CapStar Financial Holdings, Inc. Announces Fourth Quarter 2017 Results

NASHVILLE, Tenn., Jan. 25, 2018 (GLOBE NEWSWIRE) --

CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) reported unaudited net income of $91,000, or $0.01 per share on a fully diluted basis, for the three months ended December 31, 2017. As a result of the Tax Cuts and Jobs Act of 2017 that was signed into law last month, CapStar revalued its net deferred tax asset position. CapStar currently expects that the revaluation will result in a one-time, non-cash charge of approximately $3.6 million, or $0.27 per share on a fully diluted basis. Reconciliations of non-GAAP measures are provided in the tables that follow. Adjusted net income was $3.7 million, or $0.28 per share on a fully diluted basis for the three months ended December 31, 2017, compared to net income of $2.9 million, or $0.23 per share on a fully diluted basis, for the three months ended December 31, 2016.

“We remain focused on delivering consistent financial results for our shareholders through sound, profitable growth,” said Claire W. Tucker, CapStar’s president and chief executive officer. “The recent addition of a SBA team is intended to augment financial results by expanding market penetration and enhancing fee income.”

Soundness

  • The allowance for loan losses represented 1.45% of total loans at December 31, 2017 compared to 1.24% at December 31, 2016.

  • Non-performing assets as a percentage of total loans and other real estate owned was 0.28% at December 31, 2017 compared to 0.39% at December 31, 2016.

  • Annualized net charge-offs (recoveries) to average loans was 0.15% for the three months ended December 31, 2017 compared to (0.02%) for the same period in 2016.

  • The total risk based capital ratio was 12.50% at December 31, 2017 compared to 12.60% at December 31, 2016.

Profitability

  • Return on average assets ("ROAA") for the three months ended December 31, 2017 was 0.03% compared to 0.88% for the same period in 2016.
    • Adjusting for the impact for tax reform, our adjusted ROAA was 1.09%.

  • The net interest margin (“NIM”) for the three months ended December 31, 2017 was 3.26% compared to 3.17% for the same period in 2016.

  • The efficiency ratio for the three months ended December 31, 2017 was 65.6% compared to 65.8% for the same period in 2016.

Growth

  • Average demand deposits for the quarter ended December 31, 2017 increased 29.5%, to $253.6 million, compared to $195.9 million for the same period in 2016.

  • Average gross loans for the quarter ended December 31, 2017 increased 1.9%, to $956.4 million, compared to $938.9 million for the same period in 2016.

  • Average total assets for the quarter ended December 31, 2017 increased 0.4%, to $1.33 billion, compared to $1.32 billion for the same period in 2016.

“Although 2017 presented some challenges, there are many positives that have us excited about our prospects for 2018,” said Rob Anderson, chief financial officer and chief administrative officer of CapStar. “Banking is a relationship business, and our bankers continue to have success growing core relationships, as over half of our deposit book is now in DDA or NOW checking accounts. In addition, our treasury management and other deposit service charges increased 38% over prior year.”

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 8:30 a.m. Central Time on Friday, January 26, 2018. 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 8989947. 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, 2017, on a consolidated basis, CapStar had total assets of $1.3 billion, gross loans of $947.5 million, total deposits of $1.1 billion, and shareholders’ equity of $146.9 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,” “guidance”, “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 headings “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” 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.

Non-GAAP Disclaimer

This earnings release includes the following financial measures that were prepared other than in accordance with generally accepted accounting principles in the United States (“non-GAAP financial measure”): adjusted net income, adjusted diluted net income per share, adjusted return on average assets, adjusted return on average tangible common equity and tangible book value per share. These non-GAAP financial measures (i) provide useful information to management and investors that is supplementary to CapStar’s financial condition, results of operations and cash flows computed in accordance with GAAP, (ii) enable a more complete understanding of factors and trends affecting CapStar’s business, and (iii) allow investors to evaluate CapStar’s performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators; however, CapStar acknowledges that these non-GAAP financial measures have a number of limitations. As such, you should not view these non-GAAP financial measures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. See below for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)
Fourth Quarter 2017 Earnings Release
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
Interest income:
Loans, including fees $11,666 $10,681 $45,601 $40,213
Securities:
Taxable 855 852 3,682 3,448
Tax-exempt 300 317 1,244 1,158
Federal funds sold 15 7 41 19
Restricted equity securities 125 71 396 281
Interest-bearing deposits in financial institutions 163 79 551 276
Total interest income 13,124 12,007 51,515 45,395
Interest expense:
Interest-bearing deposits 608 393 2,447 1,489
Savings and money market accounts 827 719 3,188 2,859
Time deposits 694 518 2,445 2,085
Federal funds purchased 1 13 22
Securities sold under agreements to repurchase 1
Federal Home Loan Bank advances 477 196 1,559 475
Total interest expense 2,606 1,827 9,652 6,931
Net interest income 10,518 10,180 41,863 38,464
Provision for loan losses (30) 70 12,870 2,829
Net interest income after provision for loan losses 10,548 10,110 28,993 35,635
Noninterest income:
Treasury management and other deposit service charges 419 303 1,516 1,108
Loan commitment fees 124 217 771 1,118
Net gain (loss) on sale of securities (108) (66) 121
Tri-Net fees 254 125 1,002 125
Mortgage banking income 1,621 2,033 6,238 7,375
Other noninterest income 426 276 1,447 1,237
Total noninterest income 2,736 2,954 10,908 11,084
Noninterest expense:
Salaries and employee benefits 5,411 5,185 20,400 20,461
Data processing and software 746 542 2,786 2,373
Professional fees 473 406 1,522 1,554
Occupancy 507 366 2,025 1,498
Equipment 467 443 2,071 1,743
Regulatory fees 234 348 1,111 1,091
Other operating 861 1,352 3,850 4,409
Total noninterest expense 8,699 8,642 33,765 33,129
Income before income taxes 4,585 4,422 6,136 13,590
Income tax expense 4,494 1,495 4,635 4,493
Net income $91 $2,927 $1,501 $9,097
Per share information:
Basic net income per share of common stock $0.01 $0.26 $0.13 $0.98
Diluted net income per share of common stock $0.01 $0.23 $0.12 $0.81
Weighted average shares outstanding:
Basic 11,403,689 11,194,534 11,280,580 9,328,236
Diluted 12,938,288 12,787,677 12,803,511 11,212,026

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) (dollars in thousands, except share data)
Fourth Quarter 2017 Earnings Release
Five Quarter Comparison
12/31/17 9/30/17 6/30/17 3/31/17 12/31/16
Income Statement Data:
Net interest income $10,518 $10,843 $10,571 $9,932 $10,180
Provision for loan losses (30) (195) 9,690 3,405 70
Net interest income after provision for loan losses 10,548 11,038 881 6,527 10,110
Treasury management and other deposit service charges 419 427 342 329 303
Loan commitment fees 124 223 187 236 217
Net gain (loss) on sale of securities (108) 9 40 (6)
Tri-Net fees 254 367 297 84 125
Mortgage banking income 1,621 2,030 1,370 1,216 2,033
Other noninterest income 426 316 430 274 276
Total noninterest income 2,736 3,372 2,666 2,133 2,954
Salaries and employee benefits 5,411 5,119 4,784 5,086 5,185
Data processing and software 746 709 711 621 542
Professional fees 473 336 350 365 406
Occupancy 507 531 539 449 366
Equipment 467 564 544 496 443
Regulatory fees 234 270 301 307 348
Other operating 861 946 988 1,052 1,352
Total noninterest expense 8,699 8,475 8,217 8,376 8,642
Net income (loss) before income tax expense 4,585 5,935 (4,670) 284 4,422
Income tax (benefit) expense 4,494 1,516 (1,328) (47) 1,495
Net income (loss) $91 $4,419 $(3,342) $331 $2,927
Weighted average shares - basic 11,403,689 11,279,364 11,226,216 11,210,948 11,194,534
Weighted average shares - diluted 12,938,288 12,750,423 12,740,104 12,784,117 12,787,677
Net income (loss) per share, basic $0.01 $0.39 $(0.30) $0.03 $0.26
Net income (loss) per share, diluted 0.01 0.35 (0.26) 0.03 0.23
Balance Sheet Data (at period end):
Cash and cash equivalents $82,797 $69,789 $48,093 $60,039 $80,111
Securities available-for-sale 192,621 146,600 155,663 188,516 182,355
Securities held-to-maturity 3,759 45,635 46,458 46,855 46,864
Loans held for sale 74,093 53,225 73,573 35,371 42,111
Total loans 947,537 974,530 996,617 1,003,434 935,251
Allowance for loan losses (13,721) (14,122) (12,454) (13,997) (11,634)
Total assets 1,344,429 1,338,559 1,371,626 1,381,703 1,333,675
Non-interest-bearing deposits 301,742 250,007 231,169 223,450 197,788
Interest-bearing deposits 818,124 841,488 889,816 934,545 930,935
Federal Home Loan Bank advances 70,000 95,000 105,000 75,000 55,000
Total liabilities 1,197,483 1,194,355 1,233,596 1,241,491 1,194,468
Shareholders' equity $146,946 $144,204 $138,030 $140,211 $139,207
Total shares of common stock outstanding 11,582,026 11,346,498 11,235,255 11,218,328 11,204,515
Total shares of preferred stock outstanding 878,049 878,049 878,049 878,049 878,049
Book value per share of common stock $11.91 $11.92 $11.48 $11.70 $11.62
Tangible book value per share of common stock * 11.37 11.36 10.93 11.14 11.06
Market value per common share $20.77 $19.58 $17.74 $19.07 $21.96
Capital ratios:
Total risk based capital 12.50% 12.42% 11.51% 12.13% 12.60%
Tier 1 risk based capital 11.39% 11.28% 10.54% 11.01% 11.61%
Common equity tier 1 capital 10.68% 10.58% 9.86% 10.32% 10.90%
Leverage 10.75% 10.36% 9.77% 10.37% 10.46%

_____________________
*This metric is a non-GAAP financial measure. See below for a reconciliation to the most directly comparable GAAP financial measure.

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) (dollars in thousands, except share data)
Fourth Quarter 2017 Earnings Release
Five Quarter Comparison
12/31/17 9/30/17 6/30/17 3/31/17 12/31/16
Average Balance Sheet Data:
Cash and cash equivalents $64,850 $59,352 $62,002 $58,925 $66,758
Investment securities 202,818 207,926 227,431 237,084 226,033
Loans held for sale 66,311 67,886 34,690 28,359 52,483
Loans 956,441 991,238 1,028,968 974,350 938,887
Assets 1,329,621 1,367,993 1,393,331 1,340,237 1,324,620
Interest bearing deposits 827,733 857,344 882,722 933,328 942,923
Deposits 1,081,380 1,094,500 1,111,833 1,143,636 1,138,779
Federal Home Loan Bank advances 92,554 123,315 128,901 43,837 33,478
Liabilities 1,181,954 1,226,438 1,250,544 1,198,686 1,185,091
Shareholders' equity $147,667 $141,556 $142,787 $141,551 $139,529
Performance Ratios:
Annualized return on average assets 0.03% 1.28% (0.96)% 0.10% 0.88%
Annualized return on average equity 0.25% 12.38% (9.39)% 0.95% 8.35%
Net interest margin 3.26% 3.26% 3.15% 3.12% 3.17%
Annualized Non-interest income to average assets 0.82% 0.98% 0.77% 0.65% 0.89%
Efficiency ratio 65.6% 59.6% 62.1% 69.4% 65.8%
Loans by Type (at period end):
Commercial and industrial $373,248 $394,600 $406,636 $420,825 $379,620
Commercial real estate - owner occupied 101,132 103,183 97,635 92,213 106,735
Commercial real estate - non-owner occupied 249,490 263,595 288,123 268,742 195,587
Construction and development 82,586 79,951 62,152 74,007 94,491
Consumer real estate 102,581 100,811 99,751 99,952 97,015
Consumer 6,862 6,289 4,096 4,495 5,974
Other $31,983 $26,460 $38,783 $43,983 $56,796
Asset Quality Data:
Allowance for loan losses to total loans 1.45% 1.45% 1.25% 1.39% 1.24%
Allowance for loan losses to non-performing loans 509% 446% 386% 103% 321%
Nonaccrual loans $2,695 $3,165 $3,229 $13,624 $3,619
Troubled debt restructurings 1,206 1,222 1,239 1,256 1,272
Loans - 90 days past due & still accruing 231 27 15 - -
Total non-performing loans 2,695 3,165 3,229 13,624 3,619
OREO and repossessed assets - - - - -
Total non-performing assets $2,695 $3,165 $3,229 $13,624 $3,619
Non-performing loans to total loans 0.28% 0.32% 0.32% 1.36% 0.39%
Non-performing assets to total assets 0.20% 0.24% 0.24% 0.99% 0.27%
Non-performing assets to total loans and OREO 0.28% 0.32% 0.32% 1.36% 0.39%
Annualized net charge-offs (recoveries) to average loans 0.15% (0.75)% 4.38% 0.43% (0.02)%
Net charge-offs (recoveries) $372 $(1,863) $11,233 $1,041 $(53)
Interest Rates and Yields:
Loans 4.54% 4.55% 4.29% 4.24% 4.32%
Securities 2.53% 2.40% 2.44% 2.37% 2.19%
Total interest-earning assets 4.06% 4.07% 3.85% 3.77% 3.74%
Deposits 0.78% 0.77% 0.70% 0.67% 0.57%
Borrowings and repurchase agreements 2.04% 1.81% 1.18% 1.30% 2.32%
Total interest-bearing liabilities 1.12% 1.08% 0.92% 0.85% 0.74%
Other Information:
Full-time equivalent employees 175 168 169 168 170

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)
Fourth Quarter 2017 Earnings Release
For the Three Months Ended December 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) $956,441 $10,950 4.54% $938,887 $10,198 4.32%
Loans held for sale 66,311 716 4.28% 52,483 483 3.66%
Securities:
Taxable investment securities (2) 153,955 980 2.55% 172,771 923 2.14%
Investment securities exempt from
federal income tax (3)
48,863 300 2.46% 53,262 317 2.38%
Total securities 202,818 1,280 2.53% 226,033 1,240 2.19%
Cash balances in other banks 52,988 163 1.22% 56,263 79 0.56%
Funds sold 2,989 15 2.04% 2,449 7 1.15%
Total interest-earning assets 1,281,547 13,124 4.06% 1,276,115 12,007 3.74%
Noninterest-earning assets 48,074 48,505
Total assets $1,329,621 $1,324,620
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $281,881 608 0.86% $286,572 393 0.55%
Savings and money market deposits 346,639 827 0.95% 455,201 719 0.63%
Time deposits 199,212 694 1.38% 201,151 518 1.03%
Total interest-bearing deposits 827,732 2,129 1.02% 942,924 1,630 0.69%
Borrowings and repurchase agreements 92,554 477 2.04% 33,694 197 2.32%
Total interest-bearing liabilities 920,286 2,606 1.12% 976,618 1,827 0.74%
Noninterest-bearing deposits 253,647 195,856
Total funding sources 1,173,934 1,172,474
Noninterest-bearing liabilities 8,020 12,617
Shareholders’ equity 147,667 139,529
Total liabilities and shareholders’ equity $1,329,621 $1,324,620
Net interest spread (4) 2.94% 3.00%
Net interest income/margin (5) $10,518 3.26% $10,180 3.17%

_____________________
(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.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)
Fourth Quarter 2017 Earnings Release
For the Year Ended December 31,
2017 2016
(Amounts in thousands) Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Interest-Earning Assets
Loans (1) $987,710 $43,531 4.41% $888,541 $38,450 4.33%
Loans held for sale 49,466 2,070 4.19% 47,303 1,763 3.73%
Securities:
Taxable investment securities (2) 166,561 4,078 2.45% 176,977 3,729 2.11%
Investment securities exempt from
federal income tax (3)
52,130 1,244 2.39% 47,353 1,158 2.45%
Total securities 218,691 5,322 2.43% 224,330 4,887 2.18%
Cash balances in other banks 49,990 551 1.10% 51,147 276 0.54%
Funds sold 2,518 41 1.63% 2,153 19 0.89%
Total interest-earning assets 1,308,375 51,515 3.94% 1,213,475 45,395 3.74%
Noninterest-earning assets 49,419 49,288
Total assets $1,357,794 $1,262,763
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $301,411 2,447 0.81% $269,113 1,489 0.55%
Savings and money market deposits 378,640 3,188 0.84% 445,873 2,859 0.64%
Time deposits 194,892 2,445 1.25% 193,881 2,085 1.08%
Total interest-bearing deposits 874,943 8,080 0.92% 908,867 6,433 0.71%
Borrowings and repurchase agreements 98,289 1,572 1.60% 32,371 498 1.54%
Total interest-bearing liabilities 973,232 9,652 0.99% 941,238 6,931 0.74%
Noninterest-bearing deposits 232,687 189,270
Total funding sources 1,205,919 1,130,507
Noninterest-bearing liabilities 8,473 12,133
Shareholders’ equity 143,402 120,123
Total liabilities and shareholders’ equity $1,357,794 $1,262,763
Net interest spread (4) 2.95% 3.00%
Net interest income/margin (5) $41,863 3.20% $38,464 3.17%

_____________________
(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.

CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands)
Fourth Quarter 2017 Earnings Release
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
Average Tangible Equity:
Average Total shareholders' equity $147,667 $139,529 $143,402 $120,123
Less: average intangible assets (6,248) (6,298) (6,265) (6,318)
Average Tangible equity $141,419 $133,231 $137,137 $113,805
Average Tangible Common Equity:
Average tangible equity $141,419 $133,231 $137,137 $113,805
Less: average preferred equity (9,000) (9,000) (9,000) (14,533)
Average tangible common equity $132,419 $124,231 $128,137 $99,272
Annualized Return on Average Tangible Common
Equity (ROATCE):
Average tangible common equity $132,419 $124,231 $128,137 $99,272
Net income $91 $2,927 $1,501 $9,097
Annualized return on average tangible
common equity (ROATCE)
0.27% 9.37% 1.17% 9.16%
12/31/17 12/31/16
Tangible Equity:
Total shareholders' equity $146,946 $139,207
Less: intangible assets (6,242) (6,290)
Tangible equity $140,704 $132,917
Tangible Common Equity:
Tangible equity $140,704 $132,917
Less: preferred equity (9,000) (9,000)
Tangible common equity $131,704 $123,917
Tangible Book Value per Share of Common Stock:
Tangible common equity $131,704 $123,917
Total shares of common stock outstanding 11,582,026 11,204,515
Tangible book value per share of common stock $11.37 $11.06


CAPSTAR FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Non-GAAP Financial Measures (unaudited) (dollars in thousands)
Fourth Quarter 2017 Earnings Release
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
Adjusted Net Income:
Reported net income $91 $2,927 $1,501 $9,097
Impact of tax reform* (3,562) (3,562)
Adjusted net income $3,653 $2,927 $5,063 $9,097
Adjusted Diluted Net Income per Share of Common Stock:
Reported diluted net income per share of common stock $0.01 $0.23 $0.12 $0.81
Impact of tax reform* (0.27) (0.28)
Adjusted diluted net income per share of common stock $0.28 $0.23 $0.40 $0.81
Adjusted Return on Average Assets (ROAA):
Reported ROAA 0.03% 0.88% 0.11% 0.72%
Impact of tax reform* (1.06)% (0.26)%
Adjusted ROAA 1.09% 0.88% 0.37% 0.72%

_____________________
* As a result of the Tax Cuts and Jobs Act of 2017, which included a Federal corporate tax rate change from 35% to 21%, we revalued our deferred tax assets, which resulted in a $3.6 million increase in income tax expense for 2017. The adjusted non-GAAP amounts and ratios above have excluded the impact of this transaction.

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

Source:CapStar Financial Holdings, Inc.