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CapStar Financial Holdings, Inc. Reports Year End 2020 Results

NASHVILLE, Tenn., Jan. 28, 2021 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $9.7 million or $0.44 per diluted share, for the quarter ended December 31, 2020, compared with net income of $5.4 million or $0.29 per diluted share, for the quarter ended December 31, 2019. Annualized return on average assets and return on average equity for the quarter ended December 31, 2020 was 1.27% and 11.30%, respectively. Excluding fourth quarter merger-related charges of $2.1 million, operating(1) diluted earnings per share were $0.51, return on average assets was 1.48%, and return on average tangible equity was 15.38%.

For the year ended December 31, 2020, the company reported net income of $24.7 million or $1.22 per diluted share compared with net income of $22.4 million, or $1.20 per diluted share, for the year ended December 31, 2019. Return on average assets and return on average equity for the year ended December 31, 2020 was 0.94% and 9.55%, respectively. Excluding merger-related charges of $5.4 million, operating(1) diluted earnings per share were $1.42, return on average assets was 1.09%, and return on average tangible equity was 11.09%.

“I would like to thank our employees for their tireless work over the past year in helping our clients and communities,” said Timothy K. Schools, chief executive officer. “As a result of their tremendous efforts and our solid risk management culture in a challenging and uncertain operating environment, we are pleased to report strong 2020 and fourth quarter financial results, led by high performance in our mortgage and tri-net divisions. During the year, we made progress in advancing several strategic initiatives, including the continued refocus on providing core banking services to our local markets, integrating and expanding our recent East Tennessee expansion with the addition of Knoxville and completion of our FCB acquisition, and strengthening our balance sheet management capabilities. Importantly, as part of our mission, we made extra efforts to support our employees, clients, and communities as we all manage through the current pandemic. We are proud to have maintained full employment and compensation, offer flexible work programs, and participate in loan assistance and deferral programs. Together, with our client-centric banking model, stable and growing markets, and key strategic initiatives, we are optimistic about our future prospects and enhanced opportunities to serve our clients.”

Profitability

  • Annualized return on average assets for the three months ended December 31, 2020 was 1.27% compared to 1.06% for the same period in 2019. Operating(1) annualized return on average assets for the three months ended December 31, 2020 was 1.48% compared to 1.08% for the same period in 2019. Operating(1) annualized pre-tax pre-provision income to average assets for the three months ended December 31, 2020 was 1.93% compared to 1.41% for the same period in 2019.
  • Annualized return on average equity for the three months ended December 31, 2020 was 11.30% compared to 7.92% for the same period in 2019. Operating(1) annualized return on average tangible equity for the three months ended December 31, 2020 was 15.38% compared to 9.69% for the same period in 2019.
  • Net interest margin was 3.12% for the three months ended December 31, 2020 compared to 3.49% for the same period in 2019.
  • The efficiency ratio for the three months ended December 31, 2020 was 63.02% compared to 68.46% for the same period in 2019. The operating(1) efficiency ratio for the three months ended December 31, 2020 was 56.85% compared to 67.73% for the same period in 2019.

Growth

  • Pre-tax pre-provision earnings for the quarter ended December 31, 2020 increased 79% to $12.6 million, compared to $7.0 million for the quarter ended December 31, 2019.
  • End of period deposits for the quarter ended December 31, 2020 decreased $49.5 million or 8% annualized.
  • Excluding PPP loans, end of period loan growth for the quarter ended December 31, 2020, was $19.61 million or 5% annualized.
  • Tangible book value per share for the quarter ended December 31, 2020 increased 7% to $13.36, compared to $12.45 for the quarter ended December 31, 2019.

Soundness

  • The total risk-based capital ratio was 16.03% at December 31, 2020 compared to 13.45% at December 31, 2019.
  • The allowance for loan losses to total loans was 1.23% at December 31, 2020 compared to 0.89% at December 31, 2019. The allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, was 1.57% at December 31, 2020 compared to 1.13% at December 31, 2019.
  • Non-performing assets to total loans and OREO were 0.28% at December 31, 2020 compared to 0.18% at December 31, 2019.
  • Annualized net charge offs to average loans were 0.02% for the three months ended December 31, 2020 compared to 0.06% for the same period in 2019.

Dividend

On January 28, 2021, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on February 24, 2021 to shareholders of record of CapStar’s common stock as of the close of business on February 10, 2021.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, January 29, 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 1963565. 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 December 31, 2020, on a consolidated basis, CapStar had total assets of $2.98 billion, total loans of $1.89 billion, total deposits of $2.57 billion, and shareholders’ equity of $343.49 million. Visit www.capstarbank.com for more information.

(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.

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)
Fourth quarter 2020 Earnings Release

    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2020     2019     2020     2019  
Interest income:                                
Loans, including fees   $ 22,653     $ 20,233     $ 84,272     $ 82,828  
Securities:                                
Taxable     1,412       1,077       4,863       4,619  
Tax-exempt     354       347       1,342       1,438  
Federal funds sold                       26  
Restricted equity securities     155       171       576       755  
Interest-bearing deposits in financial institutions     158       377       799       1,881  
  Total interest income     24,732       22,205       91,852       91,547  
Interest expense:                                
Interest-bearing deposits     497       2,015       3,868       7,538  
Savings and money market accounts     377       1,821       5,196       7,266  
Time deposits     1,121       1,626       5,317       7,542  
Federal funds purchased                       4  
Securities sold under agreements to repurchase                       5  
Federal Home Loan Bank advances     8       162       356       1,444  
Subordinated notes     398             792        
Total interest expense     2,401       5,624       15,529       23,799  
Net interest income     22,331       16,581       76,323       67,748  
Provision for loan losses     184             11,479       761  
Net interest income after provision for loan losses     22,147       16,581       64,844       66,987  
Noninterest income:                                
Treasury management and other deposit service charges     964       736       3,494       3,135  
Interchange and debit card transaction fees     782       928       3,172       3,251  
Mortgage banking income     5,971       2,316       25,034       9,467  
Tri-Net fees     1,165       274       3,693       2,785  
Wealth management fees     411       407       1,573       1,425  
Net gain (loss) on Sale of SBA Loans     916       (20 )     1,440       803  
Net gain (loss) on sale of securities     51       9       125       (99 )
Other noninterest income     1,488       1,069       4,717       3,507  
Total noninterest income     11,748       5,719       43,248       24,274  
Noninterest expense:                                
Salaries and employee benefits     11,996       9,318       45,252       35,542  
Data processing and software     2,548       1,835       8,865       6,961  
Professional fees     370       531       2,224       2,102  
Occupancy     975       795       3,590       3,345  
Equipment     900       834       3,195       3,723  
Regulatory fees     368       28       1,261       591  
Merger related expenses     2,105       163       5,390       2,654  
Amortization of intangibles     524       397       1,824       1,655  
Other operating     1,692       1,365       5,760       5,422  
Total noninterest expense     21,478       15,266       77,361       61,995  
Income before income taxes     12,417       7,034       30,731       29,266  
Income tax expense     2,736       1,613       6,035       6,844  
Net income   $ 9,681     $ 5,421     $ 24,696     $ 22,422  
Per share information:                                
Basic net income per share of common stock   $ 0.44     $ 0.30     $ 1.22     $ 1.25  
Diluted net income per share of common stock   $ 0.44     $ 0.29     $ 1.22     $ 1.20  
Weighted average shares outstanding:                                
Basic     21,960,184       18,350,994       20,162,038       17,886,164  
Diluted     21,978,925       18,443,916       20,185,589       18,613,224  

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)
Fourth quarter 2020 Earnings Release

    Five Quarter Comparison  
    12/31/20     9/30/20     6/30/20     3/31/20     12/31/19  
Income Statement Data:                                        
Net interest income   $ 22,331     $ 19,656     $ 17,675     $ 16,661     $ 16,581  
Provision for loan losses     184       2,119       1,624       7,553        
Net interest income after provision for loan losses     22,147       17,537       16,051       9,108       16,581  
Treasury management and other deposit service charges     964       1,064       691       775       736  
Interchange and debit card transaction fees     782       936       729       724       928  
Mortgage banking income     5,971       9,686       7,123       2,253       2,316  
Tri-Net fees     1,165       668       1,260       599       274  
Wealth management fees     411       382       374       407       407  
Net gain (loss) on Sale of SBA Loans     916       476       13       35       (20 )
Net gain on sale of securities     51       34       13       27       9  
Other noninterest income     1,488       1,558       620       1,054       1,069  
Total noninterest income     11,748       14,804       10,823       5,874       5,719  
Salaries and employee benefits     11,996       12,949       12,305       8,002       9,318  
Data processing and software     2,548       2,353       2,100       1,864       1,835  
Professional fees     370       638       581       636       531  
Occupancy     975       999       797       820       795  
Equipment     900       864       680       751       834  
Regulatory fees     368       397       333       163       28  
Merger related expenses     2,105       2,548       448       290       163  
Amortization of intangibles     524       539       375       386       397  
Other operating     1,692       1,452       1,315       1,299       1,365  
Total noninterest expense     21,478       22,739       18,934       14,211       15,266  
Net income before income tax expense     12,417       9,602       7,940       771       7,034  
Income tax (benefit) expense     2,736       2,115       1,759       (575 )     1,613  
Net income   $ 9,681     $ 7,487     $ 6,181     $ 1,346     $ 5,421  
Weighted average shares - basic     21,960,184       21,948,579       18,307,083       18,392,913       18,350,994  
Weighted average shares - diluted     21,978,925       21,960,490       18,320,006       18,443,725       18,443,916  
Net income per share, basic   $ 0.44     $ 0.34     $ 0.34     $ 0.07     $ 0.30  
Net income per share, diluted     0.44       0.34       0.34       0.07       0.29  
Balance Sheet Data (at period end):                                        
Cash and cash equivalents   $ 277,439     $ 455,925     $ 368,820     $ 91,450     $ 101,269  
Securities available-for-sale     486,215       308,337       223,034       219,213       213,129  
Securities held-to-maturity     2,407       2,413       2,699       3,306       3,313  
Loans held for sale     179,669       198,603       129,807       186,937       168,222  
Total loans     1,891,019       1,906,603       1,592,725       1,446,835       1,420,102  
Allowance for loan losses     (23,245 )     (23,167 )     (21,035 )     (20,114 )     (12,604 )
Total assets     2,984,102       3,024,348       2,445,172       2,072,585       2,037,201  
Non-interest-bearing deposits     662,934       716,707       546,974       442,789       312,096  
Interest-bearing deposits     1,905,067       1,900,835       1,548,592       1,320,920       1,417,355  
Federal Home Loan Bank advances and borrowings     39,423       39,418       39,464       10,000       10,000  
Total liabilities     2,640,616       2,690,453       2,163,222       1,796,795       1,764,155  
Shareholders' equity   $ 343,486     $ 333,895     $ 281,950     $ 275,790     $ 273,046  
Total shares of common stock outstanding     21,988,803       21,947,805       18,302,188       18,307,802       18,361,922  
Book value per share of common stock   $ 15.62     $ 15.21     $ 15.41     $ 15.06     $ 14.87  
Tangible book value per share of common stock *     13.36       12.92       13.02       12.66       12.45  
Market value per common share     14.75       9.81       12.00       9.89       16.65  
Capital ratios:                                        
Total risk based capital     16.03 %     15.96 %     16.76 %     13.68 %     13.45 %
Tier 1 risk based capital     13.52 %     13.39 %     13.76 %     12.56 %     12.73 %
Common equity tier 1 capital     13.52 %     13.39 %     13.76 %     12.56 %     12.73 %
Leverage     9.60 %     9.23 %     10.08 %     11.23 %     11.37 %

_____________________
*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)
Fourth quarter 2020 Earnings Release

    Five Quarter Comparison  
    12/31/20     9/30/20     6/30/20     3/31/20     12/31/19  
Average Balance Sheet Data:                                        
Cash and cash equivalents   $ 427,086     $ 526,409     $ 257,709     $ 114,272     $ 115,100  
Investment securities     407,622       323,689       238,762       226,537       225,265  
Loans held for sale     165,441       156,123       176,193       180,401       140,731  
Loans     1,891,202       1,906,449       1,560,626       1,421,256       1,431,027  
Assets     3,028,225       3,043,847       2,350,021       2,059,306       2,030,231  
Interest bearing deposits     1,909,692       1,957,259       1,519,877       1,411,666       1,388,496  
Deposits     2,613,080       2,648,465       2,031,924       1,735,635       1,711,021  
Federal Home Loan Bank advances and other borrowings     39,428       39,431       10,966       20,989       22,391  
Liabilities     2,687,516       2,722,341       2,068,408       1,780,756       1,758,663  
Shareholders' equity   $ 340,709     $ 321,506     $ 281,614     $ 278,550     $ 271,568  
Performance Ratios:                                        
Annualized return on average assets     1.27 %     0.98 %     1.06 %     0.26 %     1.06 %
Annualized return on average equity     11.30 %     9.26 %     8.83 %     1.94 %     7.92 %
Net interest margin (1)     3.12 %     2.72 %     3.23 %     3.50 %     3.49 %
Annualized noninterest income to average assets     1.54 %     1.93 %     1.85 %     1.15 %     1.12 %
Efficiency ratio     63.02 %     65.99 %     66.44 %     63.06 %     68.46 %
Loans by Type (at period end):                                        
Commercial and industrial   $ 630,775     $ 648,018     $ 621,541     $ 447,311     $ 394,408  
Commercial real estate - owner occupied     162,603       164,336       147,682       166,652       172,456  
Commercial real estate - non-owner occupied     481,229       480,106       408,402       378,170       387,443  
Construction and development     174,859       176,751       117,830       141,087       143,111  
Consumer real estate     343,791       350,238       238,696       248,243       256,097  
Consumer     44,279       42,104       27,542       27,739       28,426  
Other     53,483       45,050       31,032       37,633       38,161  
Asset Quality Data:                                        
Allowance for loan losses to total loans     1.23 %     1.22 %     1.32 %     1.39 %     0.89 %
Allowance for loan losses to non-performing loans     483 %     787 %     705 %     550 %     861 %
Nonaccrual loans   $ 4,817     $ 2,945     $ 2,982     $ 3,658     $ 1,464  
Troubled debt restructurings     1,928       1,886       1,228       1,306       2,717  
Loans - over 89 days past due     4,367       541       639       399       38  
Total non-performing loans     4,817       2,945       2,982       3,658       1,464  
OREO and repossessed assets     523       171       147       147       1,044  
Total non-performing assets   $ 5,340     $ 3,116     $ 3,129     $ 3,805     $ 2,508  
Non-performing loans to total loans     0.25 %     0.15 %     0.19 %     0.25 %     0.10 %
Non-performing assets to total assets     0.18 %     0.10 %     0.13 %     0.18 %     0.12 %
Non-performing assets to total loans and OREO     0.28 %     0.16 %     0.20 %     0.26 %     0.18 %
Annualized net charge-offs to average loans     0.02 %     0.0 %     0.18 %     0.01 %     0.06 %
Net charge-offs (recoveries)   $ 106     $ (13 )   $ 703     $ 43     $ 224  
Interest Rates and Yields:                                        
Loans     4.48 %     4.47 %     4.50 %     5.10 %     5.24 %
Securities (1)     1.98 %     2.18 %     2.73 %     3.04 %     3.00 %
Total interest-earning assets (1)     3.45 %     3.41 %     3.78 %     4.56 %     4.67 %
Deposits     0.30 %     0.67 %     0.59 %     1.14 %     1.27 %
Borrowings and repurchase agreements     4.09 %     5.14 %     3.16 %     2.77 %     2.88 %
Total interest-bearing liabilities     0.49 %     0.99 %     0.81 %     1.43 %     1.58 %
Other Information:                                        
Full-time equivalent employees     380       403       286       288       289  

_____________________

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)
Fourth quarter 2020 Earnings Release

    For the Three Months Ended December 31,  
    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)   $ 1,891,202     $ 21,305       4.48 %   $ 1,431,027     $ 18,884       5.24 %
Loans held for sale     165,441       1,348       3.24 %     140,731       1,349       3.80 %
Securities:                                                
Taxable investment securities (2)     350,644       1,567       1.79 %     175,750       1,248       2.84 %
Investment securities exempt from federal income tax (3)     56,978       354       3.14 %     49,515       347       3.55 %
Total securities     407,622       1,921       1.98 %     225,265       1,595       3.00 %
Cash balances in other banks     394,831       158       0.16 %     96,125       377       1.56 %
Funds sold                       45             3.75 %
Total interest-earning assets     2,859,096       24,732       3.45 %     1,893,193       22,205       4.67 %
Noninterest-earning assets     169,129                       137,038                  
Total assets   $ 3,028,225                     $ 2,030,231                  
Interest-Bearing Liabilities                                                
Interest-bearing deposits:                                                
Interest-bearing transaction accounts   $ 828,740       497       0.24 %   $ 566,869       2,015       1.41 %
Savings and money market deposits     593,236       377       0.25 %     514,896       1,821       1.40 %
Time deposits     487,716       1,121       0.91 %     306,731       1,626       2.10 %
Total interest-bearing deposits     1,909,692       1,995       0.42 %     1,388,496       5,462       1.56 %
Borrowings and repurchase agreements     39,428       406       4.09 %     22,391       162       2.88 %
Total interest-bearing liabilities     1,949,120       2,401       0.49 %     1,410,887       5,624       1.58 %
Noninterest-bearing deposits     703,388                       322,524                  
Total funding sources     2,652,508                       1,733,411                  
Noninterest-bearing liabilities     35,008                       25,252                  
Shareholders’ equity     340,709                       271,568                  
Total liabilities and shareholders’ equity   $ 3,028,225                     $ 2,030,231                  
Net interest spread (4)                     2.96 %                     3.09 %
Net interest income/margin (5)           $ 22,331       3.12 %           $ 16,580       3.49 %

_____________________

(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)
Fourth quarter 2020 Earnings Release

    Five Quarter Comparison  
    12/31/20     9/30/20     6/30/20     3/31/20     12/31/19  
Operating net income:                                        
Net income   $ 9,681     $ 7,487     $ 6,181     $ 1,346     $ 5,421  
Add: merger related expenses     2,105       2,548       448       290       163  
Less: income tax impact of merger related expenses     (550 )     (666 )     (117 )     (76 )     (43 )
Operating net income   $ 11,236     $ 9,369     $ 6,512     $ 1,560     $ 5,541  
                                         
Operating diluted net income per
share of common stock:
                                       
Operating net income   $ 11,236     $ 9,369     $ 6,512     $ 1,560     $ 5,541  
Weighted average shares - diluted     21,978,925       21,960,490       18,320,006       18,443,725       18,443,916  
Operating diluted net income per share of common stock   $ 0.51     $ 0.43     $ 0.36     $ 0.08     $ 0.30  
                                         
Operating annualized return on average assets:                                        
Operating net income   $ 11,236     $ 9,369     $ 6,512     $ 1,560     $ 5,541  
Average assets   $ 3,028,225     $ 3,043,847     $ 2,350,021     $ 2,059,306     $ 2,030,231  
Operating annualized return on average assets     1.48 %     1.22 %     1.11 %     0.30 %     1.08 %
                                         
Operating annualized return on average tangible equity:                                        
Average total shareholders' equity   $ 340,709     $ 321,506     $ 281,614     $ 278,550     $ 271,568  
Less: average intangible assets     (50,038 )     (50,577 )     (43,871 )     (44,253 )     (44,646 )
Average tangible equity     290,671       270,929       237,743       234,297       226,922  
Operating net income   $ 11,236     $ 9,369     $ 6,512     $ 1,560     $ 5,541  
Operating annualized return on average tangible equity     15.38 %     13.76 %     11.02 %     2.68 %     9.69 %
                                         
Operating efficiency ratio:                                        
Total noninterest expense   $ 21,478     $ 22,739     $ 18,934     $ 14,211     $ 15,266  
Less: merger related expenses     (2,105 )     (2,548 )     (448 )     (290 )     (163 )
Total operating noninterest expense     19,373       20,191       18,486       13,921       15,103  
Net interest income     22,331       19,656       17,675       16,661       16,581  
Total noninterest income     11,748       14,804       10,823       5,874       5,719  
Total revenues   $ 34,079     $ 34,460     $ 28,498     $ 22,535     $ 22,300  
Operating efficiency ratio:     56.85 %     58.59 %     64.87 %     61.78 %     67.73 %
                                         
Operating annualized pre-tax pre-provision income to average assets:                                        
Income before income taxes   $ 12,417     $ 9,602     $ 7,940     $ 771     $ 7,034  
Add: merger related expenses     2,105       2,548       448       290       163  
Add: provision for loan losses     184       2,119       1,624       7,553        
Operating pre-tax pre-provision income     14,706       14,269       10,012       8,614       7,197  
Average assets   $ 3,028,225     $ 3,043,847     $ 2,350,021     $ 2,059,306     $ 2,030,231  
Operating annualized pre-tax pre-provision income to average assets:     1.93 %     1.86 %     1.71 %     1.68 %     1.41 %
                                         
Tangible Equity:                                        
Total shareholders' equity   $ 343,486     $ 333,895     $ 281,950     $ 275,790     $ 273,046  
Less: intangible assets     (49,698 )     (50,222 )     (43,633 )     (44,008 )     (44,393 )
Tangible equity   $ 293,788     $ 283,673     $ 238,317     $ 231,782     $ 228,653  
                                         
Tangible Book Value per Share of Common Stock:                                        
Tangible common equity   $ 293,788     $ 283,673     $ 238,317     $ 231,782     $ 228,653  
Total shares of common stock outstanding     21,988,803       21,947,805       18,302,188       18,307,802       18,361,922  
Tangible book value per share of common stock   $ 13.36     $ 12.92     $ 13.02     $ 12.66     $ 12.45  


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Fourth quarter 2020 Earnings Release

    Five Quarter Comparison  
    12/31/20     9/30/20     6/30/20     3/31/20     12/31/19  
Allowance for loan losses   $ 23,245     $ 23,167     $ 21,035     $ 20,114     $ 12,604  
Purchase accounting marks     3,663       4,013       2,790       3,178       3,473  
Allowance for loan losses and purchase accounting fair value marks     26,908       27,180       23,825       23,292       16,077  
                                         
Loans     1,891,019       1,906,603       1,592,725       1,446,835       1,420,102  
Less: PPP Loans net of deferred fees     181,601       216,799       213,064              
Non-PPP Loans     1,709,418       1,689,804       1,379,661       1,446,835       1,420,102  
                                         
Allowance for loan losses plus fair value marks / Non-PPP Loans     1.57 %     1.61 %     1.73 %     1.61 %     1.13 %


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Fourth quarter 2020 Earnings Release

    Year Ended  
    December 31, 2020     December 31, 2020  
Operating net income:                
Net income   $ 24,696     $ 22,422  
Add: merger related expenses     5,390       2,654  
Less: income tax impact of merger related expenses     (1,409 )     (694 )
Operating net income   $ 28,677     $ 24,382  
                 
Operating diluted net income per
share of common stock:
               
Operating net income   $ 28,677     $ 24,382  
Weighted average shares - diluted     20,185,589       18,613,224  
Operating diluted net income per share of common stock   $ 1.42     $ 1.31  
                 
Operating return on average assets:                
Operating net income   $ 28,677     $ 24,382  
Average assets   $ 2,622,635     $ 2,007,327  
Operating return on average assets     1.09 %     1.21 %
                 
Operating return on average tangible equity:                
Average total shareholders' equity   $ 305,748     $ 264,124  
Less: average intangible assets     (47,202 )     (45,256 )
Average tangible equity     258,546       218,868  
Operating net income   $ 28,677     $ 24,382  
Operating return on average tangible equity     11.09 %     11.14 %
                 
Operating efficiency ratio:                
Total noninterest expense   $ 77,361     $ 61,995  
Less: merger related expenses     (5,390 )     (2,654 )
Total operating noninterest expense     71,971       59,341  
Net interest income     76,323       67,748  
Total noninterest income     43,248       24,274  
Total revenues   $ 119,571     $ 92,022  
Operating efficiency ratio:     60.19 %     64.49 %

CONTACT

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

 


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Source: CapStar Financial Holdings, Inc.

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