CapStar Financial Holdings, Inc. Reports Second Quarter 2020 Results

Rhea-AI Summary

CapStar Financial Holdings, Inc. (CSTR) reported a net income of $6.2 million for Q2 2020, with diluted earnings per share increasing to $0.34, up $0.03 from Q2 2019. Pre-tax pre-provision income rose to $9.6 million, showing a 26.3% increase year-over-year. The company faced merger-related expenses and a provision for loan losses of $1.6 million. Average deposits increased by 21.1% to $2.03 billion. A dividend of $0.05 per share was approved, payable on August 27, 2020. Return on average assets stood at 1.06%, while net interest margin fell to 3.23% due to PPP loans impact.

Positive

• Net income rose to $6.2 million in Q2 2020.
• Diluted earnings per share increased to $0.34, up from $0.31 in Q2 2019.
• Pre-tax pre-provision income grew by 26.3% to $9.6 million.
• Average deposits surged by 21.1% to $2.03 billion.
• Tangible book value per share increased by 9.7% to $13.02.

Negative

• Operating earnings per share declined to $0.36, down $0.02 from Q2 2019.
• Return on average assets decreased from 1.40% in Q2 2019 to 1.11% in Q2 2020.
• Net interest margin fell from 3.68% in Q2 2019 to 3.23% due to PPP loans.
• Operating efficiency ratio worsened to 64.87% compared to 61.39% in Q2 2019.

NASHVILLE, Tenn., July 23, 2020 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) today reported second quarter net income of $6.2 million and pre-tax pre-provision income of $9.6 million.  Diluted earnings per share were $0.34, an increase of $0.03 from the second quarter of 2019. Excluding merger-related charges, diluted operating⁽¹⁾ earnings per share were $0.36, a decline of $0.02 from the second quarter of 2019. Return on average assets and return on average equity for the second quarter of 2020 were 1.06% and 8.83%, respectively.  On an operating basis, return on average assets was 1.11% and return on average tangible common equity was 11.02%.  Net income for the quarter included provision for loan losses of $1.6 million, severance expense of $1.4 million, and merger related expenses of $448,000.

“I am proud of the CapStar team for their remarkable dedication during an extremely challenging operating environment,” said Timothy K. Schools, CapStar’s president and CEO.  “In keeping with our vision, mission and values, we have been unwavering in our commitment to support our employees, clients and communities through the public health crisis. Our non-financial center work force mobilized to working 100% remotely and continues to provide outstanding service. Importantly, we prioritized client assistance by offering loan deferrals and took a leadership position in facilitating PPP loans to protect all local business – both clients and non-clients – as they navigate the challenges presented by COVID-19.  Our inclusive and response-driven approach is supporting our communities and presents the prospect for many new and expanded relationships.”

“In the second quarter, we delivered solid financial results with strong pre-tax pre-provision revenue led by our mortgage and Tri-Net divisions,” continued Schools.  “During the quarter, we saw a significant rise in both loans related to PPP and in deposits which will bring short-term compression to our net interest margin and we continued to actively monitor our portfolio to identify potential weaknesses.  On July 1, we completed our merger with The Bank of Waynesboro and The First National Bank of Manchester, creating an approximately $3 billion financial institution which will enhance our funding profile, diversify our loan portfolio, expand our geographic reach, and improve our net interest margin, efficiency ratio, and return on assets."

Soundness

• Allowance for loan losses to total loans was 1.32% at June 30, 2020 compared to 0.90% at June 30, 2019.
• Annualized net charge-offs to average loans were 0.18% for the three months ended June 30, 2020 compared to 0.02% for the same period in 2019.
• Non-performing assets to total loans and OREO were 0.20% at June 30, 2020 compared to 0.16% at June 30, 2019.
• The leverage ratio was 10.08% at June 30, 2020 compared to 11.01% at June 30, 2019.
• The total risk based capital ratio was 16.76% at June 30, 2020 compared to 13.29% at June 30, 2019.                                                            

Profitability

• Operating annualized return on average assets for the three months ended June 30, 2020 was 1.11% compared to 1.40% for the same period in 2019.
• Operating annualized return on average tangible equity for the three months ended June 30, 2020 was 11.02% compared to 13.05% for the same period in 2019.
• Net interest margin for the three months ended June 30, 2020 was 3.23% compared to 3.68% for the same period in 2019; approximately 17 bps of the decline is attributed to the impact of PPP loans and an increase in cash due to significant deposit growth during the quarter.
• The operating efficiency ratio for the three months ended June 30, 2020 was 64.87% compared to 61.39% for the same period in 2019.
• Operating annualized pre-tax pre-provision income to average assets for the three months ended June 30, 2020 was 1.71% compared to 1.86% for the same period in 2019.

Growth

• Average deposits for the quarter ended June 30, 2020 increased 21.1% to $2.03 billion, compared to $1.68 billion for the same period in 2019.
• Average gross loans for the quarter ended June 30, 2020 increased 6.3% to $1.56 billion, compared to $1.47 billion for the same period in 2019.
• Pre-tax pre-provision earnings for the quarter ended June 30, 2020 increased 26.3% to $9.6 million, compared to $7.6 million for the quarter ended June 30, 2019.
• Tangible book value per share for the quarter ended June 30, 2020 increased 9.7% to $13.02, compared to $11.87 for the quarter ended June 30, 2019.

Dividend

On July 23, 2020, the board of directors of CapStar approved a quarterly dividend of $0.05 per common share that will be paid on August 27, 2020 to shareholders of record of CapStar’s common stock as of the close of business on August 13, 2020.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 24, 2020. During the call, management will review the second quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 4376815. 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 June 30, 2020, on a consolidated basis, CapStar had total assets of $2.45 billion, gross loans of $1.59 billion, total deposits of $2.10 billion, and shareholders’ equity of $282.0 million. Visit www.capstarbank.com for more information.

FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements, as defined by federal securities laws, including statements about CapStar and its financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of our operations and future financial performance. Our operations and such performance involves risks and uncertainties, including but in no way limited to the effect of the COVID-19 pandemic, that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to CapStar’s filings with the Securities and Exchange Commission, including its 2019 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Item 1A Risk Factors.”  Forward-looking statements speak only as of the date they are made, and except as otherwise required by applicable law, we undertake no obligation to update or revise forward-looking statements.

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)
Second quarter 2020 Earnings Release

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		Three Months Ended			Six Months Ended
		June 30,			June 30,
		2020			2019			2020			2019
Interest income:
Loans, including fees		$	19,086			$	20,999			$	38,823			$	41,591
Securities:
Taxable			1,096				1,165				2,272				2,512
Tax-exempt			312				363				633				739
Federal funds sold			—				6				—				25
Restricted equity securities			140				214				282				401
Interest-bearing deposits in financial institutions			107				411				469				857
Total interest income			20,741				23,158				42,479				46,125
Interest expense:
Interest-bearing deposits			831				1,827				2,732				3,420
Savings and money market accounts			731				1,782				2,283				3,500
Time deposits			1,416				2,217				2,897				4,030
Federal funds purchased			—				—				—				4
Securities sold under agreements to repurchase			—				—				—				5
Federal Home Loan Bank advances			88				324				231				1,156
Total interest expense			3,066				6,150				8,143				12,115
Net interest income			17,675				17,008				34,336				34,010
Provision for loan losses			1,624				—				9,177				886
Net interest income after provision for loan losses			16,051				17,008				25,159				33,124
Noninterest income:
Treasury management and other deposit service charges			691				813				1,466				1,611
Net gain (loss) on sale of securities			13				(121	)			40				(108	)
Tri-Net fees			1,260				1,024				1,860				1,664
Mortgage banking income			7,123				3,087				9,376				4,472
Wealth management fees			374				334				781				639
Interchange and debit card transaction fees			729				991				1,454				1,569
Other noninterest income			633				904				1,720				1,920
Total noninterest income			10,823				7,032				16,697				11,767
Noninterest expense:
Salaries and employee benefits			12,305				8,563				20,307				16,995
Data processing and software			2,100				1,862				3,964				3,336
Professional fees			581				501				1,216				1,043
Occupancy			797				809				1,616				1,692
Equipment			680				1,026				1,431				1,878
Regulatory fees			333				272				496				546
Merger related expenses			448				1,711				738				2,305
Amortization of intangibles			375				419				761				850
Other operating			1,315				1,307				2,616				2,551
Total noninterest expense			18,934				16,470				33,145				31,196
Income before income taxes			7,940				7,570				8,711				13,695
Income tax expense			1,759				1,814				1,184				3,160
Net income		$	6,181			$	5,756			$	7,527			$	10,535
Per share information:
Basic net income per share of common stock		$	0.34			$	0.33			$	0.41			$	0.59
Diluted net income per share of common stock		$	0.34			$	0.31			$	0.41			$	0.56
Weighted average shares outstanding:
Basic			18,307,083				17,663,992				18,349,998				17,723,286
Diluted			18,320,006				18,650,706				18,381,866				18,740,322

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)
Second quarter 2020 Earnings Release

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		Five Quarter Comparison
		6/30/20			3/31/20			12/31/19			9/30/19			6/30/19
Income Statement Data:
Net interest income		$	17,675			$	16,661			$	16,581			$	17,156			$	17,008
Provision for loan losses			1,624				7,553				—				(125	)			—
Net interest income after provision for loan losses			16,051				9,108				16,581				17,281				17,008
Treasury management and other deposit service charges			691				775				736				788				813
Net gain (loss) on sale of securities			13				27				9				—				(121	)
Tri-Net fees			1,260				599				274				847				1,024
Mortgage banking income			7,123				2,253				2,316				2,679				3,087
Wealth management fees			374				407				407				379				334
Interchange and debit card transaction fees			729				724				928				754				991
Other noninterest income			633				1,089				1,049				1,341				904
Total noninterest income			10,823				5,874				5,719				6,788				7,032
Salaries and employee benefits			12,305				8,002				9,318				9,229				8,563
Data processing and software			2,100				1,864				1,835				1,790				1,862
Professional fees			581				636				531				528				501
Occupancy			797				820				795				858				809
Equipment			680				751				834				1,012				1,026
Regulatory fees			333				163				28				18				272
Merger related expenses			448				290				163				187				1,711
Amortization of intangibles			375				386				397				408				419
Other operating			1,315				1,299				1,365				1,501				1,307
Total noninterest expense			18,934				14,211				15,266				15,531				16,470
Net income before income tax expense			7,940				771				7,034				8,538				7,570
Income tax (benefit) expense			1,759				(575	)			1,613				2,072				1,814
Net income		$	6,181			$	1,346			$	5,421			$	6,466			$	5,756
Weighted average shares - basic			18,307,083				18,392,913				18,350,994				17,741,778				17,663,992
Weighted average shares - diluted			18,320,006				18,443,725				18,443,916				18,532,479				18,650,706
Net income per share, basic		$	0.34			$	0.07			$	0.30			$	0.36			$	0.33
Net income per share, diluted			0.34				0.07				0.29				0.35				0.31
Balance Sheet Data (at period end):
Cash and cash equivalents		$	368,820			$	91,450			$	101,269			$	154,021			$	156,085
Securities available-for-sale			223,034				219,213				213,129				203,500				194,957
Securities held-to-maturity			2,699				3,306				3,313				3,319				3,721
Loans held for sale			129,807				186,937				168,222				129,613				89,629
Total loans			1,592,725				1,446,835				1,420,102				1,411,768				1,440,617
Allowance for loan losses			(21,035	)			(20,114	)			(12,604	)			(12,828	)			(12,903	)
Total assets			2,445,172				2,072,585				2,037,201				2,033,911				2,018,421
Non-interest-bearing deposits			546,974				442,789				312,096				352,266				326,550
Interest-bearing deposits			1,548,591				1,320,920				1,417,355				1,379,497				1,396,220
Federal Home Loan Bank advances and other borrowings			39,464				10,000				10,000				10,000				10,000
Total liabilities			2,163,222				1,796,795				1,764,155				1,765,829				1,755,757
Shareholders' equity		$	281,950			$	275,790			$	273,046			$	268,082			$	262,664
Total shares of common stock outstanding			18,302,188				18,307,802				18,361,922				18,343,403				17,561,476
Total shares of preferred stock outstanding			—				—				—				—				878,048
Book value per share of common stock		$	15.41			$	15.06			$	14.87			$	14.61			$	14.44
Tangible book value per share of common stock*			13.02				12.66				12.45				12.17				11.87
Market value per share of common stock		$	12.00			$	9.89			$	16.65			$	16.58			$	15.15
Capital ratios:
Total risk based capital			16.76	%			13.68	%			13.45	%			13.46	%			13.29	%
Tier 1 risk based capital			13.76	%			12.56	%			12.73	%			12.71	%			12.53	%
Common equity tier 1 capital			13.76	%			12.56	%			12.73	%			12.71	%			12.01	%
Leverage			10.08	%			11.23	%			11.37	%			11.24	%			11.01	%

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*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)
Second quarter 2020 Earnings Release

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		Five Quarter Comparison
		6/30/20			3/31/20			12/31/19			9/30/19			6/30/19
Average Balance Sheet Data:
Cash and cash equivalents		$	257,709			$	114,272			$	115,100			$	129,114			$	93,523
Investment securities			238,762				226,537				225,265				211,460				228,283
Loans held for sale			176,193				180,401				140,731				101,835				91,585
Loans			1,560,626				1,421,256				1,431,027				1,445,755				1,469,210
Assets			2,350,021				2,059,306				2,030,231				2,005,950				2,004,207
Interest bearing deposits			1,519,877				1,411,666				1,388,496				1,370,988				1,364,211
Deposits			2,031,924				1,735,635				1,711,021				1,704,873				1,678,240
Federal Home Loan Bank advances and other borrowings			10,966				20,989				22,391				12,174				42,088
Liabilities			2,068,408				1,780,756				1,758,663				1,739,509				1,743,010
Shareholders' equity			281,614				278,550				271,568				266,441				261,197
Performance Ratios:
Annualized return on average assets			1.06	%			0.26	%			1.06	%			1.28	%			1.15	%
Annualized return on average equity			8.83	%			1.94	%			7.92	%			9.63	%			8.84	%
Net interest margin (1)			3.23	%			3.50	%			3.49	%			3.66	%			3.68	%
Annualized Noninterest income to average assets			1.85	%			1.15	%			1.12	%			1.34	%			1.41	%
Efficiency ratio			66.44	%			63.06	%			68.46	%			64.87	%			68.51	%
Loans by Type (at period end):
Commercial and industrial		$	621,541			$	447,311			$	394,408			$	382,816			$	404,745
Commercial real estate - owner occupied			147,682				166,652				172,456				169,370				173,316
Commercial real estate - non-owner occupied			408,402				378,170				387,443				407,378				421,496
Construction and development			117,830				141,087				143,111				132,222				123,901
Consumer real estate			238,696				248,243				256,097				254,736				255,043
Consumer			27,542				27,739				28,426				29,059				26,704
Other			31,032				37,633				38,161				36,187				35,412
Asset Quality Data:
Allowance for loan losses to total loans			1.32	%			1.39	%			0.89	%			0.91	%			0.90	%
Allowance for loan losses to non-performing loans			705	%			550	%			861	%			754	%			894	%
Nonaccrual loans		$	2,982			$	3,658			$	1,464			$	1,701			$	1,443
Troubled debt restructurings			1,228				1,306				2,717				2,725				1,238
Loans - over 89 days past due and accruing			639				399				38				551				302
Total non-performing loans			2,982				3,658				1,464				1,701				1,443
OREO and repossessed assets			147				147				1,044				914				914
Total non-performing assets			3,129				3,805				2,508				2,615				2,357
Non-performing loans to total loans			0.19	%			0.25	%			0.10	%			0.12	%			0.10	%
Non-performing assets to total assets			0.13	%			0.18	%			0.12	%			0.13	%			0.12	%
Non-performing assets to total loans and OREO			0.20	%			0.26	%			0.18	%			0.19	%			0.16	%
Annualized net charge-offs (recoveries) to average loans			0.18	%			0.01	%			0.06	%			(0.01	)%			0.02	%
Net charge-offs (recoveries)		$	703			$	43			$	224			$	(50	)		$	56
Interest Rates and Yields:
Loans			4.50	%			5.10	%			5.24	%			5.48	%			5.44	%
Securities (1)			2.73	%			3.04	%			3.00	%			3.14	%			3.22	%
Total interest-earning assets (1)			3.78	%			4.56	%			4.67	%			4.95	%			5.00	%
Deposits			0.59	%			1.14	%			1.27	%			1.38	%			1.39	%
Borrowings and repurchase agreements			3.16	%			2.77	%			2.88	%			4.12	%			3.09	%
Total interest-bearing liabilities			0.81	%			1.43	%			1.58	%			1.74	%			1.75	%
Other Information:
Full-time equivalent employees			286				288				289				290				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)
Second quarter 2020 Earnings Release

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		For the Three Months Ended June 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)		$	1,560,626			$	17,459				4.50	%		$	1,469,210			$	19,931				5.44	%
Loans held for sale			176,193				1,627				3.71	%			91,585				1,068				4.68	%
Securities:
Taxable investment securities (2)			194,876				1,236				2.54	%			175,742				1,379				3.14	%
Investment securities exempt from   federal income tax (3)			43,886				312				3.60	%			52,541				363				3.50	%
Total securities			238,762				1,548				2.73	%			228,283				1,742				3.22	%
Cash balances in other banks			237,738				107				0.18	%			75,485				411				2.18	%
Funds sold			1				—				1.27	%			767				6				2.96	%
Total interest-earning assets			2,213,320				20,741				3.78	%			1,865,330				23,158				5.00	%
Noninterest-earning assets			136,701												138,877
Total assets		$	2,350,021											$	2,004,207
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts		$	691,063				831				0.48	%		$	467,326				1,827				1.57	%
Savings and money market deposits			492,682				731				0.60	%			479,012				1,782				1.49	%
Time deposits			336,132				1,416				1.69	%			417,873				2,217				2.13	%
Total interest-bearing deposits			1,519,877				2,978				0.79	%			1,364,211				5,826				1.71	%
Borrowings and repurchase agreements			11,131				88				3.16	%			42,117				324				3.09	%
Total interest-bearing liabilities			1,531,008				3,066				0.81	%			1,406,328				6,150				1.75	%
Noninterest-bearing deposits			512,046												314,029
Total funding sources			2,043,054												1,720,357
Noninterest-bearing liabilities			25,353												22,653
Shareholders’ equity			281,614												261,197
Total liabilities and shareholders’ equity		$	2,350,021											$	2,004,207
Net interest spread (4)											2.98	%											3.25	%
Net interest income/margin (5)						$	17,675				3.23	%						$	17,008				3.68	%

                                               

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)
Second quarter 2020 Earnings Release

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		Three Months Ended
		June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Operating net income:
Net income		$	6,181			$	1,346			$	5,421			$	6,466			$	5,756
Add:  merger related expenses			448				290				163				187				1,711
Less: income tax impact of merger related expenses			(117	)			(76	)			(43	)			(49	)			(447	)
Operating net income		$	6,512			$	1,560			$	5,541			$	6,604			$	7,020
Operating diluted net income per   share of common stock:
Operating net income		$	6,512			$	1,560			$	5,541			$	6,604			$	7,020
Weighted average shares - diluted			18,320,006				18,443,725				18,443,916				18,532,479				18,650,706
Operating diluted net income   per share of common stock		$	0.36			$	0.08			$	0.30			$	0.36			$	0.38
Operating annualized return on average assets:
Operating net income		$	6,512			$	1,560			$	5,541			$	6,604			$	7,020
Average assets		$	2,350,021			$	2,059,306			$	2,030,231			$	2,005,950			$	2,004,207
Operating annualized return on   average assets			1.11	%			0.30	%			1.08	%			1.31	%			1.40	%
Operating annualized return on   average tangible equity:
Average total shareholders' equity		$	281,614			$	278,550			$	271,568			$	266,441			$	261,197
Less: average intangible assets			(43,871	)			(44,253	)			(44,646	)			(45,050	)			(45,456	)
Average tangible equity			237,743				234,297				226,922				221,391				215,741
Operating net income		$	6,512			$	1,560			$	5,541			$	6,604			$	7,020
Operating annualized return on   average tangible equity			11.02	%			2.68	%			9.69	%			11.83	%			13.05	%
Operating efficiency ratio:
Total noninterest expense		$	18,934			$	14,211			$	15,266			$	15,531			$	16,470
Less:  merger related expenses			(448	)			(290	)			(163	)			(187	)			(1,711	)
Total operating noninterest expense			18,486				13,921				15,103				15,344				14,759
Net interest income			17,675				16,661				16,581				17,156				17,008
Total noninterest income			10,823				5,874				5,719				6,788				7,032
Total revenues		$	28,498			$	22,535			$	22,300			$	23,944			$	24,040
Operating efficiency ratio:			64.87	%			61.78	%			67.73	%			64.08	%			61.39	%
Operating annualized pre-tax pre-provision income to average assets:
Income before income taxes		$	7,940			$	771			$	7,034			$	8,538			$	7,570
Add:  merger related expenses			448				290				163				187				1,711
Add: provision for loan losses			1,624				7,553				—				(125	)			—
Operating pre-tax pre-provision income			10,012				8,614				7,197				8,600				9,281
Average assets		$	2,350,021			$	2,059,306			$	2,030,231			$	2,005,950			$	2,004,207
Operating annualized pre-tax pre-provision income to average assets:			1.71	%			1.68	%			1.41	%			1.70	%			1.86	%
		June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Tangible Equity:
Total shareholders' equity		$	281,950			$	275,790			$	273,046			$	268,082			$	262,664
Less: intangible assets			(43,633	)			(44,008	)			(44,393	)			(44,790	)			(45,199	)
Tangible equity		$	238,317			$	231,782			$	228,653			$	223,292			$	217,465
Tangible Common Equity:
Tangible equity		$	238,317			$	231,782			$	228,653			$	223,292			$	217,465
Less: preferred equity			—				—				—				—				(9,000	)
Tangible common equity		$	238,317			$	231,782			$	228,653			$	223,292			$	208,465
Tangible Book Value per Share of Common Stock:
Tangible common equity		$	238,317			$	231,782			$	228,653			$	223,292			$	208,465
Total shares of common stock outstanding			18,302,188				18,307,802				18,361,922				18,343,403				17,561,476
Tangible book value per share of common stock		$	13.02			$	12.66			$	12.45			$	12.17			$	11.87

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

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		Six Months Ended
		June 30, 2020			June 30, 2019
Operating net income:
Net income		$	7,527			$	10,535
Add:  merger related expenses			738				2,305
Less: income tax impact of merger related expenses			(193	)			(603	)
Operating net income		$	8,072			$	12,237
Operating diluted net income per   share of common stock:
Operating net income		$	8,072			$	12,237
Weighted average shares - diluted			18,381,866				18,740,322
Operating diluted net income   per share of common stock		$	0.44			$	0.65
Operating annualized return on average assets:
Operating net income		$	8,072			$	12,237
Average assets		$	2,204,663			$	1,996,386
Operating annualized return on   average assets			0.74	%			1.24	%
Operating annualized return on   average tangible equity:
Average total shareholders' equity		$	280,082			$	259,162
Less: average intangible assets			(44,062	)			(45,672	)
Average tangible equity			236,020				213,490
Operating net income		$	8,072			$	12,237
Operating annualized return on   average tangible equity			6.88	%			11.56	%
Operating efficiency ratio:
Total noninterest expense		$	33,145			$	31,196
Less:  merger related expenses			(738	)			(2,305	)
Total operating noninterest expense			32,407				28,891
Net interest income			34,336				34,010
Total noninterest income			16,697				11,767
Total revenues		$	51,033			$	45,777
Operating efficiency ratio:			63.50	%			63.11	%

CONTACT

Mike Fowler
Chief Financial Officer
(615) 732-7404

FAQ

What were CapStar Financial's earnings per share in Q2 2020?

CapStar Financial reported diluted earnings per share of $0.34 in Q2 2020.

How much net income did CapStar Financial report for Q2 2020?

CapStar Financial reported a net income of $6.2 million for Q2 2020.

What is the dividend amount approved by CapStar Financial for Q3 2020?

CapStar Financial approved a quarterly dividend of $0.05 per common share, payable on August 27, 2020.

What was the return on average assets for CapStar Financial in Q2 2020?

The return on average assets for CapStar Financial in Q2 2020 was 1.06%.

How did average deposits change for CapStar Financial in Q2 2020?

Average deposits increased by 21.1% to $2.03 billion in Q2 2020.