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): July 23, 2020
______________________________
CAPSTAR FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Tennessee |
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001-37886 |
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81-1527911 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.)
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1201 Demonbreun Street, Suite 700 Nashville, Tennessee |
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37203 |
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(Address of principal executive offices) |
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(Zip Code) |
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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))
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Securities registered pursuant to Section 12(b) of the Exchange Act: |
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, $1.00 par value per share |
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CSTR |
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Nasdaq Global Select Market |
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]
Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On July 23, 2020, CapStar Financial Holdings, Inc. (the “Company”) issued an earnings release announcing its financial results for the second quarter ended June 30, 2020. 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 9:00 a.m. (Central Time) on July 24, 2020 to discuss its financial results for the second quarter ended June 30, 2020.
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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Exhibit Number |
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Description |
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Earnings release issued on July 23, 2020 by CapStar Financial Holdings, Inc. |
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99.2 |
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2
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.
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CAPSTAR FINANCIAL HOLDINGS, INC. |
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By: |
/s/ Michael J. Fowler |
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Michael J. Fowler |
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Chief Financial Officer |
Date: July 23, 2020
3
Exhibit 99.1
EARNINGS RELEASE
CONTACT
Mike Fowler
Chief Financial Officer
(615) 732-7404
CapStar Financial Holdings, Inc. Reports Second Quarter 2020 Results
Strong Pre-tax Pre-provision Income led by Record Mortgage Results
NASHVILLE, TN, July 23, 2020 GlobeNewswire -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported second quarter net income of $6.2 million and pre-tax pre-provision income of $9.6 million. Diluted earnings per share were $0.34, an increase of $0.03 from the second quarter of 2019. Excluding merger-related charges, diluted operating(1) earnings per share were $0.36, a decline of $0.02 from the second quarter of 2019. Return on average assets and return on average equity for the second quarter of 2020 were 1.06% and 8.83%, respectively. On an operating basis, return on average assets was 1.11% and return on average tangible common equity was 11.02%. Net income for the quarter included provision for loan losses of $1.6 million, severance expense of $1.4 million, and merger related expenses of $448,000.
“I am proud of the CapStar team for their remarkable dedication during an extremely challenging operating environment,” said Timothy K. Schools, CapStar’s president and CEO. “In keeping with our vision, mission and values, we have been unwavering in our commitment to support our employees, clients and communities through the public health crisis. Our non-financial center work force mobilized to working 100% remotely and continues to provide outstanding service. Importantly, we prioritized client assistance by offering loan deferrals and took a leadership position in facilitating PPP loans to protect all local business – both clients and non-clients – as they navigate the challenges presented by COVID-19. Our inclusive and response-driven approach is supporting our communities and presents the prospect for many new and expanded relationships.”
“In the second quarter, we delivered solid financial results with strong pre-tax pre-provision revenue led by our mortgage and Tri-Net divisions,” continued Schools. “During the quarter, we saw a significant rise in both loans related to PPP and in deposits which will bring short-term compression to our net interest margin and we continued to actively monitor our portfolio to identify potential weaknesses. On July 1, we completed our merger with The Bank of Waynesboro and The First National Bank of Manchester, creating an approximately $3 billion financial institution which will enhance our funding profile, diversify our loan portfolio, expand our geographic reach, and improve our net interest margin, efficiency ratio, and return on assets."
Soundness
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• |
Allowance for loan losses to total loans was 1.32% at June 30, 2020 compared to 0.90% at June 30, 2019. |
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• |
Annualized net charge-offs to average loans were 0.18% for the three months ended June 30, 2020 compared to 0.02% for the same period in 2019. |
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• |
Non-performing assets to total loans and OREO were 0.20% at June 30, 2020 compared to 0.16% at June 30, 2019. |
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• |
The leverage ratio was 10.08% at June 30, 2020 compared to 11.01% at June 30, 2019. |
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• |
The total risk based capital ratio was 16.76% at June 30, 2020 compared to 13.29% at June 30, 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.
Profitability
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• |
Operating annualized return on average assets for the three months ended June 30, 2020 was 1.11% compared to 1.40% for the same period in 2019. |
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• |
Operating annualized return on average tangible equity for the three months ended June 30, 2020 was 11.02% compared to 13.05% for the same period in 2019. |
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• |
Net interest margin for the three months ended June 30, 2020 was 3.23% compared to 3.68% for the same period in 2019; approximately 17 bps of the decline is attributed to the impact of PPP loans and an increase in cash due to significant deposit growth during the quarter. |
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• |
The operating efficiency ratio for the three months ended June 30, 2020 was 64.87% compared to 61.39% for the same period in 2019. |
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• |
Operating annualized pre-tax pre-provision income to average assets for the three months ended June 30, 2020 was 1.71% compared to 1.86% for the same period in 2019. |
Growth
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• |
Average deposits for the quarter ended June 30, 2020 increased 21.1% to $2.03 billion, compared to $1.68 billion for the same period in 2019. |
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• |
Average gross loans for the quarter ended June 30, 2020 increased 6.3% to $1.56 billion, compared to $1.47 billion for the same period in 2019. |
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• |
Pre-tax pre-provision earnings for the quarter ended June 30, 2020 increased 26.3% to $9.6 million, compared to $7.6 million for the quarter ended June 30, 2019. |
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• |
Tangible book value per share for the quarter ended June 30, 2020 increased 9.7% to $13.02, compared to $11.87 for the quarter ended June 30, 2019. |
Dividend
On July 23, 2020, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on August 27, 2020 to shareholders of record of CapStar’s common stock as of the close of business on August 13, 2020.
Conference Call and Webcast Information
CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 24, 2020. During the call, management will review the second quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 4376815. 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 June 30, 2020, on a consolidated basis, CapStar had total assets of $2.45 billion, gross loans of $1.59 billion, total deposits of $2.10 billion, and shareholders’ equity of $282.0 million. Visit www.capstarbank.com for more information.
This release contains forward-looking statements, as defined by federal securities laws, including statements about CapStar and its financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of our operations and future financial performance. Our operations and such performance involves risks and uncertainties, including but in no way limited to the effect of the COVID-19 pandemic, that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to CapStar’s filings with the Securities and Exchange Commission, including its 2019 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Item 1A Risk Factors.” Forward-looking statements speak only as of the date they are made, and except as otherwise required by applicable law, we undertake no obligation to update or revise forward-looking statements.
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)
Second quarter 2020 Earnings Release
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Interest income: |
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|
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|
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|
|
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Loans, including fees |
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$ |
19,086 |
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$ |
20,999 |
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$ |
38,823 |
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$ |
41,591 |
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Securities: |
|
|
|
|
|
|
|
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|
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|
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Taxable |
|
|
1,096 |
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|
|
1,165 |
|
|
|
2,272 |
|
|
|
2,512 |
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Tax-exempt |
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312 |
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|
|
363 |
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|
|
633 |
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|
739 |
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Federal funds sold |
|
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— |
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|
|
6 |
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|
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— |
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25 |
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Restricted equity securities |
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140 |
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214 |
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282 |
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401 |
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Interest-bearing deposits in financial institutions |
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107 |
|
|
|
411 |
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|
|
469 |
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|
|
857 |
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Total interest income |
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|
20,741 |
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|
|
23,158 |
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|
|
42,479 |
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|
|
46,125 |
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Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest-bearing deposits |
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|
831 |
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|
|
1,827 |
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|
|
2,732 |
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|
|
3,420 |
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Savings and money market accounts |
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|
731 |
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1,782 |
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|
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2,283 |
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|
|
3,500 |
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Time deposits |
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|
1,416 |
|
|
|
2,217 |
|
|
|
2,897 |
|
|
|
4,030 |
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Federal funds purchased |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
Securities sold under agreements to repurchase |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
|
Federal Home Loan Bank advances |
|
|
88 |
|
|
|
324 |
|
|
|
231 |
|
|
|
1,156 |
|
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Total interest expense |
|
|
3,066 |
|
|
|
6,150 |
|
|
|
8,143 |
|
|
|
12,115 |
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|
Net interest income |
|
|
17,675 |
|
|
|
17,008 |
|
|
|
34,336 |
|
|
|
34,010 |
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Provision for loan losses |
|
|
1,624 |
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|
|
— |
|
|
|
9,177 |
|
|
|
886 |
|
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Net interest income after provision for loan losses |
|
|
16,051 |
|
|
|
17,008 |
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|
|
25,159 |
|
|
|
33,124 |
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Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Treasury management and other deposit service charges |
|
|
691 |
|
|
|
813 |
|
|
|
1,466 |
|
|
|
1,611 |
|
|
Net gain (loss) on sale of securities |
|
|
13 |
|
|
|
(121 |
) |
|
|
40 |
|
|
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(108 |
) |
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Tri-Net fees |
|
|
1,260 |
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|
|
1,024 |
|
|
|
1,860 |
|
|
|
1,664 |
|
|
Mortgage banking income |
|
|
7,123 |
|
|
|
3,087 |
|
|
|
9,376 |
|
|
|
4,472 |
|
|
Wealth management fees |
|
|
374 |
|
|
|
334 |
|
|
|
781 |
|
|
|
639 |
|
|
Interchange and debit card transaction fees |
|
|
729 |
|
|
|
991 |
|
|
|
1,454 |
|
|
|
1,569 |
|
|
Other noninterest income |
|
|
633 |
|
|
|
904 |
|
|
|
1,720 |
|
|
|
1,920 |
|
|
Total noninterest income |
|
|
10,823 |
|
|
|
7,032 |
|
|
|
16,697 |
|
|
|
11,767 |
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Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
12,305 |
|
|
|
8,563 |
|
|
|
20,307 |
|
|
|
16,995 |
|
|
Data processing and software |
|
|
2,100 |
|
|
|
1,862 |
|
|
|
3,964 |
|
|
|
3,336 |
|
|
Professional fees |
|
|
581 |
|
|
|
501 |
|
|
|
1,216 |
|
|
|
1,043 |
|
|
Occupancy |
|
|
797 |
|
|
|
809 |
|
|
|
1,616 |
|
|
|
1,692 |
|
|
Equipment |
|
|
680 |
|
|
|
1,026 |
|
|
|
1,431 |
|
|
|
1,878 |
|
|
Regulatory fees |
|
|
333 |
|
|
|
272 |
|
|
|
496 |
|
|
|
546 |
|
|
Merger related expenses |
|
|
448 |
|
|
|
1,711 |
|
|
|
738 |
|
|
|
2,305 |
|
|
Amortization of intangibles |
|
|
375 |
|
|
|
419 |
|
|
|
761 |
|
|
|
850 |
|
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Other operating |
|
|
1,315 |
|
|
|
1,307 |
|
|
|
2,616 |
|
|
|
2,551 |
|
|
Total noninterest expense |
|
|
18,934 |
|
|
|
16,470 |
|
|
|
33,145 |
|
|
|
31,196 |
|
|
Income before income taxes |
|
|
7,940 |
|
|
|
7,570 |
|
|
|
8,711 |
|
|
|
13,695 |
|
|
Income tax expense |
|
|
1,759 |
|
|
|
1,814 |
|
|
|
1,184 |
|
|
|
3,160 |
|
|
Net income |
|
$ |
6,181 |
|
|
$ |
5,756 |
|
|
$ |
7,527 |
|
|
$ |
10,535 |
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|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share of common stock |
|
$ |
0.34 |
|
|
$ |
0.33 |
|
|
$ |
0.41 |
|
|
$ |
0.59 |
|
|
Diluted net income per share of common stock |
|
$ |
0.34 |
|
|
$ |
0.31 |
|
|
$ |
0.41 |
|
|
$ |
0.56 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,307,083 |
|
|
|
17,663,992 |
|
|
|
18,349,998 |
|
|
|
17,723,286 |
|
|
Diluted |
|
|
18,320,006 |
|
|
|
18,650,706 |
|
|
|
18,381,866 |
|
|
|
18,740,322 |
|
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)
Second quarter 2020 Earnings Release
|
|
|
Five Quarter Comparison |
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|
|
6/30/20 |
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|
3/31/20 |
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|
12/31/19 |
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|
9/30/19 |
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|
6/30/19 |
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Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
17,675 |
|
|
$ |
16,661 |
|
|
$ |
16,581 |
|
|
$ |
17,156 |
|
|
$ |
17,008 |
|
|
Provision for loan losses |
|
|
1,624 |
|
|
|
7,553 |
|
|
|
— |
|
|
|
(125 |
) |
|
|
— |
|
|
Net interest income after provision for loan losses |
|
|
16,051 |
|
|
|
9,108 |
|
|
|
16,581 |
|
|
|
17,281 |
|
|
|
17,008 |
|
|
Treasury management and other deposit service charges |
|
|
691 |
|
|
|
775 |
|
|
|
736 |
|
|
|
788 |
|
|
|
813 |
|
|
Net gain (loss) on sale of securities |
|
|
13 |
|
|
|
27 |
|
|
|
9 |
|
|
|
— |
|
|
|
(121 |
) |
|
Tri-Net fees |
|
|
1,260 |
|
|
|
599 |
|
|
|
274 |
|
|
|
847 |
|
|
|
1,024 |
|
|
Mortgage banking income |
|
|
7,123 |
|
|
|
2,253 |
|
|
|
2,316 |
|
|
|
2,679 |
|
|
|
3,087 |
|
|
Wealth management fees |
|
|
374 |
|
|
|
407 |
|
|
|
407 |
|
|
|
379 |
|
|
|
334 |
|
|
Interchange and debit card transaction fees |
|
|
729 |
|
|
|
724 |
|
|
|
928 |
|
|
|
754 |
|
|
|
991 |
|
|
Other noninterest income |
|
|
633 |
|
|
|
1,089 |
|
|
|
1,049 |
|
|
|
1,341 |
|
|
|
904 |
|
|
Total noninterest income |
|
|
10,823 |
|
|
|
5,874 |
|
|
|
5,719 |
|
|
|
6,788 |
|
|
|
7,032 |
|
|
Salaries and employee benefits |
|
|
12,305 |
|
|
|
8,002 |
|
|
|
9,318 |
|
|
|
9,229 |
|
|
|
8,563 |
|
|
Data processing and software |
|
|
2,100 |
|
|
|
1,864 |
|
|
|
1,835 |
|
|
|
1,790 |
|
|
|
1,862 |
|
|
Professional fees |
|
|
581 |
|
|
|
636 |
|
|
|
531 |
|
|
|
528 |
|
|
|
501 |
|
|
Occupancy |
|
|
797 |
|
|
|
820 |
|
|
|
795 |
|
|
|
858 |
|
|
|
809 |
|
|
Equipment |
|
|
680 |
|
|
|
751 |
|
|
|
834 |
|
|
|
1,012 |
|
|
|
1,026 |
|
|
Regulatory fees |
|
|
333 |
|
|
|
163 |
|
|
|
28 |
|
|
|
18 |
|
|
|
272 |
|
|
Merger related expenses |
|
|
448 |
|
|
|
290 |
|
|
|
163 |
|
|
|
187 |
|
|
|
1,711 |
|
|
Amortization of intangibles |
|
|
375 |
|
|
|
386 |
|
|
|
397 |
|
|
|
408 |
|
|
|
419 |
|
|
Other operating |
|
|
1,315 |
|
|
|
1,299 |
|
|
|
1,365 |
|
|
|
1,501 |
|
|
|
1,307 |
|
|
Total noninterest expense |
|
|
18,934 |
|
|
|
14,211 |
|
|
|
15,266 |
|
|
|
15,531 |
|
|
|
16,470 |
|
|
Net income before income tax expense |
|
|
7,940 |
|
|
|
771 |
|
|
|
7,034 |
|
|
|
8,538 |
|
|
|
7,570 |
|
|
Income tax (benefit) expense |
|
|
1,759 |
|
|
|
(575 |
) |
|
|
1,613 |
|
|
|
2,072 |
|
|
|
1,814 |
|
|
Net income |
|
$ |
6,181 |
|
|
$ |
1,346 |
|
|
$ |
5,421 |
|
|
$ |
6,466 |
|
|
$ |
5,756 |
|
|
Weighted average shares - basic |
|
|
18,307,083 |
|
|
|
18,392,913 |
|
|
|
18,350,994 |
|
|
|
17,741,778 |
|
|
|
17,663,992 |
|
|
Weighted average shares - diluted |
|
|
18,320,006 |
|
|
|
18,443,725 |
|
|
|
18,443,916 |
|
|
|
18,532,479 |
|
|
|
18,650,706 |
|
|
Net income per share, basic |
|
$ |
0.34 |
|
|
$ |
0.07 |
|
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
0.33 |
|
|
Net income per share, diluted |
|
|
0.34 |
|
|
|
0.07 |
|
|
|
0.29 |
|
|
|
0.35 |
|
|
|
0.31 |
|
|
Balance Sheet Data (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
368,820 |
|
|
$ |
91,450 |
|
|
$ |
101,269 |
|
|
$ |
154,021 |
|
|
$ |
156,085 |
|
|
Securities available-for-sale |
|
|
223,034 |
|
|
|
219,213 |
|
|
|
213,129 |
|
|
|
203,500 |
|
|
|
194,957 |
|
|
Securities held-to-maturity |
|
|
2,699 |
|
|
|
3,306 |
|
|
|
3,313 |
|
|
|
3,319 |
|
|
|
3,721 |
|
|
Loans held for sale |
|
|
129,807 |
|
|
|
186,937 |
|
|
|
168,222 |
|
|
|
129,613 |
|
|
|
89,629 |
|
|
Total loans |
|
|
1,592,725 |
|
|
|
1,446,835 |
|
|
|
1,420,102 |
|
|
|
1,411,768 |
|
|
|
1,440,617 |
|
|
Allowance for loan losses |
|
|
(21,035 |
) |
|
|
(20,114 |
) |
|
|
(12,604 |
) |
|
|
(12,828 |
) |
|
|
(12,903 |
) |
|
Total assets |
|
|
2,445,172 |
|
|
|
2,072,585 |
|
|
|
2,037,201 |
|
|
|
2,033,911 |
|
|
|
2,018,421 |
|
|
Non-interest-bearing deposits |
|
|
546,974 |
|
|
|
442,789 |
|
|
|
312,096 |
|
|
|
352,266 |
|
|
|
326,550 |
|
|
Interest-bearing deposits |
|
|
1,548,591 |
|
|
|
1,320,920 |
|
|
|
1,417,355 |
|
|
|
1,379,497 |
|
|
|
1,396,220 |
|
|
Federal Home Loan Bank advances and other borrowings |
|
|
39,464 |
|
|
|
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
|
Total liabilities |
|
|
2,163,222 |
|
|
|
1,796,795 |
|
|
|
1,764,155 |
|
|
|
1,765,829 |
|
|
|
1,755,757 |
|
|
Shareholders' equity |
|
$ |
281,950 |
|
|
$ |
275,790 |
|
|
$ |
273,046 |
|
|
$ |
268,082 |
|
|
$ |
262,664 |
|
|
Total shares of common stock outstanding |
|
|
18,302,188 |
|
|
|
18,307,802 |
|
|
|
18,361,922 |
|
|
|
18,343,403 |
|
|
|
17,561,476 |
|
|
Total shares of preferred stock outstanding |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
878,048 |
|
|
Book value per share of common stock |
|
$ |
15.41 |
|
|
$ |
15.06 |
|
|
$ |
14.87 |
|
|
$ |
14.61 |
|
|
$ |
14.44 |
|
|
Tangible book value per share of common stock* |
|
|
13.02 |
|
|
|
12.66 |
|
|
|
12.45 |
|
|
|
12.17 |
|
|
|
11.87 |
|
|
Market value per share of common stock |
|
$ |
12.00 |
|
|
$ |
9.89 |
|
|
$ |
16.65 |
|
|
$ |
16.58 |
|
|
$ |
15.15 |
|
|
Capital ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk based capital |
|
|
16.76 |
% |
|
|
13.68 |
% |
|
|
13.45 |
% |
|
|
13.46 |
% |
|
|
13.29 |
% |
|
Tier 1 risk based capital |
|
|
13.76 |
% |
|
|
12.56 |
% |
|
|
12.73 |
% |
|
|
12.71 |
% |
|
|
12.53 |
% |
|
Common equity tier 1 capital |
|
|
13.76 |
% |
|
|
12.56 |
% |
|
|
12.73 |
% |
|
|
12.71 |
% |
|
|
12.01 |
% |
|
Leverage |
|
|
10.08 |
% |
|
|
11.23 |
% |
|
|
11.37 |
% |
|
|
11.24 |
% |
|
|
11.01 |
% |
_____________________
*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)
Second quarter 2020 Earnings Release
|
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
|
6/30/20 |
|
|
3/31/20 |
|
|
12/31/19 |
|
|
9/30/19 |
|
|
6/30/19 |
|
|||||
|
Average Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
257,709 |
|
|
$ |
114,272 |
|
|
$ |
115,100 |
|
|
$ |
129,114 |
|
|
$ |
93,523 |
|
|
Investment securities |
|
|
238,762 |
|
|
|
226,537 |
|
|
|
225,265 |
|
|
|
211,460 |
|
|
|
228,283 |
|
|
Loans held for sale |
|
|
176,193 |
|
|
|
180,401 |
|
|
|
140,731 |
|
|
|
101,835 |
|
|
|
91,585 |
|
|
Loans |
|
|
1,560,626 |
|
|
|
1,421,256 |
|
|
|
1,431,027 |
|
|
|
1,445,755 |
|
|
|
1,469,210 |
|
|
Assets |
|
|
2,350,021 |
|
|
|
2,059,306 |
|
|
|
2,030,231 |
|
|
|
2,005,950 |
|
|
|
2,004,207 |
|
|
Interest bearing deposits |
|
|
1,519,877 |
|
|
|
1,411,666 |
|
|
|
1,388,496 |
|
|
|
1,370,988 |
|
|
|
1,364,211 |
|
|
Deposits |
|
|
2,031,924 |
|
|
|
1,735,635 |
|
|
|
1,711,021 |
|
|
|
1,704,873 |
|
|
|
1,678,240 |
|
|
Federal Home Loan Bank advances and other borrowings |
|
|
10,966 |
|
|
|
20,989 |
|
|
|
22,391 |
|
|
|
12,174 |
|
|
|
42,088 |
|
|
Liabilities |
|
|
2,068,408 |
|
|
|
1,780,756 |
|
|
|
1,758,663 |
|
|
|
1,739,509 |
|
|
|
1,743,010 |
|
|
Shareholders' equity |
|
|
281,614 |
|
|
|
278,550 |
|
|
|
271,568 |
|
|
|
266,441 |
|
|
|
261,197 |
|
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average assets |
|
|
1.06 |
% |
|
|
0.26 |
% |
|
|
1.06 |
% |
|
|
1.28 |
% |
|
|
1.15 |
% |
|
Annualized return on average equity |
|
|
8.83 |
% |
|
|
1.94 |
% |
|
|
7.92 |
% |
|
|
9.63 |
% |
|
|
8.84 |
% |
|
Net interest margin (1) |
|
|
3.23 |
% |
|
|
3.50 |
% |
|
|
3.49 |
% |
|
|
3.66 |
% |
|
|
3.68 |
% |
|
Annualized Noninterest income to average assets |
|
|
1.85 |
% |
|
|
1.15 |
% |
|
|
1.12 |
% |
|
|
1.34 |
% |
|
|
1.41 |
% |
|
Efficiency ratio |
|
|
66.44 |
% |
|
|
63.06 |
% |
|
|
68.46 |
% |
|
|
64.87 |
% |
|
|
68.51 |
% |
|
Loans by Type (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
621,541 |
|
|
$ |
447,311 |
|
|
$ |
394,408 |
|
|
$ |
382,816 |
|
|
$ |
404,745 |
|
|
Commercial real estate - owner occupied |
|
|
147,682 |
|
|
|
166,652 |
|
|
|
172,456 |
|
|
|
169,370 |
|
|
|
173,316 |
|
|
Commercial real estate - non-owner occupied |
|
|
408,402 |
|
|
|
378,170 |
|
|
|
387,443 |
|
|
|
407,378 |
|
|
|
421,496 |
|
|
Construction and development |
|
|
117,830 |
|
|
|
141,087 |
|
|
|
143,111 |
|
|
|
132,222 |
|
|
|
123,901 |
|
|
Consumer real estate |
|
|
238,696 |
|
|
|
248,243 |
|
|
|
256,097 |
|
|
|
254,736 |
|
|
|
255,043 |
|
|
Consumer |
|
|
27,542 |
|
|
|
27,739 |
|
|
|
28,426 |
|
|
|
29,059 |
|
|
|
26,704 |
|
|
Other |
|
|
31,032 |
|
|
|
37,633 |
|
|
|
38,161 |
|
|
|
36,187 |
|
|
|
35,412 |
|
|
Asset Quality Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to total loans |
|
|
1.32 |
% |
|
|
1.39 |
% |
|
|
0.89 |
% |
|
|
0.91 |
% |
|
|
0.90 |
% |
|
Allowance for loan losses to non-performing loans |
|
|
705 |
% |
|
|
550 |
% |
|
|
861 |
% |
|
|
754 |
% |
|
|
894 |
% |
|
Nonaccrual loans |
|
$ |
2,982 |
|
|
$ |
3,658 |
|
|
$ |
1,464 |
|
|
$ |
1,701 |
|
|
$ |
1,443 |
|
|
Troubled debt restructurings |
|
|
1,228 |
|
|
|
1,306 |
|
|
|
2,717 |
|
|
|
2,725 |
|
|
|
1,238 |
|
|
Loans - over 89 days past due and accruing |
|
|
639 |
|
|
|
399 |
|
|
|
38 |
|
|
|
551 |
|
|
|
302 |
|
|
Total non-performing loans |
|
|
2,982 |
|
|
|
3,658 |
|
|
|
1,464 |
|
|
|
1,701 |
|
|
|
1,443 |
|
|
OREO and repossessed assets |
|
|
147 |
|
|
|
147 |
|
|
|
1,044 |
|
|
|
914 |
|
|
|
914 |
|
|
Total non-performing assets |
|
|
3,129 |
|
|
|
3,805 |
|
|
|
2,508 |
|
|
|
2,615 |
|
|
|
2,357 |
|
|
Non-performing loans to total loans |
|
|
0.19 |
% |
|
|
0.25 |
% |
|
|
0.10 |
% |
|
|
0.12 |
% |
|
|
0.10 |
% |
|
Non-performing assets to total assets |
|
|
0.13 |
% |
|
|
0.18 |
% |
|
|
0.12 |
% |
|
|
0.13 |
% |
|
|
0.12 |
% |
|
Non-performing assets to total loans and OREO |
|
|
0.20 |
% |
|
|
0.26 |
% |
|
|
0.18 |
% |
|
|
0.19 |
% |
|
|
0.16 |
% |
|
Annualized net charge-offs (recoveries) to average loans |
|
|
0.18 |
% |
|
|
0.01 |
% |
|
|
0.06 |
% |
|
|
(0.01 |
)% |
|
|
0.02 |
% |
|
Net charge-offs (recoveries) |
|
$ |
703 |
|
|
$ |
43 |
|
|
$ |
224 |
|
|
$ |
(50 |
) |
|
$ |
56 |
|
|
Interest Rates and Yields: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
4.50 |
% |
|
|
5.10 |
% |
|
|
5.24 |
% |
|
|
5.48 |
% |
|
|
5.44 |
% |
|
Securities (1) |
|
|
2.73 |
% |
|
|
3.04 |
% |
|
|
3.00 |
% |
|
|
3.14 |
% |
|
|
3.22 |
% |
|
Total interest-earning assets (1) |
|
|
3.78 |
% |
|
|
4.56 |
% |
|
|
4.67 |
% |
|
|
4.95 |
% |
|
|
5.00 |
% |
|
Deposits |
|
|
0.59 |
% |
|
|
1.14 |
% |
|
|
1.27 |
% |
|
|
1.38 |
% |
|
|
1.39 |
% |
|
Borrowings and repurchase agreements |
|
|
3.16 |
% |
|
|
2.77 |
% |
|
|
2.88 |
% |
|
|
4.12 |
% |
|
|
3.09 |
% |
|
Total interest-bearing liabilities |
|
|
0.81 |
% |
|
|
1.43 |
% |
|
|
1.58 |
% |
|
|
1.74 |
% |
|
|
1.75 |
% |
|
Other Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time equivalent employees |
|
|
286 |
|
|
|
288 |
|
|
|
289 |
|
|
|
290 |
|
|
|
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)
Second quarter 2020 Earnings Release
|
|
|
For the Three Months Ended June 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) |
|
$ |
1,560,626 |
|
|
$ |
17,459 |
|
|
|
4.50 |
% |
|
$ |
1,469,210 |
|
|
$ |
19,931 |
|
|
|
5.44 |
% |
|
Loans held for sale |
|
|
176,193 |
|
|
|
1,627 |
|
|
|
3.71 |
% |
|
|
91,585 |
|
|
|
1,068 |
|
|
|
4.68 |
% |
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable investment securities (2) |
|
|
194,876 |
|
|
|
1,236 |
|
|
|
2.54 |
% |
|
|
175,742 |
|
|
|
1,379 |
|
|
|
3.14 |
% |
|
Investment securities exempt from federal income tax (3) |
|
|
43,886 |
|
|
|
312 |
|
|
|
3.60 |
% |
|
|
52,541 |
|
|
|
363 |
|
|
|
3.50 |
% |
|
Total securities |
|
|
238,762 |
|
|
|
1,548 |
|
|
|
2.73 |
% |
|
|
228,283 |
|
|
|
1,742 |
|
|
|
3.22 |
% |
|
Cash balances in other banks |
|
|
237,738 |
|
|
|
107 |
|
|
|
0.18 |
% |
|
|
75,485 |
|
|
|
411 |
|
|
|
2.18 |
% |
|
Funds sold |
|
|
1 |
|
|
|
— |
|
|
|
1.27 |
% |
|
|
767 |
|
|
|
6 |
|
|
|
2.96 |
% |
|
Total interest-earning assets |
|
|
2,213,320 |
|
|
|
20,741 |
|
|
|
3.78 |
% |
|
|
1,865,330 |
|
|
|
23,158 |
|
|
|
5.00 |
% |
|
Noninterest-earning assets |
|
|
136,701 |
|
|
|
|
|
|
|
|
|
|
|
138,877 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,350,021 |
|
|
|
|
|
|
|
|
|
|
$ |
2,004,207 |
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing transaction accounts |
|
$ |
691,063 |
|
|
|
831 |
|
|
|
0.48 |
% |
|
$ |
467,326 |
|
|
|
1,827 |
|
|
|
1.57 |
% |
|
Savings and money market deposits |
|
|
492,682 |
|
|
|
731 |
|
|
|
0.60 |
% |
|
|
479,012 |
|
|
|
1,782 |
|
|
|
1.49 |
% |
|
Time deposits |
|
|
336,132 |
|
|
|
1,416 |
|
|
|
1.69 |
% |
|
|
417,873 |
|
|
|
2,217 |
|
|
|
2.13 |
% |
|
Total interest-bearing deposits |
|
|
1,519,877 |
|
|
|
2,978 |
|
|
|
0.79 |
% |
|
|
1,364,211 |
|
|
|
5,826 |
|
|
|
1.71 |
% |
|
Borrowings and repurchase agreements |
|
|
11,131 |
|
|
|
88 |
|
|
|
3.16 |
% |
|
|
42,117 |
|
|
|
324 |
|
|
|
3.09 |
% |
|
Total interest-bearing liabilities |
|
|
1,531,008 |
|
|
|
3,066 |
|
|
|
0.81 |
% |
|
|
1,406,328 |
|
|
|
6,150 |
|
|
|
1.75 |
% |
|
Noninterest-bearing deposits |
|
|
512,046 |
|
|
|
|
|
|
|
|
|
|
|
314,029 |
|
|
|
|
|
|
|
|
|
|
Total funding sources |
|
|
2,043,054 |
|
|
|
|
|
|
|
|
|
|
|
1,720,357 |
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing liabilities |
|
|
25,353 |
|
|
|
|
|
|
|
|
|
|
|
22,653 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
281,614 |
|
|
|
|
|
|
|
|
|
|
|
261,197 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
2,350,021 |
|
|
|
|
|
|
|
|
|
|
$ |
2,004,207 |
|
|
|
|
|
|
|
|
|
|
Net interest spread (4) |
|
|
|
|
|
|
|
|
|
|
2.98 |
% |
|
|
|
|
|
|
|
|
|
|
3.25 |
% |
|
Net interest income/margin (5) |
|
|
|
|
|
$ |
17,675 |
|
|
|
3.23 |
% |
|
|
|
|
|
$ |
17,008 |
|
|
|
3.68 |
% |
|
(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)
Second quarter 2020 Earnings Release
|
|
|
Three Months Ended |
|
|||||||||||||||||
|
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
|
September 30, 2019 |
|
|
June 30, 2019 |
|
|||||
|
Operating net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,181 |
|
|
$ |
1,346 |
|
|
$ |
5,421 |
|
|
$ |
6,466 |
|
|
$ |
5,756 |
|
|
Add: merger related expenses |
|
|
448 |
|
|
|
290 |
|
|
|
163 |
|
|
|
187 |
|
|
|
1,711 |
|
|
Less: income tax impact of merger related expenses |
|
|
(117 |
) |
|
|
(76 |
) |
|
|
(43 |
) |
|
|
(49 |
) |
|
|
(447 |
) |
|
Operating net income |
|
$ |
6,512 |
|
|
$ |
1,560 |
|
|
$ |
5,541 |
|
|
$ |
6,604 |
|
|
$ |
7,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating diluted net income per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating net income |
|
$ |
6,512 |
|
|
$ |
1,560 |
|
|
$ |
5,541 |
|
|
$ |
6,604 |
|
|
$ |
7,020 |
|
|
Weighted average shares - diluted |
|
|
18,320,006 |
|
|
|
18,443,725 |
|
|
|
18,443,916 |
|
|
|
18,532,479 |
|
|
|
18,650,706 |
|
|
Operating diluted net income per share of common stock |
|
$ |
0.36 |
|
|
$ |
0.08 |
|
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating annualized return on average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating net income |
|
$ |
6,512 |
|
|
$ |
1,560 |
|
|
$ |
5,541 |
|
|
$ |
6,604 |
|
|
$ |
7,020 |
|
|
Average assets |
|
$ |
2,350,021 |
|
|
$ |
2,059,306 |
|
|
$ |
2,030,231 |
|
|
$ |
2,005,950 |
|
|
$ |
2,004,207 |
|
|
Operating annualized return on average assets |
|
|
1.11 |
% |
|
|
0.30 |
% |
|
|
1.08 |
% |
|
|
1.31 |
% |
|
|
1.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating annualized return on average tangible equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total shareholders' equity |
|
$ |
281,614 |
|
|
$ |
278,550 |
|
|
$ |
271,568 |
|
|
$ |
266,441 |
|
|
$ |
261,197 |
|
|
Less: average intangible assets |
|
|
(43,871 |
) |
|
|
(44,253 |
) |
|
|
(44,646 |
) |
|
|
(45,050 |
) |
|
|
(45,456 |
) |
|
Average tangible equity |
|
|
237,743 |
|
|
|
234,297 |
|
|
|
226,922 |
|
|
|
221,391 |
|
|
|
215,741 |
|
|
Operating net income |
|
$ |
6,512 |
|
|
$ |
1,560 |
|
|
$ |
5,541 |
|
|
$ |
6,604 |
|
|
$ |
7,020 |
|
|
Operating annualized return on average tangible equity |
|
|
11.02 |
% |
|
|
2.68 |
% |
|
|
9.69 |
% |
|
|
11.83 |
% |
|
|
13.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating efficiency ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
18,934 |
|
|
$ |
14,211 |
|
|
$ |
15,266 |
|
|
$ |
15,531 |
|
|
$ |
16,470 |
|
|
Less: merger related expenses |
|
|
(448 |
) |
|
|
(290 |
) |
|
|
(163 |
) |
|
|
(187 |
) |
|
|
(1,711 |
) |
|
Total operating noninterest expense |
|
|
18,486 |
|
|
|
13,921 |
|
|
|
15,103 |
|
|
|
15,344 |
|
|
|
14,759 |
|
|
Net interest income |
|
|
17,675 |
|
|
|
16,661 |
|
|
|
16,581 |
|
|
|
17,156 |
|
|
|
17,008 |
|
|
Total noninterest income |
|
|
10,823 |
|
|
|
5,874 |
|
|
|
5,719 |
|
|
|
6,788 |
|
|
|
7,032 |
|
|
Total revenues |
|
$ |
28,498 |
|
|
$ |
22,535 |
|
|
$ |
22,300 |
|
|
$ |
23,944 |
|
|
$ |
24,040 |
|
|
Operating efficiency ratio: |
|
|
64.87 |
% |
|
|
61.78 |
% |
|
|
67.73 |
% |
|
|
64.08 |
% |
|
|
61.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating annualized pre-tax pre-provision income to average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
7,940 |
|
|
$ |
771 |
|
|
$ |
7,034 |
|
|
$ |
8,538 |
|
|
$ |
7,570 |
|
|
Add: merger related expenses |
|
|
448 |
|
|
|
290 |
|
|
|
163 |
|
|
|
187 |
|
|
|
1,711 |
|
|
Add: provision for loan losses |
|
|
1,624 |
|
|
|
7,553 |
|
|
|
— |
|
|
|
(125 |
) |
|
|
— |
|
|
Operating pre-tax pre-provision income |
|
|
10,012 |
|
|
|
8,614 |
|
|
|
7,197 |
|
|
|
8,600 |
|
|
|
9,281 |
|
|
Average assets |
|
$ |
2,350,021 |
|
|
$ |
2,059,306 |
|
|
$ |
2,030,231 |
|
|
$ |
2,005,950 |
|
|
$ |
2,004,207 |
|
|
Operating annualized pre-tax pre-provision income to average assets: |
|
|
1.71 |
% |
|
|
1.68 |
% |
|
|
1.41 |
% |
|
|
1.70 |
% |
|
|
1.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
|
September 30, 2019 |
|
|
June 30, 2019 |
|
|||||
|
Tangible Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
|
$ |
281,950 |
|
|
$ |
275,790 |
|
|
$ |
273,046 |
|
|
$ |
268,082 |
|
|
$ |
262,664 |
|
|
Less: intangible assets |
|
|
(43,633 |
) |
|
|
(44,008 |
) |
|
|
(44,393 |
) |
|
|
(44,790 |
) |
|
|
(45,199 |
) |
|
Tangible equity |
|
$ |
238,317 |
|
|
$ |
231,782 |
|
|
$ |
228,653 |
|
|
$ |
223,292 |
|
|
$ |
217,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible equity |
|
$ |
238,317 |
|
|
$ |
231,782 |
|
|
$ |
228,653 |
|
|
$ |
223,292 |
|
|
$ |
217,465 |
|
|
Less: preferred equity |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,000 |
) |
|
Tangible common equity |
|
$ |
238,317 |
|
|
$ |
231,782 |
|
|
$ |
228,653 |
|
|
$ |
223,292 |
|
|
$ |
208,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Book Value per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity |
|
$ |
238,317 |
|
|
$ |
231,782 |
|
|
$ |
228,653 |
|
|
$ |
223,292 |
|
|
$ |
208,465 |
|
|
Total shares of common stock outstanding |
|
|
18,302,188 |
|
|
|
18,307,802 |
|
|
|
18,361,922 |
|
|
|
18,343,403 |
|
|
|
17,561,476 |
|
|
Tangible book value per share of common stock |
|
$ |
13.02 |
|
|
$ |
12.66 |
|
|
$ |
12.45 |
|
|
$ |
12.17 |
|
|
$ |
11.87 |
|
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2020 Earnings Release
|
|
|
Six Months Ended |
|
|||||
|
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
||
|
Operating net income: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
7,527 |
|
|
$ |
10,535 |
|
|
Add: merger related expenses |
|
|
738 |
|
|
|
2,305 |
|
|
Less: income tax impact of merger related expenses |
|
|
(193 |
) |
|
|
(603 |
) |
|
Operating net income |
|
$ |
8,072 |
|
|
$ |
12,237 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating diluted net income per share of common stock: |
|
|
|
|
|
|
|
|
|
Operating net income |
|
$ |
8,072 |
|
|
$ |
12,237 |
|
|
Weighted average shares - diluted |
|
|
18,381,866 |
|
|
|
18,740,322 |
|
|
Operating diluted net income per share of common stock |
|
$ |
0.44 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating annualized return on average assets: |
|
|
|
|
|
|
|
|
|
Operating net income |
|
$ |
8,072 |
|
|
$ |
12,237 |
|
|
Average assets |
|
$ |
2,204,663 |
|
|
$ |
1,996,386 |
|
|
Operating annualized return on average assets |
|
|
0.74 |
% |
|
|
1.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating annualized return on average tangible equity: |
|
|
|
|
|
|
|
|
|
Average total shareholders' equity |
|
$ |
280,082 |
|
|
$ |
259,162 |
|
|
Less: average intangible assets |
|
|
(44,062 |
) |
|
|
(45,672 |
) |
|
Average tangible equity |
|
|
236,020 |
|
|
|
213,490 |
|
|
Operating net income |
|
$ |
8,072 |
|
|
$ |
12,237 |
|
|
Operating annualized return on average tangible equity |
|
|
6.88 |
% |
|
|
11.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating efficiency ratio: |
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
33,145 |
|
|
$ |
31,196 |
|
|
Less: merger related expenses |
|
|
(738 |
) |
|
|
(2,305 |
) |
|
Total operating noninterest expense |
|
|
32,407 |
|
|
|
28,891 |
|
|
Net interest income |
|
|
34,336 |
|
|
|
34,010 |
|
|
Total noninterest income |
|
|
16,697 |
|
|
|
11,767 |
|
|
Total revenues |
|
$ |
51,033 |
|
|
$ |
45,777 |
|
|
Operating efficiency ratio: |
|
|
63.50 |
% |
|
|
63.11 |
% |
Second Quarter 2020 Earnings Call July 24, 2020 Exhibit 99.2
FORWARD-LOOKING STATEMENTS This investor presentation contains forward-looking statements, as defined by federal securities laws, including statements about CapStar Financial Holdings, Inc. (“CapStar”) and its financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of our operations and future financial performance. Our operations and such performance involves risks and uncertainties, including but in no way limited to the effect of the COVID-19 pandemic, that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to CapStar’s filings with the Securities and Exchange Commission, including its 2019 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Item 1A. Risk Factors”. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements. NON-GAAP MEASURES This investor presentation 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. Disclosures
Financial Highlights and Results Risk Management FCB Update Looking Forward Agenda
Financial Highlights and Results
Strong PTPP led by mortgage and Tri-Net divisions 2Q PTPP / Assets of 1.71% up 0.03% vs 1Q20 Positive operating leverage year over year and linked quarter Operating net income was $6.5MM or $0.36 per share Increase in Net Interest Income due to success of PPP NIM declined due to asset sensitive position and increasing excess liquidity Assessing opportunities to further reduce deposit pricing and levels of non-core deposit funding Market leader in PPP relative to assets; non-PPP loans down vs 1Q20 Sound expense control Mortgage expenses rose in relation to record mortgage revenue 2Q included merger-related and severance expense Core expenses in-line with prior year quarters Proactive risk management Continued low net charge-offs and criticized and classified asset levels Further provisioned for uncertain economic environment Strengthened total-risked based capital through subordinated debt issuance Maintained significant on and off-balance sheet liquidity FCB merger closed July 1; accretive to NIM, efficiency, ROAA and EPS Financial Highlights
Financial Results GAAP(2) 2Q20 Favorable/(Unfavorable) 1Q20 2Q19 Net Interest Income $17.68 6% 4% Noninterest Income $10.82 84% 54% Revenue $28.50 26% 19% Noninterest Expense $18.93 (33%) (15%) Pre-tax Pre-provision Income $9.56 15% 26% Provision for Loan Losses $1.62 79% N/A Net Income $6.18 359% 7% Diluted EPS $0.34 362% 9% Operating(1)(2) 2Q20 Favorable/(Unfavorable) 1Q20 2Q19 $17.68 6% 4% $10.82 84% 54% $28.50 26% 19% $18.49 (33%) (25%) $10.01 16% 8% $1.62 79% N/A $6.51 317% (7%) $0.36 320% (6%) Operating results are non-GAAP financial measures that adjust GAAP net income and other metrics for certain revenue and expense items. See the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation, which use a blended statutory income tax rate of 26.14% and exclude non-deductible one-time merger items. Dollars in millions, except per share data.
Key Performance Indicators Operating Metrics(1) 2Q20 1Q20 2Q19 Soundness Net Charge-Offs to Average Loans (Annualized) 0.18% 0.01% 0.02% Non-Performing Assets / Loans + OREO 0.20% 0.26% 0.16% Allowance for Loan Losses / Loans Held for Investment 1.32% 1.39% 0.90% Tangible Common Equity / Tangible Assets 9.92% 11.43% 10.56% Total Risk Based Capital 16.76% 13.68% 13.29% Profitability Net Interest Margin(2) (tax equivalent basis) 3.23% 3.50% 3.68% Efficiency Ratio(3) 64.87% 61.78% 61.39% Pre-tax Pre-provision Income / Assets(4) 1.71% 1.68% 1.86% Return on Average Assets 1.11% 0.30% 1.40% Return on Average Equity 9.30% 2.25% 10.78% Return on Average Tangible Equity 11.02% 2.68% 13.05% Growth(5) Total Deposits (Avg) $2,032 $1,736 $1,678 Total Loans (Avg) $1,561 $1,421 $1,469 Total Assets (Avg) $2,350 $2,059 $2,004 Pre-tax Pre-provision Income $10.01 $8.61 $9.28 Net Income $6.51 $1.56 $7.02 Diluted EPS $0.36 $0.08 $0.38 Tangible Book Value per Share $13.02 $12.66 $11.87 Operating results are non-GAAP financial measures that adjust GAAP net income and other metrics for certain revenue and expense items. See the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation, which use a blended statutory income tax rate of 26.14% and exclude non-deductible one-time merger items. Calculated on a tax equivalent basis. Efficiency ratio is Noninterest expense divided by the sum of net interest income and noninterest income. Pre-tax Pre-provision Operating ROA calculated as ROA excluding the effect of income tax expense, provision expense and merger charges Dollars in millions, except per share data.
Net Interest Margin(1) Net interest income increased as a result of higher average earning assets related to PPP NIM was 3.23%, down 27 bps from 1Q20 Increased cash driven by strong Q2 deposit growth Full quarter impact of the Fed’s March rate cuts given our asset sensitive position EOP loan to deposit ratio dropped to the mid 80s Calculated on a tax equivalent basis.
Deposit Growth and Costs Avg Deposit balances grew 21.1% over 2Q19 Estimated impact of increased deposits from PPP was $77.4MM at 0.11% Avg NOW balances grew 47.9% over 2Q19 Deposit costs down 55 bps from 1Q20 due to rate adjustments in the quarter *Annualized % change from 1Q20 to 2Q20. 2Q20 Change Vs. 1Q20* Change Vs. 2Q19 $ in millions $ $ % $ % Balance Sheet (EOP Balances) Non-Interest Bearing $ 547 $ 104 94.6% $ 220 67.5% Interest Checking (NOW) 686 139 102.0% 195 39.8% Savings & Money Market 510 37 31.4% 1 0.2% Time Deposit's under $100K 71 (0) -1.5% (34) -32.7% Time Deposit's over $100K 282 52 91.3% (10) -3.3% Deposits $ 2,096 $ 332 75.7% $ 373 21.6% Fed Funds 1.75% Fed Funds 0.25% Fed Funds 2.00% Fed Funds 2.25%
Loan Growth EOP Loans HFI increased $146MM or 40.6% annualized from 1Q20 PPP loans were $222MM at June 30 Avg Loans HFI increased 39% on an annualized basis from 1Q20 driven by the addition of $154MM in PPP Loans Line utilization decreased by 4.7% to 47.4% *Annualized % change from 1Q20 to 2Q20 2Q20 Change Vs. 1Q20* Change Vs. 2Q19 $ in millions $ $ % $ % Balance Sheet (EOP Balances) Commercial and Industrial $622 $174 156.7% $217 53.6% Commercial Real Estate (Non-Owner Occupied) 408 30 32.2% (13) -3.1% Commercial Real Estate (Owner Occupied) 148 (19) -45.8% (26) -14.8% Consumer Real Estate 239 (10) -15.5% (16) -6.4% Construction & Land Development 118 (23) -66.3% (6) -4.9% Consumer 28 (0) -2.8% 1 3.1% Other 31 (7) -70.6% (4) -12.4% Total Loans $1,593 $146 40.6% $152 10.6%
Supported needs of both clients and non-clients across our communities $222 million loans funded, market leader in Nashville relative to assets $151 thousand average loan size: 82% of loans under $150 thousand 2Q20 average yield of 3.45% Obtained financing for more than 1,493 businesses Benefited more than 25,167 employees Payroll Protection Program (PPP)
Loan Yields Overall loan yield declined 60 bps from 1Q20 Average 1 month Libor rate was 0.39% and down 104 bps from 1Q20, which negatively contributed to our variable rate loan yield decline of 72 bps Loan fees increased 21 bps from 1Q20 principally from fees associated with PPP Loans The yield on new loan production excluding the impact of PPP was 4.17% Loan Yield Rollforward 1Q20 (Avg) 5.10% Increase in Loan Fees/Cost 0.21% Increase in Purchase Accounting 0.02% PPP Loan Yields/Fees -0.11% Repricing of Variable Rate Loans -0.72% 2Q20 (Avg) 4.50%
Noninterest Income Mortgage income up from the prior year and quarter due to higher volumes and spreads Tri-Net fees of $1.3MM in line with previous guidance and prior year Treasury Management and other Deposit Service Charges down due to clients paying TM fees with deposit balances Other includes a $238K Mortgage Servicing Right valuation adjustment and a $94K loss on sale of fixed assets Three Months Ended (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 Noninterest Income Treasury Management and Other Deposit Service Charges $ 691 $ 775 $ 736 $ 788 $ 813 Net Gain (Loss) on Sale of Securities 13 27 9 0 (121) Tri-Net Fees 1,260 599 274 847 1,024 Mortgage Banking Income 7,123 2,253 2,316 2,679 3,087(1) Wealth Management Fees 374 407 407 379 334 Interchange and Debit Card Transaction Fees 729 724 928 754 991 Other 633 1,089 1,049 1,341 904 Total Noninterest Income $ 10,823 $ 5,874 $ 5,719 $ 6,788 $ 7,032 Average Assets 2,350,021 2,059,306 2,030,231 2,005,950 2,004,207 Noninterest Income / Average Assets 1.85% 1.15% 1.12% 1.34% 1.41% (1) Reflects the impact of the implementation of mandatory mortgage locks as opposed to best efforts mortgage locks. The aggregate accounting impact of the change was $(912K).
Residential Mortgage Originations increased $101MM from 1Q20 driven predominately by increased refinance activity With mortgage rates at historic lowers, refinance activity increased to 68% of the origination volume for the quarter compared to 58% in 1Q20 and 21% in 2Q19 Mortgage Fee Income up $4.9MM due to increase of $121.5MM in loans sold over 1Q20 and a 110 bps increase in gain on sale % Residential Mortgage Income
Noninterest Expense Three Months Ended (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 Noninterest Expense Salaries and Employee Benefits $ 12,305 $ 8,002 $ 9,318 $ 9,229 $ 8,563 Data Processing & Software 2,100 1,864 1,835 1,790 1,862 Professional Fees 581 636 531 528 501 Occupancy 797 820 795 858 809 Equipment 680 751 834 1,012 1,026 Regulatory Fees 333 163 28 18 272 Merger Related Expenses 448 290 163 187 1,711 Amortization of Intangibles 375 386 397 408 419 Other Operating 1,315 1,299 1,365 1,501 1,307 Total Noninterest Expense $ 18,934 $ 14,211 $ 15,266 $ 15,531 $ 16,470 Efficiency Ratio 66.44% 63.06% 68.46% 64.87% 68.51% Average Assets $ 2,350,021 $ 2,059,306 $ 2,030,231 $ 2,005,950 $ 2,004,207 Noninterest Expense / Average Assets 3.24% 2.78% 2.98% 3.07% 3.30% FTE 286 288 289 290 290 Operating Noninterest Expense(1) $ 18,486 $ 13,921 $ 15,103 $ 15,344 $ 14,759 Operating Efficiency Ratio(1) 64.87% 61.78% 67.73% 64.08% 61.39% Operating Noninterest Expense / Average Assets(1) 3.16% 2.72% 2.95% 3.04% 2.95% (1) Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items. See the non-GAAP reconciliation calculations included in the Appendix at the end of this presentation, which use a blended statutory income tax rate of 26.14% and exclude non-deductible one-time merger related items. Operating Noninterest Expense of $18.5MM and up $4.6MM primarily due to increased mortgage incentives, one-time contract buyouts, and expenses associated with PPP. One-time expenses for contract buyouts were $1.4MM. Regulatory Fees higher due to credits in previous quarters.
Risk Management
Strong credit underwriting and portfolio management culture Diversified portfolio in resilient markets CRE portfolio has strong market and underwriting characteristics In 2Q, We have successfully completed the first of three 2020 loan reviews 2020 by an external firm External firm performs annual stress test; most recent completed 4/20 COVID-19 impact update By close of the opt in period, 32% of total loans opted into our deferral program expiring in July We anticipate 6-8% to request a second deferral from interest only or more 11% exposure to COVID-19 sensitive industries Actively managing Lodging, Recreation/Restaurants, Retail, and Senior Living Proactively increased allowance for loan losses due to economic uncertainty related to COVID-19 2Q20 reserve is 1.32%; or 1.53% excluding PPP loans Including $2.8MM fair value mark on acquired loans, 2Q20 reserve is 1.50%; or 1.73% excluding PPP loans Loan Portfolio Summary
Loan Portfolio Performance (1) Commercial & Industrial includes Commercial & Industrial loans and Owner Occupied CRE loans (1)
Select Industries Lodging Funded (Non-PPP) Balances (In Millions) No Deferral Elected $26.0 Deferral Opt-In 62.1 Grand Total $88.1 6/30/2020 balances Second Deferral Expectations (In Millions) Expected $48.0 Not Expected 14.1 Grand Total $62.1 Lodging - Detail Funded (Non-PPP) Balances (In Millions) Marriott $49.9 Hilton 21.9 Wyndham 7.6 Non-Flag 4.8 Choice Hotels 3.9 Grand Total $88.1 Pre-pandemic loan to value ratios are 57% with debt service coverage of 1.92x provides substantial buffer to absorb lower room rates and/or occupancy. Cash equity assures reduced exposure to value reductions Hotel exposure is dominated by: National brands Newer and well-located properties Seasoned developers East Tennessee locations ($33MM) are dominated by: Interstate exit locations performing below 2019 levels but reasonably well Family destinations performing well related to 2019 levels Nashville locations ($41MM) are: Heavily tied to convention/event activities Expected to have a longer re-stabilization with indications of strong pre-bookings in 2H2021 Newly constructed or newly opened facilities
Select Industries Recreation / Restaurants Funded (Non-PPP) Balances (In Millions) No Deferral Elected $12.4 Deferral Opt-In 17.7 Grand Total $30.1 Retail Funded (Non-PPP) Balances (In Millions) No Deferral Elected $10.0 Deferral Opt-In 0.4 Grand Total $10.4 Senior Living Funded (Non-PPP) Balances (In Millions) No Deferral Elected $11.9 Deferral Opt-In 19.7 Grand Total $31.6 Loans in these pandemic sensitive sectors: Remain a small portion of our portfolio Are expected to resume normal scheduled payments this quarter with expectations for second deferrals below 10% Are primarily secured by Real Estate Are greater than 92% Pass Rated As to Senior Living: No facilities have been impacted by Covid19 infection
Commercial Real Estate Strong market fundamentals result in exceptionally strong quality metrics Focused on highly seasoned and liquid developer/investor profile Standard requirement expectation is 30%-35% cash equity Result is low LTV, high DSC that mitigates indirect tenant risk exposure 100% of balances Pass rated
Allowance for Loan Losses Multiple stress tests performed to evaluate a range of potential losses Due to the uncertainty of the impact of COVID-19, proactively increased allowance for loan losses 67% since 4Q19 2Q increase of $1.6MM in qualitative factors reflecting continued uncertain economic environment Excluding the $215.5MM(1) in PPP loans, Reserve/Loans increased from 1.39% in 1Q20 to 1.53% in 2Q20 The current reserve of $21MM plus the $2.8MM fair value mark on acquired loans equates to a 1.50% reserve/loans or 1.73% excluding PPP Loans (1) PPP Loan balances net of unearned fees as of 6/30/2020.
Capital ratios significantly above “well capitalized” and risk-based ratios are higher than a year ago. Total risk-based capital increased 312 bps vs. 1Q20, including the impact of $30MM subordinated debt issuance. Quarterly dividend of $0.05 per common share was declared on July 23, 2020. Repurchased 147,800 shares during 1Q20 at an average price of $9.69 per share for a total of $1.4MM. Share repurchases discontinued March 24, 2020; $7.6MM remain under current authorization. *Reconciliation provided in non-GAAP tables in the Appendix at the end of this presentation. Capital Capital Ratios 2Q20 1Q20 2Q19 "Well Capitalized" Guidelines Leverage 10.08% 11.23% 11.01% ≥ 5.00% Tangible Common Equity / Tangible Assets1 9.92% 11.43% 10.56% NA Tier 1 Risk Based Capital 13.76% 12.56% 12.53% ≥ 8.00% Total Risk Based Capital 16.76% 13.68% 13.29% ≥ 10.00%
Liquidity stress tests performed quarterly using four scenarios Liquidity to be expanded further by renewal of Fed Discount Window Liquidity As of 06/30/2020 (1) Amount outstanding uses fair market value as reported on CSTR’s financial statements as of 6/30/20 (2) Available to draw amounts are based on CSTR ALCO policy guideline of 15% of total deposits (3) CSTR has a borrowing arrangement in place and is in process of pledging loan collateral and determining borrowing capacity Funding Sources Amount Outstanding ($000) Available to Draw ($000) Total Funding Capacity ($000) Cash & Equivalents $368,820 N/A $368,820 Unpledged AFS Securities(1) 159,816 N/A 159,816 Loans Held for Sale 129,807 N/A 129,807 On Balance Sheet 658,443 N/A 658,443 FHLB Advances 10,000 150,228 160,228 Fed Funds Lines - 125,000 125,000 Brokered CDs(2) 114,433 199,902 314,335 QwickRate Deposits(2) 348 313,987 314,335 Fed Discount Window(3) - N/A N/A Off Balance Sheet 124,781 789,117 913,898 Total $783,224 $789,117 $1,572,341
FCB Merger Update
Strategic and Financial Rationale Very established and well-run banks in less competitive markets Strong deposit franchise – granular and low cost Loan diversification – product, size, geography, and pricing Scale to leverage back office overhead Continue to establish CSTR as a proven acquirer Projected financial impact: Manageable TBV dilution with acceptable TBV earnback period Double-digit 2021 EPS accretion Accretive to NIM, efficiency ratio, and ROA
Key Dates Announced1Q20 FNB|BOW Shareholder ApprovalApril 30, 2020 Regulatory ApprovalJune 15, 2020 CloseJuly 1, 2020 System Conversions4Q20 Acquisition Summary
Pro Forma Deposit Composition CapStar Bank First National Bank of Manchester Pro Forma1 Bank of Waynesboro Preliminary estimates of CSTR pro forma for pending acquisition Note: As of March 31, 2020; dollars in thousands; bank level data
Pro Forma Loan Composition Includes loans HFS Preliminary estimates of CSTR pro forma for pending acquisition Note: As of March 31, 2020; dollars in thousands; bank level data CapStar Bank1 First National Bank of Manchester Pro Forma2 Bank of Waynesboro
Looking Forward
As we move forward, CapStar has tremendous opportunities to continue to improve our performance Our priorities include: Delivering strong risk management practices Maintain strong liquidity, reserves, and capital Escalate portfolio monitoring and proactively manage credit portfolio Generate strong PTPP Enhancing the level and consistency of our profitability Improving our net interest margin and its stability Implementing expense disciplines – proficient and frugal execution Eliminating prior credit “spikes” Expanding and accelerating our growth opportunities Aggressively seeking to expand customer relationships in our existing markets Strategically hiring additional talented bankers in or around our service areas Actively pursuing acquisitions of well-managed, appropriately-priced banks Looking Forward
Appendix: Other Financial Results and Non-GAAP Reconciliations
(Dollars in thousands, except per share information) June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 TANGIBLE EQUITY Total Shareholders’ Equity $ 281,950 $ 275,790 $ 273,046 $ 268,082 $ 262,664 Less: Intangible Assets 43,633 44,008 44,393 44,790 45,199 Tangible Equity 238,317 231,782 228,653 223,292 217,465 TANGIBLE COMMON EQUITY Tangible Equity 238,317 $ 231,782 $ 228,653 $ 223,292 $ 217,465 Less: Preferred Equity - - - - 9,000 Tangible Common Equity 238,317 231,782 228,653 223,292 208,465 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Tangible Common Equity $ 238,317 $ 231,782 $ 228,653 $ 223,292 $ 208,465 Total Assets 2,445,172 2,072,585 2,037,201 2,033,911 2,018,421 Less: Intangible Assets 43,633 44,008 44,393 44,790 45,199 Tangible Assets 2,401,539 2,028,577 1,992,808 1,989,121 1,973,223 Tangible Common Equity to Tangible Assets 9.92% 11.43% 11.47% 11.23% 10.56% TANGIBLE BOOK VALUE PER SHARE, REPORTED Tangible Common Equity $ 238,317 $ 231,782 $ 228,653 $ 223,292 $ 208,465 Shares of Common Stock Outstanding 18,302,188 18,307,802 18,361,922 18,343,403 17,561,476 Tangible Book Value Per Share, Reported $13.02 $12.66 $12.45 $12.17 $11.87 Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Total Average Shareholders’ Equity $ 281,614 $ 278,550 $ 271,568 $ 266,441 $ 261,197 Less: Average Intangible Assets 43,871 44,253 44,646 45,050 45,456 Average Tangible Equity 237,743 234,297 226,922 221,391 215,741 Net Income 6,181 1,346 5,421 6,466 5,756 Return on Average Tangible Equity (ROATE) 10.46% 2.31% 9.48% 11.59% 10.70% RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE) Average Tangible Equity $ 237,743 $ 234,297 $ 226,922 $ 221,391 $ 215,741 Less: Preferred Equity - - - 7,043 9,000 Average Tangible Common Equity 237,743 234,297 226,922 214,347 206,741 Net Income 6,181 1,346 5,421 6,466 5,756 Return on Average Tangible Common Equity (ROATCE) 10.46% 2.31% 9.48% 11.97% 11.17% Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 OPERATING NET INCOME Net Income (Loss) $ 6,181 $ 1,346 $ 5,421 $ 6,466 $ 5,756 Add: Merger Related Expense 448 290 163 187 1,711 Less: Income Tax Impact (117) (76) (43) (49) (447) Operating Net Income 6,512 1,560 5,541 6,604 7,020 OPERATING DILUTED NET INCOME PER SHARE Operating Net Income $ 6,512 $ 1,560 $ 5,541 $ 6,604 $ 7,020 Average Diluted Shares Outstanding 18,320,006 18,443,725 18,443,916 18,532,479 18,650,706 Operating Diluted Net Income per Share $ 0.36 $0.08 $0.30 $0.36 $0.38 OPERATING RETURN ON AVERAGE ASSETS (ROAA) Operating Net Income $ 6,512 $ 1,560 $ 5,541 $ 6,604 $ 7,020 Total Average Assets 2,350,021 2,059,306 2,030,231 2,005,950 2,004,207 Operating Return on Average Assets (ROAA) 1.11% 0.30% 1.08% 1.31% 1.40% OPERATING RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Average Tangible Equity $ 237,743 $ 234,297 $ 226,922 $ 221,391 $ 215,741 Operating Net Income 6,512 1,560 5,541 6,604 7,020 Operating Return on Average Tangible Equity (ROATE) 11.02% 2.68% 9.69% 11.83% 13.05% 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) June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 OPERATING NONINTEREST EXPENSE Noninterest Expense $ 18,934 $ 14,211 $ 15,266 $ 15,531 $ 16,470 Less: Merger Related Expense (448) (290) (163) (187) (1,711) Operating Noninterest Expense 18,486 13,921 15,103 15,344 14,759 OPERATING NONINTEREST EXPENSE / AVERAGE ASSETS Operating Noninterest Expense $ 18,486 $ 13,921 $ 15,103 $ 15,344 $ 14,759 Total Average Assets 2,350,021 2,059,306 2,030,231 2,005,950 2,004,207 Operating Noninterest Income / Average Assets 3.16% 2.72% 2.95% 3.04% 2.95% OPERATING EFFICIENCY RATIO Operating Noninterest Expense $ 18,486 $ 13,921 $ 15,103 $ 15,344 $ 14,759 Net Interest Income 17,675 16,661 16,581 17,156 17,008 Noninterest Income 10,823 5,874 5,719 6,788 7,032 Total Revenues 28,498 22,535 22,300 23,944 24,040 Operating Efficiency Ratio 64.87% 61.78% 67.73% 64.08% 61.39% 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 Mike Fowler Chief Financial Officer CapStar Financial Holdings, Inc. (615) 732-7404 Email: mike.fowler@capstarbank.com Corporate Headquarters
