Atlantic Capital Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - Atlantic Capital Bancshares, Inc.	acb-form8xkearningsrelease.htm

PRESS RELEASE



Contact:	Douglas L. Williams	Patrick T. Oakes
	Chief Executive Officer	Executive Vice President and CFO
	404-995-6051	404-995-6079
	doug.williams@atlcapbank.com	patrick.oakes@atlcapbank.com

ATLANTIC CAPITAL BANCSHARES, INC. REPORTS THIRD QUARTER 2016 RESULTS

Atlanta, GA - October 28, 2016 - Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced results of the quarter ended September 30, 2016.

Third Quarter Highlights


•	Net income of $3.7 million, or $0.15 per diluted share; operating net income of $4.1 million, or $0.16 per diluted share.


•	Total loans held for investment increased $66 million, or 3.4%, to $2.01 billion from June 30, 2016.


•	Total deposits increased $31 million, or 1.4%, to $2.19 billion from June 30, 2016.


•	Noninterest expense decreased $1.6 million, or 8.7%, to $17.3 million, compared to the second quarter of 2016. Operating noninterest expense decreased $0.7 million, or 4.1%, to $16.7 million compared the second quarter of 2016.


•	Nonperforming assets totaled 0.09% of total assets as of September 30, 2016.


•	Net charge-offs were 0.06% of average loans for the third quarter of 2016 and 0.13% for the nine months ended September 30, 2016.

“Atlantic Capital’s third quarter results reflect strong growth and profit improvement in our metropolitan Atlanta and specialized lending and corporate services businesses while our work to redirect and restructure our Tennessee based businesses continued. We also announced our intent to open a corporate banking office in Charlotte, North Carolina as part of our effort to build capacity for growth in revenue and improvement in profitability,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the third quarter of 2016, Atlantic Capital recorded net income of $3.7 million, or $0.15 per diluted share, compared to net income of $5.1 million, or $0.20 per diluted share, in the second quarter of 2016. Operating net income totaled $4.1 million, or $0.16 per diluted share, for the third quarter of 2016, compared to $3.7 million, or $0.15 per diluted share, in the second quarter of 2016. Operating net income excludes merger related expenses and the net gain on sale of Eastern Tennessee branches.

Taxable equivalent net interest income improved to $19.5 million in the third quarter of 2016 from $19.3 million in the second quarter of 2016. Net accretion income on acquired loans totaled $576,000 and premium amortization on acquired time deposits totaled $170,000 in the third quarter of 2016 compared to $525,000 and $234,000, respectively, in the second quarter of 2016.

Taxable equivalent net interest margin was unchanged at 3.12% in the third quarter of 2016 from the second quarter of 2016. The accretion of acquired loan discount and amortization of time deposit premium contributed 12 basis points in the second and third quarters of 2016. The net interest margin excluding these purchase accounting adjustments was unchanged at 3.00% in the third quarter of 2016 from the second quarter of 2016.

The provision for loan losses was $463,000 in the third quarter of 2016 compared to $777,000 in the second quarter of 2016.

Total noninterest income totaled $4.0 million in the third quarter of 2016, a decrease of $4.9 million compared to the second quarter of 2016. The second quarter included a $3.6 million net gain on sale of branches. Excluding the gain

on sale of branches, noninterest income decreased $1 million to $4.0 million from $5.0 million in the second quarter of 2016. This decrease was primarily due to lower gains on the sale of SBA and TriNet loans. The SBA division contributed $1.0 million in income in the third quarter of 2016 compared to $1.2 million in the second quarter of 2016. The TriNet lending division did not sell any loans in the third quarter compared to $761,000 of income on sales in the second quarter of 2016.

During the third quarter, Atlantic Capital made the decision to close the TriNet Lending division. Sales of additional TriNet loans are expected in the fourth quarter of 2016, resulting in additional fee income and a reduction in loan balances. A portion of the cost savings from closure of the TriNet division will be reinvested in our SBA lending division.

On December 17, 2015, Atlantic Capital announced that it had entered into agreements for the sale of seven legacy FSGBank branches in Eastern Tennessee. The sale of four of the branches closed on April 1, 2016 and the sale of the remaining three branches closed on May 13, 2016. The branch sales resulted in a net gain of $3.6 million in the second quarter of 2016 and included the sale of approximately $190 million in deposits, $35 million in loans and $9 million in other assets. The net gain included the write-off of $1.6 million in core deposit intangibles and $305,000 in expenses related to the sales.

Noninterest expense totaled $17.3 million in the third quarter of 2016, a decrease of $1.6 million compared to $18.9 million in the second quarter of 2016. Merger related expenses accounted for $631,000 of the decrease and totaled $579,000 in the third quarter of 2016, compared to $1.2 million in the second quarter. Operating noninterest expense, which excludes merger related expenses and the other noninterest expenses associated with the branch sales, decreased by $711,000 to $16.7 million. Salaries and benefits decreased $361,000 due to lower incentive expense and the remaining benefit from the second quarter branch sales. Professional fees decreased $318,000 in the third quarter as a result of lower legal fees. Amortization of intangibles decreased $148,000 largely from the decrease in core deposit intangibles from the second quarter branch sale.

Loans held for investment were $2.01 billion at September 30, 2016, an increase of $66 million, or 3.4%, from June 30, 2016. The third quarter included the net transfer of $17 million in TriNet loans from loans held for investment to loans held for sale. Excluding the transfer of TriNet loans, loans held for investment increased $83 million from June 30, 2016.

At September 30, 2016, the allowance for loan losses was $18.5 million, or 0.92% of loans held for investment, compared to $18.4 million, or 0.95% of loans held for investment as June 30, 2016. Annualized net charge-offs in the third quarter of 2016 totaled 0.06% of average loans and 0.13% for the nine months ended September 30, 2016. Nonperforming assets totaled $2.5 million, or 0.09% of total assets, as of September 30, 2016, compared to $1.9 million, or 0.07% of total assets, as of June 30, 2016.

Total deposits as of September 30, 2016 were $2.19 billion, an increase of $31 million, or 1.4%, from June 30, 2016. Brokered deposits were $194 million at September 30, 2016, a decrease of $18 million from June 30, 2016. Deposits associated with our payments business were $212 million at September 30, 2016, a decrease of $83 million in the third quarter, due to the normal volatility.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, October 28, 2016, to discuss the financial results for the quarter ended September 30, 2016. 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) interest income - taxable equivalent; (ii) net interest income - taxable equivalent; (iii) operating provision for loan losses; (iv) operating noninterest income; (v) operating noninterest expense; (vi) operating income before income taxes; (vii) operating income tax expense; (viii) operating net income; (ix) diluted earnings per share - operating; (x) tangible common equity; (xi) tangible book value; (xii) return on average assets - operating; (xiii) return on average equity - operating; (xiv) efficiency ratio; (xv) total tangible assets; and (xvi) deposits excluding deposits to be assumed in branch sales, 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, provision for loan losses for the acquired FSG portfolio, 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. Operating provision for loan losses excludes the provision related to loans acquired from FSG. 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 for the year ended December 31, 2015 and Quarterly Reports on Form 10-Q for the periods ended March 31, 2016 and June 30, 2016. 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., with assets of $2.8 billion, is a publicly-traded bank holding company headquartered in Atlanta, Georgia with corporate offices in Chattanooga and Knoxville, Tennessee. Atlantic Capital Bank, (the “Bank”) operates under the “Atlantic Capital” brand in Atlanta and “FSGBank” brand in east Tennessee and northwest Georgia. The Bank provides lending, treasury management and capital markets services to small and mid-sized businesses and mortgage, trust and other banking services to private and individual clients.



ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information

				2016						2015								For the nine months ended September 30,
(in thousands, except share and per share data; taxable equivalent)	Third Quarter			Second Quarter			First Quarter			Fourth Quarter				Third Quarter				2016			2015
INCOME SUMMARY
Interest income ⁽¹⁾	$	22,428		$	22,190		$	21,553		$	18,270			$	10,345			$	66,171		$	30,760
Interest expense	2,941			2,907			2,632			2,292				840				8,480			2,631
Net interest income	19,487			19,283			18,921			15,978				9,505				57,691			28,129
Operating provision for loan losses ⁽²⁾	463			777			368			859				(137		)		1,608			412
Net interest income after provision for loan losses	19,024			18,506			18,553			15,119				9,642				56,083			27,717
Operating noninterest income	4,002			4,995			4,420			3,460				1,729				13,417			5,939
Operating noninterest expense ⁽³⁾	16,717			17,428			17,517			16,067				6,953				51,662			20,712
Operating income before income taxes	6,309			6,073			5,456			2,512				4,418				17,838			12,944
Operating income tax expense	2,245			2,381			2,065			2,117				1,749				6,691			4,880
Operating net income ⁽²⁾⁽³⁾	4,064			3,692			3,391			395				2,669				11,147			8,064
Provision for acquired non PCI FSG loans	—			—			—			4,153				—				—			—
Merger related expenses, net of income tax	356			743			460			4,403				443				1,559			1,222
Net gain on sale of branches, net of income tax	—			2,198			—			—				—				2,198			—
Net income (loss) - GAAP	$	3,708		$	5,147		$	2,931		$	(8,161	)		$	2,226			$	11,786		$	6,842

PER SHARE DATA
Diluted earnings (loss) per share - GAAP	$	0.15		$	0.20		$	0.12		$	(0.40	)		$	0.16			$	0.47		$	0.49
Diluted earnings per share - operating ⁽²⁾⁽³⁾	0.16			0.15			0.14			0.02				0.19				0.44			0.58
Book value per share	12.36			12.29			11.99			11.79				11.05				12.36			11.05
Tangible book value per share ⁽⁴⁾	11.16			11.01			10.61			10.35				10.95				11.16			10.95

PERFORMANCE MEASURES
Return on average equity - GAAP	4.84		%	6.88		%	4.02		%	(13.22		)	%	6.08			%	5.25		%	6.30		%
Return on average equity - operating ⁽²⁾⁽³⁾	5.30			4.94			4.65			0.64				7.29				4.97			7.42
Return on average assets - GAAP	0.55			0.76			0.45			(1.45		)		0.66				0.58			0.67
Return on average assets operating ⁽²⁾⁽³⁾	0.60			0.54			0.52			0.07				0.79				0.55			0.79
Taxable equivalent net interest margin	3.12			3.12			3.26			3.13				2.93				3.11			2.91
Efficiency ratio	71.57			72.00			75.22			82.79				61.95				72.92			60.86

CAPITAL
Average equity to average assets	11.28		%	11.01		%	11.13		%	10.98			%	10.85			%	11.06		%	10.85		%
Tangible common equity to tangible assets	10.19			9.81			9.69			9.71				10.76				10.19			10.76
Tier 1 capital ratio	9.7		⁽⁶⁾	9.9			9.5			9.8				11.0				9.7		⁽⁶⁾	11.0
Total risk based capital ratio	12.5		⁽⁶⁾	12.8			12.4			12.9				15.5				12.5		⁽⁶⁾	15.5
Number of common shares outstanding - basic	24,950,099			24,750,163			24,569,823			24,425,546				13,562,125				24,950,099			13,562,125
Number of common shares outstanding - diluted	25,342,883			25,267,803			25,077,520			25,059,823				13,904,395				25,342,883			13,904,395

ASSET QUALITY
Allowance for loan losses to loans held for investment	0.92		%	0.95		%	0.93		%	1.06			%	1.13			%	0.92		%	1.13		%
Net charge-offs to average loans ⁽⁵⁾	0.06			—			0.35			0.15				(0.01		)		0.13			—
NPAs to total assets	0.09			0.07			0.08			0.40				—				0.09			—

⁽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 provision for acquired non PCI FSG loans. ⁽³⁾Excludes merger related expenses. ⁽⁴⁾Excludes effect of servicing asset and acquisition related intangibles. ⁽⁵⁾Annualized. ⁽⁶⁾Amounts are estimates as of 9/30/16.



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

	September 30,			June 30,			December 31,			September 30,
(in thousands, except share data)	2016			2016			2015			2015
ASSETS
Cash and due from banks	$	44,563		$	40,309		$	45,848		$	45,971
Interest-bearing deposits in banks	75,750			239,387			130,900			90,695
Other short-term investments	23,159			20,548			26,137			24,135
Cash and cash equivalents	143,472			300,244			202,885			160,801
Investment securities available-for-sale	348,484			328,370			346,221			127,168
Other investments	26,370			22,575			8,034			3,011
Loans held for sale	46,600			29,061			95,465			—
Loans held for investment	2,008,102			1,942,137			1,790,669			1,046,437
Less: allowance for loan losses	(18,534		)	(18,377		)	(18,905		)	(11,862		)
Loans, net	1,989,568			1,923,760			1,771,764			1,034,575
Branch premises held for sale	5,201			—			7,200			—
Premises and equipment, net	15,213			21,770			23,145			3,138
Bank owned life insurance	61,766			61,378			60,608			30,479
Goodwill and intangible assets, net	30,071			31,674			35,232			1,259
Other real estate owned	1,727			951			1,982			27
Other assets	92,772			88,039			86,244			21,240
Total assets	$	2,761,244		$	2,807,822		$	2,638,780		$	1,381,698

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	557,783		$	592,043		$	544,561		$	328,065
Interest-bearing checking	260,531			231,091			232,868			135,350
Savings	29,658			30,839			28,922			321
Money market	974,072			913,094			875,441			550,879
Time	172,348			178,615			183,206			15,434
Brokered deposits	194,464			212,623			183,810			98,559
Deposits to be assumed in branch sale	—			—			213,410			—
Total deposits	2,188,856			2,158,305			2,262,218			1,128,608
Federal funds purchased and securities sold under agreements to repurchase	—			14,047			11,931			43,000
Federal Home Loan Bank borrowings	170,000			240,000			—			—
Long-term debt	49,324			49,281			49,197			49,226
Other liabilities	44,601			42,123			27,442			11,055
Total liabilities	2,452,781			2,503,756			2,350,788			1,231,889

SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015	—			—			—			—
Common stock, no par value; 100,000,000 shares authorized; 24,950,099, 24,750,163, 24,425,546, and 13,562,125 shares issued and outstanding as of September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015, respectively	290,835			289,353			286,367			136,941
Retained earnings	14,927			11,219			3,141			11,302
Accumulated other comprehensive income (loss)	2,701			3,494			(1,516		)	1,566
Total shareholders’ equity	308,463			304,066			287,992			149,809
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,761,244		$	2,807,822		$	2,638,780		$	1,381,698



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

(in thousands, except share and per share data)	Three months ended												Nine months ended
	September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015			September 30, 2015			September 30, 2016		September 30, 2015
INTEREST INCOME
Loans, including fees	$	20,511	$	20,282	$	19,625	$	16,688		$	9,423		$	60,418	$	27,874
Investment securities available-for-sale	1,293		1,327		1,601		1,224			664			4,221		2,077
Interest and dividends on other interest‑earning assets	491		507		273		328			247			1,271		776
Total interest income	22,295		22,116		21,499		18,240			10,334			65,910		30,727

INTEREST EXPENSE
Interest on deposits	1,956		1,841		1,673		1,355			751			5,470		2,262
Interest on Federal Home Loan Bank advances	133		147		44		7			52			324		283
Interest on federal funds purchased and securities sold under agreements to repurchase	37		87		67		10			20			191		69
Interest on long-term debt	815		832		810		841			17			2,457		17
Other	—		—		38		79			—			38		—
Total interest expense	2,941		2,907		2,632		2,292			840			8,480		2,631

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	19,354		19,209		18,867		15,948			9,494			57,430		28,096
Provision for loan losses	463		777		368		7,623			(137		)	1,608		412
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	18,891		18,432		18,499		8,325			9,631			55,822		27,684

NONINTEREST INCOME
Service charges	1,270		1,392		1,498		1,265			521			4,160		1,348
Gains on sale of securities available-for-sale	—		11		33		—			10			44		10
Gains on sale of other assets	71		31		48		103			—			150		—
Mortgage income	632		447		339		163			—			1,418		—
Trust income	361		386		314		192			—			1,061		—
Derivatives income	69		98		65		89			67			232		215
Bank owned life insurance	424		398		393		365			227			1,215		1,794
SBA lending activities	959		1,204		880		904			745			3,043		2,006
TriNet gains on sale	—		761		383		—			—			1,144		—
Gains on sale of branches	—		3,885		—		—			—			3,885		—
Other noninterest income	216		267		467		379			159			950		566
Total noninterest income	4,002		8,880		4,420		3,460			1,729			17,302		5,939

NONINTEREST EXPENSE
Salaries and employee benefits	10,059		10,420		10,555		9,661			4,859			31,034		14,437
Occupancy	1,235		1,274		1,100		907			419			3,609		1,263
Equipment and software	862		724		686		608			243			2,272		687
Professional services	442		760		748		1,020			208			1,950		613
Postage, printing and supplies	61		159		169		115			21			389		63
Communications and data processing	617		694		916		555			313			2,227		986
Marketing and business development	269		317		267		197			90			853		213
FDIC premiums	415		493		398		273			161			1,306		516
Merger and conversion costs	579		1,210		749		7,172			718			2,538		1,982
Amortization of intangibles	520		668		762		526			—			1,950		—
Other noninterest expense	2,237		2,224		1,916		2,205			639			6,377		1,934
Total noninterest expense	17,296		18,943		18,266		23,239			7,671			54,505		22,694

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	5,597		8,369		4,653		(11,454		)	3,689			18,619		10,929
Provision for income taxes	1,889		3,222		1,722		(3,293		)	1,463			6,833		4,087
NET INCOME (LOSS)	$	3,708	$	5,147	$	2,931	$	(8,161	)	$	2,226		$	11,786	$	6,842

Net income (loss) per common share‑basic	$	0.15	$	0.21	$	0.12	$	(0.40	)	$	0.16		$	0.48	$	0.51
Net income (loss) per common share‑diluted	$	0.15	$	0.20	$	0.12	$	(0.40	)	$	0.16		$	0.47	$	0.49

Weighted average shares - basic	24,891,822		24,644,755		24,485,900		20,494,895			13,562,125			24,674,953		13,527,195
Weighted average shares - diluted	25,260,280		25,158,694		24,993,597		21,004,577			13,904,395			25,106,250		13,866,312



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

	Three months ended
	September 30, 2016						June 30, 2016
(dollars in thousands; taxable equivalent)	Average Balance		Interest Income/Expense		Tax Equivalent Yield/Rate		Average Balance		Interest Income/Expense		Tax Equivalent Yield/Rate

Assets
Interest bearing deposits in other banks	$	109,883	$	158	0.57	%	$	84,734	$	131	0.62	%
Other short-term investments	18,741		60		1.27		27,777		100		1.45
Investment securities:
Taxable investment securities	283,303		1,033		1.45		329,237		1,183		1.45
Non-taxable investment securities⁽¹⁾	52,577		393		2.97		29,202		218		3.00
Total investment securities	335,880		1,426		1.69		358,439		1,401		1.57
Total loans	2,003,180		20,511		4.07		2,000,685		20,281		4.08
FHLB and FRB stock	17,192		273		6.32		14,642		277		7.61
Total interest-earning assets	2,484,876		22,428		3.59		2,486,277		22,190		3.59
Non-earning assets	233,120						231,833
Total assets	$	2,717,996					$	2,718,110
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,236,828		1,338		0.43		1,173,093		1,256		0.43
Time deposits	175,135		241		0.55		203,679		189		0.37
Brokered deposits	196,598		377		0.76		220,098		395		0.72
Total interest-bearing deposits	1,608,561		1,956		0.48		1,596,870		1,840		0.46
Total borrowings	157,957		170		0.43		204,231		235		0.46
Long-term debt	49,296		815		6.58		49,254		832		6.79
Total interest-bearing liabilities	1,815,814		2,941		0.64		1,850,355		2,907		0.63
Demand deposits	555,008						538,422
Other liabilities	40,532						30,163
Shareholders' equity	306,642						299,170
Total liabilities and shareholders' equity	$	2,717,996					$	2,718,110
Net interest spread					2.95	%					2.96	%
Net interest income and net interest margin⁽²⁾			$	19,487	3.12	%			$	19,283	3.12	%

⁽¹⁾ Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate.
⁽²⁾ Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.



	Three months ended
	September 30, 2016					June 30, 2016
(dollars in thousands; taxable equivalent)	Amount			Yield		Amount			Yield

Reported interest income on loans	$	20,511		4.07	%	$	20,281		4.08	%
Less: accretion of loan acquisition discounts	(576		)			(525		)
Core interest income on loans	$	19,935		3.96	%	$	19,756		3.97	%

	Amount			Net Interest Margin		Amount			Net Interest Margin

Net interest income / net interest margin	$	19,487		3.12	%	$	19,283		3.12	%
Less:
Accretion of loan acquisition discounts	(576		)			(525		)
Accretion of time deposit premium	(170		)			(234		)
Net interest income / net interest margin excluding purchase accounting	$	18,741		3.00	%	$	18,524		3.00	%



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

	Nine months ended
	September 30, 2016						September 30, 2015
(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	$	100,279	$	481	0.64	%	$	46,376	$	87	0.25	%
Other short-term investments	24,120		244		1.35		54,843		547		1.33
Investment securities:
Taxable investment securities	337,263		3,714		1.47		133,641		2,016		2.02
Non-taxable investment securities⁽¹⁾	34,945		768		2.94		2,320		94		5.42
Total investment securities	372,208		4,482		1.61		135,961		2,110		2.07
Total loans	1,965,092		60,418		4.11		1,051,878		27,874		3.54
FHLB and FRB stock	13,825		546		5.28		4,599		142		4.13
Total interest-earning assets	2,475,524		66,171		3.57		1,293,657		30,760		3.18
Non-earning assets	229,146						65,402
Total assets	$	2,704,670					$	1,359,059
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,182,520		3,646		0.41		655,641		1,890		0.39
Time deposits	221,937		654		0.39		16,094		46		0.38
Brokered deposits	210,803		1,170		0.74		120,676		326		0.36
Total interest-bearing deposits	1,615,260		5,470		0.45		792,411		2,262		0.38
Total borrowings	156,148		553		0.47		104,861		369		0.47
Total long-term debt	49,254		2,457		6.66		—		—		—
Total interest-bearing liabilities	1,820,662		8,480		0.62		897,272		2,631		0.39
Demand deposits	549,217						307,991
Other liabilities	35,743						8,980
Shareholders' equity	299,048						144,816
Total liabilities and shareholders' equity	$	2,704,670					$	1,359,059
Net interest spread					2.95	%					2.79	%
Net interest income and net interest margin⁽²⁾			$	57,691	3.11	%			$	28,129	2.91	%

⁽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.



	Six months ended
	September 30, 2016					September 30, 2015
(dollars in thousands; taxable equivalent)	Amount			Yield		Amount		Yield

Reported interest income on loans	$	60,418		4.11	%	$	27,874	3.54	%
Less: accretion of loan acquisition discounts	(1,987		)			—
Core interest income on loans	$	58,431		3.97	%	$	27,874	3.54	%

	Amount			Net Interest Margin		Amount		Net Interest Margin

Net interest income / net interest margin	$	57,691		3.11	%	$	28,129	2.91	%
Less:
Accretion of loan acquisition discounts	(1,987		)			—
Accretion of time deposit premium	(712		)			—
Net interest income / net interest margin excluding purchase accounting	$	54,992		2.97	%	$	28,129	2.91	%



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans

	2016									2015						Linked Quarter Change			Year Over Year Change
(dollars in thousands)	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter

Loans held for sale
Loans held for sale	$	46,600		$	29,061		$	61,003		$	59,995		$	—		$	17,539		$	46,600
Branch loans held for sale	—			—			34,288			35,470			—			—			—
Total loans held for sale	$	46,600		$	29,061		$	95,291		$	95,465		$	—		$	17,539		$	46,600

Loans held for investment
Commercial loans:
Commercial and industrial	$	533,632		$	508,516		$	499,634		$	467,083		$	366,830		$	25,116		$	166,802
Commercial real estate:
Multifamily	74,881			79,144			81,331			78,778			55,352			(4,263		)	19,529
Owner occupied	337,277			351,419			333,172			320,656			165,210			(14,142		)	172,067
Investment	451,125			431,633			429,094			446,979			219,664			19,492			231,461
Construction and land:
1-4 family residential construction	11,273			9,611			8,540			6,609			—			1,662			11,273
Other construction, development, and land	202,063			199,536			174,899			159,749			106,934			2,527			95,129
Mortgage warehouse loans	171,251			126,108			123,875			84,350			89,816			45,143			81,435
Total commercial loans	1,781,502			1,705,967			1,650,545			1,564,204			1,003,806			75,535			777,696

Residential:
Residential mortgages	100,046			103,313			106,433			110,381			726			(3,267		)	99,320
Home equity	78,952			80,321			83,094			80,738			27,186			(1,369		)	51,766
Total residential loans	178,998			183,634			189,527			191,119			27,912			(4,636		)	151,086

Consumer	30,453			29,788			30,905			30,451			18,741			665			11,712
Other	20,736			28,168			20,925			6,901			—			(7,432		)	20,736
	2,011,689			1,947,557			1,891,902			1,792,675			1,050,459			64,132			961,230
Less net deferred fees and other unearned income	(3,587		)	(5,420		)	(5,139		)	(2,006		)	(4,022		)	1,833			435
Total loans held for investment	$	2,008,102		$	1,942,137		$	1,886,763		$	1,790,669		$	1,046,437		$	65,965		$	961,665



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


	2016												2015
(dollars in thousands)	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter

Balance at beginning of period	$	18,377			$	17,608			$	18,905			$	11,862			$	11,985
Provision for loan losses	463				777				368				7,623				(137		)
Loans charged-off:
Commercial and industrial	(61		)		(5		)		(1,465		)		—				—
Commercial real estate	(226		)		—				(140		)		(500		)		—
Residential mortgages	—				(2		)		—				—				—
Home equity	(9		)		(23		)		—				—				—
Consumer	(60		)		(38		)		(146		)		(128		)		—
Other	(5		)		—				—				—				—
Total loans charged-off	(361		)		(68		)		(1,751		)		(628		)		—
Recoveries on loans previously charged‑off:
Construction and land	12				—				—				—				—
Commercial and industrial	2				—				15				—				14
Commercial real estate	20				—				2				—				—
Residential mortgages	5				—				—				—				—
Home equity	2				—				—				—				—
Consumer	12				60				69				48				—
Other	2				—				—				—				—
Total recoveries	55				60				86				48				14
Net charge-offs	(306		)		(8		)		(1,665		)		(580		)		14
Balance at period end	$	18,534			$	18,377			$	17,608			$	18,905			$	11,862

Loans held for investment
PCI Loans	$	17,237			$	19,733			$	22,893			$	24,349			$	—
Non-PCI Loans	1,990,865				1,922,404				1,863,870				1,766,320				1,046,437
	$	2,008,102			$	1,942,137			$	1,886,763			$	1,790,669			$	1,046,437

Non-performing loans - PCI	$	2,348			$	1,082			$	911			$	1,422			$	—

Non-performing loans - Non-PCI	$	792			$	922			$	566			$	8,549			$	—
Foreclosed properties (OREO)	1,727				951				1,760				1,982				27
Total nonperforming assets	$	2,519			$	1,873			$	2,326			$	10,531			$	27

Allowance for loan losses to loans	0.92			%	0.95			%	0.93			%	1.06			%	1.13			%
Net charge-offs to average loans ⁽¹⁾	0.06				—				0.35				0.15				(0.01		)
Nonperforming loans as a percentage of total loans⁽²⁾	0.04				0.05				0.02				0.45				—
Nonperforming assets as a percentage of total assets⁽²⁾	0.09				0.07				0.08				0.40				—

⁽¹⁾Annualized ⁽²⁾Excludes non-performing PCI loans



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

	2016									2015						Linked Quarter Change			Year Over Year Change
(dollars in thousands)	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Linked Quarter Change			Year Over Year Change

DDA	$	557,783		$	592,043		$	560,363		$	544,561		$	328,065		$	(34,260	)	$	229,718
NOW	260,531			231,091			215,176			232,868			135,350			29,440			125,181
Savings	29,658			30,839			29,788			28,922			321			(1,181		)	29,337
Money Market	974,072			913,094			862,120			875,441			550,879			60,978			423,193
Time	172,348			178,615			187,750			183,206			15,434			(6,267		)	156,914
Brokered	194,464			212,623			229,408			183,810			98,559			(18,159		)	95,905
Deposits to be assumed in branch sale	—			—			197,857			213,410			—			—			—
Total Deposits	$	2,188,856		$	2,158,305		$	2,282,462		$	2,262,218		$	1,128,608		$	30,551		$	1,060,248

Payments Clients	$	212,049		$	295,440		$	300,348		$	261,102		$	170,554		$	(83,391	)	$	41,495

Average Deposits⁽¹⁾

	2016									2015						Linked Quarter Change			Year Over Year Change
(dollars in thousands)	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Linked Quarter Change			Year Over Year Change

DDA	$	555,008		$	538,422		$	554,547		$	486,860		$	325,474		$	16,586		$	229,534
NOW	282,701			272,556			302,376			254,821			154,776			10,145			127,925
Savings	30,692			35,090			45,571			30,024			425			(4,398		)	30,267
Money Market	923,435			865,447			769,369			730,582			506,064			57,988			417,371
Time	175,135			203,679			267,330			184,257			15,756			(28,544		)	159,379
Brokered	196,598			220,098			216,490			199,748			98,939			(23,500		)	97,659
Total Deposits	$	2,163,569		$	2,135,292		$	2,155,683		$	1,886,292		$	1,101,434		$	28,277		$	1,062,135

Payments Clients	$	184,895		$	176,474		$	155,860		$	198,539		$	140,346		$	8,421		$	44,549

Noninterest bearing deposits as a percentage of average deposits	25.7		%	25.2		%	25.7		%	25.8		%	29.6		%
Cost of deposits	0.36		%	0.35		%	0.31		%	0.28		%	0.27		%

⁽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)	2016									2015						For the nine months ended September 30,
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2016			2015

Interest income reconciliation
Interest income - GAAP	$	22,295		$	22,116		$	21,499		$	18,240		$	10,334		$	65,910		$	30,727
Taxable equivalent adjustment	133			74			54			30			11			261			33
Interest income - taxable equivalent	$	22,428		$	22,190		$	21,553		$	18,270		$	10,345		$	66,171		$	30,760

Net interest income reconciliation
Net interest income - GAAP	$	19,354		$	19,209		$	18,867		$	15,948		$	9,494		$	57,430		$	28,096
Taxable equivalent adjustment	133			74			54			30			11			261			33
Net interest income - taxable equivalent	$	19,487		$	19,283		$	18,921		$	15,978		$	9,505		$	57,691		$	28,129

Operating provision for loan losses reconciliation
Provision for loan losses - GAAP	$	463		$	777		$	368		$	7,623		$	(137	)	$	1,608		$	412
Provision for acquired non PCI FSG loans	—			—			—			(6,764		)	—			—			—
Operating provision for loan losses	$	463		$	777		$	368		$	859		$	(137	)	$	1,608		$	412

Operating noninterest income reconciliation
Noninterest income - GAAP	$	4,002		$	8,880		$	4,420		$	3,460		$	1,729		$	17,302		$	5,939
Gain on sale of branches	—			(3,885		)	—			—			—			(3,885		)	—
Operating noninterest income	$	4,002		$	4,995		$	4,420		$	3,460		$	1,729		$	13,417		$	5,939

Operating noninterest expense reconciliation
Noninterest expense - GAAP	$	17,296		$	18,943		$	18,266		$	23,239		$	7,671		$	54,505		$	22,694
Merger-related expenses	(579		)	(1,210		)	(749		)	(7,172		)	(718		)	(2,538		)	(1,982		)
Divestiture expenses	—			(305		)	—			—			—			(305		)	—
Operating noninterest expense	$	16,717		$	17,428		$	17,517		$	16,067		$	6,953		$	51,662		$	20,712

Operating income before income taxes reconciliation
Income (loss) before income taxes - GAAP	$	5,597		$	8,369		$	4,653		$	(11,454	)	$	3,689		$	18,619		$	10,929
Taxable equivalent adjustment	133			74			54			30			11			261			33
Merger-related expenses	579			1,210			749			7,172			718			2,538			1,982
Divestiture expenses	—			305			—			—			—			305			—
Gain on sale of branches	—			(3,885		)	—			—			—			(3,885		)	—
Provision for acquired non PCI FSG loans	—			—			—			6,764			—			—			—
Operating income before income taxes	$	6,309		$	6,073		$	5,456		$	2,512		$	4,418		$	17,838		$	12,944

Income tax reconciliation
Income tax expense - GAAP	$	1,889		$	3,222		$	1,722		$	(3,293	)	$	1,463		6,833			4,087
Taxable equivalent adjustment	133			74			54			30			11			261			33
Merger related expenses, tax benefit	223			467			289			2,769			275			979			760
Divestiture expenses, tax benefit	—			118			—			—			—			118			—



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


(in thousands, except share and per share data)	2016												2015								For the nine months ended September 30,
	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2016				2015

Gain on sale of branches, tax expense	—				(1,500		)		—				—				—				(1,500		)		—
Provision for acquired non PCI FSG loans, tax benefit	—				—				—				2,611				—				—				—
Operating income tax expense	$	2,245			$	2,381			$	2,065			$	2,117			$	1,749			$	6,691			$	4,880

Net income reconciliation
Net income - GAAP	$	3,708			$	5,147			$	2,931			$	(8,161	)		$	2,226			11,786				$	6,842
Merger related expenses, net of income tax	356				743				460				4,403				443				1,559				1,222
Divestiture expenses, net of income tax	—				187				—				—				—				187				—
Gain on sale of branches, net of income tax	—				(2,385		)		—				—				—				(2,385		)		—
Provision for acquired non PCI FSG loans, net of income tax	—				—				—				4,153				—				—				—
Operating net income	$	4,064			$	3,692			$	3,391			$	395			$	2,669			$	11,147			$	8,064

Diluted earnings per share reconciliation
Diluted earnings per share - GAAP	$	0.15			$	0.20			$	0.12			$	(0.40	)		$	0.16			$	0.47			$	0.49
Merger related expenses	0.01				0.03				0.02				0.42				0.03				0.07				0.09
Net gain on sale of branches	—				(0.08		)		—				—				—				(0.10		)		—
Diluted earnings per share - operating	$	0.16			$	0.15			$	0.14			$	0.02			$	0.19			$	0.44			$	0.58

Book value per common share reconciliation
Total shareholders’ equity	$	308,463			$	304,066			$	294,652			$	287,992			$	149,809			$	308,463			$	149,809
Intangible assets	(30,071		)		(31,674		)		(33,914		)		(35,232		)		(1,259		)		(30,071		)		(1,259		)
Total tangible common equity	$	278,392			$	272,392			$	260,738			$	252,760			$	148,550			$	278,392			$	148,550
Common shares outstanding	24,950,099				24,750,163				24,569,823				24,425,546				13,562,125				24,950,099				13,562,125
Book value per common share - GAAP	12.36				12.29				11.99				11.79				11.05				12.36				11.05
Tangible book value	11.16				11.01				10.61				10.35				10.95				11.16				10.95

Return on average equity reconciliation
Net income - GAAP	$	3,708			$	5,147			$	2,931			$	(8,161	)		$	2,226			$	11,786			$	6,842
Merger related expenses, net of income tax	356				743				460				4,403				443				1,559				1,222
Divestiture expenses, net of income tax	—				187				—				—				—				187				—
Gain on sale of branches, net of income tax	—				(2,385		)		—				—				—				(2,385		)		—
Provision for acquired FSG loans, net of income tax	—				—				—				4,153				—				—				—
Operating net income	$	4,064			$	3,692			$	3,391			$	395			$	2,669			$	11,147			$	8,064
Average shareholders' equity	306,642				299,170				291,806				246,842				146,430				299,048				144,816
Return on average equity - GAAP	4.84			%	6.88			%	4.02			%	(13.22		)	%	6.08			%	5.25			%	6.30			%
Return on average equity - operating	5.30				4.94				4.65				0.64				7.29				4.97				7.42

Return on average assets reconciliation
Net income - GAAP	$	3,708			$	5,147			$	2,931			$	(8,161	)		$	2,226			$	11,786			$	6,842
Merger related expenses, net of income tax	356				743				460				4,403				443				1,559				1,222
Divestiture expenses, net of income tax	—				187				—				—				—				187				—
Gain on sale of branches, net of income tax	—				(2,385		)		—				—				—				(2,385		)		—
Provision for acquired FSG loans, net of income tax	—				—				—				4,153				—				—				—
Operating net income	$	4,064			$	3,692			$	3,391			$	395			$	2,669			$	11,147			$	8,064
Average assets	2,717,996				2,718,110				2,620,750				2,248,614				1,349,997				2,704,670				1,359,059
Return on average assets - GAAP	0.55			%	0.76			%	0.45			%	(1.45		)	%	0.66			%	0.58			%	0.67			%



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


(in thousands, except share and per share data)	2016												2015								For the nine months ended September 30,
	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2016				2015

Return on average assets - operating	0.60				0.54				0.52				0.07				0.79				0.55				0.79

Efficiency ratio reconciliation
Noninterest income - GAAP	$	4,002			$	8,880			$	4,420			$	3,460			$	1,729			$	17,302			$	5,939
Gain on sale of branches	—				(3,885		)		—				—				—				(3,885		)		—
Operating noninterest income	$	4,002			$	4,995			$	4,420			$	3,460			$	1,729			$	13,417			$	5,939
Noninterest expense - GAAP	$	17,296			$	18,943			$	18,266			$	23,239			$	7,671			$	54,505			$	22,694
Merger-related expenses	(579		)		(1,210		)		(749		)		(7,172		)		(718		)		(2,538		)		(1,982		)
Divestiture expenses	—				(305		)		—				—				—				(305		)		—
Operating noninterest expense	$	16,717			$	17,428			$	17,517			$	16,067			$	6,953			$	51,662			$	20,712
Net interest income	19,354				19,209				18,867				15,948				9,494				57,430				28,096
Efficiency ratio	71.57			%	72.00			%	75.22			%	82.79			%	61.95			%	72.92			%	60.86			%

Tangible equity to tangible assets reconciliation
Total shareholders’ equity	$	308,463			$	304,066			$	294,652			$	287,992			$	149,809			$	308,463			$	149,809
Intangible assets	(30,071		)		(31,674		)		(33,914		)		(35,232		)		(1,259		)		(30,071		)		(1,259		)
Total tangible common equity	$	278,392			$	272,392			$	260,738			$	252,760			$	148,550			$	278,392			$	148,550

Total assets	$	2,761,244			$	2,807,822			$	2,724,669			$	2,638,780			$	1,381,698			$	2,761,244			$	1,381,698
Intangible assets	(30,071		)		(31,674		)		(33,914		)		(35,232		)		(1,259		)		(30,071		)		(1,259		)
Total tangible assets	$	2,731,173			$	2,776,148			$	2,690,755			$	2,603,548			$	1,380,439			$	2,731,173			$	1,380,439
Tangible common equity to tangible assets	10.19			%	9.81			%	9.69			%	9.71			%	10.76			%	10.19			%	10.76			%

Deposits excluding deposits to be assumed in branch sales
Total deposits	$	2,188,856			$	2,158,305			$	2,282,462			$	2,262,218			$	1,128,608			$	2,188,856			$	1,128,608
Deposits to be assumed in branch sales	—				—				197,857				213,410				—				—				—
Deposits excluding deposits to be assumed in branch sales	$	2,188,856			$	2,158,305			$	2,084,605			$	2,048,808			$	1,128,608			$	2,188,856			$	1,128,608

Atlantic Capital Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 28, 2016

Attached files

Atlantic Capital Bancshares, Inc. Reports