ATLANTA, April 23, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income from continuing operations for the quarter ended March 31, 2020 of $2.1 million, or $0.10 per diluted share, compared to $6.4 million, or $0.26 per diluted share, for the first quarter of 2019 and $7.1 million, or $0.32 per diluted share, for the fourth quarter of 2019. The decrease in net income was predominantly driven by increases in credit reserves in anticipation of the expected impact from the economic slowdown from COVID-19.

“Atlantic Capital entered the COVID-19 crisis in a position of strength with solid first quarter operating results, a fortress balance sheet, and sound business continuity plans. With that strength, our company will provide needed assistance to businesses in our community, add new client relationships, and strive to continue to build meaningful shareholder value through the crisis,” remarked Douglas Williams, President and Chief Executive Officer.

Response to COVID-19

As the COVID-19 pandemic affected all areas of economic and social life, Atlantic Capital responded with measures to protect the health of its community, customers and associates. The Company implemented work-from-home initiatives for employees when possible, ceased non-essential business related travel, and began regular meetings of its executive leadership and incident response teams to direct the Company’s response to the ever-changing environment. Each week, Doug Williams and his executive leadership team host an internal company-wide conference call to communicate the latest developments, answer teammate questions, and gather information from teammates based on the challenges their relationship customers are facing.

In addition, Atlantic Capital has taken the following steps to assist borrowers during these challenging times, consistent with sound banking practice:

• facilitating approximately $223 million in loan applications for business borrowers through the Paycheck Protection Program;
  
  
• evaluating business segments in our market areas to evaluate areas of need and focus our assessment and management of portfolio risk;
  
  
• offering payment deferrals to existing customers with a streamlined loan modification process when appropriate;
  
  
• communicating with customers in order to assess developing credit situations and needs; and
  
  
• engaging in liquidity planning, including pausing stock repurchases in March.

Our goal is to continue to support our community of customers and prospective customers while maintaining our historically cautious approach to new loan underwriting. With reliable core deposit funding, solid balance sheet liquidity, a strong capital position, and access to significant wholesale funding, Atlantic Capital anticipates adequate funding capacity for future lending needs.

First Quarter Highlights⁽¹⁾

• Capital ratios remained strong, with a tangible common equity to tangible assets ratio of 11.6%.
• Tangible book value per share increased 19.5% from March 31, 2019 to $14.54, and increased 12.8% annualized from December 31, 2019.
• Net interest margin from continuing operations of 3.41%, compared to 3.74% in the first quarter of 2019 and 3.38% in the fourth quarter of 2019.
• Average deposits from continuing operations increased $460.7 million, or 25.7%, compared to the first quarter of 2019 and $107.9 million, or 20.1% annualized, compared to the fourth quarter of 2019.
• Total loans held for investment increased $198.4 million, or 11.4% from March 31, 2019 and $59.4 million, or 12.7% annualized, from December 31, 2019.
• Annualized net charge-offs to average loans totaled 0.04%, compared 0.11% in the first quarter of 2019 and 0.07% for the fourth quarter of 2019.

Income Statement

Taxable equivalent net interest income from continuing operations totaled $21.2 million for the first quarter of 2020, an increase of $679,000, or 3.3%, from the first quarter of 2019, and an increase of $469,000, or 9.0% annualized, from the fourth quarter of 2019. The linked quarter increase in net interest income was primarily driven by a decrease in the cost of interest bearing liabilities offset by a decrease in loan yields. 

Taxable equivalent net interest margin from continuing operations was 3.41% in the first quarter of 2020, a decrease of 33 basis points from the first quarter of 2019 and an increase of 3 basis points from the fourth quarter of 2019. The linked quarter increase was primarily the result of a drop in the cost of interest bearing deposits and an increase in the yield on investment securities. This was partially offset by a decrease in loan yields.

The yield on loans from continuing operations in the first quarter of 2020 was 4.77%, a decrease of 63 basis points from the first quarter of 2019 and a decrease of 18 basis points from the fourth quarter of 2019. The decrease in loan yields was due primarily to the repricing of variable rate loans as a result of declines in short term interest rates during 2019 and 2020.

The taxable equivalent yield on investment securities in the first quarter of 2020 was 2.84%, an increase of 7 basis points from the first quarter of 2019 and an increase of 21 basis points from the fourth quarter of 2019. The increase in taxable equivalent investment portfolio yields was primarily the result of municipal bond purchases in 2019 and 2020, many of which were non-taxable.

The cost of deposits from continuing operations in the first quarter of 2020 was 0.75%, a decrease of 34 basis points from the first quarter of 2019 and a decrease of 15 basis points from the fourth quarter of 2019. The cost of interest bearing deposits from continuing operations decreased 52 basis points to 1.09% from the first quarter of 2019, and decreased 27 basis points from the fourth quarter of 2019.

The provision for credit losses for continuing operations was $8.1 million in the first quarter of 2020 compared to $814,000 in the first quarter of 2019 and $787,000 in the fourth quarter of 2019. The provision for credit losses in the first quarter of 2020 included a $7.4 million provision for loan losses and a $671,000 provision for unfunded commitments. The provision increased primarily as a response to the expected impact from the economic slowdown from COVID-19.

Noninterest income from continuing operations totaled $2.4 million in the first quarter of 2020 compared to $2.3 million in the first quarter of 2019 and $2.7 million in the fourth quarter of 2019. Service charge income in the first quarter of 2020 totaled $1.2 million, an increase of $438,000 or 55.2%, compared to the first quarter of 2019 and an increase of $234,000, or 93.8% annualized, from the fourth quarter of 2019. Continued strong growth in core deposits, particularly in our payments processing businesses, drove the increases in service charge income. SBA income totaled $414,000, a decrease from $1.1 million in the first quarter of 2019 and $846,000 in the fourth quarter of 2019, primarily from lower SBA origination volume and a decrease in loan premiums during the quarter.

Noninterest expense from continuing operations totaled $12.9 million in the first quarter of 2020, a decrease of $918,000 compared to the first quarter of 2019 and $505,000 compared to the fourth quarter of 2019. Salaries and employee benefits totaled $8.5 million in the first quarter of 2020, unchanged from the previous quarter as the higher first quarter benefits costs were offset by lower incentive accruals.

The effective tax rate from continuing operations for the first quarter of 2020 was 13.3% compared to 21.3% for the full year of 2019, and was impacted by lower pretax earnings as well as increased non-taxable securities income from municipal bonds.

(1) Commentary is on a fully taxable-equivalent basis unless otherwise noted. Consistent with SEC guidance in Industry Guide 3 that contemplates the calculation of tax-exempt income on a tax equivalent basis, net interest income and net interest margin are provided on a fully taxable-equivalent basis, which generally assumes a 21% marginal tax rate. We provide detailed reconciliations in the Non-GAAP Performance and Financial Measures Reconciliation table on page 14.

Balance Sheet

Total loans held for investment were $1.93 billion at March 31, 2020, an increase of $198.4 million, or 11.4%, from March 31, 2019 and an increase of $59.4 million, or 12.7% annualized, from December 31, 2019. Commercial and industrial loans were $760.0 million at March 31, 2020, an increase of 11.9% from March 31, 2019 and 31.2% annualized from December 31, 2019. The increase from December 31, 2019 was primarily due to organic growth across different areas of the Company. Mortgage warehouse loan participations decreased to zero as we exited the business during the first quarter of 2020. Consumer loans increased $20.4 million from December 31, 2019 to $58.2 million at March 31, 2020, due to the growth in a partnership with a fintech firm that offers CD-secured loans to its customers. 

On January 1, 2020, the Company adopted the CECL accounting standard, which resulted in a day one reduction of $854,000 to the allowance for loan losses offset by an increase of $1.3 million to the allowance for unfunded commitments. The allowance for loan losses totaled $18.5 million as of December 31, 2019, was reduced by $854,000 due to CECL adoption, was increased by $7.4 million related to the first quarter 2020 provision, and ended the quarter at $24.9 million. The allowance for unfunded commitments totaled $892,000 at December 31, 2019, was increased by $1.3 million due to CECL adoption, was increased by $671,000 related to the first quarter 2020 provision, and ended the quarter at $2.8 million. At March 31, 2020, the combined allowance for credit losses for loans and unfunded commitments was $27.7 million, compared to $19.4 million at December 31, 2019.

The allowance for loan losses was 1.29% of total loans held for investment at March 31, 2020, compared to 0.99% at December 31, 2019. The increase reflects the impact of COVID-19 on the economic forecast used in the estimation of expected credit losses. Non-performing assets from continuing operations totaled $7.3 million, or 0.27% of total assets, as of March 31, 2020, compared to 0.34% of total assets as of March 31, 2019 and 0.26% of total assets as of December 31, 2019.

Tangible common equity to tangible assets was 11.6% at March 31, 2020, an increase from 10.6% at December 31, 2019 due to the elevated levels of cash related to year-end deposits at December 31, 2019. The estimated total risk based capital ratio was 14.9% at March 31, 2020 compared to 13.7% at March 31, 2019 and 15.0% at December 31, 2019.

Earnings Conference Call

The Company will host a conference call at 9:30 a.m. EDT on Friday, April 24, 2020, to discuss the financial results for the quarter ended March 31, 2020. Individuals wishing to participate in the conference call may do so by dialing 877-270-2148 from the United States. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.atlanticcapitalbank.com. A presentation will be used during the earnings conference call and is available at http://www.snl.com/IRW/CorporateProfile/4155740.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. Atlantic Capital management uses non-GAAP financial measures, including: (i) taxable equivalent interest income; (ii) taxable equivalent net interest income; (iii) taxable equivalent net interest margin; (iv) taxable equivalent income before income taxes; (v) taxable equivalent income tax expense; (vi) tangible assets; (vii) tangible common equity; 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,” “strive,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about Atlantic Capital’s confidence in its strategies and its expectations about financial performance, the impact of COVID-19 on operations, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on Atlantic Capital’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Atlantic Capital’s control. Atlantic Capital undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Atlantic Capital’s Annual Report on Form 10-K, as supplemented by our Current Report on Form 8-K filed on April 23, 2020, and Quarterly Reports on Form 10-Q. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $2.7 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers commercial and not-for-profit banking services, specialty corporate financial services, private banking services and commercial real estate finance solutions to privately held companies and individuals in the Atlanta area, as well as specialized financial services for select clients nationally.

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

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

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information

		2020			2019
(in thousands, except share and per share data;		First			Fourth			Third			Second			First				First Quarter 2020
taxable equivalent)		Quarter			Quarter			Quarter			Quarter			Quarter				to 2019 Change
INCOME SUMMARY (1)
Interest income (2)		$	26,246		$	26,699		$	26,624		$	26,686		$	26,297				(0	)%
Interest expense			5,043			5,965			6,536			6,709			5,773				(13	)
Net interest income			21,203			20,734			20,088			19,977			20,524				3
Provision for credit losses			8,074			787			413			698			814				892
Net interest income after provision for credit losses			13,129			19,947			19,675			19,279			19,710				(33	)
Noninterest income			2,422			2,679			2,769			2,941			2,336				4
Noninterest expense			12,877			13,382			12,677			13,254			13,795				(7	)
Income from continuing operations before income taxes			2,674			9,244			9,767			8,966			8,251				(68	)
Income tax expense			550			2,104			2,198			1,957			1,811				(70	)
Net income from continuing operations(2)(3)			2,124			7,140			7,569			7,009			6,440				(67	)
Income (loss) from discontinued operations, net of tax			—			—			617			22,143			(1,063	)			(100	)
Net income		$	2,124		$	7,140		$	8,186		$	29,152		$	5,377				(60	)%
PER SHARE DATA
Diluted earnings per share - continuing operations		$	0.10		$	0.32		$	0.33		$	0.29		$	0.26
Diluted earnings (loss) per share - discontinued operations			—			—			0.03			0.92			(0.04	)
Diluted earnings per share			0.10			0.32			0.36			1.21			0.21
Book value per share			15.47			15.01			14.81			14.46			13.10
Tangible book value per common share (3)			14.54			14.09			13.91			13.60			12.17
PERFORMANCE MEASURES
Return on average equity			2.56	%		8.65	%		9.77	%		34.38	%		6.80	%
Return on average assets			0.32			1.08			1.32			4.79			0.77
Taxable equivalent net interest margin - continuing operations			3.41			3.38			3.52			3.61			3.74
Efficiency ratio - continuing operations			55.03			57.57			55.72			58.06			60.61
Average loans to average deposits			83.84			86.54			92.41			93.05			95.20
CAPITAL
Average equity to average assets			12.41	%		12.47	%		13.54	%		13.94	%		11.34	%
Tangible common equity to tangible assets			11.57			10.61			12.92			13.37			10.51
Tier 1 capital ratio			11.7	(4)		12.0			12.5			13.4			11.0
Total risk based capital ratio			14.9	(4)		15.0			15.5			16.5			13.7
SHARES OUTSTANDING
Number of common shares outstanding - basic			21,479,986			21,751,026			22,193,761			23,293,465			24,466,964
Number of common shares outstanding - diluted			21,675,934			21,974,959			22,405,141			23,508,442			24,719,273
Average number of common shares - basic			21,689,038			21,876,487			22,681,904			23,888,381			24,855,171
Average number of common shares - diluted			21,842,175			22,053,907			22,837,531			24,040,806			25,019,384
ASSET QUALITY
Allowance for loan losses to loans held for investment (5)			1.29	%		0.99	%		0.98	%		1.02	%		1.04	%
Net charge-offs to average loans (6)			0.04			0.07			0.11			0.14			0.11
Non-performing assets to total assets			0.27			0.26			0.29			0.31			0.40
AVERAGE BALANCES
Total loans - continuing operations		$	1,890,184		$	1,857,736		$	1,801,629		$	1,769,803		$	1,707,682
Investment securities			417,971			389,667			340,872			360,047			400,101
Total assets			2,686,266			2,626,388			2,453,438			2,440,502			2,829,072
Deposits - continuing operations			2,254,505			2,146,626			1,949,657			1,902,076			1,793,791
Shareholders' equity			333,480			327,543			332,291			340,119			320,812
AT PERIOD END
Loans and loans held for sale		$	1,932,909		$	1,873,524		$	1,836,589		$	1,789,740		$	2,120,866
Investment securities			466,405			399,433			329,648			348,723			402,640
Total assets			2,719,658			2,910,379			2,410,198			2,389,680			2,855,887
Deposits			2,225,119			2,499,046			1,854,272			1,851,531			2,440,448
Shareholders’ equity			332,300			326,495			328,711			336,715			320,627

⁽¹⁾ On April 5, 2019, Atlantic Capital completed the sale to FirstBank of its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The mortgage business and branches sold to FirstBank are reported as discontinued operations.
⁽²⁾ Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
⁽³⁾ Excludes effect of acquisition related intangibles.
⁽⁴⁾ Amounts are estimates as of March 31, 2020.
⁽⁵⁾ The ratios for the first, second, and third quarters of 2019 are calculated on a continuing operations basis.
⁽⁶⁾ Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Financial Information from Discontinued Operations

Assets and Liabilities from Discontinued Operations

(in thousands)		March 31, 2020			December 31, 2019			March 31, 2019
Cash		$	—		$	—		$	4,168
Loans held for sale - discontinued operations			—			—			384,779
Premises held for sale - discontinued operations			—			—			7,736
Goodwill - discontinued operations			—			—			4,555
Other assets			—			—			1,158
Total assets		$	—		$	—		$	402,396
Deposits to be assumed - discontinued operations		$	—		$	—		$	593,264
Securities sold under agreements to repurchase - discontinued operations			—			—			9,821
Total liabilities		$	—		$	—		$	603,085
Net liabilities		$	—		$	—		$	(200,689	)

Components of Net Income (Loss) from Discontinued Operations

		2020			2019
		First			Fourth			Third				Second				First
(in thousands)		Quarter			Quarter			Quarter				Quarter				Quarter
Net interest income		$	—		$	—		$	—			$	(39	)		$	3,125
Provision for credit losses			—			—			—				—				—
Net interest income after provision			—			—			—				(39	)			3,125
Service charges			—			—			—				46				481
Mortgage income			—			—			—				—				288
Gain on sale of branches			—			—			—				34,475				—
Other income			—			—			—				(22	)			21
Total noninterest income			—			—			—				34,499				790
Salaries and employee benefits			—			—			—				330				2,427
Occupancy			—			—			—				71				339
Equipment and software			—			—			—				8				123
Amortization of intangibles			—			—			—				—				247
Communications and data processing			—			—			—				197				389
Divestiture expense			—			—			—				3,646				1,449
Other noninterest expense			—			—			—				101				358
Total noninterest expense			—			—			—				4,353				5,332
Net income (loss) before provision for income taxes			—			—			—				30,107				(1,417	)
Provision (benefit) for income taxes			—			—			(617	)			7,964				(354	)
Net income (loss) from discontinued operations		$	—		$	—		$	617			$	22,143			$	(1,063	)

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

		March 31,				December 31,				March 31,
(in thousands, except share data)		2020				2019				2019
ASSETS
Cash and due from banks		$	27,536			$	45,249			$	36,992
Interest-bearing deposits in banks			114,829				421,079				76,720
Other short-term investments			—				—				29,457
Cash and cash equivalents			142,365				466,328				143,169
Securities available for sale			280,390				282,461				402,640
Securities held to maturity, net of allowance for credit losses of $14, $0 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively (fair value of $189,940, $115,291 and $0 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively)			186,015				116,972				—
Other investments			27,140				27,556				28,844
Loans held for sale			—				370				1,530
Loans held for sale - discontinued operations(1)			—				—				384,779
Loans held for investment(1)			1,932,909				1,873,524				1,734,557
Less: allowance for loan losses			(24,896	)			(18,535	)			(18,107	)
Loans held for investment, net			1,908,013				1,854,989				1,716,450
Premises held for sale - discontinued operations(1)			—				—				7,736
Premises and equipment, net(1)			22,533				22,536				23,311
Bank owned life insurance			66,761				66,421				65,486
Goodwill - discontinued operations(1)			—				—				4,555
Goodwill - continuing operations(1)			19,925				19,925				17,135
Other intangibles, net			2,785				3,027				4,241
Other real estate owned			779				278				971
Other assets			62,952				49,516				55,040
Total assets		$	2,719,658			$	2,910,379			$	2,855,887
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand(1)		$	712,919			$	824,646			$	561,829
Interest-bearing checking(1)			368,463				373,727				233,838
Savings(1)			567				1,219				896
Money market(1)			982,109				1,173,218				962,741
Time(1)			66,793				44,389				22,069
Brokered deposits			94,268				81,847				65,811
Deposits to be assumed - discontinued operations(1)			—				—				593,264
Total deposits			2,225,119				2,499,046				2,440,448
Federal funds purchased			75,000				—				—
Securities sold under agreements to repurchase - discontinued operations(1)			—				—				9,821
Long-term debt			49,916				49,873				49,746
Other liabilities			37,323				34,965				35,245
Total liabilities			2,387,358				2,583,884				2,535,260
SHAREHOLDERS’ EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2020, December 31, 2019, and March 31, 2019			—				—				—
Common stock, no par value; 100,000,000 shares authorized; 21,479,986, 21,751,026, and 24,466,964 shares issued and outstanding as of March 31, 2020, December 31, 2019, and March 31, 2019; respectively			224,233				230,265				276,346
Retained earnings			93,721				91,669				47,191
Accumulated other comprehensive income (loss)			14,346				4,561				(2,910	)
Total shareholders’ equity			332,300				326,495				320,627
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,719,658			$	2,910,379			$	2,855,887

¹⁾ Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of March 31, 2019.

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

(in thousands, except share and per share data)		Three months ended
		March 31,			December 31,			September 30,				June 30,				March 31,
		2020			2019			2019				2019				2019
INTEREST INCOME
Loans, including fees		$	22,426		$	23,175		$	23,541			$	23,554			$	22,752
Investment securities			2,732			2,413			2,176				2,339				2,631
Interest and dividends on other interest‑earning assets			865			944			803				705				814
Total interest income			26,023			26,532			26,520				26,598				26,197
INTEREST EXPENSE
Interest on deposits			4,182			4,890			5,223				5,448				4,831
Interest on Federal Home Loan Bank advances			—			157			390				270				—
Interest on federal funds purchased and securities sold under agreements to repurchase			32			94			99				168				118
Interest on long-term debt			829			824			824				823				824
Total interest expense			5,043			5,965			6,536				6,709				5,773
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES			20,980			20,567			19,984				19,889				20,424
Provision for credit losses			8,074			787			413				698				814
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			12,906			19,780			19,571				19,191				19,610
NONINTEREST INCOME
Service charges			1,232			998			925				870				794
Gains (losses) on sale of securities			—			—			253				654				—
Gains (losses) on sale of other assets			5			—			140				(10	)			(3	)
Derivatives income			246			315			(293	)			(233	)			(111	)
Bank owned life insurance			362			375			422				389				360
SBA lending activities			414			846			1,150				1,096				1,086
Other noninterest income			163			145			172				175				210
Total noninterest income			2,422			2,679			2,769				2,941				2,336
NONINTEREST EXPENSE
Salaries and employee benefits			8,476			8,500			8,295				8,529				9,213
Occupancy			794			838			722				689				639
Equipment and software			779			769			842				753				739
Professional services			705			577			764				792				775
Communications and data processing			897			1,066			796				662				675
Marketing and business development			153			143			243				233				226
Travel, meals and entertainment			140			175			152				186				166
FDIC premiums			—			—			(193	)			175				235
Other noninterest expense			933			1,314			1,056				1,235				1,127
Total noninterest expense			12,877			13,382			12,677				13,254				13,795
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES			2,451			9,077			9,663				8,878				8,151
Provision for income taxes			327			1,937			2,094				1,869				1,711
NET INCOME FROM CONTINUING OPERATIONS			2,124			7,140			7,569				7,009				6,440
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations		$	—		$	—		$	—			$	30,107			$	(1,417	)
Provision (benefit) for income taxes			—			—			(617	)			7,964				(354	)
Net income (loss) from discontinued operations			—			—			617				22,143				(1,063	)
NET INCOME		$	2,124		$	7,140		$	8,186			$	29,152			$	5,377
Net Income (Loss) per Common Share - Basic
Net income per common share - continuing operations		$	0.10		$	0.33		$	0.33			$	0.29			$	0.26
Net income (loss) per common share - discontinued operations			—			—			0.03				0.93				(0.04	)
Net Income per Common Share - Basic			0.10			0.33			0.36				1.22				0.22
Net Income (Loss) per Common Share - Diluted
Net income per common share - continuing operations		$	0.10		$	0.32		$	0.33			$	0.29			$	0.26
Net income (loss) per common share - discontinued operations			—			—			0.03				0.92				(0.04	)
Net Income per Common Share - Diluted			0.10			0.32			0.36				1.21				0.21
Weighted average shares - basic			21,689,038			21,876,487			22,681,904				23,888,381				24,855,171
Weighted average shares - diluted			21,842,175			22,053,907			22,837,531				24,040,806				25,019,384

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

		Three months ended
		March 31, 2020									December 31, 2019
					Interest			Tax						Interest			Tax
		Average			Income/			Equivalent			Average			Income/			Equivalent
(dollars in thousands; taxable equivalent)		Balance			Expense			Yield/Rate			Balance			Expense			Yield/Rate
Assets
Interest bearing deposits in other banks		$	177,063		$	668		1.52	%		$	174,589		$	733		1.67	%
Other short-term investments			110			—		—				—			—		—
Investment securities:
Taxable investment securities			253,937			1,680		2.66				242,175			1,570		2.57
Non-taxable investment securities(1)			164,034			1,275		3.13				147,492			1,010		2.72
Total investment securities			417,971			2,955		2.84				389,667			2,580		2.63
Loans			1,890,184			22,426		4.77				1,857,736			23,175		4.95
FHLB and FRB stock			12,678			197		6.25				14,106			211		5.93
Total interest-earning assets			2,498,006			26,246		4.23				2,436,098			26,699		4.35
Non-earning assets			188,260									190,290
Total assets		$	2,686,266								$	2,626,388
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,393,541			3,767		1.09				1,328,184			4,525		1.35
Time deposits			55,775			52		0.37				37,388			52		0.55
Brokered deposits			92,188			363		1.58				62,757			313		1.98
Total interest-bearing deposits			1,541,504			4,182		1.09				1,428,329			4,890		1.36
Total borrowings			11,703			32		1.10				54,706			252		1.83
Total long-term debt			49,888			829		6.68				49,845			823		6.55
Total interest-bearing liabilities			1,603,095			5,043		1.27				1,532,880			5,965		1.54
Demand deposits			713,001									718,297
Other liabilities			36,690									47,668
Shareholders’ equity			333,480									327,543
Total liabilities and shareholders’ equity		$	2,686,266								$	2,626,388
Net interest spread								2.96	%								2.80	%
Net interest income and net interest margin(2)					$	21,203		3.41	%					$	20,734		3.38	%
Non-taxable equivalent net interest margin								3.38	%								3.35	%

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

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

		Three months ended
		March 31, 2020									March 31, 2019
					Interest			Tax						Interest			Tax
		Average			Income/			Equivalent			Average			Income/			Equivalent
(dollars in thousands; taxable equivalent)		Balance			Expense			Yield/Rate			Balance			Expense			Yield/Rate
Assets
Interest bearing deposits in other banks		$	177,063		$	668		1.52	%		$	92,168		$	463		2.04	%
Other short-term investments			110			—		—				11,680			86		2.99
Investment securities:
Taxable investment securities			253,937			1,680		2.66				320,089			2,113		2.68
Non-taxable investment securities(1)			164,034			1,275		3.13				80,012			618		3.13
Total investment securities			417,971			2,955		2.84				400,101			2,731		2.77
Loans - continuing operations			1,890,184			22,426		4.77				1,707,682			22,752		5.40
FHLB and FRB stock			12,678			197		6.25				12,528			265		8.58
Total interest-earning assets - continuing operations			2,498,006			26,246		4.23				2,224,159			26,297		4.80
Loans held for sale - discontinued operations			—			—		—				381,783			4,541		4.82
Total interest-earning assets			2,498,006			26,246		4.23				2,605,942			30,838		4.80
Non-earning assets			188,260									223,130
Total assets		$	2,686,266								$	2,829,072
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,393,541			3,767		1.09				1,124,350			4,255		1.53
Time deposits			55,775			52		0.37				12,847			38		1.20
Brokered deposits			92,188			363		1.58				81,141			538		2.69
Total interest-bearing deposits			1,541,504			4,182		1.09				1,218,338			4,831		1.61
Total borrowings			11,703			32		1.10				18,056			118		2.65
Total long-term debt			49,888			829		6.68				49,719			824		6.72
Total interest-bearing liabilities - continuing operations			1,603,095			5,043		1.27				1,286,113			5,773		1.82
Interest-bearing liabilities - discontinued operations			—			—		—				473,090			1,416		1.21
Total interest-bearing liabilities			1,603,095			5,043		1.27				1,759,203			7,189		1.66
Demand deposits			713,001									575,453
Demand deposits - discontinued operations			—									128,977
Other liabilities			36,690									44,627
Shareholders’ equity			333,480									320,812
Total liabilities and shareholders’ equity		$	2,686,266								$	2,829,072
Net interest spread - continuing operations								2.96	%								2.98	%
Net interest income and net interest margin - continuing operations(2)					$	21,203		3.41	%					$	20,524		3.74	%
Net interest income and net interest margin(2)					$	21,203		3.41	%					$	23,649		3.68	%
Non-taxable equivalent net interest margin								3.38	%								3.66	%

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

ATLANTIC CAPITAL BANCSHARES, INC.
Period End Loans

																						Linked				Year Over
		March 31,				December 31,				September 30,				June 30,				March 31,				Quarter				Year
(dollars in thousands)		2020				2019				2019				2019				2019				Change				Change
Loans held for sale
Loans held for sale		$	—			$	370			$	916			$	—			$	1,530			$	(370	)		$	(1,530	)
Loans held for sale - discontinued operations			—				—				—				—				384,779				—				(384,779	)
Total loans held for sale		$	—			$	370			$	916			$	—			$	386,309			$	(370	)		$	(386,309	)
Loans held for investment
Commercial loans:
Commercial and industrial		$	760,062			$	705,115			$	697,412			$	701,566			$	679,489			$	54,947			$	80,573
Commercial real estate:
Multifamily			73,654				98,378				60,398				43,907				43,929				(24,724	)			29,725
Owner occupied			359,026				357,912				352,842				313,310				304,945				1,114				54,081
Investment			477,451				460,038				452,285				409,629				394,087				17,413				83,364
Construction and land:
1‑4 family residential construction			2,706				4,009				5,186				3,696				2,067				(1,303	)			639
Other construction, development, and land			124,116				123,531				139,991				195,260				171,818				585				(47,702	)
Mortgage warehouse loans			—				13,941				23,256				10,665				22,267				(13,941	)			(22,267	)
Total commercial loans			1,797,015				1,762,924				1,731,370				1,678,033				1,618,602				34,091				178,413
Residential:
Residential mortgages			31,761				31,315				31,903				31,338				32,915				446				(1,154	)
Home equity			23,479				25,002				25,638				24,303				23,171				(1,523	)			308
Total residential loans			55,240				56,317				57,541				55,641				56,086				(1,077	)			(846	)
Consumer			58,164				37,765				27,168				34,618				35,203				20,399				22,961
Other			25,488				19,552				22,533				24,126				26,663				5,936				(1,175	)
			1,935,907				1,876,558				1,838,612				1,792,418				1,736,554				59,349				199,353
Less net deferred fees and other unearned income			(2,998	)			(3,034	)			(2,939	)			(2,678	)			(1,997	)			36				(1,001	)
Total loans held for investment		$	1,932,909			$	1,873,524			$	1,835,673			$	1,789,740			$	1,734,557			$	59,385			$	198,352
Total loans		$	1,932,909			$	1,873,894			$	1,836,589			$	1,789,740			$	2,120,866			$	59,015			$	(187,957	)

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

		2020				2019
		First				Fourth				Third				Second				First
(dollars in thousands)		Quarter				Quarter				Quarter				Quarter				Quarter
Allowance for loan losses
Balance at beginning of period		$	18,535			$	18,080			$	18,186			$	18,107			$	17,851
Adoption of ASU 2016-13			(854	)			—				—				—				—
Provision for loan losses			7,409				787				413				698				814
Loans charged-off:
Commercial and industrial			(18	)			(344	)			(541	)			(588	)			(549	)
Commercial real estate			(78	)			—				—				(47	)			—
Construction and land			—				—				—				—				—
Residential mortgages			—				—				—				—				(9	)
Home equity			(125	)			—				—				—				—
Consumer			—				—				(2	)			—				(37	)
Other			—				—				—				—				—
Total loans charged-off			(221	)			(344	)			(543	)			(635	)			(595	)
Recoveries on loans previously charged-off:
Commercial and industrial			—				5				17				—				14
Commercial real estate			18				—				—				—				—
Construction and land			—				—				1				—				3
Residential mortgages			1				7				—				—				7
Home equity			—				—				—				—				1
Consumer			8				—				6				16				12
Other			—				—				—				—				—
Total recoveries			27				12				24				16				37
Net charge-offs		$	(194	)		$	(332	)		$	(519	)		$	(619	)		$	(558	)
Balance at period end		$	24,896			$	18,535			$	18,080			$	18,186			$	18,107
Allowance for unfunded commitments
Balance at beginning of period		$	892			$	836			$	785			$	631			$	653
Adoption of ASU 2016-13			1,275				—				—				—				—
Provision for unfunded commitments			671				56				51				154				(22	)
Balance at period end		$	2,838			$	892			$	836			$	785			$	631
Total allowance for credit losses - loans and unfunded commitments		$	27,734			$	19,427			$	18,916			$	18,971			$	18,738
Provision for credit losses under CECL
Provision for loan losses			7,409				787				413				698				814
Provision for securities held to maturity credit losses			(6	)			-				-				-				-
Provision for unfunded commitments(1)			671				-				-				-				-
Total provision for credit losses		$	8,074			$	787			$	413			$	698			$	814
Non-performing loans - continuing operations		$	6,515			$	7,293			$	6,770			$	6,352			$	8,830
Non-performing loans - discontinued operations			—				—				—				—				1,506
Total nonperforming loans			6,515				7,293				6,770				6,352				10,336
Foreclosed properties (OREO)			779				278				278				971				971
Total nonperforming assets		$	7,294			$	7,571			$	7,048			$	7,323			$	11,307
Allowance for loan losses to loans held for investment (2)			1.29	%			0.99	%			0.98	%			1.02	%			1.04	%
Net charge-offs to average loans (3)			0.04				0.07				0.11				0.14				0.11
Non-performing loans as a percentage of total loans
Continuing operations			0.34	%			0.39	%			0.37	%			0.35	%			0.51	%
Discontinued operations			—				—				—				—				0.39
Total			0.34				0.39				0.37				0.35				0.49
Non-performing assets as a percentage of total assets
Continuing operations			0.27	%			0.26	%			0.29	%			0.31	%			0.34	%
Discontinued operations			—				—				—				—				0.05
Total			0.27				0.26				0.29				0.31				0.40

⁽¹⁾ Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $56, $51, $154 and ($22) for the fourth, third, second, and first quarters of 2019, respectively.
⁽²⁾ The third, second, and first quarters of 2019 ratios are calculated on a continuing operations basis.
⁽³⁾ Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits

																	Linked
		March 31,			December 31,			September 30,			June 30,			March 31,			Quarter				Year Over
(dollars in thousands)		2020			2019			2019			2019			2019			Change				Year Change
DDA		$	712,919		$	824,646		$	599,657		$	569,693		$	561,829		$	(111,727	)		$	151,090
NOW			368,463			373,727			240,427			309,709			233,838			(5,264	)			134,625
Savings			567			1,219			1,081			1,090			896			(652	)			(329	)
Money market			982,109			1,173,218			921,133			802,973			962,741			(191,109	)			19,368
Time			66,793			44,389			30,782			33,902			22,069			22,404				44,724
Brokered			94,268			81,847			61,192			134,164			65,811			12,421				28,457
Total deposits - continuing operations			2,225,119			2,499,046			1,854,272			1,851,531			1,847,184			(273,927	)			377,935
Deposits to be assumed - discontinued operations			—			—			—			—			593,264			—				(593,264	)
Total deposits		$	2,225,119		$	2,499,046		$	1,854,272		$	1,851,531		$	2,440,448		$	(273,927	)		$	(215,329	)
Payments clients		$	483,585		$	567,597		$	286,373		$	301,413		$	361,192		$	(84,012	)		$	122,393

Average Deposits

		2020			2019												Linked
		First			Fourth			Third			Second			First			Quarter				Q1 2020 vs
(dollars in thousands)		Quarter			Quarter			Quarter			Quarter			Quarter			Change				Q1 2019
DDA		$	713,001		$	718,298		$	637,809		$	587,957		$	575,453		$	(5,297	)		$	137,548
NOW			382,178			320,637			295,106			314,601			276,212			61,541				105,966
Savings			650			1,098			1,085			956			884			(448	)			(234	)
Money market			1,010,713			1,006,449			895,102			859,680			847,254			4,264				163,459
Time			55,775			37,388			32,409			32,358			12,847			18,387				42,928
Brokered			92,188			62,757			88,146			106,524			81,141			29,431				11,047
Total deposits - continuing operations			2,254,505			2,146,627			1,949,657			1,902,076			1,793,791			107,878				460,714
Deposits to be assumed - discontinued operations			—			—			—			45,350			593,313			—				(593,313	)
Total deposits		$	2,254,505		$	2,146,627		$	1,949,657		$	1,947,426		$	2,387,104		$	107,878			$	(132,599	)
Payments clients		$	419,630		$	362,327		$	289,526		$	285,949		$	295,059		$	57,303			$	124,571
Noninterest bearing deposits as a percentage of average deposits - continuing operations			31.6	%		33.5	%		32.7	%		30.9	%		32.1	%
Cost of interest-bearing deposits - continuing operations			1.09	%		1.36	%		1.58	%		1.66	%		1.61	%
Cost of deposits - continuing operations			0.75	%		0.90	%		1.06	%		1.15	%		1.09	%

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

		2020				2019
		First				Fourth				Third				Second				First
(in thousands, except share and per share data)		Quarter				Quarter				Quarter				Quarter				Quarter
Taxable equivalent interest income reconciliation
Interest income - GAAP		$	26,023			$	26,532			$	26,520			$	26,598			$	26,197
Taxable equivalent adjustment			223				167				104				88				100
Interest income - taxable equivalent		$	26,246			$	26,699			$	26,624			$	26,686			$	26,297
Taxable equivalent net interest income reconciliation - continuing operations
Net interest income - GAAP		$	20,980			$	20,567			$	19,984			$	19,889			$	20,424
Taxable equivalent adjustment			223				167				104				88				100
Net interest income - taxable equivalent - continuing operations		$	21,203			$	20,734			$	20,088			$	19,977			$	20,524
Taxable equivalent net interest margin reconciliation - continuing operations
Net interest margin - GAAP - continuing operations			3.38	%			3.35	%			3.51	%			3.60	%			3.72	%
Impact of taxable equivalent adjustment			0.03				0.03				0.01				0.01				0.02
Net interest margin - taxable equivalent - continuing operations			3.41	%			3.38	%			3.52	%			3.61	%			3.74	%
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP			3.38	%			3.35	%			3.51	%			3.54	%			3.66	%
Impact of taxable equivalent adjustment			0.03				0.03				0.01				0.02				0.02
Net interest margin - taxable equivalent			3.41	%			3.38	%			3.52	%			3.56	%			3.68	%
Income before income taxes reconciliation
Income before income taxes - GAAP		$	2,451			$	9,077			$	9,663			$	8,878			$	8,151
Taxable equivalent adjustment			223				167				104				88				100
Income before income taxes		$	2,674			$	9,244			$	9,767			$	8,966			$	8,251
Income tax reconciliation
Income tax expense - GAAP		$	327			$	1,937			$	2,094			$	1,869			$	1,711
Taxable equivalent adjustment			223				167				104				88				100
Income tax expense		$	550			$	2,104			$	2,198			$	1,957			$	1,811
Tangible book value per common share reconciliation
Total shareholders’ equity		$	332,300			$	326,495			$	328,711			$	336,715			$	320,627
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(22,848	)
Total tangible common equity		$	312,375			$	306,570			$	308,786			$	316,790			$	297,779
Common shares outstanding			21,479,986				21,751,026				22,193,761				23,293,465				24,466,964
Book value per common share - GAAP		$	15.47			$	15.01			$	14.81			$	14.46			$	13.10
Tangible book value			14.54				14.09				13.91				13.60				12.17
Tangible common equity to tangible assets reconciliation
Total shareholders’ equity		$	332,300			$	326,495			$	328,711			$	336,715			$	320,627
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(22,848	)
Total tangible common equity		$	312,375			$	306,570			$	308,786			$	316,790			$	297,779
Total assets		$	2,719,658			$	2,910,379			$	2,410,198			$	2,389,680			$	2,855,887
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(22,848	)
Total tangible assets		$	2,699,733			$	2,890,454			$	2,390,273			$	2,369,755			$	2,833,039
Tangible common equity to tangible assets			11.57	%			10.61	%			12.92	%			13.37	%			10.51	%

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