GlobeNewswire
NASHVILLE, Tenn., April 22, 2021 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $11.0 million or $0.50 per diluted share, for the quarter ended March 31, 2021, compared with net income of $1.3 million or $0.07 per diluted share, for the quarter ended March 31, 2020. Annualized return on average assets and return on average tangible equity for the quarter ended March 31, 2021 were 1.45% and 14.85%, respectively. “CapStar began 2021 with outstanding results,” said Timothy K. Schools, president and chief executive officer. “Our performance reflects the beginning of an improving economy and execution of strategic priorities to enhance our profitability and earnings consistency, accelerate organic growth, maintain sound risk management principles, and develop disciplined capital allocation. With continued dedication to exceptional customer service, our hard-working associates are delivering. If current trends continue, we are optimistic that 2021 can be an outstanding year for CapStar. We have more levers than ever before, now serving two dynamic urban markets, three established and stable community markets, and operating several unique specialty businesses.” “During the quarter, average loans, excluding PPP loans, grew 11.5% annualized; we added Commercial Relationship Managers in both the Knoxville and Nashville metropolitan areas to complement our existing teams; our mortgage, Tri-Net, and SBA businesses showed continued strength; expense discipline led to a record efficiency ratio of 54.08%; and asset quality remained solid with criticized and classified loan levels improving from elevated pandemic levels. Importantly, we ended the quarter with capital ratios approximately 200 bps higher than the industry median and nearly 30% of our assets in cash and investment securities, of which $391 million was in cash. This positions CapStar favorably, allowing us to expand our business, increase our dividend, and announce a substantial share purchase program that enables us to return excess capital to shareholders at the times we believe our stock is our best investment.” Profitability Annualized pre-tax pre-provision income to average assets for the three months ended March 31, 2021 was 1.95% compared to 1.63% for the same period in 2020.Annualized return on average assets for the three months ended March 31, 2021 was 1.45% compared to 0.26% for the same period in 2020.Annualized return on average tangible equity for the three months ended March 31, 2021 was 14.85% compared to 2.31% for the same period in 2020.Net interest margin was 3.13% for the three months ended March 31, 2021 compared to 3.50% for the same period in 2020. The decrease was principally the result of excess liquidity, partially offset by the positive impact of PPP loans.The efficiency ratio for the three months ended March 31, 2021 was 54.08% compared to 63.06% for the same period in 2020. Growth Pre-tax pre-provision earnings for the quarter ended March 31, 2021 totaled $14.8 million, compared to $8.3 million for the quarter ended March 31, 2020. The increase was largely attributable to the acquisitions of The Bank of Waynesboro and The First National Bank of Manchester, along with growth in our mortgage business.Average deposits for the quarter ended March 31, 2021 increased $50.5 million or 7.8% annualized compared to December 31, 2020.Average loans, excluding PPP loans, increased $48.0 million or 11.5% annualized for the quarter ended March 31, 2021 compared to December 31, 2020.Tangible book value per share for the quarter ended March 31, 2021 increased to $13.34 compared to $12.66 for the quarter ended March 31, 2020 and declined 2 cents compared to the quarter ended December 31, 2020. Soundness The total risk-based capital ratio was 16.29% at March 31, 2021 compared to 13.68% at March 31, 2020.The allowance for loan losses to total loans was 1.23% at March 31, 2021 compared to 1.39% at March 31, 2020. The allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, was 1.59% at March 31, 2021 compared to 1.61% at March 31, 2020.Non-performing assets to total loans and OREO was 0.30% at March 31, 2021 compared to 0.26% at March 31, 2020.Annualized net charge offs to average loans for the three months ended March 31, 2021 was less than 0.01% compared to 0.01% at March 31, 2020. Dividend On April 22, 2021, the board of directors of CapStar approved a quarterly dividend of $0.06 per common share, an increase of 20% from $0.05 in the first quarter 2020, payable on May 26, 2021 to shareholders of record of CapStar’s common stock as of the close of business on May 12, 2021. The increase reflects the Board of Directors’ confidence in CapStar’s near-term and long-term strategy and further underscores its commitment to return value to shareholders. Conference Call and Webcast Information CapStar will host a conference call and webcast at 11:00 a.m. Central Time on Friday, April 23, 2021. During the call, management will review the first quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 3558917. 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 March 31, 2021, on a consolidated basis, CapStar had total assets of $3.15 billion, total loans of $1.94 billion, total deposits of $2.75 billion, and shareholders’ equity of $343.94 million. Visit www.capstarbank.com for more information. 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 SUBSIDIARYConsolidated Statements of Income (unaudited) (dollars in thousands, except share data)First quarter 2021 Earnings Release Three Months Ended March 31, 2021 2020 Interest income: Loans, including fees$22,014 $19,738 Securities: Taxable 1,596 1,174 Tax-exempt 373 321 Federal funds sold — — Restricted equity securities 161 142 Interest-bearing deposits in financial institutions 134 363 Total interest income 24,278 21,738 Interest expense: Interest-bearing deposits 446 1,901 Savings and money market accounts 313 1,551 Time deposits 931 1,481 Federal funds purchased — — Securities sold under agreements to repurchase — — Federal Home Loan Bank advances 12 144 Subordinated notes 394 — Total interest expense 2,096 5,077 Net interest income 22,182 16,661 Provision for loan losses 650 7,553 Net interest income after provision for loan losses 21,532 9,108 Noninterest income: Deposit service charges 1,102 775 Interchange and debit card transaction fees 1,092 724 Mortgage banking 4,716 2,253 Tri-Net 1,143 599 Wealth management 459 407 SBA lending 492 35 Net gain on sale of securities 26 27 Other noninterest income 984 1,054 Total noninterest income 10,014 5,874 Noninterest expense: Salaries and employee benefits 9,427 8,002 Data processing and software 2,827 1,864 Occupancy 1,108 820 Equipment 899 751 Professional services 704 636 Regulatory fees 257 163 Acquisition related expenses 67 290 Amortization of intangibles 508 386 Other operating 1,616 1,299 Total noninterest expense 17,413 14,211 Income before income taxes 14,133 771 Income tax expense 3,103 (575)Net income$11,030 $1,346 Per share information: Basic net income per share of common stock$0.50 $0.07 Diluted net income per share of common stock$0.50 $0.07 Weighted average shares outstanding: Basic 22,045,501 18,392,913 Diluted 22,076,600 18,443,725 This information is preliminary and based on CapStar data available at the time of this earnings release. CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARYSelected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)First quarter 2021 Earnings Release Five Quarter Comparison 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Income Statement Data: Net interest income$22,182 $22,331 $19,656 $17,675 $16,661 Provision for loan losses 650 184 2,119 1,624 7,553 Net interest income after provision for loan losses 21,532 22,147 17,537 16,051 9,108 Deposit service charges 1,102 964 1,064 691 775 Interchange and debit card transaction fees 1,092 782 936 729 724 Mortgage banking 4,716 5,971 9,686 7,123 2,253 Tri-Net 1,143 1,165 668 1,260 599 Wealth management 459 411 382 374 407 SBA lending 492 916 476 13 35 Net gain on sale of securities 26 51 34 13 27 Other noninterest income 984 1,488 1,558 620 1,054 Total noninterest income 10,014 11,748 14,804 10,823 5,874 Salaries and employee benefits 9,427 11,996 12,949 12,305 8,002 Data processing and software 2,827 2,548 2,353 2,100 1,864 Occupancy 1,108 975 999 797 820 Equipment 899 900 864 680 751 Professional services 704 370 638 581 636 Regulatory fees 257 368 397 333 163 Acquisition related expenses 67 2,105 2,548 448 290 Amortization of intangibles 508 524 539 375 386 Other operating 1,616 1,692 1,452 1,315 1,299 Total noninterest expense 17,413 21,478 22,739 18,934 14,211 Net income before income tax expense 14,133 12,417 9,602 7,940 771 Income tax expense (benefit) 3,103 2,736 2,115 1,759 (575)Net income$11,030 $9,681 $7,487 $6,181 $1,346 Weighted average shares - basic 22,045,501 21,960,184 21,948,579 18,307,083 18,392,913 Weighted average shares - diluted 22,076,600 21,978,925 21,960,490 18,320,006 18,443,725 Net income per share, basic$0.50 $0.44 $0.34 $0.34 $0.07 Net income per share, diluted 0.50 0.44 0.34 0.34 0.07 Balance Sheet Data (at period end): Cash and cash equivalents$390,565 $277,439 $455,925 $368,820 $91,450 Securities available-for-sale 474,788 486,215 308,337 223,034 219,213 Securities held-to-maturity 2,401 2,407 2,413 2,699 3,306 Loans held for sale 162,269 179,669 198,603 129,807 186,937 Total loans 1,941,078 1,891,019 1,906,603 1,592,725 1,446,835 Allowance for loan losses (23,877) (23,245) (23,167) (21,035) (20,114)Total assets 3,150,457 2,987,006 3,024,348 2,445,172 2,072,585 Non-interest-bearing deposits 711,606 662,934 716,707 546,974 442,789 Interest-bearing deposits 2,039,595 1,905,067 1,900,835 1,548,592 1,320,920 Federal Home Loan Bank advances and other borrowings 29,455 39,423 39,418 39,464 10,000 Total liabilities 2,806,513 2,643,520 2,690,453 2,163,222 1,796,795 Shareholders' equity$343,944 $343,486 $333,895 $281,950 $275,790 Total shares of common stock outstanding 22,089,873 21,988,803 21,947,805 18,302,188 18,307,802 Book value per share of common stock$15.57 $15.62 $15.21 $15.41 $15.06 Tangible book value per share of common stock* 13.34 13.36 12.92 13.02 12.66 Market value per share of common stock$17.25 $14.75 $9.81 $12.00 $9.89 Capital ratios: Total risk based capital 16.29% 16.03% 15.96% 16.76% 13.68%Tier 1 risk based capital 13.79% 13.52% 13.39% 13.76% 12.56%Common equity tier 1 capital 13.79% 13.52% 13.39% 13.76% 12.56%Leverage 9.78% 9.60% 9.23% 10.08% 11.23% _____________________*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 SUBSIDIARYSelected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)First quarter 2021 Earnings Release Five Quarter Comparison 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Average Balance Sheet Data: Cash and cash equivalents$341,092 $427,086 $526,409 $257,709 $114,272 Investment securities 496,035 407,622 323,689 238,762 226,537 Loans held for sale 155,677 165,441 156,123 176,193 180,401 Loans 1,938,532 1,891,202 1,906,449 1,560,626 1,421,256 Assets 3,078,745 3,028,225 3,043,847 2,350,021 2,059,306 Interest bearing deposits 1,986,621 1,909,692 1,957,259 1,519,877 1,411,666 Deposits 2,663,551 2,613,080 2,648,465 2,031,924 1,735,635 Federal Home Loan Bank advances and other borrowings 33,879 39,428 39,431 10,966 20,989 Liabilities 2,728,064 2,687,516 2,722,341 2,068,408 1,780,756 Shareholders' equity 350,681 340,709 321,506 281,614 278,550 Performance Ratios: Annualized return on average assets 1.45% 1.27% 0.98% 1.06% 0.26%Annualized return on average equity 12.76% 11.30% 9.26% 8.83% 1.94%Net interest margin (1) 3.13% 3.12% 2.72% 3.23% 3.50%Annualized noninterest income to average assets 1.32% 1.54% 1.93% 1.85% 1.15%Efficiency ratio 54.08% 63.02% 65.99% 66.44% 63.06%Loans by Type (at period end): Commercial and industrial$619,287 $630,775 $648,018 $621,541 $447,311 Commercial real estate - owner occupied 197,758 162,603 164,336 147,682 166,652 Commercial real estate - non-owner occupied 505,252 481,229 480,106 408,402 378,170 Construction and development 170,965 174,859 176,751 117,830 141,087 Consumer real estate 336,496 343,791 350,238 238,696 248,243 Consumer 45,481 44,279 42,104 27,542 27,739 Other 65,839 53,483 45,050 31,032 37,633 Asset Quality Data: Allowance for loan losses to total loans 1.23% 1.23% 1.22% 1.32% 1.39%Allowance for loan losses to non-performing loans 446% 483% 787% 705% 550%Nonaccrual loans$5,355 $4,817 $2,945 $2,982 $3,658 Troubled debt restructurings 1,914 1,928 1,886 1,228 1,306 Loans - over 89 days past due and accruing 2,720 4,367 541 639 399 Total non-performing loans 5,355 4,817 2,945 2,982 3,658 OREO and repossessed assets 523 523 171 147 147 Total non-performing assets 5,878 5,340 3,116 3,129 3,805 Non-performing loans to total loans 0.28% 0.25% 0.15% 0.19% 0.25%Non-performing assets to total assets 0.19% 0.18% 0.10% 0.13% 0.18%Non-performing assets to total loans and OREO 0.30% 0.28% 0.16% 0.20% 0.26%Annualized net charge-offs (recoveries) to average loans 0.00% 0.02% 0.00% 0.18% 0.01%Net charge-offs (recoveries)$18 $106 $(13) $703 $43 Interest Rates and Yields: Loans 4.34% 4.48% 4.47% 4.50% 5.10%Securities (1) 1.80% 1.98% 2.18% 2.73% 3.04%Total interest-earning assets (1) 3.42% 3.45% 3.41% 3.78% 4.56%Deposits 0.26% 0.30% 0.67% 0.59% 1.14%Borrowings and repurchase agreements 4.85% 4.09% 5.14% 3.16% 2.77%Total interest-bearing liabilities 0.42% 0.49% 0.99% 0.81% 1.43%Other Information: Full-time equivalent employees 379 380 403 286 288 _____________________ 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 SUBSIDIARYAnalysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)First quarter 2021 Earnings Release For the Three Months Ended March 31, 2021 2020 AverageOutstandingBalance InterestIncome/Expense AverageYield/Rate AverageOutstandingBalance InterestIncome/Expense AverageYield/Rate Interest-Earning Assets Loans (1)$1,938,532 $20,723 4.34% $1,421,256 $18,019 5.10%Loans held for sale 155,677 1,291 3.36% 180,401 1,719 3.83%Securities: Taxable investment securities (2) 431,406 1,757 1.63% 181,649 1,316 2.90%Investment securities exempt from federal income tax (3) 64,629 373 2.92% 44,888 321 3.62%Total securities 496,035 2,130 1.80% 226,537 1,637 3.04%Cash balances in other banks 298,722 134 0.18% 96,004 363 1.52%Funds sold 153 — 1.27% 71 — 2.80%Total interest-earning assets 2,889,119 24,278 3.42% 1,924,269 21,738 4.56%Noninterest-earning assets 189,626 135,037 Total assets$3,078,745 $2,059,306 Interest-Bearing Liabilities Interest-bearing deposits: Interest-bearing transaction accounts$944,651 446 0.19% $613,855 1,901 1.25%Savings and money market deposits 583,590 313 0.22% 500,117 1,551 1.25%Time deposits 458,380 931 0.82% 297,694 1,481 2.00%Total interest-bearing deposits 1,986,621 1,690 0.35% 1,411,666 4,933 1.41%Borrowings and repurchase agreements 33,879 406 4.85% 20,989 144 2.77%Total interest-bearing liabilities 2,020,500 2,096 0.42% 1,432,655 5,077 1.43%Noninterest-bearing deposits 676,929 323,969 Total funding sources 2,697,429 1,756,624 Noninterest-bearing liabilities 30,635 24,132 Shareholders’ equity 350,681 278,550 Total liabilities and shareholders’ equity$3,078,745 $2,059,306 Net interest spread (4) 3.00% 3.14%Net interest income/margin (5) $22,182 3.13% $16,661 3.50% _____________________ (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 SUBSIDIARYNon-GAAP Financial Measures (unaudited) (dollars in thousands except share data)First quarter 2021 Earnings Release Five Quarter Comparison 3/31/2021 12/31/20 9/30/20 6/30/20 3/31/20 Operating net income: Net income$11,030 $9,681 $7,487 $6,181 $1,346 Add: acquisition related expenses 67 2,105 2,548 448 290 Less: income tax impact of acquisition related expenses (18) (550) (666) (117) (76)Operating net income$11,079 $11,236 $9,369 $6,512 $1,560 Operating diluted net income per share of common stock: Operating net income$11,079 $11,236 $9,369 $6,512 $1,560 Weighted average shares - diluted 22,076,600 21,978,925 21,960,490 18,320,006 18,443,725 Operating diluted net income per share of common stock$0.50 $0.51 $0.43 $0.36 $0.08 Operating annualized return on average assets: Operating net income$11,079 $11,236 $9,369 $6,512 $1,560 Average assets 3,078,745 3,028,225 3,043,847 2,350,021 2,059,306 Operating annualized return on average assets 1.46% 1.48% 1.22% 1.11% 0.30% Operating annualized return on average tangible equity: Average total shareholders' equity$350,681 $340,709 $321,506 $281,614 $278,550 Less: average intangible assets (49,514) (50,038) (50,577) (43,871) (44,253)Average tangible equity 301,167 290,671 270,929 237,743 234,297 Operating net income$11,079 $11,236 $9,369 $6,512 $1,560 Operating annualized return on average tangible equity 14.92% 15.38% 13.76% 11.02% 2.68% Operating efficiency ratio: Total noninterest expense$17,413 $21,478 $22,739 $18,934 $14,211 Less: acquisition related expenses (67) (2,105) (2,548) (448) (290)Total operating noninterest expense 17,346 19,373 20,191 18,486 13,921 Net interest income 22,182 22,331 19,656 17,675 16,661 Total noninterest income 10,014 11,748 14,804 10,823 5,874 Total revenues$32,196 $34,079 $34,460 $28,498 $22,535 Operating efficiency ratio: 53.88% 56.85% 58.59% 64.87% 61.78% Operating annualized pre-tax pre-provision income to average assets: Income before income taxes$14,133 $12,417 $9,602 $7,940 $771 Add: acquisition related expenses 67 2,105 2,548 448 290 Add: provision for loan losses 650 184 2,119 1,624 7,553 Operating pre-tax pre-provision income 14,850 14,706 14,269 10,012 8,614 Average assets$3,078,745 $3,028,225 $3,043,847 $2,350,021 $2,059,306 Operating annualized pre-tax pre-provision income to average assets: 1.96% 1.93% 1.86% 1.71% 1.68% 3/31/2021 12/31/20 9/30/20 6/30/20 3/31/20 Tangible Equity: Total shareholders' equity$343,944 $343,486 $333,895 $281,950 $275,790 Less: intangible assets (49,190) (49,698) (50,222) (43,633) (44,008)Tangible equity$294,754 $293,788 $283,673 $238,317 $231,782 Tangible Book Value per Share of Common Stock: Tangible common equity$294,754 $293,788 $283,673 $238,317 $231,782 Total shares of common stock outstanding 22,089,873 21,988,803 21,947,805 18,302,188 18,307,802 Tangible book value per share of common stock$13.34 $13.36 $12.92 $13.02 $12.66 CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARYNon-GAAP Financial Measures (unaudited) (dollars in thousands except share data)First quarter 2021 Earnings Release Five Quarter Comparison 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Allowance for loan losses$23,877 $23,245 $23,167 $21,035 $20,114 Purchase accounting marks 3,615 3,663 4,013 2,790 3,178 Allowance for loan losses and purchase accounting fair value marks 27,492 26,908 27,180 23,825 23,292 Loans 1,941,078 1,891,019 1,906,603 1,592,725 1,446,835 Less: PPP Loans net of deferred fees 210,810 181,601 216,799 213,064 — Non-PPP Loans 1,730,268 1,709,418 1,689,804 1,379,661 1,446,835 Allowance for loan losses plus fair value marks / Non-PPP Loans 1.59% 1.57% 1.61% 1.73% 1.61% CONTACT Denis J. DuncanChief Financial Officer(615) 732-7492
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