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

Attached files

file	filename
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 2017 RESULTS

Atlanta, GA - October 27, 2017 - Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced results of the quarter ended September 30, 2017.

Third Quarter Highlights


•	Reported net income of $4.1 million, or $0.16 per diluted share, compared to $4.3 million, or $0.17 per diluted share, in the second quarter of 2017.


•	Reported return on average assets of 0.60% and tangible book value per share of $11.67.


•	Excluding the impact of purchase accounting, reported taxable equivalent net interest margin of 3.20%, up 5 basis points from the second quarter of 2017.


•	Lowered noninterest expense to $17.5 million from $17.6 million in the second quarter of 2017.


•	Decreased nonperforming assets to 0.23% of total assets from 0.52% in the second quarter of 2017.

“Atlantic Capital’s earnings this quarter fell short of our expectations for a variety of reasons, including exceptionally large, unanticipated loan repayments and one-time expenses related to the secondary offering in August. Our board and new leadership team are working together to develop and implement new revenue and cost savings initiatives designed to accelerate performance improvement in 2018 and beyond,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the third quarter of 2017, Atlantic Capital recorded net income of $4.1 million, or $0.16 per diluted share, compared to net income of $4.3 million, or $0.17 per diluted share, in the second quarter of 2017.

Taxable equivalent net interest income decreased to $20.5 million in the third quarter of 2017 from $20.7 million in the second quarter of 2017. This decrease was driven by lower loan accretion income and an increase in the cost of interest bearing deposits. Net accretion income on acquired loans totaled $343,000 in the third quarter of 2017 compared to $629,000 in the second quarter of 2017.

Taxable equivalent net interest margin was 3.26% in the third quarter of 2017, unchanged from the second quarter of 2017. Excluding the impact of purchase accounting, the margin in the third quarter of 2017 increased 5 basis points to 3.20%, benefiting from the increase in the Fed Funds rate in June 2017. Loan yields, excluding loan accretion income, increased 10 basis points and the cost of deposits increased 4 basis points in the third quarter. The accretion of the acquired loan discount and amortization of time deposit premium contributed 6 basis points to the net interest margin in the third quarter of 2017 compared to 11 basis points in the second quarter of 2017.

The provision for loan losses was $322,000 in the third quarter of 2017 compared to $2.0 million in the second quarter of 2017. The second quarter of 2017 included the downgrade of a $7.7 million loan relationship to nonperforming and an additional $1.0 million specific reserve related to this downgrade. The third quarter included a $3.3 million charge-off of this loan relationship which had a $2.75 million total specific reserve as of June 30, 2017.

Noninterest income totaled $3.5 million in the third quarter of 2017, a decrease of $1.8 million from the second quarter of 2017. The second quarter of 2017 included a $302,000 gain on the sale of the Cleveland branch, a $240,000 gain on sale of other real estate, and a $426,000 gain on the sale of a tax credit investment. In addition, SBA lending activities decreased $283,000 from the second quarter of 2017, to $888,000.

Noninterest expense totaled $17.5 million in the third quarter of 2017 compared to $17.6 million in the second quarter of 2017. The second quarter of 2017 included $304,000 in merger expenses related to rebranding of the legacy First Security branches. The third quarter of 2017 included $395,000 in expenses related to the public offering of common stock by a selling stockholder completed during the quarter. Salaries and employee benefits decreased in the third quarter of 2017 by $194,000 to $10.4 million mainly from a lower incentive accrual.

Total loans were $1.91 billion at September 30, 2017, a decrease of $55.1 million from June 30, 2017. Loans held for investment were $1.91 billion at September 30, 2017, a decrease of $56.7 million from June 30, 2017 mainly as a result of higher loan payoffs and decreases in the balances of existing lines of credit. Mortgage warehouse participations decreased $6.4 million in the third quarter to $41.6 million at September 30, 2017.

At September 30, 2017, the allowance for loan losses was $18.9 million, or 0.99% of loans held for investment, compared to $21.9 million, or 1.11% of loans held for investment as of June 30, 2017. The decrease in the allowance was the result of the $3.3 million charge-off of the $7.7 million loan relationship which had a $2.75 million specific impairment as of June 30, 2017.

Annualized net charge-offs to average loans totaled 0.68% in the third quarter of 2017 and totaled 0.32% the first nine months of 2017. Nonperforming assets totaled $6.0 million, or 0.23% of total assets, as of September 30, 2017, compared to $14.1 million, or 0.52% of total assets, as of June 30, 2017, primarily as a result of the $3.3 million charge-off of the $7.7 million loan relationship.

Total average deposits for the third quarter of 2017 were $2.12 billion, a decrease of $37.4 million from the second quarter of 2017. Average noninterest bearing deposits increased $1.7 million to $628 million in the third quarter of 2017 and accounted for 29.6% of average total deposits. Average deposits associated with our payments business were $210 million in the third quarter of 2017, a decrease of $34.3 million from the second quarter of 2017.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, October 27, 2017, to discuss the financial results for the quarter ended September 30, 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; and (ix) tangible common equity, 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 $2.6 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						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			2017			2016
INCOME SUMMARY
Interest income ⁽¹⁾	$	24,566		$	24,545		$	22,716		$	22,530		$	22,428		$	71,827		$	66,171
Interest expense	4,060			3,833			3,208			3,029			2,941			11,101			8,480
Net interest income	20,506			20,712			19,508			19,501			19,487			60,726			57,691
Provision for loan losses	322			1,980			634			2,208			463			2,936			1,608
Net interest income after provision for loan losses	20,184			18,732			18,874			17,293			19,024			57,790			56,083
Operating noninterest income ⁽²⁾	3,477			5,287			3,857			4,430			4,002			12,621			13,417
Operating noninterest expense ⁽³⁾	17,504			17,623			17,744			18,571			16,717			52,871			51,662
Operating income before income taxes	6,157			6,396			4,987			3,152			6,309			17,540			17,838
Operating income tax expense	2,105			2,067			1,757			1,417			2,245			5,929			6,691
Operating net income ⁽²⁾⁽³⁾	4,052			4,329			3,230			1,735			4,064			11,611			11,147
Merger related expenses, net of income tax	—			—			—			126			356			—			1,559
Net gain on sale of branches, net of income tax	—			—			—			—			—			—			2,198
Net income - GAAP	$	4,052		$	4,329		$	3,230		$	1,609		$	3,708		$	11,611		$	11,786

PER SHARE DATA
Diluted earnings per share - GAAP	$	0.16		$	0.17		$	0.13		$	0.06		$	0.15		$	0.45		$	0.47
Diluted earnings per share - operating ⁽²⁾⁽³⁾	0.16			0.17			0.13			0.07			0.16			0.45			0.44
Book value per share	12.63			12.45			12.18			12.10			12.36			12.63			12.36
Tangible book value per share ⁽⁴⁾	11.67			11.47			11.16			11.05			11.29			11.67			11.29

PERFORMANCE MEASURES
Return on average equity - GAAP	4.96		%	5.48		%	4.19		%	2.09		%	4.84		%	4.91		%	5.25		%
Return on average equity - operating ⁽²⁾⁽³⁾	4.96			5.48			4.19			2.25			5.30			4.91			4.97
Return on average assets - GAAP	0.60			0.63			0.48			0.24			0.55			0.57			0.58
Return on average assets - operating ⁽²⁾⁽³⁾	0.60			0.63			0.48			0.25			0.60			0.57			0.55
Taxable equivalent net interest margin	3.26			3.26			3.20			3.11			3.12			3.24			3.11
Efficiency ratio	73.65			68.37			76.78			78.33			71.57			72.77			72.92

CAPITAL
Average equity to average assets	11.99		%	11.47		%	11.44		%	11.33		%	11.28		%	11.63		%	11.06		%
Tangible common equity to tangible assets	11.48			10.99			10.27			10.27			10.30			11.48			10.30
Tier 1 capital ratio	11.2		⁽⁶⁾	10.9			10.7			10.3			9.7			11.2		⁽⁶⁾	9.7
Total risk based capital ratio	14.2		⁽⁶⁾	14.0			13.8			13.3			12.5			14.2		⁽⁶⁾	12.5
Number of common shares outstanding - basic	25,716,418			25,654,521			25,535,013			25,093,135			24,950,099			25,716,418			24,950,099
Number of common shares outstanding - diluted	25,967,575			25,931,671			25,836,809			25,673,841			25,342,883			25,967,575			25,342,883

ASSET QUALITY
Allowance for loan losses to loans held for investment	0.99		%	1.11		%	1.05		%	1.04		%	0.92		%	0.99		%	0.92		%
Net charge-offs to average loans ⁽⁵⁾	0.68			0.01			0.26			0.03			0.06			0.32			0.13
NPAs to total assets	0.23			0.52			0.21			0.13			0.09			0.23			0.09

⁽¹⁾Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate. ⁽²⁾Excludes gain on sale of branches. ⁽³⁾Excludes merger related and divestiture expenses. ⁽⁴⁾Excludes effect of acquisition related intangibles. ⁽⁵⁾Annualized. ⁽⁶⁾Amounts are estimates as of 9/30/17.



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

	September 30,			June 30,			December 31,			September 30,
(in thousands, except share data)	2017			2017			2016			2016
ASSETS
Cash and due from banks	$	35,504		$	45,008		$	36,790		$	44,563
Interest-bearing deposits in banks	40,558			36,171			118,039			75,750
Other short-term investments	5,189			17,459			10,896			23,159
Cash and cash equivalents	81,251			98,638			165,725			143,472
Investment securities available-for-sale	447,005			450,273			347,705			348,484
Other investments	35,818			26,741			23,806			26,370
Loans held for sale	3,274			1,744			35,219			46,600
Loans held for investment	1,905,432			1,962,091			1,981,330			2,008,102
Less: allowance for loan losses	(18,870		)	(21,870		)	(20,595		)	(18,534		)
Loans held for investment, net	1,886,562			1,940,221			1,960,735			1,989,568
Branch premises held for sale	—			—			2,995			5,201
Premises and equipment, net	11,747			11,997			11,958			15,213
Bank owned life insurance	63,284			62,901			62,160			61,766
Goodwill and intangible assets, net	27,945			28,446			29,567			30,071
Other real estate owned	1,494			1,819			1,872			1,727
Other assets	80,032			79,795			85,801			92,772
Total assets	$	2,638,412		$	2,702,575		$	2,727,543		$	2,761,244

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	599,292		$	612,744		$	643,471		$	557,783
Interest-bearing checking	270,740			250,254			264,062			260,531
Savings	30,131			30,170			27,932			29,658
Money market	865,238			882,824			912,493			974,072
Time	144,250			142,915			157,810			172,348
Brokered deposits	193,994			195,047			200,223			194,464
Deposits to be assumed in branch sale	—			—			31,589			—
Total deposits	2,103,645			2,113,954			2,237,580			2,188,856
Federal funds purchased and securities sold under agreements to repurchase	—			15,000			—			—
Federal Home Loan Bank borrowings	125,000			180,000			110,000			170,000
Long-term debt	49,493			49,451			49,366			49,324
Other liabilities	35,520			24,735			26,939			44,601
Total liabilities	2,313,658			2,383,140			2,423,885			2,452,781

SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017, June 30, 2017, December 31, 2016, and September 30, 2016	—			—			—			—
Common stock, no par value; 100,000,000 shares authorized; 25,716,418, 25,654,521, 25,093,135, and 24,950,099 shares issued and outstanding as of September 30, 2017, June 30, 2017, December 31, 2016, and September 30, 2016, respectively	298,469			297,610			292,747			290,835
Retained earnings	28,147			24,095			16,536			14,927
Accumulated other comprehensive income (loss)	(1,862		)	(2,270		)	(5,625		)	2,701
Total shareholders’ equity	324,754			319,435			303,658			308,463
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,638,412		$	2,702,575		$	2,727,543		$	2,761,244



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, 2017			June 30, 2017		March 31, 2017			December 31, 2016		September 30, 2016		September 30, 2017			September 30, 2016
INTEREST INCOME
Loans, including fees	$	21,491		$	21,361	$	19,994		$	20,363	$	20,511	$	62,846		$	60,418
Investment securities available-for-sale	2,298			2,355		2,018			1,477		1,293		6,671			4,221
Interest and dividends on other interest‑earning assets	562			606		449			467		491		1,617			1,271
Total interest income	24,351			24,322		22,461			22,307		22,295		71,134			65,910

INTEREST EXPENSE
Interest on deposits	2,693			2,481		2,047			1,929		1,956		7,221			5,470
Interest on Federal Home Loan Bank advances	459			452		302			234		133		1,213			324
Interest on federal funds purchased and securities sold under agreements to repurchase	84			76		36			38		37		196			191
Interest on long-term debt	824			824		823			828		815		2,471			2,457
Other	—			—		—			—		—		—			38
Total interest expense	4,060			3,833		3,208			3,029		2,941		11,101			8,480

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	20,291			20,489		19,253			19,278		19,354		60,033			57,430
Provision for loan losses	322			1,980		634			2,208		463		2,936			1,608
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	19,969			18,509		18,619			17,070		18,891		57,097			55,822

NONINTEREST INCOME
Service charges	1,247			1,274		1,349			1,327		1,270		3,870			4,160
Gains (losses) on sale of securities available-for-sale	(80		)	—		—			—		—		(80		)	44
Gains on sale of other assets	44			666		78			238		71		788			150
Mortgage income	320			388		257			499		632		965			1,418
Trust income	437			488		407			350		361		1,332			1,061
Derivatives income	(3		)	116		(51		)	346		69		62			232
Bank owned life insurance	384			384		378			395		424		1,146			1,215
SBA lending activities	888			1,171		1,227			599		959		3,286			3,043
TriNet lending activities	20			20		20			357		—		60			1,144
Gains on sale of branches	—			302		—			—		—		302			3,885
Other noninterest income	220			478		192			319		216		890			950
Total noninterest income	3,477			5,287		3,857			4,430		4,002		12,621			17,302

NONINTEREST EXPENSE
Salaries and employee benefits	10,409			10,603		11,065			11,269		10,059		32,077			31,034
Occupancy	1,129			1,074		1,230			995		1,235		3,433			3,609
Equipment and software	776			996		805			694		862		2,577			2,272
Professional services	1,595			973		904			968		442		3,472			1,950
Postage, printing and supplies	63			78		85			73		61		226			389
Communications and data processing	982			1,069		987			1,064		617		3,038			2,227
Marketing and business development	272			179		270			247		269		721			853
FDIC premiums	308			132		314			262		415		754			1,306
Merger and conversion costs	—			304		—			204		579		304			2,538
Amortization of intangibles	391			425		470			495		520		1,286			1,950
Foreclosed property/problem asset expense	7			107		3			666		39		117			198
Other noninterest expense	1,572			1,683		1,611			1,838		2,198		4,866			6,179
Total noninterest expense	17,504			17,623		17,744			18,775		17,296		52,871			54,505

INCOME BEFORE PROVISION FOR INCOME TAXES	5,942			6,173		4,732			2,725		5,597		16,847			18,619
Provision for income taxes	1,890			1,844		1,502			1,116		1,889		5,236			6,833
NET INCOME	$	4,052		$	4,329	$	3,230		$	1,609	$	3,708	$	11,611		$	11,786

Net income per common share ‑ basic	$	0.16		$	0.17	$	0.13		$	0.06	$	0.15	$	0.45		$	0.48
Net income per common share ‑ diluted	$	0.16		$	0.17	$	0.13		$	0.06	$	0.15	$	0.45		$	0.47

Weighted average shares - basic	25,699,179			25,621,910		25,320,690			25,027,304		24,891,822		25,548,646			24,674,953
Weighted average shares - diluted	25,890,779			25,831,281		25,672,286			25,407,728		25,260,280		25,799,851			25,106,250



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

	Three months ended
	September 30, 2017						June 30, 2017
(dollars in thousands; taxable equivalent)	Average Balance		Interest Income/ Expense		Tax Equivalent Yield/Rate		Average Balance		Interest Income/ Expense		Tax Equivalent Yield/Rate

Assets
Interest bearing deposits in other banks	$	69,839	$	216	1.23	%	$	85,935	$	233	1.09	%
Other short-term investments	13,830		67		1.92		23,683		117		1.98
Investment securities:
Taxable investment securities	373,087		1,812		1.93		373,170		1,862		2.00
Non-taxable investment securities⁽¹⁾	82,781		701		3.36		81,920		716		3.51
Total investment securities	455,868		2,513		2.19		455,090		2,578		2.27
Total loans	1,934,505		21,491		4.41		1,962,374		21,361		4.37
FHLB and FRB stock	18,494		279		5.99		19,352		256		5.31
Total interest-earning assets	2,492,536		24,566		3.91		2,546,434		24,545		3.87
Non-earning assets	208,851						215,955
Total assets	$	2,701,387					$	2,762,389
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,192,664		1,886		0.63		1,183,744		1,641		0.56
Time deposits	143,862		292		0.81		149,898		270		0.72
Brokered deposits	156,708		515		1.30		198,703		570		1.15
Total interest-bearing deposits	1,493,234		2,693		0.72		1,532,345		2,481		0.65
Total borrowings	179,808		543		1.20		214,931		528		0.99
Total long-term debt	49,465		824		6.61		49,423		824		6.69
Total interest-bearing liabilities	1,722,507		4,060		0.94		1,796,699		3,833		0.86
Demand deposits	628,029						626,330
Other liabilities	27,019						22,535
Shareholders' equity	323,832						316,825
Total liabilities and shareholders' equity	$	2,701,387					$	2,762,389
Net interest spread					2.97	%					3.01	%
Net interest income and net interest margin⁽²⁾			$	20,506	3.26	%			$	20,712	3.26	%

⁽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, 2017					June 30, 2017
(dollars in thousands; taxable equivalent)	Amount			Yield		Amount			Yield

Reported interest income on loans	$	21,491		4.41	%	$	21,361		4.37	%
Less: accretion of loan acquisition discounts	(343		)			(629		)
Core interest income on loans	$	21,148		4.34	%	$	20,732		4.24	%

	Amount			Net Interest Margin		Amount			Net Interest Margin

Net interest income / net interest margin	$	20,506		3.26	%	$	20,712		3.26	%
Less:
Accretion of loan acquisition discounts	(343		)			(629		)
Accretion of time deposit premium	(75		)			(86		)
Net interest income / net interest margin excluding purchase accounting	$	20,088		3.20	%	$	19,997		3.15	%



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

	Nine months ended
	September 30, 2017						September 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	$	76,079	$	614	1.08	%	$	100,279	$	481	0.64	%
Other short-term investments	16,198		231		1.91		24,120		244		1.35
Investment securities:
Taxable investment securities	362,080		5,197		1.92		337,263		3,714		1.47
Non-taxable investment securities⁽¹⁾	81,485		2,167		3.56		34,945		768		2.94
Total investment securities	443,565		7,364		2.22		372,208		4,482		1.61
Total loans	1,948,700		62,846		4.31		1,965,092		60,418		4.11
FHLB and FRB stock	19,147		772		5.39		13,825		546		5.28
Total interest-earning assets	2,503,689		71,827		3.84		2,475,524		66,171		3.57
Non-earning assets	215,830						229,146
Total assets	$	2,719,519					$	2,704,670
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,171,369		4,842		0.55		1,182,520		3,646		0.41
Time deposits	152,190		833		0.73		221,937		654		0.39
Brokered deposits	182,195		1,546		1.13		210,803		1,170		0.74
Total interest-bearing deposits	1,505,754		7,221		0.64		1,615,260		5,470		0.45
Total borrowings	196,352		1,409		0.96		156,148		553		0.47
Total long-term debt	49,423		2,471		6.68		49,254		2,457		6.66
Total interest-bearing liabilities	1,751,529		11,101		0.85		1,820,662		8,480		0.62
Demand deposits	624,923						549,217
Other liabilities	26,706						35,743
Shareholders' equity	316,361						299,048
Total liabilities and shareholders' equity	$	2,719,519					$	2,704,670
Net interest spread					2.99	%					2.95	%
Net interest income and net interest margin⁽²⁾			$	60,726	3.24	%			$	57,691	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.



	Nine months ended
	September 30, 2017					September 30, 2016
(dollars in thousands; taxable equivalent)	Amount			Yield		Amount			Yield

Reported interest income on loans	$	62,846		4.31	%	$	60,418		4.11	%
Less: accretion of loan acquisition discounts	(1,729		)			(1,987		)
Core interest income on loans	$	61,117		4.19	%	$	58,431		3.97	%

	Amount			Net Interest Margin		Amount			Net Interest Margin

Net interest income / net interest margin	$	60,726		3.24	%	$	57,691		3.11	%
Less:
Accretion of loan acquisition discounts	(1,729		)			(1,987		)
Accretion of time deposit premium	(280		)			(712		)
Net interest income / net interest margin excluding purchase accounting	$	58,717		3.14	%	$	54,992		2.97	%



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans


(dollars in thousands)	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			Linked Quarter Change			Year Over Year Change

Loans held for sale
Loans held for sale	$	3,274		$	1,744		$	1,297		$	4,302		$	46,600		$	1,530		$	(43,326	)
Branch loans held for sale	—			—			27,944			30,917			—			—			—
Total loans held for sale	$	3,274		$	1,744		$	29,241		$	35,219		$	46,600		$	1,530		$	(43,326	)

Loans held for investment
Commercial loans:
Commercial and industrial	$	562,426		$	578,888		$	544,911		$	531,061		$	533,632		$	(16,462	)	$	28,794
Commercial real estate:
Multifamily	91,219			113,571			108,215			68,223			74,881			(22,352		)	16,338
Owner occupied	348,447			351,733			348,888			352,523			337,277			(3,286		)	11,170
Investment	505,188			517,571			478,485			438,032			451,125			(12,383		)	54,063
Construction and land:
1-4 family residential construction	9,644			11,711			11,799			10,335			11,273			(2,067		)	(1,629		)
Other construction, development, and land	122,436			113,347			123,838			209,017			202,063			9,089			(79,627		)
Mortgage warehouse loans	41,551			47,992			58,357			147,519			171,251			(6,441		)	(129,700		)
Total commercial loans	1,680,911			1,734,813			1,674,493			1,756,710			1,781,502			(53,902		)	(100,591		)

Residential:
Residential mortgages	101,976			101,798			99,665			101,921			100,046			178			1,930
Home equity	78,773			79,769			81,438			77,358			78,952			(996		)	(179		)
Total residential loans	180,749			181,567			181,103			179,279			178,998			(818		)	1,751

Consumer	31,750			31,981			32,525			27,338			30,453			(231		)	1,297
Other	16,106			18,013			17,611			21,565			20,736			(1,907		)	(4,630		)
	1,909,516			1,966,374			1,905,732			1,984,892			2,011,689			(56,858		)	(102,173		)
Less net deferred fees and other unearned income	(4,084		)	(4,283		)	(4,008		)	(3,562		)	(3,587		)	199			(497		)
Total loans held for investment	$	1,905,432		$	1,962,091		$	1,901,724		$	1,981,330		$	2,008,102		$	(56,659	)	$	(102,670	)

Total loans	$	1,908,706		$	1,963,835		$	1,930,965		$	2,016,549		$	2,054,702		$	(55,129	)	$	(145,996	)



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

	2017												2016
(dollars in thousands)	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter

Balance at beginning of period	$	21,870			$	19,939			$	20,595			$	18,534			$	18,377
Provision for loan losses	314				2,048				565				2,134				463
Provision for PCI loan losses	8				(68		)		69				74				—
Loans charged-off:
Commercial and industrial	(3,292		)		—				(781		)		—				(61		)
Commercial real estate	—				—				(132		)		24				(226		)
Construction and land	(16		)		—				—				—				—
Residential mortgages	—				—				(46		)		—				—
Home equity	(31		)		(8		)		—				—				(9		)
Consumer	(7		)		(57		)		(332		)		(158		)		(60		)
Other	—				—				—				—				(5		)
Total loans charged-off	(3,346		)		(65		)		(1,291		)		(134		)		(361		)
Recoveries on loans previously charged‑off:
Construction and land	15				—				—				—				12
Commercial and industrial	1				7				—				—				2
Commercial real estate	—				2				—				(15		)		20
Residential mortgages	—				1				—				—				5
Home equity	—				1				—				—				2
Consumer	8				5				1				2				12
Other	—				—				—				—				2
Total recoveries	24				16				1				(13		)		55
Net charge-offs	(3,322		)		(49		)		(1,290		)		(147		)		(306		)
Balance at period end	$	18,870			$	21,870			$	19,939			$	20,595			$	18,534

Loans held for investment
PCI Loans	$	12,090			$	11,510			$	11,841			$	15,253			$	17,237
Non-PCI Loans	1,893,342				1,950,581				1,889,883				1,966,077				1,990,865
	$	1,905,432			$	1,962,091			$	1,901,724			$	1,981,330			$	2,008,102

Non-performing loans - PCI	$	1,289			$	1,310			$	1,684			$	2,446			$	2,348

Non-performing loans - Non-PCI	$	4,553			$	12,300			$	3,983			$	1,615			$	790
Foreclosed properties (OREO)	1,494				1,819				1,869				1,872				1,727
Total nonperforming assets	$	6,047			$	14,119			$	5,852			$	3,487			$	2,517

Allowance for loan losses to loans held for investment	0.99			%	1.11			%	1.05			%	1.04			%	0.92			%
Net charge-offs to average loans ⁽¹⁾	0.68				0.01				0.26				0.03				0.06
Nonperforming loans as a percentage of total loans ⁽²⁾	0.24				0.63				0.21				0.08				0.04
Nonperforming assets as a percentage of total assets ⁽²⁾	0.23				0.52				0.21				0.13				0.09

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



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

(dollars in thousands)	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			Linked Quarter Change			Year Over Year Change

DDA	$	599,292		$	612,744		$	606,386		$	643,471		$	557,783		$	(13,452	)	$	41,509
NOW	270,740			250,254			259,760			264,062			260,531			20,486			10,209
Savings	30,131			30,170			30,756			27,932			29,658			(39		)	473
Money Market	865,238			882,824			916,390			912,493			974,072			(17,586		)	(108,834		)
Time	144,250			142,915			150,867			157,810			172,348			1,335			(28,098		)
Brokered	193,994			195,047			209,385			200,223			194,464			(1,053		)	(470		)
Deposits to be assumed in branch sale	—			—			29,495			31,589			—			—			—
Total Deposits	$	2,103,645		$	2,113,954		$	2,203,039		$	2,237,580		$	2,188,856		$	(10,309	)	$	(85,211	)

Payments Clients	$	239,079		$	250,104		$	321,899		$	347,833		$	212,049		$	(11,025	)	$	27,030

Average Deposits⁽¹⁾

	2017									2016						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	$	628,029		$	626,330		$	620,325		$	591,166		$	555,008		$	1,699		$	73,021
NOW	291,810			293,160			290,862			253,187			282,701			(1,350		)	9,109
Savings	30,236			30,468			30,306			29,741			30,692			(232		)	(456		)
Money Market	870,618			860,116			815,920			853,281			923,435			10,502			(52,817		)
Time	143,862			149,898			163,021			169,677			175,135			(6,036		)	(31,273		)
Brokered	156,708			198,703			191,558			197,833			196,598			(41,995		)	(39,890		)
Total Deposits	$	2,121,263		$	2,158,675		$	2,111,992		$	2,094,885		$	2,163,569		$	(37,412	)	$	(42,306	)

Payments Clients	$	209,851		$	244,157		$	273,630		$	211,000		$	184,895		$	(34,306	)	$	24,956

Noninterest bearing deposits as a percentage of average deposits	29.6		%	29.0		%	29.4		%	28.2		%	25.7		%
Cost of deposits	0.50		%	0.46		%	0.39		%	0.37		%	0.36		%

⁽¹⁾ Includes average balances of deposits to be assumed in branch sale.



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


(in thousands, except share and per share data)	2017												2016								For the nine months ended September 30,
	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2017				2016

Taxable equivalent interest income reconciliation
Interest income - GAAP	$	24,351			$	24,322			$	22,461			$	22,307			$	22,295			$	71,134			$	65,910
Taxable equivalent adjustment	215				223				255				223				133				693				261
Interest income - taxable equivalent	$	24,566			$	24,545			$	22,716			$	22,530			$	22,428			$	71,827			$	66,171

Taxable equivalent net interest income reconciliation
Net interest income - GAAP	$	20,291			$	20,489			$	19,253			$	19,278			$	19,354			$	60,033			$	57,430
Taxable equivalent adjustment	215				223				255				223				133				693				261
Net interest income - taxable equivalent	$	20,506			$	20,712			$	19,508			$	19,501			$	19,487			$	60,726			$	57,691

Taxable equivalent net interest margin excluding purchase accounting
Taxable equivalent net interest margin	3.26			%	3.26			%	3.20			%	3.11			%	3.12			%	3.24			%	3.11			%
Impact of purchase accounting	(0.06		)		(0.11		)		(0.13		)		(0.12		)		(0.12		)		(0.10		)		(0.14		)
Taxable equivalent net interest margin excluding purchase accounting	3.20			%	3.15			%	3.07			%	2.99			%	3.00			%	3.14			%	2.97			%

Operating noninterest income reconciliation
Noninterest income - GAAP	$	3,477			$	5,287			$	3,857			$	4,430			$	4,002			$	12,621			$	17,302
Gain on sale of branches	—				—				—				—				—				—				(3,885		)
Operating noninterest income	$	3,477			$	5,287			$	3,857			$	4,430			$	4,002			$	12,621			$	13,417

Operating noninterest expense reconciliation
Noninterest expense - GAAP	$	17,504			$	17,623			$	17,744			$	18,775			$	17,296			$	52,871			$	54,505
Merger-related expenses	—				—				—				(204		)		(579		)		—				(2,538		)
Divestiture expenses	—				—				—				—				—				—				(305		)
Operating noninterest expense	$	17,504			$	17,623			$	17,744			$	18,571			$	16,717			$	52,871			$	51,662

Operating income before income taxes reconciliation
Income before income taxes - GAAP	$	5,942			$	6,173			$	4,732			$	2,725			$	5,597			$	16,847			$	18,619
Taxable equivalent adjustment	215				223				255				223				133				693				261
Merger-related expenses	—				—				—				204				579				—				2,538
Divestiture expenses	—				—				—				—				—				—				305
Gain on sale of branches	—				—				—				—				—				—				(3,885		)
Operating income before income taxes	$	6,157			$	6,396			$	4,987			$	3,152			$	6,309			$	17,540			$	17,838

Operating income tax reconciliation
Income tax expense - GAAP	$	1,890			$	1,844			$	1,502			$	1,116			$	1,889			$	5,236			$	6,833
Taxable equivalent adjustment	215				223				255				223				133				693				261
Merger related expenses, tax benefit	—				—				—				78				223				—				979
Divestiture expenses, tax benefit	—				—				—				—				—				—				118
Gain on sale of branches, tax expense	—				—				—				—				—				—				(1,500		)
Operating income tax expense	$	2,105			$	2,067			$	1,757			$	1,417			$	2,245			$	5,929			$	6,691



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


(in thousands, except share and per share data)	2017												2016								For the nine months ended September 30,
	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2017				2016

Operating net income reconciliation
Net income - GAAP	$	4,052			$	4,329			$	3,230			$	1,609			$	3,708			$	11,611			$	11,786
Merger related expenses, net of income tax	—				—				—				126				356				—				1,559
Divestiture expenses, net of income tax	—				—				—				—				—				—				187
Gain on sale of branches, net of income tax	—				—				—				—				—				—				(2,385		)
Operating net income	$	4,052			$	4,329			$	3,230			$	1,735			$	4,064			$	11,611			$	11,147

Operating diluted earnings per share reconciliation
Diluted earnings per share - GAAP	$	0.16			$	0.17			$	0.13			$	0.06			$	0.15			$	0.45			$	0.47
Merger related expenses	—				—				—				0.01				0.01				—				0.07
Net gain on sale of branches	—				—				—				—				—				—				(0.10		)
Diluted earnings per share - operating	$	0.16			$	0.17			$	0.13			$	0.07			$	0.16			$	0.45			$	0.44

Tangible book value per common share reconciliation
Total shareholders’ equity	$	324,754			$	319,435			$	310,967			$	303,658			$	308,463			$	324,754			$	308,463
Intangible assets	(24,760		)		(25,151		)		(25,913		)		(26,383		)		(26,878		)		(24,760		)		(26,878		)
Total tangible common equity	$	299,994			$	294,284			$	285,054			$	277,275			$	281,585			$	299,994			$	281,585
Common shares outstanding	25,716,418				25,654,521				25,535,013				25,093,135				24,950,099				25,716,418				24,950,099
Book value per common share - GAAP	$	12.63			$	12.45			$	12.18			$	12.10			$	12.36			$	12.63			$	12.36
Tangible book value	11.67				11.47				11.16				11.05				11.29				11.67				11.29

Return on average equity reconciliation
Net income - GAAP	$	4,052			$	4,329			$	3,230			$	1,609			$	3,708			$	11,611			$	11,786
Merger related expenses, net of income tax	—				—				—				126				356				—				1,559
Divestiture expenses, net of income tax	—				—				—				—				—				—				187
Gain on sale of branches, net of income tax	—				—				—				—				—				—				(2,385		)
Operating net income	$	4,052			$	4,329			$	3,230			$	1,735			$	4,064			$	11,611			$	11,147
Average shareholders' equity	$	323,832			$	316,825			$	308,261			$	308,588			$	306,642			$	316,361			$	299,048
Return on average equity - GAAP	4.96			%	5.48			%	4.19			%	2.09			%	4.84			%	4.91			%	5.25			%
Return on average equity - operating	4.96				5.48				4.19				2.25				5.30				4.91				4.97

Return on average assets reconciliation
Net income - GAAP	$	4,052			$	4,329			$	3,230			$	1,609			$	3,708			$	11,611			$	11,786
Merger related expenses, net of income tax	—				—				—				126				356				—				1,559
Divestiture expenses, net of income tax	—				—				—				—				—				—				187
Gain on sale of branches, net of income tax	—				—				—				—				—				—				(2,385		)
Operating net income	$	4,052			$	4,329			$	3,230			$	1,735			$	4,064			$	11,611			$	11,147
Average assets	$	2,701,387			$	2,762,389			$	2,694,715			$	2,722,444			$	2,717,996			$	2,719,519			$	2,704,670
Return on average assets - GAAP	0.60			%	0.63			%	0.48			%	0.24			%	0.55			%	0.57			%	0.58			%
Return on average assets - operating	0.60				0.63				0.48				0.25				0.60				0.57				0.55



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


(in thousands, except share and per share data)	2017												2016								For the nine months ended September 30,
	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2017				2016

Efficiency ratio reconciliation
Noninterest income - GAAP	$	3,477			$	5,287			$	3,857			$	4,430			$	4,002			$	12,621			$	17,302
Gain on sale of branches	—				—				—				—				—				—				(3,885		)
Operating noninterest income	$	3,477			$	5,287			$	3,857			$	4,430			$	4,002			$	12,621			$	13,417
Noninterest expense - GAAP	$	17,504			$	17,623			$	17,744			$	18,775			$	17,296			$	52,871			$	54,505
Merger-related expenses	—				—				—				(204		)		(579		)		—				(2,538		)
Divestiture expenses	—				—				—				—				—				—				(305		)
Operating noninterest expense	$	17,504			$	17,623			$	17,744			$	18,571			$	16,717			$	52,871			$	51,662
Net interest income	$	20,291			$	20,489			$	19,253			$	19,278			$	19,354			$	60,033			$	57,430
Efficiency ratio	73.65			%	68.37			%	76.78			%	78.33			%	71.57			%	72.77			%	72.92			%

Tangible common equity to tangible assets reconciliation
Total shareholders’ equity	$	324,754			$	319,435			$	310,967			$	303,658			$	308,463			$	324,754			$	308,463
Intangible assets	(24,760		)		(25,151		)		(25,913		)		(26,383		)		(26,878		)		(24,760		)		(26,878		)
Total tangible common equity	$	299,994			$	294,284			$	285,054			$	277,275			$	281,585			$	299,994			$	281,585

Total assets	$	2,638,412			$	2,702,575			$	2,802,078			$	2,727,543			$	2,761,244			$	2,638,412			$	2,761,244
Intangible assets	(24,760		)		(25,151		)		(25,913		)		(26,383		)		(26,878		)		(24,760		)		(26,878		)
Total tangible assets	$	2,613,652			$	2,677,424			$	2,776,165			$	2,701,160			$	2,734,366			$	2,613,652			$	2,734,366
Tangible common equity to tangible assets	11.48			%	10.99			%	10.27			%	10.27			%	10.30			%	11.48			%	10.30			%

Atlantic Capital Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 27, 2017

Attached files

Atlantic Capital Bancshares, Inc. Reports