CapStar Financial Holdings, Inc. Reports Third Quarter 2020 Results

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

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

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

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

Profitability

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

Growth

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

Soundness

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

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

Dividend

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

Conference Call and Webcast Information

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

About CapStar Financial Holdings, Inc.

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

FORWARD-LOOKING STATEMENTS

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

NON-GAAP MEASURES

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

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

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

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

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

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

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

_____________________

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

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

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

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

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

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


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

CONTACT

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

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