYK.png

Source: Atlantic Capital Bancshares, Inc.