Atlantic Capital Bancshares, Inc. Reports Third Quarter 2020 Results

/EIN News/ -- ATLANTA, Oct. 22, 2020 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income from continuing operations for the quarter ended September 30, 2020 of $8.6 million, or $0.40 per diluted share, compared to $8.2 million, or $0.33 per diluted share, for the third quarter of 2019 and $1.8 million, or $0.09 per diluted share, for the second quarter of 2020.

“We reported another quarter of solid operating results and strong year over year growth in pre-provision, pre-tax net revenue, while continuing to strengthen our fortress balance sheet with the issuance of $75 million in subordinated debt. With confidence in our credit quality, capital strength and earnings outlook, we also resumed our share repurchase program,” remarked Douglas Williams, President and Chief Executive Officer.

Third Quarter Highlights⁽¹⁾

• Capital ratios remained strong, with a tangible common equity to tangible assets ratio of 11.0% and a total risk-based capital ratio of 16.9%.
• Tangible book value per share increased to $15.11 from $14.72 at June 30, 2020 and from $14.09 at December 31, 2019.  
• Average deposits from continuing operations increased $62.3 million, or 10.3% annualized, compared to the second quarter of 2020 and increased $522.6 million, or 26.8%, compared to the third quarter of 2019.
• Cost of deposits decreased to 0.19% from 0.22% in the second quarter of 2020.
• Annualized net charge-offs to average loans totaled 0.06% for the third quarter of 2020 and 0.13% for the full year 2020.
• Non-performing assets to total assets were 0.20% at September 30, 2020 compared to 0.24% at June 30, 2020.
• We repurchased 401,000 shares in the third quarter of 2020 totaling $4.6 million.
• We issued $75 million in subordinated notes in the third quarter of 2020, and called the existing $50 million of subordinated notes on September 30, 2020.

Income Statement        

Taxable equivalent net interest income from continuing operations totaled $22.1 million for the third quarter of 2020, an increase of $2.0 million, or 9.8%, from the third quarter of 2019, and an increase of $78,000, or 1.4% annualized, from the second quarter of 2020. The third quarter of 2020 included $1.6 million in Paycheck Protection Program (“PPP”) loan income compared to $696,000 in the second quarter of 2020. The third quarter of 2020 also included a $521,000 increase in interest expense due to the $75 million subordinated debt issuance.

Taxable equivalent net interest margin from continuing operations was 3.14% in the third quarter of 2020, compared to 3.52% in the third quarter of 2019 and 3.23% in the second quarter of 2020. The linked quarter decrease was primarily the result of the additional interest expense due to the subordinated debt issuance along with a decrease in loan yields, partially offset by a decrease in the cost of interest bearing deposits. The taxable equivalent net interest margin, excluding PPP loans, in the third quarter of 2020 was 3.18% compared to 3.35% in the second quarter of 2020.

The yield on loans from continuing operations in the third quarter of 2020 was 3.82%, a decrease of 136 basis points from the third quarter of 2019 and a decrease of 5 basis points from the second quarter of 2020. Excluding the PPP loans, the third quarter of 2020 loan yield was 3.95% compared to 4.09% in the second quarter of 2020.

The cost of deposits from continuing operations in the third quarter of 2020 was 0.19%, a decrease of 87 basis points from the third quarter of 2019 and a decrease of 3 basis points from the second quarter of 2020. The cost of interest bearing deposits from continuing operations decreased 130 basis points to 0.28% from the third quarter of 2019, and decreased 5 basis points from the second quarter of 2020.

The provision for credit losses for continuing operations was $28,000 in the third quarter of 2020 compared to $413,000 in the third quarter of 2019 and $8.9 million in the second quarter of 2020. The third quarter of 2020 provision for credit losses included a $636,000 provision for loan losses offset by a $609,000 decrease in the reserve for unfunded commitments.

Noninterest income from continuing operations totaled $2.5 million in the third quarter of 2020 compared to $2.8 million in the third quarter of 2019 and $2.3 million in the second quarter of 2020. Service charge income in the third quarter of 2020 totaled $1.2 million, an increase of $292,000 compared to the third quarter of 2019, and an increase of $136,000 from the second quarter of 2020. The increase in service charge income was primarily due to an increase in ACH volumes in our payments business. The third quarter of 2020 also included a loss of $145,000 on the sale of other assets, primarily due to the sale of an OREO property.   

Noninterest expense from continuing operations totaled $13.7 million in the third quarter of 2020, compared to $12.7 million in the third quarter of 2019 and $12.9 million in the second quarter of 2020. The linked quarter increase in expenses was primarily driven by an increase in our accruals for incentive compensation and a decrease in loan production salary cost deferrals. In addition, other noninterest expense increased primarily due to $470,000 in losses on customer accounts.

The year-to-date 2020 effective tax rate from continuing operations was 16.8% 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 13.

Balance Sheet

Total loans held for investment were $2.19 billion at September 30, 2020, an increase of $352.4 million, or 19.2%, from September 30, 2019 and an increase of $3.3 million from June 30, 2020. PPP loans totaled $231.8 million at September 30, 2020, a decrease of $2.2 million compared to June 30, 2020, due to early payoffs during the third quarter. Consumer loans increased $41.8 million from June 30, 2020 to $154.9 million at September 30, 2020, due to the growth in a partnership with a fintech firm that offers CD-secured loans to its customers.

The allowance for credit losses was 1.59% of total loans held for investment at September 30, 2020, compared to 1.61% at June 30, 2020. Excluding the impact of PPP loans, the allowance for credit losses at June 30, 2020 was 1.78%. Annualized net charge-offs were 0.06% for the third quarter of 2020 and 0.13% for the first nine months of 2020. Non-performing assets totaled $6.0 million, or 0.20% of total assets, as of September 30, 2020, compared to $7.0 million, or 0.24% of total assets, as of June 30, 2020.

Total average deposits from continuing operations were $2.47 billion for the third quarter of 2020, an increase of $522.6 million, or 26.8%, from the third quarter of 2019 and an increase of $62.3 million, or 10.3% annualized, from the second quarter of 2020. Noninterest bearing deposits were 34.6% of total average deposits in the third quarter of 2020, compared to 32.7% in the third quarter of 2019 and 33.8% in the second quarter of 2020.

Tangible common equity to tangible assets was 11.0% at September 30, 2020, unchanged from June 30, 2020. The estimated total risk based capital ratio increased to 16.9% at September 30, 2020 from 14.8% at June 30, 2020 due to the issuance of $75 million in subordinated debt.

Earnings Conference Call

Atlantic Capital will host a conference call at 10:00 a.m. EDT on Friday, October 23, 2020, to discuss the financial results for the quarter ended September 30, 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 our  website, www.atlanticcapitalbank.com. A presentation will be used during the earnings conference call and is available at https://atlanticcapitalbank.q4ir.com/news-market-data/presentations/default.aspx.

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) loan yield excluding PPP loans; (iv) taxable equivalent net interest margin; (v) taxable equivalent net interest margin excluding PPP loans; (vi) taxable equivalent income before income taxes; (vii) taxable equivalent income tax expense; (viii) tangible assets; (ix) tangible common equity; (x) tangible book value per common share, and (xi) allowance for credit losses to loans held for investment excluding PPP loans, in our analysis of the Company's performance. Tangible common equity excludes goodwill 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 $2.9 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 payments and other specialized financial services for select clients nationally.

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

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

 

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information
																	For the nine months ended
		2020									2019						September 30,
(in thousands, except share and per share data;		Third			Second			First			Fourth			Third
taxable equivalent)		Quarter			Quarter			Quarter			Quarter			Quarter			2020			2019
INCOME SUMMARY (1)
Interest income - taxable equivalent (2)		$	24,578		$	24,151		$	26,246		$	26,699		$	26,624		$	74,976		$	79,607
Interest expense			2,515			2,166			5,043			5,965			6,536			9,724			19,018
Net interest income - taxable equivalent			22,063			21,985			21,203			20,734			20,088			65,252			60,589
Provision for credit losses			28			8,863			8,074			787			413			16,965			1,925
Net interest income after provision for credit losses			22,035			13,122			13,129			19,947			19,675			48,287			58,664
Noninterest income			2,504			2,343			2,422			2,679			2,769			7,269			8,046
Noninterest expense			13,713			12,904			12,877			13,382			12,677			39,494			39,726
Income from continuing operations before income taxes			10,826			2,561			2,674			9,244			9,767			16,062			26,984
Income tax expense			2,208			712			550			2,104			2,198			3,471			5,966
Net income from continuing operations(2)(3)			8,618			1,849			2,124			7,140			7,569			12,591			21,018
Income (loss) from discontinued operations, net of tax			—			—			—			—			617			—			21,697
Net income		$	8,618		$	1,849		$	2,124		$	7,140		$	8,186		$	12,591		$	42,715
PER SHARE DATA
Diluted earnings per share - continuing operations		$	0.40		$	0.09		$	0.10		$	0.32		$	0.33		$	0.58		$	0.88
Diluted earnings (loss) per share - discontinued operations			—			—			—			—			0.03			—			0.91
Diluted earnings per share			0.40			0.09			0.10			0.32			0.36			0.58			1.78
Book value per share			16.05			15.64			15.47			15.01			14.81			16.05			14.81
Tangible book value per common share (3)			15.11			14.72			14.54			14.09			13.91			15.11			13.91
PERFORMANCE MEASURES
Return on average equity			10.05	%		2.20	%		2.56	%		8.65	%		9.77	%		4.98	%		17.25	%
Return on average assets			1.15			0.25			0.32			1.08			1.32			0.59			2.22
Taxable equivalent net interest margin - continuing operations			3.14			3.23			3.41			3.38			3.52			3.25			3.66
Taxable equivalent net interest margin excluding PPP loans			3.18			3.35			3.41			3.38			3.52			3.31			3.66
Efficiency ratio - continuing operations			56.61			53.82			55.03			57.57			55.72			55.16			58.13
Average loans to average deposits			88.65			88.46			83.84			86.54			92.41			87.07			93.96
CAPITAL
Average equity to average assets			11.45	%		11.53	%		12.41	%		12.47	%		13.54	%		11.78	%		12.87	%
Tangible common equity to tangible assets			11.03			11.01			11.57			10.61			12.92			11.03			12.92
Leverage ratio			9.9	(4)		9.9			10.7			11.0			11.8			9.9	(4)		11.8
Total risk based capital ratio			16.9	(4)		14.8			14.9			15.0			15.5			16.9	(4)		15.5
SHARES OUTSTANDING
Number of common shares outstanding - basic			21,202,783			21,477,631			21,479,986			21,751,026			22,193,761			21,202,783			22,193,761
Number of common shares outstanding - diluted			21,298,098			21,569,050			21,675,934			21,974,959			22,405,141			21,298,098			22,405,141
Average number of common shares - basic			21,500,735			21,472,462			21,689,038			21,876,487			22,681,904			21,553,953			23,800,525
Average number of common shares - diluted			21,543,805			21,535,040			21,842,175			22,053,907			22,837,531			21,640,057			23,957,915
ASSET QUALITY
Allowance for credit losses to loans held for investment (5)			1.59	%		1.61	%		1.43	%		1.04	%		1.03	%		1.59	%		1.03	%
Net charge-offs to average loans (6)			0.06			0.29			0.04			0.07			0.11			0.13			0.12
Non-performing assets to total assets			0.20			0.24			0.27			0.26			0.29			0.20			0.29
AVERAGE BALANCES
Total loans - continuing operations		$	2,191,669		$	2,131,847		$	1,890,184		$	1,857,736		$	1,801,629		$	2,071,673		$	1,739,917
Investment securities			453,382			462,850			417,971			389,667			340,872			444,766			366,790
Total assets			2,977,444			2,932,716			2,686,266			2,626,388			2,453,438			2,865,884			2,572,961
Deposits - continuing operations			2,472,218			2,409,958			2,254,505			2,146,626			1,949,657			2,379,235			1,851,674
Shareholders' equity			341,017			338,027			333,480			327,543			332,291			337,521			331,116
AT PERIOD END
Loans and loans held for sale		$	2,188,894		$	2,185,847		$	1,932,909		$	1,873,524		$	1,836,589		$	2,188,894		$	1,836,589
Investment securities			446,706			457,749			466,405			399,433			329,648			446,706			329,648
Total assets			2,923,977			2,890,622			2,719,658			2,910,379			2,410,198			2,923,977			2,410,198
Deposits			2,468,722			2,407,631			2,225,119			2,499,046			1,854,272			2,468,722			1,854,272
Shareholders’ equity			340,309			335,980			332,300			326,495			328,711			340,309			328,711
(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 September 30, 2020.
(5) The ratios for the third quarter of 2019 are calculated on a continuing operations basis.
(6) Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
		September 30,				June 30,				December 31,				September 30,
(in thousands, except share data)		2020				2020				2019				2019
ASSETS
Cash and due from banks		$	22,715			$	33,759			$	45,249			$	42,577
Interest-bearing deposits in banks			91,243				33,038				421,079				27,167
Cash and cash equivalents			113,958				66,797				466,328				69,744
Investment securities available for sale			260,884				271,829				282,461				286,785
Investment securities held to maturity, net of allowance for credit losses of $15 and $13 at September 30, 2020 and June 30, 2020, respectively			185,822				185,920				116,972				42,863
Other investments			26,315				28,811				27,556				31,360
Loans held for sale			859				1,153				370				916
Loans held for investment			2,188,035				2,184,694				1,873,524				1,835,673
Less: allowance for loan losses			(31,894	)			(31,605	)			(18,535	)			(18,080	)
Loans held for investment, net			2,156,141				2,153,089				1,854,989				1,817,593
Premises and equipment, net			22,558				22,494				22,536				19,688
Bank owned life insurance			67,489				67,127				66,421				66,047
Goodwill			19,925				19,925				19,925				19,925
Other intangibles, net			2,685				2,731				3,027				3,112
Other real estate owned			563				779				278				278
Other assets			66,778				69,967				49,516				51,887
Total assets		$	2,923,977			$	2,890,622			$	2,910,379			$	2,410,198
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		$	843,656			$	883,662			$	824,646			$	599,657
Interest-bearing checking			387,858				449,737				373,727				240,427
Savings			568				583				1,219				1,081
Money market			945,834				879,863				1,173,218				921,133
Time			196,343				131,353				44,389				30,782
Brokered deposits			94,463				62,433				81,847				61,192
Total deposits			2,468,722				2,407,631				2,499,046				1,854,272
Federal funds purchased			—				6,000				—				57,000
Federal Home Loan Bank borrowings			—				50,000				—				76,000
Long-term debt			73,814				49,958				49,873				49,831
Other liabilities			41,132				41,053				34,965				44,384
Total liabilities			2,583,668				2,554,642				2,583,884				2,081,487
SHAREHOLDERS’ EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020, June 30, 2020, December 31, 2019, and September 30, 2019			—				—				—				—
Common stock, no par value; 100,000,000 shares authorized; 21,202,783, 21,477,631, 21,751,026, and 22,193,761 shares issued and outstanding as of September 30, 2020, June 30, 2020, December 31, 2019, and September 30, 2019, respectively			220,643				224,520				230,265				237,687
Retained earnings			104,188				95,570				91,669				84,529
Accumulated other comprehensive income			15,478				15,890				4,561				6,495
Total shareholders’ equity			340,309				335,980				326,495				328,711
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,923,977			$	2,890,622			$	2,910,379			$	2,410,198

ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share data)		Three months ended																		Nine months ended
		September 30,				June 30,				March 31,			December 31,			September 30,				September 30,				September 30,
		2020				2020				2020			2019			2019				2020				2019
INTEREST INCOME
Loans, including fees		$	21,049			$	20,496			$	22,426		$	23,175		$	23,541			$	63,971			$	69,847
Investment securities			2,910				3,041				2,732			2,413			2,176				8,683				7,146
Interest and dividends on other interest‑earning assets			274				260				865			944			803				1,399				2,322
Total interest income			24,233				23,797				26,023			26,532			26,520				74,053				79,315
INTEREST EXPENSE
Interest on deposits			1,151				1,299				4,182			4,890			5,223				6,632				15,502
Interest on Federal Home Loan Bank advances			16				38				—			157			390				54				660
Interest on federal funds purchased and securities sold under agreements to repurchase			3				6				32			94			99				41				385
Interest on long-term debt			1,345				823				829			824			824				2,997				2,471
Total interest expense			2,515				2,166				5,043			5,965			6,536				9,724				19,018
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES			21,718				21,631				20,980			20,567			19,984				64,329				60,297
Provision for credit losses			28				8,863				8,074			787			413				16,965				1,925
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			21,690				12,768				12,906			19,780			19,571				47,364				58,372
NONINTEREST INCOME
Service charges			1,217				1,081				1,232			998			925				3,530				2,589
Gains on sale of securities			—				—				—			—			253				—				907
Gains (losses) on sale of other assets			(145	)			—				5			—			140				(140	)			127
Derivatives income (loss)			10				(10	)			246			315			(293	)			246				(637	)
Bank owned life insurance			363				367				362			375			422				1,092				1,171
SBA lending activities			893				782				414			846			1,150				2,089				3,332
Other noninterest income			166				123				163			145			172				452				557
Total noninterest income			2,504				2,343				2,422			2,679			2,769				7,269				8,046
NONINTEREST EXPENSE
Salaries and employee benefits			8,850				8,466				8,476			8,500			8,295				25,792				26,037
Occupancy			739				883				794			838			722				2,416				2,050
Equipment and software			826				763				779			769			842				2,368				2,334
Professional services			562				792				705			577			764				2,059				2,331
Communications and data processing			757				670				897			1,066			796				2,324				2,133
Marketing and business development			141				79				153			143			243				373				702
Travel, meals and entertainment			39				34				140			175			152				213				504
FDIC premiums			213				175				—			—			(193	)			388				217
Other noninterest expense			1,586				1,042				933			1,314			1,056				3,561				3,418
Total noninterest expense			13,713				12,904				12,877			13,382			12,677				39,494				39,726
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES			10,481				2,207				2,451			9,077			9,663				15,139				26,692
Provision for income taxes			1,863				358				327			1,937			2,094				2,548				5,674
NET INCOME FROM CONTINUING OPERATIONS			8,618				1,849				2,124			7,140			7,569				12,591				21,018
DISCONTINUED OPERATIONS
Income from discontinued operations		$	—			$	—			$	—		$	—		$	—			$	—			$	28,690
Provision (benefit) for income taxes			—				—				—			—			(617	)			—				6,993
Net income from discontinued operations			—				—				—			—			617				—				21,697
NET INCOME		$	8,618			$	1,849			$	2,124		$	7,140		$	8,186			$	12,591			$	42,715
Net Income per Common Share - Basic
Net income per common share - continuing operations		$	0.40			$	0.09			$	0.10		$	0.33		$	0.33			$	0.58			$	0.88
Net income per common share - discontinued operations			—				—				—			—			0.03				—				0.91
Net Income per Common Share - Basic			0.40				0.09				0.10			0.33			0.36				0.58				1.79
Net Income per Common Share - Diluted
Net income per common share - continuing operations		$	0.40			$	0.09			$	0.10		$	0.32		$	0.33			$	0.58			$	0.88
Net income per common share - discontinued operations			—				—				—			—			0.03				—				0.91
Net Income per Common Share - Diluted			0.40				0.09				0.10			0.32			0.36				0.58				1.78
Weighted average shares - basic			21,500,735				21,472,462				21,689,038			21,876,487			22,681,904				21,553,953				23,800,525
Weighted average shares - diluted			21,543,805				21,535,040				21,842,175			22,053,907			22,837,531				21,640,057				23,957,915

ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
		Three months ended
		September 30, 2020									June 30, 2020
					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		$	136,459		$	65		0.19	%		$	129,989		$	23		0.07	%
Other short-term investments			—			—		—				—			—		—
Investment securities:
Taxable investment securities			237,655			1,467		2.46				247,668			1,581		2.57
Non-taxable investment securities(1)			215,727			1,788		3.30				215,182			1,814		3.39
Total investment securities			453,382			3,255		2.86				462,850			3,395		2.95
Loans			2,191,669			21,049		3.82				2,131,847			20,496		3.87
FHLB and FRB stock			14,484			209		5.74				16,842			237		5.66
Total interest-earning assets			2,795,994			24,578		3.50				2,741,528			24,151		3.54
Non-earning assets			181,450									191,188
Total assets		$	2,977,444								$	2,932,716
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,383,382			1,006		0.29				1,415,069			1,115		0.32
Time deposits			166,019			86		0.21				96,362			58		0.24
Brokered deposits			68,102			59		0.34				83,228			126		0.61
Total interest-bearing deposits			1,617,503			1,151		0.28				1,594,659			1,299		0.33
Total borrowings			40,793			19		0.19				97,769			44		0.18
Total long-term debt			82,708			1,345		6.47				49,930			823		6.63
Total interest-bearing liabilities			1,741,004			2,515		0.57				1,742,358			2,166		0.50
Demand deposits			854,715									815,299
Other liabilities			40,708									37,032
Shareholders’ equity			341,017									338,027
Total liabilities and shareholders’ equity		$	2,977,444								$	2,932,716
Net interest spread								2.92	%								3.04	%
Net interest income and net interest margin(2)					$	22,063		3.14	%					$	21,985		3.23	%
Non-taxable equivalent net interest margin								3.09	%								3.17	%
(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
		September 30, 2020									September 30, 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		$	136,459		$	65		0.19	%		$	103,954		$	564		2.15	%
Other short-term investments			—			—		—				—			—		—
Investment securities:
Taxable investment securities			237,655			1,467		2.46				257,005			1,657		2.56
Non-taxable investment securities(1)			215,727			1,788		3.30				83,867			623		2.95
Total investment securities			453,382			3,255		2.86				340,872			2,280		2.65
Loans			2,191,669			21,049		3.82				1,801,629			23,541		5.18
FHLB and FRB stock			14,484			209		5.74				15,524			239		6.11
Total interest-earning assets			2,795,994			24,578		3.50				2,261,979			26,624		4.67
Non-earning assets			181,450									191,459
Total assets		$	2,977,444								$	2,453,438
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,383,382			1,006		0.29				1,191,293			4,642		1.55
Time deposits			166,019			86		0.21				32,409			51		0.62
Brokered deposits			68,102			59		0.34				88,146			530		2.39
Total interest-bearing deposits			1,617,503			1,151		0.28				1,311,848			5,223		1.58
Total borrowings			40,793			19		0.19				85,478			489		2.27
Total long-term debt			82,708			1,345		6.47				49,803			824		6.56
Total interest-bearing liabilities			1,741,004			2,515		0.57				1,447,129			6,536		1.79
Demand deposits			854,715									637,809
Other liabilities			40,708									36,209
Shareholders’ equity			341,017									332,291
Total liabilities and shareholders’ equity		$	2,977,444								$	2,453,438
Net interest spread								2.92	%								2.88	%
Net interest income and net interest margin(2)					$	22,063		3.14	%					$	20,088		3.52	%
Non-taxable equivalent net interest margin								3.09	%								3.51	%
(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
		Nine months ended
		September 30, 2020									September 30, 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		$	147,795		$	756		0.68	%		$	88,960		$	1,477		2.22	%
Other short-term investments			36			—		—				5,181			118		3.05
Investment securities:
Taxable investment securities			246,388			4,729		2.56				284,978			5,619		2.64
Non-taxable investment securities (1)			198,378			4,877		3.28				81,812			1,819		2.97
Total investment securities			444,766			9,606		2.88				366,790			7,438		2.71
Loans - continuing operations			2,071,673			63,971		4.12				1,739,917			69,847		5.37
FHLB and FRB stock			14,667			643		5.86				14,173			727		6.86
Total interest-earning assets - continuing operations			2,678,937			74,976		3.74				2,215,021			79,607		4.81
Loans held for sale - discontinued operations			—			—		—				156,060			4,588		3.93
Total interest-earning assets			2,678,937			74,976		3.74				2,371,081			84,195		4.75
Non-earning assets			186,947									201,880
Total assets		$	2,865,884								$	2,572,961
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,397,280			5,889		0.56				1,147,508			13,630		1.59
Time deposits			106,271			196		0.25				18,246			139		1.02
Brokered deposits			81,125			547		0.90				91,963			1,733		2.52
Total interest-bearing deposits			1,584,676			6,632		0.56				1,257,717			15,502		1.65
Total borrowings			50,055			95		0.25				57,844			1,045		2.42
Total long-term debt			60,922			2,997		6.57				49,761			2,471		6.64
Total interest-bearing liabilities - continuing operations			1,695,653			9,724		0.77				1,365,322			19,018		1.86
Interest-bearing liabilities - discontinued operations			—			—		—				192,613			1,502		1.04
Total interest-bearing liabilities			1,695,653			9,724		0.77				1,557,935			20,520		1.76
Demand deposits			794,559									593,957
Demand deposits - discontinued operations			—									52,481
Other liabilities			38,151									37,472
Shareholders’ equity			337,521									331,116
Total liabilities and shareholders’ equity		$	2,865,884								$	2,572,961
Net interest spread - continuing operations								2.97	%								2.95	%
Net interest income and net interest margin - continuing operations (2)					$	65,252		3.25	%					$	60,589		3.66	%
Net interest income and net interest margin (2)					$	65,252		3.25	%					$	63,675		3.59	%
Non-taxable equivalent net interest margin								3.21	%								3.57	%
(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
		September 30,				June 30,				March 31,				December 31,				September 30,				Quarter				Year
(dollars in thousands)		2020				2020				2020				2019				2019				Change				Change
Loans held for sale
Loans held for sale		$	859			$	1,153			$	—			$	370			$	916			$	(294	)		$	(57	)
Total loans held for sale		$	859			$	1,153			$	—			$	370			$	916			$	(294	)		$	(57	)
Loans held for investment
Commercial loans:
Commercial and industrial - other		$	712,567			$	739,769			$	760,062			$	705,115			$	697,412			$	(27,202	)		$	15,155
Commercial and industrial - PPP			231,834				234,049				—				—				—				(2,215	)			231,834
Commercial real estate:
Multifamily			58,336				58,909				73,654				98,378				60,398				(573	)			(2,062	)
Owner occupied			364,170				366,847				359,026				357,912				352,842				(2,677	)			11,328
Investment			458,279				474,565				477,451				460,038				452,285				(16,286	)			5,994
Construction and land:
1‑4 family residential construction			—				11				2,706				4,009				5,186				(11	)			(5,186	)
Other construction, development, and land			139,836				128,980				124,116				123,531				139,991				10,856				(155	)
Mortgage warehouse loans			—				—				—				13,941				23,256				—				(23,256	)
Total commercial loans			1,965,022				2,003,130				1,797,015				1,762,924				1,731,370				(38,108	)			233,652
Residential:
Residential mortgages			29,460				32,327				31,761				31,315				31,903				(2,867	)			(2,443	)
Home equity			24,528				23,689				23,479				25,002				25,638				839				(1,110	)
Total residential loans			53,988				56,016				55,240				56,317				57,541				(2,028	)			(3,553	)
Consumer			154,916				113,149				58,164				37,765				27,168				41,767				127,748
Other			22,777				22,160				25,488				19,552				22,533				617				244
			2,196,703				2,194,455				1,935,907				1,876,558				1,838,612				2,248				358,091
Less net deferred fees and other unearned income			(8,668	)			(9,761	)			(2,998	)			(3,034	)			(2,939	)			1,093				(5,729	)
Total loans held for investment		$	2,188,035			$	2,184,694			$	1,932,909			$	1,873,524			$	1,835,673			$	3,341			$	352,362
Total loans		$	2,188,894			$	2,185,847			$	1,932,909			$	1,873,894			$	1,836,589			$	3,047			$	352,305
Total unfunded commitments		$	764,247			$	749,321			$	689,620			$	743,958			$	687,295			$	14,926			$	76,952

ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Credit Losses Activity and Credit Quality
		2020												2019
		Third				Second				First				Fourth				Third
(dollars in thousands)		Quarter				Quarter				Quarter				Quarter				Quarter
Allowance for loan losses
Balance at beginning of period		$	31,605			$	24,896			$	18,535			$	18,080			$	18,186
Adoption of ASU 2016-13			—				—				(854	)			—				—
Provision for loan losses			636				8,222				7,409				787				413
Loans charged-off:
Commercial and industrial			(404	)			(1,479	)			(18	)			(344	)			(541	)
Commercial real estate			—				—				(78	)			—				—
Construction and land			—				—				—				—				—
Residential mortgages			—				(36	)			—				—				—
Home equity			—				—				(125	)			—				—
Consumer			—				—				—				—				(2	)
Other			—				—				—				—				—
Total loans charged-off			(404	)			(1,515	)			(221	)			(344	)			(543	)
Recoveries on loans previously charged-off:
Commercial and industrial			56				1				—				5				17
Commercial real estate			—				—				18				—				—
Construction and land			—				—				—				—				1
Residential mortgages			—				—				1				7				—
Home equity			—				—				—				—				—
Consumer			1				1				8				—				6
Other			—				—				—				—				—
Total recoveries			57				2				27				12				24
Net charge-offs		$	(347	)		$	(1,513	)		$	(194	)		$	(332	)		$	(519	)
Balance at period end		$	31,894			$	31,605			$	24,896			$	18,535			$	18,080
Allowance for unfunded commitments
Balance at beginning of period		$	3,480			$	2,838			$	892			$	836			$	785
Adoption of ASU 2016-13			—				—				1,275				—				—
Provision for unfunded commitments			(609	)			642				671				56				51
Balance at period end		$	2,871			$	3,480			$	2,838			$	892			$	836
Total allowance for credit losses - loans and unfunded commitments		$	34,765			$	35,085			$	27,734			$	19,427			$	18,916
Provision for credit losses under CECL
Provision for loan losses			636				8,222				7,409				787				413
Provision for securities held to maturity credit losses			1				(1	)			(6	)			-				-
Provision for unfunded commitments(1)			(609	)			642				671				-				-
Total provision for credit losses		$	28			$	8,863			$	8,074			$	787			$	413
Non-performing loans		$	5,421			$	6,265			$	6,515			$	7,293			$	6,770
Foreclosed properties (OREO)			563				779				779				278				278
Total nonperforming assets		$	5,984			$	7,044			$	7,294			$	7,571			$	7,048
Allowance for loan losses to loans held for investment (2)			1.46	%			1.45	%			1.29	%			0.99	%			0.98	%
Allowance for credit losses to loans held for investment (2)			1.59	%			1.61	%			1.43	%			1.04	%			1.03	%
Allowance for credit losses to loans held for investment excluding PPP loans (2)			1.78	%			1.80	%			1.43	%			1.04	%			1.03	%
Net charge-offs to average loans (3)			0.06				0.29				0.04				0.07				0.11
Non-performing loans as a percentage of total loans			0.25	%			0.29	%			0.34	%			0.39	%			0.37	%
Non-performing assets as a percentage of total assets			0.20	%			0.24	%			0.27	%			0.26	%			0.29	%
(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $56 and $51 for the fourth and third quarters of 2019, respectively.
(2) The third quarter of 2019 ratios are calculated on a continuing operations basis.
(3) Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
																	Linked
		September 30,			June 30,			March 31,			December 31,			September 30,			Quarter				Year Over
(dollars in thousands)		2020			2020			2020			2019			2019			Change				Year Change
DDA		$	843,656		$	883,662		$	712,919		$	824,646		$	599,657		$	(40,006	)		$	243,999
NOW			387,858			449,737			368,463			373,727			240,427			(61,879	)			147,431
Savings			568			583			567			1,219			1,081			(15	)			(513	)
Money market			945,834			879,863			982,109			1,173,218			921,133			65,971				24,701
Time			196,343			131,353			66,793			44,389			30,782			64,990				165,561
Brokered			94,463			62,433			94,268			81,847			61,192			32,030				33,271
Total deposits		$	2,468,722		$	2,407,631		$	2,225,119		$	2,499,046		$	1,854,272		$	61,091			$	614,450
Average Deposits
		2020									2019						Linked
		Third			Second			First			Fourth			Third			Quarter				Q3 2020 vs
(dollars in thousands)		Quarter			Quarter			Quarter			Quarter			Quarter			Change				Q3 2019
DDA		$	854,715		$	815,299		$	713,001		$	718,298		$	637,809		$	39,416			$	216,906
NOW			440,734			462,051			382,178			320,637			295,106			(21,317	)			145,628
Savings			586			574			650			1,098			1,085			12				(499	)
Money market			942,062			952,444			1,010,713			1,006,449			895,102			(10,382	)			46,960
Time			166,019			96,362			55,775			37,388			32,409			69,657				133,610
Brokered			68,102			83,228			92,188			62,757			88,146			(15,126	)			(20,044	)
Total deposits		$	2,472,218		$	2,409,958		$	2,254,505		$	2,146,627		$	1,949,657		$	62,260			$	522,561
Noninterest bearing deposits as a percentage of average deposits			34.6	%		33.8	%		31.6	%		33.5	%		32.7	%
Cost of interest-bearing deposits			0.28	%		0.33	%		1.09	%		1.36	%		1.58	%
Cost of deposits			0.19	%		0.22	%		0.75	%		0.90	%		1.06	%

ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation
																						For the nine months
		2020												2019								ended September 30,
		Third				Second				First				Fourth				Third
(in thousands, except share and per share data)		Quarter				Quarter				Quarter				Quarter				Quarter				2020				2019
Taxable equivalent interest income reconciliation
Interest income - GAAP		$	24,233			$	23,797			$	26,023			$	26,532			$	26,520			$	74,053			$	79,315
Taxable equivalent adjustment			345				354				223				167				104				923				292
Interest income - taxable equivalent		$	24,578			$	24,151			$	26,246			$	26,699			$	26,624			$	74,976			$	79,607
Taxable equivalent net interest income reconciliation - continuing operations
Net interest income - GAAP		$	21,718			$	21,631			$	20,980			$	20,567			$	19,984			$	64,329			$	60,297
Taxable equivalent adjustment			345				354				223				167				104				923				292
Net interest income - taxable equivalent - continuing operations		$	22,063			$	21,985			$	21,203			$	20,734			$	20,088			$	65,252			$	60,589
Loan yield excluding PPP loans reconciliation