U.S. markets closed
  • S&P Futures

    4,278.50
    -8.00 (-0.19%)
     
  • Dow Futures

    33,941.00
    -40.00 (-0.12%)
     
  • Nasdaq Futures

    13,495.50
    -27.75 (-0.21%)
     
  • Russell 2000 Futures

    1,995.20
    -6.50 (-0.32%)
     
  • Crude Oil

    90.41
    -0.09 (-0.10%)
     
  • Gold

    1,767.80
    -3.40 (-0.19%)
     
  • Silver

    19.33
    -0.13 (-0.69%)
     
  • EUR/USD

    1.0079
    -0.0013 (-0.13%)
     
  • 10-Yr Bond

    2.8800
    -0.0130 (-0.45%)
     
  • Vix

    19.56
    -0.34 (-1.71%)
     
  • GBP/USD

    1.1914
    -0.0019 (-0.16%)
     
  • USD/JPY

    136.2620
    +0.4000 (+0.29%)
     
  • BTC-USD

    22,825.07
    -637.00 (-2.72%)
     
  • CMC Crypto 200

    541.73
    -16.00 (-2.87%)
     
  • FTSE 100

    7,541.85
    +26.10 (+0.35%)
     
  • Nikkei 225

    28,959.63
    +17.49 (+0.06%)
     

CapStar Reports Fourth Quarter 2021 Results

  • Oops!
    Something went wrong.
    Please try again later.
·30 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

NASHVILLE, Tenn., Jan. 27, 2022 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported net income of $12.5 million or $0.56 per diluted share, for the quarter ended December 31, 2021, compared with net income of $13.1 million or $0.59 per diluted share, for the quarter ended September 30, 2021, and net income of $9.7 million or $0.44 per diluted share, for the quarter ended December 31, 2020. Annualized return on average assets and return on average equity for the quarter ended December 31, 2021 were 1.57 percent and 13.11 percent, respectively. Fourth quarter 2020 earnings included acquisition related expenses totaling $2.1 million.

For the twelve months ended December 31, 2021, the Company reported net income of $48.7 million or $2.19 per diluted share, compared with $24.7 million or $1.22 per diluted share, for the same period of 2020. Year to date 2021 return on average assets and return on average equity were 1.56 percent and 13.38 percent, respectively. The twelve months ended December 31, 2021 and 2020 included acquisition related expenses of $0.3 million and $5.4 million, respectively.

Four Key Drivers

Targets

2021

4Q21

3Q21

Q420

Annualized revenue growth

> 5

%

11.94

%

-5.61

%

20.49

%

-4.40

%

Net interest margin

≥ 3.60

%

3.16

%

3.14

%

3.12

%

3.12

%

Efficiency ratio

≤ 55

%

54.94

%

54.74

%

53.06

%

63.02

%

Annualized net charge-offs to average loans

≤ 0.25

%

0.03

%

0.04

%

0.05

%

0.02

%

“The employees of CapStar delivered outstanding fourth quarter and yearly results. Their commitment to excellence led to many expanded and new customer relationships and helped us operate the company in a more productive manner,” said Timothy K. Schools President and Chief Executive Officer of CapStar. “Like many banks, CapStar experienced record earnings in 2021. However, it is the positive developments and many successes occurring across the company that make me proud and excited for our future. Of note, our team has improved our organic revenue growth capabilities, gained increased operating discipline around balance sheet and expense management, and developed active plans for significant excess capital that is currently held on our balance sheet as cash.”

“CapStar has built a winning culture, and the Company's improved operating performance, superior markets and size have us well positioned in 2022 and beyond to be an attractive destination for high performance employees and customers seeking a more personal banking experience. It is an exciting time at CapStar and we thank our employees, customers, and business partners for a great year.”

Revenue

Total revenue, defined as net interest income plus noninterest income, totaled $34.1 million in the fourth quarter, the third highest in Company history. This represents a decline of $0.5 million from the previous quarter, which was the highest revenue produced in Company history. Net interest income totaled $23.0 million, equal to the third quarter of 2021, while fourth quarter 2021 noninterest income totaled $11.1 million, a decrease of $0.5 million from the prior quarter. Interchange and debit card fees as well as the Company’s Tri-Net division achieved record results offset by declines in mortgage and SBA revenues each of which had particularly strong third quarters.

The Company continues to have excess liquidity providing the opportunity to increase net interest income without having to grow average earning assets by replacing lower yielding cash and securities with higher yielding loan balances. As a result, fourth quarter 2021 average earning assets remained relatively flat at $2.92 billion compared to September 30, 2021. As occurred throughout the year, loan growth continued to accelerate during the quarter. Average loans held for investment, excluding PPP balances, increased $56.4 million from the prior quarter, or 12.5 percent linked-quarter annualized. End of period loans held for investment, excluding PPP balances, increased $109.2 million, or 23.7 percent linked-quarter annualized, of which approximately $53.1 million originated through the Company's mid-fourth quarter Chattanooga expansion. Over the past two years, the Company successfully strengthened its in-market organic loan capabilities with fourth quarter annualized loans held for investment production of $1.02 billion compared to total actual production of $674.0 million, $445.4 million, and $296.4 million in 2021, 2020, and 2019 respectively. The current commercial loan pipeline exceeds $500 million, presenting the Company a tremendous opportunity to utilize current excess liquidity and capital to grow revenue and net income.

For the fourth quarter of 2021, the net interest margin increased 2 basis points from the prior quarter to 3.14 percent primarily resulting from an increase in non-PPP loans with higher rates and improved yields in the investment portfolio. Adjusting for the influence of PPP and excess deposits accumulated during the pandemic, the Company estimates its fourth quarter 2021 net interest margin was 3.40 percent, a 4 basis point increase compared to the third quarter of 2021. While the Company is managing to a more neutral interest rate risk profile in order to enhance earnings consistency, net interest income over the next year is expected to benefit modestly from rising rates.

The Company's average deposits totaled $2.71 billion in the fourth quarter of 2021, a slight decrease from the Company's record level of $2.73 billion for the third quarter of 2021. During the quarter, the Company experienced a $23.2 million reduction in higher cost average time deposits and $19.9 million decrease in average interest-bearing transaction accounts. These decreases were offset by a $27.5 million increase in average savings and money market deposits, creating an overall net decrease of $15.7 million in average interest-bearing deposits when compared to the third quarter of 2021. 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. During the quarter, the Company’s lowest cost deposit category, noninterest bearing, comprised 27.6 percent of total average deposits, consistent with the third quarter ended September 30, 2021. Total deposit costs remained flat for the fourth quarter at 0.19 percent.

The Company's unique fee businesses continue to support non-interest income, which has exceeded 30 percent of total revenue for the past seven quarters. Noninterest income during the quarter benefitted from record Tri-Net revenue, contributing a $2.1 million improvement when compared to the quarter ended September 30, 2021. Additionally, the Company produced record interchange and debit card revenues as it relates to the Company's core banking. These increases were offset by a $2.0 million decline in mortgage banking, as the residential housing market returns to more normalized levels, and $0.6 million decline in SBA revenue following the divisions second highest results in Company history.

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 increased $0.3 million from the third quarter of 2021 to $18.7 million in the fourth quarter of 2021. Excluding $0.4 million in costs associated with the Company's recent Chattanooga expansion, noninterest expense declined from the prior quarter.

For the quarter ended December 31, 2021, the efficiency ratio was 54.74 percent, an increase from 53.06 percent in the third quarter of 2021. Annualized noninterest expense as a percentage of average assets increased 5 basis points to 2.35 percent for the quarter ended December 31, 2021 compared to 2.30 percent for the quarter ended September 30, 2021. Assets per employee remained unchanged at $7.9 million as of December 31, 2021 compared to 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 December 31, 2021, improved to 0.04 percent. Past due loans as a percentage of total loans held for investment improved to 0.25 percent at December 31, 2021 compared to 0.31 percent at September 30, 2021. Within this amount, loans greater than 89 days past due totaled $2.1 million, or 0.11 percent of loans held for investment at December 31, 2021, compared to 0.12 percent at September 30, 2021. Non-performing assets to total loans and OREO were 0.18 percent at December 31, 2021, a 2 basis point improvement from 0.20 percent at September 30, 2021. Criticized and classified loans to total loans, which elevated during the pandemic, continued to improve and were 2.64 percent at December 31, 2021, a 21 basis point decline from September 30, 2021. Overall, the Company's asset quality metrics are approaching pre-pandemic levels.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses, the Company released reserves during the quarter based on improved asset quality trends and other qualitative factors. In addition to providing reserves for the strong loan growth experienced during the fourth quarter, the allowance for loan losses declined $0.7 million. As a result, the allowance for loan losses plus the fair value mark on acquired loans to total loans, less PPP loans, declined 14 basis points to 1.27 percent at December 31, 2021 from 1.41 percent at September 30, 2021.

Asset Quality Data:

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Annualized net charge-offs to average loans

0.04

%

0.05

%

0.01

%

0.00

%

0.02

%

Criticized and classified loans to total loans

2.64

%

2.85

%

3.95

%

4.39

%

5.46

%

Classified loans to total risk-based capital

7.49

%

7.16

%

7.69

%

10.51

%

11.08

%

Loans past due to total end of period loans

0.25

%

0.31

%

0.49

%

0.44

%

1.12

%

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

0.11

%

0.12

%

0.13

%

0.14

%

0.23

%

Non-performing assets to total loans and OREO

0.18

%

0.20

%

0.22

%

0.30

%

0.28

%

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

1.27

%

1.41

%

1.47

%

1.60

%

1.58

%

Allowance for loan losses to non-performing loans

666

%

657

%

571

%

446

%

483

%

Income Tax Expense

The Company’s fourth quarter effective income tax rate increased to approximately 22.5% compared to 19.4% for the prior quarter ended September 30, 2021. The Company's 2021 effective tax rate was 21.0 percent, a 1.0 percent increase from the forecasted rate due primarily to an increase in taxable income for the full year when compared to the previous interim estimate.

Capital

The Company continues to be well capitalized with tangible equity of $332.3 million at December 31, 2021. Tangible book value per share of common stock for the quarter ended December 31, 2021 increased to $14.99 compared to $14.53 and $13.36 for the quarters ended September 30, 2021 and December 31, 2020, respectively. The regulatory capital ratios in the table below are significantly above levels required to be considered “well capitalized," which is the highest possible regulatory designation.

Capital ratios:

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Total risk-based capital

16.29

%

16.23

%

16.13

%

16.29

%

16.03

%

Common equity tier 1 capital

14.11

%

13.95

%

13.78

%

13.79

%

13.52

%

Leverage

10.69

%

10.28

%

10.17

%

9.78

%

9.60

%

In the fourth quarter of 2021, the Company did not repurchase common stock under its share repurchase program; however, on January 27, 2022, the Board of Directors of the Company renewed a common stock share repurchase up to $30 million. 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 January 27, 2022, the Board of Directors of the Company approved a quarterly dividend of $0.06 per common share payable on February 23, 2022 to shareholders of record of CapStar’s common stock as of the close of business on February 9, 2022.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, January 28, 2022. During the call, management will review the fourth quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 2095058. 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 December 31, 2021, on a consolidated basis, CapStar had total assets of $3.1 billion, total loans of $2.0 billion, total deposits of $2.7 billion, and shareholders’ equity of $380.1 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)
Fourth quarter 2021 Earnings Release

Three Months Ended

Year Ended

December 31,

December 31,

2021

2020

2021

2020

Interest income:

Loans, including fees

$

22,284

$

22,653

$

89,219

$

84,272

Securities:

Taxable

1,682

1,412

6,573

4,863

Tax-exempt

335

354

1,408

1,342

Federal funds sold

9

21

Restricted equity securities

157

155

640

576

Interest-bearing deposits in financial institutions

192

158

598

799

Total interest income

24,659

24,732

98,459

91,852

Interest expense:

Interest-bearing deposits

410

497

1,626

3,868

Savings and money market accounts

307

377

1,203

5,196

Time deposits

556

1,121

2,873

5,317

Federal Home Loan Bank advances

8

12

356

Subordinated notes

394

398

1,575

792

Total interest expense

1,667

2,401

7,289

15,529

Net interest income

22,992

22,331

91,170

76,323

Provision for loan losses

(651

)

184

(1,066

)

11,479

Net interest income after provision for loan losses

23,643

22,147

92,236

64,844

Noninterest income:

Deposit service charges

1,117

964

4,515

3,494

Interchange and debit card transaction fees

1,261

782

4,816

3,172

Mortgage banking income

2,740

5,971

16,058

25,034

Tri-Net

3,996

1,165

8,613

3,693

Wealth management

438

411

1,850

1,573

SBA lending

279

916

2,060

1,440

Net gain on sale of securities

8

51

28

125

Other noninterest income

1,295

1,488

4,741

4,717

Total noninterest income

11,134

11,748

42,681

43,248

Noninterest expense:

Salaries and employee benefits

10,549

11,996

41,758

45,252

Data processing and software

2,719

2,548

11,248

8,865

Occupancy

1,012

975

4,205

3,590

Equipment

867

900

3,507

3,195

Professional services

521

370

2,155

2,224

Regulatory fees

284

368

1,031

1,261

Acquisition related expenses

2,105

323

5,390

Amortization of intangibles

461

524

1,939

1,824

Other operating

2,269

1,692

7,375

5,760

Total noninterest expense

18,682

21,478

73,541

77,361

Income before income taxes

16,095

12,417

61,376

30,731

Income tax expense

3,625

2,736

12,699

6,035

Net income

$

12,470

$

9,681

$

48,677

$

24,696

Per share information:

Basic net income per share of common stock

$

0.56

$

0.44

$

2.20

$

1.22

Diluted net income per share of common stock

$

0.56

$

0.44

$

2.19

$

1.22

Weighted average shares outstanding:

Basic

22,166,410

21,960,184

22,127,919

20,162,038

Diluted

22,221,989

21,978,925

22,179,461

20,185,589

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)
Fourth quarter 2021 Earnings Release

Five Quarter Comparison

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Income Statement Data:

Net interest income

$

22,992

$

22,964

$

23,032

$

22,182

$

22,331

Provision for loan losses

(651

)

(1,065

)

650

184

Net interest income after provision for loan losses

23,643

22,964

24,097

21,532

22,147

Deposit service charges

1,117

1,187

1,109

1,102

964

Interchange and debit card transaction fees

1,261

1,236

1,227

1,092

782

Mortgage banking

2,740

4,693

3,910

4,716

5,971

Tri-Net

3,996

1,939

1,536

1,143

1,165

Wealth management

438

481

471

459

411

SBA lending

279

911

377

492

916

Net gain (loss) on sale of securities

8

7

(13

)

26

51

Other noninterest income

1,295

1,197

1,266

984

1,488

Total noninterest income

11,134

11,651

9,883

10,014

11,748

Salaries and employee benefits

10,549

10,980

10,803

9,427

11,996

Data processing and software

2,719

2,632

3,070

2,827

2,548

Occupancy

1,012

1,028

1,057

1,108

975

Equipment

867

760

980

899

900

Professional services

521

469

460

704

370

Regulatory fees

284

279

211

257

368

Acquisition related expenses

256

67

2,105

Amortization of intangibles

461

477

493

508

524

Other operating

2,269

1,741

1,750

1,616

1,692

Total noninterest expense

18,682

18,366

19,080

17,413

21,478

Net income before income tax expense

16,095

16,249

14,900

14,133

12,417

Income tax expense

3,625

3,147

2,824

3,103

2,736

Net income

$

12,470

$

13,102

$

12,076

$

11,030

$

9,681

Weighted average shares - basic

22,166,410

22,164,278

22,133,759

22,045,501

21,960,184

Weighted average shares - diluted

22,221,989

22,218,402

22,198,829

22,076,600

21,978,925

Net income per share, basic

$

0.56

$

0.59

$

0.55

$

0.50

$

0.44

Net income per share, diluted

0.56

0.59

0.54

0.50

0.44

Balance Sheet Data (at period end):

Cash and cash equivalents

$

415,125

$

359,267

$

449,267

$

390,565

$

277,439

Securities available-for-sale

459,396

483,778

500,339

474,788

486,215

Securities held-to-maturity

1,782

1,788

2,395

2,401

2,407

Loans held for sale

83,715

176,488

158,234

171,660

186,998

Loans held for investment

1,965,769

1,894,249

1,897,838

1,931,687

1,883,690

Allowance for loan losses

(21,698

)

(22,533

)

(22,754

)

(23,877

)

(23,245

)

Total assets

3,133,046

3,112,127

3,212,390

3,150,457

2,987,006

Non-interest-bearing deposits

725,171

718,299

782,170

711,606

662,934

Interest-bearing deposits

1,959,110

1,956,093

1,998,024

2,039,595

1,905,067

Federal Home Loan Bank advances and borrowings

29,532

29,499

29,487

29,455

39,423

Total liabilities

2,752,952

2,741,799

2,852,639

2,806,513

2,643,520

Shareholders' equity

$

380,094

$

370,328

$

359,752

$

343,944

$

343,486

Total shares of common stock outstanding

22,166,129

22,165,760

22,165,547

22,089,873

21,988,803

Book value per share of common stock

$

17.15

$

16.71

$

16.23

$

15.57

$

15.62

Tangible book value per share of common stock *

14.99

14.53

14.03

13.34

13.36

Market value per common share

21.03

21.24

20.50

17.25

14.75

Capital ratios:

Total risk based capital

16.29

%

16.23

%

16.13

%

16.29

%

16.03

%

Tier 1 risk based capital

14.11

%

13.95

%

13.78

%

13.79

%

13.52

%

Common equity tier 1 capital

14.11

%

13.95

%

13.78

%

13.79

%

13.52

%

Leverage

10.69

%

10.28

%

10.17

%

9.78

%

9.60

%

_____________________
*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)
Fourth quarter 2021 Earnings Release

Five Quarter Comparison

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Average Balance Sheet Data:

Cash and cash equivalents

$

470,963

$

411,101

$

301,773

$

341,092

$

427,086

Investment securities

491,135

515,877

508,595

496,035

407,622

Loans held for sale

123,962

173,402

147,912

164,867

171,517

Loans held for investment

1,888,094

1,884,935

1,938,818

1,929,343

1,885,126

Assets

3,159,308

3,171,182

3,078,748

3,078,745

3,028,225

Interest-bearing deposits

1,964,641

1,980,304

1,940,442

1,986,621

1,909,692

Deposits

2,713,314

2,732,165

2,662,192

2,663,551

2,613,080

Federal Home Loan Bank advances and other borrowings

29,514

29,495

29,467

33,879

39,428

Liabilities

2,781,951

2,803,375

2,719,898

2,728,064

2,687,516

Shareholders' equity

$

377,357

$

367,807

$

358,850

$

350,681

$

340,709

Performance Ratios:

Annualized return on average assets

1.57

%

1.64

%

1.57

%

1.45

%

1.27

%

Annualized return on average equity

13.11

%

14.13

%

13.50

%

12.76

%

11.30

%

Net interest margin (1)

3.14

%

3.12

%

3.26

%

3.13

%

3.12

%

Annualized noninterest income to average assets

1.40

%

1.46

%

1.29

%

1.32

%

1.54

%

Efficiency ratio

54.74

%

53.06

%

57.97

%

54.08

%

63.02

%

Loans by Type (at period end):

Commercial and industrial

$

497,615

$

478,279

$

536,279

$

609,896

$

623,446

Commercial real estate - owner occupied

209,261

193,139

200,725

197,758

162,603

Commercial real estate - non-owner occupied

616,023

579,857

538,520

505,252

481,229

Construction and development

214,310

210,516

198,448

170,965

174,859

Consumer real estate

326,412

328,262

331,580

336,496

343,791

Consumer

46,811

45,669

45,898

45,481

44,279

Other

55,337

58,527

46,387

65,839

53,483

Asset Quality Data:

Allowance for loan losses to total loans

1.10

%

1.19

%

1.20

%

1.24

%

1.23

%

Allowance for loan losses to non-performing loans

666

%

657

%

571

%

446

%

483

%

Nonaccrual loans

3,258

3,431

3,985

5,355

4,817

Troubled debt restructurings

1,832

1,859

1,895

1,914

1,928

Loans - over 89 days past due

2,120

2,333

2,389

2,720

4,367

Total non-performing loans

3,258

3,431

3,985

5,355

4,817

OREO and repossessed assets

266

349

184

523

523

Total non-performing assets

$

3,524

$

3,780

$

4,169

$

5,878

$

5,340

Non-performing loans to total loans

0.17

%

0.18

%

0.21

%

0.28

%

0.26

%

Non-performing assets to total assets

0.11

%

0.12

%

0.13

%

0.19

%

0.18

%

Non-performing assets to total loans and OREO

0.18

%

0.20

%

0.22

%

0.30

%

0.28

%

Annualized net charge-offs to average loans

0.04

%

0.05

%

0.01

%

0.00

%

0.02

%

Net charge-offs

$

184

$

221

$

59

$

18

$

106

Interest Rates and Yields:

Loans

4.47

%

4.41

%

4.43

%

4.36

%

4.50

%

Securities (1)

1.84

%

1.75

%

1.77

%

1.80

%

1.98

%

Total interest-earning assets (1)

3.36

%

3.35

%

3.51

%

3.42

%

3.45

%

Deposits

0.19

%

0.19

%

0.21

%

0.26

%

0.30

%

Borrowings and repurchase agreements

5.29

%

5.30

%

5.36

%

4.85

%

4.09

%

Total interest-bearing liabilities

0.33

%

0.34

%

0.37

%

0.42

%

0.49

%

Other Information:

Full-time equivalent employees

397

392

383

379

380

_____________________

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)
Fourth quarter 2021 Earnings Release

For the Three Months Ended December 31,

2021

2020

Average
Outstanding
Balance

Interest
Income/
Expense

Average
Yield/
Rate

Average
Outstanding
Balance

Interest
Income/
Expense

Average
Yield/
Rate

Interest-Earning Assets

Loans held for investment (1)

$

1,888,094

$

21,291

4.47

%

$

1,885,126

$

21,305

4.50

%

Loans held for sale

123,962

993

3.18

%

171,517

1,348

3.13

%

Securities:

Taxable investment securities (2)

432,165

1,839

1.70

%

350,644

1,567

1.79

%

Investment securities exempt from federal income tax (3)

58,970

335

2.88

%

56,978

354

3.14

%

Total securities

491,135

2,174

1.84

%

407,622

1,921

1.98

%

Cash balances in other banks

397,381

192

0.19

%

394,831

158

0.16

%

Funds sold

19,906

9

Total interest-earning assets

2,920,478

24,659

3.36

%

2,859,096

24,732

3.45

%

Noninterest-earning assets

238,830

169,129

Total assets

$

3,159,308

$

3,028,225

Interest-Bearing Liabilities

Interest-bearing deposits:

Interest-bearing transaction accounts

$

964,932

410

0.17

%

$

828,740

497

0.24

%

Savings and money market deposits

616,610

307

0.20

%

593,236

377

0.25

%

Time deposits

383,099

556

0.58

%

487,716

1,121

0.91

%

Total interest-bearing deposits

1,964,641

1,273

0.26

%

1,909,692

1,995

0.42

%

Borrowings and repurchase agreements

29,514

394

5.29

%

39,428

406

4.09

%

Total interest-bearing liabilities

1,994,155

1,667

0.33

%

1,949,120

2,401

0.49

%

Noninterest-bearing deposits

748,673

703,388

Total funding sources

2,742,828

2,652,508

Noninterest-bearing liabilities

39,123

35,008

Shareholders’ equity

377,357

340,709

Total liabilities and shareholders’ equity

$

3,159,308

$

3,028,225

Net interest spread (4)

3.03

%

2.96

%

Net interest income/margin (5)

$

22,992

3.14

%

$

22,331

3.12

%

_____________________

(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)
Fourth quarter 2021 Earnings Release

Five Quarter Comparison

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Operating net income:

Net income

$

12,470

$

13,102

$

12,076

$

11,030

$

9,681

Add: acquisition related expenses

256

67

2,105

Less: income tax impact of acquisition related expenses

(67

)

(18

)

(550

)

Operating net income

$

12,470

$

13,102

$

12,265

$

11,079

$

11,236

Operating diluted net income per share of common stock:

Operating net income

$

12,470

$

13,102

$

12,265

$

11,079

$

11,236

Weighted average shares - diluted

22,221,989

22,218,402

22,198,829

22,076,600

21,978,925

Operating diluted net income per share of common stock

$

0.56

$

0.59

$

0.55

$

0.50

$

0.51

Operating annualized return on average assets:

Operating net income

$

12,470

$

13,102

$

12,265

$

11,079

$

11,236

Average assets

$

3,159,308

$

3,171,182

$

3,078,748

$

3,078,745

$

3,028,225

Operating annualized return on average assets

1.57

%

1.64

%

1.60

%

1.46

%

1.48

%

Operating annualized return on average tangible equity:

Average total shareholders' equity

$

377,357

$

367,807

$

358,850

$

350,681

$

340,709

Less: average intangible assets

(48,054

)

(48,527

)

(49,012

)

(49,514

)

(50,038

)

Average tangible equity

329,303

319,280

309,838

301,167

290,671

Operating net income

$

12,470

$

13,102

$

12,265

$

11,079

$

11,236

Operating annualized return on average tangible equity

15.02

%

16.28

%

15.88

%

14.92

%

15.38

%

Operating efficiency ratio:

Total noninterest expense

$

18,682

$

18,366

$

19,080

$

17,413

$

21,478

Less: acquisition related expenses

(256

)

(67

)

(2,105

)

Total operating noninterest expense

18,682

18,366

18,824

17,346

19,373

Net interest income

22,992

22,964

23,032

22,182

22,331

Total noninterest income

11,134

11,651

9,883

10,014

11,748

Total revenues

$

34,126

$

34,615

$

32,915

$

32,196

$

34,079

Operating efficiency ratio:

54.74

%

53.06

%

57.19

%

53.88

%

56.85

%

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

Income before income taxes

$

16,095

$

16,249

$

14,900

$

14,133

$

12,417

Add: acquisition related expenses

256

67

2,105

Add: provision for loan losses

(651

)

(1,065

)

650

184

Operating pre-tax pre-provision income

15,444

16,249

14,091

14,850

14,706

Average assets

$

3,159,308

$

3,171,182

$

3,078,748

$

3,078,745

$

3,028,225

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

1.94

%

2.03

%

1.84

%

1.96

%

1.93

%

Tangible Equity:

Total shareholders' equity

$

380,094

$

370,328

$

359,752

$

343,944

$

343,486

Less: intangible assets

(47,759

)

(48,220

)

(48,697

)

(49,190

)

(49,698

)

Tangible equity

$

332,335

$

322,108

$

311,055

$

294,754

$

293,788

Tangible Book Value per Share of Common Stock:

Tangible common equity

$

332,335

$

322,108

$

311,055

$

294,754

$

293,788

Total shares of common stock outstanding

22,166,129

22,165,760

22,165,547

22,089,873

21,988,803

Tangible book value per share of common stock

$

14.99

$

14.53

$

14.03

$

13.34

$

13.36

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Fourth quarter 2021 Earnings Release

Year Ended

December 31, 2021

December 31, 2020

Operating net income:

Net income

$

48,677

$

24,696

Add: acquisition related expenses

323

5,390

Less: income tax impact of acquisition related expenses

(84

)

(1,409

)

Operating net income

$

48,916

$

28,677

Operating diluted net income per share of common stock:

Operating net income

$

48,916

$

28,677

Weighted average shares - diluted

22,179,461

20,185,589

Operating diluted net income per share of common stock

$

2.21

$

1.42

Operating return on average assets:

Operating net income

$

48,916

$

28,677

Average assets

$

3,122,351

$

2,622,635

Operating return on average assets

1.57

%

1.09

%

Operating return on average tangible equity:

Average total shareholders' equity

$

363,759

$

305,748

Less: average intangible assets

(48,772

)

(47,202

)

Average tangible equity

314,987

258,546

Operating net income

$

48,916

$

28,677

Operating return on average tangible equity

15.53

%

11.09

%

Operating efficiency ratio:

Total noninterest expense

$

73,541

$

77,361

Less: merger related expenses

(323

)

(5,390

)

Total operating noninterest expense

73,218

71,971

Net interest income

91,170

76,323

Total noninterest income

42,681

43,248

Total revenues

$

133,851

$

119,571

Operating efficiency ratio:

54.70

%

60.19

%

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Fourth quarter 2021 Earnings Release

Five Quarter Comparison

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Net interest income

$

22,992

$

22,964

$

23,032

$

22,182

$

22,331

Less: PPP loan income

(1,691

)

(1,897

)

(2,686

)

(2,260

)

(2,184

)

Less: Excess liquidity interest income

(479

)

(545

)

(545

)

(504

)

(300

)

Adjusted net interest income

20,822

20,522

19,801

19,418

19,847

Average interest earning assets

2,920,478

2,931,134

2,848,857

2,889,119

2,859,096

Less: Average PPP loans

(42,055

)

(95,257

)

(173,733

)

(204,459

)

(204,918

)

Less: Excess liquidity

(447,548

)

(411,926

)

(301,325

)

(334,109

)

(341,654

)

Adjusted interest earning assets

2,430,875

2,423,951

2,373,799

2,350,551

2,312,524

Net interest margin (1)

3.14

%

3.12

%

3.26

%

3.13

%

3.12

%

Adjusted Net interest margin (1)

3.40

%

3.36

%

3.36

%

3.35

%

3.41

%


Five Quarter Comparison

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Allowance for loan losses

$

21,698

$

22,533

$

22,754

$

23,877

$

23,245

Purchase accounting marks

3,003

3,288

3,533

3,615

3,663

Allowance for loan losses and purchase accounting fair value marks

24,701

25,821

26,287

27,492

26,908

Loans held for investment

1,965,769

1,894,249

1,897,838

1,931,687

1,883,690

Less: PPP Loans net of deferred fees

26,539

64,188

109,940

210,810

181,601

Non-PPP Loans

1,939,230

1,830,061

1,787,898

1,720,877

1,702,089

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

1.27

%

1.41

%

1.47

%

1.60

%

1.58

%

_____________________

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

CONTACT

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