Atlantic Capital Bancshares, Inc. Reports First Quarter 2017 Results

ATLANTA--()--Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced results of the quarter ended March 31, 2017.

First Quarter Highlights

  • Reported net income of $3.2 million, or $0.13 per diluted share, compared to $1.6 million, or $0.06 per diluted share, in the fourth quarter of 2016.
  • Increased taxable equivalent net interest margin to 3.20% compared to 3.11% in the fourth quarter of 2016.
  • Increased SBA income to $1.2 million from $600,000 in the fourth quarter of 2016.
  • Reduced noninterest expense to $17.7 million from $18.8 million in the fourth quarter of 2016.
  • Reported nonperforming assets to total assets of 0.21% as of March 31, 2017.
  • Increased average noninterest bearing deposits $29 million, or 18.7% annualized, to $620 million. Average noninterest bearing deposits equaled 29.4% of total deposits.

“Atlantic Capital reported improved results for the first quarter of 2017, with strong growth in demand deposits and an expanded net interest margin, despite weaker than expected loan growth. We’ve strengthened our banking teams to provide the capacity for resumed loan growth consistent with our plan,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the first quarter of 2017, Atlantic Capital recorded net income of $3.2 million, or $0.13 per diluted share, compared to net income of $1.6 million, or $0.06 per diluted share, in the fourth quarter of 2016. Operating net income totaled $3.2 million, or $0.13 per diluted share, for the first quarter of 2017, compared to $1.7 million, or $0.07 per diluted share, in the fourth quarter of 2016. Operating net income excludes merger related expenses, divestiture expenses, and net gain on sale of branches.

Taxable equivalent net interest income was unchanged at $19.5 million in the first quarter of 2017 compared to the fourth quarter of 2016. The first quarter net interest income was impacted by two fewer days compared to the fourth quarter. Net accretion income on acquired loans totaled $702,000 and premium amortization on acquired time deposits totaled $119,000 in the first quarter of 2017 compared to $571,000 and $142,000 respectively, in the fourth quarter of 2016.

Taxable equivalent net interest margin was 3.20% in the first quarter of 2017 compared to 3.11% in the fourth quarter of 2016. The margin benefited from the increase in the Fed Funds rate in December 2016. Loan yields increased 18 basis points to 4.16%, while cost of deposits increased 2 basis points to 0.39%. This increase was offset by a change in asset mix, as mortgage warehouse loans decreased and the investment portfolio increased. The accretion of the acquired loan discount and amortization of time deposit premium contributed 13 basis points to the net interest margin in the first quarter of 2017 compared to 12 basis points in the fourth quarter of 2016.

The provision for loan losses was $600,000 in the first quarter of 2017 compared to $2.2 million in the fourth quarter of 2016.

Noninterest income totaled $3.9 million in the first quarter of 2017, a decrease of $573,000 compared to the fourth quarter of 2016. The SBA division contributed $1.2 million in income in the first quarter of 2017, an increase of $628,000 compared to $599,000 in the fourth quarter of 2016. This increase was offset by decreases in derivative income, mortgage income and the elimination of gains from the sale of TriNet loans.

Noninterest expense totaled $17.7 million in the first quarter of 2017, a decrease of $1 million compared to $18.8 million in the fourth quarter of 2016. Operating noninterest expense, which excludes merger related expenses, decreased by $827,000 to $17.7 million. Salaries and benefits decreased $204,000 due to a lower incentive accrual offset by seasonally higher payroll taxes. The fourth quarter of 2016 included an expense of $600,000 from an impairment on other real estate owned of two closed bank branches.

On December 9, 2016, Atlantic Capital announced the sale of the branch located in Cleveland, Tennessee. This transaction includes the sale of approximately $29 million in deposits, $28 million in loans and $3 million in other assets. Subject to customary closing conditions, including the receipt of all necessary regulatory approvals, the transaction is expected to close during the second quarter of 2017.

Total loans were $1.93 billion at March 31, 2017, a decrease of $86 million from December 31, 2016. Loans held for investment were $1.90 billion at March 31, 2017, a decrease of $80 million from December 31, 2016. Mortgage warehouse loans decreased $89 million in the first quarter to $58 million at March 31, 2017, primarily as a result of lower mortgage activity due to higher interest rates. Excluding the decrease in mortgage warehouse loans, loans held for investment increased $10 million in the first quarter of 2017.

Available for sale securities increased $109 million in the first quarter of 2017, as Atlantic Capital responded to the decrease in mortgage warehouse loans.

At March 31, 2017, the allowance for loan losses was $19.9 million, or 1.05% of loans held for investment, compared to $20.6 million, or 1.04% of loans held for investment as of December 31, 2016. Annualized net charge-offs to average loans in the first quarter of 2017 totaled 0.26% compared to 0.03% in the fourth quarter of 2016. Nonperforming assets totaled $5.9 million, or 0.21% of total assets, as of March 31, 2017, compared to $3.5 million, or 0.13% of total assets, as of December 31, 2016.

Total average deposits for the first quarter of 2017 were $2.11 billion, an increase of $17 million from the fourth quarter of 2016. Average noninterest bearing deposits increased $29 million to $620 million in the first quarter of 2017 and accounted for 29.4% of average total deposits. Average deposits associated with our payments business were $274 million in the first quarter of 2017, an increase of $63 million from the fourth quarter of 2016.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. ET on Friday, April 28, 2017, to discuss the financial results for the quarter ended March 31, 2017. Individuals wishing to participate in the conference call may do so by dialing 844.868.8848 from the United States and entering Conference ID 89772886. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com.

Non-GAAP Financial Measures

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

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

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about Atlantic Capital’s confidence in its strategies and its expectations about financial performance, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $2.8 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers banking, treasury management, capital markets, trust, and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, northwest Georgia and Charlotte, North Carolina. Atlantic Capital also provides specialized financial services to select clients nationally.

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information
                             
2017 2016

First
Quarter
2017 to 2016
Change

(in thousands, except share and per share data; taxable equivalent)

First
Quarter

Fourth
Quarter

 

Third
Quarter

 

Second
Quarter

 

First
Quarter

INCOME SUMMARY
Interest income (1) $ 22,716 $ 22,530 $ 22,428 $ 22,190 $ 21,553 5

%

 

Interest expense 3,208 3,029 2,941 2,907 2,632 22
Net interest income 19,508 19,501 19,487 19,283 18,921 3
Provision for loan losses 634 2,208 463 777 368 72
Net interest income after provision for loan losses 18,874 17,293 19,024 18,506 18,553 2
Operating noninterest income 3,857 4,430 4,002 4,995 4,420 (13 )
Operating noninterest expense (2) 17,744 18,571 16,717 17,428 17,517 1
Operating income before income taxes 4,987 3,152 6,309 6,073 5,456 (9 )
Operating income tax expense 1,757 1,417 2,245 2,381 2,065 (15 )
Operating net income (2) 3,230 1,735 4,064 3,692 3,391 (5 )
Merger related expenses, net of income tax 126 356 743 460 (100 )
Net gain on sale of branches, net of income tax 2,198
Net income - GAAP $ 3,230 $ 1,609 $ 3,708 $ 5,147 $ 2,931 10

%

 

 
PER SHARE DATA
Diluted earnings per share - GAAP $ 0.13 $ 0.06 $ 0.15 $ 0.20 $ 0.12
Diluted earnings per share - operating (2) 0.13 0.07 0.16 0.15 0.14
Book value per share 12.18 12.10 12.36 12.29 11.99
Tangible book value per share (3) 11.04 10.92 11.16 11.01 10.61
 
PERFORMANCE MEASURES
Return on average equity - GAAP 4.19 % 2.09 % 4.84 % 6.88 % 4.02 %
Return on average equity - operating (2) 4.19 2.25 5.30 4.94 4.65
Return on average assets - GAAP 0.48 0.24 0.55 0.76 0.45
Return on average assets - operating (2) 0.48 0.25 0.60 0.54 0.52
Taxable equivalent net interest margin 3.20 3.11 3.12 3.12 3.26
Efficiency ratio 76.78 78.33 71.57 72.00 75.22
 
CAPITAL
Average equity to average assets 11.44 % 11.33 % 11.28 % 11.01 % 11.13 %
Tangible common equity to tangible assets 10.16 10.16 10.19 9.81 9.69
Tier 1 capital ratio 10.5 ((5 )) 10.3 9.7 9.9 9.5
Total risk based capital ratio 13.5 ((5 )) 13.3 12.5 12.8 12.4
Number of common shares outstanding - basic 25,535,013 25,093,135 24,950,099 24,750,163 24,569,823
Number of common shares outstanding - diluted 25,836,809 25,673,841 25,342,883 25,267,803 25,077,520
 
ASSET QUALITY
Allowance for loan losses to loans held for investment 1.05 % 1.04 % 0.92 % 0.95 % 0.93 %
Net charge-offs to average loans (4) 0.26 0.03 0.06 0.35
NPAs to total assets 0.21 0.13 0.09 0.07 0.08
 
(1)Interest income has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate. (2)Excludes merger related expenses. (3)Excludes effect of servicing asset and acquisition related intangibles. (4)Annualized. (5)Amounts are estimates as of 3/31/17.
 
ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
           

March 31,

December 31, March 31,
(in thousands, except share data) 2017 2016 2016
ASSETS
Cash and due from banks $ 34,626 $ 36,790 $ 36,585
Interest-bearing deposits in banks 158,920 118,039 91,608
Other short-term investments 20,870   10,896   32,861  
Cash and cash equivalents 214,416 165,725 161,054
Investment securities available-for-sale 456,942 347,705 366,641
Other investments 28,331 23,806 11,899
Loans held for sale 29,241 35,219 95,291
Loans held for investment 1,901,724 1,981,330 1,886,763
Less: allowance for loan losses (19,939 ) (20,595 ) (17,608 )
Loans held for investment, net 1,881,785 1,960,735 1,869,155
Branch premises held for sale 2,897 2,995 7,200
Premises and equipment, net 12,308 11,958 22,780
Bank owned life insurance 62,516 62,160 60,981
Goodwill and intangible assets, net 29,186 29,567 33,914
Other real estate owned 1,869 1,872 1,760
Other assets 82,587   85,801   96,213  
Total assets $ 2,802,078   $ 2,727,543   $ 2,726,888  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 606,386 $ 643,471 $ 560,363
Interest-bearing checking 259,760 264,062 215,176
Savings 30,756 27,932 29,788
Money market 916,390 912,493 862,120
Time 150,867 157,810 187,750
Brokered deposits 209,385 200,223 229,408
Deposits to be assumed in branch sale 29,495   31,589   197,857  
Total deposits 2,203,039 2,237,580 2,282,462
Federal funds purchased and securities sold under agreements to repurchase 11,824
Federal Home Loan Bank borrowings 217,000 110,000 60,000
Long-term debt 49,408 49,366 49,239
Other liabilities 21,664   26,939   27,348  
Total liabilities 2,491,111   2,423,885   2,430,873  
 
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2017, December 31, 2016, and March 31, 2016
Common stock, no par value; 100,000,000 shares authorized; 25,535,013, 25,093,135, and 24,569,823 shares issued and outstanding as of March 31, 2017, December 31, 2016, and March 31, 2016, respectively 296,608 292,747 288,271
Retained earnings 19,766 16,536 6,072
Accumulated other comprehensive income (loss) (5,407 ) (5,625 ) 1,672  
Total shareholders’ equity 310,967   303,658   296,015  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,802,078   $ 2,727,543   $ 2,726,888  
 
ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
                   
(in thousands, except share and per share data) Three months ended

March 31,
2017

 

December
31, 2016

 

September
30, 2016

 

June 30,
2016

 

March 31,
2016

INTEREST INCOME
Loans, including fees $ 19,994 $ 20,363 $ 20,511 $ 20,282 $ 19,625
Investment securities available-for-sale 2,018 1,477 1,293 1,327 1,601
Interest and dividends on other interest-earning assets 449   467   491   507   273
Total interest income 22,461   22,307   22,295   22,116   21,499
 
INTEREST EXPENSE
Interest on deposits 2,047 1,929 1,956 1,841 1,673
Interest on Federal Home Loan Bank advances 302 234 133 147 44
Interest on federal funds purchased and securities sold under agreements to repurchase 36 38 37 87 67
Interest on long-term debt 823 828 815 832 810
Other         38
Total interest expense 3,208   3,029   2,941   2,907   2,632
 
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 19,253 19,278 19,354 19,209 18,867
Provision for loan losses 634   2,208   463   777   368
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,619   17,070   18,891   18,432   18,499
 
NONINTEREST INCOME
Service charges 1,349 1,327 1,270 1,392 1,498
Gains on sale of securities available-for-sale 11 33
Gains on sale of other assets 78 238 71 31 48
Mortgage income 257 499 632 447 339
Trust income 407 350 361 386 314
Derivatives income (51 ) 346 69 98 65
Bank owned life insurance 378 395 424 398 393
SBA lending activities 1,227 599 959 1,204 880
TriNet lending activities 20 357 761 383
Gains on sale of branches 3,885
Other noninterest income 192   319   216   267   467
Total noninterest income 3,857   4,430   4,002   8,880   4,420
 
NONINTEREST EXPENSE
Salaries and employee benefits 11,065 11,269 10,059 10,420 10,555
Occupancy 1,230 995 1,235 1,274 1,100
Equipment and software 805 694 862 724 686
Professional services 904 968 442 760 748
Postage, printing and supplies 85 73 61 159 169
Communications and data processing 987 1,064 617 694 916
Marketing and business development 270 247 269 317 267
FDIC premiums 314 262 415 493 398
Merger and conversion costs 204 579 1,210 749
Amortization of intangibles 470 495 520 668 762
Foreclosed property/problem asset expense 3 666 39 55 104
Other noninterest expense 1,611   1,838   2,198   2,169   1,812
Total noninterest expense 17,744   18,775   17,296   18,943   18,266
 
INCOME BEFORE PROVISION FOR INCOME TAXES 4,732 2,725 5,597 8,369 4,653
Provision for income taxes 1,502   1,116   1,889   3,222   1,722
NET INCOME $ 3,230   $ 1,609   $ 3,708   $ 5,147   $ 2,931
 
Net income per common share - basic $ 0.13   $ 0.06   $ 0.15   $ 0.21   $ 0.12
Net income per common share - diluted $ 0.13   $ 0.06   $ 0.15   $ 0.20   $ 0.12
 
Weighted average shares - basic 25,320,690 25,027,304 24,891,822 24,644,755 24,485,900
Weighted average shares - diluted 25,672,286 25,407,728 25,260,280 25,158,694 24,993,597
 
ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
   
Three months ended
March 31, 2017     December 31, 2016
(dollars in thousands; taxable equivalent)

Average
Balance

 

Interest
Income/Expense

   

Tax
Equivalent
Yield/Rate

Average
Balance

   

Interest
Income/Expense

   

Tax
Equivalent
Yield/Rate

 
Assets
Interest bearing deposits in other banks $ 72,494 $ 165 0.92 % $ 70,304 $ 102 0.58 %
Other short-term investments 11,052 47 1.72 20,198 74 1.46
Investment securities:
Taxable investment securities 339,614 1,523 1.82 269,928 1,041 1.53
Non-taxable investment securities(1) 79,721   750   3.82 79,834   659   3.28
Total investment securities 419,335 2,273 2.20 349,762 1,700 1.93
Total loans 1,949,385 19,994 4.16 2,036,995 20,363 3.98
FHLB and FRB stock 19,608   237   4.90 20,954   291   5.52
Total interest-earning assets 2,471,874 22,716 3.73 2,498,213 22,530 3.59
Non-earning assets 222,841   224,231  
Total assets $ 2,694,715   $ 2,722,444  
Liabilities
Interest bearing deposits:
NOW, money market, and savings 1,137,088 1,315 0.47 1,136,209 1,243 0.44
Time deposits 163,021 272 0.68 169,677 282 0.66
Brokered deposits 191,558   460   0.97 197,833   404   0.81
Total interest-bearing deposits 1,491,667 2,047 0.56 1,503,719 1,929 0.51
Total borrowings 194,478 338 0.70 235,608 272 0.46
Long-term debt 49,381   823   6.76 49,338   828   6.68
Total interest-bearing liabilities 1,735,526 3,208 0.75 1,788,665 3,029 0.67
Demand deposits 620,325 591,166
Other liabilities 30,603 34,025
Shareholders' equity 308,261   308,588  
Total liabilities and shareholders' equity $ 2,694,715   $ 2,722,444  
Net interest spread   2.98 %   2.92 %
Net interest income and net interest margin(2) $ 19,508   3.20 % $ 19,501   3.11 %
 
(1) Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate.
(2) Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.
  Three months ended
March 31, 2017     December 31, 2016
(dollars in thousands; taxable equivalent) Amount     Yield Amount     Yield
 
Reported interest income on loans $ 19,994 4.16 % $ 20,363 3.98 %
Less: accretion of loan acquisition discounts (702 ) (571 )
Core interest income on loans $ 19,292   4.01 % $ 19,792   3.87 %
       
Amount

Net Interest
Margin

Amount

Net Interest
Margin

 
Net interest income / net interest margin $ 19,508 3.2 % $ 19,501 3.11 %
Less:
Accretion of loan acquisition discounts (702 ) (571 )
Accretion of time deposit premium (119 ) (142 )
Net interest income / net interest margin excluding purchase accounting $ 18,687   3.07 % $ 18,788   2.99 %
 
ATLANTIC CAPITAL BANCSHARES, INC.    
Period End Loans
           
             
(dollars in thousands)

March 31,
2017

December
31, 2016

September
30, 2016

June 30,
2016

March 31,
2016

Linked
Quarter
Change

Year Over
Year
Change

 
Loans held for sale
Loans held for sale $ 1,297 $ 4,302 $ 46,600 $ 29,061 $ 61,003 $ (3,005 ) $ (59,706 )
Branch loans held for sale 27,944   30,917       34,288   (2,973 ) (6,344 )
Total loans held for sale $ 29,241   $ 35,219   $ 46,600   $ 29,061   $ 95,291   $ (5,978 ) $ (66,050 )
 
Loans held for investment
Commercial loans:
Commercial and industrial $ 544,911 $ 531,061 $ 533,632 $ 508,516 $ 499,634 $ 13,850 $ 45,277
Commercial real estate:
Multifamily 108,215 68,223 74,881 79,144 81,331 39,992 26,884
Owner occupied 348,888 352,523 337,277 351,419 333,172 (3,635 ) 15,716
Investment 478,485 438,032 451,125 431,633 429,094 40,453 49,391
Construction and land:
1-4 family residential construction 11,799 10,335 11,273 9,611 8,540 1,464 3,259
Other construction, development, and land 123,838 209,017 202,063 199,536 174,899 (85,179 ) (51,061 )
Mortgage warehouse loans 58,357   147,519   171,251   126,108   123,875   (89,162 ) (65,518 )
Total commercial loans 1,674,493 1,756,710 1,781,502 1,705,967 1,650,545 (82,217 ) 23,948
 
Residential:
Residential mortgages 99,665 101,921 100,046 103,313 106,433 (2,256 ) (6,768 )
Home equity 81,438   77,358   78,952   80,321   83,094   4,080   (1,656 )
Total residential loans 181,103 179,279 178,998 183,634 189,527 1,824 (8,424 )
 
Consumer 32,525 27,338 30,453 29,788 30,905 5,187 1,620
Other 17,611   21,565   20,736   28,168   20,925   (3,954 ) (3,314 )
1,905,732 1,984,892 2,011,689 1,947,557 1,891,902 (79,160 ) 13,830
Less net deferred fees and other unearned income (4,008 ) (3,562 ) (3,587 ) (5,420 ) (5,139 ) (446 ) 1,131  
Total loans held for investment $ 1,901,724   $ 1,981,330   $ 2,008,102   $ 1,942,137   $ 1,886,763   $ (79,606 ) $ 14,961  
 
Total loans $ 1,930,965   $ 2,016,549   $ 2,054,702   $ 1,971,198   $ 1,982,054   $ (85,584 ) $ (51,089 )
 
ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Loan Losses Activity and Credit Quality
                 
2017   2016  
(dollars in thousands)

First
Quarter

Fourth
Quarter

 

Third
Quarter

 

Second
Quarter

 

First
Quarter

 
Balance at beginning of period $ 20,595 $ 18,534 $ 18,377 $ 17,608 $ 18,905
Provision for loan losses 565 2,134 463 777 368
Provision for PCI loan losses 69 74
Loans charged-off:
Commercial and industrial (781 ) (61 ) (5 ) (1,465 )
Commercial real estate (132 ) 24 (226 ) (140 )
Residential mortgages (46 ) (2 )
Home equity (9 ) (23 )
Consumer (332 ) (158 ) (60 ) (38 ) (146 )
Other     (5 )    
Total loans charged-off (1,291 ) (134 ) (361 ) (68 ) (1,751 )
Recoveries on loans previously charged-off:
Construction and land 12 15
Commercial and industrial 2 2
Commercial real estate (15 ) 20
Residential mortgages 5
Home equity 2
Consumer 1 2 12 60 69
Other     2      
Total recoveries 1 (13 ) 55 60 86
Net charge-offs (1,290 ) (147 ) (306 ) (8 ) (1,665 )
Balance at period end $ 19,939   $ 20,595   $ 18,534   $ 18,377   $ 17,608  
 
Loans held for investment
PCI Loans $ 11,841 $ 15,253 $ 17,237 $ 19,733 $ 22,893
Non-PCI Loans 1,889,883   1,966,077   1,990,865   1,922,404   1,863,870  
$ 1,901,724   $ 1,981,330   $ 2,008,102   $ 1,942,137   $ 1,886,763  
 
Non-performing loans - PCI $ 1,684   $ 2,446   $ 2,348   $ 1,082   $ 911  
 
Non-performing loans - Non-PCI $ 3,983 $ 1,615 $ 790 $ 922 $ 566
Foreclosed properties (OREO) 1,869   1,872   1,727   951   1,760  
Total nonperforming assets $ 5,852   $ 3,487   $ 2,517   $ 1,873   $ 2,326  
 
Allowance for loan losses to loans held for investment 1.05 % 1.04 % 0.92 % 0.95 % 0.93 %
Net charge-offs to average loans (1) 0.26 0.03 0.06 0.35
Nonperforming loans as a percentage of total loans(2) 0.21 0.08 0.04 0.05 0.02
Nonperforming assets as a percentage of total assets(2) 0.21 0.13 0.09 0.07 0.08
 
(1)Annualized. (2)Excludes non-performing PCI loans.
 
ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
                           
(dollars in thousands)

March 31,
2017

December 31,
2016

September
30, 2016

June 30,
2016

March 31,
2016

Linked
Quarter
Change

Year Over
Year Change

 
DDA $ 606,386 $ 643,471 $ 557,783 $ 592,043 $ 560,363 $ (37,085 ) $ 46,023
NOW 259,760 264,062 260,531 231,091 215,176 (4,302 ) 44,584
Savings 30,756 27,932 29,658 30,839 29,788 2,824 968
Money Market 916,390 912,493 974,072 913,094 862,120 3,897 54,270
Time 150,867 157,810 172,348 178,615 187,750 (6,943 ) (36,883 )
Brokered 209,385 200,223 194,464 212,623 229,408 9,162 (20,023 )
Deposits to be assumed in branch sale 29,495   31,589       197,857   (2,094 ) (168,362 )
Total Deposits $ 2,203,039   $ 2,237,580   $ 2,188,856   $ 2,158,305   $ 2,282,462   $ (34,541 ) $ (79,423 )
             
Payments Clients $ 321,899   $ 347,833   $ 212,049   $ 295,440   $ 300,348   $ (25,934 ) $ 21,551  
 
Average Deposits(1)
                   
2017 2016

Linked
Quarter
Change

Year Over
Year Change

(dollars in thousands)

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

First
Quarter

 
DDA $ 620,325 $ 591,166 $ 555,008 $ 538,422 $ 554,547 $ 29,159 $ 65,778
NOW 290,862 253,187 282,701 272,556 302,376 37,675 (11,514 )
Savings 30,306 29,741 30,692 35,090 45,571 565 (15,265 )
Money Market 815,920 853,281 923,435 865,447 769,369 (37,361 ) 46,551
Time 163,021 169,677 175,135 203,679 267,330 (6,656 ) (104,309 )
Brokered 191,558   197,833   196,598   220,098   216,490   (6,275 ) (24,932 )
Total Deposits $ 2,111,992   $ 2,094,885   $ 2,163,569   $ 2,135,292   $ 2,155,683   $ 17,107   $ (43,691 )
             
Payments Clients $ 273,630   $ 211,000   $ 184,895   $ 176,474   $ 155,860   $ 62,630   $ 117,770  
 
Noninterest bearing deposits as a percentage of average deposits 29.4 % 28.2 % 25.7 % 25.2 % 25.7 %
Cost of deposits 0.39 % 0.37 % 0.36 % 0.35 % 0.31 %
 
(1) Includes average balances of deposits to be assumed in branch sale.
 
ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance Measures Reconciliation
         
               
(in thousands, except share and per share data) 2017 2016
 

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

First
Quarter

 
Interest income reconciliation
Interest income - GAAP $ 22,461 $ 22,307 $ 22,295 $ 22,116 $ 21,499
Taxable equivalent adjustment 255   223   133   74   54  
Interest income - taxable equivalent $ 22,716   $ 22,530   $ 22,428   $ 22,190   $ 21,553  
 
Net interest income reconciliation
Net interest income - GAAP $ 19,253 $ 19,278 $ 19,354 $ 19,209 $ 18,867
Taxable equivalent adjustment 255   223   133   74   54  
Net interest income - taxable equivalent $ 19,508   $ 19,501   $ 19,487   $ 19,283   $ 18,921  
 
Operating noninterest income reconciliation
Noninterest income - GAAP $ 3,857 $ 4,430 $ 4,002 $ 8,880 $ 4,420
Gain on sale of branches       (3,885 )  
Operating noninterest income $ 3,857   $ 4,430   $ 4,002   $ 4,995   $ 4,420  
 
Operating noninterest expense reconciliation
Noninterest expense - GAAP $ 17,744 $ 18,775 $ 17,296 $ 18,943 $ 18,266
Merger-related expenses (204 ) (579 ) (1,210 ) (749 )
Divestiture expenses       (305 )  
Operating noninterest expense $ 17,744   $ 18,571   $ 16,717   $ 17,428   $ 17,517  
 
Operating income before income taxes reconciliation
Income (loss) before income taxes - GAAP $ 4,732 $ 2,725 $ 5,597 $ 8,369 $ 4,653
Taxable equivalent adjustment 255 223 133 74 54
Merger-related expenses 204 579 1,210 749
Divestiture expenses 305
Gain on sale of branches       (3,885 )  
Operating income before income taxes $ 4,987   $ 3,152   $ 6,309   $ 6,073   $ 5,456  
 
Income tax reconciliation
Income tax expense - GAAP $ 1,502 $ 1,116 $ 1,889 $ 3,222 $ 1,722
Taxable equivalent adjustment 255 223 133 74 54
Merger related expenses, tax benefit 78 223 467 289
Divestiture expenses, tax benefit 118
Gain on sale of branches, tax expense       (1,500 )  
Operating income tax expense $ 1,757   $ 1,417   $ 2,245   $ 2,381   $ 2,065  
 
Net income reconciliation
Net income - GAAP $ 3,230 $ 1,609 $ 3,708 $ 5,147 $ 2,931
Merger related expenses, net of income tax 126 356 743 460
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax       (2,385 )  
Operating net income $ 3,230   $ 1,735   $ 4,064   $ 3,692   $ 3,391  
 
Diluted earnings per share reconciliation
Diluted earnings per share - GAAP $ 0.13 $ 0.06 $ 0.15 $ 0.20 $ 0.12
Merger related expenses 0.01 0.01 0.03 0.02
Net gain on sale of branches       (0.08 )  
Diluted earnings per share - operating $ 0.13   $ 0.07   $ 0.16   $ 0.15   $ 0.14  
 
           

ATLANTIC CAPITAL BANCSHARES, INC.

Non-GAAP Performance Measures Reconciliation

               

(in thousands, except share and per share data)

   

2017

 

2016

 
     

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

First
Quarter

 
Book value per common share reconciliation
Total shareholders’ equity $ 310,967 $ 303,658 $ 308,463 $ 304,066 $ 294,652
Intangible assets (29,186 ) (29,567 ) (30,071 ) (31,674 ) (33,914 )
Total tangible common equity $ 281,781   $ 274,091   $ 278,392   $ 272,392   $ 260,738  
Common shares outstanding 25,535,013 25,093,135 24,950,099 24,750,163 24,569,823
Book value per common share - GAAP $ 12.18 $ 12.10 $ 12.36 $ 12.29 $ 11.99
Tangible book value 11.04 10.92 11.16 11.01 10.61
 
Return on average equity reconciliation
Net income - GAAP $ 3,230 $ 1,609 $ 3,708 $ 5,147 $ 2,931
Merger related expenses, net of income tax 126 356 743 460
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax       (2,385 )  
Operating net income $ 3,230   $ 1,735   $ 4,064   $ 3,692   $ 3,391  
Average shareholders' equity 308,261 308,588 306,642 299,170 291,806
Return on average equity - GAAP 4.19 % 2.09 % 4.84 % 6.88 % 4.02 %
Return on average equity - operating 4.19 2.25 5.30 4.94 4.65
 
Return on average assets reconciliation
Net income - GAAP $ 3,230 $ 1,609 $ 3,708 $ 5,147 $ 2,931
Merger related expenses, net of income tax 126 356 743 460
Divestiture expenses, net of income tax 187
Gain on sale of branches, net of income tax       (2,385 )  
Operating net income $ 3,230   $ 1,735   $ 4,064   $ 3,692   $ 3,391  
Average assets 2,694,715 2,722,444 2,717,996 2,718,110 2,620,750
Return on average assets - GAAP 0.48 % 0.24 % 0.55 % 0.76 % 0.45 %
Return on average assets - operating 0.48 0.25 0.60 0.54 0.52
 
Efficiency ratio reconciliation
Noninterest income - GAAP $ 3,857 $ 4,430 $ 4,002 $ 8,880 $ 4,420
Gain on sale of branches       (3,885 )  
Operating noninterest income $ 3,857   $ 4,430   $ 4,002   $ 4,995   $ 4,420  
Noninterest expense - GAAP $ 17,744 $ 18,775 $ 17,296 $ 18,943 $ 18,266
Merger-related expenses (204 ) (579 ) (1,210 ) (749 )
Divestiture expenses       (305 )  
Operating noninterest expense $ 17,744   $ 18,571   $ 16,717   $ 17,428   $ 17,517  
Net interest income 19,253 19,278 19,354 19,209 18,867
Efficiency ratio 76.78 % 78.33 % 71.57 % 72.00 % 75.22 %
 
Tangible equity to tangible assets reconciliation
Total shareholders’ equity $ 310,967 $ 303,658 $ 308,463 $ 304,066 $ 294,652
Intangible assets (29,186 ) (29,567 ) (30,071 ) (31,674 ) (33,914 )
Total tangible common equity $ 281,781   $ 274,091   $ 278,392   $ 272,392   $ 260,738  
 
Total assets $ 2,802,078 $ 2,727,543 $ 2,761,244 $ 2,807,822 $ 2,724,669
Intangible assets (29,186 ) (29,567 ) (30,071 ) (31,674 ) (33,914 )
Total tangible assets $ 2,772,892   $ 2,697,976   $ 2,731,173   $ 2,776,148   $ 2,690,755  
Tangible common equity to tangible assets 10.16 % 10.16 % 10.19 % 9.81 % 9.69 %
 
         

ATLANTIC CAPITAL BANCSHARES, INC.

Non-GAAP Performance Measures Reconciliation

 
               

(in thousands, except share and per share data)

2017

2016

 

First
Quarter

Fourth
Quarter

Third
Quarter

 

Second
Quarter

First
Quarter

Deposits excluding deposits to be assumed in branch sales
Total deposits $ 2,203,039 $ 2,237,580 $ 2,188,856 $ 2,158,305 $ 2,282,462
Deposits to be assumed in branch sales (29,495 ) (31,589 )     (197,857 )
Deposits excluding deposits to be assumed in branch sales $ 2,173,544   $ 2,205,991   $ 2,188,856   $ 2,158,305   $ 2,084,605  
 
Loans held for investment excluding mortgage warehouse loans
Total loans held for investment $ 1,901,724 $ 1,981,330 $ 2,008,102 $ 1,942,137 $ 1,886,763
Mortgage warehouse loans (58,357 ) (147,519 ) (171,251 ) (126,108 ) (123,875 )
Loans held for investment excluding mortgage warehouse loans $ 1,843,367   $ 1,833,811   $ 1,836,851   $ 1,816,029   $ 1,762,888  
 

Contacts

Atlantic Capital Bancshares, Inc.
Douglas L. Williams, 404-995-6051
Chief Executive Officer
doug.williams@atlcapbank.com
or
Patrick T. Oakes, 404-995-6079
Executive Vice President and CFO
patrick.oakes@atlcapbank.com

Contacts

Atlantic Capital Bancshares, Inc.
Douglas L. Williams, 404-995-6051
Chief Executive Officer
doug.williams@atlcapbank.com
or
Patrick T. Oakes, 404-995-6079
Executive Vice President and CFO
patrick.oakes@atlcapbank.com