Form 8-K/A
0001676479 0001676479 2020-07-01 2020-07-01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K/A

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 21, 2020 (July 1, 2020)

 

 

CAPSTAR FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Tennessee   001-37886   81-1527911
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

1201 Demonbreun Street, Suite 700
Nashville, Tennessee 37203
(Address of principal executive offices)   (Zip Code)

(615) 732-6400

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $1.00 par value per share   CSTR   Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

 

 

 


EXPLANATORY NOTE

On July 1, 2020, CapStar Financial Holdings, Inc., a Tennessee corporation (“CapStar”), filed with the U.S. Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “Initial 8-K”) to disclose that it had completed its previously announced acquisitions of FCB Corporation, a Tennessee corporation (“FCB”) and The Bank of Waynesboro, a Tennessee chartered bank (“BOW”). This Form 8-K/A amends the Initial 8-K to include the historical audited and unaudited financial statements of FCB and BOW and the pro forma combined financial information required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Initial 8-K in reliance on the instructions to such items.

 

Item 9.01.

Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of FCB and its subsidiaries as of and for the year ended December 31, 2019, and the notes related thereto, included in Amendment No. 1 to CapStar’s Registration Statement on Form S-4 (No. 333-236961) filed with the SEC on March 27, 2020 and declared effective on March 31, 2020 (the “Registration Statement”) are incorporated herein by reference as Exhibit 99.1 to this Form 8-K/A. The audited consolidated financial statements of BOW and its subsidiary as of and for the year ended December 31, 2019, and the notes related thereto, included in the Registration Statement are incorporated herein by reference as Exhibit 99.2 to this Form 8-K/A.

The unaudited consolidated financial statements of FCB as of March 31, 2020 and for the three months ended March 31, 2019 and March 31, 2020, and the notes related thereto, are attached as Exhibit 99.3 to this Form 8-K/A and incorporated herein by reference.

The unaudited consolidated financial statements of BOW as of March 31, 2020 and for the three months ended March 31, 2019 and March 31, 2020, and the notes related thereto, are attached as Exhibit 99.4 to this Form 8-K/A and incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma combined consolidated financial information of CapStar, FCB and BOW for the year ended December 31, 2019, and the notes related thereto, included in the Registration Statement are incorporated herein by reference as Exhibit 99.5 to this Form 8-K/A.

The unaudited pro forma combined consolidated financial information of CapStar, FCB and BOW as of and for the three months ended March 31, 2020, and the notes related thereto, are attached as Exhibit 99.6 to this Form 8-K/A and incorporated herein by reference.

(d) Exhibits.

 

Exhibit No.   

Description of Exhibit

23.1    Consent of Blankenship CPA Group, PLLC.
23.2    Consent of Blankenship CPA Group, PLLC.
23.3    Consent of Elliott Davis, LLC.
99.1    Audited consolidated financial statements of FCB Corporation as of and for the year ended December 31, 2019, and the notes related thereto (incorporated by reference to Amendment No. 1 to CapStar Financial Holdings, Inc.’s Registration Statement on Form S-4 filed with the SEC on March 27, 2020).

 

-2-


99.2    Audited consolidated financial statements of The Bank of Waynesboro as of and for the year ended December 31, 2019, and the notes related thereto (incorporated by reference to Amendment No. 1 to CapStar Financial Holdings, Inc.’s Registration Statement on Form S-4 filed with the SEC on March 27, 2020).
99.3    Unaudited consolidated financial statements of FCB Corporation as of March 31, 2020 and for the three months ended March 31, 2019 and March 31, 2020, and the notes related thereto.
99.4    Unaudited consolidated financial statements of The Bank of Waynesboro as of March 31, 2020 and for the three months ended March 31, 2019 and March 31, 2020, and the notes related thereto.
99.5    Unaudited pro forma combined consolidated financial information of CapStar Financial Holdings, Inc., FCB Corporation and The Bank of Waynesboro as of and for the year ended December 31, 2019, and the notes related thereto (incorporated by reference to Amendment No. 1 to CapStar Financial Holdings, Inc.’s Registration Statement on Form S-4 filed with the SEC on March 27, 2020).
99.6    Unaudited pro forma combined consolidated financial information of CapStar Financial Holdings, Inc., FCB Corporation and The Bank of Waynesboro as of and for the three months ended March 31, 2020, and the notes related thereto.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

-3-


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

CAPSTAR FINANCIAL HOLDINGS, INC.
By:  

/s/ Steve Groom

Name:   Steve Groom
Title:   Chief Risk Officer and
  General Counsel

Date: August 21, 2020

 

-4-

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the Registration Statement on Form S-4 (No. 333-236961) of CapStar Financial Holdings, Inc. of our report, dated February 20, 2020, with respect to the consolidated financial statements of FCB Corporation and its subsidiaries as of and for the years ended December 31, 2019 and 2018, incorporated by reference in this Current Report on Form 8-K/A of CapStar Financial Holdings, Inc.

 

BLANKENSHIP CPA GROUP, PLLC

/s/ BLANKENSHIP CPA GROUP, PLLC

Brentwood, Tennessee
August 21, 2020
EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the Registration Statement on Form S-4 (No. 333-236961) of CapStar Financial Holdings, Inc. of our report, dated February 20, 2020, with respect to the consolidated financial statements of The Bank of Waynesboro and subsidiary as of and for the years ended December 31, 2019 and 2018, incorporated by reference in this Current Report on Form 8-K/A of CapStar Financial Holdings, Inc.

 

BLANKENSHIP CPA GROUP, PLLC

/s/ BLANKENSHIP CPA GROUP, PLLC

Brentwood, Tennessee
August 21, 2020
EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Form 8-K/A of CapStar Financial Holdings, Inc. of our report dated March 6, 2020, with respect to the consolidated financial statements of CapStar Financial Holdings, Inc. and its subsidiary as of December 31, 2019 and 2018 and for each of the years in the three-year period ended December 31, 2019 appearing in the Annual Report on Form 10-K of CapStar Financial Holdings, Inc.

/s/ Elliott Davis, LLC

Franklin, Tennessee

August 21, 2020

EX-99.3

Exhibit 99.3

FCB Corporation

Unaudited Consolidated Financial Statements

As of and For the Three Months Ended

March 31, 2020


FCB Corporation

Unaudited Financial Statements

Table of Contents

 

Unaudited Consolidated Balance Sheet

     1  

Unaudited Consolidated Statements of Income

     2  

Unaudited Consolidated Statements of Comprehensive Income

     3  

Unaudited Consolidated Statement of Changes in Shareholders’ Equity

     4  

Unaudited Consolidated Statements of Cash Flows

     5  

Notes to Consolidated Financial Statements

     6  


FCB Corporation

Unaudited Consolidated Balance Sheet

(Dollars in thousands, except share data)

March 31, 2020

 

Assets

  

Cash and due from banks

   $ 12,062  

Interest-bearing deposits in financial institutions

     42,023  
  

 

 

 

Total cash and cash equivalents

     54,085  
  

 

 

 

Certificates of deposit with other banks

     11,532  

Securities available-for-sale, at fair value

     76,040  

Loans

     316,266  

Less allowance for loan losses

     (4,384
  

 

 

 

Loans, net

     311,882  
  

 

 

 

Premises and equipment, net

     10,031  

Restricted equity securities

     1,090  

Accrued interest receivable

     1,769  

Other real estate owned, net

     321  

Other assets

     14,962  
  

 

 

 

Total assets

   $ 481,712  
  

 

 

 

Liabilities and Shareholders’ Equity

  

Deposits:

  

Non-interest-bearing

   $ 87,232  

Interest-bearing

     92,758  

Savings and money market accounts

     85,549  

Time

     145,836  
  

 

 

 

Total deposits

     411,375  

Other liabilities

     8,382  
  

 

 

 

Total liabilities

     419,757  
  

 

 

 

Shareholders’ equity:

  

Common stock, $10 par value; 300,000 shares authorized, 220,052 shares issued; 216,678 shares outstanding

     2,167  

Additional paid-in capital

     537  

Retained earnings

     47,883  

Accumulated other comprehensive income, net of income tax

     12  

Noncontrolling interest

     11,356  
  

 

 

 

Total shareholders’ equity

     61,955  
  

 

 

 

Total liabilities and shareholders’ equity

   $ 481,712  
  

 

 

 

See accompanying notes to consolidated financial statements.

 

1


FCB Corporation

Unaudited Consolidated Statements of Income

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020     2019  

Interest income:

    

Loans, including fees

   $ 4,831     $ 4,846  

Securities:

    

Taxable

     310       352  

Tax-exempt

     91       76  

Restricted equity securities

     3       14  

Interest-bearing deposits in financial institutions

     210       179  
  

 

 

   

 

 

 

Total interest income

     5,445       5,467  
  

 

 

   

 

 

 

Interest expense:

    

Interest-bearing deposits

     46       54  

Savings and money market accounts

     65       73  

Time deposits

     658       538  
  

 

 

   

 

 

 

Total interest expense

     769       665  
  

 

 

   

 

 

 

Net interest income

     4,676       4,802  

Provision for loan losses

     193       102  
  

 

 

   

 

 

 

Net interest income after provision for loan losses

     4,483       4,700  
  

 

 

   

 

 

 

Noninterest income:

    

Treasury management and other deposit service charges

     297       287  

Interchange and debit card transaction fees

     126       142  

Other noninterest income

     125       405  
  

 

 

   

 

 

 

Total noninterest income

     548       834  
  

 

 

   

 

 

 

Noninterest expense:

    

Salaries and employee benefits

     1,724       1,817  

Data processing and software

     230       205  

Professional fees

     350       181  

Occupancy

     229       241  

Equipment

     283       295  

Regulatory fees

     42       68  

Other operating

     489       479  
  

 

 

   

 

 

 

Total noninterest expense

     3,347       3,286  
  

 

 

   

 

 

 

Income before income taxes

     1,684       2,248  

Income tax expense

     514       610  
  

 

 

   

 

 

 

Net income before noncontrolling interest

     1,170       1,638  

Noncontrolling interest

     (223     (346
  

 

 

   

 

 

 

Net income

   $ 947     $ 1,292  
  

 

 

   

 

 

 

Per share information:

    

Basic net income per share of common stock

   $ 4.37     $ 5.96  
  

 

 

   

 

 

 

Diluted net income per share of common stock

   $ 4.37     $ 5.96  
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     216,678       216,678  
  

 

 

   

 

 

 

Diluted

     216,678       216,678  
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

2


FCB Corporation

Unaudited Consolidated Statements of Comprehensive Income

(Dollars in thousands)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020     2019  

Net income

   $ 947     $ 1,292  

Other comprehensive income (loss):

    

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

    

Unrealized holding gains (losses) arising during the period

     (324     721  

Reclassification adjustment for gains included in net income

     (9     (9

Tax effect

     87       (186
  

 

 

   

 

 

 

Other comprehensive income (loss)

     (246     526  
  

 

 

   

 

 

 

Comprehensive income before noncontrolling interest

     701       1,818  

Noncontrolling interest

     223       346  
  

 

 

   

 

 

 

Comprehensive income

   $ 924     $ 2,164  
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

3


FCB Corporation

Unaudited Consolidated Statement of Changes in Shareholders’ Equity

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2020

 

     Common
stock, voting
(shares)
     Common
stock, voting
(amount)
     Additional
paid-in capital
     Retained
earnings
     Accumulated
other
comprehensive
income
    Noncontrolling
interest
    Total
shareholders’
equity
 

Balance December 31, 2019

     216,678      $ 2,167      $ 537      $ 46,936      $ 52     $ 11,339     $ 61,031  

Net income

     —          —          —          947        —         223       1,170  

Other comprehensive loss

     —          —          —          —          (40     (206     (246
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance March 31, 2020

     216,678      $ 2,167      $ 537      $ 47,883      $ 12     $ 11,356     $ 61,955  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

4


FCB Corporation

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020     2019  

Cash flows from operating activities:

    

Net income

   $ 947     $ 1,292  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for loan losses

     193       102  

Depreciation and amortization

     126       135  

Securities (gains) losses, net

     (9     (9

Net gain on sale of other real estate owned

     (2     (62

Noncontrolling interest

     223       346  

Net (increase) decrease in accrued interest receivable and other assets

     (4,224     (4,946

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

     3,745       3,396  
  

 

 

   

 

 

 

Net cash provided by operating activities

     999       254  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Activities in securities available-for-sale:

    

Purchases

     (38,323     (14,373

Sales

     —         2,898  

Maturities, prepayments and calls

     30,685       3,926  

Activities in securities held-to-maturity:

    

Maturities, prepayments and calls

     2,999       7,998  

Activities in certificates of deposits with other banks:

    

Purchases

     (2,239     —    

Maturities

     1,233       604  

Net decrease in loans

     5,272       2,990  

Proceeds from sale of other real estate

     110       201  

Purchase of premises and equipment

     (18     (49
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (281     4,195  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net increase in deposits

     13,805       15,216  
  

 

 

   

 

 

 

Net cash provided by financing activities

     13,805       15,216  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     14,523       19,665  

Cash and cash equivalents at beginning of period

     39,562       20,925  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 54,085     $ 40,590  
  

 

 

   

 

 

 

Supplemental disclosures of cash paid:

    

Interest paid

   $ 2,002     $ 1,544  

Income taxes

     481       431  

See accompanying notes to consolidated financial statements.

 

5


FCB Corporation

Notes to Consolidated Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements as of and for the period ended March 31, 2020 include FCB Corporation, its wholly owned subsidiary, First National Bank, and its 50.56% owned subsidiary, The Bank of Waynesboro (the “Banks”, together referred to as the “Company”). Significant intercompany transactions and accounts are eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the financial condition and results of operations for the periods presented have been included. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for the full year or in any other period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses (“ALL”) and the valuation of the investment portfolio. There have been no significant changes to the Company’s critical accounting policies as disclosed in the Company’s Annual Report for the year ended December 31, 2019.

Subsequent Events

Accounting Standards Codification (“ASC”) 855, Subsequent Events, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The Company evaluated all events or transactions that occurred after March 31, 2020 through the date of the issued financial statements.

 

6


NOTE 2 – LOANS AND ALLOWANCE FOR LOAN LOSSES

A summary of the loan portfolio as of March 31, 2020 follows (dollars in thousands):

 

Commercial real estate

   $ 87,475  

Consumer real estate

     115,543  

Construction and land development

     50,588  

Commercial and industrial

     31,743  

Consumer

     23,477  

Other

     7,440  
  

 

 

 

Total

     316,266  

Allowance for loan losses

     (4,384
  

 

 

 

Total loans, net

   $ 311,882  
  

 

 

 

The following tables detail the changes in the ALL for the three months ended March 31, 2020 (dollars in thousands):

 

     Commercial
real estate
     Consumer
real estate
    Construction
and land
development
     Commercial
and
industrial
    Consumer     Other     Total  

Balance, beginning of period

   $ 1,062      $ 1,396     $ 777      $ 412     $ 330     $ 237     $ 4,214  

Charged-off loans

     —          (10     —          (2     (10     (15     (37

Recoveries

     —          —         —          1       9       4       14  

Provision for loan losses

     43        66       31        18       14       21       193  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of period

   $ 1,105      $ 1,452     $ 808      $ 429     $ 343     $ 247     $ 4,384  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

A breakdown of the ALL and the loan portfolio by loan category at March 31, 2020 follows (dollars in thousands):

 

     Commercial
real estate
     Consumer
real estate
     Construction
and land
development
     Commercial
and
industrial
     Consumer      Other      Total  

Allowance for Loan Losses:

                    

Collectively evaluated for impairment

   $ 1,105      $ 1,452      $ 808      $ 429      $ 343      $ 247      $ 4,384  

Individually evaluated for impairment

     —          —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balances, end of period

   $ 1,105      $ 1,452      $ 808      $ 429      $ 343      $ 247      $ 4,384  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans:

                    

Collectively evaluated for impairment

   $ 87,281      $ 114,743      $ 50,588      $ 31,442      $ 23,198      $ 7,440      $ 314,692  

Individually evaluated for impairment

     194        800        —          301        279        —          1,574  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balances, end of period

   $ 87,475      $ 115,543      $ 50,588      $ 31,743      $ 23,477      $ 7,440      $ 316,266  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

7


The following table presents the Company’s impaired loans that were evaluated for specific loss allowance as of March 31, 2020 (dollars in thousands):

 

     Recorded
investment
     Unpaid
principal
balance
     Related
allowance
 

With no related allowance recorded:

        

Commercial real estate

   $ 194      $ 194      $ —    

Consumer real estate

     800        800        —    

Construction and land development

     —          —          —    

Commercial and industrial

     301        301        —    

Consumer

     279        279        —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     1,574        1,574        —    
  

 

 

    

 

 

    

 

 

 

With an allowance recorded:

        

Commercial real estate

     —          —          —    

Consumer real estate

     —          —          —    

Construction and land development

     —          —          —    

Commercial and industrial

     —          —          —    

Consumer

     —          —          —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total

   $ 1,574      $ 1,574      $ —    
  

 

 

    

 

 

    

 

 

 

The following table presents the recorded investment in non-accrual loans, past due loans over 89 days outstanding and accruing and troubled debt restructurings (“TDR”) by class of loans as of March 31, 2020 (dollars in thousands):

 

     Non-Accrual      Past Due Over 89
Days and Accruing
     Troubled Debt
Restructurings
 

Commercial real estate

   $ 194      $ —        $ —    

Consumer real estate

     800        99        —    

Construction and land development

     —          —          —    

Commercial and industrial

     301        16        —    

Consumer

     279        49        —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total

   $ 1,574      $ 164      $ —    
  

 

 

    

 

 

    

 

 

 

NOTE 3 – EARNINGS PER SHARE

The following is a summary of the basic and diluted earnings per share calculation for the three months ended March 31, 2020 and 2019 (dollars in thousands, except share data):

 

     Three Months Ended March 31,  
     2020      2019  

Basic net income per share calculation:

     

Numerator – Net income

   $ 947      $ 1,292  

Denominator – Average common shares outstanding

     216,678        216,678  
  

 

 

    

 

 

 

Basic net income per share

   $ 4.37      $ 5.96  
  

 

 

    

 

 

 

Diluted net income per share calculation:

     

Numerator – Net income

   $ 947      $ 1,292  

Denominator – Average common shares outstanding

     216,678        216,678  

Dilutive shares contingently issuable

     —          —    
  

 

 

    

 

 

 

Average diluted common shares outstanding

     216,678        216,678  
  

 

 

    

 

 

 

Diluted net income per share

   $ 4.37      $ 5.96  
  

 

 

    

 

 

 

 

8


NOTE 4 – SUBSEQUENT EVENT

On July 1, 2020, pursuant to the Agreement and Plan of Merger, dated as of January 23, 2020 (the “FCB Merger Agreement”), by and between CapStar Financial Holdings, Inc., a Tennessee corporation (“CapStar”), and FCB Corporation, a Tennessee corporation (“FCB”), FCB was merged with and into CapStar, with CapStar continuing as the surviving entity (the “FCB Merger”). Immediately following the FCB Merger, The First National Bank of Manchester, a national banking association, a wholly owned subsidiary of FCB, merged with and into CapStar Bank, a wholly owned subsidiary of CapStar (the “Bank Merger”), with CapStar Bank continuing as the surviving entity in the Bank Merger.

Effective July 1, 2020, following the FCB Merger, pursuant to the Plan of Bank Merger, dated as of January 23, 2020 (the “BOW Merger Agreement,” and together with the FCB Merger Agreement, the “Merger Agreements”), by and among CapStar, CapStar Bank and The Bank of Waynesboro, a Tennessee chartered bank (“BOW”), BOW was merged with and into CapStar Bank, with CapStar Bank continuing as the surviving entity (the “BOW Merger,” and together with the FCB Merger, the “Mergers”). Prior to the FCB Merger, FCB owned 50.56% of the issued and outstanding shares of common stock, par value $10.00 per share, of BOW (“BOW Common Stock”); other shareholders owned the remaining 49.44% of the issued and outstanding shares of BOW Common Stock.

On the terms and subject to the conditions set forth in the FCB Merger Agreement, at the effective time of the FCB Merger, holders of common stock (the “FCB Common Stock”), par value $10.00 per share, of FCB collectively had the right to receive, without interest, 2,969,418 shares of common stock, par value $1.00 per share, of CapStar (“CapStar Common Stock”), with cash (without interest) in lieu of fractional shares, and $22,182,262.97 in cash, without interest.

On the terms and subject to the conditions set forth in the BOW Merger Agreement, at the effective time of the BOW Merger, holders of BOW Common Stock other than CapStar (such shareholders, the “BOW Minority Shareholders”), collectively had the right to receive, without interest, 664,800 shares of CapStar Common Stock, with cash (without interest) in lieu of fractional shares, and $5,096,990.31 in cash, without interest. Each share of BOW Common Stock held by CapStar will be converted into the number of shares of CapStar Common Stock equal in value to the per share merger consideration received by the BOW Minority Shareholders.

Total acquisition consideration resulting from the Mergers amounted to approximately $70.9 million.

The foregoing description of the Merger Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreements, copies of which were attached as Exhibits 2.1 and 2.2 to CapStar’s Form 8-K filed with the U.S. Securities and Exchange Commission on January 29, 2020 and the terms of which are incorporated herein by reference.

 

9

EX-99.4

Exhibit 99.4

The Bank of Waynesboro & Subsidiary

(A 50.56% Owned Subsidiary of FCB Corporation)

Unaudited Financial Statements

As of and For the Three Months Ended

March 31, 2020


The Bank of Waynesboro & Subsidiary

Unaudited Financial Statements

Table of Contents

 

Unaudited Consolidated Balance Sheet

     1  

Unaudited Consolidated Statements of Income

     2  

Unaudited Consolidated Statements of Comprehensive Income

     3  

Unaudited Consolidated Statement of Changes in Shareholders’ Equity

     4  

Unaudited Consolidated Statements of Cash Flows

     5  

Notes to Consolidated Financial Statements

     6  


The Bank of Waynesboro & Subsidiary

Unaudited Consolidated Balance Sheet

(Dollars in thousands, except share data)

March 31, 2020

 

Assets

  

Cash and due from banks

   $ 6,740  

Interest-bearing deposits in financial institutions

     14,050  
  

 

 

 

Total cash and cash equivalents

     20,790  
  

 

 

 

Certificates of deposit with other banks

     10,197  

Securities available-for-sale, at fair value

     20,444  

Loans

     119,012  

Less allowance for loan losses

     (1,898
  

 

 

 

Loans, net

     117,114  
  

 

 

 

Premises and equipment, net

     3,663  

Restricted equity securities

     420  

Accrued interest receivable

     763  

Other real estate owned, net

     321  

Other assets

     3,542  
  

 

 

 

Total assets

   $ 177,254  
  

 

 

 

Liabilities and Shareholders’ Equity

  

Deposits:

  

Non-interest-bearing

   $ 32,110  

Interest-bearing

     26,305  

Savings and money market accounts

     43,126  

Time

     52,028  
  

 

 

 

Total deposits

     153,569  

Other liabilities

     713  
  

 

 

 

Total liabilities

     154,282  
  

 

 

 

Shareholders’ equity:

  

Common stock, $10 par value; 30,000 shares authorized, issued and outstanding

     300  

Additional paid-in capital

     1,000  

Retained earnings

     22,022  

Accumulated other comprehensive loss, net of income tax

     (350
  

 

 

 

Total shareholders’ equity

     22,972  
  

 

 

 

Total liabilities and shareholders’ equity

   $ 177,254  
  

 

 

 

See accompanying notes to consolidated financial statements.

 

1


The Bank of Waynesboro & Subsidiary

Unaudited Consolidated Statements of Income

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020      2019  

Interest income:

     

Loans, including fees

   $ 1,904      $ 1,971  

Securities:

     

Taxable

     93        112  

Tax-exempt

     37        33  

Restricted equity securities

     3        6  

Interest-bearing deposits in financial institutions

     111        62  
  

 

 

    

 

 

 

Total interest income

     2,148        2,184  
  

 

 

    

 

 

 

Interest expense:

     

Interest-bearing deposits

     20        19  

Savings and money market accounts

     47        48  

Time deposits

     205        163  
  

 

 

    

 

 

 

Total interest expense

     272        230  
  

 

 

    

 

 

 

Net interest income

     1,876        1,954  

Provision for loan losses

     158        12  
  

 

 

    

 

 

 

Net interest income after provision for loan losses

     1,718        1,942  
  

 

 

    

 

 

 

Noninterest income:

     

Treasury management and other deposit service charges

     161        139  

Interchange and debit card transaction fees

     58        54  

Other noninterest income

     49        124  
  

 

 

    

 

 

 

Total noninterest income

     268        317  
  

 

 

    

 

 

 

Noninterest expense:

     

Salaries and employee benefits

     848        838  

Data processing and software

     120        112  

Professional fees

     90        47  

Occupancy

     91        92  

Equipment

     75        84  

Regulatory fees

     13        18  

Other operating

     150        131  
  

 

 

    

 

 

 

Total noninterest expense

     1,387        1,322  
  

 

 

    

 

 

 

Income before income taxes

     599        937  

Income tax expense

     146        235  
  

 

 

    

 

 

 

Net income

   $ 453      $ 702  
  

 

 

    

 

 

 

Per share information:

     

Basic net income per share of common stock

   $ 1.51      $ 2.34  
  

 

 

    

 

 

 

Diluted net income per share of common stock

   $ 1.51      $ 2.34  
  

 

 

    

 

 

 

Weighted average shares outstanding:

     

Basic

     300,000        300,000  
  

 

 

    

 

 

 

Diluted

     300,000        300,000  
  

 

 

    

 

 

 

See accompanying notes to consolidated financial statements.

 

2


The Bank of Waynesboro & Subsidiary

Unaudited Consolidated Statements of Comprehensive Income

(Dollars in thousands)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020     2019  

Net income

   $ 453     $ 702  

Other comprehensive income:

    

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

    

Unrealized holding gains (losses) arising during the period

     (558     249  

Reclassification adjustment for gains included in net income

     (6     (9

Tax effect

     147       (63
  

 

 

   

 

 

 

Other comprehensive income (loss)

     (417     177  
  

 

 

   

 

 

 

Comprehensive income

   $ 36     $ 879  
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

3


The Bank of Waynesboro & Subsidiary

Unaudited Consolidated Statement of Changes in Shareholders’ Equity

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2020

 

     Common
stock, voting
(shares)
     Common
stock, voting
(amount)
     Additional
paid-in capital
     Retained
earnings
     Accumulated
other
comprehensive
income (loss)
    Total
shareholders’
equity
 

Balance December 31, 2019

     300,000      $ 300      $ 1,000      $  21,569      $ 67     $ 22,936  

Net income

     —          —          —          453        —         453  

Other comprehensive loss

     —          —          —          —          (417     (417
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance March 31, 2020

     300,000      $ 300      $ 1,000      $ 22,022      $ (350   $ 22,972  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

4


The Bank of Waynesboro & Subsidiary

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended March 31,  
     2020     2019  

Cash flows from operating activities:

    

Net income

   $ 453     $ 702  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for loan losses

     158       12  

Depreciation and amortization

     39       46  

Securities (gains) losses, net

     (6     (9

Net gain on sale of other real estate owned

     (2     (64

Net (increase) decrease in accrued interest receivable and other assets

     (407     17  

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

     (84     36  
  

 

 

   

 

 

 

Net cash provided by operating activities

     151       740  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Activities in securities available-for-sale:

    

Purchases

     (6,000     (2,399

Sales

     —         2,898  

Maturities, prepayments and calls

     10,397       580  

Activities in certificates of deposits with other banks:

    

Purchases

     (2,239     —    

Maturities

     496       497  

Net increase in loans

     193       723  

Proceeds from sale of other real estate

     110       74  

Purchase of premises and equipment

     —         (21
  

 

 

   

 

 

 

Net cash provided by investing activities

     2,957       2,352  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net increase in deposits

     2,699       5,532  
  

 

 

   

 

 

 

Net cash provided by financing activities

     2,699       5,532  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     5,807       8,624  

Cash and cash equivalents at beginning of period

     14,983       4,097  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 20,790     $ 12,721  
  

 

 

   

 

 

 

Supplemental disclosures of cash paid:

    

Interest paid

   $ 672     $ 487  

Income taxes

     48       39  

See accompanying notes to consolidated financial statements.

 

5


The Bank of Waynesboro & Subsidiary

Notes to Consolidated Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements as of and for the period ended March 31, 2020 include The Bank of Waynesboro and its wholly owned subsidiary, Waynesboro Holdings, Inc. (the “Bank”, together referred to as the “Company”). Significant intercompany transactions and accounts are eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the financial condition and results of operations for the periods presented have been included. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for the full year or in any other period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses (“ALL”) and the valuation of our investment portfolio. There have been no significant changes to the Company’s critical accounting policies as disclosed in the Company’s Annual Report for the year ended December 31, 2019.

Subsequent Events

Accounting Standards Codification (“ASC”) 855, Subsequent Events, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The Company evaluated all events or transactions that occurred after March 31, 2020 through the date of the issued financial statements.

 

6


NOTE 2 – LOANS AND ALLOWANCE FOR LOAN LOSSES

A summary of the loan portfolio as of March 31, 2020 follows (dollars in thousands):

 

Commercial real estate

   $ 36,362  

Consumer real estate

     46,456  

Construction and land development

     10,015  

Commercial and industrial

     11,980  

Consumer

     10,022  

Other

     4,177  
  

 

 

 

Total

     119,012  

Allowance for loan losses

     (1,898
  

 

 

 

Total loans, net

   $ 117,114  
  

 

 

 

The following tables detail the changes in the ALL for the three and nine months ended March 31, 2020 (dollars in thousands):

 

     Commercial
real estate
     Consumer
real estate
    Construction
and land
development
     Commercial
and
industrial
     Consumer     Other     Total  

Balance, beginning of period

   $ 513      $ 606     $ 114      $ 176      $ 137     $ 205     $ 1,751  

Charged-off loans

     —          (10     —          —          (1     (9     (20

Recoveries

     —          —         —          —          5       4       9  

Provision for loan losses

     104        152       41        37        22       (198     158  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, end of period

   $ 617      $ 748     $ 155      $ 213      $ 163     $ 2     $ 1,898  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

A breakdown of the ALL and the loan portfolio by loan category at March 31, 2020 follows (dollars in thousands):

 

     Commercial
real estate
     Consumer
real estate
     Construction
and land
development
     Commercial
and
industrial
     Consumer      Other      Total  

Allowance for Loan Losses:

                    

Collectively evaluated for impairment

   $ 617      $ 748      $ 155      $ 213      $ 163      $ 2      $ 1,898  

Individually evaluated for impairment

     —          —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balances, end of period

   $ 617      $ 748      $ 155      $ 213      $ 163      $ 2      $ 1,898  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans:

                    

Collectively evaluated for impairment

   $ 36,362      $ 46,251      $ 10,015      $ 11,707      $ 9,998      $ 4,177      $ 118,510  

Individually evaluated for impairment

     —          205        —          273        24        —          502  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balances, end of period

   $ 36,362      $ 46,456      $ 10,015      $ 11,980      $ 10,022      $ 4,177      $  119,012  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

7


The following table presents the Company’s impaired loans that were evaluated for specific loss allowance as of March 31, 2020 (dollars in thousands):

 

     Recorded
investment
     Unpaid
principal
balance
     Related
allowance
 

With no related allowance recorded:

        

Commercial real estate

   $ —        $ —        $ —    

Consumer real estate

     205        205        —    

Construction and land development

     —          —          —    

Commercial and industrial

     273        273        —    

Consumer

     24        24        —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     502        502        —    
  

 

 

    

 

 

    

 

 

 

With an allowance recorded:

        

Commercial real estate

     —          —          —    

Consumer real estate

     —          —          —    

Construction and land development

     —          —          —    

Commercial and industrial

     —          —          —    

Consumer

     —          —          —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total

   $ 502      $ 502      $ —    
  

 

 

    

 

 

    

 

 

 

The following table presents the recorded investment in non-accrual loans, past due loans over 89 days outstanding and accruing and troubled debt restructurings (“TDR”) by class of loans as of March 31, 2020 (dollars in thousands):

 

     Non-Accrual      Past Due Over 89
Days and Accruing
     Troubled Debt
Restructurings
 

Commercial real estate

   $ —        $ —        $ —    

Consumer real estate

     205        36        —    

Construction and land development

     —          —          —    

Commercial and industrial

     273        —          —    

Consumer

     24        —          —    

Other

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total

   $ 502      $ 36      $ —    
  

 

 

    

 

 

    

 

 

 

NOTE 3 – EARNINGS PER SHARE

The following is a summary of the basic and diluted earnings per share calculation for the three months ended March 31, 2020 and 2019 (dollars in thousands, except share data):

 

     Three Months Ended March 31,  
     2020      2019  

Basic net income per share calculation:

     

Numerator – Net income

   $ 453      $ 702  

Denominator – Average common shares outstanding

     300,000        300,000  
  

 

 

    

 

 

 

Basic net income per share

   $ 1.51      $ 2.34  
  

 

 

    

 

 

 

Diluted net income per share calculation:

     

Numerator – Net income

   $ 453      $ 702  

Denominator – Average common shares outstanding

     300,000        300,000  

Dilutive shares contingently issuable

     —          —    
  

 

 

    

 

 

 

Average diluted common shares outstanding

     300,000        300,000  
  

 

 

    

 

 

 

Diluted net income per share

   $ 1.51      $ 2.34  
  

 

 

    

 

 

 

 

8


NOTE 4 – SUBSEQUENT EVENT

On July 1, 2020, pursuant to the Agreement and Plan of Merger, dated as of January 23, 2020 (the “FCB Merger Agreement”), by and between CapStar Financial Holdings, Inc., a Tennessee corporation (“CapStar”), and FCB Corporation, a Tennessee corporation (“FCB”), FCB was merged with and into CapStar, with CapStar continuing as the surviving entity (the “FCB Merger”). Immediately following the FCB Merger, The First National Bank of Manchester, a national banking association, a wholly owned subsidiary of FCB, merged with and into CapStar Bank, a wholly owned subsidiary of CapStar (the “Bank Merger”), with CapStar Bank continuing as the surviving entity in the Bank Merger.

Effective July 1, 2020, following the FCB Merger, pursuant to the Plan of Bank Merger, dated as of January 23, 2020 (the “BOW Merger Agreement,” and together with the FCB Merger Agreement, the “Merger Agreements”), by and among CapStar, CapStar Bank and The Bank of Waynesboro, a Tennessee chartered bank (“BOW”), BOW was merged with and into CapStar Bank, with CapStar Bank continuing as the surviving entity (the “BOW Merger,” and together with the FCB Merger, the “Mergers”). Prior to the FCB Merger, FCB owned 50.56% of the issued and outstanding shares of common stock, par value $10.00 per share, of BOW (“BOW Common Stock”); other shareholders owned the remaining 49.44% of the issued and outstanding shares of BOW Common Stock.

On the terms and subject to the conditions set forth in the FCB Merger Agreement, at the effective time of the FCB Merger, holders of common stock (the “FCB Common Stock”), par value $10.00 per share, of FCB collectively had the right to receive, without interest, 2,969,418 shares of common stock, par value $1.00 per share, of CapStar (“CapStar Common Stock”), with cash (without interest) in lieu of fractional shares, and $22,182,262.97 in cash, without interest.

On the terms and subject to the conditions set forth in the BOW Merger Agreement, at the effective time of the BOW Merger, holders of BOW Common Stock other than CapStar (such shareholders, the “BOW Minority Shareholders”), collectively had the right to receive, without interest, 664,800 shares of CapStar Common Stock, with cash (without interest) in lieu of fractional shares, and $5,096,990.31 in cash, without interest. Each share of BOW Common Stock held by CapStar will be converted into the number of shares of CapStar Common Stock equal in value to the per share merger consideration received by the BOW Minority Shareholders.

Total acquisition consideration resulting from the Mergers amounted to approximately $70.9 million.

The foregoing description of the Merger Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreements, copies of which were attached as Exhibits 2.1 and 2.2 to CapStar’s Form 8-K filed with the U.S. Securities and Exchange Commission on January 29, 2020 and the terms of which are incorporated herein by reference.

 

9

EX-99.6

Exhibit 99.6

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma combined consolidated financial information and accompanying notes showing the impact on the historical financial conditions and results of operations of CapStar Financial Holdings, Inc., a Tennessee corporation (“CapStar”), FCB Corporation, a Tennessee corporation (“FCB”), and The Bank of Waynesboro, a Tennessee chartered bank (“BOW”), have been prepared to illustrate the effects of the merger of FCB with and into CapStar, with CapStar as the entity surviving the merger (the “FCB merger”), and the merger of BOW into CapStar Bank, a Tennessee chartered bank and wholly owned subsidiary of CapStar, with CapStar Bank as the entity surviving the merger (the “BOW merger,” and together with the FCB merger, the “mergers”), under the acquisition method of accounting.

The unaudited pro forma combined consolidated balance sheet as of March 31, 2020 is presented as if the FCB merger and the BOW merger had occurred on March 31, 2020. The unaudited pro forma combined consolidated statements of income for the year ended December 31, 2019 and for the three months ended March 31, 2020 are presented as if the FCB merger and the BOW merger had occurred on January 1, 2019. The actual completion date of the FCB merger and the BOW merger was July 1, 2020.

The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the mergers and, with respect to the income statement only, expected to have a continuing impact on consolidated results of operations. As such, one-time merger costs are not included.

The unaudited pro forma combined consolidated financial statements are provided for informational purposes only. The unaudited pro forma combined consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the merger been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma combined consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined consolidated financial statements should be read together with:

 

   

the accompanying notes to the unaudited pro forma combined consolidated financial statements;

 

   

CapStar’s audited consolidated financial statements and accompanying notes as of and for the twelve months ended December 31, 2019, included in CapStar’s Annual Report on Form 10-K for the year ended December 31, 2019;

 

   

CapStar’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020;

 

   

FCB’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2019, included as Exhibit 99.1 to this Form 8-K/A;

 

   

FCB’s unaudited consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2020, included as Exhibit 99.3 to this Form 8-K/A;

 

   

BOW’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2019, included as Exhibit 99.2 to this Form 8-K/A; and

 

   

BOW’s unaudited consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2020, included as Exhibit 99.4 to this Form 8-K/A.

 

1


Unaudited Pro Forma Combined Consolidated Balance Sheet

At March 31, 2020

(in thousands, except per share data)

 

     CapStar Financial
Holdings, Inc.
Consolidated
    FCB
Corporation
Consolidated
    Pro Forma
Adjustments
         Pro Forma
Combined
 

Assets

           

Cash and due from financial institutions

   $ 91,450     $ 54,085     $ 183     a,i,l    $ 145,718  

Federal funds sold

     —            —             —     
  

 

 

   

 

 

   

 

 

      

 

 

 

Total cash and cash equivalents

     91,450       54,085       183          145,718  
  

 

 

   

 

 

   

 

 

      

 

 

 

Certificates of deposit with other banks

     —          11,532       —             11,532  

Securities

     222,519       76,040       159     d      298,718  

Loans held for sale

     186,937       —          —             186,937  

Loans

     1,446,835       316,266       (4,857   e      1,758,244  

Less allowance for loan losses

     (20,114     (4,384     4,384     b      (20,114
  

 

 

   

 

 

   

 

 

      

 

 

 

Loans, net

     1,426,721       311,882       (473        1,738,130  
  

 

 

   

 

 

   

 

 

      

 

 

 

Premises and equipment, net

     18,896       10,031       1,540     f      30,467  

Restricted equity securities

     13,573       1,090       —             14,663  

Accrued interest receivable

     5,786       1,769       —             7,555  

Goodwill

     37,510       —          7,297     k      44,807  

Core deposit intangible

     6,498       —          3,570     c      10,068  

Other real estate owned, net

     147       321       —             468  

Other assets

     62,548       14,962       (507   g      77,003  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 2,072,585     $ 481,712     $ 11,769        $ 2,566,066  
  

 

 

   

 

 

   

 

 

      

 

 

 

Liabilities and Shareholders’ Equity

           

Deposits:

           

Non-interest-bearing

   $ 442,789     $ 87,232     $ —           $ 530,021  

Interest-bearing

     1,320,920       324,143       113     a,h      1,645,176  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total deposits

     1,763,709       411,375       113          2,175,197  

Federal Home Loan Bank advances and other borrowings

     10,000       —          30,000     l      40,000  

Other liabilities

     23,086       8,382       —             31,468  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     1,796,795       419,757       30,113          2,246,665  
  

 

 

   

 

 

   

 

 

      

 

 

 

Shareholders’ equity:

           

Common stock

     18,308       2,167       1,467     i,j      21,942  

Additional paid-in capital

     206,043       537       39,440     i,j      246,020  

Retained earnings

     46,648       47,883       (47,883   j      46,648  

Accumulated other comprehensive loss, net of income tax

     4,791       12       (12   j      4,791  

Noncontrolling interest

     —          11,356       (11,356   j      —     
  

 

 

   

 

 

   

 

 

      

 

 

 

Total shareholders’ equity

     275,790       61,955       (18,344        319,401  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and shareholders’ equity

   $ 2,072,585     $ 481,712     $ 11,769        $ 2,566,066  
  

 

 

   

 

 

   

 

 

      

 

 

 

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

2


Unaudited Pro Forma Combined Consolidated Statement of Income

For the year ended December 31, 2019

(in thousands, except per share data)

 

     CapStar Financial
Holdings, Inc.
Consolidated
    FCB
Corporation
Consolidated
    Income Statement
Reclassifications
         Pro Forma
Adjustments
         Pro Forma
Combined
 

Interest income:

                

Loans, including fees

   $ 82,828     $ 19,845     $ —          $ 475     p    $ 103,148  

Securities:

                

Taxable

     4,619       1,422       —            —            6,041  

Tax-exempt

     1,438       329       —            —            1,767  

Federal funds sold

     26       —         —            —            26  

Restricted equity securities

     755       —         —            —            755  

Interest-bearing deposits in financial institutions

     1,881       855       —            (73   s      2,663  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Total interest income

     91,547       22,451       —            402          114,400  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Interest expense:

                

Deposits

     22,346       3,056       —            (1,583   q,s      23,819  

Federal funds purchased

     4       —         —            —            4  

Securities sold under agreements to repurchase

     5       —         —            —            5  

Federal Home Loan Bank advances

     1,444       —         —            —            1,444  

Other

     —         30       —            1,575     u      1,605  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Total interest expense

     23,799       3,086       —            (8        26,877  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Net interest income

     67,748       19,365       —            410          87,523  

Provision for loan losses

     761       721       —            —            1,482  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Net interest income after provision for loan losses

     66,987       18,644       —            410          86,041  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Noninterest income:

                

Treasury management and other deposit service charges

     3,135       1,322       —            —            4,457  

Net gain (loss) on sale of securities

     (99     64       —            —            (35

Tri-Net fees

     2,785       —         —            —            2,785  

Mortgage banking income

     9,467       311       —            —            9,778  

Other noninterest income

     8,986       1,404       —            —            10,390  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Total noninterest income

     24,274       3,101       —            —            27,375  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Noninterest expense:

                

Salaries and employee benefits

     35,542       7,409       —            —            42,951  

Data processing and software

     6,961       —         786     n      —            7,747  

Professional fees

     2,102       —         465     n      —            2,567  

Occupancy

     3,345       643       462     m      —            4,450  

Equipment

     3,723       —         941     m,n      —            4,664  

Regulatory fees

     591       —         181     n      —            772  

Merger related expenses

     2,654       —         —            —            2,654  

Amortization of intangibles

     1,655       —         —            676     o      2,331  

Depreciation

     —         515       (515   m      —            —    

Other operating

     5,422       4,277       (2,320   n      —            7,379  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Total noninterest expense

     61,995       12,844       —            676          75,515  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Income before income taxes

     29,266       8,901       —            (266        37,901  

Income tax expense (benefit)

     6,844       2,138       —            (70   r      8,912  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Net income before noncontrolling interest

     22,422       6,763       —            (196        28,989  

Noncontrolling interest

     —         (1,344     —            1,344     t      —    
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Net income

   $ 22,422     $ 5,419     $ —          $ 1,148        $ 28,989  
  

 

 

   

 

 

   

 

 

      

 

 

      

 

 

 

Per share information:

                

Basic net income per share of common stock

   $ 1.25                 $ 1.35  
  

 

 

               

 

 

 

Diluted net income per share of common stock

   $ 1.20                 $ 1.30  
  

 

 

               

 

 

 

Weighted average shares outstanding:

                

Basic

     17,886,164                   21,520,382  
  

 

 

               

 

 

 

Diluted

     18,613,224                   22,247,442  
  

 

 

               

 

 

 

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

3


Unaudited Pro Forma Combined Consolidated Statement of Income

For the three months ended March 31, 2020

(in thousands, except per share data)

 

     CapStar Financial
Holdings, Inc.
Consolidated
    FCB
Corporation
Consolidated
    Pro Forma
Adjustments
         Pro Forma
Combined
 

Interest income:

           

Loans, including fees

   $ 19,738     $ 4,831     $ 88     p    $ 24,657  

Securities:

           

Taxable

     1,174       310       —            1,484  

Tax-exempt

     321       91       —            412  

Restricted equity securities

     142       3       —            145  

Interest-bearing deposits in financial institutions

     363       210       (25   s      548  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total interest income

     21,738       5,445       63          27,246  
  

 

 

   

 

 

   

 

 

      

 

 

 

Interest expense:

           

Deposits

     4,933       769       (208   q,s      5,494  

Federal Home Loan Bank advances and other borrowings

     144       —         394     u      538  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total interest expense

     5,077       769       186          6,032  
  

 

 

   

 

 

   

 

 

      

 

 

 

Net interest income

     16,661       4,676       (123        21,214  

Provision for loan losses

     7,553       193       —            7,746  
  

 

 

   

 

 

   

 

 

      

 

 

 

Net interest income after provision for loan losses

     9,108       4,483       (123        13,468  
  

 

 

   

 

 

   

 

 

      

 

 

 

Noninterest income:

           

Treasury management and other deposit service charges

     775       297       —            1,072  

Net gain on sale of securities

     27       9       —            36  

Tri-Net fees

     599       —         —            599  

Mortgage banking income

     2,253       —         —            2,253  

Wealth management fees

     407       —         —            407  

Interchange and debit card transaction fees

     724       126       —            850  

Other noninterest income

     1,089       116       —            1,205  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total noninterest income

     5,874       548       —            6,422  
  

 

 

   

 

 

   

 

 

      

 

 

 

Noninterest expense:

           

Salaries and employee benefits

     8,002       1,724       —            9,726  

Data processing and software

     1,864       230       —            2,094  

Professional fees

     636       350       —            986  

Occupancy

     820       229       —            1,049  

Equipment

     751       283       —            1,034  

Regulatory fees

     163       42       —            205  

Merger related expenses

     290       —         —            290  

Amortization of intangibles

     386       —         158     o      544  

Other operating

     1,299       489       —            1,788  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total noninterest expense

     14,211       3,347       158          17,716  
  

 

 

   

 

 

   

 

 

      

 

 

 

Income before income taxes

     771       1,684       (281        2,174  

Income tax expense (benefit)

     (575     514       (73   r      (134
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income before noncontrolling interest

     1,346       1,170       (207        2,309  

Noncontrolling interest

     —         (223     223     t      —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income

   $ 1,346     $ 947     $ 16        $ 2,309  
  

 

 

   

 

 

   

 

 

      

 

 

 

Per share information:

           

Basic net income per share of common stock

   $ 0.07            $ 0.10  
  

 

 

          

 

 

 

Diluted net income per share of common stock

   $ 0.07            $ 0.10  
  

 

 

          

 

 

 

Weighted average shares outstanding:

           

Basic

     18,392,913              22,027,131  
  

 

 

          

 

 

 

Diluted

     18,443,725              22,077,943  
  

 

 

          

 

 

 

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

4


NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(all amounts are in thousands, except per share data, unless otherwise indicated)

Note 1—Basis of Pro Forma Presentation

The unaudited pro forma combined balance sheet as of March 31, 2020 and the unaudited pro forma combined statements of income for the year ended December 31, 2019 and the three months ended March 31, 2020 are based on the historical financial statements of CapStar, FCB and BOW after giving effect to the completion of the mergers and the assumptions and adjustments described in the accompanying notes. Such financial statements do not reflect cost savings or operating synergies expected to result from the mergers, or the costs to achieve these cost savings or operating synergies, or any anticipated disposition of assets that may result from the integration of the operations of the three companies. Certain historical financial information has been reclassified to conform to the current presentation.

FCB owns 50.56% of BOW and therefore all of BOW’s historical balances and activity are reflected in the FCB Corporation Consolidated amounts presented. Therefore, addition of the FCB Corporation Consolidated amounts with the CapStar Financial Holdings, Inc. Consolidated amounts, after factoring in the Pro Forma Adjustments, produces the Pro Forma Combined Amounts for the combined company, after giving effect to the FCB merger and the BOW merger.

The transactions will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, a more reliable measure.

Under ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. Subsequent to the completion of the merger, CapStar, FCB and BOW will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company. For those assets in the combined company that will be phased out or will no longer be used, additional amortization, depreciation and possibly impairment charges will be recorded after management completes the integration plan.

The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

 

5


Note 2—Preliminary Estimated Acquisition Consideration

Based on the merger agreement for the FCB merger and the merger agreement for the BOW merger, and assuming no adjustment to the merger considerations pursuant to the terms of such agreements, the preliminary estimated acquisition consideration is as follows.

 

     FCB
Corporation
     The Bank of
Waynesboro
     Total  

Number of shares of CapStar common stock as exchanged

     2,969,418        664,800        3,634,218  

Multiplied by CapStar common stock price per share on June 30, 2020

   $ 12.00      $ 12.00      $ 12.00  
  

 

 

    

 

 

    

 

 

 

Estimated fair value of CapStar common stock issued (“Stock Consideration”)

   $ 35,633      $ 7,978      $ 43,611  
  

 

 

    

 

 

    

 

 

 

Stock Consideration

   $ 35,633      $ 7,978      $ 43,611  

Cash Consideration

   $ 22,181      $ 5,097      $ 27,278  
  

 

 

    

 

 

    

 

 

 

Total Preliminary Estimated Acquisition Consideration

   $ 57,814      $ 13,075      $ 70,889  
  

 

 

    

 

 

    

 

 

 

Note 3—Preliminary Estimated Acquisition Consideration Allocation

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of FCB and BOW based on their estimated fair values as of the closing of the mergers. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The allocation of the estimated acquisition consideration is based on estimates, assumptions, valuations, and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation unaudited pro forma adjustments will remain preliminary until CapStar management determines the final acquisition consideration and the fair values of assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the mergers and will be based on the value of the CapStar common stock at the closing of the mergers. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma combined consolidated financial statements.

The total preliminary estimated acquisition consideration as shown in the tables above is allocated to FCB and BOW’s tangible and intangible assets and liabilities as of March 31, 2020 based on their preliminary estimated fair values as follows.

 

Cash and cash equivalents

   $ 51,546  

Securities available-for-sale

     76,199  

Loans

     311,409  

Premises and equipment, net

     11,571  

Goodwill

     7,297  

Core deposit intangible

     3,570  

Other assets

     29,167  

Deposits

     (411,488

Other liabilities

     (8,382
  

 

 

 

Total preliminary estimated acquisition consideration

   $ 70,889  
  

 

 

 

Approximately $3,570 has been preliminarily allocated to amortizable intangible assets acquired. The amortization related to the preliminary fair value of net amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined financial statements.

Identifiable intangible assets. The preliminary fair values of intangible assets were determined based on the provisions of ASC 805, which defines fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The preliminary allocation to intangible assets is allocated to core deposit intangibles.

 

6


Goodwill. Goodwill represents the excess of the preliminary estimated acquisition consideration over the preliminary fair value of the underlying net tangible and intangible assets. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets are the skill sets, operations, customer base and organizational cultures that can be leveraged to enable the combined company to build an enterprise greater than the sum of its parts. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. In the event management determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the period in which the determination is made.

Note 4—Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

The unaudited pro forma financial information is not necessarily indicative of what the financial position actually would have been had the mergers been completed at the date indicated. Such information includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-merger periods. The unaudited pro forma financial information does not give consideration to the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the mergers.

The following unaudited pro forma adjustments result from accounting for the mergers, including the determination of fair value of the assets, liabilities, and commitments which CapStar, as the acquirer, will acquire from FCB and BOW. The descriptions related to these preliminary adjustments are as follows.

Balance Sheet – the explanations and descriptions below are referenced to the March 31, 2020 Unaudited Pro Forma Combined Consolidated Balance Sheet on page 2.

 

Pro Forma Adjusting Entries (Balance Sheet):    Debit      Credit  

a

   Cash and due from banks       $ 2,539  

a

   Interest-bearing deposits      2,539     

b

   Allowance for loan losses      4,384     

c

   Core deposit intangible      3,570     

d

   Securities      159     

e

   Loans         4,857  

f

   Premises and equipment      1,540     

g

   Deferred tax asset (included in “other assets”)         507  

h

   Interest-bearing deposits         2,652  

i

   Common stock         3,634  

i

   Cash and due from banks         27,278  

i

   Additional paid-in capital         39,977  

j

   Common stock      2,167     

j

   Additional paid-in capital      537     

j

   Retained earnings      47,883     

j

   Accumulated other comprehensive loss, net of income tax      12     

j

   Noncontrolling interest      11,356     

k

   Goodwill      7,297     

l

   Cash and due from banks      30,000     

l

   Federal Home Loan Bank advances and other borrowings         30,000  

 

a)

Elimination of deposits FCB/BOW on deposit at CapStar.

b)

Adjustment to allowance for loan losses to reflect the reversal of FCB/BOW’s allowance for loan losses.

c)

Adjustment to intangible assets to reflect the preliminary estimate of the core deposit intangible at the acquisition date.

d)

Adjust certain security investments to estimated fair value.

e)

Adjustment to loans to reflect the preliminary estimated fair value at acquisition date.

 

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f)

Adjustment to real estate to reflect the preliminary estimated fair value at acquisition date.

g)

Adjustment to reflect the net deferred tax asset generated by the net fair value adjustments using an assumed effective tax rate equal to 26.14%.

h)

Adjustment to time deposits to reflect the preliminary estimated fair value at acquisition date.

i)

Cash paid and CapStar common shares issued to FCB’s shareholders and the BOW minority shareholders representing the stock consideration component of the total merger consideration in the FCB merger and BOW merger. For purposes of this pro-forma presentation, the value of a share of CapStar common stock was assumed to equal its closing price on June 30, 2020, as reported by NASDAQ ($12.00 per share).

j)

To reflect the reversal of FCB/BOW’s equity.

k)

Adjustment to reflect the preliminary estimated goodwill generated as a result of consideration paid in excess of the fair value of the net assets acquired.

l)

To reflect issuance of subordinated debt at CapStar Financial Holdings, Inc. to facilitate cash paid in transaction and provide an additional source of strength to the Bank.

Income Statements – the explanations and descriptions below are referenced to the Unaudited Pro Forma Combined Consolidated Statements of Income for the year ended December 31, 2019 and the three months ended March 31, 2020 starting on page 3.

Income Statements—reclassifications

The following reclassifications adjusted FCB/BOW’s historical income statement to conform to CapStar’s historical income statement.

 

m)

Depreciation expense has been reclassified to conform to CapStar’s historical income statement.

n)

Other noninterest expense has been reclassified to conform to CapStar’s historical income statement.

Income Statements—Pro Forma Adjustments

 

          Year Ended December 31, 2019  
Pro Forma Adjusting Entries (Income Statement):    Debit      Credit  

o

   Amortization of new CDI    $ 676                                  

p

   Preliminary estimate of loan interest accretion                                      475  

q

   Preliminary estimate of time deposit premium amortization         1,510  

r

   Income tax benefit of pro-forma adjustments         70  

s

   Elimination of intercompany income/expense      73        73  

t

   Elimination of noncontrolling interest         1,344  

u

   Interest expense on subordinated debt      1,575     

 

          Three Months Ended March 31, 2020  
Pro Forma Adjusting Entries (Income Statement):    Debit      Credit  

o

   Amortization of new CDI    $ 158                                  

p

   Preliminary estimate of loan interest accretion                                      88  

q

   Preliminary estimate of time deposit premium amortization         183  

r

   Income tax benefit of pro-forma adjustments         73  

s

   Elimination of intercompany income/expense      25        25  

t

   Elimination of noncontrolling interest         223  

u

   Interest expense on subordinated debt      394     

 

o)

The preliminary estimate of CDI related to CapStar’s acquisition of FCB/BOW is expected to approximate $3,570 and will be amortized over a ten year period on an accelerated basis which is expected to produce approximately $676 of amortization expense during the first year of operations.

p)

Represents the preliminary estimate of the first year’s interest income accretion related to the preliminary estimate of the fair value adjustment of the loans acquired pursuant to the mergers. The total amount to be accreted in interest income over the estimated lives of the related loans is approximately $1,575.

q)

Represents the preliminary estimate of the first year’s interest expense amortization related to the preliminary estimate of the fair value adjustment of the time deposits acquired pursuant to the merger. The total amount to be amortized to interest expense over the estimated lives of the related time deposits is approximately $2,652.

r)

Adjustment to reflect the income tax provision of the Pro Forma Adjustments using 26.14% as the incremental effective tax rate.

 

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s)

Elimination of intercompany income/expense related to FCB/BOW’s deposits held at CapStar.

t)

Elimination of noncontrolling interest due to acquisition of 100% of FCB and BOW.

u)

Adjustment to reflect interest expense on $30,000 of subordinated debt (at holding company level), calculated at 5.25%.

Note 5—Earnings per Common Share

Unaudited pro forma earnings per common share for the year ended December 31, 2019 and the three months ended March 31, 2020 have been calculated using CapStar’s historic weighted average common shares outstanding plus the common shares assumed to be issued to FCB/shareholders and the BOW minority shareholders in each of their respective mergers.

The following table sets forth the calculation of basic and diluted unaudited pro forma earnings per common share for the year ended December 31, 2019 and the three months ended March 31, 2020. In the table below, amounts are in thousands except for share data.

 

     Three months ended March 31, 2020      Year ended December 31, 2019  
     Basic      Diluted      Basic      Diluted  

Pro forma net income available to common shareholders

   $ 2,309      $ 2,309      $ 28,989      $ 28,989  

Weighted average common shares outstanding:

           

CapStar

     18,392,913        18,443,725        17,886,164        18,613,224  

Common shares issued to FCB/BOW

     3,634,218        3,634,218        3,634,218        3,634,218  
  

 

 

    

 

 

    

 

 

    

 

 

 

Pro forma

     22,027,131        22,077,943        21,520,382        22,247,442  
  

 

 

    

 

 

    

 

 

    

 

 

 

Pro forma net income per common share

   $ 0.10      $ 0.10      $ 1.35      $ 1.30  
  

 

 

    

 

 

    

 

 

    

 

 

 

Note 6—Merger Related Charges

CapStar’s preliminary estimated transaction expenses related to the FCB merger and BOW merger are approximately $5,723, net of tax. These one-time merger related expenses have not been included in the Unaudited Pro Forma Combined Consolidated Statement of Income, as the pro forma adjustments does not give consideration to non-recurring items, the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the merger. These preliminary estimated merger transaction expenses are still being developed and will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment, and service contracts to determine where they may take advantage of redundancies. The preliminary estimated pro forma presentation of CapStar’s merger transaction costs is in the following table.

 

Change in control and severance expenses

   $ 1,395  

System termination fees and system conversion expenses

     2,936  

Investment bankers, accounting, auditing and legal

     2,648  

Other related expenses

     150  
  

 

 

 

Total non-interest expense

     7,129  
  

 

 

 

Tax benefit

     1,406  
  

 

 

 

Net expense after tax benefit

   $ 5,723  
  

 

 

 

 

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