ACBI - Earnings call transcript Q2 2021 | Atlantic Capital Bancshares, Inc.

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Will Matthews

Good morning and welcome. Thank you for joining us. This is Will Matthews. And joining me on this call are Robert Hill, John Corbett, Doug Williams, Steve Young, and Richard Murray. Earlier this morning, we issued a joint press release to announce a merger between South State and Atlantic Capital. issued second separately earnings also companies their quarter respective releases. Both

earnings. on discuss regarding and quarter today’s will the each merger second comments We brief announcement call some then company’s provide

call As will earnings noted previously scheduled. earnings in releases, calls take place of our the the this

each posted on website. have today’s that presentation will slides refer We on to we call company’s

forward-looking may may in within risks Before which our may disclaimer remarks, South that statements meaning by made and Any for comments teams press Private subject we Reform such I of forward-looking you rules. and Securities statements begin uncertainties, language Harbor presentations Act we about the the to and State include Harbor the information of the Capital of us. Atlantic the the Safe want to Safe forward-looking the management Litigation affect release remind are review Please and make more XXXX.

call Robert will to Hill, turn I Chairman. the Executive Now, over

Robert Hill

joining so Good Will. you, Thank for morning thank you much us and today.

would I First, a State. years. team have many for like Atlantic fit he be his South known great Doug team State. Capital for and to and would South the always I I believed have welcome Doug to

about We together. are our excited future

conversion largest We also done. this possible none quarter and this our completed the would the job in support our have our teams history tremendous of without been have bankers and

to sound, last the a over State been position about a has focus year our of All and build growing South in profitable company. putting

to turn in the over John. ahead. company certainly for is to call we road While our have now will well opportunities all of areas, improve these numerous I positioned the

John Corbett

welcome Thanks, Doug. Robert. to also And I want

a the share. quarter, earnings reported bringing minutes. $X.XX I Will per to partnership share Doug your We and are overview providing share a earnings first, level the the of Atlantic adjusted discuss to Capital $X.XX, of you, our detail additional am team. with We year-to-date merits in will but merger, high excited some per with I this very going strategic few of about

with strong our quarter another and for $XX we Asset therefore, quality release in credit benefited losses. reduced NPAs another of allowance be continues very from to million

Our the first from second was quarter quarter. PPNR down

While we business, the things: second reduced and was the mortgage Organic in are PPP to to treatments we income our were accounting seeing. we strategically due the first quarter. balance was two mark growth bright and acquired for the it pipeline retain the the more entirely was a was two growth sheet; our in as of production disappointed decline, mortgage decided loans. on spot on underlying accretion are not These fundamental reflective a of

XX% announcement if loan our only the a evidence the which interest I to revenue and such The systems I complex South the complement our project. execution the I’d nation to that CenterState, the of didn’t a best to the since on and started. be will integration positions increase months the grew Southeast want second enhanced remiss company. publicly transformed team their XX interest the the and rearview net the quarter of State pandemic merger for It momentum in rate of growth. is quarter, professionalism be during in income second completion mirror, an growing the synergies Our South second about of the and us long-term with mention successful of the in the our ago is markets double rate. end of we conversion first State The with the we at platform, nearly XX% I and that finance loan growth at cycle there from at portfolio market this core The XX to is lows portfolio country. first out but density and X% lending did deposits in the have our importance the announced twice the economic bottoming production grew commercial cost turn the opportunities between loan the loan to our the that pandemic quarter. morning. by digital And strategy net in increased quarter process opportunities the previous asked the corridor about pipeline When grew page Not the explore core are and us grow, preference of is annualized about M&A that Atlanta other calls, markets. look our core allows build making it talked and and Interstate like on new Charlotte

Atlanta in building C&I Doug with people Wachovia. he Wachovia of XXXX Banking long Atlantic as in evidence on of Capital leader. of when was successfully de a they soundness, team He the teams, he completed Capital novo a at based And that the Corporate team. it growth. loyalty him X on the manner followed I And founded Atlantic and Head in capital will as approach balanced know a years building admired his growth both the quality annual the also Capital we the after start capitalize largest enjoyed and which franchise have and career so have to and at the raise been also Atlantic is that and growth The large disruption You in have great can ever we over partnership the national I was is X loan the They time. State our on principles ago XX% treasury companies with Atlantic Capital of at oriented the the company. that and last banks. compounded years. make rate a Doug middle-market South expanding actively watched better. met a is profitability

This quarter, growth. XX% loan delivered they

capital a Atlanta. solutions a scale provide middle-market State offer balance and market with grow his growth clients South and will Atlantic Capital team engine will Doug’s sheet and to strong larger State South in

in which fin-tech This there share team market. single core market. management excited very Banking quarter. Doug the the will I’ve on verticals now to to Doug Group, partnership high-growth potential. transaction. assets a also X the $X as payments We I in huge solution, largest billion of processing only our to and are branches system to turn serve and companies the same welcome entire little so both clients. is for also Atlantic the Banking our South State. continue our the There be low-risk These Atlantic disruption and It’s remarks same treasury Capital to businesses. company. to Doug’s as asked over Corporate it He will with serve I investing want is and our new of are Head President his end are for his And will and

Doug Williams

morning. and you, good Thank John

clients Atlantic new partners, purpose our teammates. careful capacity, part, business year, record a and would organic of be company base, competitive that our enhance and new we our larger a As opportunities for to investment pre-provision changing a the it and and and Opportunities the loans, partnership spending John, After you Capital sustain State with to could with our in growth capital of the of that these shareholders, larger capabilities provide. above-peer in average niches. broader consistent consider in apparent in net opportunities and and strong last revenue growth built for became South mentioned accelerate Atlanta apparent new the with teammates began earlier prosperity consideration and benefits has years. know, prospective to X.X as deposits over landscape of and fuel pipelines greater view our that commercial national this partnership in are for a potential In opportunities market clients

management a and management have South companies risk rapidly Atlantic and and constructed built banking contribute core are business. tightly aligned treasury on best and growing company. We platforms that, our Atlanta and great soundly operate Our the are processes believe culturally. philosophies fin-tech company. payments is teammates credit commercial similar. State My the a banking great same and Southeastern team the next banking We and in regional we To will Capital

to sizzle We will story. State South add great the growth

Capital’s second highlights Quarterly annualized quarter diluted few XX% PPP grew and results. to We for $XX.X investment, the year-over-year. of deposits. first of linked non-interest-bearing net the Now, earned were quarter quarter quarter the quality year-to-date to a from excluding XX% grew remains XX% XX.X% and linked income million, of of loans, banking. XX average deposits XXXX. Capital’s basis XXXX. of quarter among total revenue per increased $X.XX compared deposits XX% best second increased Atlantic X declined XX% held months Loans from the average first net cost and deposits The Pre-provision credit average annualized or annualized in XX% share. of points. Average Atlantic

non-performing charge-offs net XX, X X were and of points points were basis on first June total months XX assets assets XXXX. basis of the For XXXX,

Our growth XXXX. through new remain strong deposit robust anticipate loan business the second of half we and pipelines and

information Will Matthews will I State’s over Now, to second results. who on more South turn quarter has it

Will Matthews

stock is ratio merger the of financial X and fixed transaction with key X exchange a assumptions This outline Slides XXX% and impact. X.XX. modeling Doug. Thanks, deck the a of

on modeling and costs Key Our assumptions after-tax consistent saves for NIE modeling of estimates. merger based are Atlantic approximately $XX of and approximately of XX% integration base Capital’s million. is cost

penetrate will though its QX that X will share would XX this revenue a at which earn early dilution, we have per Our modeled our expectation in This book negligible another synergies we generates I that in larger estimate value X-year non-PCD points transaction approximately tangible less base customer chance optimistic basis modeling have of points, XXX provision. as note have to would of balance X%, of we accretion a XXXX, a close mark day back. $X.XX we team is time the loan further sheet. than basis EPS and no part of with are

expand now quarter. me our comments John’s second Let bit a on on

strong negative line As bottom John had performance another said, we after provision.

declined impacts the in which and million $XX deck and showing QX, decline a decline drop discount from accretion accretion mortgage which was the was earnings to PPP waterfall was is However, QX. acquired $X a million in meaningfully million QX on chart income, by a PPNR PPNR revenue from loans Slide $X of X the of of accretion. $XX caused but million

numbers XX. the me and some Let breakdown Slide for on will revenue you I reference a mortgage bit

$X.X mortgage the first actually strong year-to-date of X production up quarter $X.X billion months producing year. is had quarter, and production in quarter, Our the X% the a first second is compared up which in team to from billion last

to causing However, levels. pipeline the quarter return on the and by as lower be performance percentage our by the increase to volume on secondary evidenced led mortgage of of due to mortgage the however million. pipeline sale margins gain we this into approximately core the more to to mark environment, business reduced to selling market, strong versus decline that elected portfolio decision This production the normal $XXX our pipeline secondary sheet very strategic production secondary balance increase changes the The the in a $XX large negative and continues rate stays to of million. interest

expect a in growth QX. was ahead. negative division business not XX% would our levels the model population continued the we pipeline similar pipeline in earnings our quarters will Given believe vibrant our The and at volume QX, of migration And in the mortgage southeastern result housing we market mark purchased. is for markets increased to

had John in levels. loans up first XX, non-PPP over to in build, our XX% our continues at year a billion As loan quarter noted, for to QX June pipeline growth we growing and commercial $X.X over from

yields which per X sold with were very deposit from Slide continued on $X.X $X total was billion of to continued in $X.X percentage production liabilities up sold mentioned million QX’s points the a core reflecting growing QX, excluding X.XX%, interest be PPP QX, Fed our position funds QX strong income, net illustrated with by loan to $XXX position With by interest cash $XXX as up basis XX deck. securities average core basis basis Investment declined New With average. the was core by basis impact cost and of accretion growth on X Cost average XX our funds of in of grew flat points. loans, basis Fed fell and to net margin and continues growth, NIM, was the interest-bearing million. deposits of with flat point. earnings earning over quarter’s essentially of up of and assets. John a billion, essentially respect day and X.XX% Reported high our securities XX cash that’s X.XX% the million declined all and to points

QX. QX, points more We full here. continue versus of X a our make in deposit to Duncan-Williams hope and with progress to flat quarter were expenses basis manage few a for Non-interest with costs months

range. in million last to noted million the most we of third saves As and quarter, recognize the $XXX we $XXX the will and expect cost operating we NIE fourth quarter to QX in continue remaining

non-performing million. in release and with assets As remains to quarter economic asset $XX.X with John negative further reserve expense led of a noted, another provision strong quality reductions improving forecast this

For our was at baseline with had and quarter’s one-third in we weighting. XX-XX SX scenario two-thirds. scenario same with scenarios, quarter QX Moody’s pessimistic this first we the weighting economic This the the weighted weighted compares

$XXX. shares still additional bringing after Slide price As capital This shares at reserve of our a the loans, the for noted TBV was company X.XX%. second XXX,XXX loss end, shares purchase volume-weighted capital quarter XX, the absorption loans, $X.XX repurchased return and quarter to to ending since if PPP accounting by an this average at or second X.XX% share the ending X.X% and XXX,XXX was at of end standpoint, March at after include a repurchases, excluding quarter per the ratio, The during on XXX,XXX grew the company including quarter And unfunded shares XX. From represents our total reserve marks, commitments. return repurchased X.XX% $XX.XX. year you approximately

Our CETX very capital capital it to above I healthy XX% you, and total all above remain ratios will back with risk-based ratio John. XX%. a turn

John Corbett

Will. we a are value share, per activity, up buyback to XX.X% to and measure over continue with how Thanks we see last solid the going tangible the year our in that’s growth book over success cycle. Even

I think The a is is booming. this up economy production XX% interesting time to it’s a be Loan really quarter. banker.

are great We in markets.

our lot $X liquidity. debate of there how our above peers deploy are We in is to quickly cash. in on internal billion a And

horizon an and economic about consequences. unpredictable we in important by is the actions cycle. with this the core values entire how think through And One and of the capital particularly our managing extreme monetary year is Federal long-term is Reserve that last the

are and for make go up Operator, to and interest So, going begin live questions. we it we are be we to going ahead that patient can with rise. to investments and be rates thoughtful open when let’s

Operator

Please comes Jennifer with question Thank Demba you. first [Operator ahead. Instructions] from Today’s Truist. go

Jennifer Demba

Thank you. Good morning.

John Corbett

morning. Good

Jennifer Demba

questions. Congratulations on the deal. I have a couple of

And the if transaction? you about this employees? background for to thought tell could partner? why time was key about my question find And second then us you to the Thank talk can just packages you Atlantic First, retention Capital of the is you. right Doug, us a the

Doug Williams

do to Jennifer. Yes, that, happy

an And merger. strategic came considered First the the the possibilities very months. contain of a all, terrific the statement that filing a S-X course, the look Atlantic think deal a State us. announce of and good able And detail we pleased it Capital was a with conclusion to be growth on and of to background proxy we to few that to will are time of will here weeks our a be and course the But few of over is trajectory to larger considered in last carefully bit several partner who businesses. South for we sustain we in partner we to to alternatives

retention also going employment We agreements The Capital think have be senior as under some will at XX receiving forward. people think we X spread around have the Atlantic more we with to or And opportunities. XX appropriate money next State. top employees South I

very So Atlantic has been attractive a Capital employer.

been very State a South attractive employer. has

we are companies culturally, in Atlanta Our and market aligned the and retain people and beyond. think very do tightly can we our well

Jennifer Demba

Great. so Thank you much.

Operator

our ahead. question today next Rose James. from And Raymond comes go Please at Michael

Michael Rose

morning good you? everyone. Hey, How are

John Corbett

Good morning.

Michael Rose

it’s I the get contemplating what that on Thanks. combined sure discussion. just pieces it are They the holistic good as get company? fin-tech of earlier your could on wanted stages. what one mean for kind the was I you of I’m growing to some ACBI’s this start. payments transaction the off wanted business. in Just really a for guys were plans putting to But of would color larger be in to together, know And thoughts

John Corbett

Michael, Hey, fee have a growth they momentum, trajectory I good of if think And think And very across shows and that great John is such companies transformation of that volumes. have is increasing. think That and annual one as fin-tech just the page that the team things in Yes, growing companies that us you about we to fee the XX% that was about built a the was what into the with that morning. here. our tapping digital slide business country. country, and a income his compounded Doug the about rate huge there payroll attractive appealing at across done job industry. the is

that’s capital on balance sheet, I source, So sense growth. continue that businesses. things a leaning that businesses think one of larger that the to makes just we’re that’s provide about partnership, going those interested is to this in team in And those growing we’re very larger Doug’s

Michael Rose

like quarter relates helpful. Because guys, And the mortgage. obviously, it Okay. in to outlook as step like you was What’s PPNR as basis. on for basis, kind follow-up, exclude looks a down least I big second it on and the where looks of maybe it of John, earnings you a of PPP consensus I kind That’s missed just if at there? guys a the sort stuff and that

we looking what for offsets on could mortgage the be move as Thanks. color just forward? some So

Steve Young

percentage know, we we last the the Last a assets period over trend me of secondary our picture at between, of year, don’t drill Michael. I million, from Sure, look Yes, is income. $XX X%, of down remember, mortgage assets. million, showed was running of X% per second. around over year, the and time This XX, the long were decline was of And we Steve. On kind mortgage take over a time. kind in a that Non-interest our all income Page is from because let and of this and big then X.XX%. average it the just $XX quarter goal

XX This quarter is about points. basis

focused, we’d closes Atlantic about over points Capital. the XX the pipeline, or next maybe around rebound of before commercially if the And because kind of few think XXXX. expect think that the would more be mark, think about consensus we to estimate, basis with number basis as quarters somewhere deal XX when points existing And so XX over, think I is mortgage Capital you we and would I Atlantic the use closer

about the between that’s is that’s long-term in how balanced trying of Hopefully, short, then thinking the and we’re helpful. revenue. get it So revenue medium and fee spread kind to a fee

Michael Rose

things me, to are here? just just some deal? back in Still expect you bought And some maybe you for the shares Very have helpful. quarter. finally the active in hold be Would authorization to left? of light then continue on the guys Or

Will Matthews

filed today’s back in Will. are would capital. And Hey, next of that’s we, market we continue announcement, be we managers. the the to a – and go be been allowed it’s S-X. saw, as to Michael, believe And market to active We of thoughtful, to been have you have once we we active have after plan use capital good and – week then be the out

John Corbett

just on I’ll tack Will, as to that, well.

a things a the which recently. I all X%, He don’t Ernie that And for are, think kind a shares price and know We authorization said Pinner, low, X.X buyback it’s way in this You Ernie got of bought million where very all stock. saying is to do is put X we think attractive back about we shares overcomplicate of place you had buy roughly. high. business. million of sell We

these sometime in a the environment low of about rise stocks be people in bank and the thinking rise. believe and will tied so therefore, to quarters. closely here, XXXX, for the rates all interest But indications a couple rate stocks going are will curve to we’re cycle that that bank yield are Just most

when to and accumulating price we’re the the interest time accumulating later be good we’re when think capital XXXX. a start right in to rise active low, in rates now. is buyback before So it’s capital We

Michael Rose

color. Thanks for my questions. the all taking Appreciate

John Corbett

Michael. Thanks,

Operator

Fitzsimmons D.A. next question Kevin from And ahead. go today of Davidson. our Please comes

Kevin Fitzsimmons

everyone. morning good Hi,

John Corbett

morning, Good Kevin.

Kevin Fitzsimmons

drill a inflection was heavy little – you like into of I could just ACBI. see the hoping down I bit C&I the

loan they wondering corporate C&I larger? make? if kind this talk would is a more about, versus you Thanks. do you portfolio, a what be trying typically And think going they of forward? Just is overall between you would going your typical part these loans? distinguish making? making just can Are bigger C&I are to SSB in be that Atlanta than Are what ACBI was Metro to different loans I’m of

John Corbett

Hey, Kevin, good John. it’s morning.

make it terminology all in If at the billion smaller that there some people grew largest we I’ve banking, early State commercial think That’s to out South South up you was grew look bank of bank us find was corporate And gives out our about now. and grown doing And where loans the recruiting been kind heard big do into look and the at banks community large use $XX where we’re up market we disruption up flexibility go much middle kinds that in we’re State success the had Doug ourselves now where banking. of if the of that Capital’s a of in kind We we’ve Doug the you is now banks. Capital, a you to Atlantic did work all right of having doing our in And Doug building refugees. up the balance people Atlantic make sheet, actively what country careers. really, if size. heading, we’ve transactions at for so teams, I

in our middle State that’s last of in South right space. few the the However, of years middle market down has kind where migrated

fit. it’s think great I a So

think sheet doing that more very are of is the balance similar what going to middle in strength, I market more segment. we’re South give types credits flexibility, to today doing team State our he’s Doug’s

Kevin Fitzsimmons

just have did you’re what in the from ACBI? weighed choices buying you I’m Thanks. partnering partnerships then about a capability? And some along if way you just going so, your have Okay. the getting the question of a Did fin-tech this into this that just versus And place? already curious, programs Great, into going Thank on direction? you then is to John. you. fin-tech in that how this provide – And platforms

John Corbett

what And of in – Steve businesses and views, it’s it’s very but team HOA involved a vertical four currently in, his vertical will business is broad treasury where a business, level and high-volume that’s a gets to types core okay? are a fin-tech We about lot got I you use largely billion the largely take in, $X.X something business. that the we want fin-tech us. And ACH used maybe platforms, there. banking. doing deposit to provide management We’ve for the HOA Doug State’s add similar South term ACH, of our solutions, say,

And think complement that million payroll so I about I think, $XXX deposits, in about volume, natural it’s, and heavy ACH there. vertical,

You the And secured that Atlantic trajectory Capital. has was business they self think CD repair with that enormous I where credit think for Capital do growth about fin-tech what partnership is loans, business. the love that seeing Atlantic in we’re

to We’re expand sheet going provide businesses. space more of kinds balance to those

where So think a and expanding it’s the just industry those, evolution about we’re we natural trending. is excited

Steve Young

just so, payments or back tried businesses. decade some to the build over add, – we’ve to, I’d last

Our XX,XXX wires a for institutions. correspondent do month is We doing business a banking that business. payments

We have a prepaid card business.

HOA We have the business.

this and payments this there headed, continue so should to love is to as the with things. business investors So where significant it. in is you is think just about And industry we and be multiple grow

Kevin Fitzsimmons

thanks. one how I you’re necessarily were maybe in take – want is? bank Great, with it, last a one, deal does out while about making such it not it a you market, Thanks. And or John, risk closing points of few branches this because you does take it of integrating and you further it low The acquisitions earlier, to clarify. and just low-risk being

John Corbett

at our on make an done. normally, one the the about work We over time. time, a conversion announcement, you confident we’re look we integration, at doing we we to If if Kevin, we move feel it, feel good history on. thing get

we’ve this that’s way other we’d We we on And opportunities. this when focused coming integrated, right converted. But we’re So consider confidence done look that’s the then want this. get I that, to properly now, at would have properly integration up.

Kevin Fitzsimmons

sense. much. Makes Thank very you great. That’s

Operator

our at Please question next go Marinac comes Montgomery today Janney ahead. from Christopher And Scott.

Christopher Marinac

Good Thanks. morning.

to Atlanta could and of hiring forward. this people kind quick low and merger a compare Atlanta about you curious, envision I’m guess ACBI what hiring question of contrast expand risk Just if sort And more ease just the before in that? and sort you versus sort John, announcement and buying of just I in of of going on

John Corbett

or, think well. time. been it’s a have great, that as got don’t either of roles. lenders recruiting an with are team I Chris, I great and him have in both. their very a productive Yes. long been think actively And it’s They Doug’s hiring we

we did X press a slate. with a ago another think release or week I

X, commercial Southeast. I bankers think around it was the X, X

So I don’t it’s in to and ability our an or, Think it’s just recruiting of think recruit. either think Atlanta. kind to we’re enhance the I about bankers going

Now capital they with background corporate balance leadership. sheet market to Doug’s see billion going $X banking a are solutions, and

I think place their this there? spend to even careers to want bankers is Doug, going you to come for to add become more us. attractive with anything

Doug Williams

do think that. think with as at ambitious – and enhances add opportunity this I we we will new Also, our know, bankers Capital, have I And you we the State to have that. a here, on join bigger as we to Atlantic Chris, pretty can team plans of the hire we to year. to South only street, bankers team continue this

Atlanta and elsewhere active across So think will here in bankers be in company. the new we hiring I very

Christopher Marinac

Best you Sounds Thank successes. wishes good. for both.

Doug Williams

Thank you.

Operator

today next Mealor comes our from question Please go Catherine And ahead. KBW. with

Catherine Mealor

morning. Good Thanks.

John Corbett

Catherine. Good morning,

Catherine Mealor

will was it liquidity loans pickup that growth the will up this to in in you’ll be excess able in the of some near-term, picking half the think be into deploy John, near-term growth? help back you billion bit great year? like bottom think, thoughts seems And to little of up any see $X prominent pick rate, I on do more if ACBI, line of of quarter, growth volumes and origination kind then, it also course, are a and this

John Corbett

quarter we thought And we’d the a side, or you be commercial about growth the if loan there in on back now. year. the back Catherine, think guided Yes, was we kind where half of that at mid-single-digit two really, we’re of

loans continues quarter this little X%. to Mortgage grew Our flat. better than about commercial a be

So second that up is a in continue production rate to bit. pulls down up X% commercial The The loan quarter. XX% grow. and the little pipelines growth

but it July, We through looks that. good. markets payoff The are feel in I had like So we’re growing one strong. sizable

still So that, I that holds original guidance think

Catherine Mealor

Great.

size Okay. environment? are about – securities this rate the rate book in And how the thinking then investments you on of the in kind growth securities of and

Steve Young

Hey, Catherine, it’s Steve.

talk just $X cash. me quickly excess Let about of the deployment billion the of

an story. to think piece I important that’s our

we liquidity. we billion said I’ll of excess call have, quarter, like $X.X it, Just last

of we powder the then of as months think of So of some over And of the thinking XXXX, either growth get is to us if $X gives loan there or approximately $X.X for growth, loan dry that kind deposit end next billion security that growth, we’re shrinkage. growth XX billion $X billion period. security about to us about that

about I the position think all – as really So the of think we time, average don’t we with future, over our like like in excess a to liquidity. period but we we

do peers. would relative go But a have suggesting we security cash billion. if underinvested harder. we before. that’s better, talked you’ve and which last position, seen environment to is the And We it to billion. quarter. Page think about certainly, $X.X rate But we’re about we’re our that got compare it to and on I slide, how then XX, XX Page peers $X.X refers both X%, shows our by assets We to All interest we our securities

helpful. that’s hopefully, So

Will Matthews

just I’ll it Catherine, That’s it’s as South And today. stands State Will. add,

partner the adds with and their we in the Of picture. to sheet, when of growth quarter, course, first hopefully the in whole loan Capital their balance course, Atlantic early

Catherine Mealor

sure. for Yes, Sure.

should on any yield, outlook accretable back be? just one little it quarterly pulled kind nitty bit normalized And that what Okay. on little run-rate that of quarter, a this then question maybe

Steve Young

Yes, it’s Catherine, Steve.

always about to is we calls, difficult As accretion predict. on these talk

of that a will have XX% as is – know into about maybe point. steady Although will what estimate. accretion this $XX few And think $XX a kind think through be million some around think then That accretion, point we’re the next forgiven be $X that. some bit PPP get will two $X things about that we We But got reserve. that we will like to reasonably loan should million accretion. XX.X%, sort know. we at million quarter over we is there in of as we best year come as XXXX loss million the reserve. quarters come capital through PPP And that of our at is of accretion of just is bucket that we’ve little expecting that credit It’s

And that add to million. $XX $X should another so million

several the on for put million, that’s in – obviously, between, all don’t kinds of XXXX, quarters, our all I million determined $XX It’s million based guess. things, but the a forecast, kind you just those accretion kind this payoffs is know, of and if $XX next together reasonable somewhere So $X of quarter reasonable and million. all to $X

Catherine Mealor

deal. the on Congrats Thanks. helpful. very That’s great. Okay,

John Corbett

Thank you, Catherine.

Operator

comes question Inc. Brody our ahead. go Preston today And with Stephens next Please from

Brody Preston

Hi, everyone. good morning

John Corbett

morning, Good Brody.

Brody Preston

about I loan Just you’ve think expect total see marks deck, me Slide recognized? you that from ACBI’s the ACBI on how do dollar that accretion, over you just portfolio? years help the of a be And got for of but you to that could on X accretion many amount expect

John Corbett

life. So over model model, the really count, double a in will our X-year basis typically day be and XX we mark, X about points

however over would – that that out significant that X-year not that very quickly So value period, to number. a a be want you pull

a a of accretion which that makes add to lot percentage going be to picture our of you for is going estimates, clear accretion a pretty income number the you forward, guess guys. as If low I existing

Will Matthews

Yes. going XXXX that. is coming And to very, accretion million ACBI the of minimal. out describe $X $X that million just I kind Brody, mean includes into very of I

Brody Preston

It have third guess, down of in third for how here you year. just will for will in the you up show cost about quarter much quarter? completed come sense that in savings the do the the back I expense then May, And run-rate, right? because conversion any thinking you Thank So here just on I guess, the Alright. this half the maybe for clarification. of

Will Matthews

Yes. $XXX we guided towards have to $XXX NIE quarter. fourth million million Brody, in the

factors The them some more creates they bit to third generate relate north second of more of the quarter successful and will – how commission be quarter. hard love based be more and yes. a be really little But NIE. for to successful business we than bit little would in to the but are that, are. commission revenue expect that that lower lines a to that The We predict

Brody Preston

it. Got

And Okay. the division. correspondent on maybe just then

revenues looks looks slide down of eyeball just this slightly. slightly, income were here. the quarter close it but down like it to of fixed like on guess So, full Duncan-Williams. kind the looks I maybe And was the It flattish, first

third kind just of quarter move year? speak fourth shape the to income we the as business then you to of – could of sort this environment the the fixed guess, the how I of how and operating revenues the And for portion quarter environment forward quarter? up So yield current expect into you those

Steve Young

it’s Brody, Steve.

shows Slide you the couple we that of A have clients XX, correspondent revenue thoughts. of it kind have, also shows of breakout X,XXX referenced. that and We which which

did million from million you changes. a is this about in $XX interest so as mentioned, of and upon we dependent down, much last revenue quarter, This rates the quarter. few But dollars

you as recall, we a the so rising first interest quarter, rate had environment. And

income just their do. a is people they deploying are what fixed – So, and better that’s cash

think come expectation of yield of kind have bring XX But The I or That’s kind didn’t commercial loans. rate interest days back to have where for yields forward, we second our quarter hit had over – the going. was about was days. just XX business down curve the of – everybody’s swap going certainly the way last it going

are more out activity we so see there. And of to going

fixed they see income. bit kind We built offset how But is of my the little of a kind probably other, less will business. each we guess

next revenue. lot the over more that that If markets $XX If income fixed Hopefully, So, highly dependent will out, a flattens but the the essentially gets of I are correspondent that’s helpful. of where quarters, rates. to have upon deeper, that would kind capital have we expect it’s is of we we million reasonably $XX interest that curve curve will revenue. revenue million in couple

Brody Preston

you. And I for Thank just planning business am the maybe payments banking are housing on, line the I That perspective modeling. a item business? think is. correspondent ACBI’s guess, from within you trying about to

Steve Young

company, we frankly It’s are be continue this build system. able we just I that’s of build synergies going all businesses. the to to have as is a of think lot together housing of corporate that to there these bank Doug. tons under pull going I the payment opportunity, do really between a and And talent, a first-class all lot And to be No. to going stuff of think

Brody Preston

it. Got

charges show So, service in then? up will that

Steve Young

Yes. correct. That’s

Brody Preston

more have you component, mortgage on I when you remember, have and of line Okay, it quarter Thank But equity estate And that resi But the X and in a past. think for real then on alright. portfolio, kind I it equity. was balance just the consumer from of was what that. think – put split this XX-XX we combined than you to look between sheet maybe so this the owner-occupied or home into understanding the at home I roughly item. I kind consumer X the

like of So, I and pay-downs guess production quarter. this seems just more drove portfolio were this outsized quarter? you And it what the considering the

John Corbett

a Yes, question. Brody, great it’s

we about think I talked have last it quarter.

months, at increasing portfolio Over the sale last had on rates the time, spreads were while residential we shrunk were million, book and about XX the interest same $XXX gain low.

last shrank less our was happening resi were growth was So, loan of into I some at million refinancing secondary taking we think quarter. the $XXX quarter, what because practically we that and Last market. was

But was you customers. That’s want components, construction This grew the just their custom it construction the what the look X $XX consumer construction in or we million. land. see people quarter, own $XX shrink in to by residential if I you to on which into that’s traditional about, kind of some million just book, of say, is at houses, the we normal – X did the of

quarter, different last residential so two $XXX shrunk million. It’s book about actually the And places. But in we grew. just

pick what and this and interest and on rates we production use excess more and was of we sale got think higher, an that’s appropriate and capital. put think way the less to secondary decided it credit liquidity lower. balance And just So on happened of it as decided that got basically, the – gain We we we market. cash like, into to the – with sheet all

Brody Preston

Got it.

just $X.X securities I be into Is billion number to the And cash, earlier. Okay. that year-end on book? deployed heard by the the expected

John Corbett

– interest guidance that putting of the out but at on $X.X last probably come time. probably a to up are about will in end for security talked quarter at guide at of are. some we point, rates come is we come some the of what right new we purchases, what in averaging how think quarter, my But air, run our remainder quarter we update with billion depending our a just new I the about then $X.X net now, to rates sort the in. on kind then year rate point will depending billion where just we interest And deploy as determine for are

Brody Preston

of me Slide to for loan are XX, Got you some you re-pricing on what last showing rate loans this Okay. charts? and at then floors now? floors of And right you are percent the kind explain, could me. one or then remind could gave it. in saw floating bar actually, what I But just here – And those me could addition percent And you I you maybe with disclosures. of then the guess, also have are what are are just tell there currently?

Will Matthews

repurchasing the combined are low Yes. capital shares about our about the we what Atlantic asset interest charts. of you that’s off show to rates our deployment, because But is talked And with it just important before story. Capital graphs. relative an to John and And piece our is this when these sensitivity wanted

we the we across curve. me let is So, XXX you were a of did static all kind sheet through and took of take rates What balance said Page XX. just entire up

Our in our and about go net two XX% go up year based modeling. income would on year up liability asset one would XX%

So, really one, excess two, the cash, to because deposits. but our down core comes of, the earnings potential franchise of our

up, when checking go they We And have – deposits anything. accounts. don’t our in rates XX% do are of

that’s that, so piece that’s illustrated relationship the the the of real the in of model And franchise, that power and left. on

left. really we loan are daily. the XX% On is it’s basically, that which is happens describing what on a the floating floating our But loans of right, portfolio, our what have subset of

some have it have are the and fixed then We about fixed, years future is XX% X is XX% of them XX%, we of in. in variable most about that and of component

of there. communicate we you to So hopefully, understanding that gives are a kind good trying of what

John Corbett

a question, we your amount Brody, number. an big have part floor to balance of floors respect our – extensive sheet. It’s are with not in we don’t our the And – not of

Brody Preston

Alright, all me great. letting for ask guys. and questions the I time appreciate my

John Corbett

Thanks Brody.

Operator

ahead. Please Piper Sandler. Scouten question next Our comes today Instructions] from go [Operator Stephen from

Stephen Scouten

Hi, good Congrats, morning. everyone.

Steve Young

Hi Stephen.

Stephen Scouten

first, those side, the resi I if perm construction maybe so, just are said And a would construction if one they of Steve, guess thing, loans? like I shorter much could duration? clarify on you have

Steve Young

like or up residential something in are perm out once loans construction will what into they they end an will down is then ARM They that. and below Yes. do they

Stephen Scouten

XX construction noted much Perfect. in Okay. to And billion resi of said or think sheet? more would you component, I holding that balance that over, of anticipate are being X loans theoretically of you family the guys in how X months on that more either that kind months, $X XX you to now you

Steve Young

If you average months, at between look rate kind XX that next X%. over of know, I is, X% loan the guidance don’t that growth and

time, what’s our is But what continues around portfolio. commercial productive. growing over same X%, book can going we of grow you That’s So, put What portfolio at X% outpaces X% while and – stop that we of growing in keep billion, – commercial to about just growth, are XX and thing when the most residential commercial is of the X% our we to around drive book all together that expectation a make to off the to is is billion bank residential period time. is bleeding well think residential. commercial now because it is so and the long it the if the probably $XX the is talking in being $XX it to bleeding of just

Stephen Scouten

about or some you like think rise? do the to Do I are doing at we those earlier, that And optionality of quickly or the you much then book anything of talk could And every what all going unique are for put lot more, having mentioned if really be? of how how conversations about rates or think But just these away? is a hey, I conversations there differentiated be Can of look just and guys about deposits wondering obviously, we deploy having to kind what speak you is kind securities bank is we the cash. am you Great. to same. may John, might wait it really you in do were Okay. conversations

John Corbett

Yes, into is are the going going we than What inflation the be is story we that money, right to this trying here, all I to now. to prints happen. when and I going world like think we turn amount And macro am maybe think in in the feel what’s permanent. Steve. clear is of clients to little debate inflation permanent about flipping economists the in on our mean drive see the and what transitory we a Fed Fed I wants our the there maybe perceives a and talk are markets, little when to it’s more market bit

economy shortage But company I clients, The to talk is to contractors, they labor. I to talk owners, labor talk I booming. As deal. a big can’t the is get

going so We think to going that that’s to drive think that we think is don’t think up. that’s And – that transitory. permanent. we drive prices labor and We that is

this We put quickly to kind to work. sustainable of to having how we the to month ultimately, has of this the make bet those think we last that low money at baffling got so. therefore, kind conversations the a or So don’t treasury in what is And are here it’s dropped on level. are stay that because that XX-year

are we doing. what that’s So,

because playing the early. epic what on We are is totally and everybody an experiment don’t want macro are Fed chips our push table doing, and all too just like is to just the of we this else you economists

Stephen Scouten

makes Yes, of lot sense. a that

this grow that And that’s which on maybe noted specific at opens And think not legacy businesses. Is wider answer. platforms any for faster? I Doug, maybe then kind lending will what maybe are am that sheet John. thing ACBI, but more maybe and fintech expectations? balance especially obviously maybe into businesses, up little of there I wondering you the national this if these I in sure. the and ACBI I the for and built mean could is X% curious bit me, payment potentially? am accretion some good last a help I if your Thanks just CAGR, – am But larger of XX% a the of even touching those ways

Steve Young

The yes, that to all short is Stephen. answer of

to have capacity. with you and respect a business, larger fin-tech capital, obviously, think sheet, more balance I the investment spending more payments

but respect time. money the And With have growth confidence a that lot commercial only business, so fin-tech also in and of we greater of accelerated sheet able of to larger that clients business, have not being the large can clients level to that credit we payments banking Atlantic over business, clearly sustain of amounts balance we the needs. lend our pursue corporate existing to larger larger have – terms in helps banking and

in really will across Atlanta I spectrum country. we So, the both think here of across and benefit our the businesses,

Will Matthews

Will. And is Stephen, this

Let answer our addition modeled and company. me of potential it’s concentration synergistic to that doesn’t in But our the issues that we just mean would accretion. have you on. is around this balance that become business something sheet, sheet different not, some a it’s And in, capitalize we as modeled revenue we balance not question part don’t great although think that in add of got expansion have our question and on the asked about whether was into

John Corbett

capital, business the continue and at level, executing a capabilities more this a really are and high to a balance of businesses horizon And high opportunities investment transaction in lot is I accelerate that on critical out at capacity, the bankers grow more of just larger pace those to were are a performing see being pace to really growth. company. even spending Stephen, this would the is at motivation good at core We Atlantic doing is the add of that more our seize our there able sheet, very level. opportunities Capital’s our and

Stephen Scouten

Fantastic. that for the and And expand of think congrats Thank fit highly great it. you again. is here. We being a color you Got market this to think I here. for all Atlanta all

So, congrats.

John Corbett

lot. Thanks a

Operator

gentlemen, I for team and to conference would over Ladies turn final the concludes the this remarks. our question-and-answer management like session. back the to

John Corbett

we us the and a very are There such about is excited And few next joining moving Doug, morning. over this for to this guys, notice with parts lot short years. work Thanks, of here. excited Yes. you early on

Thank So feel models update as you. out want and day. and have great Will, reach and you always, if talk free to to your Steve to them to a

Operator

We sir. today’s you, conference thank for thank today’s concludes presentation. you And call. This attending all

You may day. a have lines, your wonderful now disconnect and

Atlantic Capital Bancshares (ACBI) 23 Jul 212021 Q2 Earnings call transcript