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CapStar Financial Holdings, Inc. Reports Third Quarter 2020 Results

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NASHVILLE, Tenn., Oct. 22, 2020 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported third quarter net income of $7.5 million and pre-tax pre-provision income of $11.7 million. Diluted earnings per share were $0.34, a decrease of $0.01 from the third quarter of 2019. Return on average assets and return on average equity for the third quarter of 2020 was 0.98% and 9.26%, respectively.

Excluding merger-related charges of $2.5 million, diluted operating(1) earnings per share were $0.43, an increase of $0.07 from the third quarter of 2019. On an operating basis, return on average assets was 1.22% and return on average tangible common equity was 13.76%. Net income and operating earnings for the quarter include a loss on previously terminated interest rate swaps of $1.9 million which will improve earnings through mid-2023 by approximately $700,000 per year, gain on sale of $394,000 for two dormant branches acquired in the Athens Federal acquisition, and provision for loan losses of $2.1 million.

“I am extremely proud of our team and continued accomplishments during what has been an unexpected and challenging year,” said Timothy K. Schools, President and Chief Executive Officer. “Through a difficult economic and interest rate environment, we have remained focused on taking care of our customers, practicing sound risk management, and producing strong pre-tax pre-provision income, while continuing to invest in growth. This quarter, our operating pre-tax pre-provision income to assets, excluding the swap related expense and branch gain on sale, rose to 2.06%. This is the result of record mortgage banking revenue as well as improvements within the overall bank. Importantly, we have made significant investments in growth with our Knoxville expansion, hiring of additional Middle Tennessee Relationship Managers, and our FCB acquisition. Each of these present a substantial opportunity and have begun to capitalize on our non-customer PPP relationships.”

“While the economic and political outlook remain uncertain, we are observing stabilization and a gradual increase in economic activity. Our credit quality remains strong as a result of sound underwriting, proactive portfolio management, and the benefits of economic stimulus. As anticipated, we have seen an increase in our criticized loans due to the pandemic. However, past dues remain stable and loan deferrals are now in place for only about 40 customers totaling 4.7% of total loans held for investment. It has been inspiring to observe the commitment our employees have to serving our customers, communities, and shareholders during this challenging time. Our team is energized and excited to build on the momentum we have put into place over the past year.”

Profitability

  • Operating annualized pre-tax pre-provision income to average assets for the three months ended September 30, 2020 was 1.86% compared to 1.70% for the same period in 2019.

  • Operating annualized return on average assets for the three months ended September 30, 2020 was 1.22% compared to 1.31% for the same period in 2019.

  • Operating annualized return on average tangible equity for the three months ended September 30, 2020 was 13.76% compared to 11.83% for the same period in 2019.

  • Adjusted for the terminated interest rate swaps, net interest margin was 2.98% compared to 3.66% for the same period in 2019. Increased cash due to significant deposit growth since March 31, 2020 negatively impacted net interest margin by 42 bps.

  • The operating efficiency ratio for the three months ended September 30, 2020 was 58.59% compared to 64.08% for the same period in 2019.

Growth

  • Pre-tax pre-provision earnings for the quarter ended September 30, 2020 increased 39.3% to $11.7 million, compared to $8.4 million for the quarter ended September 30, 2019.

  • Deposit growth for the quarter ended September 30, 2020, was $80.6 million or 12.8% annualized, subsequent to the FCB acquisition.

  • Loan growth for the quarter ended September 30, 2020, was $17.5 million or 3.7% annualized, subsequent to the FCB acquisition.

  • Tangible book value per share for the quarter ended September 30, 2020 increased 6.2% to $12.92, compared to $12.17 for the quarter ended September 30, 2019.

Soundness

  • The total risk-based capital ratio was 15.96% at September 30, 2020 compared to 13.46% at September 30, 2019.

  • The allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, was 1.61%.

  • Non-performing assets to total loans and OREO were 0.16% at September 30, 2020 compared to 0.19% at September 30, 2019.

  • Annualized net charge offs to average loans were (0.00)% for the three months ended September 30, 2020 compared to (0.01)% for the same period in 2019.

(1) Operating measures exclude merger-related expenses unrelated to CapStar’s normal operations. For a discussion and reconciliation of the Non-GAAP operating measures that exclude merger-related costs unrelated to CapStar’s normal operations, see the section titled “Non-GAAP Disclaimer” and the Non-GAAP financial measures section of the financial statements.

Dividend

On October 22, 2020, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on November 25, 2020 to shareholders of record of CapStar’s common stock as of the close of business on November 11, 2020.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, October 23, 2020. During the call, management will review the third quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 5490625. 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 September 30, 2020, on a consolidated basis, CapStar had total assets of $3.02 billion, total loans of $1.91 billion, total deposits of $2.62 billion, and shareholders’ equity of $333.9 million. Visit www.capstarbank.com for more information.

FORWARD-LOOKING STATEMENTS

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 effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the Covid-19 pandemic and its impact on general economic and financial market conditions and on the Company’s customer’s business, results of operations, asset quality and financial condition; (III) 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; (IV) 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; (V) 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; (VI) difficulties and delays in integrating required businesses or fully realizing cost savings or other benefits from acquisitions; (VII) the Company‘s ability to profitably grow its business and successfully execute on its business plans; (VIII) any matter that would cause the Company to conclude that there was impairment of any asset, including goodwill or other intangible assets; (IX) 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; (X) the availability of and access to capital; (XI) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals, and/or other negative affects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the Covid-19 pandemic; and (XII) 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.

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)
Third quarter 2020 Earnings Release

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Interest income:

Loans, including fees

$

22,796

$

21,005

$

61,620

$

62,596

Securities:

Taxable

1,193

1,028

3,465

3,540

Tax-exempt

343

354

975

1,093

Federal funds sold

1

26

Restricted equity securities

139

183

421

584

Interest-bearing deposits in financial institutions

171

645

640

1,502

Total interest income

24,642

23,216

67,121

69,341

Interest expense:

Interest-bearing deposits

640

2,102

3,371

5,523

Savings and money market accounts

2,537

1,944

4,819

5,445

Time deposits

1,299

1,887

4,197

5,917

Federal funds purchased

4

Securities sold under agreements to repurchase

5

Federal Home Loan Bank advances

116

127

348

1,281

Subordinated notes

394

394

Total interest expense

4,986

6,060

13,129

18,175

Net interest income

19,656

17,156

53,992

51,166

Provision for loan losses

2,119

(125

)

11,295

761

Net interest income after provision for loan losses

17,537

17,281

42,697

50,405

Noninterest income:

Treasury management and other deposit service charges

1,064

788

2,531

2,399

Net gain (loss) on sale of securities

34

74

(108

)

Tri-Net fees

668

847

2,528

2,511

Mortgage banking income

9,686

2,679

19,063

7,151

Wealth management fees

382

379

1,162

1,018

Interchange and debit card transaction fees

936

754

2,389

2,323

Other noninterest income

2,034

1,341

3,753

3,261

Total noninterest income

14,804

6,788

31,500

18,555

Noninterest expense:

Salaries and employee benefits

12,949

9,229

33,256

26,224

Data processing and software

2,353

1,790

6,317

5,126

Professional fees

638

528

1,854

1,571

Occupancy

999

858

2,615

2,550

Equipment

864

1,012

2,295

2,890

Regulatory fees

397

18

893

564

Merger related expenses

2,548

187

3,286

2,491

Amortization of intangibles

539

408

1,300

1,258

Other operating

1,452

1,501

4,067

4,054

Total noninterest expense

22,739

15,531

55,883

46,728

Income before income taxes

9,602

8,538

18,314

22,232

Income tax expense

2,115

2,072

3,299

5,231

Net income

$

7,487

$

6,466

$

15,015

$

17,001

Per share information:

Basic net income per share of common stock

$

0.34

$

0.36

$

0.77

$

0.96

Diluted net income per share of common stock

$

0.34

$

0.35

$

0.77

$

0.91

Weighted average shares outstanding:

Basic

21,948,579

17,741,778

19,558,281

17,729,518

Diluted

21,960,490

18,532,479

19,583,448

18,670,280

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)
Third quarter 2020 Earnings Release

Five Quarter Comparison

9/30/20

6/30/20

3/31/20

12/31/19

9/30/19

Income Statement Data:

Net interest income

$

19,656

$

17,675

$

16,661

$

16,581

$

17,156

Provision for loan losses

2,119

1,624

7,553

(125

)

Net interest income after provision for loan losses

17,537

16,051

9,108

16,581

17,281

Treasury management and other deposit service charges

1,064

691

775

736

788

Net gain on sale of securities

34

13

27

9

Tri-Net fees

668

1,260

599

274

847

Mortgage banking income

9,686

7,123

2,253

2,316

2,679

Wealth management fees

382

374

407

407

379

Interchange and debit card transaction fees

936

729

724

928

754

Other noninterest income

2,034

633

1,089

1,049

1,341

Total noninterest income

14,804

10,823

5,874

5,719

6,788

Salaries and employee benefits

12,949

12,305

8,002

9,318

9,229

Data processing and software

2,353

2,100

1,864

1,835

1,790

Professional fees

638

581

636

531

528

Occupancy

999

797

820

795

858

Equipment

864

680

751

834

1,012

Regulatory fees

397

333

163

28

18

Merger related expenses

2,548

448

290

163

187

Amortization of intangibles

539

375

386

397

408

Other operating

1,452

1,315

1,299

1,365

1,501

Total noninterest expense

22,739

18,934

14,211

15,266

15,531

Net income before income tax expense

9,602

7,940

771

7,034

8,538

Income tax (benefit) expense

2,115

1,759

(575

)

1,613

2,072

Net income

$

7,487

$

6,181

$

1,346

$

5,421

$

6,466

Weighted average shares - basic

21,948,579

18,307,083

18,392,913

18,350,994

17,741,778

Weighted average shares - diluted

21,960,490

18,320,006

18,443,725

18,443,916

18,532,479

Net income per share, basic

$

0.34

$

0.34

$

0.07

$

0.30

$

0.36

Net income per share, diluted

0.34

0.34

0.07

0.29

0.35

Balance Sheet Data (at period end):

Cash and cash equivalents

$

455,925

$

368,820

$

91,450

$

101,269

$

154,021

Securities available-for-sale

308,337

223,034

219,213

213,129

203,500

Securities held-to-maturity

2,413

2,699

3,306

3,313

3,319

Loans held for sale

198,603

129,807

186,937

168,222

129,613

Total loans

1,906,603

1,592,725

1,446,835

1,420,102

1,411,768

Allowance for loan losses

(23,167

)

(21,035

)

(20,114

)

(12,604

)

(12,828

)

Total assets

3,024,348

2,445,172

2,072,585

2,037,201

2,033,911

Non-interest-bearing deposits

716,707

546,974

442,789

312,096

352,266

Interest-bearing deposits

1,900,835

1,548,591

1,320,920

1,417,355

1,379,497

Federal Home Loan Bank advances and other borrowings

39,418

39,464

10,000

10,000

10,000

Total liabilities

2,690,453

2,163,222

1,796,795

1,764,155

1,765,829

Shareholders' equity

$

333,895

$

281,950

$

275,790

$

273,046

$

268,082

Total shares of common stock outstanding

21,947,805

18,302,188

18,307,802

18,361,922

18,343,403

Book value per share of common stock

$

15.21

$

15.41

$

15.06

$

14.87

$

14.61

Tangible book value per share of common stock*

12.92

13.02

12.66

12.45

12.17

Market value per share of common stock

$

9.81

$

12.00

$

9.89

$

16.65

$

16.58

Capital ratios:

Total risk based capital

15.96

%

16.76

%

13.68

%

13.45

%

13.46

%

Tier 1 risk based capital

13.39

%

13.76

%

12.56

%

12.73

%

12.71

%

Common equity tier 1 capital

13.39

%

13.76

%

12.56

%

12.73

%

12.71

%

Leverage

9.23

%

10.08

%

11.23

%

11.37

%

11.24

%

_____________________
*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)
Third quarter 2020 Earnings Release

Five Quarter Comparison

9/30/20

6/30/20

3/31/20

12/31/19

9/30/19

Average Balance Sheet Data:

Cash and cash equivalents

$

526,409

$

257,709

$

114,272

$

115,100

$

129,114

Investment securities

323,689

238,762

226,537

225,265

211,460

Loans held for sale

156,123

176,193

180,401

140,731

101,835

Loans

1,906,449

1,560,626

1,421,256

1,431,027

1,445,755

Assets

3,043,847

2,350,021

2,059,306

2,030,231

2,005,950

Interest bearing deposits

1,957,259

1,519,877

1,411,666

1,388,496

1,370,988

Deposits

2,648,465

2,031,924

1,735,635

1,711,021

1,704,873

Federal Home Loan Bank advances and other borrowings

39,431

10,966

20,989

22,391

12,174

Liabilities

2,722,341

2,068,408

1,780,756

1,758,663

1,739,509

Shareholders' equity

321,506

281,614

278,550

271,568

266,441

Performance Ratios:

Annualized return on average assets

0.98

%

1.06

%

0.26

%

1.06

%

1.28

%

Annualized return on average equity

9.26

%

8.83

%

1.94

%

7.92

%

9.63

%

Net interest margin (1)

2.72

%

3.23

%

3.50

%

3.49

%

3.66

%

Annualized Noninterest income to average assets

1.93

%

1.85

%

1.15

%

1.12

%

1.34

%

Efficiency ratio

65.99

%

66.44

%

63.06

%

68.46

%

64.87

%

Loans by Type (at period end):

Commercial and industrial

$

648,018

$

621,541

$

447,311

$

394,408

$

382,816

Commercial real estate - owner occupied

164,336

147,682

166,652

172,456

169,370

Commercial real estate - non-owner occupied

480,106

408,402

378,170

387,443

407,378

Construction and development

176,751

117,830

141,087

143,111

132,222

Consumer real estate

350,238

238,696

248,243

256,097

254,736

Consumer

42,104

27,542

27,739

28,426

29,059

Other

45,050

31,032

37,633

38,161

36,187

Asset Quality Data:

Allowance for loan losses to total loans

1.22

%

1.32

%

1.39

%

0.89

%

0.91

%

Allowance for loan losses to non-performing loans

787

%

705

%

550

%

861

%

754

%

Nonaccrual loans

$

2,945

$

2,982

$

3,658

$

1,464

$

1,701

Troubled debt restructurings

1,886

1,228

1,306

2,717

2,725

Loans - over 89 days past due and accruing

541

639

399

38

551

Total non-performing loans

2,945

2,982

3,658

1,464

1,701

OREO and repossessed assets

171

147

147

1,044

914

Total non-performing assets

3,116

3,129

3,805

2,508

2,615

Non-performing loans to total loans

0.15

%

0.19

%

0.25

%

0.10

%

0.12

%

Non-performing assets to total assets

0.10

%

0.13

%

0.18

%

0.12

%

0.13

%

Non-performing assets to total loans and OREO

0.16

%

0.20

%

0.26

%

0.18

%

0.19

%

Annualized net charge-offs (recoveries) to average loans

(0.00

)%

0.18

%

0.01

%

0.06

%

(0.01

)%

Net charge-offs (recoveries)

$

(13

)

$

703

$

43

$

224

$

(50

)

Interest Rates and Yields:

Loans

4.47

%

4.50

%

5.10

%

5.24

%

5.48

%

Securities (1)

2.18

%

2.73

%

3.04

%

3.00

%

3.14

%

Total interest-earning assets (1)

3.41

%

3.78

%

4.56

%

4.67

%

4.95

%

Deposits

0.67

%

0.59

%

1.14

%

1.27

%

1.38

%

Borrowings and repurchase agreements

5.14

%

3.16

%

2.77

%

2.88

%

4.12

%

Total interest-bearing liabilities

0.99

%

0.81

%

1.43

%

1.58

%

1.74

%

Other Information:

Full-time equivalent employees

403

286

288

289

290

_____________________

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)
Third quarter 2020 Earnings Release

For the Three Months Ended September 30,

2020

2019

Average
Outstanding
Balance

Interest
Income/
Expense

Average
Yield/
Rate

Average
Outstanding
Balance

Interest
Income/
Expense

Average
Yield/
Rate

Interest-Earning Assets

Loans (1)

$

1,906,449

$

21,398

4.47

%

$

1,445,755

$

19,955

5.48

%

Loans held for sale

156,123

1,398

3.56

%

101,835

1,050

4.09

%

Securities:

Taxable investment securities (2)

271,838

1,332

1.96

%

160,528

1,211

3.02

%

Investment securities exempt from
federal income tax (3)

51,851

343

3.35

%

50,932

354

3.52

%

Total securities

323,689

1,675

2.18

%

211,460

1,565

3.14

%

Cash balances in other banks

499,770

171

0.14

%

110,690

645

2.31

%

Funds sold

144

1

3.46

%

Total interest-earning assets

2,886,031

24,642

3.41

%

1,869,884

23,216

4.95

%

Noninterest-earning assets

157,816

136,066

Total assets

$

3,043,847

$

2,005,950

Interest-Bearing Liabilities

Interest-bearing deposits:

Interest-bearing transaction accounts

$

840,926

640

0.30

%

$

527,759

2,102

1.58

%

Savings and money market deposits

610,942

2,537

1.65

%

494,183

1,944

1.56

%

Time deposits

505,391

1,299

1.02

%

349,046

1,887

2.14

%

Total interest-bearing deposits

1,957,259

4,476

0.91

%

1,370,988

5,933

1.72

%

Borrowings and repurchase agreements

39,431

510

5.14

%

12,174

127

4.12

%

Total interest-bearing liabilities

1,996,690

4,986

0.99

%

1,383,162

6,060

1.74

%

Noninterest-bearing deposits

691,205

333,885

Total funding sources

2,687,895

1,717,047

Noninterest-bearing liabilities

34,446

22,462

Shareholders’ equity

321,506

266,441

Total liabilities and shareholders’ equity

$

3,043,847

$

2,005,950

Net interest spread (4)

2.42

%

3.21

%

Net interest income/margin (5)

$

19,656

2.72

%

$

17,156

3.66

%

_____________________
(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)
Third quarter 2020 Earnings Release

Three Months Ended

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Operating net income:

Net income

$

7,487

$

6,181

$

1,346

$

5,421

$

6,466

Add: merger related expenses

2,548

448

290

163

187

Less: income tax impact of merger related expenses

(666

)

(117

)

(76

)

(43

)

(49

)

Operating net income

$

9,369

$

6,512

$

1,560

$

5,541

$

6,604

Operating diluted net income per share of common stock:

Operating net income

$

9,369

$

6,512

$

1,560

$

5,541

$

6,604

Weighted average shares - diluted

21,960,490

18,320,006

18,443,725

18,443,916

18,532,479

Operating diluted net income per share of common stock

$

0.43

$

0.36

$

0.08

$

0.30

$

0.36

Operating annualized return on average assets:

Operating net income

$

9,369

$

6,512

$

1,560

$

5,541

$

6,604

Average assets

3,043,847

2,350,021

2,059,306

2,030,231

2,005,950

Operating annualized return on average assets

1.22

%

1.11

%

0.30

%

1.08

%

1.31

%

Operating annualized return on average tangible equity:

Average total shareholders' equity

$

321,506

$

281,614

$

278,550

$

271,568

$

266,441

Less: average intangible assets

(50,577

)

(43,871

)

(44,253

)

(44,646

)

(45,050

)

Average tangible equity

270,929

237,743

234,297

226,922

221,391

Operating net income

$

9,369

$

6,512

$

1,560

$

5,541

$

6,604

Operating annualized return on average tangible equity

13.76

%

11.02

%

2.68

%

9.69

%

11.83

%

Operating efficiency ratio:

Total noninterest expense

$

22,739

$

18,934

$

14,211

$

15,266

$

15,531

Less: merger related expenses

(2,548

)

(448

)

(290

)

(163

)

(187

)

Total operating noninterest expense

20,191

18,486

13,921

15,103

15,344

Net interest income

19,656

17,675

16,661

16,581

17,156

Total noninterest income

14,804

10,823

5,874

5,719

6,788

Total revenues

$

34,460

$

28,498

$

22,535

$

22,300

$

23,944

Operating efficiency ratio:

58.59

%

64.87

%

61.78

%

67.73

%

64.08

%

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

Income before income taxes

$

9,602

$

7,940

$

771

$

7,034

$

8,538

Add: merger related expenses

2,548

448

290

163

187

Add: provision for loan losses

2,119

1,624

7,553

(125

)

Operating pre-tax pre-provision income

14,269

10,012

8,614

7,197

8,600

Average assets

$

3,043,847

$

2,350,021

$

2,059,306

$

2,030,231

$

2,005,950

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

1.86

%

1.71

%

1.68

%

1.41

%

1.70

%

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Tangible Equity:

Total shareholders' equity

$

333,895

$

281,950

$

275,790

$

273,046

$

268,082

Less: intangible assets

(50,222

)

(43,633

)

(44,008

)

(44,393

)

(44,790

)

Tangible equity

$

283,673

$

238,317

$

231,782

$

228,653

$

223,292

Tangible Common Equity:

Tangible equity

$

283,673

$

238,317

$

231,782

$

228,653

$

223,292

Less: preferred equity

Tangible common equity

$

283,673

$

238,317

$

231,782

$

228,653

$

223,292

Tangible Book Value per Share of Common Stock:

Tangible common equity

$

283,673

$

238,317

$

231,782

$

228,653

$

223,292

Total shares of common stock outstanding

21,947,805

18,302,188

18,307,802

18,361,922

18,343,403

Tangible book value per share of common stock

$

12.92

$

13.02

$

12.66

$

12.45

$

12.17


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2020 Earnings Release

Nine Months Ended

September 30, 2020

September 30, 2019

Operating net income:

Net income

$

15,015

$

17,001

Add: merger related expenses

3,286

2,491

Less: income tax impact of merger related expenses

(859

)

(651

)

Operating net income

$

17,442

$

18,841

Operating diluted net income per share of common stock:

Operating net income

$

17,442

$

18,841

Weighted average shares - diluted

19,583,448

18,670,280

Operating diluted net income per share of common stock

$

0.89

$

1.01

Operating annualized return on average assets:

Operating net income

$

17,442

$

18,841

Average assets

$

2,486,433

$

1,999,609

Operating annualized return on average assets

0.94

%

1.26

%

Operating annualized return on average tangible equity:

Average total shareholders' equity

$

293,990

$

261,615

Less: average intangible assets

(46,249

)

(45,462

)

Average tangible equity

247,741

216,153

Operating net income

$

17,442

$

18,841

Operating annualized return on average tangible equity

9.40

%

11.65

%

Operating efficiency ratio:

Total noninterest expense

$

55,883

$

46,728

Less: merger related expenses

(3,286

)

(2,491

)

Total operating noninterest expense

52,597

44,237

Net interest income

53,992

51,166

Total noninterest income

31,500

18,555

Total revenues

$

85,492

$

69,721

Operating efficiency ratio:

61.52

%

63.45

%

CONTACT

Denis J. Duncan
Chief Financial Officer
(615) 732-7492