March 27, 2024

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CapStar Financial Holdings, Inc. Reports Year End 2020 Results Nasdaq:CSTR

13 min read

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

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

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

Profitability

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

Growth

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

Soundness

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

Dividend

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

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, January 29, 2021. During the call, management will review the third quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 1963565. A simultaneous webcast may be accessed on CapStar’s website at ir.capstarbank.com by clicking on ‘News & Events.’ An archived version of the webcast will be available in the same location shortly after the live call has ended.

About CapStar Financial Holdings, Inc.

CapStar Financial Holdings, Inc. is a bank holding company headquartered in Nashville, Tennessee and operates primarily through its wholly owned subsidiary, CapStar Bank, a Tennessee-chartered state bank. CapStar Bank is a commercial bank that seeks to establish and maintain comprehensive relationships with its clients by delivering customized and creative banking solutions and superior client service. As of December 31, 2020, on a consolidated basis, CapStar had total assets of $2.98 billion, total loans of $1.89 billion, total deposits of $2.57 billion, and shareholders’ equity of $343.49 million. Visit for more information.

(1) Operating measures exclude merger-related expenses unrelated to CapStar’s normal operations. For a discussion and reconciliation of the Non-GAAP operating measures that exclude merger-related costs unrelated to CapStar’s normal operations, see the section titled ‘Non-GAAP Disclaimer’ and the Non-GAAP financial measures section of the financial statements.

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this release and any oral statements made regarding the subject of this release, including in the conference call referenced herein, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1955. The words ‘expect’, ‘anticipate’, ‘intend’, ‘may’, ‘should’, ‘plan’, ‘believe’, ‘seek’, ‘estimate’ and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to : (I) deterioration in the financial condition of borrowers of the Company and its subsidiaries, resulting in significant increases in loan losses and provisions for those losses; (II) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the Covid-19 pandemic and its impact on general economic and financial market conditions and on the Company’s customer’s business, results of operations, asset quality and financial condition; (III) the ability to grow and retain low-cost, core deposits and retain large, uninsured deposits, including during times when the Company is seeking to lower rates it pays on deposits; (IV) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on the Company’s results, including as a result of compression to net interest margin; (V) fluctuations or differences in interest rates on loans or deposits from those that the Company is modeling or anticipating, including as a result of the Company’s inability to better match deposit rates with the changes in the short term rate environment, or that affect the yield curve; (VI) difficulties and delays in integrating required businesses or fully realizing cost savings or other benefits from acquisitions; (VII) the Company’s ability to profitably grow its business and successfully execute on its business plans; (VIII) any matter that would cause the Company to conclude that there was impairment of any asset, including goodwill or other intangible assets; (IX) the vulnerability of the Company’s network and online banking portals, and the systems of customers or parties with whom the Company contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (X) the availability of and access to capital; (XI) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals, and/or other negative affects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the Covid-19 pandemic; and (XII) general competitive, economic, political and market conditions. Additional factors which could affect the forward-looking statements can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with the SEC. The Company disclaims any obligation to update or revise any forward-looking statements contained in this press release (we speak only as of the date hereof), whether as a result of new information, future events, or otherwise.

NON-GAAP MEASURES

This release includes financial information determined by methods other than in accordance with generally accepted accounting principles (‘GAAP’). This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations. Such measures include: ‘Efficiency ratio – operating,’ ‘Expenses – operating,’ ‘Earnings per share – operating,’ ‘Diluted earnings per share – operating,’ ‘Tangible book value per share,’ ‘Return on common equity – operating,’ ‘Return on tangible common equity – operating,’ ‘Return on assets – operating,’ and ‘Tangible common equity to tangible assets.’

Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating CapStar’s underlying performance trends. Further, management uses these measures in managing and evaluating CapStar’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included in the exhibits to this presentation.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)
Fourth quarter 2020 Earnings Release

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

This information is preliminary and based on CapStar data available at the time of this earnings release.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Fourth quarter 2020 Earnings Release

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

_____________________
*This metric is a non-GAAP financial measure. See Non-GAAP disclaimer in this earnings release and below for discussion and reconciliation to the most directly comparable GAAP financial measure.
This information is preliminary and based on CapStar data available at the time of this earnings release.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Fourth quarter 2020 Earnings Release

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

_____________________

This information is preliminary and based on CapStar data available at the time of this earnings release.

(1) Net Interest Margin, Securities yields, and Total interest-earning asset yields are calculated on a tax-equivalent basis.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)
Fourth quarter 2020 Earnings Release

For the Three Months Ended December 31,
2020 2019
Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Interest-Earning Assets
Loans (1) $ 1,891,202 $ 21,305 4.48 % $ 1,431,027 $ 18,884 5.24 %
Loans held for sale 165,441 1,348 3.24 % 140,731 1,349 3.80 %
Securities:
Taxable investment securities (2) 350,644 1,567 1.79 % 175,750 1,248 2.84 %
Investment securities exempt from federal income tax (3) 56,978 354 3.14 % 49,515 347 3.55 %
Total securities 407,622 1,921 1.98 % 225,265 1,595 3.00 %
Cash balances in other banks 394,831 158 0.16 % 96,125 377 1.56 %
Funds sold 45 3.75 %
Total interest-earning assets 2,859,096 24,732 3.45 % 1,893,193 22,205 4.67 %
Noninterest-earning assets 169,129 137,038
Total assets $ 3,028,225 $ 2,030,231
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 828,740 497 0.24 % $ 566,869 2,015 1.41 %
Savings and money market deposits 593,236 377 0.25 % 514,896 1,821 1.40 %
Time deposits 487,716 1,121 0.91 % 306,731 1,626 2.10 %
Total interest-bearing deposits 1,909,692 1,995 0.42 % 1,388,496 5,462 1.56 %
Borrowings and repurchase agreements 39,428 406 4.09 % 22,391 162 2.88 %
Total interest-bearing liabilities 1,949,120 2,401 0.49 % 1,410,887 5,624 1.58 %
Noninterest-bearing deposits 703,388 322,524
Total funding sources 2,652,508 1,733,411
Noninterest-bearing liabilities 35,008 25,252
Shareholders’ equity 340,709 271,568
Total liabilities and shareholders’ equity $ 3,028,225 $ 2,030,231
Net interest spread (4) 2.96 % 3.09 %
Net interest income/margin (5) $ 22,331 3.12 % $ 16,580 3.49 %

_____________________

(1) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
(2) Taxable investment securities include restricted equity securities.
(3) Yields on tax exempt securities, total securities, and total interest-earning assets are shown on a tax equivalent basis.
(4) Net interest spread is the average yield on total average interest-earning assets minus the average rate on total average interest-bearing liabilities.
(5) Net interest margin is annualized net interest income calculated on a tax equivalent basis divided by total average interest-earning assets for the period.

This information is preliminary and based on CapStar data available at the time of this earnings release.

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

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

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

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


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

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

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

CONTACT

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

 

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