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CapStar Reports Second Quarter 2022 Results
Source: Nasdaq GlobeNewswire / 21 Jul 2022 18:14:51 America/Chicago
NASHVILLE, Tenn., July 21, 2022 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $10.0 million or $0.45 per diluted share, for the quarter ended June 30, 2022, compared with net income of $10.7 million or $0.48 per diluted share, for the quarter ended March 31, 2022, and net income of $12.1 million or $0.54 per diluted share, for the quarter ended June 30, 2021. Annualized return on average assets and return on average equity for the quarter ended June 30, 2022 were 1.28 percent and 11.08 percent, respectively.
For the six months ended June 30, 2022, the Company reported net income of $20.6 million or $0.93 per diluted share, compared with $23.1 million or $1.04 per diluted share, for the same period of 2021. Year to date 2022 annualized return on average assets and return on average equity were 1.33 percent and 11.24 percent, respectively.
Four Key Drivers Targets 2Q22 1Q22 2Q21 Annualized revenue growth > 5% 1.15 % -46.31 % 8.96 % Net interest margin ≥ 3.60% 3.41 % 2.97 % 3.26 % Efficiency ratio ≤ 55% 56.32 % 58.67 % 57.97 % Annualized net charge-offs to average loans ≤ 0.25% 0.00 % 0.01 % 0.01 % “CapStar’s associates delivered outstanding customer service and performance in the second quarter,” said Timothy K. Schools, CapStar President and Chief Executive Officer. “Each of our Four Key Drivers are progressing: 1) Outside of our specialty banking businesses, core bank revenue grew mid double digits compared to the prior year benefiting from robust loan growth, 2) our net interest margin expanded due to a favorable earning asset mix shift and modest benefit from rising rates, 3) we are working more productively, improving our efficiency ratio to 56%, and 4) net-charge offs were $0 and our past dues reached their second consecutive record low. Our positive results are attracting the attention of bankers seeking an environment where they and their customers can have a bigger voice. Last week, we were excited to announce additions to our Chattanooga and Nashville teams and entry into Asheville – our fourth dynamic metro market.”
“While rising rates benefited our core bank earnings, they slowed our mortgage and Tri-Net businesses. Mortgage results were near break-even. Tri-Net has been an outstanding business having contributed more than $25 million of revenue to CapStar over its life. However, Tri-Net did not produce a gain on sale during the quarter as the sharp increase in market rates and overall slowdown in demand reduced the value of Tri-Net’s funded loans. We are pursuing hedging strategies to mitigate this risk in the future. We expect each of these businesses to experience headwinds in the near-term until the rate environment stabilizes. We are proud of the strength of our earnings this quarter. We remain excited about the increasing contribution of our investments in new markets.”
Revenue
Total revenue, defined as net interest income plus noninterest income, was $30.3 million in the second quarter. This represents an increase of $0.1 million from the previous quarter. Net interest income and noninterest income totaled $24.4 million and $5.9 million, an increase of $3.3 million and a decrease of $3.2 million, respectively, from the first quarter of 2022. Rising interest rates and a positive mix shift in average earning assets contributed to the increase in net interest income, while noninterest income declined due to lower mortgage and Tri-Net division revenues and one-time BOLI income in the previous quarter.Second quarter 2022 average earning assets remained flat at $2.90 billion compared to March 31, 2022 as strong loan growth was principally funded from cash. During the quarter, $106.9 million of Tri-Net loans were transferred from loans held for sale to loans held for investment. Excluding PPP balances and the Tri-Net transfer, average loans held for investment increased $98.1 million from the prior quarter, or 19.8 percent linked-quarter annualized. End of period loans held for investment, excluding PPP balances and the Tri-Net transfer, increased $85.9 million, or 16.9 percent linked-quarter annualized, including $47.5 million in loan production from 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 in combination with the recent Asheville, Chattanooga, and Nashville hires to leverage capital to grow revenue and earnings per share.
For the second quarter of 2022, the net interest margin increased 44 basis points from the prior quarter to 3.41 percent primarily resulting from continued increases in interest rates and the positive mix shift in average earning assets. 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 continue to benefit modestly from rising rates in 2022.
The Company's average deposits totaled $2.66 billion in the second quarter of 2022, a $40.3 million decline from the first quarter of 2022. During the quarter, the Company experienced a $15.8 million reduction in higher cost average time deposits and $33.5 million decrease in average interest-bearing transaction accounts. These decreases were partially offset by a $9.4 million increase in average savings and money market deposits, creating an overall net decrease of $39.9 million in average interest-bearing deposits when compared to the first quarter of 2022. During the quarter, the Company’s lowest cost deposit category, noninterest bearing, improved 40 basis points to 27.3 percent of total average deposits as of June 30, 2022. Total deposit costs increased 4 basis points to 0.23 percent compared to 0.19 for the prior quarter. 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 $3.2 million from the first quarter ended March 31, 2022. This decrease was attributable to a $0.3 million decline in mortgage revenue, a $2.2 million decline in Tri-Net revenue and $0.9 million of one-time BOLI income recorded in the previous quarter. During the quarter, $106.9 million of Tri-Net loans were transferred from loans held for sale to loans held for investment to mitigate potential losses related to the adverse impact of rapidly rising interest rates on pricing and investor demand. The Company’s mortgage and Tri-Net divisions have been strong contributors in the past, but it is anticipated that they will continue to face challenges in the volatile rate environment.
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 $0.7 million from the first quarter of 2022 to $17.1 million in the second quarter of 2022. This decrease was primarily attributable to a decline in nonrecurring first quarter items and no mortgage incentive expense.
For the quarter ended June 30, 2022, the efficiency ratio was 56.32 percent, an improvement from 58.67 percent in the first quarter of 2022. Annualized noninterest expense as a percentage of average assets improved 9 basis points to 2.19 percent for the quarter ended June 30, 2022 compared to 2.28 percent for the quarter ended March 31, 2022. Assets per employee was $7.9 million as of June 30, 2022 compared to $8.0 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 June 30, 2022 were 0.00 percent. Past due loans as a percentage of total loans held for investment improved to a record 0.12 percent at June 30, 2022 compared to 0.17 percent at March 31, 2022. Within this amount, loans greater than 90 days past due totaled $0.5 million, or 0.02 percent of loans held for investment at June 30, 2022, an improvement from 0.05 percent at March 31, 2022. Non-performing assets to total loans and OREO improved to 0.11 percent at June 30, 2022 compared to 0.18 percent at March 31, 2022. Criticized and classified loans to total loans, which were elevated during the pandemic, continued to improve to 2.12 percent at June 30, 2022, a 37 basis point improvement from March 31, 2022.
The Company recorded a provision for loan losses of $0.8 million during the quarter as a result of continued strong loan growth. Due to improved credit trends, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, declined 7 basis points to 1.09 percent at June 30, 2022 from 1.16 percent at March 31, 2022.
Asset Quality Data: 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Annualized net charge-offs to average loans 0.00 % 0.01 % 0.04 % 0.05 % 0.01 % Criticized and classified loans to total loans 2.12 % 2.49 % 2.64 % 2.85 % 3.95 % Loans- past due to total end of period loans 0.12 % 0.17 % 0.25 % 0.31 % 0.49 % Loans- over 90 days past due to total end of period loans 0.02 % 0.05 % 0.11 % 0.12 % 0.13 % Non-performing assets to total loans held for investment and OREO 0.11 % 0.18 % 0.18 % 0.20 % 0.22 % Allowance for loan losses plus fair value marks / Non-PPP Loans 1.09 % 1.16 % 1.27 % 1.41 % 1.47 % Allowance for loan losses to non-performing loans 974 % 596 % 666 % 657 % 571 % Income Tax Expense
The Company’s second quarter effective income tax rate remained flat at 19.6 percent when compared to the prior quarter ended March 31, 2022. 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 $310.9 million at June 30, 2022. Tangible book value per share of common stock for the quarter ended June 30, 2022 was $14.17 compared to $14.49 and $14.03 for the quarters ended March 31, 2022 and June 30, 2021, respectively, with the change from March 31, 2022 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. Excluding the impact of after-tax gain or loss within the available for sale investment portfolio, tangible book value per share of common stock for the quarter ended June 30, 2022 was $15.86 compared to $15.53 and $14.02 for the quarters ended March 31, 2022 and June 30, 2021, respectively.
Capital ratios: 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Total risk-based capital 14.79 % 15.60 % 16.29 % 16.23 % 16.13 % Common equity tier 1 capital 12.87 % 13.58 % 14.11 % 13.95 % 13.78 % Leverage 11.10 % 10.99 % 10.69 % 10.28 % 10.17 % In the second quarter of 2022, the Company repurchased $5.4 million in common stock under its share repurchase program. The total remaining authorization for future purchases was $23.9 million as of June 30, 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 July 20, 2022, the Board of Directors of the Company approved a quarterly dividend of $0.10 per common share payable on August 24, 2022 to shareholders of record of CapStar’s common stock as of the close of business on August 10, 2022.
Conference Call and Webcast Information
CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 22, 2022. During the call, management will review the second quarter results and operational highlights. Interested parties may listen to the call by registering here to access the live call, including for participants who plan to ask a question during the call. 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 June 30, 2022, on a consolidated basis, CapStar had total assets of $3.1 billion, total loans of $2.2 billion, total deposits of $2.6 billion, and shareholders’ equity of $357.7 million. Visit www.capstarbank.com for more information.
NON-GAAP MEASURES
Certain releases include financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information may include certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations. Such measures may 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 may include 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)
Second quarter 2022 Earnings ReleaseThree Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Interest income: Loans, including fees $ 23,775 $ 22,572 $ 44,141 $ 44,586 Securities: Taxable 1,922 1,640 3,677 3,244 Tax-exempt 319 356 644 722 Federal funds sold 14 3 24 3 Restricted equity securities 173 160 329 321 Interest-bearing deposits in financial institutions 286 101 458 234 Total interest income 26,489 24,832 49,273 49,110 Interest expense: Interest-bearing deposits 638 379 1,074 826 Savings and money market accounts 467 295 797 608 Time deposits 454 732 938 1,663 Federal Home Loan Bank advances 96 — 96 12 Subordinated notes 394 394 788 788 Total interest expense 2,049 1,800 3,693 3,897 Net interest income 24,440 23,032 45,580 45,213 Provision for loan losses 843 (1,065 ) 59 (415 ) Net interest income after provision for loan losses 23,597 24,097 45,521 45,628 Noninterest income: Deposit service charges 1,182 1,109 2,324 2,211 Interchange and debit card transaction fees 1,336 1,227 2,558 2,318 Mortgage banking 1,705 3,910 3,671 8,625 Tri-Net (73 ) 1,536 2,098 2,679 Wealth management 459 471 899 931 SBA lending 273 377 494 870 Net gain on sale of securities — (13 ) — 13 Other noninterest income 994 1,266 2,921 2,250 Total noninterest income 5,876 9,883 14,965 19,897 Noninterest expense: Salaries and employee benefits 9,209 10,803 19,478 20,229 Data processing and software 2,847 3,070 5,494 5,898 Occupancy 1,076 1,057 2,174 2,165 Equipment 783 980 1,492 1,880 Professional services 506 460 1,185 1,165 Regulatory fees 265 211 545 467 Acquisition related expenses — 256 — 323 Amortization of intangibles 430 493 876 1,001 Other operating 1,959 1,750 3,566 3,364 Total noninterest expense 17,075 19,080 34,810 36,492 Income before income taxes 12,398 14,900 25,676 29,033 Income tax expense 2,426 2,824 5,031 5,927 Net income $ 9,972 $ 12,076 $ 20,645 $ 23,106 Per share information: Basic net income per share of common stock $ 0.45 $ 0.55 $ 0.93 $ 1.05 Diluted net income per share of common stock $ 0.45 $ 0.54 $ 0.93 $ 1.04 Weighted average shares outstanding: Basic 22,022,109 22,133,759 22,109,737 22,089,874 Diluted 22,074,260 22,198,829 22,163,954 22,138,052 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)
Second quarter 2022 Earnings ReleaseFive Quarter Comparison 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Income Statement Data: Net interest income $ 24,440 $ 21,140 $ 22,992 $ 22,964 $ 23,032 Provision for loan losses 843 (784 ) (651 ) — (1,065 ) Net interest income after provision for loan losses 23,597 21,924 23,643 22,964 24,097 Deposit service charges 1,182 1,142 1,117 1,187 1,109 Interchange and debit card transaction fees 1,336 1,222 1,261 1,236 1,227 Mortgage banking 1,705 1,966 2,740 4,693 3,910 Tri-Net (73 ) 2,171 3,996 1,939 1,536 Wealth management 459 440 438 481 471 SBA lending 273 222 279 911 377 Net gain (loss) on sale of securities — — 8 7 (13 ) Other noninterest income 994 1,926 1,295 1,197 1,266 Total noninterest income 5,876 9,089 11,134 11,651 9,883 Salaries and employee benefits 9,209 10,269 10,549 10,980 10,803 Data processing and software 2,847 2,647 2,719 2,632 3,070 Occupancy 1,076 1,099 1,012 1,028 1,057 Equipment 783 709 867 760 980 Professional services 506 679 521 469 460 Regulatory fees 265 280 284 279 211 Acquisition related expenses — — — — 256 Amortization of intangibles 430 446 461 477 493 Other noninterest expense 1,959 1,607 2,269 1,741 1,750 Total noninterest expense 17,075 17,736 18,682 18,366 19,080 Net income before income tax expense 12,398 13,277 16,095 16,249 14,900 Income tax expense 2,426 2,604 3,625 3,147 2,824 Net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,076 Weighted average shares - basic 22,022,109 22,198,339 22,166,410 22,164,278 22,133,759 Weighted average shares - diluted 22,074,260 22,254,644 22,221,989 22,218,402 22,198,829 Net income per share, basic $ 0.45 $ 0.48 $ 0.56 $ 0.59 $ 0.55 Net income per share, diluted 0.45 0.48 0.56 0.59 0.54 Balance Sheet Data (at period end): Cash and cash equivalents $ 113,825 $ 355,981 $ 415,125 $ 359,267 $ 449,267 Securities available-for-sale 437,420 460,558 459,396 483,778 500,339 Securities held-to-maturity 1,769 1,775 1,782 1,788 2,395 Loans held for sale 85,884 106,895 83,715 176,488 158,234 Loans held for investment 2,234,833 2,047,555 1,965,769 1,894,249 1,897,838 Allowance for loan losses (21,684 ) (20,857 ) (21,698 ) (22,533 ) (22,754 ) Total assets 3,096,537 3,190,749 3,133,046 3,112,127 3,212,390 Non-interest-bearing deposits 717,167 702,172 725,171 718,299 782,170 Interest-bearing deposits 1,913,320 2,053,823 1,959,110 1,956,093 1,998,024 Federal Home Loan Bank advances and other borrowings 74,599 29,566 29,532 29,499 29,487 Total liabilities 2,738,802 2,821,832 2,752,952 2,741,799 2,852,639 Shareholders' equity $ 357,735 $ 368,917 $ 380,094 $ 370,328 $ 359,752 Total shares of common stock outstanding 21,934,554 22,195,071 22,166,129 22,165,760 22,165,547 Book value per share of common stock $ 16.31 $ 16.62 $ 17.15 $ 16.71 $ 16.23 Tangible book value per share of common stock* 14.17 14.49 14.99 14.53 14.03 Tangible book value per share of common stock less after-tax
unrealized available for sale investment
(gains) losses*15.86 15.53 15.13 14.59 14.02 Market value per share of common stock $ 19.62 $ 21.08 $ 21.03 $ 21.24 $ 20.50 Capital ratios: Total risk-based capital 14.79 % 15.60 % 16.29 % 16.23 % 16.13 % Tangible common equity to tangible assets* 10.19 % 10.23 % 10.77 % 10.51 % 9.83 % Tangible common equity to tangible assets less after-tax unrealized available for sale investment (gains) losses* 11.27 % 10.88 % 10.86 % 10.55 % 9.82 % Common equity tier 1 capital 12.87 % 13.58 % 14.11 % 13.95 % 13.78 % Leverage 11.10 % 10.99 % 10.69 % 10.28 % 10.17 % _____________________
*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)
Second quarter 2022 Earnings ReleaseFive Quarter Comparison 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Average Balance Sheet Data: Cash and cash equivalents $ 189,542 $ 380,262 $ 470,963 $ 411,101 $ 301,773 Investment securities 473,167 483,339 491,135 515,877 508,595 Loans held for sale 114,223 90,163 123,962 173,402 147,912 Loans held for investment 2,147,750 2,001,740 1,888,094 1,884,935 1,938,818 Assets 3,128,864 3,153,320 3,159,308 3,171,182 3,078,748 Interest bearing deposits 1,936,910 1,976,803 1,964,641 1,980,304 1,940,442 Deposits 2,664,614 2,704,938 2,713,314 2,732,165 2,662,192 Federal Home Loan Bank advances and other borrowings 70,516 29,547 29,514 29,495 29,467 Liabilities 2,767,714 2,773,281 2,781,951 2,803,375 2,719,898 Shareholders' equity 361,150 380,039 377,357 367,807 358,850 Performance Ratios: Annualized return on average assets 1.28 % 1.37 % 1.57 % 1.64 % 1.57 % Annualized return on average equity 11.08 % 11.39 % 13.11 % 14.13 % 13.50 % Net interest margin (1) 3.41 % 2.97 % 3.14 % 3.12 % 3.26 % Annualized noninterest income to average assets 0.75 % 1.17 % 1.40 % 1.46 % 1.29 % Efficiency ratio 56.32 % 58.67 % 54.74 % 53.06 % 57.97 % Loans by Type (at period end): Commercial and industrial $ 510,987 $ 499,719 $ 497,615 $ 478,279 $ 536,279 Commercial real estate - owner occupied 241,461 231,933 209,261 193,139 200,725 Commercial real estate - non-owner occupied 786,610 652,936 616,023 579,857 538,520 Construction and development 205,573 208,513 214,310 210,516 198,448 Consumer real estate 357,849 327,416 326,412 328,262 331,580 Consumer 53,227 48,790 46,811 45,669 45,898 Other 79,126 78,248 55,337 58,527 46,387 Asset Quality Data: Allowance for loan losses to total loans 0.97 % 1.02 % 1.10 % 1.19 % 1.20 % Allowance for loan losses to non-performing loans 974 % 596 % 666 % 657 % 571 % Nonaccrual loans $ 2,225 $ 3,502 $ 3,258 $ 3,431 $ 3,985 Troubled debt restructurings 86 1,847 1,832 1,859 1,895 Loans - over 90 days past due 494 1,076 2,120 2,333 2,389 Total non-performing loans 2,225 3,502 3,258 3,431 3,985 OREO and repossessed assets 165 178 266 349 184 Total non-performing assets 2,390 3,680 3,524 3,780 4,169 Non-performing loans to total loans held for investment 0.10 % 0.17 % 0.17 % 0.18 % 0.21 % Non-performing assets to total assets 0.08 % 0.12 % 0.11 % 0.12 % 0.13 % Non-performing assets to total loans held for investment and OREO 0.11 % 0.18 % 0.18 % 0.20 % 0.22 % Annualized net charge-offs to average loans 0.00 % 0.01 % 0.04 % 0.05 % 0.01 % Net charge-offs $ 16 $ 59 $ 184 $ 221 $ 59 Interest Rates and Yields: Loans 4.25 % 3.97 % 4.47 % 4.41 % 4.43 % Securities (1) 2.11 % 1.92 % 1.84 % 1.75 % 1.77 % Total interest-earning assets (1) 3.69 % 3.20 % 3.36 % 3.35 % 3.51 % Deposits 0.23 % 0.19 % 0.19 % 0.19 % 0.21 % Borrowings and repurchase agreements 2.79 % 5.40 % 5.29 % 5.30 % 5.36 % Total interest-bearing liabilities 0.41 % 0.33 % 0.33 % 0.34 % 0.37 % Other Information: Full-time equivalent employees 391 397 397 392 383 _____________________
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)
Second quarter 2022 Earnings ReleaseFor the Three Months Ended June 30, 2022 2021 Average
Outstanding
BalanceInterest
Income/
ExpenseAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Income/
ExpenseAverage
Yield/
RateInterest-Earning Assets Loans (1) $ 2,147,750 $ 22,755 4.25 % $ 1,938,819 $ 21,412 4.43 % Loans held for sale 114,223 1,020 3.58 % 147,912 1,160 3.14 % Securities: Taxable investment securities (2) 417,526 2,095 2.01 % 446,696 1,800 1.61 % Investment securities exempt from
federal income tax (3)55,641 319 2.92 % 61,899 356 2.91 % Total securities 473,167 2,414 2.11 % 508,595 2,156 1.77 % Cash balances in other banks 144,533 286 0.80 % 235,212 101 0.17 % Funds sold 7,950 14 0.70 % 18,319 3 0.06 % Total interest-earning assets 2,887,623 26,489 3.69 % 2,848,857 24,832 3.51 % Noninterest-earning assets 241,241 229,891 Total assets $ 3,128,864 $ 3,078,748 Interest-Bearing Liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 915,837 638 0.28 % $ 927,210 379 0.16 % Savings and money market deposits 670,144 467 0.28 % 589,006 295 0.20 % Time deposits 350,929 454 0.52 % 424,226 732 0.69 % Total interest-bearing deposits 1,936,910 1,559 0.32 % 1,940,442 1,406 0.29 % Borrowings and repurchase agreements 70,516 490 2.79 % 29,467 394 5.36 % Total interest-bearing liabilities 2,007,426 2,049 0.41 % 1,969,909 1,800 0.37 % Noninterest-bearing deposits 727,705 721,751 Total funding sources 2,735,131 2,691,660 Noninterest-bearing liabilities 32,583 28,238 Shareholders’ equity 361,150 358,850 Total liabilities and shareholders’ equity $ 3,128,864 $ 3,078,748 Net interest spread (4) 3.28 % 3.14 % Net interest income/margin (5) $ 24,440 3.41 % $ 23,032 3.26 % _____________________
- Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
- Taxable investment securities include restricted equity securities.
- Yields on tax exempt securities, total securities, and total interest-earning assets are shown on a tax equivalent basis.
- Net interest spread is the average yield on total average interest-earning assets minus the average rate on total average interest-bearing liabilities.
- 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)
Second quarter 2022 Earnings ReleaseFive Quarter Comparison 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Operating net income: Net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,076 Add: acquisition related expenses — — — — 256 Less: income tax impact of acquisition related expenses — — — — (67 ) Operating net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,265 Operating diluted net income per
share of common stock:Operating net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,265 Weighted average shares - diluted 22,074,260 22,254,644 22,221,989 22,218,402 22,198,829 Operating diluted net income
per share of common stock$ 0.45 $ 0.48 $ 0.56 $ 0.59 $ 0.55 Operating annualized return on average assets: Operating net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,265 Average assets 3,128,864 3,153,320 3,159,308 3,171,182 3,078,748 Operating annualized return on
average assets1.28 % 1.37 % 1.57 % 1.64 % 1.60 % Operating annualized return on
average tangible equity:Average total shareholders' equity $ 361,150 $ 380,039 $ 377,357 $ 367,807 $ 358,850 Less: average intangible assets (47,160 ) (47,604 ) (48,054 ) (48,527 ) (49,012 ) Average tangible equity 313,990 332,435 329,303 319,280 309,838 Operating net income $ 9,972 $ 10,673 $ 12,470 $ 13,102 $ 12,265 Operating annualized return on
average tangible equity12.74 % 13.02 % 15.02 % 16.28 % 15.88 % Operating efficiency ratio: Total noninterest expense $ 17,075 $ 17,736 $ 18,682 $ 18,366 $ 19,080 Less: acquisition related expenses — — — — (256 ) Total operating noninterest expense 17,075 17,736 18,682 18,366 18,824 Net interest income 24,440 21,140 22,992 22,964 23,032 Total noninterest income 5,876 9,089 11,134 11,651 9,883 Total revenues $ 30,316 $ 30,229 $ 34,126 $ 34,615 $ 32,915 Operating efficiency ratio: 56.32 % 58.67 % 54.74 % 53.06 % 57.19 % Operating annualized pre-tax pre-provision income to average assets: Income before income taxes $ 12,398 $ 13,277 $ 16,095 $ 16,249 $ 14,900 Add: acquisition related expenses — — — — 256 Add: provision for loan losses 843 (784 ) (651 ) — (1,065 ) Operating pre-tax pre-provision income 13,241 12,493 15,444 16,249 14,091 Average assets $ 3,128,864 $ 3,153,320 $ 3,159,308 $ 3,171,182 $ 3,078,748 Operating annualized pre-tax pre-provision income to average assets: 1.70 % 1.61 % 1.94 % 2.03 % 1.84 % CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings ReleaseFive Quarter Comparison 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Tangible Equity: Total shareholders' equity $ 357,735 $ 368,917 $ 380,094 $ 370,328 $ 359,752 Less: intangible assets (46,883 ) (47,313 ) (47,759 ) (48,220 ) (48,697 ) Tangible equity $ 310,852 $ 321,604 $ 332,335 $ 322,108 $ 311,055 Tangible book value per share of common stock: Tangible equity $ 310,852 $ 321,604 $ 332,335 $ 322,108 $ 311,055 Total shares of common stock outstanding 21,934,554 22,195,071 22,166,129 22,165,760 22,165,547 Tangible book value per share of common stock $ 14.17 $ 14.49 $ 14.99 $ 14.53 $ 14.03 Tangible book value per share of common stock
less after-tax unrealized available for sale investment
(gains) losses:Total shareholders' equity $ 357,735 $ 368,917 $ 380,094 $ 370,328 $ 359,752 Less: intangible assets (46,883 ) (47,313 ) (47,759 ) (48,220 ) (48,697 ) Add: after-tax unrealized available for sale
investment (gains) losses37,034 23,041 2,978 1,209 (374 ) Tangible equity less after-tax unrealized
available for sale investment (gains) losses$ 347,886 $ 344,645 $ 335,313 $ 323,317 $ 310,681 Total shares of common stock outstanding 21,934,554 22,195,071 22,166,129 22,165,760 22,165,547 Tangible book value per share of
common stock less after-tax unrealized
available for sale investment (gains) losses$ 15.86 $ 15.53 $ 15.13 $ 14.59 $ 14.02 Tangible common equity to tangible assets: Tangible equity $ 310,852 $ 321,604 $ 332,335 $ 322,108 $ 311,055 Assets $ 3,096,537 $ 3,190,749 $ 3,133,046 $ 3,112,127 $ 3,212,390 Less: intangible assets (46,883 ) (47,313 ) (47,759 ) (48,220 ) (48,697 ) Tangible assets $ 3,049,654 $ 3,143,436 $ 3,085,287 $ 3,063,907 $ 3,163,693 Tangible common equity to tangible
assets10.19 % 10.23 % 10.77 % 10.51 % 9.83 % Tangible common equity to tangible assets less after-tax unrealized available for sale investment (gains) losses: Tangible equity less after-tax unrealized
available for sale investment (gains) losses$ 347,886 $ 344,645 $ 335,313 $ 323,317 $ 310,681 Tangible assets $ 3,049,654 $ 3,143,436 $ 3,085,287 $ 3,063,907 $ 3,163,693 Add: after-tax unrealized available for sale
investment (gains) losses37,034 23,041 2,978 1,209 (374 ) Tangible assets less after-tax unrealized
available for sale investment (gains) losses$ 3,086,688 $ 3,166,477 $ 3,088,265 $ 3,065,116 $ 3,163,319 Tangible common equity to tangible
assets less after-tax unrealized available for sale investment
(gains) losses11.27 % 10.88 % 10.86 % 10.55 % 9.82 % CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings ReleaseSix Months Ended 6/30/2022 6/30/2021 Operating net income: Net income $ 20,645 $ 23,106 Add: acquisition related expenses — 323 Less: income tax impact of acquisition related expenses — (84 ) Operating net income $ 20,645 $ 23,345 Operating diluted net income per
share of common stock:Operating net income $ 20,645 $ 23,345 Weighted average shares - diluted 22,163,954 22,138,052 Operating diluted net income
per share of common stock$ 0.93 $ 1.05 Operating annualized return on average assets: Operating net income $ 20,645 $ 23,345 Average assets $ 3,141,024 $ 3,078,746 Operating annualized return on
average assets1.33 % 1.53 % Operating annualized return on
average tangible equity:Average total shareholders' equity $ 370,542 $ 354,788 Less: average intangible assets (49,014 ) (49,262 ) Average tangible equity 321,528 305,526 Operating net income $ 20,645 $ 23,345 Operating annualized return on
average tangible equity12.95 % 15.41 % Operating efficiency ratio: Total noninterest expense $ 34,810 $ 36,492 Less: acquisition related expenses — (323 ) Total operating noninterest expense 34,810 36,169 Net interest income 45,580 45,213 Total noninterest income 14,965 19,897 Total revenues $ 60,545 $ 65,110 Operating efficiency ratio: 57.49 % 55.55 % CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Second quarter 2022 Earnings ReleaseFive Quarter Comparison 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Allowance for loan losses $ 21,684 $ 20,857 $ 21,698 $ 22,533 $ 22,754 Purchase accounting marks 2,717 2,838 3,003 3,288 3,533 Allowance for loan losses and purchase accounting fair value marks 24,401 23,695 24,701 25,821 26,287 Loans held for investment 2,234,833 2,047,555 1,965,769 1,894,249 1,897,838 Less: PPP Loans net of deferred fees 921 6,529 26,539 64,188 109,940 Non-PPP Loans 2,233,912 2,041,026 1,939,230 1,830,061 1,787,898 Allowance for loan losses plus fair value marks / Non-PPP Loans 1.09 % 1.16 % 1.27 % 1.41 % 1.47 % _____________________
- Net interest margin and adjusted net interest margin are shown on a tax equivalent basis.
CONTACTMichael J. Fowler
Chief Financial Officer
(615) 732-7404