EX-99.1 2 cstr-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

EARNINGS RELEASE

 

CONTACT

 

Michael J. Fowler

Chief Financial Officer

(615) 732-7404

 

 

img25355703_0.jpg 

 

 

CapStar Reports First Quarter 2022 Results and Increase in Quarterly Dividend

 

 

NASHVILLE, TN, April 21, 2022 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $10.7 million or $0.48 per diluted share, for the quarter ended March 31, 2022, compared with net income of $12.5 million or $0.56 per diluted share, for the quarter ended December 31, 2021, and net income of $11.0 million or $0.50 per diluted share, for the quarter ended March 31, 2021. Annualized return on average assets and return on average equity for the quarter ended March 31, 2022 were 1.37 percent and 11.39 percent, respectively. The first quarter included a BOLI death benefit of $0.9 million, deferred loan origination expense related to prior periods of $0.5 million and severance expense of $0.4 million.

 

 

Four Key Drivers

 

Targets

 

1Q22

 

4Q21

 

1Q21

Annualized revenue growth

 

> 5%

 

-46.31%

 

-5.61%

 

-22.41%

Net interest margin

 

≥ 3.60%

 

2.97%

 

3.14%

 

3.13%

Efficiency ratio

 

≤ 55%

 

58.67%

 

54.74%

 

54.08%

Annualized net charge-offs to average loans

 

≤ 0.25%

 

0.01%

 

0.04%

 

0.00%

 

"CapStar’s first quarter results demonstrate continued progress and momentum in strengthening non-mortgage related profitability and growth in addition to executing a disciplined capital allocation strategy,” said Timothy K. Schools President and Chief Executive Officer of CapStar. “Our return on average tangible common equity was 13% despite of significant excess equity available to invest, end of period loan growth excluding PPP loans exceeded $100 million for the second consecutive quarter leading to 31% average loan growth, and we increased our dividend 67%. Supported by outstanding bankers in outstanding markets, excess liquidity, and excess equity, we are focused on the following capital priorities: invest in and grow existing and new markets; pay a competitive, sustainable dividend; and opportunistically repurchase CapStar common stock."

 

"As we transition from the potential credit-related risks of the recent pandemic to current supply chain, inflation, and interest rate risks, we are optimistic about the continued strength of our local economy and markets. Tennessee continues to experience significant in-migration of both businesses and individuals. Combined with the acquisition of a large number of locally-based banks, most recently to include the sale of First Horizon to TD, CapStar is poised to be a beneficiary of customers and talent. I am proud of our team and excited for what we are building at CapStar.”

 

Revenue


Total revenue, defined as net interest income plus noninterest income, totaled $30.2 million in the first quarter. This represents a decline of $3.9 million from the previous quarter. Net interest income and noninterest income totaled $21.1 million and $9.1 million, a decrease of $1.9 million and $2.0 million, respectively, from the fourth quarter of 2021. A $1.1

 

 

million PPP fee decline and the aforementioned deferred expense adjustment of $0.5 million contributed to the decrease in net interest income. Noninterest income declined due to lower Tri-Net division revenues following a record quarter.

 

First quarter 2022 average earning assets remained relatively flat at $2.90 billion compared to December 31, 2021 as organic loan growth was funded by redeploying excess liquidity. Loan growth continued to accelerate during the quarter with average loans held for investment, excluding PPP balances, increasing $141.6 million from the prior quarter, or 31.1 percent linked-quarter annualized. End of period loans held for investment, excluding PPP balances, increased $101.8 million, or 21.3 percent linked-quarter annualized, which benefited from $76.9 million in loan production associated with the Company's recent Chattanooga expansion. The current commercial loan pipeline remains strong, exceeding $500 million and continues to present the Company a tremendous opportunity to utilize excess liquidity and capital to grow revenue and earnings per share.

 

For the first quarter of 2022, the net interest margin decreased 17 basis points from the prior quarter to 2.97 percent primarily resulting from the aforementioned deferred expense adjustment. Excluding the deferred expense adjustment, influence of PPP and excess liquidity accumulated during the pandemic, the Company estimates its first quarter 2022 net interest margin was 3.32 percent, an 8 basis point decrease compared to the fourth quarter of 2021. While the Company is managing to a more neutral interest rate risk profile over time in order to enhance earnings consistency, net interest income is expected to benefit modestly from rising rates in 2022.

 

The Company's average deposits totaled $2.70 billion in the first quarter of 2022, equal to the fourth quarter of 2021. During the quarter, the Company experienced a $16.3 million reduction in higher cost average time deposits and $15.6 million decrease in average interest-bearing transaction accounts. These decreases were offset by a $44.1 million increase in average savings and money market deposits, creating an overall net increase of $12.2 million in average interest-bearing deposits when compared to the fourth quarter of 2021. During the quarter, the Company’s lowest cost deposit category, noninterest bearing, comprised 26.9 percent of total average deposits, a 70 basis point decrease compared to December 31, 2021. Total deposit costs remained flat for the first quarter at 0.19 percent. While in the short-term the Company is experiencing a period of excess liquidity, a key longer-term strategic initiative is to create a stronger deposit-led culture with an emphasis on lower cost relationship-based deposits.

 

Noninterest income during the quarter decreased $2.0 million from the fourth quarter ended December 31, 2021.This decrease was primarily attributable to declines in Tri-Net and mortgage revenue, offset by an increase in bank owned life insurance income associated with death benefits. Despite the decrease, the Company's unique fee businesses continue to support non-interest income, which has exceeded 30 percent of total revenue for the past eight quarters.

 

Noninterest Expense and Operating Efficiency

 

Improving productivity and operating efficiency is a key focus of the Company. During the quarter, the Company continued to exhibit strong expense discipline. Noninterest expenses decreased $0.9 million from the fourth quarter of 2021 to $17.7 million in the first quarter of 2022. This decrease was primarily attributable to a decline in compensation expense and other expenses, despite $0.4 million of severance costs incurred during the first quarter.

 

For the quarter ended March 31, 2022, the efficiency ratio was 58.67 percent, an increase from 54.74 percent in the fourth quarter of 2021. Annualized noninterest expense as a percentage of average assets decreased 7 basis points to 2.28 percent for the quarter ended March 31, 2022 compared to 2.35 percent for the quarter ended December 31, 2021. Assets per employee increased slightly to $8.0 million as of March 31, 2022 compared to $7.9 million in the previous quarter. The continued discipline in productivity metrics demonstrates the Company's commitment to outstanding performance.

 

Asset Quality

 

Strong asset quality is a core tenant of the Company’s culture. Continued sound risk management and an improving economy led to continued low net charge-offs and strong credit metrics. Annualized net charge offs to average loans for the three months ended March 31, 2022, improved to 0.01 percent, a 3 basis point decline compared to the fourth quarter ended December 31, 2021. Past due loans as a percentage of total loans held for investment improved to a record 0.17 percent at March 31, 2022 compared to 0.25 percent at December 31, 2021. Within this amount, loans greater than 89 days past due totaled $1.1 million, or 0.05 percent of loans held for investment at March 31, 2022, an improvement from

 

 

0.11 percent at December 31, 2021. Non-performing assets to total loans and OREO were 0.18 percent at March 31, 2022 and December 31, 2021. Criticized and classified loans to total loans, which were elevated during the pandemic, continued to improve to 2.49 percent at March 31, 2022, a 15 basis point decline from December 31, 2021.

 

In addition to providing reserves for the strong loan growth experienced during the first quarter, the allowance for loan losses declined $0.8 million based on improved asset quality trends and other qualitative factors. The Company continues to retain a portion of pandemic related reserves in the allowance for loan losses. As a result, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, declined 11 basis points to 1.16 percent at March 31, 2022 from 1.27 percent at December 31, 2021.

 

Asset Quality Data:

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Annualized net charge-offs to average loans

 

 

0.01

%

 

 

0.04

%

 

 

0.05

%

 

 

0.01

%

 

 

0.00

%

Criticized and classified loans to total loans

 

 

2.49

%

 

 

2.64

%

 

 

2.85

%

 

 

3.95

%

 

 

4.39

%

Loans- past due to total end of period loans

 

 

0.17

%

 

 

0.25

%

 

 

0.31

%

 

 

0.49

%

 

 

0.44

%

Loans- over 89 days past due to total end of period loans

 

 

0.05

%

 

 

0.11

%

 

 

0.12

%

 

 

0.13

%

 

 

0.14

%

Non-performing assets to total loans held for investment and OREO

 

 

0.18

%

 

 

0.18

%

 

 

0.20

%

 

 

0.22

%

 

 

0.30

%

Allowance for loan losses plus fair value marks / Non-PPP Loans

 

 

1.16

%

 

 

1.27

%

 

 

1.41

%

 

 

1.47

%

 

 

1.59

%

Allowance for loan losses to non-performing loans

 

 

596

%

 

 

666

%

 

 

657

%

 

 

571

%

 

 

446

%

 

Income Tax Expense

 

The Company’s first quarter effective income tax rate decreased to approximately 19.6 percent compared to 22.5 percent for the prior quarter ended December 31, 2021 due to an increase in the provision in the prior quarter to true up the effective tax rate for 2021. The Company anticipates its effective tax rate for 2022 to be approximately 20 percent.

 

Capital

 

The Company continues to be well capitalized with tangible equity of $321.6 million at March 31, 2022. Tangible book value per share of common stock for the quarter ended March 31, 2022 was $14.49 compared to $14.99 and $13.34 for the quarters ended December 31, 2021 and March 31, 2021, respectively, with the change from December 31, 2021 being attributable to a decline in the value of the investment portfolio related to an increase in market interest rates, partially offset by ongoing earnings.

 

Capital ratios:

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Total risk-based capital

 

 

15.60

%

 

 

16.29

%

 

 

16.23

%

 

 

16.13

%

 

 

16.29

%

Common equity tier 1 capital

 

 

13.58

%

 

 

14.11

%

 

 

13.95

%

 

 

13.78

%

 

 

13.79

%

Leverage

 

 

10.99

%

 

 

10.69

%

 

 

10.28

%

 

 

10.17

%

 

 

9.78

%

 

In the first quarter of 2022, the Company repurchased $0.8 million in common stock under its share repurchase program. The total remaining authorization for future purchases was $29.2 million as of March 31, 2022. The Plan will terminate on the earlier of the date on which the maximum authorized dollar amount of shares of common stock has been repurchased or January 31, 2023.

 

Dividend

 

On April 21, 2022, the Board of Directors of the Company approved a quarterly dividend of $0.10 per common share, a $0.04 or 67% increase versus the prior quarter, payable on May 25, 2022 to shareholders of record of CapStar’s common stock as of the close of business on May 11, 2022.

 

Conference Call and Webcast Information

 

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, April 22, 2022. 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 2594842. 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, 2022, on a consolidated basis, CapStar had total assets of $3.2 billion, total loans of $2.0 billion, total deposits of $2.8 billion, and shareholders’ equity of $368.9 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 SUBSIDIARY

Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)

First quarter 2022 Earnings Release

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Interest income:

 

 

 

 

 

 

Loans, including fees

 

$

20,367

 

 

$

22,014

 

Securities:

 

 

 

 

 

 

Taxable

 

 

1,754

 

 

 

1,596

 

Tax-exempt

 

 

325

 

 

 

373

 

Federal funds sold

 

 

10

 

 

 

—

 

Restricted equity securities

 

 

156

 

 

 

161

 

Interest-bearing deposits in financial institutions

 

 

172

 

 

 

134

 

Total interest income

 

 

22,784

 

 

 

24,278

 

Interest expense:

 

 

 

 

 

 

Interest-bearing deposits

 

 

436

 

 

 

446

 

Savings and money market accounts

 

 

331

 

 

 

313

 

Time deposits

 

 

484

 

 

 

931

 

Federal Home Loan Bank advances

 

 

—

 

 

 

12

 

Subordinated notes

 

 

393

 

 

 

394

 

Total interest expense

 

 

1,644

 

 

 

2,096

 

Net interest income

 

 

21,140

 

 

 

22,182

 

Provision for loan losses

 

 

(784

)

 

 

650

 

Net interest income after provision for loan losses

 

 

21,924

 

 

 

21,532

 

Noninterest income:

 

 

 

 

 

 

Deposit service charges

 

 

1,142

 

 

 

1,102

 

Interchange and debit card transaction fees

 

 

1,222

 

 

 

1,092

 

Mortgage banking

 

 

1,966

 

 

 

4,716

 

Tri-Net

 

 

2,171

 

 

 

1,143

 

Wealth management

 

 

440

 

 

 

459

 

SBA lending

 

 

222

 

 

 

492

 

Net gain on sale of securities

 

 

—

 

 

 

26

 

Other noninterest income

 

 

1,926

 

 

 

984

 

Total noninterest income

 

 

9,089

 

 

 

10,014

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

10,269

 

 

 

9,427

 

Data processing and software

 

 

2,647

 

 

 

2,827

 

Occupancy

 

 

1,099

 

 

 

1,108

 

Equipment

 

 

709

 

 

 

899

 

Professional services

 

 

679

 

 

 

704

 

Regulatory fees

 

 

280

 

 

 

257

 

Acquisition related expenses

 

 

—

 

 

 

67

 

Amortization of intangibles

 

 

446

 

 

 

508

 

Other operating

 

 

1,607

 

 

 

1,616

 

Total noninterest expense

 

 

17,736

 

 

 

17,413

 

Income before income taxes

 

 

13,277

 

 

 

14,133

 

Income tax expense

 

 

2,604

 

 

 

3,103

 

Net income

 

$

10,673

 

 

$

11,030

 

Per share information:

 

 

 

 

 

 

Basic net income per share of common stock

 

$

0.48

 

 

$

0.50

 

Diluted net income per share of common stock

 

$

0.48

 

 

$

0.50

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

22,198,339

 

 

 

22,045,501

 

Diluted

 

 

22,254,644

 

 

 

22,076,600

 

 

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)

First quarter 2022 Earnings Release

 

 

Five Quarter Comparison

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

21,140

 

 

$

22,992

 

 

$

22,964

 

 

$

23,032

 

 

$

22,182

 

Provision for loan losses

 

 

(784

)

 

 

(651

)

 

 

—

 

 

 

(1,065

)

 

 

650

 

Net interest income after provision for loan losses

 

 

21,924

 

 

 

23,643

 

 

 

22,964

 

 

 

24,097

 

 

 

21,532

 

Deposit service charges

 

 

1,142

 

 

 

1,117

 

 

 

1,187

 

 

 

1,109

 

 

 

1,102

 

Interchange and debit card transaction fees

 

 

1,222

 

 

 

1,261

 

 

 

1,236

 

 

 

1,227

 

 

 

1,092

 

Mortgage banking

 

 

1,966

 

 

 

2,740

 

 

 

4,693

 

 

 

3,910

 

 

 

4,716

 

Tri-Net

 

 

2,171

 

 

 

3,996

 

 

 

1,939

 

 

 

1,536

 

 

 

1,143

 

Wealth management

 

 

440

 

 

 

438

 

 

 

481

 

 

 

471

 

 

 

459

 

SBA lending

 

 

222

 

 

 

279

 

 

 

911

 

 

 

377

 

 

 

492

 

Net gain (loss) on sale of securities

 

 

—

 

 

 

8

 

 

 

7

 

 

 

(13

)

 

 

26

 

Other noninterest income

 

 

1,926

 

 

 

1,295

 

 

 

1,197

 

 

 

1,266

 

 

 

984

 

Total noninterest income

 

 

9,089

 

 

 

11,134

 

 

 

11,651

 

 

 

9,883

 

 

 

10,014

 

Salaries and employee benefits

 

 

10,269

 

 

 

10,549

 

 

 

10,980

 

 

 

10,803

 

 

 

9,427

 

Data processing and software

 

 

2,647

 

 

 

2,719

 

 

 

2,632

 

 

 

3,070

 

 

 

2,827

 

Occupancy

 

 

1,099

 

 

 

1,012

 

 

 

1,028

 

 

 

1,057

 

 

 

1,108

 

Equipment

 

 

709

 

 

 

867

 

 

 

760

 

 

 

980

 

 

 

899

 

Professional services

 

 

679

 

 

 

521

 

 

 

469

 

 

 

460

 

 

 

704

 

Regulatory fees

 

 

280

 

 

 

284

 

 

 

279

 

 

 

211

 

 

 

257

 

Acquisition related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

256

 

 

 

67

 

Amortization of intangibles

 

 

446

 

 

 

461

 

 

 

477

 

 

 

493

 

 

 

508

 

Other noninterest expense

 

 

1,607

 

 

 

2,269

 

 

 

1,741

 

 

 

1,750

 

 

 

1,616

 

Total noninterest expense

 

 

17,736

 

 

 

18,682

 

 

 

18,366

 

 

 

19,080

 

 

 

17,413

 

Net income before income tax expense

 

 

13,277

 

 

 

16,095

 

 

 

16,249

 

 

 

14,900

 

 

 

14,133

 

Income tax expense

 

 

2,604

 

 

 

3,625

 

 

 

3,147

 

 

 

2,824

 

 

 

3,103

 

Net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,076

 

 

$

11,030

 

Weighted average shares - basic

 

 

22,198,339

 

 

 

22,166,410

 

 

 

22,164,278

 

 

 

22,133,759

 

 

 

22,045,501

 

Weighted average shares - diluted

 

 

22,254,644

 

 

 

22,221,989

 

 

 

22,218,402

 

 

 

22,198,829

 

 

 

22,076,600

 

Net income per share, basic

 

$

0.48

 

 

$

0.56

 

 

$

0.59

 

 

$

0.55

 

 

$

0.50

 

Net income per share, diluted

 

 

0.48

 

 

 

0.56

 

 

 

0.59

 

 

 

0.54

 

 

 

0.50

 

Balance Sheet Data (at period end):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

355,981

 

 

$

415,125

 

 

$

359,267

 

 

$

449,267

 

 

$

390,565

 

Securities available-for-sale

 

 

460,558

 

 

 

459,396

 

 

 

483,778

 

 

 

500,339

 

 

 

474,788

 

Securities held-to-maturity

 

 

1,775

 

 

 

1,782

 

 

 

1,788

 

 

 

2,395

 

 

 

2,401

 

Loans held for sale

 

 

106,895

 

 

 

83,715

 

 

 

176,488

 

 

 

158,234

 

 

 

171,660

 

Loans held for investment

 

 

2,047,555

 

 

 

1,965,769

 

 

 

1,894,249

 

 

 

1,897,838

 

 

 

1,931,687

 

Allowance for loan losses

 

 

(20,857

)

 

 

(21,698

)

 

 

(22,533

)

 

 

(22,754

)

 

 

(23,877

)

Total assets

 

 

3,190,749

 

 

 

3,133,046

 

 

 

3,112,127

 

 

 

3,212,390

 

 

 

3,150,457

 

Non-interest-bearing deposits

 

 

702,172

 

 

 

725,171

 

 

 

718,299

 

 

 

782,170

 

 

 

711,606

 

Interest-bearing deposits

 

 

2,053,823

 

 

 

1,959,110

 

 

 

1,956,093

 

 

 

1,998,024

 

 

 

2,039,595

 

Federal Home Loan Bank advances and other borrowings

 

 

29,566

 

 

 

29,532

 

 

 

29,499

 

 

 

29,487

 

 

 

29,455

 

Total liabilities

 

 

2,821,832

 

 

 

2,752,952

 

 

 

2,741,799

 

 

 

2,852,639

 

 

 

2,806,513

 

Shareholders' equity

 

$

368,917

 

 

$

380,094

 

 

$

370,328

 

 

$

359,752

 

 

$

343,944

 

Total shares of common stock outstanding

 

 

22,195,071

 

 

 

22,166,129

 

 

 

22,165,760

 

 

 

22,165,547

 

 

 

22,089,873

 

Book value per share of common stock

 

$

16.62

 

 

$

17.15

 

 

$

16.71

 

 

$

16.23

 

 

$

15.57

 

Tangible book value per share of common stock*

 

 

14.49

 

 

 

14.99

 

 

 

14.53

 

 

 

14.03

 

 

 

13.34

 

Market value per share of common stock

 

$

21.08

 

 

$

21.03

 

 

$

21.24

 

 

$

20.50

 

 

$

17.25

 

Capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital

 

 

15.60

%

 

 

16.29

%

 

 

16.23

%

 

 

16.13

%

 

 

16.29

%

Tier 1 risk-based capital

 

 

13.58

%

 

 

14.11

%

 

 

13.95

%

 

 

13.78

%

 

 

13.79

%

Common equity tier 1 capital

 

 

13.58

%

 

 

14.11

%

 

 

13.95

%

 

 

13.78

%

 

 

13.79

%

Leverage

 

 

10.99

%

 

 

10.69

%

 

 

10.28

%

 

 

10.17

%

 

 

9.78

%

_____________________

*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)

First quarter 2022 Earnings Release

 

 

 

Five Quarter Comparison

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Average Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

380,262

 

 

$

470,963

 

 

$

411,101

 

 

$

301,773

 

 

$

341,092

 

Investment securities

 

 

483,339

 

 

 

491,135

 

 

 

515,877

 

 

 

508,595

 

 

 

496,035

 

Loans held for sale

 

 

90,163

 

 

 

123,962

 

 

 

173,402

 

 

 

147,912

 

 

 

164,867

 

Loans held for investment

 

 

2,001,740

 

 

 

1,888,094

 

 

 

1,884,935

 

 

 

1,938,818

 

 

 

1,929,343

 

Assets

 

 

3,153,320

 

 

 

3,159,308

 

 

 

3,171,182

 

 

 

3,078,748

 

 

 

3,078,745

 

Interest bearing deposits

 

 

1,976,803

 

 

 

1,964,641

 

 

 

1,980,304

 

 

 

1,940,442

 

 

 

1,986,621

 

Deposits

 

 

2,704,938

 

 

 

2,713,314

 

 

 

2,732,165

 

 

 

2,662,192

 

 

 

2,663,551

 

Federal Home Loan Bank advances and other borrowings

 

 

29,547

 

 

 

29,514

 

 

 

29,495

 

 

 

29,467

 

 

 

33,879

 

Liabilities

 

 

2,773,281

 

 

 

2,781,951

 

 

 

2,803,375

 

 

 

2,719,898

 

 

 

2,728,064

 

Shareholders' equity

 

 

380,039

 

 

 

377,357

 

 

 

367,807

 

 

 

358,850

 

 

 

350,681

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized return on average assets

 

 

1.37

%

 

 

1.57

%

 

 

1.64

%

 

 

1.57

%

 

 

1.45

%

Annualized return on average equity

 

 

11.39

%

 

 

13.11

%

 

 

14.13

%

 

 

13.50

%

 

 

12.76

%

Net interest margin (1)

 

 

2.97

%

 

 

3.14

%

 

 

3.12

%

 

 

3.26

%

 

 

3.13

%

Annualized noninterest income to average assets

 

 

1.17

%

 

 

1.40

%

 

 

1.46

%

 

 

1.29

%

 

 

1.32

%

Efficiency ratio

 

 

58.67

%

 

 

54.74

%

 

 

53.06

%

 

 

57.97

%

 

 

54.08

%

Loans by Type (at period end):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

499,719

 

 

$

497,615

 

 

$

478,279

 

 

$

536,279

 

 

$

609,896

 

Commercial real estate - owner occupied

 

 

231,933

 

 

 

209,261

 

 

 

193,139

 

 

 

200,725

 

 

 

197,758

 

Commercial real estate - non-owner occupied

 

 

652,936

 

 

 

616,023

 

 

 

579,857

 

 

 

538,520

 

 

 

505,252

 

Construction and development

 

 

208,513

 

 

 

214,310

 

 

 

210,516

 

 

 

198,448

 

 

 

170,965

 

Consumer real estate

 

 

327,416

 

 

 

326,412

 

 

 

328,262

 

 

 

331,580

 

 

 

336,496

 

Consumer

 

 

48,790

 

 

 

46,811

 

 

 

45,669

 

 

 

45,898

 

 

 

45,481

 

Other

 

 

78,248

 

 

 

55,337

 

 

 

58,527

 

 

 

46,387

 

 

 

65,839

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses to total loans

 

 

1.02

%

 

 

1.10

%

 

 

1.19

%

 

 

1.20

%

 

 

1.24

%

Allowance for loan losses to non-performing loans

 

 

596

%

 

 

666

%

 

 

657

%

 

 

571

%

 

 

446

%

Nonaccrual loans

 

$

3,502

 

 

$

3,258

 

 

$

3,431

 

 

$

3,985

 

 

$

5,355

 

Troubled debt restructurings

 

 

1,847

 

 

 

1,832

 

 

 

1,859

 

 

 

1,895

 

 

 

1,914

 

Loans - over 89 days past due

 

 

1,076

 

 

 

2,120

 

 

 

2,333

 

 

 

2,389

 

 

 

2,720

 

Total non-performing loans

 

 

3,502

 

 

 

3,258

 

 

 

3,431

 

 

 

3,985

 

 

 

5,355

 

OREO and repossessed assets

 

 

178

 

 

 

266

 

 

 

349

 

 

 

184

 

 

 

523

 

Total non-performing assets

 

 

3,680

 

 

 

3,524

 

 

 

3,780

 

 

 

4,169

 

 

 

5,878

 

Non-performing loans to total loans held for investment

 

 

0.17

%

 

 

0.17

%

 

 

0.18

%

 

 

0.21

%

 

 

0.28

%

Non-performing assets to total assets

 

 

0.12

%

 

 

0.11

%

 

 

0.12

%

 

 

0.13

%

 

 

0.19

%

Non-performing assets to total loans held for investment and OREO

 

 

0.18

%

 

 

0.18

%

 

 

0.20

%

 

 

0.22

%

 

 

0.30

%

Annualized net charge-offs to average loans

 

 

0.01

%

 

 

0.04

%

 

 

0.05

%

 

 

0.01

%

 

 

0.00

%

Net charge-offs

 

$

59

 

 

$

184

 

 

$

221

 

 

$

59

 

 

$

18

 

Interest Rates and Yields:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

3.97

%

 

 

4.47

%

 

 

4.41

%

 

 

4.43

%

 

 

4.36

%

Securities (1)

 

 

1.92

%

 

 

1.84

%

 

 

1.75

%

 

 

1.77

%

 

 

1.80

%

Total interest-earning assets (1)

 

 

3.20

%

 

 

3.36

%

 

 

3.35

%

 

 

3.51

%

 

 

3.42

%

Deposits

 

 

0.19

%

 

 

0.19

%

 

 

0.19

%

 

 

0.21

%

 

 

0.26

%

Borrowings and repurchase agreements

 

 

5.40

%

 

 

5.29

%

 

 

5.30

%

 

 

5.36

%

 

 

4.85

%

Total interest-bearing liabilities

 

 

0.33

%

 

 

0.33

%

 

 

0.34

%

 

 

0.37

%

 

 

0.42

%

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full-time equivalent employees

 

 

397

 

 

 

397

 

 

 

392

 

 

 

383

 

 

 

379

 

_____________________

 

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)

First quarter 2022 Earnings Release

 

 

For the Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

Average
Outstanding
Balance

 

 

Interest
Income/
Expense

 

 

Average
Yield/
Rate

 

 

Average
Outstanding
Balance

 

 

Interest
Income/
Expense

 

 

Average
Yield/
Rate

 

Interest-Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1)

 

$

2,001,740

 

 

$

19,599

 

 

 

3.97

%

 

$

1,929,342

 

 

$

20,723

 

 

 

4.47

%

Loans held for sale

 

 

90,163

 

 

 

768

 

 

 

3.46

%

 

 

164,867

 

 

 

1,291

 

 

 

3.56

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable investment securities (2)

 

 

426,144

 

 

 

1,909

 

 

 

1.79

%

 

 

431,406

 

 

 

1,757

 

 

 

1.63

%

Investment securities exempt from
   federal income tax (3)

 

 

57,195

 

 

 

326

 

 

 

2.89

%

 

 

64,629

 

 

 

373

 

 

 

2.92

%

Total securities

 

 

483,339

 

 

 

2,235

 

 

 

1.92

%

 

 

496,035

 

 

 

2,130

 

 

 

1.80

%

Cash balances in other banks

 

 

305,922

 

 

 

172

 

 

 

0.23

%

 

 

298,722

 

 

 

134

 

 

 

0.18

%

Funds sold

 

 

20,149

 

 

 

10

 

 

 

0.19

%

 

 

153

 

 

 

—

 

 

 

1.27

%

Total interest-earning assets

 

 

2,901,313

 

 

 

22,784

 

 

 

3.20

%

 

 

2,889,119

 

 

 

24,278

 

 

 

3.42

%

Noninterest-earning assets

 

 

252,007

 

 

 

 

 

 

 

 

 

189,626

 

 

 

 

 

 

 

Total assets

 

$

3,153,320

 

 

 

 

 

 

 

 

$

3,078,745

 

 

 

 

 

 

 

Interest-Bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

$

949,313

 

 

 

436

 

 

 

0.19

%

 

$

944,651

 

 

 

446

 

 

 

0.19

%

Savings and money market deposits

 

 

660,721

 

 

 

331

 

 

 

0.20

%

 

 

583,590

 

 

 

313

 

 

 

0.22

%

Time deposits

 

 

366,769

 

 

 

484

 

 

 

0.54

%

 

 

458,380

 

 

 

931

 

 

 

0.82

%

Total interest-bearing deposits

 

 

1,976,803

 

 

 

1,251

 

 

 

0.26

%

 

 

1,986,621

 

 

 

1,690

 

 

 

0.35

%

Borrowings and repurchase agreements

 

 

29,547

 

 

 

393

 

 

 

5.40

%

 

 

33,879

 

 

 

406

 

 

 

4.85

%

Total interest-bearing liabilities

 

 

2,006,350

 

 

 

1,644

 

 

 

0.33

%

 

 

2,020,500

 

 

 

2,096

 

 

 

0.42

%

Noninterest-bearing deposits

 

 

728,134

 

 

 

 

 

 

 

 

 

676,929

 

 

 

 

 

 

 

Total funding sources

 

 

2,734,484

 

 

 

 

 

 

 

 

 

2,697,429

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

 

38,797

 

 

 

 

 

 

 

 

 

30,635

 

 

 

 

 

 

 

Shareholders’ equity

 

 

380,039

 

 

 

 

 

 

 

 

 

350,681

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

3,153,320

 

 

 

 

 

 

 

 

$

3,078,745

 

 

 

 

 

 

 

Net interest spread (4)

 

 

 

 

 

 

 

 

2.86

%

 

 

 

 

 

 

 

 

3.00

%

Net interest income/margin (5)

 

 

 

 

$

21,140

 

 

 

2.97

%

 

 

 

 

$

22,182

 

 

 

3.13

%

_____________________

 

(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)

First quarter 2022 Earnings Release

 

 

Five Quarter Comparison

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Operating net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,076

 

 

$

11,030

 

Add: acquisition related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

256

 

 

 

67

 

Less: income tax impact of acquisition related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(67

)

 

 

(18

)

Operating net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,265

 

 

$

11,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating diluted net income per
   share of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,265

 

 

$

11,079

 

Weighted average shares - diluted

 

 

22,254,644

 

 

 

22,221,989

 

 

 

22,218,402

 

 

 

22,198,829

 

 

 

22,076,600

 

Operating diluted net income
   per share of common stock

 

$

0.48

 

 

$

0.56

 

 

$

0.59

 

 

$

0.55

 

 

$

0.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating annualized return on average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,265

 

 

$

11,079

 

Average assets

 

 

3,153,320

 

 

 

3,159,308

 

 

 

3,171,182

 

 

 

3,078,748

 

 

 

3,078,745

 

Operating annualized return on
   average assets

 

 

1.37

%

 

 

1.57

%

 

 

1.64

%

 

 

1.60

%

 

 

1.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating annualized return on
   average tangible equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total shareholders' equity

 

$

380,039

 

 

$

377,357

 

 

$

367,807

 

 

$

358,850

 

 

$

350,681

 

Less: average intangible assets

 

 

(47,604

)

 

 

(48,054

)

 

 

(48,527

)

 

 

(49,012

)

 

 

(49,514

)

Average tangible equity

 

 

332,435

 

 

 

329,303

 

 

 

319,280

 

 

 

309,838

 

 

 

301,167

 

Operating net income

 

$

10,673

 

 

$

12,470

 

 

$

13,102

 

 

$

12,265

 

 

$

11,079

 

Operating annualized return on
   average tangible equity

 

 

13.02

%

 

 

15.02

%

 

 

16.28

%

 

 

15.88

%

 

 

14.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating efficiency ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

$

17,736

 

 

$

18,682

 

 

$

18,366

 

 

$

19,080

 

 

$

17,413

 

Less: acquisition related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(256

)

 

 

(67

)

Total operating noninterest expense

 

 

17,736

 

 

 

18,682

 

 

 

18,366

 

 

 

18,824

 

 

 

17,346

 

Net interest income

 

 

21,140

 

 

 

22,992

 

 

 

22,964

 

 

 

23,032

 

 

 

22,182

 

Total noninterest income

 

 

9,089

 

 

 

11,134

 

 

 

11,651

 

 

 

9,883

 

 

 

10,014

 

Total revenues

 

$

30,229

 

 

$

34,126

 

 

$

34,615

 

 

$

32,915

 

 

$

32,196

 

Operating efficiency ratio:

 

 

58.67

%

 

 

54.74

%

 

 

53.06

%

 

 

57.19

%

 

 

53.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating annualized pre-tax pre-provision income to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

13,277

 

 

$

16,095

 

 

$

16,249

 

 

$

14,900

 

 

$

14,133

 

Add: acquisition related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

256

 

 

 

67

 

Add: provision for loan losses

 

 

(784

)

 

 

(651

)

 

 

—

 

 

 

(1,065

)

 

 

650

 

Operating pre-tax pre-provision income

 

 

12,493

 

 

 

15,444

 

 

 

16,249

 

 

 

14,091

 

 

 

14,850

 

Average assets

 

$

3,153,320

 

 

$

3,159,308

 

 

$

3,171,182

 

 

$

3,078,748

 

 

$

3,078,745

 

Operating annualized pre-tax pre-provision income to average assets:

 

 

1.61

%

 

 

1.94

%

 

 

2.03

%

 

 

1.84

%

 

 

1.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

$

368,917

 

 

$

380,094

 

 

$

370,328

 

 

$

359,752

 

 

$

343,944

 

Less: intangible assets

 

 

(47,313

)

 

 

(47,759

)

 

 

(48,220

)

 

 

(48,697

)

 

 

(49,190

)

Tangible equity

 

$

321,604

 

 

$

332,335

 

 

$

322,108

 

 

$

311,055

 

 

$

294,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Book Value per Share of Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

$

321,604

 

 

$

332,335

 

 

$

322,108

 

 

$

311,055

 

 

$

294,754

 

Total shares of common stock outstanding

 

 

22,195,071

 

 

 

22,166,129

 

 

 

22,165,760

 

 

 

22,165,547

 

 

 

22,089,873

 

Tangible book value per share of common stock

 

$

14.49

 

 

$

14.99

 

 

$

14.53

 

 

$

14.03

 

 

$

13.34

 

 

 

 

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)

First quarter 2022 Earnings Release

 

 

 

Five Quarter Comparison

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Net interest income

 

$

21,140

 

 

$

22,992

 

 

$

22,964

 

 

$

23,032

 

 

$

22,182

 

Less: PPP loan income

 

 

(493

)

 

 

(1,691

)

 

 

(1,897

)

 

 

(2,686

)

 

 

(2,260

)

Less: Excess liquidity interest income

 

 

(437

)

 

 

(479

)

 

 

(545

)

 

 

(545

)

 

 

(504

)

Plus: Impact of deferred cost adjustment

 

 

545

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Adjusted net interest income

 

 

20,755

 

 

 

20,822

 

 

 

20,522

 

 

 

19,801

 

 

 

19,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest earning assets

 

 

2,901,313

 

 

 

2,920,478

 

 

 

2,931,134

 

 

 

2,848,857

 

 

 

2,889,119

 

Less: Average PPP loans

 

 

(14,144

)

 

 

(42,055

)

 

 

(95,257

)

 

 

(173,733

)

 

 

(204,459

)

Less: Excess liquidity

 

 

(348,535

)

 

 

(447,548

)

 

 

(411,926

)

 

 

(301,325

)

 

 

(334,109

)

Adjusted interest earning assets

 

 

2,538,634

 

 

 

2,430,875

 

 

 

2,423,951

 

 

 

2,373,799

 

 

 

2,350,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

2.97

%

 

 

3.14

%

 

 

3.12

%

 

 

3.26

%

 

 

3.13

%

Adjusted Net interest margin (1)

 

 

3.32

%

 

 

3.40

%

 

 

3.36

%

 

 

3.36

%

 

 

3.35

%

 

 

 

Five Quarter Comparison

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

Allowance for loan losses

 

$

20,857

 

 

$

21,698

 

 

$

22,533

 

 

$

22,754

 

 

$

23,877

 

Purchase accounting marks

 

 

2,838

 

 

 

3,003

 

 

 

3,288

 

 

 

3,533

 

 

 

3,615

 

Allowance for loan losses and purchase accounting fair value marks

 

 

23,695

 

 

 

24,701

 

 

 

25,821

 

 

 

26,287

 

 

 

27,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

2,047,555

 

 

 

1,965,769

 

 

 

1,894,249

 

 

 

1,897,838

 

 

 

1,931,687

 

Less: PPP Loans net of deferred fees

 

 

6,529

 

 

 

26,539

 

 

 

64,188

 

 

 

109,940

 

 

 

210,810

 

Non-PPP Loans

 

 

2,041,026

 

 

 

1,939,230

 

 

 

1,830,061

 

 

 

1,787,898

 

 

 

1,720,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses plus fair value marks / Non-PPP Loans

 

 

1.16

%

 

 

1.27

%

 

 

1.41

%

 

 

1.47

%

 

 

1.59

%

_____________________

 

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