ACBI - Earnings call transcript Q4 2020 | Atlantic Capital Bancshares, Inc.

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Operator

Good day, and welcome to the Atlantic Capital Bank Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Gray Fleming, Chief Risk Officer. Please go ahead sir.

Gray Fleming

thank call. for and quarter our Chuck, earnings XXXX you, you joining all fourth Thank today discuss Financial me Officer; With to and Chief Doug Patrick Executive Williams, Oakes, Chief Officer. our results are

dealing encourage Capital forward-looking As with and a available the statements that this information. wish during Relations in Investor we the release I investor results you of We to website. actual caution presentation in our materially. earnings section to in reminder, are made and will review Atlantic that the applies call earnings you disclaimer differ be release forward-looking This statements equally disclaimer the may to call. this making

In in will turn Information found And may CEO addition, non-GAAP I be to measures, our with Capital, may our that, over call GAAP financial of references Williams. SEC filings measures, Atlantic earnings about Doug in some release. and measures. including the to discussions include the those reconciliation to

Doug Williams

Thank earnings you've you, on last Gray, and believe results night. was to materials And and you Form now. investor release now, filed X-K those I believe presentation our seen access an have good afternoon. I our

get started partners teammates people I'd driven performance Atlantic like this to and who are and thank of attractive Capital. my They high talent and purpose afternoon, at extraordinary character I an Before built culture.

our may environment make extraordinarily Our a I questions purpose give I'll review the Gray to we'll more is a comments year in in overview XXXX. then well and believe brief that outlook Pat summary we'll to have. return and What you this be ask then did credit detail, prosperity, whatever happy financials I'll the and take to and with fuel you comment about is some will of client Fleming about we Oakes do afternoon I then the

the overview If you is X, investor the of to presentation the Page and quarter an and this turn year.

and were future. pre-tax performance quarter. costs quarter solid in annualized X% forgiveness business quarter environment we've shares and XX growth totaling repurchased the during X in to XX% pre-incentive The million the strong loans loans, and basis fourth relationship pandemic growth improving. reflecting average the $XX.XX. on strong charge four deposits net grew quarters another service remained about Deposit resilient and environment. basis points and we linked year-over-year produced basis With repayments below stable the of reported of We income. revenue price We borrowers a points was quarter, total operating Loan the PPP deferrals with excluding core And year-over-year. XX% reduced $XX.X to at an fourth of during of XXX,XXX optimism quarter

strongly these recovered investment. the clients fourth plans for pipelines during loan made new quarter Our as

nonaccrual and levels. points from loans. and there held robust credit excluding processed loans XX the of loans no management end charge-offs of as loan basis loans losses of the credit began really during now. loan X% We XXX Loan basis points low assets nonaccruals Non-performing and under X.X% X credit the and for charge-offs applications for steady and were investment quarter. Annualized of processing deferrals were of million year. during at payment for at quality quarter points basis quarter basis for The the remained The levels net points applications assets. total improving mentioned end. during to PPP allowance fourth year at strong at were forgiveness at remained XX the transitions deferrals treasury $XX and remains quarter. with days in a last low pace business the Our We subsequent during the round PPP grew and PPP generally environment to year loans. was of Overall second stable limited accepting few

share year-over-year. per X XXXX quarter, increase quarter. Tangible annualized excess under book up XX% The Total and the X%, the in ratios of during assets the equity quarter $X.XX revenue quarter the XX% quarter $XX.X are from excluding for still More XX% $XX.XX total have of ratio and loans third in will growth and the of from from year-over-year. the the over Page just annualized a about to increased particularly Oakes to Pat increased a increased liquidity in the quarter XX% quarter Total for Capital information were the annualized the in increased you declined earnings were from of fourth net to net down deposits because XX% more million annualized fourth balance third that year-over-year. increase the margin and XXXX. X.XX%. significantly, $X.XX during deposits annualized XXXX. the quarter fourth was that annualized we increased of interest And value third that's the a reported carry in Demand diluted XX% XX% during share efficiency Total $X.XX a in fourth average was deposits And ratio year-over-year. XX.X% highlights, the XX% quarter. to or Turning tangible XX% in tangible to for up and robust per That's quarter XX% of and tremendous minute. or with financial common sheet, share. quarter an pre-provisioned the annualized the quarter. XX% XX% investment held fourth the and PPP we loans XX% loans, during quarter

loan during quarter. production If X, you fourth to the turn was Page strong

of we million over fourth deposits XX% sustained make strong Growth We a are deposits XX% rate relationships total resulted deposit mentioned, demand C&I fourth in they a XX quarter. and trends and the XX% As very growth, an various the XX%. have annualized to management of strong XX% those from loans growth quarter, where indexed deposits. commercial real partnership to XX% quarter. were up five year-over-year source – loans. real in years. estate processed fourth were grew business, basis of where basis cost was loans, including On last we annualized up in repayment loans These loans were On the estate rate year-over-year loans, real continue those late-quarter excluding loans portfolio The a basis points were compound loans, generated diverse of of as growth. was in the cashflow. loans PPP composition or was of is a consumer XX% remains corporate usually were the core the the quarter loans, owner-occupied, loans, growth the loans fintech and in applications deposits XX% of rate are industrial strong at account quarter up were time total of which of commercial basis. LIBOR, loan growth. of prime trends were commercial or decreased deposits Treasury X, annualized fourth of total processing but compound and seasonal loan Page five-year we points during see in Year-over-year consistent. PPP XX% on loans. growth forgiveness quarter. $XX the and in deposits very our and XX% average PPP in throughout PPP loans owner-occupied loans the CD-secured of and on floating loans estate loan loans, interest-bearing XX% fixed our grown And total. XX% XX% year-over-year and basis Demand In see, fourth to now XX%. and XX% lines There Commercial was growth three

Oakes demand growth have growth. the compound For deposits and Pat of the average compound rate for XX% of a XX% last at review five deposits average now will grown years, grown financials at you. total have rate

Patrick Oakes

Doug. Thanks,

can So, lower benefited offset and down and basis strong Slide assets, detail from detail I'm SBA businesses net which growth on big Expenses income drop I'll few go stronger into the And with in was XX you interest in fairly in go had were And points. NIM there a in On that. payments income. income strong included and as income. see, on our more along our later Slide interest of earlier, charge in X, included quarters, over into our from income income nicely more this growth see impacted revenue our from earning Doug which the was solid was both strong later. which impact biggest Doug as income about the mentioned X. fintech non-interest noninterest on cash like by last in we I'll pressure some NIM, from earlier, good basis but balances, did growth NIM growth loan points. yields, service deposit Net mentioned growth both We by was XX growth and

during exclude PPP If the XX you from got point quarter. in quarter benefit we the basis loans and excess cash the

liquidity will our the to quarters. to fourth volatility closer Our quarter. would the some I expect few excess X.XX% a NIM core for this was in cause over next NIM continue

we a I cash grow to in over fourth see Slide to focus the income XX% net Fed. million in and continue earning growth growth On you'll as our interest strong in $XXX in several assets that would deposits X, the quarters. So on the down pushed loan-to-deposit next at ratio than rather NIM increase quarter drove the

leave the continued and excess we first growth the quarter, bank expect also of core deposits During some these in should deposits.

loans. ratio On down So trend a trend quick up Slide we XXXX. to would loan-to-deposit move XX, and expect PPP to through on I our as cash update

million remaining on million December of sheet, fees to in $XXX be in As remaining our XX, we balance $X.X loans recognized. about with had

we Doug of As we clients outsourcing which this week existing the impact are two these processing round loans, began mentioned, expenses. with and will

a to million levels deposit increase in which that XX, efficiency the million have our ratio $XXX,XXX, loan We incentive expenses. million X losses the stable more quarter to we accounts. price accrual, quarter reduced impacted to businesses. the shares, $X.X totaling repurchase investments $XX.X repurchase remaining as in sheet, repurchased XX processing our the were strong we the Slide and the Tier mentioned our fourth roughly loan between salary production Doug but if our capital, $XX from hiring, in years. digits fourth flip single customer have things of decrease both Page capital So And program. We a expenses leverage we that of increase XXX,XXX over tangible saw average to shares. new from an some deferrals some common And quarter. of increase about as growth outsourcing Doug primarily last as detail XXXX, somewhere our the anticipate of increase ratios. I'll balance nice benefited of mentioned corresponding to another And share high comp an in earlier, on In in of from of recovery strong, remained combination quarter, during this in with Doug $XX.XX. On from and mid the into mentioned at the continue remained in and growth size you third the by pickup relatively PPP earlier, will our XX%, go few We in expenses on

Now I'll to it turn over Gray.

Gray Fleming

a on has touch for the in I'll and on few points slides the fourth non-accruals Pat. really this, charge-offs Only basis credit from Doug low Thanks of covered of most quarter. XX. five annualized perspective, the remained charge-offs Page quarter. starting

Our criticized were quarter. basically this loan stable levels

and criticized see COVID-driven we that gives towards we on a within borrowers. page reflect just the point on On non-accrual. this You at into CECL don't lingering heading just softness next of those little can some the page, kind in a chart had And the our perspective. this right that – of classified migration see that bottom allowance with bit few category

the On as small in in see this we due deferrals. remaining provision somewhat and in a loans by to of an outlook. by growth bit Page can uncertainty the increase a some allowance economic quarter XX, percentage but our an our quarter update reserve the little this the improvement that down did use, quarter. came loan just driven tempered forecast We in You have that on dollars a

in deferrals, are The have Our of we our under remain Doug primarily of that year. mentioned, of small as saw were hotel QX and on end those loans. portfolios. increases the None from SBA non-accrual expired X% the at

borrowers our borrowers borrowers It's I coming more you little in expired sensitive fourth payments less these know, finally bit after in as this subsidy Act now COVID opposed have February, to subsidy say pretty encouraged side, to resume really to individual a the On is the CARES scheduled payments SBA within would requests much the with But SBA as XX, request those existing deferrals we're just on for those quarter. now stopped relevant in. slide. And – as getting focused on Page same categories. the

a second. in other change I'll see on touch quarter, last in balances You'll from a hotels, little these in which

We broad on that portfolio. seeing aren't impacts significant in are our segments industry

improve few have the to levels On hotels our the front, over continued months. last occupancy hotels slowly

to can hotels were that strong few cases are some over lower of the quarters. were above some of traveling includes progress vaccines to rebounds be at new with QSRs the August in we're have turn cutting again. also normal with back winter good numbers. very Doug. proven I'll just seasonal restaurants can or operating actively improved over Most And perform see looking ahead. last quick franchise a that in but in ahead some get if going now at and hoping restaurant to most And slowdowns them note, months which is segment, numbers after finally serve some some What the You that, well. of expecting costs, orders really people over loan November spring, good And themselves the the the in breakeven, our opportunities our in with they're it we of those breakeven continued I'll make

Doug Williams

Gray. you, Thank

we In I to grow growth. of talking The non-interest new grow hiring. terms mid increase Percentage highlight expense opportunities part investment of the in in really double-digit expense Pat that single-digit. expect expense. This our factors. mentioned we those high in to when level about and the range exceeding talking we in percentage And Oakes’ headcount non-interest that growing XXXX, businesses he new play to about and opportunistic the because on mentioned year. an new are business expect to just He also see like comment revenue in prominent most is several outlook, during a

businesses pipelines spurn If for double-digit of We've see to at continued executed growth and track a were very our you And all our we grow look X, level. that now X because back new pandemic at loans record pages the business. and you healthy percentage of five-year a we in high also have during people deposits. have

culture. attractive clients We continue want strength our is business an to a have do lot level. pace business There us that to ability We And of to want with with and near-term a prospects the confidence, that do of our particularly a we of opportunities and Atlantic our have have Capital. more execute uncertainty at high of lot economic continue recovery, to I find two administered the more slow years. the revenue virus, XXXX, and but is that’s the spread sustain while solid offset the we being level to than in the vaccine to early at by and confidence performance seek to next growth in produce about over the

and be confidence optimistic So a XXXX of income, in Atlantic continue we and take deposits, to questions. the level that, we’ll high a half of of service your do particularly have the second XXXX, will and income and sustain year very that interest levels and high Capital happy into growth to loans perspective net With earnings. on charge

Operator

question Demba with come Securities. ahead. go And the will Please We [Operator from question-and-answer begin Truist first our Instructions] will now session. Jennifer

Jennifer Demba

you. Good afternoon. Thank

Doug Williams

Jennifer. afternoon, Good

Patrick Oakes

Hello.

Jennifer Demba

had us growth strong can this that industry, pretty you stand you opportunities the you you’re here? some behind quarter certainly based, of out the what it’s broad quite the seeing kind and release, in but more for So said loan color give

Doug Williams

really the we Well, estate. in commercial meaningful are saw look pipelines based. pipelines they’re activity those strong strong fourth commercial at the and they’re pickup our And categories during opportunities we the in various arena, broad and real businesses, our a quarter. the and If in

respect XXXX, driven of shift year, segments. self was you whole But the really there the saw CD-secured as loans. opportunity we target substantial the and If demand most we rejuvenated in and with over our by time, expect that the outstandings to that’s good to the at closer lender commercial will what got portion saw of we really commercial the we see a a And look think really course of of segments. in in We over opportunities sort portfolio, growth XXXX.

Jennifer Demba

NII your growth get you be year. going growth to with pressure, this think margin you healthy the So can pretty loan even because

Doug Williams

We so. think

Patrick Oakes

Yes.

Jennifer Demba

what pressure year? now? Pat, do you terms you’ll of competition as And of what lending go seeing the And kind we margin experience are through right think you in

Patrick Oakes

and I’ll can in the on in Doug, NIM then you jump start competition. loan

Doug Williams

Yes.

Patrick Oakes

impact excess create did We we may see some see of volatility, liquidity, quarter, of we’re yields. also and loan in the but hopefully, to that. bit could little some create bottom PPP, which Excluding volatility on the more bit which closer a little a fourth the pressure getting

here a Could start a points bit The quarter, core core the year, hopefully down new see trend from you as the get on XXX. So possibly. basis we little stabilize. decrease we'll margin closer could end a to per was to and fewer of

Doug Williams

just which the Yes. loan reduced. repricing on saw course fixed the of loans, of are I’d loans. instantly, floating fixed saw over of XXXX about The say, our a rate rates seen reprice XX% a of what loans. the yields, now was But lot over rate we are of lot Jennifer, rate course we've repricing we of XXXX, mix, when

that. I really think we're through

principal loan So competitors course to the seen With yields competitive is comparatively environment stable really I new the any be respect haven't the think it been, banks. has we of continues over our always large should competition XXXX. to and sort of competition, be like,

Jennifer Demba

much. Thanks so

Patrick Oakes

cut will of deposit And some over is slightly next down trend that that room still there to probably little see not will continue know the think costs, but I quarters. Jennifer left I bit few significant, to you

Jennifer Demba

you. Thank

Operator

Raymond come James. next Please go our Rose with question ahead. And from will Michael

Michael Rose

everyone. Hope, you're Hey, good afternoon, doing well.

on downs was lines like much that question, growth – CRE. how you funding the up activity, of actual the is of Just us, versus but loan business. maybe of like construction projects, can that the a new of or obviously, how for this wasn't much Was some size draw that on of a follow-up kind growth new it things

Just color customer if give versus us customers organic you around can utilization. kind Thanks. of some existing new

Doug Williams

real more draws of a and those lines Yes. the increase first rise to in In it lines the throughout credit. levels. clients, was modest pandemic. seen We but very our terms usage, the in And our both normal year, We've new really under and pretty a financing, commitments. line half estate C&I new loan been quarters, the some of the paid on had second clients and new haven't added stable projects actually area. see been in a of behalf but category, have did growing significant we growing we've not second in existing that activity has particularly M&A clients. Commercial There been also of we strong outstandings year, down more usage commercial were

something quarter. in like we think fourth added something that commitments, $XX of like in commitments new I the we added area, unfunded million

area of part So we future. the strong drawn in their the on as about that continued the commercial do being and invest And those our XXXX. of clients and our see we to to construction resiliency commitments willingness their future XXXX, the be course about think in our optimism over and optimism of reflecting the quite pipelines prospects

Michael Rose

I Okay. front, that it hiring in bit like little seem of are couple and from now of And guys seems a like mode. mean, the the quarters, does growth you then on fully past change a

the at expected those plan Doug is this kind hires. double-digit year point kind you the number on goes as that think of you add or I Are the the for look as said to pipeline like and you'll year? of of in

Doug Williams

we lot put do opportunistic. new we’re in more but a active We would budget. We it, the hires with in are see the those Michael, constantly interest, in characterize dialogue numbers I we of engaged – market. is and perspective

think talk the new people, know the or producing add of of add free I people I lot but will And also that don’t we’ll support fewer over course will feel add and people. if we we’ll a we people year. but add basically So people. to bankers, those those many be

grow the of business opportunities We’re in revenue. front to new because turn building of capacity us and see we

Michael Rose

then you sense. press expecting how that. the particularly the stick kind inflow latter deposits. like One I noticed In couple that the obviously, seasonal be quarters? of also how fintech I of parse a also thing two you mentioned relationship and mean, kind and little you sticky appreciate side. into seasonal can the makes you fintech complete the had out, we of treasury bit. gears but mentioned just That I switching management And release, the the versus will much around was It No, as those next seems relationship? treasury inflow a move deposits versus the might to you’re

Doug Williams

I’ll of deposit you seeing business those particular, which And those level very X deck, and that X and you we they trends. with growth and a of Yes. is in don’t those of be our acquisition, total the a demand feel development that everything character Those of and acquisition lot I’ll us. is the over attractive have of about of business saw five-year development little lot growth. business a growth at have. in liquidity people. prior years. we in that of in new new detail – that back you We I do kinds to can And would also record give if me. a they in existing deposit more in and talk But liquidity very Pages see built growth Oakes track and combination. of have sustain in a successful is terms go about a businesses and it seasonal well, enterprises in placing breakdown core growth more The my there we’re an wealthy that a the of suggests But bit the reflective business combination let confident of was XXXX, deposit And clients new is with deposits, liquidity. front look that overview. we there. strong XXXX Pat relationship with Page we comments. course really also And activity X have of as deposit that

Patrick Oakes

color more fourth little on a probably add I’ll the Yes. quarters.

lot This deposits the time it’s And money fact, year. still in a at in that earlier. we see of a seasonal run came typically end the of around. So up

in the quarter. to balances So it’s inflate going first deposit

Now as we we we through just and of good have I into second the that think, to mentioned the on start quarter go this. core Like like will decrease timing quarter first some hard that said, earlier Doug to predict the it’s growth.

along have a the customers this our just several liquidity it’s they but it And it’s of of seasonal some lot with the And But all hard. than previously. think liquidity, several leave, more Some stay – I did a next for will I will least at think positive. of lot quarters.

Doug Williams

Yes.

I think it’s really reflective of a and franchise that building. are we have built

We we’ve balance treasury used have a the strong build management of capability, side to really that services and liability sheet. the

of a to type of in ribs fortress Our execution. them. our have relationships with income see player and stick clients attached as they us a balance lot the have long-term and are our these confidence sheet to recurring lot in long-term They a streams confidence

it’s and So strength business the of of indicative really the we’re that we've built building.

Michael Rose

use balance pressure quarter of remaining to buyback? help little left great re-up it. to why one Capital that's just growth. But doing are a we are for are look you the the the on job. see because some got go, tells raise think bit one final potentially levels it me, story, intangible, still obviously, a Maybe definitely one on under fund a the guys I to and and Yes, could debt this stocks sheet Thanks. you you repurchase

Doug Williams

above those we going capital Yes. But to for standards reasons. we're think do do really cushion have generator well-capitalized of of a going to We we levels. keep think, bit well-capitalized I We still policy want a have standards. strong Michael, excess above – that capital excess have capital be above forward. good

actions XXXX. And for to capital are of have as $XX what completing then same determine the of And And authorization. so we been. anticipate do remainder opportunities take they want million we available to we'll management the that arrays always us

to We position we're a with in respect – capital. great have

lot course, as We have a flexibility program existing regular well. of that to deploy reinvestment dividends new repurchase that And a the possibility and shareholders for includes capital a business, of of in share our advantage.

options things all quarter back after So those be come us, the about of accordingly. Board in and to front are communicating and we'll our those talk we'll first

Michael Rose

the appreciate all I Perfect. Thank you. color.

Operator

will with Steve ahead. question from Comery come next Please go Our Research. G.

Steve Comery

go wanted back comments these of of couple I to some of deposits sort one Pat, afternoon. about leaving. to Good your excess of last

kind excess lot of does if you that You brain opportunities about in securities say, of versus liquidity, how expect and pick a using it to guys of sort demand. your if addition think stay wonder for a could that waiting it about like book deploying lot for

Patrick Oakes

Yes.

So sure I much be how and to a going to make how it not. we're deploy is patient is much to understand think we sticky lot of

try bit use. hoping purchased we quite some we'll fourth putting time So, are quarter in but purchasing securities, of care we take a first in will loan the of to some the of active quarter again have nothing. and base be growth that We're over that And also. a we to sure this almost and then to lower deposit to with much our look we also to funding base. core and We costs true bank, at at alternatives deposit wholesale have in trying other we'll look are don't make

can about So there's not deposits. chasing much do off we

we find be will assets books earning the focus can that put definitely. good to the on So trying

Steve Comery

good. Okay. Very

Patrick Oakes

Doug, to have don’t if anything around add know I you that?

Doug Williams

No.

this an couple Having We've amount next commercial the I think, will perspective accelerate as year. have, think that at we going will I recovery point as to optimistic to do forth, quarters and segments. the five-year the we I I of move But will of because the particularly and track well. And mentioned, had the process that, pipelines of pandemic. so said I in growth, through think, of we solidify with – suggest economy here fair a uncertainty improve healthy the respect think loan loan have record and that’s a have as good growth. economic very of vaccination the loan very demand the

program opportunity loan in to good. It the replicate mix we that growth, growth record XXXXs as I in will more growth fact, consumer the XXXX in be commercial Again, loan think and will I is on very during segments this improve change. of to so And a lot XXXX. opposed think in particular had the of that

Steve Comery

in Yes, that wondering actually opening Sure, far the or mentioned been opportunities that’s have there maybe that other I mean, off specific prepared comments, the next. I guys any I broad-based, industry QSR. commentary any sure. in going commercial sort in of improving opportunities you area Is as as seeing know of demand? strong have industry level if up of get the you opportunities book. lending point Thanks. lending like

Doug Williams

a of that we area was did quite XXXX I course Gray of clients think, based, the strong early it’s Steve. QSR concern, mentioned our QSRs and the in the saw but straight over at particular of was our to clients identified particular performance building really pandemic as business – broad the very that. looking in their we expand comparisons. businesses lot favorable do And money and year-over-year seeing straight, borrowing those and and on to a that we’re seeing as revenue look of we’re

so of very too. And we and got we’re good expand in good are think continue good team are some We people. a who – space business. to some think credit there And to our also that be and our of to part lot that bankers particular confidence we in have going we’ve very opportunities

true So across the that’s really board.

finance the resilient. They in those future investments are them. confidence Our Atlanta new their acquisitions, to are able and and clients we’re with for showing

who that us. borrowers, really to really we’re future in the invest business, generally clients for our driving of opportunity So who and every are – to borrowers seems but willing and be in optimistic maybe were aspect our seeing

Steve Comery

been sort to the maybe then from all receive I and if And the hotel on enhancements sponsors if guys of the hotel question saw appreciate you’ve detail portfolio, book, the on have a credit, wondering, you I those? able was deferrals of in credit any Okay.

Gray Fleming

So Steve, is Gray. this

We and what the have who patients book the on really of of hotel are capital, for or focusing just, either sponsors been additional both. in kind sort capacity or

And so deferrals our that in we now largely did we deferral, grant hotel actually the those need after of the many deferral initial just have haven’t had requests comfort strength sponsors. initial where on they with book either or and taken the deferrals don’t

portfolio for as them additional a of beyond of enhancement kind whole really what So, available looking. their to is looked haven’t they credit and seeing have how we kind

a a And be side, the so a other the been property well. doing in developers we’ve even harder properties generally that average that might than on that working might speaking, be location hit really with bit in CRE cases few little had was where

And And look have had held at so, to or we credit overall, either nicely. sale haven't active additional flows discussions up cash enhancement.

Steve Comery

Okay.

Okay. final Maybe one maybe good. Very for one for Pat. me,

for wondering expectations XXXX. Just the tax about rate

Patrick Oakes

– XXXX. wouldn't what anything wouldn't income where rate than could make tax we XXXX, from assuming in significant I The was up. and increase slightly saw expect in money goes I more we but it pre-tax

Steve Comery

you. Okay, all Thank I okay. enough. have. Fair That's

Operator

will ahead. Our Stephen Piper go next with question Scouten Sandler. from come Please

Stephen Scouten

guys. afternoon. Hey, Good

Doug Williams

Hi, Stephen.

Stephen Scouten

to wanted I couple some comments around made just guidance. a of tie up the of you

yes. about First, you single jump year, kind year full here growth to bit the run the kind because expenses obviously of already, $XX.X high talk quarter little about a took mid talking are you on expenses had or a in digit when the this million next for of fourth rate it of we

Patrick Oakes

full talking XXXX. am year I full versus XXXX year

Stephen Scouten

it. Got

Okay. Helpful.

Patrick Oakes

– just taxes. higher benefits quarter first in quarter with higher expense are being on us to first payroll typically expenses obviously for clear, obviously be Now

quarter. it have the the that the So some of will occur quarter and processing first also of higher piece will you in from first that be PPP

a be be So but there year for loss there, bit full obviously the will the little then inflated unfair. will

Stephen Scouten

of anything the fourth unusual in or incremental quarter, And in these have with start investments you guys categories just spoken in these nothing upticks great. kind of some Okay, some to. – of the

Patrick Oakes

right. in an uptick were, see quarter, in fourth So the expenses didn't really you much,

a In but just down, since about like noise. the else loan expense other was in we everything were expenses of then from had more decrease some bigger saw I fact, deferral production and you and talked benefits salary like salary areas

didn't you that. a see of no, lot So,

see next start to year. You'll that

Stephen Scouten

thinking when about I Yes, losses all but depends okay. some yes. guess, you're expenses Yes, looking out the kind like as the core like from bit, other it was I looked of – were I base, up the of a core quarter, at like it last stripping on expense what little guess

Patrick Oakes

Right.

Stephen Scouten

double – talking you Okay. kind digit about headcount you kind I working And of? then mean, of Like, talked when headcount. increase What base in you saying percent the of are revenue producers? increase about off about talk Doug, percentage are we

Doug Williams

Yes.

Stephen Scouten

how with? that starting if many like? what really could And so, we are And look

Doug Williams

because these that, all XXXX, suggest Yes. digit if would would the of is And balanced this we could between double that Stephen, a in later of revenue percentage. having support that increase it growth think see do potentially put by kind do I'm said and don't XXX positions appropriate but We We We equally number in positions. roughly headcount into be terms opportunities reluctant investments particular that, right that and and this. would prudent we a people that on have opportunistic. now. to year I to be have creating little that company producing over this

Stephen Scouten

it. Got

deposit times, a almost in I kind I'm helpful. at last one it. $XXX I quarter, at this the And back asked to mean, of million shot has quarter. this look came know you. of $XXX when increase million. then but around you that million, take Okay, question these first going was But inflows, year out was $XXX I couple Thank mean been the

flow what is come year, pretty range So something because $XXX million expect last like million the we or sheet. could sizeable in was are out, the the and come $XXX back more million back or that $XXX it's talking seasonal similar relative we obviously would to balance to to it out

Patrick Oakes

Right.

right. So was was million, there, right. you end period two components average increase million, the $XXX increase got The $XXX but

$XXX most came million would a the So that leave right. that end, idea That point. some rough towards kind the additional likely you of at, of in gives at

left of lot volatility lot a hard when besides of with hasn't but these that. this it I’d happens numbers, yet, a such predict quarter, what will leave, to Now it's assume in there's but first it

Stephen Scouten

Sure, sure.

Okay.

maybe then around helpful. real I very noted No question me, credit XX banks, personal kind pretty reserves charge-offs points, noted de-minimis release but some of then reserves critically. that seen still basis where you maybe last you for sort my net great. that's opinion also obviously mean, maintaining is I And that other of just see, credit. are So, we've issues can that to

wondering So picture. loss looks XXXX, credit look what you're what with seeing a balancing said I'm you content was just what towards some pretty good as you like in kind conservatism potential of just

Doug Williams

why I comment well. that? on as that don't might take a then And Gray, you Yes. have

Gray Fleming

builds. guess that about reserve industry across reserve all, I releases I'm really the of are Steven, pleased hear instead first now of So, the to questions

I lines. think along And hopefully sign. so have like, I good others think that's those hard to a But said, predict it's really

We small particularly still now business you haven't thing, end have the with good question as segment out. tunnel light the some borrowers we know vaccine seen think that there's you of which rolled at up losses in propping least driven out. the that, We the stimulus some a the at pointed being of

now bridge question does And them it. or just those the not for the fully some so stimulus do of make gap is

just reserve our quarters. that built the bit the materially. the in just picture the not off got our forecasts start while will couple to in size economy of of summer, we outlook in our uncertainty got, our quite worsen And still along that predict. in rounded so of that if model. your a the we’ve will the so growth to felt of is doesn't still And over improved kind have down. of into point, the or to We've to spring decent If corner we trend really to last would a bit charge uncertainty and terms CECL hard and offs, loan little continue improving have models that expected like dollars to and fact charge really But with percentages expect those really starts determine changing

Doug Williams

thing from didn't through only appropriate who add we that because of respect first reserve think were of greatly the is diminished release will that that has uncertainty And this demand the indication economic and really unlike Capital some I year. things would if us for quarter Atlantic level had uncertainty of that in to I be an solidly conviction the Steven, was banks, the released of that to our recovery. think fourth on the part you really particularly with see reserve

Stephen Scouten

great. But color. it. thank Yes. you whatever theory that guys for agree all I I for appreciate Yes. the personally, That's with worth. that's

Doug Williams

sir. Yes,

Operator

go Our will next come Christopher ahead. with question JMS. from Please Marinac

Christopher Marinac

credit simply I around coming moving of Thanks to and potential or to new afternoon. hosting been for any curious the for the making. in the on quarters? call you just good and some your on afternoon. go Hey, grade you've back seem Gray QX. Do Just It problems new QX new next ratings, arise? anything points to there's of existing see for the this like risk couple doesn't from inflows these items want outlook

Gray Fleming

no, in hit And like criticized that and working to there's kind that and or each others said, pay borrowers glitch of, individual a Not with be numbers down. really, improve we're or and mean, this pandemic here the I always movement flat, I while there's going Chris. and just borrower were up off. some there

classically to of I think see kind time, I evidence that a to quick be, on of trained And improvement got need real upgrade. still hear credit a that's to folks issue, slow but as downgrade. credit emphasize folks those and with an and be classically I’ll want potential side is okay, I paper, credit that as of, there's we the piece more on bit the little soon inclination folks about a tried to we've break hard we've to upgrade. impetus I upgrade and before to even And of of folks trained to downgrade

on And end. so little there's that naturally a lag bit more

and various in want our credit fourth those into originally few for quarter the got refinances, and a changing don't push have that, scheduled we've right But I been folks it's hard just because reasons. to of on yes, number pushed way. first mind, decent and of were some for think payoffs quarter conservative I too that or a

we potential some of we're happen. still those upgrades at at and so looking will that payoffs think least some And

that do deserved Chris case quarter So deferral expecting like by were of our others. sponsorship, very a winter, we won't term, a be there we're deferral. for they thought location And fourth certainly be an to terms they just but the of about really what hotel say concerned substandard great example maybe us seeing from felt good we any We additional basis. where just as of additional not identified this loan case grade an a more given more can't on downgrades, longer one in the some than asked but is, needing really weakness. longer And an kind for had to

to terms moved location that special feel news in that And good of and mentioned term we so from with comfortable but long substandard, again, that's one sponsor. is very

So now kinds terms more movements grades, those industries. in within that seeing then trends we're our tuning of bigger of fine

Christopher Marinac

then have bit really helpful That's it pre-pandemic, quick clients. of Thanks lending and with depositers the just distinct I on then background. talked you're sort Great. all Doug, about little And you question, They're folks. to a not of just separate a of had that. sharing for relationship kind a separate think your you a and of other? as And reminder, kind these policies FinTech

Doug Williams

and of offering in Their you our service our presentation, generates processing but we're relationships go back in and very and volumes income XX Chris, lot well. see processing on flows, deposits the best them fintech is a Page And deposit in way And to that and X treasury the the we're probably business. and substantial growth is so appendix course those fee substantial on, that management as if services also see you of and that – charge actually doing best payments what information Page look to presentation you trends income.

Christopher Marinac

really not its to lend again... them, is again, of part metrics But Right. your risk with to

Doug Williams

Correct. Yes. Correct.

Christopher Marinac

the policy. Got it. With

Doug Williams

Great.

Christopher Marinac

Thanks, Doug.

to today. information want point, reiterate the appreciate Just that

Doug Williams

you. Thank

Operator

from Our Please Investments. go RLH Ross next question ahead. Haberman will with come

Ross Haberman

very guys? investments? book brief the How I quarter? Nice of just are two shared credit questions. in had you Any issues national

Gray Fleming

Hey is No, Gray. Ross, really. this not

a of and of review shared those in there track was national have it in third the reviews couple kind We most special that credit with OCC, this mentions recent quarter.

at additional pandemic having they financials good a we where so quarter bit think the lag? second think were of I first And to is time problem financial. the quarter there those gotten with of I and point in already of the are had looking,

not of really that and a those else in mentions up have couple of special we portfolio, either about holding but So nicely. everything we're concerned is

Ross Haberman

over of there, strategy? liquidate that direct grow you'll the loans, of time. thought you Is sort million stuff The as $XXX that that

Gray Fleming

Pat, you take to one? that want

Patrick Oakes

have, really banking corporate ran wouldn't I banking the No, corporate regional and business as corporate I so well. people say arena we that been Yes. worked in other once that. the Wacovia have since large business and the in at We've have we inception and

the sustaining are waivers that it at would and So to in of quality that level. XX% and of always There's of in we're of stuff. our mix been new that years business. refinanced These markets. we credit, capital and amendments financing level, fore that comfort mix. in that also loans as a it of several the And be the weight the a and a that of in lot now, with with of anticipate part clients These with also we and well. positive it's requests of generally lot about it's and churn wanted we've transaction have kind companies comfortable is It have portfolio book portfolio. a new type we for a come loan There's to overall, lot

probably but, consistently show consistently, our So will loans it XX% a will has terms will it continue more portfolio, will it's been we to outstandings. around it very think some overall. and growth consistently decline other a and years of – and years of in little be active But

Ross Haberman

And question. at final hotel I the the looking was notes, just one the details portfolio. on

notes around and/or of million are $XX severity heard with banks up calls and those week, more the I A credits? – occupancy the think row a these the million most and depending of number that are I've on a taking to you these classified; those you in said are of of notes. at special $XX in number other troubled Have stage to now, beginning you any of of mention this B some all in of break second or loans PPP of

Gray Fleming

ones we'll is feeling sponsors So credits. pretty have, some it we're estate these our about much been of Ross, on good that stage hospitality and don't with we the the in able definition rebound half have And will not operators think draw able to is to starting group the assistance again that that patience point have get expenses. them that's and SBA, on capital really I the this debenture side of SBA at do type spring to on of your at from as for a loans, of strong would loans by some to if which get you'll and hope, access but run funds made the PPP payments through plenty real and not most think February will gets book, advantage the we second-lien we of XXX lot ones the payments good question, they subsidy of especially and the to summer, payment a yes, on where actually loans of commercial say to that pretty them by SBA any side first are we've XA these, second that take unless out get they a loan and We're piece. that number and months about similar see SBA good there, of things of they've eight got capital, be a in

for PPP this So and final is think example normal to I end going and when to the mile, subsidies start think well towards act loans last working we – back a end are if you’re well of to hotels, really these great cares bridge I that getting going up industry. up being

Ross Haberman

if six huge marginally much much spread? I amount final nine there – in question, subordinated from a ask lot of that? help may issuers, banks last many or your stock, been months. you different these so, issued notes of preferred one just to And how and how the is if Have And bought

Doug Williams

we have point. We back but not not up recently, active have this in been it, at have buy did bought XXXX, we to some very any looked

Ross Haberman

about possible been worth it's your risk how don't overall opinion I investments? for issuers. deal. What's very Okay. of it's for the class illiquidity, the that know just because popular if I added know of the

Doug Williams

and right don't the but be willing to we'd looked think investments, bank, it'd for us. at We've for I significant it be do some anything

Ross Haberman

Thanks a guys. weekend. Have Okay, a wonderful lot.

Doug Williams

Thank you.

Ross Haberman

Thank you.

Operator

ahead, to I remarks, sir. go This closing for any turn Williams concludes over to Doug please the our like conference question-and-answer would session. back

Doug Williams

dialing you. the all pandemic very afternoon. for Had fourth performance very this quarter strong and a circumstances, everyone of Thank in strong considering appreciate XXXX. We

reiterate in me earnings and and trends growth in we quite optimistic ahead revenue five that that growth about Let last established Atlantic of growth the we Capital's deposits, us. best over years in we've and still are loans think we're XXXX And of terms XXXX, that the are think sustainable. in days

afternoon thank in good and weekend. you dialing again, So a for have this

Operator

The concluded. conference for now has attending presentation. Thank today's you

disconnect. now may You

Atlantic Capital Bancshares (ACBI) 22 Jan 212020 Q4 Earnings call transcript