Atlantic Capital Bancshares, Inc. Reports Second Quarter 2021 Results

ATLANTA, July 23, 2021 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) announced net income for the quarter ended June 30, 2021 of $11.8 million, or $0.58 per diluted share, compared to $1.8 million, or $0.09 per diluted share, for the second quarter of 2020 and $13.4 million, or $0.65 per diluted share, for the first quarter of 2021.

"Atlantic Capital recorded another quarter of strong and sustainable growth in loans, deposits, and revenue. Our new business pipelines remain robust, our banking teams are executing at a high level, and we expect solid growth through the balance of 2021 and into 2022," remarked Douglas Williams, President and Chief Executive Officer.

Second Quarter Highlights⁽¹⁾

• Total assets were $3.8 billion, compared to $3.7 billion at March 31, 2021 and $2.9 billion at June 30, 2020.
• Loans held for investment, excluding Paycheck Protection Program ("PPP") loans, increased $77.2 million, or 15% annualized, from March 31, 2021 and increased $208.6 million, or 11%, from June 30, 2020.
• Quarterly average deposits increased $150.7 million, or 19% annualized, compared to the first quarter of 2021 and increased $897.6 million, or 37%, compared to the second quarter of 2020.
• Cost of deposits decreased to 0.10% from 0.12% in the first quarter of 2021 and from 0.22% in the second quarter of 2020.
• Tangible book value per common share increased to $16.40 from $15.74 at March 31, 2021 and from $14.72 at June 30, 2020.
• Annualized net charge-offs to average loans totaled 0.10% for the second quarter of 2021 and 0.07% for the full year 2021. Non-performing assets to total assets were 0.14% at June 30, 2021.
• The allowance for credit losses was 1.27% of total loans held for investment at June 30, 2021, compared to 1.31% at March 31, 2021 and 1.61% at June 30, 2020.
• 50,000 shares were repurchased in the second quarter of 2021 totaling $1.3 million at an average price of $25.71. As of June 30, 2021, approximately $1.8 million remained from our $25 million share repurchase program.

Income Statement

Taxable equivalent net interest income totaled $26.0 million for the second quarter of 2021, an increase of $4.1 million, or 18%, from the second quarter of 2020, and an increase of $2.3 million, or 39% annualized, from the first quarter of 2021. The second quarter of 2021 included $3.0 million in PPP loan income compared to $696,000 in the second quarter of 2020 and $2.2 million in the first quarter of 2021. The second quarter of 2021 also included $671,000 in interest income related to the receipt of an investment prepayment penalty and the accelerated accretion of a loan discount upon payoff.

Taxable equivalent net interest margin was 2.91% in the second quarter of 2021, compared to 3.23% in the second quarter of 2020 and 2.81% in the first quarter of 2021. The tax equivalent net interest margin excluding PPP loans was 2.70%, unchanged from the first quarter of 2021.

The yield on loans in the second quarter of 2021 was 4.19%, an increase of 32 basis points from the second quarter of 2020 and an increase of 30 basis points from the first quarter of 2021. Excluding PPP loans, the second quarter of 2021 loan yield was 3.95%, an increase of 12 basis points compared to the first quarter of 2021. In addition, loan interest income for the second quarter of 2021 included $405,000 in previously mentioned accelerated discount accretion.

The cost of deposits in the second quarter of 2021 was 0.10%, a decrease of 12 basis points from the second quarter of 2020 and a decrease of 2 basis points from the first quarter of 2021. The cost of interest bearing deposits decreased 16 basis points to 0.17% from the second quarter of 2020, and decreased 2 basis points from the first quarter of 2021.

In the second quarter of 2021, we recorded a negative provision for credit losses of $933,000 compared to a provision for credit losses of $8.9 million in the second quarter of 2020 and a negative provision for credit losses of $4.5 million in the first quarter of 2021. The second quarter of 2021 provision for credit losses included a negative provision for loan losses of $814,000 and a negative provision for unfunded commitments of $118,000.

Noninterest income totaled $3.6 million in the second quarter of 2021 compared to $2.3 million in the second quarter of 2020 and unchanged from the first quarter of 2021. Service charge income in the second quarter of 2021 totaled $1.7 million, an increase of $646,000 compared to the second quarter of 2020, and an increase of $64,000 from the first quarter of 2021. The increase in service charge income was primarily due to growth in our payments and fintech businesses.

Noninterest expense totaled $15.2 million in the second quarter of 2021, compared to $12.9 million in the second quarter of 2020 and $15.1 million in the first quarter of 2021. Salaries and employee benefits expense totaled $10.4 million in the second quarter of 2021, unchanged compared to the first quarter of 2021.

(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 $2.3 billion at June 30, 2021, an increase of $80.2 million from June 30, 2020 and a decrease of $35.9 million from March 31, 2021. Loans held for investment, excluding PPP loans, increased $77.2 million, or 15% annualized, from March 31, 2021 and increased $208.6 million, or 11%, from June 30, 2020.

The allowance for credit losses was 1.27% of total loans held for investment at June 30, 2021, compared to 1.31% at March 31, 2021. The decrease in the allowance was a result of an improvement in our current expected credit losses, or CECL, economic forecast along with credit rating upgrades for certain criticized and classified loans. Excluding the impact of PPP loans, the allowance for credit losses at June 30, 2021 was 1.33%, compared to 1.45% at March 31, 2021.

Total average deposits were $3.3 billion for the second quarter of 2021, an increase of $897.6 million, or 37%, from the second quarter of 2020 and an increase of $150.7 million, or 19% annualized, from the first quarter of 2021. Average noninterest bearing deposits were $1.3 billion for the second quarter of 2021, an increase of $480.4 million, or 59%, from the second quarter of 2020 and an increase of $159.2 million, or 56% annualized, from the first quarter of 2021. Noninterest bearing deposits were 39.2% of total average deposits in the second quarter of 2021, compared to 33.8% in the second quarter of 2020 and 36.0% in the first quarter of 2021.

Subsequent Event

As announced and further described in a separate press release issued by Atlantic Capital today, Atlantic Capital and South State Corporation, have entered into a merger agreement under which South State will acquire Atlantic Capital in an all stock merger transaction.

Conference Call

In light of the announcement earlier today of our entry into a merger agreement with South State Corporation, Atlantic Capital and South State will host a joint conference call at 8:00 a.m. ET on Friday, July 23, 2021, to discuss the transaction and the financial results for the quarter ended June 30, 2021. Individuals wishing to participate in the conference call may do so by dialing 1-877-506-9272 from the United States. The call will also be available live via webcast at https://services.choruscall.com/links/ssb210723.html.

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) loans held for investment excluding PPP loans; (iv) loan yield excluding PPP loans; (v) taxable equivalent net interest margin; (vi) taxable equivalent net interest margin excluding PPP loans; (vii) taxable equivalent income before income taxes; (viii) taxable equivalent income tax expense; (ix) tangible common equity to tangible assets; (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. 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 $3.8 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: [email protected]

Phone: 404-995-6050

(ACB-ER)

Financial Contact:

Patrick Oakes

Email: [email protected]

Phone: 404-995-6050

 

ATLANTIC CAPITAL BANCSHARES, INC.
Selected Financial Information
																					For the six months ended
	2021								2020												June 30,
(in thousands, except share and per share data;	Second				First				Fourth				Third				Second
taxable equivalent)	Quarter				Quarter				Quarter				Quarter				Quarter				2021				2020
INCOME SUMMARY
Interest income - taxable equivalent (1)	$	27,993			$	25,775			$	25,288			$	24,578			$	24,151			$	53,768			$	50,397
Interest expense		1,958				2,065				2,299				2,515				2,166				4,023				7,209
Net interest income - taxable equivalent		26,035				23,710				22,989				22,063				21,985				49,745				43,188
Provision for credit losses		(933	)			(4,519	)			481				28				8,863				(5,452	)			16,937
Net interest income after provision for credit losses		26,968				28,229				22,508				22,035				13,122				55,197				26,251
Noninterest income		3,584				3,562				3,016				2,504				2,343				7,146				4,765
Noninterest expense		15,197				15,149				13,164				13,713				12,904				30,346				25,781
Income before income taxes		15,355				16,642				12,360				10,826				2,561				31,997				5,235
Income tax expense		3,539				3,280				2,410				2,208				712				6,819				1,262
Net income(1)(2)	$	11,816			$	13,362			$	9,950			$	8,618			$	1,849			$	25,178			$	3,973
PER SHARE DATA
Diluted earnings per share	$	0.58			$	0.65			$	0.48			$	0.40			$	0.09			$	1.23			$	0.18
Book value per share		17.38				16.72				16.60				16.05				15.64				17.38				15.64
Tangible book value per common share (2)		16.40				15.74				15.62				15.11				14.72				16.40				14.72
PERFORMANCE MEASURES
Return on average equity		13.60		%		15.99		%		11.68		%		10.05		%		2.20		%		14.77		%		2.38		%
Return on average assets		1.26				1.50				1.19				1.15				0.25				1.38				0.28
Taxable equivalent net interest margin		2.91				2.81				2.91				3.14				3.23				2.86				3.32
Taxable equivalent net interest margin excluding PPP loans		2.70				2.70				2.81				3.18				3.35				2.70				3.38
Efficiency ratio		51.97				56.30				51.30				56.61				53.82				54.04				54.42
Average loans to average deposits		67.54				71.93				76.81				88.65				88.46				69.67				86.23
CAPITAL
Average equity to average assets		9.24		%		9.39		%		10.18		%		11.45		%		11.53		%		9.31		%		11.95		%
Tangible common equity to tangible assets		8.86				8.63				8.86				11.03				11.01				8.86				11.01
Leverage ratio		8.4		(3)		8.4				8.9				9.9				9.9				8.5		(4)		10.3
Total risk based capital ratio		16.0		(3)		16.4				16.1				16.9				14.8				16.0		(4)		14.8
SHARES OUTSTANDING
Number of common shares outstanding - basic		20,319,429				20,354,077				20,394,912				21,202,783				21,477,631				20,319,429				21,477,631
Number of common shares outstanding - diluted		20,595,812				20,617,188				20,492,542				21,298,098				21,569,050				20,595,812				21,569,050
Average number of common shares - basic		20,332,503				20,380,066				20,711,089				21,500,735				21,472,462				20,356,153				21,580,855
Average number of common shares - diluted		20,516,478				20,502,184				20,795,332				21,543,805				21,535,040				20,509,370				21,688,712
ASSET QUALITY
Allowance for credit losses to loans held for investment		1.27		%		1.31		%		1.55		%		1.59		%		1.61		%		1.27		%		1.61		%
Net charge-offs to average loans (4)		0.10				0.04				0.05				0.06				0.29				0.07				0.17
Non-performing assets to total assets		0.14				0.06				0.13				0.20				0.24				0.14				0.24
AVERAGE BALANCES
Total loans	$	2,233,906			$	2,270,660			$	2,207,956			$	2,191,669			$	2,131,847			$	2,252,182			$	2,011,016
Investment securities		656,507				579,547				491,134				453,382				462,850				618,239				440,410
Total assets		3,771,970				3,611,417				3,328,719				2,977,444				2,932,716				3,692,133				2,809,491
Deposits		3,307,601				3,156,906				2,874,402				2,472,218				2,409,958				3,232,669				2,332,231
Shareholders' equity		348,416				338,990				338,948				341,017				338,027				343,725				335,754
AT PERIOD END
Loans and loans held for sale	$	2,264,899			$	2,302,661			$	2,249,036			$	2,188,894			$	2,185,847			$	2,264,899			$	2,185,847
Investment securities		714,065				613,236				535,579				446,706				457,749				714,065				457,749
Total assets		3,780,445				3,732,668				3,615,617				2,923,977				2,890,622				3,780,445				2,890,622
Deposits		3,306,224				3,277,692				3,161,508				2,468,722				2,407,631				3,306,224				2,407,631
Shareholders' equity		353,185				340,328				338,586				340,309				335,980				353,185				335,980
(1)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.
(2)Excludes effect of acquisition related intangibles.
(3)Amounts are estimates as of June 30, 2021.
(4)Annualized.

 

ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
		June 30,				March 31,				December 31,				June 30,
(in thousands, except share data)		2021				2021				2020				2020
ASSETS
Cash and due from banks		$	35,530			$	32,850			$	16,865			$	33,759
Interest-bearing deposits in banks			593,195				612,966				636,537				33,038
Cash and cash equivalents			628,725				645,816				653,402				66,797
Investment securities available for sale			480,518				390,701				335,423				271,829
Investment securities held to maturity, net of allowance for credit losses of $13, $14, $14, and $13 at June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively			233,547				222,535				200,156				185,920
Other investments			24,293				24,709				25,892				28,811
Loans held for sale			—				1,847				—				1,153
Loans held for investment			2,264,899				2,300,814				2,249,036				2,184,694
Less: allowance for loan losses			(26,123	)			(27,506	)			(31,818	)			(31,605	)
Loans held for investment, net			2,238,776				2,273,308				2,217,218				2,153,089
Premises and equipment, net			19,643				20,633				21,589				22,494
Bank owned life insurance			73,610				73,223				72,856				67,127
Goodwill			19,925				19,925				19,925				19,925
Other intangibles, net			2,637				2,688				2,731				2,731
Other real estate owned			16				16				16				779
Other assets			58,755				57,267				66,409				69,967
Total assets		$	3,780,445			$	3,732,668			$	3,615,617			$	2,890,622
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand		$	1,374,018			$	1,280,524			$	1,033,765			$	883,662
Interest-bearing checking			536,677				485,540				760,638				449,737
Savings			676				562				625				583
Money market			1,026,239				1,142,361				1,030,753				879,863
Time			283,656				294,129				241,328				131,353
Brokered deposits			84,958				74,576				94,399				62,433
Total deposits			3,306,224				3,277,692				3,161,508				2,407,631
Federal funds purchased			—				—				—				6,000
Federal Home Loan Bank borrowings			—				—				—				50,000
Long-term debt			73,953				73,878				73,807				49,958
Other liabilities			47,083				40,770				41,716				41,053
Total liabilities			3,427,260				3,392,340				3,277,031				2,554,642
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020			—				—				—				—
Common stock, no par value; 100,000,000 shares authorized; 20,319,429, 20,354,077, 20,394,912, and 21,477,631 shares issued and outstanding as of June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively			206,619				207,047				209,942				224,520
Retained earnings			139,315				127,499				114,137				95,570
Accumulated other comprehensive income			7,251				5,782				14,507				15,890
Total shareholders' equity			353,185				340,328				338,586				335,980
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	3,780,445			$	3,732,668			$	3,615,617			$	2,890,622

 

ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share data)		Three months ended																				Six months ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2021				2021				2020				2020				2020				2021				2020
INTEREST INCOME
Loans, including fees		$	23,352			$	21,769			$	21,609			$	21,049			$	20,496			$	45,121			$	42,922
Investment securities			3,900				3,374				3,000				2,910				3,041				7,274				5,773
Interest and dividends on other interest‑earning assets			366				267				334				274				260				633				1,125
Total interest income			27,618				25,410				24,943				24,233				23,797				53,028				49,820
INTEREST EXPENSE
Interest on deposits			851				971				1,188				1,151				1,299				1,822				5,481
Interest on Federal Home Loan Bank advances			—				—				—				16				38				—				38
Interest on federal funds purchased and securities sold under agreements to repurchase			—				—				—				3				6				—				38
Interest on long-term debt			1,107				1,094				1,111				1,345				823				2,201				1,652
Total interest expense			1,958				2,065				2,299				2,515				2,166				4,023				7,209
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES			25,660				23,345				22,644				21,718				21,631				49,005				42,611
Provision for credit losses			(933	)			(4,519	)			481				28				8,863				(5,452	)			16,937
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			26,593				27,864				22,163				21,690				12,768				54,457				25,674
NONINTEREST INCOME
Service charges			1,727				1,663				1,341				1,217				1,081				3,390				2,313
Gains (losses) on sale of securities			—				2				(23	)			—				—				2				—
(Losses) gains on sale of other assets			—				—				(6	)			(145	)			—				—				5
Derivatives (loss) income			(7	)			47				11				10				(10	)			40				236
Bank owned life insurance			388				391				368				363				367				779				729
SBA lending activities			1,231				1,225				1,015				893				782				2,456				1,196
Other noninterest income			245				234				310				166				123				479				286
Total noninterest income			3,584				3,562				3,016				2,504				2,343				7,146				4,765
NONINTEREST EXPENSE
Salaries and employee benefits			10,362				10,421				8,437				8,850				8,466				20,783				16,942
Occupancy			778				734				767				739				883				1,512				1,677
Equipment and software			819				774				969				826				763				1,593				1,542
Professional services			723				922				686				562				792				1,645				1,497
Communications and data processing			869				792				789				757				670				1,661				1,567
Marketing and business development			138				108				144				141				79				246				232
Travel, meals and entertainment			47				10				14				39				34				57				174
FDIC premiums			421				275				241				213				175				696				175
Other noninterest expense			1,040				1,113				1,117				1,586				1,042				2,153				1,975
Total noninterest expense			15,197				15,149				13,164				13,713				12,904				30,346				25,781
INCOME BEFORE PROVISION FOR INCOME TAXES			14,980				16,277				12,015				10,481				2,207				31,257				4,658
Provision for income taxes			3,164				2,915				2,065				1,863				358				6,079				685
NET INCOME		$	11,816			$	13,362			$	9,950			$	8,618			$	1,849			$	25,178			$	3,973
Net income per common share - basic		$	0.58			$	0.66			$	0.48			$	0.40			$	0.09			$	1.24			$	0.18
Net income per common share - diluted		$	0.58			$	0.65			$	0.48			$	0.40			$	0.09			$	1.23			$	0.18
Weighted average shares - basic			20,332,503				20,380,066				20,711,089				21,500,735				21,472,462				20,356,153				21,580,855
Weighted average shares - diluted			20,516,478				20,502,184				20,795,332				21,543,805				21,535,040				20,509,370				21,688,712

 

ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
		Three months ended
		June 30, 2021									March 31, 2021
					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		$	687,795		$	201		0.12	%		$	561,809		$	168		0.12	%
Investment securities:
Taxable investment securities			426,634			2,382		2.24				356,250			1,898		2.16
Non-taxable investment securities (1)			229,873			1,893		3.30				223,297			1,841		3.34
Total investment securities			656,507			4,275		2.61				579,547			3,739		2.62
Loans			2,233,906			23,352		4.19				2,270,660			21,769		3.89
FHLB and FRB stock			11,931			165		5.55				12,701			99		3.17
Total interest-earning assets			3,590,139			27,993		3.13				3,424,717			25,775		3.05
Non-earning assets			181,831									186,700
Total assets		$	3,771,970								$	3,611,417
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,637,374			725		0.18				1,662,097			834		0.20
Time deposits			290,331			68		0.09				273,615			74		0.11
Brokered deposits			84,168			58		0.28				84,663			63		0.30
Total interest-bearing deposits			2,011,873			851		0.17				2,020,375			971		0.19
Total borrowings			89			—		—				—			—		—
Total long-term debt			73,904			1,107		6.01				73,830			1,094		6.01
Total interest-bearing liabilities			2,085,866			1,958		0.38				2,094,205			2,065		0.40
Demand deposits			1,295,728									1,136,531
Other liabilities			41,960									41,691
Shareholders' equity			348,416									338,990
Total liabilities and shareholders' equity		$	3,771,970								$	3,611,417
Net interest spread								2.75	%								2.65	%
Net interest income and net interest margin (2)					$	26,035		2.91	%					$	23,710		2.81	%
Non-taxable equivalent net interest margin								2.87	%								2.76	%
(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
		June 30, 2021									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		$	687,795		$	201		0.12	%		$	129,989		$	23		0.07	%
Investment securities:
Taxable investment securities			426,634			2,382		2.24				247,668			1,581		2.57
Non-taxable investment securities (1)			229,873			1,893		3.30				215,182			1,814		3.39
Total investment securities			656,507			4,275		2.61				462,850			3,395		2.95
Loans			2,233,906			23,352		4.19				2,131,847			20,496		3.87
FHLB and FRB stock			11,931			165		5.55				16,842			237		5.66
Total interest-earning assets			3,590,139			27,993		3.13				2,741,528			24,151		3.54
Non-earning assets			181,831									191,188
Total assets		$	3,771,970								$	2,932,716
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,637,374			725		0.18				1,415,069			1,115		0.32
Time deposits			290,331			68		0.09				96,362			58		0.24
Brokered deposits			84,168			58		0.28				83,228			126		0.61
Total interest-bearing deposits			2,011,873			851		0.17				1,594,659			1,299		0.33
Total borrowings			89			—		—				97,769			44		0.18
Total long-term debt			73,904			1,107		6.01				49,930			823		6.63
Total interest-bearing liabilities			2,085,866			1,958		0.38				1,742,358			2,166		0.50
Demand deposits			1,295,728									815,299
Other liabilities			41,960									37,032
Shareholders' equity			348,416									338,027
Total liabilities and shareholders' equity		$	3,771,970								$	2,932,716
Net interest spread								2.75	%								3.04	%
Net interest income and net interest margin (2)					$	26,035		2.91	%					$	21,985		3.23	%
Non-taxable equivalent net interest margin								2.87	%								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
		Six months ended
		June 30, 2021									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		$	625,503		$	369		0.12	%		$	153,526		$	691		0.91	%
Other short-term investments			—			—		—				55			—		—
Investment securities:
Taxable investment securities			391,636			4,280		2.20				250,802			3,261		2.61
Non-taxable investment securities (1)			226,603			3,734		3.32				189,608			3,089		3.28
Total investment securities			618,239			8,014		2.61				440,410			6,350		2.90
Loans			2,252,182			45,121		4.04				2,011,016			42,922		4.29
FHLB and FRB stock			12,310			264		4.32				14,760			434		5.91
Total interest-earning assets			3,508,234			53,768		3.09				2,619,767			50,397		3.87
Non-earning assets			183,899									189,724
Total assets		$	3,692,133								$	2,809,491
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,649,667			1,559		0.19				1,404,305			4,882		0.70
Time deposits			282,019			142		0.10				76,068			111		0.29
Brokered deposits			84,414			121		0.29				87,708			488		1.12
Total interest-bearing deposits			2,016,100			1,822		0.18				1,568,081			5,481		0.70
Total borrowings			45			—		—				54,736			76		0.28
Total long-term debt			73,867			2,201		6.01				49,909			1,652		6.66
Total interest-bearing liabilities			2,090,012			4,023		0.39				1,672,726			7,209		0.87
Demand deposits			1,216,569									764,150
Other liabilities			41,827									36,861
Shareholders' equity			343,725									335,754
Total liabilities and shareholders' equity		$	3,692,133								$	2,809,491
Net interest spread								2.70	%								3.00	%
Net interest income and net interest margin (2)					$	49,745		2.86	%					$	43,188		3.32	%
Non-taxable equivalent net interest margin								2.82	%								3.27	%
(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
		June 30,				March 31,				December 31,				September 30,				June 30,				Quarter				Year
(dollars in thousands)		2021				2021				2020				2020				2020				Change				Change
Loans held for sale
Loans held for sale		$	—			$	1,847			$	—			$	859			$	1,153			$	(1,847	)		$	(1,153	)
Total loans held for sale		$	—			$	1,847			$	—			$	859			$	1,153			$	(1,847	)		$	(1,153	)
Loans held for investment
Commercial loans:
Commercial and industrial - other		$	767,646			$	735,287			$	760,645			$	712,567			$	739,769			$	32,359			$	27,877
Commercial and industrial - PPP			105,684				218,766				192,160				231,834				234,049				(113,082	)			(128,365	)
Commercial real estate:
Multifamily			58,632				80,507				66,262				58,336				58,909				(21,875	)			(277	)
Owner occupied			392,108				381,018				373,689				364,170				366,847				11,090				25,261
Investment			506,230				480,566				469,150				458,279				474,565				25,664				31,665
Construction and land:
1‑4 family residential construction			2,074				1,578				1,171				—				11				496				2,063
Other construction, development, and land			178,423				141,218				144,424				139,836				128,980				37,205				49,443
Total commercial loans			2,010,797				2,038,940				2,007,501				1,965,022				2,003,130				(28,143	)			7,667
Residential:
Residential mortgages			45,207				31,817				33,783				29,460				32,327				13,390				12,880
Home equity			24,972				26,293				25,443				24,528				23,689				(1,321	)			1,283
Total residential loans			70,179				58,110				59,226				53,988				56,016				12,069				14,163
Consumer			184,203				203,176				176,066				154,916				113,149				(18,973	)			71,054
Other			5,234				7,689				13,897				22,777				22,160				(2,455	)			(16,926	)
			2,270,413				2,307,915				2,256,690				2,196,703				2,194,455				(37,502	)			75,958
Less net deferred fees and other unearned income			(5,514	)			(7,101	)			(7,654	)			(8,668	)			(9,761	)			1,587				4,247
Total loans held for investment		$	2,264,899			$	2,300,814			$	2,249,036			$	2,188,035			$	2,184,694			$	(35,915	)		$	80,205
Total loans		$	2,264,899			$	2,302,661			$	2,249,036			$	2,188,894			$	2,185,847			$	(37,762	)		$	79,052
Total unfunded commitments		$	804,784			$	789,869			$	813,757			$	764,247			$	749,321			$	14,915			$	55,463

 

ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Credit Losses Activity and Credit Quality
		2021								2020
		Second				First				Fourth				Third				Second
(dollars in thousands)		Quarter				Quarter				Quarter				Quarter				Quarter
Allowance for loan losses
Balance at beginning of period		$	27,506			$	31,818			$	31,894			$	31,605			$	24,896
Provision for loan losses			(814	)			(4,074	)			225				636				8,222
Loans charged-off:
Commercial and industrial			(386	)			(288	)			(401	)			(404	)			(1,479	)
Commercial real estate			—				—				—				—				—
Construction and land			—				—				—				—				—
Residential mortgages			(223	)			—				—				—				(36	)
Home equity			—				—				—				—				—
Consumer			—				—				—				—				—
Other			—				—				—				—				—
Total loans charged-off			(609	)			(288	)			(401	)			(404	)			(1,515	)
Recoveries on loans previously charged-off:
Commercial and industrial			6				50				37				56				1
Commercial real estate			—				—				44				—				—
Construction and land			—				—				18				—				—
Residential mortgages			32				—				—				—				—
Home equity			—				—				—				—				—
Consumer			2				—				1				1				1
Other			—				—				—				—				—
Total recoveries			40				50				100				57				2
Net charge-offs		$	(569	)		$	(238	)		$	(301	)		$	(347	)		$	(1,513	)
Balance at period end		$	26,123			$	27,506			$	31,818			$	31,894			$	31,605
Allowance for unfunded commitments
Balance at beginning of period		$	2,683			$	3,128			$	2,871			$	3,480			$	2,838
Provision for unfunded commitments			(118	)			(445	)			257				(609	)			642
Balance at period end		$	2,565			$	2,683			$	3,128			$	2,871			$	3,480
Total allowance for credit losses - loans and unfunded commitments		$	28,688			$	30,189			$	34,946			$	34,765			$	35,085
Provision for credit losses under CECL
Provision for loan losses			(814	)			(4,074	)			225				636				8,222
Provision for securities held to maturity credit losses			(1	)			-				(1	)			1				(1	)
Provision for unfunded commitments			(118	)			(445	)			257				(609	)			642
Total provision for credit losses		$	(933	)		$	(4,519	)		$	481			$	28			$	8,863
Non-performing loans		$	5,194			$	2,056			$	4,862			$	5,421			$	6,265
Foreclosed properties (OREO)			16				16				16				563				779
Total nonperforming assets		$	5,210			$	2,072			$	4,878			$	5,984			$	7,044
Allowance for loan losses to loans held for investment			1.15		%		1.20		%		1.41		%		1.46		%		1.45		%
Allowance for credit losses to loans held for investment			1.27		%		1.31		%		1.55		%		1.59		%		1.61		%
Allowance for credit losses to loans held for investment excluding PPP loans			1.33		%		1.45		%		1.70		%		1.78		%		1.80		%
Net charge-offs to average loans (1)			0.10				0.04				0.05				0.06				0.29
Non-performing loans as a percentage of total loans			0.23		%		0.09		%		0.22		%		0.25		%		0.29		%
Non-performing assets as a percentage of total assets			0.14		%		0.06		%		0.13		%		0.20		%		0.24		%
(1)Annualized.

 

ATLANTIC CAPITAL BANCSHARES, INC.
Period End Deposits
																	Linked
		June 30,			March 31,			December 31,			September 30,			June 30,			Quarter				Year Over
(dollars in thousands)		2021			2021			2020			2020			2020			Change				Year Change
DDA		$	1,374,018		$	1,280,524		$	1,033,765		$	843,656		$	883,662		$	93,494			$	490,356
NOW			536,677			485,540			760,638			387,858			449,737			51,137				86,940
Savings			676			562			625			568			583			114				93
Money market			1,026,239			1,142,361			1,030,753			945,834			879,863			(116,122	)			146,376
Time			283,656			294,129			241,328			196,343			131,353			(10,473	)			152,303
Brokered			84,958			74,576			94,399			94,463			62,433			10,382				22,525
Total deposits		$	3,306,224		$	3,277,692		$	3,161,508		$	2,468,722		$	2,407,631		$	28,532			$	898,593
Average Deposits
		2021						2020									Linked
		Second			First			Fourth			Third			Second			Quarter				Q2 2021 vs
(dollars in thousands)		Quarter			Quarter			Quarter			Quarter			Quarter			Change				Q2 2020
DDA		$	1,295,728		$	1,136,531		$	977,009		$	854,715		$	815,299		$	159,197			$	480,429
NOW			548,358			618,701			558,967			440,734			462,051			(70,343	)			86,307
Savings			593			587			614			586			574			6				19
Money market			1,088,423			1,042,809			1,026,347			942,062			952,444			45,614				135,979
Time			290,331			273,615			221,792			166,019			96,362			16,716				193,969
Brokered			84,168			84,663			89,673			68,102			83,228			(495	)			940
Total deposits		$	3,307,601		$	3,156,906		$	2,874,402		$	2,472,218		$	2,409,958		$	150,695			$	897,643
Noninterest bearing deposits as a percentage of average deposits			39.2	%		36.0	%		34.0	%		34.6	%		33.8	%
Cost of interest-bearing deposits			0.17	%		0.19	%		0.25	%		0.28	%		0.33	%
Cost of deposits			0.10	%		0.12	%		0.16	%		0.19	%		0.22	%

 

ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation
																						For the six months
		2021								2020												ended June 30,
		Second				First				Fourth				Third				Second
(in thousands, except share and per share data)		Quarter				Quarter				Quarter				Quarter				Quarter				2021				2020
Taxable equivalent interest income reconciliation
Interest income - GAAP		$	27,618			$	25,410			$	24,943			$	24,233			$	23,797			$	53,028			$	49,820
Taxable equivalent adjustment			375				365				345				345				354				740				577
Interest income - taxable equivalent		$	27,993			$	25,775			$	25,288			$	24,578			$	24,151			$	53,768			$	50,397
Taxable equivalent net interest income reconciliation
Net interest income - GAAP		$	25,660			$	23,345			$	22,644			$	21,718			$	21,631			$	49,005			$	42,611
Taxable equivalent adjustment			375				365				345				345				354				740				577
Net interest income - taxable equivalent		$	26,035			$	23,710			$	22,989			$	22,063			$	21,985			$	49,745			$	43,188
Loan yield excluding PPP loans reconciliation
Loan yield - GAAP			4.19		%		3.89		%		3.89		%		3.82		%		3.87		%		4.04		%		4.29		%
Impact of PPP loans			(0.24	)			(0.06	)			(0.03	)			0.13				0.22				(0.15	)			0.14
Loan yield excluding PPP loans			3.95		%		3.83		%		3.86		%		3.95		%		4.09		%		3.89		%		4.43		%
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP			2.87		%		2.76		%		2.86		%		3.09		%		3.17		%		2.82		%		3.27		%
Impact of taxable equivalent adjustment			0.04				0.05				0.05				0.05				0.06				0.04				0.05
Net interest margin - taxable equivalent			2.91		%		2.81		%		2.91		%		3.14		%		3.23		%		2.86		%		3.32		%
Taxable equivalent net interest margin excluding PPP loans reconciliation
Net interest margin - taxable equivalent			2.91		%		2.81		%		2.91		%		3.14		%		3.23		%		2.86		%		3.32		%
Impact of PPP loans			(0.21	)			(0.11	)			(0.10	)			0.04				0.12				(0.16	)			0.06
Net interest margin - taxable equivalent excluding PPP loans			2.70		%		2.70		%		2.81		%		3.18		%		3.35		%		2.70		%		3.38		%
Taxable equivalent income before income taxes reconciliation
Income before income taxes - GAAP		$	14,980			$	16,277			$	12,015			$	10,481			$	2,207			$	31,257			$	4,658
Taxable equivalent adjustment			375				365				345				345				354				740				577
Income before income taxes		$	15,355			$	16,642			$	12,360			$	10,826			$	2,561			$	31,997			$	5,235
Taxable equivalent income tax expense reconciliation
Income tax expense - GAAP		$	3,164			$	2,915			$	2,065			$	1,863			$	358			$	6,079			$	685
Taxable equivalent adjustment			375				365				345				345				354				740				577
Income tax expense		$	3,539			$	3,280			$	2,410			$	2,208			$	712			$	6,819			$	1,262
Tangible book value per common share reconciliation
Total shareholders' equity		$	353,185			$	340,328			$	338,586			$	340,309			$	335,980			$	353,185			$	335,980
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible common equity		$	333,260			$	320,403			$	318,661			$	320,384			$	316,055			$	333,260			$	316,055
Common shares outstanding			20,319,429				20,354,077				20,394,912				21,202,783				21,477,631				20,319,429				21,477,631
Book value per common share - GAAP		$	17.38			$	16.72			$	16.60			$	16.05			$	15.64			$	17.38			$	15.64
Tangible book value			16.40				15.74				15.62				15.11				14.72				16.40				14.72
Tangible common equity to tangible assets reconciliation
Total shareholders' equity		$	353,185			$	340,328			$	338,586			$	340,309			$	335,980			$	353,185			$	335,980
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible common equity		$	333,260			$	320,403			$	318,661			$	320,384			$	316,055			$	333,260			$	316,055
Total assets		$	3,780,445			$	3,732,668			$	3,615,617			$	2,923,977			$	2,890,622			$	3,780,445			$	2,890,622
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible assets		$	3,760,520			$	3,712,743			$	3,595,692			$	2,904,052			$	2,870,697			$	3,760,520			$	2,870,697
Tangible common equity to tangible assets			8.86		%		8.63		%		8.86		%		11.03		%		11.01		%		8.86		%		11.01		%
Allowance for credit losses to loans held for investment reconciliation
Total loans held for investment		$	2,264,899			$	2,300,814			$	2,249,036			$	2,188,035			$	2,184,694			$	2,264,899			$	2,184,694
PPP loans			(105,684	)			(218,766	)			(192,160	)			(231,834	)			(234,049	)			(105,684	)			(234,049	)
Total loans held for investment excluding PPP loans		$	2,159,215			$	2,082,048			$	2,056,876			$	1,956,201			$	1,950,645			$	2,159,215			$	1,950,645
Allowance for credit losses to loans held for investment			1.27		%		1.31		%		1.55		%		1.59		%		1.61		%		1.27		%		1.61		%
Allowance for credit losses to loans held for investment excluding PPP loans			1.33		%		1.45		%		1.70		%		1.78		%		1.80		%		1.33		%		1.80		%