NASHVILLE, Tenn., July 20, 2023 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (CSTR, Financial) today reported net income of $7.8 million or $0.37 per diluted share, for the quarter ended June 30, 2023, compared with net income of $6.4 million or $0.30 per diluted share, for the quarter ended March 31, 2023, and net income of $10.0 million or $0.45 per diluted share, for the quarter ended June 30, 2022. Annualized return on average assets and return on average equity for the quarter ended June 30, 2023 was 0.98% and 8.95%, respectively.
Revenue
Total revenue, defined as net interest income plus noninterest income, was $28.8 million in the second quarter of 2023 compared to the first quarter of 2023 revenue of $29.5 million. Second quarter net interest income decreased $0.6 million from the prior quarter to $22.6 million while noninterest income declined $0.1 million to $6.2 million.
Second quarter 2023 average earning assets increased $48.8 million to $2.97 billion compared to the first quarter 2023. The growth in average earning assets was attributed to a $43.1 million, or 7% linked-quarter annualized, increase in loans held for investment while the related yield increased 30 basis points from the prior quarter to 5.79%.
Over the past year, the Company has been proactive and disciplined in curtailing lending on commercial real estate investment properties and to non-depositors focusing all efforts on liquidity management. While second quarter 2023 end of period loan held for investment balances declined versus the first quarter of 2023, the Company maintains strong lending capabilities in robust markets and is pleased with $76.5 million of growth in customer deposit balances that have occurred from May 31, through July 19, 2023 and improvement in insured or collateralized deposits to 75.5% as of June 30, 2023.
The net interest margin decreased 18 basis points from the prior quarter to 3.06%. The decline in net interest margin was principally related to the pace at which market deposit rates are rising as a result of intense market competition in relation to the repricing of the Company's loan portfolio. The total cost of deposits increased 49 basis points from the first quarter of 2023 to 2.26% in the second quarter of 2023.
Second quarter 2023 noninterest income as compared to the first quarter of 2023 benefited from increased servicing fee income offset by declines in deposit service charges and mortgage banking. SBA production and pipeline remains strong with the enhanced benefit of escalating servicing income now contributing over $800 thousand on an annualized basis. The Company’s Tri-Net business continues to remain disciplined awaiting a return to rational market pricing with limited originations and sales occurring in 2023.
Noninterest Expense and Operating Efficiency
Noninterest expense was $19.2 million for the second quarter of 2023, compared to $19.1 million in the first quarter of 2023. Second quarter noninterest expense included $122 thousand related to the anticipated changes in legislation for stock repurchase taxation. During the quarter, the Company identified approximately $3.0 million of annualized expense reductions with partial implementation in late June and the remainder anticipated throughout the second half of 2023.
The efficiency ratio was 66.61% for the quarter ended June 30, 2023 and 64.60% for the quarter ended March 31, 2023. Annualized noninterest expense as a percentage of average assets was 2.41% for the quarter ended June 30, 2023 which is a decrease of 4 basis points compared to the quarter ended March 31, 2023. Assets per employee increased to $8.3 million as of June 30, 2023 compared to $8.1 million in the previous quarter.
Asset Quality
Despite a decrease in end of period loans held for investment and unfunded commitments versus the first quarter of 2023, the Company recorded a nominal provision of $22 thousand during the second quarter due to the continued overall macroeconomic uncertainty. Net loan charge-offs in second quarter totaled $0.2 million or 0.03% annualized of average loans held for investment.
Past due loans improved to $3.6 million or 0.15% of total loans held for investment at June 30, 2023 compared to $8.5 million or 0.35% of total loans held for investment at March 31, 2023. The improvement was related to one relationship totaling $5.8 million which became current during the second quarter. Past dues include a $1.3 million relationship that is well secured and is in the process of being liquidated with no expected loss.
Non-performing assets to total loans held for investment and OREO were 0.48% at June 30, 2023 compared to 0.42% at March 31, 2023. Non-performing assets include two relationships totaling approximately $8.0 million which entered forbearance agreements and were brought current during the first quarter. The Company is optimistic these relationships will return to accrual status in the third quarter with recognition of full interest income not recognized while on nonaccrual.
The allowance for credit losses related to loans increased to 1.08% as of June 30, 2023 compared to 1.05% as of March 31, 2023. The allowance for credit losses related to unfunded commitments decreased to 0.43% of available balances as of June 30, 2023 from 0.47% at March 31, 2023.
Asset Quality Data: 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Annualized net charge-offs to average loans 0.03% 0.03% 0.03% 0.02% 0.00%Criticized and classified loans to total loans 1.36% 1.76% 1.31% 1.79% 2.12%Loans- past due to total end of period loans 0.15% 0.35% 0.50% 0.63% 0.12%Loans-over 90 days past due to total period end loans 0.08% 0.05% 0.44% 0.27% 0.02%Non-performing assets to total loans held for investment and OREO 0.48% 0.42% 0.46% 0.30% 0.11%Allowance for credit losses on loans to non-performing loans 228% 249% 222% 333% 974%Income Tax Expense
The Company’s second quarter effective income tax rate decreased slightly to 18.6% when compared to 19.4% in the prior quarter ended March 31, 2023 and compared to the rate of 19.6% for the quarter ended June 30, 2022. When compared to the six months ended June 30, 2022, the six months ended June 30, 2023 showed a decrease in the rate from 19.6% to 19.0%, in line with Company expectations for the remainder of the year.
Capital
The Company continues to be strongly capitalized with equity of $347.5 million and tangible equity of $302.1 million at June 30, 2023. At June 30, 2023, CapStar’s Leverage Ratio was 11.05%, Common Equity Tier I ratio was 12.40%, and its Total Risk-Based Capital ratio was 14.34%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation. As all investments are designated as available-for-sale, the Tangible Common Equity to Tangible Assets ratio of 9.64% is inclusive of all unrealized investment portfolio losses.
Book value per share of common stock as of June 30, 2023 was $16.64 while tangible book value per share of common stock was $14.47 as of June 30, 2023 compared to $16.57 and $14.43, respectively, for the quarter ended March 31, 2023. Excluding the impact of after-tax unrealized gain or loss within the available for sale investment portfolio, tangible book value per share of common stock for the quarter ended June 30, 2023 was $16.95 compared to $16.56 and $15.86 for the quarters ended March 31, 2023 and June 30, 2022, respectively.
Consolidated Capital ratios: 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Total risk-based capital 14.34% 13.98% 14.51% 14.59% 14.79%Common equity tier 1 capital 12.40% 12.09% 12.61% 12.70% 12.87%Leverage 11.05% 11.20% 11.40% 11.22% 11.10%Tangible common equity to tangible assets * 9.64% 9.67% 10.03% 9.65% 10.19%_____________________
*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.
As a component of the Company’s capital allocation strategy, $8.3 million was returned to shareholders in the second quarter of 2023 in the form of share repurchases and dividends. In total, 453,822 shares were repurchased at an average price of $13.36. The Board of Directors of the Company renewed a common stock share repurchase authorization of up to $20 million on May 25, 2023. 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, 2024.
Liquidity
Liquidity sources remain strong at a total $1.5 billion as of June 30, 2023 compared to the March 31, 2023 total of $1.6 billion. Sources as of June 30, 2023 include cash and equivalents of $170.7 million, unpledged securities of $172.8 million, remaining borrowing capacity with the FHLB of $473.3 million, borrowing capacity with the Federal Reserve Discount Window of $314.8 million, the ability to issue an additional $137.1 million of brokered CDs based on internal limits, federal funds lines of $115.0 million, loans held-for-sale of $48.1 million and $55.0 million of additional funding capacity through the Federal Reserve’s Bank Term Funding Program.
Dividend
On July 19, 2023, the Board of Directors of the Company approved a quarterly dividend of $0.11 per common share payable on August 23, 2023 to shareholders of record of CapStar’s common stock as of the close of business on August 9, 2023.
Conference Call and Webcast Information
CapStar will host a conference call and webcast at 10:00 a.m. Central Time on Friday, July 21, 2023. 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.
CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)
Second quarter 2023 Earnings Release Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Interest income: Loans, including fees $34,815 $23,775 $66,774 $44,141 Securities: Taxable 2,025 1,922 3,976 3,677 Tax-exempt 308 319 622 644 Federal funds sold 68 14 123 24 Restricted equity securities 248 173 488 329 Interest-bearing deposits in financial institutions 1,823 286 3,087 458 Total interest income 39,287 26,489 75,070 49,273 Interest expense: Interest-bearing deposits 4,474 638 7,420 1,074 Savings and money market accounts 3,254 467 6,513 797 Time deposits 7,363 454 12,936 938 Federal Home Loan Bank advances 1,231 96 1,623 96 Subordinated notes 394 394 788 788 Total interest expense 16,716 2,049 29,280 3,693 Net interest income 22,571 24,440 45,790 45,580 Provision for credit losses: Provision for credit losses on loans 519 843 570 59 Provision for credit losses on available-for-sale securities — — 2,000 — Provision for (recovery of) credit losses on unfunded commitments (497) — (106) — Total provision for credit losses 22 843 2,464 59 Net interest income after provision for credit losses 22,549 23,597 43,326 45,521 Noninterest income: Deposit service charges 1,264 1,182 2,632 2,324 Interchange and debit card transaction fees 1,060 1,336 2,098 2,558 Mortgage banking 955 1,705 2,248 3,671 Tri-Net 27 (73) 27 2,098 Wealth management 426 459 800 899 SBA lending 977 273 2,068 494 Net gain on sale of securities — — 5 0 Other noninterest income 1,503 994 2,609 2,921 Total noninterest income 6,212 5,876 12,487 14,965 Noninterest expense: Salaries and employee benefits 10,533 9,209 20,874 19,478 Data processing and software 3,294 2,847 6,505 5,494 Occupancy 1,097 1,076 2,290 2,174 Equipment 674 783 1,496 1,492 Professional services 899 506 1,687 1,185 Regulatory fees 419 265 832 545 Amortization of intangibles 368 430 752 876 Other operating 1,888 1,959 3,790 3,566 Total noninterest expense 19,172 17,075 38,226 34,810 Income before income taxes 9,589 12,398 17,587 25,676 Income tax expense 1,785 2,426 3,337 5,031 Net income $7,804 $9,972 $14,250 $20,645 Per share information: Basic net income per share of common stock $0.37 $0.45 $0.67 $0.93 Diluted net income per share of common stock $0.37 $0.45 $0.67 $0.93 Weighted average shares outstanding: Basic 21,065,115 22,022,109 21,311,691 22,109,737 Diluted 21,107,457 22,074,260 21,349,972 22,163,954
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 2023 Earnings Release Five Quarter Comparison 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Income Statement Data: Net interest income $22,571 $23,219 $24,959 $25,553 $24,440 Provision for credit losses 22 2,442 1,548 867 843 Net interest income after provision for credit losses 22,549 20,777 23,411 24,686 23,597 Deposit service charges 1,264 1,368 1,206 1,251 1,182 Interchange and debit card transaction fees 1,060 1,038 1,250 1,245 1,336 Mortgage banking 955 1,293 637 765 1,705 Tri-Net 27 — 39 (2,059) (73)Wealth management 426 374 403 385 459 SBA lending 977 1,091 1,446 560 273 Net gain on sale of securities — 5 1 7 — Other noninterest income 1,503 1,106 1,303 1,118 994 Total noninterest income 6,212 6,275 6,285 3,272 5,876 Salaries and employee benefits 10,533 10,341 9,875 8,712 9,209 Data processing and software 3,294 3,211 2,797 2,861 2,847 Occupancy 1,097 1,193 1,032 1,092 1,076 Equipment 674 822 753 743 783 Professional services 899 788 522 468 506 Regulatory fees 419 413 266 269 265 Amortization of intangibles 368 384 399 415 430 Other noninterest expense 1,888 1,902 984 3,371 1,959 Total noninterest expense 19,172 19,054 16,628 17,931 17,075 Net income before income tax expense 9,589 7,998 13,068 10,027 12,398 Income tax expense 1,785 1,552 2,735 1,988 2,426 Net income $7,804 $6,446 $10,333 $8,039 $9,972 Weighted average shares - basic 21,065,115 21,561,007 21,887,351 21,938,259 22,022,109 Weighted average shares - diluted 21,107,457 21,595,182 21,926,821 21,988,085 22,074,260 Net income per share, basic $0.37 $0.30 $0.47 $0.37 $0.45 Net income per share, diluted 0.37 0.30 0.47 0.37 0.45 Balance Sheet Data (at period end): Cash and cash equivalents $170,709 $175,557 $135,305 $199,913 $113,825 Securities available-for-sale 373,262 391,547 396,416 401,345 437,420 Securities held-to-maturity - 1,232 1,240 1,762 1,769 Loans held for sale 48,895 31,501 44,708 43,122 85,884 Loans held for investment 2,358,928 2,407,328 2,312,798 2,290,269 2,234,833 Allowance for credit losses on loans (25,524) (25,189) (23,806) (22,431) (21,684)Total assets 3,179,016 3,232,751 3,117,169 3,165,706 3,096,537 Non-interest-bearing deposits 414,828 463,243 512,076 628,846 717,167 Interest-bearing deposits 2,295,931 2,286,844 2,167,743 2,004,827 1,913,320 Federal Home Loan Bank advances and other borrowings 79,733 85,199 44,666 149,633 74,599 Total liabilities 2,831,551 2,878,840 2,762,987 2,818,341 2,738,802 Shareholders' equity 347,465 353,911 354,182 347,365 357,735 Total shares of common stock outstanding 20,884,492 21,361,614 21,714,380 21,931,624 21,934,554 Book value per share of common stock $16.64 $16.57 $16.31 $15.84 $16.31 Tangible book value per share of common stock* 14.47 14.43 14.19 13.72 14.17 Tangible book value per share of common stock less after-tax unrealized available for sale investment losses* 16.95 16.56 16.57 16.16 15.86 Market value per share of common stock 12.27 15.15 17.66 18.53 19.62 Consolidated Capital ratios: Total risk-based capital 14.34% 13.98% 14.51% 14.59% 14.79%Tangible common equity to tangible assets* 9.64% 9.67% 10.03% 9.65% 10.19%Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses* 11.11% 10.94% 11.52% 11.17% 11.27%Common equity tier 1 capital 12.40% 12.09% 12.61% 12.70% 12.87%Leverage 11.05% 11.20% 11.40% 11.22% 11.10%
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*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 2023 Earnings Release Five Quarter Comparison 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Average Balance Sheet Data: Cash and cash equivalents $157,862 $153,464 $154,150 $154,543 $189,542 Investment securities 402,743 410,371 415,414 450,933 473,167 Loans held for sale 37,031 29,578 37,945 94,811 114,223 Loans held for investment 2,391,229 2,348,100 2,309,349 2,241,355 2,147,750 Assets 3,196,593 3,150,436 3,124,928 3,146,841 3,128,864 Interest bearing deposits 2,244,499 2,176,542 2,076,743 1,993,172 1,936,910 Deposits 2,678,337 2,691,108 2,662,954 2,659,268 2,664,615 Federal Home Loan Bank advances and other borrowings 126,397 62,585 74,812 88,584 70,516 Liabilities 2,846,824 2,797,442 2,776,902 2,782,703 2,767,714 Shareholders' equity 349,769 352,994 348,027 364,138 361,150 Performance Ratios: Annualized return on average assets 0.98% 0.83% 1.31% 1.01% 1.28%Annualized return on average equity 8.95% 7.41% 11.78% 8.76% 11.08%Net interest margin (1) 3.06% 3.24% 3.44% 3.50% 3.41%Annualized noninterest income to average assets 0.78% 0.81% 0.80% 0.41% 0.75%Efficiency ratio 66.61% 64.60% 53.23% 62.21% 56.32%Loans by Type (at period end): Commercial and industrial $518,136 $534,521 $496,347 $499,048 $510,987 Commercial real estate - owner occupied 275,712 276,515 246,109 235,519 241,461 Commercial real estate - non-owner occupied 802,574 840,755 803,611 832,156 786,610 Construction and development 230,859 209,556 229,972 198,869 205,573 Consumer real estate 429,517 425,649 402,615 386,628 357,849 Consumer 52,759 55,125 53,382 52,715 53,227 Other 49,371 65,207 80,762 85,334 79,126 Asset Quality Data: Allowance for credit losses on loans to total loans 1.08% 1.05% 1.03% 0.98% 0.97%Allowance for credit losses on loans to non-performing loans 228% 249% 222% 333% 974%Nonaccrual loans $11,216 $10,123 $10,714 $6,734 $2,225 Loans - over 90 days past due 1,815 1,182 10,222 6,096 494 Total non-performing loans 11,216 10,123 10,714 6,734 2,225 OREO and repossessed assets 11 — — 165 165 Total non-performing assets 11,227 10,123 10,714 6,899 2,390 Non-performing loans to total loans held for investment 0.48% 0.42% 0.46% 0.29% 0.10%Non-performing assets to total assets 0.35% 0.31% 0.34% 0.22% 0.08%Non-performing assets to total loans held for investment and OREO 0.48% 0.42% 0.46% 0.30% 0.11%Annualized net charge-offs to average loans 0.03% 0.03% 0.03% 0.02% 0.00%Net charge-offs $184 $165 $172 $120 $16 Interest Rates and Yields: Loans 5.79% 5.49% 5.03% 4.62% 4.25%Securities (1) 2.64% 2.52% 2.53% 2.29% 2.11%Total interest-earning assets (1) 5.33% 4.99% 4.66% 4.17% 3.69%Deposits 2.26% 1.77% 1.20% 0.62% 0.23%Borrowings and repurchase agreements 5.16% 5.09% 4.22% 3.41% 2.79%Total interest-bearing liabilities 2.83% 2.28% 1.63% 0.93% 0.41%Other Information: Full-time equivalent employees 381 401 397 387 391
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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 2023 Earnings Release For the Three Months Ended June 30, 2023 2022 Average
Outstanding
Balance Interest
Income/
Expense Average
Yield/
Rate Average
Outstanding
Balance Interest
Income/
Expense Average
Yield/
Rate Interest-Earning Assets Loans (1) $2,391,229 $34,494 5.79% $2,147,750 $22,755 4.25%Loans held for sale 37,031 321 3.48% 114,223 1,020 3.58%Securities: Taxable investment securities (2) 349,701 2,273 2.60% 417,526 2,095 2.01%Investment securities exempt from
federal income tax (3) 53,042 308 2.94% 55,641 319 2.92%Total securities 402,743 2,581 2.64% 473,167 2,414 2.11%Cash balances in other banks 130,711 1,823 5.59% 144,533 286 0.80%Funds sold 3,593 68 7.59% 7,950 14 0.70%Total interest-earning assets 2,965,307 39,287 5.33% 2,887,623 26,489 3.69%Noninterest-earning assets 231,286 241,241 Total assets $3,196,593 $3,128,864 Interest-Bearing Liabilities Interest-bearing deposits: Interest-bearing transaction accounts $853,818 4,474 2.10% $915,837 638 0.28%Savings and money market deposits 597,860 3,254 2.18% 670,144 467 0.28%Time deposits 792,821 7,363 3.73% 350,929 454 0.52%Total interest-bearing deposits 2,244,499 15,091 2.70% 1,936,910 1,559 0.32%Borrowings and repurchase agreements 126,397 1,625 5.16% 70,516 490 2.79%Total interest-bearing liabilities 2,370,896 16,716 2.83% 2,007,426 2,049 0.41%Noninterest-bearing deposits 433,838 727,705 Total funding sources 2,804,734 2,735,131 Noninterest-bearing liabilities 42,090 32,583 Shareholders’ equity 349,769 361,150 Total liabilities and shareholders’ equity $3,196,593 $3,128,864 Net interest spread (4) 2.50% 3.28%Net interest income/margin (5) $22,571 3.06% $24,440 3.41%
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(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)
Second quarter 2023 Earnings Release For the three months ended For the six months ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 6/30/2023 6/30/2022 Annualized pretax preprovision return on assets Annualized return on assets (GAAP) 0.98% 0.83% 1.31% 1.01% 1.28% 0.91% 1.33%Effect of income tax and provision expense 0.23% 0.51% 0.55% 0.36% 0.42% 0.36% 0.32%Annualized pretax preprovision return on assets 1.21% 1.34% 1.86% 1.37% 1.70% 1.27% 1.65% Annualized return on tangible common equity Annualized return on equity (GAAP) 8.95% 7.41% 11.78% 8.76% 11.08% 8.18% 11.24%Effect of goodwill and other intangibles 1.34% 1.10% 1.81% 1.29% 1.66% 1.22% 1.64%Return on tangible common equity 10.29% 8.51% 13.59% 10.05% 12.74% 9.40% 12.88% Tangible book value per share of common stock Book value per share of common stock (GAAP) $16.64 $16.57 $16.31 $15.84 $16.31 $16.64 $16.31 Effect of goodwill and other intangibles (2.17) (2.14) (2.12) (2.12) (2.14) (2.17) (2.14)Tangible book value per share of common stock $14.47 $14.43 $14.19 $13.72 $14.17 $14.47 $14.17 Tangible book value per share of common stock less after-tax unrealized available for sale investment losses Tangible book value per share of common stock $14.47 $14.43 $14.19 $13.72 $14.17 $14.47 $14.17 Effect of after-tax unrealized losses 2.48 2.13 2.38 2.44 1.69 2.48 1.69 Tangible book value per share of
common stock less after-tax unrealized
available for sale investment losses $16.95 $16.56 $16.57 $16.16 $15.86 $16.95 $15.86 Tangible common equity to tangible assets Equity to Assets (GAAP) 10.93% 10.95% 11.36% 10.97% 11.55% 10.93% 11.55%Effect of goodwill and other intangibles (1.29)% (1.28)% (1.33)% (1.32)% (1.36)% 1.29% 1.36%Tangible common equity to tangible assets 9.64% 9.67% 10.03% 9.65% 10.19% 9.64% 10.19% Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses Tangible common equity to tangible assets 9.64% 9.67% 10.03% 9.65% 10.19% 9.64% 10.19%Effect of after-tax unrealized losses 1.47% 1.27% 1.49% 1.52% 1.08% 1.47% 1.08%Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses 11.11% 10.94% 11.52% 11.17% 11.27% 11.11% 11.27% Adjusted annualized noninterest expense as a percentage of average assets Annualized noninterest expense as a percentage of average assets 2.41% 2.45% 2.11% 2.26% 2.19% 2.43% 2.23%Effect of operational recoveries (losses) 0.00% 0.00% 0.09% -0.28% 0.00% 0.00% 0.00%Effect of the reversal of executive incentives 0.00% 0.00% 0.00% 0.10% 0.00% 0.00% 0.00%Adjusted annualized noninterest expense as a percentage of average assets 2.41% 2.45% 2.20% 2.08% 2.19% 2.43% 2.23%
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, 2023, on a consolidated basis, CapStar had total assets of $3.2 billion, total loans of $2.4 billion, total deposits of $2.7 billion, and shareholders’ equity of $347.5 million. Visit www.capstarbank.com for more information.
NON-GAAP MEASURES
Certain releases may 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 charges that are not considered part of recurring operations. Such measures may include: “Annualized pre-tax pre-provision return on assets”, “Annualized return on tangible common equity”, “Tangible book value per share of common stock,” “Tangible book value per share of common stock less after-tax unrealized losses”, “Tangible common equity to tangible assets”, “Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses”, “Adjusted annualized noninterest expense as a percentage of average assets”, or other measures.
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.
FORWARD-LOOKING STATEMENTS
This investor presentation contains forward-looking statements, as defined by federal securities laws, including statements about CapStar Financial Holdings, Inc. (“CapStar”) and its financial outlook and business environment. All statements, other than statements of historical fact, included in this release and any oral statements made regarding the subject of this release, including in the conference call referenced herein, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are “forward-looking statements“ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1955. The words “expect“, “anticipate”, “intend”, “may”, “should”, “plan”, “believe”, “seek“, “estimate“ and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (I) deterioration in the financial condition of borrowers of the Company and its subsidiaries, resulting in significant increases in loan losses and provisions for those losses; (II) the ability to grow and retain low-cost, core deposits and retain large, uninsured deposits, including during times when the Company is seeking to lower rates it pays on deposits; (III) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on the Company’s results, including as a result of compression to net interest margin; (IV) fluctuations or differences in interest rates on loans or deposits from those that the Company is modeling or anticipating, including as a result of the Company’s inability to better match deposit rates with the changes in the short term rate environment, or that affect the yield curve; (V) difficulties and delays in integrating required businesses or fully realizing cost savings or other benefits from acquisitions; (VI) the Company‘s ability to profitably grow its business and successfully execute on its business plans; (VII) any matter that would cause the Company to conclude that there was impairment of any asset, including goodwill or other intangible assets; (VIII) the vulnerability of the Company’s network and online banking portals, and the systems of customers or parties with whom the Company contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (IX) the availability of and access to capital; and (X) general competitive, economic, political and market conditions. Additional factors which could affect the forward-looking statements can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed with the SEC. The Company disclaims any obligation to update or revise any forward-looking statements contained in this press release (we speak only as of the date hereof ), whether as a result of new information, future events, or otherwise.
CONTACT
Michael J. Fowler
Chief Financial Officer
(615) 732-7404
