NASHVILLE, Tenn., 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 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.
CONTACT
Michael J. Fowler
Chief Financial Officer
(615) 732-7404
