cstr-10q_20160930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2016

OR

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

For the transition period from _______ to ________.

Commission File Number:  001-37886

 

CAPSTAR FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Tennessee

81-1527911

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

 

 

201 4th Avenue North, Suite 950

Nashville, Tennessee 37219

(Address of principal executive office)

37219

(zip code)

 

(615) 732-6400

(Registrant’s telephone number, including area code)

 

Not Applicable

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

 

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

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

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

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

(Do not check if a smaller reporting company)

Smaller Reporting Company

 

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

As of November 8, 2016, there were 11,186,433 shares of common stock, $1.00 par value per share, issued and outstanding.

 

 

 

 


CAPSTAR FINANCIAL HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

Item

 

 

Page

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Consolidated Financial Statements

 

5

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015

 

5

 

 

 

 

 

Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2016 and 2015

 

6

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September, 2016 and 2015

 

7

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the nine months ended September 30, 2016 and 2015

 

8

 

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2016 and 2015

 

9

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

10

 

 

 

 

Item 2.

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

 

29

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

40

 

 

 

 

Item 4.

Controls and Procedures

 

40

 

 

 

PART II – OTHER INFORMATION

 

41

 

 

 

 

Item 1. 

Legal Proceedings

 

41

 

 

 

 

Item 1A.

Risk Factors

 

41

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

Item 6.

Exhibits

 

42

 

 

 

 

SIGNATURES

 

43

 

 

2


TERMINOLOGY

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

3


The foregoing factors should not be construed as exhaustive and should be read in conjunction with the section entitled “Risk Factors” included in the Company’s prospectus filed with the United States Securities and Exchange Commission on September 23, 2016 pursuant to Rule 424(b)(4) under the Securities Act (the “Prospectus”).  If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Report, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us.

 

 

4


PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Balance Sheets

 

 

 

September 30, 2016

 

 

 

 

 

 

 

(unaudited)

 

 

December 31, 2015

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

10,330,683

 

 

$

8,265,287

 

Interest-bearing deposits in financial institutions

 

 

62,925,052

 

 

 

85,189,846

 

Federal funds sold

 

 

195,000

 

 

 

6,729,708

 

Total cash and cash equivalents

 

 

73,450,735

 

 

 

100,184,841

 

Securities available for sale, at fair value

 

 

167,213,109

 

 

 

173,382,957

 

Securities held to maturity, fair value of $50,664,931, and $46,458,841 at

   September 30, 2016 and December 31, 2015, respectively

 

 

46,227,968

 

 

 

43,093,951

 

Loans held for sale

 

 

61,251,662

 

 

 

35,729,353

 

Loans and leases

 

 

924,030,515

 

 

 

808,396,064

 

Less allowance for loan and lease losses

 

 

(11,510,464

)

 

 

(10,131,729

)

Loans, net

 

 

912,520,051

 

 

 

798,264,335

 

Premises and equipment, net

 

 

4,722,726

 

 

 

4,896,447

 

Restricted equity securities

 

 

5,525,500

 

 

 

5,413,500

 

Accrued interest receivable

 

 

3,813,485

 

 

 

3,029,550

 

Goodwill

 

 

6,218,867

 

 

 

6,218,867

 

Core deposit intangible

 

 

84,445

 

 

 

125,045

 

Other real estate owned

 

 

 

 

 

216,254

 

Deferred tax assets

 

 

12,376,347

 

 

 

12,849,508

 

Bank owned life insurance

 

 

21,750,220

 

 

 

21,299,068

 

Other assets

 

 

2,902,210

 

 

 

2,096,603

 

Total assets

 

$

1,318,057,325

 

 

$

1,206,800,279

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest-bearing

 

$

191,469,462

 

 

$

190,580,468

 

Interest-bearing

 

 

284,500,917

 

 

 

189,982,675

 

Savings and money market accounts

 

 

451,415,904

 

 

 

437,214,054

 

Time

 

 

208,673,509

 

 

 

220,683,113

 

Total deposits

 

 

1,136,059,792

 

 

 

1,038,460,310

 

Securities sold under repurchase agreements

 

 

 

 

 

3,755,000

 

Federal Home Loan Bank advances

 

 

30,000,000

 

 

 

45,000,000

 

Accrued interest payable

 

 

201,981

 

 

 

176,540

 

Other liabilities

 

 

13,369,051

 

 

 

10,822,322

 

Total liabilities

 

 

1,179,630,824

 

 

 

1,098,214,172

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

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

   878,049 and 1,609,756 shares issued and outstanding at September 30, 2016 and

   December 31, 2015, respectively

 

 

878,049

 

 

 

1,609,756

 

Common stock, voting, $1 par value; 20,000,000 shares authorized; 11,191,021 and

   8,577,051 shares issued and outstanding at September 30, 2016 and December 31,

   2015, respectively

 

 

11,191,021

 

 

 

8,577,051

 

Additional paid-in capital

 

 

116,143,008

 

 

 

95,277,968

 

Retained earnings

 

 

14,205,030

 

 

 

8,035,712

 

Accumulated other comprehensive loss, net of income tax

 

 

(3,990,607

)

 

 

(4,914,380

)

Total shareholders’ equity

 

 

138,426,501

 

 

 

108,586,107

 

Total liabilities and shareholders’ equity

 

$

1,318,057,325

 

 

$

1,206,800,279

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

5


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

10,658,758

 

 

$

9,428,826

 

 

$

29,531,404

 

 

$

25,834,421

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

787,076

 

 

 

993,485

 

 

 

2,596,059

 

 

 

3,277,535

 

Tax-exempt

 

 

291,110

 

 

 

277,365

 

 

 

841,264

 

 

 

802,029

 

Federal funds sold

 

 

3,597

 

 

 

3,089

 

 

 

12,107

 

 

 

13,138

 

Restricted equity securities

 

 

70,609

 

 

 

67,528

 

 

 

209,654

 

 

 

200,174

 

Interest-bearing deposits in financial institutions

 

 

63,455

 

 

 

32,354

 

 

 

197,033

 

 

 

105,063

 

Total interest income

 

 

11,874,605

 

 

 

10,802,647

 

 

 

33,387,521

 

 

 

30,232,360

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

404,040

 

 

 

184,162

 

 

 

1,095,984

 

 

 

533,747

 

Savings and money market accounts

 

 

689,382

 

 

 

650,735

 

 

 

2,140,405

 

 

 

2,039,751

 

Time deposits

 

 

545,733

 

 

 

492,178

 

 

 

1,566,373

 

 

 

1,564,751

 

Federal funds purchased

 

 

13,097

 

 

 

7,510

 

 

 

20,917

 

 

 

14,604

 

Securities sold under agreements to repurchase

 

 

 

 

 

3,715

 

 

 

1,311

 

 

 

12,731

 

Federal Home Loan Bank advances

 

 

96,838

 

 

 

47,333

 

 

 

279,586

 

 

 

131,000

 

Total interest expense

 

 

1,749,090

 

 

 

1,385,633

 

 

 

5,104,576

 

 

 

4,296,584

 

Net interest income

 

 

10,125,515

 

 

 

9,417,014

 

 

 

28,282,945

 

 

 

25,935,776

 

Provision for loan and lease losses

 

 

1,638,669

 

 

 

580,000

 

 

 

2,758,749

 

 

 

1,300,675

 

Net interest income after provision for loan and lease losses

 

 

8,486,846

 

 

 

8,837,014

 

 

 

25,524,196

 

 

 

24,635,101

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

276,751

 

 

 

235,035

 

 

 

805,322

 

 

 

667,415

 

Loan commitment fees

 

 

328,785

 

 

 

306,231

 

 

 

901,524

 

 

 

631,130

 

Net gain (loss) on sale of securities

 

 

(3,964

)

 

 

38,673

 

 

 

120,873

 

 

 

95,584

 

Mortgage banking income

 

 

2,339,310

 

 

 

1,748,883

 

 

 

5,341,605

 

 

 

4,699,177

 

Other noninterest income

 

 

250,581

 

 

 

305,837

 

 

 

961,103

 

 

 

872,047

 

Total noninterest income

 

 

3,191,463

 

 

 

2,634,659

 

 

 

8,130,427

 

 

 

6,965,353

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,119,356

 

 

 

5,205,896

 

 

 

15,275,494

 

 

 

14,628,293

 

Data processing and software

 

 

627,335

 

 

 

562,544

 

 

 

1,830,553

 

 

 

1,776,955

 

Professional fees

 

 

390,862

 

 

 

374,496

 

 

 

1,147,733

 

 

 

1,113,776

 

Occupancy

 

 

351,691

 

 

 

381,522

 

 

 

1,132,664

 

 

 

1,172,163

 

Equipment

 

 

458,053

 

 

 

442,899

 

 

 

1,300,793

 

 

 

1,201,084

 

Regulatory fees

 

 

250,424

 

 

 

227,053

 

 

 

742,308

 

 

 

688,965

 

Other operating

 

 

1,329,084

 

 

 

1,409,489

 

 

 

3,057,795

 

 

 

3,072,518

 

Total noninterest expense

 

 

8,526,805

 

 

 

8,603,899

 

 

 

24,487,340

 

 

 

23,653,754

 

Income before income taxes

 

 

3,151,504

 

 

 

2,867,774

 

 

 

9,167,283

 

 

 

7,946,700

 

Income tax expense

 

 

1,042,282

 

 

 

831,307

 

 

 

2,997,965

 

 

 

2,480,231

 

Net income

 

$

2,109,222

 

 

$

2,036,467

 

 

$

6,169,318

 

 

$

5,466,469

 

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.24

 

 

$

0.24

 

 

$

0.71

 

 

$

0.64

 

Diluted net income per common share

 

$

0.20

 

 

$

0.20

 

 

$

0.58

 

 

$

0.53

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

8,792,665

 

 

 

8,554,802

 

 

 

8,701,596

 

 

 

8,526,840

 

Diluted

 

 

10,799,536

 

 

 

10,407,721

 

 

 

10,682,976

 

 

 

10,364,278

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

6


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net income

 

$

2,109,222

 

 

$

2,036,467

 

 

$

6,169,318

 

 

$

5,466,469

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(744,017

)

 

 

1,150,343

 

 

 

2,829,245

 

 

 

1,199,555

 

Reclassification adjustment for (gains) losses included in

   net income

 

 

3,964

 

 

 

(38,673

)

 

 

(120,873

)

 

 

(95,584

)

Tax effect

 

 

283,366

 

 

 

(425,658

)

 

 

(1,037,036

)

 

 

(422,710

)

Net of tax

 

 

(456,687

)

 

 

686,012

 

 

 

1,671,336

 

 

 

681,261

 

Unrealized losses on securities transferred to held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for losses included in

   net income

 

 

41,720

 

 

 

41,720

 

 

 

125,159

 

 

 

125,159

 

Tax effect

 

 

(15,975

)

 

 

(15,975

)

 

 

(47,923

)

 

 

(47,923

)

Net of tax

 

 

25,745

 

 

 

25,745

 

 

 

77,236

 

 

 

77,236

 

Unrealized gains (losses) on cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

86,957

 

 

 

(2,430,325

)

 

 

(1,759,814

)

 

 

(1,912,757

)

Reclassification adjustment for losses included in

   net income

 

 

87,727

 

 

 

 

 

 

261,182

 

 

 

 

Tax effect

 

 

(33,296

)

 

 

1,406,356

 

 

 

673,833

 

 

 

437,179

 

Net of tax

 

 

141,388

 

 

 

(1,023,969

)

 

 

(824,799

)

 

 

(1,475,578

)

Other comprehensive income (loss)

 

 

(289,554

)

 

 

(312,212

)

 

 

923,773

 

 

 

(717,081

)

Comprehensive income

 

$

1,819,668

 

 

$

1,724,255

 

 

$

7,093,091

 

 

$

4,749,388

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

7


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

 

 

 

Preferred

 

 

Common Stock

 

 

Additional

paid-in

 

 

Retained

 

 

Accumulated

other

comprehensive

 

 

Total

shareholders’

 

 

 

stock

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

loss

 

 

equity

 

Balance December 31, 2014

 

$

1,609,756

 

 

 

8,471,516

 

 

$

8,471,516

 

 

$

94,927,215

 

 

$

476,275

 

 

$

(2,833,389

)

 

$

102,651,373

 

Issuance of restricted common

   stock, net of forfeitures

 

 

 

 

 

92,535

 

 

 

92,535

 

 

 

(92,535

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

288,850

 

 

 

 

 

 

 

 

 

288,850

 

Excess tax benefit from stock

   compensation

 

 

 

 

 

 

 

 

 

 

 

5,777

 

 

 

 

 

 

 

 

 

5,777

 

Exercise of employee common

   stock options

 

 

 

 

 

1,000

 

 

 

1,000

 

 

 

9,000

 

 

 

 

 

 

 

 

 

10,000

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,466,469

 

 

 

 

 

 

5,466,469

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(717,081

)

 

 

(717,081

)

Balance September 30, 2015

 

$

1,609,756

 

 

 

8,565,051

 

 

$

8,565,051

 

 

$

95,138,307

 

 

$

5,942,744

 

 

$

(3,550,470

)

 

$

107,705,388

 

Balance December 31, 2015

 

$

1,609,756

 

 

 

8,577,051

 

 

$

8,577,051

 

 

$

95,277,968

 

 

$

8,035,712

 

 

$

(4,914,380

)

 

$

108,586,107

 

Issuance of restricted common

   stock, net of forfeitures and

   withholdings to satisfy

   employee tax obligations

 

 

 

 

 

106,548

 

 

 

106,548

 

 

 

(122,886

)

 

 

 

 

 

 

 

 

(16,338

)

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

643,276

 

 

 

 

 

 

 

 

 

643,276

 

Excess tax benefit from stock

   compensation

 

 

 

 

 

 

 

 

 

 

 

28,576

 

 

 

 

 

 

 

 

 

28,576

 

Issuance of common stock

 

 

 

 

 

1,688,049

 

 

 

1,688,049

 

 

 

20,239,574

 

 

 

 

 

 

 

 

 

21,927,623

 

Conversion of preferred stock

 

 

(731,707

)

 

 

731,707

 

 

 

731,707

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of common stock

   warrants

 

 

 

 

 

87,666

 

 

 

87,666

 

 

 

76,500

 

 

 

 

 

 

 

 

 

164,166

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,169,318

 

 

 

 

 

 

6,169,318

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

923,773

 

 

 

923,773

 

Balance September 30, 2016

 

$

878,049

 

 

 

11,191,021

 

 

$

11,191,021

 

 

$

116,143,008

 

 

$

14,205,030

 

 

$

(3,990,607

)

 

$

138,426,501

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

 

8


CAPSTAR FINANCIAL HOLDINGS, INC. & SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

6,169,318

 

 

$

5,466,469

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

2,758,749

 

 

 

1,300,675

 

Accretion of discounts on acquired loans and deferred fees

 

 

(1,233,940

)

 

 

(1,755,968

)

Depreciation and amortization

 

 

323,955

 

 

 

442,834

 

Net amortization of premiums on investment securities

 

 

1,105,485

 

 

 

1,204,910

 

Securities (gains) losses, net

 

 

(120,873

)

 

 

(95,584

)

Mortgage banking income

 

 

(5,341,605

)

 

 

(4,699,177

)

Net loss on disposal of premises and equipment

 

 

 

 

 

(28,106

)

Net (gain) loss on sale of other real estate owned

 

 

(157,184

)

 

 

5,100

 

Stock-based compensation

 

 

643,276

 

 

 

288,850

 

Excess tax benefit from stock compensation

 

 

(28,576

)

 

 

(5,777

)

Deferred income tax expense

 

 

62,035

 

 

 

1,232,969

 

Origination of loans held for sale

 

 

(393,378,252

)

 

 

(328,066,517

)

Proceeds from loans held for sale

 

 

370,374,921

 

 

 

319,381,550

 

Net increase in accrued interest receivable and other assets

 

 

(2,022,143

)

 

 

(1,501,183

)

Net increase in accrued interest payable and other liabilities

 

 

1,076,673

 

 

 

1,333,490

 

Net cash used in operating activities

 

 

(19,768,161

)

 

 

(5,495,465

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Activities in securities available for sale:

 

 

 

 

 

 

 

 

Purchases

 

 

(55,862,232

)

 

 

(43,493,770

)

Sales

 

 

46,700,138

 

 

 

88,158,011

 

Maturities, prepayments and calls

 

 

17,113,459

 

 

 

21,781,269

 

Activities in securities held to maturity:

 

 

 

 

 

 

 

 

Purchases

 

 

(4,300,000

)

 

 

 

Maturities, prepayments and calls

 

 

1,233,385

 

 

 

581,577

 

Purchase of restricted equity securities

 

 

(112,000

)

 

 

(144,700

)

Net increase in loans

 

 

(112,957,898

)

 

 

(70,486,544

)

Purchase of premises and equipment

 

 

(102,744

)

 

 

(8,804

)

Proceeds from the sale of premises and equipment

 

 

 

 

 

233,387

 

Proceeds from sale of other real estate

 

 

373,438

 

 

 

234,246

 

Net cash used in investing activities

 

 

(107,914,454

)

 

 

(3,145,328

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net increase (decrease) in deposits

 

 

97,599,482

 

 

 

(6,045,546

)

Proceeds from Federal Home Loan Bank advances

 

 

15,000,000

 

 

 

15,000,000

 

Payments on Federal Home Loan Bank advances

 

 

(30,000,000

)