cstr-10q_20170930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2017

OR

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

For the transition period from _______ to ________.

Commission File Number:  001-37886

 

CAPSTAR FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Tennessee

81-1527911

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

 

 

1201 Demonbreun Street, Suite 700

Nashville, Tennessee

(Address of principal executive office)

37203

(zip code)

 

(615) 732-6400

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

(Do not check if a smaller reporting company)

Smaller Reporting Company

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 16, 2017, there were 11,359,130 shares of common stock, $1.00 par value per share, issued and outstanding.

 

 


CAPSTAR FINANCIAL HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

Item

 

 

Page

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Consolidated Financial Statements

 

5

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016

 

5

 

 

 

 

 

Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2017 and 2016

 

6

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2017 and 2016

 

7

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the nine months ended September 30, 2017 and 2016

 

8

 

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2017 and 2016

 

9

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

10

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

30

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

42

 

 

 

 

Item 4.

Controls and Procedures

 

42

 

 

 

PART II – OTHER INFORMATION

 

43

 

 

 

 

Item 1. 

Legal Proceedings

 

43

 

 

 

 

Item 1A.

Risk Factors

 

43

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

 

 

 

 

Item 6.

Exhibits

 

44

 

 

 

 

SIGNATURES

 

45

 

 

2


TERMINOLOGY

The terms “we,” “our,” “us,” “the Company,” “CSTR” and “CapStar” that appear in this Quarterly Report on Form 10-Q (this “Report”) refer to CapStar Financial Holdings, Inc. and its wholly-owned subsidiary, CapStar Bank.  The terms “CapStar Bank,” “the Bank” and “our Bank” that appear in this Report refer to CapStar Bank.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “aspire,” “roadmap,” “achieve,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “goal,” “target,” “would,” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. The inclusion of these forward-looking statements should not be regarded as a representation by us or any other person that such expectations, estimates and projections will be achieved. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date of this Report, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following:

Economic conditions (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation) that impact the financial services industry as a whole and/or our business; the concentration of our business in the Nashville metropolitan statistical area (“MSA”) and the effect of changes in the economic, political and environmental conditions on this market; increased competition in the financial services industry, locally, regionally or nationally, which may adversely affect pricing and the other terms offered to our clients; our dependence on our management team and board of directors and changes in our management and board composition; our reputation in the community; our ability to execute our strategy and to achieve loan and deposit growth through organic growth and strategic acquisitions; credit risks related to the size of our borrowers and our ability to adequately identify, assess and limit our credit risk; our concentration of large loans to a small number of borrowers; the significant portion of our loan portfolio that originated during the past two years and therefore may less reliably predict future collectability than older loans; the adequacy of reserves (including our allowance for loan losses) and the appropriateness of our methodology for calculating such reserves; non-performing loans and leases; non-performing assets; charge-offs, non-accruals, troubled-debt restructurings, impairments and other credit issues; adverse trends in the healthcare service industry, which is an integral component of our market’s economy; our management of risks inherent in our commercial real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of our collateral and our ability to sell collateral upon any foreclosure; governmental legislation and regulation, including changes in the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act of 2010, as amended, Basel guidelines, capital requirements, accounting regulation or standards and other applicable laws and regulations; the loss of large depositor relationships, which could force us to fund our business through more expensive and less stable sources; operational and liquidity risks associated with our business, including liquidity risks inherent in correspondent banking; volatility in interest rates and our overall management of interest rate risk, including managing the sensitivity of our interest-earning assets and interest-bearing liabilities to interest rates, and the impact to our earnings from a change in interest rates; the potential for our Bank’s regulatory lending limits and other factors related to our size to restrict our growth and prevent us from effectively implementing our business strategy; strategic acquisitions we may undertake to achieve our goals; the sufficiency of our capital, including sources of capital and the extent to which we may be required to raise additional capital to meet our goals; fluctuations to the fair value of our investment securities that are beyond our control; deterioration in the fiscal position of the U.S. government and downgrades in Treasury and federal agency securities; potential exposure to fraud, negligence, computer theft and cyber-crime; the adequacy of our risk management framework; our dependence on our information technology and telecommunications systems and the potential for any systems failures or interruptions; our dependence upon outside third parties for the processing and handling of our records and data; our ability to adapt to technological change; the financial soundness of other financial institutions; our exposure to environmental liability risk associated with our lending activities; our engagement in derivative transactions; our involvement from time to time in legal proceedings and examinations and remedial actions by regulators; the susceptibility of our market to natural disasters and acts of God; and the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting.

3


The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are detailed from time to time in the Company’s periodic and current reports filed with the Securities and Exchange Commission (the “SEC”), including those factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 under the headings “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.  If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Report, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us.

 

 

4


PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Balance Sheets

(Dollars in thousands, except share data)

 

 

 

September 30, 2017

 

 

 

 

 

 

 

(unaudited)

 

 

December 31, 2016

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

10,796

 

 

$

9,134

 

Interest-bearing deposits in financial institutions

 

 

58,993

 

 

 

54,323

 

Federal funds sold

 

 

 

 

 

16,654

 

Total cash and cash equivalents

 

 

69,789

 

 

 

80,111

 

Securities available-for-sale, at fair value

 

 

146,600

 

 

 

182,355

 

Securities held-to-maturity, fair value of $48,980, and $49,731 at

   September 30, 2017 and December 31, 2016, respectively

 

 

45,635

 

 

 

46,864

 

Loans held for sale

 

 

53,225

 

 

 

42,111

 

Loans

 

 

974,530

 

 

 

935,251

 

Less allowance for loan losses

 

 

(14,122

)

 

 

(11,634

)

Loans, net

 

 

960,408

 

 

 

923,617

 

Premises and equipment, net

 

 

5,978

 

 

 

5,350

 

Restricted equity securities

 

 

8,799

 

 

 

6,032

 

Accrued interest receivable

 

 

3,849

 

 

 

3,942

 

Goodwill

 

 

6,219

 

 

 

6,219

 

Core deposit intangible

 

 

33

 

 

 

71

 

Deferred tax assets

 

 

12,472

 

 

 

12,956

 

Bank owned life insurance

 

 

22,335

 

 

 

21,900

 

Other assets

 

 

3,217

 

 

 

2,147

 

Total assets

 

$

1,338,559

 

 

$

1,333,675

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest-bearing

 

$

250,007

 

 

$

197,788

 

Interest-bearing

 

 

303,756

 

 

 

299,621

 

Savings and money market accounts

 

 

338,391

 

 

 

447,686

 

Time

 

 

199,341

 

 

 

183,628

 

Total deposits

 

 

1,091,495

 

 

 

1,128,723

 

Federal Home Loan Bank advances

 

 

95,000

 

 

 

55,000

 

Accrued interest payable

 

 

305

 

 

 

212

 

Other liabilities

 

 

7,555

 

 

 

10,533

 

Total liabilities

 

 

1,194,355

 

 

 

1,194,468

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Series A convertible preferred stock, $1 par value; 5,000,000 shares authorized;

   878,049 shares issued and outstanding at September 30, 2017 and

   December 31, 2016

 

 

878

 

 

 

878

 

Common stock, voting, $1 par value; 20,000,000 shares authorized; 11,346,498 and

   11,204,515 shares issued and outstanding at September 30, 2017 and December 31,

   2016, respectively

 

 

11,347

 

 

 

11,205

 

Additional paid-in capital

 

 

117,617

 

 

 

116,143

 

Retained earnings

 

 

18,541

 

 

 

17,132

 

Accumulated other comprehensive loss, net of income tax

 

 

(4,179

)

 

 

(6,151

)

Total shareholders’ equity

 

 

144,204

 

 

 

139,207

 

Total liabilities and shareholders’ equity

 

$

1,338,559

 

 

$

1,333,675

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

5


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

12,095

 

 

$

10,659

 

 

$

33,935

 

 

$

29,532

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

838

 

 

 

787

 

 

 

2,827

 

 

 

2,596

 

Tax-exempt

 

 

304

 

 

 

291

 

 

 

944

 

 

 

841

 

Federal funds sold

 

 

7

 

 

 

4

 

 

 

26

 

 

 

12

 

Restricted equity securities

 

 

108

 

 

 

71

 

 

 

271

 

 

 

210

 

Interest-bearing deposits in financial institutions

 

 

169

 

 

 

63

 

 

 

387

 

 

 

197

 

Total interest income

 

 

13,521

 

 

 

11,875

 

 

 

38,390

 

 

 

33,388

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

635

 

 

 

404

 

 

 

1,839

 

 

 

1,096

 

Savings and money market accounts

 

 

772

 

 

 

689

 

 

 

2,360

 

 

 

2,141

 

Time deposits

 

 

706

 

 

 

546

 

 

 

1,750

 

 

 

1,566

 

Federal funds purchased

 

 

2

 

 

 

13

 

 

 

13

 

 

 

21

 

Securities sold under agreements to repurchase

 

 

 

 

 

 

 

 

 

 

 

1

 

Federal Home Loan Bank advances

 

 

563

 

 

 

97

 

 

 

1,083

 

 

 

280

 

Total interest expense

 

 

2,678

 

 

 

1,749

 

 

 

7,045

 

 

 

5,105

 

Net interest income

 

 

10,843

 

 

 

10,126

 

 

 

31,345

 

 

 

28,283

 

Provision for loan losses

 

 

(195

)

 

 

1,639

 

 

 

12,900

 

 

 

2,759

 

Net interest income after provision for loan losses

 

 

11,038

 

 

 

8,487

 

 

 

18,445

 

 

 

25,524

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury management and other deposit service charges

 

 

427

 

 

 

277

 

 

 

1,097

 

 

 

805

 

Loan commitment fees

 

 

223

 

 

 

329

 

 

 

646

 

 

 

901

 

Net gain (loss) on sale of securities

 

 

9

 

 

 

(4

)

 

 

42

 

 

 

121

 

Tri-Net fees

 

 

367

 

 

 

 

 

 

748

 

 

 

 

Mortgage banking income

 

 

2,030

 

 

 

2,339

 

 

 

4,617

 

 

 

5,342

 

Other noninterest income

 

 

316

 

 

 

250

 

 

 

1,021

 

 

 

961

 

Total noninterest income

 

 

3,372

 

 

 

3,191

 

 

 

8,171

 

 

 

8,130

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,119

 

 

 

5,119

 

 

 

14,989

 

 

 

15,275

 

Data processing and software

 

 

709

 

 

 

627

 

 

 

2,040

 

 

 

1,831

 

Professional fees

 

 

336

 

 

 

391

 

 

 

1,050

 

 

 

1,148

 

Occupancy

 

 

531

 

 

 

352

 

 

 

1,518

 

 

 

1,133

 

Equipment

 

 

564

 

 

 

458

 

 

 

1,604

 

 

 

1,301

 

Regulatory fees

 

 

270

 

 

 

250

 

 

 

877

 

 

 

742

 

Other operating

 

 

946

 

 

 

1,330

 

 

 

2,988

 

 

 

3,057

 

Total noninterest expense

 

 

8,475

 

 

 

8,527

 

 

 

25,066

 

 

 

24,487

 

Income before income taxes

 

 

5,935

 

 

 

3,151

 

 

 

1,550

 

 

 

9,167

 

Income tax expense

 

 

1,516

 

 

 

1,042

 

 

 

141

 

 

 

2,998

 

Net income

 

$

4,419

 

 

$

2,109

 

 

$

1,409

 

 

$

6,169

 

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share of common stock

 

$

0.39

 

 

$

0.24

 

 

$

0.13

 

 

$

0.71

 

Diluted net income per share of common stock

 

$

0.35

 

 

$

0.20

 

 

$

0.11

 

 

$

0.58

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,279,364

 

 

 

8,792,665

 

 

 

11,239,093

 

 

 

8,701,596

 

Diluted

 

 

12,750,423

 

 

 

10,799,536

 

 

 

12,758,091

 

 

 

10,682,976

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

6


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

4,419

 

 

$

2,109

 

 

$

1,409

 

 

$

6,169

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

526

 

 

 

(744

)

 

 

2,433

 

 

 

2,829

 

Reclassification adjustment for gains (losses) included in

   net income

 

 

(9

)

 

 

4

 

 

 

(42

)

 

 

(121

)

Tax effect

 

 

(198

)

 

 

283

 

 

 

(915

)

 

 

(1,037

)

Net of tax

 

 

319

 

 

 

(457

)

 

 

1,476

 

 

 

1,671

 

Unrealized losses on securities transferred to held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for losses included in

   net income

 

 

79

 

 

 

42

 

 

 

162

 

 

 

125

 

Tax effect

 

 

(30

)

 

 

(16

)

 

 

(62

)

 

 

(48

)

Net of tax

 

 

49

 

 

 

26

 

 

 

100

 

 

 

77

 

Unrealized gains (losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(29

)

 

 

87

 

 

 

(242

)

 

 

(1,760

)

Reclassification adjustment for losses included in

   net income

 

 

278

 

 

 

88

 

 

 

589

 

 

 

261

 

Tax effect

 

 

(34

)

 

 

(33

)

 

 

49

 

 

 

674

 

Net of tax

 

 

215

 

 

 

142

 

 

 

396

 

 

 

(825

)

Other comprehensive income (loss)

 

 

583

 

 

 

(289

)

 

 

1,972

 

 

 

923

 

Comprehensive income

 

$

5,002

 

 

$

1,820

 

 

$

3,381

 

 

$

7,092

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

7


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(Dollars in thousands, except share data)

 

 

 

Preferred

 

 

Common Stock

 

 

Additional

paid-in

 

 

Retained

 

 

Accumulated

other

comprehensive

 

 

Total

shareholders’

 

 

 

stock

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

loss

 

 

equity

 

Balance December 31, 2015

 

$

1,610

 

 

 

8,577,051

 

 

$

8,577

 

 

$

95,277

 

 

$

8,036

 

 

$

(4,914

)

 

$

108,586

 

Issuance of restricted common

   stock, net of forfeitures and

   withholdings to satisfy

   employee tax obligations

 

 

 

 

 

106,548

 

 

 

107

 

 

 

(123

)

 

 

 

 

 

 

 

 

(16

)

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

643

 

 

 

 

 

 

 

 

 

643

 

Excess tax benefit from stock

   compensation

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Issuance of common stock

 

 

 

 

 

1,688,049

 

 

 

1,688

 

 

 

20,240

 

 

 

 

 

 

 

 

 

21,928

 

Conversion of preferred stock

 

 

(732

)

 

 

731,707

 

 

 

732

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of common stock

   warrants

 

 

 

 

 

87,666

 

 

 

88

 

 

 

77

 

 

 

 

 

 

 

 

 

165

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,169

 

 

 

 

 

 

6,169

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

923

 

 

 

923

 

Balance September 30, 2016

 

$

878

 

 

 

11,191,021

 

 

$

11,192

 

 

$

116,143

 

 

$

14,205

 

 

$

(3,991

)

 

$

138,427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2016

 

$

878

 

 

 

11,204,515

 

 

$

11,205

 

 

$

116,143

 

 

$

17,132

 

 

$

(6,151

)

 

$

139,207

 

Issuance of restricted common

   stock, net of forfeitures and

   withholdings to satisfy

   employee tax obligations

 

 

 

 

 

21,480

 

 

 

21

 

 

 

(285

)

 

 

 

 

 

 

 

 

(264

)

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

771

 

 

 

 

 

 

 

 

 

771

 

Exercise of employee

   common stock options, net

   of withholdings to satisfy

   employee tax obligations

 

 

 

 

 

71,517

 

 

 

72

 

 

 

572

 

 

 

 

 

 

 

 

 

644

 

Exercise of common stock

   warrants

 

 

 

 

 

48,986

 

 

 

49

 

 

 

416

 

 

 

 

 

 

 

 

 

465

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,409

 

 

 

 

 

 

1,409

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,972

 

 

 

1,972

 

Balance September 30, 2017

 

$

878

 

 

 

11,346,498

 

 

$

11,347

 

 

$

117,617

 

 

$

18,541

 

 

$

(4,179

)

 

$

144,204

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

8


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

1,409

 

 

$

6,169

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

12,900

 

 

 

2,759

 

Accretion of discounts on acquired loans and deferred fees

 

 

(537

)

 

 

(1,232

)

Depreciation and amortization

 

 

345

 

 

 

324

 

Net amortization of premiums on investment securities

 

 

984

 

 

 

1,106

 

Securities gains, net

 

 

(42

)

 

 

(121

)

Mortgage banking income

 

 

(4,617

)

 

 

(5,342

)

Tri-Net fees

 

 

(748

)

 

 

 

Net gain on sale of loans

 

 

(67

)

 

 

 

Net loss on disposal of premises and equipment

 

 

137

 

 

 

 

Net gain on sale of other real estate owned

 

 

 

 

 

(157

)

Stock-based compensation

 

 

771

 

 

 

643

 

Excess tax benefit from stock compensation

 

 

 

 

 

(29

)

Deferred income tax expense

 

 

(445

)

 

 

63

 

Origination of loans held for sale

 

 

(409,179

)

 

 

(393,378

)

Proceeds from loans held for sale

 

 

403,497

 

 

 

370,374

 

Net increase in accrued interest receivable and other assets

 

 

(1,320

)

 

 

(2,021

)

Net increase (decrease) in accrued interest payable and other liabilities

 

 

(2,630

)

 

 

1,077

 

Net cash provided by (used in) operating activities

 

 

458

 

 

 

(19,765

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Activities in securities available for sale:

 

 

 

 

 

 

 

 

Purchases

 

 

(11,754

)

 

 

(55,862

)

Sales

 

 

34,299

 

 

 

46,700

 

Maturities, prepayments and calls

 

 

14,718

 

 

 

17,113

 

Activities in securities held to maturity:

 

 

 

 

 

 

 

 

Purchases

 

 

 

 

 

(4,300

)

Maturities, prepayments and calls

 

 

1,332

 

 

 

1,233

 

Purchase of restricted equity securities

 

 

(2,767

)

 

 

(112

)

Net increase in loans

 

 

(49,154

)

 

 

(112,961

)

Purchase of premises and equipment

 

 

(1,074

)

 

 

(103

)

Proceeds from the sale of premises and equipment

 

 

3

 

 

 

 

Proceeds from sale of other real estate