Atlantic Capital Bancshares, Inc. Reports Third Quarter 2021 Results

Rhea-AI Summary

Atlantic Capital Bancshares (NASDAQ: ACBI) reported a net income of $13.3 million for Q3 2021, translating to $0.65 per diluted share, up from $8.6 million in Q3 2020. Total assets reached $4.2 billion, with a 1.36% return on average assets and a 14.69% return on average equity. Loans held for investment grew by 12.3% annualized compared to Q2 2021. The company anticipates continued momentum into Q4 2021 and beyond, supported by robust new business pipelines.

Positive

• Net income of $13.3 million for Q3 2021, up 55% year-over-year.
• Total assets increased to $4.2 billion, up from $3.8 billion in Q2 2021.
• Loans held for investment grew by $66.3 million from Q2 2021, representing 12.3% annualized growth.
• Quarterly average deposits rose by $106.3 million or 12.9% annualized compared to Q2 2021.
• Non-interest income totaled $4.6 million, up 84% year-over-year.

Negative

• Net interest margin decreased to 2.69%, down from 3.14% in Q3 2020.
• Taxable equivalent net interest income fell from $26 million in Q2 2021 to $25.1 million.
• Expenses increased to $15 million, up from $13.7 million in Q3 2020.

ATLANTA, Oct. 27, 2021 (GLOBE NEWSWIRE) -- Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced net income for the quarter ended September 30, 2021, of $13.3 million, or $0.65 per diluted share, compared to $8.6 million, or $0.40 per diluted share, for the third quarter of 2020 and $11.8 million, or $0.58 per diluted share, for the second quarter of 2021.

“With strong growth in loans, deposits, and revenue, Atlantic Capital recorded another quarter of solid operating results. Our clients are performing well, and Atlantic Capital is fueling their prosperity with reliable service and innovative solutions. New business pipelines are robust, and we expect continued strong momentum in the fourth quarter of this year and into 2022,” remarked Douglas Williams, President and Chief Executive Officer.

Third Quarter Highlights⁽¹⁾

• Total assets were $4.2 billion, compared to $3.8 billion at June 30, 2021 and $2.9 billion at September 30, 2020.
• Return on average assets totaled 1.36% and return on average equity was 14.69% in the third quarter of 2021.
• Loans held for investment, excluding Paycheck Protection Program (“PPP”) loans, increased $66.3 million, or 12.3% annualized, from June 30, 2021, and increased $269.4 million, or 13.8%, from September 30, 2020.
• Quarterly average deposits increased $106.3 million, or 12.9% annualized, compared to the second quarter of 2021 and increased $941.7 million, or 38.1%, compared to the third quarter of 2020.
• Cost of deposits decreased to 0.08% from 0.10% in the second quarter of 2021 and from 0.19% in the third quarter of 2020.
• Tangible book value per share increased to $16.94 from $16.40 at June 30, 2021 and from $15.11 at September 30, 2020.
• Annualized net charge-offs to average loans totaled 0.00% for the third quarter of 2021 and 0.05% for the full year 2021. Non-performing assets to total assets were 0.10% at September 30, 2021.
• The allowance for credit losses was 1.16% of total loans held for investment at September 30, 2021, compared to 1.27% at June 30, 2021 and 1.59% at September 30, 2020.

Income Statement

Taxable equivalent net interest income totaled $25.1 million for the third quarter of 2021, compared to $22.1 million in the third quarter of 2020 and $26.0 million in the second quarter of 2021. The third quarter of 2021 included $1.9 million in PPP loan income, compared to $3.0 million in the second 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 2.69% in the third quarter of 2021, compared to 3.14% in the third quarter of 2020 and 2.91% in the second quarter of 2021. The taxable equivalent net interest margin excluding PPP loans was 2.54% for the third quarter of 2021, compared to 2.70% for the second quarter of 2021.

The yield on loans in the third quarter of 2021 was 3.91%, an increase of 9 basis points from the third quarter of 2020 and a decrease of 28 basis points from the second quarter of 2021. Excluding PPP loans, the third quarter of 2021 loan yield was 3.71%, a decrease of 24 basis points compared to the second 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 third quarter of 2021 was 0.08%, a decrease of 11 basis points from the third quarter of 2020 and a decrease of 2 basis points from the second quarter of 2021. The cost of interest-bearing deposits decreased 13 basis points to 0.15% from the third quarter of 2020 and decreased 2 basis points from the second quarter of 2021.

In the third quarter of 2021, we recorded a negative provision for credit losses of $2.4 million, compared to a provision for credit losses of $28,000 in the third quarter of 2020 and a negative provision for credit losses of $933,000 in the second quarter of 2021.

Noninterest income totaled $4.6 million in the third quarter of 2021, compared to $2.5 million in the third quarter of 2020 and $3.6 million in the second quarter of 2021. Other noninterest income in the third quarter of 2021 totaled $1.1 million and included $930,000 in income from Small Business Investment Company (“SBIC”) funds.

Noninterest expense totaled $15.0 million in the third quarter of 2021, compared to $13.7 million in the third quarter of 2020 and $15.2 million in the second quarter of 2021. The third quarter of 2021 included an expense reduction of $3.0 million as a result of the employee retention payroll tax credit pursuant to the CARES Act. Additionally, there were $2.9 million in merger related expenses.

⁽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 September 30, 2021, an increase of $85.8 million from September 30, 2020 and an increase of $9.0 million from June 30, 2021. Loans held for investment, excluding PPP loans, increased $66.3 million, or 12.3% annualized, from June 30, 2021, and increased $269.4 million, or 13.8%, from September 30, 2020.

The allowance for credit losses was 1.16% of total loans held for investment at September 30, 2021, compared to 1.27% at June 30, 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 September 30, 2021 was 1.18%, compared to 1.33% at June 30, 2021.

Total average deposits were $3.4 billion for the third quarter of 2021, an increase of $941.7 million, or 38.1%, from the third quarter of 2020 and an increase of $106.3 million, or 12.9% annualized, from the second quarter of 2021. Average noninterest bearing deposits were $1.4 billion for the third quarter of 2021, an increase of $520.4 million, or 61%, from the third quarter of 2020 and an increase of $79.4 million, or 24.5% annualized, from the second quarter of 2021. Noninterest bearing deposits were 40.3% of total average deposits in the third quarter of 2021, compared to 34.6% in the third quarter of 2020 and 39.2% in the second quarter of 2021.

Merger Update

On July 22, 2021, Atlantic Capital and SouthState Corporation (“SouthState”) entered into an Agreement and Plan of Merger, pursuant to which Atlantic Capital will merge with and into SouthState, with SouthState as the surviving corporation in the merger. The merger remains subject to approval by our shareholders at the Special Meeting scheduled for November 16, 2021, as well as approval by the Board of Governors of the Federal Reserve System. Approval of the merger from the Office of the Comptroller of the Currency has been received.

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 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 the proposed merger with SouthState, 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. Additional information and other factors that could affect future financial results are included in Atlantic Capital’s subsequent filings with the SEC. Please refer to the SEC’s website at www.sec.gov where you can review those documents.

Important Additional Information

SouthState filed a registration statement on Form S-4 with the SEC on September 15, 2021, to register the shares of SouthState common stock that will be issued to Atlantic Capital’s shareholders in connection with the merger. The registration statement, which became effective on October 15, 2021, includes a proxy statement/prospectus and other relevant materials in connection with the transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC on its website at http://www.sec.gov. Investors and security holders may also obtain free copies of the documents filed with the SEC by Atlantic Capital on our website at www.atlanticcapitalbank.com and by SouthState on its website at www.southstatebank.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Before making any voting or investment decision, investors and security holders of Atlantic Capital and SouthState are urged to read carefully the entire registration statement and proxy statement/prospectus, including any amendments thereto, because they contain important information about the merger. Free copies of these documents may be obtained as described above.

Participants in the Merger

Atlantic Capital and SouthState, and certain of their respective directors, executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from Atlantic Capital’s shareholders in respect of the merger. Information regarding such persons who may be deemed participants in the solicitation of proxies from Atlantic Capital’s shareholders is included in the proxy statement/prospectus for Atlantic Capital’s meeting of shareholders, which was filed by SouthState on Form S-4 on September 15, 2021 and declared effective on October 15, 2021. Information about Atlantic Capital’s directors and executive officers and their ownership of Atlantic Capital common stock can also be found in definitive proxy statement filed in connection with its 2021 annual meeting of shareholders on May 20, 2021, and other documents subsequently filed by Atlantic Capital with the SEC. Information about SouthState’s directors and executive officers and their ownership of SouthState common stock can also be found in SouthState’s definitive proxy statement filed in connection with its 2021 annual meeting of shareholders on April 28, 2021, and other documents subsequently filed by SouthState with the SEC. Information regarding the interests of such participants is included in the proxy statement/prospectus and other relevant documents regarding the merger filed with the SEC.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $4.2 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
	2021												2020								September 30,
(in thousands, except share and per share data;	Third				Second				First				Fourth				Third
taxable equivalent)	Quarter				Quarter				Quarter				Quarter				Quarter				2021				2020
INCOME SUMMARY
Interest income - taxable equivalent (1)	$	27,040			$	27,993			$	25,775			$	25,288			$	24,578			$	80,808			$	74,976
Interest expense		1,895				1,958				2,065				2,299				2,515				5,918				9,724
Net interest income - taxable equivalent		25,145				26,035				23,710				22,989				22,063				74,890				65,252
Provision for credit losses		(2,405	)			(933	)			(4,519	)			481				28				(7,857	)			16,965
Net interest income after provision for credit losses		27,550				26,968				28,229				22,508				22,035				82,747				48,287
Noninterest income		4,609				3,584				3,562				3,016				2,504				11,755				7,269
Noninterest expense		15,018				15,197				15,149				13,164				13,713				45,364				39,494
Income before income taxes		17,141				15,355				16,642				12,360				10,826				49,138				16,062
Income tax expense		3,837				3,539				3,280				2,410				2,208				10,656				3,471
Net income(1)(2)	$	13,304			$	11,816			$	13,362			$	9,950			$	8,618			$	38,482			$	12,591
PER SHARE DATA
Diluted earnings per share	$	0.65			$	0.58			$	0.65			$	0.48			$	0.40			$	1.88			$	0.58
Book value per share		17.92				17.38				16.72				16.60				16.05				17.92				16.05
Tangible book value per common share (3)		16.94				16.40				15.74				15.62				15.11				16.94				15.11
PERFORMANCE MEASURES
Return on average equity		14.69		%		13.60		%		15.99		%		11.68		%		10.05		%		14.74		%		4.98		%
Return on average assets		1.36				1.26				1.50				1.19				1.15				1.37				0.59
Taxable equivalent net interest margin		2.69				2.91				2.81				2.91				3.14				2.80				3.25
Taxable equivalent net interest margin excluding PPP loans		2.54				2.70				2.70				2.81				3.18				2.65				3.31
Efficiency ratio		51.12				51.97				56.30				51.30				56.61				53.04				55.16
Average loans to average deposits		65.81				67.54				71.93				76.81				88.65				68.32				87.07
CAPITAL
Average equity to average assets		9.23		%		9.24		%		9.39		%		10.18		%		11.45		%		9.28		%		11.78		%
Tangible common equity to tangible assets		8.21				8.86				8.63				8.86				11.03				8.21				11.03
Leverage ratio		8.50		(3)		8.4				8.4				8.9				9.9				8.73		(3)		9.9
Total risk based capital ratio		15.91		(3)		16.0				16.4				16.1				16.9				15.91		(3)		16.9
SHARES OUTSTANDING
Number of common shares outstanding - basic		20,305,109				20,319,429				20,354,077				20,394,912				21,202,783				20,305,109				21,202,783
Number of common shares outstanding - diluted		20,590,747				20,595,812				20,617,188				20,492,542				21,298,098				20,590,747				21,298,098
Average number of common shares - basic		20,308,761				20,332,503				20,380,066				20,711,089				21,500,735				20,340,182				21,553,953
Average number of common shares - diluted		20,507,604				20,516,478				20,502,184				20,795,332				21,543,805				20,508,775				21,640,057
ASSET QUALITY
Allowance for credit losses to loans held for investment		1.16		%		1.27		%		1.31		%		1.55		%		1.59		%		1.16		%		1.59		%
Net charge-offs to average loans (4)		0.00				0.10				0.04				0.05				0.06				0.05				0.13
Non-performing assets to total assets		0.10				0.14				0.06				0.13				0.20				0.10				0.20
AVERAGE BALANCES
Total loans	$	2,246,529			$	2,233,906			$	2,270,660			$	2,207,956			$	2,191,669			$	2,250,277			$	2,071,673
Investment securities		733,452				656,507				579,547				491,134				453,382				657,066				444,766
Total assets		3,893,049				3,771,970				3,611,417				3,328,719				2,977,444				3,759,841				2,865,884
Deposits		3,413,882				3,307,601				3,156,906				2,874,402				2,472,218				3,293,738				2,379,235
Shareholders' equity		359,300				348,416				338,990				338,948				341,017				348,974				337,521
AT PERIOD END
Loans and loans held for sale	$	2,285,670			$	2,264,899			$	2,302,661			$	2,249,036			$	2,188,894			$	2,285,670			$	2,188,894
Investment securities		772,987				714,065				613,236				535,579				446,706				772,987				446,706
Total assets		4,210,316				3,780,445				3,732,668				3,615,617				2,923,977				4,210,316				2,923,977
Deposits		3,727,321				3,306,224				3,277,692				3,161,508				2,468,722				3,727,321				2,468,722
Shareholders’ equity		363,925				353,185				340,328				338,586				340,309				363,925				340,309
(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 September 30, 2021.
(4)Annualized.

ATLANTIC CAPITAL BANCSHARES, INC.
Consolidated Balance Sheets (unaudited)
		September 30,				June 30,				December 31,				September 30,
(in thousands, except share data)		2021				2021				2020				2020
ASSETS
Cash and due from banks		$	25,725			$	35,530			$	16,865			$	22,715
Interest-bearing deposits in banks			811,168				593,195				636,537				91,243
Other short-term investments			140,848				—				—				—
Cash and cash equivalents			977,741				628,725				653,402				113,958
Investment securities available for sale			535,158				480,518				335,423				260,884
Investment securities held to maturity, net of allowance for credit losses of $13, $13, $14, and $15 at September 30,2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively			237,829				233,547				200,156				185,822
Other investments			23,877				24,293				25,892				26,315
Loans held for sale			11,814				—				—				859
Loans held for investment			2,273,856				2,264,899				2,249,036				2,188,035
Less: allowance for loan losses			(23,924	)			(26,123	)			(31,818	)			(31,894	)
Loans held for investment, net			2,249,932				2,238,776				2,217,218				2,156,141
Premises and equipment, net			18,517				19,643				21,589				22,558
Bank owned life insurance			74,000				73,610				72,856				67,489
Goodwill			19,925				19,925				19,925				19,925
Other intangibles, net			2,573				2,637				2,731				2,685
Other real estate owned			—				16				16				563
Other assets			58,950				58,755				66,409				66,778
Total assets		$	4,210,316			$	3,780,445			$	3,615,617			$	2,923,977
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		$	1,691,616			$	1,374,018			$	1,033,765			$	843,656
Interest-bearing checking			721,525				536,677				760,638				387,858
Savings			800				676				625				568
Money market			930,929				1,026,239				1,030,753				945,834
Time			287,865				283,656				241,328				196,343
Brokered deposits			94,586				84,958				94,399				94,463
Total deposits			3,727,321				3,306,224				3,161,508				2,468,722
Long-term debt			74,024				73,953				73,807				73,814
Other liabilities			45,046				47,083				41,716				41,132
Total liabilities			3,846,391				3,427,260				3,277,031				2,583,668
SHAREHOLDERS’ EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020			—				—				—				—
Common stock, no par value; 100,000,000 shares authorized; 20,305,109, 20,319,429, 20,394,912, and 21,202,783 shares issued and outstanding as of September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively			207,214				206,619				209,942				220,643
Retained earnings			152,619				139,315				114,137				104,188
Accumulated other comprehensive income			4,092				7,251				14,507				15,478
Total shareholders’ equity			363,925				353,185				338,586				340,309
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	4,210,316			$	3,780,445			$	3,615,617			$	2,923,977

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,
		2021				2021				2021				2020				2020				2021				2020
INTEREST INCOME
Loans, including fees		$	22,151			$	23,352			$	21,769			$	21,609			$	21,049			$	67,272			$	63,971
Investment securities			3,920				3,900				3,374				3,000				2,910				11,194				8,683
Interest and dividends on other interest‑earning assets			593				366				267				334				274				1,226				1,399
Total interest income			26,664				27,618				25,410				24,943				24,233				79,692				74,053
INTEREST EXPENSE
Interest on deposits			789				851				971				1,188				1,151				2,611				6,632
Interest on Federal Home Loan Bank advances			—				—				—				—				16				—				54
Interest on federal funds purchased and securities sold under agreements to repurchase			—				—				—				—				3				—				41
Interest on long-term debt			1,106				1,107				1,094				1,111				1,345				3,307				2,997
Total interest expense			1,895				1,958				2,065				2,299				2,515				5,918				9,724
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES			24,769				25,660				23,345				22,644				21,718				73,774				64,329
Provision for credit losses			(2,405	)			(933	)			(4,519	)			481				28				(7,857	)			16,965
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			27,174				26,593				27,864				22,163				21,690				81,631				47,364
NONINTEREST INCOME
Service charges			1,765				1,727				1,663				1,341				1,217				5,155				3,530
Gains (losses) on sale of securities			—				—				2				(23	)			—				2				—
Gains (losses) on sale of other assets			38				—				—				(6	)			(145	)			38				(140	)
Derivatives income (loss)			21				(7	)			47				11				10				61				246
Bank owned life insurance			391				388				391				368				363				1,170				1,092
SBA lending activities			1,276				1,231				1,225				1,015				893				3,732				2,089
Other noninterest income			1,118				245				234				310				166				1,597				452
Total noninterest income			4,609				3,584				3,562				3,016				2,504				11,755				7,269
NONINTEREST EXPENSE
Salaries and employee benefits			10,290				10,362				10,421				8,437				8,850				31,073				25,792
Employee retention credit			(3,035	)			—				—				—				—				(3,035	)			—
Occupancy			756				778				734				767				739				2,268				2,416
Equipment and software			857				819				774				969				826				2,450				2,368
Professional services			737				723				922				686				562				2,382				2,059
Communications and data processing			889				869				792				789				757				2,550				2,324
Marketing and business development			142				138				108				144				141				388				373
Travel, meals and entertainment			91				47				10				14				39				148				213
FDIC premiums			478				421				275				241				213				1,174				388
Merger and conversion costs			2,899				—				—				—				—				2,899				—
Other noninterest expense			914				1,040				1,113				1,117				1,586				3,067				3,561
Total noninterest expense			15,018				15,197				15,149				13,164				13,713				45,364				39,494
INCOME BEFORE PROVISION FOR INCOME TAXES			16,765				14,980				16,277				12,015				10,481				48,022				15,139
Provision for income taxes			3,461				3,164				2,915				2,065				1,863				9,540				2,548
NET INCOME		$	13,304			$	11,816			$	13,362			$	9,950			$	8,618			$	38,482			$	12,591
Net income per common share - basic		$	0.66			$	0.58			$	0.66			$	0.48			$	0.40			$	1.89			$	0.58
Net income per common share - diluted		$	0.65			$	0.58			$	0.65			$	0.48			$	0.40			$	1.88			$	0.58
Weighted average shares - basic			20,308,761				20,332,503				20,380,066				20,711,089				21,500,735				20,340,182				21,553,953
Weighted average shares - diluted			20,507,604				20,516,478				20,502,184				20,795,332				21,543,805				20,508,775				21,640,057

ATLANTIC CAPITAL BANCSHARES, INC.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information
		Three months ended
		September 30, 2021									June 30, 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		$	594,338		$	266		0.18	%		$	687,795		$	201		0.12	%
Other short-term investments			122,477			156		0.51				—			—		—
Investment securities:
Taxable investment securities			503,420			2,411		1.90				426,634			2,382		2.24
Non-taxable investment securities (1)			230,032			1,885		3.25				229,873			1,893		3.30
Total investment securities			733,452			4,296		2.32				656,507			4,275		2.61
Loans			2,246,529			22,151		3.91				2,233,906			23,352		4.19
FHLB and FRB stock			11,931			171		5.69				11,931			165		5.55
Total interest-earning assets			3,708,727			27,040		2.89				3,590,139			27,993		3.13
Non-earning assets			184,322									181,831
Total assets		$	3,893,049								$	3,771,970
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,665,462			680		0.16				1,637,374			725		0.18
Time deposits			285,808			50		0.07				290,331			68		0.09
Brokered deposits			87,498			59		0.27				84,168			58		0.28
Total interest-bearing deposits			2,038,768			789		0.15				2,011,873			851		0.17
Total borrowings			—			—		—				89			—		—
Total long-term debt			73,978			1,106		5.93				73,904			1,107		6.01
Total interest-bearing liabilities			2,112,746			1,895		0.36				2,085,866			1,958		0.38
Demand deposits			1,375,114									1,295,728
Other liabilities			45,889									41,960
Shareholders’ equity			359,300									348,416
Total liabilities and shareholders’ equity		$	3,893,049								$	3,771,970
Net interest spread								2.53	%								2.75	%
Net interest income and net interest margin (2)					$	25,145		2.69	%					$	26,035		2.91	%
Non-taxable equivalent net interest margin								2.65	%								2.87	%
(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, 2021									September 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		$	594,338		$	266		0.18	%		$	136,459		$	65		0.19	%
Other short-term investments			122,477			156		0.51				—			—		—
Investment securities:
Taxable investment securities			503,420			2,411		1.90				237,655			1,467		2.46
Non-taxable investment securities (1)			230,032			1,885		3.25				215,727			1,788		3.30
Total investment securities			733,452			4,296		2.32				453,382			3,255		2.86
Loans			2,246,529			22,151		3.91				2,191,669			21,049		3.82
FHLB and FRB stock			11,931			171		5.69				14,484			209		5.74
Total interest-earning assets			3,708,727			27,040		2.89				2,795,994			24,578		3.50
Non-earning assets			184,322									181,450
Total assets		$	3,893,049								$	2,977,444
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,665,462			680		0.16				1,383,382			1,006		0.29
Time deposits			285,808			50		0.07				166,019			86		0.21
Brokered deposits			87,498			59		0.27				68,102			59		0.34
Total interest-bearing deposits			2,038,768			789		0.15				1,617,503			1,151		0.28
Total borrowings			—			—		—				40,793			19		0.19
Total long-term debt			73,978			1,106		5.93				82,708			1,345		6.47
Total interest-bearing liabilities			2,112,746			1,895		0.36				1,741,004			2,515		0.57
Demand deposits			1,375,114									854,715
Other liabilities			45,889									40,708
Shareholders’ equity			359,300									341,017
Total liabilities and shareholders’ equity		$	3,893,049								$	2,977,444
Net interest spread								2.53	%								2.92	%
Net interest income and net interest margin (2)					$	25,145		2.69	%					$	22,063		3.14	%
Non-taxable equivalent net interest margin								2.65	%								3.09	%
(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, 2021									September 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		$	615,001		$	634		0.14	%		$	147,795		$	756		0.68	%
Other short-term investments			41,274			156		0.51				36			—		—
Investment securities:
Taxable investment securities			429,307			6,691		2.08				246,388			4,729		2.56
Non-taxable investment securities (1)			227,759			5,619		3.30				198,378			4,877		3.28
Total investment securities			657,066			12,310		2.50				444,766			9,606		2.88
Loans			2,250,277			67,272		4.00				2,071,673			63,971		4.12
FHLB and FRB stock			12,183			436		4.78				14,667			643		5.86
Total interest-earning assets			3,575,801			80,808		3.02				2,678,937			74,976		3.74
Non-earning assets			184,040									186,947
Total assets		$	3,759,841								$	2,865,884
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,654,990			2,240		0.18				1,397,280			5,889		0.56
Time deposits			283,296			191		0.09				106,271			196		0.25
Brokered deposits			85,454			180		0.28				81,125			547		0.90
Total interest-bearing deposits			2,023,740			2,611		0.17				1,584,676			6,632		0.56
Total borrowings			30			—		—				50,055			95		0.25
Total long-term debt			73,905			3,307		5.98				60,922			2,997		6.57
Total interest-bearing liabilities			2,097,675			5,918		0.38				1,695,653			9,724		0.77
Demand deposits			1,269,998									794,559
Other liabilities			43,194									38,151
Shareholders’ equity			348,974									337,521
Total liabilities and shareholders’ equity		$	3,759,841								$	2,865,884
Net interest spread								2.64	%								2.97	%
Net interest income and net interest margin (2)					$	74,890		2.80	%					$	65,252		3.25	%
Non-taxable equivalent net interest margin								2.76	%								3.21	%
(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)		2021				2021				2021				2020				2020				Change				Change
Loans held for sale
Loans held for sale		$	11,814			$	—			$	1,847			$	—			$	859			$	11,814			$	10,955
Total loans held for sale		$	11,814			$	—			$	1,847			$	—			$	859			$	11,814			$	10,955
Loans held for investment
Commercial loans:
Commercial and industrial - other		$	790,437			$	767,646			$	735,287			$	760,645			$	712,567			$	22,791			$	77,870
Commercial and industrial - PPP			48,304				105,684				218,766				192,160				231,834				(57,380	)			(183,530	)
Commercial real estate:
Multifamily			62,906				58,632				80,507				66,262				58,336				4,274				4,570
Owner occupied			413,875				392,108				381,018				373,689				364,170				21,767				49,705
Investment			483,538				506,230				480,566				469,150				458,279				(22,692	)			25,259
Construction and land:
1‑4 family residential construction			2,338				2,074				1,578				1,171				—				264				2,338
Other construction, development, and land			202,810				178,423				141,218				144,424				139,836				24,387				62,974
Total commercial loans			2,004,208				2,010,797				2,038,940				2,007,501				1,965,022				(6,589	)			39,186
Residential:
Residential mortgages			47,076				45,207				31,817				33,783				29,460				1,869				17,616
Home equity			28,943				24,972				26,293				25,443				24,528				3,971				4,415
Total residential loans			76,019				70,179				58,110				59,226				53,988				5,840				22,031
Consumer			192,462				184,203				203,176				176,066				154,916				8,259				37,546
Other			4,921				5,234				7,689				13,897				22,777				(313	)			(17,856	)
			2,277,610				2,270,413				2,307,915				2,256,690				2,196,703				7,197				80,907
Less net deferred fees and other unearned income			(3,754	)			(5,514	)			(7,101	)			(7,654	)			(8,668	)			1,760				4,914
Total loans held for investment		$	2,273,856			$	2,264,899			$	2,300,814			$	2,249,036			$	2,188,035			$	8,957			$	85,821
Total loans		$	2,285,670			$	2,264,899			$	2,302,661			$	2,249,036			$	2,188,894			$	20,771			$	96,776
Total unfunded commitments		$	848,642			$	804,784			$	789,869			$	813,757			$	764,247			$	43,858			$	84,395

ATLANTIC CAPITAL BANCSHARES, INC.
Allowance for Credit Losses Activity and Credit Quality
		2021												2020
		Third				Second				First				Fourth				Third
(dollars in thousands)		Quarter				Quarter				Quarter				Quarter				Quarter
Allowance for loan losses
Balance at beginning of period		$	26,123			$	27,506			$	31,818			$	31,894			$	31,605
Provision for loan losses			(2,221	)			(814	)			(4,074	)			225				636
Loans charged-off:
Commercial and industrial			(131	)			(386	)			(288	)			(401	)			(404	)
Commercial real estate			—				—				—				—				—
Construction and land			—				—				—				—				—
Residential mortgages			—				(223	)			—				—				—
Home equity			—				—				—				—				—
Consumer			—				—				—				—				—
Other			—				—				—				—				—
Total loans charged-off			(131	)			(609	)			(288	)			(401	)			(404	)
Recoveries on loans previously charged-off:
Commercial and industrial			151				6				50				37				56
Commercial real estate			—				—				—				44				—
Construction and land			—				—				—				18				—
Residential mortgages			—				32				—				—				—
Home equity			—				—				—				—				—
Consumer			2				2				—				1				1
Other			—				—				—				—				—
Total recoveries			153				40				50				100				57
Net charge-offs		$	22			$	(569	)		$	(238	)		$	(301	)		$	(347	)
Balance at period end		$	23,924			$	26,123			$	27,506			$	31,818			$	31,894
Allowance for unfunded commitments
Balance at beginning of period		$	2,565			$	2,683			$	3,128			$	2,871			$	3,480
Provision for unfunded commitments			(185	)			(118	)			(445	)			257				(609	)
Balance at period end		$	2,380			$	2,565			$	2,683			$	3,128			$	2,871
Total allowance for credit losses - loans and unfunded commitments		$	26,304			$	28,688			$	30,189			$	34,946			$	34,765
Provision for credit losses under CECL
Provision for loan losses			(2,221	)			(814	)			(4,074	)			225				636
Provision for securities held to maturity credit losses			1				(1	)			-				(1	)			1
Provision for unfunded commitments			(185	)			(118	)			(445	)			257				(609	)
Total provision for credit losses		$	(2,405	)		$	(933	)		$	(4,519	)		$	481			$	28
Non-performing loans		$	4,077			$	5,194			$	2,056			$	4,862			$	5,421
Foreclosed properties (OREO)			—				16				16				16				563
Total nonperforming assets		$	4,077			$	5,210			$	2,072			$	4,878			$	5,984
Allowance for loan losses to loans held for investment			1.05		%		1.15		%		1.20		%		1.41		%		1.46		%
Allowance for credit losses to loans held for investment			1.16		%		1.27		%		1.31		%		1.55		%		1.59		%
Allowance for credit losses to loans held for investment excluding PPP loans			1.18		%		1.33		%		1.45		%		1.70		%		1.78		%
Net charge-offs to average loans (1)			0.00				0.10				0.04				0.05				0.06
Non-performing loans as a percentage of total loans			0.18		%		0.23		%		0.09		%		0.22		%		0.25		%
Non-performing assets as a percentage of total assets			0.10		%		0.14		%		0.06		%		0.13		%		0.20		%
(1)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)		2021			2021			2021			2020			2020			Change				Year Change
DDA		$	1,691,616		$	1,374,018		$	1,280,524		$	1,033,765		$	843,656		$	317,598			$	847,960
NOW			721,525			536,677			485,540			760,638			387,858			184,848				333,667
Savings			800			676			562			625			568			124				232
Money market			930,929			1,026,239			1,142,361			1,030,753			945,834			(95,310	)			(14,905	)
Time			287,865			283,656			294,129			241,328			196,343			4,209				91,522
Brokered			94,586			84,958			74,576			94,399			94,463			9,628				123
Total deposits		$	3,727,321		$	3,306,224		$	3,277,692		$	3,161,508		$	2,468,722		$	421,097			$	1,258,599
Average Deposits
		2021									2020						Linked
		Third			Second			First			Fourth			Third			Quarter				Q3 2021 vs
(dollars in thousands)		Quarter			Quarter			Quarter			Quarter			Quarter			Change				Q3 2020
DDA		$	1,375,114		$	1,295,728		$	1,136,531		$	977,009		$	854,715		$	79,386			$	520,399
NOW			607,485			548,358			618,701			558,967			440,734			59,127			$	166,751
Savings			731			593			587			614			586			138			$	145
Money market			1,057,246			1,088,423			1,042,809			1,026,347			942,062			(31,177	)		$	115,184
Time			285,808			290,331			273,615			221,792			166,019			(4,523	)		$	119,789
Brokered			87,498			84,168			84,663			89,673			68,102			3,330			$	19,396
Total deposits		$	3,413,882		$	3,307,601		$	3,156,906		$	2,874,402		$	2,472,218		$	106,281			$	941,664
Noninterest bearing deposits as a percentage of average deposits			40.3	%		39.2	%		36.0	%		34.0	%		34.6	%
Cost of interest-bearing deposits			0.15	%		0.17	%		0.19	%		0.25	%		0.28	%
Cost of deposits			0.08	%		0.10	%		0.12	%		0.16	%		0.19	%

ATLANTIC CAPITAL BANCSHARES, INC.
Non-GAAP Performance and Financial Measures Reconciliation
																						For the nine months
		2021												2020								ended September 30,
		Third				Second				First				Fourth				Third
(in thousands, except share and per share data)		Quarter				Quarter				Quarter				Quarter				Quarter				2021				2020
Taxable equivalent interest income reconciliation
Interest income - GAAP		$	26,664			$	27,618			$	25,410			$	24,943			$	24,233			$	79,692			$	74,053
Taxable equivalent adjustment			376				375				365				345				345				1,116				923
Interest income - taxable equivalent		$	27,040			$	27,993			$	25,775			$	25,288			$	24,578			$	80,808			$	74,976
Taxable equivalent net interest income reconciliation
Net interest income - GAAP		$	24,769			$	25,660			$	23,345			$	22,644			$	21,718			$	73,774			$	64,329
Taxable equivalent adjustment			376				375				365				345				345				1,116				923
Net interest income - taxable equivalent		$	25,145			$	26,035			$	23,710			$	22,989			$	22,063			$	74,890			$	65,252
Loan yield excluding PPP loans reconciliation
Loan yield - GAAP			3.91		%		4.19		%		3.89		%		3.89		%		3.82		%		4.00		%		4.12		%
Impact of PPP loans			(0.20	)			(0.24	)			(0.06	)			(0.03	)			0.13				(0.17	)			0.14
Loan yield excluding PPP loans			3.71		%		3.95		%		3.83		%		3.86		%		3.95		%		3.83		%		4.26		%
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP			2.65		%		2.87		%		2.76		%		2.86		%		3.09		%		2.76		%		3.21		%
Impact of taxable equivalent adjustment			0.04				0.04				0.05				0.05				0.05				0.04				0.04
Net interest margin - taxable equivalent			2.69		%		2.91		%		2.81		%		2.91		%		3.14		%		2.80		%		3.25		%
Taxable equivalent net interest margin excluding PPP loans reconciliation
Net interest margin - taxable equivalent			2.69		%		2.91		%		2.81		%		2.91		%		3.14		%		2.80		%		3.21		%
Impact of PPP loans			(0.15	)			(0.21	)			(0.11	)			(0.10	)			0.04				(0.15	)			0.10
Net interest margin - taxable equivalent excluding PPP loans			2.54		%		2.70		%		2.70		%		2.81		%		3.18		%		2.65		%		3.31		%
Taxable equivalent income before income taxes reconciliation
Income before income taxes - GAAP		$	16,765			$	14,980			$	16,277			$	12,015			$	10,481			$	48,022			$	15,139
Taxable equivalent adjustment			376				375				365				345				345				1,116				923
Income before income taxes		$	17,141			$	15,355			$	16,642			$	12,360			$	10,826			$	49,138			$	16,062
Taxable equivalent income tax expense reconciliation
Income tax expense - GAAP		$	3,461			$	3,164			$	2,915			$	2,065			$	1,863			$	9,540			$	2,548
Taxable equivalent adjustment			376				375				365				345				345				1,116				923
Income tax expense		$	3,837			$	3,539			$	3,280			$	2,410			$	2,208			$	10,656			$	3,471
Tangible book value per common share reconciliation
Total shareholders’ equity		$	363,925			$	353,185			$	340,328			$	338,586			$	340,309			$	363,925			$	340,309
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible common equity		$	344,000			$	333,260			$	320,403			$	318,661			$	320,384			$	344,000			$	320,384
Common shares outstanding			20,305,109				20,319,429				20,354,077				20,394,912				21,202,783				20,305,109				21,202,783
Book value per common share - GAAP		$	17.92			$	17.38			$	16.72			$	16.60			$	16.05			$	17.92			$	16.05
Tangible book value			16.94				16.40				15.74				15.62				15.11				16.94				15.11
Tangible common equity to tangible assets reconciliation
Total shareholders’ equity		$	363,925			$	353,185			$	340,328			$	338,586			$	340,309			$	363,925			$	340,309
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible common equity		$	344,000			$	333,260			$	320,403			$	318,661			$	320,384			$	344,000			$	320,384
Total assets		$	4,210,316			$	3,780,445			$	3,732,668			$	3,615,617			$	2,923,977			$	4,210,316			$	2,923,977
Intangible assets			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)			(19,925	)
Total tangible assets		$	4,190,391			$	3,760,520			$	3,712,743			$	3,595,692			$	2,904,052			$	4,190,391			$	2,904,052
Tangible common equity to tangible assets			8.21		%		8.86		%		8.63		%		8.86		%		11.03		%		8.21		%		11.03		%
Allowance for credit losses to loans held for investment reconciliation
Total loans held for investment		$	2,273,856			$	2,264,899			$	2,300,814			$	2,249,036			$	2,188,035			$	2,273,856			$	2,188,035
PPP loans			(48,304	)			(105,684	)			(218,766	)			(192,160	)			(231,834	)			(48,304	)			(231,834	)
Total loans held for investment excluding PPP loans		$	2,225,552			$	2,159,215			$	2,082,048			$	2,056,876			$	1,956,201			$	2,225,552			$	1,956,201
Allowance for credit losses to loans held for investment			1.16		%		1.27		%		1.31		%		1.55		%		1.59		%		1.16		%		1.59		%
Allowance for credit losses to loans held for investment excluding PPP loans			1.18		%		1.33		%		1.45		%		1.70		%		1.78		%		1.18		%		1.78		%

FAQ

What is Atlantic Capital Bancshares' net income for Q3 2021?

Atlantic Capital Bancshares reported a net income of $13.3 million for Q3 2021.

How did total assets perform for Atlantic Capital in Q3 2021?

Total assets increased to $4.2 billion as of September 30, 2021.

What is the expected momentum for Atlantic Capital going forward?

The company expects continued strong momentum into Q4 2021 and 2022.

What was the return on average equity for ACBI in Q3 2021?

The return on average equity for Atlantic Capital was 14.69% in Q3 2021.

How much did loans held for investment grow in Q3 2021?

Loans held for investment increased by $66.3 million, or 12.3% annualized, from Q2 2021.