Investor Relations

News Release

Printer Friendly Version View printer-friendly version
<< Back
CapStar Reports Second Quarter 2022 Results

NASHVILLE, Tenn., July 21, 2022 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $10.0 million or $0.45 per diluted share, for the quarter ended June 30, 2022, compared with net income of $10.7 million or $0.48 per diluted share, for the quarter ended March 31, 2022, and net income of $12.1 million or $0.54 per diluted share, for the quarter ended June 30, 2021. Annualized return on average assets and return on average equity for the quarter ended June 30, 2022 were 1.28 percent and 11.08 percent, respectively.

For the six months ended June 30, 2022, the Company reported net income of $20.6 million or $0.93 per diluted share, compared with $23.1 million or $1.04 per diluted share, for the same period of 2021. Year to date 2022 annualized return on average assets and return on average equity were 1.33 percent and 11.24 percent, respectively.

Four Key Drivers   Targets   2Q22   1Q22   2Q21
Annualized revenue growth   > 5%   1.15 %   -46.31 %   8.96 %
Net interest margin   ≥ 3.60%   3.41 %   2.97 %   3.26 %
Efficiency ratio   ≤ 55%   56.32 %   58.67 %   57.97 %
Annualized net charge-offs to average loans   ≤ 0.25%   0.00 %   0.01 %   0.01 %

“CapStar’s associates delivered outstanding customer service and performance in the second quarter,” said Timothy K. Schools, CapStar President and Chief Executive Officer. “Each of our Four Key Drivers are progressing: 1) Outside of our specialty banking businesses, core bank revenue grew mid double digits compared to the prior year benefiting from robust loan growth, 2) our net interest margin expanded due to a favorable earning asset mix shift and modest benefit from rising rates, 3) we are working more productively, improving our efficiency ratio to 56%, and 4) net-charge offs were $0 and our past dues reached their second consecutive record low. Our positive results are attracting the attention of bankers seeking an environment where they and their customers can have a bigger voice. Last week, we were excited to announce additions to our Chattanooga and Nashville teams and entry into Asheville – our fourth dynamic metro market.”

“While rising rates benefited our core bank earnings, they slowed our mortgage and Tri-Net businesses. Mortgage results were near break-even. Tri-Net has been an outstanding business having contributed more than $25 million of revenue to CapStar over its life. However, Tri-Net did not produce a gain on sale during the quarter as the sharp increase in market rates and overall slowdown in demand reduced the value of Tri-Net’s funded loans. We are pursuing hedging strategies to mitigate this risk in the future. We expect each of these businesses to experience headwinds in the near-term until the rate environment stabilizes. We are proud of the strength of our earnings this quarter. We remain excited about the increasing contribution of our investments in new markets.”

Revenue

Total revenue, defined as net interest income plus noninterest income, was $30.3 million in the second quarter. This represents an increase of $0.1 million from the previous quarter. Net interest income and noninterest income totaled $24.4 million and $5.9 million, an increase of $3.3 million and a decrease of $3.2 million, respectively, from the first quarter of 2022. Rising interest rates and a positive mix shift in average earning assets contributed to the increase in net interest income, while noninterest income declined due to lower mortgage and Tri-Net division revenues and one-time BOLI income in the previous quarter.

Second quarter 2022 average earning assets remained flat at $2.90 billion compared to March 31, 2022 as strong loan growth was principally funded from cash. During the quarter, $106.9 million of Tri-Net loans were transferred from loans held for sale to loans held for investment. Excluding PPP balances and the Tri-Net transfer, average loans held for investment increased $98.1 million from the prior quarter, or 19.8 percent linked-quarter annualized. End of period loans held for investment, excluding PPP balances and the Tri-Net transfer, increased $85.9 million, or 16.9 percent linked-quarter annualized, including $47.5 million in loan production from the Company's recent Chattanooga expansion. The current commercial loan pipeline remains strong, exceeding $500 million and continues to present the Company a tremendous opportunity in combination with the recent Asheville, Chattanooga, and Nashville hires to leverage capital to grow revenue and earnings per share.

For the second quarter of 2022, the net interest margin increased 44 basis points from the prior quarter to 3.41 percent primarily resulting from continued increases in interest rates and the positive mix shift in average earning assets. While the Company is managing to a more neutral interest rate risk profile over time in order to enhance earnings consistency, net interest income is expected to continue to benefit modestly from rising rates in 2022.

The Company's average deposits totaled $2.66 billion in the second quarter of 2022, a $40.3 million decline from the first quarter of 2022. During the quarter, the Company experienced a $15.8 million reduction in higher cost average time deposits and $33.5 million decrease in average interest-bearing transaction accounts. These decreases were partially offset by a $9.4 million increase in average savings and money market deposits, creating an overall net decrease of $39.9 million in average interest-bearing deposits when compared to the first quarter of 2022. During the quarter, the Company’s lowest cost deposit category, noninterest bearing, improved 40 basis points to 27.3 percent of total average deposits as of June 30, 2022. Total deposit costs increased 4 basis points to 0.23 percent compared to 0.19 for the prior quarter. A key longer-term strategic initiative is to create a stronger deposit-led culture with an emphasis on lower cost relationship-based deposits.

Noninterest income during the quarter decreased $3.2 million from the first quarter ended March 31, 2022. This decrease was attributable to a $0.3 million decline in mortgage revenue, a $2.2 million decline in Tri-Net revenue and $0.9 million of one-time BOLI income recorded in the previous quarter. During the quarter, $106.9 million of Tri-Net loans were transferred from loans held for sale to loans held for investment to mitigate potential losses related to the adverse impact of rapidly rising interest rates on pricing and investor demand. The Company’s mortgage and Tri-Net divisions have been strong contributors in the past, but it is anticipated that they will continue to face challenges in the volatile rate environment.

Noninterest Expense and Operating Efficiency

Improving productivity and operating efficiency is a key focus of the Company. During the quarter, the Company continued to exhibit strong expense discipline. Noninterest expenses decreased $0.7 million from the first quarter of 2022 to $17.1 million in the second quarter of 2022. This decrease was primarily attributable to a decline in nonrecurring first quarter items and no mortgage incentive expense.

For the quarter ended June 30, 2022, the efficiency ratio was 56.32 percent, an improvement from 58.67 percent in the first quarter of 2022. Annualized noninterest expense as a percentage of average assets improved 9 basis points to 2.19 percent for the quarter ended June 30, 2022 compared to 2.28 percent for the quarter ended March 31, 2022. Assets per employee was $7.9 million as of June 30, 2022 compared to $8.0 million in the previous quarter. The continued discipline in productivity metrics demonstrates the Company's commitment to outstanding performance.

Asset Quality

Strong asset quality is a core tenant of the Company’s culture. Continued sound risk management and an improving economy led to continued low net charge-offs and strong credit metrics. Annualized net charge-offs to average loans for the three months ended June 30, 2022 were 0.00 percent. Past due loans as a percentage of total loans held for investment improved to a record 0.12 percent at June 30, 2022 compared to 0.17 percent at March 31, 2022. Within this amount, loans greater than 90 days past due totaled $0.5 million, or 0.02 percent of loans held for investment at June 30, 2022, an improvement from 0.05 percent at March 31, 2022. Non-performing assets to total loans and OREO improved to 0.11 percent at June 30, 2022 compared to 0.18 percent at March 31, 2022. Criticized and classified loans to total loans, which were elevated during the pandemic, continued to improve to 2.12 percent at June 30, 2022, a 37 basis point improvement from March 31, 2022.

The Company recorded a provision for loan losses of $0.8 million during the quarter as a result of continued strong loan growth. Due to improved credit trends, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, declined 7 basis points to 1.09 percent at June 30, 2022 from 1.16 percent at March 31, 2022.

Asset Quality Data:   6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Annualized net charge-offs to average loans     0.00 %     0.01 %     0.04 %     0.05 %     0.01 %
Criticized and classified loans to total loans     2.12 %     2.49 %     2.64 %     2.85 %     3.95 %
Loans- past due to total end of period loans     0.12 %     0.17 %     0.25 %     0.31 %     0.49 %
Loans- over 90 days past due to total end of period loans     0.02 %     0.05 %     0.11 %     0.12 %     0.13 %
Non-performing assets to total loans held for investment and OREO     0.11 %     0.18 %     0.18 %     0.20 %     0.22 %
Allowance for loan losses plus fair value marks / Non-PPP Loans     1.09 %     1.16 %     1.27 %     1.41 %     1.47 %
Allowance for loan losses to non-performing loans     974 %     596 %     666 %     657 %     571 %

Income Tax Expense

The Company’s second quarter effective income tax rate remained flat at 19.6 percent when compared to the prior quarter ended March 31, 2022. The Company anticipates its effective tax rate for 2022 to be approximately 20 percent.

Capital

The Company continues to be well capitalized with tangible equity of $310.9 million at June 30, 2022. Tangible book value per share of common stock for the quarter ended June 30, 2022 was $14.17 compared to $14.49 and $14.03 for the quarters ended March 31, 2022 and June 30, 2021, respectively, with the change from March 31, 2022 being attributable to a decline in the value of the investment portfolio related to an increase in market interest rates, partially offset by ongoing earnings. Excluding the impact of after-tax gain or loss within the available for sale investment portfolio, tangible book value per share of common stock for the quarter ended June 30, 2022 was $15.86 compared to $15.53 and $14.02 for the quarters ended March 31, 2022 and June 30, 2021, respectively.

Capital ratios:   6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Total risk-based capital     14.79 %     15.60 %     16.29 %     16.23 %     16.13 %
Common equity tier 1 capital     12.87 %     13.58 %     14.11 %     13.95 %     13.78 %
Leverage     11.10 %     10.99 %     10.69 %     10.28 %     10.17 %

In the second quarter of 2022, the Company repurchased $5.4 million in common stock under its share repurchase program. The total remaining authorization for future purchases was $23.9 million as of June 30, 2022. The Plan will terminate on the earlier of the date on which the maximum authorized dollar amount of shares of common stock has been repurchased or January 31, 2023.

Dividend

On July 20, 2022, the Board of Directors of the Company approved a quarterly dividend of $0.10 per common share payable on August 24, 2022 to shareholders of record of CapStar’s common stock as of the close of business on August 10, 2022.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 22, 2022. During the call, management will review the second quarter results and operational highlights. Interested parties may listen to the call by registering here to access the live call, including for participants who plan to ask a question during the call. 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 June 30, 2022, on a consolidated basis, CapStar had total assets of $3.1 billion, total loans of $2.2 billion, total deposits of $2.6 billion, and shareholders’ equity of $357.7 million. Visit www.capstarbank.com for more information.

NON-GAAP MEASURES

Certain releases include financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information may include certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations. Such measures may 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 may include 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)
Second quarter 2022 Earnings Release

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2022     2021     2022     2021  
Interest income:                        
Loans, including fees   $ 23,775     $ 22,572     $ 44,141     $ 44,586  
Securities:                        
Taxable     1,922       1,640       3,677       3,244  
Tax-exempt     319       356       644       722  
Federal funds sold     14       3       24       3  
Restricted equity securities     173       160       329       321  
Interest-bearing deposits in financial institutions     286       101       458       234  
Total interest income     26,489       24,832       49,273       49,110  
Interest expense:                        
Interest-bearing deposits     638       379       1,074       826  
Savings and money market accounts     467       295       797       608  
Time deposits     454       732       938       1,663  
Federal Home Loan Bank advances     96             96       12  
Subordinated notes     394       394       788       788  
Total interest expense     2,049       1,800       3,693       3,897  
Net interest income     24,440       23,032       45,580       45,213  
Provision for loan losses     843       (1,065 )     59       (415 )
Net interest income after provision for loan losses     23,597       24,097       45,521       45,628  
Noninterest income:                        
Deposit service charges     1,182       1,109       2,324       2,211  
Interchange and debit card transaction fees     1,336       1,227       2,558       2,318  
Mortgage banking     1,705       3,910       3,671       8,625  
Tri-Net     (73 )     1,536       2,098       2,679  
Wealth management     459       471       899       931  
SBA lending     273       377       494       870  
Net gain on sale of securities           (13 )           13  
Other noninterest income     994       1,266       2,921       2,250  
Total noninterest income     5,876       9,883       14,965       19,897  
Noninterest expense:                        
Salaries and employee benefits     9,209       10,803       19,478       20,229  
Data processing and software     2,847       3,070       5,494       5,898  
Occupancy     1,076       1,057       2,174       2,165  
Equipment     783       980       1,492       1,880  
Professional services     506       460       1,185       1,165  
Regulatory fees     265       211       545       467  
Acquisition related expenses           256             323  
Amortization of intangibles     430       493       876       1,001  
Other operating     1,959       1,750       3,566       3,364  
Total noninterest expense     17,075       19,080       34,810       36,492  
Income before income taxes     12,398       14,900       25,676       29,033  
Income tax expense     2,426       2,824       5,031       5,927  
Net income   $ 9,972     $ 12,076     $ 20,645     $ 23,106  
Per share information:                        
Basic net income per share of common stock   $ 0.45     $ 0.55     $ 0.93     $ 1.05  
Diluted net income per share of common stock   $ 0.45     $ 0.54     $ 0.93     $ 1.04  
Weighted average shares outstanding:                        
Basic     22,022,109       22,133,759       22,109,737       22,089,874  
Diluted     22,074,260       22,198,829       22,163,954       22,138,052  

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)
Second quarter 2022 Earnings Release

    Five Quarter Comparison  
    6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Income Statement Data:                              
Net interest income   $ 24,440     $ 21,140     $ 22,992     $ 22,964     $ 23,032  
Provision for loan losses     843       (784 )     (651 )           (1,065 )
Net interest income after provision for loan losses     23,597       21,924       23,643       22,964       24,097  
Deposit service charges     1,182       1,142       1,117       1,187       1,109  
Interchange and debit card transaction fees     1,336       1,222       1,261       1,236       1,227  
Mortgage banking     1,705       1,966       2,740       4,693       3,910  
Tri-Net     (73 )     2,171       3,996       1,939       1,536  
Wealth management     459       440       438       481       471  
SBA lending     273       222       279       911       377  
Net gain (loss) on sale of securities                 8       7       (13 )
Other noninterest income     994       1,926       1,295       1,197       1,266  
Total noninterest income     5,876       9,089       11,134       11,651       9,883  
Salaries and employee benefits     9,209       10,269       10,549       10,980       10,803  
Data processing and software     2,847       2,647       2,719       2,632       3,070  
Occupancy     1,076       1,099       1,012       1,028       1,057  
Equipment     783       709       867       760       980  
Professional services     506       679       521       469       460  
Regulatory fees     265       280       284       279       211  
Acquisition related expenses                             256  
Amortization of intangibles     430       446       461       477       493  
Other noninterest expense     1,959       1,607       2,269       1,741       1,750  
Total noninterest expense     17,075       17,736       18,682       18,366       19,080  
Net income before income tax expense     12,398       13,277       16,095       16,249       14,900  
Income tax expense     2,426       2,604       3,625       3,147       2,824  
Net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,076  
Weighted average shares - basic     22,022,109       22,198,339       22,166,410       22,164,278       22,133,759  
Weighted average shares - diluted     22,074,260       22,254,644       22,221,989       22,218,402       22,198,829  
Net income per share, basic   $ 0.45     $ 0.48     $ 0.56     $ 0.59     $ 0.55  
Net income per share, diluted     0.45       0.48       0.56       0.59       0.54  
Balance Sheet Data (at period end):                              
Cash and cash equivalents   $ 113,825     $ 355,981     $ 415,125     $ 359,267     $ 449,267  
Securities available-for-sale     437,420       460,558       459,396       483,778       500,339  
Securities held-to-maturity     1,769       1,775       1,782       1,788       2,395  
Loans held for sale     85,884       106,895       83,715       176,488       158,234  
Loans held for investment     2,234,833       2,047,555       1,965,769       1,894,249       1,897,838  
Allowance for loan losses     (21,684 )     (20,857 )     (21,698 )     (22,533 )     (22,754 )
Total assets     3,096,537       3,190,749       3,133,046       3,112,127       3,212,390  
Non-interest-bearing deposits     717,167       702,172       725,171       718,299       782,170  
Interest-bearing deposits     1,913,320       2,053,823       1,959,110       1,956,093       1,998,024  
Federal Home Loan Bank advances and other borrowings     74,599       29,566       29,532       29,499       29,487  
Total liabilities     2,738,802       2,821,832       2,752,952       2,741,799       2,852,639  
Shareholders' equity   $ 357,735     $ 368,917     $ 380,094     $ 370,328     $ 359,752  
Total shares of common stock outstanding     21,934,554       22,195,071       22,166,129       22,165,760       22,165,547  
Book value per share of common stock   $ 16.31     $ 16.62     $ 17.15     $ 16.71     $ 16.23  
Tangible book value per share of common stock*     14.17       14.49       14.99       14.53       14.03  
Tangible book value per share of common stock less after-tax
unrealized available for sale investment
(gains) losses*
    15.86       15.53       15.13       14.59       14.02  
Market value per share of common stock   $ 19.62     $ 21.08     $ 21.03     $ 21.24     $ 20.50  
Capital ratios:                              
Total risk-based capital     14.79 %     15.60 %     16.29 %     16.23 %     16.13 %
Tangible common equity to tangible assets*     10.19 %     10.23 %     10.77 %     10.51 %     9.83 %
Tangible common equity to tangible assets less after-tax unrealized available for sale investment (gains) losses*     11.27 %     10.88 %     10.86 %     10.55 %     9.82 %
Common equity tier 1 capital     12.87 %     13.58 %     14.11 %     13.95 %     13.78 %
Leverage     11.10 %     10.99 %     10.69 %     10.28 %     10.17 %

_____________________
*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)
Second quarter 2022 Earnings Release

    Five Quarter Comparison  
    6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Average Balance Sheet Data:                              
Cash and cash equivalents   $ 189,542     $ 380,262     $ 470,963     $ 411,101     $ 301,773  
Investment securities     473,167       483,339       491,135       515,877       508,595  
Loans held for sale     114,223       90,163       123,962       173,402       147,912  
Loans held for investment     2,147,750       2,001,740       1,888,094       1,884,935       1,938,818  
Assets     3,128,864       3,153,320       3,159,308       3,171,182       3,078,748  
Interest bearing deposits     1,936,910       1,976,803       1,964,641       1,980,304       1,940,442  
Deposits     2,664,614       2,704,938       2,713,314       2,732,165       2,662,192  
Federal Home Loan Bank advances and other borrowings     70,516       29,547       29,514       29,495       29,467  
Liabilities     2,767,714       2,773,281       2,781,951       2,803,375       2,719,898  
Shareholders' equity     361,150       380,039       377,357       367,807       358,850  
Performance Ratios:                              
Annualized return on average assets     1.28 %     1.37 %     1.57 %     1.64 %     1.57 %
Annualized return on average equity     11.08 %     11.39 %     13.11 %     14.13 %     13.50 %
Net interest margin (1)     3.41 %     2.97 %     3.14 %     3.12 %     3.26 %
Annualized noninterest income to average assets     0.75 %     1.17 %     1.40 %     1.46 %     1.29 %
Efficiency ratio     56.32 %     58.67 %     54.74 %     53.06 %     57.97 %
Loans by Type (at period end):                              
Commercial and industrial   $ 510,987     $ 499,719     $ 497,615     $ 478,279     $ 536,279  
Commercial real estate - owner occupied     241,461       231,933       209,261       193,139       200,725  
Commercial real estate - non-owner occupied     786,610       652,936       616,023       579,857       538,520  
Construction and development     205,573       208,513       214,310       210,516       198,448  
Consumer real estate     357,849       327,416       326,412       328,262       331,580  
Consumer     53,227       48,790       46,811       45,669       45,898  
Other     79,126       78,248       55,337       58,527       46,387  
Asset Quality Data:                              
Allowance for loan losses to total loans     0.97 %     1.02 %     1.10 %     1.19 %     1.20 %
Allowance for loan losses to non-performing loans     974 %     596 %     666 %     657 %     571 %
Nonaccrual loans   $ 2,225     $ 3,502     $ 3,258     $ 3,431     $ 3,985  
Troubled debt restructurings     86       1,847       1,832       1,859       1,895  
Loans - over 90 days past due     494       1,076       2,120       2,333       2,389  
Total non-performing loans     2,225       3,502       3,258       3,431       3,985  
OREO and repossessed assets     165       178       266       349       184  
Total non-performing assets     2,390       3,680       3,524       3,780       4,169  
Non-performing loans to total loans held for investment     0.10 %     0.17 %     0.17 %     0.18 %     0.21 %
Non-performing assets to total assets     0.08 %     0.12 %     0.11 %     0.12 %     0.13 %
Non-performing assets to total loans held for investment and OREO     0.11 %     0.18 %     0.18 %     0.20 %     0.22 %
Annualized net charge-offs to average loans     0.00 %     0.01 %     0.04 %     0.05 %     0.01 %
Net charge-offs   $ 16     $ 59     $ 184     $ 221     $ 59  
Interest Rates and Yields:                              
Loans     4.25 %     3.97 %     4.47 %     4.41 %     4.43 %
Securities (1)     2.11 %     1.92 %     1.84 %     1.75 %     1.77 %
Total interest-earning assets (1)     3.69 %     3.20 %     3.36 %     3.35 %     3.51 %
Deposits     0.23 %     0.19 %     0.19 %     0.19 %     0.21 %
Borrowings and repurchase agreements     2.79 %     5.40 %     5.29 %     5.30 %     5.36 %
Total interest-bearing liabilities     0.41 %     0.33 %     0.33 %     0.34 %     0.37 %
Other Information:                              
Full-time equivalent employees     391       397       397       392       383  

_____________________

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)
Second quarter 2022 Earnings Release

    For the Three Months Ended June 30,  
    2022     2021  
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/
Rate
 
Interest-Earning Assets                                    
Loans (1)   $ 2,147,750     $ 22,755       4.25 %   $ 1,938,819     $ 21,412       4.43 %
Loans held for sale     114,223       1,020       3.58 %     147,912       1,160       3.14 %
Securities:                                    
Taxable investment securities (2)     417,526       2,095       2.01 %     446,696       1,800       1.61 %
Investment securities exempt from
federal income tax (3)
    55,641       319       2.92 %     61,899       356       2.91 %
Total securities     473,167       2,414       2.11 %     508,595       2,156       1.77 %
Cash balances in other banks     144,533       286       0.80 %     235,212       101       0.17 %
Funds sold     7,950       14       0.70 %     18,319       3       0.06 %
Total interest-earning assets     2,887,623       26,489       3.69 %     2,848,857       24,832       3.51 %
Noninterest-earning assets     241,241                   229,891              
Total assets   $ 3,128,864                 $ 3,078,748              
Interest-Bearing Liabilities                                    
Interest-bearing deposits:                                    
Interest-bearing transaction accounts   $ 915,837       638       0.28 %   $ 927,210       379       0.16 %
Savings and money market deposits     670,144       467       0.28 %     589,006       295       0.20 %
Time deposits     350,929       454       0.52 %     424,226       732       0.69 %
Total interest-bearing deposits     1,936,910       1,559       0.32 %     1,940,442       1,406       0.29 %
Borrowings and repurchase agreements     70,516       490       2.79 %     29,467       394       5.36 %
Total interest-bearing liabilities     2,007,426       2,049       0.41 %     1,969,909       1,800       0.37 %
Noninterest-bearing deposits     727,705                   721,751              
Total funding sources     2,735,131                   2,691,660              
Noninterest-bearing liabilities     32,583                   28,238              
Shareholders’ equity     361,150                   358,850              
Total liabilities and shareholders’ equity   $ 3,128,864                 $ 3,078,748              
Net interest spread (4)                 3.28 %                 3.14 %
Net interest income/margin (5)         $ 24,440       3.41 %         $ 23,032       3.26 %

_____________________

  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)
Second quarter 2022 Earnings Release

    Five Quarter Comparison    
    6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021    
Operating net income:                                
Net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,076    
Add: acquisition related expenses                             256    
Less: income tax impact of acquisition related expenses                             (67 )  
Operating net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,265    
                                 
Operating diluted net income per
share of common stock:
                               
Operating net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,265    
Weighted average shares - diluted     22,074,260       22,254,644       22,221,989       22,218,402       22,198,829    
Operating diluted net income
per share of common stock
  $ 0.45     $ 0.48     $ 0.56     $ 0.59     $ 0.55    
                                 
Operating annualized return on average assets:                                
Operating net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,265    
Average assets     3,128,864       3,153,320       3,159,308       3,171,182       3,078,748    
Operating annualized return on
average assets
    1.28 %     1.37 %     1.57 %     1.64 %     1.60 %  
                                 
Operating annualized return on
average tangible equity:
                               
Average total shareholders' equity   $ 361,150     $ 380,039     $ 377,357     $ 367,807     $ 358,850    
Less: average intangible assets     (47,160 )     (47,604 )     (48,054 )     (48,527 )     (49,012 )  
Average tangible equity     313,990       332,435       329,303       319,280       309,838    
Operating net income   $ 9,972     $ 10,673     $ 12,470     $ 13,102     $ 12,265    
Operating annualized return on
average tangible equity
    12.74 %     13.02 %     15.02 %     16.28 %     15.88 %  
                                 
Operating efficiency ratio:                                
Total noninterest expense   $ 17,075     $ 17,736     $ 18,682     $ 18,366     $ 19,080    
Less: acquisition related expenses                             (256 )  
Total operating noninterest expense     17,075       17,736       18,682       18,366       18,824    
Net interest income     24,440       21,140       22,992       22,964       23,032    
Total noninterest income     5,876       9,089       11,134       11,651       9,883    
Total revenues   $ 30,316     $ 30,229     $ 34,126     $ 34,615     $ 32,915    
Operating efficiency ratio:     56.32 %     58.67 %     54.74 %     53.06 %     57.19 %  
                                 
Operating annualized pre-tax pre-provision income to average assets:                                
Income before income taxes   $ 12,398     $ 13,277     $ 16,095     $ 16,249     $ 14,900    
Add: acquisition related expenses                             256    
Add: provision for loan losses     843       (784 )     (651 )           (1,065 )  
Operating pre-tax pre-provision income     13,241       12,493       15,444       16,249       14,091    
Average assets   $ 3,128,864     $ 3,153,320     $ 3,159,308     $ 3,171,182     $ 3,078,748    
Operating annualized pre-tax pre-provision income to average assets:     1.70 %     1.61 %     1.94 %     2.03 %     1.84 %  


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings Release

    Five Quarter Comparison  
    6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Tangible Equity:                              
Total shareholders' equity   $ 357,735     $ 368,917     $ 380,094     $ 370,328     $ 359,752  
Less: intangible assets     (46,883 )     (47,313 )     (47,759 )     (48,220 )     (48,697 )
Tangible equity   $ 310,852     $ 321,604     $ 332,335     $ 322,108     $ 311,055  
                               
Tangible book value per share of common stock:                              
Tangible equity   $ 310,852     $ 321,604     $ 332,335     $ 322,108     $ 311,055  
Total shares of common stock outstanding     21,934,554       22,195,071       22,166,129       22,165,760       22,165,547  
Tangible book value per share of common stock   $ 14.17     $ 14.49     $ 14.99     $ 14.53     $ 14.03  
                               
Tangible book value per share of common stock
less after-tax unrealized available for sale investment
(gains) losses:
                             
Total shareholders' equity   $ 357,735     $ 368,917     $ 380,094     $ 370,328     $ 359,752  
Less: intangible assets     (46,883 )     (47,313 )     (47,759 )     (48,220 )     (48,697 )
Add: after-tax unrealized available for sale
investment (gains) losses
    37,034       23,041       2,978       1,209       (374 )
Tangible equity less after-tax unrealized
available for sale investment (gains) losses
  $ 347,886     $ 344,645     $ 335,313     $ 323,317     $ 310,681  
Total shares of common stock outstanding     21,934,554       22,195,071       22,166,129       22,165,760       22,165,547  
Tangible book value per share of
common stock less after-tax unrealized
available for sale investment (gains) losses
  $ 15.86     $ 15.53     $ 15.13     $ 14.59     $ 14.02  
                               
Tangible common equity to tangible assets:                              
Tangible equity   $ 310,852     $ 321,604     $ 332,335     $ 322,108     $ 311,055  
                               
Assets   $ 3,096,537     $ 3,190,749     $ 3,133,046     $ 3,112,127     $ 3,212,390  
Less: intangible assets     (46,883 )     (47,313 )     (47,759 )     (48,220 )     (48,697 )
Tangible assets   $ 3,049,654     $ 3,143,436     $ 3,085,287     $ 3,063,907     $ 3,163,693  
Tangible common equity to tangible
assets
    10.19 %     10.23 %     10.77 %     10.51 %     9.83 %
                               
Tangible common equity to tangible assets less after-tax unrealized available for sale investment (gains) losses:                              
Tangible equity less after-tax unrealized
available for sale investment (gains) losses
  $ 347,886     $ 344,645     $ 335,313     $ 323,317     $ 310,681  
                               
Tangible assets   $ 3,049,654     $ 3,143,436     $ 3,085,287     $ 3,063,907     $ 3,163,693  
Add: after-tax unrealized available for sale
investment (gains) losses
    37,034       23,041       2,978       1,209       (374 )
Tangible assets less after-tax unrealized
available for sale investment (gains) losses
  $ 3,086,688     $ 3,166,477     $ 3,088,265     $ 3,065,116     $ 3,163,319  
Tangible common equity to tangible
assets less after-tax unrealized available for sale investment
(gains) losses
    11.27 %     10.88 %     10.86 %     10.55 %     9.82 %


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings Release

    Six Months Ended  
    6/30/2022     6/30/2021  
Operating net income:            
Net income   $ 20,645     $ 23,106  
Add: acquisition related expenses           323  
Less: income tax impact of acquisition related expenses           (84 )
Operating net income   $ 20,645     $ 23,345  
             
Operating diluted net income per
share of common stock:
           
Operating net income   $ 20,645     $ 23,345  
Weighted average shares - diluted     22,163,954       22,138,052  
Operating diluted net income
per share of common stock
  $ 0.93     $ 1.05  
             
Operating annualized return on average assets:            
Operating net income   $ 20,645     $ 23,345  
Average assets   $ 3,141,024     $ 3,078,746  
Operating annualized return on
average assets
    1.33 %     1.53 %
             
Operating annualized return on
average tangible equity:
           
Average total shareholders' equity   $ 370,542     $ 354,788  
Less: average intangible assets     (49,014 )     (49,262 )
Average tangible equity     321,528       305,526  
Operating net income   $ 20,645     $ 23,345  
Operating annualized return on
average tangible equity
    12.95 %     15.41 %
             
Operating efficiency ratio:            
Total noninterest expense   $ 34,810     $ 36,492  
Less: acquisition related expenses           (323 )
Total operating noninterest expense     34,810       36,169  
Net interest income     45,580       45,213  
Total noninterest income     14,965       19,897  
Total revenues   $ 60,545     $ 65,110  
Operating efficiency ratio:     57.49 %     55.55 %


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings Release

    Five Quarter Comparison  
    6/30/2022     3/31/2022     12/31/2021     9/30/2021     6/30/2021  
Allowance for loan losses   $ 21,684     $ 20,857     $ 21,698     $ 22,533     $ 22,754  
Purchase accounting marks     2,717       2,838       3,003       3,288       3,533  
Allowance for loan losses and purchase accounting fair value marks     24,401       23,695       24,701       25,821       26,287  
                               
Loans held for investment     2,234,833       2,047,555       1,965,769       1,894,249       1,897,838  
Less: PPP Loans net of deferred fees     921       6,529       26,539       64,188       109,940  
Non-PPP Loans     2,233,912       2,041,026       1,939,230       1,830,061       1,787,898  
                               
Allowance for loan losses plus fair value marks / Non-PPP Loans     1.09 %     1.16 %     1.27 %     1.41 %     1.47 %

_____________________

  1. Net interest margin and adjusted net interest margin are shown on a tax equivalent basis.


CONTACT

Michael J. Fowler
Chief Financial Officer
(615) 732-7404


Primary Logo

Source: CapStar Financial Holdings, Inc.

Print Page RSS Feeds E-mail Alerts IR Contacts