UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
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(Exact name of registrant as specified in its charter)
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(Commission File Number) |
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(IRS Employer Identification No.)
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code
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) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act: |
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Name of each exchange on which registered |
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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
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.
Item 2.02. Results of Operations and Financial Condition.
On July 22, 2021, CapStar Financial Holdings, Inc. (the “Company”) issued an earnings release announcing its financial results for the second quarter ended June 30, 2021. 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.
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.
The Company will conduct a conference call at 9:00 a.m. (Central Time) on July 23, 2021 to discuss its financial results for the second quarter ended June 30, 2021.
Item 9.01. Financial Statements and Exhibits.
Exhibit Number |
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Description |
99.1 |
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Earnings release issued on July 22, 2021 by CapStar Financial Holdings, Inc. |
99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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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.
CAPSTAR FINANCIAL HOLDINGS, INC. |
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By: |
/s/ Denis J. Duncan |
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Denis J. Duncan |
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Chief Financial Officer |
Date: July 22, 2021
3
Exhibit 99.1
EARNINGS RELEASE
CONTACT
Denis J. Duncan
Chief Financial Officer
(615) 732-7492
CapStar Reports Second Quarter 2021 Results
NASHVILLE, TN, July 22, 2021 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $12.1 million or $0.54 per diluted share, for the quarter ended June 30, 2021, compared with net income of $11.0 million or $0.50 per diluted share, for the quarter ended March 31, 2021, and net income of $6.2 million or $0.34 per diluted share, for the quarter ended June 30, 2020. Annualized return on average assets and return on average equity for the quarter ended June 30, 2021 were 1.57 percent and 13.50 percent, respectively. Second quarter 2021 noninterest expense included $256,000 in acquisition related costs.
For the six months ended June 30, 2021, the Company reported net income of $23.1 million or $1.04 per diluted share, compared with $7.5 million or $0.41 per diluted share, for the same period of 2020. Year to date 2021 annualized return on average assets and return on average equity were 1.51 percent and 13.13 percent, respectively. Year to date 2021 noninterest expense included $323,000 in acquisition related costs.
Four Key Drivers |
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Targets |
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2Q21 |
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1Q21 |
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2Q20 |
Annualized revenue growth |
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> 5% |
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8.96% |
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-22.41% |
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106.43% |
Net interest margin |
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≥ 3.60% |
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3.26% |
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3.13% |
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3.23% |
Efficiency ratio |
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≤ 55% |
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57.97% |
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54.08% |
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66.44% |
Annualized net charge-offs to average loans |
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≤ 0.25% |
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0.01% |
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0.00% |
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0.18% |
“Our second quarter results reflect strong, profitable growth resulting from the hard work of our dedicated employees. As we continue to execute on our strategic plan, we are enhancing profitability and accelerating in-market revenue growth while maintaining outstanding credit quality and customer service,” said Timothy K. Schools, President and Chief Executive Officer of CapStar. “The highlights of the second quarter include record noninterest bearing and total deposit balances; loan production, loan balances, and loan pipeline; earnings per share; book value per share; stock price; and market capitalization. Additionally, our criticized and classified loans as a percentage of total loans and classified loans to total risk-based capital ratios are returning to more traditional pre-pandemic levels. Our results benefited from increased PPP forgiveness and while these earnings are temporary in nature, they represent the tremendous effort and customer service provided by our teammates during the pandemic and are reflective of the Company’s capabilities. Looking forward, we are excited and optimistic about the many opportunities we have to expand our highly responsive and customer centric banking model across Tennessee, cited in a recent CNBC study as having our nation’s second best economy and as the fifth best place for business among all fifty states. With four Tennessee-based, $1 billion and greater financial institutions being acquired within our markets over the past twelve months, CapStar is poised to become one of Tennessee’s leading locally-based banks.”
Revenue
Total revenue, defined as net interest income plus noninterest income, increased $0.7 million to $32.9 million from the prior quarter. Net interest income totaled $23.0 million, an increase of $0.9 million compared to the first quarter of 2021, principally from income related to increased forgiveness of PPP loans. Second quarter 2021 noninterest income totaled $9.9 million, a decline of $131,000 from the prior quarter.
Second quarter 2021 average earning assets of $2.85 billion remained essentially unchanged from first quarter 2021, as strong growth in loans held for investment offset declines in low-yielding interest earning cash and PPP balances. Average loans held for investment, excluding PPP balances, increased $40.8 million from the prior quarter, or 9.4 percent linked-quarter annualized. Loan growth accelerated during the second quarter of 2021 with end of period loans held for investment, excluding PPP balances, increasing $67.6 million, or 15.7 percent linked-quarter annualized. Due to a significant increase in deposits over the past year, average loans as a percentage of average earning assets was 68.4 percent for second quarter 2021. The Company’s commercial loan pipeline is at a record level, approaching $500 million, comprised principally of CapStar-led Tennessee-based loans, presenting the Company a tremendous opportunity to utilize current excess liquidity and capital to grow revenue and net income.
The Company’s net interest margin continues to be positively and negatively impacted from the effects of the recent pandemic. For the second quarter of 2021, the net interest margin increased 13 basis points from the prior quarter to 3.26 percent. The Company's net interest margin continues to be impacted by revenues related to PPP loans, as well as significant growth in deposit balances over the past year. Adjusting for the influence of PPP and excess deposits, the Company estimates its second quarter 2021 net interest margin was 3.36 percent, an increase of 1 basis point compared to the first quarter of 2021.
Within the adjusted net interest margin, the Company continued to experience favorable deposit trends. Average deposits totaled $2.66 billion in the second quarter of 2021, unchanged from the prior quarter. The Company experienced a favorable mix shift as average interest-bearing deposits declined $46.2 million, led by a $34.2 million reduction in higher cost time deposits. While the Company is experiencing a period of excess liquidity, a key longer-term strategic initiative is to create a stronger deposit-led culture with an emphasis on lower cost relationship-based deposits. During the quarter, the Company’s two lowest cost deposit categories, noninterest bearing and savings, increased $55.8 million on average from the prior quarter, or 27.8 percent linked-quarter annualized. Deposit costs declined across all interest-bearing account types leading to a 6 basis point decline to 0.29 percent. Combined with the favorable shift in noninterest bearing deposits, total deposit costs improved 5 basis points to 0.21 percent.
Noninterest income during the quarter benefitted from record interchange and debit card transaction fees, Tri-Net revenues, wealth management revenues, as well as continued strength in SBA revenues. While mortgage revenues declined from record levels, they remain high relative to past performance, and the Company strengthened its position during the quarter by hiring one of Nashville’s leading mortgage loan originators.
Noninterest Expense and Operating Efficiency
Noninterest expenses increased $1.7 million from the first quarter of 2021 to $19.1 million in the second quarter of 2021. Second quarter 2021 noninterest expense included approximately $3.0 million associated with the Company's 2021 incentive plan. Given the Company's performance in the first two quarters of 2021 and the outlook for the remainder of the year, the incentive accrual was increased $1.5 million in anticipation of reaching maximum payout. Data processing fees increased approximately $1 million for the quarter ended June 30, 2021 compared to the same period in 2020 due to increased transaction volumes related to the Company's recent acquisitions and services related to the processing of PPP loans. As noted above, second quarter 2021 noninterest expense included $256,000 in acquisition related costs.
Efficiency is a key focus and the Company uses three metrics to monitor its performance relative to peers: efficiency ratio (noninterest expense as a percentage of total revenue), noninterest expense as a percentage of assets, and assets per employee. For the quarter ended June 30, 2021, the efficiency ratio was 57.97 percent, an increase from 54.08 percent in the first quarter of 2021. Annualized noninterest expense as a percentage of average assets increased to 2.49 percent for the quarter ended June 30, 2021 compared to 2.29 percent for the quarter ended March 31, 2021. Assets per employee improved to $8.4 million as of June 30, 2021 compared to $8.3 million for the previous quarter.
Asset Quality
Asset quality is a core tenant of the Company’s culture. Sound risk management and an improving economy led to low net charge-offs and strong credit metrics. Annualized net charge offs to average loans for the three months ended June 30, 2021 remained low at 0.01 percent. Past due loans as a percentage of total loans held for investment were 0.49 percent at June 30, 2021, compared to 0.43 percent at March 31, 2021. Within this amount, loans greater than 90 days past due totaled $2.4 million, or 0.13 percent of loans held for investment at June 30, 2021, compared to 0.14 percent at March 31, 2021. Non-performing assets to total loans and OREO were 0.22 percent at June 30, 2021, an improvement from 0.30 percent at March 31, 2021. Criticized and classified loans to total loans, which elevated during the pandemic, continued to improve and were 3.93 percent at June 30, 2021.
As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses, the Company released reserves during the quarter based on improved asset quality trends and other qualitative factors. In addition to providing reserves for the strong loan growth experienced during the second quarter, the allowance for loan losses declined $1.1 million. As a result, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, declined 13 basis points to 1.46 percent at June 30, 2021 from 1.59 percent at March 31, 2021.
Asset Quality Data: |
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6/30/2021 |
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3/31/2021 |
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12/31/2020 |
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9/30/2020 |
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6/30/2020 |
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Annualized net charge-offs (recoveries) to average loans |
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0.01 |
% |
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0.00 |
% |
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0.02 |
% |
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0.00 |
% |
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0.18 |
% |
Criticized and classified loans to total loans |
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3.93 |
% |
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4.37 |
% |
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5.44 |
% |
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5.61 |
% |
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4.25 |
% |
Classified loans to total risk-based capital |
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7.69 |
% |
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10.51 |
% |
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11.08 |
% |
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11.43 |
% |
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8.88 |
% |
Loans- past due to total end of period loans |
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0.49 |
% |
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0.43 |
% |
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1.12 |
% |
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0.44 |
% |
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0.32 |
% |
Loans- over 89 days past due to total end of period loans |
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0.13 |
% |
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0.14 |
% |
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0.23 |
% |
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0.09 |
% |
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0.09 |
% |
Non-performing assets to total loans and OREO |
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0.22 |
% |
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0.30 |
% |
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0.28 |
% |
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0.16 |
% |
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0.20 |
% |
Allowance for loan losses plus fair value marks / Non-PPP Loans |
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1.46 |
% |
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1.59 |
% |
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1.57 |
% |
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1.61 |
% |
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1.73 |
% |
Allowance for loan losses to non-performing loans |
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571 |
% |
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446 |
% |
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483 |
% |
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787 |
% |
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705 |
% |
Income Tax Expense
The Company’s effective income tax rate for the second quarter of 2021 was 19.0 percent, a decline from 22.0. percent in the prior quarter ended March 31, 2021. The decrease was primarily attributable to adjustments to the tax provision related to changes in tax strategy and updated expected results for the year. The Company anticipates its effective tax rate for 2021 to be approximately 21.0 percent.
Capital
The Company continues to be strongly capitalized with tangible equity of $311.1 million at June 30, 2021. Tangible book value per share of common stock for the quarter ended June 30, 2021 increased to $14.03 compared to $13.34 and $13.02 for the quarters ended March 31, 2021 and June 30, 2020, respectively. The regulatory capital ratios in the table below are significantly above levels required to be considered “well capitalized," which is the highest possible regulatory designation.
Capital ratios: |
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6/30/2021 |
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3/31/2021 |
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12/31/2020 |
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9/30/2020 |
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6/30/2020 |
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Total risk-based capital |
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16.13 |
% |
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16.29 |
% |
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16.03 |
% |
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15.96 |
% |
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16.76 |
% |
Common equity tier 1 capital |
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13.78 |
% |
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13.79 |
% |
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13.52 |
% |
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13.39 |
% |
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13.76 |
% |
Leverage |
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10.17 |
% |
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9.78 |
% |
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9.60 |
% |
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9.23 |
% |
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10.08 |
% |
In the second quarter of 2021, the Company did not repurchase common stock under its share repurchase program. The total remaining authorization for future repurchases was $29.7 million as of June 30, 2021.
Dividend
On July 22, 2021, the Board of Directors of CapStar approved a quarterly cash dividend of $0.06 per common share payable on August 25, 2021 to shareholders of record as of August 11, 2021.
Conference Call and Webcast Information
CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 23, 2021. 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 2976541. 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, 2021, on a consolidated basis, CapStar had total assets of $3.2 billion, total loans of $1.9 billion, total deposits of $2.8 billion, and shareholders’ equity of $359.8 million. Visit www.capstarbank.com for more information.
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 2021 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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2021 |
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2020 |
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2021 |
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2020 |
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Interest income: |
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Loans, including fees |
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$ |
22,572 |
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$ |
19,086 |
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$ |
44,586 |
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$ |
38,823 |
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Securities: |
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Taxable |
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1,640 |
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1,096 |
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3,244 |
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2,272 |
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Tax-exempt |
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356 |
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312 |
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722 |
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633 |
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Federal funds sold |
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3 |
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|
|
— |
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|
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3 |
|
|
|
— |
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Restricted equity securities |
|
|
160 |
|
|
|
140 |
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|
|
321 |
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|
|
282 |
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Interest-bearing deposits in financial institutions |
|
|
101 |
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|
|
107 |
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|
|
234 |
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|
|
469 |
|
Total interest income |
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|
24,832 |
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|
|
20,741 |
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|
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49,110 |
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|
|
42,479 |
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Interest expense: |
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|
|
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|
|
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Interest-bearing deposits |
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379 |
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|
831 |
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|
|
826 |
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|
|
2,732 |
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Savings and money market accounts |
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295 |
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|
731 |
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|
608 |
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|
|
2,283 |
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Time deposits |
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732 |
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|
|
1,416 |
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|
|
1,663 |
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|
|
2,897 |
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Federal funds purchased |
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|
— |
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|
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— |
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|
|
— |
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|
|
— |
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Securities sold under agreements to repurchase |
|
|
— |
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|
|
— |
|
|
|
— |
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|
|
— |
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Federal Home Loan Bank advances |
|
|
— |
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|
|
88 |
|
|
|
12 |
|
|
|
231 |
|
Subordinated notes |
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|
394 |
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|
|
— |
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|
|
788 |
|
|
|
— |
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Total interest expense |
|
|
1,800 |
|
|
|
3,066 |
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|
|
3,897 |
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|
|
8,143 |
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Net interest income |
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|
23,032 |
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|
|
17,675 |
|
|
|
45,213 |
|
|
|
34,336 |
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Provision for loan losses |
|
|
(1,065 |
) |
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|
1,624 |
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|
|
(415 |
) |
|
|
9,177 |
|
Net interest income after provision for loan losses |
|
|
24,097 |
|
|
|
16,051 |
|
|
|
45,628 |
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|
|
25,159 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
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Deposit service charges |
|
|
1,109 |
|
|
|
691 |
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|
|
2,211 |
|
|
|
1,466 |
|
Interchange and debit card transaction fees |
|
|
1,227 |
|
|
|
729 |
|
|
|
2,318 |
|
|
|
1,454 |
|
Mortgage banking |
|
|
3,910 |
|
|
|
7,123 |
|
|
|
8,625 |
|
|
|
9,376 |
|
Tri-Net |
|
|
1,536 |
|
|
|
1,260 |
|
|
|
2,679 |
|
|
|
1,860 |
|
Wealth management |
|
|
471 |
|
|
|
374 |
|
|
|
931 |
|
|
|
781 |
|
SBA lending |
|
|
377 |
|
|
|
13 |
|
|
|
870 |
|
|
|
49 |
|
Net gain (loss) on sale of securities |
|
|
(13 |
) |
|
|
13 |
|
|
|
13 |
|
|
|
40 |
|
Other noninterest income |
|
|
1,266 |
|
|
|
620 |
|
|
|
2,250 |
|
|
|
1,671 |
|
Total noninterest income |
|
|
9,883 |
|
|
|
10,823 |
|
|
|
19,897 |
|
|
|
16,697 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and employee benefits |
|
|
10,803 |
|
|
|
12,305 |
|
|
|
20,229 |
|
|
|
20,307 |
|
Data processing and software |
|
|
3,070 |
|
|
|
2,100 |
|
|
|
5,898 |
|
|
|
3,964 |
|
Occupancy |
|
|
1,057 |
|
|
|
797 |
|
|
|
2,165 |
|
|
|
1,616 |
|
Equipment |
|
|
980 |
|
|
|
680 |
|
|
|
1,880 |
|
|
|
1,431 |
|
Professional services |
|
|
460 |
|
|
|
581 |
|
|
|
1,165 |
|
|
|
1,216 |
|
Regulatory fees |
|
|
211 |
|
|
|
333 |
|
|
|
467 |
|
|
|
496 |
|
Acquisition related expenses |
|
|
256 |
|
|
|
448 |
|
|
|
323 |
|
|
|
738 |
|
Amortization of intangibles |
|
|
493 |
|
|
|
375 |
|
|
|
1,001 |
|
|
|
761 |
|
Other operating |
|
|
1,750 |
|
|
|
1,315 |
|
|
|
3,364 |
|
|
|
2,616 |
|
Total noninterest expense |
|
|
19,080 |
|
|
|
18,934 |
|
|
|
36,492 |
|
|
|
33,145 |
|
Income before income taxes |
|
|
14,900 |
|
|
|
7,940 |
|
|
|
29,033 |
|
|
|
8,711 |
|
Income tax expense |
|
|
2,824 |
|
|
|
1,759 |
|
|
|
5,927 |
|
|
|
1,184 |
|
Net income |
|
$ |
12,076 |
|
|
$ |
6,181 |
|
|
$ |
23,106 |
|
|
$ |
7,527 |
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per share of common stock |
|
$ |
0.55 |
|
|
$ |
0.34 |
|
|
$ |
1.05 |
|
|
$ |
0.41 |
|
Diluted net income per share of common stock |
|
$ |
0.54 |
|
|
$ |
0.34 |
|
|
$ |
1.04 |
|
|
$ |
0.41 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
22,133,759 |
|
|
|
18,307,083 |
|
|
|
22,089,874 |
|
|
|
18,349,998 |
|
Diluted |
|
|
22,198,829 |
|
|
|
18,320,006 |
|
|
|
22,138,052 |
|
|
|
18,381,866 |
|
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 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income |
|
$ |
23,032 |
|
|
$ |
22,182 |
|
|
$ |
22,331 |
|
|
$ |
19,656 |
|
|
$ |
17,675 |
|
Provision for loan losses |
|
|
(1,065 |
) |
|
|
650 |
|
|
|
184 |
|
|
|
2,119 |
|
|
|
1,624 |
|
Net interest income after provision for loan losses |
|
|
24,097 |
|
|
|
21,532 |
|
|
|
22,147 |
|
|
|
17,537 |
|
|
|
16,051 |
|
Deposit service charges |
|
|
1,109 |
|
|
|
1,102 |
|
|
|
964 |
|
|
|
1,064 |
|
|
|
691 |
|
Interchange and debit card transaction fees |
|
|
1,227 |
|
|
|
1,092 |
|
|
|
782 |
|
|
|
936 |
|
|
|
729 |
|
Mortgage banking |
|
|
3,910 |
|
|
|
4,716 |
|
|
|
5,971 |
|
|
|
9,686 |
|
|
|
7,123 |
|
Tri-Net |
|
|
1,536 |
|
|
|
1,143 |
|
|
|
1,165 |
|
|
|
668 |
|
|
|
1,260 |
|
Wealth management |
|
|
471 |
|
|
|
459 |
|
|
|
411 |
|
|
|
382 |
|
|
|
374 |
|
SBA lending |
|
|
377 |
|
|
|
492 |
|
|
|
916 |
|
|
|
476 |
|
|
|
13 |
|
Net gain on sale of securities |
|
|
(13 |
) |
|
|
26 |
|
|
|
51 |
|
|
|
34 |
|
|
|
13 |
|
Other noninterest income |
|
|
1,266 |
|
|
|
984 |
|
|
|
1,488 |
|
|
|
1,558 |
|
|
|
620 |
|
Total noninterest income |
|
|
9,883 |
|
|
|
10,014 |
|
|
|
11,748 |
|
|
|
14,804 |
|
|
|
10,823 |
|
Salaries and employee benefits |
|
|
10,803 |
|
|
|
9,427 |
|
|
|
11,996 |
|
|
|
12,949 |
|
|
|
12,305 |
|
Data processing and software |
|
|
3,070 |
|
|
|
2,827 |
|
|
|
2,548 |
|
|
|
2,353 |
|
|
|
2,100 |
|
Occupancy |
|
|
1,057 |
|
|
|
1,108 |
|
|
|
975 |
|
|
|
999 |
|
|
|
797 |
|
Equipment |
|
|
980 |
|
|
|
899 |
|
|
|
900 |
|
|
|
864 |
|
|
|
680 |
|
Professional services |
|
|
460 |
|
|
|
704 |
|
|
|
370 |
|
|
|
638 |
|
|
|
581 |
|
Regulatory fees |
|
|
211 |
|
|
|
257 |
|
|
|
368 |
|
|
|
397 |
|
|
|
333 |
|
Acquisition related expenses |
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
|
|
448 |
|
Amortization of intangibles |
|
|
493 |
|
|
|
508 |
|
|
|
524 |
|
|
|
539 |
|
|
|
375 |
|
Other operating |
|
|
1,750 |
|
|
|
1,616 |
|
|
|
1,692 |
|
|
|
1,452 |
|
|
|
1,315 |
|
Total noninterest expense |
|
|
19,080 |
|
|
|
17,413 |
|
|
|
21,478 |
|
|
|
22,739 |
|
|
|
18,934 |
|
Net income before income tax expense |
|
|
14,900 |
|
|
|
14,133 |
|
|
|
12,417 |
|
|
|
9,602 |
|
|
|
7,940 |
|
Income tax expense (benefit) |
|
|
2,824 |
|
|
|
3,103 |
|
|
|
2,736 |
|
|
|
2,115 |
|
|
|
1,759 |
|
Net income |
|
$ |
12,076 |
|
|
$ |
11,030 |
|
|
$ |
9,681 |
|
|
$ |
7,487 |
|
|
$ |
6,181 |
|
Weighted average shares - basic |
|
|
22,133,759 |
|
|
|
22,045,501 |
|
|
|
21,960,184 |
|
|
|
21,948,579 |
|
|
|
18,307,083 |
|
Weighted average shares - diluted |
|
|
22,198,829 |
|
|
|
22,076,600 |
|
|
|
21,978,925 |
|
|
|
21,960,490 |
|
|
|
18,320,006 |
|
Net income per share, basic |
|
$ |
0.55 |
|
|
$ |
0.50 |
|
|
$ |
0.44 |
|
|
$ |
0.34 |
|
|
$ |
0.34 |
|
Net income per share, diluted |
|
|
0.54 |
|
|
|
0.50 |
|
|
|
0.44 |
|
|
|
0.34 |
|
|
|
0.34 |
|
Balance Sheet Data (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
449,267 |
|
|
$ |
390,565 |
|
|
$ |
277,439 |
|
|
$ |
455,925 |
|
|
$ |
368,820 |
|
Securities available-for-sale |
|
|
500,339 |
|
|
|
474,788 |
|
|
|
486,215 |
|
|
|
308,337 |
|
|
|
223,034 |
|
Securities held-to-maturity |
|
|
2,395 |
|
|
|
2,401 |
|
|
|
2,407 |
|
|
|
2,413 |
|
|
|
2,699 |
|
Loans held for sale |
|
|
148,251 |
|
|
|
162,269 |
|
|
|
179,669 |
|
|
|
198,603 |
|
|
|
129,807 |
|
Loans held for investment |
|
|
1,907,820 |
|
|
|
1,941,078 |
|
|
|
1,891,019 |
|
|
|
1,906,603 |
|
|
|
1,592,725 |
|
Allowance for loan losses |
|
|
(22,754 |
) |
|
|
(23,877 |
) |
|
|
(23,245 |
) |
|
|
(23,167 |
) |
|
|
(21,035 |
) |
Total assets |
|
|
3,212,390 |
|
|
|
3,150,457 |
|
|
|
2,987,006 |
|
|
|
3,024,348 |
|
|
|
2,445,172 |
|
Non-interest-bearing deposits |
|
|
782,170 |
|
|
|
711,606 |
|
|
|
662,934 |
|
|
|
716,707 |
|
|
|
546,974 |
|
Interest-bearing deposits |
|
|
1,998,024 |
|
|
|
2,039,595 |
|
|
|
1,905,067 |
|
|
|
1,900,835 |
|
|
|
1,548,592 |
|
Federal Home Loan Bank advances and other borrowings |
|
|
29,487 |
|
|
|
29,455 |
|
|
|
39,423 |
|
|
|
39,418 |
|
|
|
39,464 |
|
Total liabilities |
|
|
2,852,639 |
|
|
|
2,806,513 |
|
|
|
2,643,520 |
|
|
|
2,690,453 |
|
|
|
2,163,222 |
|
Shareholders' equity |
|
$ |
359,752 |
|
|
$ |
343,944 |
|
|
$ |
343,486 |
|
|
$ |
333,895 |
|
|
$ |
281,950 |
|
Total shares of common stock outstanding |
|
|
22,165,547 |
|
|
|
22,089,873 |
|
|
|
21,988,803 |
|
|
|
21,947,805 |
|
|
|
18,302,188 |
|
Book value per share of common stock |
|
$ |
16.23 |
|
|
$ |
15.57 |
|
|
$ |
15.62 |
|
|
$ |
15.21 |
|
|
$ |
15.41 |
|
Tangible book value per share of common stock* |
|
|
14.03 |
|
|
|
13.34 |
|
|
|
13.36 |
|
|
|
12.92 |
|
|
|
13.02 |
|
Market value per share of common stock |
|
$ |
20.50 |
|
|
$ |
17.25 |
|
|
$ |
14.75 |
|
|
$ |
9.81 |
|
|
$ |
12.00 |
|
Capital ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total risk-based capital |
|
|
16.13 |
% |
|
|
16.29 |
% |
|
|
16.03 |
% |
|
|
15.96 |
% |
|
|
16.76 |
% |
Tier 1 risk-based capital |
|
|
13.78 |
% |
|
|
13.79 |
% |
|
|
13.52 |
% |
|
|
13.39 |
% |
|
|
13.76 |
% |
Common equity tier 1 capital |
|
|
13.78 |
% |
|
|
13.79 |
% |
|
|
13.52 |
% |
|
|
13.39 |
% |
|
|
13.76 |
% |
Leverage |
|
|
10.17 |
% |
|
|
9.78 |
% |
|
|
9.60 |
% |
|
|
9.23 |
% |
|
|
10.08 |
% |
_____________________
*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 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Average Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
301,773 |
|
|
$ |
341,092 |
|
|
$ |
427,086 |
|
|
$ |
526,409 |
|
|
$ |
257,709 |
|
Investment securities |
|
|
508,595 |
|
|
|
496,035 |
|
|
|
407,622 |
|
|
|
323,689 |
|
|
|
238,762 |
|
Loans held for sale |
|
|
138,093 |
|
|
|
155,677 |
|
|
|
165,441 |
|
|
|
156,123 |
|
|
|
176,193 |
|
Loans |
|
|
1,948,638 |
|
|
|
1,938,532 |
|
|
|
1,891,202 |
|
|
|
1,906,449 |
|
|
|
1,560,626 |
|
Assets |
|
|
3,078,748 |
|
|
|
3,078,745 |
|
|
|
3,028,225 |
|
|
|
3,043,847 |
|
|
|
2,350,021 |
|
Interest bearing deposits |
|
|
1,940,442 |
|
|
|
1,986,621 |
|
|
|
1,909,692 |
|
|
|
1,957,259 |
|
|
|
1,519,877 |
|
Deposits |
|
|
2,662,192 |
|
|
|
2,663,551 |
|
|
|
2,613,080 |
|
|
|
2,648,465 |
|
|
|
2,031,924 |
|
Federal Home Loan Bank advances and other borrowings |
|
|
29,467 |
|
|
|
33,879 |
|
|
|
39,428 |
|
|
|
39,431 |
|
|
|
10,966 |
|
Liabilities |
|
|
2,719,898 |
|
|
|
2,728,064 |
|
|
|
2,687,516 |
|
|
|
2,722,341 |
|
|
|
2,068,408 |
|
Shareholders' equity |
|
|
358,850 |
|
|
|
350,681 |
|
|
|
340,709 |
|
|
|
321,506 |
|
|
|
281,614 |
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Annualized return on average assets |
|
|
1.57 |
% |
|
|
1.45 |
% |
|
|
1.27 |
% |
|
|
0.98 |
% |
|
|
1.06 |
% |
Annualized return on average equity |
|
|
13.50 |
% |
|
|
12.76 |
% |
|
|
11.30 |
% |
|
|
9.26 |
% |
|
|
8.83 |
% |
Net interest margin (1) |
|
|
3.26 |
% |
|
|
3.13 |
% |
|
|
3.12 |
% |
|
|
2.72 |
% |
|
|
3.23 |
% |
Annualized noninterest income to average assets |
|
|
1.29 |
% |
|
|
1.32 |
% |
|
|
1.54 |
% |
|
|
1.93 |
% |
|
|
1.85 |
% |
Efficiency ratio |
|
|
57.97 |
% |
|
|
54.08 |
% |
|
|
63.02 |
% |
|
|
65.99 |
% |
|
|
66.44 |
% |
Loans by Type (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
546,261 |
|
|
$ |
619,287 |
|
|
$ |
630,775 |
|
|
$ |
648,018 |
|
|
$ |
621,541 |
|
Commercial real estate - owner occupied |
|
|
200,725 |
|
|
|
197,758 |
|
|
|
162,603 |
|
|
|
164,336 |
|
|
|
147,682 |
|
Commercial real estate - non-owner occupied |
|
|
538,521 |
|
|
|
505,252 |
|
|
|
481,229 |
|
|
|
480,106 |
|
|
|
408,402 |
|
Construction and development |
|
|
198,448 |
|
|
|
170,965 |
|
|
|
174,859 |
|
|
|
176,751 |
|
|
|
117,830 |
|
Consumer real estate |
|
|
331,580 |
|
|
|
336,496 |
|
|
|
343,791 |
|
|
|
350,238 |
|
|
|
238,696 |
|
Consumer |
|
|
45,898 |
|
|
|
45,481 |
|
|
|
44,279 |
|
|
|
42,104 |
|
|
|
27,542 |
|
Other |
|
|
46,387 |
|
|
|
65,839 |
|
|
|
53,483 |
|
|
|
45,050 |
|
|
|
31,032 |
|
Asset Quality Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for loan losses to total loans |
|
|
1.19 |
% |
|
|
1.23 |
% |
|
|
1.23 |
% |
|
|
1.22 |
% |
|
|
1.32 |
% |
Allowance for loan losses to non-performing loans |
|
|
571 |
% |
|
|
446 |
% |
|
|
483 |
% |
|
|
787 |
% |
|
|
705 |
% |
Nonaccrual loans |
|
$ |
3,985 |
|
|
$ |
5,355 |
|
|
$ |
4,817 |
|
|
$ |
2,945 |
|
|
$ |
2,982 |
|
Troubled debt restructurings |
|
|
1,895 |
|
|
|
1,914 |
|
|
|
1,928 |
|
|
|
1,886 |
|
|
|
1,228 |
|
Loans - over 89 days past due |
|
|
2,389 |
|
|
|
2,720 |
|
|
|
4,367 |
|
|
|
1,781 |
|
|
|
1,460 |
|
Total non-performing loans |
|
|
3,985 |
|
|
|
5,355 |
|
|
|
4,817 |
|
|
|
2,945 |
|
|
|
2,982 |
|
OREO and repossessed assets |
|
|
184 |
|
|
|
523 |
|
|
|
523 |
|
|
|
171 |
|
|
|
147 |
|
Total non-performing assets |
|
|
4,169 |
|
|
|
5,878 |
|
|
|
5,340 |
|
|
|
3,116 |
|
|
|
3,129 |
|
Non-performing loans to total loans |
|
|
0.21 |
% |
|
|
0.28 |
% |
|
|
0.25 |
% |
|
|
0.15 |
% |
|
|
0.19 |
% |
Non-performing assets to total assets |
|
|
0.13 |
% |
|
|
0.19 |
% |
|
|
0.18 |
% |
|
|
0.10 |
% |
|
|
0.13 |
% |
Non-performing assets to total loans and OREO |
|
|
0.22 |
% |
|
|
0.30 |
% |
|
|
0.28 |
% |
|
|
0.16 |
% |
|
|
0.20 |
% |
Annualized net charge-offs (recoveries) to average loans |
|
|
0.01 |
% |
|
|
0.00 |
% |
|
|
0.02 |
% |
|
0.00% |
|
|
|
0.18 |
% |
|
Net charge-offs (recoveries) |
|
$ |
59 |
|
|
$ |
18 |
|
|
$ |
106 |
|
|
$ |
(13 |
) |
|
$ |
703 |
|
Interest Rates and Yields: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans |
|
|
4.41 |
% |
|
|
4.34 |
% |
|
|
4.48 |
% |
|
|
4.47 |
% |
|
|
4.50 |
% |
Securities (1) |
|
|
1.77 |
% |
|
|
1.80 |
% |
|
|
1.98 |
% |
|
|
2.18 |
% |
|
|
2.73 |
% |
Total interest-earning assets (1) |
|
|
3.51 |
% |
|
|
3.42 |
% |
|
|
3.45 |
% |
|
|
3.41 |
% |
|
|
3.78 |
% |
Deposits |
|
|
0.21 |
% |
|
|
0.26 |
% |
|
|
0.30 |
% |
|
|
0.67 |
% |
|
|
0.59 |
% |
Borrowings and repurchase agreements |
|
|
5.36 |
% |
|
|
4.85 |
% |
|
|
4.09 |
% |
|
|
5.14 |
% |
|
|
3.16 |
% |
Total interest-bearing liabilities |
|
|
0.37 |
% |
|
|
0.42 |
% |
|
|
0.49 |
% |
|
|
0.99 |
% |
|
|
0.81 |
% |
Other Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Full-time equivalent employees |
|
|
383 |
|
|
|
379 |
|
|
|
380 |
|
|
|
403 |
|
|
|
286 |
|
_____________________
This information is preliminary and based on CapStar data available at the time of this earnings release.
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)
Second quarter 2021 Earnings Release
|
|
For the Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
Interest-Earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans (1) |
|
$ |
1,948,638 |
|
|
$ |
21,412 |
|
|
|
4.41 |
% |
|
$ |
1,560,626 |
|
|
$ |
17,459 |
|
|
|
4.50 |
% |
Loans held for sale |
|
|
138,093 |
|
|
|
1,160 |
|
|
|
3.37 |
% |
|
|
176,193 |
|
|
|
1,627 |
|
|
|
3.71 |
% |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxable investment securities (2) |
|
|
446,696 |
|
|
|
1,800 |
|
|
|
1.61 |
% |
|
|
194,876 |
|
|
|
1,236 |
|
|
|
2.54 |
% |
Investment securities exempt from |
|
|
61,899 |
|
|
|
356 |
|
|
|
2.91 |
% |
|
|
43,886 |
|
|
|
312 |
|
|
|
3.60 |
% |
Total securities |
|
|
508,595 |
|
|
|
2,156 |
|
|
|
1.77 |
% |
|
|
238,762 |
|
|
|
1,548 |
|
|
|
2.73 |
% |
Cash balances in other banks |
|
|
235,212 |
|
|
|
101 |
|
|
|
0.17 |
% |
|
|
237,738 |
|
|
|
107 |
|
|
|
0.18 |
% |
Funds sold |
|
|
18,319 |
|
|
|
3 |
|
|
|
0.06 |
% |
|
|
1 |
|
|
|
— |
|
|
|
1.27 |
% |
Total interest-earning assets |
|
|
2,848,857 |
|
|
|
24,832 |
|
|
|
3.51 |
% |
|
|
2,213,320 |
|
|
|
20,741 |
|
|
|
3.78 |
% |
Noninterest-earning assets |
|
|
229,891 |
|
|
|
|
|
|
|
|
|
136,701 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
3,078,748 |
|
|
|
|
|
|
|
|
$ |
2,350,021 |
|
|
|
|
|
|
|
||||
Interest-Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing transaction accounts |
|
$ |
927,210 |
|
|
|
379 |
|
|
|
0.16 |
% |
|
$ |
691,063 |
|
|
|
831 |
|
|
|
0.48 |
% |
Savings and money market deposits |
|
|
589,006 |
|
|
|
295 |
|
|
|
0.20 |
% |
|
|
492,682 |
|
|
|
731 |
|
|
|
0.60 |
% |
Time deposits |
|
|
424,226 |
|
|
|
732 |
|
|
|
0.69 |
% |
|
|
336,132 |
|
|
|
1,416 |
|
|
|
1.69 |
% |
Total interest-bearing deposits |
|
|
1,940,442 |
|
|
|
1,406 |
|
|
|
0.29 |
% |
|
|
1,519,877 |
|
|
|
2,978 |
|
|
|
0.79 |
% |
Borrowings and repurchase agreements |
|
|
29,467 |
|
|
|
394 |
|
|
|
5.36 |
% |
|
|
11,131 |
|
|
|
88 |
|
|
|
3.16 |
% |
Total interest-bearing liabilities |
|
|
1,969,909 |
|
|
|
1,800 |
|
|
|
0.37 |
% |
|
|
1,531,008 |
|
|
|
3,066 |
|
|
|
0.81 |
% |
Noninterest-bearing deposits |
|
|
721,751 |
|
|
|
|
|
|
|
|
|
512,046 |
|
|
|
|
|
|
|
||||
Total funding sources |
|
|
2,691,660 |
|
|
|
|
|
|
|
|
|
2,043,054 |
|
|
|
|
|
|
|
||||
Noninterest-bearing liabilities |
|
|
28,238 |
|
|
|
|
|
|
|
|
|
25,353 |
|
|
|
|
|
|
|
||||
Shareholders’ equity |
|
|
358,850 |
|
|
|
|
|
|
|
|
|
281,614 |
|
|
|
|
|
|
|
||||
Total liabilities and shareholders’ equity |
|
$ |
3,078,748 |
|
|
|
|
|
|
|
|
$ |
2,350,021 |
|
|
|
|
|
|
|
||||
Net interest spread (4) |
|
|
|
|
|
|
|
|
3.14 |
% |
|
|
|
|
|
|
|
|
2.98 |
% |
||||
Net interest income/margin (5) |
|
|
|
|
$ |
23,032 |
|
|
|
3.26 |
% |
|
|
|
|
$ |
17,675 |
|
|
|
3.23 |
% |
||
_____________________
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 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Operating net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income |
|
$ |
12,076 |
|
|
$ |
11,030 |
|
|
$ |
9,681 |
|
|
$ |
7,487 |
|
|
$ |
6,181 |
|
Add: acquisition related expenses |
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
|
|
448 |
|
Less: income tax impact of acquisition related expenses |
|
|
(67 |
) |
|
|
(18 |
) |
|
|
(550 |
) |
|
|
(666 |
) |
|
|
(117 |
) |
Operating net income |
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
|
$ |
6,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating diluted net income per |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating net income |
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
|
$ |
6,512 |
|
Weighted average shares - diluted |
|
|
22,198,829 |
|
|
|
22,076,600 |
|
|
|
21,978,925 |
|
|
|
21,960,490 |
|
|
|
18,320,006 |
|
Operating diluted net income |
|
$ |
0.55 |
|
|
$ |
0.50 |
|
|
$ |
0.51 |
|
|
$ |
0.43 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized return on average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating net income |
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
|
$ |
6,512 |
|
Average assets |
|
|
3,078,748 |
|
|
|
3,078,745 |
|
|
|
3,028,225 |
|
|
|
3,043,847 |
|
|
|
2,350,021 |
|
Operating annualized return on |
|
|
1.60 |
% |
|
|
1.46 |
% |
|
|
1.48 |
% |
|
|
1.22 |
% |
|
|
1.11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average total shareholders' equity |
|
$ |
358,850 |
|
|
$ |
350,681 |
|
|
$ |
340,709 |
|
|
$ |
321,506 |
|
|
$ |
281,614 |
|
Less: average intangible assets |
|
|
(49,012 |
) |
|
|
(49,514 |
) |
|
|
(50,038 |
) |
|
|
(50,577 |
) |
|
|
(43,871 |
) |
Average tangible equity |
|
|
309,838 |
|
|
|
301,167 |
|
|
|
290,671 |
|
|
|
270,929 |
|
|
|
237,743 |
|
Operating net income |
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
|
$ |
6,512 |
|
Operating annualized return on |
|
|
15.88 |
% |
|
|
14.92 |
% |
|
|
15.38 |
% |
|
|
13.76 |
% |
|
|
11.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating efficiency ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total noninterest expense |
|
$ |
19,080 |
|
|
$ |
17,413 |
|
|
$ |
21,478 |
|
|
$ |
22,739 |
|
|
$ |
18,934 |
|
Less: acquisition related expenses |
|
|
(256 |
) |
|
|
(67 |
) |
|
|
(2,105 |
) |
|
|
(2,548 |
) |
|
|
(448 |
) |
Total operating noninterest expense |
|
|
18,824 |
|
|
|
17,346 |
|
|
|
19,373 |
|
|
|
20,191 |
|
|
|
18,486 |
|
Net interest income |
|
|
23,032 |
|
|
|
22,182 |
|
|
|
22,331 |
|
|
|
19,656 |
|
|
|
17,675 |
|
Total noninterest income |
|
|
9,883 |
|
|
|
10,014 |
|
|
|
11,748 |
|
|
|
14,804 |
|
|
|
10,823 |
|
Total revenues |
|
$ |
32,915 |
|
|
$ |
32,196 |
|
|
$ |
34,079 |
|
|
$ |
34,460 |
|
|
$ |
28,498 |
|
Operating efficiency ratio: |
|
|
57.19 |
% |
|
|
53.88 |
% |
|
|
56.85 |
% |
|
|
58.59 |
% |
|
|
64.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized pre-tax pre-provision income to average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
$ |
14,900 |
|
|
$ |
14,133 |
|
|
$ |
12,417 |
|
|
$ |
9,602 |
|
|
$ |
7,940 |
|
Add: acquisition related expenses |
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
|
|
448 |
|
Add: provision for loan losses |
|
|
(1,065 |
) |
|
|
650 |
|
|
|
184 |
|
|
|
2,119 |
|
|
|
1,624 |
|
Operating pre-tax pre-provision income |
|
|
14,091 |
|
|
|
14,850 |
|
|
|
14,706 |
|
|
|
14,269 |
|
|
|
10,012 |
|
Average assets |
|
$ |
3,078,748 |
|
|
$ |
3,078,745 |
|
|
$ |
3,028,225 |
|
|
$ |
3,043,847 |
|
|
$ |
2,350,021 |
|
Operating annualized pre-tax pre-provision income to average assets: |
|
|
1.84 |
% |
|
|
1.96 |
% |
|
|
1.93 |
% |
|
|
1.86 |
% |
|
|
1.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Tangible Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total shareholders' equity |
|
$ |
359,752 |
|
|
$ |
343,944 |
|
|
$ |
343,486 |
|
|
$ |
333,895 |
|
|
$ |
281,950 |
|
Less: intangible assets |
|
|
(48,697 |
) |
|
|
(49,190 |
) |
|
|
(49,698 |
) |
|
|
(50,222 |
) |
|
|
(43,633 |
) |
Tangible equity |
|
$ |
311,055 |
|
|
$ |
294,754 |
|
|
$ |
293,788 |
|
|
$ |
283,673 |
|
|
$ |
238,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible Book Value per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible common equity |
|
$ |
311,055 |
|
|
$ |
294,754 |
|
|
$ |
293,788 |
|
|
$ |
283,673 |
|
|
$ |
238,317 |
|
Total shares of common stock outstanding |
|
|
22,165,547 |
|
|
|
22,089,873 |
|
|
|
21,988,803 |
|
|
|
21,947,805 |
|
|
|
18,302,188 |
|
Tangible book value per share of common stock |
|
$ |
14.03 |
|
|
$ |
13.34 |
|
|
$ |
13.36 |
|
|
$ |
12.92 |
|
|
$ |
13.02 |
|
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2021 Earnings Release
|
|
Six Months Ended |
|
|||||
|
|
6/30/2021 |
|
|
6/30/2020 |
|
||
Operating net income: |
|
|
|
|
|
|
||
Net income |
|
$ |
23,106 |
|
|
$ |
7,527 |
|
Add: acquisition related expenses |
|
|
323 |
|
|
|
738 |
|
Less: income tax impact of acquisition related expenses |
|
|
(84 |
) |
|
|
(193 |
) |
Operating net income |
|
$ |
23,345 |
|
|
$ |
8,072 |
|
|
|
|
|
|
|
|
||
Operating diluted net income per |
|
|
|
|
|
|
||
Operating net income |
|
$ |
23,345 |
|
|
$ |
8,072 |
|
Weighted average shares - diluted |
|
|
22,138,052 |
|
|
|
18,381,866 |
|
Operating diluted net income |
|
$ |
1.05 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
||
Operating annualized return on average assets: |
|
|
|
|
|
|
||
Operating net income |
|
$ |
23,345 |
|
|
$ |
8,072 |
|
Average assets |
|
$ |
3,078,746 |
|
|
$ |
2,204,663 |
|
Operating annualized return on |
|
|
1.53 |
% |
|
|
0.74 |
% |
|
|
|
|
|
|
|
||
Operating annualized return on |
|
|
|
|
|
|
||
Average total shareholders' equity |
|
$ |
354,788 |
|
|
$ |
280,082 |
|
Less: average intangible assets |
|
|
(49,262 |
) |
|
|
(44,062 |
) |
Average tangible equity |
|
|
305,526 |
|
|
|
236,020 |
|
Operating net income |
|
$ |
23,345 |
|
|
$ |
8,072 |
|
Operating annualized return on |
|
|
15.41 |
% |
|
|
6.88 |
% |
|
|
|
|
|
|
|
||
Operating efficiency ratio: |
|
|
|
|
|
|
||
Total noninterest expense |
|
$ |
36,492 |
|
|
$ |
33,145 |
|
Less: acquisition related expenses |
|
|
(323 |
) |
|
|
(738 |
) |
Total operating noninterest expense |
|
|
36,169 |
|
|
|
32,407 |
|
Net interest income |
|
|
45,213 |
|
|
|
34,336 |
|
Total noninterest income |
|
|
19,897 |
|
|
|
16,697 |
|
Total revenues |
|
$ |
65,110 |
|
|
$ |
51,033 |
|
Operating efficiency ratio: |
|
|
55.55 |
% |
|
|
63.50 |
% |
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Net interest income |
|
$ |
23,032 |
|
|
$ |
22,182 |
|
|
$ |
22,331 |
|
|
$ |
19,656 |
|
|
$ |
17,675 |
|
Less: PPP loan income |
|
|
(2,686 |
) |
|
|
(2,260 |
) |
|
|
(2,184 |
) |
|
|
(2,050 |
) |
|
|
(1,258 |
) |
Less: Excess liquidity interest income |
|
|
(545 |
) |
|
|
(504 |
) |
|
|
(300 |
) |
|
|
— |
|
|
|
— |
|
Plus: Loss recognized on termination of interest rate swap |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,910 |
|
|
|
— |
|
Adjusted net interest income |
|
|
19,801 |
|
|
|
19,418 |
|
|
|
19,847 |
|
|
|
19,516 |
|
|
|
16,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average interest earning assets |
|
|
2,848,857 |
|
|
|
2,889,119 |
|
|
|
2,859,096 |
|
|
|
2,886,031 |
|
|
|
2,213,320 |
|
Less: Average PPP loans |
|
|
(173,733 |
) |
|
|
(204,459 |
) |
|
|
(204,918 |
) |
|
|
(215,806 |
) |
|
|
(153,857 |
) |
Less: Excess liquidity |
|
|
(301,325 |
) |
|
|
(334,109 |
) |
|
|
(341,654 |
) |
|
|
(362,659 |
) |
|
|
(145,502 |
) |
Adjusted interest earning assets |
|
|
2,373,799 |
|
|
|
2,350,551 |
|
|
|
2,312,524 |
|
|
|
2,307,566 |
|
|
|
1,913,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest margin (1) |
|
|
3.26 |
% |
|
|
3.13 |
% |
|
|
3.12 |
% |
|
|
2.72 |
% |
|
|
3.23 |
% |
Adjusted Net interest margin (1) |
|
|
3.36 |
% |
|
|
3.35 |
% |
|
|
3.41 |
% |
|
|
3.40 |
% |
|
|
3.45 |
% |
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|
6/30/2020 |
|
|||||
Allowance for loan losses |
|
$ |
22,754 |
|
|
$ |
23,877 |
|
|
$ |
23,245 |
|
|
$ |
23,167 |
|
|
$ |
21,035 |
|
Purchase accounting marks |
|
|
3,533 |
|
|
|
3,615 |
|
|
|
3,663 |
|
|
|
4,013 |
|
|
|
2,790 |
|
Allowance for loan losses and purchase accounting fair value marks |
|
|
26,287 |
|
|
|
27,492 |
|
|
|
26,908 |
|
|
|
27,180 |
|
|
|
23,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans |
|
|
1,907,820 |
|
|
|
1,941,078 |
|
|
|
1,891,019 |
|
|
|
1,906,603 |
|
|
|
1,592,725 |
|
Less: PPP Loans net of deferred fees |
|
|
109,940 |
|
|
|
210,810 |
|
|
|
181,601 |
|
|
|
216,799 |
|
|
|
213,064 |
|
Non-PPP Loans |
|
|
1,797,880 |
|
|
|
1,730,268 |
|
|
|
1,709,418 |
|
|
|
1,689,804 |
|
|
|
1,379,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for loan losses plus fair value marks / Non-PPP Loans |
|
|
1.46 |
% |
|
|
1.59 |
% |
|
|
1.57 |
% |
|
|
1.61 |
% |
|
|
1.73 |
% |
_____________________
Second Quarter 2021 Earnings Call July 23, 2021 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. All statements, other than statements of historical fact, included in this release and any oral statements made regarding the subject of this release, including in the conference call referenced herein, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are “forward-looking statements“ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1955. The words “expect“, “anticipate”, “intend”, “may”, “should”, “plan”, “believe”, “seek“, “estimate“ and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (I) deterioration in the financial condition of borrowers of the Company and its subsidiaries, resulting in significant increases in loan losses and provisions for those losses; (II) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the Covid-19 pandemic and its impact on general economic and financial market conditions and on the Company’s customer’s business, results of operations, asset quality and financial condition; (III) the ability to grow and retain low-cost, core deposits and retain large, uninsured deposits, including during times when the Company is seeking to lower rates it pays on deposits; (IV) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on the Company’s results, including as a result of compression to net interest margin; (V) fluctuations or differences in interest rates on loans or deposits from those that the Company is modeling or anticipating, including as a result of the Company’s inability to better match deposit rates with the changes in the short term rate environment, or that affect the yield curve; (VI) difficulties and delays in integrating required businesses or fully realizing cost savings or other benefits from acquisitions; (VII) the Company‘s ability to profitably grow its business and successfully execute on its business plans; (VIII) any matter that would cause the Company to conclude that there was impairment of any asset, including goodwill or other intangible assets; (IX) the vulnerability of the Company’s network and online banking portals, and the systems of customers or parties with whom the Company contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (X) the availability of and access to capital; (XI) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals, and/or other negative affects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the Covid-19 pandemic; and (XII) general competitive, economic, political and market conditions. Additional factors which could affect the forward-looking statements can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with the SEC. The Company disclaims any obligation to update or revise any forward-looking statements contained in this press release (we speak only as of the date hereof ), whether as a result of new information, future events, or otherwise. NON-GAAP MEASURES This 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
$507.5 Market Capitalization Record 06.07.21 2Q21 Accomplishments $1.9B Loan Balance Record Quarter Average (incl PPP) $0.55 EPS Record (Operating) $2.8B Total Deposits Record (EOP) $151.3MM Loan Production Record Quarter $782MM NIB Deposits Record (EOP) $446MM Loan Pipeline Record (excl GGL) $23.00 Stock Price Record 06.07.21 Deposit Service Charges Interchange + Debit Transaction Fees Tri-Net Wealth Management Fee Income Record Quarter
Executing on strategic objectives Enhance profitability and earnings consistency Accelerate organic growth Maintain sound risk management Execute disciplined capital allocation Delivering high performance Operating earnings per share of $0.55 and ROAA of 1.60% NIM adjusted for PPP and excess deposits increased 1 basis point to 3.36% Loans (excluding PPP) grew 9.4% and 15.7% linked-quarter annualized on average and EOP, respectively Noninterest bearing and savings deposits increased 27.8% on average linked-quarter annualized Operating efficiency ratio of 57.19% ; bank-only of 54.13% Proactively managing risk Meaningful shift in balance sheet profile YTD loan production nearly 100% CapStar-led to Tennessee borrowers Focus is loans with strong collateral / guarantee profile Shared national credits less than 2% of total loans Continued improvement in criticized and classified loans Deploying capital in a disciplined manner ~ 200 - 300 basis points of excess capital over targeted levels Investing in core business through additional bankers and prepared for opportunistic buyback 2Q21 Highlights
Financial Results (Dollars in millions, except per share data) GAAP 2Q21 Favorable/(Unfavorable) 1Q21 2Q20(2) Net Interest Income $23.03 4% 30% Noninterest Income $9.88 -1% -9% Revenue $32.91 2% 15% Noninterest Expense $19.08 -10% 1% Pre-tax Pre-provision Income $13.83 -6% 45% Provision for Loan Losses ($1.06) 264% 166% Net Income $12.08 9% 95% Diluted Earnings per Share $0.54 9% 61% Operating(1) 2Q21 Favorable/(Unfavorable) 1Q20 2Q20(2) $23.03 4% 30% $9.88 -1% -9% $32.91 2% 15% $18.82 -8% 2% $14.09 -5% 41% ($1.06) 264% 166% $12.27 11% 88% $0.55 10% 55% 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 related items. 2Q20 Results are pre the acquisition of FCB and Net Income and EPS comparisons are not meaningful.
Operating Metrics(1) 2Q21 1Q21 2Q20 Profitability Net Interest Margin(2) 3.26% 3.13% 3.23% Efficiency Ratio(3) 57.19% 53.88% 64.87% Pretax Preprovision Income / Assets(4) 1.84% 1.96% 1.71% Return on Average Assets 1.60% 1.46% 1.11% Return on Average Tangible Equity 15.88% 14.92% 11.02% Growth Total Assets (Avg) $3,079 $3,079 $2,350 Growth Total Deposits (Avg) $2,662 $2,664 $2,032 Total Loans HFI (Avg) (Excl PPP) $1,775 $1,734 $1,479 Diluted Earnings per Share $0.55 $0.50 $0.36 Tangible Book Value per Share $14.03 $13.34 $13.02 Soundness Net Charge-Offs to Average Loans (Annualized) 0.01% 0.00% 0.18% Non-Performing Assets / Loans + OREO 0.22% 0.30% 0.20% Allowance for Loan Losses + Fair Value Mark / Loans Excl PPP 1.46% 1.59% 1.73% Common Equity Tier 1 Capital 13.78% 13.79% 13.76% Total Risk Based Capital 16.13% 16.29% 16.76% Key Performance Indicators 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 related 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 expenses. (Dollars in millions, except for per share data)
Financial Detail
Net Interest Income / Margin(1) NII up $0.8MM from 1Q21 due to 13 bps NIM improvement and an additional day NIM up 13 bps vs 1Q21 primarily due to a 7 bps loan yield increase related primarily by greater PPP loan forgiveness and a 5 bps decline in deposit rates paid Adjusted NIM, excluding 28 bps negative impact of excess liquidity and 18 bps positive impact of PPP loans, increased 1 bps vs 1Q21 Significant opportunity to benefit NII, net income, ROAA, and ROE through redeploying excess liquidity in loan growth and investments as well as deposit pricing Calculated on a tax equivalent basis. Adjusted for 3Q20 SWAP Termination Expense, Excess Cash and PPP Loan impact. (2)
Deposit Growth and Costs Total Deposits and Non-interest bearing deposits at record levels in 2Q21 Deposit costs declined 5 bps to 0.21% with increases in DDA and Savings, the Company’s two lowest cost categories, offset by a decline in Time Deposits, the Company’s highest cost category While the Company is currently faced with excess deposits, a priority is to develop a deposit first culture to ensure strong core funding into the future (1) 3Q20 excludes the amortization of swap expense. (1)
Strong core loan growth, excluding PPP loans 9.4% average linked-quarter annualized 15.7% EOP linked-quarter annualized PPP loans totaled $110MM at June 30, 2021 Round 1&2 PPP balances totaled approximately $35MM with $0.4MM of fees remaining to be recognized Round 3 PPP balances totaled approximately $75MM with $3.4MM of fees remaining to be recognized Strengthened loan capabilities Stronger and larger commercial banker line-up Growing loan pipeline Improved credit process Loan Growth and Yields
Noninterest Income Strong contribution across all categories Record: Deposit Service Charges Interchange and Debit Card Tri-Net Wealth Management Continued strength in Mortgage and SBA Three Months Ended (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Noninterest Income Deposit Service Charges $ 1,109 $ 1,102 $ 964 $ 1,064 $ 691 Interchange and Debit Transaction Fees 1,227 1,092 782 936 729 Mortgage Banking 3,910 4,716 5,971 9,686 7,123 Tri-Net 1,536 1,143 1,165 668 1,260 Wealth Management 471 459 411 382 374 SBA Lending 377 492 916 476 13 Net Gain on Sale of Securities (13) 26 51 34 13 Other 1,266 984 1,488 1,558 620 Total Noninterest Income $ 9,883 $ 10,014 $ 11,748 $ 14,804 $ 10,823 Average Assets $ 3,078,748 $ 3,078,745 $ 3,028,225 $ 3,043,847 $ 2,350,021 Noninterest Income / Average Assets 1.29% 1.32% 1.54% 1.93% 1.85% Revenue $ 32,915 $ 32,196 $ 34,079 $ 34,460 $ 28,498 % of Revenue 30.03% 31.10% 34.47% 42.96% 37.98%
Noninterest Expense Three Months Ended (Dollars in thousands) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Noninterest Expense Salaries and Employee Benefits $ 10,803 $ 9,427 $ 11,996 $ 12,949 $ 12,305 Data Processing and Software 3,070 2,827 2,548 2,353 2,100 Occupancy 1,057 1,108 975 999 797 Equipment 980 899 900 864 680 Professional Services 460 704 370 638 581 Regulatory Fees 211 257 368 397 333 Acquisition Related Expenses 256 67 2,105 2,548 448 Amortization of Intangibles 493 508 524 539 375 Other Operating 1,750 1,616 1,692 1,452 1,315 Total Noninterest Expense $ 19,080 $ 17,413 $ 21,478 $ 22,739 $ 18,934 Efficiency Ratio 57.97% 54.08% 63.02% 65.99% 66.44% Average Assets $ 3,078,748 $ 3,078,745 $ 3,028,225 $ 3,043,847 $ 2,350,021 Noninterest Expense / Average Assets 2.49% 2.29% 2.82% 2.97% 3.24% FTE 383 379 380 403 286 Operating Noninterest Expense(1) $ 18,824 $ 17,346 $ 19,373 $ 20,191 $ 18,486 Operating Efficiency Ratio(1) 57.19% 53.88% 56.85% 58.59% 64.87% Operating Noninterest Expense/Average Assets(1) 2.45% 2.28% 2.55% 2.64% 3.16% (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. 2Q21 increase principally related to incentive accruals in anticipation of achieving maximum year-end payout Adjusted for $1.5 million in increased incentive accruals, operating noninterest expense is flat Noninterest expense includes approximately $250K of temporary expense related to the processing of PPP loans
Risk Management
Continued focus on growing in-market core relationship banking activities Robust internal asset quality review process over low Pass rated credits and all Criticized and Classified borrowers > $250,000, including a monthly assessment of: direction of risk adequacy and sustainability of the borrower’s cash flow coverage of collateral and guaranties Continual external validation with robust external loan review and periodic stress tests At 2Q21: % of Criticized and Classified Loans improved 10% from 1Q21 Payment deferrals were at 2% involving 6 borrowers Shared National Credits were < 2% In-market loans were > 96% Loan losses remained low and averaged < $140K over last 8 quarters Loan Portfolio Summary (1)
Loan Portfolio Performance (1) Criticized and classified loans improved from 4.37% to 3.93% with the peak at 5.61% Net charge-offs remained low and have averaged < $140K over the last 8 quarters
Allowance for Loan Losses In addition to providing reserves for loan growth in the second quarter, the Allowance for Loan Losses declined $1.1MM due to ongoing economic recovery. The Allowance for Loan Losses at 2Q21 of $22.8MM plus the $3.5MM fair value mark on acquired loans was 1.46% of non-PPP Loans (1) PPP Loan balances net of unearned fees as of 06/30/2021. (1)
Capital Management
Capital Ratios Capital ratios remained significantly above “well capitalized” minimums and approximately 200 – 300 basis points above targeted levels Proactively seeking opportunities to invest in our business through additional bankers Prepared for opportunistic stock buyback; minimal shares repurchased in 2Q21 Declared a quarterly dividend of $0.06 per common share Capital Ratios 2Q21 1Q21 2Q20 "Well Capitalized" Guidelines Leverage 10.17% 9.78% 10.08% ≥ 5.00% Tangible Common Equity / Tangible Assets 9.83% 9.50% 9.92% NA Tier 1 Risk Based Capital 13.78% 13.79% 13.76% ≥ 8.00% Total Risk Based Capital 16.13% 16.29% 16.76% ≥ 10.00%
Looking Forward
Investment Thesis Quality Management Team Strong operational and capital allocation experience Insiders own ~10% of the company Shareholder-friendly culture Catalyst for Improved Profitability and Growth Dynamic and stable markets offer opportunities for organic customer growth and expansion Three recent acquisitions provide greater scale to leverage Strong cash/securities and capital levels available for deployment Repeatable Investment Opportunities Beneficiary of significant immigration and growing number of dissatisfied large regional bank customers Lift out opportunities for employees who value a higher touch and more entrepreneurial culture M&A available to capitalize on continued Tennessee consolidation Attractive Valuation Improved profitability and growth prospects provide potential for relative multiple expansion and increased earnings
Board Draft 4 America’s Top States for Business No. 2 Best Economy in the Nation No. 5 Top State to do Business in the Nation TN 2020 & 2021 M&A Transactions Seller Asset Size Reliant Bancorp, Inc. $3B Landmark Community Bank $1B Triumph Bancshares, Inc. $894MM Tri-State Bank of Memphis $105MM Cumberland Bancshares, Inc. $289MM Sevier County Bancshares, Inc. $424MM SFB Bancorp, Inc. $62MM American Bancshares Corp. $264MM Brighton Bancorp, Inc. $42MM Bumpushares, Inc. $25MM FCB Corporation $467MM Franklin Financial Network, Inc. $3.9B Dyer F & M Bancshares, Inc. $99MM Progressive Financial Group, Inc. $292MM First Advantage Bancorp $733MM TN Community Bank Holdings, Inc. $251MM Best State Rankings No. 1 State for Long-Term Fiscal Stability in the Nation States Americans Headed to Most in 2020 No. 1 State in the Nation for Relocations in 2020 Sources: CNBC Top States for Business, 2021; US News Best State Rankings: Tennessee, 2019; CNBC U-Haul Relocation, 2021 Tennessee Landscape
Appendix: Other Financial Results and Non-GAAP Reconciliations
(Dollars in thousands, except per share information) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 TANGIBLE COMMON EQUITY Total Shareholders’ Equity $ 359,752 $ 343,944 $ 343,486 $ 333,895 $ 281,950 Less: Intangible Assets 48,697 49,190 49,698 50,222 43,633 Tangible Common Equity 311,055 294,754 293,788 283,673 238,317 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Tangible Common Equity $ 311,055 $ 294,754 $ 293,788 $ 283,673 $ 238,317 Total Assets 3,212,390 3,150,457 2,987,006 3,024,348 2,445,172 Less: Intangible Assets 48,697 49,190 49,698 50,222 43,633 Tangible Assets 3,163,693 3,101,268 2,934,404 2,974,127 2,401,539 Tangible Common Equity to Tangible Assets 9.83% 9.50% 10.01% 9.54% 9.92% TANGIBLE BOOK VALUE PER SHARE, REPORTED Tangible Common Equity $ 311,055 $ 294,754 $ 293,788 $ 283,673 $ 238,317 Shares of Common Stock Outstanding 22,165,547 22,089,873 21,988,803 21,947,805 18,302,188 Tangible Book Value Per Share, Reported $14.03 $13.34 $13.36 $12.92 $13.02 Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Total Average Shareholders’ Equity $ 358,850 $ 350,681 $ 340,709 $ 321,506 $ 281,614 Less: Average Intangible Assets 49,012 49,514 50,038 50,577 43,871 Average Tangible Equity 309,838 301,167 290,671 270,929 237,743 Net Income 12,076 11,030 9,681 7,487 6,181 Return on Average Tangible Equity (ROATE) 15.63% 14.85% 13.25% 10.99% 10.46% Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 OPERATING NET INCOME Net Income $ 12,076 $ 11,030 $ 9,681 $ 7,487 $ 6,181 Add: Merger Related Expense 256 67 2,105 2,548 448 Less: Income Tax Impact (67) (18) (550) (666) (117) Operating Net Income 12,265 11,079 11,236 9,369 6,512 OPERATING DILUTED NET INCOME PER SHARE Operating Net Income $ 12,265 $ 11,079 $ 11,236 $ 9,369 $ 6,512 Average Diluted Shares Outstanding 22,198,829 22,076,600 21,978,925 21,960,490 18,320,006 Operating Diluted Net Income per Share $ 0.55 $ 0.50 $ 0.51 $ 0.43 $ 0.36 OPERATING RETURN ON AVERAGE ASSETS (ROAA) Operating Net Income $ 12,265 $ 11,079 $ 11,236 $ 9,369 $ 6,512 Total Average Assets 3,078,748 3,078,745 3,028,225 3,043,847 2,350,021 Operating Return on Average Assets (ROAA) 1.60% 1.46% 1.48% 1.22% 1.11% OPERATING RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Average Tangible Equity $ 309,838 $ 301,167 $ 290,671 $ 270,929 $ 237,743 Operating Net Income 12,265 11,079 11,236 9,369 6,512 Operating Return on Average Tangible Equity (ROATE) 15.88% 14.92% 15.38% 13.76% 11.02% 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 OPERATING NONINTEREST EXPENSE Noninterest Expense $ 19,080 $ 17,413 $ 21,478 $ 22,739 $ 18,934 Less: Merger Related Expense (256) (67) (2,105) (2,548) (448) Operating Noninterest Expense 18,824 17,346 19,373 20,191 18,486 OPERATING NONINTEREST EXPENSE / AVERAGE ASSETS Operating Noninterest Expense $ 18,824 $ 17,346 $ 19,373 $ 20,191 $ 18,486 Total Average Assets 3,078,748 3,078,745 3,028,225 3,043,847 2,350,021 Operating Noninterest Income / Average Assets 2.45% 2.28% 2.55% 2.64% 3.16% OPERATING EFFICIENCY RATIO Operating Noninterest Expense $ 18,824 $ 17,346 $ 19,373 $ 20,191 $ 18,486 Net Interest Income 23,032 22,182 22,331 19,656 17,675 Noninterest Income 9,883 10,014 11,748 14,804 10,823 Total Revenues 32,915 32,196 34,079 34,460 28,498 Operating Efficiency Ratio 57.19% 53.88% 56.85% 58.59% 64.87% 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 Denis J. Duncan Chief Financial Officer CapStar Financial Holdings, Inc. (615) 732-7492 Email: denis.duncan@capstarbank.com Corporate Headquarters
