×

CapStar Financial Holdings, Inc. Announces First Quarter 2017 Results

NASHVILLE, Tenn., April 26, 2017 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) reported net income of $0.3 million, or $0.03 per share on a fully diluted basis for the three months ended March 31, 2017, compared to $1.6 million, or $0.15 per share on a fully diluted basis for the three months ended March 31, 2016. Fully diluted earnings per share were impacted by $0.18 per share during the first quarter due to credit related issues.

“While we are disappointed with the increase in nonperforming loans and net charge-offs during the first quarter, we are pleased with another strong quarter of loan and core deposit growth,” said Claire W Tucker, President and Chief Executive Officer of CapStar. “The changes in these credit metrics are a result of two borrowers that have been on our radar screen and classified for some time, “said Tucker. “We continue to believe the credit infrastructure and risk management systems we have in place will satisfactorily support our operations and will allow us to achieve our goal of delivering sound, profitable growth for our shareholders. We remain confident that overall asset quality remains solid, growth continues at a robust pace, and we are committed to delivering the profitability that will help us achieve our goal of 1.0% ROAA by the end of 2018.”

Soundness

  • The allowance for loan and lease losses represented 1.39% of total loans at March 31, 2017 compared to 1.23% at March 31, 2016.
  • Non-performing assets as a percent of total loans and other real estate owned was 1.36% at March 31, 2017 compared to 0.67% at March 31, 2016.
  • Annualized net charge-offs totaled 0.43% for the three months ended March 31, 2017 compared to 0.38% for the same period in 2016.
  • The total risk based capital ratio increased to 12.13% at March 31, 2017 compared to 11.26% at March 31, 2016.

Profitability

  • Return on average assets ("ROAA") for the three months ended March 31, 2017 was 0.10% compared to 0.54% for the same period in 2016.
  • Return on average equity ("ROAE") for the three months ended March 31, 2017 was 0.95% compared to 5.75% for the same period in 2016.
  • The net interest margin (“NIM”) for the three months ended March 31, 2017 was 3.12% compared to 3.18% for the same period in 2016.
  • The efficiency ratio for the three months ended March 31, 2017 was 69.4% compared to 70.7% for the same period in 2016.

“Although our margin was impacted by the increase in nonaccrual loans, our profitability roadmap is dependent on expanding existing and acquiring new relationships, which drives our loan and core deposit growth,” said Rob Anderson, chief financial officer and chief administrative officer of CapStar. “While we typically lead with a loan opportunity, we continue to achieve success in obtaining the operating accounts and providing treasury management services to our commercial clients, as we focus on becoming their primary bank.”

Growth

  • Average gross loans and leases for the quarter ended March 31, 2017 increased 19%, to $974 million, compared to $822 million for the same period in 2016.
  • Average total deposits for the quarter ended March 31, 2017 increased 11.0%, to $1.1 billion, compared to $1.0 billion for the same period in 2016.
  • Average Demand and NOW deposits for the quarter ended March 31, 2017 increased 38%, to $541 million, compared to $393 million for the same period in 2016.
  • Mortgage loan originations increased 10%, to $93 million for the three months ended March 31, 2017 compared to $85 million for the same period in 2016.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Thursday, April 27, 2017. 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 6970312. A simultaneous webcast may be accessed on CapStar’s website at www.capstarbank.com. 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, 2017, on a consolidated basis, CapStar had total assets of $1.4 billion, gross loans of $1.0 billion, total deposits of $1.2 billion, and shareholders’ equity of $140.2 million. Visit www.capstarbank.com for more information.

Forward-Looking Statements

Certain statements in this earnings release are forward-looking statements that reflect CapStar’s current views with respect to, among other things, future events and CapStar’s financial and operational performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “aspire,” “achieve,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “roadmap”, “goal,” “target,” “would,” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about CapStar’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond CapStar’s control. The inclusion of these forward-looking statements should not be regarded as a representation by CapStar or any other person that such expectations, estimates and projections will be achieved. Accordingly, CapStar cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although CapStar believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause CapStar’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, any factors identified in this earnings release as well as those factors that are detailed from time to time in CapStar’s periodic and current reports filed with the Securities and Exchange Commission, including those factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 under the heading “Item 1A. Risk Factors” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if CapStar’s underlying assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this earnings release, and CapStar does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for CapStar to predict their occurrence or how they will affect CapStar.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Income (unaudited)

First Quarter 2017 Earnings Release
Three Months Ended
March 31,
2017 2016
Interest income:
Loans, including fees $10,466,758 $9,268,272
Securities:
Taxable 1,002,896 898,038
Tax-exempt 325,916 282,244
Federal funds sold 2,305 4,138
Restricted equity securities 76,286 69,108
Interest-bearing deposits in financial institutions 104,791 76,378
Total interest income 11,978,952 10,598,178
Interest expense:
Interest-bearing deposits 617,466 301,633
Savings and money market accounts 815,092 731,702
Time deposits 470,645 514,445
Federal funds purchased 3,910 2,083
Securities sold under agreements to repurchase 1,311
Federal Home Loan Bank advances 140,259 90,728
Total interest expense 2,047,372 1,641,902
Net interest income 9,931,580 8,956,276
Provision for loan and lease losses 3,404,799 937,216
Net interest income after provision for loan and lease losses 6,526,781 8,019,060
Noninterest income:
Service charges on deposit accounts 328,585 225,427
Loan commitment fees 236,274 430,122
Net gain (loss) on sale of securities (6,229) 38,961
Mortgage banking income 1,216,362 1,347,452
Other noninterest income 358,554 328,810
Total noninterest income 2,133,546 2,370,772
Noninterest expense:
Salaries and employee benefits 5,086,451 5,217,755
Data processing and software 620,508 568,477
Professional fees 364,553 330,738
Occupancy 448,798 409,881
Equipment 496,196 406,571
Regulatory fees 307,060 227,260
Other operating 1,051,871 849,059
Total noninterest expense 8,375,437 8,009,741
Income before income taxes 284,890 2,380,091
Income tax (benefit) expense (47,168) 796,245
Net income $332,058 $1,583,846
Per share information:
Basic net income per share of common stock $0.03 $0.18
Diluted net income per share of common stock $0.03 $0.15
Weighted average shares outstanding:
Basic 11,210,948 8,628,683
Diluted 12,784,117 10,572,193
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited)

First Quarter 2017 Earnings Release
Five Quarter Comparison
3/31/17 12/31/16 9/30/16 6/30/16 3/31/16
Income Statement Data:
Net interest income $9,931,580 $10,180,273 $10,125,515 $9,201,155 $8,956,275
Provision for loan and lease losses 3,404,799 69,884 1,638,669 182,863 937,216
Net interest income after provision for loan and lease losses 6,526,781 10,110,389 8,486,845 9,018,292 8,019,059
Service charges on deposit accounts 328,585 302,831 276,751 303,144 225,427
Loan commitment fees 236,274 217,042 328,785 142,618 430,122
Net gain (loss) on sale of securities (6,229) (3,964) 85,876 38,961
Mortgage banking income 1,216,362 2,033,459 2,339,310 1,654,843 1,347,452
Other noninterest income 358,554 400,690 250,582 381,711 328,809
Total noninterest income 2,133,546 2,954,021 3,191,463 2,568,192 2,370,772
Salaries and employee benefits 5,086,451 5,185,016 5,119,356 4,938,383 5,217,755
Data processing and software 620,508 542,300 627,335 634,742 568,477
Professional fees 364,553 405,947 390,862 426,132 330,738
Occupancy 448,798 365,741 351,691 371,092 409,881
Equipment 496,196 442,547 458,053 436,168 406,571
Regulatory fees 307,060 348,427 250,424 264,625 227,260
Other operating 1,051,871 1,351,527 1,329,084 879,652 849,059
Total noninterest expense 8,375,437 8,641,506 8,526,805 7,950,794 8,009,741
Net income before income tax expense 284,890 4,422,904 3,151,504 3,635,690 2,380,090
Income tax (benefit) expense (47,168) 1,495,445 1,042,282 1,159,438 796,245
Net income $332,058 $2,927,460 $2,109,222 $2,476,252 $1,583,845
Weighted average shares - basic 11,210,948 11,194,534 8,792,665 8,682,438 8,628,683
Weighted average shares - diluted 12,784,117 12,787,677 10,799,536 10,675,916 10,572,194
Net income per share, basic $0.03 $0.26 $0.24 $0.29 $0.18
Net income per share, diluted 0.03 0.23 0.20 0.23 0.15
Balance Sheet Data (at period end):
Cash and cash equivalents $60,038,626 $80,110,806 $73,450,735 $97,546,046 $76,706,579
Securities available for sale 188,516,087 182,354,987 167,213,109 171,336,596 189,807,985
Securities held to maturity 46,854,518 46,863,640 46,227,968 43,331,042 42,953,364
Loans held for sale 35,370,814 42,110,581 61,251,662 57,014,256 29,530,174
Total loans and leases 1,003,433,910 935,250,703 924,030,515 887,437,485 837,690,395
Allowance for loan and lease losses (13,996,869) (11,633,531) (11,510,464) (10,453,603) (10,298,559)
Total assets 1,381,702,597 1,333,675,063 1,318,057,325 1,310,417,841 1,223,179,646
Non-interest-bearing deposits 223,449,870 197,787,618 191,469,462 193,541,662 220,686,364
Interest-bearing deposits 934,545,319 930,934,634 944,590,330 949,759,113 865,650,400
Federal Home Loan Bank advances 75,000,000 55,000,000 30,000,000 40,000,000 15,000,000
Total liabilities 1,241,491,175 1,194,467,666 1,179,630,825 1,196,099,660 1,112,320,842
Shareholders' equity 140,211,422 139,207,396 138,426,500 114,318,181 110,858,804
Total shares of common stock outstanding 11,218,328 11,204,515 11,191,021 8,683,902 8,677,902
Total shares of preferred stock outstanding 878,049 878,049 878,049 1,609,756 1,609,756
Book value per share of common stock 11.70 11.62 11.57 11.26 10.87
Market value per share of common stock (1) 19.07 21.96 16.92 - -
Capital ratios:
Total risk based capital 12.13% 12.60% 12.45% 10.67% 11.26%
Tier 1 risk based capital 11.01% 11.61% 11.46% 9.73% 10.26%
Common equity tier 1 capital 10.32% 10.90% 10.75% 8.34% 8.75%
Leverage 10.37% 10.46% 10.47% 8.90% 9.16%

(1) CapStar Financial Holdings, Inc. completed its initial public offering during the third quarter of 2016. As such, market values per share of common stock are not provided for previous periods.
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Selected Quarterly Financial Data (unaudited)

First Quarter 2017 Earnings Release
Five Quarter Comparison
3/31/17 12/31/16 9/30/16 6/30/16 3/31/16
Average Balance Sheet Data:
Average cash and cash equivalents $58,925,144 $66,757,676 $55,054,076 $56,458,924 $67,706,162
Average investment securities 237,084,429 226,032,691 218,462,999 232,587,954 220,281,801
Average loans held for sale 28,359,188 52,483,255 63,640,373 43,055,160 29,798,738
Average loans and leases 974,349,816 938,887,232 918,301,556 873,984,373 822,111,590
Average assets 1,340,236,730 1,324,620,495 1,296,870,515 1,247,076,866 1,181,427,683
Average interest bearing deposits 933,328,122 942,922,989 944,794,017 909,027,610 837,952,639
Average total deposits 1,143,636,485 1,138,778,930 1,132,037,604 1,093,452,418 1,027,457,215
Average Federal Home Loan Bank advances 43,836,734 33,478,261 29,565,217 27,417,582 28,021,978
Average liabilities 1,198,685,795 1,185,091,445 1,179,480,497 1,134,506,177 1,070,607,967
Average shareholders' equity 141,550,935 139,529,051 117,390,018 112,570,689 110,819,715
Performance Ratios:
Annualized return on average assets 0.10% 0.88% 0.65% 0.80% 0.54%
Annualized return on average equity 0.95% 8.35% 7.15% 8.85% 5.75%
Net interest margin 3.12% 3.17% 3.23% 3.09% 3.18%
Annualized Non-interest income to average assets 0.65% 0.89% 0.98% 0.83% 0.81%
Efficiency ratio 69.4% 65.8% 64.0% 67.6% 70.7%
Loans by Type:
Commercial and industrial $420,825,316 $379,619,518 $389,717,893 $389,087,927 $381,548,046
Commercial real estate - owner occupied 92,213,135 106,734,888 108,920,619 104,345,021 104,243,080
Commercial real estate - non-owner occupied 268,741,865 195,586,977 163,625,512 171,426,074 161,466,867
Construction and development 74,006,891 94,491,256 91,366,437 63,744,151 52,479,785
Consumer real estate 99,952,470 97,014,959 96,918,661 91,090,508 90,393,165
Consumer 4,494,573 5,974,465 7,045,978 7,486,178 8,291,223
Other 43,983,239 56,795,954 67,805,899 61,669,965 40,698,880
Asset Quality Data:
Allowance for loan and lease losses to total loans 1.39% 1.24% 1.25% 1.18% 1.23%
Allowance for loan and lease losses to non-performing loans 103% 321% 279% 179% 184%
Nonaccrual loans $13,623,534 $3,619,422 $4,122,942 $5,829,423 $5,586,503
Troubled debt restructurings 1,255,651 1,271,897 1,288,324 - -
Loans - 90 days past due and accruing - - - - -
Total non-performing loans 13,623,534 3,619,422 4,122,942 5,829,423 5,586,503
OREO and repossessed assets - - - - -
Total non-performing assets 13,623,534 3,619,422 4,122,942 5,829,423 5,586,503
Non-performing loans to total loans 1.36% 0.39% 0.45% 0.66% 0.67%
Non-performing assets to total assets 0.99% 0.27% 0.31% 0.44% 0.46%
Non-performing assets to total loans and OREO 1.36% 0.39% 0.45% 0.66% 0.67%
Annualized net charge-offs to average loans 0.43% -0.02% 0.25% 0.01% 0.38%
Net charge-offs (recoveries) $1,041,460 $(53,183) $581,809 $27,819 $770,386
Interest Rates and Yields:
Loans 4.24% 4.32% 4.36% 4.24% 4.39%
Securities 2.37% 2.19% 2.10% 2.15% 2.27%
Total interest-earning assets 3.77% 3.74% 3.79% 3.66% 3.77%
Deposits 0.67% 0.57% 0.58% 0.59% 0.61%
Borrowings and repurchase agreements 1.30% 2.32% 1.25% 1.31% 1.23%
Total interest-bearing liabilities 0.85% 0.74% 0.71% 0.73% 0.76%
Other Information:
Full-time equivalent employees 168 170 168 166 163
This information is preliminary and based on company data available at the time of the presentation.


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY

Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)

First Quarter 2017 Earnings Release
For the Three Months Ended March 31,
2017 2016
Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Interest-Earning Assets
Loans (1) $974,350 $10,194 4.24% $822,112 $8,976 4.39%
Loans held for sale 28,359 273 3.91% 29,799 292 3.94%
Securities:
Taxable investment securities (2) 181,647 1,079 2.38% 177,563 968 2.18%
Investment securities exempt from
federal income tax (3)
55,437 326 2.35% 42,719 282 2.64%
Total securities 237,084 1,405 2.37% 220,282 1,250 2.27%
Cash balances in other banks 48,041 105 0.88% 56,427 76 0.54%
Funds sold 1,729 2 0.54% 2,703 4 0.62%
Total interest-earning assets 1,289,563 11,979 3.77% 1,131,323 10,598 3.77%
Noninterest-earning assets 50,674 50,105
Total assets $1,340,237 $1,181,428
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $330,627 617 0.76% $203,283 302 0.60%
Savings and money market deposits 434,375 815 0.76% 445,891 732 0.66%
Time deposits 168,326 471 1.13% 188,778 514 1.10%
Total interest-bearing deposits 933,328 1,903 0.83% 837,952 1,548 0.74%
Borrowings and repurchase agreements 45,115 144 1.30% 30,798 94 1.23%
Total interest-bearing liabilities 978,443 2,047 0.85% 868,750 1,642 0.76%
Noninterest-bearing deposits 210,308 189,505
Total funding sources 1,188,751 1,058,255
Noninterest-bearing liabilities 9,935 12,353
Shareholders’ equity 141,551 110,820
Total liabilities and shareholders’ equity $1,340,237 $1,181,428
Net interest spread (4) 2.92% 3.01%
Net interest income/margin (5) $9,932 3.12% $8,956 3.18%

(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) Balances for investment securities exempt from federal income tax are not calculated 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 net interest income divided by total average interest-earning assets and is presented in the table above on an annualized basis.
This information is preliminary and based on company data available at the time of the presentation.

Rob Anderson Chief Financial Officer and Chief Administrative Officer (615) 732-6470

Source:CapStar Financial Holdings, Inc.