Atlantic Capital Bancshares Reports First Quarter 2017 Results

5/1/17

ATLANTA--(BUSINESS WIRE)--Atlantic Capital Bancshares, Inc. (NASDAQ: ACBI) announced results of the quarter ended March 31, 2017.

First Quarter Highlights

  • Reported net income of $3.2 million, or $0.13 per diluted share, compared to $1.6 million, or $0.06 per diluted share, in the fourth quarter of 2016.
  • Increased taxable equivalent net interest margin to 3.20% compared to 3.11% in the fourth quarter of 2016.
  • Increased SBA income to $1.2 million from $600,000 in the fourth quarter of 2016.
  • Reduced noninterest expense to $17.7 million from $18.8 million in the fourth quarter of 2016.
  • Reported nonperforming assets to total assets of 0.21% as of March 31, 2017.
  • Increased average noninterest bearing deposits $29 million, or 18.7% annualized, to $620 million. Average noninterest bearing deposits equaled 29.4% of total deposits.

“Atlantic Capital reported improved results for the first quarter of 2017, with strong growth in demand deposits and an expanded net interest margin, despite weaker than expected loan growth. We’ve strengthened our banking teams to provide the capacity for resumed loan growth consistent with our plan,” explained Douglas Williams, Chief Executive Officer.

Results of Operations

For the first quarter of 2017, Atlantic Capital recorded net income of $3.2 million, or $0.13 per diluted share, compared to net income of $1.6 million, or $0.06 per diluted share, in the fourth quarter of 2016. Operating net income totaled $3.2 million, or $0.13 per diluted share, for the first quarter of 2017, compared to $1.7 million, or $0.07 per diluted share, in the fourth quarter of 2016. Operating net income excludes merger related expenses, divestiture expenses, and net gain on sale of branches.

Taxable equivalent net interest income was unchanged at $19.5 million in the first quarter of 2017 compared to the fourth quarter of 2016. The first quarter net interest income was impacted by two fewer days compared to the fourth quarter. Net accretion income on acquired loans totaled $702,000 and premium amortization on acquired time deposits totaled $119,000 in the first quarter of 2017 compared to $571,000 and $142,000 respectively, in the fourth quarter of 2016.

Taxable equivalent net interest margin was 3.20% in the first quarter of 2017 compared to 3.11% in the fourth quarter of 2016. The margin benefited from the increase in the Fed Funds rate in December 2016. Loan yields increased 18 basis points to 4.16%, while cost of deposits increased 2 basis points to 0.39%. This increase was offset by a change in asset mix, as mortgage warehouse loans decreased and the investment portfolio increased. The accretion of the acquired loan discount and amortization of time deposit premium contributed 13 basis points to the net interest margin in the first quarter of 2017 compared to 12 basis points in the fourth quarter of 2016.

The provision for loan losses was $600,000 in the first quarter of 2017 compared to $2.2 million in the fourth quarter of 2016.

Noninterest income totaled $3.9 million in the first quarter of 2017, a decrease of $573,000 compared to the fourth quarter of 2016. The SBA division contributed $1.2 million in income in the first quarter of 2017, an increase of $628,000 compared to $599,000 in the fourth quarter of 2016. This increase was offset by decreases in derivative income, mortgage income and the elimination of gains from the sale of TriNet loans.

Noninterest expense totaled $17.7 million in the first quarter of 2017, a decrease of $1 million compared to $18.8 million in the fourth quarter of 2016. Operating noninterest expense, which excludes merger related expenses, decreased by $827,000 to $17.7 million. Salaries and benefits decreased $204,000 due to a lower incentive accrual offset by seasonally higher payroll taxes. The fourth quarter of 2016 included an expense of $600,000 from an impairment on other real estate owned of two closed bank branches.

On December 9, 2016, Atlantic Capital announced the sale of the branch located in Cleveland, Tennessee. This transaction includes the sale of approximately $29 million in deposits, $28 million in loans and $3 million in other assets. Subject to customary closing conditions, including the receipt of all necessary regulatory approvals, the transaction is expected to close during the second quarter of 2017.

Total loans were $1.93 billion at March 31, 2017, a decrease of $86 million from December 31, 2016. Loans held for investment were $1.90 billion at March 31, 2017, a decrease of $80 million from December 31, 2016. Mortgage warehouse loans decreased $89 million in the first quarter to $58 million at March 31, 2017, primarily as a result of lower mortgage activity due to higher interest rates. Excluding the decrease in mortgage warehouse loans, loans held for investment increased $10 million in the first quarter of 2017.

Available for sale securities increased $109 million in the first quarter of 2017, as Atlantic Capital responded to the decrease in mortgage warehouse loans.

At March 31, 2017, the allowance for loan losses was $19.9 million, or 1.05% of loans held for investment, compared to $20.6 million, or 1.04% of loans held for investment as of December 31, 2016. Annualized net charge-offs to average loans in the first quarter of 2017 totaled 0.26% compared to 0.03% in the fourth quarter of 2016. Nonperforming assets totaled $5.9 million, or 0.21% of total assets, as of March 31, 2017, compared to $3.5 million, or 0.13% of total assets, as of December 31, 2016.

Total average deposits for the first quarter of 2017 were $2.11 billion, an increase of $17 million from the fourth quarter of 2016. Average noninterest bearing deposits increased $29 million to $620 million in the first quarter of 2017 and accounted for 29.4% of average total deposits. Average deposits associated with our payments business were $274 million in the first quarter of 2017, an increase of $63 million from the fourth quarter of 2016.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is a $2.8 billion publicly traded bank holding company headquartered in Atlanta, Georgia. Atlantic Capital offers banking, treasury management, capital markets, trust, and mortgage services to privately held companies and individuals in Atlanta, eastern Tennessee, northwest Georgia and Charlotte, North Carolina. Atlantic Capital also provides specialized financial services to select clients nationally.