1 Atlantic Capital Bancshares, Inc. (ACBI) Investor Presentation May 25, 2016
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable of a future or forward-looking nature. These forward- looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. The following risks, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the business of Atlantic Capital Bancshares, Inc. (“Atlantic Capital”) may not integrate successfully with the former First Security Group, Inc. (“First Security”) business or the integration may be more difficult, time-consuming or costly than expected; (2) the expected growth opportunities and cost savings from the transaction with First Security may not be fully realized or may take longer to realize than expected; (3) revenues following the transaction may be lower than expected as a result of losses of customers or other reasons, including issues arising in connection with integration of First Security’s operations and the sale and pending sale of certain branches; (4) deposit attrition, operating costs, customer loss and business disruption following the transaction with First Security, including difficulties in maintaining relationships with employees, may be greater than expected; (5) reputational risks and the reaction of the companies’ customers to the acquisition of First Security; (6) diversion of management time on merger related issues; (7) changes in asset quality and credit risk; (8) the cost and availability of capital; (9) customer acceptance of the combined company’s products and services; (10) customer borrowing, repayment, investment and deposit practices; (11) the introduction, withdrawal, success and timing of business initiatives; (12) the impact, extent, and timing of technological changes; (13) severe catastrophic events in our geographic area; (14) a weakening of the economies in which the combined company will conduct operations may adversely affect its operating results; (15) the U.S. legal and regulatory framework, including those associated with the Dodd-Frank Wall Street Reform and Consumer Protection Act could adversely affect the operating results of the combined company; (16) the interest rate environment may compress margins and adversely affect net interest income; (17) changes in trade, monetary and fiscal policies of various governmental bodies and central banks could affect the economic environment in which we operate; (18) our ability to determine accurate values of certain assets and liabilities; (19) adverse behaviors in securities, public debt, and capital markets, including changes in market liquidity and volatility; (20) our ability to anticipate interest rate changes correctly and manage interest rate risk presented through unanticipated changes in our interest rate risk position and/or short- and long-term interest rates; (21) unanticipated changes in our liquidity position, including but not limited to our ability to enter the financial markets to manage and respond to any changes to our liquidity position; (22) adequacy of our risk management program; (23) increased costs associated with operating as a public company; (24) competition from other financial services companies in the companies’ markets could adversely affect operations; and (25) other factors described in Atlantic Capital’s reports filed with the Securities and Exchange Commission and available on the SEC’s website (www.sec.gov). 2 2
Proprietary & Confidential Overview Atlantic Capital was organized in 2006 and completed an initial equity capital raise of $125 million in 2007 Focused on banking: Small to mid-sized enterprises with revenues up to $250 million Highly-select group of institutional caliber commercial real estate developers and investors Principals of our commercial clients, professionals and their practices, and other affluent families Differentiated by providing superior expertise, competitive capabilities, and high touch service delivery Completed acquisition of First Security on October 31, 2015 Public market liquidity and value by listing shares on NASDAQ Geographic diversification into Eastern Tennessee Business mix diversification Announced sale of 7 offices as part of repositioning of First Security’s retail business Closed in 2nd quarter of 2016 3
Proprietary & Confidential Atlantic Capital Strategy Become a premier southeastern business and private banking company Investing in people and capabilities to accelerate organic growth and build profitability Results are evidence of meaningful progress Attractive interest rate risk position Completed acquisition of First Security on October 31, 2015 New market expansion through mergers and acquisitions and de novo entry Patient and disciplined approach with focus on shareholder value Accelerated Organic Growth Strategic Expansion 4
Proprietary & Confidential Atlantic Capital Highlights Opened in 2007 to serve middle market companies in southeastern US Organically grew to $1.4 billion in assets despite market downturn Well positioned to capitalize on Atlanta market recovery, new market expansion and higher interest rates Supplemented by recently completed strategic acquisition of First Security Leadership continuity in key markets Broad experience in all business lines Focused on small to mid-sized companies and high net worth clients Initiatives in place to maintain robust top line growth Operating model will produce enhanced efficiencies going forward Consistently high asset quality NPAs/total assets 0.08% as of March 31, 2016 Organic Growth Story in Desirable Markets Experienced Management Team Attractive Business Mix Strong Growth Prospects Disciplined Risk Management 5
Loans $701 $811 $817 $1,040 $1,886 $1,982 2011 2012 2013 2014 2015 Financial Highlights Total loans held for investment increased $96 million, or 5.4%, from December 31, 2015 Total deposits (excluding deposits subject to pending branch sales) increased $36 million from year-end Taxable equivalent net interest margin of 3.26% compared to 3.13% in the fourth quarter of 2015 Mortgage Warehouse: Dollars in millions CAGR: 2011-2015 performance $8 $117 $84 $874 $1,026 $1,081 $1,106 $2,262 $2,282 2011 2012 2013 2014 2015 Deposits $1,021 $1,203 $1,229 $1,315 $2,639 $2,727 2011 2012 2013 2014 2015 Assets $64 $0 $1,048 $1,338 $1,519 Legacy ACB FSG 6 $124 Q1 2016 Q1 2016 Q1 2016 Combined Bank
$0.13 $0.44 $0.38 $0.55 $0.62 $0.02 $0.14 Q4 Q1 2015 2016 Financial Highlights Dollars in thousands *excludes merger-related expenses; GAAP reconciliation on p. 20 $2,797 $2,888 $3,875 $5,342 $9,399 $3,460 $4,420 64.2% 73.5% 75.9% 69.1% 68.8% 82.8% 75.2% 7 Efficiency Ratio* Noninterest Income Diluted Earnings Per Share – Operating* 2.99% 2.75% 2.75% 2.85% 2.98% 3.13% 3.26% 2011 2012 2013 2014 2015 Net Interest Margin 2011 2012 2013 2014 2015 Q4 Q1 2015 2016 2011 2012 2013 2014 2015 Q4 Q1 2015 2016 2011 2012 2013 2014 2015 Q4 Q1 2015 2016
1.39% 1.44% 1.32% 1.10% 1.06% 1.06% 0.93% Q4 Q1 2015 2016 0.71% 0.43% 0.36% 0.12% 0.40% 0.40% 0.08% Superior Credit Quality 8 0.79% 0.49% 0.36% 0.00% 0.45% 0.45% 0.02% Allowance for Loan Losses / Total Loans Non-Performing Loans / Total Loans Non-Performing Assets / Total Assets 1.43% -0.32% 0.02% -0.01% 0.05% 0.15% 0.35% Net Charge Offs / Total Average Loans Q4 Q1 2015 2016 2011 2012 2013 2014 2015 Q4 Q1 2015 2016 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Q4 Q1 2015 2016 2011 2012 2013 2014 2015
Asset Sensitivity Change in Net Interest Income 9 5.6% 12.4% 19.5% 6.1% 13.3% 20.8% 0% 5% 10% 15% 20% 25% Up 100 bps Up 200 bps Up 300 bps 1 Year 2 Years As of March 31, 2016: 55% of loans are variable rate 25% of deposits are noninterest bearing
Diversified Loan Mix Dollars in thousands Note: Data as of Mar. 31, 2016; loans include held for sale Loans Held For Investment 10 Loan Growth by Type Q1 2016 Q4 2015 Linked Qtr Loans held for investment Commercial loans: Commercial and industrial 499,634 467,083 32,551 Commercial real estate 843,597 846,413 (2,816) Construction and land 183,439 166,358 17,081 Mortgage warehouse loans 123,875 84,350 39,525 Total commercial loans 1,650,545 1,564,204 86,341 Residential: Residential mortgages 106,433 110,381 (3,948) Home equity 83,094 80,738 2,356 Total residential loans 189,527 191,119 (1,592) Consumer 30,905 30,451 454 Other 20,925 6,901 14,024 1,891,902 1,792,675 99,227 Less net deferred fees and other unearned income (5,139) (2,006) (3,133) Total loans held for investment 1,886,763$ 1,790,669$ 96,094$ Loans held for sale 61,003$ 59,995$ 1,008$ Branch loans held for sale 34,288 35,470 (1,182) Total loans held for sale 95,291$ 95,465$ (174)$ Total loans 1,982,054$ 1,886,134$ 95,920$ C&I Owner Occupied CRE Construction and land Mortgage Warehouse Residential mortgages Home equity Consumer & Other 27% 17% 10% 7% 6% 4% 26% 3%
Attractive Deposit Mix Deposits 25% 9% 1% 38% 8% 10% 9% Noninterest-bearing Interest Checking Savings Money Market Time Brokered To be assumed in branch sale Noninterest-bearing Interest checking Savings Money market Time Brokered Deposits to be assumed in branch sale Total Amount $560,363 215,176 29,788 862,120 187,750 229,408 197,857 $2,282,462 25 9 1 38 8 10 9 100 % % Dollars in thousands Note: Data as of Mar. 31, 2016 % of Total 11 First quarter cost of deposits: 0.31% Branch sales closed in 2nd quarter
First Security Acquisition Rationale NASDAQ listing Significant new capital including DTA, equity private placement at premium to TBV, and subordinated notes More diverse shareholder base 18 offices providing core funding along commercially attractive I-75 corridor Atlanta: High density of small businesses and commercial enterprises Chattanooga/Knoxville: Diversified manufacturing and service economies Atlantic Capital’s Strengths: C&I, CRE and Private Banking; Corporate Treasury and Private Banking Deposits First Security’s Strengths: Small Business and Specialty Commercial Lending; Small Business and Retail Deposit Channel Integration plan ensures management continuity with local market presence and significant domain expertise Significant cost saving and revenue enhancement opportunities Retains a significant portion of First Security NOLs Sustains robust loan origination trends and opportunities in strategic markets Sound credit quality profile limits balance sheet risk Complementary interest rate risk positions Public Company Value and Liquidity For Shareholders Geographic Expansion Broader Business Mix Compelling Financial Opportunity 12
Creates a leading middle market commercial bank operating along the I-75 corridor Attractive Market Demographics Atlanta-Sandy Springs-Roswell, GA MSA • Total Population 2014: Approximately 5.6 million • 2014-2019E Population Growth: 6.4% projected • Median Household Income 2014: $52,533 • Total Deposits in Market: Approximately $130 billion Chattanooga, TN-GA MSA • Total Population 2014: Approximately 544,000 • 2014-2019E Population Growth: 4.0% projected • Median Household Income 2014: $41,704 • Total Deposits in Market: Approximately $8.5 billion Knoxville, TN MSA • Total Population 2014: Approximately 855,000 • 2014-2019E Population Growth: 3.1% projected • Median Household Income 2014: $44,405 • Total Deposits in Market: Approximately $14.7 billion Source: Nielsen, SNL Financial 13 Branches sold in Q2 2016
2016 Priorities 14 Complete integration of the acquired First Security businesses including the realization of estimated cost savings Continue the trajectory of growth and profit improvement in legacy Atlantic Capital businesses Reposition legacy First Security businesses for improved performance Consider further geographic expansion, particularly de novo or team lift-out opportunities in other attractive metropolitan markets
The New Atlantic Capital Three attractive growth markets Focus on corporate, business and private banking Solid relationship deposit funding Sound credit quality Positioned for interest rate increase Pursuing disciplined strategic expansion with a focus on shareholder value Organic Growth Strategic Opportunities 15
APPENDIX
Management Biographies Name and Title Age Experience Patrick Oakes Executive Vice President & Chief Financial Officer 47 • Former Chief Financial Officer of Square 1 Financial, Inc. • Former Executive Vice President and Chief Financial Officer of Encore Bancshares, Inc. • Former Senior Vice President and Treasurer for Sterling Bancshares, Inc. • Chartered Financial Analyst Douglas Williams Chief Executive Officer 58 • Chief Executive Officer of Atlantic Capital since its inception • Former Managing Director and Head of Wachovia Corporation’s International Corporate Finance Group • Held numerous roles within Wachovia, including Executive Vice President and Head of the Global Corporate Banking Division; Chief Risk Officer for all corporate, institutional, and wholesale banking activities; Executive Vice President and Co-Head of Wachovia’s Capital Markets Division and Executive Vice President and Head of Wachovia’s US Corporate Banking Division • Chairman of the Community Depository Institutions Advisory Council (CDIAC) of the Federal Reserve Bank of Atlanta and its representative to the CDIAC of the Federal Reserve Board of Governors • Serves on the Boards of the Metro Atlanta Chamber of Commerce, the Georgia Chamber of Commerce, and the YMCA of Metropolitan Atlanta and the High Museum of Art and is a Member of the Buckhead Coalition Michael Kramer President, Chief Operating Officer 58 • Chief Executive Officer and President of First Security since December and Chief Executive Officer of FSGBank since 2011 • Former Managing Director of Ridley Capital Group • Former Director, Chief Executive Officer and President of Ohio Legacy Corporation • Former Chief Operating Officer and Chief Technology Officer of Integra Bank Corporation • Serves on the Boards of Chattanooga Chamber of Commerce, Chattanooga United Way, The Tennessee Bankers Association and the Chattanooga Young Life Committee 17
ACBI Historical Balance Sheet 18 March 31, December 31, March 31, (in thousands, except share and per share data) 2016 2015 2015 ASSETS Cash and due from banks $ 49,054 $ 58,319 $ 40,223 Interest-bearing deposits in banks 91,608 130,900 28,607 Other short-term investments 20,392 13,666 40,503 Cash and cash equivalents 161,054 202,885 109,333 Securities available-for-sale 366,641 346,221 136,783 Other investments 11,899 8,034 4,561 Loans held for sale 95,291 95,465 581 Loans held for investment 1,886,763 1,790,669 1,084,669 Less: allowance for loan losses (17,608) (18,905) (11,800) Loans held for investment, net 1,869,155 1,771,764 1,072,869 Branch premises held for sale 7,200 7,200 – Premises and equipment, net 22,780 23,145 3,466 Bank owned life insurance 60,981 60,608 30,802 Goodwill and intangible assets, net 33,914 35,232 848 Other real estate owned 1,760 1,982 1,531 Other assets 96,213 86,244 19,994 Total assets $ 2,726,888 $ 2,638,780 $ 1,380,768 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 560,363 $ 544,561 $ 300,439 Interest-bearing checking 215,176 232,868 106,680 Savings 29,788 28,922 403 Money market 862,120 875,441 585,971 Time 187,750 183,206 16,069 Brokered deposits 229,408 183,810 139,049 Deposits to be assumed in branch sale 197,857 213,410 – Total deposits 2,282,462 2,262,218 1,148,611 Federal funds purchased and securities sold under agreements to repurchase 11,824 11,931 – Federal Home Loan Bank borrowings 60,000 – 79,434 Long-term debt 49,239 49,197 – Other liabilities 27,348 27,442 8,564 Total liabilities 2,430,873 2,350,788 1,236,609 SHAREHOLDERS' EQUITY Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2016, December 31, 2015 and March 31, 2015 – – – Common stock, no par value; 100,000,000 shares authorized; 24,569,823, 24,425,546 and 13,508,480 shares issued and outstanding as of March 31, 2016, December 31, 2015, and March 31, 2015, respectively 288,271 286,367 136,569 Retained earnings 6,072 3,141 6,174 Accumulated other comprehensive income (loss) 1,672 (1,516) 1,416 Total shareholders’ equity 296,015 287,992 144,159 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,726,888 $ 2,638,780 $ 1,380,768 Atlantic Capital Bancshares, Inc. Consolidated Balance Sheets (unaudited)
ACBI Historical Income Statement ($ in thousands) 19 Atlantic Capital Bancshares, Inc. Consolidated Statements of Income (unaudited) (in thousands except per share data) March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 INTEREST INCOME Loans, including fees $ 19,625 $ 16,688 $ 9,423 $ 9,500 $ 8,951 Investment securities - available-for-sale 1,601 1,224 664 710 703 Interest and dividends on other interest‑earning assets 273 328 247 271 258 Total interest income 21,499 18,240 10,334 10,481 9,912 INTEREST EXPENSE Interest on deposits 1,673 1,355 751 769 742 Interest on Federal Home Loan Bank advances 44 7 52 117 114 Interest on federal funds purchased and securities sold under agreements to repurchase 67 10 20 25 24 Interest on long-term debt 810 841 17 – – Other 38 79 – – – Total interest expense 2,632 2,292 840 911 880 NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 18,867 15,948 9,494 9,570 9,032 Provision for loan losses 368 7,623 (137) 185 364 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,499 8,325 9,631 9,385 8,668 NONINTEREST INCOME Service charges 1,498 1,265 521 501 326 Gains on sale of securities available-for-sale 33 – 10 – – Gains on sale of other assets 48 103 – – – Mortgage income 339 163 – – – Trust income 314 192 – – – Derivatives income 65 89 67 65 83 Bank owned life insurance 393 365 227 1,336 231 SBA lending activities 880 904 745 903 358 TriNet lending activities 383 – – – – Other noninterest income 467 379 159 223 184 Total noninterest income 4,420 3,460 1,729 3,028 1,182 NONINTEREST EXPENSE Salaries and employee benefits 10,555 9,661 4,859 4,836 4,742 Occupancy 1,100 907 419 423 421 Equipment and software 686 608 243 225 219 Professional services 748 1,020 208 273 109 Postage, printing and supplies 169 115 21 18 24 Communications and data processing 916 555 313 342 331 Marketing and business development 267 197 90 77 46 FDIC premiums 398 273 161 189 166 Merger and conversion costs 749 7,172 718 756 508 Amortization of intangibles 762 526 – – – Other noninterest expense 1,916 2,205 639 682 636 Total noninterest expense 18,266 23,239 7,671 7,821 7,202 INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 4,653 (11,454) 3,689 4,592 2,648 Provision for income taxes 1,722 (3,293) 1,463 1,690 934 NET INCOME (LOSS) $ 2,931 $ (8,161) $ 2,226 $ 2,902 $ 1,714 Net income (loss) per common share‑basic $ 0.12 $ (0.40) $ 0.16 $ 0.21 $ 0.13 Net income (loss) per common share‑diluted $ 0.12 $ (0.40) $ 0.16 $ 0.21 $ 0.12 Weighted average shares - basic 24,485,900 20,494,895 13,562,125 13,552,820 13,465,579 Weighted average shares - diluted 24,993,597 21,004,577 13,904,395 13,895,090 13,798,344 Three months ended
GAAP Reconciliation and Explanation This presentation contains non-GAAP financial measures, which are performance measures determined by methods other than in accordance with GAAP. Such non-GAAP financial measures include, the following: tangible book value per share and efficiency ratio excluding merger expenses. Management uses these non-GAAP financial measures because it believes they are useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies. A reconciliation of these operating performance measures to GAAP performance measures is included below. 20 (in thousands, except per share data) 2016 First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter Interest income reconciliation Interest income - taxable equivalent $ 21,553 $ 18,270 $ 10,345 10,492$ 9,923$ Taxable equivalent adjustment (54) (30) (11) (11) (11) Interest income - GAAP $ 21,499 $ 18,240 $ 10,334 $ 10,481 $ 9,912 Net interest income reconciliation Net interest income - taxable equivalent $ 18,921 $ 15,978 $ 9,505 9,581$ 9,043$ Taxable equivalent adjustment (54) (30) (11) (11) (11) Net interest income - GAAP $ 18,867 $ 15,948 $ 9,494 $ 9,570 $ 9,032 Total revenue reconciliation Total operating revenue $ 23,341 $ 19,438 $ 11,234 12,609$ 10,225$ Taxable equivalent adjustment (54) (30) (11) (11) (11) Total revenue - GAAP $ 23,287 $ 19,408 $ 11,223 $ 12,598 $ 10,214 Operating provision for loan losses reconciliation Operating provision for loan losses $ 368 $ 859 $ (137) 185$ 364$ Provision for acquired non PCI FSG loans - 6,764 - - - Provision for loan losses - GAAP $ 368 $ 7,623 $ (137) $ 185 $ 364 Operating noninterest expense reconciliation Operating noninterest expense $ 17,517 $ 16,067 $ 6,953 7,065$ 6,694$ Merger-related charges 749 7,172 718 756 508 Noninterest expense - GAAP $ 18,266 $ 23,239 $ 7,671 $ 7,821 $ 7,202 Op ating income befo e incom taxes reconciliation Opera ing nco e before ncome taxes $ 5,456 $ 2,512 $ 4,418 5,359$ 3,167$ Taxable equivalent adjustment (54) (30) (11) (11) (11) Merger-related charges (749) (7,172) (718) (756) (508) Provision for acquired non PCI FSG loans - (6,764) - - - Income (loss) before income taxes - GAAP $ 4,653 $ (11,454) $ 3,689 $ 4,592 $ 2,648 2015 (in thousands, except per share data) 2016 First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter Income tax reconciliation Operating income tax expense $ 2,065 $ 2,117 $ 1,749 1,991$ 1,140$ Taxable equivalent adjustment (54) (30) (11) (11) (11) Merger related charges, tax benefit (289) (2,769) (275) (290) (195) Provision for acquired non PCI FSG loans, tax benefit - (2,611) - - - Income tax expense - GAAP $ 1,722 $ (3,293) $ 1,463 $ 1,690 $ 934 Net income reconciliation Operating net income $ 3,391 $ 395 $ 2,669 3,368$ 2,027$ Merger related charges, net of income tax (460) (4,403) (443) (466) (313) Provision for acquired non PCI FSG loans, net of income tax - (4,153) - - - Net income - GAAP $ 2,931 $ (8,161) $ 2,226 $ 2,902 $ 1,714 Diluted earnings per share reconciliation Diluted earnings per share - operating $ 0.14 $ 0.02 $ 0.19 0.24$ 0.15$ Merger related charges (0.02) (0.42) (0.03) (0.03) (0.03) Diluted earnings per share - GAAP $ 0.12 $ (0.40) $ 0.16 $ 0.21 $ 0.12 Effici y ratio reconciliation Operating noninterest expense $ 17,517 $ 16,067 $ 6,953 7,065$ 6,694$ Merger-related charges 749 7,172 718 756 508 Noninterest expense - GAAP $ 18,266 $ 23,239 $ 7,671 $ 7,821 $ 7,202 Net interest income 18,867 15,948 9,494 9,570 9,032 Noninterest income 4,420 3,460 1,729 3,028 1,182 Efficiency ratio 75.22% 82.79% 61.95% 56.08% 65.54% 2015