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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(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 October 21, 2021, CapStar Financial Holdings, Inc. (the “Company”) issued an earnings release announcing its financial results for the third quarter ended September 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 October 22, 2021 to discuss its financial results for the third quarter ended September 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 October 21, 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: October 21, 2021
3
Exhibit 99.1
EARNINGS RELEASE
CONTACT
Denis J. Duncan
Chief Financial Officer
(615) 732-7492
CapStar Reports Third Quarter 2021 Results and Chattanooga Expansion
NASHVILLE, TN, October 21, 2021 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $13.1 million or $0.59 per diluted share, for the quarter ended September 30, 2021, compared with net income of $12.1 million or $0.54 per diluted share, for the quarter ended June 30, 2021, and net income of $7.5 million or $0.34 per diluted share, for the quarter ended September 30, 2020. Annualized return on average assets and return on average equity for the quarter ended September 30, 2021 were 1.64 percent and 14.13 percent, respectively.
For the nine months ended September 30, 2021, the Company reported net income of $36.2 million or $1.63 per diluted share, compared with $15.0 million or $0.77 per diluted share, for the same period of 2020. Year to date 2021 annualized return on average assets and return on average equity were 1.56 percent and 13.48 percent, respectively.
Four Key Drivers |
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Targets |
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3Q21 |
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2Q21 |
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3Q20 |
Annualized revenue growth |
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> 5% |
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20.49% |
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8.96% |
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83.00% |
Net interest margin |
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≥ 3.60% |
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3.12% |
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3.26% |
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2.72% |
Efficiency ratio |
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≤ 55% |
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53.06% |
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57.97% |
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65.99% |
Annualized net charge-offs to average loans |
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≤ 0.25% |
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0.05% |
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0.01% |
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0.00% |
Concurrently, the Company announced the hiring of a team of nine experienced financial professionals to grow market share and serve clients in Chattanooga, TN. The group includes five Commercial Relationship Managers who will deliver CapStar’s banking solutions to businesses, their owners, professionals, and real estate investors; one senior credit officer; one office leader, and two support and processing associates. Brian Paris, former Financial Advisor at Pinnacle Financial Partners, will serve as CapStar’s Chattanooga market president. Paris has twenty years of banking experience within the Chattanooga region, including the past eleven at CapitalMark/Pinnacle where he has been a key contributor in creating the metro area’s fourth largest bank, according to FDIC deposit share data.
“Third quarter marks two milestone events as we report record earnings and announce our exciting Chattanooga expansion,” said Timothy K. Schools President and Chief Executive Officer of CapStar. “Originating from twenty-four months of tremendous focus on strategic alignment and execution, our associates are delivering winning results, improved profitability, and enhanced growth. I could not be more proud of our team and nothing illustrates their efforts more than the positive trends of our four key drivers and recent recognition by Piper Sandler as one of their 2021 Sm-All Stars.”
“In the summer of 2019, we established four clear strategic objectives: 1) enhance profitability and earnings consistency, 2) accelerate organic growth, 3) maintain sound risk management, and 4) execute disciplined capital allocation. Complimenting the first three objectives, we are rapidly expanding our customer-centric banking model in attractive, high-growth markets through the hiring of top-tier talent. At the outset of 2020, we expanded to Knoxville where our team’s loan commitments now exceed $150 million. This summer, we added one of Nashville’s highest volume mortgage
loan originators. Today, we are thrilled to welcome Brian Paris and his former teammates, who are among Chattanooga’s banking leaders. As we speak with bankers across the state, CapStar’s capabilities, size, customer responsiveness, and flexibility are attractive to high-quality talent seeking an organization where they can better serve their customers and have a greater relative impact.”
“As we plan for the new year, I am very encouraged by CapStar’s positioning and prospects to become one of Tennessee’s great banks. Tennessee’s fifth largest bank by assets, CapStar is leveraging the inherent advantage of operating in one of the best states in the nation to do business and live, has strategically positioned itself in three of the Southeast’s most dynamic markets where population and household income are growing faster than national averages, has one of the industry’s youngest and most experienced management teams, and is executing a focused business model that produces strong financial results. Having significant excess liquidity and capital, we are focused on strategic initiatives that take advantage of market opportunities to significantly improve our return on tangible equity, earnings per share, and book value per share over time.”
Revenue
Total revenue, defined as net interest income plus noninterest income, increased $1.7 million to $34.6 million from the prior quarter. Net interest income totaled $23.0 million, flat compared to the second quarter of 2021. Third quarter 2021 noninterest income totaled $11.7 million, an increase of $1.8 million from the prior quarter. The increase was attributable to continued strong performance within the Company's Mortgage, SBA Lending, and Tri-Net divisions.
Third quarter 2021 average earning assets increased to $2.93 billion compared to $2.85 billion at June 30, 2021. Average loans held for investment, excluding PPP balances, increased $24.6 million from the prior quarter, or 5.5 percent linked-quarter annualized. Loan growth continued to accelerate during the third quarter of 2021 with end of period loans held for investment, excluding PPP balances, increasing $42.2 million, or 9.4 percent linked-quarter annualized. Due to a significant increase in deposits over the past year, average loans as a percentage of average earning assets declined to 64.31 percent for third quarter 2021. The Company’s commercial loan pipeline remains strong, exceeding $400 million, 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 third quarter of 2021, the net interest margin decreased 14 basis points from the prior quarter to 3.12 percent resulting principally from a reduction in revenues related to PPP forgiveness. Adjusting for the influence of PPP and excess deposits accumulated over the past year, the Company estimates its third quarter 2021 net interest margin was 3.36 percent, unchanged compared to the second quarter of 2021.
The Company's average deposits totaled $2.73 billion in the third quarter of 2021, an increase of $70.0 million compared to June 30, 2021. The Company experienced an increase of $39.9 million in average interest-bearing deposits offset by a $17.9 million reduction in higher cost time deposits. While in the short-term 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 lowest cost deposit category, noninterest bearing, increased $30.1 million on average from the prior quarter, or 16.55 percent linked-quarter annualized. Overall deposit costs declined 2 basis points to 0.19 percent.
Noninterest income during the quarter benefitted from record SBA and Tri-Net revenues, contributing $0.5 and $0.4 million improvements, respectively, when compared to the quarter ended June 30, 2021. Mortgage revenues remain strong increasing $0.8 million compared to the quarter ended June 30, 2021 to $4.7 million for the quarter ended September 30, 2021.
Noninterest Expense and Operating Efficiency
Noninterest expenses decreased $0.7 million from the second quarter of 2021 to $18.4 million in the third quarter of 2021. The third quarter noninterest expense decrease benefitted from a $0.4 million reduction in data processing fees related to decreases in processing of PPP loans and the absence of $0.3 million in acquisition related expenses incurred during the second quarter.
Efficiency is a key driver for the Company. 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 September 30, 2021, the efficiency ratio was 53.06 percent, a decrease from 57.97 percent in the second quarter of 2021. Annualized noninterest expense as a percentage of average assets decreased to 2.30 percent for the quarter ended September 30, 2021 compared to 2.49 percent for the quarter ended June 30, 2021. Assets per employee decreased to $7.9 million as of September 30, 2021 compared to $8.4 million for the previous quarter. The continued favorable trend in operating efficiency metrics demonstrates the Company's commitment, ability, and success in controlling its costs in accordance with its four key strategic initiatives.
Asset Quality
Asset quality is a core tenant of the Company’s culture. Continued sound risk management and an improving economy led to continued low net charge-offs and strong credit metrics. Annualized net charge offs to average loans for the three months ended September 30, 2021, were 0.05 percent. Past due loans as a percentage of total loans held for investment improved to 0.31 percent at September 30, 2021 compared to 0.49 percent at June 30, 2021. Within this amount, loans greater than 90 days past due totaled $2.3 million, or 0.12 percent of loans held for investment at September 30, 2021, compared to 0.13 percent at June 30, 2021. Non-performing assets to total loans and OREO were 0.20 percent at September 30, 2021, an improvement from 0.22 percent at June 30, 2021. Criticized and classified loans to total loans, which elevated during the pandemic, continued to improve and were 2.85 percent at September 30, 2021, a 108 basis point decline from June 30, 2021.
Positive asset quality trends combined with strong loan growth, resulted in no provision expense during the third quarter of 2021. As a result, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans decreased 6 basis points to 1.41 percent at September 30, 2021 when compared to June 30, 2021.
Asset Quality Data: |
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9/30/2021 |
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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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Annualized net charge-offs to average loans |
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0.05 |
% |
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0.01 |
% |
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0.00 |
% |
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0.02 |
% |
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0.00 |
% |
Criticized and classified loans to total loans |
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2.85 |
% |
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3.95 |
% |
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4.39 |
% |
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5.46 |
% |
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5.64 |
% |
Classified loans to total risk-based capital |
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7.16 |
% |
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7.69 |
% |
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10.51 |
% |
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11.08 |
% |
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11.43 |
% |
Loans- past due to total end of period loans |
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0.31 |
% |
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0.49 |
% |
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0.44 |
% |
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1.12 |
% |
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0.44 |
% |
Loans- over 89 days past due to total end of period loans |
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0.12 |
% |
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0.13 |
% |
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0.14 |
% |
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0.23 |
% |
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0.09 |
% |
Non-performing assets to total loans and OREO |
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0.20 |
% |
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0.22 |
% |
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0.30 |
% |
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0.28 |
% |
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0.16 |
% |
Allowance for loan losses plus fair value marks / Non-PPP Loans |
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1.41 |
% |
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1.47 |
% |
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1.60 |
% |
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1.58 |
% |
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1.62 |
% |
Allowance for loan losses to non-performing loans |
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657 |
% |
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571 |
% |
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|
446 |
% |
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483 |
% |
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787 |
% |
Income Tax Expense
The Company’s third quarter effective income tax rate of approximately 19.0% remained unchanged from the prior quarter ended June 30, 2021. During the third quarter, the Company revised its expected annual effective tax rate for 2021 to approximately 20.0 percent, a 1.0 percent decrease from the previous estimate. The decrease is attributable to continued benefits in the Company's tax strategy.
Capital
The Company continues to be strongly capitalized with tangible equity of $322.1 million at September 30, 2021. Tangible book value per share of common stock for the quarter ended September 30, 2021 increased to $14.53 compared to $14.03 and $12.92 for the quarters ended June 30, 2021 and September 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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9/30/2021 |
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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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Total risk-based capital |
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16.23 |
% |
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16.13 |
% |
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16.29 |
% |
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16.03 |
% |
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15.96 |
% |
Common equity tier 1 capital |
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13.95 |
% |
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13.78 |
% |
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13.79 |
% |
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13.52 |
% |
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13.39 |
% |
Leverage |
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10.28 |
% |
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10.17 |
% |
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9.78 |
% |
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9.60 |
% |
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|
9.23 |
% |
In the third 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 September 30, 2021.
Dividend
On October 21, 2021, the Board of Directors of CapStar approved a quarterly cash dividend of $0.06 per common share payable on November 24, 2021 to shareholders of record as of November 10, 2021.
Conference Call and Webcast Information
CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, October 22, 2021. During the call, management will review the third quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 2255846. A simultaneous webcast may be accessed on CapStar’s website at ir.capstarbank.com by clicking on “News & Events.” An archived version of the webcast will be available in the same location shortly after the live call has ended.
About CapStar Financial Holdings, Inc.
CapStar Financial Holdings, Inc. is a bank holding company headquartered in Nashville, Tennessee and operates primarily through its wholly owned subsidiary, CapStar Bank, a Tennessee-chartered state bank. CapStar Bank is a commercial bank that seeks to establish and maintain comprehensive relationships with its clients by delivering customized and creative banking solutions and superior client service. As of September 30, 2021, on a consolidated basis, CapStar had total assets of $3.1 billion, total loans of $1.9 billion, total deposits of $2.7 billion, and shareholders’ equity of $370.3 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)
Third quarter 2021 Earnings Release
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 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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$ |
22,350 |
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$ |
22,796 |
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$ |
66,936 |
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$ |
61,620 |
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Securities: |
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Taxable |
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|
1,655 |
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|
|
1,193 |
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|
|
4,900 |
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|
|
3,465 |
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Tax-exempt |
|
|
344 |
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|
|
343 |
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|
|
1,065 |
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|
|
975 |
|
Federal funds sold |
|
|
9 |
|
|
|
— |
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|
|
12 |
|
|
|
— |
|
Restricted equity securities |
|
|
161 |
|
|
|
139 |
|
|
|
482 |
|
|
|
421 |
|
Interest-bearing deposits in financial institutions |
|
|
171 |
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|
|
171 |
|
|
|
405 |
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|
|
640 |
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Total interest income |
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|
24,690 |
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|
|
24,642 |
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|
|
73,800 |
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|
|
67,121 |
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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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|
390 |
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|
640 |
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|
|
1,216 |
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|
|
3,371 |
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Savings and money market accounts |
|
|
288 |
|
|
|
2,537 |
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|
|
896 |
|
|
|
4,819 |
|
Time deposits |
|
|
654 |
|
|
|
1,299 |
|
|
|
2,317 |
|
|
|
4,197 |
|
Federal Home Loan Bank advances |
|
|
— |
|
|
|
116 |
|
|
|
12 |
|
|
|
348 |
|
Subordinated notes |
|
|
394 |
|
|
|
394 |
|
|
|
1,181 |
|
|
|
394 |
|
Total interest expense |
|
|
1,726 |
|
|
|
4,986 |
|
|
|
5,622 |
|
|
|
13,129 |
|
Net interest income |
|
|
22,964 |
|
|
|
19,656 |
|
|
|
68,178 |
|
|
|
53,992 |
|
Provision for loan losses |
|
|
— |
|
|
|
2,119 |
|
|
|
(415 |
) |
|
|
11,295 |
|
Net interest income after provision for loan losses |
|
|
22,964 |
|
|
|
17,537 |
|
|
|
68,593 |
|
|
|
42,697 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposit service charges |
|
|
1,187 |
|
|
|
1,064 |
|
|
|
3,398 |
|
|
|
2,531 |
|
Interchange and debit card transaction fees |
|
|
1,236 |
|
|
|
936 |
|
|
|
3,555 |
|
|
|
2,389 |
|
Mortgage banking |
|
|
4,693 |
|
|
|
9,686 |
|
|
|
13,318 |
|
|
|
19,063 |
|
Tri-Net |
|
|
1,939 |
|
|
|
668 |
|
|
|
4,618 |
|
|
|
2,528 |
|
Wealth management |
|
|
481 |
|
|
|
382 |
|
|
|
1,412 |
|
|
|
1,162 |
|
SBA lending |
|
|
911 |
|
|
|
476 |
|
|
|
1,781 |
|
|
|
525 |
|
Net gain on sale of securities |
|
|
7 |
|
|
|
34 |
|
|
|
20 |
|
|
|
74 |
|
Other noninterest income |
|
|
1,197 |
|
|
|
1,558 |
|
|
|
3,446 |
|
|
|
3,228 |
|
Total noninterest income |
|
|
11,651 |
|
|
|
14,804 |
|
|
|
31,548 |
|
|
|
31,500 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and employee benefits |
|
|
10,980 |
|
|
|
12,949 |
|
|
|
31,210 |
|
|
|
33,256 |
|
Data processing and software |
|
|
2,632 |
|
|
|
2,353 |
|
|
|
8,530 |
|
|
|
6,317 |
|
Occupancy |
|
|
1,028 |
|
|
|
999 |
|
|
|
3,193 |
|
|
|
2,615 |
|
Equipment |
|
|
760 |
|
|
|
864 |
|
|
|
2,640 |
|
|
|
2,295 |
|
Professional services |
|
|
469 |
|
|
|
638 |
|
|
|
1,634 |
|
|
|
1,854 |
|
Regulatory fees |
|
|
279 |
|
|
|
397 |
|
|
|
746 |
|
|
|
893 |
|
Acquisition related expenses |
|
|
— |
|
|
|
2,548 |
|
|
|
323 |
|
|
|
3,286 |
|
Amortization of intangibles |
|
|
477 |
|
|
|
539 |
|
|
|
1,478 |
|
|
|
1,300 |
|
Other operating |
|
|
1,741 |
|
|
|
1,452 |
|
|
|
5,105 |
|
|
|
4,067 |
|
Total noninterest expense |
|
|
18,366 |
|
|
|
22,739 |
|
|
|
54,859 |
|
|
|
55,883 |
|
Income before income taxes |
|
|
16,249 |
|
|
|
9,602 |
|
|
|
45,282 |
|
|
|
18,314 |
|
Income tax expense |
|
|
3,147 |
|
|
|
2,115 |
|
|
|
9,075 |
|
|
|
3,299 |
|
Net income |
|
$ |
13,102 |
|
|
$ |
7,487 |
|
|
$ |
36,207 |
|
|
$ |
15,015 |
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per share of common stock |
|
$ |
0.59 |
|
|
$ |
0.34 |
|
|
$ |
1.64 |
|
|
$ |
0.77 |
|
Diluted net income per share of common stock |
|
$ |
0.59 |
|
|
$ |
0.34 |
|
|
$ |
1.63 |
|
|
$ |
0.77 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
22,164,278 |
|
|
|
21,948,579 |
|
|
|
22,114,948 |
|
|
|
19,558,281 |
|
Diluted |
|
|
22,218,402 |
|
|
|
21,960,490 |
|
|
|
22,165,130 |
|
|
|
19,583,448 |
|
This information is preliminary and based on CapStar data available at the time of this earnings release.
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
9/30/2021 |
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|||||
Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income |
|
$ |
22,964 |
|
|
$ |
23,032 |
|
|
$ |
22,182 |
|
|
$ |
22,331 |
|
|
$ |
19,656 |
|
Provision for loan losses |
|
|
— |
|
|
|
(1,065 |
) |
|
|
650 |
|
|
|
184 |
|
|
|
2,119 |
|
Net interest income after provision for loan losses |
|
|
22,964 |
|
|
|
24,097 |
|
|
|
21,532 |
|
|
|
22,147 |
|
|
|
17,537 |
|
Deposit service charges |
|
|
1,187 |
|
|
|
1,109 |
|
|
|
1,102 |
|
|
|
964 |
|
|
|
1,064 |
|
Interchange and debit card transaction fees |
|
|
1,236 |
|
|
|
1,227 |
|
|
|
1,092 |
|
|
|
782 |
|
|
|
936 |
|
Mortgage banking |
|
|
4,693 |
|
|
|
3,910 |
|
|
|
4,716 |
|
|
|
5,971 |
|
|
|
9,686 |
|
Tri-Net |
|
|
1,939 |
|
|
|
1,536 |
|
|
|
1,143 |
|
|
|
1,165 |
|
|
|
668 |
|
Wealth management |
|
|
481 |
|
|
|
471 |
|
|
|
459 |
|
|
|
411 |
|
|
|
382 |
|
SBA lending |
|
|
911 |
|
|
|
377 |
|
|
|
492 |
|
|
|
916 |
|
|
|
476 |
|
Net gain (loss) on sale of securities |
|
|
7 |
|
|
|
(13 |
) |
|
|
26 |
|
|
|
51 |
|
|
|
34 |
|
Other noninterest income |
|
|
1,197 |
|
|
|
1,266 |
|
|
|
984 |
|
|
|
1,488 |
|
|
|
1,558 |
|
Total noninterest income |
|
|
11,651 |
|
|
|
9,883 |
|
|
|
10,014 |
|
|
|
11,748 |
|
|
|
14,804 |
|
Salaries and employee benefits |
|
|
10,980 |
|
|
|
10,803 |
|
|
|
9,427 |
|
|
|
11,996 |
|
|
|
12,949 |
|
Data processing and software |
|
|
2,632 |
|
|
|
3,070 |
|
|
|
2,827 |
|
|
|
2,548 |
|
|
|
2,353 |
|
Occupancy |
|
|
1,028 |
|
|
|
1,057 |
|
|
|
1,108 |
|
|
|
975 |
|
|
|
999 |
|
Equipment |
|
|
760 |
|
|
|
980 |
|
|
|
899 |
|
|
|
900 |
|
|
|
864 |
|
Professional services |
|
|
469 |
|
|
|
460 |
|
|
|
704 |
|
|
|
370 |
|
|
|
638 |
|
Regulatory fees |
|
|
279 |
|
|
|
211 |
|
|
|
257 |
|
|
|
368 |
|
|
|
397 |
|
Acquisition related expenses |
|
|
— |
|
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
Amortization of intangibles |
|
|
477 |
|
|
|
493 |
|
|
|
508 |
|
|
|
524 |
|
|
|
539 |
|
Other operating |
|
|
1,741 |
|
|
|
1,750 |
|
|
|
1,616 |
|
|
|
1,692 |
|
|
|
1,452 |
|
Total noninterest expense |
|
|
18,366 |
|
|
|
19,080 |
|
|
|
17,413 |
|
|
|
21,478 |
|
|
|
22,739 |
|
Net income before income tax expense |
|
|
16,249 |
|
|
|
14,900 |
|
|
|
14,133 |
|
|
|
12,417 |
|
|
|
9,602 |
|
Income tax expense |
|
|
3,147 |
|
|
|
2,824 |
|
|
|
3,103 |
|
|
|
2,736 |
|
|
|
2,115 |
|
Net income |
|
$ |
13,102 |
|
|
$ |
12,076 |
|
|
$ |
11,030 |
|
|
$ |
9,681 |
|
|
$ |
7,487 |
|
Weighted average shares - basic |
|
|
22,164,278 |
|
|
|
22,133,759 |
|
|
|
22,045,501 |
|
|
|
21,960,184 |
|
|
|
21,948,579 |
|
Weighted average shares - diluted |
|
|
22,218,402 |
|
|
|
22,198,829 |
|
|
|
22,076,600 |
|
|
|
21,978,925 |
|
|
|
21,960,490 |
|
Net income per share, basic |
|
$ |
0.59 |
|
|
$ |
0.55 |
|
|
$ |
0.50 |
|
|
$ |
0.44 |
|
|
$ |
0.34 |
|
Net income per share, diluted |
|
|
0.59 |
|
|
|
0.54 |
|
|
|
0.50 |
|
|
|
0.44 |
|
|
|
0.34 |
|
Balance Sheet Data (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
359,267 |
|
|
$ |
449,267 |
|
|
$ |
390,565 |
|
|
$ |
277,439 |
|
|
$ |
455,925 |
|
Securities available-for-sale |
|
|
483,778 |
|
|
|
500,339 |
|
|
|
474,788 |
|
|
|
486,215 |
|
|
|
308,337 |
|
Securities held-to-maturity |
|
|
1,788 |
|
|
|
2,395 |
|
|
|
2,401 |
|
|
|
2,407 |
|
|
|
2,413 |
|
Loans held for sale |
|
|
176,488 |
|
|
|
158,234 |
|
|
|
171,660 |
|
|
|
186,998 |
|
|
|
208,218 |
|
Loans held for investment |
|
|
1,894,249 |
|
|
|
1,897,838 |
|
|
|
1,931,687 |
|
|
|
1,883,690 |
|
|
|
1,896,988 |
|
Allowance for loan losses |
|
|
(22,533 |
) |
|
|
(22,754 |
) |
|
|
(23,877 |
) |
|
|
(23,245 |
) |
|
|
(23,167 |
) |
Total assets |
|
|
3,112,127 |
|
|
|
3,212,390 |
|
|
|
3,150,457 |
|
|
|
2,987,006 |
|
|
|
3,024,348 |
|
Non-interest-bearing deposits |
|
|
718,299 |
|
|
|
782,170 |
|
|
|
711,606 |
|
|
|
662,934 |
|
|
|
716,707 |
|
Interest-bearing deposits |
|
|
1,956,093 |
|
|
|
1,998,024 |
|
|
|
2,039,595 |
|
|
|
1,905,067 |
|
|
|
1,900,835 |
|
Federal Home Loan Bank advances and other borrowings |
|
|
29,499 |
|
|
|
29,487 |
|
|
|
29,455 |
|
|
|
39,423 |
|
|
|
39,418 |
|
Total liabilities |
|
|
2,741,799 |
|
|
|
2,852,639 |
|
|
|
2,806,513 |
|
|
|
2,643,520 |
|
|
|
2,690,453 |
|
Shareholders' equity |
|
$ |
370,328 |
|
|
$ |
359,752 |
|
|
$ |
343,944 |
|
|
$ |
343,486 |
|
|
$ |
333,895 |
|
Total shares of common stock outstanding |
|
|
22,165,760 |
|
|
|
22,165,547 |
|
|
|
22,089,873 |
|
|
|
21,988,803 |
|
|
|
21,947,805 |
|
Book value per share of common stock |
|
$ |
16.71 |
|
|
$ |
16.23 |
|
|
$ |
15.57 |
|
|
$ |
15.62 |
|
|
$ |
15.21 |
|
Tangible book value per share of common stock* |
|
|
14.53 |
|
|
|
14.03 |
|
|
|
13.34 |
|
|
|
13.36 |
|
|
|
12.92 |
|
Market value per share of common stock |
|
$ |
21.24 |
|
|
$ |
20.50 |
|
|
$ |
17.25 |
|
|
$ |
14.75 |
|
|
$ |
9.81 |
|
Capital ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total risk-based capital |
|
|
16.23 |
% |
|
|
16.13 |
% |
|
|
16.29 |
% |
|
|
16.03 |
% |
|
|
15.96 |
% |
Tier 1 risk-based capital |
|
|
13.95 |
% |
|
|
13.78 |
% |
|
|
13.79 |
% |
|
|
13.52 |
% |
|
|
13.39 |
% |
Common equity tier 1 capital |
|
|
13.95 |
% |
|
|
13.78 |
% |
|
|
13.79 |
% |
|
|
13.52 |
% |
|
|
13.39 |
% |
Leverage |
|
|
10.28 |
% |
|
|
10.17 |
% |
|
|
9.78 |
% |
|
|
9.60 |
% |
|
|
9.23 |
% |
_____________________
*This metric is a non-GAAP financial measure. See Non-GAAP disclaimer in this earnings release and below for discussion and reconciliation to the most directly comparable GAAP financial measure.
This information is preliminary and based on CapStar data available at the time of this earnings release.
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
9/30/2021 |
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|||||
Average Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
411,101 |
|
|
$ |
301,773 |
|
|
$ |
341,092 |
|
|
$ |
427,086 |
|
|
$ |
526,409 |
|
Investment securities |
|
|
515,877 |
|
|
|
508,595 |
|
|
|
496,035 |
|
|
|
407,622 |
|
|
|
323,689 |
|
Loans held for sale |
|
|
173,402 |
|
|
|
147,912 |
|
|
|
164,867 |
|
|
|
171,517 |
|
|
|
163,390 |
|
Loans held for investment |
|
|
1,884,935 |
|
|
|
1,938,818 |
|
|
|
1,929,343 |
|
|
|
1,885,126 |
|
|
|
1,899,182 |
|
Assets |
|
|
3,171,182 |
|
|
|
3,078,748 |
|
|
|
3,078,745 |
|
|
|
3,028,225 |
|
|
|
3,043,847 |
|
Interest bearing deposits |
|
|
1,980,304 |
|
|
|
1,940,442 |
|
|
|
1,986,621 |
|
|
|
1,909,692 |
|
|
|
1,957,259 |
|
Deposits |
|
|
2,732,165 |
|
|
|
2,662,192 |
|
|
|
2,663,551 |
|
|
|
2,613,080 |
|
|
|
2,648,465 |
|
Federal Home Loan Bank advances and other borrowings |
|
|
29,495 |
|
|
|
29,467 |
|
|
|
33,879 |
|
|
|
39,428 |
|
|
|
39,431 |
|
Liabilities |
|
|
2,803,375 |
|
|
|
2,719,898 |
|
|
|
2,728,064 |
|
|
|
2,687,516 |
|
|
|
2,722,341 |
|
Shareholders' equity |
|
|
367,807 |
|
|
|
358,850 |
|
|
|
350,681 |
|
|
|
340,709 |
|
|
|
321,506 |
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Annualized return on average assets |
|
|
1.64 |
% |
|
|
1.57 |
% |
|
|
1.45 |
% |
|
|
1.27 |
% |
|
|
0.98 |
% |
Annualized return on average equity |
|
|
14.13 |
% |
|
|
13.50 |
% |
|
|
12.76 |
% |
|
|
11.30 |
% |
|
|
9.26 |
% |
Net interest margin (1) |
|
|
3.12 |
% |
|
|
3.26 |
% |
|
|
3.13 |
% |
|
|
3.12 |
% |
|
|
2.72 |
% |
Annualized noninterest income to average assets |
|
|
1.46 |
% |
|
|
1.29 |
% |
|
|
1.32 |
% |
|
|
1.54 |
% |
|
|
1.93 |
% |
Efficiency ratio |
|
|
53.06 |
% |
|
|
57.97 |
% |
|
|
54.08 |
% |
|
|
63.02 |
% |
|
|
65.99 |
% |
Loans by Type (at period end): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
478,279 |
|
|
$ |
536,279 |
|
|
$ |
609,896 |
|
|
$ |
623,446 |
|
|
$ |
638,403 |
|
Commercial real estate - owner occupied |
|
|
193,139 |
|
|
|
200,725 |
|
|
|
197,758 |
|
|
|
162,603 |
|
|
|
164,336 |
|
Commercial real estate - non-owner occupied |
|
|
579,857 |
|
|
|
538,521 |
|
|
|
505,252 |
|
|
|
481,229 |
|
|
|
480,106 |
|
Construction and development |
|
|
210,516 |
|
|
|
198,448 |
|
|
|
170,965 |
|
|
|
174,859 |
|
|
|
176,751 |
|
Consumer real estate |
|
|
328,262 |
|
|
|
331,580 |
|
|
|
336,496 |
|
|
|
343,791 |
|
|
|
350,238 |
|
Consumer |
|
|
45,669 |
|
|
|
45,898 |
|
|
|
45,481 |
|
|
|
44,279 |
|
|
|
42,104 |
|
Other |
|
|
58,527 |
|
|
|
46,387 |
|
|
|
65,839 |
|
|
|
53,483 |
|
|
|
45,050 |
|
Asset Quality Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for loan losses to total loans |
|
|
1.19 |
% |
|
|
1.20 |
% |
|
|
1.24 |
% |
|
|
1.23 |
% |
|
|
1.22 |
% |
Allowance for loan losses to non-performing loans |
|
|
657 |
% |
|
|
571 |
% |
|
|
446 |
% |
|
|
483 |
% |
|
|
787 |
% |
Nonaccrual loans |
|
$ |
3,431 |
|
|
$ |
3,985 |
|
|
$ |
5,355 |
|
|
$ |
4,817 |
|
|
$ |
2,945 |
|
Troubled debt restructurings |
|
|
1,859 |
|
|
|
1,895 |
|
|
|
1,914 |
|
|
|
1,928 |
|
|
|
1,886 |
|
Loans - over 89 days past due |
|
|
2,333 |
|
|
|
2,389 |
|
|
|
2,720 |
|
|
|
4,367 |
|
|
|
1,781 |
|
Total non-performing loans |
|
|
3,431 |
|
|
|
3,985 |
|
|
|
5,355 |
|
|
|
4,817 |
|
|
|
2,945 |
|
OREO and repossessed assets |
|
|
349 |
|
|
|
184 |
|
|
|
523 |
|
|
|
523 |
|
|
|
171 |
|
Total non-performing assets |
|
|
3,780 |
|
|
|
4,169 |
|
|
|
5,878 |
|
|
|
5,340 |
|
|
|
3,116 |
|
Non-performing loans to total loans |
|
|
0.18 |
% |
|
|
0.21 |
% |
|
|
0.28 |
% |
|
|
0.26 |
% |
|
|
0.16 |
% |
Non-performing assets to total assets |
|
|
0.12 |
% |
|
|
0.13 |
% |
|
|
0.19 |
% |
|
|
0.18 |
% |
|
|
0.10 |
% |
Non-performing assets to total loans and OREO |
|
|
0.20 |
% |
|
|
0.22 |
% |
|
|
0.30 |
% |
|
|
0.28 |
% |
|
|
0.16 |
% |
Annualized net charge-offs to average loans |
|
|
0.05 |
% |
|
|
0.01 |
% |
|
|
0.00 |
% |
|
|
0.02 |
% |
|
0.00% |
|
|
Net charge-offs (recoveries) |
|
$ |
221 |
|
|
$ |
59 |
|
|
$ |
18 |
|
|
$ |
106 |
|
|
$ |
(13 |
) |
Interest Rates and Yields: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans |
|
|
4.41 |
% |
|
|
4.43 |
% |
|
|
4.36 |
% |
|
|
4.50 |
% |
|
|
4.48 |
% |
Securities (1) |
|
|
1.75 |
% |
|
|
1.77 |
% |
|
|
1.80 |
% |
|
|
1.98 |
% |
|
|
2.18 |
% |
Total interest-earning assets (1) |
|
|
3.35 |
% |
|
|
3.51 |
% |
|
|
3.42 |
% |
|
|
3.45 |
% |
|
|
3.41 |
% |
Deposits |
|
|
0.19 |
% |
|
|
0.21 |
% |
|
|
0.26 |
% |
|
|
0.30 |
% |
|
|
0.67 |
% |
Borrowings and repurchase agreements |
|
|
5.30 |
% |
|
|
5.36 |
% |
|
|
4.85 |
% |
|
|
4.09 |
% |
|
|
5.14 |
% |
Total interest-bearing liabilities |
|
|
0.34 |
% |
|
|
0.37 |
% |
|
|
0.42 |
% |
|
|
0.49 |
% |
|
|
0.99 |
% |
Other Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Full-time equivalent employees |
|
|
392 |
|
|
|
383 |
|
|
|
379 |
|
|
|
380 |
|
|
|
403 |
|
_____________________
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)
Third quarter 2021 Earnings Release
|
|
For the Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
Interest-Earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans (1) |
|
$ |
1,884,935 |
|
|
$ |
20,942 |
|
|
|
4.41 |
% |
|
$ |
1,899,182 |
|
|
$ |
21,398 |
|
|
|
4.47 |
% |
Loans held for sale |
|
|
173,402 |
|
|
|
1,408 |
|
|
|
3.22 |
% |
|
|
163,390 |
|
|
|
1,398 |
|
|
|
3.56 |
% |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxable investment securities (2) |
|
|
455,583 |
|
|
|
1,816 |
|
|
|
1.59 |
% |
|
|
271,838 |
|
|
|
1,332 |
|
|
|
1.96 |
% |
Investment securities exempt from |
|
|
60,294 |
|
|
|
344 |
|
|
|
2.90 |
% |
|
|
51,851 |
|
|
|
343 |
|
|
|
3.35 |
% |
Total securities |
|
|
515,877 |
|
|
|
2,160 |
|
|
|
1.75 |
% |
|
|
323,689 |
|
|
|
1,675 |
|
|
|
2.18 |
% |
Cash balances in other banks |
|
|
337,011 |
|
|
|
171 |
|
|
|
0.20 |
% |
|
|
499,770 |
|
|
|
171 |
|
|
|
0.14 |
% |
Funds sold |
|
|
19,909 |
|
|
|
9 |
|
|
|
0.18 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total interest-earning assets |
|
|
2,931,134 |
|
|
|
24,690 |
|
|
|
3.35 |
% |
|
|
2,886,031 |
|
|
|
24,642 |
|
|
|
3.41 |
% |
Noninterest-earning assets |
|
|
240,048 |
|
|
|
|
|
|
|
|
|
157,816 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
3,171,182 |
|
|
|
|
|
|
|
|
$ |
3,043,847 |
|
|
|
|
|
|
|
||||
Interest-Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing transaction accounts |
|
$ |
984,874 |
|
|
|
390 |
|
|
|
0.16 |
% |
|
$ |
840,926 |
|
|
|
640 |
|
|
|
0.30 |
% |
Savings and money market deposits |
|
|
589,101 |
|
|
|
288 |
|
|
|
0.19 |
% |
|
|
610,942 |
|
|
|
2,537 |
|
|
|
1.65 |
% |
Time deposits |
|
|
406,329 |
|
|
|
654 |
|
|
|
0.64 |
% |
|
|
505,391 |
|
|
|
1,299 |
|
|
|
1.02 |
% |
Total interest-bearing deposits |
|
|
1,980,304 |
|
|
|
1,332 |
|
|
|
0.27 |
% |
|
|
1,957,259 |
|
|
|
4,476 |
|
|
|
0.91 |
% |
Borrowings and repurchase agreements |
|
|
29,495 |
|
|
|
394 |
|
|
|
5.30 |
% |
|
|
39,431 |
|
|
|
510 |
|
|
|
5.14 |
% |
Total interest-bearing liabilities |
|
|
2,009,799 |
|
|
|
1,726 |
|
|
|
0.34 |
% |
|
|
1,996,690 |
|
|
|
4,986 |
|
|
|
0.99 |
% |
Noninterest-bearing deposits |
|
|
751,862 |
|
|
|
|
|
|
|
|
|
691,205 |
|
|
|
|
|
|
|
||||
Total funding sources |
|
|
2,761,661 |
|
|
|
|
|
|
|
|
|
2,687,895 |
|
|
|
|
|
|
|
||||
Noninterest-bearing liabilities |
|
|
41,714 |
|
|
|
|
|
|
|
|
|
34,446 |
|
|
|
|
|
|
|
||||
Shareholders’ equity |
|
|
367,807 |
|
|
|
|
|
|
|
|
|
321,506 |
|
|
|
|
|
|
|
||||
Total liabilities and shareholders’ equity |
|
$ |
3,171,182 |
|
|
|
|
|
|
|
|
$ |
3,043,847 |
|
|
|
|
|
|
|
||||
Net interest spread (4) |
|
|
|
|
|
|
|
|
3.01 |
% |
|
|
|
|
|
|
|
|
2.42 |
% |
||||
Net interest income/margin (5) |
|
|
|
|
$ |
22,964 |
|
|
|
3.12 |
% |
|
|
|
|
$ |
19,656 |
|
|
|
2.72 |
% |
||
_____________________
This information is preliminary and based on CapStar data available at the time of this earnings release.
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
9/30/2021 |
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|||||
Operating net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income |
|
$ |
13,102 |
|
|
$ |
12,076 |
|
|
$ |
11,030 |
|
|
$ |
9,681 |
|
|
$ |
7,487 |
|
Add: acquisition related expenses |
|
|
— |
|
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
Less: income tax impact of acquisition related expenses |
|
|
— |
|
|
|
(67 |
) |
|
|
(18 |
) |
|
|
(550 |
) |
|
|
(666 |
) |
Operating net income |
|
$ |
13,102 |
|
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating diluted net income per |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating net income |
|
$ |
13,102 |
|
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
Weighted average shares - diluted |
|
|
22,218,402 |
|
|
|
22,198,829 |
|
|
|
22,076,600 |
|
|
|
21,978,925 |
|
|
|
21,960,490 |
|
Operating diluted net income |
|
$ |
0.59 |
|
|
$ |
0.55 |
|
|
$ |
0.50 |
|
|
$ |
0.51 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized return on average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating net income |
|
$ |
13,102 |
|
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
Average assets |
|
|
3,171,182 |
|
|
|
3,078,748 |
|
|
|
3,078,745 |
|
|
|
3,028,225 |
|
|
|
3,043,847 |
|
Operating annualized return on |
|
|
1.64 |
% |
|
|
1.60 |
% |
|
|
1.46 |
% |
|
|
1.48 |
% |
|
|
1.22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized return on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average total shareholders' equity |
|
$ |
367,807 |
|
|
$ |
358,850 |
|
|
$ |
350,681 |
|
|
$ |
340,709 |
|
|
$ |
321,506 |
|
Less: average intangible assets |
|
|
(48,527 |
) |
|
|
(49,012 |
) |
|
|
(49,514 |
) |
|
|
(50,038 |
) |
|
|
(50,577 |
) |
Average tangible equity |
|
|
319,280 |
|
|
|
309,838 |
|
|
|
301,167 |
|
|
|
290,671 |
|
|
|
270,929 |
|
Operating net income |
|
$ |
13,102 |
|
|
$ |
12,265 |
|
|
$ |
11,079 |
|
|
$ |
11,236 |
|
|
$ |
9,369 |
|
Operating annualized return on |
|
|
16.28 |
% |
|
|
15.88 |
% |
|
|
14.92 |
% |
|
|
15.38 |
% |
|
|
13.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating efficiency ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total noninterest expense |
|
$ |
18,366 |
|
|
$ |
19,080 |
|
|
$ |
17,413 |
|
|
$ |
21,478 |
|
|
$ |
22,739 |
|
Less: acquisition related expenses |
|
|
— |
|
|
|
(256 |
) |
|
|
(67 |
) |
|
|
(2,105 |
) |
|
|
(2,548 |
) |
Total operating noninterest expense |
|
|
18,366 |
|
|
|
18,824 |
|
|
|
17,346 |
|
|
|
19,373 |
|
|
|
20,191 |
|
Net interest income |
|
|
22,964 |
|
|
|
23,032 |
|
|
|
22,182 |
|
|
|
22,331 |
|
|
|
19,656 |
|
Total noninterest income |
|
|
11,651 |
|
|
|
9,883 |
|
|
|
10,014 |
|
|
|
11,748 |
|
|
|
14,804 |
|
Total revenues |
|
$ |
34,615 |
|
|
$ |
32,915 |
|
|
$ |
32,196 |
|
|
$ |
34,079 |
|
|
$ |
34,460 |
|
Operating efficiency ratio: |
|
|
53.06 |
% |
|
|
57.19 |
% |
|
|
53.88 |
% |
|
|
56.85 |
% |
|
|
58.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating annualized pre-tax pre-provision income to average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
$ |
16,249 |
|
|
$ |
14,900 |
|
|
$ |
14,133 |
|
|
$ |
12,417 |
|
|
$ |
9,602 |
|
Add: acquisition related expenses |
|
|
— |
|
|
|
256 |
|
|
|
67 |
|
|
|
2,105 |
|
|
|
2,548 |
|
Add: provision for loan losses |
|
|
— |
|
|
|
(1,065 |
) |
|
|
650 |
|
|
|
184 |
|
|
|
2,119 |
|
Operating pre-tax pre-provision income |
|
|
16,249 |
|
|
|
14,091 |
|
|
|
14,850 |
|
|
|
14,706 |
|
|
|
14,269 |
|
Average assets |
|
$ |
3,171,182 |
|
|
$ |
3,078,748 |
|
|
$ |
3,078,745 |
|
|
$ |
3,028,225 |
|
|
$ |
3,043,847 |
|
Operating annualized pre-tax pre-provision income to average assets: |
|
|
2.03 |
% |
|
|
1.84 |
% |
|
|
1.96 |
% |
|
|
1.93 |
% |
|
|
1.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total shareholders' equity |
|
$ |
370,328 |
|
|
$ |
359,752 |
|
|
$ |
343,944 |
|
|
$ |
343,486 |
|
|
$ |
333,895 |
|
Less: intangible assets |
|
|
(48,220 |
) |
|
|
(48,697 |
) |
|
|
(49,190 |
) |
|
|
(49,698 |
) |
|
|
(50,222 |
) |
Tangible equity |
|
$ |
322,108 |
|
|
$ |
311,055 |
|
|
$ |
294,754 |
|
|
$ |
293,788 |
|
|
$ |
283,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible Book Value per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible common equity |
|
$ |
322,108 |
|
|
$ |
311,055 |
|
|
$ |
294,754 |
|
|
$ |
293,788 |
|
|
$ |
283,673 |
|
Total shares of common stock outstanding |
|
|
22,165,760 |
|
|
|
22,165,547 |
|
|
|
22,089,873 |
|
|
|
21,988,803 |
|
|
|
21,947,805 |
|
Tangible book value per share of common stock |
|
$ |
14.53 |
|
|
$ |
14.03 |
|
|
$ |
13.34 |
|
|
$ |
13.36 |
|
|
$ |
12.92 |
|
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2021 Earnings Release
|
|
Nine Months Ended |
|
|||||
|
|
9/30/2021 |
|
|
9/30/2020 |
|
||
Operating net income: |
|
|
|
|
|
|
||
Net income |
|
$ |
36,207 |
|
|
$ |
15,015 |
|
Add: acquisition related expenses |
|
|
323 |
|
|
|
3,286 |
|
Less: income tax impact of acquisition related expenses |
|
|
(84 |
) |
|
|
(859 |
) |
Operating net income |
|
$ |
36,446 |
|
|
$ |
17,442 |
|
|
|
|
|
|
|
|
||
Operating diluted net income per |
|
|
|
|
|
|
||
Operating net income |
|
$ |
36,446 |
|
|
$ |
17,442 |
|
Weighted average shares - diluted |
|
|
22,165,130 |
|
|
|
19,583,448 |
|
Operating diluted net income |
|
$ |
1.64 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
||
Operating annualized return on average assets: |
|
|
|
|
|
|
||
Operating net income |
|
$ |
36,446 |
|
|
$ |
17,442 |
|
Average assets |
|
$ |
3,109,897 |
|
|
$ |
2,486,433 |
|
Operating annualized return on |
|
|
1.57 |
% |
|
|
0.94 |
% |
|
|
|
|
|
|
|
||
Operating annualized return on |
|
|
|
|
|
|
||
Average total shareholders' equity |
|
$ |
359,176 |
|
|
$ |
293,990 |
|
Less: average intangible assets |
|
|
(49,014 |
) |
|
|
(46,249 |
) |
Average tangible equity |
|
|
310,162 |
|
|
|
247,741 |
|
Operating net income |
|
$ |
36,446 |
|
|
$ |
17,442 |
|
Operating annualized return on |
|
|
15.71 |
% |
|
|
9.40 |
% |
|
|
|
|
|
|
|
||
Operating efficiency ratio: |
|
|
|
|
|
|
||
Total noninterest expense |
|
$ |
54,859 |
|
|
$ |
55,883 |
|
Less: acquisition related expenses |
|
|
(323 |
) |
|
|
(3,286 |
) |
Total operating noninterest expense |
|
|
54,536 |
|
|
|
52,597 |
|
Net interest income |
|
|
68,178 |
|
|
|
53,992 |
|
Total noninterest income |
|
|
31,548 |
|
|
|
31,500 |
|
Total revenues |
|
$ |
99,726 |
|
|
$ |
85,492 |
|
Operating efficiency ratio: |
|
|
54.69 |
% |
|
|
61.52 |
% |
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2021 Earnings Release
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
9/30/2021 |
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|||||
Net interest income |
|
$ |
22,964 |
|
|
$ |
23,032 |
|
|
$ |
22,182 |
|
|
$ |
22,331 |
|
|
$ |
19,656 |
|
Less: PPP loan income |
|
|
(1,897 |
) |
|
|
(2,686 |
) |
|
|
(2,260 |
) |
|
|
(2,184 |
) |
|
|
(2,050 |
) |
Less: Excess liquidity interest income |
|
|
(545 |
) |
|
|
(545 |
) |
|
|
(504 |
) |
|
|
(300 |
) |
|
|
— |
|
Plus: Loss recognized on termination of interest rate swap |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
1,910 |
|
|
Adjusted net interest income |
|
|
20,522 |
|
|
|
19,801 |
|
|
|
19,418 |
|
|
|
19,847 |
|
|
|
19,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Average interest earning assets |
|
|
2,931,134 |
|
|
|
2,848,857 |
|
|
|
2,889,119 |
|
|
|
2,859,096 |
|
|
|
2,886,031 |
|
Less: Average PPP loans |
|
|
(95,257 |
) |
|
|
(173,733 |
) |
|
|
(204,459 |
) |
|
|
(204,918 |
) |
|
|
(215,806 |
) |
Less: Excess liquidity |
|
|
(411,926 |
) |
|
|
(301,325 |
) |
|
|
(334,109 |
) |
|
|
(341,654 |
) |
|
|
(362,659 |
) |
Adjusted interest earning assets |
|
|
2,423,951 |
|
|
|
2,373,799 |
|
|
|
2,350,551 |
|
|
|
2,312,524 |
|
|
|
2,307,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest margin (1) |
|
|
3.12 |
% |
|
|
3.26 |
% |
|
|
3.13 |
% |
|
|
3.12 |
% |
|
|
2.72 |
% |
Adjusted Net interest margin (1) |
|
|
3.36 |
% |
|
|
3.36 |
% |
|
|
3.35 |
% |
|
|
3.41 |
% |
|
|
3.40 |
% |
|
|
Five Quarter Comparison |
|
|||||||||||||||||
|
|
9/30/2021 |
|
|
6/30/2021 |
|
|
3/31/2021 |
|
|
12/31/2020 |
|
|
9/30/2020 |
|
|||||
Allowance for loan losses |
|
$ |
22,533 |
|
|
$ |
22,754 |
|
|
$ |
23,877 |
|
|
$ |
23,245 |
|
|
$ |
23,167 |
|
Purchase accounting marks |
|
|
3,288 |
|
|
|
3,533 |
|
|
|
3,615 |
|
|
|
3,663 |
|
|
|
4,013 |
|
Allowance for loan losses and purchase accounting fair value marks |
|
|
25,821 |
|
|
|
26,287 |
|
|
|
27,492 |
|
|
|
26,908 |
|
|
|
27,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for investment |
|
|
1,894,249 |
|
|
|
1,897,838 |
|
|
|
1,931,687 |
|
|
|
1,883,690 |
|
|
|
1,896,988 |
|
Less: PPP Loans net of deferred fees |
|
|
64,188 |
|
|
|
109,940 |
|
|
|
210,810 |
|
|
|
181,601 |
|
|
|
216,799 |
|
Non-PPP Loans |
|
|
1,830,061 |
|
|
|
1,787,898 |
|
|
|
1,720,877 |
|
|
|
1,702,089 |
|
|
|
1,680,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for loan losses plus fair value marks / Non-PPP Loans |
|
|
1.41 |
% |
|
|
1.47 |
% |
|
|
1.60 |
% |
|
|
1.58 |
% |
|
|
1.62 |
% |
_____________________
Third Quarter 2021 Earnings Call October 22, 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
Executing on strategic objectives Enhance profitability and earnings consistency Accelerate organic growth Maintain sound risk management Execute disciplined capital allocation Delivering high performance Earnings per share of $0.59 PTPPA, ROAA, ROATE of 2.03%, 1.64%, and 16.28%, respectively, despite high liquidity and capital levels NIM, adjusted for PPP and excess deposits, was 3.36%, equal to 2Q21 AVG Noninterest bearing and savings deposits increased 16.9% linked-quarter annualized Loans, excluding PPP, grew 5.5% and 9.4% linked-quarter annualized AVG and EOP, respectively Efficiency ratio of 53.06%; bank-only of 50.58% Proactively managing risk Meaningful shift in balance sheet profile YTD loan production nearly 100% CapStar-led to Tennessee borrowers; total SNCs now less than 2% of loans Focus is loans with strong collateral / guarantee profile 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 3Q21 Highlights
Financial Results (Dollars in millions, except per share data) GAAP 3Q21 Favorable/(Unfavorable) 2Q21 3Q20 Net Interest Income $22.96 0% 17% Noninterest Income $11.65 18% -21% Revenue $34.61 5% 0% Noninterest Expense $18.37 4% -19% Pre-tax Pre-provision Income $16.25 17% 39% Provision for Loan Losses $0.00 100% 100% Net Income $13.10 8% 75% Diluted Earnings per Share $0.59 8% 73% Operating(1) 3Q21 Favorable/(Unfavorable) 2Q21 3Q20 $22.96 0% 17% $11.65 18% -21% $34.61 5% 0% $18.37 2% -9% $16.25 15% 14% $0.00 100% 100% $13.10 7% 40% $0.59 7% 38% 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.
Operating Metrics(1) 3Q21 2Q21 3Q20 Profitability Net Interest Margin(2) 3.12% 3.26% 2.72% Efficiency Ratio(3) 53.06% 57.19% 58.59% Pretax Preprovision Income / Assets(4) 2.03% 1.84% 1.86% Return on Average Assets 1.64% 1.60% 1.22% Return on Average Tangible Equity 16.28% 15.88% 13.76% Growth Total Assets (Avg) $3,171 $3,079 $3,044 Growth Total Deposits (Avg) $2,732 $2,662 $2,648 Total Loans HFI (Avg) (Excl PPP) $1,790 $1,765 $1,683 Diluted Earnings per Share $0.59 $0.55 $0.43 Tangible Book Value per Share $14.53 $14.03 $12.92 Soundness Net Charge-Offs to Average Loans (Annualized) 0.05% 0.01% 0.00% Non-Performing Assets / Loans + OREO 0.20% 0.22% 0.16% Allowance for Loan Losses + Fair Value Mark / Loans Excl PPP 1.41% 1.47% 1.62% Common Equity Tier 1 Capital 13.95% 13.78% 13.39% Total Risk Based Capital 16.23% 16.13% 15.96% 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)
Chattanooga Expansion
Former Athens Federal Markets Knoxville Chattanooga Project MoonPie Team of nine experienced financial professionals, led by five Commercial Relationship Managers, hired to grow and serve Chattanooga customers Strategically: Consistent with our message of investing excess capital in local market, core banking With Knoxville, demonstrates quality high-quality lift-out experience Low risk vs acquisitions Diversifies CapStar’s markets and revenues Additive significant Athens Federal and Knoxville investments Provides strong in-state loan potential for current excess liquidity Financially: ~30% IRR ~ 9-month PTPP breakeven ~ 18-month PTPP earnback ~ 15-month net income breakeven ~ 30-month net income earnback ~ $0.08 dilutive year 1 Accretive year 2 ~ 10%, ~15%, ~20% accretion year 3-5
Chattanooga is Tennessee’s fourth largest MSA in population size (~700,000) and total deposits ($12.1 bil) Cited by SmartAssets as one of the nation’s top 20 best cities for young professionals. Named one of the “Top 45 Places to Go in the World” by the New York Times. Recognized by Niche as one of the nation’s best cities to retire in America in 2021. Dubbed “Gig City” when it was the first to implement a citywide gigabit network – now the fastest and least expensive high speed internet service in the U.S. Distinguished by an authentic arts scene with events such as the 7 Bridges Marathon and Riverbend Music Festival attracting thousands to the city each year. Enacted a series of bold sustainability policies as a pioneer in the green urban policy now termed a green renaissance for its focus on clean living. Known as the Scenic City, Chattanooga is recognized as one of America’s most breathtaking cities, tucked between the unique ridge-and-valley portion of the Appalachian mountains and the majestic Tennessee river with dozens of tourist destinations. Notable companies operating in Chattanooga MSA Sources: WRCBtv, niche.com, visitchattanooga.com, pcmag.com Chattanooga Highlights
Source: S&P Global Market Intelligence Includes all MSAs located in AL, AR, GA, KY, MS, NC, SC, TN, VA, and WV with 2021 population greater than 750,000; includes Chattanooga with population of 571,204 Attractive High-Growth Markets Birmingham, AL Memphis, TN Virginia Beach, VA Richmond, VA Knoxville, TN Chattanooga, TN Greensboro, SC Columbia, SC Atlanta, GA Nashville, TN Greenville, SC Charlotte, NC Charleston, SC Raleigh, NC 2021 - 2026 Projected Population Growth US Memphis, TN Virginia Beach, VA Columbia, SC Knoxville, TN Richmond, VA Greensboro, SC Birmingham, AL Chattanooga, TN Raleigh, NC Nashville, TN Charlotte, NC Greenville, SC Charleston, SC Atlanta, GA 2021 - 2026 Projected Household Income Growth US
Financial Detail
Net Interest Income / Margin(1) Net interest income of $23MM, consistent with 2Q21 NIM down 14 bps vs 2Q21 primarily due to record levels of deposits and lower PPP loan forgiveness fees Adjusted NIM stabilized over the last 3 quarters Significant opportunity to benefit net interest income, net income, PTPPA, ROAA, and ROATE through redeploying excess liquidity in loan growth 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 3Q21 Total deposit cost declined 2 bps to 0.19% driven by an increase in non-interest bearing balances and a decline in time deposit balances, 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 5.5% AVG linked-quarter annualized 9.4% EOP linked-quarter annualized PPP loans totaled $64MM at September 30, 2021 $2.2MM of fees remaining to be recognized Anticipate majority to be realized in 4Q21 Strengthened loan capabilities Stronger and larger commercial banker line-up Growing loan pipeline Improved credit processes Loan Growth and Yields
Noninterest Income Strong contribution across all categories Record: Deposit Service Charges Interchange and Debit Card Tri-Net Wealth Management Near record for SBA Continued strength in Mortgage Three Months Ended (Dollars in thousands) September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Noninterest Income Deposit Service Charges $ 1,187 $ 1,109 $ 1,102 $ 964 $ 1,064 Interchange and Debit Transaction Fees 1,236 1,227 1,092 782 936 Mortgage Banking 4,693 3,910 4,716 5,971 9,686 Tri-Net 1,939 1,536 1,143 1,165 668 Wealth Management 481 471 459 411 382 SBA Lending 911 377 492 916 476 Net Gain on Sale of Securities 7 (13) 26 51 34 Other 1,197 1,266 984 1,488 1,558 Total Noninterest Income $ 11,651 $ 9,883 $ 10,014 $ 11,748 $ 14,804 Average Assets $ 3,171,182 $ 3,078,748 $ 3,078,745 $ 3,028,225 $ 3,043,847 Noninterest Income / Average Assets 1.46% 1.29% 1.32% 1.54% 1.93% Revenue $ 34,615 $ 32,915 $ 32,196 $ 34,079 $ 34,460 % of Revenue 33.66% 30.03% 31.10% 34.47% 42.96%
Noninterest Expense Three Months Ended (Dollars in thousands) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 Noninterest Expense Salaries and Employee Benefits $ 10,980 $ 10,803 $ 9,427 $ 11,996 $ 12,949 Data Processing and Software 2,632 3,070 2,827 2,548 2,353 Occupancy 1,028 1,057 1,108 975 999 Equipment 760 980 899 900 864 Professional Services 469 460 704 370 638 Regulatory Fees 279 211 257 368 397 Acquisition Related Expenses - 256 67 2,105 2,548 Amortization of Intangibles 477 493 508 524 539 Other Operating 1,741 1,750 1,616 1,692 1,452 Total Noninterest Expense $ 18,366 $ 19,080 $ 17,413 $ 21,478 $ 22,739 Efficiency Ratio 53.06% 57.97% 54.08% 63.02% 65.99% Average Assets $ 3,171,182 $ 3,078,748 $ 3,078,745 $ 3,028,225 $ 3,043,847 Noninterest Expense / Average Assets 2.30% 2.49% 2.29% 2.82% 2.97% FTE 392 383 379 380 403 Operating Noninterest Expense(1) $ 18,366 $ 18,824 $ 17,346 $ 19,373 $ 20,191 Operating Efficiency Ratio(1) 53.06% 57.19% 53.88% 56.85% 58.59% Operating Noninterest Expense/Average Assets(1) 2.30% 2.45% 2.28% 2.55% 2.64% (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. Strong expense discipline with adoption of productivity mindset across the organization 3Q21 increase in salaries and benefits related to incentive accruals in anticipation of achieving maximum year-end payout Operating Noninterest Expenses excluding Mortgage and PPP declined $400K vs. 2Q21
Risk Management
We remain committed to continued focus on growing in-market core relationship banking activities and are achieving continued reductions in “out of market” exposures and Shared National Credits. We remain committed to robust internal asset quality review with a forward looking approach to assess: direction of risk adequacy and sustainability of the borrower’s cash flow coverage of collateral and guaranties We remain committed to external validation with robust external loan review and periodic stress tests At 3Q21: Initial focus on company-wide collection strategy led to marked improvement in past dues % of Criticized and Classified Loans improved 43% from 2Q21 Payment deferrals totaled $33MM involving 5 borrowers Shared National Credits were < 2% In-market loans were > 96% Loan losses remained low and averaged < $170K over last 8 quarters Loan Portfolio Summary (1)
Loan Portfolio Performance (1) Initial company-wide collection effort led to 36% reduction in past due loans Criticized and classified loans improved from 3.95% to 2.85% with the peak at 5.64% Net charge-offs remained low and have averaged < $170K over the last 8 quarters
Allowance for Loan Losses Positive asset quality trends combined with strong loan growth, resulted in no provision expense during the quarter The Allowance for Loan Losses at 3Q21 of $22.5MM plus the $3.3MM fair value mark on acquired loans was 1.41% of non-PPP Loans (1) PPP Loan balances net of unearned fees as of 09/30/2021. (1)
Capital Management
Capital Ratios 3Q21 2Q21 1Q21 "Well Capitalized" Guidelines Leverage 10.28% 10.17% 9.78% ≥ 5.00% Tangible Common Equity / Tangible Assets 10.51% 9.83% 9.50% NA Tier 1 Risk Based Capital 13.95% 13.78% 13.79% ≥ 8.00% Total Risk Based Capital 16.23% 16.13% 16.29% ≥ 10.00% 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 Declared a quarterly dividend of $0.06 per common share Prepared for opportunistic stock buyback; no shares repurchased in 3Q21
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 liquidity and capital levels provide earnings and profitability upside Repeatable Investment Opportunities Beneficiary of significant in-migration 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
Appendix: Other Financial Results and Non-GAAP Reconciliations
(Dollars in thousands, except per share information) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 TANGIBLE COMMON EQUITY Total Shareholders’ Equity $ 370,328 $ 359,752 $ 343,944 $ 343,486 $ 333,895 Less: Intangible Assets 48,220 48,697 49,190 49,698 50,222 Tangible Common Equity 322,108 311,055 294,754 293,788 283,673 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Tangible Common Equity $ 322,108 $ 311,055 $ 294,754 $ 293,788 $ 283,673 Total Assets 3,112,127 3,212,390 3,150,457 2,987,006 3,024,348 Less: Intangible Assets 48,220 48,697 49,190 49,698 50,222 Tangible Assets 3,063,907 3,163,693 3,101,268 2,934,404 2,974,127 Tangible Common Equity to Tangible Assets 10.51% 9.83% 9.50% 10.01% 9.54% TANGIBLE BOOK VALUE PER SHARE, REPORTED Tangible Common Equity $ 322,108 $ 311,055 $ 294,754 $ 293,788 $ 283,673 Shares of Common Stock Outstanding 22,165,760 22,165,547 22,089,873 21,988,803 21,947,805 Tangible Book Value Per Share, Reported $14.53 $14.03 $13.34 $13.36 $12.92 Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Total Average Shareholders’ Equity $ 367,807 $ 358,850 $ 350,681 $ 340,709 $ 321,506 Less: Average Intangible Assets 48,527 49,012 49,514 50,038 50,577 Average Tangible Equity 319,280 309,838 301,167 290,671 270,929 Net Income 13,102 12,076 11,030 9,681 7,487 Return on Average Tangible Equity (ROATE) 16.28% 15.63% 14.85% 13.25% 10.99% Non-GAAP Financial Measures
Three Months Ended (Dollars in thousands, except per share information) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 OPERATING NET INCOME Net Income $ 13,102 $ 12,076 $ 11,030 $ 9,681 $ 7,487 Add: Merger Related Expense - 256 67 2,105 2,548 Less: Income Tax Impact - (67) (18) (550) (666) Operating Net Income 13,102 12,265 11,079 11,236 9,369 OPERATING DILUTED NET INCOME PER SHARE Operating Net Income $ 13,102 $ 12,265 $ 11,079 $ 11,236 $ 9,369 Average Diluted Shares Outstanding 22,218,402 22,198,829 22,076,600 21,978,925 21,960,490 Operating Diluted Net Income per Share $ 0.59 $ 0.55 $ 0.50 $ 0.51 $ 0.43 OPERATING RETURN ON AVERAGE ASSETS (ROAA) Operating Net Income $ 13,102 $ 12,265 $ 11,079 $ 11,236 $ 9,369 Total Average Assets 3,171,182 3,078,748 3,078,745 3,028,225 3,043,847 Operating Return on Average Assets (ROAA) 1.64% 1.60% 1.46% 1.48% 1.22% OPERATING RETURN ON AVERAGE TANGIBLE EQUITY (ROATE) Average Tangible Equity $ 319,280 $ 309,838 $ 301,167 $ 290,671 $ 270,929 Operating Net Income 13,102 12,265 11,079 11,236 9,369 Operating Return on Average Tangible Equity (ROATE) 16.28% 15.88% 14.92% 15.38% 13.76% Non-GAAP Financial Measures Operating results are non-GAAP financial measures that adjust GAAP reported net income and other metrics for certain income and expense items as outlined in the non-GAAP reconciliation calculations above using a blended statutory income tax rate of 26.14% excluding non-deductible one-time merger related items.
Three Months Ended (Dollars in thousands, except per share information) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 OPERATING NONINTEREST EXPENSE Noninterest Expense $ 18,366 $ 19,080 $ 17,413 $ 21,478 $ 22,739 Less: Merger Related Expense - (256) (67) (2,105) (2,548) Operating Noninterest Expense 18,366 18,824 17,346 19,373 20,191 OPERATING NONINTEREST EXPENSE / AVERAGE ASSETS Operating Noninterest Expense $ 18,366 $ 18,824 $ 17,346 $ 19,373 $ 20,191 Total Average Assets 3,171,182 3,078,748 3,078,745 3,028,225 3,043,847 Operating Noninterest Expense / Average Assets 2.30% 2.45% 2.28% 2.55% 2.64% OPERATING EFFICIENCY RATIO Operating Noninterest Expense $ 18,366 $ 18,824 $ 17,346 $ 19,373 $ 20,191 Net Interest Income 22,964 23,032 22,182 22,331 19,656 Noninterest Income 11,651 9,883 10,014 11,748 14,804 Total Revenues 34,615 32,915 32,196 34,079 34,460 Operating Efficiency Ratio 53.06% 57.19% 53.88% 56.85% 58.59% 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
