UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 24, 2019

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CAPSTAR FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code    (615) 732-6400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [X]

 

 

 

 

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Section 2 – Financial Information

 

Item 2.02.  Results of Operations and Financial Condition.

 

On October 24, 2019, CapStar Financial Holdings, Inc. (the “Company”) issued an earnings release announcing its financial results for the third quarter ended September 30, 2019.  A copy of the earnings release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Report”) and is incorporated herein by reference.

 

The Company will conduct a conference call at 8:30 a.m. (Central Time) on October 25, 2019 to discuss its financial results for the third quarter ended September 30, 2019.  A copy of the presentation to be used for the conference call is furnished as Exhibit 99.2 to this Report and is incorporated herein by reference.

 

Section 7 – Regulation FD

 

Item 7.01.  Regulation FD Disclosure.

 

The information disclosed under Item 2.02 of this Report is incorporated by reference into this Item 7.01.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01.  Financial Statements and Exhibits.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

Date: October 24, 2019

 

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Exhibit 99.1

EARNINGS RELEASE

 

CONTACT

 

Rob Anderson

Chief Financial Officer and Chief Administrative Officer

(615) 732-6470

 

 

 

CapStar Reports Fully Diluted EPS of $0.35 and Fully Diluted Operating EPS of $0.36 for 3Q 2019

 

NASHVILLE, TN, October 24, 2019/GlobeNewswire/ -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) reported net income of $6.47 million, or $0.35 per share on a fully diluted basis, for the three months ended September 30, 2019, compared to net income of $3.66 million, or $0.28 per share on a fully diluted basis, for the three months ended September 30, 2018.  Operating⁽¹⁾ net income was $6.60 million, or $0.36 per share on a fully diluted basis, for the three months ended September 30, 2019, compared to $4.06 million, or $0.31 per share on a fully diluted basis, for the three months ended September 30, 2018.  

 

“I am pleased with our third quarter results,” said Timothy K. Schools, President and Chief Executive Officer. “We continue to experience strong credit metrics, our mortgage and Tri-Net businesses performed very well, and we are approaching the first anniversary of our acquisition of Athens Federal.  Additionally, our former largest shareholder was able to successfully exit their position, as the life of the fund this investment was held in came to an end, creating increased liquidity for our remaining shareholders.  As we look ahead, we will be working to improve upon our loan production and deposit gathering capabilities as we navigate through a period of increased loan prepayments and net interest margin pressure.”

 

Soundness

 

Profitability

Operating measures exclude non-recurring merger-related expenses unrelated to CapStar’s normal operations.

 

 

(1) 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.

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“With the FOMC cutting rates for the first time since 2008, we experienced 2 basis points of net interest margin compression compared to the second quarter,” said Rob Anderson Chief Financial Officer and Chief Administrative Officer of CapStar. “Elevated loan fees helped offset the decline in variable rate loan yields, but yields on newly originated loans remain above our portfolio average.  Further, our deposit costs are down slightly due to rate adjustments made late in the quarter and our associates continue to meet with customers to reset rates lower,” continued Mr. Anderson. “On another positive note, our salesforce was able to grow non-interest bearing deposit accounts by 25.1% on an annualized basis from the second quarter.”

 

Growth

 

Dividend

 

On October 24, 2019, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on November 22, 2019 to shareholders of record of CapStar’s capital stock as of the close of business on November 8, 2019.

 

Conference Call and Webcast Information

 

CapStar will host a conference call and webcast at 8:30 a.m. Central Time on Friday October 25, 2019.  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 5171609.  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, 2019, on a consolidated basis, CapStar had total assets of $2.03 billion, gross loans of $1.41 billion, total deposits of $1.73 billion, and shareholders’ equity of $268.08 million.  Visit www.capstarbank.com for more information.

 

 

Forward-Looking Statements

 

Certain statements in this earnings release are forward-looking statements that reflect CapStar’s current views with respect to, among other things, CapStar’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives and the timing, benefits, costs and synergies of recently completed and future acquisition, disposition and other growth opportunities, including, without limitation, those relating to a projected increase in liquidity for our shareholders, improvements in our loan production and deposit gathering capabilities, the acceptance by customers of Athens of CapStar’s products and services, the ability of CapStar to meet expectations regarding the benefits, costs, synergies, and financial and operational impact of the Athens merger, the possibility that any of the anticipated benefits, costs, synergies and financial and operational improvements of the Athens merger will not be realized or will not be realized as expected and the opportunities to enhance market share in certain markets and market acceptance of CapStar are generally in new

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markets. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “aspire,” “achieve,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “roadmap,” “goal,” “guidance,” “target,” “would,” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about CapStar’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond CapStar’s control. The inclusion of these forward-looking statements should not be regarded as a representation by CapStar or any other person that such expectations, estimates and projections will be achieved. Accordingly, CapStar cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although CapStar believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause CapStar’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, any factors identified in this earnings release as well as those factors that are detailed from time to time in CapStar’s periodic and current reports filed with the Securities and Exchange Commission, including those factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 under the headings “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.  If one or more events related to these or other risks or uncertainties materialize, or if CapStar’s underlying assumptions prove to be incorrect, actual results may differ materially from its forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this earnings release, and CapStar does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for CapStar to predict their occurrence or how they will affect CapStar.

 

Non-GAAP Disclaimer

 

This earnings release includes the following financial measures that were prepared other than in accordance with generally accepted accounting principles in the United States (“non-GAAP financial measure”): operating net income, operating diluted net income per share, operating return on average assets, operating return on average tangible equity, tangible book value per share and operating efficiency ratio. These non-GAAP financial measures (i) provide useful information to management and investors that is supplementary to CapStar’s financial condition, results of operations and cash flows computed in accordance with GAAP, (ii) enable a more complete understanding of factors and trends affecting CapStar’s business, and (iii) allow investors to evaluate CapStar’s performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators; however, CapStar acknowledges that these non-GAAP financial measures have a number of limitations.  As such, you should not view these non-GAAP financial measures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use.  See below for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure.  

 

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)

Third Quarter 2019 Earnings Release

 

This information is preliminary and based on company data available at the time of the release.

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)

Third Quarter 2019 Earnings Release

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*This metric is a non-GAAP financial measure.  See below for discussion and reconciliation to the most directly comparable GAAP financial measure.

 

This information is preliminary and based on company data available at the time of the release.

 

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)

Third Quarter 2019 Earnings Release

 

_____________________

 

This information is preliminary and based on company data available at the time of the release.

 

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

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)

Third Quarter 2019 Earnings Release

 

This information is preliminary and based on company data available at the time of the release.

 

 

 

 

 

 

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)

Third Quarter 2019 Earnings Release

 

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CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)

Third Quarter 2019 Earnings Release

 

 

 

 

 

Third Quarter 2019 Earnings Call October 25, 2019 Exhibit 99.2

Terminology The terms “we,” “our,” “us,” “the Company,” “CSTR” and “CapStar” that appear in this presentation refer to CapStar Financial Holdings, Inc. and its wholly owned subsidiary, CapStar Bank. The terms “CapStar Bank,” “the Bank” and “our Bank” that appear in this presentation refer to CapStar Bank. Contents of Presentation Except as is otherwise expressly stated in this presentation, the contents of this presentation are presented as of the date on the front cover of this presentation. Market Data Market data used in this presentation has been obtained from government and independent industry sources and publications available to the public, sometimes with a subscription fee, as well as from research reports prepared for other purposes. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. CSTR did not commission the preparation of any of the sources or publications referred to in this presentation. CSTR has not independently verified the data obtained from these sources, and, although CSTR believes such data to be reliable as of the dates presented, it could prove to be inaccurate. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this presentation. Non-GAAP Disclaimer This presentation includes the following financial measures that have been prepared other than in accordance with generally accepted accounting principles in the United States (“non-GAAP financial measures”): pre-tax, pre-provision net income, pre-tax, pre-provision return on average assets, tangible equity, tangible common equity, tangible assets, return on average tangible equity, return on average tangible common equity, book value per share (as adjusted), tangible book value per share (as reported and as adjusted), tangible equity to tangible assets, tangible common equity to tangible assets and adjusted shares outstanding at the end of the period. CSTR non-GAAP financial measures (i) provide useful information to management and investors that is supplementary to its financial condition, results of operations and cash flows computed in accordance with GAAP, (ii) enable a more complete understanding of factors and trends affecting CSTR’s business, and (iii) allow investors to evaluate CSTR’s performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators; however, CSTR acknowledges that its non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. See the Appendix to this presentation for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. Disclaimers

Certain statements in this presentation are forward-looking statements that reflect our current views with respect to, among other things, future events and our financial and operational performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “aspire,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “roadmap,” “goal,” “target,” “guidance,” “would,” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. The inclusion of these forward-looking statements should not be regarded as a representation by us or any other person that such expectations, estimates and projections will be achieved. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: The acceptance by customers of Athens of the Company’s products and services; the ability of the Company to meet expectations regarding the benefits, costs, synergies, and financial and operational impact of the Athens merger; the possibility that any of the anticipated benefits, costs, synergies and financial and operational improvements of the Athens merger will not be realized or will not be realized as expected; the possibility that the Athens merger integration may be more expensive or take more time to complete than anticipated; the opportunities to enhance market share in certain markets and acceptance of the Company generally in new markets; economic conditions (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation) that impact the financial services industry as a whole and/or our business; the concentration of our business in the Nashville metropolitan statistical area (“MSA”) and in Tennessee, and the effect of changes in the economic, political and environmental conditions on this market; increased competition in the financial services industry, locally, regionally or nationally, which may adversely affect pricing and the other terms offered to our clients; an increase in the cost of deposits, loss of deposits or a change in the deposit mix, which could increase our cost of funding; an increase in the costs of capital, which could negatively affect our ability to borrow funds, successfully raise additional capital or participate in strategic acquisition opportunities; our dependence on our management team and board of directors and changes in our management and board composition; our reputation in the community; our ability to execute our strategy and to achieve our loan ROAA and efficiency ratio goals, hire seasoned bankers, loan and deposit growth through organic growth and strategic acquisitions; credit risks related to the size of our borrowers and our ability to adequately identify, assess and limit our credit risk; our concentration of large loans to a small number of borrowers; the significant portion of our loan portfolio that originated during the past two years and therefore may less reliably predict future collectability than older loans; the adequacy of reserves (including our allowance for loan losses) and the appropriateness of our methodology for calculating such reserves; non-performing loans and leases; non-performing assets; charge-offs, non-accruals, troubled debt restructurings, impairments and other credit-related issues; adverse trends in the healthcare service industry, which is an integral component of our market’s economy; our management of risks inherent in our commercial real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of our collateral and our ability to sell collateral upon any foreclosure; governmental legislation and regulation, including changes in the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act of 2010, as amended, Basel guidelines, capital requirements, accounting regulation or standards and other applicable laws and regulations; the impact of the Tax Cuts and Job Act of 2017, as amended, on the Company and its financial performance and results of operations; the loss of large depositor relationships, which could force us to fund our business through more expensive and less stable sources; operational and liquidity risks associated with our business, including liquidity risks inherent in correspondent banking; volatility in interest rates and our overall management of interest rate risk, including managing the sensitivity of our interest-earning assets and interest-bearing liabilities to interest rates, and the impact to our earnings from a change in interest rates; the potential for our bank’s regulatory lending limits and other factors related to our size to restrict our growth and prevent us from effectively implementing our business strategy; strategic acquisitions we may undertake to achieve our goals; the sufficiency of our capital, including sources of capital and the extent to which we may be required to raise additional capital to meet our goals; fluctuations in the fair value of our investment securities that are beyond our control; deterioration in the fiscal position of the U.S. government and downgrades in Treasury and federal agency securities; potential exposure to fraud, negligence, computer theft and cyber-crime; the adequacy of our risk management framework; our dependence on our information technology and telecommunications systems and the potential for any systems failures or interruptions; threats to and breaches of our information technology systems and data security, including cyber-attacks; our dependence upon outside third parties for the processing and handling of our records and data; our ability to adapt to technological change; the financial soundness of other financial institutions; our exposure to environmental liability risk associated with our lending activities; our engagement in derivative transactions; our involvement from time to time in legal proceedings and examinations and remedial actions by regulators; the susceptibility of our market to natural disasters and acts of God; and the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting. The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are detailed from time to time in the Company’s periodic and current reports filed with the Securities and Exchange Commission, including those factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 under the headings “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this presentation, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. Safe Harbor Statements

Operating EPS(1) of $0.36 up $0.05 or 16.1% year-over year. Operating Return on Average Assets(1) of 1.31%; ROATE of 11.83%. Tangible Book Value per share increased 10.1% annualized from $11.87 to $12.17 on a linked quarter basis. Annualized Average Deposit growth of 6.3% over 2Q19. Noninterest Income to Average Assets of 1.34% driven predominately by Mortgage and TriNet Fees. Current Criticized and Classified loans continue to be at a low level. One year anniversary of our acquisition of Athens Federal (October 1, 2018). Third Quarter 2019 Highlights Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items.

Successful exit of founding shareholder and largest investor, Corsair Capital CSTR purchased $2.0MM (130K shares). Certain board members and management purchased $3.5MM (227K shares). Several institutional investors purchased remaining shares (1.2MM shares) improving diversification of shareholder base and trading volume has increased post transaction. Third Quarter 2019 Highlights, continued

Sound, Profitable, Growth Financial Metrics - 3Q19 Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items. Efficiency ratio is Noninterest expense divided by the sum of net interest income and noninterest income Calculated on a tax equivalent basis.     Operating Metrics1 3Q19 2Q19 3Q18                     Soundness Allowance for Loan Losses to Total Loans 0.91% 0.90% 1.42% Net Charge-Offs to Average Loans (Periods Annualized) -0.01% 0.02% -0.01% Non-Performing Assets/Assets 0.13% 0.12% 0.40% Total Risk Based Capital Ratio 13.46% 13.29% 12.62% Tangible Common Equity / Tangible Assets 11.23% 10.56% 10.09% Profitability   Return on Average Assets (ROAA) 1.31% 1.40% 1.13%   Return on Average Equity (ROAE) 9.83% 10.78% 10.29%   Return on Average Tangible Equity (ROATE) 11.83% 13.05% 10.72%   Efficiency Ratio2 64.08% 61.39% 64.56%   Net Interest Margin3 (tax equivalent basis) 3.66% 3.68% 3.35%                         Growth Operating Net Income $6.60 $7.02 $4.06 Diluted EPS $0.36 $0.38 $0.31 Tangible Book Value per Share $12.17 $11.87 $11.74   Total Loans (Avg) $1,446 $1,469 $1,070   Total Deposits (Avg) $1,705 $1,678 $1,147   Total Assets (Avg) $2,006 $2,004 $1,422

Deposit Growth and Costs Avg Deposit balances grew 6.3% on an annualized basis from 2Q19. Avg DDA balances grew of 25.1% on an annualized basis from 2Q19. Avg NOW balances grew of 51.3% on an annualized basis from 2Q19. Excluding Day 1 deposits from Athens, organic average deposit growth was 17.9% vs. 3Q18. Deposit costs down slightly due to rate adjustments late in the quarter. *Annualized % change from 2Q19 to 3Q19       3Q19 Change Vs. 2Q19* Change Vs. 3Q18 $ in millions $ $ % $ % Balance Sheet (EOP Balances) Non-Interest Bearing $ 352 $ 26 31.2% $ 112 46.9% Interest Checking (NOW) 563 71 57.7% 255 83.1% Savings & Money Market 510 1 1.0% 133 35.2% Time Deposit's under $100K 74 (32) -119.3% 35 91.5% Time Deposit's over $100K 233 (57) -78.7% 70 42.5% Deposits $ 1,732 $ 9 2.1% $ 605 53.7%

Loan Growth Avg Loans HFI decreased 6.3% on an annualized basis from 2Q19. Payoffs and paydowns remained elevated for the quarter. Excluding Day 1 loans from Athens, organic average loan growth was 2.9% over 3Q18. Total “in market” growth was 4.5% excluding Athens vs. 3Q18 while our “out of market” loans declined $49MM from $132MM in 3Q18 to $84MM over the same period. *Annualized % change from 2Q19 to 3Q19       3Q19 Change Vs. 2Q19* Change Vs. 3Q18 $ in millions $ $ % $ % Balance Sheet (EOP Balances) Commercial and Industrial $383 $(22) -21.5% $(16) -4.0% Commercial Real Estate (Non-Owner Occupied) 407 (14) -13.3% 121 42.0% Commercial Real Estate (Owner Occupied) 169 (4) -9.0% 51 43.7% Consumer Real Estate 255 (0) -0.5% 142 125.5% Construction & Land Development 132 8 26.6% 2 1.9% Consumer 29 2 35.0% 21 251.2% Other 37 1 8.7% 17 85.9% Total Loans $1,412 $(29) -7.9% $338 31.5%

Loan Yields Overall loan yield was 5.48%, up 4 bps from the prior quarter. The yield on new loan production was 5.53% and above the portfolio average for the last 4 quarters. The average 1 month Libor rate was 2.19% and down 26 bps from the second quarter, which negatively impacted our variable rate loan book by 9 bps. Loan fees increased 12 bps from the prior quarter predominately due to the immediate recognition of amortized loan fees with early loan payoffs. Loan Yield Rollforward 2Q19 (Avg) 5.44% Increase in Loan Fees 0.12% Increase in Purchase Accounting 0.03% Loan Volume/Mix (0.02%) Repricing of Variable Rate Loans (0.09%) 3Q19 (Avg) 5.48%

Net Interest Margin(1) Our NIM was 3.66% and decreased 2 bps. The mix of our balance sheet impacted our NIM. A combination of lower loans and investments coupled with an increase in deposits resulted in higher cash balances. EOP loan to deposit ratio decreased to 90.8% with loan payoffs late in the quarter. Net Interest Margin     2Q19 (Avg) 3.68% Decrease in Loan Balances (0.07%) Decrease in Investment Balances & Yields (0.04%) Increase in Interest Bearing Cash Balances 0.05% Increase in Loan Yields 0.03% Change in Deposit Mix & Lower Rates 0.01% 3Q19 (Avg) 3.66% Calculated on a tax equivalent basis

Credit Quality The current reserve of $12.8MM plus the $4.0MM fair value mark on acquired loans equates to a 1.19% reserve/loans. Adjusting for small ticket consumer credits, the average Criticized Loan Balance remains less than $300K. The increase in Special Mention is centered in a real estate secured credit with no loss expectation. Current NPAs/Assets remain at a low level.

Noninterest Income Treasury Management and other Deposit Service Charges down due to clients paying TM fees with deposit balances. Tri-Net fees of $847K in line with previous guidance. Mortgage income predominantly due to higher volumes and spreads. Other fee businesses (Debit card Interchange, Wealth, SBA fees, BOLI, Title and Finance company) continue to demonstrate growth.   Three Months Ended (Dollars in thousands) September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 Noninterest Income  Treasury Management and Other Deposit Service Charges $ 788 $ 813 $ 798 $ 793 $ 528 Net Gain (Loss) on Sale of Securities 0 (121) 12 1 (1) Tri-Net Fees 847 1,024 641 276 373 Mortgage Banking Income 2,679 3,087(1) 1,385 1,324 1,634 Other 2,474 2,229 1,899 3,993 684 Total Noninterest Income $ 6,788 $ 7,032 $ 4,735 $ 6,387 $ 3,218 Average Assets 2,005,950 2,004,207 1,988,478 1,940,991 1,421,873 Noninterest Income / Average Assets 1.34% 1.41% 0.97% 1.31% 0.90%    Noninterest Income was 1.34% of Average Assets. (1) Accounting change with the implementation of forward rate locks and mandatory delivery vs. selling at best efforts. ($912K)

Noninterest Expense .42 Three Months Ended (Dollars in thousands) September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 Noninterest Expense  Salaries and Employee Benefits $ 9,229 $ 8,563 $ 8,432 $ 9,475 $ 6,514 Data Processing & Software 1,790 1,862 1,474 1,424 803 Professional Fees 528 501 543 534 255 Occupancy 858 809 883 736 544 Equipment 1,012 1,026 852 810 520 Regulatory Fees 18 272 274 364 228 Merger Related Expenses 187 1,711 594 8,929 540 Amortization of Intangibles 408 419 430 442 3 Other Operating 1,501 1,307 1,243 1,118 663 Total Noninterest Expense $ 15,531 $ 16,470 $ 14,725 $ 23,832 $ 10,070 Efficiency Ratio 64.87% 68.51% 67.74% 98.88% 68.22% Average Assets $ 2,005,950 $ 2,004,207 $ 1,988,478 $ 1,940,991 $ 1,421,873 Noninterest Expense / Average Assets 3.07% 3.30% 3.00% 4.87% 2.81% FTE 290 290 289 286 185    Operating Noninterest Expense(1) $ 15,344 $ 14,759 $ 14,131 $ 14,903 $ 9,530 Operating Efficiency Ratio(1) 64.08% 61.39% 65.01% 61.83% 64.56% Operating Noninterest Expense / Average Assets(1) 3.04% 2.95% 2.88% 3.05% 2.66% Operating Efficiency slightly elevated due to one-time costs and bubble IT expenses. (1) Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items.             Salaries and Employee Benefits elevated due to increased incentive accrual and one-time severance expense of $176K. Regulatory Fees lower due to a FDIC credit of $200K. $100K of double expenses for two managed IT providers; one vendor goes away in 4Q19.

All capital ratios increased from the prior quarter and are above regulatory guidelines. Shares repurchases: 3Q19: 129,786 CSTR shares in 3Q19 at an average price of $15.41 per share. YTD 2019: 504,786 CSTR shares at an average price of $15.52 per share. $9 million remaining under current share repurchase authorization announced on September 6, 2019. Paid quarterly cash dividend of $0.05 per share to common shareholders on August 26, 2019. With the exit of Corsair Capital, all shares of preferred and non-voting common stock have been converted into shares of voting common stock. *Reconciliation provided in non-GAAP tables in the Appendix at the end of this presentation. Capital Ratios 9/30/19   6/30/19   3/31/19   12/31/18   "Well Capitalized" Guidelines                     Tangible Common Equity / Tangible Assets* 11.23%   10.56%   10.31%   10.39%   NA Leverage 11.24%   11.01%   10.97%   11.06%   ≥ 5.00% Tier 1 Risk Based Capital 12.71%   12.53%   11.90%   12.13%   ≥ 8.00% Total Risk Based Capital 13.46%   13.29%   12.64%   12.84%   ≥ 10.00% Draft Capital

CapStar’s strategy remains one of sound, profitable growth: Continuing to build out a client-centric model committed to serving local consumers, small and medium sized businesses and their owners and employees in our target markets. Expanding market share in Middle and East Tennessee. Building a consistent and stable earnings franchise. Improving our ability to grow stable, low cost deposits. Maintaining a sound credit profile. Exploring strategic and opportunistic M&A. Points of Emphasis

Appendix: Non-GAAP Reconciliations

  (Dollars in thousands, except per share information) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 TANGIBLE EQUITY Total Shareholders’ Equity $ 268,082 $ 262,664 $ 259,751 $ 254,379 $ 157,510 Less: Intangible Assets 44,790 45,199 45,618 46,048 6,219 Tangible Equity 223,292 217,465 214,133 208,331 151,291 TANGIBLE COMMON EQUITY Tangible Equity $ 223,292 $ 217,465 $ 214,133 $ 208,331 $ 151,291 Less: Preferred Equity - 9,000 9,000 9,000 9,000 Tangible Common Equity 223,292 208,465 205,133 199,331 142,291 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Tangible Common Equity $ 223,292 $ 208,465 $ 205,133 $ 199,331 $ 142,291 Total Assets 2,033,911 2,018,421 2,035,811 1,963,883 1,416,907 Less: Intangible Assets 44,790 45,199 45,618 46,048 6,219 Tangible Assets 1,989,121 1,973,223 1,990,193 1,917,835 1,410,689 Tangible Common Equity to Tangible Assets 11.23% 10.56% 10.31% 10.39% 10.09% Non-GAAP Financial Measures

  Three Months Ended (Dollars in thousands, except per share information) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Total Average Shareholders’ Equity $ 266,441 $ 261,197 $ 257,105 $ 245,811 $ 156,264 Less: Average Intangible Assets 45,050 45,456 45,890 45,687 6,220 Average Tangible Equity 221,391 215,741 211,215 200,124 150,044 Net Income 6,466 5,756 4,780 (708) 3,656 Return on Average Tangible Equity (ROATE) 11.59% 10.70% 9.18% -1.40% 9.67% RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE) Average Tangible Equity $ 221,391 $ 215,741 $ 211,215 $ 200,124 $ 150,044 Less: Preferred Equity 7,043 9,000 9,000 9,000 9,000 Average Tangible Common Equity 214,347 206,741 202,215 191,124 141,044 Net Income 6,466 5,756 4,780 (708) 3,656 Return on Average Tangible Common Equity (ROATCE) 11.97% 11.17% 9.59% -1.47% 10.28% Non-GAAP Financial Measures

  (Dollars in thousands, except per share information) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 TANGIBLE BOOK VALUE PER SHARE, REPORTED Tangible Common Equity $ 223,292 $ 208,465 $ 205,133 $ 199,331 $ 142,291 Shares of Common Stock Outstanding 18,343,403 17,561,476 17,765,124 17,724,721 12,125,122 Tangible Book Value Per Share, Reported $ 12.17 $11.87 $11.55 $11.25 $11.74 SHARES OUTSTANDING AT END OF PERIOD Shares of Common Stock Outstanding 18,343,403 17,561,476 17,765,124 17,724,721 12,125,122 Shares of Preferred Stock Outstanding - 878,048 878,048 878,048 878,048 Total Shares Outstanding at End of Period 18,343,403 18,439,524 18,643,172 18,602,769 13,003,170 TANGIBLE BOOK VALUE PER SHARE, ADJUSTED Tangible Equity $ 223,292 $ 217,465 $ 214,133 $ 208,331 $ 151,291 Total Shares Outstanding at End of Period 18,343,403 18,439,524 18,643,172 18,602,769 13,003,170 Tangible Book Value Per Share, Adjusted $ 12.17 $11.79 $11.49 $11.20 $11.63 Non-GAAP Financial Measures

  Three Months Ended (Dollars in thousands, except per share information) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 OPERATING NET INCOME Net Income (Loss) $ 6,466 $ 5,756 $ 4,780 $ (708) $ 3,656 Add: Merger Related Expense 187 1,711 594 8,929 540 Less: Income Tax Impact (49) (447) (155) (1,985) (141) Operating Net Income 6,604 7,020 5,219 6,236 4,055 OPERATING DILUTED NET INCOME PER SHARE Operating Net Income $ 6,604 $ 7,020 $ 5,219 $ 6,236 $ 4,055 Average Diluted Shares Outstanding 18,532,479 18,650,706 18,830,933 18,716,562 13,113,775 Operating Diluted Net Income per Share $ 0.36 $0.38 $0.28 $0.33 $0.31 OPERATING RETURN ON AVERAGE ASSETS (ROAA) Operating Net Income $ 6,604 $ 7,020 $ 5,219 $ 6,236 $ 4,055 Total Average Assets 2,005,950 2,004,207 1,988,478 1,940,991 1,421,873 Operating Return on Average Assets (ROAA) 1.31% 1.40% 1.06% 1.27% 1.13% OPERATING RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Average Tangible Equity $ 221,391 $ 215,741 $ 211,215 $ 200,124 $ 150,044 Operating Net Income 6,604 7,020 5,219 6,236 4,055 Operating Return on Average Tangible Equity (ROATE) 11.83% 13.05% 10.02% 12.36% 10.72% Non-GAAP Financial Measures Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations above using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items.

  Three Months Ended (Dollars in thousands, except per share information) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 OPERATING NONINTEREST EXPENSE Noninterest Expense $ 15,531 $ 16,470 $ 14,725 $ 23,832 $ 10,070 Less: Merger Related Expense (187) (1,711) (594) (8,929) (540) Operating Noninterest Expense 15,344 14,759 14,131 14,903 9,530 OPERATING NONINTEREST EXPENSE / AVERAGE ASSETS Operating Noninterest Expense $ 15,344 $ 14,759 $ 14,131 $ 14,903 $ 9,530 Total Average Assets 2,005,950 2,004,207 1,988,478 1,940,991 1,421,873 Operating Noninterest Income / Average Assets 3.04% 2.95% 2.88% 3.05% 2.66% OPERATING EFFICIENCY RATIO Operating Noninterest Expense $ 15,344 $ 14,759 $ 14,131 $ 14,903 $ 9,530 Net Interest Income 17,156 17,008 17,002 17,716 11,543 Noninterest Income 6,788 7,032 4,735 6,387 3,218 Total Revenues 23,944 24,040 21,737 24,103 14,761 Operating Efficiency Ratio 64.08% 61.39% 65.01% 61.83% 64.56% Non-GAAP Financial Measures Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations above using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items.

CapStar Financial Holdings, Inc. 1201 Demonbreun Street, Suite 700 Nashville, TN 37203 Mail: P.O. Box 305065 Nashville, TN 37230-5065 (615) 732-6400 Telephone www.capstarbank.com (615) 732-6455 Email: ir@capstarbank.com Contact Information Investor Relations Executive Leadership Tim Schools President and Chief Executive Officer, CapStar Financial Holdings, Inc, and CapStar Bank (615) 732-7449 Email: tkschools@capstarbank.com Rob Anderson Chief Financial and Administrative Officer CapStar Financial Holdings, Inc. (615) 732-6470 Email: randerson@capstarbank.com Corporate Headquarters