News Release

NASDAQ GS | CSTR (Common Stock)

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10/20/17 4:00 p.m. ET
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News Release

CapStar Financial Holdings, Inc., is a bank holding company headquartered in Nashville, Tennessee, operated primarily through its wholly owned subsidiary, CapStar Bank, a Tennessee-chartered state bank. CapStar is a commercial bank that establishes and maintains comprehensive relationships with clients by delivering customized and creative banking solutions and superior client service.

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CapStar Financial Holdings, Inc. Announces First Quarter 2017 Results

NASHVILLE, Tenn., April 26, 2017 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) reported net income of $0.3 million, or $0.03 per share on a fully diluted basis for the three months ended March 31, 2017, compared to $1.6 million, or $0.15 per share on a fully diluted basis for the three months ended March 31, 2016.  Fully diluted earnings per share were impacted by $0.18 per share during the first quarter due to credit related issues. 

“While we are disappointed with the increase in nonperforming loans and net charge-offs during the first quarter, we are pleased with another strong quarter of loan and core deposit growth,” said Claire W Tucker, President and Chief Executive Officer of CapStar. “The changes in these credit metrics are a result of two borrowers that have been on our radar screen and classified for some time, “said Tucker. “We continue to believe the credit infrastructure and risk management systems we have in place will satisfactorily support our operations and will allow us to achieve our goal of delivering sound, profitable growth for our shareholders. We remain confident that overall asset quality remains solid, growth continues at a robust pace, and we are committed to delivering the profitability that will help us achieve our goal of 1.0% ROAA by the end of 2018.”

Soundness

  • The allowance for loan and lease losses represented 1.39% of total loans at March 31, 2017 compared to 1.23% at March 31, 2016.
     
  • Non-performing assets as a percent of total loans and other real estate owned was 1.36% at March 31, 2017 compared to 0.67% at March 31, 2016.
     
  • Annualized net charge-offs totaled 0.43% for the three months ended March 31, 2017 compared to 0.38% for the same period in 2016. 
     
  • The total risk based capital ratio increased to 12.13% at March 31, 2017 compared to 11.26% at March 31, 2016.

Profitability

  • Return on average assets ("ROAA") for the three months ended March 31, 2017 was 0.10% compared to 0.54% for the same period in 2016. 
     
  • Return on average equity ("ROAE") for the three months ended March 31, 2017 was 0.95% compared to 5.75% for the same period in 2016. 
     
  • The net interest margin (“NIM”) for the three months ended March 31, 2017 was 3.12% compared to 3.18% for the same period in 2016. 
     
  • The efficiency ratio for the three months ended March 31, 2017 was 69.4% compared to 70.7% for the same period in 2016. 

“Although our margin was impacted by the increase in nonaccrual loans, our profitability roadmap is dependent on expanding existing and acquiring new relationships, which drives our loan and core deposit growth,” said Rob Anderson, chief financial officer and chief administrative officer of CapStar.  “While we typically lead with a loan opportunity, we continue to achieve success in obtaining the operating accounts and providing treasury management services to our commercial clients, as we focus on becoming their primary bank.” 

Growth

  • Average gross loans and leases for the quarter ended March 31, 2017 increased 19%, to $974 million, compared to $822 million for the same period in 2016.
     
  • Average total deposits for the quarter ended March 31, 2017 increased 11.0%, to $1.1 billion, compared to $1.0 billion for the same period in 2016.
     
  • Average Demand and NOW deposits for the quarter ended March 31, 2017 increased 38%, to $541 million, compared to $393 million for the same period in 2016.
     
  • Mortgage loan originations increased 10%, to $93 million for the three months ended March 31, 2017 compared to $85 million for the same period in 2016.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Thursday, April 27, 2017.  During the call, management will review the first quarter results and operational highlights.  Interested parties may listen to the call by dialing (844) 412-1002.  The conference ID number is 6970312.  A simultaneous webcast may be accessed on CapStar’s website at www.capstarbank.com.  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 March 31, 2017, on a consolidated basis, CapStar had total assets of $1.4 billion, gross loans of $1.0 billion, total deposits of $1.2 billion, and shareholders’ equity of $140.2 million.  Visit www.capstarbank.com for more information.

Forward-Looking Statements

Certain statements in this earnings release are forward-looking statements that reflect CapStar’s current views with respect to, among other things, future events and CapStar’s financial and operational 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,” “achieve,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “roadmap”, “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 CapStar’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond CapStar’s control. The inclusion of these forward-looking statements should not be regarded as a representation by CapStar or any other person that such expectations, estimates and projections will be achieved. Accordingly, CapStar cautions 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 CapStar believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, 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 CapStar’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, any factors identified in this earnings release as well as those factors that are detailed from time to time in CapStar’s periodic and current reports filed with the Securities and Exchange Commission, including those factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 under the heading “Item 1A. Risk Factors” 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 CapStar’s 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 earnings release, and CapStar does 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 CapStar to predict their occurrence or how they will affect CapStar.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Income (unaudited)

First Quarter 2017 Earnings Release
     
     Three Months Ended  
    March 31,  
    2017     2016  
Interest income:                
Loans, including fees   $ 10,466,758     $ 9,268,272  
Securities:                
Taxable     1,002,896       898,038  
Tax-exempt     325,916       282,244  
Federal funds sold     2,305       4,138  
Restricted equity securities     76,286       69,108  
Interest-bearing deposits in financial institutions     104,791       76,378  
    Total interest income     11,978,952       10,598,178  
Interest expense:                
Interest-bearing deposits     617,466       301,633  
Savings and money market accounts     815,092       731,702  
Time deposits     470,645       514,445  
Federal funds purchased     3,910       2,083  
Securities sold under agreements to repurchase           1,311  
Federal Home Loan Bank advances     140,259       90,728  
Total interest expense     2,047,372       1,641,902  
Net interest income     9,931,580       8,956,276  
Provision for loan and lease losses     3,404,799       937,216  
Net interest income after provision for loan and lease losses     6,526,781       8,019,060  
Noninterest income:                
Service charges on deposit accounts     328,585       225,427  
Loan commitment fees     236,274       430,122  
Net gain (loss) on sale of securities     (6,229 )     38,961  
Mortgage banking income     1,216,362       1,347,452  
Other noninterest income     358,554       328,810  
Total noninterest income     2,133,546       2,370,772  
Noninterest expense:                
Salaries and employee benefits     5,086,451       5,217,755  
Data processing and software     620,508       568,477  
Professional fees     364,553       330,738  
Occupancy     448,798       409,881  
Equipment     496,196       406,571  
Regulatory fees     307,060       227,260  
Other operating     1,051,871       849,059  
Total noninterest expense     8,375,437       8,009,741  
Income before income taxes     284,890       2,380,091  
Income tax (benefit) expense     (47,168 )     796,245  
Net income   $ 332,058     $ 1,583,846  
Per share information:                
Basic net income per share of common stock   $ 0.03     $ 0.18  
Diluted net income per share of common stock   $ 0.03     $ 0.15  
Weighted average shares outstanding:                
Basic     11,210,948       8,628,683  
Diluted     12,784,117       10,572,193  
 
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited)

First Quarter 2017 Earnings Release
     Five Quarter Comparison  
    3/31/17     12/31/16     9/30/16     6/30/16     3/31/16  
Income Statement Data:                                        
Net interest income   $ 9,931,580     $ 10,180,273     $ 10,125,515     $ 9,201,155     $ 8,956,275  
Provision for loan and lease losses     3,404,799       69,884       1,638,669       182,863       937,216  
Net interest income after provision for loan and lease losses     6,526,781       10,110,389       8,486,845       9,018,292       8,019,059  
Service charges on deposit accounts     328,585       302,831       276,751       303,144       225,427  
Loan commitment fees     236,274       217,042       328,785       142,618       430,122  
Net gain (loss) on sale of securities     (6,229 )           (3,964 )     85,876       38,961  
Mortgage banking income     1,216,362       2,033,459       2,339,310       1,654,843       1,347,452  
Other noninterest income     358,554       400,690       250,582       381,711       328,809  
Total noninterest income     2,133,546       2,954,021       3,191,463       2,568,192       2,370,772  
Salaries and employee benefits     5,086,451       5,185,016       5,119,356       4,938,383       5,217,755  
Data processing and software     620,508       542,300       627,335       634,742       568,477  
Professional fees     364,553       405,947       390,862       426,132       330,738  
Occupancy     448,798       365,741       351,691       371,092       409,881  
Equipment     496,196       442,547       458,053       436,168       406,571  
Regulatory fees     307,060       348,427       250,424       264,625       227,260  
Other operating     1,051,871       1,351,527       1,329,084       879,652       849,059  
Total noninterest expense     8,375,437       8,641,506       8,526,805       7,950,794       8,009,741  
Net income before income tax expense     284,890       4,422,904       3,151,504       3,635,690       2,380,090  
Income tax (benefit) expense     (47,168 )     1,495,445       1,042,282       1,159,438       796,245  
Net income   $ 332,058     $ 2,927,460     $ 2,109,222     $ 2,476,252     $ 1,583,845  
Weighted average shares - basic     11,210,948       11,194,534       8,792,665       8,682,438       8,628,683  
Weighted average shares - diluted     12,784,117       12,787,677       10,799,536       10,675,916       10,572,194  
Net income per share, basic   $ 0.03     $ 0.26     $ 0.24     $ 0.29     $ 0.18  
Net income per share, diluted     0.03       0.23       0.20       0.23       0.15  
Balance Sheet Data (at period end):                                        
Cash and cash equivalents   $ 60,038,626     $ 80,110,806     $ 73,450,735     $ 97,546,046     $ 76,706,579  
Securities available for sale     188,516,087       182,354,987       167,213,109       171,336,596       189,807,985  
Securities held to maturity     46,854,518       46,863,640       46,227,968       43,331,042       42,953,364  
Loans held for sale     35,370,814       42,110,581       61,251,662       57,014,256       29,530,174  
Total loans and leases     1,003,433,910       935,250,703       924,030,515       887,437,485       837,690,395  
Allowance for loan and lease losses     (13,996,869 )     (11,633,531 )     (11,510,464 )     (10,453,603 )     (10,298,559 )
Total assets     1,381,702,597       1,333,675,063       1,318,057,325       1,310,417,841       1,223,179,646  
Non-interest-bearing deposits     223,449,870       197,787,618       191,469,462       193,541,662       220,686,364  
Interest-bearing deposits     934,545,319       930,934,634       944,590,330       949,759,113       865,650,400  
Federal Home Loan Bank advances     75,000,000       55,000,000       30,000,000       40,000,000       15,000,000  
Total liabilities     1,241,491,175       1,194,467,666       1,179,630,825       1,196,099,660       1,112,320,842  
Shareholders' equity     140,211,422       139,207,396       138,426,500       114,318,181       110,858,804  
Total shares of common stock outstanding     11,218,328       11,204,515       11,191,021       8,683,902       8,677,902  
Total shares of preferred stock outstanding     878,049       878,049       878,049       1,609,756       1,609,756  
Book value per share of common stock     11.70       11.62       11.57       11.26       10.87  
Market value per share of common stock (1)     19.07       21.96       16.92       -       -  
Capital ratios:                                        
Total risk based capital     12.13 %     12.60 %     12.45 %     10.67 %     11.26 %
Tier 1 risk based capital     11.01 %     11.61 %     11.46 %     9.73 %     10.26 %
Common equity tier 1 capital     10.32 %     10.90 %     10.75 %     8.34 %     8.75 %
Leverage     10.37 %     10.46 %     10.47 %     8.90 %     9.16 %
                                                   
(1) CapStar Financial Holdings, Inc. completed its initial public offering during the third quarter of 2016.  As such, market values per share of common stock are not provided for previous periods.
 
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited)

First Quarter 2017 Earnings Release
     Five Quarter Comparison  
    3/31/17     12/31/16     9/30/16     6/30/16     3/31/16  
Average Balance Sheet Data:                                        
Average cash and cash equivalents   $ 58,925,144     $ 66,757,676     $ 55,054,076     $ 56,458,924     $ 67,706,162  
Average investment securities     237,084,429       226,032,691       218,462,999       232,587,954       220,281,801  
Average loans held for sale     28,359,188       52,483,255       63,640,373       43,055,160       29,798,738  
Average loans and leases     974,349,816       938,887,232       918,301,556       873,984,373       822,111,590  
Average assets     1,340,236,730       1,324,620,495       1,296,870,515       1,247,076,866       1,181,427,683  
Average interest bearing deposits     933,328,122       942,922,989       944,794,017       909,027,610       837,952,639  
Average total deposits     1,143,636,485       1,138,778,930       1,132,037,604       1,093,452,418       1,027,457,215  
Average Federal Home Loan Bank advances     43,836,734       33,478,261       29,565,217       27,417,582       28,021,978  
Average liabilities     1,198,685,795       1,185,091,445       1,179,480,497       1,134,506,177       1,070,607,967  
Average shareholders' equity     141,550,935       139,529,051       117,390,018       112,570,689       110,819,715  
Performance Ratios:                                        
Annualized return on average assets     0.10 %     0.88 %     0.65 %     0.80 %     0.54 %
Annualized return on average equity     0.95 %     8.35 %     7.15 %     8.85 %     5.75 %
Net interest margin     3.12 %     3.17 %     3.23 %     3.09 %     3.18 %
Annualized Non-interest income to average assets     0.65 %     0.89 %     0.98 %     0.83 %     0.81 %
Efficiency ratio     69.4 %     65.8 %     64.0 %     67.6 %     70.7 %
Loans by Type:                                        
Commercial and industrial   $ 420,825,316     $ 379,619,518     $ 389,717,893     $ 389,087,927     $ 381,548,046  
Commercial real estate - owner occupied     92,213,135       106,734,888       108,920,619       104,345,021       104,243,080  
Commercial real estate - non-owner occupied     268,741,865       195,586,977       163,625,512       171,426,074       161,466,867  
Construction and development     74,006,891       94,491,256       91,366,437       63,744,151       52,479,785  
Consumer real estate     99,952,470       97,014,959       96,918,661       91,090,508       90,393,165  
Consumer     4,494,573       5,974,465       7,045,978       7,486,178       8,291,223  
Other     43,983,239       56,795,954       67,805,899       61,669,965       40,698,880  
Asset Quality Data:                                        
Allowance for loan and lease losses to total loans     1.39 %     1.24 %     1.25 %     1.18 %     1.23 %
Allowance for loan and lease losses to non-performing loans     103 %     321 %     279 %     179 %     184 %
Nonaccrual loans   $ 13,623,534     $ 3,619,422     $ 4,122,942     $ 5,829,423     $ 5,586,503  
Troubled debt restructurings     1,255,651       1,271,897       1,288,324       -       -  
Loans - 90 days past due and accruing     -       -       -       -       -  
Total non-performing loans     13,623,534       3,619,422       4,122,942       5,829,423       5,586,503  
OREO and repossessed assets     -       -       -       -       -  
Total non-performing assets     13,623,534       3,619,422       4,122,942       5,829,423       5,586,503  
Non-performing loans to total loans     1.36 %     0.39 %     0.45 %     0.66 %     0.67 %
Non-performing assets to total assets     0.99 %     0.27 %     0.31 %     0.44 %     0.46 %
Non-performing assets to total loans and OREO     1.36 %     0.39 %     0.45 %     0.66 %     0.67 %
Annualized net charge-offs to average loans     0.43 %     -0.02 %     0.25 %     0.01 %     0.38 %
Net charge-offs (recoveries)   $ 1,041,460     $ (53,183 )   $ 581,809     $ 27,819     $ 770,386  
Interest Rates and Yields:                                        
Loans     4.24 %     4.32 %     4.36 %     4.24 %     4.39 %
Securities     2.37 %     2.19 %     2.10 %     2.15 %     2.27 %
Total interest-earning assets     3.77 %     3.74 %     3.79 %     3.66 %     3.77 %
Deposits     0.67 %     0.57 %     0.58 %     0.59 %     0.61 %
Borrowings and repurchase agreements     1.30 %     2.32 %     1.25 %     1.31 %     1.23 %
Total interest-bearing liabilities     0.85 %     0.74 %     0.71 %     0.73 %     0.76 %
Other Information:                                        
Full-time equivalent employees   168     170     168     166     163  
                               
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)

First Quarter 2017 Earnings Release
    For the Three Months Ended March 31,  
    2017     2016  
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
 
Interest-Earning Assets                                                
Loans (1)   $ 974,350     $ 10,194       4.24 %   $ 822,112     $ 8,976       4.39 %
Loans held for sale     28,359       273       3.91 %     29,799       292       3.94 %
Securities:                                                
Taxable investment securities (2)     181,647       1,079       2.38 %     177,563       968       2.18 %
Investment securities exempt from
  federal income tax (3)
    55,437       326       2.35 %     42,719       282       2.64 %
Total securities     237,084       1,405       2.37 %     220,282       1,250       2.27 %
Cash balances in other banks     48,041       105       0.88 %     56,427       76       0.54 %
Funds sold     1,729       2       0.54 %     2,703       4       0.62 %
Total interest-earning assets     1,289,563       11,979       3.77 %     1,131,323       10,598       3.77 %
Noninterest-earning assets     50,674                       50,105                  
Total assets   $ 1,340,237                     $ 1,181,428                  
Interest-Bearing Liabilities                                                
Interest-bearing deposits:                                                
Interest-bearing transaction accounts   $ 330,627       617       0.76 %   $ 203,283       302       0.60 %
Savings and money market deposits     434,375       815       0.76 %     445,891       732       0.66 %
Time deposits     168,326       471       1.13 %     188,778       514       1.10 %
Total interest-bearing deposits     933,328       1,903       0.83 %     837,952       1,548       0.74 %
Borrowings and repurchase agreements     45,115       144       1.30 %     30,798       94       1.23 %
Total interest-bearing liabilities     978,443       2,047       0.85 %     868,750       1,642       0.76 %
Noninterest-bearing deposits     210,308                       189,505                  
Total funding sources     1,188,751                       1,058,255                  
Noninterest-bearing liabilities     9,935                       12,353                  
Shareholders’ equity     141,551                       110,820                  
Total liabilities and shareholders’ equity   $ 1,340,237                     $ 1,181,428                  
Net interest spread (4)                     2.92 %                     3.01 %
Net interest income/margin (5)           $ 9,932       3.12 %           $ 8,956       3.18 %
                                                 
(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) Balances for investment securities exempt from federal income tax are not calculated 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 net interest income divided by total average interest-earning assets and is presented in the table above on an annualized basis.
 
This information is preliminary and based on company data available at the time of the presentation.
Rob Anderson
Chief Financial Officer and Chief Administrative Officer
(615) 732-6470

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CapStar Financial Holdings, Inc.



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