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CapStar Financial Holdings, Inc. Reports Third Quarter 2020 Results

/EIN News/ -- NASHVILLE, Tenn., Oct. 22, 2020 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported third quarter net income of $7.5 million and pre-tax pre-provision income of $11.7 million. Diluted earnings per share were $0.34, a decrease of $0.01 from the third quarter of 2019. Return on average assets and return on average equity for the third quarter of 2020 was 0.98% and 9.26%, respectively.

Excluding merger-related charges of $2.5 million, diluted operating(1) earnings per share were $0.43, an increase of $0.07 from the third quarter of 2019. On an operating basis, return on average assets was 1.22% and return on average tangible common equity was 13.76%. Net income and operating earnings for the quarter include a loss on previously terminated interest rate swaps of $1.9 million which will improve earnings through mid-2023 by approximately $700,000 per year, gain on sale of $394,000 for two dormant branches acquired in the Athens Federal acquisition, and provision for loan losses of $2.1 million.

“I am extremely proud of our team and continued accomplishments during what has been an unexpected and challenging year,” said Timothy K. Schools, President and Chief Executive Officer. “Through a difficult economic and interest rate environment, we have remained focused on taking care of our customers, practicing sound risk management, and producing strong pre-tax pre-provision income, while continuing to invest in growth. This quarter, our operating pre-tax pre-provision income to assets, excluding the swap related expense and branch gain on sale, rose to 2.06%. This is the result of record mortgage banking revenue as well as improvements within the overall bank. Importantly, we have made significant investments in growth with our Knoxville expansion, hiring of additional Middle Tennessee Relationship Managers, and our FCB acquisition. Each of these present a substantial opportunity and have begun to capitalize on our non-customer PPP relationships.”

“While the economic and political outlook remain uncertain, we are observing stabilization and a gradual increase in economic activity. Our credit quality remains strong as a result of sound underwriting, proactive portfolio management, and the benefits of economic stimulus. As anticipated, we have seen an increase in our criticized loans due to the pandemic. However, past dues remain stable and loan deferrals are now in place for only about 40 customers totaling 4.7% of total loans held for investment. It has been inspiring to observe the commitment our employees have to serving our customers, communities, and shareholders during this challenging time. Our team is energized and excited to build on the momentum we have put into place over the past year.”

Profitability

  • Operating annualized pre-tax pre-provision income to average assets for the three months ended September 30, 2020 was 1.86% compared to 1.70% for the same period in 2019.
  • Operating annualized return on average assets for the three months ended September 30, 2020 was 1.22% compared to 1.31% for the same period in 2019.
  • Operating annualized return on average tangible equity for the three months ended September 30, 2020 was 13.76% compared to 11.83% for the same period in 2019.
  • Adjusted for the terminated interest rate swaps, net interest margin was 2.98% compared to 3.66% for the same period in 2019. Increased cash due to significant deposit growth since March 31, 2020 negatively impacted net interest margin by 42 bps.
  • The operating efficiency ratio for the three months ended September 30, 2020 was 58.59% compared to 64.08% for the same period in 2019.

Growth

  • Pre-tax pre-provision earnings for the quarter ended September 30, 2020 increased 39.3% to $11.7 million, compared to $8.4 million for the quarter ended September 30, 2019.
  • Deposit growth for the quarter ended September 30, 2020, was $80.6 million or 12.8% annualized, subsequent to the FCB acquisition.
  • Loan growth for the quarter ended September 30, 2020, was $17.5 million or 3.7% annualized, subsequent to the FCB acquisition.
  • Tangible book value per share for the quarter ended September 30, 2020 increased 6.2% to $12.92, compared to $12.17 for the quarter ended September 30, 2019.

Soundness

  • The total risk-based capital ratio was 15.96% at September 30, 2020 compared to 13.46% at September 30, 2019.
  • The allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, was 1.61%.
  • Non-performing assets to total loans and OREO were 0.16% at September 30, 2020 compared to 0.19% at September 30, 2019.
  • Annualized net charge offs to average loans were (0.00)% for the three months ended September 30, 2020 compared to (0.01)% for the same period in 2019.

(1) Operating measures exclude merger-related expenses unrelated to CapStar’s normal operations. For a discussion and reconciliation of the Non-GAAP operating measures that exclude merger-related costs unrelated to CapStar’s normal operations, see the section titled “Non-GAAP Disclaimer” and the Non-GAAP financial measures section of the financial statements.

Dividend

On October 22, 2020, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on November 25, 2020 to shareholders of record of CapStar’s common stock as of the close of business on November 11, 2020.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, October 23, 2020. During the call, management will review the third quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 5490625. A simultaneous webcast may be accessed on CapStar’s website at ir.capstarbank.com by clicking on “News & Events.” An archived version of the webcast will be available in the same location shortly after the live call has ended.

About CapStar Financial Holdings, Inc.

CapStar Financial Holdings, Inc. is a bank holding company headquartered in Nashville, Tennessee and operates primarily through its wholly owned subsidiary, CapStar Bank, a Tennessee-chartered state bank. CapStar Bank is a commercial bank that seeks to establish and maintain comprehensive relationships with its clients by delivering customized and creative banking solutions and superior client service. As of September 30, 2020, on a consolidated basis, CapStar had total assets of $3.02 billion, total loans of $1.91 billion, total deposits of $2.62 billion, and shareholders’ equity of $333.9 million. Visit www.capstarbank.com for more information.

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this release and any oral statements made regarding the subject of this release, including in the conference call referenced herein, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are “forward-looking statements“ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1955. The words “expect“, “anticipate”, “intend”, “may”, “should”, “plan”, “believe”, “seek“, “estimate“ and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (I) deterioration in the financial condition of borrowers of the Company and its subsidiaries, resulting in significant increases in loan losses and provisions for those losses; (II) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the Covid-19 pandemic and its impact on general economic and financial market conditions and on the Company’s customer’s business, results of operations, asset quality and financial condition; (III) the ability to grow and retain low-cost, core deposits and retain large, uninsured deposits, including during times when the Company is seeking to lower rates it pays on deposits; (IV) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on the Company’s results, including as a result of compression to net interest margin; (V) fluctuations or differences in interest rates on loans or deposits from those that the Company is modeling or anticipating, including as a result of the Company’s inability to better match deposit rates with the changes in the short term rate environment, or that affect the yield curve; (VI) difficulties and delays in integrating required businesses or fully realizing cost savings or other benefits from acquisitions; (VII) the Company‘s ability to profitably grow its business and successfully execute on its business plans; (VIII) any matter that would cause the Company to conclude that there was impairment of any asset, including goodwill or other intangible assets; (IX) the vulnerability of the Company’s network and online banking portals, and the systems of customers or parties with whom the Company contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (X) the availability of and access to capital; (XI) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals, and/or other negative affects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the Covid-19 pandemic; and (XII) general competitive, economic, political and market conditions. Additional factors which could affect the forward-looking statements can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with the SEC. The Company disclaims any obligation to update or revise any forward-looking statements contained in this press release (we speak only as of the date hereof ), whether as a result of new information, future events, or otherwise.

NON-GAAP MEASURES

This release includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations. Such measures include: “Efficiency ratio – operating,” “Expenses – operating,” “Earnings per share – operating,” “Diluted earnings per share – operating,” “Tangible book value per share,” “Return on common equity – operating,” “Return on tangible common equity – operating,” “Return on assets – operating,” and “Tangible common equity to tangible assets.”

Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating CapStar’s underlying performance trends. Further, management uses these measures in managing and evaluating CapStar’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included in the exhibits to this presentation.

             
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)
Third quarter 2020 Earnings Release
             
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2020     2019     2020     2019  
Interest income:                                
Loans, including fees   $ 22,796     $ 21,005     $ 61,620     $ 62,596  
Securities:                                
Taxable     1,193       1,028       3,465       3,540  
Tax-exempt     343       354       975       1,093  
Federal funds sold           1             26  
Restricted equity securities     139       183       421       584  
Interest-bearing deposits in financial institutions     171       645       640       1,502  
Total interest income     24,642       23,216       67,121       69,341  
Interest expense:                                
Interest-bearing deposits     640       2,102       3,371       5,523  
Savings and money market accounts     2,537       1,944       4,819       5,445  
Time deposits     1,299       1,887       4,197       5,917  
Federal funds purchased                       4  
Securities sold under agreements to repurchase                       5  
Federal Home Loan Bank advances     116       127       348       1,281  
Subordinated notes     394             394        
Total interest expense     4,986       6,060       13,129       18,175  
Net interest income     19,656       17,156       53,992       51,166  
Provision for loan losses     2,119       (125 )     11,295       761  
Net interest income after provision for loan losses     17,537       17,281       42,697       50,405  
Noninterest income:                                
Treasury management and other deposit service charges     1,064       788       2,531       2,399  
Net gain (loss) on sale of securities     34             74       (108 )
Tri-Net fees     668       847       2,528       2,511  
Mortgage banking income     9,686       2,679       19,063       7,151  
Wealth management fees     382       379       1,162       1,018  
Interchange and debit card transaction fees     936       754       2,389       2,323  
Other noninterest income     2,034       1,341       3,753       3,261  
Total noninterest income     14,804       6,788       31,500       18,555  
Noninterest expense:                                
Salaries and employee benefits     12,949       9,229       33,256       26,224  
Data processing and software     2,353       1,790       6,317       5,126  
Professional fees     638       528       1,854       1,571  
Occupancy     999       858       2,615       2,550  
Equipment     864       1,012       2,295       2,890  
Regulatory fees     397       18       893       564  
Merger related expenses     2,548       187       3,286       2,491  
Amortization of intangibles     539       408       1,300       1,258  
Other operating     1,452       1,501       4,067       4,054  
Total noninterest expense     22,739       15,531       55,883       46,728  
Income before income taxes     9,602       8,538       18,314       22,232  
Income tax expense     2,115       2,072       3,299       5,231  
Net income   $ 7,487     $ 6,466     $ 15,015     $ 17,001  
Per share information:                                
Basic net income per share of common stock   $ 0.34     $ 0.36     $ 0.77     $ 0.96  
Diluted net income per share of common stock   $ 0.34     $ 0.35     $ 0.77     $ 0.91  
Weighted average shares outstanding:                                
Basic     21,948,579       17,741,778       19,558,281       17,729,518  
Diluted     21,960,490       18,532,479       19,583,448       18,670,280  

This information is preliminary and based on CapStar data available at the time of this earnings release.

 
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2020 Earnings Release
 
    Five Quarter Comparison  
    9/30/20     6/30/20     3/31/20     12/31/19     9/30/19  
Income Statement Data:                                        
Net interest income   $ 19,656     $ 17,675     $ 16,661     $ 16,581     $ 17,156  
Provision for loan losses     2,119       1,624       7,553             (125 )
Net interest income after provision for loan losses     17,537       16,051       9,108       16,581       17,281  
Treasury management and other deposit service charges     1,064       691       775       736       788  
Net gain on sale of securities     34       13       27       9        
Tri-Net fees     668       1,260       599       274       847  
Mortgage banking income     9,686       7,123       2,253       2,316       2,679  
Wealth management fees     382       374       407       407       379  
Interchange and debit card transaction fees     936       729       724       928       754  
Other noninterest income     2,034       633       1,089       1,049       1,341  
Total noninterest income     14,804       10,823       5,874       5,719       6,788  
Salaries and employee benefits     12,949       12,305       8,002       9,318       9,229  
Data processing and software     2,353       2,100       1,864       1,835       1,790  
Professional fees     638       581       636       531       528  
Occupancy     999       797       820       795       858  
Equipment     864       680       751       834       1,012  
Regulatory fees     397       333       163       28       18  
Merger related expenses     2,548       448       290       163       187  
Amortization of intangibles     539       375       386       397       408  
Other operating     1,452       1,315       1,299       1,365       1,501  
Total noninterest expense     22,739       18,934       14,211       15,266       15,531  
Net income before income tax expense     9,602       7,940       771       7,034       8,538  
Income tax (benefit) expense     2,115       1,759       (575 )     1,613       2,072  
Net income   $ 7,487     $ 6,181     $ 1,346     $ 5,421     $ 6,466  
Weighted average shares - basic     21,948,579       18,307,083       18,392,913       18,350,994       17,741,778  
Weighted average shares - diluted     21,960,490       18,320,006       18,443,725       18,443,916       18,532,479  
Net income per share, basic   $ 0.34     $ 0.34     $ 0.07     $ 0.30     $ 0.36  
Net income per share, diluted     0.34       0.34       0.07       0.29       0.35  
Balance Sheet Data (at period end):                                        
Cash and cash equivalents   $ 455,925     $ 368,820     $ 91,450     $ 101,269     $ 154,021  
Securities available-for-sale     308,337       223,034       219,213       213,129       203,500  
Securities held-to-maturity     2,413       2,699       3,306       3,313       3,319  
Loans held for sale     198,603       129,807       186,937       168,222       129,613  
Total loans     1,906,603       1,592,725       1,446,835       1,420,102       1,411,768  
Allowance for loan losses     (23,167 )     (21,035 )     (20,114 )     (12,604 )     (12,828 )
Total assets     3,024,348       2,445,172       2,072,585       2,037,201       2,033,911  
Non-interest-bearing deposits     716,707       546,974       442,789       312,096       352,266  
Interest-bearing deposits     1,900,835       1,548,591       1,320,920       1,417,355       1,379,497  
Federal Home Loan Bank advances and other borrowings     39,418       39,464       10,000       10,000       10,000  
Total liabilities     2,690,453       2,163,222       1,796,795       1,764,155       1,765,829  
Shareholders' equity   $ 333,895     $ 281,950     $ 275,790     $ 273,046     $ 268,082  
Total shares of common stock outstanding     21,947,805       18,302,188       18,307,802       18,361,922       18,343,403  
Book value per share of common stock   $ 15.21     $ 15.41     $ 15.06     $ 14.87     $ 14.61  
Tangible book value per share of common stock*     12.92       13.02       12.66       12.45       12.17  
Market value per share of common stock   $ 9.81     $ 12.00     $ 9.89     $ 16.65     $ 16.58  
Capital ratios:                                        
Total risk based capital     15.96 %     16.76 %     13.68 %     13.45 %     13.46 %
Tier 1 risk based capital     13.39 %     13.76 %     12.56 %     12.73 %     12.71 %
Common equity tier 1 capital     13.39 %     13.76 %     12.56 %     12.73 %     12.71 %
Leverage     9.23 %     10.08 %     11.23 %     11.37 %     11.24 %

_____________________
*This metric is a non-GAAP financial measure. See Non-GAAP disclaimer in this earnings release and below for discussion and reconciliation to the most directly comparable GAAP financial measure.
This information is preliminary and based on CapStar data available at the time of this earnings release.

 
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2020 Earnings Release
 
    Five Quarter Comparison  
    9/30/20     6/30/20     3/31/20     12/31/19     9/30/19  
Average Balance Sheet Data:                                        
Cash and cash equivalents   $ 526,409     $ 257,709     $ 114,272     $ 115,100     $ 129,114  
Investment securities     323,689       238,762       226,537       225,265       211,460  
Loans held for sale     156,123       176,193       180,401       140,731       101,835  
Loans     1,906,449       1,560,626       1,421,256       1,431,027       1,445,755  
Assets     3,043,847       2,350,021       2,059,306       2,030,231       2,005,950  
Interest bearing deposits     1,957,259       1,519,877       1,411,666       1,388,496       1,370,988  
Deposits     2,648,465       2,031,924       1,735,635       1,711,021       1,704,873  
Federal Home Loan Bank advances and other borrowings     39,431       10,966       20,989       22,391       12,174  
Liabilities     2,722,341       2,068,408       1,780,756       1,758,663       1,739,509  
Shareholders' equity     321,506       281,614       278,550       271,568       266,441  
Performance Ratios:                                        
Annualized return on average assets     0.98 %     1.06 %     0.26 %     1.06 %     1.28 %
Annualized return on average equity     9.26 %     8.83 %     1.94 %     7.92 %     9.63 %
Net interest margin (1)     2.72 %     3.23 %     3.50 %     3.49 %     3.66 %
Annualized Noninterest income to average assets     1.93 %     1.85 %     1.15 %     1.12 %     1.34 %
Efficiency ratio     65.99 %     66.44 %     63.06 %     68.46 %     64.87 %
Loans by Type (at period end):                                        
Commercial and industrial   $ 648,018     $ 621,541     $ 447,311     $ 394,408     $ 382,816  
Commercial real estate - owner occupied     164,336       147,682       166,652       172,456       169,370  
Commercial real estate - non-owner occupied     480,106       408,402       378,170       387,443       407,378  
Construction and development     176,751       117,830       141,087       143,111       132,222  
Consumer real estate     350,238       238,696       248,243       256,097       254,736  
Consumer     42,104       27,542       27,739       28,426       29,059  
Other     45,050       31,032       37,633       38,161       36,187  
Asset Quality Data:                                        
Allowance for loan losses to total loans     1.22 %     1.32 %     1.39 %     0.89 %     0.91 %
Allowance for loan losses to non-performing loans     787 %     705 %     550 %     861 %     754 %
Nonaccrual loans   $ 2,945     $ 2,982     $ 3,658     $ 1,464     $ 1,701  
Troubled debt restructurings     1,886       1,228       1,306       2,717       2,725  
Loans - over 89 days past due and accruing     541       639       399       38       551  
Total non-performing loans     2,945       2,982       3,658       1,464       1,701  
OREO and repossessed assets     171       147       147       1,044       914  
Total non-performing assets     3,116       3,129       3,805       2,508       2,615  
Non-performing loans to total loans     0.15 %     0.19 %     0.25 %     0.10 %     0.12 %
Non-performing assets to total assets     0.10 %     0.13 %     0.18 %     0.12 %     0.13 %
Non-performing assets to total loans and OREO     0.16 %     0.20 %     0.26 %     0.18 %     0.19 %
Annualized net charge-offs (recoveries) to average loans     (0.00 )%     0.18 %     0.01 %     0.06 %     (0.01 )%
Net charge-offs (recoveries)   $ (13 )   $ 703     $ 43     $ 224     $ (50 )
Interest Rates and Yields:                                        
Loans     4.47 %     4.50 %     5.10 %     5.24 %     5.48 %
Securities (1)     2.18 %     2.73 %     3.04 %     3.00 %     3.14 %
Total interest-earning assets (1)     3.41 %     3.78 %     4.56 %     4.67 %     4.95 %
Deposits     0.67 %     0.59 %     1.14 %     1.27 %     1.38 %
Borrowings and repurchase agreements     5.14 %     3.16 %     2.77 %     2.88 %     4.12 %
Total interest-bearing liabilities     0.99 %     0.81 %     1.43 %     1.58 %     1.74 %
Other Information:                                        
Full-time equivalent employees     403       286       288       289       290  

_____________________

This information is preliminary and based on CapStar data available at the time of this earnings release.

(1) Net Interest Margin, Securities yields, and Total interest-earning asset yields are calculated on a tax-equivalent basis.

 
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)
Third quarter 2020 Earnings Release
 
    For the Three Months Ended September 30,  
    2020     2019  
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
 
Interest-Earning Assets                                            
Loans (1)   $ 1,906,449     $ 21,398     4.47 %   $ 1,445,755     $ 19,955     5.48 %
Loans held for sale     156,123       1,398     3.56 %     101,835       1,050     4.09 %
Securities:                                            
Taxable investment securities (2)     271,838       1,332     1.96 %     160,528       1,211     3.02 %
Investment securities exempt from
  federal income tax (3)
    51,851       343     3.35 %     50,932       354     3.52 %
Total securities     323,689       1,675     2.18 %     211,460       1,565     3.14 %
Cash balances in other banks     499,770       171     0.14 %     110,690       645     2.31 %
Funds sold                     144       1     3.46 %
Total interest-earning assets     2,886,031       24,642     3.41 %     1,869,884       23,216     4.95 %
Noninterest-earning assets     157,816                     136,066                
Total assets   $ 3,043,847                   $ 2,005,950                
Interest-Bearing Liabilities                                            
Interest-bearing deposits:                                            
Interest-bearing transaction accounts   $ 840,926       640     0.30 %   $ 527,759       2,102     1.58 %
Savings and money market deposits     610,942       2,537     1.65 %     494,183       1,944     1.56 %
Time deposits     505,391       1,299     1.02 %     349,046       1,887     2.14 %
Total interest-bearing deposits     1,957,259       4,476     0.91 %     1,370,988       5,933     1.72 %
Borrowings and repurchase agreements     39,431       510     5.14 %     12,174       127     4.12 %
Total interest-bearing liabilities     1,996,690       4,986     0.99 %     1,383,162       6,060     1.74 %
Noninterest-bearing deposits     691,205                     333,885                
Total funding sources     2,687,895                     1,717,047                
Noninterest-bearing liabilities     34,446                     22,462                
Shareholders’ equity     321,506                     266,441                
Total liabilities and shareholders’ equity   $ 3,043,847                   $ 2,005,950                
Net interest spread (4)                   2.42 %                   3.21 %
Net interest income/margin (5)           $ 19,656     2.72 %           $ 17,156     3.66 %

_____________________
(1)   Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
(2)   Taxable investment securities include restricted equity securities.
(3)   Yields on tax exempt securities, total securities, and total interest-earning assets are shown on a tax equivalent basis.
(4)   Net interest spread is the average yield on total average interest-earning assets minus the average rate on total average interest-bearing liabilities.
(5)   Net interest margin is annualized net interest income calculated on a tax equivalent basis divided by total average interest-earning assets for the period.

This information is preliminary and based on CapStar data available at the time of this earnings release.

 
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2020 Earnings Release
 
    Three Months Ended  
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
 
Operating net income:                                        
Net income   $ 7,487     $ 6,181     $ 1,346     $ 5,421     $ 6,466  
Add: merger related expenses     2,548       448       290       163       187  
Less: income tax impact of merger related expenses     (666 )     (117 )     (76 )     (43 )     (49 )
Operating net income   $ 9,369     $ 6,512     $ 1,560     $ 5,541     $ 6,604  
                                         
Operating diluted net income per share of common stock:                                        
Operating net income   $ 9,369     $ 6,512     $ 1,560     $ 5,541     $ 6,604  
Weighted average shares - diluted     21,960,490       18,320,006       18,443,725       18,443,916       18,532,479  
Operating diluted net income per share of common stock   $ 0.43     $ 0.36     $ 0.08     $ 0.30     $ 0.36  
                                         
Operating annualized return on average assets:                                        
Operating net income   $ 9,369     $ 6,512     $ 1,560     $ 5,541     $ 6,604  
Average assets     3,043,847       2,350,021       2,059,306       2,030,231       2,005,950  
Operating annualized return on average assets     1.22 %     1.11 %     0.30 %     1.08 %     1.31 %
                                         
Operating annualized return on average tangible equity:                                        
Average total shareholders' equity   $ 321,506     $ 281,614     $ 278,550     $ 271,568     $ 266,441  
Less: average intangible assets     (50,577 )     (43,871 )     (44,253 )     (44,646 )     (45,050 )
Average tangible equity     270,929       237,743       234,297       226,922       221,391  
Operating net income   $ 9,369     $ 6,512     $ 1,560     $ 5,541     $ 6,604  
Operating annualized return on average tangible equity     13.76 %     11.02 %     2.68 %     9.69 %     11.83 %
                                         
Operating efficiency ratio:                                        
Total noninterest expense   $ 22,739     $ 18,934     $ 14,211     $ 15,266     $ 15,531  
Less: merger related expenses     (2,548 )     (448 )     (290 )     (163 )     (187 )
Total operating noninterest expense     20,191       18,486       13,921       15,103       15,344  
Net interest income     19,656       17,675       16,661       16,581       17,156  
Total noninterest income     14,804       10,823       5,874       5,719       6,788  
Total revenues   $ 34,460     $ 28,498     $ 22,535     $ 22,300     $ 23,944  
Operating efficiency ratio:     58.59 %     64.87 %     61.78 %     67.73 %     64.08 %
                                         
Operating annualized pre-tax pre-provision income to average assets:                                        
Income before income taxes   $ 9,602     $ 7,940     $ 771     $ 7,034     $ 8,538  
Add: merger related expenses     2,548       448       290       163       187  
Add: provision for loan losses     2,119       1,624       7,553             (125 )
Operating pre-tax pre-provision income     14,269       10,012       8,614       7,197       8,600  
Average assets   $ 3,043,847     $ 2,350,021     $ 2,059,306     $ 2,030,231     $ 2,005,950  
Operating annualized pre-tax pre-provision income to average assets:     1.86 %     1.71 %     1.68 %     1.41 %     1.70 %
                                         
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
 
Tangible Equity:                                        
Total shareholders' equity   $ 333,895     $ 281,950     $ 275,790     $ 273,046     $ 268,082  
Less: intangible assets     (50,222 )     (43,633 )     (44,008 )     (44,393 )     (44,790 )
Tangible equity   $ 283,673     $ 238,317     $ 231,782     $ 228,653     $ 223,292  
                                         
Tangible Common Equity:                                        
Tangible equity   $ 283,673     $ 238,317     $ 231,782     $ 228,653     $ 223,292  
Less: preferred equity                              
Tangible common equity   $ 283,673     $ 238,317     $ 231,782     $ 228,653     $ 223,292  
                                         
Tangible Book Value per Share of Common Stock:                                        
Tangible common equity   $ 283,673     $ 238,317     $ 231,782     $ 228,653     $ 223,292  
Total shares of common stock outstanding     21,947,805       18,302,188       18,307,802       18,361,922       18,343,403  
Tangible book value per share of common stock   $ 12.92     $ 13.02     $ 12.66     $ 12.45     $ 12.17  


 
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2020 Earnings Release
 
    Nine Months Ended  
    September 30, 2020     September 30, 2019  
Operating net income:                
Net income   $ 15,015     $ 17,001  
Add: merger related expenses     3,286       2,491  
Less: income tax impact of merger related expenses     (859 )     (651 )
Operating net income   $ 17,442     $ 18,841  
                 
Operating diluted net income per share of common stock:                
Operating net income   $ 17,442     $ 18,841  
Weighted average shares - diluted     19,583,448       18,670,280  
Operating diluted net income per share of common stock   $ 0.89     $ 1.01  
                 
Operating annualized return on average assets:                
Operating net income   $ 17,442     $ 18,841  
Average assets   $ 2,486,433     $ 1,999,609  
Operating annualized return on average assets     0.94 %     1.26 %
                 
Operating annualized return on average tangible equity:                
Average total shareholders' equity   $ 293,990     $ 261,615  
Less: average intangible assets     (46,249 )     (45,462 )
Average tangible equity     247,741       216,153  
Operating net income   $ 17,442     $ 18,841  
Operating annualized return on average tangible equity     9.40 %     11.65 %
                 
Operating efficiency ratio:                
Total noninterest expense   $ 55,883     $ 46,728  
Less: merger related expenses     (3,286 )     (2,491 )
Total operating noninterest expense     52,597       44,237  
Net interest income     53,992       51,166  
Total noninterest income     31,500       18,555  
Total revenues   $ 85,492     $ 69,721  
Operating efficiency ratio:     61.52 %     63.45 %

CONTACT

Denis J. Duncan
Chief Financial Officer
(615) 732-7492 

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