Atlantic Capital Bancshares, Inc. Reports Second Quarter 2020 Results

ATLANTA, July 23, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income from continuing operations for the quarter ended June 30, 2020 of $1.8 million, or $0.09 per diluted share, compared to $7.0 million, or $0.29 per diluted share, for the second quarter of 2019 and $2.1 million, or $0.10 per diluted share, for the first quarter of 2020.

“With solid growth in loans and deposits, a significant decline in deposit costs, and disciplined expense management, Atlantic Capital grew earnings before taxes and provision for potential credit losses at a strong pace from the first quarter of 2020 and from the second quarter of 2019. These solid operating results, along with another substantial addition to the allowance for credit losses, further buttress Atlantic Capital’s fortress balance sheet for the uncertain economic environment ahead. As the second quarter progressed, our borrowers generally reported improved business results and are cautiously optimistic about the remainder of 2020,” remarked Douglas Williams, President and Chief Executive Officer.

Second Quarter Highlights(1)

  • Capital ratios remained strong, with a tangible common equity to tangible assets ratio of 11.0% and total risk-based capital ratio of 14.8%.
  • Tangible book value per share increased to $14.72 from $14.54 at March 31, 2020.
  • Total loans held for investment increased $251.8 million, or 52.1% annualized, from March 31, 2020. Included in the increase are $234 million in SBA Paycheck Protection Program (“PPP”) loans.
  • Average deposits from continuing operations increased $155.4 million, or 27.6% annualized, compared to the first quarter of 2020.
  • Cost of deposits from continuing operations decreased to 0.22% from 0.75% in the first quarter of 2020.
  • Efficiency ratio improved to 53.8% compared to 55.0% in the first quarter of 2020.
  • Allowance for credit losses increased to 1.61% of loans held for investment compared to 1.43% at March 31, 2020. Excluding the impact of PPP loans, the allowance for credit losses at June 30, 2020 was 1.80% of total loans held for investment.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $22.0 million for the second quarter of 2020, an increase of $2.0 million, or 10.1%, from the second quarter of 2019, and an increase of $782,000, or 14.8% annualized, from the first quarter of 2020. The linked quarter increase in net interest income was primarily driven by the addition of the PPP loans during the second quarter.

Taxable equivalent net interest margin from continuing operations was 3.23% in the second quarter of 2020, a decrease of 38 basis points from the second quarter of 2019 and a decrease of 18 basis points from the first quarter of 2020. The linked quarter decrease was primarily the result of a decrease in loan yields and the addition of the lower yielding PPP loans, partially offset by a decrease in the cost of interest bearing deposits. The PPP loans had an adverse impact of approximately 14 basis points on the net interest margin for the second quarter of 2020.

The yield on loans from continuing operations in the second quarter of 2020 was 3.87%, a decrease of 147 basis points from the second quarter of 2019 and a decrease of 90 basis points from the first quarter of 2020. The decrease in loan yields was due primarily to the repricing of variable rate loans from declines in short term interest rates and the addition of lower yielding PPP loans. The PPP loans had an adverse impact of approximately 22 basis points on loan yields for the second quarter of 2020.

The cost of deposits from continuing operations in the second quarter of 2020 was 0.22%, a decrease of 93 basis points from the second quarter of 2019 and a decrease of 53 basis points from the first quarter of 2020. The cost of interest bearing deposits from continuing operations decreased 133 basis points to 0.33% from the second quarter of 2019, and decreased 76 basis points from the first quarter of 2020.

(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 13.

The provision for credit losses for continuing operations was $8.9 million in the second quarter of 2020 compared to $698,000 in the second quarter of 2019 and $8.1 million in the first quarter of 2020. The provision for credit losses in the second quarter of 2020 included an $8.2 million provision for loan losses and a $642,000 provision for unfunded commitments. Annualized net charge-offs were 0.29% of average loans in the second quarter of 2020 and 0.17% for the first six months of 2020.

Noninterest income from continuing operations totaled $2.3 million in the second quarter of 2020 compared to $2.9 million in the second quarter of 2019 and $2.4 million in the first quarter of 2020. Service charge income in the second quarter of 2020 totaled $1.1 million, an increase of $211,000 compared to the second quarter of 2019 and a decrease of $151,000 from the first quarter of 2020. The linked-quarter decrease in service charge income was primarily due to the COVID-19 related impact on ACH volumes in our payments business. SBA income totaled $768,000, a decrease from $1.10 million in the second quarter of 2019 and an increase from $414,000 in the first quarter of 2020, primarily from an increase in loans sold during the second quarter of 2020.

Noninterest expense from continuing operations totaled $12.9 million in the second quarter of 2020, a decrease of $350,000 compared to the second quarter of 2019 and unchanged compared to the first quarter of 2020. Salaries and employee benefits totaled $8.5 million in the second quarter of 2020, unchanged from the previous quarter as the seasonal decrease in first quarter benefits costs were offset by higher salaries and an increase in incentive accruals. Approximately $293,000 in incentive expense was incurred in the second quarter of 2020 related to COVID-19 pay for employees.

The year-to-date 2020 effective tax rate from continuing operations was 14.7% 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.

Balance Sheet

Total loans held for investment were $2.18 billion at June 30, 2020, an increase of $395.0 million, or 22.0%, from June 30, 2019 and an increase of $251.8 million, or 52.1% annualized, from March 31, 2020. Excluding the $234.0 million in PPP loans funded during the second quarter of 2020, loans held for investment increased $17.7 million, or 3.7% annualized. Consumer loans increased $55.0 million from March 31, 2020 to $113.1 million at June 30, 2020, due to the growth in a partnership with a fintech firm that offers CD-secured loans to its customers.

The allowance for credit losses was 1.61% of total loans held for investment at June 30, 2020, compared to 1.43% at March 31, 2020. Excluding the impact of PPP loans, the allowance for credit losses at June 30, 2020 was 1.80% of total loans held for investment. Non-performing assets totaled $7.2 million, or 0.25% of total assets, as of June 30, 2020, compared to $7.3 million, or 0.27% of total assets, as of March 31, 2020.

Total average deposits from continuing operations were $2.41 billion for the second quarter of 2020, an increase of $507.9 million, or 26.7%, from the second quarter of 2019 and an increase of $155.5 million, or 27.6% annualized, from the first quarter of 2020. Noninterest bearing deposits were 33.8% of total average deposits from continuing operations in the second quarter of 2020, compared to 30.9% in the second quarter of 2019 and 31.6% in the first quarter of 2020.

Tangible common equity to tangible assets was 11.0% at June 30, 2020, a decrease from 11.6% at March 31, 2020 due to the increase in PPP loans in the second quarter. The estimated total risk based capital ratio was 14.8% at June 30, 2020 compared to 16.5% at June 30, 2019 and 14.9% at March 31, 2020.

Earnings Conference Call

The Company will host a conference call at 9:00 a.m. EST on Friday, July 24, 2020, to discuss the financial results for the quarter ended June 30, 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; (viii) tangible book value per common share; and (ix) allowance for loan losses to loans held for investment excluding PPP loans, 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 $2.9 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

Media Contact:

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

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



ATLANTIC CAPITAL BANCSHARES, INC.                      
Selected Financial Information                      
                       
      For the six months ended 
  2020 2019 June 30, 
(in thousands, except share and per share data; Second First Fourth Third Second       
taxable equivalent) Quarter Quarter Quarter Quarter Quarter 2020 2019 
INCOME SUMMARY (1)                      
Interest income (2) $24,151 $26,246 $26,699 $26,624 $26,686 $50,397 $52,983 
Interest expense  2,166  5,043  5,965  6,536  6,709  7,209  12,482 
Net interest income  21,985  21,203  20,734  20,088  19,977  43,188  40,501 
Provision for credit losses  8,863  8,074  787  413  698  16,937  1,512 
Net interest income after provision for credit losses  13,122  13,129  19,947  19,675  19,279  26,251  38,989 
Noninterest income  2,343  2,422  2,679  2,769  2,941  4,765  5,277 
Noninterest expense  12,904  12,877  13,382  12,677  13,254  25,781  27,049 
Income from continuing operations before income taxes  2,561  2,674  9,244  9,767  8,966  5,235  17,217 
Income tax expense  712  550  2,104  2,198  1,957  1,262  3,768 
Net income from continuing operations(2)(3)  1,849  2,124  7,140  7,569  7,009  3,973  13,449 
Income (loss) from discontinued operations, net of tax        617  22,143    21,080 
Net income $1,849 $2,124 $7,140 $8,186 $29,152 $3,973 $34,529 
                       
PER SHARE DATA                      
Diluted earnings per share - continuing operations $0.09 $0.10 $0.32 $0.33 $0.29 $0.18 $0.55 
Diluted earnings (loss) per share - discontinued operations       0.03  0.92    0.86 
Diluted earnings per share  0.09  0.10  0.32  0.36  1.21  0.18  1.41 
Book value per share  15.64  15.47  15.01  14.81  14.46  15.64  14.46 
Tangible book value per common share (3)  14.72  14.54  14.09  13.91  13.60  14.72  13.60 
                       
PERFORMANCE MEASURES                      
Return on average equity  2.20% 2.56% 8.65% 9.77% 34.38% 2.38% 21.07%
Return on average assets  0.25  0.32  1.08  1.32  4.79  0.28  2.64 
Taxable equivalent net interest margin - continuing operations  3.23  3.41  3.38  3.52  3.61  3.32  3.73 
Efficiency ratio - continuing operations  53.82  55.03  57.57  55.72  58.06  54.42  59.33 
Average loans to average deposits  88.46  83.84  86.54  92.41  93.05  86.23  94.82 
CAPITAL                      
Average equity to average assets  11.53% 12.41% 12.47% 13.54% 13.94% 11.95% 12.55%
Tangible common equity to tangible assets  11.01  11.57  10.61  12.92  13.37  11.01  13.37 
Tier 1 capital ratio  11.6(4) 11.7  12.0  12.5  13.4  11.6(4) 13.4 
Total risk based capital ratio  14.8(4) 14.9  15.0  15.5  16.5  14.8(4) 16.5 
                       
SHARES OUTSTANDING                      
Number of common shares outstanding - basic  21,477,631  21,479,986  21,751,026  22,193,761  23,293,465  21,477,631  23,293,465 
Number of common shares outstanding - diluted  21,569,050  21,675,934  21,974,959  22,405,141  23,508,442  21,569,050  23,508,442 
Average number of common shares - basic  21,472,462  21,689,038  21,876,487  22,681,904  23,888,381  21,580,855  24,369,106 
Average number of common shares - diluted  21,535,040  21,842,175  22,053,907  22,837,531  24,040,806  21,688,712  24,527,392 
                       
ASSET QUALITY                      
Allowance for credit losses to loans held for investment (5) 1.61% 1.43% 1.04% 1.03% 1.06% 1.61% 1.06%
Net charge-offs to average loans (6)  0.29  0.04  0.07  0.11  0.14  0.17  0.12 
Non-performing assets to total assets  0.24  0.27  0.26  0.29  0.31  0.24  0.31 
                       
AVERAGE BALANCES                      
Total loans - continuing operations $2,131,847 $1,890,184 $1,857,736 $1,801,629 $1,769,803 $2,011,016 $1,708,549 
Investment securities  462,850  417,971  389,667  340,872  360,047  440,410  379,964 
Total assets  2,932,716  2,686,266  2,626,388  2,453,438  2,440,502  2,809,491  2,633,713 
Deposits - continuing operations  2,409,958  2,254,505  2,146,626  1,949,657  1,902,076  2,332,231  1,801,874 
Shareholders' equity  338,027  333,480  327,543  332,291  340,119  335,754  330,519 
                       
AT PERIOD END                      
Loans and loans held for sale $2,185,847 $1,932,909 $1,873,524 $1,836,589 $1,789,740 $2,185,847 $1,789,740 
Investment securities  457,749  466,405  399,433  329,648  348,723  457,749  348,723 
Total assets  2,890,622  2,719,658  2,910,379  2,410,198  2,389,680  2,890,622  2,389,680 
Deposits  2,407,631  2,225,119  2,499,046  1,854,272  1,851,531  2,407,631  1,851,531 
Shareholders’ equity  335,980  332,300  326,495  328,711  336,715  335,980  336,715 
                       
(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 June 30, 2020.                      
(5)The ratios for the second and third quarters of 2019 are calculated on a continuing operations basis.               
(6)Annualized.                      



ATLANTIC CAPITAL BANCSHARES, INC.                     
Financial Information from Discontinued Operations                     
                      
Components of Net Income from Discontinued Operations                    
                      
                 For the six months ended
  2020 2019  June 30,
  Second First Fourth Third Second       
(in thousands) Quarter Quarter Quarter Quarter Quarter 2020 2019
Net interest (loss) income $ $ $ $  $(39) $ $3,086 
Provision for credit losses                 
Net interest (loss) income after provision           (39)    3,086 
Service charges           46     527 
Mortgage income                288 
Gain on sale of branches           34,475     34,475 
Other income           (22)    (1)
Total noninterest income           34,499     35,289 
Salaries and employee benefits           330     2,757 
Occupancy           71     410 
Equipment and software           8     131 
Amortization of intangibles                247 
Communications and data processing           197     586 
Divestiture expense           3,646     5,095 
Other noninterest expense           101     459 
Total noninterest expense           4,353     9,685 
Net income before provision for income taxes           30,107     28,690 
(Benefit) provision for income taxes        (617)  7,964     7,610 
Net income from discontinued operations $ $ $ $617  $22,143  $ $21,080 
                      



ATLANTIC CAPITAL BANCSHARES, INC.            
Consolidated Balance Sheets (unaudited)            
             
  June 30,  March 31,  December 31,  June 30, 
(in thousands, except share data) 2020  2020  2019  2019 
ASSETS            
Cash and due from banks $33,759  $27,536  $45,249  $24,206 
Interest-bearing deposits in banks  33,038   114,829   421,079   52,932 
Cash and cash equivalents  66,797   142,365   466,328   77,138 
Investment securities available for sale  271,829   280,390   282,461   348,723 
Investment securities held to maturity, net of allowance for credit losses of $13 and $14 at June 30, 2020 and March 31, 2020, respectively  185,920   186,015   116,972    
Other investments  28,811   27,140   27,556   31,912 
Loans held for sale  1,153      370    
Loans held for investment  2,184,694   1,932,909   1,873,524   1,789,740 
Less: allowance for loan losses  (31,605)  (24,896)  (18,535)  (18,186)
Loans held for investment, net  2,153,089   1,908,013   1,854,989   1,771,554 
Premises and equipment, net  22,494   22,533   22,536   20,037 
Bank owned life insurance  67,127   66,761   66,421   65,874 
Goodwill - continuing operations  19,925   19,925   19,925   19,925 
Other intangibles, net  2,731   2,785   3,027   3,095 
Other real estate owned  779   779   278   971 
Other assets  69,967   62,952   49,516   50,451 
Total assets $2,890,622  $2,719,658  $2,910,379  $2,389,680 
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Deposits:            
Noninterest-bearing demand $883,662  $712,919  $824,646  $569,693 
Interest-bearing checking  449,737   368,463   373,727   309,709 
Savings  583   567   1,219   1,090 
Money market  879,863   982,109   1,173,218   802,973 
Time  131,353   66,793   44,389   33,902 
Brokered deposits  62,433   94,268   81,847   134,164 
Total deposits  2,407,631   2,225,119   2,499,046   1,851,531 
Federal funds purchased  6,000   75,000      35,000 
Federal Home Loan Bank borrowings  50,000         82,000 
Long-term debt  49,958   49,916   49,873   49,789 
Other liabilities  41,053   37,323   34,965   34,645 
Total liabilities  2,554,642   2,387,358   2,583,884   2,052,965 
             
SHAREHOLDERS’ EQUITY            
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2020, March 31, 2020, December 31, 2019, and June 30, 2019            
Common stock, no par value; 100,000,000 shares authorized; 21,477,631, 21,479,986, 21,751,026, and 23,293,465 shares issued and outstanding as of June 30, 2020, March 31, 2020, December 31, 2019, and June 30, 2019, respectively  224,520   224,233   230,265   256,791 
Retained earnings  95,570   93,721   91,669   76,343 
Accumulated other comprehensive income (loss)  15,890   14,346   4,561   3,581 
Total shareholders’ equity  335,980   332,300   326,495   336,715 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,890,622  $2,719,658  $2,910,379  $2,389,680 
                 



ATLANTIC CAPITAL BANCSHARES, INC.                  
Consolidated Statements of Income (unaudited)                  
                      
(in thousands, except share and per share data) Three months ended  Six months ended
  June 30,  March 31,  December 31,  September 30,  June 30,  June 30,  June 30, 
  2020  2020 2019 2019  2019  2020 2019 
INTEREST INCOME                     
Loans, including fees $20,496  $22,426 $23,175 $23,541  $23,554  $42,922 $46,306 
Investment securities  3,041   2,732  2,413  2,176   2,339   5,773  4,970 
Interest and dividends on other interest‑earning assets 260   865  944  803   705   1,125  1,519 
Total interest income  23,797   26,023  26,532  26,520   26,598   49,820  52,795 
INTEREST EXPENSE                     
Interest on deposits  1,299   4,182  4,890  5,223   5,448   5,481  10,279 
Interest on Federal Home Loan Bank advances  38     157  390   270   38  270 
Interest on federal funds purchased and securities sold under agreements to repurchase  6   32  94  99   168   38  286 
Interest on long-term debt  823   829  824  824   823   1,652  1,647 
Total interest expense  2,166   5,043  5,965  6,536   6,709   7,209  12,482 
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES  21,631   20,980  20,567  19,984   19,889   42,611  40,313 
Provision for credit losses  8,863   8,074  787  413   698   16,937  1,512 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES  12,768   12,906  19,780  19,571   19,191   25,674  38,801 
NONINTEREST INCOME                     
Service charges  1,081   1,232  998  925   870   2,313  1,664 
Gains (losses) on sale of securities         253   654     654 
Gains (losses) on sale of other assets     5    140   (10)  5  (13)
Derivatives income  (10)  246  315  (293)  (233)  236  (344)
Bank owned life insurance  367   362  375  422   389   729  749 
SBA lending activities  782   414  846  1,150   1,096   1,196  2,182 
Other noninterest income  123   163  145  172   175   286  385 
Total noninterest income  2,343   2,422  2,679  2,769   2,941   4,765  5,277 
NONINTEREST EXPENSE                     
Salaries and employee benefits  8,466   8,476  8,500  8,295   8,529   16,942  17,742 
Occupancy  883   794  838  722   689   1,677  1,328 
Equipment and software  763   779  769  842   753   1,542  1,492 
Professional services  792   705  577  764   792   1,497  1,567 
Communications and data processing  670   897  1,066  796   662   1,567  1,337 
Marketing and business development  79   153  143  243   233   232  459 
Travel, meals and entertainment  34   140  175  152   186   174  352 
FDIC premiums  175       (193)  175   175  410 
Other noninterest expense  1,042   933  1,314  1,056   1,235   1,975  2,362 
Total noninterest expense  12,904   12,877  13,382  12,677   13,254   25,781  27,049 
                      
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES  2,207   2,451  9,077  9,663   8,878   4,658  17,029 
Provision for income taxes  358   327  1,937  2,094   1,869   685  3,580 
NET INCOME FROM CONTINUING OPERATIONS  1,849   2,124  7,140  7,569   7,009   3,973  13,449 
DISCONTINUED OPERATIONS                     
Income (loss) from discontinued operations $  $ $ $  $30,107  $ $28,690 
Provision (benefit) for income taxes         (617)  7,964     7,610 
Net income (loss) from discontinued operations         617   22,143     21,080 
NET INCOME $1,849  $2,124 $7,140 $8,186  $29,152  $3,973 $34,529 
                      
Net Income (Loss) per Common Share - Basic                     
Net income per common share - continuing operations $0.09  $0.10 $0.33 $0.33  $0.29  $0.18 $0.55 
Net income (loss) per common share - discontinued operations         0.03   0.93     0.87 
Net Income per Common Share - Basic  0.09   0.10  0.33  0.36   1.22   0.18  1.42 
Net Income (Loss) per Common Share - Diluted                     
Net income per common share - continuing operations $0.09  $0.10 $0.32 $0.33  $0.29  $0.18 $0.55 
Net income (loss) per common share - discontinued operations         0.03   0.92     0.86 
Net Income per Common Share - Diluted  0.09   0.10  0.32  0.36   1.21   0.18  1.41 
                      
Weighted average shares - basic  21,472,462   21,689,038  21,876,487  22,681,904   23,888,381   21,580,855  24,369,106 
Weighted average shares - diluted  21,535,040   21,842,175  22,053,907  22,837,531   24,040,806   21,688,712  24,527,392 
                      


Average Balance Sheets and Net Interest Margin Analysis                 
Selected Financial Information                  
  Three months ended  
  June 30, 2020  March 31, 2020 
     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 $129,989 $23 0.07% $177,063 $668 1.52%
Other short-term investments        110    
Investment securities:                  
Taxable investment securities  247,668  1,581 2.57   253,937  1,680 2.66 
Non-taxable investment securities(1)  215,182  1,814 3.39   164,034  1,275 3.13 
Total investment securities  462,850  3,395 2.95   417,971  2,955 2.84 
Loans  2,131,847  20,496 3.87   1,890,184  22,426 4.77 
FHLB and FRB stock  16,842  237 5.66   12,678  197 6.25 
Total interest-earning assets  2,741,528  24,151 3.54   2,498,006  26,246 4.23 
Non-earning assets  191,188        188,260      
Total assets $2,932,716       $2,686,266      
Liabilities                  
Interest bearing deposits:                  
NOW, money market, and savings  1,415,069  1,115 0.32   1,393,541  3,767 1.09 
Time deposits  96,362  58 0.24   55,775  52 0.37 
Brokered deposits  83,228  126 0.61   92,188  363 1.58 
Total interest-bearing deposits  1,594,659  1,299 0.33   1,541,504  4,182 1.09 
Total borrowings  97,769  44 0.18   11,703  32 1.10 
Total long-term debt  49,930  823 6.63   49,888  829 6.68 
Total interest-bearing liabilities  1,742,358  2,166 0.50   1,603,095  5,043 1.27 
Demand deposits  815,299        713,001      
Other liabilities  37,032        36,690      
Shareholders’ equity  338,027        333,480      
Total liabilities and shareholders’ equity $2,932,716       $2,686,266      
Net interest spread       3.04%       2.96%
Net interest income and net interest margin(2)    $21,985 3.23%    $21,203 3.41%
                   
Non-taxable equivalent net interest margin       3.17%       3.38%
                   
 
(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.
                   
  Three months ended  
  June 30, 2020  June 30, 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 $129,989 $23 0.07 $70,628 $450 2.56%
Other short-term investments        3,993  32 3.21 
Investment securities:                  
Taxable investment securities  247,668  1,581 2.57   280,639  1,848 2.64 
Non-taxable investment securities(1)  215,182  1,814 3.39   79,408  579 2.92 
Total investment securities  462,850  3,395 2.95   360,047  2,427 2.70 
Loans - continuing operations  2,131,847  20,496 3.87   1,769,803  23,554 5.34 
FHLB and FRB stock  16,842  237 5.66   14,435  223 6.20 
Total interest-earning assets - continuing operations  2,741,528  24,151 3.54   2,218,906  26,686 4.82 
Loans held for sale - discontinued operations        30,198  47 0.62 
Total interest-earning assets  2,741,528  24,151 3.54   2,249,104  26,733 4.77 
Non-earning assets  191,188        191,398      
Total assets $2,932,716       $2,440,502      
Liabilities                  
Interest bearing deposits:                  
NOW, money market, and savings  1,415,069  1,115 0.32   1,175,237  4,733 1.62 
Time deposits  96,362  58 0.24   32,358  50 0.62 
Brokered deposits  83,228  126 0.61   106,524  665 2.50 
Total interest-bearing deposits  1,594,659  1,299 0.33   1,314,119  5,448 1.66 
Total borrowings  97,769  44 0.18   70,770  438 2.48 
Total long-term debt  49,930  823 6.63   49,761  823 6.63 
Total interest-bearing liabilities - continuing operations  1,742,358  2,166 0.50   1,434,650  6,709 1.88 
Interest-bearing liabilities - discontinued operations        36,255  86 0.95 
Total interest-bearing liabilities  1,742,358  2,166 0.50   1,470,905  6,795 1.85 
Demand deposits  815,299        587,957      
Demand deposits - discontinued operations          9,851      
Other liabilities  37,032        31,670      
Shareholders’ equity  338,027        340,119      
Total liabilities and shareholders’ equity $2,932,716       $2,440,502      
Net interest spread - continuing operations       3.04       2.94%
Net interest income and net interest margin - continuing operations(2)    $21,985 3.23    $19,977 3.61%
Net interest income and net interest margin(2)    $21,985 3.23    $19,938 3.56%
                   
Non-taxable equivalent net interest margin       3.17       3.54%
                   
 
(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   
  Six months ended  
  June 30, 2020 June 30, 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 $153,526 $691 0.91% $81,339 $913 2.26%
Other short-term investments  55      7,815  118 3.04 
Investment securities:                  
Taxable investment securities  250,802  3,261 2.61   300,255  3,962 2.66 
Non-taxable investment securities (1)  189,608  3,089 3.28   79,709  1,196 3.03 
Total investment securities  440,410  6,350 2.90   379,964  5,158 2.74 
Loans - continuing operations  2,011,016  42,922 4.29   1,708,549  46,306 5.47 
FHLB and FRB stock  14,760  434 5.91   13,487  488 7.30 
Total interest-earning assets - continuing operations  2,619,767  50,397 3.87   2,191,154  52,983 4.88 
Loans held for sale - discontinued operations     -   235,384  4,588 3.93 
Total interest-earning assets  2,619,767  50,397 3.87   2,426,538  57,571 4.78 
Non-earning assets  189,724        207,175      
Total assets $2,809,491       $2,633,713      
Liabilities                  
Interest bearing deposits:                  
NOW, money market, and savings  1,404,305  4,882 0.70   1,125,253  8,988 1.61 
Time deposits  76,068  111 0.29   11,049  88 1.61 
Brokered deposits  87,708  488 1.12   93,903  1,203 2.58 
Total interest-bearing deposits  1,568,081  5,481 0.70   1,230,205  10,279 1.68 
Total borrowings  54,736  76 0.28   43,798  556 2.56 
Total long-term debt  49,909  1,652 6.66   49,740  1,647 6.68 
Total interest-bearing liabilities - continuing operations  1,672,726  7,209 0.87   1,323,743  12,482 1.90 
Interest-bearing liabilities - discontinued operations     -   290,515  1,502 1.04 
Total interest-bearing liabilities  1,672,726  7,209 0.87   1,614,258  13,984 1.75 
Demand deposits  764,150        571,669      
Demand deposits - discontinued operations  -        79,156      
Other liabilities  36,861        38,111      
Shareholders’ equity  335,754        330,519      
Total liabilities and shareholders’ equity $2,809,491       $2,633,713      
Net interest spread - continuing operations       3.00%       2.98%
Net interest income and net interest margin - continuing operations (2)    $43,188 3.32%    $40,501 3.73%
Net interest income and net interest margin (2)    $43,188 3.32%    $43,587 3.62%
                   
Non-taxable equivalent net interest margin       3.27%       3.61%
                   
 
(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
  June 30,  March 31,  December 31,  September 30,  June 30,  Quarter Year
(dollars in thousands) 2020  2020  2019  2019  2019  Change Change
Loans held for sale                     
Loans held for sale $1,153  $  $370  $916  $  $1,153  $1,153 
Total loans held for sale $1,153  $  $370  $916  $  $1,153  $1,153 
                      
Loans held for investment                     
Commercial loans:                     
Commercial and industrial $973,818  $760,062  $705,115  $697,412  $701,566  $213,756  $272,252 
Commercial real estate:                     
Multifamily  58,909   73,654   98,378   60,398   43,907   (14,745)  15,002 
Owner occupied  366,847   359,026   357,912   352,842   313,310   7,821   53,537 
Investment  474,565   477,451   460,038   452,285   409,629   (2,886)  64,936 
Construction and land:                     
1‑4 family residential construction  11   2,706   4,009   5,186   3,696   (2,695)  (3,685)
Other construction, development, and land  128,980   124,116   123,531   139,991   195,260   4,864   (66,280)
Mortgage warehouse loans        13,941   23,256   10,665      (10,665)
Total commercial loans  2,003,130   1,797,015   1,762,924   1,731,370   1,678,033   206,115   325,097 
                      
Residential:                     
Residential mortgages  32,327   31,761   31,315   31,903   31,338   566   989 
Home equity  23,689   23,479   25,002   25,638   24,303   210   (614)
Total residential loans  56,016   55,240   56,317   57,541   55,641   776   375 
                      
Consumer  113,149   58,164   37,765   27,168   34,618   54,985   78,531 
Other  22,160   25,488   19,552   22,533   24,126   (3,328)  (1,966)
   2,194,455   1,935,907   1,876,558   1,838,612   1,792,418   258,548   402,037 
Less net deferred fees and other unearned income  (9,761)  (2,998)  (3,034)  (2,939)  (2,678)  (6,763)  (7,083)
Total loans held for investment $2,184,694  $1,932,909  $1,873,524  $1,835,673  $1,789,740  $251,785  $394,954 
                      
Total loans $2,185,847  $1,932,909  $1,873,894  $1,836,589  $1,789,740  $252,938  $396,107 
                      
PPP loans (1) $234,049  $  $  $  $  $234,049  $234,049 
Total unfunded commitments $749,321  $689,620  $743,958  $687,295  $637,559  $59,701  $111,762 
                      
      
(1) PPP loans are included in total loans held for investment.     


ATLANTIC CAPITAL BANCSHARES, INC.                
Allowance for Credit Losses Activity and Credit Quality               
                 
  2020  2019
 
  Second First Fourth Third Second
 
(dollars in thousands) Quarter Quarter Quarter Quarter Quarter
 
Allowance for loan losses                
Balance at beginning of period $24,896  $18,535  $18,080  $18,186  $18,107  
Adoption of ASU 2016-13     (854)          
Provision for loan losses  8,222   7,409   787   413   698  
Loans charged-off:                
Commercial and industrial  (1,479)  (18)  (344)  (541)  (588) 
Commercial real estate     (78)        (47) 
Construction and land                
Residential mortgages  (36)             
Home equity     (125)          
Consumer           (2)    
Other                
Total loans charged-off  (1,515)  (221)  (344)  (543)  (635) 
Recoveries on loans previously charged-off:                
Commercial and industrial  1      5   17     
Commercial real estate     18           
Construction and land           1     
Residential mortgages     1   7        
Home equity                
Consumer  1   8      6   16  
Other                
Total recoveries  2   27   12   24   16  
Net charge-offs $(1,513) $(194) $(332) $(519) $(619) 
Balance at period end $31,605  $24,896  $18,535  $18,080  $18,186  
                 
Allowance for unfunded commitments                
Balance at beginning of period $2,838  $892  $836  $785  $631  
Adoption of ASU 2016-13     1,275           
Provision for unfunded commitments  642   671   56   51   154  
Balance at period end $3,480  $2,838  $892  $836  $785  
                 
Total allowance for credit losses - loans and unfunded commitments $35,085  $27,734  $19,427  $18,916  $18,971  
                 
Provision for credit losses under CECL                
Provision for loan losses  8,222   7,409   787   413   698  
Provision for securities held to maturity credit losses  (1)  (6)  -   -   -  
Provision for unfunded commitments(1)  642   671   -   -   -  
Total provision for credit losses $8,863  $8,074  $787  $413  $698  
                 
Non-performing loans $6,265  $6,515  $7,293  $6,770  $6,352  
Foreclosed properties (OREO)  779   779   278   278   971  
Total nonperforming assets $7,044  $7,294  $7,571  $7,048  $7,323  
                 
Allowance for loan losses to loans held for investment (2)  1.45 % 1.29 % 0.99 % 0.98 % 1.02 %
Allowance for credit losses to loans held for investment (2)  1.61 % 1.43 % 1.04 % 1.03 % 1.06 %
Net charge-offs to average loans (3)  0.29   0.04   0.07   0.11   0.14  
Non-performing loans as a percentage of total loans  0.29 % 0.34 % 0.39 % 0.37 % 0.35 %
Non-performing assets as a percentage of total assets  0.24 % 0.27 % 0.26 % 0.29 % 0.31 %
                 
(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $56, $51 and $154 for the fourth, third, and second quarters of 2019, respectively.
(2)The third and second quarters of 2019 ratios are calculated on a continuing operations basis.             
(3)Annualized.                


ATLANTIC CAPITAL BANCSHARES, INC.                
Period End Deposits                      
                       
                 Linked     
  June 30,  March 31,  December 31,  September 30,  June 30,  Quarter Year Over 
(dollars in thousands) 2020 2020 2019 2019 2019 Change Year Change 
DDA $883,662 $712,919 $824,646 $599,657 $569,693 $170,743  $313,969  
NOW  449,737  368,463  373,727  240,427  309,709  81,274   140,028  
Savings  583  567  1,219  1,081  1,090  16   (507) 
Money market  879,863  982,109  1,173,218  921,133  802,973  (102,246)  76,890  
Time  131,353  66,793  44,389  30,782  33,902  64,560   97,451  
Brokered  62,433  94,268  81,847  61,192  134,164  (31,835)  (71,731) 
Total deposits $2,407,631 $2,225,119 $2,499,046 $1,854,272 $1,851,531 $182,512  $556,100  
                       
Payments clients $344,608 $483,585 $567,597 $286,373 $301,413 $(138,977) $43,195  
                       
Average Deposits                      
                       
  2020 2019 Linked   
  Second First Fourth Third Second Quarter Q2 2020 vs 
(dollars in thousands) Quarter Quarter Quarter Quarter Quarter Change Q2 2019 
DDA $815,299 $713,001 $718,298 $637,809 $587,957 $102,298  $227,342  
NOW  462,051  382,178  320,637  295,106  314,601  79,873   147,450  
Savings  574  650  1,098  1,085  956  (76)  (382) 
Money market  952,444  1,010,713  1,006,449  895,102  859,680  (58,269)  92,764  
Time  96,362  55,775  37,388  32,409  32,358  40,587   64,004  
Brokered  83,228  92,188  62,757  88,146  106,524  (8,960)  (23,296) 
Total deposits - continuing operations  2,409,958  2,254,505  2,146,627  1,949,657  1,902,076  155,453   507,882  
Deposits to be assumed - discontinued operations          45,350     (45,350) 
Total deposits $2,409,958 $2,254,505 $2,146,627 $1,949,657 $1,947,426 $155,453  $462,532  
                       
Payments clients $377,923 $419,630 $362,327 $289,526 $285,949 $(41,707) $91,974  
                       
Noninterest bearing deposits as a percentage of average deposits - continuing operations  33.8% 31.6% 33.5% 32.7% 30.9%      
Cost of interest-bearing deposits - continuing operations  0.33% 1.09% 1.36% 1.58% 1.66%      
Cost of deposits - continuing operations  0.22% 0.75% 0.90% 1.06% 1.15%      
                       



ATLANTIC CAPITAL BANCSHARES, INC.                   
Non-GAAP Performance and Financial Measures Reconciliation                
                       
                 For the six months 
  2020  2019  ended June 30,  
  Second First Fourth Third Second       
(in thousands, except share and per share data) Quarter Quarter Quarter Quarter Quarter 2020
 2019 
                       
Taxable equivalent interest income reconciliation                      
Interest income - GAAP $23,797  $26,023  $26,532  $26,520  $26,598  $49,820  $52,795  
Taxable equivalent adjustment  354   223   167   104   88   577   188  
Interest income - taxable equivalent $24,151  $26,246  $26,699  $26,624  $26,686  $50,397  $52,983  
                       
Taxable equivalent net interest income reconciliation - continuing operations                      
Net interest income - GAAP $21,631  $20,980  $20,567  $19,984  $19,889  $42,611  $40,313  
Taxable equivalent adjustment  354   223   167   104   88   577   188  
Net interest income - taxable equivalent - continuing operations $21,985  $21,203  $20,734  $20,088  $19,977  $43,188  $40,501  
                       
Taxable equivalent net interest margin reconciliation - continuing operations                      
Net interest margin - GAAP - continuing operations  3.17 % 3.38 % 3.35 % 3.51 % 3.60 % 3.27 % 3.71 %
Impact of taxable equivalent adjustment  0.06   0.03   0.03   0.01   0.01   0.05   0.02  
Net interest margin - taxable equivalent - continuing operations  3.23 % 3.41 % 3.38 % 3.52 % 3.61 % 3.32 % 3.73 %
                       
Taxable equivalent net interest margin reconciliation                      
Net interest margin - GAAP  3.17 % 3.38 % 3.35 % 3.51 % 3.54 % 3.27 % 3.61 %
Impact of taxable equivalent adjustment  0.06   0.03   0.03   0.01   0.02   0.05   0.01  
Net interest margin - taxable equivalent  3.23 % 3.41 % 3.38 % 3.52 % 3.56 % 3.32 % 3.62 %
                       
Income before income taxes reconciliation                      
Income before income taxes - GAAP $2,207  $2,451  $9,077  $9,663  $8,878  $4,658  $17,029  
Taxable equivalent adjustment  354   223   167   104   88   577   188  
Income before income taxes $2,561  $2,674  $9,244  $9,767  $8,966  $5,235  $17,217  
                       
Income tax reconciliation                      
Income tax expense - GAAP $358  $327  $1,937  $2,094  $1,869  $685  $3,580  
Taxable equivalent adjustment  354   223   167   104   88   577   188  
Income tax expense $712  $550  $2,104  $2,198  $1,957  $1,262  $3,768  
                       
Tangible book value per common share reconciliation                      
Total shareholders’ equity $335,980  $332,300  $326,495  $328,711  $336,715  $335,980  $336,715  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925) 
Total tangible common equity $316,055  $312,375  $306,570  $308,786  $316,790  $316,055  $316,790  
Common shares outstanding  21,477,631   21,479,986   21,751,026   22,193,761   23,293,465   21,477,631   23,293,465  
Book value per common share - GAAP $15.64  $15.47  $15.01  $14.81  $14.46  $15.64  $14.46  
Tangible book value  14.72   14.54   14.09   13.91   13.60   14.72   13.60  
                       
Tangible common equity to tangible assets reconciliation                      
Total shareholders’ equity $335,980  $332,300  $326,495  $328,711  $336,715  $335,980  $336,715  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925) 
Total tangible common equity $316,055  $312,375  $306,570  $308,786  $316,790  $316,055  $316,790  
                       
Total assets $2,890,622  $2,719,658  $2,910,379  $2,410,198  $2,389,680  $2,890,622  $2,389,680  
Intangible assets  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925)  (19,925) 
Total tangible assets $2,870,697  $2,699,733  $2,890,454  $2,390,273  $2,369,755  $2,870,697  $2,369,755  
Tangible common equity to tangible assets  11.01 % 11.57 % 10.61 % 12.92 % 13.37 % 11.01 % 13.37 %
                       
Allowance for loan losses to loans held for investment reconciliation                      
Total loans held for investment $2,184,694  $1,932,909  $1,873,524  $1,835,673  $1,789,740  $2,184,694  $1,789,740  
PPP loans  (234,049)              (234,049)    
Total loans held for investment excluding PPP loans $1,950,645  $1,932,909  $1,873,524  $1,835,673  $1,789,740  $1,950,645  $1,789,740  
                       
Allowance for credit losses to loans held for investment  1.61 %1.43 % 1.04 % 1.03 % 1.06 % 1.61 %1.06 %
Allowance for credit losses to loans held for investment excluding PPP loans  1.80 %1.43 %1.04 %1.03 % 1.06 % 1.80 %1.06 %
                       

 

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