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

ATLANTIC CAPITAL BANCSHARES, INC. REPORTS FOURTH QUARTER 2018 RESULTS

Atlanta, GA - January 31, 2018 - Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced earnings of $8.8 million, or $0.34 per diluted share, for the fourth quarter of 2018, compared to $6.5 million, or $0.25 per diluted share, in the third quarter of 2018. Net income for 2018 was $28.5 million, or $1.09 per diluted share, compared to a loss of $3.7 million, or ($0.15) per diluted share, for 2017.

On November 14, 2018, Atlantic Capital announced the sale of fourteen branches in Tennessee and northwest Georgia and the mortgage business. This branch divestiture includes the sale of approximately $585 million in deposits and $373 million in loans. The income and expenses related to these branches are included in discontinued operations and prior period financial information has been retrospectively adjusted for the impact of discontinued operations. Subject to customary closing conditions, including the receipt of all necessary regulatory approvals, the transaction is expected to be completed during the second quarter of 2019.

“Atlantic Capital’s results in the fourth quarter of 2018 and for all of 2018 reflect continued strength in our core Atlanta and national commercial businesses. We begin 2019 with solid momentum and good prospects for strong operating performance in our continuing operations,” remarked Douglas Williams, President and Chief Executive Officer.

Fourth Quarter Highlights⁽¹⁾


•	Return on average assets of 1.21% and return on average equity of 10.90%.


•	Net income from continuing operations totaled $7.5 million, or $0.29 per diluted share, compared to $7.0 million, or $0.27 per diluted share in the third quarter of 2018.


•	Net interest margin from continuing operations was 3.66% compared to 3.48% for the third quarter of 2018.


•	Total loans held for investment increased $65.7 million, or 15.8% annualized, compared to September 30, 2018.


•	Average deposits from continuing operations increased $127.4 million, or 30.8% annualized, compared to the third quarter of 2018.


•	822,100 shares were repurchased in the fourth quarter totaling $14.2 million.


•	Noninterest income includes a $1.9 million loss on the sale of securities that were sold in the fourth quarter to help fund the cash owed to the buyer at the upcoming closing of the branch sale.


•	Provision for income taxes includes a $996,000 net benefit as a result of the pending transaction.

2018 Highlights


•	Net income from continuing operations totaled $28.1 million, or $1.07 per diluted share, compared to a loss of $4.8 million, or ($0.19) per diluted share in 2017.


•	Efficiency ratio - continuing operations improved to 57.9% from 70.4% in 2017.


•	Total loans held for investment increased $209.6 million, or 13.8%, compared to December 31, 2017.


•	Average deposits from continuing operations in the fourth quarter of 2018 increased $177 million, or 11.0%, compared to the fourth quarter of 2017.


•	Net charge-offs to average loans totaled 0.02% compared to 0.23% in 2017.

⁽¹⁾ Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income and net interest margin are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal tax rate for 2018 and 35% for 2017 and prior. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table on page 16.

Income Statement

Taxable equivalent net interest income from continuing operations increased to $21.2 million in the fourth quarter of 2018 from $19.4 million in the third quarter of 2018, primarily as a result of higher loan balances and an increase in loan yields offset by an increase in the cost of interest bearing deposits. Net interest income from continuing operations does not currently reflect the planned decrease in net interest income necessary to fund the cash amount owed to the buyer at the closing of the branch sale in the second quarter of 2019. The Company anticipates funding the transaction with a combination of brokered deposits and proceeds from sold securities.

Net interest margin from continuing operations was 3.66% in the fourth quarter of 2018, an increase of 18 basis points from the third quarter of 2018, as a result of an increase in loan yields partially offset by higher cost of deposits. Following the close of the branch transaction in the second quarter of 2019, the Company anticipates the net interest margin to range from 3.50% to 3.55%.

The yield on loans from continuing operations in the fourth quarter of 2018 increased 27 basis points to 5.31% from the third quarter of 2018. Loan yields benefited from increases in 1 month LIBOR during the fourth quarter of 2018.

The cost of deposits from continuing operations in the fourth quarter of 2018 was 0.93%, an increase of 17 basis points from the third quarter of 2018. The cost of interest bearing deposits from continuing operations increased 24 basis points to 1.40% from the third quarter of 2018, driven by the increase in rates on money market accounts.

The provision for loan losses for continuing operations was $502,000 in the fourth quarter of 2018, a decrease compared to $845,000 in the third quarter of 2018. The Company recorded negative provision for loan losses totaling $3.1 million included in discontinued operations, primarily due to the classification of $373 million of loans to held for sale.

Noninterest income from continuing operations totaled $164,000 in the fourth quarter of 2018 compared to $2.3 million in the third quarter of 2018. The fourth quarter included a loss of $1.9 million on the sale of $63 million in investment securities to help fund the cash owed to the buyer at the closing of the upcoming branch sale.

SBA income totaled $425,000 in the fourth quarter of 2018, a decrease of $457,000 from the third quarter of 2018, partly as a result of the impact on the sale of SBA loans in December from the shutdown of the Small Business Administration. As of December 31, 2018, loans held for sale included $3.6 million in SBA 7a loans that the Company intends to sell.

Noninterest expense from continuing operations totaled $12.2 million in the fourth quarter of 2018, an increase of $336,000 compared to $11.9 million in the third quarter of 2018. Salaries and employee benefits expense increased by $241,000 from the third quarter of 2018 to $7.6 million in the fourth quarter, primarily from an increase in incentive expense. Compared to the third quarter of 2018, professional fees increased $151,000 in the fourth quarter due to higher consulting fees.

Income tax expense related to continuing operations totaled $1.1 million in the fourth quarter of 2018, compared to $1.9 million in the third quarter of 2018. In the fourth quarter of 2018, the Company recorded a $4.5 million favorable reduction of the valuation allowance on Federal deferred tax assets related to the limitations under Section 382 of the Internal Revenue Code. This reduction was offset by an unfavorable increase of $3.5 million in the valuation allowance related to state net operating losses and carryforwards that are not expected to be utilized.

Balance Sheet

Total loans held for investment were $1.73 billion at December 31, 2018, an increase of $65.7 million, or 15.8% annualized, from September 30, 2018. This included growth of $66.2 million, or 30.2% annualized, in commercial and industrial and owner occupied commercial real estate loans from September 30, 2018.

At December 31, 2018, the allowance for loan losses was $17.9 million, or 1.03% of loans held for investment, a decrease of $2.6 million from the $20.4 million allowance at September 30, 2018. This decrease included a $3.1 million reduction in the allowance for loan losses due to the transfer of the branch sale loans to held for sale.

Annualized net charge-offs to average loans were 0.00% in the fourth quarter of 2018, unchanged from the third quarter of 2018. Nonperforming assets from continuing operations totaled $4.1 million, or 0.14% of total assets, as of December 30, 2018, compared to $3.1 million, or 0.11% of total assets, as of September 30, 2018.

Total average deposits from continuing operations were $1.78 billion for the fourth quarter of 2018, an increase of $127.4 million from the third quarter of 2018. This included increases in large, year-end deposits that the Company anticipates will decrease in the first quarter of 2019.

Earnings Conference Call

The Company will host a conference call at 10:00 a.m. EST on Friday, February 1, 2019, to discuss the financial results for the quarter ended December 31, 2018. 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) taxable equivalent interest income; (ii) taxable equivalent net interest income; (iii) taxable equivalent net interest margin; (iv) taxable equivalent income before income taxes; (v) taxable equivalent income tax expense; (vi) tangible assets; (vii) tangible common equity; and (viii) tangible book value per common share, in its analysis of the Company's performance. Tangible common equity excludes goodwill and other intangible assets from shareholders' equity.

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

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” 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 “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K 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 $2.96 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers banking, treasury management, capital markets and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, and northwest Georgia. Atlantic Capital also provides specialized financial services to select clients nationally.

Media Contact:

Ashley Carson

Email: ashley.carson@atlcapbank.com

Phone: 404-995-6050

Financial Contact:

Patrick Oakes

Email: patrick.oakes@atlcapbank.com

Phone: 404-995-6050



ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information

	2018															2017				For the year ended December 31,
(in thousands, except share and per share data; taxable equivalent)	Fourth Quarter			Third Quarter				Second Quarter				First Quarter				Fourth Quarter				2018			2017
INCOME SUMMARY ⁽¹⁾
Interest income ⁽²⁾	$	26,725		$	24,114			$	22,934			$	21,382			$	20,383			$	95,155		$	76,724
Interest expense	5,560			4,720				4,392				3,841				3,454				18,513			12,986
Net interest income	21,165			19,394				18,542				17,541				16,929				76,642			63,738
Provision for loan losses	502			845				(173		)		772				282				1,946			3,218
Net interest income after provision for loan losses	20,663			18,549				18,715				16,769				16,647				74,696			60,520
Noninterest income	164			2,255				4,466				3,162				2,748				10,047			12,179
Noninterest expense	12,208			11,872				12,623				13,288				15,333				49,991			52,834
Income from continuing operations before income taxes	8,619			8,932				10,558				6,643				4,062				34,752			19,865
Income tax expense	1,136			1,934				2,180				1,452				19,370				6,702			24,621
Net income (loss) from continuing operations	7,483			6,998				8,378				5,191				(15,308		)		28,050			(4,756		)
Income (loss) from discontinued operations, net of tax	1,347			(485		)		(227		)		(153		)		(29		)		482			1,030
Net income (loss)	$	8,830		$	6,513			$	8,151			$	5,038			$	(15,337	)		$	28,532		$	(3,726	)

PER SHARE DATA
Diluted earnings (loss) per share - continuing operations	$	0.29		$	0.27			$	0.32			$	0.20			$	(0.60	)		$	1.07		$	(0.19	)
Diluted earnings (loss) per share - discontinued operations	0.05			(0.02		)		(0.01		)		(0.01		)		—				0.02			0.04
Diluted earnings (loss) per share	0.34			0.25				0.31				0.19				(0.60		)		1.09			(0.15		)
Book value per share	12.80			12.27				12.14				11.91				11.99				12.80			11.99
Tangible book value per common share ⁽³⁾	11.88			11.37				11.23				10.98				11.05				11.88			11.05

PERFORMANCE MEASURES
Return on average equity	10.90		%	8.07			%	10.46			%	6.66			%	(18.66		)	%	9.05		%	(1.17		)	%
Return on average assets	1.21			0.92				1.20				0.76				(2.24		)		1.03			(0.14		)
Taxable equivalent net interest margin - continuing operations	3.66			3.48				3.51				3.39				3.23				3.50			3.07
Efficiency ratio - continuing operations	57.50			55.09				55.10				64.50				78.78				57.93			70.44

CAPITAL
Average equity to average assets	11.11		%	11.41			%	11.50			%	11.34			%	11.99			%	11.34		%	11.72			%
Tangible common equity to tangible assets	10.25			10.38				10.99				10.50				9.91				10.25			9.91
Tier 1 capital ratio	11.5		⁽⁶⁾	11.8				12.0				11.3				11.2				11.5		⁽⁶⁾	11.2
Total risk based capital ratio	14.2		⁽⁶⁾	14.7				15.0				14.3				14.1				14.2		⁽⁶⁾	14.1
Number of common shares outstanding - basic	25,290,419			26,103,666				26,102,217				25,772,208				25,712,909				25,290,419			25,712,909
Number of common shares outstanding - diluted	25,480,233			26,281,849				26,336,871				26,000,216				25,891,225				25,480,233			25,891,225

ASSET QUALITY
Allowance for loan losses to loans held for investment ⁽⁴⁾	1.03		%	1.00			%	1.01			%	1.01			%	1.00			%	1.03		%	1.00			%
Net charge-offs to average loans ⁽⁵⁾	—			—				0.03				0.05				(0.04		)		0.02			0.23
Non-performing assets to total assets	0.20			0.13				0.14				0.13				0.14				0.20			0.14

⁽¹⁾On November 14, 2018, Atlantic Capital entered into an agreement with FirstBank to sell its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches to be sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for all periods presented. ⁽²⁾Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for all periods ending in 2018 and 35% for all periods ending in 2017, reflecting the statutory federal income tax rates. ⁽³⁾Excludes effect of acquisition related intangibles. ⁽⁴⁾The fourth quarter 2018 ratio is calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. ⁽⁵⁾Annualized. ⁽⁶⁾Amounts are estimates as of 12/31/18.



ATLANTIC CAPITAL BANCSHARES, INC.
Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

(in thousands)	December 31, 2018
Cash	$	4,234
Loans held for sale - discontinued operations	373,030
Premises held for sale - discontinued operations	7,722
Goodwill - discontinued operations	6,290
Other assets	1,405
Total assets	$	392,681

Deposits to be assumed - discontinued operations	$	585,429
Securities sold under agreements to repurchase - discontinued operations	6,220
Total liabilities	$	591,649
Net liabilities	$	(198,968	)



Components of Net Income (Loss) from Discontinued Operations

	2018												2017			For the year ended December 31,
(in thousands)	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			2018			2017

Net interest income	$	3,225		$	3,266		$	3,570		$	4,079		$	4,393		$	14,140		$	18,310
Provision for loan losses	(3,097		)	—			—			—			—			(3,097		)	—
Net interest income after provision	6,322			3,266			3,570			4,079			4,393			17,237			18,310
Service charges	483			474			480			485			484			1,922			2,342
Mortgage income	320			315			363			304			290			1,302			1,255
Other income	47			22			22			32			46			123			413
Total noninterest income	850			811			865			821			820			3,347			4,010
Salaries and employee benefits	2,757			2,820			3,010			3,127			3,300			11,714			12,245
Occupancy	479			556			511			470			523			2,016			2,073
Equipment and software	158			217			203			201			193			779			1,108
Amortization of intangibles	271			296			319			343			367			1,229			1,653
Communications and data processing	440			381			346			362			394			1,529			1,524
Divestiture expense	825			—			—			—			—			825			—
Other noninterest expense	446			453			349			601			484			1,849			2,028
Total noninterest expense	5,376			4,723			4,738			5,104			5,261			19,941			20,631
Net income (loss) before provision for income taxes	1,796			(646		)	(303		)	(204		)	(48		)	643			1,689
Provision (benefit) for income taxes	449			(161		)	(76		)	(51		)	(19		)	161			659
Net income (loss) from discontinued operations	$	1,347		$	(485	)	$	(227	)	$	(153	)	$	(29	)	$	482		$	1,030



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

	December 31,			September 30,			December 31,
(in thousands, except share data)	2018			2018			2017
ASSETS
Cash and due from banks	$	42,895		$	28,007		$	38,086
Interest-bearing deposits in banks	216,040			140,682			281,247
Other short-term investments	9,457			20,898			10,681
Cash and cash equivalents	268,392			189,587			330,014
Investment securities available-for-sale	402,486			465,756			449,117
Other investments	29,236			33,021			32,174
Loans held for sale	5,889			1,886			1,487
Loans held for sale - discontinued operations⁽¹⁾	373,030			376,081			415,335
Loans held for investment⁽¹⁾	1,728,073			1,662,353			1,518,504
Less: allowance for loan losses⁽²⁾	(17,851		)	(20,443		)	(19,344		)
Loans held for investment, net	1,710,222			1,641,910			1,499,160
Premises held for sale - discontinued operations⁽¹⁾	7,722			7,158			7,958
Premises and equipment, net⁽¹⁾	9,779			10,213			4,096
Bank owned life insurance	65,149			64,769			63,667
Goodwill - discontinued operations⁽¹⁾	6,290			6,290			6,310
Goodwill and intangible assets, net⁽¹⁾	19,788			20,267			21,323
Other real estate owned	874			968			1,215
Other assets	56,583			64,815			59,565
Total assets	$	2,955,440		$	2,882,721		$	2,891,421

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	602,252		$	518,155		$	596,328
Interest-bearing checking	252,490			407,214			203,113
Savings	725			698			530
Money market	987,183			759,583			925,536
Time	10,623			10,396			10,812
Brokered deposits	99,241			79,119			128,816
Deposits to be assumed - discontinued operations⁽¹⁾	585,429			604,659			585,530
Total deposits	2,537,943			2,379,824			2,450,665
Securities sold under agreements to repurchase - discontinued operations⁽¹⁾	6,220			8,904			—
Federal Home Loan Bank borrowings	—			83,000			45,000
Long-term debt	49,704			49,662			49,535
Other liabilities	37,920			41,094			37,796
Total liabilities	2,631,787			2,562,484			2,582,996

SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018, September 30, 2018, and December 31, 2017	—			—			—
Common stock, no par value; 100,000,000 shares authorized; 25,290,419, 26,103,666, and 25,712,909 shares issued and outstanding as of December 31, 2018, September 30, 2018, and December 31, 2017, respectively	291,771			305,300			299,474
Retained earnings	42,187			33,357			12,810
Accumulated other comprehensive (loss) income	(10,305		)	(18,420		)	(3,859		)
Total shareholders’ equity	323,653			320,237			308,425
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,955,440		$	2,882,721		$	2,891,421

⁽¹⁾Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018, and prior periods have been adjusted retrospectively. ⁽²⁾The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.



ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited) ⁽¹⁾

(in thousands, except share and per share data)	Three months ended															Year ended
	December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			December 31, 2018			December 31, 2017
INTEREST INCOME
Loans, including fees	$	22,752		$	20,117		$	19,269		$	17,972		$	17,076		$	80,110		$	64,436
Investment securities available-for-sale	2,844			2,789			2,687			2,592			2,510			10,912			9,181
Interest and dividends on other interest‑earning assets	1,032			1,111			880			715			584			3,738			2,201
Total interest income	26,628			24,017			22,836			21,279			20,170			94,760			75,818

INTEREST EXPENSE
Interest on deposits	4,185			3,182			2,715			2,424			2,282			12,506			7,934
Interest on Federal Home Loan Bank advances	487			637			766			509			323			2,399			1,536
Interest on federal funds purchased and securities sold under agreements to repurchase	60			77			88			79			26			304			222
Interest on long-term debt	828			824			823			829			823			3,304			3,294
Total interest expense	5,560			4,720			4,392			3,841			3,454			18,513			12,986

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	21,068			19,297			18,444			17,438			16,716			76,247			62,832
Provision for loan losses	502			845			(173		)	772			282			1,946			3,218
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	20,566			18,452			18,617			16,666			16,434			74,301			59,614

NONINTEREST INCOME
Service charges	876			804			828			707			722			3,215			2,734
Gains (losses) on sale of securities	(1,853		)	—			(2		)	—			17			(1,855		)	(63		)
Gains (losses) on sale of other assets	—			58			(166		)	(46		)	(46		)	(154		)	742
Trust income	—			—			507			518			482			1,025			1,814
Derivatives income	154			20			20			114			94			308			156
Bank owned life insurance	380			379			378			369			384			1,506			1,530
SBA lending activities	425			882			997			1,302			843			3,606			4,129
Gain on sale of trust company	—			—			1,681			—			—			1,681			—
Other noninterest income	182			112			223			198			252			715			1,137
Total noninterest income	164			2,255			4,466			3,162			2,748			10,047			12,179

NONINTEREST EXPENSE
Salaries and employee benefits	7,573			7,332			7,911			8,950			9,998			31,766			33,130
Occupancy	655			732			700			885			633			2,972			2,516
Equipment and software	783			747			701			586			679			2,817			2,341
Professional services	947			796			943			825			1,205			3,511			4,591
Postage, printing and supplies	30			55			44			37			84			166			244
Communications and data processing	772			566			657			681			717			2,676			2,625
Marketing and business development	224			211			135			140			150			710			798
FDIC premiums	157			154			143			108			156			562			697
Merger and conversion costs	—			—			—			—			—			—			304
Other noninterest expense	1,067			1,279			1,389			1,076			1,711			4,811			5,588
Total noninterest expense	12,208			11,872			12,623			13,288			15,333			49,991			52,834

INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES	8,522			8,835			10,460			6,540			3,849			34,357			18,959
Provision for income taxes	1,039			1,837			2,082			1,349			19,157			6,307			23,715
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	7,483			6,998			8,378			5,191			(15,308		)	28,050			(4,756		)
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations	$	1,796		$	(646	)	$	(303	)	$	(204	)	$	(48	)	$	643		$	1,689
Provision (benefit) for income taxes	449			(161		)	(76		)	(51		)	(19		)	161			659
Net income (loss) from discontinued operations	1,347			(485		)	(227		)	(153		)	(29		)	482			1,030
NET INCOME (LOSS)	$	8,830		$	6,513		$	8,151		$	5,038		$	(15,337	)	$	28,532		$	(3,726	)



ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited) ⁽¹⁾

(in thousands, except share and per share data)	Three months ended														Year ended
	December 31, 2018		September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			December 31, 2018		December 31, 2017
Net Income (Loss) per Common Share ‑ Basic
Net income (loss) per common share - continuing operations	$	0.29	$	0.27		$	0.32		$	0.20		$	(0.60	)	$	1.08	$	(0.19	)
Net income (loss) per common share - discontinued operations	0.05		(0.02		)	(0.01		)	(0.01		)	—			0.02		0.04
Net Income (Loss) per Common Share ‑ Basic	$	0.34	$	0.25		$	0.31		$	0.19		$	(0.60	)	$	1.10	$	(0.15	)
Net Income (Loss) per Common Share ‑ Diluted
Net income (loss) per common share - continuing operations	$	0.29	$	0.27		$	0.32		$	0.20		$	(0.60	)	$	1.07	$	(0.19	)
Net income (loss) per common share - discontinued operations	0.05		(0.02		)	(0.01		)	(0.01		)	—			0.02		0.04
Net Income (Loss) per Common Share ‑ Diluted	$	0.34	$	0.25		$	0.31		$	0.19		$	(0.60	)	$	1.09	$	(0.15	)

Weighted average shares - basic	25,919,445		26,103,397			26,010,914			25,750,824			25,723,548			25,947,038		25,592,731
Weighted average shares - diluted	26,043,799		26,254,772			26,200,026			25,945,773			25,888,064			26,111,755		25,822,085

⁽¹⁾Discontinued operations have been reported retrospectively for all periods presented.



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

	Three months ended
	December 31, 2018						September 30, 2018
(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	$	111,988	$	638	2.26	%	$	128,248	$	647	2.00	%
Other short-term investments	19,078		142		2.95		21,985		157		2.83
Investment securities:
Taxable investment securities	376,163		2,362		2.49		385,834		2,315		2.38
Non-taxable investment securities⁽¹⁾	74,302		579		3.09		75,514		571		3.00
Total investment securities	450,465		2,941		2.59		461,348		2,886		2.48
Loans - continuing operations	1,699,801		22,752		5.31		1,583,459		20,117		5.04
FHLB and FRB stock	15,985		252		6.25		17,624		307		6.91
Total interest-earning assets - continuing operations	2,297,317		26,725		4.62		2,212,664		24,114		4.32
Loans held for sale - discontinued operations	377,052		4,509		4.74		380,358		4,502		4.70
Total interest-earning assets	2,674,369		31,234		4.63		2,593,022		28,616		4.38
Non-earning assets	216,958						212,718
Total assets	$	2,891,327					$	2,805,740
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,079,178		3,601		1.32		1,012,953		2,791		1.09
Time deposits	10,116		33		1.29		10,406		30		1.14
Brokered deposits	93,558		551		2.34		67,937		361		2.11
Total interest-bearing deposits	1,182,852		4,185		1.40		1,091,296		3,182		1.16
Total borrowings	91,155		547		2.38		134,609		714		2.10
Total long-term debt	49,677		828		6.61		49,634		824		6.59
Total interest-bearing liabilities - continuing operations	1,323,684		5,560		1.67		1,275,539		4,720		1.47
Interest-bearing liabilities - discontinued operations	472,162		1,284		1.08		473,388		1,236		1.04
Total interest-bearing liabilities	1,795,846		6,844		1.51		1,748,927		5,956		1.35
Demand deposits	597,240						561,355
Demand deposits - discontinued operations	135,774						136,572
Other liabilities	41,120						38,796
Shareholders' equity	321,347						320,090
Total liabilities and shareholders' equity	$	2,891,327					$	2,805,740
Net interest spread - continuing operations					2.95	%					2.85	%
Net interest income and net interest margin - continuing operations⁽²⁾			$	21,165	3.66	%			$	19,394	3.48	%
Net interest income and net interest margin⁽²⁾			$	24,390	3.62	%			$	22,660	3.47	%

Non-taxable equivalent net interest margin					3.60	%					3.45	%

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



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

	Year ended
	December 31, 2018						December 31, 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	$	104,145	$	2,244	2.15	%	$	85,525	$	916	1.07	%
Other short-term investments	15,210		426		2.80		14,266		270		1.89
Investment securities:
Taxable investment securities	379,035		9,005		2.38		366,309		7,221		1.97
Non-taxable investment securities⁽¹⁾	76,064		2,302		3.03		81,466		2,866		3.52
Total investment securities	455,099		11,307		2.48		447,775		10,087		2.25
Loans - continuing operations	1,599,916		80,110		5.01		1,506,862		64,436		4.28
FHLB and FRB stock	17,710		1,068		6.03		18,528		1,015		5.48
Total interest-earning assets - continuing operations	2,192,080		95,155		4.34		2,072,956		76,724		3.70
Loans held for sale - discontinued operations	377,098		18,224		4.83		429,247		20,453		4.76
Total interest-earning assets	2,569,178		113,379		4.41		2,502,203		97,177		3.88
Non-earning assets	211,393						217,455
Total assets	$	2,780,571					$	2,719,658
Liabilities
Interest bearing deposits:
NOW, money market, and savings	1,001,025		10,627		1.06		868,999		5,921		0.68
Time deposits	10,046		115		1.14		11,345		53		0.47
Brokered deposits	84,105		1,764		2.10		168,685		1,960		1.16
Total interest-bearing deposits	1,095,176		12,506		1.14		1,049,029		7,934		0.76
Total borrowings	139,422		2,703		1.94		175,060		1,758		1.00
Total long-term debt	49,613		3,304		6.66		49,444		3,294		6.66
Total interest-bearing liabilities - continuing operations	1,284,211		18,513		1.44		1,273,533		12,986		1.02
Interest-bearing liabilities - discontinued operations	467,101		4,084		0.87		466,777		2,143		0.46
Total interest-bearing liabilities	1,751,312		22,597		1.29		1,740,310		15,129		0.87
Demand deposits	538,110						490,495
Demand deposits - discontinued operations	137,905						140,551
Other liabilities	37,991						29,497
Shareholders' equity	315,253						318,805
Total liabilities and shareholders' equity	$	2,780,571					$	2,719,658
Net interest spread - continuing operations					2.90	%					2.68	%
Net interest income and net interest margin - continuing operations⁽²⁾			$	76,642	3.50	%			$	63,738	3.07	%
Net interest income and net interest margin⁽²⁾			$	90,782	3.53	%			$	82,048	3.28	%

Non-taxable equivalent net interest margin					3.52	%					3.24	%

⁽¹⁾ Interest revenue on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for the year ended December 31, 2018 and 35% for the year ended December 31, 2017, reflecting the statutory federal income tax rates.
⁽²⁾ Tax equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset.



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans⁽¹⁾


(dollars in thousands)	December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			Linked Quarter Change			Year Over Year Change

Loans held for sale
Loans held for sale	$	5,889		$	1,886		$	1,612		$	835		$	1,487		$	4,003		$	4,402
Loans held for sale - discontinued operations	373,030			376,081			382,848			397,212			415,335			(3,051		)	(42,305		)
Total loans held for sale	$	378,919		$	377,967		$	384,460		$	398,047		$	416,822		$	952		$	(37,903	)

Loans held for investment
Commercial loans:
Commercial and industrial	$	645,374		$	581,632		$	546,381		$	558,536		$	538,917		$	63,742		$	106,457
Commercial real estate:
Multifamily	88,826			108,001			92,013			92,016			91,475			(19,175		)	(2,649		)
Owner occupied	298,291			295,801			265,576			260,270			250,588			2,490			47,703
Investment	407,711			409,145			386,072			389,410			411,923			(1,434		)	(4,212		)
Construction and land:
1-4 family residential construction	1,006			—			378			287			335			1,006			671
Other construction, development, and land	155,226			147,114			134,764			131,466			101,466			8,112			53,760
Mortgage warehouse loans	27,967			27,838			38,352			44,575			39,981			129			(12,014		)
Total commercial loans	1,624,401			1,569,531			1,463,536			1,476,560			1,434,685			54,870			189,716

Residential:
Residential mortgages	32,800			24,904			20,270			19,446			12,960			7,896			19,840
Home equity	22,822			33,410			32,638			34,673			39,407			(10,588		)	(16,585		)
Total residential loans	55,622			58,314			52,908			54,119			52,367			(2,692		)	3,255

Consumer	25,851			26,825			25,531			23,214			21,959			(974		)	3,892
Other	24,712			10,579			12,409			11,769			13,303			14,133			11,409
	1,730,586			1,665,249			1,554,384			1,565,662			1,522,314			65,337			208,272
Less net deferred fees and other unearned income	(2,513		)	(2,896		)	(2,921		)	(3,453		)	(3,810		)	383			1,297
Total loans held for investment	$	1,728,073		$	1,662,353		$	1,551,463		$	1,562,209		$	1,518,504		$	65,720		$	209,569

Total loans	$	2,106,992		$	2,040,320		$	1,935,923		$	1,960,256		$	1,935,326		$	66,672		$	171,666

⁽¹⁾Loans held for sale-discontinued operations and loans held for investment have been adjusted retrospectively for all periods presented for the impact of discontinued operations.



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

	2018															2017
(dollars in thousands)	Fourth Quarter				Third Quarter			Second Quarter				First Quarter				Fourth Quarter

Balance at beginning of period	$	20,443			$	19,583		$	19,885			$	19,344			$	18,870
Provision for loan losses	595				758			(173		)		811				312
Provision for loan losses (reversal of provision) - discontinued operations	(3,097		)		—			—				—				—
Provision for PCI loan losses	(93		)		87			—				(39		)		(30		)
Loans charged-off:
Commercial and industrial	—				—			—				(126		)		—
Commercial real estate	—				—			(50		)		—				—
Construction and land	—				—			—				—				—
Residential mortgages	(5		)		—			—				(70		)		—
Home equity	—				—			(102		)		(58		)		—
Consumer	(3		)		—			(10		)		(3		)		(13		)
Other	—				—			—				—				—
Total loans charged-off	(8		)		—			(162		)		(257		)		(13		)
Recoveries on loans previously charged-off:
Commercial and industrial	—				—			—				19				192
Commercial real estate	—				—			28				—				—
Construction and land	—				—			—				—				1
Residential mortgages	4				—			—				—				—
Home equity	—				—			—				—				—
Consumer	7				15			5				7				12
Other	—				—			—				—				—
Total recoveries	11				15			33				26				205
Net charge-offs	$	3			$	15		$	(129	)		$	(231	)		$	192
Balance at period end ⁽¹⁾	$	17,851			$	20,443		$	19,583			$	19,885			$	19,344

Loans
Loans held for sale	$	5,889			$	1,886		$	1,612			$	835			$	1,487
Loans held for sale - discontinued operations	373,030				376,081			382,848				397,212				415,335
Loans held for investment - continuing operations	1,728,073				1,662,353			1,551,463				1,562,209				1,518,504
Total loans	$	2,106,992			$	2,040,320		$	1,935,923			$	1,960,256			$	1,935,326

Non-performing loans - continuing operations ⁽⁴⁾	$	3,252			$	2,160		$	1,697			$	1,941			$	1,915
Non-performing loans - discontinued operations	1,924				556			709				560				997
Total non-performing loans	5,176				2,716			2,406				2,501				2,912
Foreclosed properties (OREO)	874				968			1,288				927				1,215
Total nonperforming assets	$	6,050			$	3,684		$	3,694			$	3,428			$	4,127

Allowance for loan losses to loans held for investment ⁽²⁾	1.03			%	1.00		%	1.01			%	1.01			%	1.00			%
Net charge-offs to average loans ⁽³⁾	—				—			0.03				0.05				(0.04		)

Non-performing loans as a percentage of total loans - continuing operations ⁽⁴⁾	0.19			%	0.13		%	0.11			%	0.12			%	0.13			%
Non-performing loans as a percentage of total loans - discontinued operations ⁽⁴⁾	0.52				0.15			0.19				0.14				0.24
Non-performing loans as a percentage of total loans ⁽⁴⁾	0.25				0.13			0.12				0.13				0.15

Non-performing assets as a percentage of total assets - continuing operations ⁽⁴⁾	0.14			%	0.11		%	0.11			%	0.11			%	0.11			%
Non-performing assets as a percentage of total assets - discontinued operations ⁽⁴⁾	0.07				0.02			0.03				0.02				0.03
Non-performing assets as a percentage of total assets ⁽⁴⁾	0.20				0.13			0.14				0.13				0.14

⁽¹⁾ The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods. ⁽²⁾ The fourth quarter 2018 ratio is calculated on a continuing operations basis. Prior period ratios have not been retroactively adjusted for the impact of discontinued operations. ⁽³⁾ Annualized. ⁽⁴⁾ Excludes non-performing PCI loans.



ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

(dollars in thousands)	December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			Linked Quarter Change			Year Over Year Change

DDA	$	602,252		$	518,155		$	464,282		$	472,181		$	596,328		$	84,097		$	5,924
NOW	252,490			407,214			241,461			214,333			203,113			(154,724		)	49,377
Savings	725			698			951			3,593			530			27			195
Money market	987,183			759,583			647,247			699,311			925,536			227,600			61,647
Time	10,623			10,396			10,359			3,074			10,812			227			(189		)
Brokered	99,241			79,119			92,656			112,376			128,816			20,122			(29,575		)
Total deposits - continuing operations	1,952,514			1,775,165			1,456,956			1,504,868			1,865,135			177,349			87,379
Deposits to be assumed - discontinued operations	585,429			604,659			609,631			591,432			585,530			(19,230		)	(101		)
Total deposits	$	2,537,943		$	2,379,824		$	2,066,587		$	2,096,300		$	2,450,665		$	158,119		$	87,278

Payments clients	$	397,608		$	258,320		$	251,748		$	311,943		$	405,873		$	139,288		$	(8,265	)

Average Deposits

	2018												2017			Linked Quarter Change			Q4 2018 vs Q4 2017
(dollars in thousands)	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Linked Quarter Change			Q4 2018 vs Q4 2017

DDA	$	597,239		$	561,355		$	489,722		$	502,829		$	509,301		$	35,884		$	87,938
NOW	280,449			314,759			287,283			236,796			240,891			(34,310		)	39,558
Savings	712			616			674			527			436			96			276
Money market	798,017			697,578			645,034			697,092			713,118			100,439			84,899
Time	10,117			10,406			9,855			9,800			10,643			(289		)	(526		)
Brokered	93,558			67,937			100,425			117,787			128,594			25,621			(35,036		)
Total deposits - continuing operations	1,780,092			1,652,651			1,532,993			1,564,831			1,602,983			127,441			177,109
Deposits to be assumed - discontinued operations	600,769			601,421			602,832			589,054			591,866			(652		)	8,903
Total deposits	$	2,380,861		$	2,254,072		$	2,135,825		$	2,153,885		$	2,194,849		$	126,789		$	186,012

Payments clients	$	263,800		$	227,029		$	219,016		$	256,794		$	234,558		$	36,771		$	29,242

Noninterest bearing deposits as a percentage of average deposits - continuing operations	33.6		%	34.0		%	31.9		%	32.1		%	31.8		%
Cost of deposits - continuing operations	0.93		%	0.76		%	0.71		%	0.63		%	0.56		%



ATLANTIC CAPITAL BANCSHARES, INC.
Discontinued Operations Information

	Q4 2018
(in thousands, except per share data)	Actual Results (GAAP)		Discontinued Operations Adjustments⁽¹⁾			Loss on Sale of Securities		DTA Adjustment⁽²⁾			Adjusted Results (Non-GAAP)
Net interest income	$	21,068	$	—		$	—	$	—		$	21,068
Provision for loan losses	502		—			—		—			502
Net interest income after provision for loan losses	20,566		—			—		—			20,566
Noninterest income	164		—			1,853		—			2,017
Noninterest expense	12,208		—			—		—			12,208
Income from continuing operations before income tax	8,522		—			1,853		—			10,375
Provision for income taxes	1,039		—			463		996			2,498
Net income from continuing operations	7,483		—			1,390		(996		)	7,877
Income (loss) from discontinued operations	1,347		(1,704		)	—		—			(357		)
Net income	$	8,830	$	(1,704	)	$	1,390	$	(996	)	$	7,520

Diluted earnings per share - continuing operations	$	0.29									$	0.30
Diluted earnings per share	0.34										0.29

⁽¹⁾Includes negative provision for loan losses and divestiture expenses, net of tax.
⁽²⁾Represents a $4.5 million favorable reduction of the valuation allowance on deferred tax assets related to Section 382 limitation offset by an unfavorable increase of $3.5 million in the valuation allowance related to deferred taxes on state net operating loss utilization.



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


	2018																2017				For the year ended December 31,
(in thousands, except share and per share data)	Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter				2018				2017

Taxable equivalent interest income reconciliation
Interest income - GAAP	$	26,628			$	24,017			$	22,836			$	21,279			$	20,170			$	94,760			$	75,818
Taxable equivalent adjustment	97				97				98				103				213				395				906
Interest income - taxable equivalent	$	26,725			$	24,114			$	22,934			$	21,382			$	20,383			$	95,155			$	76,724

Taxable equivalent net interest income reconciliation
Net interest income - GAAP	$	21,068			$	19,297			$	18,444			$	17,438			$	16,716			$	76,247			$	62,832
Taxable equivalent adjustment	97				97				98				103				213				395				906
Net interest income - taxable equivalent	$	21,165			$	19,394			$	18,542			$	17,541			$	16,929			$	76,642			$	63,738

Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP	3.60			%	3.45			%	3.52			%	3.49			%	3.35			%	3.52			%	3.24			%
Impact of taxable equivalent adjustment	0.02				0.02				0.02				0.02				0.04				0.01				0.04
Net interest margin - taxable equivalent	3.62			%	3.47			%	3.54			%	3.51			%	3.39			%	3.53			%	3.28			%

Income before income taxes reconciliation
Income before income taxes - GAAP	$	8,522			$	8,835			$	10,460			$	6,540			$	3,849			$	34,357			$	18,959
Taxable equivalent adjustment	97				97				98				103				213				395				906
Income before income taxes	$	8,619			$	8,932			$	10,558			$	6,643			$	4,062			$	34,752			$	19,865

Income tax reconciliation
Income tax expense - GAAP	$	1,039			$	1,837			$	2,082			$	1,349			$	19,157			$	6,307			$	23,715
Taxable equivalent adjustment	97				97				98				103				213				395				906
Income tax expense	$	1,136			$	1,934			$	2,180			$	1,452			$	19,370			$	6,702			$	24,621

Tangible book value per common share reconciliation
Total shareholders’ equity	$	323,653			$	320,237			$	316,770			$	307,059			$	308,425			$	323,653			$	308,425
Intangible assets	(23,095		)		(23,367		)		(23,662		)		(24,050		)		(24,393		)		(23,095		)		(24,393		)
Total tangible common equity	$	300,558			$	296,870			$	293,108			$	283,009			$	284,032			$	300,558			$	284,032
Common shares outstanding	25,290,419				26,103,666				26,102,217				25,772,208				25,712,909				25,290,419				25,712,909
Book value per common share - GAAP	$	12.80			$	12.27			$	12.14			$	11.91			$	11.99			$	12.80			$	11.99
Tangible book value	11.88				11.37				11.23				10.98				11.05				11.88				11.05

Tangible common equity to tangible assets reconciliation
Total shareholders’ equity	$	323,653			$	320,237			$	316,770			$	307,059			$	308,425			$	323,653			$	308,425
Intangible assets	(23,095		)		(23,367		)		(23,662		)		(24,050		)		(24,393		)		(23,095		)		(24,393		)
Total tangible common equity	$	300,558			$	296,870			$	293,108			$	283,009			$	284,032			$	300,558			$	284,032

Total assets	$	2,955,440			$	2,882,721			$	2,690,674			$	2,718,665			$	2,891,421			$	2,955,440			$	2,891,421
Intangible assets	(23,095		)		(23,367		)		(23,662		)		(24,050		)		(24,393		)		(23,095		)		(24,393		)
Total tangible assets	$	2,932,345			$	2,859,354			$	2,667,012			$	2,694,615			$	2,867,028			$	2,932,345			$	2,867,028
Tangible common equity to tangible assets	10.25			%	10.38			%	10.99			%	10.50			%	9.91			%	10.25			%	9.91			%

Atlantic Capital Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 31, 2019

Attached files

Atlantic Capital Bancshares, Inc. Reports