ITEM 1A.    RISK FACTORS

Risks Related to the Company and its Banking Operations

We have recently implemented a strategic realignment, including the Branch Sale, the exit of the Tennessee and northwest Georgia markets, the exit of the mortgage banking and trust and wealth management businesses, and the addition of branches and loan production offices in Atlanta and the surrounding areas. We may experience increased delinquencies and credit losses, which could have a material adverse effectnot fully realize the anticipated benefits of our strategic realignment if the negative impacts on our capital, financial conditionbusiness, including the loss of deposits as a source of funding, the loss of customers and resultsrevenue from the affected branches and the lines of operations.

We are subject to risks associated with geographic and results ofcustomer concentration in our lending operations,.

Following the existing portfolio of loans. The allowance for loan losses and our methodology for calculating the allowance are fully described in Note 1 to our consolidated financial statements for the year ended December 31, 2017 under “Allowance for Loan Losses,” and in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Allowance for Loan Losses” section. In general, an increase in the allowance for loan losses results in a decrease in net income, and possibly risk-based capital, and may have a material adverse effect on our capital, financial condition and results of operations.

We are subject to risks associated with customer concentration in our deposit base, which could negatively impact our liquidity.

We transferred approximately $598 million of deposits in connection with the banking industry in TennesseeBranch Sale, which decreased our liquidity available for making loans. Because the transferred deposits were comprised primarily of a large number of smaller deposits, we are more reliant on a smaller number of large deposit customers for liquidity funding. Our strategy involves continued solicitation of and Georgia is affected by general economic conditions such as inflation, recession, unemployment and other factors beyondreliance on larger deposits from our control.

We offer commercial and industrialreal estate and commercial real estateand industrial loans, and as of December 31, 2017,2019, we had $1.56 billion in such$916.3 million of commercial real estate loans and $705.1 million of commercial and industrial loans outstanding, representing 493%49% and 38%, respectively, of our total loan portfolio. These types of loans have historically driven the Bank’s total risk-based capital.  Commercialgrowth in our loan portfolio and industrial andwe intend to continue our lending efforts for commercial real estate and commercial and industrial products.

Commercial real estate and commercial and industrial loans may present a greater risk of non‑paymentnon-payment by a borrower than other types of loans. They typically involve larger loan balances and are particularly sensitive to economic conditions.  Unlike residential mortgage loans, which generally are made on the basis of the borrowers’ ability to make repayment from their employment and other income and which are secured by real property whose value tends to be more easily ascertainable, commercial loans typically are made on the basis of the borrowers’ ability to make repayment from the cash flow of the related commercial venture. If the cash flow from business operations is reduced, the borrower’s ability to repay the loan may be impaired. Due to the larger average size of a commercial loan in comparison to other loans such as residential loans, as well as the collateral which is generally less readily-marketable, losses incurred on a small number of commercial loans could have a material adverse impact on our financial condition and results of operations. In addition, commercial loan customers often have the ability to fund current interest payments through additional borrowings, and as a result the actual credit risk associated with these customers may be worse than anticipated. In addition, some of our commercial borrowers have more than one loan outstanding with us, which means that an adverse development with respect to one loan or one credit relationship can expose us to significantly greater risk of loss. In the case of commercial and industrial loans, collateral often consists of accounts receivable, inventory and equipment, which may not yield substantial recovery of principal losses incurred, and is susceptible to deterioration or other loss in advance of liquidation of such collateral. These typesloans may lack standardized terms and may include a balloon payment feature. The ability of loans, however, have historically drivena borrower to make or refinance a balloon payment may be affected by a number of factors, including the growth in our loan portfoliofinancial condition of the borrower, prevailing economic conditions and we intend to continue our lending efforts for commercial and industrial products.

Because of the risks associated with commercial real estate, commercial and industrial and acquisition and development and construction loans, we may experience higher rates of default than a portfolio more heavily weighted towards smaller or residential mortgage loans. Losses in our commercial real estate, commercial and industrial, commercial real estate, land acquisition and development, or construction and land loan portfolio could exceed our reserves, which would adversely impact our capital and earnings.  Non-performing

In addition to considering the financial strength and cash flow characteristics of borrowers, we often secure loans with real estate collateral. At December 31, 2017,2019, approximately 64%60% of the Bank’s loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower but may deteriorate in value during the time the credit is extended. If the value of real estate in our core markets were to decline further, a significant portion of our loan portfolio could become under-collateralized. As a result, if we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.

Our use of appraisals in deciding whether to make a loan on or secured by real property or how to value such loan in the future may not accurately describe the net value of the real property collateral that we can realize.

In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values in our market area have experienced changes in value in relatively short periods of time, this estimate might not accurately describe the net value of the real property collateral after the loan has been closed. If the appraisal does not reflect the amount that may be obtained upon any sale or foreclosure of the property, we may not realize an amount equal to the indebtedness secured by the property. The valuation of the property may negatively impact the continuing value of such loan and could adversely affect our operating results and financial condition.

We depend on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to customers, we may assume that a customer’s audited financial statements conform to accounting principles generally accepted in the United States (“GAAP”), and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings and our financial condition could be negatively impacted to the extent the information furnished to us by and on behalf of borrowers is not correct or complete or is noncompliant with GAAP.

We have a strategy to manage our non-performing assets aggressively, a portion of which may not be currently identified. Non-performing assets are recorded on our financial statements at fair value, as required under GAAP, unless these assets have been specifically identified for liquidation, in which case they are recorded at the lower of cost or estimated net realizable value. In

Changes in the policies of monetary authorities and other government action could materially adversely affect our profitability.

The Bank’s results of operations are affected by policies of monetary authorities, particularly the Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open market operations in U.S. government securities, changes in the discount rate or the federal funds rate on bank borrowings and changes in reserve requirements against bank deposits. In view of changing conditions in the national economy and in the money markets particularly in light of the continuing threat of terrorist attacks and the current military operations and other instances of unrest in the Middle East, and the economic and political situations in certain parts of the world, we cannot predict with certainty possible future changes in interest rates, deposit levels, loan demand or our business and earnings. Furthermore, the actions of the U.S. government and other governments in responding to such terrorist attacks or events in these or other regions may result in currency fluctuations, exchange controls, market disruption and other adverse effects.

Fluctuations in interest rates could reduce our profitability.

Our earnings are significantly dependent on our net interest income, as we realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings. We are unable to predict future fluctuations in interest rates, which are affected by many factors, including inflation, economic growth, employment rates, fiscal and monetary policy and disorder and instability in domestic and foreign financial markets. Our net interest income is affected not only by the level and direction of interest rates, but also by the shape of the yield curve and relationships between interest sensitive instruments and key interest driver rates, as well as balance sheet growth, customer loan and deposit preferences and the timing of changes in these variables. Our net interest income also may decline based on our exposure to a difference in short-term and long-term interest rates. A relatively high cost for securing deposits, combined with lower interest rates that can be charged on customer loans, will place downward pressure on our net interest income. Our asset-liability management strategy may not be effective in preventing changes in interest rates from having a material adverse effect on our business, financial condition and results of operations.

We are subject to risks in the event of certain borrower defaults, which could have an adverse impact on our liquidity position and results of operations.

We may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of certain borrower defaults, which could adversely affect our liquidity position, results of operations, and financial condition. WhenPrior to the exit of our mortgage banking business in connection with the Branch Sale, when we sell mortgage loans, we arewere required to make customary representations and warranties to the purchaser about the mortgage loans and the manner in which the loans were originated. In the event of a breach of any of the representations and warranties related to a loan sold, we could be liable for damages to the investor up to and including a “make whole” demand that involves, at the investor’s option, either reimbursing the investor for actual losses incurred on the loan or repurchasing the loan in full. Our maximum exposure to credit loss in the event of a make whole loan repurchase claim would be the unpaid principal balance of the loan to be repurchased along with any premium paid by the investor when the loan was purchased and other collection cost reimbursements. If repurchase demands increase, our liquidity position, results of operations, and financial condition could be adversely affected.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming or costly and increases demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

The fact that we are a public company has increased the costs of our director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage in the future. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit and compensation committees, and qualified executive officers.

WeAtlantic Capital may need to rely on the financial markets to provide needed capital.

Our common stock is listed and traded on The NASDAQ Global Select Market under the symbol “ACBI”. Although we anticipate that our capital resources will be adequate for the foreseeable future to meet our capital requirements, at times we may depend on the liquidity of the Nasdaq market to raise equity capital. If the market should fail to operate, or if conditions in the capital markets are adverse, we may be constrained in raising capital. Downgrades in the opinions of the analysts that follow us may cause our stock price to fall and significantly limit our ability to access the markets for additional capital requirements. Should these risks materialize, our ability to further expand our operations through internal growth or acquisition may be limited.

Negative publicity about financial institutions, generally, or about ourthe Company or the Bank, specifically, could damage our reputation and adversely impact our liquidity, business operations or financial results.

Reputation risk, or the risk to our business from negative publicity, is inherent in our business. Negative publicity can result from the actual or alleged conduct of financial institutions, generally, or our Company or the Bank, specifically, in any number of activities, including leasing and lending practices, corporate governance, and actions taken by government regulators in response to those activities. Negative publicity can adversely affect our ability to keep and attract customers and can expose us to litigation and regulatory action, any of which could negatively affect our liquidity, business operations or financial results.

Our expenses and other costs, such as operating expenses and hiring new employees, directly affect our earnings results. In light of the extremely competitive environment in which we operate, and because the size and scale of many of our competitors provides them with increased operational efficiencies, it is important that we are able to successfully manage such expenses. We are aggressively managing our expenses in the current economic environment, but as our business develops, changes or expands, and as we hire additional personnel, additional expenses can arise. Other factors that can affect the amount of our expenses include legal and administrative cases and proceedings, which can be expensive to pursue or defend. In addition, changes in accounting policies can significantly affect how we calculate expenses and earnings.

Certain changes in interest rates, inflation, deflation or the financial markets could affect demand for our products and our results of operations and cash flows.

Loan originations, and potentially loan revenues, could be materially adversely impacted by sharply rising interest rates. Conversely, sharply falling rates could increase prepayments within our securities portfolio and fixed rate loans lowering interest earnings from those investments.earnings. An unanticipated increase in inflation could cause our operating costs related to salaries and benefits, technology and supplies to increase at a faster pace than revenues.

The fair market value of our securities portfolio and the investment income from these securities also fluctuate depending on general economic and market conditions. In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations.

Interest rate increases often result in larger payment requirements for our borrowers, which increase the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.

Liquidity is essential to the orderly function of our business. An inability to raise funds through deposits, borrowings and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Factors that could negatively impact our access to liquidity sources include a decrease in the level of our business activity as a result of an economic downturn in the markets in which our loans are concentrated, adverse regulatory action against us, or our inability to attract and retain deposits. Our ability to borrow could be impaired by factors that are not specific to us or our

We compete with these institutions in attracting deposits and making loans and providing private banking services.loans. In addition, we primarily have to attract our customer base from other existing financial institutions and from new residents. We also compete with these institutions in recruiting employees who are critical to our success. Many of our competitors are well-established and much larger financial institutions. Many of our competitors have fewer regulatory constraints and may have lower cost structures. We may face a competitive disadvantage as a result of our smaller size and relative lack of geographic diversification.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other

The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition.

We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business. Our insurance may not cover all claims that may be asserted against it and indemnification rights to which we are entitled may not be honored, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations. In addition, premiums for insurance covering the financial and banking sectors are rising. We may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms or at historic rates, if at all.

We are subject to various taxing jurisdictions where we conduct business. We assess the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent and other pertinent information and maintain tax accruals consistent with our evaluation. This evaluation incorporates assumptions and estimates that involve a high degree of judgment and subjectivity. Changes in the results of these evaluations could have a material impact on our operating results.

In the course of our business, we may foreclose on and take title to properties securing our loans. If hazardous substances are discovered on any of these properties, we may be liable to governmental entities or third parties for the costs of remediation of the hazard, as well as for personal injury and property damage. Many environmental laws impose liability regardless of whether we knew of, or were responsible for, the contamination. In addition, if we arrange for the disposal of hazardous or toxic substances at another site, we may be liable for the costs of cleaning up and removing those substances from the site, even if we neither own nor operate the disposal site. Environmental laws may require us to incur substantial expenses and may materially limit the use of properties that we acquire through foreclosure, reduce their value or limit our ability to sell them in the event of a default on the loans they secure. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Our loan policies requiring certain due diligence of high risk industries and properties may not be effective in reducing the risks of environmental liability resulting from non-performing loan and/or foreclosed property.

We may not be able to retain, attract and motivate qualified individuals.

Our success depends on our ability to retain, attract and motivate qualified individuals in key positions throughout the organization. Competition for qualified individuals in most activities in which we are engaged can be intense, and we may not be able to hire or retain the people we want and/or need. Although we have entered into employment agreements with certain key employees, and have incentive compensation plans aimed, in part, at long-term employee retention, the unexpected loss of services of one or more of our key personnel could still occur, and such events may have a material adverse impact on our business because of the loss of the employee’s skills, knowledge of our market, and years of industry experience and the difficulty of promptly finding qualified replacement personnel. If we are unable to retain, attract and motivate qualified individuals in key positions, our business and results of operations could be adversely affected.

A failure in or breach of our operational or security systems, or those of our third party service providers, including as a result of cyber-attacks, could disrupt our business, result in unintentional disclosure or misuse of confidential or proprietary information, or damage our reputation.

As a financial institution, our operations rely heavily on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Any failure, interruption or breach in security or operational integrity of these systems could result in failures or disruptions in our Internet banking system, treasury management products, check and document imaging, remote deposit capture systems, general ledger, deposit, loan and other systems.

There has been an increase in the number and sophistication of criminal cyber-security attacks against companies where customer and other sensitive information has been compromised. The financial services industry has experienced an increase in the number and severity of cyber-attacks, including efforts to hack or breach security measures in order to access, obtain or misuse information, misappropriate financial assets, corrupt or destroy data, disrupt operations, or install viruses, “ransomware” or other malware. Although we devote significant resources to maintaining the integrity of our systems, we are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. The protective policies and procedures we currently have in place or which we implement in the future may not be sufficient as the nature and sophistication of such threats continue to evolve. We may be required to expend significant additional resources in the future to modify and enhance our protective measures.

Any failures, interruptions or security breaches in our information systems, or the systems operated by our third party service providers, could damage our reputation, result in a loss of customer business, impair our ability to provide our services or maintain availability of our systems to customers, result in a violation of privacy or other laws, subject us to regulatory enforcement or other actions, or expose us to remediation costs, increased insurance premiums, civil litigation, fines, penalties or losses not covered by insurance. Any of these events could have a material adverse effect on our financial condition or results of operations.

Our business is dependent on technology, and an inability to invest in technological improvements or obtain reliable technology and technological support may adversely affect our business, financial condition and results of operations.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of institutions to reduce costs. We depend in part upon our ability to address the needs of our customers by using technology to provide products and services that satisfy their operational needs. Many of our competitors have substantially greater resources to invest in technological improvements and third-party support. There can be no assurance that we will effectively implement new technology-driven products and services or successfully market these products and services to our customers. We also rely on our computer systems. For example, we rely on our computer systems to accurately track and record our assets and liabilities. If our computer systems become unreliable, fail or experience a breach of security, our ability to maintain accurate financial records may be impaired, which could materially affect our business, financial condition and results of operations.

Impairment of our investment securities could require charges to earnings, which could result in a negative impact on our results of operations.

In assessing the impairment of investment securities, we consider the length of time and extent to which the fair value has beenis less than cost, the financial condition and near-term prospects of the issuers, whether the decline in market value was affected by macroeconomic conditions and whether we have the intent to sell the security or will be required to sell the security before its anticipated recovery. Future declines in the market value or our investment securities may result in other-than-temporary impairment of these securities, which could lead to charges that could have a material adverse effect on our net income and capital levels.

The Dodd-Frank Act and related regulations may adversely affect our business, financial condition, liquidity or results of operations.

The Dodd-Frank Act created a new agency, the CFPB, with power to promulgate and enforce consumer protection laws. Smaller depository institutions, including those with $10 billion or less in assets, will beare subject to the CFPB’s rule-writing authority, and existing depository institution regulatory agencies will retain examination and enforcement authority for such institutions. The Dodd-Frank Act also established a Financial Stability Oversight Council chaired by the Secretary of the Treasury with authority to identify institutions and practices that might pose a systemic risk and, among other things, includes provisions affecting:

The trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of our common stock. Among the factors that could affect our stock price are:

·

actual or anticipated quarterly fluctuations in our operating results and financial condition;

actual or anticipated quarterly fluctuations in our operating results and financial condition;

·

changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other financial institutions;

changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other financial institutions;

·

failure to meet analysts’ revenue or earnings estimates;

failure to meet analysts’ revenue or earnings estimates;

·

speculation in the press or investment community;

speculation in the press or investment community;

·

strategic actions by us or our competitors, such as acquisitions or restructurings;

strategic actions by us or our competitors, such as acquisitions or restructurings;

·

actions by institutional shareholders;

actions by institutional shareholders;

·

fluctuations in the stock price and operating results of our competitors;

fluctuations in the stock price and operating results of our competitors;

·

general market conditions and, in particular, developments related to market conditions for the financial services industry;

general market conditions and, in particular, developments related to market conditions for the financial services industry;

·

proposed or adopted regulatory changes or developments;

proposed or adopted regulatory changes or developments;

·

anticipated or pending investigations, proceedings or litigation that involve or affect us or the financial services industry; or

anticipated or pending investigations, proceedings or litigation that involve or affect us or the financial services industry; or

·

domestic and international economic factors unrelated to our performance.

domestic and international economic factors unrelated to our performance.

The holders of our subordinated notes have rights that are senior to those of our shareholders.

As of December 31, 2017,2019, we had $50 million of subordinated notes outstanding. The subordinated notes are senior to shares of our common stock. As a result, we must make payments on the subordinated notes before any dividends can be paid on our common stock and, in the event of bankruptcy, dissolution, or liquidation, the holders of the subordinated notes must be satisfied before any distributions can be made to the holders of the common stock. Our ability to pay future distributions depends upon the earnings of the Bank and the issuance of dividends from the Bank to the Company, which may be inadequate to service the obligations.

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The amount of interest payable on our 6.25% Fixed to Floating Rate Subordinated Notes due 2025 will vary after September 19, 2020.

The interest rate on our 6.25% Fixed to Floating Rate Subordinated Notes due 2025 will vary after September 29, 2020. From and including the issue date of such notes to but excluding September 30, 2020, the notes will bear interest at a fixed rate of 6.25% per year. From September 30, 2020 to the maturity date, the notes will bear interest at an annual floating rate equal to the three-month LIBOR plus 468 basis points for any interest period. If interest rates rise, the cost of our subordinated notes may increase, negatively affecting our net income. For additional information regarding the subordinated notes, see Note 11 – Other Borrowings and Long Term Debt in “Item 8 – Financial Statements and Supplementary Data.”

We may borrow funds or issue additional debt and equity securities or securities convertible into equity securities, any of which may be senior to our common stock as to distributions and in liquidation, which could negatively affect the value of our common stock.

In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock, common stock, or securities convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and preferred securities would receive a distribution of our available assets before distributions to the holders of our common stock. Because our decision to incur debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate with certainty the amount, timing or nature of our future offerings and debt financings. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. In addition, the borrowing of funds or the issuance of debt would increase our leverage and decrease our liquidity, and the issuance of additional equity securities would dilute the interests of our existing shareholders.

Our ability to pay dividends to our shareholders is limited.

Our primary source of cash is dividends we receive from the Bank. Therefore, our ability to pay dividends to our shareholders depends on the Bank’s ability to pay dividends to us. We haveAtlantic Capital has not historically paid dividends to shareholders and did not pay dividends in 2017, 20162019, 2018, or 2015.2017. Additionally, banks and bank holding companies are subject to significant regulatory restrictions on the payment of cash dividends. In light of regulatory restrictions and our plans to build capital, we currently intend to reinvest the earnings of the Bank and to not pay any dividends for the foreseeable future. Our future dividend policy will depend on our earnings, capital requirements, financial condition, regulatory requirements and other factors that the boards of directors of the Company and the Bank consider relevant.

We may not be able to raise additional capital on terms favorable to us or at all.

In the future, should we need additional capital to support our business, expand our operations or maintain our minimum capital requirements, we may not be able to raise additional funds. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance at that time. We cannot provide assurance that such financing will be available to us on acceptable terms or at all. If we borrow money to provide capital to the Bank, we must obtain prior regulatory approvals, and we may not be able to pay this debt and could default. We cannot provide assurance that funds will be available to us on favorable terms or at all.

ITEM 1B.	UNRESOLVED STAFF COMMENTS

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.PROPERTIES

The executive office of Atlantic Capital Bancshares, Inc., is and the headquarters of Atlantic Capital Bank,  are located at 3280 Peachtree945 East Paces Ferry Road NE, Suite 1600, Atlanta, Fulton County, Georgia. The headquarters of Atlantic Capital Bank, N.A.This property is located at 1110 Market Street, #300, Chattanooga, Hamilton County, Tennessee. Both properties are leased.  Atlantic Capital provides services or performs operational functions at 205 additional locations, all of which 10 are owned and 10 are leased.  These offices are located in Cobb County, Fulton WhitfieldCounty and OconeeAthens-Clarke County, Georgia, and Hamilton Union, Jefferson, Knox, and Loudon County, Tennessee.

We believe that our banking offices are in good condition, and are suitable to our needs.  We are not aware of any environmental problems with the properties that we own or lease that would be material, either individually, or in the aggregate, to our operations or financial condition.

ITEM 3.	LEGAL PROCEEDINGS

ITEM 3.LEGAL PROCEEDINGS

In the ordinary course of business, the Company is involved in routine litigation and various legal proceedings related to the Company’s operations.  Currently, there is no pending litigation or proceedings that management believes will have a material adverse effect, either individually or in the aggregate, on the Company’s business, financial condition and results of operations.

ITEM 4.	MINE SAFETY DISCLOSURES

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5.	MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5.MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) trading under the symbol “ACBI.” The following table sets forth for

Holders

At March 2,  2020, there were 289 record shareholders.  We estimate the period indicated the high and low per share sale pricesnumber of beneficial shareholders to be much higher as many of our common stock on Nasdaq.

		2017													2016
		Price Per Share									Cash Dividends Declared				Price Per Share									Cash Dividends Declared
Quarter Ended:		High			Low			Close							High			Low			Close
March 31		$	20.20		$	17.48		$	18.95		$	—			$	14.90		$	11.55		$	13.94		$	—
June 30		$	19.85		$	18.15		$	19.00		$	—			$	14.58		$	12.92		$	14.46		$	—
September 30		$	19.60		$	15.36		$	18.15		$	—			$	15.74		$	14.04		$	14.98		$	—
December 31		$	19.00		$	15.20		$	17.60		$	—			$	19.25		$	13.80		$	19.00		$	—

Holders

At March 1, 2018, there were 345 record shareholders and approximately 1,507 beneficial shareholders of the Company’s common stock.

shares are held by brokers or dealers for their customers in street name.

Dividend Policy

We did

Historically, we have not pay any dividends in fiscal 2017 or fiscal 2016. We have no current plans to pay any dividends on our common stock for the foreseeable future and instead currently intend to retain earnings, if any, for future operations and expansion.

paid dividends.

The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our Board. Additionally, banks and bank holding companies are subject to significant regulatory restrictions on the payment of cash dividends. Our future dividend policy will depend on our earnings, capital requirements, financial condition, regulatory requirements and other factors that the boards of directors of the Company and the Bank consider relevant. See “Item 1.1 –  Business - Supervision and Regulation - Payment of Dividends and Other Restrictions”Dividends” above for regulatory restrictions which limit our ability to pay dividends.

Performance Graph

Set forth below is a line graph, which was prepared by SNL Financial LC (“SNL”) comparing the yearly percentage change in the cumulative total shareholder return on Atlantic Capital’s common stock against the cumulative total return on the Nasdaq Stock Market (U.S. Companies) Index, the SNL U.S. Bank Index and the SNL Southeast U.S. Bank Index, commencing November 2, 2015 (when our shares began trading) and ending on December 31, 2017.2019.

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Issuer Repurchases of Equity Securities

On November 14, 2018, the Company announced that the Board of Directors authorized a stock repurchase program pursuant to which the Company may purchase up to $85 million of its issued and outstanding common stock. After completing the repurchases pursuant to this authorization during the first quarter of 2020, the Company announced on March 4, 2020 that the Board of Directors had authorized a new stock repurchase program pursuant to which it may purchase up to $25 million of its issued and outstanding common stock. The new repurchase program commenced immediately with respect to $15 million of stock, and the remaining $10 million is subject to regulatory approval of a dividend from Atlantic Capital Bank to Atlantic Capital. The timing and amounts of any repurchases will depend on certain factors, including but not limited to market conditions and prices, available funds and alternative uses of capital. The stock repurchase program may be carried out through open-market purchases, block trades, negotiated private transactions and pursuant to a trading plan adopted in accordance with Rule 10b-18 or Rule 10b5-1 under the Securities Exchange Act of 1934. The stock repurchase program may be suspended or discontinued at any time and will automatically expire on March 4, 2022. Any repurchased shares will constitute authorized but unissued shares.

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Table of Contents

During 2019, the Company repurchased $64.8 million, or 3,694,902 shares of common stock.  The following table presents information with respect to repurchases of our common shares during the periods indicated:

									Approximate
							Total Number of		Dollar Value of
							Shares Purchased		Shares that May
		Total Number of					as Part of Publicly		Yet be Purchased
		Shares		Average Price			Announced Plans		Under the Plans or
Period		Purchased		Paid per Share			or Programs		Programs
October 1 - 31, 2019		307,046			17.37		307,046			8,743,547
November 1 - 30, 2019		90,880			18.84		90,880			7,031,239
December 1 - 31, 2019		54,397			18.80		54,397			6,008,829
Total		452,323		$	18.34		452,323		$	6,008,829

ITEM 6.SELECTED FINANCIAL DATA

ATLANTIC CAPITAL BANCSHARES, INC.(1)

		For the Year Ended December 31,
(in thousands, except share and per share data)		2019			2018			2017			2016			2015
INCOME SUMMARY
Interest income		$	105,847		$	94,760		$	75,818		$	63,273		$	43,546
Interest expense			24,983			18,513			12,986			9,554			4,600
Net interest income			80,864			76,247			62,832			53,719			38,946
Provision for loan losses			2,712			1,946			3,218			3,816			8,035
Net interest income after provision for loan losses			78,152			74,301			59,614			49,903			30,911
Noninterest income			10,725			10,047			12,179			11,981			8,664
Noninterest expense			53,108			49,991			52,834			50,099			42,435
Income (loss) from continuing operations before income taxes			35,769			34,357			18,959			11,785			(2,860)
Income tax expense (benefit)			7,611			6,307			23,715			4,221			(117)
Net income (loss) from continuing operations			28,158			28,050			(4,756)			7,564			(2,743)
Income from discontinued operations, net of tax			21,697			482			1,030			5,831			1,424
Net income (loss)		$	49,855		$	28,532		$	(3,726)		$	13,395		$	(1,319)
PER SHARE DATA
Basic earnings (loss) per share - continuing operations		$	1.21		$	1.08		$	(0.19)		$	0.31		$	(0.18)
Basic earnings per share - discontinued operations			0.93			0.02			0.04			0.24			0.09
Basic earnings (loss) per share			2.14			1.10			(0.15)			0.54			(0.09)
Diluted earnings (loss) per share - continuing operations		$	1.20		$	1.07		$	(0.19)		$	0.30		$	(0.18)
Diluted earnings per share - discontinued operations			0.92			0.02			0.04			0.23			0.09
Diluted earnings (loss) per share			2.12			1.09			(0.15)			0.53			(0.09)
Book value per share			15.01			12.80			11.99			12.10			11.79
Dividends declared			—			—			—			—			—
PERFORMANCE MEASURES
Return on average equity			15.10	%		9.05	%		(1.17)	%		4.44	%		(0.77)	%
Return on average assets			1.93			1.03			(0.14)			0.49			(0.08)
Taxable equivalent net interest margin - continuing operations			3.58			3.50			3.07			2.76			2.76
Efficiency ratio - continuing operations			57.99			57.93			70.44			76.25			89.13
Equity to assets			11.22			10.95			10.67			11.13			10.91
Dividend payout ratio			—			—			—			—			—
ASSET QUALITY
Allowance for loan losses to loans held for investment(2)			0.99	%		1.03	%		1.00	%		1.04	%		1.06	%
Net charge-offs		$	2,028		$	342		$	4,469		$	2,126		$	551
Net charge-offs to average loans			0.11	%		0.02	%		0.23	%		0.11	%		0.05	%
NPAs to total assets			0.26			0.20			0.14			0.13			0.40

ITEM 6. (1)	SELECTED FINANCIAL DATA	On April 5, 2019, the Bank sold its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for all prior periods presented.

(2)

The December 31, 2018 and 2019 ratios are calculated on a continuing operations basis. Prior period ratios have not been retrospectively adjusted for the impact of discontinued operations.

39

ATLANTIC CAPITAL BANCSHARES, INC.(1)
		For the Years Ended December 31,
(in thousands, except share and per share data)		2017				2016				2015				2014				2013
INCOME SUMMARY
Interest income		$	96,271			$	88,217			$	48,967			$	36,542			$	32,537
Interest expense		15,129				11,509				4,923				3,449				3,615
Net interest income		81,142				76,708				44,044				33,093				28,922
Provision for loan losses		3,218				3,816				8,035				488				246
Net interest income after provision for loan losses		77,924				72,892				36,009				32,605				28,676
Noninterest income		16,189				21,732				9,399				5,342				3,875
Noninterest expense		73,465				73,280				45,933				26,574				24,893
Income before income taxes		20,648				21,344				(525		)		11,373				7,658
Income tax expense		24,374				7,949				794				3,857				2,515
Net income		$	(3,726	)		$	13,395			$	(1,319	)		$	7,516			$	5,143
PER SHARE DATA
Basic earnings per share		$	(0.15	)		$	0.54			$	(0.09	)		$	0.56			$	0.38
Diluted earnings per share		(0.15		)		0.53				(0.09		)		0.55				0.38
Book value per share		11.99				12.10				11.79				10.48				9.77
Dividends declared		—				—				—				—				—
PERFORMANCE MEASURES
Return on average equity		(1.17		)	%	4.44			%	(0.77		)	%	5.54			%	3.96			%
Return on average assets		(0.14		)		0.49				(0.08		)		0.61				0.46
Taxable equivalent net interest margin		3.28				3.12				2.99				2.86				2.75
Efficiency ratio		75.48				74.44				85.95				69.14				75.90
Equity to assets		10.67				11.13				10.91				10.72				10.67
Dividend payout ratio		—				—				—				—				—
ASSET QUALITY
Allowance for loan losses to loans held for investment		1.00			%	1.04			%	1.06			%	1.10			%	1.32			%
Net charge-offs		$	4,469			$	2,126			$	551			$	(118	)		$	167
Net charge-offs to average loans		0.23			%	0.11			%	0.05			%	(0.01		)	%	0.02			%
NPAs to total assets		0.14				0.13				0.40				0.12				0.36
AVERAGE BALANCES
Loans and loans held for sale		$	1,936,109			$	1,986,482			$	1,192,103			$	918,959			$	793,505
Investment securities		447,775				357,054				165,796				143,727				147,323
Total assets		2,719,658				2,709,138				1,581,687				1,227,230				1,118,527
Deposits		2,146,852				2,146,984				1,296,763				983,772				935,469
Shareholders’ equity		318,805				301,443				170,675				135,687				129,853
Number of common shares - basic		25,592,731				24,763,522				15,283,437				13,445,122				13,420,599
Number of common shares - diluted		25,822,085				25,186,680				15,663,865				13,641,882				13,531,952
AT PERIOD END
Total loans		$	1,935,326			$	2,016,549			$	1,886,134			$	1,039,713			$	817,002
Investment securities		449,117				347,705				346,221				133,437				145,743
Total assets		2,891,421				2,727,543				2,638,780				1,314,859				1,229,392
Deposits		2,450,665				2,237,580				2,262,218				1,105,845				1,081,153
Shareholders’ equity		308,425				303,658				287,992				140,929				131,235
Number of common shares outstanding		25,712,909				25,093,135				24,425,546				13,453,820				13,426,489
(1) First Security’s results are included in Atlantic Capital’s consolidated results beginning on October 31, 2015, the acquisition date.

Table of Contents

		For the Year Ended December 31,
(in thousands, except share and per share data)		2019			2018			2017			2016			2015
AVERAGE BALANCES
Total loans		$	1,769,613		$	1,977,014		$	1,936,109		$	1,986,482		$	1,192,103
Investment securities			372,556			455,099			447,775			357,054			165,796
Total assets			2,586,428			2,780,571			2,719,658			2,709,138			1,581,687
Deposits			1,844,553			2,238,292			2,146,852			2,146,984			1,296,763
Shareholders’ equity			330,216			315,253			318,805			301,443			170,675
Number of common shares - basic			23,315,562			25,947,038			25,592,731			24,763,522			15,283,437
Number of common shares - diluted			23,478,001			26,111,755			25,822,085			25,186,680			15,663,865
AT PERIOD END
Total loans		$	1,873,894		$	2,106,992		$	1,935,326		$	2,016,549		$	1,886,134
Investment securities			399,433			402,486			449,117			347,705			346,221
Total assets			2,910,379			2,955,440			2,891,421			2,727,543			2,638,780
Deposits			2,499,046			2,537,943			2,450,665			2,237,580			2,262,218
Shareholders’ equity			326,495			323,653			308,425			303,658			287,992
Number of common shares outstanding			21,751,026			25,290,419			25,712,909			25,093,135			24,425,546

Non-GAAP Financial Measures

Statements included in this annual report include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. Atlantic Capital management uses non-GAAP financial measures, including: (i) taxable equivalent interest income; (ii) taxable equivalent net interest income; (iii) taxable equivalent net interest margin;margin – continuing operations; (iv) operating net income; (v) diluted earnings per share – operating; and (vi) interest income after provision for loan losses-taxable equivalent; (v) income before income taxes-taxable equivalent; and (vi) income tax expense-taxableon investment securities – taxable equivalent.

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.

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Non-GAAP Performance Measures Reconciliation
		For the Years Ended December 31,
(in thousands, except per share data)		2017				2016				2015				2014				2013
Operating net income reconciliation
Net income (loss) - GAAP		$	(3,726	)		$	13,395			$	(1,319	)		$	7,516			$	5,143
Merger related expenses, net of income tax		—				1,685				5,625				—				—
Divestiture expenses, net of income tax		—				187				—				—				—
Gain on sale of branches, net of income tax		—				(2,385		)		—				—				—
Provision for acquired non PCI FSG loans, net of income tax		—				—				4,153				—				—
Revaluation of net deferred tax asset		17,398				—				—				—				—
Operating net income		$	13,672			$	12,882			$	8,459			$	7,516			$	5,143
Operating diluted earnings per share reconciliation
Diluted earnings (loss) per share - GAAP		$	(0.15	)		$	0.53			$	(0.09	)		$	0.55			$	0.38
Merger related expenses		—				0.06				0.63				—				—
Net gain on sale of branches		—				(0.08		)		—				—				—
Revaluation of net deferred tax asset		0.68				—				—				—				—
Diluted earnings per share - operating		$	0.53			$	0.51			$	0.54			$	0.55			$	0.38
Interest income on investment securities reconciliation
Interest income on investment securities - GAAP		$	9,181			$	5,698			$	3,301			$	3,109			$	2,917
Taxable equivalent adjustment		906				484				63				39				29
Interest income on investment securities - taxable equivalent		$	10,087			$	6,182			$	3,364			$	3,148			$	2,946
Interest income reconciliation
Interest income - GAAP		$	96,271			$	88,217			$	48,967			$	36,542			$	32,537
Taxable equivalent adjustment		906				484				63				39				29
Interest income - taxable equivalent		$	97,177			$	88,701			$	49,030			$	36,581			$	32,566
Net interest income reconciliation
Net interest income - GAAP		$	81,142			$	76,708			$	44,044			$	33,093			$	28,922
Taxable equivalent adjustment		906				484				63				39				29
Net interest income - taxable equivalent		$	82,048			$	77,192			$	44,107			$	33,132			$	28,951
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP		3.24			%	3.10			%	2.98			%	2.85			%	2.75			%
Impact of taxable equivalent adjustment		0.04				0.02				0.01				0.01				—
Net interest margin - taxable equivalent		3.28			%	3.12			%	2.99			%	2.86			%	2.75			%

Table of Contents

Non-GAAP Performance Measures Reconciliation

		For the Year Ended December 31,
(in thousands, except per share data)		2019			2018			2017			2016			2015
Operating net income reconciliation
Net income (loss) - GAAP		$	49,855		$	28,532		$	(3,726)		$	13,395		$	(1,319)
Merger related expenses, net of income tax			—			—			—			1,685			5,625
Divestiture expenses, net of income tax			—			—			—			187			—
Gain on sale of branches, net of income tax			—			—			—			(2,385)			—
Provision for acquired non PCI FSG loans, net of income tax			—			—			—			—			4,153
Revaluation of net deferred tax asset			—			—			17,398			—			—
Operating net income		$	49,855		$	28,532		$	13,672		$	12,882		$	8,459
Operating diluted earnings per share reconciliation
Diluted earnings (loss) per share - GAAP		$	2.12		$	1.09		$	(0.15)		$	0.53		$	(0.09)
Merger related expenses			—			—			—			0.06			0.63
Net gain on sale of branches			—			—			—			(0.08)			—
Revaluation of net deferred tax asset			—			—			0.68			—			—
Diluted earnings per share - operating		$	2.12		$	1.09		$	0.53		$	0.51		$	0.54
Interest income on investment securities reconciliation
Interest income on investment securities - GAAP		$	9,559		$	10,912		$	9,181		$	5,698		$	3,301
Taxable equivalent adjustment			459			395			906			484			63
Interest income on investment securities - taxable equivalent		$	10,018		$	11,307		$	10,087		$	6,182		$	3,364
Interest income reconciliation
Interest income - GAAP		$	105,847		$	94,760		$	75,818		$	63,273		$	43,546
Taxable equivalent adjustment			459			395			906			484			63
Interest income - taxable equivalent		$	106,306		$	95,155		$	76,724		$	63,757		$	43,609
Net interest income reconciliation
Net interest income - GAAP		$	80,864		$	76,247		$	62,832		$	53,719		$	38,946
Taxable equivalent adjustment			459			395			906			484			63
Net interest income - taxable equivalent		$	81,323		$	76,642		$	63,738		$	54,203		$	39,009
Taxable equivalent net interest margin reconciliation - continuing operations
Net interest margin - GAAP - continuing operations			3.52	%		3.48	%		3.03	%		2.74	%		2.75	%
Impact of taxable equivalent adjustment			0.06			0.02			0.04			0.02			0.01
Net interest margin - taxable equivalent - continuing operations			3.58	%		3.50	%		3.07	%		2.76	%		2.76	%

41

		2017																2016
(in thousands, except share and per share data)		Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter				First Quarter
INCOME SUMMARY
Interest income		$	25,137			$	24,351			$	24,322			$	22,461			$	22,307			$	22,295			$	22,116			$	21,499
Interest expense		4,028				4,060				3,833				3,208				3,029				2,941				2,907				2,632
Net interest income		21,109				20,291				20,489				19,253				19,278				19,354				19,209				18,867
Provision for loan losses		282				322				1,980				634				2,208				463				777				368
Net interest income after provision for loan losses		20,827				19,969				18,509				18,619				17,070				18,891				18,432				18,499
Noninterest income		3,568				3,477				5,287				3,857				4,430				4,002				8,880				4,420
Noninterest expense		20,594				17,504				17,623				17,744				18,775				17,296				18,943				18,266
Income before income taxes		3,801				5,942				6,173				4,732				2,725				5,597				8,369				4,653
Income tax expense		19,138				1,890				1,844				1,502				1,116				1,889				3,222				1,722
Net Income		$	(15,337	)		$	4,052			$	4,329			$	3,230			$	1,609			$	3,708			$	5,147			$	2,931
Basic Earnings per share		$	(0.60	)		$	0.16			$	0.17			$	0.13			$	0.06			$	0.15			$	0.21			$	0.12
Diluted earnings per share		(0.60		)		0.16				0.17				0.13				0.06				0.15				0.20				0.12
Book value per share		11.99				12.63				12.45				12.18				12.10				12.36				12.29				12.05
PERFORMANCE MEASURES
Return on average equity		(18.66		)	%	4.96			%	5.48			%	4.19			%	2.09			%	4.84			%	6.88			%	4.02			%
Return on average assets		(2.24		)		0.60				0.63				0.48				0.24				0.55				0.76				0.45
Taxable equivalent net interest margin		3.39				3.26				3.26				3.20				3.11				3.12				3.12				3.26
Efficiency ratio		83.45				73.65				68.37				76.78				79.19				74.05				67.44				78.44
Equity to assets		10.67				12.31				11.82				11.10				11.13				11.17				10.83				10.86
ASSET QUALITY
Allowance for loan losses to loans held for investment		1.00			%	0.99			%	1.11			%	1.05			%	1.04			%	0.92			%	0.95			%	0.93			%
Net charge-offs		$	(192	)		$	3,322			$	49			$	1,290			$	147			$	306			$	8			$	1,665
Net charge-offs to average loans (1)		(0.04		)	%	0.68			%	0.01			%	0.26			%	0.03			%	0.06			%	—			%	0.35			%
NPAs to total assets		0.14				0.23				0.52				0.21				0.13				0.09				0.07				0.08
AVERAGE BALANCES
Loans		$	1,898,745			$	1,934,505			$	1,962,374			$	1,949,385			$	2,036,995			$	2,003,180			$	2,000,685			$	1,881,749
Investment securities		460,269				455,868				455,090				419,335				349,762				335,880				358,439				357,728
Total assets		2,720,070				2,701,387				2,762,389				2,694,715				2,722,444				2,717,996				2,718,110				2,620,750
Deposits		2,194,849				2,121,263				2,158,675				2,111,992				2,094,885				2,163,569				2,135,292				2,155,683
Shareholders’ equity		326,059				323,832				316,825				308,261				308,588				306,642				299,170				291,806
Number of common shares - basic		25,723,548				25,699,179				25,621,910				25,320,690				25,027,304				24,891,822				24,644,755				24,485,900
Number of common shares - diluted		25,888,064				25,890,779				25,831,281				25,672,286				25,407,728				25,260,280				25,158,694				24,993,597
AT PERIOD END
Total loans		$	1,935,326			$	1,908,706			$	1,963,835			$	1,930,965			$	2,016,549			$	2,054,702			$	1,971,198			$	1,982,054
Investment securities		449,117				447,005				450,273				456,942				347,705				348,484				328,370				366,641
Total assets		2,891,421				2,638,412				2,702,575				2,802,078				2,727,543				2,761,244				2,807,822				2,726,888
Deposits		2,450,665				2,103,645				2,113,954				2,203,039				2,237,580				2,188,856				2,158,305				2,282,462
Shareholders’ equity		308,425				324,754				319,435				310,967				303,658				308,463				304,066				296,015
Number of common shares outstanding		25,712,909				25,716,418				25,654,521				25,535,013				25,093,135				24,950,099				24,750,163				24,569,823
(1)  Annualized.

Table of Contents

ATLANTIC CAPITAL BANCSHARES, INC.(1)

		2019												2018
(in thousands, except share and per share data)		Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
INCOME SUMMARY
Interest income		$	26,532		$	26,520		$	26,598		$	26,197		$	26,628		$	24,017		$	22,836		$	21,279
Interest expense			5,965			6,536			6,709			5,773			5,560			4,720			4,392			3,841
Net interest income			20,567			19,984			19,889			20,424			21,068			19,297			18,444			17,438
Provision (benefit) for loan losses			787			413			698			814			502			845			(173)			772
Net interest income after provision for loan losses			19,780			19,571			19,191			19,610			20,566			18,452			18,617			16,666
Noninterest income			2,679			2,769			2,941			2,336			164			2,255			4,466			3,162
Noninterest expense			13,382			12,677			13,254			13,795			12,208			11,872			12,623			13,288
Income from continuing operations before income taxes			9,077			9,663			8,878			8,151			8,522			8,835			10,460			6,540
Income tax expense			1,937			2,094			1,869			1,711			1,039			1,837			2,082			1,349
Net income from continuing operations			7,140			7,569			7,009			6,440			7,483			6,998			8,378			5,191
Income (loss) from discontinued operations, net of tax			—			617			22,143			(1,063)			1,347			(485)			(227)			(153)
Net income		$	7,140		$	8,186		$	29,152		$	5,377		$	8,830		$	6,513		$	8,151		$	5,038
PER SHARE DATA
Basic earnings per share - continuing operations		$	0.33		$	0.33		$	0.29		$	0.26		$	0.29		$	0.27		$	0.32		$	0.20
Basic earnings (loss) per share - discontinued operations			—			0.03			0.93			(0.04)			0.05			(0.02)			(0.01)			(0.01)
Basic earnings per share		$	0.33		$	0.36		$	1.22		$	0.22		$	0.34		$	0.25		$	0.31		$	0.19
Diluted earnings per share - continuing operations		$	0.32		$	0.33		$	0.29		$	0.26		$	0.29		$	0.27		$	0.32		$	0.20
Diluted earnings (loss) per share - discontinued operations			—			0.03			0.92			(0.04)			0.05			(0.02)			(0.01)			(0.01)
Diluted earnings per share		$	0.32		$	0.36		$	1.21		$	0.21		$	0.34		$	0.25		$	0.31		$	0.19
Book value per share			15.01			14.81			14.46			13.10			12.80			12.27			12.14			11.91
PERFORMANCE MEASURES
Return on average equity			8.65	%		9.77	%		34.38	%		6.80	%		10.90	%		8.07	%		10.46	%		6.66	%
Return on average assets			1.08			1.32			4.79			0.77			1.21			0.92			1.20			0.76
Taxable equivalent net interest margin - continuing operations			3.38			3.52			3.61			3.74			3.66			3.48			3.51			3.39
Efficiency ratio - continuing operations			57.57			55.72			58.06			60.61			57.50			55.09			55.10			64.50
Equity to assets			11.22			13.64			14.09			11.23			10.95			11.11			11.77			11.29
ASSET QUALITY
Allowance for loan losses to loans held for investment (2)			0.99	%		0.98	%		1.02	%		1.04	%		1.03	%		1.00	%		1.01	%		1.01	%
Net charge-offs		$	332		$	519		$	619		$	558		$	(3)		$	(15)		$	129		$	231
Net charge-offs to average loans (3)			0.07	%		0.11	%		0.14	%		0.11	%		—	%		—	%		0.03	%		0.05	%
NPAs to total assets			0.26			0.29			0.31			0.40			0.20			0.13			0.14			0.13
AVERAGE BALANCES
Total loans		$	1,857,736		$	1,801,629		$	1,800,001		$	2,089,465		$	2,076,853		$	1,963,817		$	1,927,063		$	1,938,953
Investment securities			389,667			340,872			360,047			400,101			450,465			461,348			454,634			453,917
Total assets			2,626,388			2,453,438			2,440,502			2,829,072			2,891,327			2,805,740			2,718,071			2,704,822
Deposits			2,146,626			1,949,657			1,947,426			2,387,104			2,380,861			2,254,072			2,135,825			2,153,885
Shareholders’ equity			327,543			332,291			340,119			320,812			321,348			320,090			312,543			306,821
Number of common shares - basic			21,876,487			22,681,904			23,888,381			24,855,171			25,919,445			26,103,397			26,010,914			25,750,824
Number of common shares - diluted			22,053,907			22,837,531			24,040,806			25,019,384			26,043,799			26,254,772			26,200,026			25,945,773
AT PERIOD END
Total loans and loans held for sale		$	1,873,894		$	1,836,589		$	1,789,740		$	2,120,866		$	2,106,992		$	2,040,320		$	1,935,923		$	1,960,256
Investment securities			399,433			329,648			348,723			402,640			402,486			465,756			453,968			458,730
Total assets			2,910,379			2,410,198			2,389,680			2,855,887			2,955,440			2,882,721			2,690,674			2,718,665
Deposits			2,499,046			1,854,272			1,851,531			2,440,448			2,544,163			2,379,824			2,066,587			2,096,300
Shareholders’ equity			326,495			328,711			336,715			320,627			323,653			320,237			316,770			307,059
Number of common shares outstanding			21,751,026			22,193,761			23,293,465			24,466,964			25,290,419			26,103,666			26,102,217			25,772,208

---

(1)

On April 5, 2019, the Bank sold its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches that were sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for all prior periods presented.

(2)

The fourth quarter 2018 ratio is calculated on a continuing operations basis. Prior period ratios have not been retrospectively adjusted for the impact of discontinued operations.

(3)

Annualized.

42

Non-GAAP Performance Measures Reconciliation
		2017																2016
(in thousands, except per share data)		Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter				First Quarter
Operating net income reconciliation
Net income (loss) - GAAP		$	(15,337	)		$	4,052			$	4,329			$	3,230			$	1,609			$	3,708			$	5,147			$	2,931
Merger related expenses, net of income tax		—				—				—				—				126				356				743				460
Divestiture expenses, net of income tax		—				—				—				—				—				—				187				—
Gain on sale of branches, net of income tax		—				—				—				—				—				—				(2,385		)		—
Revaluation of net deferred tax asset		17,398				—				—				—				—				—				—				—
Operating net income		$	2,061			$	4,052			$	4,329			$	3,230			$	1,735			$	4,064			$	3,692			$	3,391
Operating diluted earnings per share reconciliation
Diluted earnings (loss) per share - GAAP		$	(0.60	)		$	0.16			$	0.17			$	0.13			$	0.06			$	0.15			$	0.20			$	0.12
Merger related expenses		—				—				—				—				0.01				0.01				0.03				0.02
Net gain on sale of branches		—				—				—				—				—				—				(0.08		)		—
Revaluation of net deferred tax asset		0.68				—				—				—				—				—				—				—
Diluted earnings per share - operating		$	0.08			$	0.16			$	0.17			$	0.13			$	0.07			$	0.16			$	0.15			$	0.14
Interest income on investment securities reconciliation
Interest income on investment securities - GAAP		$	2,510			$	2,298			$	2,355			$	2,018			$	1,477			$	1,293			$	1,327			$	1,601
Taxable equivalent adjustment		213				215				223				255				223				133				74				54
Interest income on investment securities - taxable equivalent		$	2,723			$	2,513			$	2,578			$	2,273			$	1,700			$	1,426			$	1,401			$	1,655
Interest income reconciliation
Interest income - GAAP		$	25,137			$	24,351			$	24,322			$	22,461			$	22,307			$	22,295			$	22,116			$	21,499
Taxable equivalent adjustment		213				215				223				255				223				133				74				54
Interest income - taxable equivalent		$	25,350			$	24,566			$	24,545			$	22,716			$	22,530			$	22,428			$	22,190			$	21,553
Net interest income reconciliation
Net interest income - GAAP		$	21,109			$	20,291			$	20,489			$	19,253			$	19,278			$	19,354			$	19,209			$	18,867
Taxable equivalent adjustment		213				215				223				255				223				133				74				54
Net interest income - taxable equivalent		$	21,322			$	20,506			$	20,712			$	19,508			$	19,501			$	19,487			$	19,283			$	18,921
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP		3.35			%	3.23			%	3.23			%	3.16			%	3.07			%	3.10			%	3.11			%	3.25			%
Impact of taxable equivalent adjustment		0.04				0.03				0.03				0.04				0.04				0.02				0.01				0.01
Net interest margin - taxable equivalent		3.39			%	3.26			%	3.26			%	3.20			%	3.11			%	3.12			%	3.12			%	3.26			%

Table of Contents

Non-GAAP Performance Measures Reconciliation

		2019												2018
(in thousands, except per share data)		Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Interest income on investment securities reconciliation
Interest income on investment securities - GAAP		$	2,413		$	2,176		$	2,339		$	2,631		$	2,844		$	2,789		$	2,687		$	2,592
Taxable equivalent adjustment			167			104			88			100			97			97			98			103
Interest income on investment securities - taxable equivalent		$	2,580		$	2,280		$	2,427		$	2,731		$	2,941		$	2,886		$	2,785		$	2,695
Taxable equivalent interest income reconciliation
Interest income - GAAP		$	26,532		$	26,520		$	26,598		$	26,197		$	26,628		$	24,017		$	22,836		$	21,279
Taxable equivalent adjustment			167			104			88			100			97			97			98			103
Interest income - taxable equivalent		$	26,699		$	26,624		$	26,686		$	26,297		$	26,725		$	24,114		$	22,934		$	21,382
Taxable equivalent net interest income reconciliation
Net interest income - GAAP		$	20,567		$	19,984		$	19,889		$	20,424		$	21,068		$	19,297		$	18,444		$	17,438
Taxable equivalent adjustment			167			104			88			100			97			97			98			103
Net interest income - taxable equivalent		$	20,734		$	20,088		$	19,977		$	20,524		$	21,165		$	19,394		$	18,542		$	17,541
Taxable equivalent net interest margin reconciliation
Net interest margin - GAAP			3.35	%		3.51	%		3.60	%		3.72	%		3.64	%		3.46	%		3.49	%		3.37	%
Impact of taxable equivalent adjustment			0.03			0.01			0.01			0.02			0.02			0.02			0.02			0.02
Net interest margin - taxable equivalent			3.38	%		3.52	%		3.61	%		3.74	%		3.66	%		3.48	%		3.51	%		3.39	%

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of earningsfinancial condition and related financial dataresults of operations (“MD&A”) is presented to assist in understanding the financial condition and results of operations of Atlantic Capital Bancshares, Inc. and its subsidiaries. This discussion and analysisMD&A should be read in conjunction with the audited consolidated financial statements and related notes included in this Annual Report on Form 10-K.10‑K. Intercompany accounts and transactions have been eliminated. Although certain amounts for prior years have been reclassified to conform to statement presentations for 2017, the reclassifications have no material effect on shareholders’ equity or net income as previously reported. Unless otherwise noted, for purposes ofwhen we refer to “Atlantic Capital,” “the Company,” “we,” “our,” and “us” in this section, “Atlantic Capital” refersreport, we are referring to the consolidated financial position and consolidated results of operations for Atlantic Capital Bancshares, Inc.

EXECUTIVE OVERVIEW AND EARNINGS SUMMARY

On October 31, 2015, Atlantic CapitalApril 5, 2019, the Bank completed the acquisitionpreviously disclosed sale of First Securityall 14 of its bank branches located in Tennessee and northwest Georgia, including its wholly-owned bank subsidiary FSGBank.mortgage banking business, to FirstBank (the “Branch Sale”). In connection with the Branch Sale, FirstBank assumed deposits and customer repurchase agreements of approximately $598 million and purchased approximately $385 million in loans. FirstBank paid a deposit premium equal to 6.25% of the balance of assumed deposits, less a discount of 0.68% of purchased loans. The acquired entity’s resultsincome and expenses related to these branches are included in Atlantic Capital’s consolidated results beginningdiscontinued operations and prior period financial information has been retrospectively adjusted for the impact of discontinued operations. Prior periods’ financial information covering income and expense amounts in this MD&A has been retrospectively adjusted for the impact of the discontinued operations for comparative purposes. The financial information for prior periods included in this MD&A also reflects the reclassification of assets and liabilities related to discontinued operations to held for sale. Net income from discontinued operations for the year ended December 31, 2019 included a gain on October 31, 2015, the acquisition date.

sale of branches of $34.5 million and divestiture expenses of $5.1 million. 

Atlantic Capital reported a net lossincome from continuing operations of $3.7$28.2 million for the year ended December 31, 2017. This2019 compared to  net income of $13.4$28.1 million for the year ended December 31, 2016.2018. Diluted income per common share from continuing operations was ($0.15)$1.20 for 2017,2019, compared to $0.53$1.07 for 2016.

The decrease in2018. 

A net incomeloss from continuing operations of $4.8 million for the year ended December 31, 2017 comparedincreased $32.8 million to 2016net income from continuing operations of $28.1 million for the year ended December 31, 2018. The loss in 2017 was primarily the result of a  $16.4$17.4 million or 207%, increase in provision for income taxes. This was due to a reduction in the value of Atlantic Capital’s net deferred tax asset as a result of the tax reform legislation signed into law on December 22, 2017. In addition, noninterest income decreased $5.5 million, or 26%, from 2016 to 2017, primarily duerelated to the $3.9 million gain on the sale2017 Tax Cuts and Jobs Act.

43

Table of seven branches in 2016 and a $1.4 million, or 94%, decrease in TriNet lending activities due to Atlantic Capital’s decision to close the TriNet Lending division during the third quarter of 2016. This was offset by a $5.0 million, or 7%, increase in netContents

Net interest income afterbefore provision for loan losses resulting primarily from a $4.1increased $4.6 million, or 5%6.1%, from 2018 to 2019, primarily due to a $12.9 million, or 16.1%, increase in interest and fee income on loans, partially offset by a $7.9 million, or 63.1%, increase in interest on deposits. Net interest income before provision for loan losses increased $13.4 million, or 21.4%, from 2017 to 2018, primarily due to a $15.7 million, or 24.3%, increase in interest and fee income on loans, and a $3.5$1.2 million, or 61%12.1%, increase in interest on investment securities available-for-sale.

Atlantic Capital reportedavailable-for-sale (taxable equivalent).

Taxable equivalent net interest income of $13.4from continuing operations was $81.3 million or $0.53 per diluted share,for 2019, compared to $76.6 million for 2018. Taxable equivalent net interest margin from continuing operations increased to 3.58% for the year ended December 31, 20162019, from 3.50% for 2018. The margin increase was primarily due to increases in loan yields and a higher average Federal Funds rate during the first half of 2019.

Taxable equivalent net interest income from continuing operations was $76.6 million for 2018, compared to a$63.7 million for 2017. Taxable equivalent net loss of $1.3 million, or ($0.09) per diluted common shareinterest margin from continuing operations  increased to 3.50% for the year ended December 31, 2015. The $14.7 million increase in net income2018, from 2015 to 2016 was primarily the result of a $32.7 million, or 74%, increase in net interest income before provision3.07% for loan losses, as well as a $4.2 million, or 53%, decrease in the provision for loan losses. During the fourth quarter of 2015, Atlantic Capital recorded a loan loss provision related to the acquired First Security loan portfolio in the amount of $6.8 million. In addition, noninterest income increased $12.3 million, or 131%, from 2015 to 2016, due to the $3.9 million gain on the sale of seven branches, increased service charges and higher trust and mortgage income due to the acquisition of First Security. This was offset by a $27.3 million, or 60%, increase in noninterest expense, resulting primarily from a $24.1 million increase in salary and benefits, occupancy, equipment and software, and data processing expenses related to the acquisition of First Security.

Taxable equivalent net interest income was $82.0 million for 2017, compared to $77.2 million for 2016. Taxable equivalent net interest margin increased to 3.28% for the year ended December 31, 2017, from 3.12% for 2016.2017. The margin increase was primarily due to increases in the FedFederal Funds rate.

Taxable equivalent net interest income increased $33.1 million, or 75%,

Provision for loan losses from $44.1 million for 2015, to $77.2 million for 2016. Net interest margin increased from 2.99%continuing operations for the year ended December 31, 20152019 totaled $2.7 million, an increase of $766,000, or 39.4%, from the year ended December 31, 2018, due to 3.12%higher net charge-offs and specific reserve impairments.  For the years ended December 31, 2017 to 2018, provision expense decreased by $1.3 million from $3.2 million to $1.9 million, primarily related to lower net charge-offs. The Company also recorded negative provision for 2016. The margin increase wasloan losses in 2018 totaling $3.1 million included in discontinued operations, primarily due to higher yields onthe classification of $373 million of loans andto held for sale in connection with the increase in loan volumeBranch Sale.

Noninterest income from First Security.

Provision for loan lossescontinuing operations increased $678,000, or 6.7%, to $10.7 million for the year ended December 31, 2017 totaled $3.2 million, a decrease of $598,0002019 from the year ended December 31, 2016. The decrease2018. This was primarily relateddue to an increase in gains on sales of securities of $2.8 million; largely resulting from the $1.9 million loss in the fourth quarter of 2018 on the sale of $63 million in investment securities. The proceeds from the securities sale were used to help fund the cash payout for the Branch Sale that closed in the second quarter of 2019. Additionally, SBA lending activities increased  $572,000 from 2018 to 2019. These increases were partially offset by a reduction$1.7 million net gain on the sale of Southeastern Trust Company in loan growth. Provision expense decreased by $4.22018 and the resulting loss of trust income of $1.0 million from $8.0the prior year.

Noninterest income from continuing operations decreased $2.1 million, in 2015or 17.5%, to $3.8$10.0 million in 2016.for the year ended December 31, 2018 from the year ended December 31, 2017.  The decrease was primarily due to a $6.8loss of $1.9 million provision recordedon the sale of $63 million in investment securities to help fund the cash owed to the buyer at the closing of the Branch Sale, which occurred during the second quarter of 2019.

For the year ended December 31, 2019, noninterest expense from continuing operations increased $3.1 million, or 6.2%, compared to 2018.  This increase was mainly driven by higher salary and employee benefits expense of $34.5 million, up  $2.8 million, or 8.7%, from December 31, 2018, which was primarily the result of the full impact of new hires in 2019 and higher incentive  and medical insurance expense. Communications and data processing expense increased $523,000, or 19.5%, from 2018 to 2019 due to a higher volume of transactions in the fourth quarter of 2015payments business, as well as non-recurring charges related to vendor negotiations and contract terminations. Partially offsetting this increase was a decline in FDIC premium expense of $345,000, or 61.4%, compared to 2018 due to the acquired First Security loan portfolio.

FDIC assessment credit received in 2019.

Noninterest income decreased $5.5 million, or 26%, to $16.2expense from continuing operations totaled $50.0 million for the year ended December 31, 2018, compared to $52.8 million in 2017, from the year ended December 31, 2016. Thea decrease was primarily due to the $3.9 million gain on the sale of seven branches in 2016, and a $1.4$2.8 million, or 94%, decrease in TriNet lending activities due to Atlantic Capital’s decision to close the TriNet Lending division during the third quarter of 2016.

Noninterest income increased by $12.3 million, or 131%, from $9.4 million in 2015 to $21.7 million in 2016. The increase was primarily due to a $2.9 million increase in service charges due to the addition of First Security deposits, the $3.9 million gain on the sale of seven branches, as well as $1.5 million in gains related to the sale of TriNet loans. Two new lines of business resulting from the merger - mortgage banking and trust - contributed an additional $1.8 million and $1.2 million, respectively, during 2016, compared to 2015.

For the year ended December 31, 2017, noninterest expense increased $185,000, or less than 1%, compared to the same period of 2016.5.4%. Salary and benefits expense increased $3.1decreased $1.4 million, or 7%4.1%, in 20172018 due to severance costs and $2.0 million in expenses related to the President and Chief Operating Officer’s resignation.resignation in 2017. Additionally, professional services expense increased $1.8decreased $1.1 million, or 63%23.5%, from 2017 to 2018, primarily due to expenses related to the publicregistered offering of common stock by a selling stockholder completed during the third quarterin 2017.

44

Table of 2017. These increases were offset by a $2.4 million, or 89%, decrease in merger and conversion costs from 2016 to 2017 related to the acquisition of First Security. Noninterest expense totaled $73.3 million for the year ended December 31, 2016, compared to $45.9 million for 2015, an increase of $27.3 million, or 60%. The most significant components of the increase were higher salary and benefits, equipment and software, and data processing expenses related to the acquisition of First Security.Contents

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of Atlantic Capital are in accordance with GAAP and conform to general practices within the banking industry. Atlantic Capital’s financial position and results of operations are affected by management’s application of accounting policies, including judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in Atlantic Capital’s consolidated financial position and/or consolidated results of operations. The more critical accounting and reporting policies include Atlantic Capital’s accounting for the allowance for loan losses, fair value measurements, and income tax related items. Significant accounting policies are discussed in Note 1 - Accounting Policies and Basis of Presentation to the consolidated financial statements.

The following is a summary of Atlantic Capital’s critical accounting policies that are material to the consolidated financial statements and are highly dependent on estimates and assumptions.

Allowance for loan losses.

The allowance for loan losses (“ALL”) is management’s estimate of probable credit losses inherent in Atlantic Capital’s loan portfolio at the balance sheet date. Atlantic Capital determines the allowance for loan losses based on an ongoing estimation process. This estimation process is inherently subjective, as it requires material estimates, including the amounts and timing of cash flows expected to be received on impaired loans and losses incurred as of the balance sheet date in Atlantic Capital’s loan portfolio. Those estimates may be susceptible to significant change. Increases to the allowance for loan losses are made by charges to the provision for loan losses. Loans deemed to be uncollectible are charged against the allowance for loan losses. Recoveries of previously charged-off amounts are credited to the allowance for loan losses.

The allowance is the accumulation of various components that are calculated based on an independent estimation process. All components of the allowance for loan losses represent estimates based on data that management believes are most reflective of the underlying credit losses being estimated. This evaluation includes credit quality trends, peer analysis, recent loan loss experience, collateral type, loan volumes, seasoning of the loan portfolio, economic conditions, and the findings of internal credit quality assessments and results from external bank regulatory examinations.

While management uses the best information available to establish the allowance for loan losses, future adjustments may become necessary if conditions differ substantially from the assumptions used in making the estimates. In addition, regulatory examiners may require adjustments to the allowance for loan losses based on their judgments about information available to them at the time of their examination. Such adjustments to original estimates, as necessary, are made and reflected in the financial results in the period in which these factors and other relevant considerations indicate that loss levels may vary from previous estimates.

Management continuously monitors and actively manages the credit quality of the entire loan portfolio and recognizes provision expense to maintain the allowance at an appropriate level. Specific allowances for impaired loans are determined by analyzing estimated cash flows discounted at a loan’s original rate or collateral values in situations where Atlantic Capital believes repayment is dependent on collateral liquidation.

Management considers the established ALL adequate to absorb losses that relate to loans outstanding at December 31, 2017,2019, although future additions may be necessary based on changes indeteriorated economic conditions, reduced collateral values, erosion of the borrower’s

access to liquidity and other factors. If the financial condition of borrowers were to deteriorate, resulting in an impairment of their ability to make payments, Atlantic Capital’s estimates would be updated and additions to the ALL may be required.

In June 2016, the FASB issued guidance related to credit losses on financial instruments. This update, commonly referred to as the current expected credit losses methodology (“CECL”), changes the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This differs significantly from the “incurred loss” model which delays recognition until it is probable a loss has been incurred. This new guidance became effective for the Company on January 1, 2020.

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Due to this change in methodology, the Company anticipates a smaller allowance requirement for its shorter-lived commercial portfolio, offset by an increase in its reserve for unfunded commitments, which is recorded in Other Liabilities on the Consolidated Balance Sheet. Based upon the Company’s loan portfolio composition at December 31, 2019, the current economic environment, and management’s current forecast and qualitative adjustment assumptions, the overall impact to retained earnings is not material upon adoption of the standard.

Fair value measurements.

Atlantic Capital’s impaired loans and foreclosed assets may be measured and carried at fair value, the determination of which requires management to make assumptions, estimates and judgments. See Note 18  - Fair Value Measurements into the consolidated financial statements for additional disclosures regarding the fair value of our assets and liabilities.

When a loan is considered individually impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. In addition, foreclosed assets are carried at the lower of cost, fair value, less cost to sell, or listed selling price less cost to sell, following foreclosure. Fair value is defined by GAAP as “the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.” GAAP further defines an “orderly transaction” as “a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets. It is not a forced transaction (for example, a forced liquidation or distress sale).” Although management believes its processes for determining the value of impaired loans and foreclosed properties are appropriate and allow Atlantic Capital to arrive at a fair value, the processes require management judgment and assumptions and the value of such assets at the time they are revalued or divested may be significantly different from management’s determination of fair value. In addition, because of subjectivity in fair value determinations, there may be grounds for differences in opinions, which may result in disagreements between management and Atlantic Capital Bank’sour regulators, disagreements which could cause Atlantic Capital Bankus to change itsour judgments about fair value.

The fair values for available-for-sale securities are generally based upon quoted market prices or observable market prices for similar instruments. Atlantic Capital utilizes a third-party pricing service to assist with determining the fair value of its securities portfolio. The pricing service uses observable inputs when available including benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids and offers. These values take into account recent market activity as well as other market observable data such as interest rate, spread and prepayment information. When market observable data is not available, which generally occurs due to the lack of liquidity for certain securities, the valuation of the security is subjective and may involve substantial judgment by management. Atlantic Capital periodically reviews available-for-sale securities that are in an unrealized loss position to determine whether other-than-temporary impairment exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost-basis. The primary factors Atlantic Capital considers in determining whether impairment is other-than-temporary are long term expectations andchanges in interest rates, the financial condition of the borrower, recent experience regarding principal and interest payments, and Atlantic Capital’s ability and intent to hold the security until the amortized cost basis is recovered.

Atlantic Capital uses derivatives primarily to manage interest rate risk. The fair values of derivative financial instruments are determined based on quoted market prices, dealer quotes and pricing models that are primarily sensitive to observable market observable data.

Income taxes.

taxes.

Atlantic Capital recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies by jurisdiction and entity in making this assessment.

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Regulatory risk-based capital rules limit the amount of deferred tax assets that a bank or bank holding company can include in Tier 1 capital. Generally, deferred tax assets that arise from net operating loss and tax credit carryforwards, net of any related valuation allowances and net of deferred tax liabilities, are excluded from CET1 and Tier 1 capital. Deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, net of related valuation allowances and net of deferred tax liabilities, that exceed certain thresholds are excluded from CET1 and Tier 1 capital.

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

Taxable equivalent net interest income from continuing operations for 2017the year ended December 31, 2019 totaled $82.0$81.3 million, a $4.9$4.7 million, or 6%6.1%, increase from 2016.2018. This increase was primarily driven by an $8.5$11.2 million, or 10%11.7%, increase in taxable equivalent interest income.income from continuing operations. The interest income increase primarily resulted from the following:

·

a $12.9 million, or 16.1%, increase to $93.0 million in interest income on loans, resulting from an increase in average loan balances and higher yields; partially offset by

a $3.9 million, or 63%, increase

·

a $1.3 million, or 11.4%, decrease to $10.0 million in taxable equivalent interest income on investment securities, resulting from an $82.5 million decrease in investment securities average balances

Due to $10.1the $167 million in taxable equivalent interest income on investment securities, resulting from a $90.7 million, or 25%, increase in average balance, due primarilycash paid to the increased investment in non-taxable investment securities;buyer at the closing of the Branch Sale, Atlantic Capital restructured the balance sheet following the transaction with a combination of excess cash, proceeds from sold securities, Federal Home Loan Bank (“FHLB”) borrowings, and

a $4.1 million, or 5%, increase in interest income on loans, resulting from increases in the Fed Funds rate.

brokered deposits.

Interest expense from continuing operations for the year ended December 31, 20172019 totaled $15.1$25.0 million, a $3.6$6.5 million, or 31%34.9%, increase from 2016,2018, primarily due to a $2.7$7.9 million, or 36%63.1%, increase in interest paid on deposits. The rate paid on deposits from continuing operations increased 54 basis points, and the rate paid on total interest bearing liabilities from continuing operations increased 2445 basis points from 20162018 to 2017,2019, both driven by an increase in the average Federal Funds rate in 2017 and 2018.

Taxable equivalent net interest rates on deposits and other borrowings resultingmargin from increases in the Fed Funds rate. In addition, premium amortization on acquired time deposits reduced interest expensecontinuing operations increased to 3.58% from 3.50% for the year ended December 31, 2017 in the amount of $352,000, compared to $853,000 for the year ended December 31, 2016.

Taxable equivalent net interest margin increased to 3.28% from 3.12% for the year ended December 31, 20172019 compared to the year ended December 31, 2016.2018. The primary reasonsreason for the increase in taxable equivalent net interest margin for 20172019 compared to 2016 were2018 was the higher interest rates on loans resulting from FedFederal Funds rate increases. Net accretion income on acquired loans discount totaled $2.4 million$392,000 for the year ended December 31, 2017,2019, compared to $2.6$1.4 million for the same period in 2016.

Overall funding costs increased gradually from 2016 to 2017 due to Fed Funds rate increases and remained relatively stable from 2015 to 2016. However, the long-term debt issued in September of 2015 added a relatively high cost funding source to the balance sheet.

2018.

Taxable equivalent net interest income from continuing operations increased $33.1$12.9 million, or 75%20.2%, from $44.1$63.7 million in 20152017 to $77.2$76.6 million in 2016.2018. Taxable equivalent net interest margin was 3.12%increased to 3.50% in 2016 compared to 2.99%2018 from 3.07% in 2015,2017, primarily due to higher average loan balances from the First Security acquisition.

Federal Funds rate increases and increased yields on loans and investment securities.

The following table presents information regarding average balances for assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing the income or expense by the average balances for assets or liabilities, respectively, for the periods presented. Loan fees are included in interest income on loans.

47

Table 1 - Average Balance Sheets and Net Interest Analysis
(Dollars in thousands; taxable equivalent)
		Twelve months ended December 31,
		2017											2016											2015
		Average Balance				Interest Income/Expense				Yield/Rate			Average Balance				Interest Income/Expense				Yield/Rate			Average Balance				Interest Income/Expense				Yield/Rate
Assets
Interest bearing deposits in other banks		$	85,525			$	916			1.07	%		$	92,744			$	583			0.63	%		$	65,093			$	263			0.40	%
Other short-term investments		14,266				270				1.89	%		23,134				318				1.37	%		49,014				652				1.33	%
Investment securities:
Taxable investment securities		366,309				7,221				1.97	%		310,815				4,755				1.53	%		161,597				3,179				1.97	%
Non-taxable investment securities(1)		81,466				2,866				3.52	%		46,239				1,427				3.09	%		4,199				185				4.41	%
Total investment securities		447,775				10,087				2.25	%		357,054				6,182				1.73	%		165,796				3,364				2.03	%
Total loans		1,936,109				84,889				4.38	%		1,986,482				80,781				4.07	%		1,192,103				44,562				3.74	%
FHLB and FRB stock		18,528				1,015				5.48	%		15,617				837				5.36	%		4,338				189				4.36	%
Total interest-earning assets		2,502,203				97,177				3.88	%		2,475,031				88,701				3.58	%		1,476,344				49,030				3.32	%
Non-earning assets		217,455											234,107											105,343
Total assets		$	2,719,658										$	2,709,138										$	1,581,687
Liabilities
Interest bearing deposits:
NOW, money market, and savings		1,197,771				6,983				0.58	%		1,170,879				4,889				0.42	%		745,777				2,840				0.38	%
Time deposits		149,350				1,134				0.76	%		208,800				936				0.45	%		58,133				150				0.26	%
Internet and brokered deposits		168,685				1,960				1.16	%		207,543				1,574				0.76	%		140,416				628				0.45	%
Total interest-bearing deposits		1,515,806				10,077				0.66	%		1,587,222				7,399				0.47	%		944,326				3,618				0.38	%
Total borrowings		175,060				1,758				1.00	%		176,122				825				0.47	%		84,196				447				0.53	%
Total long-term debt		49,444				3,294				6.66	%		49,275				3,285				6.67	%		12,805				858				6.70	%
Total interest-bearing liabilities		1,740,310				15,129				0.87	%		1,812,619				11,509				0.63	%		1,041,327				4,923				0.47	%
Demand deposits		631,046											559,762											352,437
Other liabilities		29,497											35,314											17,248
Shareholders' equity		318,805											301,443											170,675
Total liabilities and shareholders' equity		$	2,719,658										$	2,709,138										$	1,581,687
Net interest spread										3.01	%										2.95	%										2.85	%
Net interest income and net interest margin (taxable equivalent)(2)						$	82,048			3.28	%						$	77,192			3.12	%						$	44,107			2.99	%
(1) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate.
(2) Taxable equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset. For a reconciliation of Non-GAAP financial measures, see Item 6. Selected Financial Data - Non-GAAP Performance Measures Reconciliation.

Table of Contents

Table 1 - Average Balance Sheets and Net Interest Analysis(1)

(Dollars in thousands; taxable equivalent)

		Year ended December 31,
		2019								2018								2017
					Interest								Interest								Interest
		Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
		Balance			Expense			Rate		Balance			Expense			Rate		Balance			Expense			Rate
Assets
Interest bearing deposits in other banks		$	110,543		$	2,209		2.00	%	$	104,145		$	2,244		2.15	%	$	85,525		$	916		1.07	%
Other short-term investments			3,875			118		3.05	%		15,210			426		2.80	%		14,266			270		1.89	%
Investment securities:
Taxable investment securities			274,189			7,188		2.62	%		379,035			9,005		2.38	%		366,309			7,221		1.97	%
Non-taxable investment securities(2)			98,367			2,830		2.88	%		76,064			2,302		3.03	%		81,466			2,866		3.52	%
Total investment securities			372,556			10,018		2.69	%		455,099			11,307		2.48	%		447,775			10,087		2.25	%
Loans - continuing operations			1,769,613			93,022		5.26	%		1,600,257			80,110		5.01	%		1,507,453			64,436		4.27	%
FHLB and FRB stock			14,156			939		6.63	%		17,710			1,068		6.03	%		18,528			1,015		5.48	%
Total interest-earning assets - continuing operations			2,270,743			106,306		4.68	%		2,192,421			95,155		4.34	%		2,073,547			76,724		3.70	%
Loans held for sale - discontinued operations			116,725			4,588		3.93	%		376,757			18,224		4.84	%		428,656			20,453		4.77	%
Total interest-earning assets			2,387,468			110,894		4.64	%		2,569,178			113,379		4.41	%		2,502,203			97,177		3.88	%
Non-earning assets			198,960								211,393								217,455
Total assets		$	2,586,428							$	2,780,571							$	2,719,658
Liabilities
Interest bearing deposits:
NOW, money market, and savings			1,107,765			18,155		1.64	%		1,001,025			10,627		1.06	%		868,999			5,921		0.68	%
Time deposits			23,072			191		0.83	%		10,046			115		1.14	%		11,345			53		0.47	%
Brokered deposits			84,601			2,046		2.42	%		84,105			1,764		2.10	%		168,685			1,960		1.16	%
Total interest-bearing deposits			1,215,438			20,392		1.68	%		1,095,176			12,506		1.14	%		1,049,029			7,934		0.76	%
Total borrowings			54,931			1,297		2.36	%		139,422			2,703		1.94	%		175,060			1,758		1.00	%
Total long-term debt			49,782			3,294		6.62	%		49,613			3,304		6.66	%		49,444			3,294		6.66	%
Total interest-bearing liabilities - continuing operations			1,320,151			24,983		1.89	%		1,284,211			18,513		1.44	%		1,273,533			12,986		1.02	%
Interest-bearing liabilities - discontinued operations			144,064			1,502		1.04	%		467,101			4,084		0.87	%		466,777			2,143		0.46	%
Total interest-bearing liabilities			1,464,215			26,485		1.81	%		1,751,312			22,597		1.29	%		1,740,310			15,129		0.87	%
Demand deposits			589,862								538,110								490,495
Demand deposits - discontinued operations			39,253								137,905								140,551
Other liabilities			162,882								37,991								29,497
Shareholders’ equity			330,216								315,253								318,805
Total liabilities and shareholders’ equity		$	2,586,428							$	2,780,571							$	2,719,658
Net interest spread - continuing operations								2.79	%							2.90	%							2.68	%
Net interest income and net interest margin - continuing operations(3)					$	81,323		3.58	%				$	76,642		3.50	%				$	63,738		3.07	%
Net interest income and net interest margin(3)					$	84,409		3.54	%				$	90,782		3.53	%				$	82,048		3.28	%

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(1)

On April 5, 2019, the Company sold its Tennessee and northwest Georgia banking operations, including 14 branches and the mortgage business. The banking business and branches that were sold to FirstBank are reported as discontinued operations. Discontinued operations have been reported retrospectively for all prior periods presented.

(2)

Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017, reflecting the statutory federal income tax rates.

(3)

Taxable equivalent net interest income divided by total interest-earning assets using the appropriate day count convention based on the type of interest-earning asset. For a reconciliation of Non-GAAP financial measures, see “Item 6 - Selected Financial Data - Non-GAAP Performance Measures Reconciliation.”

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The following table shows the relative effect on taxable equivalent net interest income for changes in the average outstanding amounts (volume) of interest-earning assets and interest-bearing liabilities and the rates earned and paid on such assets and liabilities (rate). Variances resulting from a combination of changes in rate and volume are allocated in proportion to the absolute dollar amounts of the change in each category.

Table 2 - Changes in Net Interest Income

(in thousands)

		2019 Compared to 2018									2018 Compared to 2017
		Increase (decrease) Due to Changes in:									Increase (decrease) Due to Changes in:
								Total									Total
		Volume			Yield/Rate			Change			Volume			Yield/Rate			Change
Interest earning assets
Interest bearing deposits in other banks		$	128		$	(163)		$	(35)		$	401		$	927		$	1,328
Other short-term investments			(345)			37			(308)			26			130			156
Investment securities:
Taxable investment securities			(2,749)			932			(1,817)			302			1,482			1,784
Non-taxable investment securities(1)			642			(114)			528			(163)			(401)			(564)
Total investment securities			(2,107)			818			(1,289)			139			1,081			1,220
Loans - continuing operations			8,902			4,010			12,912			4,646			11,028			15,674
FHLB and FRB stock			(236)			107			(129)			(49)			102			53
Total interest-earning assets - continuing operations			6,342			4,809			11,151			5,163			13,268			18,431
Loans held for sale - discontinued operations			(10,221)			(3,415)			(13,636)			(2,510)			281			(2,229)
Total interest-earning assets			(3,879)			1,394			(2,485)			2,653			13,549			16,202
Interest bearing liabilities
Interest bearing deposits:
NOW, money market, and savings			1,749			5,779			7,528			1,402			3,304			4,706
Time deposits			108			(32)			76			(15)			77			62
Brokered deposits			12			270			282			(1,774)			1,578			(196)
Total interest-bearing deposits			1,869			6,017			7,886			(387)			4,959			4,572
Total borrowings			(1,995)			589			(1,406)			(691)			1,636			945
Total long-term debt			11			(21)			(10)			11			(1)			10
Total interest-bearing liabilities - continuing operations			(115)			6,585			6,470			(1,067)			6,594			5,527
Interest-bearing liabilities - discontinued operations			(3,368)			786			(2,582)			3			1,938			1,941
Total interest-bearing liabilities			(3,483)			7,371			3,888			(1,064)			8,532			7,468
Change in net interest income - continuing operations		$	6,457		$	(1,776)		$	4,681		$	6,230		$	6,674		$	12,904
Change in net interest income		$	(396)		$	(5,977)		$	(6,373)		$	3,717		$	5,017		$	8,734

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Table 2 - Changes in Net Interest Income
(in thousands)
		2017 Compared to 2016 Increase (decrease) Due to Changes in:												2016 Compared to 2015 Increase (decrease) Due to Changes in:
		Volume				Yield/Rate				Total Change				Volume				Yield/Rate				Total Change
Interest earning assets
Interest bearing deposits in other banks		$	(77	)		$	410			$	333			$	172			$	148			$	320
Other short-term investments		(168		)		120				(48		)		(354		)		20				(334		)
Investment securities:
Taxable investment securities		1,094				1,372				2,466				2,289				(713		)		1,576
Non-taxable investment securities(1)		1,239				200				1,439				1,297				(55		)		1,242
Total investment securities		2,333				1,572				3,905				3,586				(768		)		2,818
Total loans		(2,209		)		6,317				4,108				32,290				3,929				36,219
FHLB stock		159				19				178				605				43				648
Total interest-earning assets		38				8,438				8,476				36,299				3,372				39,671
Interest bearing liabilities
Interest bearing deposits:
NOW, money market, and savings		157				1,937				2,094				1,755				294				2,049
Time deposits		(451		)		649				198				676				110				786
Internet and brokered deposits		(452		)		838				386				511				435				946
Total interest-bearing deposits		(746		)		3,424				2,678				2,942				839				3,781
Total borrowings		(11		)		944				933				429				(51		)		378
Total long-term debt		11				(2		)		9				2,431				(4		)		2,427
Total interest-bearing liabilities		(746		)		4,366				3,620				5,802				784				6,586
Change in net interest income		$	784			$	4,072			$	4,856			$	30,497			$	2,588			$	33,085
(1) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 35%, reflecting the statutory federal income tax rate.

(1)

Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017, reflecting the statutory federal income tax rates.

Provision for Loan Losses

Management considers a number of factors in determining the required level of the allowance for loan losses and the provision required to achieve what is believed to be appropriate reserve level, including historical loss experience, loan growth, credit risk rating trends, nonperforming loan levels, delinquencies, loan portfolio concentrations and economic and market trends. The provision for loan losses represents management’s determination of the amount necessary to be charged against the current period’s earnings to maintain the allowance for loan losses at a level that it considered adequate in relation to the estimated losses inherent in the loan portfolio.

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The provision for loan losses from continuing operations was $2.7 million in 2019,  an increase of $766,000, or 39.4%, compared to 2018, due to an increase in net charge-offs as well as an increase in specific reserve impairments. In 2018, the Company recorded negative provision for loan losses of $3.1 million included in discontinued operations, which was primarily due to the classification of $373 million of loans to held for sale. The provision for loan losses was $3.2$1.9 million in 2017,2018, a decrease of $598,000,$1.3 million, or 16%39.5%, compared to 2016.2017. The decrease from 2017 to 2018 was primarily relateddue to a reductionlower net charge-offs in loan growth. The provision for loan losses was $3.8 million in 2016, a decrease of $4.2 million, or 53%, compared to 2015. In accordance with the accounting guidance for business combinations, there was no allowance for loan losses brought forward on loans acquired from First Security on October 31, 2015. 2018.

At December 31, 2015, Atlantic Capital included the performing non-impaired loans acquired from First Security in its general allowance calculation in order to reflect the necessary allowance for incurred losses, which accounted for a majority of the decrease in provision expense from 2015 to 2016.

At December 31, 2017,2019, nonperforming loans totaled $2.9$7.3 million compared to $1.6$5.2 million at December 31, 2016.2018. The increase was primarily attributable to the Bank placing one loan relationship totaling $1.8 millionaddition of commercial and industrial loans being placed on nonaccrual status.status, offset by a decrease in nonaccrual commercial real estate loans and residential mortgage loans. Net loan charge-offs were 0.23%0.11%, 0.11%0.02%, and 0.05%, respectively,0.23% of average loans for the years ended December 31, 2017, 2016,2019,  2018, and 2015,2017, respectively. The allowance for loan losses to total loans at December 31, 20172019  was 1.00%0.99%, compared to 1.04%1.03% at December 31, 2016.

2018.

Noninterest Income

Noninterest income was $46.0 million in 2019, compared to $13.4 million in 2018, and $16.2 million in 2017, compared with $21.7 million in 2016, and $9.4 million in 2015.2017. The following table presents the components of noninterest income.

Table 3 - Noninterest Income

(in thousands)

	Year ended December 31,									Change
	2019			2018			2017			2019‑2018
Service charges	$	3,587		$	3,215		$	2,734		$	372
Securities gains (losses), net		907			(1,855)			(63)			2,762
Gain (loss) on sales of other assets		127			(154)			742			281
Trust income		—			1,025			1,814			(1,025)
Derivatives (loss) income		(322)			308			156			(630)
Bank owned life insurance		1,546			1,506			1,530			40
SBA lending activities		4,178			3,606			4,129			572
Gain on sale of trust business		—			1,681			—			(1,681)
Other noninterest income		702			715			1,137			(13)
Total noninterest income - continuing operations		10,725			10,047			12,179			678
Noninterest income - discontinued operations		35,289			3,347			4,010			31,942
Noninterest income	$	46,014		$	13,394		$	16,189		$	32,620

Table 3 - Noninterest Income
(in thousands)
		Twelve months ended December 31,												Change
		2017				2016				2015				2017-2016
Service charges		$	5,076			$	5,487			$	2,613			$	(411	)
Gain (loss) on sales of securities		(63		)		44				10				(107		)
Gain on sale of other assets		742				388				189				354
Mortgage income		1,255				1,917				163				(662		)
Trust income		1,814				1,411				192				403
Derivatives income		156				578				304				(422		)
Bank owned life insurance		1,530				1,610				2,159				(80		)
SBA lending activities		4,129				3,642				2,910				487
TriNet lending activities		87				1,501				—				(1,414		)
Gains on sale of branches		302				3,885				—				(3,583		)
Other noninterest income		1,161				1,269				859				(108		)
Total noninterest income		$	16,189			$	21,732			$	9,399			$	(5,543	)

Service charges from continuing operations for the year ended December 31, 2017 decreased $411,000,2019 increased $372,000, or 7%11.6%, from 2016.2018. The decreaseincrease was primarily due to growth in the reductionCompany’s payments processing businesses.

Securities gains from continuing operations for the year ended December 31, 2019 increased $2.8 million from a loss of retail customer activity from$1.9 million in 2018 primarily as a result of the balance sheet realignment due to the Branch Sale. In the fourth quarter of 2018, Atlantic Capital recorded a loss of $1.9 million on the sale of seven legacy FSGBank branches$63 million in investment securities to help fund the second quartercash owed to the buyer at the closing of 2016 and one branch in the second quarter of 2017. Branch Sale.

Gain on sales of other assets from continuing operations for the year ended December 31, 20172019 increased $354,000,$281,000 compared to 2018 due to a gain on the sale of a foreclosed property compared to a loss on disposition of fixed assets in the second quarter of 2018 related to the relocation of our Atlanta headquarters.

Trust income from continuing operations for the year ended December 31, 2019 decreased $1.0 million, or 91%100%, from 2018 due to the sale of the trust business in the second quarter of 2018.  

Derivatives income (loss) from continuing operations for the year ended December 31, 2019 was a loss of $322,000 compared to a gain of $308,000 for 2018. The decrease in income was due to changes in the derivatives credit valuation adjustment.

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Table of Contents

Income from SBA lending activities from continuing operations for the year ended December 31, 2019 increased $572,000, or 15.9%, compared to 20162018 due to increases in loan balances sold. During the years ended December 31, 2019 and 2018, guaranteed portions of loans with principal balances of $62.9 million and $52.2 million, respectively, were sold in the secondary market.

Noninterest income from discontinued operations increased $31.9 million for the year ended December 31, 2019 compared to 2018 due to a $239,000$34.5 million gain in connection with the Branch Sale.

For the year ended December 31, 2018, noninterest income totaled $13.4 million compared to $16.2 million for 2017, a $2.8 million, or 17.3%, decrease. The most significant component of the decrease was a $1.8 million loss on sales of securities driven by the aforementioned sale of $63 million in investment securities as well as a decrease in gain on salesales of other assets of $896,000 from 2017 to 2018.  The decrease in gain on sales of other assets was the result of a $323,000 decrease in net gains on sales of other real estate owned and a gain of $426,000 gain on the sale of a tax credit investment in 2017. MortgageAdditionally, the decrease in other noninterest income from continuing operations was due to a $789,000, or 43.5%, decrease in trust income from 2017 to 2018 due to the sale of the trust business in 2018 and a $663,000, or 16.5%, decrease in noninterest income from discontinued operations. Partially offsetting the decrease in noninterest income was a $1.7 million gain on the sale of the trust business in 2018.

Noninterest Expense

Noninterest expense was $62.8 million for the year ended December 31, 2017 decreased $662,000, or 35%, from 2016 due to higher interest rates and lower demand. Trust income for the year ended December 31, 2017 increased $403,000, or 29%, from 2016 due to an increase in managed assets. During the fourth quarter of 2017, Atlantic Capital entered into an agreement to sell the trust division and exit the trust business.

Income from SBA lending activities for the year ended December 31, 2017 increased $487,000, or 13%,2019 as compared to 2016, due to a higher amount of principal balances sold. During the years ended 2017 and 2016, guaranteed portions of 43 and 47 SBA loans with principal balances of $65.0 million and $56.9 million, respectively, were sold in the secondary market. During the year ended December 31, 2016, the TriNet lending division contributed $1.5$69.9 million in noninterest income from the sale of loans. During the third quarter of 2016, Atlantic Capital made the decision to close the TriNet Lending division.

The sale of seven branches in the second quarter of 2016 resulted in a net gain of $3.9 million2018, and included the sale of approximately $191.0$73.5 million in deposits, $34.7 million in loans and $8.6 million in other assets.2017. The net gain includeddecrease from 2018 to 2019 was primarily the write-offresult of $2.0 million in core deposit intangibles. In addition, $305,000 in expenses related to the sales were recorded in noninterest expense.

The sale of one branch in the second quarter of 2017 resulted in a net gain of $302,000 as well as a reduction of approximately $21.9 million in deposits and approximately $27.3 million in loans and other assets. The gross gain of $533,000 was reduced by an impairment of $337,000 in core deposit intangibles, which was offset by a $106,000 reversal in time deposit premium. There were also $38,000 of expenses associated with the divestiture includeddecrease in noninterest expense from discontinued operations from $19.9 million in 2018 to $9.7 million in 2019 in connection with the second quarter of 2017.

For 2016, noninterest income totaled $21.7 million compared to $9.4 million for 2015, a $12.3 million, or 131%, increase. In addition to the $3.9 million net gain on branch salesBranch Sale that occurred in 2016, the most significant component of the increase was a $2.9 million, or 110%, increase in service charges which was primarily due to the addition of First Security deposits. Mortgage income and trust income for 2016 increased from 2015 due to these two new lines of business acquired from First Security.

Noninterest Expense

2019. The following table presents the components of noninterest expense.

Table 4 - Noninterest Expense
(in thousands)
		Twelve months ended December 31,												Change
		2017				2016				2015				2017-2016
Salaries and employee benefits		$	45,375			$	42,303			$	24,098			$	3,072
Occupancy		4,589				4,604				2,170				(15		)
Equipment and software		3,449				2,966				1,295				483
Professional services		4,752				2,918				1,610				1,834
Postage, printing and supplies		340				462				178				(122		)
Communications and data processing		4,149				3,291				1,541				858
Marketing and business development		946				1,100				410				(154		)
FDIC premiums		966				1,568				789				(602		)
Merger expense and conversion costs		304				2,742				9,154				(2,438		)
Amortization of intangibles		1,653				2,445				526				(792		)
Foreclosed property/problem asset expense		124				864				70				(740		)
Other noninterest expense		6,818				8,017				4,092				(1,199		)
Total noninterest expense		$	73,465			$	73,280			$	45,933			$	185

Table 4 - Noninterest expenses were $73.5 million Expense

(in 2017 as compared to $73.3 million in 2016, and $45.9 million in 2015. The slight increase from 2016 to 2017 is primarily the result of higher salaries, employee benefits, and professional services expenses which were offset by decreases in merger and conversion costs, and other noninterest expense.thousands)

	Year ended December 31,									Change
	2019			2018			2017			2019‑2018
Salaries and employee benefits	$	34,537		$	31,766		$	33,130		$	2,771
Occupancy		2,888			2,972			2,516			(84)
Equipment and software		3,103			2,817			2,341			286
Professional services		2,908			3,511			4,591			(603)
Postage, printing and supplies		137			166			244			(29)
Communications and data processing		3,199			2,676			2,625			523
Marketing and business development		845			710			798			135
FDIC premiums		217			562			697			(345)
Merger and conversion costs		—			—			304			—
Other noninterest expense		5,274			4,811			5,588			463
Total noninterest expense		53,108			49,991			52,834			3,117
Noninterest expense - discontinued operations		9,685			19,941			20,631			(10,256)
Noninterest expense	$	62,793		$	69,932		$	73,465		$	(7,139)

Salaries and employee benefits expense for 2017 was $45.4 million, an increase of $3.1 million, or 7%, from 2016. The increase was due to severance costs and $2.0 million in expenses related to the President and Chief Operating Officer’s resignation. Full time equivalent headcount totaled 348 at December 31, 2017 compared to 345 at December 31, 2016, an increase of 3 full time equivalent positions, mainly due to increased staffing needs of the Bank.

Equipment and software expense of $3.4 million for 2017 was up $483,000, or 16%, compared to 2016, primarily due to higher maintenance contracts and an increase in managed services costs.

Professional services fees of $4.8 million for 2017 were up $1.8 million, or 63%, compared to 2016, primarily due to higher accounting and legal fees related to the public offering of Atlantic Capital stock by a selling stockholder during the third quarter of 2017. Communications and data processing expenses for 2017 of $4.1 million were up $858,000, or 26%, compared to 2016. This is the result of reduced core processing expenses in 2016 due to vendor credits which expired in 2017.

Merger and conversion costs totaled $304,000continuing operations for the year ended December 31, 2017,2019 was $34.5 million,  an increase of $2.8 million, or 8.7%, from 2018. The increase was primarily attributable to severance expense unrelated to the Branch Sale, an increase in medical insurance expense and new hires made in 2019. Full time equivalent headcount totaled 204 at December 31, 2019 compared to 334 at December 31, 2018, a decrease of $2.4 million, or 89%, from 2016. These costs include professional fees, severance, rebranding and data conversion related130 full time equivalent positions, primarily due to the acquisition of First Security.

Amortization of intangibles includes the amortization of core deposit intangible related to the acquisition of First Security and totaled $1.7 million and $2.4 millionBranch Sale.

Professional services from continuing operations decreased by $603,000, or 17.2%, for the years ended December 31, 2017 and 2016, respectively.

Other noninterest expense decreased $1.2 million, or 15%, compared to the year ended December 31, 2016.2019 compared to 2018 primarily due to lower consultant fees.

Communications and data processing expense from continuing operations was $3.2 million for the year ended December 31, 2019 compared to $2.7 million for 2018. This increase of $523,000 was the result of a higher volume of transactions in the payments business as well as non-recurring charges related to vendor negotiations and contract terminations.

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Table of Contents

FDIC premiums expense from continuing operations was $217,000 for the year ended December 31, 2019, a decrease includesof $345,000 from 2018. This decline in FDIC premiums expense was the result of a $357,000, or 23%, decreasesmall bank assessment credit in 2019 and the termination of FICO assessments in the second quarter of 2019.

The increase of $463,000 in other outside services, a $249,000, or 40%, decreasenoninterest expense from continuing operations for the year ended December 31, 2019 compared to 2018 was primarily driven by an increase in insurance expenses, and a $307,000, or 60%, decrease in mortgage warehouse servicing fees.

provision for unfunded commitments of $484,000, due to higher levels of outstanding commitments.

Noninterest expense totaled $73.3$69.9 million for 2016,2018, a $27.3$3.5 million, or 60%4.8%, increasedecrease from $45.9$73.5 million in 2015.2017. The increasedecrease from 20152017 to 20162018 is primarily the result of higherlower salaries and employee benefits occupancy, equipmentexpense and software and data processing expenses related to the acquisition of First Security.

professional services expenses.

Income Taxes

Atlantic Capital monitors and evaluates the potential impact of current events on the estimates used to establish income tax expenses and income tax liabilities. On a periodic basis, Atlantic Capital evaluates its income tax positions based on current tax law and positions taken by various tax auditors within the jurisdictions where Atlantic Capital is required to file income tax returns.

Income tax provisionexpense from continuing operations was $24.4$7.6 million in 2017,2019, compared to income tax provisionexpense from continuing operations of $7.9$6.3 million in 20162018 and $794,000$23.7 million in 2015.2017. The effective tax rate (as a percentage of pre-tax earnings) for 2019,  2018, and 2017 2016,was 21.3%,  18.4%, and 2015 was 118.0%, 37.2% and (151.3)%125.1%, respectively. The change in the effective tax rate for 20172018 compared to 20162017 resulted primarily from a $17.4 million reduction of the value of Atlantic Capital’s net deferred tax asset due to the tax reform legislation signed into law in December 2017. The change in the effective tax rate for 2016 compared to 2015 resulted from the impact of a pre-tax loss in 2015, as well as the impact of non-deductible merger expenses and the increase in non-taxable income on municipal securities purchased throughout 2016.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and their respective tax basis including operating losses and tax credit carryforwards. Net deferred tax assets (deferred tax assets net of deferred tax liabilities and valuation allowance) are reported in the consolidated balance sheet as a component of total assets.

Accounting Standards Codification Topic 740, Income Taxes, requires that companies assess whether a valuation allowance should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. The determination of whether a valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all positive and negative evidence with more weight given to evidence that can be objectively verified. Each quarter, management considers both positive and negative evidence and analyzes changes in near-term market conditions as well as other factors which may impact future operating results.

Based on all evidence considered, as of December 31, 20172019 and 2016,2018, management concluded that it was more likely than not that the net deferred tax asset would be realized, except as outlined in the following discussion. At December 31, 20172019 and 2016,2018, Atlantic Capital recorded a deferred tax asset valuation allowance totaling $8.5$6.7 million and $9.2$7.4 million, respectively, on certain net operating loss carryforwards due to the fact that certain tax attributes are subject to an annual limitation as a result of the acquisition of First Security, which constituted a change of ownership as defined under Internal Revenue Code Section 382. Management expects to generate future taxable income and believes this will allow for full utilization of Atlantic Capital’s remaining net operating loss carryforwards within the statutory carryforward periods.

Additional information regarding income taxes, including a reconciliation of the differences between the recorded income tax provision and the amount of income tax computed by applying the statutory federal income tax rate to income before income taxes, can be found in Note 14 - Income Taxes to the consolidated financial statements.

FINANCIAL CONDITION

Total assets at December 31, 20172019 and December 31, 20162018 were $2.89$2.91 billion and $2.73$2.96 billion, respectively. Average total assets for 20172019 were $2.72$2.59 billion, compared to $2.71$2.78 billion for 2016.2018.

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Loans

Table of Contents

Loans

At December 31, 2017,2019, total loans held for investment decreased $47.5increased $146.0 million, or 2%8.4%, compared to December 31, 2016,2018, primarily due to a decreasean increase of $107.5$59.7 million, or 9.3%, in the mortgage warehouse.commercial and industrial loans as well as increases in commercial real estate owner occupied loans and non-owner occupied loans of $59.6 million and $52.3 million, respectively. Details of loans at December 31, 2019,  2018,  2017, 2016, 2015, 2014, and 20132015 are provided in Table 5.

Table 5 - Loans

(in thousands)

		December 31,
		2019			2018			2017			2016			2015
Loans held for sale
TriNet loans held for sale		$	—		$	—		$	—		$	—		$	58,934
Branch loans held for sale			—			—			—			30,917			35,470
Loans held for sale - discontinued operations			—			373,030			415,206			465,946			450,078
Loans held for sale - continuing operations			370			5,889			1,487			4,302			1,061
Total loans held for sale		$	370		$	378,919		$	416,693		$	501,165		$	545,543
Loans held for investment
Commercial loans:
Commercial and industrial		$	705,115		$	645,374		$	539,046		$	435,836		$	363,866
Commercial real estate:
Owner occupied			357,912			298,291			250,588			251,796			168,641
Non-owner occupied			558,416			496,537			503,398			447,296			471,596
Construction and land			127,540			156,232			101,801			174,810			118,766
Mortgage warehouse loans			13,941			27,967			39,981			147,519			84,350
Total commercial loans			1,762,924			1,624,401			1,434,814			1,457,257			1,207,219
Residential:
Residential mortgages			31,315			32,800			12,960			16,418			77,235
Home equity	`		25,002			22,822			39,407			6,829			26,034
Total residential loans			56,317			55,622			52,367			23,247			103,269
Consumer			37,765			25,851			21,959			18,882			20,028
Other			19,552			24,712			13,303			19,560			12,531
Loans held for investment, gross			1,876,558			1,730,586			1,522,443			1,518,946			1,343,047
Less net deferred fees and other unearned income			(3,034)			(2,513)			(3,810)			(3,562)			(2,006)
Less allowance for loan losses			(18,535)			(17,851)			(19,344)			(20,595)			(18,905)
Loans held for investment, net		$	1,854,989		$	1,710,222		$	1,499,289		$	1,494,789		$	1,322,136

53

Table 5 - Loans
(in thousands)
		December 31,
		2017				2016				2015				2014				2013
Loans held for sale
TriNet loans held for sale		$	—			$	—			$	58,934			$	—			$	—
Branch loans held for sale		—				30,917				35,470				—				—
Other loans held for sale		1,487				4,302				1,061				—				—
Total loans held for sale		$	1,487			$	35,219			$	95,465			$	—			$	—
Loans held for investment
Commercial loans:
Commercial and industrial		$	615,359			$	531,061			$	467,083			$	365,447			$	329,651
Commercial real estate:
Owner occupied		346,746				352,523				320,656				193,892				188,956
Non-owner occupied		593,669				506,255				525,757				245,179				207,627
Construction and land		115,495				219,352				166,358				82,567				49,101
Mortgage warehouse loans		39,981				147,519				84,350				116,939				8,026
Total commercial loans		1,711,250				1,756,710				1,564,204				1,004,024				783,361
Residential:
Residential mortgages		104,484				101,921				110,381				1,320				—
Home equity		76,244				77,358				80,738				28,464				27,006
Total residential loans		180,728				179,279				191,119				29,784				27,006
Consumer		29,393				27,338				30,451				9,290				8,719
Other		16,278				21,565				6,901				—				—
		1,937,649				1,984,892				1,792,675				1,043,098				819,086
Less net deferred fees and other unearned income		(3,810		)		(3,562		)		(2,006		)		(3,385		)		(2,084		)
Less allowance for loan losses		(19,344		)		(20,595		)		(18,905		)		(11,421		)		(10,815		)
Loans held for investment, net		$	1,914,495			$	1,960,735			$	1,771,764			$	1,028,292			$	806,187

Table of Contents

The following table sets forth the maturity distribution of loans as of December 31, 2017.2019.

Table 6 - Loan Maturity Distribution and Interest Rate Sensitivity

(in thousands)

		Within			One to			After
		One Year			Five Years			Five Years			Total
Loans held for investment:
Commercial and industrial		$	187,130		$	336,077		$	181,908		$	705,115
Commercial real estate			100,020			387,694			428,614			916,328
Construction and land			46,269			63,040			18,231			127,540
Mortgage warehouse loans			13,941			—			—			13,941
Residential mortgages			785			1,124			29,406			31,315
Home equity			5,507			9,022			10,473			25,002
Consumer			15,328			22,400			37			37,765
Other			3,044			8,784			7,724			19,552
Total loans held for investment		$	372,024		$	828,141		$	676,393		$	1,876,558
Loans maturing with:
Fixed interest rates		$	86,722		$	303,579		$	351,995		$	742,296
Floating or adjustable rates			285,302			524,562			324,398			1,134,262
Total loans held for investment		$	372,024		$	828,141		$	676,393		$	1,876,558

Table 6 - Loan Maturity Distribution and Interest Rate Sensitivity
(in thousands)
		Within				One to				After				Total
		One Year				Five Years				Five Years
Loans:
Commercial and industrial		$	231,023			$	268,262			$	116,074			$	615,359
Commercial real estate		102,755				385,317				452,343				940,415
Construction and land		43,218				64,533				7,744				115,495
Mortgage warehouse loans		39,981				—				—				39,981
Residential mortgages		13,790				16,528				74,166				104,484
Home equity		19,711				17,064				39,469				76,244
Consumer		5,158				17,419				6,816				29,393
Other		2,291				12,122				1,865				16,278
Total loans		$	457,927			$	781,245			$	698,477			$	1,937,649
Loans maturing with:
Fixed interest rates		$	55,540			$	218,705			$	336,025			$	610,270
Floating or adjustable rates		402,387				562,540				362,452				1,327,379
Total loans		$	457,927			$	781,245			$	698,477			$	1,937,649

Nonperforming Assets

Nonperforming assets include nonaccrual loans, accruing loans past due 90 days or more, and other real estate owned. Loans are considered to be past due when payment is not received from the borrower by the contractually specified due date. Interest accruals on loans are discontinued when interest or principal has been in default 90 days or more, unless the loan is secured by collateral that is sufficient to repay the debt in full and the loan is in the process of collection. When a loan is placed on nonaccrual status, interest accrued and not paid in the current accounting period is reversed against current period income. Interest accrued and not paid in prior periods, if significant, is reversed against the allowance for loan losses.

Income on such loans is subsequently recognized on a cash basis as long as the future collection of principal is deemed probable or after all principal payments are received. Commercial loans are placed back on accrual status after sustained performance of timely and current principal and interest payments and it is probable that all remaining amounts due, both principal and interest, are fully collectible according to the terms of the loan agreement. Residential loans and consumer loans are generally placed back on accrual status when they are no longer past due.

Purchased Credit Impaired (“PCI”) loans accounted for under ASC 310-30310‑30 are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. However, these loans are considered as performing, even though they may be contractually past due, as any non-payment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period covered loan loss provision or future period yield adjustments. PCI loans were not classified as nonaccrual atfor periods ended prior to December 31, 20172018, as the carrying value of the respective loan or pool of loans cash flows were considered estimable and collection was probable. Therefore, interest revenue, through accretion of the difference between the carrying value of the loans and the expected cash flows, is beingwas recognized on all PCI loans.

At December 31, 2017,2018, PCI loans were designated as held-for-sale and subsequently sold in the Branch Sale that occurred in the second quarter of 2019.

At December 31, 2019, Atlantic Capital’s nonperforming assets totaled to $4.1$7.6 million, or 0.14%0.26% of assets, compared to $3.5$6.1 million, or 0.13%0.20% of assets, at December 31, 2016.2018. The increase was primarily due to the Bank placing onetwo loan relationship totaling $1.8 millionrelationships that were placed on nonaccrual status, offset by the sale of an increase in total assets.other real estate owned property during 2019.

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Nonaccrual loans totaled $2.6$7.2 million and $621,000$4.7 million as of December 31, 20172019 and 2016,2018, respectively. The increase was primarily due to the Bank placing one loan relationship totaling $1.8 million on nonaccrual status. Loans past due 90 days and still accruing totaled $298,000$85,000 at December 31, 20172019 compared to $994,000$479,000 at December 31, 2016.2018. The gross additional interest revenue that would have been earned if the loans classified as nonaccrual had performed in accordance with the original terms in 2017, 2016,

2019,  2018, and 20152017 is immaterial. Table 7 provides details on nonperforming assets and other risk elements at December 31, 2019,  2018,  2017, 2016, 2015, 2014, and 2013.2015.

Table 7 - Nonperforming assets

(Dollars in thousands)

			December 31,
			2019		2018			2017			2016			2015
Nonaccrual loans		$	7,208		$	4,697		$	2,614		$	621		$	7,772
Loans past due 90 days and still accruing			85			479			298			994			777
Total nonperforming loans(1) (NPLs)			7,293			5,176			2,912			1,615			8,549
Other real estate owned			278			874			1,215			1,872			1,982
Total nonperforming assets (NPAs)		$	7,571		$	6,050		$	4,127		$	3,487		$	10,531
NPLs as a percentage of total loans			0.39	%		0.25	%		0.15	%		0.08	%		0.45	%
NPAs as a percentage of total assets			0.26	%		0.20	%		0.14	%		0.13	%		0.40	%

---

(1)

Nonperforming loans as of December 31, 2017, 2016, and 2015 exclude those loans which are PCI loans. As of December 31, 2018, PCI loans were designated as held for sale in the Branch Sale. As a result, nonperforming loans held for sale which were previously designated as PCI loans are included in total nonperforming loans as of December 31, 2018.

Table 7 - Nonperforming assets
(Dollars in thousands)
		December 31,
		2017				2016				2015				2014				2013
Nonaccrual loans		$	2,614			$	621			$	7,772			$	—			$	2,954
Loans past due 90 days and still accruing		298				994				777				—				—
Total nonperforming loans* (NPLs)		2,912				1,615				8,549				—				2,954
Other real estate owned		1,215				1,872				1,982				1,531				1,531
Total nonperforming assets (NPAs)		$	4,127			$	3,487			$	10,531			$	1,531			$	4,485
NPLs as a percentage of total loans		0.15			%	0.08			%	0.45			%	—			%	0.36			%
NPAs as a percentage of total assets		0.14				0.13				0.40				0.12				0.36

*Nonperforming loans excludes those loans which are PCI loans

Troubled Debt Restructurings

Troubled Debt Restructurings (“TDRs”) are selectively made to provide relief to customers experiencing liquidity challenges or other circumstances that could affect their ability to meet their debt obligations. Typical modifications include interest rate reductions, term extensions and other concessions intended to minimize losses. Nonperforming TDRs are not accruing interest and are included as nonperforming assets within nonaccrual loans. TDRs, which are accruing interest based on the restructured terms, are considered performing. The following table summarizes TDRs:TDRs at December 31, 2019, 2018, 2017, 2016, and 2015.

Table 8 - Troubled Debt Restructurings

(in thousands)

		December 31,
		2019			2018			2017			2016			2015
Accruing TDRs		$	11,953		$	8,237		$	5,323		$	6,602		$	4,616
Nonaccruing TDRs			1,217			—			—			—			4,449
Total TDRs		$	13,170		$	8,237		$	5,323		$	6,602		$	9,065

Table 8 - Troubled Debt Restructurings
(in thousands)
		December 31,
		2017				2016				2015				2014				2013
Accruing TDRs		$	5,323			$	6,602			$	4,616			$	6,601			$	6,809
Nonaccruing TDRs		—				—				4,449				—				—
Total TDRs		$	5,323			$	6,602			$	9,065			$	6,601			$	6,809

The gross additional interest income that would have been earned in 2017, 2016, and 20152019 had performing TDRs performed in accordance with the original terms is immaterial.

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Potential Problem Loans

Management identifies and maintains a list of potential problem loans. These are loans that are internally risk graded special mention or below but which are not included in nonaccrual status and are not past due 90 days or more. A loan is added to the potential problem list when management becomes aware of information about possible credit problems of the borrower which raises serious doubts as to the ability of such borrower to comply with the current loan repayment terms. Potential problem loans totaled $54.6$76.3 million and $47.6$58.2 million, respectively, as of December 31, 20172019 and December 31, 2016.2018. As a percentage of total loans, excluding PCI loans, potential problem loans increased towere 4.1% and 2.8% from 2.4%. The potential problem loan balance atas of December 31, 2017 does not include2019 and 2018, respectively. At December 31, 2018, PCI loans were not significant due to the reclassification of $11.8 million which have a remaining purchase discountmajority of $2.4 million.these loans to held for sale. These PCI loans were subsequently sold in 2019. As a number of potential problem loans are real estate secured, management closely tracks the current values of real estate collateral when assessing the collectability of these loans.

Allowance for Loan Losses

At December 31, 2017,2019, the allowance for loan losses totaled $19.3$18.5 million, or 1.00%0.99% of total loans, compared to $20.6$17.9 million, or 1.04%1.03% of total loans, at December 31, 2016.2018. The decreaseincrease in the allowance was primarily related to the $3.3 million charge-off of aan increase in outstanding loan relationship and the reversal of thebalances as well as an increase in specific reserve.

reserves.

Net charge-offs during 20172019 and 20162018 were $4.5$2.0 million and $2.1 million,$342,000, respectively. The increase wasrelated primarily due to a $3.3 million charge-off of athe following: net charge-offs for Tennessee commercial and industrial relationship.loans not included in the Branch Sale totaling $330,000 and net charge-offs on commercial and industrial SBA loans totaling $1.3 million.  Table 9 provides details concerning the allowance for loan losses during the past five years.

Table 9 - Allowance for Loan Losses (ALL)

(Dollars in thousands)

		December 31,
		2019			2018			2017			2016			2015
Allowance for loan losses at beginning of period		$	17,851		$	19,344		$	20,595		$	18,905		$	11,421
Provision for loan losses			2,712			1,991			3,239			3,742			8,035
Provision for loan losses (negative provision) - discontinued operations			—			(3,097)			—			—			—
Provision for PCI loan losses			—			(45)			(21)			74			—
Charge-offs:
Commercial and industrial			2,022			126			4,073			1,531			—
Commercial real estate			47			50			132			342			500
Construction and land			—			—			16			—			—
Residential mortgages			9			75			46			2			—
Home equity			—			160			39			32			—
Consumer			39			16			409			402			128
Other			—			—			—			5			—
Total charge-offs			2,117			427			4,715			2,314			628
Recoveries:
Commercial and industrial			36			19			200			4			—
Commercial real estate			—			28			2			5			—
Construction and land			4			—			16			27			29
Residential mortgages			14			4			1			5			—
Home equity			1			—			1			2			—
Consumer			34			34			26			143			48
Other			—			—			—			2			—
Total recoveries			89			85			246			188			77
Net charge-offs			2,028			342			4,469			2,126			551
Allowance for loan losses at end of period (1)		$	18,535		$	17,851		$	19,344		$	20,595		$	18,905
Average loans		$	1,769,613		$	1,977,014		$	1,936,109		$	1,986,482		$	1,192,103
Loans at end of period			1,873,524			1,728,073			1,933,839			1,981,330			1,790,669
Ratios
Net charge-offs to average loans			0.11	%		0.02	%		0.23	%		0.11	%		0.05	%
Allowance for loan losses to total loans (1)			0.99			1.03			1.00			1.04			1.06

---

(1)

The allowance for loan losses has not been adjusted retrospectively for discontinued operations in prior periods.

56

Table 9 - Allowance for Loan Losses (ALL)
(Dollars in thousands)
	December 31,
	2017				2016				2015				2014				2013
Allowance for loan losses at beginning of period	$	20,595			$	18,905			$	11,421			$	10,815			$	10,736
Provision for loan losses	3,239				3,742				8,035				488				246
Provision for PCI loan losses	(21		)		74				—				—				—
Charge-offs:
Commercial and industrial	4,073				1,531				—				—				167
Commercial real estate	132				342				500				—				—
Construction and land	16				—				—				—				—
Residential mortgages	46				2				—				—				—
Home equity	39				32				—				—				—
Consumer	409				402				128				—				—
Other	—				5				—				—				—
Total charge-offs	4,715				2,314				628				—				167
Recoveries:
Commercial and industrial	200				4				—				—				—
Commercial real estate	2				5				—				81				—
Construction and land	16				27				29				37				—
Residential mortgages	1				5				—				—				—
Home equity	1				2				—				—				—
Consumer	26				143				48				—				—
Other	—				2				—				—				—
Total recoveries	246				188				77				118				—
Net charge-offs	4,469				2,126				551				(118		)		167
Allowance for loan losses at end of period	$	19,344			$	20,595			$	18,905			$	11,421			$	10,815
Average loans	$	1,936,109			$	1,986,482			$	1,192,103			$	918,959			$	793,505
Loans at end of period	1,933,839				1,981,330				1,790,669				1,039,713				817,002
Ratios
Net charge-offs to average loans	0.23			%	0.11			%	0.05			%	(0.01		)	%	0.02			%
Allowance for loan losses to total loans	1.00				1.04				1.06				1.10				1.32

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Table 10 - Allocation of Allowance for Loan Losses
(Dollars in thousands)
		December 31,
		2017							2016							2015							2014							2013
		Allowance for loan losses				Percent of loans to total loans			Allowance for loan losses				Percent of loans to total loans			Allowance for loan losses				Percent of loans to total loans			Allowance for loan losses				Percent of loans to total loans			Allowance for loan losses				Percent of loans to total loans
Allowance for loan losses allocated to:
Commercial and industrial		$	8,706			32		%	$	8,616			27		%	$	6,186			26		%	$	4,185			35		%	$	4,272			40		%
Commercial real estate		8,001				49			7,159				44			8,656				47			5,837				42			5,438				49
Construction and land		1,560				6			2,942				11			1,695				9			945				8			636				6
Mortgage warehouse loans		—				2			—				7			—				5			—				11			—				1
Residential mortgages		409				5			732				5			1,156				6			15				—			—				—
Home equity		393				4			686				4			825				5			332				3			356				3
Consumer		275				2			460				2			387				2			107				1			113				1
Total allowance for loan losses		$	19,344			100		%	$	20,595			100		%	$	18,905			100		%	$	11,421			100		%	$	10,815			100		%

Table 10 - Allocation of Allowance for Loan Losses

(Dollars in thousands)

		December 31,
		2019					2018					2017					2016					2015
					Percent					Percent					Percent					Percent					Percent
		Allowance			of loans		Allowance			of loans		Allowance			of loans		Allowance			of loans		Allowance			of loans
		for loan			to total		for loan			to total		for loan			to total		for loan			to total		for loan			to total
		losses			loans		losses			loans		losses			loans		losses			loans		losses			loans
Allowance for loan losses allocated to:
Commercial and industrial		$	9,014		37	%	$	8,360		37	%	$	8,706		32	%	$	8,616		27	%	$	6,186		26	%
Commercial real estate			7,505		49			6,948		46			8,001		49			7,159		44			8,656		47
Construction and land			1,684		7			2,014		9			1,560		6			2,942		11			1,695		9
Mortgage warehouse loans			—		1			—		2			—		2			—		7			—		5
Residential mortgages			82		2			144		2			409		5			732		5			1,156		6
Home equity			63		1			148		1			393		4			686		4			825		5
Consumer			187		3			237		3			275		2			460		2			387		2
Total allowance for loan losses		$	18,535		100	%	$	17,851		100	%	$	19,344		100	%	$	20,595		100	%	$	18,905		100	%

Investment Securities

Investment securities available-for-sale totaled $449.1$282.5 million at December 31, 2017,2019 compared to $347.7$402.5 million at December 31, 2016.2018.  Held-to-maturity securities totaled $117.0 million at December 31, 2019 compared to $0 at December 31, 2018. Available-for-sale securities are reported at their aggregate fair value, and unrealized gains and losses are included as a component of other comprehensive income, net of deferred taxes. Held-to-maturity securities are carried at amortized cost. As of December 31, 2017,2019, investment securities available-for-sale had a net unrealized lossgain of $5.6$3.2 million compared to a net unrealized loss of $9.6$11.8 million as of December 31, 2016.2018. Market changes in interest rates and credit spreads will result in temporary unrealized losses as the market price of securities fluctuate. After evaluating the securities with unrealized losses, management concluded that no other than temporary impairment existed as of December 31, 2017.

2019 and December 31, 2018.

Changes in the amount of Atlantic Capital’s investment securities portfolio result primarily from balance sheet trends including loans, deposit balances, and short-term borrowings. When inflows arising from deposits and short-term borrowings exceed loan demand, Atlantic Capital invests excess funds in the securities portfolio or in short-term investments. Conversely, when loan demand exceeds growth in deposits and short-term borrowings, Atlantic Capital allows interest-bearing balances with other banks to decline and uses proceeds from maturing securities to fund loan demand.  During 2019, the Company purchased $117.0 million in held-to-maturity municipal securities to extend the duration of the securities portfolio as well as to reduce the asset sensitivity of the balance sheet. During the fourth quarter of 2018, Atlantic Capital sold securities totaling approximately $63 million to provide funding for the Branch Sale. 

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Details of investment securities at December 31, 2017,2019,  December 31, 2016,2018, and December 31, 20152017 are provided in Table 11.

Table 11 - Investment Securities

(in thousands)

		December 31, 2019						December 31, 2018						December 31, 2017
		Amortized						Amortized						Amortized
Available-for-Sale Securities		Cost			Fair Value			Cost			Fair Value			Cost			Fair Value
U.S. Government agencies		$	—		$	—		$	27,259		$	26,849		$	34,699		$	34,111
U.S. states and political divisions			81,865			82,485			91,864			84,834			92,169			90,001
Trust preferred securities			4,808			4,688			4,781			4,400			4,754			4,650
Corporate debt securities			19,557			19,920			12,855			12,363			12,948			12,622
Residential mortgage-backed securities			173,047			175,368			277,524			274,040			310,129			307,733
Total available-for-sale			279,277			282,461			414,283			402,486			454,699			449,117
Held-to-Maturity Securities
U.S. states and political divisions			116,972			115,291			—			—			—			—
Total held-to-maturity			116,972			115,291			—			—			—			—
Total securities		$	396,249		$	397,752		$	414,283		$	402,486		$	454,699		$	449,117

Table 11 - Investment Securities
(in thousands)
		December 31, 2017								December 31, 2016								December 31, 2015
Available-for-Sale Securities		Amortized Cost				Fair Value				Amortized Cost				Fair Value				Amortized Cost				Fair Value
U.S. Treasuries		$	—			$	—			$	—			$	—			$	4,952			$	4,922
U.S. Government agencies		34,699				34,111				21,485				21,152				65,373				64,852
U.S. states and political divisions		92,169				90,001				96,908				90,172				27,751				27,790
Trust preferred securities		4,754				4,650				4,727				4,525				4,732				4,275
Corporate debt securities		12,948				12,622				19,928				19,231				20,653				20,517
Residential mortgage-backed securities		310,129				307,733				214,297				212,625				226,142				223,865
Total available-for-sale		$	454,699			$	449,117			$	357,345			$	347,705			$	349,603			$	346,221

The effective duration of Atlantic Capital’s securities at December 31, 2019 was 6.97 years compared to 5.26 years at December 31, 2018.

The following table presents the contractual maturity of investment securities by maturity date and average yields based on amortized cost. The composition and maturity / maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

58

Table 12 - Investment Securities
(Dollars in thousands)
		2017													2016
		Amortized cost				Fair Value				Weighted Average Maturity			Weighted Average Yield(1)		Amortized cost				Fair Value				Weighted Average Maturity			Weighted Average Yield(1)
U.S. Government agencies
1 to 5 years		$	9,414			$	9,260			3.99			1.99	%	$	2,993			$	2,961			4.88			1.78	%
5 to 10 years		18,502				18,191				5.70			2.39		10,614				10,466				5.27			2.02
More than 10 years		6,783				6,660				5.25			2.28		7,878				7,725				5.23			2.24
		34,699				34,111				5.02			2.23		21,485				21,152				5.22			2.15
U.S. states and political subdivisions
Within 1 year		65				65				0.16			2.98		96				95				0.92			2.51
1 to 5 years		3,131				3,091				3.55			2.09		4,465				4,406				3.34			1.99
5 to 10 years		21,134				20,941				7.61			2.09		21,334				21,000				7.72			2.07
More than 10 years		67,839				65,904				16.28			2.30		71,013				64,671				16.83			2.25
		92,169				90,001				13.41			2.24		96,908				90,172				13.66			2.19
Trust preferred securities
5 to 10 years		4,754				4,650				9.17			2.82		4,727				4,525				10.17			2.13
		4,754				4,650				9.17			2.82		4,727				4,525				10.17			2.13
Corporate debt securities
Within 1 year		—				—				—			—		5,153				5,172				0.51			2.42
1 to 5 years		9,619				9,652				4.07			2.82		9,339				9,128				4.48			2.41
5 to 10 years		3,329				2,970				5.37			0.34		5,436				4,931				6.01			1.78
		12,948				12,622				4.22			2.54		19,928				19,231				3.61			2.27
Residential mortgage-backed securities		310,129				307,733				4.80			2.43		214,297				212,625				4.95			2.25
Total		$	454,699			$	449,117								$	357,345			$	347,705
(1) Weighted average yields are not presented in this table on a fully taxable equivalent basis.

Table of Contents

Table 12 - Investment Securities

(Dollars in thousands)

		2019													2018
								Weighted			Weighted									Weighted				Weighted
		Amortized						Average			Average			Amortized						Average				Average
		cost			Fair Value			Maturity			Yield(1)			cost			Fair Value			Maturity				Yield(1)
U.S. Government agencies
1 to 5 years		$	—		$	—			—			—	%	$	18,588		$	18,294			4.70			2.38	%
5 to 10 years			—			—			—			—			2,883			2,906			5.97			3.02
More than 10 years			—			—			—			—			5,788			5,649			4.80			2.28
			—			—			—			—			27,259			26,849			4.87			2.36
U.S. states and political subdivisions
Within 1 year			—			—			—			—			125			125			0.49			3.48
1 to 5 years			514			513			4.17			1.30			1,281			1,253			4.19			2.29
5 to 10 years			19,996			20,245			8.42			1.96			24,023			23,225			7.60			2.07
More than 10 years			178,327			177,018			19.02			2.56			66,435			60,231			16.07			2.36
			198,837			197,776			19.19			2.41			91,864			84,834			13.20			2.28
Trust preferred securities
5 to 10 years			4,808			4,688			7.17			3.15			4,781			4,400			8.17			3.99
			4,808			4,688			7.17			3.15			4,781			4,400			8.17			3.99
Corporate debt securities
Within 1 year			6,043			6,136			1.70			2.96			—			—			—			—
1 to 5 years			3,514			3,565			2.69			2.64			12,855			12,363			3.22			2.68
5 to 10 years			10,000			10,219			9.71			4.13			—			—			—			—
			19,557			19,920			4.98			2.98			12,855			12,363			3.22			2.68
Residential mortgage-backed securities			173,047			175,368			7.09			2.70			277,524			274,040			5.40			2.59
Total		$	396,249		$	397,752								$	414,283		$	402,486

---

(1)

Weighted average yields are not presented in this table on a fully taxable equivalent basis.

Goodwill and Other Intangible Assets

Atlantic Capital’s core deposit intangible representing the value of the acquired deposit base, is an amortizing intangible asset that is required to be tested for impairment only when events or circumstances indicate that impairment may exist. There were no events or circumstances that led management to believe that any impairment existed at December 31, 2017This core deposit intangible was fully amortized in Atlantic Capital’s other intangible assets.

the second quarter of 2019 as a result of the Branch Sale.

Goodwill represents the premium paid for acquired companies above the fair value of the assets acquired and liabilities assumed, including separately identifiable intangible assets. Atlantic Capital evaluates its goodwill annually as of October 1, or more frequently if necessary, to determine if any impairment exists.  Factors that management considers in this assessment includes macroeconomic conditions, industry and market considerations, overall financial performance of the Company and changes in the composition or carrying amount of net assets.  Management concluded that the 2019 annual qualitative impairment assessment indicated that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill).

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Deposits

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On April 5, 2019, the Bank completed the Branch Sale. In accordance with U.S. GAAP, Atlantic Capital allocated a proportionate share of its goodwill balance to the discontinued operations on a relative fair value basis and performed an impairment test for the goodwill remaining in the reporting unit to be retained. This impairment analysis of goodwill remaining in the retained reporting unit resulted in no impairment. The Company monitored events from the date of the assessment through December 31, 2019 and no events or circumstances led management to believe any impairment existed at the balance sheet date.

Deposits

At December 31, 2017,2019, total deposits were $2.45$2.5 billion, an increasea decrease of $213.1$38.9 million, or 10%1.5%, since  December 31, 2016. Noninterest-bearing demand2018. Interest-bearing checking deposits increased $89.0$121.2 million, or 14%48.0%, and money markets increased $205.4$186.0 million, or 23%18.8%, from December 31, 20162018 to December 31, 2017.2019. This was partially offset by a decrease in brokered deposits of $71.4$17.4 million, or 36%17.5%, during the same period. period as well as a decrease of $585.4 million in deposits to be assumed in the Branch Sale. Brokered deposits decreased as a result of growth in core deposits and reduced funding needs.

Total average deposits from continuing operations for the year ended December 31, 2019 were $1.8 billion, an increase of $172.0 million, or 10.5%, from 2018. For the year ended December 31, 2019 compared to 2018, average noninterest-bearing demand deposits from continuing operations increased $51.8 million, or 9.6%, and average savings and money market deposits from continuing operations increased $109.5 million, or 15.2%. Average time deposits less than $250,000 increased from 2018 to 2019 due to the growth in the partnership with a fintech firm that offers CD-secured loans to its customers in order to build credit and/or improve their credit score.

Table 13 provides the average deposit balances as a percentage of total deposits for December 31, 2017, 2016,2019,  2018, and 2015.2017.

Table 13 - Average Deposits

(Dollars in thousands)

		December 31,
					% of					% of					% of
		2019			total		2018			total		2017			total
Non-interest bearing demand deposits		$	589,862		30	%	$	538,110		24	%	$	490,495		23	%
Interest-bearing demand deposits			277,242		14			280,037		13			211,385		10
Savings and money market deposits			830,523		42			720,988		32			657,614		31
Time deposits less than $250,000			16,398		1			3,092		—			3,492		—
Time deposits $250,000 or greater			6,674		—			6,954		—			7,853		—
Brokered deposits			84,601		4			84,105		4			168,685		8
Deposits from continuing operations			1,805,300		91			1,633,286		73			1,539,524		72
Deposits from discontinued operations			180,593		9			598,559		27			607,328		28
Total deposits		$	1,985,893		100	%	$	2,231,845		100	%	$	2,146,852		100	%

Table 13 - Average Deposits
(Dollars in thousands)
		December 31,
		2017				% of total		2016				% of total		2015				% of total
Non-interest bearing demand deposits		$	631,046			29	%	$	559,762			26	%	$	352,437			27	%
Interest-bearing demand deposits		303,742				14		279,594				13		160,452				12
Savings and money market deposits		894,029				42		891,285				42		585,325				45
Time deposits less than $250,000		121,351				6		180,251				8		48,832				4
Time deposits $250,000 or greater		27,999				1		28,549				1		9,301				1
Brokered deposits		168,685				8		207,543				10		140,416				11
		$	2,146,852			100		$	2,146,984			100		$	1,296,763			100
Branch deposits to be assumed in a sale		$	3,960					$	62,217					$	106,705

The following table sets forth the scheduled maturities of time deposits of $250,000 and greater and brokered time deposits.deposits from continuing operations as of December 31, 2019.

Table 14 - Maturities of Time Deposits of $250,000 or More

(in thousands)

			December 31, 2019
Time deposits maturing in:
Three months or less		$	—
Over three through six months			1,106
Over six through twelve months			—
Over twelve months			5,603
		$	6,709

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Table 14 - Maturities of Time Deposits of $250,000 or More
(in thousands)
Time deposits maturing in:
Three months or less		$	3,086
Over three through six months		1,401
Over six through twelve months		8,158
Over twelve months		7,555
		$	20,200

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Short-Term Borrowings

There were no outstanding securities sold under repurchase agreements at December 31, 2019. Securities sold under repurchase agreements with commercial checking customers or balances of federal funds purchasedtotaled $6.2 million as of December 31, 20172018 and 2016.

were classified as discontinued operations.  

As a member of the Federal Home Loan Bank of Atlanta (“FHLB”),FHLB, Atlantic Capital has the ability to acquire short and long-term advances through a blanket agreement secured by our unencumbered qualifying 1-41‑4 family first mortgage loans and by pledging investment securities or individual, qualified loans, subject to approval of the FHLB. At December 31, 20172019 and 2016,2018, Atlantic Capital had no FHLB advances of $45.0 million and $110.0 million,outstanding, respectively. The balance of FHLB borrowings decreased due to a decrease in short-term funding needs.

Long-Term Debt

During the third quarter of

On September 28, 2015, Atlantic Capital issued $50.0 million in 6.25% fixed-to-floating rate subordinated notes due in 2025, and callable at par on September 30, 2020, all of which waswere outstanding at December 31, 20172019 and 2016.

2018. The notes bear a fixed rate of 6.25% per year until September 29, 2020, and then bear a floating rate of three month LIBOR plus 468 basis points until maturity.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Risk Management

Liquidity risk is the risk that an institution will be unable to generate or obtain sufficient funding, at a reasonable cost, to meet operational cash needs and to take advantage of revenue producing opportunities as they arise. Other forms of liquidity risk include market constraints on the ability to convert assets into cash at expected levels, an inability to access funding sources at sufficient levels at a reasonable cost, and changes in economic conditions or exposure to credit, market, operational, legal, and reputation risks that can affect an institution’s liquidity risk profile. Liquidity management involves maintaining Atlantic Capital’s ability to meet the daily cash flow requirements of Atlantic Capital’s customers, both depositors and borrowers.

Atlantic Capital utilizes various measures to monitor and control liquidity risk across three different types of liquidity:

·

tactical liquidity measures the risk of a negative cash flow position whereby cash outflows exceed cash inflows over a short-term horizon;

tactical liquidity measures the risk of a negative cash flow position whereby cash outflows exceed cash inflows over a short-term horizon;

·

structural liquidity measures the amount by which illiquid assets are supported by long-term funding; and

structural liquidity measures the amount by which illiquid assets are supported by long-term funding; and

·

contingent liquidity utilizes cash flow stress testing across four crisis scenarios to determine the adequacy of Atlantic Capital’s liquidity.

contingent liquidity utilizes cash flow stress testing across three crisis scenarios to determine the adequacy of Atlantic Capital’s liquidity.

Atlantic Capital aims to maintain a diverse mix of existing and potential liquidity sources to support the liquidity management function. At its core is a reliance on the customer deposit book,deposits, due to the low cost it offers.costs they offer. Other sources of liquidity include asset-based liquidity in the form of cash and unencumbered securities, as well as access to wholesale funding from external counterparties, primarily advances from the FHLB of Atlanta, Federal Funds lines and other borrowing facilities. Atlantic Capital aims to avoid funding concentrations by diversifying external secured and unsecured funding with respect to maturities, counterparties and nature.

As of At December 31, 2017,2019,  management believed that Atlantic Capital expected to maintainhad sufficient on-balance sheet liquidity to meet its funding needs.

On April 5, 2019, the Bank completed the Branch Sale. FirstBank assumed deposits and customer repurchase agreements of approximately $598 million and purchased approximately $385 million in loans and $12 million in other assets. Since Atlantic Capital divested a larger amount of deposits than assets, it made a cash payment of approximately $167 million to FirstBank at the closing of the Branch Sale. The Company funded the cash payment for the Branch Sale with a combination of excess cash, proceeds from sold securities, FHLB borrowings, and brokered deposits.

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At December 31, 2017,2019, Atlantic Capital had access to $375.0$526.0 million in unsecured borrowings and $796.6$779.2 million in secured borrowings through various sources.sources, including FHLB advances and access to Federal Funds. Atlantic Capital also has the ability to attract more retail deposits by offering aggressively pricedincreasing rates.

Shareholders’ Equity and Capital Adequacy

Shareholders’ equity at December 31, 2019  was $326.5 million, an increase of $2.8 million, or 0.9%, from  December 31, 2018. Net income of $49.9 million for the year ended December 31, 2019, an increase of $14.9 million in accumulated other comprehensive income and $1.8 million in issues of common stock for option exercises and long-term incentives were offset by $64.8 million due to the repurchase of 3,694,902 shares of common stock. The Bank paid intercompany dividends totaling $45.5 million to Atlantic Capital during 2019 in order to fund the repurchases. Atlantic Capital and the Bank are required to meet minimum capital requirements imposed by regulatory authorities. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on Atlantic Capital’s consolidated financial statements.

Shareholders’ equity at December 31, 2017 was $308.4 million, an increase of $4.8 million, or 2%, from December 31, 2016.

Accumulated other comprehensive income, which includes unrealized gains and losses on securities available-for-sale and unrealized gains and losses on derivatives qualifying as cash flow hedges, is excluded in the calculation of regulatory capital ratios.

Table 15 - Capital Ratios

(Dollars in thousands)

														Regulatory Guidelines
																		Minimum capital
		Consolidated						Bank										plus capital
		December 31,			December 31,			December 31,			December 31,					Well		conservation buffer
		2019			2018			2019			2018			Minimum		capitalized		2020
Risk based ratios:
Common equity tier 1 capital			12.0	%		11.5	%		13.8	%		12.3	%	4.5	%	6.5	%	7.0	%
Tier 1 Capital			12.0			11.5			13.8			12.3		6.0		8.0		8.5
Total capital			15.0			14.2			14.6			13.0		8.0		10.0		10.5
Leverage ratio			11.0			10.0			12.7			10.6		4.0		5.0		N/A
Common equity tier 1 capital		$	285,456		$	285,250		$	327,426		$	304,907
Tier 1 capital			285,456			285,250			327,426			304,907
Total capital			354,757			353,458			346,854			323,411
Risk weighted assets			2,372,001			2,489,631			2,371,384			2,489,373
Quarterly average total assets for leverage ratio			2,589,910			2,842,618			2,585,629			2,864,357

Table 15 - Capital Ratios
(Dollars in thousands)
		Consolidated								Bank								Regulatory Guidelines
		December 31, 2017				December 31, 2016				December 31, 2017				December 31, 2016				Minimum			Well capitalized			Minimum capital plus capital conservation buffer 2019
Risk based ratios:
Common equity tier 1 capital		11.2			%	10.3			%	12.7			%	11.8			%	4.5		%	6.5		%	7.0		%
Tier 1 capital		11.2				10.3				12.7				11.8				6.0			8.0			8.5
Total capital		14.1				13.3				13.6				12.7				8.0			10.0			10.5
Leverage ratio		9.7				9.1				11.1				10.4				4.0			5.0			N/A
Common equity tier 1 capital		$	259,865			$	241,313			$	295,629			$	276,778
Tier 1 capital		259,865				241,313				295,629				276,778
Total capital		329,641				311,954				315,870				298,053
Risk weighted assets		2,330,574				2,343,622				2,330,171				2,344,387
Quarterly average total assets for leverage ratio		2,667,652				2,654,473				2,675,228				2,654,473

As of December 31, 2019, Atlantic Capital continues to exceed minimum capital standards and the Bank remainsremained “well-capitalized” under regulatory guidelines. See “Item 1. Business–Supervision and Regulation–Capital Adequacy” above for additional information.

In July 2013, bank regulatory agencies approved the Basel III capital guidelines, which are aimed at strengthening existing capital requirements for bank holding companies through a combination of higher minimum capital requirements, new capital conservation buffers and more conservative definitions of capital and balance sheet exposure. Atlantic Capital and the Bank became subject to the requirements of Basel III effective January 1, 2015, subject to a transition period for several aspects of the rule.

Under the revised rules, Atlantic Capital’s tier 1 common equity ratio was 11.2% at December 31, 2017, compared to the fully phased-in, well-capitalized minimum of 7.0%, which includes the 2.5% minimum conservation buffer.

Management continues to monitor Basel III developments and remains committed to managing Atlantic Capital’s capital levels in a prudent manner.

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Table 16 - Tier 1 Common Equity Under Basel III
(Dollars in thousands)
		December 31, 2017
Tier 1 capital		$	259,865
Less: restricted core capital		—
Tier 1 common equity		$	259,865
Risk-weighted assets		$	2,330,574
Tier 1 common equity ratio		11.2			%

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Table 16 - Tier 1 Common Equity Under Basel III

(Dollars in thousands)

		December 31, 2019
Tier 1 capital		$	285,456
Less: restricted core capital			—
Tier 1 common equity		$	285,456
Risk-adjusted assets		$	2,372,001
Tier 1 common equity ratio			12.0	%

Off-Balance Sheet Arrangements

Atlantic Capital makes contractual commitments to extend credit and issues standby letters of credit in the ordinary course of its business activities. These commitments are legally binding agreements to lend money to customers at predetermined interest rates for a specified period of time. In addition to commitments to extend credit, Atlantic Capital also issues standby letters of credit which are assurances to a third party that it will not suffer a loss if the customer fails to meet a contractual obligation to the third party. At December 31, 2017,2019, Atlantic Capital had issued commitments to extend credit of approximately $689.8$735.9 million and standby letters of credit of approximately $11.0$8.1 million through various types of commercial lending arrangements.

Based on historical experience, many of the commitments and letters of credit will expire unfunded. Through its various sources of liquidity, Atlantic Capital believes it will be able to fund these obligations as they arise. Atlantic Capital evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on Atlantic Capital’s credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, and commercial and residential real estate.

Contractual Obligations

There have been no significant changes in our contractual obligations during the year ended December 31, 20172019 as compared to Atlantic Capital’s fiscalthe year ended December 31, 2016.2018. Table 17 sets forth certain information about contractual cash obligations as of December 31, 2017.2019.

Table 17 - Contractual Obligations

(in thousands)

		Payments Due by Period at December 31, 2019
											More than 5
		Less than 1 year			1‑3 years			3‑5 years			years			Total
Time deposits		$	38,560		$	5,757		$	44		$	28		$	44,389
Brokered time deposits			2,571			—			—			—			2,571
Deposits without a stated maturity			2,452,086			—			—			—			2,452,086
Operating lease obligations			2,062			4,594			2,025			11,374			20,055
Other borrowings			—			—			—			—			—
Long-term debt			—			—			—			50,000			50,000
Total contractual cash obligations		$	2,495,279		$	10,351		$	2,069		$	61,402		$	2,569,101

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Table 17 - Contractual Obligations
(in thousands)
		Payments Due by Period at December 31, 2017
		Less than 1 year				1-3 years				3-5 years				More than 5 years				Total
Time deposits		$	73,022			$	53,731			$	11,817			$	42			$	138,612
Brokered time deposits		10,324				5,098				—				—				15,422
Deposits without a stated maturity		2,296,631				—				—				—				2,296,631
Operating lease obligations		2,509				3,629				3,743				9,013				18,894
Other borrowings		45,000				—				—				—				45,000
Long-term debt		—				—				—				50,000				50,000
Total contractual cash obligations		$	2,427,486			$	62,458			$	15,560			$	59,055			$	2,564,559

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RISK MANAGEMENT

Effective risk management is critical to Atlantic Capital’s success. The Dodd-Frank Act requires that bank holding companies with total assets in excess of $10 billion establish an enterprise-wide risk committee consisting of members of its board of directors. Although Atlantic Capital does not have total assets in excess of $10 billion, the Audit Committee and the Audit and Risk Committee of the Bank’s board of directors has an Audit and Risk Committee that, among other responsibilities, providesprovide oversight of enterprise-wide risk management activities. The Audit and Risk Committee reviews the Bank’sThese committees review our activities in identifying, measuring, and mitigating existing and emerging risks (including credit, liquidity, interest-rate, compliance, operational, strategic, financial and reputational risks.) The committee monitors management’s execution of risk management practices in accordance with the board of directors’ risk appetite, reviews supervisory examination reports together with management’s response to such examinations and discusses legal matters that may have a material impact on the financial statements or Atlantic Capital’s compliance policies. With guidance from and oversight by the Audit Committee and the Bank’s Audit and Risk Committee, management continually refines and enhances its risk management policies and procedures to maintain effective risk management programs and processes.

Credit Risk

Credit risk is the risk of not collecting payments pursuant to the contractual terms of loans, leases, investment securities and investment securities.derivative instruments. Atlantic Capital’s independent creditloan review function conducts risk reviews and analyses of loans to help assure compliance with credit policies and to monitor asset quality trends.The risk reviews include portfolio analysis by geographic location, industry, collateral type and product. Atlantic Capital strives to identify potential problem loans as early as possible, to record charge-offs or write-downs as appropriate and to maintain adequate allowances for loan losses that are inherent in the loan portfolio.

Market Risk

Market risk reflects the risk of economic loss resulting from adverse changes in market price and interest rates. This risk of loss can be reflected in diminished current market values and/or reduced potential net interest income in future periods. Atlantic Capital’s market risk arises primarily from interest rate risk inherent in Atlantic Capital’s lending and deposit-taking activities. The structure of Atlantic Capital’s loan and deposit portfolios is such that a significant decline in interest rates may adversely impact net market values and net interest income. Atlantic Capital does not maintain a trading account nor is Atlantic Capital subject to currency exchange risk or commodity price risk.

Interest Rate Risk

Interest rate risk results principally from assets and liabilities maturing or repricing at different points in time, from assets and liabilities repricing at the same point in time but in different amounts and from short-term and long-term interest rates changing in different magnitudes. Market interest rates also have an impact on the interest rate and repricing characteristics of loans that are originated as well as the rate characteristics of interest-bearing liabilities.

Atlantic Capital assesses interest rate risk by forecasting net interest income under various interest rate scenarios and comparing those results to forecasted net interest income assuming stable rates. Atlantic Capital’s rate shock simulation, as of December 31, 2017, indicates that, over a 12-month period, net interest income is estimated to increase by 15.64% withWith rates rising, 200-basis points. Thethe estimated increase in net interest income is primarily due to the short-term repricing characteristics of the loan portfolio, combined with a favorable funding mix. Atlantic Capital’s loan book consists mainly of floating rate loans. Atlantic Capital’s core client deposits are likely to allow Atlantic Capital to lag short term interbank rate indices when pricing deposits. Transaction accounts comprise a significant amount of Atlantic Capital’s total deposits.

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Table 18 provides the impact on net interest income resulting from various interest rate shock scenarios as of December 31, 20172019 and 2016.2018.

Table 18 - Net Interest Income Sensitivity Simulation Analysis

		Estimated change in net interest income
Change in interest rate (basis point)		December 31, 2019		December 31, 2018
‑200		(17.56)	%	(19.60)	%
‑100		(9.88)		(7.17)
+100		9.83		6.92
+200		19.24		13.52
+300		28.28		20.06

Table 18 - Net Interest Income Sensitivity Simulation Analysis
		Estimated increase in net interest income
Change in interest rate (basis point)		December 31, 2017					December 31, 2016
-100		(10.68	)	%			(8.59	)	%
+100		7.68					8.20
+200		15.64					16.39
+300		23.30					20.34

Increases in year-end deposits that led to temporarily high cash balances at December 31, 2019 contributed to the increase in asset sensitivity compared to December 31, 2018.

Atlantic Capital also utilizes the market value of equity (MVE) as a tool in measuring and managing interest rate risk. Long-termLong-term interest rate risk exposure is measured using the MVE sensitivity analysis to study the impact of long-term cash flows on capital. As of December 31, 2017, the MVE calculated with a 200-basis point shock up in rates increased by 1.38% from the base case MVE value. Table 19 presents the MVE profile as of December 31, 20172019 and December 31, 2016.2018.

Table 19 - Market Value of Equity Modeling Analysis

		Estimated % change in MVE
Change in interest rate (basis point)		December 31, 2019		December 31, 2018
‑200		(6.13)	%	(9.44)	%
‑100		(3.73)		(3.73)
+100		2.58		1.44
+200		1.71		1.68
+300		0.68		1.41

Table 19 - Market Value of Equity Modeling Analysis
		Estimated % change in MVE
Change in interest rate (basis point)		December 31, 2017					December 31, 2016
-100		(3.09	)	%			0.90		%
+100		1.31					(2.39	)
+200		1.38					(4.52	)
+300		0.59					(5.94	)

Atlantic Capital may utilize interest rate swaps, floors, collars or other derivative financial instruments in an attempt to manage Atlantic Capital’s overall sensitivity to changes in interest rates.

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is included in Part II, Item“Item 7 of this report under “Management’s– Management’s Discussion and Analysis of Financial Condition and Results of Operations–Operations – Risk Management.”Management” of this report.

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ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Atlantic Capital Bancshares, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Atlantic Capital Bancshares, Inc. and its subsidiary (the Company) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2007.

Atlanta, Georgia 

March 16, 2020

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Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

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To the Shareholders and the Board of Directors of Atlantic Capital Bancshares, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Atlantic Capital Bancshares, Inc. and its subsidiary (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP We have served as the Company’s auditor since 2007. Atlanta, Georgia March 15, 2018

Atlantic Capital Bancshares, Inc. and Subsidiary

Consolidated Balance Sheets

		December 31,			December 31,
(in thousands, except share data)		2019			2018
ASSETS
Cash and due from banks		$	45,249		$	42,895
Interest-bearing deposits in banks			421,079			216,040
Other short-term investments			—			9,457
Cash and cash equivalents			466,328			268,392
Investment securities available for sale			282,461			402,486
Investment securities held to maturity (fair value $115,291 and $0 at December 31, 2019 and 2018, respectively)			116,972			—
Other investments			27,556			29,236
Loans held for sale			370			5,889
Loans held for sale - discontinued operations(1)			—			373,030
Loans held for investment			1,873,524			1,728,073
Less: Allowance for loan losses			(18,535)			(17,851)
Loans held for investment, net			1,854,989			1,710,222
Premises held for sale - discontinued operations(1)			—			7,722
Premises and equipment, net			22,536			9,779
Bank owned life insurance			66,421			65,149
Goodwill - discontinued operations(1)			—			4,555
Goodwill - continuing operations(1)			19,925			17,135
Other intangibles, net			3,027			4,388
Other real estate owned			278			874
Other assets			49,516			56,583
Total assets		$	2,910,379		$	2,955,440
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand		$	824,646		$	602,252
Interest-bearing checking			373,727			252,490
Savings			1,219			725
Money market			1,173,218			987,183
Time			44,389			10,623
Brokered deposits			81,847			99,241
Deposits to be assumed - discontinued operations(1)			—			585,429
Total deposits			2,499,046			2,537,943
Securities sold under agreements to repurchase - discontinued operations(1)			—			6,220
Long-term debt			49,873			49,704
Other liabilities			34,965			37,920
Total liabilities			2,583,884			2,631,787
SHAREHOLDERS’ EQUITY
Preferred Stock, no par value - 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2019 and December 31, 2018			—			—
Common stock, no par value - 100,000,000 shares authorized; 21,751,026 and 25,290,419 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively			230,265			291,771
Retained earnings			91,669			42,187
Accumulated other comprehensive income (loss)			4,561			(10,305)
Total shareholders’ equity			326,495			323,653
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,910,379		$	2,955,440

---

(in thousands, except share data)	December 31, 2017				December 31, 2016
ASSETS
Cash and due from banks	$	38,086			$	36,790
Interest-bearing deposits in banks	281,247				118,039
Other short-term investments	10,681				10,896
Cash and cash equivalents	330,014				165,725
Securities available-for-sale	449,117				347,705
Other investments	32,174				23,806
Loans held for sale	1,487				35,219
Loans	1,933,839				1,981,330
Less: Allowance for loan losses	(19,344		)		(20,595		)
Loans, net	1,914,495				1,960,735
Branch premises held for sale	—				2,995
Premises and equipment, net	12,054				11,958
Bank owned life insurance	63,667				62,160
Goodwill and intangible assets, net	27,633				29,567
Other real estate owned	1,215				1,872
Other assets	59,565				85,801
Total assets	$	2,891,421			$	2,727,543

(1)

Assets and liabilities related to the sale of Tennessee and northwest Georgia banking operations were classified as held for sale as of December 31, 2018.

See accompanying notes to consolidated financial statements.

67

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	732,442			$	643,471
Interest-bearing checking	306,331				264,062
Savings	26,573				27,932
Money market	1,117,891				912,493
Time	138,612				157,810
Brokered deposits	128,816				200,223
Total deposits	2,450,665				2,205,991
Deposits to be assumed in branch sale	—				31,589
Federal Home Loan Bank borrowings	45,000				110,000
Long-term debt	49,535				49,366
Other liabilities	37,796				26,939
Total liabilities	2,582,996				2,423,885
SHAREHOLDERS’ EQUITY
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2017 and 2016	—				—
Common stock, no par value; 100,000,000 shares authorized; 25,712,909 and 25,093,135 shares issued and outstanding as of December 31, 2017 and 2016, respectively	299,474				292,747
Retained earnings	12,810				16,536
Accumulated other comprehensive (loss) income	(3,859		)		(5,625		)
Total shareholders’ equity	308,425				303,658
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,891,421			$	2,727,543

Table of Contents

Atlantic Capital Bancshares, Inc. and Subsidiary

Consolidated Statements of Operations

		Year Ended December 31,
(in thousands, except per share data)		2019			2018			2017
INTEREST INCOME
Loans, including fees		$	93,022		$	80,110		$	64,436
Investment securities			9,559			10,912			9,181
Interest and dividends on other interest-earning assets			3,266			3,738			2,201
Total interest income			105,847			94,760			75,818
INTEREST EXPENSE
Interest on deposits			20,392			12,506			7,934
Interest on Federal Home Loan Bank advances			817			2,399			1,536
Interest on federal funds purchased and securities sold under agreements to repurchase			479			304			222
Interest on long-term debt			3,295			3,304			3,294
Total interest expense			24,983			18,513			12,986
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES			80,864			76,247			62,832
Provision for loan losses			2,712			1,946			3,218
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			78,152			74,301			59,614
NONINTEREST INCOME
Service charges			3,587			3,215			2,734
Gain (loss) on sales of securities			907			(1,855)			(63)
Gain (loss) on sales of other assets			127			(154)			742
Trust income			—			1,025			1,814
Derivatives (loss) income			(322)			308			156
Bank owned life insurance			1,546			1,506			1,530
SBA lending activities			4,178			3,606			4,129
Gain on sale of trust business			—			1,681			—
Other noninterest income			702			715			1,137
Total noninterest income			10,725			10,047			12,179
NONINTEREST EXPENSE
Salaries and employee benefits			34,537			31,766			33,130
Occupancy			2,888			2,972			2,516
Equipment and software			3,103			2,817			2,341
Professional services			2,908			3,511			4,591
Postage, printing and supplies			137			166			244
Communications and data processing			3,199			2,676			2,625
Marketing and business development			845			710			798
FDIC premiums			217			562			697
Merger and conversion costs			—			—			304
Other noninterest expense			5,274			4,811			5,588
Total noninterest expense			53,108			49,991			52,834
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES			35,769			34,357			18,959
Provision for income taxes			7,611			6,307			23,715
NET INCOME (LOSS) FROM CONTINUING OPERATIONS			28,158			28,050			(4,756)
DISCONTINUED OPERATIONS
Income from discontinued operations		$	28,690		$	643		$	1,689
Provision for income taxes			6,993			161			659
Net income from discontinued operations			21,697			482			1,030
NET INCOME (LOSS)		$	49,855		$	28,532		$	(3,726)
Net income (loss) per common share ‑ basic
Net income (loss) per common share - continuing operations		$	1.21		$	1.08		$	(0.19)
Net income per common share - discontinued operations			0.93			0.02			0.04
Net income (loss) per Common Share ‑ basic		$	2.14		$	1.10		$	(0.15)
Net income (loss) per common share ‑ diluted
Net income (loss) per common share - continuing operations		$	1.20		$	1.07		$	(0.19)
Net income per common share - discontinued operations			0.92			0.02			0.04
Net income (loss) per common share ‑ diluted		$	2.12		$	1.09		$	(0.15)

---

See accompanying notes to consolidated financial statements.

68

		Year Ended December 31,
(in thousands, except per share data)		2017				2016				2015
INTEREST INCOME
Loans, including fees		$	84,889			$	80,781			$	44,562
Investment securities available-for-sale		9,181				5,698				3,301
Interest and dividends on other interest-earning assets		2,201				1,738				1,104
Total interest income		96,271				88,217				48,967
INTEREST EXPENSE
Interest on deposits		10,077				7,399				3,618
Interest on Federal Home Loan Bank advances		1,536				558				290
Interest on federal funds purchased and securities sold under agreements to repurchase		222				229				79
Interest on long-term debt		3,294				3,285				858
Other		—				38				78
Total interest expense		15,129				11,509				4,923
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES		81,142				76,708				44,044
Provision for loan losses		3,218				3,816				8,035
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		77,924				72,892				36,009
NONINTEREST INCOME
Service charges		5,076				5,487				2,613
Gain (loss) on sales of securities		(63		)		44				10
Gain on sale of other assets		742				388				189
Mortgage income		1,255				1,917				163
Trust income		1,814				1,411				192
Derivatives income		156				578				304
Bank owned life insurance		1,530				1,610				2,159
SBA lending activities		4,129				3,642				2,910
TriNet lending activities		87				1,501				—
Gains on sale of branches		302				3,885				—
Other noninterest income		1,161				1,269				859
Total noninterest income		16,189				21,732				9,399
NONINTEREST EXPENSE
Salaries and employee benefits		45,375				42,303				24,098
Occupancy		4,589				4,604				2,170
Equipment and software		3,449				2,966				1,295
Professional services		4,752				2,918				1,610
Postage, printing and supplies		340				462				178
Communications and data processing		4,149				3,291				1,541
Marketing and business development		946				1,100				410
FDIC premiums		966				1,568				789
Merger and conversion costs		304				2,742				9,154
Amortization of intangibles		1,653				2,445				526
Foreclosed property/problem asset expense		124				864				70
Other noninterest expense		6,818				8,017				4,092
Total noninterest expense		73,465				73,280				45,933
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		20,648				21,344				(525		)
Provision for income taxes		24,374				7,949				794
NET (LOSS) INCOME		$	(3,726	)		$	13,395			$	(1,319	)
NET (LOSS) INCOME PER SHARE:
Net (loss) income per share – basic		$	(0.15	)		$	0.54			$	(0.09	)
Net (loss) income per share – diluted		$	(0.15	)		$	0.53			$	(0.09	)

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Atlantic Capital Bancshares, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Loss)

		Year Ended
		December 31,
(in thousands)		2019			2018			2017
Net income		$	49,855		$	28,532		$	(3,726)
Other comprehensive income
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the period, net of tax of $3,974, ($2,018), and $1,491, respectively			11,914			(6,052)			2,385
Reclassification adjustment for losses (gains) included in net income net of tax of ($227),  $464, and $70, respectively			(680)			1,391			111
Unrealized gains (losses) on available-for-sale securities, net of tax			11,234			(4,661)			2,496
Cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges, net of tax of $1,211, ($313), and ($457), respectively			3,632			(941)			(730)
Changes from cash flow hedges			3,632			(941)			(730)
Other comprehensive income (loss), net of tax			14,866			(5,602)			1,766
Comprehensive income		$	64,721		$	22,930		$	(1,960)

See accompanying notes to consolidated financial statements.

69

	Year Ended
	December 31,
(in thousands)	2017				2016				2015
Net (loss) income	$	(3,726	)		$	13,395			$	(1,319	)
Other comprehensive income (loss)
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the period, net of tax of $1,491, ($2,403) and ($1,578), respectively	2,385				(3,824		)		(2,548		)
Reclassification adjustment for losses (gains) included in net income net of tax of $70, ($17) and ($4), respectively	111				(27		)		(6		)
Unrealized gains (losses) on available-for-sale securities, net of tax	2,496				(3,851		)		(2,554		)
Derivatives:
Net unrealized derivative (losses) gains, net of tax of ($457), ($160) and $266, respectively	(730		)		(258		)		429
Changes from derivatives	(730		)		(258		)		429
Other comprehensive income (loss), net of tax	1,766				(4,109		)		(2,125		)
Comprehensive (loss) income	$	(1,960	)		$	9,286			$	(3,444	)

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Atlantic Capital Bancshares, Inc. and Subsidiary

Consolidated Statements of Shareholders’ Equity

										Accumulated
										Other
		Common Stock					Retained			Comprehensive
(in thousands, except share data)		Shares		Amount			Earnings			Income (Loss)			Total
Balance - December 31, 2016		25,093,135		$	292,747		$	16,536		$	(5,625)		$	303,658
Comprehensive income:
Net loss		—			—			(3,726)			—			(3,726)
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—			—			2,496			2,496
Change in unrealized gains (losses) on derivatives		—			—			—			(730)			(730)
Total comprehensive income (loss)														(1,960)
Net issuance of restricted stock		71,974			—			—			—			—
Issuance of common stock for option exercises		486,001			3,567			—			—			3,567
Issuance of common stock for long-term incentive plan		61,799			1,209			—			—			1,209
Restricted stock activity		—			810			—			—			810
Stock-based compensation		—			1,141			—			—			1,141
Balance - December 31, 2017		25,712,909		$	299,474		$	12,810		$	(3,859)		$	308,425
Comprehensive (loss) income:
Net income		—			—			28,532			—			28,532
Reclassification of tax effects from AOCI		—			—			844			(844)			—
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—			—			(4,661)			(4,661)
Change in unrealized gains (losses) on derivatives		—			—			—			(941)			(941)
Total comprehensive (loss) income														22,930
Change in accounting principle - revenue recognition		—			—			1			—			1
Net issuance of restricted stock		68,730			—			—			—			—
Issuance of common stock for option exercises		292,039			4,097			—			—			4,097
Issuance of common stock for long-term incentive plan		38,841			687			—			—			687
Restricted stock activity		—			1,158			—			—			1,158
Stock-based compensation		—			242			—			—			242
Performance share compensation		—			290			—			—			290
Stock repurchases		(822,100)			(14,177)			—			—			(14,177)
Balance - December 31, 2018		25,290,419		$	291,771		$	42,187		$	(10,305)		$	323,653
Comprehensive (loss) income:
Net income		—			—			49,855			—			49,855
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—			—			11,234			11,234
Change in unrealized gains (losses) on derivatives		—			—			—			3,632			3,632
Total comprehensive (loss) income														64,721
Change in accounting principle - leases		—			—			(373)			—			(373)
Net issuance of restricted stock		49,702			—			—			—			—
Issuance of common stock for option exercises		70,129			1,153			—			—			1,153
Issuance of common stock for long-term incentive plan		35,678			655			—			—			655
Restricted stock activity		—			908			—			—			908
Stock-based compensation		—			169			—			—			169
Performance share compensation		—			422			—			—			422
Stock repurchases		(3,694,902)			(64,813)			—			—			(64,813)
Balance - December 31, 2019		21,751,026		$	230,265		$	91,669		$	4,561		$	326,495

See accompanying notes to consolidated financial statements.

70

		Common Stock
(in thousands, except share data)		Shares			Amount				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total
Balance - December 31, 2014		13,497,118			$	136,335			$	4,460			$	609			$	(475	)		$	140,929
Comprehensive (loss) income:
Net loss		—			—				(1,319		)		—				—				(1,319		)
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—				—				(2,554		)		—				(2,554		)
Change in unrealized gains (losses) on cash flow hedges		—			—				—				429				—				429
Total comprehensive (loss) income																					(3,444		)
Acquisition of treasury stock		—			—				—				—				(707		)		(707		)
Issuance of restricted stock		151,891			—				—				—				—				—
Cancellation of treasury shares		(121,248	)		(1,182		)		—				—				1,182				—
Issuance of common stock for acquisition of First Security Group		8,790,193			121,305				—				—				—				121,305
Issuance of common stock in private placement		1,984,127			24,004				—				—				—				24,004
Issuance of common stock for option exercises		20,707			39				—				—				—				39
Issuance of common stock for long-term incentive plan		102,758			1,285				—				—				—				1,285
Acquisition consideration for acquired awards		—			2,705				—				—				—				2,705
Restricted stock activity		—			702				—				—				—				702
Stock-based compensation		—			1,174				—				—				—				1,174
Balance - December 31, 2015		24,425,546			$	286,367			$	3,141			$	(1,516	)		$	—			$	287,992
Comprehensive income:
Net income		—			—				13,395				—				—				13,395
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—				—				(3,851		)		—				(3,851		)
Change in unrealized gains (losses) on cash flow hedges		—			—				—				(258		)		—				(258		)
Total comprehensive income (loss)																					9,286
Issuance of restricted stock		89,165			—				—				—				—				—
Issuance of common stock for option exercises		512,275			3,947				—				—				—				3,947
Issuance of common stock for long-term incentive plan		66,149			884				—				—				—				884
Restricted stock activity		—			612				—				—				—				612
Stock-based compensation		—			937				—				—				—				937
Balance - December 31, 2016		25,093,135			$	292,747			$	16,536			$	(5,625	)		$	—			$	303,658
Comprehensive (loss) income:
Net loss		—			—				(3,726		)		—				—				(3,726		)
Change in unrealized gains (losses) on investment securities available-for-sale, net		—			—				—				2,496				—				2,496
Change in unrealized gains (losses) on cash flow hedges		—			—				—				(730		)		—				(730		)
Total comprehensive (loss) income																					(1,960		)
Issuance of restricted stock		71,974			—				—				—				—				—
Issuance of common stock for option exercises		486,001			3,567				—				—				—				3,567
Issuance of common stock for long-term incentive plan		61,799			1,209				—				—				—				1,209
Restricted stock activity		—			810				—				—				—				810
Stock-based compensation		—			1,141				—				—				—				1,141
Balance - December 31, 2017		25,712,909			$	299,474			$	12,810			$	(3,859	)		$	—			$	308,425

Table of Contents

Atlantic Capital Bancshares, Inc. and Subsidiary

Consolidated Statements of Cash Flows

		Year Ended
		December 31,
(in thousands)		2019			2018			2017
OPERATING ACTIVITIES
Net income (loss) from continuing operations		$	28,158		$	28,050		$	(4,756)
Net income from discontinued operations, net of tax			21,697			482			1,030
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses			2,712			1,946			3,218
Depreciation, amortization, and accretion			3,361			4,671			5,287
Amortization of operating lease right-of-use assets			2,004			—			—
Amortization of restricted stock and performance share compensation			1,330			1,448			810
Stock option compensation			169			242			1,141
Deferred income tax expense (benefit)			10,381			2,226			24,241
(Gain) loss on sales of available-for-sale securities			(907)			1,855			63
(Gain) loss on disposition of premises and equipment, net			27			214			359
Net write downs and (gains) losses on sales of other real estate owned			(154)			222			(288)
Small Business Investment Company (SBIC) impairment			26			228			—
Gain on sale of tax credit			—			—			(426)
Net increase in cash value of bank owned life insurance			(1,474)			(1,482)			(1,507)
(Gain) on bank owned life insurance			(46)			—			—
Net (gains) on sale of branches			(34,475)			—			(302)
Net (gain) on sale of trust business			—			(1,681)			—
Origination of servicing assets			(1,226)			(823)			(1,022)
Proceeds from sales of SBA loans			68,748			56,620			47,135
Net (gains) on sale of SBA loans			(3,594)			(3,089)			(3,045)
Changes in operating assets and liabilities -
Net change in loans held for sale			5,519			(776)			9,374
Net change in operating lease right-of-use assets			(3,883)			—			—
Net (increase) decrease in other assets			(2,385)			6,511			(8,217)
Net decrease in accrued expenses and other liabilities			(13,410)			720			12,089
Net cash provided by operating activities			82,578			97,584			85,184
INVESTING ACTIVITIES
Activity in securities available-for-sale:
Prepayments			40,342			50,380			47,393
Maturities and calls			5,430			365			5,894
Sales			116,963			62,087			19,238
Purchases			(28,282)			(77,036)			(173,391)
Activity in securities held to maturity:
Purchases			(117,043)			—			—
Net change in loans held for investment			(212,730)			(270,097)			(52,266)
Net change in assets held for sale - discontinued operations			(11,789)			42,412			50,774
(Purchases) proceeds of Federal Home Loan Bank stock, net			(58)			1,766			2,679
(Purchases) proceeds of Federal Reserve Bank stock, net			(92)			(114)			(102)
Proceeds from bank owned life insurance benefits			248			—			—
Proceeds from sales of other real estate owned			847			496			1,403
Net cash received (paid) for branch divestiture			(166,755)			—			5,379
Proceeds from sale of premises and equipment			—			2			—
(Purchases) of premises and equipment, net			(1,155)			(7,884)			(2,112)
Net cash (used in) investing activities			(374,074)			(197,623)			(95,111)
FINANCING ACTIVITIES
Net change in deposits			546,532			87,379			289,897
Net change in liabilities to be assumed - discontinued operations			6,560			6,119			(54,248)
Proceeds from Federal Home Loan Bank advances			738,000			1,435,100			1,734,000
Repayments of Federal Home Loan Bank advances			(738,000)			(1,480,100)			(1,799,000)
Proceeds from exercise of stock options			1,153			4,096			3,567
Repurchase of common stock			(64,813)			(14,177)			—
Net cash (provided by) financing activities			489,432			38,417			174,216
NET CHANGE IN CASH AND CASH EQUIVALENTS			197,936			(61,622)			164,289
CASH AND CASH EQUIVALENTS – beginning of period			268,392			330,014			165,725
CASH AND CASH EQUIVALENTS – end of period		$	466,328		$	268,392		$	330,014
SUPPLEMENTAL SCHEDULE OF CASH FLOWS
Interest paid		$	26,960		$	22,562		$	15,212
Income taxes paid			2,190			270			898

See accompanying notes to consolidated financial statements.

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	Year Ended
	December 31,
(in thousands)	2017				2016				2015
OPERATING ACTIVITIES
Net income (loss)	$	(3,726	)		$	13,395			$	(1,319	)
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses	3,218				3,816				8,035
Depreciation, amortization, and accretion	5,287				6,017				2,390
Amortization of restricted stock compensation	810				612				659
Stock option compensation	1,141				937				1,175
Deferred income tax expense (benefit)	24,242				3,322				(680		)
(Gain) loss on sales of securities	63				(44		)		(10		)
(Gain) loss on sales and disposals of premises and equipment, net	359				(52		)		13
Net write downs and losses (gains) on sales of other real estate owned	(288		)		417				(189		)
Gain on sale of tax credit	(426		)		—				—
Net increase in cash value of bank owned life insurance	(1,507		)		(1,561		)		(1,029		)
Gain on bank owned life insurance	—				(27		)		(1,112		)
Net gains on sale of branches	(302		)		(3,885		)		—
Origination of servicing rights	(1,022		)		(1,483		)		(1,301		)
Proceeds from sales of SBA loans	47,135				49,507				41,857
Net gains on sale of SBA loans	(3,045		)		(2,138		)		(1,732		)
Proceeds from sales of TriNet loans	—				133,183				60,305
Net gains on sale of TriNet loans	—				(1,095		)		—
Changes in operating assets and liabilities -
Net change in loans held for sale	9,374				(71,425		)		(75,848		)
Net (increase) decrease in other assets	(8,184		)		(7,187		)		(3,074		)
Net increase (decrease) in accrued expenses and other liabilities	12,089				(8,970		)		5,081
Net cash provided by operating activities	85,218				113,339				33,221
INVESTING ACTIVITIES
Activity in securities:
Prepayments	47,393				43,063				24,025
Maturities and calls	5,894				27,052				9,734
Sales	19,238				65,103				23,088
Purchases	(173,391		)		(146,741		)		(72,085		)
Net change in loans held for investment	(1,526		)		(275,721		)		(25,293		)
Net cash paid for acquisitions	—				—				(20,377		)
(Purchases) proceeds of Federal Home Loan Bank stock, net	2,679				(6,019		)		5,966
(Purchases) proceeds of Federal Reserve Bank stock, net	(102		)		(3,075		)		(4,061		)
Proceeds from bank owned life insurance benefits	—				36				1,886
Proceeds from sales of other real estate	1,403				2,002				2,060
Net cash received (paid) for branch divestitures	5,379				(140,295		)		—
Proceeds from sale of premises and equipment	—				5,649				837
(Purchases) of premises and equipment, net	(2,112		)		(1,109		)		(646		)
Net cash used in investing activities	(95,145		)		(430,055		)		(54,866		)

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	Year Ended
	December 31,
(in thousands)	2017				2016				2015
FINANCING ACTIVITIES
Net change in deposits	235,649				165,609				186,351
Proceeds from Federal Home Loan Bank advances	1,734,000				1,490,000				638,000
Repayments of Federal Home Loan Bank advances	(1,799,000		)		(1,380,000		)		(767,407		)
Issuance of subordinated debentures	—				—				50,000
Proceeds from exercise of stock options	3,567				3,947				39
Net proceeds from issuance of common stock, net of offering costs	—				—				24,004
Acquisition of treasury stock	—				—				(707		)
Net cash provided by financing activities	174,216				279,556				130,280
NET CHANGE IN CASH AND CASH EQUIVALENTS	164,289				(37,160		)		108,635
CASH AND CASH EQUIVALENTS – beginning of period	165,725				202,885				94,250
CASH AND CASH EQUIVALENTS – end of period	$	330,014			$	165,725			$	202,885
	Year Ended
	December 31,
	2017				2016				2015
SUPPLEMENTAL SCHEDULE OF CASH FLOWS
Cash paid during the year for:
Interest	$	15,212			$	11,598			$	3,532
Income taxes	898				3,974				5,927
Assets acquired in business combinations	—				—				1,244,541
Liabilities assumed in business combinations	—				—				1,076,138
Issuance of common stock in acquisitions	—				—				121,305

ATLANTIC CAPITAL BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Basis of Presentation

The accounting and financial reporting policies of Atlantic Capital Bancshares, Inc. (“Atlantic Capital”) and its subsidiary conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking industry practices. All material intercompany balances and transactions have been eliminated. On October 31, 2015, Atlantic Capital completed its acquisition of First Security Group, Inc. and its subsidiary FSGBank, N.A. (together, “First Security”). In connection with the acquisition, Atlantic Capital’s subsidiary Atlantic Capital Bank, a Georgia chartered commercial bank merged with and into FSGBank, N.A, which subsequently changed its name to Atlantic Capital Bank, N.A. The consolidated financial statements reflect the results of operations of Atlantic Capital and Atlantic Capital Bank (the “Bank”) for the full twelve months of 2015, and include the results of operations of First Security subsequent to the acquisition. In connection with the acquisition, Atlantic Capital issued approximately 8,790,193 shares of common stock as partial consideration to former shareholders of First Security, with the remaining consideration consisting of approximately $47.1 million in cash. See Note 3 to the Audited Financial Statements for additional information.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Certain prior period amounts have been reclassified to conform to the current year presentation.

As discussed in Note 3 - Divestitures and Discontinued Operations, prior periods presented in the consolidated statements of operations as well as the related note disclosures covering income and expense amounts have been retrospectively adjusted for the impact of discontinued operations for comparative purposes. The consolidated balance sheets and related note disclosures for prior periods also reflect the reclassification of certain assets and liabilities related to discontinued operations to held for sale.

Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, interest-bearing deposits in other banks, commercial paper, federal funds sold and reverse repurchase agreements. Generally, cash and cash equivalents have maturities of three months or less and, accordingly, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value. Reverse repurchase agreements are not subject to netting and offset with repurchase agreements.

Investment Securities Available-For-Sale

Investment securities designated as available-for-sale are stated at fair value. Investment securities available-for-sale include securities that may be sold in response to changes in interest rates, changes in prepayment risk, liquidity needs, or for other purposes. Held-to-maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums or discounts. Interest income and dividends on securities are recognized in interest income on an accrual basis. Premiums and discounts on debt securities are amortized or accreted over the life of the related security as an adjustment of the yield. Realized gains and losses are included in earnings and the cost of securities sold is derived using the specific identification method. Unrealized gains and losses, net of the related tax effect, on securities available-for-sale are excluded from earnings and are reported as a separate component of shareholders’ equity.

Available-for-sale securities

Securities are reviewed for other-than-temporary impairment (“OTTI”). A security is considered to be impaired if the fair value is less than its amortized cost basis at the measurement date. The Company determines whether a decline in fair value below the amortized cost basis is other-than-temporary. The Company determines whether it has the intent to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before the recovery of its amortized cost basis. If either of these conditions is met, the Company must recognize the entire impairment in the Consolidated Statements of Operations and write the debt security down to fair value. For debt securities which the Company does not expect to recover the entire amortized cost basis of the security and which do not meet either condition, an OTTI loss is considered to have occurred. The credit loss portion of impairment is recorded as a realized loss in the Consolidated Statements of Operations and the temporary impairment related to all other factors is recorded in accumulated other comprehensive income, a component of shareholders’ equity.

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Federal Home Loan Bank Stock/Federal Reserve Bank Stock

The Company holds stock in the Federal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank (“FRB”). The Company accounts for the stock based on the industry guidance in Accounting Standard Codification 325-942,325‑942, Investments ‑- Other,which requires the investment be carried at cost and be evaluated for impairment based on the ultimate recoverability of the par value.

The Company evaluated its holdings in FHLB and FRB stock at December 31, 20172019 and 2016,2018, and believes its holdings in the stock are ultimately recoverable at par.

Acquisition Activities

The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are measured and recorded at fair value at the date of acquisition, including identifiable intangible assets. If the consideration paid exceeds the fair value

Discontinued Operations

Portions of the net assets acquired, goodwill is recognized at the acquisition date. Fair values are subject to refinement over the measurement period, not to exceed one year after the closing dateCompany that were disposed of an acquisitionby sale, and that represented a strategic shift that had a major effect on operations and financial results, were accounted for as discontinued operations. Additional information relative to closing date fair values becomes available.

The determination of the fair value of loans acquired takes into account credit quality deteriorationon discontinued operations can be found in Note 3 - Divestitures and probability of loss; therefore, the related allowance for loan losses is not carried forward.

All identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity).

Discontinued Operations.

Loans

Loans Held for Investment

Loans are stated at the amount of unpaid principal, net of the allowance for loan losses, deferred income (net of deferred costs) and other unearned income. Interest income on loans is recognized using the effective yield method on the daily balances of the principal amount outstanding. Loan origination fees, net of direct loan origination costs, commitment fees, premiums and discounts are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable.

Loans are considered to be past due when payment is not received from the borrower by the contractually specified due date. Interest accruals on loans are discontinued when interest or principal has been in default 90 days or more, unless the loan is secured by collateral that is sufficient to repay the debt in full and the loan is in the process of collection. When a loan is placed on nonaccrual status, interest accrued and not paid in the current accounting period is reversed against current period income. Interest accrued and not paid in prior periods, if significant, is reversed against the allowance for loan losses.

Income on such loans is subsequently recognized on a cash basis as long as the future collection of principal is deemed probable or after all principal payments are received. Commercial loans are placed back on accrual status after sustained performance of timely and current principal and interest payments and it is probable that all remaining amounts due, both principal and interest, are fully collectible according to the terms of the loan agreement. Residential loans and consumer loans are generally placed back on accrual status when they are no longer past due.

A loan is considered to be impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. A specific allowance is established for individually evaluated impaired loans as needed. Reserves on impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the observable market price, or the fair value of the underlying collateral of the loan if the loan is collateral dependent.

The Company evaluates loans in accordance with the provisions within the Financial Accounting Standards Board (“FASB”) ASC 310‑40, Troubled Debt Restructurings by Creditors. Troubled debt restructurings (“TDRs”) are loans in which the Company has modified the terms and granted an economic concession to a borrower who is experiencing financial difficulties. These modifications may include interest rate reductions, term extensions and other concessions intended to minimize losses. Typically, loans accruing interest at the time of the modification remain on accrual status and are subject to the Company’s charge-off and nonaccrual policies. Loans on nonaccrual prior to modification remain on nonaccrual. TDRs may be returned to accrual status as outlined above. Interest income recognition on impaired loans is dependent upon nonaccrual status and loan type as discussed above.

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During the year ended December 31, 2015, the Company acquired loans through a business combination. Certain loans showed evidence of credit deterioration (see discussion below). A majority of the acquired loans did not show signs of credit deterioration and were accounted for under ASC 310-20.310‑20. As such, the difference between the fair value and the unpaid principal balance of loans at acquisition is accreted into interest income over the life of the loan.

In the third quarter of 2012, the Bank entered into a sub-participation agreement with a commercial bank (the participating bank), whereby pursuant to the sub-participation agreement, the Bank purchases participation interests in single-family mortgage loans from the participating bank that has purchased ownership interests from unaffiliated mortgage originators that seek funding to facilitate the origination of single-family residential mortgage loans for sale in the secondary market. The originators underwrite and close mortgage loans consistent with established standards of approved investors and, once the sales close, the originators and the participating bank deliver the loans to the investors. Typically, the participating bank purchases up to an aggregate of a 99% ownership interest with the originators retaining the remaining 1% interest. The Bank typically purchases a 40% or less interest in the mortgage warehouse loans from the participating bank. These loans are held for short periods, usually less than 30 days. These mortgage warehouse loans are classified as held for investment as of December 31, 2017,2019, and 2016.

2018.

Loans Held for Sale

The Company maintainshad loans held-for-sale related to branch divestitures and also, at times, will have loans held for sale in connection with two distinct departments: the mortgage department and the TriNet division. The Company’s mortgage department primarily originates long-term loans held-for-sale and uses various correspondent relationships to sell the loans on the secondary market.SBA department. Loans held-for-sale are carried at lower of cost or market on an individual loan basis. Held-for-investment loans that have been transferred to held-for-sale are carried at lower of cost or fair value. Fair value is determined from observable current market prices. The credit component of any charge-off upon transfer to held-for-sale is reflected in the allowance for loan losses. The mortgage department also originates certain mortgage loans to be retained, which are classified as loans held-for-investment. From time to time, certain of these loans may be transferred to loans held for sale, marketed and sold in order to manage the Company’s interest rate risk position and concentration limits.

Prior to the division closing in 2016, the Company’s TriNet division originated construction loans for pre-leased “build to suit” projects and provided interim and long-term financing to professional developers and private investors of commercial real estate with or subject to long-term leases to tenants that are investment grade or have investment grade attributes. The Company classifies all TriNet originations as held-for-investment. From time to time, the Company may evaluate a portion of the originated loans to sell in order to manage the Company’s overall interest rate risk and asset-liability sensitivity. The Company transfers the loans to held-for-sale once specific loans are identified and the decision to sell the loan has been made. The loans are carried at lower of cost or market.

Purchased Loans With Evidence of Credit Deterioration

During the year ended December 31, 2015, Atlantic Capital purchased loans through a business combination transaction. Some of those purchased loans showed evidence of credit deterioration since origination and are accounted for pursuant to ASC 310-30,310‑30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. These purchased credit impaired (“PCI”) loans are recorded at their estimated fair value at date of purchase.

PCI loans are aggregated into pools of loans based on common risk characteristics such as the type of loan, payment status, or collateral type. Atlantic Capital estimates the amount and timing of expected cash flows for each purchased loan pool and the expected cash flows in excess of the fair value of the loans are recorded as interest income over the remaining life of the pool (accretable yield). The excess of the pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

At least quarterly and over the life of the loan pool, expected cash flows continue to be estimated. Increases in estimated cash flows are recognized on a prospective basis as interest income over the remaining life of the loan. Decreases in expected cash flows result in the recognition of a provision for loan loss.

As of December 31, 2018, PCI loans were reclassified to held for sale and subsequently sold in the Branch Sale.

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Allowance for Loan Losses

The allowance for loan losses is established through the provision for loan losses charged against earnings and is maintained at a level that management considers adequate to absorb losses inherent in the portfolio. The allowance for loan losses framework has two basic elements: specific allowances for loans individually evaluated for impairment and a general allowance for pools of loans with similar characteristics not individually evaluated. This analysis includes the evaluation of impaired loans as prescribed under the Receivables Topic of the FASB ASC, as well as pooled loans as prescribed under the Contingencies Topic of the FASB ASC. Management’s evaluation of the allowance considers changes in the nature and volume of the portfolio, historic charge-offs, adequacy of collateral, delinquency trends, loan concentrations, economic conditions, changes in policies and procedures, changes in lending management, changes in loan review system and other factors considered necessary to maintain the allowance at an adequate level. Loans are charged against the allowance for loan losses when management believes that the collection of the principal is unlikely and the loss is quantifiable. Subsequent recoveries, if any, are credited to the allowance in the period received.

The allowance for loans losses for acquired performing loans is evaluated at each reporting date subsequent to acquisition and the allowance is determined using a methodology similar to that described above.

Management believes that the allowance for loan losses is appropriate and adequate. While management uses available information to estimate the inherent losses at each balance sheet date, future changes to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for losses on loans.

Premises and Equipment, Net

Land is carried at cost. Other premises and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. In general, estimated lives for buildings and improvements are up to 40 years, furniture and equipment useful lives range from one to ten years, and the lives of leasehold improvements range from ten to eleven years. Expenditures for major improvements of the Company’s premises and equipment are capitalized and depreciated over their estimated useful lives. Major additions and improvements are charged to the asset accounts while maintenance and repairs that do not improve or extend the useful lives of the assets are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in the results of operations for the period.

The Company determines if a lease is present at the inception of an agreement. Operating leases are capitalized at commencement and are discounted using the Company’s FHLB borrowing rate for a similar term borrowing unless the lease defines an implicit rate within the contract. Leases with original terms of less than 12 months are not capitalized.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and operating lease liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. No significant judgments or assumptions were involved in developing the estimated operating lease liabilities as the Company’s operating lease liabilities largely represent future rental expenses associated with operating leases and the borrowing rates are based on publicly available interest rates.

The lease term includes options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis and adjustments are made to the right-of-use asset and lease liability if the Company is reasonably certain that an option will be exercised and will be expensed on a straight-line basis. Right-of-use assets and lease liabilities arising from operating leases are included within premises and equipment, net and other liabilities, respectively, on the Consolidated Balance Sheets. See Note 7 – Premises and Equipment for additional information on leases.

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Goodwill and Other Intangible Assets

Goodwill is an asset representing the future economic benefits from other assets acquired that are not individually identified and separately recognized. Goodwill is measured as the excess of the consideration transferred, net of the fair value of identifiable assets acquired and liabilities assumed at the acquisition date. Goodwill is not amortized, but instead is tested for impairment annually or more frequently if events or circumstances exist that indicate a goodwill impairment test should be performed.

Other intangible assets, which are initially recorded at fair value, consist of core deposit intangible assets resulting from Atlantic Capital’s acquisition of First Security. Core deposit intangible assets are amortized on a sum-of-all-months basis over their estimated useful lives. The Company evaluates its other intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable.

Other Real Estate Owned

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the lower of the loan balance or fair value at the date of foreclosure, less estimated costs to sell. Any difference between the initial cost basis and the carrying value of the loan is charged to the allowance for loan losses at the date of the transfer to other real estate owned. Subsequent to foreclosure, any further declines in value of the assets are recorded as adjustments to the asset’s carrying amount and reported in noninterest expense, along with costs related to holding the properties, in the Consolidated Statements of Operations.

Servicing Rights

The Company sells certain loans to third parties. All such transfers are accounted for as sales by the Company. Gains or losses upon sale are recorded in noninterest income. The Company records a separate servicing asset for the loans when the servicing is retained and the expected servicing income is more than adequate compensation for providing the servicing. This asset represents the right or obligation to service the loans and receive a fee in compensation. Servicing assets are initially recorded at their fair value as a component of the sale proceeds. The fair value of the servicing assets is based on an analysis of discounted cash flows that incorporates estimates of (1) market servicing costs, (2) market-based prepayment rates, and (3) market profit margins.

The Company has elected to subsequently measure the servicing assets under the amortization method and measured for impairment on a quarterly basis. The rate of prepayment of loans serviced is the most significant estimate involved in the measurement process. Estimates of prepayment rates are based on market participant’s expectations of future prepayment rates, reflecting the Company’s historical rate of loan repayments if consistent with market participant assumptions, industry trends, and other considerations. Actual prepayment rates may differ from those projected by management due to changes in a variety of economic factors, including prevailing interest rates and the availability of alternative financing sources to borrowers. If actual prepayments of the loans being serviced were to occur more quickly than projected, an impairment could exist, and the carrying value of servicing assets may require a write-down through a charge to earnings in the current period. Accordingly, the servicing assets actually realized, could differ from the amounts initially recorded.

Bank Owned Life Insurance

The Bank has purchased life insurance policies on certain key personnel. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Segment Reporting

Atlantic Capital considers its operations to be a single business segment as defined in ASC 280, Segment Reporting.The Company has determined that its lending divisions meet the aggregation criteria of ASC 280 as the products and services, nature of the production processes, types of customers, methods used to distribute products and services and the regulatory environment are sufficiently similar to aggregate their results.

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Income Taxes

The provision for income taxes is based on income and expense reported for financial statement purposes after adjustments for permanent differences. Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax benefits, such as net operating loss carryforwards, are recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

A valuation allowance is provided when it is deemed more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the ability to realize the deferred tax assets, management considers the four possible sources of taxable income including future reversals of existing taxable temporary differences, future taxable income, taxable income in prior carryback years and tax-planning strategies that would be implemented to utilize the loss carryforwards prior to expiration.

A tax position is recognized as a benefit only if it is more-likely-than-not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

Atlantic Capital files its income tax returns on a consolidated basis. For additional information, see, Note 14 - Income Taxes.

Stock-Based Compensation

Atlantic Capital sponsors a stock-based compensation plan, which is described more fully in Note 15 - Employee and Director Benefit Plans. Compensation cost is recognized for stock options warrants and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, and warrants, while the price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation expense for performance share awards are based on the fair value of Atlantic Capital’s stock at the grant date adjusted for market conditions, as well as the subsequent achievement of performance conditions. The total cost of the Company’s stock-based awards is recognized as expense on a straight-line basis over the vesting periods of the awards.

Earnings Per Share

Basic earnings per share are computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are based on the weighted-average number of common shares outstanding during each period, plus common share equivalents calculated for stock options and warrants outstanding using the treasury stock method. When a net loss is recognized for the period, diluted earnings per share is calculated in the same manner as basic earnings per share.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the financial statements when they are funded.

Fair Value

Certain assets and liabilities are measured at fair value on a recurring basis. Examples of these include available-for-sale securities and derivative instruments. Fair value is used on a nonrecurring basis when assets are evaluated for impairment; the basis for accounting is lower of cost or market or fair value for disclosure purposes. Fair value is defined as the price

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that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. For additional information, see Note 18 - Fair Value Measurements.

Derivative Financial Instruments

The Company follows the guidance under ASC 815, Derivatives and Hedging, and records all derivatives on the Consolidated Balance Sheets at fair value. For derivatives designated as qualifying cash flow hedging relationships, the change in fair value of the effective portion is accounted for in other comprehensive income. For all other derivatives not designated as qualifying hedging relationships, changes in market value are recognized directly into earnings. For additional information, see Note 16 - Derivatives and Hedging.

Branch Assets Held for Sale and Liabilities to be Assumed

On December 9, 2016,April 5, 2019, Atlantic Capital announcedcompleted the sale of one branchall 14 of its bank branches located in Cleveland, Tennessee and northwest Georgia, including its mortgage banking business, to SmartFinancial, Inc., the bank holding company for SmartBank. On December 17, 2015, the Bank entered into two agreements to sell seven branches to First Freedom Bank and Athens Federal Community Bank, N.A.FirstBank (the “Branch Sale”). These branches were acquired from First Security and consistconsisted of loans, premises and deposits that arewere considered to be held for sale as of December 31, 2016 and 2015.2018. They arewere carried at the lower of cost or fair value. The sale of the First Freedom and Athens Federal branches closed in the second quarter of 2016. The sale of the Cleveland, Tennessee branch closed in the second quarter of 2017.

Going Concern Assessment

In August 2014, the FASB issued ASU 2014-15,2014‑15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40205‑40 - Disclosure of Uncertainties about and Entity’s Ability to Continue as a Going Concern.”  This guidance requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. No conditions or events, considered in the aggregate, raise substantial doubt about Atlantic Capital’s ability to continue as a going concern within one year after the date that the 20172019 financial statements are issued or available to be issued.

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NOTE 2 – ACCOUNTING STANDARDS UPDATES AND RECENTLY ADOPTED STANDARDS

Recently Adopted Accounting Pronouncements

In February 2018,2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02,2016‑02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The guidance gives entities the option to reclassify into retained earnings tax effects related to items in accumulated other comprehensive income (“OCI”) that were stranded in accumulated OCI as a result of tax reform. It is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted and Atlantic Capital adopted ASU 2018-02 as of January 1, 2018. The adoption of this update will result in a reclassification of approximately $845,000 between accumulated OCI and retained earnings, and a net impact of zero to total shareholders’ equity.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.Leases.” The purpose of this updatedUnder the new guidance, is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. Atlantic Capital adopted ASU 2017-12leases classified as of January 1, 2018. The guidance requires a modified retrospective transition method resulting in the cumulative effect of the changeoperating leases under previous GAAP must be recorded on the opening balance of each affected component of equitysheet. A lessee should recognize in the statement of financial position as ofa liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the date of adoption. Adoption did not have a material impact on Atlantic Capital’s consolidated financial statements.

underlying asset for the lease term. In May 2017,July 2018, the FASB issued ASU 2017-09,No. 2018‑10, “CompensationCodification Improvements to Topic 842, Leases and ASU No. 2018‑11, Leases (Topic 842): Targeted Improvements.”  ASU No. 2018‑10 provides improvements related to ASU No. 2016‑02 to increase stakeholders’ awareness of the amendments and to expedite the improvements. The amendments affect narrow aspects of the guidance issued in ASU No. 2016‑02. ASU No. 2018‑11 allows entities adopting ASU No. 2016‑02 to choose an additional (and optional) transition method, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. By electing the transition option provided in ASU No. 2018-11, the Company applied the modified retrospective approach on January 1, 2019 (as opposed to January 1, 2017). The Company also elected certain relief options offered in ASU 2016-02 including the package of practical expedients, the option not to separate lease and non-lease components and instead to account for them as a single lease component, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less). The Company did not elect the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of right-of-use assets. The amendments in these updates became effective for the Company on January 1, 2019. The impact of adoption was recording a lease liability of approximately $18.9 million in other liabilities, an ROU asset of approximately $14.5 million in premises and equipment, and a cumulative effect adjustment to retained earnings, net of tax, of approximately $373,000 on the Consolidated Balance Sheets.

Recently Issued Accounting Pronouncements Not Yet Adopted

In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments - Stock CompensationCredit Losses (Topic 718)326); Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of Accounting Standards Codification (“ASC”) 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13 (i.e., the first quarter of 2020). The Company does not expect to elect the fair value option, and therefore, ASU 2019-05 is not expected to impact the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018‑13, “Fair Value Measurement (Topic 820): Scope and Modification Accounting.Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.”The amendments in this ASU provide guidance about which changes toupdate modify the termsdisclosure requirements for fair value measurements by removing, modifying, or conditions of a share-based payment award require an entity to apply modification accounting in accordance with Topic 718.adding certain disclosures. The amendments will beupdate is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. This ASU is31, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The adoption will not expected to have a material impacteffect on Atlantic Capital’sthe Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08,2017‑08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20)310‑20): Premium Amortization on Purchased Callable Debt Securities.” This guidance shortens the premium amortization period for certain callable debt securities by requiring amortization to the earliest call date. The standard is effective for public companies for annual and interim periods beginning after December 15, 2020. The adoption of this update is not expected to have a material impact on Atlantic Capital’s consolidated financial statements.

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In January 2017, the FASB issued  ASU 2017-04,2017‑04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”  which intends to simplify goodwill impairment testing by eliminating the second step of the analysis under which the implied fair value of goodwill is determined as if the reporting unit were being acquired in a business combination. The update instead requires entities to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. ASU 2017-042017‑04 must be applied prospectively and iswas effective for the Company on January 1, 2020. Early adoption is permitted. Atlantic Capital does not expect the new guidance to have a material impact on its financial condition or results of operations.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interests in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. The amendments are effective for public companies for fiscal years beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. As this guidance only affects the classification within the statement of cash flows, this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13,2016‑13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” ASU 2016-132016‑13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. ASU 2016-132016‑13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is2016‑13 was effective for public companies for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Atlantic CapitalThe Company implemented a software package that is in the processbeing utilized to estimate credit losses under CECL and performed model validation procedures.  The Company is currently finalizing its implementation of evaluating the impact ofinternal controls and processes and will finalize the adoption of ASU 2016-13 onduring the Company’s consolidated financial statements and disclosures.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The amendments in ASU 2016-09 simplify several aspects of accounting for employee share-based payments including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance required all income tax effects of awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled and additional paid in capital pools were eliminated. The guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Companies are required to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur or estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, through an accounting policy election. The guidance increases the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s income tax withholding obligation. The guidance requires an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. For public entities, the amendments in this update were effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this guidance did not have a material effect on Atlantic Capital’s financial position or results of operations.

In February 2016, the FASB issued ASU 2016-2, “Leases.” Under the new guidance, leases classified as operating leases under previous GAAP must be recorded on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Upon adoption, Atlantic Capital expects to report higher assets and liabilities as a result of including leases on the consolidated balance sheet. The Company does not expect the new guidance to have a material impact on the consolidated statement of income or the consolidated statement of shareholders’ equity.

In January 2016, the FASB issued ASU 2016-1, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.” The guidance in this update requires that equity investments (except those accounting for under the equity method of accounting) be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The guidance also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. In addition, the guidance requires that public business entities base their fair value disclosures for financial instruments that are not measured at fair value in the financial statements on the exit price notion. For public entities, this update is effective for fiscal years beginning after December 15, 2017 with early application permitted. The adoption of this update is not expected to have a material impact on Atlantic Capital’s consolidated financial statements, however Atlantic Capital will change the disclosure of financial instruments not measured at fair value to reflect the exit price notion.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This update is a joint project with the International Accounting Standards Board initiated to clarify the principles for recognizing revenue and to develop a common revenue standard that is meant to remove inconsistencies and weaknesses in revenue requirements, provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, provide more useful information to users of financial statements and simplify the preparation of financial statements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public companies, this guidance is effective for annual and interim periods beginning after December 15, 2017. Atlantic Capital has completed its review of the impact of ASU 2014-09 on components of non-interest income and has not found any significant changes to its methodology of recognizing revenue. Revenue streams impacted by the ASU included service charges, trust income, sales of financed other real estate, and check printing revenue. The Company anticipates recording a cumulative effect adjustment to first quarter 2018 opening retained earnings in an amount less than $2,000, and the Company will include newly applicable revenue disclosures in its Form 10-Q for the quarter ended March 31, 2018.of 2020.

NOTE 3 – ACQUISITIONSDIVESTITURES AND DIVESTITURES

Acquisition of First Security Group

DISCONTINUED OPERATIONS

Discontinued Operations

On October 31, 2015, Atlantic CapitalApril 5, 2019, the Bank completed the acquisitionBranch Sale. FirstBank assumed deposits and customer repurchase agreements of First Security and its wholly-owned bank subsidiary, FSGBank. First Security operated twenty-five branches in Georgia and Tennessee. In connection with the acquisition, Atlantic Capital acquired approximately $801 million of loans and assumed approximately $970 million of deposits.

Acquisition-related costs totaled $304,000, $2.7$598 million and $9.2purchased approximately $385 million in loans. FirstBank paid a deposit premium equal to 6.25% of the balance of assumed deposits less a discount of 0.68% of purchased loans.

The income and expenses related to these branches for the years ended December 31, 2019, 2018, and 2017 2016, and 2015, respectively, and wereare included in noninterest expense indiscontinued operations and prior period financial information has been retrospectively adjusted for the consolidated income statement. Acquisition related costs primarily include severance costs, professional services, data processing fees related to systems conversion and other noninterest expenses.

Divestitureimpact of Branches

On December 17, 2015, the Bank entered into two separate definitive agreements to sell seven branches in the Bank’s Tennessee market. The agreement with First Freedom Bank includes the sale of three branches located in Algood, Cookeville and Gainesboro, Tennessee for a premium of 2.25% of deposits. The agreement with Athens Federal includes the sale of four branches in Athens, Lenoir City, Madisonville and Sweetwater, Tennessee for a premium of 3.50% of deposits. Both transactions closed in the second quarter of 2016 and resulted in a combined gain of $3.9 million as well as a reduction of approximately $191.0 million in deposits, approximately $34.7 million in loans and approximately $8.6 million in other assets. The gain was somewhat reduced by an impairment of $2.0 million in core deposit intangibles, which was offset by a $344,000 reversal in time deposit premium. There were also $305,000 of expenses associated with the divestitures included in noninterest expense in the second quarter of 2016.

On December 9, 2016, Atlantic Capital entered into a definitive agreement to sell one branch in Cleveland, Tennessee, to SmartBank. The sale closed in the second quarter of 2017, and resulted in a net gain of $302,000 as well as a reduction of approximately $21.9 million in deposits and approximately $27.3 million in loans and other assets. The gross gain of $533,000 was reduced by an impairment of $337,000 in core deposit intangibles, which was offset by a $106,000 reversal in time deposit premium. There were also $38,000 of expenses associated with the divestiture included in noninterest expense in the second quarter of 2017.

discontinued operations.

Sale of Southeastern Trust Company (“SETCO”)

On December 14, 2017, the Bank entered into an agreement with theThe Banc Group, LLC to sell its trust business, a division of the Bank known as Southeastern Trust Company, for approximately $1.8 million. The Banc Group, LLC, which subsequently changed its name to Southeastern Trust Company, LLC, is controlled by a former director and Chief Operating Officer of the Company. Subject to customary closing conditions, including the receipt of all regulatory approvals, theThe sale of SETCO is expected to closeclosed on June 1, 2018 and Atlantic Capital recorded a gain of $1.7 million during the second quarter, which was net of 2018.goodwill impairment in the amount of $69,000.

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The following table presents results of the discontinued operations for the years ended December 31, 2019, 2018, and 2017:

Components of Net Income from Discontinued Operations

		For the year ended December 31,
(in thousands)		2019			2018			2017
Net interest income		$	3,086		$	14,140		$	18,310
Provision for loan losses			—			(3,097)			—
Net interest income after provision for loan losses			3,086			17,237			18,310
Service charges			527			1,922			2,342
Mortgage income			288			1,302			1,255
Gain on sale of branches			34,475			—			302
Other (loss) income			(1)			123			111
Total noninterest income			35,289			3,347			4,010
Salaries and employee benefits			2,757			11,714			12,245
Occupancy			410			2,016			2,073
Equipment and software			131			779			1,108
Amortization of intangibles			247			1,229			1,653
Communications and data processing			586			1,529			1,524
Divestiture expense			5,095			825			—
Other noninterest expense			459			1,849			2,028
Total noninterest expense			9,685			19,941			20,631
Net income before provision for income taxes			28,690			643			1,689
Provision for income taxes			6,993			161			659
Net income from discontinued operations		$	21,697		$	482		$	1,030

Assets sold to and liabilities assumed by FirstBank include substantially all assets and liabilities associated with the branches sold in the Branch Sale, and were classified as held for sale on the consolidated balance sheets as of December 31, 2018. Prior year balances have been adjusted to conform with current presentation.

The following table summarizes the major categories of assets and liabilities classified as held for sale and intangibles related to discontinued operations in the consolidated balance sheet as of December 31, 2018:

Assets and Liabilities from Discontinued Operations

(in thousands)		December 31, 2018
Cash		$	4,234
Loans held for sale - discontinued operations			373,030
Premises held for sale - discontinued operations			7,722
Goodwill - discontinued operations			4,555
Core deposit intangible			1,405
Total assets		$	390,946
Deposits to be assumed - discontinued operations		$	585,429
Securities sold under agreements to repurchase - discontinued operations			6,220
Total liabilities		$	591,649
Net liabilities		$	(200,703)

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NOTE 4 – BALANCE SHEET OFFSETTING

Atlantic Capital enters into reverse repurchase agreements in order to invest short-term funds. The Company enters into repurchase agreements for short-term financing needs.

The following table presents a summary of amounts outstanding under repurchase agreements, reverse repurchase agreements and derivative financial instruments including those entered into in connection with the same counterparty under master netting agreements as of December 31, 20172019 and 2016.2018. While these agreements are typically over-collateralized, U.S. GAAP requires disclosures in this table to limit the amount of such collateral to the amount of the related recognized asset or liability for each counterparty.

											Gross Amounts not Offset in the
		Gross									Balance Sheet
		Amounts of			Gross Amounts			Net						Cash
(in thousands)		Recognized			Offset on the			Asset			Financial			Collateral
December 31, 2019		Assets			Balance Sheet			Balance			Instruments			Received			Net Amount
Derivatives		$	8,856		$	—		$	8,856		$	—		$	—		$	8,856
Total		$	8,856		$	—		$	8,856		$	—		$	—		$	8,856

											Gross Amounts not Offset in the
		Gross									Balance Sheet
		Amounts of			Gross Amounts			Net						Cash
		Recognized			Offset on the			Liability			Financial			Collateral
		Liabilities			Balance Sheet			Balance			Instruments			Pledged			Net Amount
Derivatives		$	5,647		$	—		$	5,647		$	(5,647)		$	—		$	—
Total		$	5,647		$	—		$	5,647		$	(5,647)		$	—		$	—

											Gross Amounts not Offset in the
		Gross									Balance Sheet
		Amounts of			Gross Amounts			Net						Cash
		Recognized			Offset on the			Asset			Financial			Collateral
December 31, 2018		Assets			Balance Sheet			Balance			Instruments			Received			Net Amount
Reverse repurchase agreements		$	9,457		$	—		$	9,457		$	(9,457)		$	—		$	—
Derivatives			1,961			—			1,961			—			—			1,961
Total		$	11,418		$	—		$	11,418		$	(9,457)		$	—		$	1,961

											Gross Amounts not Offset in the
		Gross									Balance Sheet
		Amounts of			Gross Amounts			Net						Cash
		Recognized			Offset on the			Liability			Financial			Collateral
		Liabilities			Balance Sheet			Balance			Instruments			Pledged			Net Amount
Repurchase agreements - discontinued operations		$	6,220		$	—		$	6,220		$	(6,220)		$	—		$	—
Derivatives			4,027			—			4,027			(4,027)			—			—
Total		$	10,247		$	—		$	10,247		$	(10,247)		$	—		$	—

82

(in thousands)														Gross Amounts not Offset in the Balance Sheet
December 31, 2017		Gross Amounts of Recognized Assets				Gross Amounts Offset on the Balance Sheet				Net Asset Balance				Financial Instruments				Cash Collateral Received				Net Amount
Reverse repurchase agreements		$	10,681			$	—			$	10,681			$	(10,681	)		$	—			$	—
Derivatives		3,018				—				3,018				—				—				3,018
Total		$	13,699			$	—			$	13,699			$	(10,681	)		$	—			$	3,018
														Gross Amounts not Offset in the Balance Sheet
		Gross Amounts of Recognized Liabilities				Gross Amounts Offset on the Balance Sheet				Net Liability Balance				Financial Instruments				Cash Collateral Pledged				Net Amount
Repurchase agreements		$	—			$	—			$	—			$	—			$	—			$	—
Derivatives		4,023				—				4,023				(2,705		)		(1,318		)		—
Total		$	4,023			$	—			$	4,023			$	(2,705	)		$	(1,318	)		$	—
														Gross Amounts not Offset in the Balance Sheet
December 31, 2016		Gross Amounts of Recognized Assets				Gross Amounts Offset on the Balance Sheet				Net Asset Balance				Financial Instruments				Cash Collateral Received				Net Amount
Reverse repurchase agreements		$	10,896			$	—			$	10,896			$	(10,896	)		$	—			$	—
Derivatives		4,310				—				4,310				—				—				4,310
Total		$	15,206			$	—			$	15,206			$	(10,896	)		$	—			$	4,310
														Gross Amounts not Offset in the Balance Sheet
		Gross Amounts of Recognized Liabilities				Gross Amounts Offset on the Balance Sheet				Net Liability Balance				Financial Instruments				Cash Collateral Pledged				Net Amount
Repurchase agreements		$	—			$	—			$	—			$	—			$	—			$	—
Derivatives		4,131				—				4,131				(1,818		)		(2,313		)		—
Total		$	4,131			$	—			$	4,131			$	(1,818	)		$	(2,313	)		$	—

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NOTE 5 – SECURITIES

The following table presents the amortized cost, unrealized gains and losses, and fair value of securities available-for-sale and held-to-maturity at December 31, 20172019 and December 31, 20162018.

					Gross			Gross
		Amortized			Unrealized			Unrealized
		Cost			Gains			Losses			Fair Value
		(in thousands)
December 31, 2019
Available-For-Sale
U.S. states and political divisions		$	81,865		$	863		$	(243)		$	82,485
Trust preferred securities			4,808			—			(120)			4,688
Corporate debt securities			19,557			363			—			19,920
Residential mortgage-backed securities			173,047			2,797			(476)			175,368
Total available-for-sale			279,277			4,023			(839)			282,461
Held-to-Maturity
U.S. states and political divisions			116,972			104			(1,785)			115,291
Total held-to-maturity			116,972			104			(1,785)			115,291
Total securities		$	396,249		$	4,127		$	(2,624)		$	397,752
December 31, 2018
Available-For-Sale
U.S. Government agencies		$	27,259		$	24		$	(434)		$	26,849
U.S. states and political divisions			91,864			40			(7,070)			84,834
Trust preferred securities			4,781			—			(381)			4,400
Corporate debt securities			12,855			—			(492)			12,363
Residential mortgage-backed securities			277,524			2,726			(6,210)			274,040
Total securities		$	414,283		$	2,790		$	(14,587)		$	402,486

Available-For-Sale		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(in thousands)
December 31, 2017
Debt securities
U.S. Government agencies		$	34,699			$	11			$	(599	)		$	34,111
U.S. states and political divisions		92,169				237				(2,405		)		90,001
Trust preferred securities		4,754				—				(104		)		4,650
Corporate debt securities		12,948				60				(386		)		12,622
Residential mortgage-backed securities		310,129				2,423				(4,819		)		307,733
Total		$	454,699			$	2,731			$	(8,313	)		$	449,117
December 31, 2016
Debt securities
U.S. Government agencies		$	21,485			$	24			$	(357	)		$	21,152
U.S. states and political divisions		96,908				141				(6,877		)		90,172
Trust preferred securities		4,727				—				(202		)		4,525
Corporate debt securities		19,928				72				(769		)		19,231
Residential mortgage-backed securities		214,297				2,689				(4,361		)		212,625
Total		$	357,345			$	2,926			$	(12,566	)		$	347,705

The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity at December 31, 2017.2019. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Available-For-Sale						Held-to-Maturity
		Amortized			Fair			Amortized			Fair
		Cost			Value			Cost			Value
		(in thousands)						(in thousands)
Within 1 year		$	6,044		$	6,136		$	—		$	—
Over 1 year through 5 years			4,027			4,078			—			—
5 years to 10 years			34,804			35,152			—			—
Over 10 years			61,355			61,727			116,972			115,291
			106,230			107,093			116,972			115,291
Residential mortgage-backed securities			173,047			175,368			—			—
Total		$	279,277		$	282,461		$	116,972		$	115,291

83

	Available-For-Sale
	Amortized Cost				Fair Value
	(in thousands)
Within 1 year	$	65			$	65
Over 1 year through 5 years	22,164				22,002
5 years to 10 years	47,720				46,752
Over 10 years	74,621				72,565
	144,570				141,384
Residential mortgage-backed securities	310,129				307,733
Total	$	454,699			$	449,117

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The following table summarizes available-for-sale securities and held-to-maturity securities in an unrealized loss position as of December 31, 20172019 and  December 31, 2016.2018.

		Less than 12 months						12 months or greater						Totals
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2019		Value			Losses			Value			Losses			Value			Losses
		(in thousands)
Available-for-Sale
U.S. states and political divisions		$	20,019		$	(190)		$	4,090		$	(53)		$	24,109		$	(243)
Trust preferred securities			—			—			4,687			(120)			4,687			(120)
Corporate debt securities			—			—			—			—			—			—
Residential mortgage-backed securities			10,751			(78)			30,292			(398)			41,043			(476)
Total available-for-sale			30,770			(268)			39,069			(571)			69,839			(839)
Held-to-Maturity
U.S. states and political divisions			96,854			(1,785)			—			—			96,854			(1,785)
Total held-to-maturity			96,854			(1,785)			—			—			96,854			(1,785)
Total securities		$	127,624		$	(2,053)		$	39,069		$	(571)		$	166,693		$	(2,624)
December 31, 2018
Available-for-Sale
U.S. Government agencies		$	1,487		$	(19)		$	21,849		$	(415)		$	23,336		$	(434)
U.S. states and political divisions			2,351			(54)			75,234			(7,016)			77,585			(7,070)
Trust preferred securities			—			—			4,400			(381)			4,400			(381)
Corporate debt securities			6,009			(60)			6,354			(432)			12,363			(492)
Residential mortgage-backed securities			30,938			(152)			196,745			(6,058)			227,683			(6,210)
Total securities		$	40,785		$	(285)		$	304,582		$	(14,302)		$	345,367		$	(14,587)

		Less than 12 months								12 months or greater								Totals
Available-For-Sale		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
		(in thousands)
December 31, 2017
U.S. Government agencies		$	22,148			$	(348	)		$	9,145			$	(251	)		$	31,293			$	(599	)
U.S. states and political divisions		14,009				(183		)		58,744				(2,222		)		72,753				(2,405		)
Trust preferred securities		—				—				4,650				(104		)		4,650				(104		)
Corporate debt securities		2,989				(27		)		2,970				(359		)		5,959				(386		)
Residential mortgage-backed securities		155,637				(1,344		)		126,580				(3,475		)		282,217				(4,819		)
Totals		$	194,783			$	(1,902	)		$	202,089			$	(6,411	)		$	396,872			$	(8,313	)
December 31, 2016
U.S. Government agencies		$	12,250			$	(263	)		$	2,881			$	(94	)		$	15,131			$	(357	)
U.S. states and political divisions		87,511				(6,877		)		—				—				87,511				(6,877		)
Trust preferred securities		—				—				4,525				(202		)		4,525				(202		)
Corporate debt securities		7,886				(769		)		—				—				7,886				(769		)
Residential mortgage-backed securities		151,406				(3,231		)		32,550				(1,130		)		183,956				(4,361		)
Totals		$	259,053			$	(11,140	)		$	39,956			$	(1,426	)		$	299,009			$	(12,566	)

At December 31, 2017,2019, there were 26977 available-for-sale securities and 35 held-to-maturity securities that were in an unrealized loss position. At December 31, 2018, there were 271 securities in an unrealized loss position, and all were classified as available-for-sale. Atlantic Capital does not intend to sell nor believes it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis. Unrealized losses at December 31, 20172019 and December 31, 20162018 were attributable to changes in market interest rates.

Management evaluates securities for other-than-temporary impairment on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, among other factors. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. No impairment charges were recognized during the year ended December 31, 20172019 or 2016.

2018.

Realized gains and losses are derived using the specific identification method for determining the cost of securities sold. The following table summarizes securities sales activity for the years ended December 31, 20172019 and 2016.2018.

		Year Ended December 31,
		2019			2018
		(in thousands)
Proceeds from sales		$	116,963		$	62,087
Gross realized gains		$	1,675		$	—
Gross realized losses			(768)			(1,855)
Net gains (losses) on sales of securities		$	907		$	(1,855)

			Twelve Months Ended December 31,
			2017				2016
			(in thousands)
Proceeds from sales			$	19,238			$	65,103
Gross realized gains			$	313			$	449
Gross realized losses			(376		)		(405		)
Net gains on sales of securities			$	(63	)		$	44

Investment securities with a carrying value of $93.9$32.3 million and $104.9$65.3 million were pledged to secure public funds and other borrowings at December 31, 20172019 and December 31, 2016,2018, respectively.

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As of December 31, 2019 and December 31, 2018, Atlantic Capital had investments with a carrying value of $4.7 million and $4.4 million, respectively, in Small Business Investment Companies (“SBICs”) where Atlantic Capital is a limited partner. These investments are included in other assets on the Consolidated Balance Sheets. During the years ended December 31, 2019 and 2018, the Company recorded impairments in the amounts of $26,000 and $228,000, respectively, on these SBICs. The impairment resulted from deterioration in the credit quality of one of the SBICs and their inability to pay distributions until their financial position improves. There have been no upward adjustments, cumulatively or year-to-date, on these investments.

NOTE 6 – LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of the loan portfolio as of December 31, 20172019 and December 31, 2016,2018, is summarized below.

		December 31, 2019			December 31, 2018
		(in thousands)
Loans held for sale
Loans held for sale - discontinued operations		$	—		$	373,030
Loans held for sale - continuing operations			370			5,889
Total loans held for sale		$	370		$	378,919
Loans held for investment
Commercial loans:
Commercial and industrial		$	705,115		$	645,374
Commercial real estate			916,328			794,828
Construction and land			127,540			156,232
Mortgage warehouse participations			13,941			27,967
Total commercial loans			1,762,924			1,624,401
Residential:
Residential mortgages			31,315			32,800
Home equity			25,002			22,822
Total residential loans			56,317			55,622
Consumer			37,765			25,851
Other			19,552			24,712
Total loans			1,876,558			1,730,586
Less net deferred fees and other unearned income			(3,034)			(2,513)
Less allowance for loan losses			(18,535)			(17,851)
Loans held for investment, net		$	1,854,989		$	1,710,222

	December 31, 2017				December 31, 2016
	(in thousands)
Loans held for sale
Branch loans held for sale	$	—			$	30,917
Other loans held for sale	1,487				4,302
Total loans held for sale	$	1,487			$	35,219
Loans held for investment
Commercial loans:
Commercial and industrial	$	615,359			$	531,061
Commercial real estate	940,415				858,778
Construction and land	115,495				219,352
Mortgage warehouse participations	39,981				147,519
Total commercial loans	1,711,250				1,756,710
Residential:
Residential mortgages	104,484				101,921
Home equity	76,244				77,358
Total residential loans	180,728				179,279
Consumer	29,393				27,338
Other	16,278				21,565
Total loans	1,937,649				1,984,892
Less net deferred fees and other unearned income	(3,810		)		(3,562		)
Less allowance for loan losses	(19,344		)		(20,595		)
Loans held for investment, net	$	1,914,495			$	1,960,735

At December 31, 20172019 and December 31, 2016,2018, loans with a carrying value of $490.1$729.6 million and $474.8$752.7 million, respectively, were pledged as collateral to secure FHLB advances and the Federal Reserve discount window.

At December 31, 2017, the carrying value and outstanding balance of2018, PCI loans accountedwere designated as held for under ASC 310-30 was $11.8 million and $14.1 million, respectively. At December 31, 2016,sale for the carrying value and outstanding balanceBranch Sale that occurred in the second quarter of PCI loans accounted for under ASC 310-30 was $15.3 million and $18.7 million, respectively.2019. The following table presents changes in the value of the accretable yield for acquired loans accounted for under ASC 310-30.310‑30.

						Year Ended
						December 31, 2018
Balance at beginning of period						$		2,316
Accretion								(970)
Reclassification of nonaccretable discount due to change in expected cash flows								444
Other changes, net								(1,790)
Balance at end of period						$		—

85

		Year Ended				Year Ended
		December 31, 2017				December 31, 2016
		(in thousands)
Balance at beginning of period		$	3,467			$	2,369
Accretion		(1,503		)		(1,410		)
Reclassification of nonaccretable discount due to change in expected cash flows		82				2,412
Other changes, net		270				96
Balance at end of period		$	2,316			$	3,467

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In addition to the accretable yield on PCI loans, the fair value adjustments on purchased loans outside the scope of ASC 310-30310‑30 are also accreted to interest income over the life of the loans. At December 31, 2017,2019, the remaining accretableunamortized balance of fair value discount on loans acquired through a business combination and not accounted for under ASC 310-30310‑30 was $2.8 million.

$279,000 compared to $3.6 million at December 31, 2018.

The allowance for loan losses represents management’s estimate of probable incurred losses in the loan portfolio as of the end of the period. It is comprised of specific reserves for impaired loans and a general allowance for pools of loans with similar characteristics not individually evaluated. The allowance is regularly evaluated for loan losses to maintain an adequate level to absorb probable current inherent losses in the loan portfolio. Factors contributing to the determination of the allowance include the credit worthiness of the

borrower, changes in the value of pledged collateral, and general economic conditions. AllMost loan commitments rated substandard or worse are specifically reviewed for loss potential. For loans deemed to be impaired, a specific allocation is assigned based on the losses expected to be realized from those loans.

The following table presents the balance and activity in the allowance for credit losses by portfolio segment for the years ended December 31, 20172019 and 2016.2018.

		2019												2018
Year Ended December 31,		Commercial			Residential			Consumer			Total			Commercial			Residential			Consumer			Total
		(in thousands)
Allowance for loan losses:
Beginning balance		$	17,322		$	292		$	237		$	17,851		$	18,267		$	802		$	275		$	19,344
Provision for loan losses			2,910			(153)			(45)			2,712			1,613			374			(41)			1,946
Provision for loan losses - discontinued operations			—			—			—			—			(2,429)			(653)			(15)			(3,097)
Loans charged-off			(2,069)			(9)			(39)			(2,117)			(176)			(235)			(16)			(427)
Recoveries			40			15			34			89			47			4			34			85
Total ending allowance balance		$	18,203		$	145		$	187		$	18,535		$	17,322		$	292		$	237		$	17,851

		2017																2016
Twelve months ended December 31,		Commercial				Residential				Consumer				Total				Commercial				Residential				Consumer				Total
		(in thousands)
Allowance for loan losses:
Beginning balance		$	18,717			$	1,418			$	460			$	20,595			$	16,537			$	1,981			$	387			$	18,905
Provision for loan losses		3,553				(533		)		198				3,218				4,017				(536		)		335				3,816
Loans charged-off		(4,221		)		(85		)		(409		)		(4,715		)		(1,873		)		(34		)		(407		)		(2,314		)
Recoveries		218				2				26				246				36				7				145				188
Total ending allowance balance		$	18,267			$	802			$	275			$	19,344			$	18,717			$	1,418			$	460			$	20,595

The general component of the allowance for loan losses is based on the incurred losses inherent in the portfolio. The loss factors are determined through the generation of probabilities of default (“PDs”) and losses given default (“LGDs”) for groups of similar loans with similar credit grades where Loss Factor = PD x LGD. The PDs and LGDs for the loan portfolio are calculated based on Atlantic Capital’s loss history as well as available market-based data. The loss factor for each pool of loans is adjusted based on Qualitative and Environmental factors to account for conditions in the current environment which management believes are likely to cause a difference between the calculated loss based on historical performance and the incurred loss in the existing portfolio. These factors include: changes in policies and procedures, changes in the economy, changes in nature, volume of the portfolio and in the terms of loans, changes in lending management, changes in past dues and credit migration, changes in the loan review system, changes in the value of collateral and concentration risk and changes in external factors, such as competition, legal, regulatory, etc. On a quarterly basis, management evaluates these factors in order to determine an adjustment unique to Atlantic Capital and its market.

Charge-offs are recognized when the amount of the loss is quantifiable and timing is known. Collateral based loan charge-offs are measured based on the difference between the loan’s carrying value, including deferred fees, and the estimated net realizable value of the loan. When assessing property value for the purpose of determining a charge-off, a third-party appraisal or an independently derived internal evaluation is generally employed.

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A loan is considered to be impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. A specific allowance is established for individually evaluated impaired loans as needed. Reserves on impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the observable market price, or the fair value of the underlying collateral of the loan if the loan is collateral dependent.

Nonaccrual loans include both homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans. Atlantic Capital’s policy is to place loans on nonaccrual status, when, in the opinion of management, the principal and interest on a loan is not likely to be repaid in accordance with the loan terms or when the loan becomes 90 days past due and is not well secured and in the process of collection. When a loan is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue. Principal and interest payments received on a nonaccrual loan are applied to reduce outstanding principal.

PCI Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Loans accounted for under ASC 310-30310‑30 were not classified as nonaccrual, at December 31, 2017 and 2016 as the carrying value of the respective loan or pool of loans cash flows were considered estimable and probable of collection. Therefore, interest revenue, through accretion of the difference between the carrying value of the loans and the expected cash flows (accretable yield), is beingwas recognized on all acquired loans being accounted for under ASC 310-30.

310‑30.

The balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method is presented in the following table as of December 31, 20172019 and December 31, 2016.2018.

December 31, 2019		Commercial			Residential			Consumer			Total
		(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans
Individually evaluated for impairment		$	1,010		$	—		$	—		$	1,010
Collectively evaluated for impairment			17,193			145			187			17,525
Total ending allowance balance		$	18,203		$	145		$	187		$	18,535
Loans:
Loans individually evaluated for impairment		$	22,091		$	726		$	—		$	22,817
Loans collectively evaluated for impairment			1,740,833			55,591			57,317			1,853,741
Total ending loans held for investment balance		$	1,762,924		$	56,317		$	57,317		$	1,876,558

December 31, 2018		Commercial			Residential			Consumer			Total
		(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans
Individually evaluated for impairment		$	317		$	—		$	—		$	317
Collectively evaluated for impairment			17,005			292			237			17,534
Total ending allowance balance		$	17,322		$	292		$	237		$	17,851
Loans:
Loans individually evaluated for impairment		$	10,273		$	161		$	—		$	10,434
Loans collectively evaluated for impairment			1,614,128			55,461			50,563			1,720,152
Total ending loans balance		$	1,624,401		$	55,622		$	50,563		$	1,730,586

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December 31, 2017		Commercial				Residential				Consumer				Total
		(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans
Individually evaluated for impairment		$	306			$	—			$	—			$	306
Collectively evaluated for impairment		17,918				800				275				18,993
PCI		43				2				—				45
Total ending allowance balance		$	18,267			$	802			$	275			$	19,344
Loans:
Loans individually evaluated for impairment		$	6,886			$	186			$	—			$	7,072
Loans collectively evaluated for impairment		1,694,948				178,204				45,671				1,918,823
PCI		9,416				2,338				—				11,754
Total ending loans balance		$	1,711,250			$	180,728			$	45,671			$	1,937,649
December 31, 2016		Commercial				Residential				Consumer				Total
		(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans
Individually evaluated for impairment		$	2,626			$	58			$	—			$	2,684
Collectively evaluated for impairment		16,018				1,360				459				17,837
PCI		73				—				1				74
Total ending allowance balance		$	18,717			$	1,418			$	460			$	20,595
Loans:
Loans individually evaluated for impairment		$	13,687			$	398			$	—			$	14,085
Loans collectively evaluated for impairment		1,732,324				174,338				48,892				1,955,554
PCI		10,699				4,543				11				15,253
Total ending loans balance		$	1,756,710			$	179,279			$	48,903			$	1,984,892

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The following table presents information on Atlantic Capital’s impaired loans for the years ended December 31, 20172019 and 2016:2018:

		For the Year Ended December 31,
		2019															2018
											Average Balance			Interest Income												Average Balance			Interest Income
		Unpaid									of Recorded			Recognized			Unpaid									of Recorded			Recognized
		Principal			Recorded			Related			Investment While			During			Principal			Recorded			Related			Investment While			During
		Balance			Investment			Allowance			Impaired			Impairment			Balance			Investment			Allowance			Impaired			Impairment
		(in thousands)
Impaired loans with no related allowance recorded:
Commercial and industrial		$	6,920			6,082		$	—		$	6,270		$	161		$	4,346		$	4,346		$	—		$	4,529		$	230
Commercial real estate			5,005			4,794			—			4,819			226			1,828			1,665			—			1,691			—
Construction and land			—			—			—			—			—			—			—			—			—			—
Residential mortgages			72			26			—			26			—			207			161			—			173			—
Home equity			700			700			—			700			—			—			—			—			—			—
Mortgage warehouse			—			—			—			—			—			—			—			—			—			—
Consumer			—			—			—			—			—			—			—			—			—			—
Total		$	12,697		$	11,602		$	—		$	11,815		$	387		$	6,381		$	6,172		$	—		$	6,393		$	230
Impaired loans with an allowance recorded:
Commercial and industrial		$	3,350			3,350		$	886		$	3,370		$	27		$	395		$	395		$	124		$	395		$	—
Commercial real estate			7,865			7,865			124			7,865			254			3,867			3,867			193			4,242			69
Construction and land			—			—			—			—			—			—			—			—			—			—
Residential mortgages			—			—			—			—			—			—			—			—			—			—
Home equity			—			—			—			—			—			—			—			—			—			—
Mortgage warehouse			—			—			—			—			—			—			—			—			—			—
Consumer			—			—			—			—			—			—			—			—			—			—
Total		$	11,215		$	11,215		$	1,010		$	11,235		$	281		$	4,262		$	4,262		$	317		$	4,637		$	69
Total impaired loans		$	23,912		$	22,817		$	1,010		$	23,050		$	668		$	10,643		$	10,434		$	317		$	11,030		$	299

	For the Year Ended
	2017																				2016
	Unpaid Principal Balance				Recorded Investment				Related Allowance				Average Balance of Recorded Investment While Impaired				Interest Income Recognized During Impairment				Unpaid Principal Balance				Recorded Investment				Related Allowance				Average Balance of Recorded Investment While Impaired				Interest Income Recognized During Impairment
	(in thousands)
Impaired loans with no related allowance recorded:
Commercial and industrial	$	1,037			$	974			$	—			$	1,426			$	55			$	2,593			$	2,295			$	—			$	2,861			$	136
Commercial real estate	1,771				1,608				—				1,838				1				24				24				—				24				—
Construction and land	—				—				—				—				—				—				—				—				—				—
Residential mortgages	231				186				—				218				—				177				177				—				179				2
Home equity	—				—				—				—				—				—				—				—				—				—
Mortgage warehouse	—				—				—				—				—				—				—				—				—				—
Consumer	—				—				—				—				—				—				—				—				—				—
Total	$	3,039			$	2,768			$	—			$	3,482			$	56			$	2,794			$	2,496			$	—			$	3,064			$	138
Impaired loans with an allowance recorded:
Commercial and industrial	$	3,739			$	3,739			$	181			$	3,904			$	197			$	8,735			$	8,735			$	2,437			$	8,795			$	57
Commercial real estate	565				565				125				577				25				2,633				2,633				189				1,871				32
Construction and land	—				—				—				—				—				—				—				—				—				—
Residential mortgages	—				—				—				—				—				221				221				58				223				4
Home equity	—				—				—				—				—				—				—				—				—				—
Mortgage warehouse	—				—				—				—				—				—				—				—				—				—
Consumer	—				—				—				—				—				—				—				—				—				—
Total	$	4,304			$	4,304			$	306			$	4,481			$	222			$	11,589			$	11,589			$	2,684			$	10,889			$	93
Total impaired loans	$	7,343			$	7,072			$	306			$	7,963			$	278			$	14,383			$	14,085			$	2,684			$	13,953			$	231

Atlantic Capital evaluates loans in accordance with ASC 310-40,310‑40, Troubled Debt Restructurings by Creditors. TDRs are loans in which Atlantic Capital has modified the terms and granted an economic concession to a borrower who is experiencing financial difficulties. These modifications may include interest rate reductions, term extensions and other concessions intended to minimize losses.

As of December 31, 20172019 and 2016,2018, the Company had a recorded investment in TDRs of $5.3$13.2 million and $6.6$8.2 million, respectively. The Company had commitments to lend additional funds of $26,000$4,000 and $387,000$28,000 on loans modified as TDRs, as of December 31, 20172019 and December 31, 2016,2018, respectively. During the yearyears ended December 31, 2017, a large commercial2019 and industrial borrower was sold. As a part of2018, the deficiency agreement, part of the credit relationship was restructured. The restructureCompany granted restructurings, which included a charge-offmodifications such as payment deferrals and the reclassification of the remaining balance to a TDR of $980,000. Additionally, during the year ended December 31, 2017, the modification

of terms for one home equity loan included a short term extension of the maturity date. During the year ended December 31, 2016, the modification of terms for one commercial and industrial loan included an extension of the maturity date and related amortization period date of two years. The modification of terms for two commercial real Estate loans established an interest only payment period of six months.

interest-only forbearance.

Loans, by portfolio class, modified as TDRs during the years ended December 31, 20172019 and 2016,2018, are as follows.

				Pre-Modification				Post-Modification
				Outstanding				Outstanding
		Number of Loans		Recorded Investment			Recorded Investment
				(in thousands)
Year Ended December 31, 2019
Commercial and industrial		9		$	4,699		$	4,699
Commercial real estate		4			8,471			8,471
Total		13		$	13,170		$	13,170
Year Ended December 31, 2018
Commercial real estate		1			4,617			4,617
Total		1		$	4,617		$	4,617

	Number of Loans		Pre-Modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
			(in thousands)
December 31, 2017
Commercial and industrial	1		$	980			$	980
Home equity	1		534				534
Total	2		$	1,514			$	1,514
December 31, 2016
Commercial and industrial	1		$	4,143			$	4,143
Commercial real estate	2		614				614
Total	3		$	4,757			$	4,757

The Company did not forgive any principal or give any interest rate reductions on TDRs during the years ended December 31, 20172019 and 2016,2018, and there were no subsequent defaults of previously identified TDRs.

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The Bank conducts transactions with its directors and executive officers, including companies in which such officers or directors have beneficial interests. The following is a summary of activity with respect to related-party loans in 20172019 and 2016.2018.

		2019			2018
		(in thousands)
Balance at January 1,		$	—		$	1,885
Additions			6			4,362
Repayments			(6)			(6,247)
Balance at December 31,		$	—		$	—

	2017				2016
	(in thousands)
Balance at January 1,	$	2,795			$	3,470
Additions	5,950				8,740
Repayments	(6,860		)		(9,415		)
Balance at December 31,	$	1,885			$	2,795

Atlantic Capital individually rates loans based on internal credit risk ratings using numerous factors, including thorough analysis of historical and expected cash flows, consumer credit risk scores (FICO scores), rating agency information, LTV ratios, collateral, collection experience, and other internal metrics. Atlantic Capital uses a dual rating system. The likelihood of default of a credit transaction is graded in the Obligor Rating. The risk of loss given default is graded in the Facility Rating. The Obligor Rating is determined through thorough credit analysis. Facility Ratings are used to describe the value to the bank that the collateral represents. Facility Ratings are based on the collateral package or market expectations regarding the value or liquidity of the collateral. Ratings are generally reviewed at least annually or more frequently if there is a material change in creditworthiness. Exceptions to this policy may include well collateralized term loans and loans to individuals with limited exposure or complexity.

Atlantic Capital uses the following definitions for risk ratings:

Pass: Loans that are analyzed individually as part of the above described process and that do not meet the criteria of special mention, substandard or doubtful.

Special Mention: Loans classified as special mention have a potential weakness that requires management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

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As of December 31, 20172019 and December 31, 2016,2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows. (Total loans includes loans held for sale - discontinued operations as of December 31, 2018.)

					Special			Substandard			Substandard			Doubtful
		Pass			Mention			Accruing			Nonaccruing			Nonaccruing			Total
		(in thousands)
December 31, 2019
Commercial and industrial		$	648,895		$	40,179		$	10,051		$	5,990		$	—		$	705,115
Commercial real estate			891,078			5,483			19,504			263			—			916,328
Construction and land			127,540			—			—			—			—			127,540
Residential mortgages			30,941			—			119			151			104			31,315
Home equity			24,302			—			—			700			—			25,002
Mortgage warehouse			13,941			—			—			—			—			13,941
Consumer/Other			56,336			500			481			—			—			57,317
Total loans		$	1,793,033		$	46,162		$	30,155		$	7,104		$	104		$	1,876,558

					Special			Substandard			Substandard			Doubtful
		Pass			Mention			Accruing			Nonaccruing			Nonaccruing			Total
		(in thousands)
December 31, 2018
Commercial and industrial		$	671,992		$	6,802		$	22,777		$	832		$	—		$	702,403
Commercial real estate			946,612			4,754			14,914			126			1,647			968,053
Construction and land			169,687			40			25			—			—			169,752
Residential mortgages			118,265			1,119			1,441			1,138			281			122,244
Home equity			54,707			92			294			499			—			55,592
Mortgage warehouse			22,192			5,775			—			—			—			27,967
Consumer/Other			57,268			66			97			174			—			57,605
Total loans		$	2,040,723		$	18,648		$	39,548		$	2,769		$	1,928		$	2,103,616

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	Pass				Special Mention				Substandard Accruing				Substandard Nonaccruing				Doubtful Nonaccruing				Total
	(in thousands)
December 31, 2017
Commercial and industrial	$	572,942			$	15,643			$	21,332			$	16			$	2			$	609,935
Commercial real estate	919,939				6,227				8,906				—				1,592				936,664
Construction and land	115,255				—				—				—				—				115,255
Residential mortgages	100,342				1,075				753				398				321				102,889
Home equity	74,841				64				310				285				—				75,500
Mortgage warehouse	39,981				—				—				—				—				39,981
Consumer/Other	45,422				57				192				—				—				45,671
Total loans, excluding PCI loans	$	1,868,722			$	23,066			$	31,493			$	699			$	1,915			$	1,925,895
Commercial and industrial	$	—			$	3,881			$	1,543			$	—			$	—			$	5,424
Commercial real estate	3,151				212				276				—				112				3,751
Construction and land	222				7				11				—				—				240
Residential mortgages	428				493				674				—				—				1,595
Home equity	34				354				356				—				—				744
Mortgage warehouse	—				—				—				—				—				—
Consumer/Other	—				—				—				—				—				—
Total PCI loans	$	3,835			$	4,947			$	2,860			$	—			$	112			$	11,754

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	Pass				Special Mention				Substandard Accruing				Substandard Nonaccruing				Doubtful Nonaccruing				Total
	(in thousands)
December 31, 2016
Commercial and industrial	$	494,617			$	3,160			$	26,399			$	3			$	471			$	524,650
Commercial real estate	843,924				5,513				5,571				—				—				855,008
Construction and land	213,981				4,789				64				—				—				218,834
Residential mortgages	97,660				586				747				147				—				99,140
Home equity	75,031				168				397				—				—				75,596
Mortgage warehouse	147,519				—				—				—				—				147,519
Consumer/Other	48,680				190				22				—				—				48,892
Total loans, excluding PCI loans	$	1,921,412			$	14,406			$	33,200			$	150			$	471			$	1,969,639
Commercial and industrial	$	4,650			$	299			$	614			$	—			$	848			$	6,411
Commercial real estate	477				240				2,716				—				337				3,770
Construction and land	229				8				281				—				—				518
Residential mortgages	59				1,232				1,016				—				474				2,781
Home equity	364				834				564				—				—				1,762
Mortgage warehouse	—				—				—				—				—				—
Consumer/Other	1				—				10				—				—				11
Total PCI loans	$	5,780			$	2,613			$	5,201			$	—			$	1,659			$	15,253

Atlantic Capital monitors loans by past due status. The following table presents the aging of the recorded investment in past due loans as of December 31, 20172019 and December 31, 20162018 by class of loans.

		As of December 31, 2019
					Accruing 30‑89			Accruing
		Accruing			Days			90+ Days
		Current			Past Due			Past Due			Nonaccruing			Total
		(in thousands)
Loans by Classification
Commercial and industrial		$	695,026		$	4,099		$	—		$	5,990		$	705,115
Commercial real estate			914,787			1,194			85			262			916,328
Construction and land			127,540			—			—			—			127,540
Residential mortgages			30,352			707			—			256			31,315
Home equity			24,302			—			—			700			25,002
Mortgage warehouse			13,941			—			—			—			13,941
Consumer			57,181			136			—			—			57,317
Total Loans		$	1,863,129		$	6,136		$	85		$	7,208		$	1,876,558

		As of December 31, 2018
					Accruing 30‑89			Accruing
		Accruing			Days			90+ Days
		Current			Past Due			Past Due			Nonaccruing			Total
		(in thousands)
Loans by Classification
Commercial and industrial		$	692,308		$	8,785		$	478		$	832		$	702,403
Commercial real estate			963,579			2,701			—			1,773			968,053
Construction and land			169,752			—			—			—			169,752
Residential mortgages			119,932			893			—			1,419			122,244
Home equity			54,714			379			—			499			55,592
Mortgage warehouse			27,967			—			—			—			27,967
Consumer			57,371			59			1			174			57,605
Total Loans		$	2,085,623		$	12,817		$	479		$	4,697		$	2,103,616

	As of December 31, 2017
	Accruing Current				30-89 Days Past Due				Accruing 90+ Days Past Due				Nonaccruing				PCI Loans				Total
	(in thousands)
Loans by Classification
Commercial and industrial	$	606,677			$	3,239			$	—			$	19			$	5,424			$	615,359
Commercial real estate	932,916				2,156				—				1,592				3,751				940,415
Construction and land	114,988				267				—				—				240				115,495
Residential mortgages	100,402				1,470				298				719				1,595				104,484
Home equity	75,081				135				—				284				744				76,244
Mortgage warehouse	39,981				—				—				—				—				39,981
Consumer	45,599				72				—				—				—				45,671
Total Loans	$	1,915,644			$	7,339			$	298			$	2,614			$	11,754			$	1,937,649

	As of December 31, 2016
	Accruing Current				30-89 Days Past Due				Accruing 90+ Days Past Due				Nonaccruing				PCI Loans				Total
	(in thousands)
Loans by Classification
Commercial and industrial	$	520,908			$	3,079			$	189			$	474			$	6,411			$	531,061
Commercial real estate	852,626				2,382				—				—				3,770				858,778
Construction and land	218,290				544				—				—				518				219,352
Residential mortgages	97,901				664				428				147				2,781				101,921
Home equity	74,420				884				292				—				1,762				77,358
Mortgage warehouse	147,519				—				—				—				—				147,519
Consumer	48,558				249				85				—				11				48,903
Total Loans	$	1,960,222			$	7,802			$	994			$	621			$	15,253			$	1,984,892

NOTE 7 – PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

		As of December 31,
		2019			2018
		(in thousands)
Land and improvements		$	—		$	1,902
Buildings and improvements			—			7,402
Leasehold improvements			9,040			7,745
Equipment, furniture and software			11,636			13,339
Right of use asset - leases			11,940			—
Projects in process			147			—
Premises and equipment-gross			32,763			30,388
Accumulated depreciation			(10,227)			(12,887)
Premises and equipment-net		$	22,536		$	17,501

		As of December 31,
		2017				2016
		(in thousands)
Land and improvements		$	2,036			$	2,036
Buildings and improvements		7,745				7,704
Leasehold improvements		4,064				3,730
Equipment and furniture		10,998				10,016
Projects in process		736				518
Premises and equipment-gross		25,579				24,004
Accumulated depreciation		(13,525		)		(12,046		)
Premises and equipment-net		$	12,054			$	11,958

Depreciation expense was $1.8 million, $1.9 million, and $1.6 million $2.0 million,in 2019, 2018, and $1.1 million in 2017, 2016,respectively.

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There were no premises and 2015, respectively.

Branch premisesequipment held for sale for discontinued operations as of December 31, 20162019. Premises and equipment held for sale for discontinued operations as of December 31, 2018 totaled $3.0$7.7 million. This balance represents one branchpremises and equipment related to the Branch Sale that closed on April 5, 2019.

Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which was soldthe Company is the lessee.

Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in premises and equipment and other liabilities, respectively, on the Consolidated Balance Sheets. The Company does not currently have any significant finance leases in which it is the lessee.

Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the second quarterConsolidated Statements of 2017. There were no branch premises heldOperations.

The Company’s leases relate primarily to office space and bank branches with remaining lease terms of generally 1 to 12 years. Certain lease arrangements contain extension options which typically range from 5 to 10 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. Portions of certain properties are subleased for sale asterms extending through 2024. As of December 31, 2017.

2019, operating lease ROU assets and liabilities were $11.9 million and $16.9 million, respectively. The following representsCompany elected not to include short-term leases (i.e., leases with initial terms of twelve months or less) on the future cash outflows relatedConsolidated Balance Sheets. Additionally, the Company elected, for all classes of underlying assets, not to separate lease obligations at December 31, 2017.

	December 31, 2017
	(in thousands)
2018	$	2,509
2019	1,814
2020	1,815
2021	1,850
2022	1,893
Thereafter	9,013
Total	$	18,894

The currentand non-lease components and instead to account for them as a single lease for the corporate headquarters in Atlanta, Georgia has expired and is being renewed on a monthly basis until the corporate headquarters is relocated in the second quarter of 2018. The future lease obligation of the new corporate headquarters is included in the table above, commencing in May 2018. component.

Rent expense for the years ended December 31, 2019, 2018, and 2017 2016, and 2015 was $2.7$2.3 million, $2.2$3.1 million, and $1.4$2.7 million, respectively, which were included in occupancy expense in the consolidated statementsConsolidated Statements of operations.Operations.

The table below summarizes the Company’s net lease cost:

		Year Ended
		December 31, 2019
Operating lease cost		$	2,274
Short-term lease cost			44
Sublease income			(252)
Net lease cost		$	2,066

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The tables below summarize other information related to the Company’s operating leases:

		Year Ended
		December 31, 2019
Operating cash paid for amounts included in the measurement of lease liabilities		$	1,944
Right-of-use assets obtained in exchange for new finance lease liabilities			17,807

		December 31, 2019
Weighted-average remaining lease term - operating leases		9.0
Weighted-average discount rate - operating leases		3.1	%

The table below summarizes the maturity of remaining lease liabilities:

		December 31, 2019
		(in thousands)
Year Ended:
December 31, 2020		$	2,062
December 31, 2021			2,176
December 31, 2022			2,418
December 31, 2023			2,025
December 31, 2024			1,937
Thereafter			9,437
Total future minimum lease payments			20,055
Less: Interest			(3,190)
Present value of net future minimum lease payments		$	16,865

On April 5, 2019, Atlantic Capital completed the Branch Sale.  Eight of these properties were owned by Atlantic Capital and nine were leased. The Company’s ROU asset and lease liability were reduced during the second quarter of 2019 by $3.6 million and $4.1 million, respectively, as a result of this divestiture.

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill and other intangible assets is summarized below:

		December 31,			December 31,
		2019			2018
		(in thousands)
Core deposit intangible		$	9,544		$	9,544
Less: accumulated amortization			(6,100)			(5,853)
Less: impairment to-date related to divested branches			(3,444)			(2,286)
Core deposit intangible, net - discontinued operations			—			1,405
Servicing assets, net			3,027			2,983
Total intangibles subject to amortization, net			3,027			4,388
Goodwill - discontinued operations			—			4,555
Goodwill - continuing operations			19,925			17,135
Total goodwill and other intangible assets, net		$	22,952		$	26,078

		December 31,
		2017				2016
		(in thousands)
Core deposit intangible		$	9,544			$	9,544
Less: accumulated amortization		(4,624		)		(2,971		)
Less: impairment related to divested branches		(2,286		)		(1,949		)
Core deposit intangible, net		2,634				4,624
Servicing assets, net		3,240				3,184
Total intangibles subject to amortization, net		5,874				7,808
Goodwill		21,759				21,759
Total goodwill and other intangible assets, net		$	27,633			$	29,567

During 2016, Atlantic Capital recorded measurement period adjustments that decreased goodwill by $1.6 million. The adjustments reduced the TriNet servicing asset, increased the book value of securities available-for-sale, and increased the deferred tax asset.

The Company conducted its annual impairment testing as of October 1, 2017,2019, utilizing a qualitative assessment. Factors that management considered in this assessment included macroeconomic conditions, industry and market considerations, overall financial performance of the Company and changes in the composition or carrying amount of net assets. In addition, management considered the increase in the Company’s common stock price and market value. Based on these assessments, management concluded that the 20172019 annual qualitative impairment assessment indicated that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill). Therefore, a step one quantitative analysis was not required.

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On April 5, 2019, the Bank completed the Branch Sale. In accordance with U.S. GAAP, Atlantic Capital allocated a proportionate share of its goodwill balance to the discontinued operations on a relative fair value basis and performed a qualitative assessment impairment test for the goodwill allocated to continuing operations. The qualitative goodwill impairment chargesanalysis of continuing operations indicated that it was more likely than not that the estimated fair value exceeded the carrying value as of the assessment date.

Based on a relative fair value analysis performed through the date of the Branch Sale, goodwill impairment in the amount of $1.8 million related to the Branch Sale was recorded during the second quarter of 2019. Additionally, goodwill impairment in 2017, 2016 or 2015, respectively.the amount of $69,000 related to the sale of the trust business was recorded during the second quarter of 2018. The following table presents activity for goodwill and other intangible assets:

		Goodwill			Core Deposit Intangible			Total
		(in thousands)
Balance at December 31, 2017		$	21,759		$	2,634		$	24,393
Amortization			—			(1,229)			(1,229)
Impairment, due to trust business sale			(69)			—			(69)
Balance at December 31, 2018			21,690			1,405			23,095
Amortization			—			(247)			(247)
Impairment, due to Branch Sale			(1,765)			(1,158)			(2,923)
Balance at December 31, 2019		$	19,925		$	—		$	19,925

		Goodwill				Core Deposit Intangible				Total
		(in thousands)
Balance at December 31, 2015		$	23,352			$	9,018			$	32,370
Amortization		—				(2,445		)		(2,445		)
Impairment, due to branch divestiture		—				(1,949		)		(1,949		)
Measurement period adjustments		(1,593		)		—				(1,593		)
Balance at December 31, 2016		21,759				4,624				26,383
Amortization		—				(1,653		)		(1,653		)
Impairment, due to branch divestiture		—				(337		)		(337		)
Balance at December 31, 2017		$	21,759			$	2,634			$	24,393

The

Atlantic Capital recognized amortization expense foron its core deposit intangible for 2017, 2016,of $247,000,  $1.2 million, and 2015 was $1.7 million $2.4 million,for the years ended December 31, 2019, 2018, and $526,000, respectively,2017, respectively, which was recognizedincluded in operating expenses.noninterest expense. The estimated aggregate amortization expense for future periods forCompany recorded impairment due to the core depositBranch Sale totaling $1.2 million during 2019. There were no events or circumstances that led management to believe that any impairment existed at December 31, 2019 in Atlantic Capital’s other intangible is as follows:

		Core Deposit Intangible Amortization
		(in thousands)
2018		$	1,229
2019		846
2020		463
2021		96
2022		—
Thereafter		—
Total		$	2,634

assets.

NOTE 9 – SERVICING RIGHTS

SBA Servicing Rights

SBA servicing rights are initially recorded at fair value. Subsequently, Atlantic Capital accounts for SBA servicing rights using the amortization method and they are included in goodwill and intangible assets, net.other intangibles, net on the Consolidated Balance Sheets. As of December 31, 20172019 and 2016,2018, the balance of SBA loans sold and serviced by Atlantic Capital totaled $135.8$185.5 million and $107.0$161.51 million, respectively.

Changes in the balance of SBA servicing assets for the years ended December 31, 20172019 and 20162018 are presented in the following table.

		Year ended December 31,
SBA Loan Servicing Assets		2019			2018
		(in thousands)
Beginning carrying value, net		$	2,539		$	2,635
Additions			1,226			823
Amortization			(1,034)			(919)
Ending carrying value		$	2,731		$	2,539

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SBA Loan Servicing Rights		Twelve months ended December 31,
		2017				2016
		(in thousands)
Beginning carrying value, net		$	2,359			$	1,687
Additions		1,022				1,077
Amortization		(746		)		(405		)
Ending carrying value		$	2,635			$	2,359

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At December 31, 20172019 and 2016,2018, the sensitivity of the fair value of the SBA loan servicing rights to immediate changes in key economic assumptions are presented in the table below.

Sensitivity of the SBA Servicing Assets		December 31, 2019			December 31, 2018
		(dollars in thousands)
Fair value of retained servicing assets		$	2,842		$	2,630
Weighted average life			3.77 years			4.83 years
Prepayment speed:			14.87	%		11.92	%
Decline in fair value due to a 10% adverse change		$	(150)		$	(131)
Decline in fair value due to a 20% adverse change		$	(254)		$	(223)
Weighted average discount rate			13.66	%		14.42	%
Decline in fair value due to a 100 bps adverse change		$	(98)		$	(101)
Decline in fair value due to a 200 bps adverse change		$	(156)		$	(165)

Sensitivity of the SBA Servicing Asset		December 31, 2017				December 31, 2016
		(dollars in thousands)
Fair value of retained servicing assets		$	2,865			$	2,474
Weighted average life		6.22 years				6.52 years
Prepayment speed:		8.64			%	7.67			%
Decline in fair value due to a 10% adverse change		$	(103	)		$	(89	)
Decline in fair value due to a 20% adverse change		$	(181	)		$	(151	)
Weighted average discount rate		13.01			%	12.27			%
Decline in fair value due to a 100 bps adverse change		$	(103	)		$	(97	)
Decline in fair value due to a 200 bps adverse change		$	(180	)		$	(168	)

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on valuation assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

TriNet Servicing Rights

TriNet servicing rights are initially recorded at fair value. Subsequently, Atlantic Capital accounts for TriNet servicing rights using the amortization method and they are included in goodwill and intangible assets,other intangibles, net.

Changes in the balance of TriNet servicing assets for the years ended December 31, 20172019 and 20162018 are presented in the following table.

		Year Ended December 31,
TriNet Servicing Assets		2019			2018
		(in thousands)
Beginning carrying value, net		$	444		$	605
Additions			—			—
Amortization			(148)			(161)
Ending carrying value		$	296		$	444

TriNet Servicing Rights		Twelve months ended December 31,
		2017				2016
		(in thousands)
Beginning carrying value, net		$	825			$	1,175
Additions		—				406
Amortization		(185		)		(205		)
Sale of servicing assets		(35		)		—
Impairment		—				(551		)
Ending carrying value		$	605			$	825

At December 31, 20172019 and 2016,2018, the sensitivity of the fair value of the TriNet servicing rights to immediate changes in key economic assumptions are presented in the table below.

Sensitivity of the TriNet Servicing Assets		December 31, 2019			December 31, 2018
		(dollars in thousands)
Fair value of retained servicing assets		$	414		$	515
Weighted average life			5.58 years			6.48 years
Prepayment speed:			5.00	%		5.00	%
Decline in fair value due to a 10% adverse change		$	(5)		$	(7)
Decline in fair value due to a 20% adverse change		$	(10)		$	(14)
Weighted average discount rate			8.00	%		8.00	%
Decline in fair value due to a 100 bps adverse change		$	(9)		$	(13)
Decline in fair value due to a 200 bps adverse change		$	(18)		$	(25)

Sensitivity of the TriNet Servicing Rights		December 31, 2017				December 31, 2016
		(dollars in thousands)
Fair value of retained servicing assets		$	697			$	840
Weighted average life		7.37 years				8.47 years
Prepayment speed:		5.00			%	5.00			%
Decline in fair value due to a 10% adverse change		$	(10	)		$	(12	)
Decline in fair value due to a 20% adverse change		$	(20	)		$	(24	)
Weighted average discount rate		8.00			%	8.00			%
Decline in fair value due to a 100 bps adverse change		$	(19	)		$	(25	)
Decline in fair value due to a 200 bps adverse change		$	(37	)		$	(49	)

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on valuation assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

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NOTE 10 - DEPOSITS

	December 31,
	2017				2016
	(in thousands)
Non-interest bearing demand deposits	$	732,442			$	643,471
Interest-bearing demand deposits	306,331				264,062
Savings and money market deposits	1,144,464				940,425
Time deposits less than $250,000	118,412				137,299
Time deposits $250,000 or greater	20,200				20,511
Brokered deposits	128,816				200,223
Total Deposits	$	2,450,665			$	2,205,991
Deposits to be assumed in branch sales	$	—			$	31,589

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There were no

NOTE 10 – DEPOSITS

		December 31, 2019			December 31, 2018
		(in thousands)
Non-interest bearing demand deposits		$	824,646		$	602,252
Interest-bearing demand deposits			373,727			252,490
Savings and money market deposits			1,174,437			987,908
Time deposits less than $250,000			37,680			3,630
Time deposits $250,000 or greater			6,709			6,993
Brokered deposits			81,847			99,241
Total deposits - continuing operations		$	2,499,046		$	1,952,514
Deposits to be assumed - discontinued operations		$	—		$	585,429

Time deposits to be assumed in branch salesless than $250,000 at December 31, 2017. Deposits2019 increased compared to be assumed in branch sales totaled $31.6 million at December 31, 2016, and represented deposits at one branch. Approximately $21.9 million2018 due to the Company’s growth in deposits were sold as part of the divestiture which closed during the second quarter of 2017.

its fintech partnership with a financial technology firm that offers CD-secured loans to its customers in order to build credit and/or improve their credit score. 

Brokered certificate of deposits issued in denominations of $100,000 or more are participated out by the deposit brokers in shares of $100,000 or less.

Overdrawn deposits accounts reclassified as loans were $1.1$383,000 and $1.3 million and $630,000 at December 31, 20172019 and 2016,2018, respectively. There were $93.9$32.3 million and $104.9$65.3 million in investment securities pledged to secure public deposits and other secured borrowings as of December 31, 20172019 and 2016,2018, respectively.

Deposits of certain officers, directors, and their associates totaled $8.0$9.2 million and $3.1$8.4 million as of December 31, 20172019 and 2016,2018, respectively.

The scheduled maturities of time and brokered deposits as of December 31, 20172019 are as follows:

		Time			Brokered
		(in thousands)
2020		$	38,446		$	79,276
2021			5,005			2,571
2022			866			—
2023			—			—
2024			44			—
Thereafter			28			—
Total		$	44,389		$	81,847

		Time				Brokered
		(in thousands)
2018		$	73,022			$	123,718
2019		38,629				2,527
2020		15,102				2,571
2021		7,444				—
2022		4,373				—
Thereafter		42				—
Total		$	138,612			$	128,816

NOTE 11 – OTHER BORROWINGS AND LONG TERM DEBT

As of December 31, 2019 and December 31, 2018, Atlantic Capital had no Federal Home Loan Bank borrowings as of December 31, 2017 and 2016 are as follows:

		December 31, 2017									December 31, 2016
		Balance				Interest Rate					Balance				Interest Rate
		(in thousands)									(in thousands)
FHLB short-term borrowings:									FHLB short-term borrowings:
Fixed rate advance maturing January 16, 2018		$	45,000			1.40	%		Fixed rate advance maturing January 17, 2017		$	40,000			0.64	%
									Fixed rate advance maturing January 24, 2017		40,000				0.61	%
									Fixed rate advance maturing January 30, 2017		30,000				0.62	%
Total		$	45,000								$	110,000

outstanding.

Interest expense for FHLB borrowings for the years ended December 31, 2019, 2018, and 2017 2016,was $817,000, $2.4 million, and 2015 was $1.5 million, $558,000, and $290,000, respectively.

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At December 31, 2017,2019, the Company had available line of credit commitments with the FHLB totaling $660.0$723.3 million, of which $45.0 million was advanced.with no outstanding FHLB advances. However, based on actual collateral pledged, $193.1$155.8. million was available. At December 31, 2017,2019, the Company had an available line of credit based on the collateral available of $357.1$410.9 million with the Federal Reserve Bank of Atlanta. Interest expense on federal funds purchased for the years ended December 31, 2019, 2018, and 2017 2016,totaled $479,000,  $303,000, and 2015 totaled $222,000, $218,000, and $73,000, respectively.

On September 28, 2015, Atlantic Capital issued subordinated notes (the “Notes”) totaling $50.0 million in aggregate principal amount. The Notes are due September 30, 2025 and bear a fixed rate of interest of 6.25% per year until September 29, 2020. From September 30, 2020 to the maturity date, the interest rate will be a floating rate equal to the three-month LIBOR plus 468 basis points. The Notes were priced at 100% of their par value. The Notes qualify as Tier 2 regulatory capital.

Subordinated debt is summarized as follows:

		December 31, 2019			December 31, 2018
		(in thousands)
Floating rate 10 year capital securities, with interest paid semi-annually at an annual fixed rate of 6.25% until September 30, 2020		$	50,000		$	50,000
Principal amount of subordinated debt		$	50,000		$	50,000
Less debt issuance costs			127			296
Subordinated debt, net		$	49,873		$	49,704

		December 31, 2017				December 31, 2016
		(in thousands
Floating rate 10 year capital securities, with interest paid semi-annually at an annual fixed rate of 6.25% until September 30, 2020		$	50,000			$	50,000
Principal amount of subordinated debt		$	50,000			$	50,000
Less debt issuance costs			465				634
Subordinated debt, net		$	49,535			$	49,366

All subordinated debt outstanding at December 31, 20172019 matures after more than five years.

NOTE 12 – OTHER COMPREHENSIVE (LOSS) INCOME

Other comprehensive (loss) income for Atlantic Capital consists of changes in net unrealized gains and losses on investment securities available-for-sale and derivatives. The following tables present a summary of the changes in accumulated other comprehensive (loss) income balances for the applicable periods.

		For the Year Ended
		December 31, 2019									December 31, 2018									December 31, 2017
					Income									Income									Income
					Tax									Tax									Tax
		Pre-Tax			(Expense)			After-Tax			Pre-Tax			(Expense)			After-Tax			Pre-Tax			(Expense)			After-Tax
		Amount			Benefit			Amount			Amount			Benefit			Amount			Amount			Benefit			Amount
		(in thousands)
Accumulated other comprehensive (loss) income beginning of period		$	(13,743)			3,438		$	(10,305)		$	(6,274)		$	2,415		$	(3,859)		$	(9,144)		$	3,519		$	(5,625)
Reclassification of tax effects from AOCI			—			—			—			—			(844)			(844)			—			—			—
Unrealized net (losses) gains on investment securities available-for-sale			15,888			(3,974)			11,914			(8,070)			2,018			(6,052)			3,876			(1,491)			2,385
Reclassification adjustment for net realized (gains)/losses on investment securities available-for-sale			(907)			227			(680)			1,855			(464)			1,391			181			(70)			111
Unrealized net (losses) gains on derivatives			4,843			(1,211)			3,632			(1,254)			313			(941)			(1,187)			457			(730)
Accumulated other comprehensive (loss) income end of period		$	6,081		$	(1,520)		$	4,561		$	(13,743)		$	3,438		$	(10,305)		$	(6,274)		$	2,415		$	(3,859)

97

	For the Year Ended
	December 31, 2017												December 31, 2016												December 31, 2015
	Pre-Tax Amount				Income Tax (Expense) Benefit				After-Tax Amount				Pre-Tax Amount				Income Tax (Expense) Benefit				After-Tax Amount				Pre-Tax Amount				Income Tax (Expense) Benefit				After-Tax Amount
	(in thousands)
Accumulated other comprehensive (loss) income beginning of period	$	(9,144	)		$	3,519			$	(5,625	)		$	(2,455	)		$	939			$	(1,516	)		$	986			$	(377	)		$	609
Unrealized net (losses) gains on investment securities available-for-sale	3,876				(1,491		)		2,385				(6,227		)		2,403				(3,824		)		(4,126		)		1,578				(2,548		)
Reclassification adjustment for net realized gains on investment securities available-for-sale	181				(70		)		111				(44		)		17				(27		)		(10		)		4				(6		)
Unrealized net (losses) gains on derivatives	(1,187		)		457				(730		)		(418		)		160				(258		)		695				(266		)		429
Accumulated other comprehensive (loss) income end of period	$	(6,274	)		$	2,415			$	(3,859	)		$	(9,144	)		$	3,519			$	(5,625	)		$	(2,455	)		$	939			$	(1,516	)

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NOTE 13 – EARNINGS PER COMMON SHARE

Basic earnings per share amounts are computed by dividing net income by the weighted average number of shares of common stock outstanding.

Diluted earnings per share amounts are computed by dividing net income by the weighted average number of shares of common stock outstanding and the dilutive effects of the shares awarded under the stock option plan, based on the treasury stock method using an average fair market value of the stock during the respective periods.

The following table represents the earnings per share calculations from continuing operations and discontinued operations for the years ended December 31, 2017, 2016,2019, 2018, and 2015.2017.

		Year Ended December 31,
		2019			2018			2017
		(in thousands, except share and per share amounts)
Net income (loss) from continuing operations		$	28,158		$	28,050		$	(4,756)
Net income from discontinued operations			21,697			482			1,030
Net income (loss) available to common shareholders		$	49,855		$	28,532		$	(3,726)
Weighted average shares outstanding
Basic (1)			23,315,562			25,947,038			25,592,731
Effect of dilutive securities:
Stock options and performance share awards			162,439			164,717			229,354
Diluted			23,478,001			26,111,755			25,822,085
Net income (loss) per common share - basic
Net income (loss) per common share - continuing operations		$	1.21		$	1.08		$	(0.19)
Net income per common share - discontinued operations			0.93			0.02			0.04
Net income (loss) per common share - basic		$	2.14		$	1.10		$	(0.15)
Net income (loss) per common share - diluted
Net income (loss) per common share - continuing operations		$	1.20		$	1.07		$	(0.19)
Net income per common share - discontinued operations			0.92			0.02			0.04
Net income (loss) per common share - diluted		$	2.12		$	1.09		$	(0.15)

---

		Year Ended
		December 31,
		2017				2016				2015
		(in thousands, except share and per share amounts)
Net income (loss) available to common shareholders		$	(3,726	)		$	13,395			$	(1,319	)
Weighted average shares outstanding
Basic (1)		25,592,731				24,763,522				15,283,437
Effect of diluted securities:
Stock options and warrants		229,354				423,158				380,428
Diluted		25,822,085				25,186,680				15,663,865
Income (loss) per common share:
Basic		$	(0.15	)		$	0.54			$	(0.09	)
Diluted		$	(0.15	)		$	0.53			$	(0.09	)

(1)

Unvested restricted shares are participating securities and included in basic share calculations.

⁽¹⁾ Unvested restricted shares are participating securities and included in basic share calculations.

Stock options and warrants outstanding of 550, 747,150, 2,124, and 0550 at December 31, 2017, 2016,2019, 2018, and 2015,2017, respectively, have not been included in diluted earnings per share because to do so would have been anti-dilutive for the periods presented. These awards were considered anti-dilutive because the exercise price of the award was higher than the market value of the shares.

The Amended and Restated Articles of Incorporation of Atlantic Capital which were approved by the Board of Directors on March 24, 2015 and by Atlantic Capital’s shareholders on May 21, 2015, authorize Atlantic Capital to issue 110,000,000 shares of capital stock, of which 10,000,000 shares are designated as preferred stock, no par value per share, and 100,000,000 shares are designated as common stock, no par value per share. Atlantic Capital had 25,712,90921,751,026 and 25,093,13525,290,419 shares of common stock issued and outstanding at December 31, 20172019 and 2016,2018, respectively.

The primary source of funds available to Atlantic Capital is payments of dividends from the Bank. The Bank has not paid any dividends totaling $45.5 million and $30.0 million to Atlantic Capital in 2017 or 2016.2019 and 2018, respectively. Banking laws and other regulations limit the amount of dividends a bank subsidiary may pay without prior regulatory approval. Additionally, Atlantic Capital’s ability to pay dividends to its shareholders will depend on the ability of the Bank to pay dividends to Atlantic Capital. The Bank is subject to regulatory restrictions on the payment of cash dividends, which generally may be paid only from current earnings.

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On November 14, 2018, the Board of Directors authorized a stock repurchase program pursuant to which the Company may purchase up to $85 million of its issued and outstanding common stock. The timing and amounts of any repurchases depend on certain factors, including but not limited to market conditions and prices, available funds and alternative uses of capital. The stock repurchase program may be carried out through open-market purchases, block trades, negotiated private transactions and pursuant to a trading plan that was adopted in accordance with Rule 10b‑18 and Rule 10b5‑1 under the Securities Exchange Act of 1934. Atlantic Capital repurchased 3,694,902 shares and 822,100 shares in 2019 and 2018, respectively, for a total of $64.8 million and $14.2 million, respectively. Since the announcement of the $85.0 million buyback program in November 2018, Atlantic Capital has repurchased 4.5 million shares totaling $79.0 million.

NOTE 14 – INCOME TAXES

The components of income tax expense from continuing operations included in the Consolidated Statements of Operations for the years ended were as follows:

		For the year ended December 31,
(in thousands)		2019			2018			2017
Current income tax expense (benefit):
Federal		$	(2,587)		$	3,710		$	(561)
State			(183)			371			35
Total			(2,770)			4,081			(526)
Deferred income tax expense (benefit):
Federal			9,646			(1,798)			24,354
State			735			4,024			(113)
Total			10,381			2,226			24,241
Total income tax from continuing operations		$	7,611		$	6,307		$	23,715

(in thousands)		2017				2016				2015
Current income tax expense (benefit):
Federal		$	(7	)		$	4,497			$	1,204
State		140				130				270
Total		133				4,627				1,474
Deferred income tax expense (benefit):
Federal		24,354				2,679				(504		)
State		(113		)		643				(176		)
Total		24,241				3,322				(680		)
Total income tax		$	24,374			$	7,949			$	794

The income tax expense differs from the statutory rate of 21% in 2019 and 2018 and 35% in 2017, 2016 and 2015, as indicated in the following analysis:

		For the year ended December 31,
(in thousands)		2019			2018			2017
Tax expense (benefit) based on federal statutory rate		$	7,518		$	7,215		$	6,636
State taxes, net of federal benefit			572			899			102
Income tax credits			(10)			(103)			(208)
Tax-exempt earnings			(822)			(717)			(1,221)
Excess benefit			4			(142)			(298)
Nondeductible expenses			135			116			361
Change in uncertain tax positions reserve			137			56			(109)
Change in valuation allowance			(111)			(996)			(649)
Revaluation of deferred tax asset excluding valuation allowance due to tax reform			—			—			18,983
Other			188			(21)			118
Total income tax from continuing operations		$	7,611		$	6,307		$	23,715

(in thousands)		2017				2016				2015
Tax expense (benefit) based on federal statutory rate		$	7,227			$	7,470			$	(184	)
State taxes, net of federal benefit		170				716				(78		)
Income tax credits		(208		)		(51		)		(48		)
Tax-exempt earnings		(1,221		)		(893		)		(791		)
Nondeductible merger related expenses		—				178				1,152
Excess benefit		(298		)		—				—
Excess parachute payments under Section 280G		—				115				319
Nondeductible expenses		361				322				441
Federal rate adjustment		—				—				(27		)
Change in uncertain tax positions reserve		(109		)		8				79
Change in valuation allowance		(649		)		—				—
Revaluation of deferred tax asset excluding valuation allowance due to tax reform		18,983				—				—
Other		118				84				(69		)
Total income tax		$	24,374			$	7,949			$	794

Deferred income tax assets and liabilities result from differences between assets and liabilities measured for financial reporting purposes and for income tax return purposes. These assets and liabilities are measured using the enacted tax rates and laws. The net deferred tax asset is included as a component of other assets at December 31, 20172019 and 2016,2018, and is comprised of the following:

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(in thousands)		2017				2016
Net operating loss carryforward		$	29,754			$	46,334
Federal tax credits		5,648				5,505
State credits		482				96
Allowance for loan losses		4,794				7,966
Stock-based compensation		912				1,226
Deferred loan fees and costs, net		—				1,369
Other real estate owned		305				711
Goodwill and other intangibles		—				212
Transaction costs		803				1,483
Unfunded commitments		224				262
Organizational costs		145				274
Nonaccrual loan interest		402				278
Net unrealized losses on investment securities available‑for‑sale		1,396				3,709
Net unrealized losses on cash flow hedges		172				—
Long term incentive plan		562				1,649
Other		407				857
Total gross deferred tax assets		46,006				71,931
Less: valuation allowance		(8,532		)		(9,181		)
Net deferred tax asset		37,474				62,750
Unrealized gains on cash flow hedges		—				191
Depreciation		765				772
Deferred loan costs		241				—
Other		245				214
Total gross deferred tax liabilities		1,251				1,177
Net deferred tax assets		$	36,223			$	61,573

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On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“the Tax Act”) was enacted into law. The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for tax years beginning in 2018, which resulted in the remeasurement of the federal portion of our deferred tax assets as of December 31, 2017, from 35% to the new 21% tax rate.

(in thousands)		December 31, 2019			December 31, 2018
Net operating loss carryforward		$	15,743		$	25,992
Federal tax credits			5,342			5,342
State credits			—			27
Allowance for loan losses			4,545			4,374
Stock-based compensation			729			699
Other real estate owned			206			371
Transaction costs			152			787
Deferred rent			—			815
Lease liability			4,158			—
Nonaccrual loan interest			509			530
Net unrealized losses on investment securities available‑for‑sale			—			2,950
Net unrealized losses on cash flow hedges			—			486
Long term incentive plan			204			471
Other			2,197			2,229
Total gross deferred tax assets			33,785			45,073
Less: valuation allowance			(6,698)			(7,446)
Net deferred tax asset			27,087			37,627
Depreciation			626			1,215
Deferred loan costs			429			365
Other			301			192
Right of use asset - leases			2,944			—
Net unrealized gains on investment securities available‑for‑sale			796			—
Net unrealized gains on cash flow hedges			725			—
Total gross deferred tax liabilities			5,821			1,772
Net deferred tax assets		$	21,266		$	35,855

In assessing the realizability of deferred tax assets, management considers whether it is more‑likely-than-not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is provided when it is deemed more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the ability to realize the deferred tax assets, management considers the four possible sources of taxable income including future reversals of existing taxable temporary differences, future taxable income, taxable income in prior carryback years and tax-planning strategies that would, if necessary, be implemented. At December 31, 2015,2018, the Company recordedhad a valuation allowance of $9.5$7.4 million. This valuation allowance relatedrelates to the portion of net operating losses and credits that the Company will not be able to utilize due to limitations under Section 382 of the Internal Revenue Code. In the third quarter of 2019, the Company recorded a $700,000 favorable reduction of the valuation allowance on Federal deferred tax assets through discontinued operations from the finalization of the Branch Sale. At December 31, 2016, the Atlantic Capital decreased the valuation allowance to $9.2 million. The adjustment to the valuation allowance related to a decrease in the federal net operating loss expected to be utilized and increases in certain state carryforwards that are expected to be utilized. At December 31, 2017,2019, the Company increased the valuation allowance by $0.9 million for certain state carryforwards that are expected to expire before being utilized. This was offset by a $1.6 million reduction to the valuation allowance due to the change in Federal tax rate that is applied to attributes for whichhad a valuation allowance exists.

of $6.7 million.

ASC 740-10-65740‑10‑65 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has reviewed and evaluated the relevant

technical merits of each of its tax positions in accordance with ASC 740-10-65740‑10‑65 and determined there are no uncertain tax positions that would have a material impact on the financial statements of the Company as of December 31, 2017.

2019.

A reconciliation of the beginning and ending unrecognized tax benefit related to uncertain tax positions is as follows:

(in thousands)		2019			2018
Balance at beginning of year		$	278		$	216
Additions based on tax positions related to the current year			174			62
Settlement of prior year positions			—			—
Balance at end of year		$	452		$	278

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(in thousands)		2017				2016
Balance at beginning of year		$	319			$	311
Additions based on tax positions related to the current year		14				8
Settlement of prior year positions		(117		)		—
Balance at end of year		$	216			$	319

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The amount of unrecognized tax positions that would have impacted the effective tax rate if recognized was $171,000.

$357,000.

With the adoption of ASC 740-10-65,740‑10‑65, the Company elected to recognize accrued interest and penalties related to any future unrecognized tax benefits in current income tax expense. Interest in the amount of $40,000$65,000 and $39,000$51,000 was accrued as of December 31, 20172019 and 2016,2018, respectively. The total amount of interest and penalties recognized in current income tax expense during 2019, 2018, and 2017 2016was $14,000, $11,000 and 2015 was $30,000, $32,000 and $7,000,$3,000, respectively.

At December 31, 2017,2019, Atlantic Capital hashad operating loss carryforwards for federal income tax purposes of $111.2$50.2 million, which are available to offset future federal taxable income, if any, through 2035. Atlantic Capital hashad operating loss carryforwards for state income tax purposes of $125.2$101 million, which are available to offset future state taxable income, if any, through 2035. In addition,Additionally, Atlantic Capital hashad general business credits of approximately $5.4$5.3 million, which are available to reduce future federal income taxes, if any through 2035.  Atlantic Capital has alternative minimum tax credit carryforwards of approximately $329,000 available to reduce future federal regular income taxes, if any, over an indefinite period.

The Company’s income tax returns remain subject to examination by both U.S. federal and state jurisdictions for tax years 20142015 forward.

As of December 31, 2017, the Company recorded a net income tax expense for the estimated effects of the Tax Act of $17.4 million, which was primarily due to the remeasurement of the Company’s estimated deferred tax assets and deferred tax liabilities to reflect the new federal rate of 21%. However, as additional information becomes available and additional analysis is completed, the estimate of the deferred tax assets and deferred tax liabilities may change, which could impact the remeasurement of those deferred tax balances. Any adjustment would be recorded to the provision for income taxes in 2018 in the period the amounts are determined.

NOTE 15 - EMPLOYEE AND DIRECTOR BENEFIT PLANS

Defined Contribution Plan

Atlantic Capital sponsors a 401(k) qualified retirement plan that is qualified pursuant to Section 401 of the Internal Revenue Code. The plan is referred to as a “safe harbor 401(k) plan.” The plan allows eligible employees to defer a portion of their income by making contributions into the plan on a pretaxpre-tax or post-tax basis. The 401(k) plan has an auto enrollment feature starting with a 1% deferral rate for new participants who meet eligibility requirements. The plan also includes an automatic deferral escalation feature that increases each year up to a maximum participant deferral rate of 5%. The plan provides for a safe harbor matching contribution by Atlantic Capital. If theThe Company electswill make a matching contribution of 100% on participating employee’s deferrals up to make the safe harbor contribution, it will be at least 3%5% of their eligible employees’ compensation that is subject to income tax and paid during the plan year.compensation. Eligible employees are not required to participate in the plan in order to receive the safe harbor matching contribution. The plan also provides that the Board of Directors may authorize matching contributions based on a percentage of the amount contributed by the employee and discretionary profit sharing contributions. Employees of the Company must meet certain requirements concerning minimum age and credited period of service to participate in the plan. During the years ended December 31, 2017, 2016,2019, 2018, and 2015,2017, the Company contributed approximately $1.1 million, $1.1 million, and $1.0 million, $990,000, and $431,000, respectively, to this plan under its safe harbor provision.

Long-Term Incentive Plan

In 2012,

Atlantic Capital initiatedmaintains a long-term incentive plan for certain key employees. Bonuses under the Executive OfficersOfficer Long Term Incentive Plan (the “LTI Plan”) may be paid in lump sum in cash or in common stock or in any combination of cash and common stock. Awards are granted under the LTI Plan for a bonus period, which generally means a period of more than one year. Any shares of common stock earned under the LTI Plan are issued under and subject to the terms of the Company’s 2015 Stock Incentive Plan, as amended and restated. Awards are based on individual performance, business unit, division, or divisionsimilar performance or Company-wide performance, or any combination of these performance objectives. Awards granted in 2019, 2018, and 2017 2016, and 2015 cliff vest overare earned, if at all, at the end of a three year period from the date of the awards. Compensation expense for the LTI Plan was $1.5 million, $2.6 million,$765,000,  $879,000, and $1.9$1.5 million for the years ended December 31, 2019, 2018, and 2017, 2016,respectively. Beginning in 2018, the LTI Plan issued performance share awards under the Company’s 2015 Stock Incentive Plan. The awards granted in 2019 and 2015, respectively. These2018 are accounted for as equity awards. Previously, in 2017, no performance share awards arewere issued and LTI Plan awards were accounted for as liabilities and remeasured at each reporting date.

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Stock Incentive Plans

Atlantic Capital sponsors a stock incentive plan for the benefit of directors and employees. Under the Company’s 2015 Stock Incentive Plan (as amended and restated effective May 16, 2018) there were approximately 4,525,000 shares reserved for issuance to directors, employees, and employees.independent contractors of Atlantic Capital and its affiliates. The Compensation Committee has the authority to grant the following: an incentive or nonqualified option; a stock appreciation right (including a related SAR or a freestanding SAR); a restricted stock award (including a restricted stock award or a restricted stock unit award); a performance award (including a performance share award or a performance unit award); a phantom stock award; an other stock-based award; a cash bonus award; a dividend equivalent award; or any other award granted under the plan.

As of December 31, 2017,2019, approximately 3,726,0003,345,000 additional awards could be granted under the plan. Through December 31, 2017,2019, incentive stock options, nonqualified stock options, restricted stock awards, performance share awards, and non-restricted stockother stock-based awards have been granted under the plan. Stock options are granted at a price which is no less than the fair market value of a share of Atlantic Capital common stock on the grant date. Stock options generally vest over three years and expire after ten years.

As of December 31, 2017,2019 and 2018, no warrants were outstanding for the purchase of common stock. As of December 31, 2016, and 2015, warrants for 363,000, and 588,000 shares, respectively, were outstanding for the purchase of common stock at a price of $10.00 per warrant. The warrants were issued as of May 14, 2007, the date of issuance of common stock sold in the initial private placement, and were exercisable for a period of ten years following the issuance.

The Company accounts for stock options and warrants in accordance with FASB ASC 718, Stock Compensation, which requires the Company to recognize the costs of its employee stock option awards and warrants in its Consolidated Statements of Operations. According to ASC 718, the total cost of the Company’s share‑based awards is equal to their grant date fair value and is recognized as expense on a straight-line basis over the vesting period of the awards. Total stock-based compensation expense recognized by the Company during 2017, 2016,2019, 2018, and 20152017 for stock option grants was $169,000,  $242,000, and warrants was $1.1 million, $937,000, and $1.2 million, respectively. Unrecognized stock-based compensation expense related to stock option grants and warrants at December 31, 2019, 2018, and 2017 2016,was $59,000,  $308,000, and 2015 was $646,000, $1.7 million, and $2.7 million, respectively. At December 31, 2017, 2016,2019, 2018, and 2015,2017, the weighted average period over which this unrecognized expense is expected to be recognized was 2.60.8 years, 3.41.9 years, and 4.02.6 years, respectively. The weighted average remaining contractual life of options outstanding at December 31, 2017,2019 was 5.62.4 years.

The Company estimates the fair value of its options and warrants awards using the Black‑Scholes option pricing model. The risk-free rate for periods within the contractual life of the option and warrant is based on the U.S. Treasury yield curve in effect at the time of grant. There were no options or warrants awarded during 2016. The table below summarizes the assumptions used to calculate the fair value of options granted/modified during 20172019, 2018, and 2015:2017:

		For the year ended December 31,
		2019		2018		2017
Risk‑free interest rate		2.27	%	1.66	%	1.00-2.42	%
Expected term in years		1.73-1.82		0.25		.25-8
Expected stock price volatility		26.8	%	24.2	%	23.2-25.3	%
Dividend yield		—	%	—	%	—	%

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		For the year ended December 31,
		2017		2016		2015
Risk‑free interest rate		1.00-2.42%		N/A		2.16%
Expected term in years		.25-8		N/A		7.73
Expected stock price volatility		23.2-25.3%		N/A		40.00%
Dividend yield		—%		N/A		—%

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The following table represents stock option and warrant activity for the years ended December 31, 2017, 2016,2019, 2018, and 2015:2017:

								Weighted  Average
					Weighted			Remaining		Aggregate
					Average			Contractual Term		Intrinsic Value
		Shares			Exercise Price			(in years)		(in thousands)
Outstanding, December 31, 2018			442,454		$	12.02
Granted/modified(1)			12,500			10.00
Exercised			(90,330)			12.76
Forfeited(1)			(38,500)			13.17
Expired			(7,144)			17.79
Outstanding, December 31, 2019			318,980		$	11.47		2.41		$	2,203
Exercisable, December 31, 2019			308,980		$	11.36		2.30		$	2,170
Weighted average fair value of options granted/modified		$	8.07
Outstanding, December 31, 2017			757,711		$	12.66
Granted/modified(2)			15,000			14.64
Exercised			(310,016)			13.21
Forfeited(2)			(19,935)			14.08
Expired			(306)			105.97
Outstanding, December 31, 2018			442,454		$	12.02		3.98		$	1,990
Exercisable, December 31, 2018			396,454		$	11.67		3.63		$	1,919
Weighted average fair value of options granted/modified		$	2.79
Outstanding, December 31, 2016			1,485,704		$	11.69
Granted/modified(3)			229,100			13.53
Exercised			(724,912)			10.53
Forfeited(3)			(231,546)			13.50
Expired			(635)			126.22
Outstanding, December 31, 2017			757,711		$	12.66		5.56		$	3,883
Exercisable, December 31, 2017			662,016		$	12.39		5.24		$	3,585
Weighted average fair value of options granted/modified		$	7.15

---

Options and Warrants		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2016		1,485,704				$	11.69
Granted		229,100				13.53
Exercised		(724,912		)		10.53
Forfeited		(231,546		)		13.50
Expired		(635		)		126.22
Outstanding, December 31, 2017		757,711				$	12.66			5.56		$	3,883
Exercisable, December 31, 2017		662,016				$	12.39			5.24		$	3,585
Weighted average fair value of options and warrants granted		$	7.15
Outstanding, December 31, 2015		2,369,759				$	11.30
Exercised		(872,162		)		10.04
Canceled		(4,057		)		142.89
Forfeited		(7,836		)		10.76
Outstanding, December 31, 2016		1,485,704				$	11.69			4.33		$	11,104
Exercisable, December 31, 2016		1,204,558				$	11.10			3.38		$	9,755
Weighted average fair value of options and warrants granted		$	—
Outstanding, December 31, 2014		1,663,500				$	10.01
Options assumed from First Security		482,741				14.69
Granted		245,000				14.34
Exercised		(20,707		)		10.00
Canceled		(775		)		505.31
Outstanding, December 31, 2015		2,369,759				$	11.30			4.07		$	9,258
Exercisable, December 31, 2015		1,925,858				$	10.77			2.95		$	8,662
Weighted average fair value of options and warrants granted		$	7.00

(1)

During the year ended December 31, 2019, the Company modified options for 12,500 shares. The modifications are included as shares granted/modified and as shares forfeited in this table.

Atlantic Capital assumed the stock options issued to First Security employees and directors that were outstanding at the acquisition date. The fair value of these options was included in the total consideration issued to acquire First Security.

(2)

During the year ended December 31, 2018, the Company modified options for 15,000 shares. The modifications are included as shares granted/modified and as shares forfeited in this table.

(3)

During the year ended December 31, 2017, the Company modified options for 229,100 shares. The modifications are included as shares granted/modified and as shares forfeited in this table

The total fair value of shares vested during each of the years ended December 31, 2019, 2018, and 2017, 2016,was $208,000,  $307,000, and 2015, was $1.8 million, $1.2 million,respectively.

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In 2019 and $688,000, respectively.

2018, the Company granted performance share awards under Atlantic Capital’s 2015 Stock Incentive Plan to members of executive management to evidence awards granted under the LTI Plan. The Company also granted restricted stock awards to certain employees in 2019 and 2018 under the 2015 Stock Incentive Plan. Compensation expense for restricted stock is based on the fair value of restricted stock awards at the time of grant, which is equal to the value of Atlantic Capital’s common stock on the date of grant. Compensation expense for performance share awards are based on the fair value of Atlantic Capital’s stock at the grant date adjusted for market conditions, as well as the subsequent achievement of performance conditions over the vesting period. The value of restricted stock awards and performance share awards that are expected to vest is amortized into expense over the vesting period. Restricted stock awards generallymay cliff vest over 1-31‑3 years or vest on a pro-rata basis, generally over 3 years. The market value at the date of award is amortized by charges to compensation expense over the vesting period. Compensation expense related to these awards during 2017, 2016,2019, 2018, and 20152017 was $1.3 million, $801,000,$1.5 million, and $659,000,$1.3 million, respectively. Unrecognized compensation expense associated with restricted stock was $2.6$2.2 million, $2.4$2.5 million, and $1.9$2.6 million as of December 31, 2017, 2016,2019, 2018, and 2015,2017, respectively. At December 31, 2017, 2016,2019, 2018, and 2015,2017, the weighted average period over which this unrecognized expense is to be recognized was 3.02.1 years, 3.22.4 years, and 3.43.0 years, respectively. During 2017, 2016,2019, 2018, and 2015,2017, respectively, there were 132,487, 109,959,158,593,  139,507, and 150,516132,487 restricted stock and performance share awards granted at a weighted average grant price of $17.83, $14.34,$19.19,  $19.79, and $14.01$17.83. per share.

During the year ended December 31, 2019, the Company modified options for 12,500 shares and 4,719 restricted stock awards to two individuals. During the year ended December 31, 2018, the Company modified options for 15,000 shares and 6,869 restricted stock awards to two individuals. Also, during the year ended December 31, 2017, the Company modified options for 229,100 shares and 24,628 restricted stock awards to five individuals. The modifications allowed for the immediate vesting of the awards upon termination of service.retirement. The total incremental cost resulting from the modifications was approximately $31,000,  $111,000 and $709,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

The following table represents restricted stock and performance share award activity for the year ended December 31, 2017.2019, 2018, and 2017:

				Weighted Average Grant-
		Shares		Date Fair Value
Outstanding, December 31, 2018		272,695		$	18.09
Granted/modified(1)		158,593			19.19
Vested		(70,748)			16.51
Forfeited(1)		(67,663)			18.34
Outstanding, December 31, 2019		292,877		$	19.00
Outstanding, December 31, 2017		239,468		$	15.69
Granted/modified(1)		139,507			19.79
Vested		(73,686)			14.51
Forfeited(1)		(32,594)			15.91
Outstanding, December 31, 2018		272,695		$	18.09
Outstanding, December 31, 2016		259,165		$	13.70
Granted/modified(1)		132,487			17.83
Vested		(91,671)			13.54
Forfeited(1)		(60,513)			15.03
Outstanding, December 31, 2017		239,468		$	15.69
(1) During the years ended December 31, 2019, 2018, and 2017, the Company modified 4,719, 6,869 and 24,628 restricted stock awards, respectively. The modifications are included as shares granted/modified and as shares forfeited in the table above.

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The following table represents restricted stock activity for the twelve months ended December 31, 2017, 2016, and 2015:

	Shares			Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2016	259,165			$	13.70
Granted	132,487			17.83
Vested	(91,671	)		13.54
Forfeited	(60,513	)		15.03
Outstanding, December 31, 2017	239,468			$	15.69
Outstanding, December 31, 2015	217,658			$	13.07
Granted	109,959			14.34
Vested	(44,966	)		11.92
Forfeited	(23,486	)		14.23
Outstanding, December 31, 2016	259,165			$	13.70
Outstanding, December 31, 2014	132,093			$	10.84
Granted	150,516			14.01
Vested	(54,978	)		10.53
Forfeited	(9,973	)		11.80
Outstanding, December 31, 2015	217,658			$	13.07

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NOTE 16 – DERIVATIVES AND HEDGING

Risk Management

Atlantic Capital’s objectives in using interest rate derivatives are to add stability to net interest revenue and to manage its exposure to interest rate movements. To accomplish this objective, Atlantic Capital primarily uses interest rate swaps as part of its interest rate risk management strategy.

Cash Flow Hedges

At December 31, 2017,2019, Atlantic Capital’s interest rate swaps designated as cash flow hedges involve the payment of floating-rate amounts to a counterparty in exchange for receiving fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. At December 31, 20172019 and 2016,2018, Atlantic Capital had interest rate swaps designated as cash flow hedges with an aggregate notional amountamounts of $175.0 million and $100.0 million, and $50.0 million, respectively.

No hedge ineffectiveness gains or losses were recognized on active cash flow hedges in 20172019 or 2016.2018. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Atlantic Capital expects that approximately $159,000$271,000 will be reclassified as an increasea decrease to loan interest income over the next twelve months related to these cash flow hedges.

Customer Swaps

Atlantic Capital also enters into derivative contracts, which consist of interest rate swaps, to facilitate the needs of clients desiring to manage interest rate risk. These swaps are not designated as accounting hedges under ASC 815, Derivatives and Hedging. In order to economically hedge the interest rate risk associated with offering this product, Atlantic Capital simultaneously enters into derivative contracts with third parties to offset the customer contracts, such that Atlantic Capital minimizes its net risk exposure resulting from such transactions. The derivative contracts are structured such that the notional amounts reduce over time to generally match the expected amortization of the underlying loans. These derivatives are not speculative and arise from a service provided to clients.

Atlantic Capital’s derivative instruments are recorded at fair value in other assets and accrued interest receivable and other liabilities and accrued interest payable in the Consolidated Balance Sheets. The changes in the fair value of the derivative instruments are

recognized in other noninterestderivatives income in the Consolidated Statements of Operations. At December 31, 20172019 and 2016,2018, Atlantic Capital had interest rate swaps related to this program with an aggregate notional amount of $142.3$89.5 million and $140.7$109.5 million, respectively.

Atlantic Capital acquired a loan level hedging program, which First Security utilized to accommodate clients preferring a fixed rate loan. The loan documents include an addendum with a zero premium collar. The zero premium collar is a cap and a floor at the same interest rate, resulting in a fixed rate to the borrower. To hedge this embedded option, the Bank entersFirst Security entered into a dealer facing trade exactly mirroring the terms in the loan addendum.

At December 31, 2019 and 2018, Atlantic Capital had interest rate swaps related to this program with an aggregate notional amount of $149.1 million and $166.8 million, respectively.

Counterparty Credit Risk

As a result of its derivative contracts, Atlantic Capital is exposed to credit risk. Specifically approved counterparties and exposure limits are defined. On a quarterly basis, the customer derivative contracts and related counterparties are evaluated for credit risk and an adjustment is made to the contract’s fair value. This adjustment is recognized in the Consolidated Statements of Operations.

Most derivative contracts with clients are secured by collateral. Additionally, in

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In accordance with the interest rate agreements with derivatives dealers, Atlantic Capital may be required to post margin to these counterparties. At December 31, 20172019 and 2016,2018, Atlantic Capital had minimum collateral posting thresholds with certain of its derivative counterparties and posted collateral of $8.8$13.6. million and $16.3$5.1 million, respectively, against its obligations under these agreements. Cash collateral related to derivative contracts is recorded in other assets in the Consolidated Balance Sheets.

Atlantic Capital has master netting agreements with the derivatives dealers with which it does business, but reflects gross assets and liabilities on the Consolidated Balance Sheets.

In conjunction with the FASB’s fair value measurement guidance, management made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting arrangements on a net basis.

Atlantic Capital has master netting agreements with the derivatives dealers with which it does business, but reflects gross assets and liabilities on the Consolidated Balance Sheets.

To accommodate clients, Atlantic Capital occasionally enters into credit risk participation agreements with counterparty banks to accept a portion of the credit risk related to interest rate swaps. This allows clients to execute an interest rate swap with one bank while allowing for distribution of the credit risk among participating members. Credit risk participation agreements arise when Atlantic Capital contracts with other financial institutions, as a guarantor, to share credit risk associated with certain interest rate swaps. These agreements provide for reimbursement of losses resulting from a third party default on the underlying swap. At December 31, 20172019 and 2016,2018, Atlantic Capital had credit risk participation agreements with a notional amount of $14.8$7.7 million and $4.5$9.5 million, respectively.

The following table reflects the estimated fair value positions of derivative contracts and credit risk participation agreements as of December 31, 20172019 and 2016:2018:

Derivatives designated as hedging instruments under ASC 815

				December 31, 2019						December 31, 2018
(in thousands)		Balance Sheet		Notional						Notional
Interest Rate Products		Location		Amount			Fair Value			Amount			Fair Value
Cash flow hedge of LIBOR based loans		Other assets		$	125,000		$	3,578		$	—		$	—
Cash flow hedge of LIBOR based loans		Other liabilities		$	50,000		$	8		$	100,000		$	2,029

Derivatives not designated as hedging instruments under ASC 815

				December 31, 2019						December 31, 2018
(in thousands)		Balance Sheet		Notional						Notional
Interest Rate Products		Location		Amount			Fair Value			Amount			Fair Value
Customer swap positions		Other assets		$	44,763		$	1,025		$	54,760		$	756
Zero premium collar		Other assets			74,562			4,253			83,385			1,205
				$	119,325		$	5,278		$	138,145		$	1,961
Dealer offsets to customer swap positions		Other liabilities		$	44,763		$	1,090		$	54,760		$	770
Dealer offset to zero premium collar		Other liabilities			74,562			4,545			83,385			1,226
Credit risk participation		Other liabilities			7,657			4			9,532			2
				$	126,982		$	5,639		$	147,677		$	1,998

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Derivatives designated as hedging instruments under ASC 815
(in thousands)				December 31, 2017								December 31, 2016
Interest Rate Products		Balance Sheet Location		Notional Amount				Fair Value				Notional Amount				Fair Value
Cash flow hedge of LIBOR based loans		Other assets		$	—			$	—			$	50,000			$	186
Cash flow hedge of LIBOR based loans		Other liabilities		$	100,000			$	887			$	—			$	—
Derivatives not designated as hedging instruments under ASC 815
				December 31, 2017								December 31, 2016
Interest Rate Products		Balance Sheet Location		Notional Amount				Fair Value				Notional Amount				Fair Value
Customer swap positions		Other assets		$	71,160			$	946			$	70,352			$	1,364
Zero premium collar		Other assets		94,953				2,072				98,697				2,760
				$	166,113			$	3,018			$	169,049			$	4,124
Dealer offsets to customer swap positions		Other liabilities		$	71,160			$	975			$	70,352			$	1,371
Credit risk participation		Other liabilities		14,807				4				4,460				—
Dealer offset to zero premium collar		Other liabilities		94,953				2,157				98,697				2,760
				$	180,920			$	3,136			$	173,509			$	4,131

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The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Operations for the years ended December 31, 2019 and 2018:

Derivatives not designated as hedging instruments under ASC 815

		Location of Gain or		Amount of Gain or (Loss)
		(Loss) Recognized in		Recognized in Income on Derivative
(in thousands)		Income on Derivative		Year Ended December 31,
				2019			2018
Interest rate products		Other income / (expense)		$	(321)		$	79
Other contracts		Other income / (expense)			(1)			2
Total				$	(322)		$	81
Fee income		Other income / (expense)		$	—		$	227

The following table reflects the impact to the Consolidated Statements of Operations related to derivative contracts for the years ended December 31, 20172019 and 2016:2018:

Derivatives in Cash Flow Hedging Relationships

		Amount of Gain or (Loss)
		Recognized in OCI on Derivatives						Gain or (Loss) Reclassified from Accumulated OCI in Income
		(Effective Portion)						(Effective Portion)
(in thousands)		2019			2018			Location		2019			2018
Interest rate swaps		$	4,487		$	(1,229)		Interest income		$	(356)		$	26

Derivatives in Cash Flow Hedging Relationships
		Years ended December 31,
(in thousands)		Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)								Gain or (Loss) Reclassified from Accumulated OCI in Income (Effective Portion)
		2017				2016				Location		2017				2016
Interest rate swaps		$	(688	)		$	311			Interest income		$	499			$	712

NOTE 17 – REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. On January 1, 2015, the Company became subject to Basel III rules, which include transition provisions through January 1, 2019. Under Basel III, total capital consistconsists of two tiers of capital, Tier 1 and Tier 2. Tier 1 capital is further composed of Common Equity Tier 1 Capital and additional Tier 1 capital.

The transition provisions include important differences in determining the composition of regulatory capital between the Basel I rules and Basel III rules including, changes in capital deductions related to the Company’s deferred tax assets, and the inclusion of unrealized gains and losses on AFS debt and certain marketable equity securities recorded in accumulated other comprehensive income (“AOCI”). These changes are impacted by, among other things, future changes in interest rates, overall earnings performance and company actions. Changes to the composition of regulatory capital under Basel III, as compared to the Basel I rules, are recognized in 20% annual increments, and will bewere fully recognized as of January 1, 2019. When presented on a fully phased-in basis, capital, risk-weighted assets and the capital ratios assume all regulatory capital adjustments and deductions are fully recognized.

Common Equity Tier 1 Capital primarily includes qualifying common shareholders’ equity, retained earnings, accumulated other comprehensive income and certain minority interests. Goodwill, disallowed intangible assets and certain disallowed deferred tax assets are excluded from Common Equity Tier 1 Capital.

Additional Tier 1 capital primarily includes qualifying non-cumulative preferred stock, trust preferred securities subject to phase-out and certain minority interests. Certain deferred tax assets are also excluded.

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Tier 2 capital primarily consists of qualifying subordinated debt, a limited portion of the allowance for loan and lease losses, trust preferred securities subject to phase-out and reserves for unfunded lending commitments. The Company’s total capital is the sum of Tier 1 capital plus Tier 2 capital.

To meet adequately capitalized regulatory requirements, an institution must maintain a Common Equity Tier 1 Capital of 4.5%, a Tier 1 capital ratio of 6.0%, and a Total capital ratio of 8.0%. A “well-capitalized” institution must generally maintain capital ratios 200 basis points higher than the minimum guidelines. The risk-based capital rules have been further supplemented by a Tier 1 leverage ratio, defined as Tier 1 capital divided by quarterly average total assets, after certain adjustments. The Bank must maintain a Tier 1 leverage ratio of at least 5.0% to be classified as “well capitalized.” Failure to meet the capital requirements established by the joint agencies can lead to certain mandatory and discretionary actions by regulators that could have a material adverse effect on the Company’s consolidated financial statements.

The Basel III rules also introduced a capital conservation buffer which will beis fully phased in over four years beginning on January 1, 2016, with a maximum buffer of 0.625%and is 2.5% of risk-weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and 2.5% for 2019 and thereafter. Failure to maintain the required capital conservation buffer will result in limitations on capital distributions and on discretionary bonuses to executive officers.

The Basel III rules were implemented in the first quarter of 2015. The Company opted out of the AOCI treatment under the newthese requirements and, as such, unrealized security gains and losses will continue to be excluded from bank regulatory capital.

As of December 31, 20172019 and 2016,2018, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. Management believes there are no conditions or events since the previous notification that have changed the institution’s categorizations.

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The Company’s and the Bank’s actual capital amounts and ratios are presented in the table below:

		As of December 31, 2019
												To be Well Capitalized Under
							For Capital Adequacy					Prompt Corrective Action
		Actual					Purposes					Provisions
(dollars in thousands)		Amount			Ratio		Amount			Ratio		Amount		Ratio
Common Equity Tier 1 capital (to risk weighted assets):
Consolidated		$	285,456		12.0	%	$	106,740		4.5	%	N/A		N/A
Bank			327,426		13.8	%		106,698		4.5	%	154,119		6.5	%
Tier 1 capital (to risk weighted assets):
Consolidated		$	285,456		12.0	%	$	189,760		8.0	%	N/A		N/A
Bank			327,426		13.8	%		189,685		8.0	%	237,107		10.0	%
Total capital (to risk weighted assets):
Consolidated		$	354,757		15.0	%	$	142,320		6.0	%	N/A		N/A
Bank			346,854		14.6	%		142,264		6.0	%	189,685		8.0	%
Tier 1 capital (to average assets):
Consolidated		$	285,456		11.0	%	$	103,596		4.0	%	N/A		N/A
Bank			327,426		12.7	%		103,425		4.0	%	129,281		5.0	%

		As of December 31, 2018
												To be Well Capitalized
							For Capital Adequacy					Under Prompt Corrective
		Actual					Purposes					Action Provisions
		Amount			Ratio		Amount			Ratio		Amount		Ratio
Common Equity Tier 1 capital (to risk weighted assets):
Consolidated		$	285,250		11.5	%	$	112,033		4.5	%	N/A		N/A
Bank			304,907		12.3	%		112,022		4.5	%	161,809		6.5	%
Tier 1 capital (to risk weighted assets):
Consolidated		$	285,250		11.5	%	$	149,378		6.0	%	N/A		N/A
Bank			304,907		12.3	%		149,362		6.0	%	199,150		8.0	%
Total capital (to risk weighted assets):
Consolidated		$	353,458		14.2	%	$	199,170		8.0	%	N/A		N/A
Bank			323,411		13.0	%		199,150		8.0	%	248,937		10.0	%
Tier 1 capital (to average assets):
Consolidated		$	285,250		10.0	%	$	113,705		4.0	%	N/A		N/A
Bank			304,907		10.6	%		114,574		4.0	%	143,218		5.0	%

		As of December 31, 2017
(dollars in thousands)		Actual						For Capital Adequacy Purposes						To be Well Capitalized Under Prompt Corrective Action Provisions
Common Equity Tier 1 capital (to risk weighted assets):		Amount			Ratio			Amount			Ratio			Amount		Ratio
Consolidated		$	259,865		11.2	%		$	104,876		4.5	%		N/A		N/A
Bank		295,629			12.7	%		104,858			4.5	%		151,461		6.5	%
Tier 1 capital (to risk weighted assets):
Consolidated		$	259,865		11.2	%		$	139,834		6.0	%		N/A		N/A
Bank		295,629			12.7	%		139,810			6.0	%		186,414		8.0	%
Total capital (to risk weighted assets):
Consolidated		$	329,641		14.1	%		$	186,446		8.0	%		N/A		N/A
Bank		315,870			13.6	%		186,414			8.0	%		233,017		10.0	%
Tier 1 capital (to average assets):
Consolidated		$	259,865		9.7	%		$	106,706		4.0	%		N/A		N/A
Bank		295,629			11.1	%		107,009			4.0	%		133,761		5.0	%
		As of December 31, 2016
		Actual						For Capital Adequacy Purposes						To be Well Capitalized Under Prompt Corrective Action Provisions
Common Equity Tier 1 capital (to risk weighted assets):		Amount			Ratio			Amount			Ratio			Amount		Ratio
Consolidated		$	241,313		10.3	%		$	105,463		4.5	%		N/A		N/A
Bank		276,778			11.8	%		105,497			4.5	%		152,385		6.5	%
Tier 1 capital (to risk weighted assets):
Consolidated		$	241,313		10.3	%		$	140,617		6.0	%		N/A		N/A
Bank		276,778			11.8	%		140,663			6.0	%		187,551		8.0	%
Total capital (to risk weighted assets):
Consolidated		$	311,954		13.3	%		$	187,490		8.0	%		N/A		N/A
Bank		298,053			12.7	%		187,551			8.0	%		234,439		10.0	%
Tier 1 capital (to average assets):
Consolidated		$	241,313		9.1	%		$	106,179		4.0	%		N/A		N/A
Bank		276,778			10.4	%		106,179			4.0	%		132,724		5.0	%

NOTE 18 – FAIR VALUE MEASUREMENTS

Atlantic Capital follows the guidance pursuant to ASC No. 820-10,820‑10, Fair Value Measurements and Disclosures. This guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This issuance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. Atlantic Capital measures its investment securities and interest rate derivative assets and liabilities at fair value on a recurring basis. Fair value is used on a nonrecurring basis either when assets are evaluated for impairment or for disclosure purposes. Atlantic Capital measures its servicing assets, goodwill, intangible assets, loans held for sale, impaired loans and other real estate owned at fair value on a nonrecurring basis if necessary.

The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement and defines fair value as the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, this guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

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Atlantic Capital applied the following fair value hierarchy:

Level 1 – Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments or futures contracts.

Level 2 – Assets or liabilities valued based on observable market data for similar instruments.

Level 3 – Assets or liabilities for which significant valuation assumptions are not readily observable in the market, instruments valued based on the best available data, some of which is internally-developed, and risk premiums that a market participant would require.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement. There were no transfers between Level 1 and Level 2 or Level 2 and Level 3 during 2017. There was one transfer between Level 2 and Level 3 and no transfers between Level 1 and Level 2 during 2016.

2019 or 2018.

Atlantic Capital records investment securities available-for-sale at fair value on a recurring basis. Investment securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, Atlantic Capital obtains fair value measurements from an independent pricing service. In estimating the fair values for investment securities, Atlantic Capital believes that independent third-party market prices are the best evidence of an exit price. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the Treasury Department yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things.

Derivative instruments are primarily transacted as over-the-counter trades and priced with observable market assumptions. Ongoing measurements include observable market assumptions with appropriate valuation adjustments for liquidity and for credit risk of counterparties and Atlantic Capital’s own credit. For these instruments, Atlantic Capital obtains fair value measurements from an independent pricing service. The fair value measurements consider factors such as the likelihood of default by Atlantic Capital and its counterparties, total exposure and remaining maturities in determining the appropriate fair value adjustments to record. Generally, the expected loss of each client counterparty is estimated using Atlantic Capital’s internal risk rating system. For financial institution counterparties that are rated by national rating agencies, those ratings are used in determining the credit risk. This approach used to estimate exposures to counterparties is also used by Atlantic Capital to estimate its own credit risk on derivative liability positions.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy as reported in the Consolidated Balance Sheets at December 31, 20172019 and 2016.2018.

		Fair Value Measurements at December 31, 2019 Using:
		Quoted Prices
		in Active			Significant
		Markets for			Other			Significant
		Identical			Observable			Unobservable
		Securities			Inputs			Inputs
		(Level 1)			(Level 2)			(Level 3)			Total
		(in thousands)
Securities available-for-sale—
U.S. states and political subdivisions		$	—		$	82,485		$	—		$	82,485
Trust preferred securities			—			4,688			—			4,688
Corporate debt securities			—			19,920			—			19,920
Mortgage-backed securities			—			175,368			—			175,368
Total securities available-for-sale		$	—		$	282,461		$	—		$	282,461
Interest rate derivative assets		$	—		$	8,856		$	—		$	8,856
Interest rate derivative liabilities		$	—		$	5,647		$	—		$	5,647

		Fair Value Measurements at December 31, 2018 Using:
		Quoted Prices
		in Active			Significant
		Markets for			Other			Significant
		Identical			Observable			Unobservable
		Securities			Inputs			Inputs
		(Level 1)			(Level 2)			(Level 3)			Totals
		(in thousands)
Securities available-for-sale—
U.S. government agencies		$	—		$	26,849		$	—		$	26,849
U.S. states and political subdivisions			—			84,834			—			84,834
Trust preferred securities			—			4,400			—			4,400
Corporate debt securities			—			12,363			—			12,363
Mortgage-backed securities			—			274,040			—			274,040
Total securities available-for-sale		$	—		$	402,486		$	—		$	402,486
Interest rate derivative assets		$	—		$	1,961		$	—		$	1,961
Interest rate derivative liabilities		$	—		$	4,027		$	—		$	4,027

	2017 Fair Value Measurement Using
	Quoted Prices in Active markets for Identical Securities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
	(in thousands)
Securities available-for-sale—
U.S. government agencies	$	—			$	34,111			$	—			$	34,111
U.S. states and political subdivisions	—				90,001				—				90,001
Trust preferred securities	—				4,650				—				4,650
Corporate debt securities	—				12,622				—				12,622
Mortgage-backed securities	—				307,733				—				307,733
Total securities available-for-sale	$	—			$	449,117			$	—			$	449,117
Interest rate derivative assets	$	—			$	3,018			$	—			$	3,018
Interest rate derivative liabilities	$	—			$	4,023			$	—			$	4,023

	2016 Fair Value Measurement Using
	Quoted Prices in Active markets for Identical Securities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Totals
	(in thousands)
Securities available-for-sale—
U.S. government agencies	$	—			$	21,152			$	—			$	21,152
U.S. states and political subdivisions	—				90,172				—				90,172
Trust preferred securities	—				4,525				—				4,525
Corporate debt securities	—				19,231				—				19,231
Mortgage-backed securities	—				212,625				—				212,625
Total securities available-for-sale	$	—			$	347,705			$	—			$	347,705
Interest rate derivative assets	$	—			$	4,310			$	—			$	4,310
Interest rate derivative liabilities	$	—			$	4,131			$	—			$	4,131

The following table shows a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs that are classified as Level 3 values.

		Securities Available-for-Sale
		(in thousands)
December 31, 2015		$	2,414
Change due to presence of observable market data		(2,414		)
December 31, 2016		$	—

For Level 3 securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

Atlantic Capital had no Level 3 securities as of December 31, 2019 and 2018.

For the years ended December 31, 20172019 and 2016,2018, there was not a change in the methods and significant assumptions used to estimate fair value.

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Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The following table presents the assets that were measured at fair value on a nonrecurring basis by level within the fair value hierarchy as reported in the Consolidated Balance Sheets at December 31, 20172019 and December 31, 20162018.

Level 1

Level 2

Level 3

Fair Value

Fair Value

Fair Value

December 31, 2019

Measurement

Measurement

Measurement

Total

(in thousands)

Impaired Loans

$

—

$

—

$

4,288

$

4,288

Level 1

Level 2

Level 3

Fair Value

Fair Value

Fair Value

December 31, 2018

Measurement

Measurement

Measurement

Total

(in thousands)

Impaired Loans

$

—

$

—

$

1,836

$

1,836

December 31, 2017		Level 1 Fair Value Measurement				Level 2 Fair Value Measurement				Level 3 Fair Value Measurement				Total
	(in thousands)
Impaired Loans		$	—			$	—			$	2,199			$	2,199

December 31, 2016		Level 1 Fair Value Measurement				Level 2 Fair Value Measurement				Level 3 Fair Value Measurement				Total
	(in thousands)
Impaired Loans		$	—			$	—			$	7,248			$	7,248

Level 3 loans consist of impaired loans which have been partially charged-off or have specific valuation allowances. The fair value of Level 3 assets is estimated based on the underlying collateral value. For loans which the cash proceeds from the sale of the underlying collateral is the expected source of repayment, the fair value of these loans was derived from internal estimates of the underlying collateral incorporating market data, including third party appraisals or evaluations, when available. Appraised values may be discounted based on management’s assessment of the level of inactivity in the real estate market and other markets for the underlying collateral, changes in market conditions from the time of the valuation, and other information that in management’s judgment may affect the value. Impaired loans are evaluated on at least a quarterly basis and adjusted accordingly.

Assets and Liabilities Not Measured at Fair Value

FASB ASC 825, Financial Instruments, requires disclosure of fair value information about

For financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Wherehave quoted market prices, those quotes are notused to determine fair value. Financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate, are assumed to have a fair value that approximates the reported book value, after taking into consideration any applicable credit risk. If no market quotes are available, financial instruments are valued by discounting the expected cash flows using an estimated current market interest rate for the financial instrument. For loans held for investment, fair values are basedvalue is measured using the exit price notion. For off-balance sheet derivative instruments, fair value is estimated as the amount that Atlantic Capital would receive or pay to terminate the contracts at the reporting date, taking into account the current unrealized gains or losses on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

open contracts.

The following disclosure should not be considered a surrogate of the liquidation valueshort maturity of Atlantic Capital or the Bank, but ratherCapital’s assets and liabilities results in having a good-faith estimate of the increase or decrease in valuesignificant number of financial instruments held by Atlantic Capital since purchase, originationwhose fair value equals or issuance.

Theclosely approximates carrying value. Such financial instruments are reported in the following methods and assumptions were used by the Company in estimating its fair values disclosures for financial instruments:

Cash and Cash Equivalents. Forbalance sheet captions: cash and due from banks, interest-bearing deposits in other banks, commercial paper, federal funds soldother short-term investments, and reverse repurchase agreements the carrying amount is a reasonable estimate of fair value.

Investment Securities Available-for-Sale. Fair values for investment securities available-for-sale are based on quoted market prices.

Federal Home Loan Bank Stock. The Federal Home Loan Bank has historically repurchased their stock at cost. Therefore, the carrying amount is considered a reasonable estimate of its fair value.

Loans Held for Investment, Net.FHLB stock. The fair value of fixed rate loanssecurities equals quoted market prices, if available. If a quoted market price is not available, fair value is estimated by discountingused quoted market prices for similar securities or dealer quotes. Due to the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratingsshort-term settlement of accrued interest receivable and adjusted for a market liquidity discount. For variable rate loanspayable, the carrying amount is a reasonable estimate ofclosely approximates fair value, adjusted for a market liquidity discount. Estimating the fair value of the loan portfolio when loan sales and trading markets are illiquid requires significant judgment. Therefore, the estimated fair value can vary significantly depending on a market participant’s ultimate considerations and assumptions.

The Company uses assumptions that are expected to approximate those that a market participant purchasing the loans would use to value the loans in the current environment. The final value yields a market participant’s expected return on investment that is indicative of the current market conditions, but it does not take into consideration the Company’s estimated value from continuing to hold these loans or its lack of willingness to transact at these estimated values.

Loans Held for Sale and Deposits to be Assumed in Branch Sale. Loans held for sale and deposits to be assumed in branch sale are carried at the lower of cost or market value. The fair value is based on what secondary markets are currently offering for portfolios with similar characteristics.

Derivative Financial Instruments. The estimated fair value of the interest rate swaps and credit risk participations are based on cash flow models supported by market data inputs.

Deposits. The fair value of demand deposits, savings accounts, NOW accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposits is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities.

Advances from the Federal Home Loan Bank. The fair value of the FHLB fixed rate borrowing is estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements. For variable rate FHLB borrowings the carrying amount is a reasonable estimate of fair value.

Subordinated Debt. The fair value of subordinated debt is estimated using discounted cash flows, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Off–Balance Sheet Financial Instruments. Because commitments to extend credit and letters of credit are generally short-term and at variable rates, the contract value and estimated fair value associated with these instruments are immaterial.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect anythe premium or discount on any particular financial instrument that could result from offering forthe sale at one timeof Atlantic Capital’s entire holdingsholdings. Because no ready market exists for a significant portion of a particularAtlantic Capital’s financial instrument.

Fairinstruments, fair value estimates are based on existing onmany judgments. These estimates are subjective in nature, involve uncertainties and off-balancematters of significant judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Off-balance sheet financial instruments without attempting(commitments to estimateextend credit and standby letters of credit) are generally short-term and at variable rates. Therefore, both the value of anticipated future businesscarrying amount and the estimated fair value associated with these instruments are immaterial.

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Table of assets and liabilities that are not considered financial instruments.Contents

The following table presentstables present the estimated fair values of Atlantic Capital’s financial instruments at December 31, 20172019 and December 31, 2016.2018.

		Fair Value Measurements at
		December 31, 2019 Using:
					Quoted Prices
					in Active			Significant
					markets for			Other			Significant
					Identical			Observable			Unobservable
		Carrying			Securities			Inputs			Inputs
		Amount			(Level 1)			(Level 2)			(Level 3)
		(in thousands)
Financial assets:
Cash and due from banks		$	45,249		$	45,249		$	—		$	—
Interest-bearing deposits in banks			421,079			421,079			—			—
Total securities available-for-sale			282,461			—			282,461			—
Total securities held-to-maturity			116,972			—			115,291			—
FHLB stock			2,680			—			—			2,680
Federal Reserve Bank stock			9,998			—			—			9,998
Loans held for investment, net			1,873,524			—			—			1,890,258
Loans held for sale			370			—			370			—
Derivative assets			8,856			—			8,856			—
Financial liabilities:
Deposits		$	2,499,046		$	—		$	2,421,957		$	—
Subordinated debt			49,873			—			50,081			—
Derivative financial instruments			5,647			—			5,647			—

		Fair Value Measurements at
		December 31, 2018 Using:
					Quoted Prices
					in Active			Significant
					markets for			Other			Significant
					Identical			Observable			Unobservable
		Carrying			Securities			Inputs			Inputs
		Amount			(Level 1)			(Level 2)			(Level 3)
		(in thousands)
Financial assets:
Cash and due from banks		$	42,895		$	42,895		$	—		$	—
Interest-bearing deposits in other banks			216,040			216,040			—			—
Other short-term investments			9,457			9,457			—			—
Total securities available-for-sale			402,486			—			402,486			—
FHLB stock			2,622			—			—			2,622
Federal Reserve Bank stock			9,906			—			—			9,906
Loans held for investment, net			1,710,222			—			—			1,740,438
Loans held for sale			5,889			—			5,889			—
Loans held for sale - discontinued operations			373,030			—			373,030			—
Derivative assets			1,961			—			1,961			—
Financial liabilities:
Deposits		$	1,952,514		$	—		$	1,830,673		$	—
Deposits to be assumed - discontinued operations			585,429			—			585,429			—
Securities sold under agreements to repurchase - discontinued operations			6,220			6,220			—			—
Subordinated debt			49,704			—			48,960			—
Derivative financial instruments			4,027			—			4,027			—

In accordance with the adoption of ASU 2016‑01 in 2018, the methods used to measure the fair value of financial instruments at December 31, 2019 represent an approximation of exit price, however, an actual exit price may differ.

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	Fair Value Measurements at
	December 31, 2017 Using:
	Carrying Amount				Quoted Prices in Active markets for Identical Securities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	(in thousands)
Financial assets:
Cash and due from banks	$	38,086			$	38,086			$	—			$	—
Interest-bearing deposits in banks	281,247				281,247				—				—
Other short-term investments	10,681				10,681				—				—
Total securities available-for-sale	449,117				—				449,117				—
FHLB stock	4,388				—				—				4,388
Federal Reserve Bank stock	9,792				—				—				9,792
Loans held for investment, net	1,914,495				—				—				1,955,705
Loans held for sale	1,487				—				1,487				—
Derivative assets	3,018				—				3,018				—
Financial liabilities:
Deposits	$	2,450,665			$	—			$	2,411,810			$	—
Subordinated debt	49,535				—				49,888				—
FHLB advances	45,000				—				45,057				—
Derivative financial instruments	4,023				—				4,023				—

Table of Contents

	Fair Value Measurements at
	December 31, 2016 Using:
	Carrying Amount				Quoted Prices in Active markets for Identical Securities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	(in thousands)
Financial assets:
Cash and due from banks	$	36,790			$	36,790			$	—			$	—
Interest-bearing deposits in other banks	118,039				118,039				—				—
Other short-term investments	10,896				10,896				—				—
Total securities available-for-sale	347,705				—				347,705				—
FHLB stock	7,067				—				—				7,067
Federal Reserve Bank stock	9,690				—				—				9,690
Loans held for investment, net	1,960,735				—				—				1,939,895
Loans held for sale	35,219				—				35,219				—
Derivative assets	4,310				—				4,310				—
Financial liabilities:
Deposits	$	2,205,991			$	—			$	2,144,196			$	—
Deposits to be assumed in branch sale	31,589				—				31,589				—
Subordinated debt	49,366				—				48,971				—
FHLB advances	110,000				—				109,946				—
Derivative financial instruments	4,131				—				4,131				—

NOTE 19 – COMMITMENTS AND CONTINGENCIES

Atlantic Capital is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit, most of which are standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Consolidated Balance Sheets. The contract amounts of these instruments reflect the extent of involvement Atlantic Capital has in particular classes of financial instruments.

Standby letters of credit are written conditional commitments issued by Atlantic Capital to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. Most letters of credit expire in less than one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Atlantic Capital’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. Atlantic Capital uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Atlantic Capital’s maximum exposure to credit risk for unfunded loan commitments and standby letters of credit as well as a summary of minimum lease payments at December 31, 20172019 and December 31, 2016 was2018 were as follows:

		December 31, 2019			December 31, 2018
		(in thousands)
Financial Instruments whose contract amount represents credit risk:
Commitments to extend credit		$	735,905		$	715,591
Standby letters of credit			8,053			15,650
		$	743,958		$	731,241
Minimum lease payments		$	20,055		$	22,014

	December 31, 2017				December 31, 2016
	(in thousands)
Financial Instruments whose contract amount represents credit risk:
Commitments to extend credit	$	689,753			$	617,432
Standby letters of credit	10,958				16,625
	$	700,711			$	634,057
Minimum lease payments	$	18,894			$	8,630

The Company also had commitments related to investment in SBICs totaling $2.4 million and $3.2 million at December 31, 2019 and 2018, respectively.

Atlantic Capital, in the normal course of business, is subject to various pending and threatened lawsuits in which claims for monetary damages are asserted. Although it is not possible to predict the outcome of these lawsuits, or the range of any possible loss, management, after consultation with legal counsel, does not anticipate that the ultimate aggregate liability, if any, arising from these lawsuits will have a material adverse effect on Atlantic Capital’s financial position or results of operations.

NOTE 20 – REVENUE RECOGNITION

On January 1, 2018, the Company adopted ASU No. 2014‑09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent ASUs that modified Topic 606. As stated in Note 2, Accounting Standards Updates and Recently Adopted Standards, the implementation of the new standard did not result in any significant changes to the Company’s methodology of recognizing revenue; as such, the Company recorded a cumulative effect adjustment to first quarter 2018 opening retained earnings in an amount of approximately $1,000. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605.

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Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with financial guarantees and derivatives are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as service charges on deposit accounts and trust and asset management income. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams within the scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges represent general service fees for monthly account maintenance and activity, or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when the performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed, such as a wire transfer or ATM withdrawal. Payment for such performance obligations are generally received at the time the performance obligations are satisfied. The following table presents service charges by type of service provided for the years ended December 31, 2019, 2018, and 2017:

		Year Ended December 31,
		2019			2018			2017
		(in thousands)
Deposit account analysis fees and charges		$	2,630		$	2,166		$	1,785
ATM fees			58			223			234
NSF fees			57			97			74
Wire fees			483			426			356
Foreign exchange fees			352			288			258
Other			7			15			27
Total service charges - continuing operations			3,587			3,215			2,734
Service charges - discontinued operations			527			1,922			2,342
Total service charges		$	4,114		$	5,137		$	5,076

Trust and Asset Management

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered. During the second quarter of 2018, Atlantic Capital sold its trust business. The following table presents trust income by type of service provided for the years ended December 31, 2018, and 2017:

	2018			2017
Personal trust and agency accounts	$	615		$	1,012
Employee benefit and retirement-related trust and agency accounts		120			225
Investment management and investment advisory agency accounts		216			355
Custody and safekeeping accounts		26			68
Other		48			154
	$	1,025		$	1,814

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Other

Other noninterest income consists of other recurring revenue streams such as check printing income, safety deposit box rental fees, and other miscellaneous revenue streams. Check printing income is recognized ratably over the contract period as the Company satisfies its performance obligation to sell a specific number of check packages. Safe deposit box rental fees are charged to the customer annually and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of December 31, 2019 and 2018, the Company did not have any significant contract balances.

NOTE 21 – ATLANTIC CAPITAL BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Balance Sheets

(in thousands)

		December 31,
		2019			2018
Assets
Cash		$	7,752		$	30,568
Investment in subsidiary			368,465			343,311
Other assets			938			260
Total assets		$	377,155		$	374,139
Liabilities and shareholders’ equity
Long-term debt		$	49,873		$	49,704
Other liabilities			787			782
Total liabilities			50,660			50,486
Shareholders’ equity:
Common stock			230,265			291,771
Retained earnings			91,669			42,187
Accumulated other comprehensive income			4,561			(10,305)
Total shareholders’ equity			326,495			323,653
Total liabilities and shareholders’ equity		$	377,155		$	374,139

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Balance Sheets
(in thousands)
		December 31,
		2017				2016
Assets
Cash		$	14,151			$	15,731
Investment in subsidiary		344,188				339,124
Other assets		403				305
Total assets		$	358,742			$	355,160
Liabilities and shareholders’ equity
Long-term debt		$	49,535			$	49,366
Other liabilities		782				2,136
Total liabilities		50,317				51,502
Shareholders’ equity:
Common stock		299,474				292,747
Retained earnings		12,810				16,536
Accumulated other comprehensive income		(3,859		)		(5,625		)
Total shareholders’ equity		308,425				303,658
Total liabilities and shareholders’ equity		$	358,742			$	355,160

NOTE 20 – ATLANTIC CAPITAL BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED)

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Statements of Operations
(in thousands)
		Year Ended December 31,
		2017				2016				2015
Income:
Interest income		$	197			$	98			$	46
Total income		197				98				46
Expense:
Interest on long-term debt		3,294				3,282				858
Professional fees		—				—				1,582
Other expense		1,113				322				615
Total expense		4,407				3,604				3,055
Loss before income tax expense and equity in undistributed (losses) earnings from subsidiary		(4,210		)		(3,506		)		(3,009		)
Income tax benefit		(1,681		)		(849		)		(1,126		)
Loss before equity in undistributed (losses) earnings of subsidiary		(2,529		)		(2,657		)		(1,883		)
Equity in undistributed (losses) earnings of subsidiary		(1,197		)		16,052				564
Net (loss) income		$	(3,726	)		$	13,395			$	(1,319	)

Statements of Operations

(in thousands)

		Year Ended December 31,
		2019			2018			2017
Income:
Interest income		$	—		$	381		$	197
Total income			—			381			197
Expense:
Interest on long-term debt			3,294			3,304			3,294
Other expense			1,231			1,134			1,113
Total expense			4,525			4,438			4,407
Loss before income tax expense and equity in undistributed (losses) earnings from subsidiary			(4,525)			(4,057)			(4,210)
Income tax benefit			(1,217)			(1,091)			(1,681)
Loss before equity in undistributed (losses) earnings of subsidiary			(3,308)			(2,966)			(2,529)
Equity in undistributed earnings (losses) of subsidiary			53,163			31,498			(1,197)
Net income (loss)		$	49,855		$	28,532		$	(3,726)

Statements of Cash Flows

(in thousands)

		Year Ended December 31,
		2019			2018			2017
Operating activities
Net (loss) income		$	49,855		$	28,532		$	(3,726)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiary			(53,163)			(31,498)			1,197
Decrease (increase) in other assets			(1,521)			(705)			(1,264)
(Decrease) increase in other liabilities			173			169			(1,354)
Net cash provided by (used in) operating activities			(4,656)			(3,502)			(5,147)
Investing activities
Net cash (used in) provided by investing activities			—			—			—
Financing activities
Proceeds from exercise of stock options			1,154			4,096			3,567
Cash dividends received			45,500			30,000			—
Repurchase of common stock			(64,814)			(14,177)			—
Net cash provided by financing activities			(18,160)			19,919			3,567
Net (decrease) increase in cash and cash equivalents			(22,816)			16,417			(1,580)
Cash equivalents, beginning of year			30,568			14,151			15,731
Cash equivalents, end of year		$	7,752		$	30,568		$	14,151

NOTE 20 – ATLANTIC CAPITAL BANCSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED)

Statements of Cash Flows
(in thousands)
		Year Ended December 31,
		2017				2016				2015
Operating activities
Net (loss) income		$	(3,726	)		$	13,395			$	(1,319	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiary		1,197				(16,052		)		(564		)
Decrease (increase) in other assets		(1,264		)		1,928				(433		)
(Decrease) increase in other liabilities		(1,354		)		2,100				(19		)
Net cash provided by (used in) operating activities		(5,147		)		1,371				(2,335		)
Investing activities
Advances to subsidiaries		—				—				(16,000		)
Cash consideration paid for acquisition		—				—				(47,098		)
Net cash (used in) provided by investing activities		—				—				(63,098		)
Financing activities
Proceeds from issuance of long-term debt		—				—				50,000
Net proceeds from issuance of common stock		—				—				24,004
Proceeds from exercise of stock options		3,567				3,947				—
Acquisition of treasury stock		—				—				(707		)
Net cash provided by (used in) financing activities		3,567				3,947				73,297
Net (decrease) increase in cash and cash equivalents		(1,580		)		5,318				7,864
Cash equivalents, beginning of year		15,731				10,413				2,549
Cash equivalents, end of year		$	14,151			$	15,731			$	10,413

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.	CONTROLS AND PROCEDURES

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2017.2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2017,2019, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for the preparation, integrity, accuracy, and fair presentation of the Consolidated Financial Statements appearing in this Annual Report on Form 10-K10‑K for the fiscal year ended December 31, 2017.2019.  The financial statements were prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and include amounts based on judgments and estimates by management.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f)13a‑15(f) and 15d-15(f)15d‑15(f) under the Exchange Act.  The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements in accordance with GAAP.  Our internal control over financial reporting is supported by internal audits, appropriate reviews by management, policies and guidelines, careful selection and training of qualified personnel, and a code of ethics adopted by our Board of Directors that is applicable to all directors, officers, and employees of the Company.

Because of its inherent limitations, no matter how well designed, internal control over financial reporting may not prevent or detect all misstatements.  Internal controls can only provide reasonable assurance with respect to financial statement preparation and presentation.  Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline.

Management assessed the effectiveness of the Company’s internal control over financial reporting, with the participation of the Company’s chief executive officer and chief financial officer, as of December 31, 2017.2019.  In conducting this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).  Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2017.

2019.

As an “emerging growth company” under the Jumpstart our Business Startups Act of 2012, we are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.  As a result, the Company’s independent registered public accounting firm has not audited or issued an attestation report with respect to the effectiveness of our internal control over financial reporting, as of December 31, 2017.2019.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d)13a‑15(d) or 15d-15(d)15d‑15(d) of the Exchange Act that occurred during the quarterly period ended December 31, 2017,2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.	OTHER INFORMATION

ITEM 9B.    OTHER INFORMATION

None.

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PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required under this item is incorporated herein by reference to the information presented under the headings “Proposal 1 - Election of Directors,” “Directors and Executive Officers,” “Corporate Governance Matters” and “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” in the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 20172019 (the “Proxy Statement”).

ITEM 11.	EXECUTIVE COMPENSATION

ITEM 11.    EXECUTIVE COMPENSATION

The information required under this item is incorporated herein by reference to the information presented under the headings “Corporate Governance Matters,” “Executive Compensation,” “Director Compensation,” and “Compensation and Other Information Concerning Our Executive Officers and Directors” in the Proxy Statement.

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information required under this item is incorporated herein by reference to the information presented under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation” in the Proxy Statement.

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required under this item is incorporated herein by reference to the information presented under the headings “Certain Relationships and Related Person Transactions” and “Corporate Governance Matters” in the Proxy Statement.

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required under this item is incorporated herein by reference to the information presented under the heading “Proposal 2 - Ratification of the Independent Registered Public Accounting Firm for 2018”2020” in the Proxy Statement.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

ITEM 15. (a)	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	The following documents are filed as part of this report:

(a)    The following documents are filed as part of this report:

(1)    Financial Statements:

(i)    Report of Independent Registered Public Accounting Firm

(1)

Financial Statements:

(ii)

(i)

Report of Independent Registered Public Accounting Firm

(ii)

Consolidated Balance Sheets at December 31, 20172019 and December 31, 20162018

(iii)		Consolidated Statements of Operations for the Years Ended December 31, 2017,2019,  December 31, 2016,2018, and December 31, 20152017

(iv)		Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017,2019,  December 31, 2016,2018, and December 31, 20152017

(v)		Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017,2019,  December 31, 2016,2018, and December 31, 20152017

(vi)		Consolidated Statements of Cash Flows for the Years Ended December 31, 2017,2019,  December 31, 2016,2018, and December 31, 20152017

(vii)    Notes to Consolidated Financial Statements

(vii)

Notes to Consolidated Financial Statements

(2)

(2)

Financial Statement Schedules: None. Financial statement schedules have been omitted since the required information is included in our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K.10‑K.

(3)		Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as a part of this Annual Report on Form 10-K.10‑K.

(b)		Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as a part of this Annual Report on Form 10-K.10‑K.

(c)		Separate Financial Statements and Schedules: None. Financial statement schedules have been omitted since the required information is included in our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K.10‑K.

ITEM 16.    FORM 10‑K SUMMARY

ITEM 16.	FORM 10-K SUMMARY

None.

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EXHIBIT INDEX

Exhibit No.	Description
Exhibit No. 2.1	Description
2.1	Agreement and Plan of Merger, dated as of March 25, 2015 by and between Atlantic Capital Bancshares, Inc. and First Security Group, Inc., which is incorporated by reference to Exhibit 2.1 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
2.2	First Amendment to the Agreement and Plan of Merger, dated as of June 8, 2015 by and between Atlantic Capital Bancshares, Inc. and First Security Group, Inc., which is incorporated by reference to Exhibit 2.2 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
3.1	Amended and Restated Articles of Incorporation of Atlantic Capital Bancshares, Inc., which are incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
3.2	Amended and Restated Bylaws of Atlantic Capital Bancshares, Inc., which are incorporated by reference to Exhibit 3.1 to our Current Report on Form 8‑K, initially filed with the Securities and Exchange Commission on January 19, 2017.
4.1	Form of Stock Certificate of Atlantic Capital Bancshares, Inc., which is incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
4.2	Issuing and Paying Agency Agreement, dated September 14, 2015, between Atlantic Capital Bancshares, Inc. and U.S. Bank National Association, which is incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2015.
4.3	Form of 6.25% Fixed-to-Floating Rate Subordinated Note due 2025, which is incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2015.
10.1 4.4	Corporate Governance Agreement, dated March 25, 2015, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, and BCP Fund I Southeast Holdings LLC, which is incorporated by reference to Exhibit 10.3 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.Description of Securities.
10.2* 10.1(a)*	Employment Agreement, dated January 1, 2015, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, and Douglas L. Williams, which is incorporated by reference to Exhibit 10.4 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.3*	Amendment No. 1 to Employment Agreement, dated July 20, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, and Douglas L. Williams, which is incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on August 8, 2017.
10.4*	Employment Agreement, dated November 17, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and Douglas L. Williams, which is incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (file no. 001-37615), filed with the Securities and Exchange Commission on November 20, 2017.
10.5* 10.1(b)*	Employment Agreement, dated June 5, 2015, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, and D. Michael Kramer, which is incorporated by reference to Exhibit 10.5 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.6*	Amendment No. 1 to Employment Agreement, dated July 20, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, and D. Michael Kramer, which is incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on August 8, 2017.
10.7*	Separation Agreement, dated October 25, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and D. Michael Kramer, which is incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (file no. 001-37615), filed with the Securities and Exchange Commission on October 26, 2017.
10.8*	Offer Letter, dated September 30, 2015, between Atlantic Capital Bancshares, Inc., and Patrick T. Oakes, which is incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 8, 2015.

10.9*	Employment Agreement, dated December 21, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and Patrick T. Oakes which is incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (file no. 001-37615), filed with the Securities and Exchange Commission on December 22, 2017.
10.10* 10.1(c)*	Employment Agreement, dated December 21, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and Richard A. Oglesby, Jr., which is incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (file no. 001-37615), filed with the Securities and Exchange Commission on December 22, 2017.
10.11* 10.1(d)*	Employment Agreement, dated December 21, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and Annette Rollins.F. Rollins, which is incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 15, 2018.
10.12* 10.1(e)*	Employment Agreement, dated December 21, 2017, by and among Atlantic Capital Bancshares, Inc., Atlantic Capital Bank, N.A. and Kurt A. Shreiner.Shreiner, which is incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 15, 2018.
10.13* 10.2*	Atlantic Capital Bancshares, Inc. 2006 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.8 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.14* 10.3(a)	Form of Employee Restricted Stock Award Agreement under the 2006 Stock Incentive Plan (for employees with employment agreements), which is incorporated by reference to Exhibit 10.9 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015. [reserved]

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10.15* 10.3(b)	Form of Employee Restricted Stock Award Agreement under the 2006 Stock Incentive Plan (for employees without employment agreements), which is incorporated by reference to Exhibit 10.10 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.16* 10.3(c)	Form of Non-Employee Director Restricted Stock Award Agreement under the 2006 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.11 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015. [reserved]
10.17* 10.4(a)*	Form of Employee Stock Option Agreement under the 2006 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.12 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.18* 10.4(b)*	Form of Non-Employee Director Stock Option Agreement under the 2006 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.13 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.19* 10.5(a)	[reserved]
10.5(b)*	Atlantic Capital Bancshares, Inc. Executive Officer Long-TermLong Term Incentive Plan (as Amended and Restated Effective April 19, 2018), which is incorporated by reference to Exhibit 10.1410.1 to our Registration StatementCurrent Report on Form S-48-K (file no. 333-204855)001-37615), initially filed with the Securities and Exchange Commission on June 10, 2015.April 20, 2018.
10.20* 10.6*	Amendment to Atlantic Capital Bancshares, Inc. Executive Officer Long‑Term Incentive Plan, which is incorporated by reference to Exhibit 10.15 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.21*	Form of Officer Award Certificate under the Executive Long-Term Incentive Plan, which is incorporated by reference to Exhibit 10.16 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015.
10.22* 10.7*	Atlantic Capital Bancshares, Inc. Executive Officer Short Term Incentive Plan, which is incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.23* 10.8(a)*	Atlantic Capital Bancshares, Inc. 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.17 to our Registration Statement on Form S-4 (file no. 333-204855), initially filed with the Securities and Exchange Commission on June 10, 2015. [reserved]
10.24* 10.8(b)*	Atlantic Capital Bancshares, Inc. 2015 Stock Incentive Plan (as amended and restated effective May 18, 2017)16, 2018), which is incorporated by reference to Exhibit 10.1 to our CurrentQuarterly Report on Form 8-K10-Q (file no. 001-37615), initially filed with the Securities and Exchange Commission on May 22, 2017.August 8, 2018.
10.25* 10.9(a)*	Form of Restricted Stock Award Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan (form in use prior to April 25, 2018), which is incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10‑K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.26* 10.9(b)*	Form of Restricted Stock Award Agreement (Employees - with Employment Agreement) under the 2015 Stock Incentive Plan (form in use prior to April 25, 2018), which is incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2016.
10.27* 10.9(c)*	Form of Restricted Stock Award Agreement (Non-Employee Directors) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.

10.9(d)*
10.28*	Form of Restricted Stock UnitAward Agreement (Employees -without- with Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.2210.2 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.9(e)*	Form of Restricted Stock Award Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan (form in use April 18, 2018 - October 16, 2018), which is incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.9(f)*	Form of Restricted Stock Award Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.10(f) to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.14, 2019.
10.29* 10.10(a)*	Form of Restricted Stock Unit Agreement (Employees - with Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.2310.4 to our AnnualQuarterly Report on Form 10-K,10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.May 9, 2018.

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10.10(b)*	Form of Restricted Stock Unit Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.30* 10.10(c)*	Form of Restricted Stock Unit Agreement (Non-Employee Directors) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.24 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.31* 10.11(a)*	Form of Stock Option Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan (form in use prior to April 25, 2018), which is incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.32* 10.11(b)*	Form of Stock Option Agreement (Employees - with Employment Agreement) under the 2015 Stock Incentive Plan (form in use prior to April 25, 2018), which is incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.33* 10.11(c)*	Form of Stock Option Agreement (Non-Employee Directors) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.34* 10.11(d)*	Form of Stock Option Agreement (Employees - with Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.11(e)*	Form of Stock Option Agreement (Employees - without Employment Agreement) under the 2015 Stock Incentive Plan, which is incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.12*	Form of Other Stock-Based Award Agreement (Executive Officer Long Term Incentive Plan (“LTIP”) Award), which is incorporated by reference to Exhibit 10.28 to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 30, 2016.
10.35* 10.13(a)*	Form of Performance Share Award Agreement (Employees - with Employment Agreement) (Executive Officer Long Term Incentive Plan (“LTIP”) Award), which is incorporated by reference to Exhibit 10.8 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.13(b)*	Form of Performance Share Award Agreement (Employees - without Employment Agreement) (form in use prior to October 17, 2018) (Executive Officer Long Term Incentive Plan (“LTIP”) Award), which is incorporated by reference to Exhibit 10.9 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on May 9, 2018.
10.13(c)*	Form of Performance Share Award Agreement (Employees - without Employment Agreement) (Executive Officer Long Term Incentive Plan (“LTIP”) Award), which is incorporated by reference to Exhibit 10.14(c) to our Annual Report on Form 10-K (file no. 001-37615), filed with the Securities and Exchange Commission on March 14, 2019.
10.14*	First Security Group, Inc. 2012 Long-Term Incentive Plan, as amended and restated, as further amended and assumed by Atlantic Capital Bancshares, Inc., which is incorporated by reference to Exhibit 99.1 to the Post-Effective Amendment No. 1 on Form S-8 to Form S-4 (file no. 333- 204855), filed with the Securities and Exchange Commission on November 2, 2015.
10.36* 10.15*	Form of Incentive Stock Option Award pursuant to the First Security Group, Inc. 2012 Long-Term Incentive Plan, which is incorporated by reference to Exhibit 10.29 to First Security Group, Inc.’s Form 10-K (file no. 000-49747), filed with the Securities and Exchange Commission on April 15, 2013.
10.37* 10.16*	Form of Non-Qualified Stock Option Award under the First Security Group, Inc. 2012 Long-Term Incentive Plan, which is incorporated by reference to Exhibit 10.30 to First Security Group, Inc.’s Form 10-K (file no. 000-49747), filed with the Securities and Exchange Commission on April 15, 2013.
10.38* 10.17*	First Security Group, Inc. 2002 Long-Term Incentive Plan, as amended, as further amended and assumed by Atlantic Capital Bancshares, Inc., which is incorporated by reference to Exhibit 99.2 to the Post-Effective Amendment No. 1 on Form S-8 to Form S-4 (file no. 333-204855), filed with the Securities and Exchange Commission on November 2, 2015.

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10.39* 10.18*	Form of Incentive Stock Option Award under the First Security Group, Inc. 2002 Long-Term Incentive Plan, which is incorporated by reference to Exhibit 10.5 to First Security Group, Inc.’s Form 10-K (file no. 000-49747), filed with the Securities and Exchange Commission on March 16, 2005.
10.40* 10.19*	Form of Non-Qualified Stock Option Award under the 2002 Long-Term Incentive Plan, which is incorporated by reference to Exhibit 10.6 to First Security Group, Inc.’s Form 10-K (file no. 000-49747)for its fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 16, 2005.
10.41* 10.20*	[reserved]
10.21(a)*	Atlantic Capital Bancshares, Inc. Change in Control Plan, which is incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on August 8, 2017.
10.21(b)*	Atlantic Capital Bancshares, Inc. 2017 Change in Control Plan, which is incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on November 9, 2017.
10.22*	Atlantic Capital Bank Severance Plan, which is incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on November 9, 2017.
10.23	Form of Stock Purchase Agreement by and between First Security Group, Inc. and each of the investors named therein, which is incorporated by reference to Exhibit 10.18 to our Registration Statement on Form S-4/A (file no. 333‑204855), filed with the Securities and Exchange Commission on July 17, 2015.
10.42* 10.24†	AmendedPurchase and RestatedAssumption Agreement, dated November 14, 2018, by and between Atlantic Capital Bancshares, Inc. Executive Officer Long-Term Incentive Plan,Bank, N.A. and FirstBank, which is incorporated by reference to Exhibit 10.4410.1 to our AnnualCurrent Report on Form 10-K, filed with the Securities and Exchange Commission on March 14, 2017.
10.43*	Atlantic Capital Bancshares, Inc. Change in Control Plan, which is incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on August 8, 2017.
10.44*	Atlantic Capital Bancshares, Inc. 2017 Change in Control Plan, which is incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q8-K (file no. 001-37615), filed with the Securities and Exchange Commission on November 9, 2017.14, 2018.
10.45* 21	Atlantic Capital Bank Severance Plan, which is incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q (file no. 001-37615), filed with the Securities and Exchange Commission on November 9, 2017.
21	Subsidiaries of Atlantic Capital Bancshares, Inc.
23	Consent of Ernst & Young LLP, independent registered public accounting firm of Atlantic Capital Bancshares, Inc.

31.1
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Exchange Act, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from our Annual Report on Form 10-K for the year ended December 31, 2017,2019, formatted in XBRL (eXtensible Business Reporting Language):  (i) the Consolidated Balance Sheets as of December 31, 20172019 and December 31, 2016;2018; (ii) the Consolidated Statements of Operations for the Years Ended December 31, 2017,2019, December 31, 2016,2018, and December 31, 2015;2017; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017,2019, December 31, 2016,2018, and December 31, 2015;2017; (iv) Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017,2019, December 31, 2016,2018, and December 31, 2015;2017; (v) the Consolidated Statements of Cash Flows for the Years Ended December 31, 2017,2019, December 31, 2016,2018, and December 31, 2015;2017; and (vi) the Notes to the Consolidated Financial Statements.

*Management contract or compensatory plan or arrangement.

†Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

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SIGNATURES

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15th16th day of March, 2018.

2020.

	ATLANTIC CAPITAL BANCSHARES, INC.
	/s/ Douglas L. Williams
	Douglas L. Williams
	President & Chief Executive Officer
	(Principal Executive Officer)
	/s/ Patrick T. Oakes
	Patrick T. Oakes
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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Pursuant to the requirements of the Securities and Exchange Act of 1934, the report has been signed by the following persons on behalf of the registrant and in the capacities indicated on  March 15, 2018.

16,  2020.

Signature		Title
Signature		Title
/s/ Douglas L. Williams		President, Chief Executive Officer and Director
Douglas L. Williams		(Principal Executive Officer)
/s/ Patrick T. Oakes		Executive Vice President and Chief Financial Officer
Patrick T. Oakes		(Principal Financial and Accounting Officer)
/s/ Walter M. Deriso, Jr.		Chairman of the Board
Walter M. Deriso, Jr.
/s/ Shantella E. Cooper		Director
Shantella E. Cooper
/s/ Henchy R. Enden		Director
Henchy R. Enden
/s/ James H. Graves		Director
James H. Graves
/s/ Douglas J. Hertz		Director
Douglas J. Hertz
/s/ Adam G. HurwichThomas M. Holder		Director
Adam G. Hurwich Thomas M. Holder
/s/ Larry D. Mauldin		Director
Larry D. Mauldin
/s/ R. Charles Shufeldt		Director
R. Charles Shufeldt
/s/ Lizanne Thomas		Director
Lizanne Thomas
/s/ Marietta Edmunds Zakas		Director
Marietta Edmunds Zakas

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