CapStar Reports Fully Diluted EPS of $0.31 and Fully Diluted Operating EPS of $0.38 for 2Q2019

NASHVILLE, Tenn., July 25, 2019 (GLOBE NEWSWIRE) -- CapStar Financial Holdings, Inc. ("CapStar") CSTR reported net income of $5.76 million, or $0.31 per share on a fully diluted basis, for the three months ended June 30, 2019, compared to net income of $3.51 million, or $0.27 per share on a fully diluted basis, for the three months ended June 30, 2018.  Operating⁽¹⁾ net income was $7.02 million, or $0.38 per share on a fully diluted basis, for the three months ended June 30, 2019, compared to $3.76 million, or $0.29 per share on a fully diluted basis, for the three months ended June 30, 2018. 

"Our strong second quarter results show that CapStar's talented group of bankers continues to deliver a highly-personalized banking experience, providing creative solutions for our clients and creating long-term sustainable value for our shareholders," said Claire W. Tucker, CapStar's chief executive officer. 

"Since joining the company in May, I have met with associates and customers across the organization and I am excited about the opportunities in front of us," added Timothy K. Schools, CapStar's recently appointed president. "CapStar is well positioned to expand within our dynamic markets and our strong second quarter results demonstrate the importance of our diverse revenue streams," continued Mr. Schools.

Soundness

• Non-performing assets as a percentage of total assets were 0.12% at June 30, 2019 compared to 0.39% at June 30, 2018.
• Annualized net charge-offs to average loans were 0.02% for the three months ended June 30, 2019 compared to 0.01% for the same period in 2018.
• The total risk based capital ratio was 13.29% at June 30, 2019 compared to 12.53% at June 30, 2018.

Profitability

Operating measures exclude merger-related expenses unrelated to CapStar's normal operations. CapStar believes these measures are useful to investors as they exclude certain non-recurring costs resulting from acquisition activity and allow investors to more clearly see the financial results of CapStar's operations.

• Operating annualized return on average assets for the three months ended June 30, 2019 was 1.40% compared to 1.08% for the same period in 2018.
• Operating annualized return on average tangible equity for the three months ended June 30, 2019 was 13.05% compared to 10.38% for the same period in 2018.
• The operating efficiency ratio for the three months ended June 30, 2019 was 61.39% compared to 67.38% for the same period in 2018.
• Net interest margin for the three months ended June 30, 2019 was 3.68% compared to 3.46% for the same period in 2018.

"Despite a challenging macro-economic environment with a flat to inverted yield curve, we grew our operating earnings per share by 31.0% from the same period last year and our operating return on average tangible equity grew to 13.05%," said Rob Anderson, chief financial officer and chief administrative officer of CapStar. "A tremendous quarter by our Mortgage Banking and TriNet teams boosted profitability measures and helped mitigate the decline in our margin," continued Mr. Anderson. 

Growth

• Operating EPS on a fully diluted basis increased 31.0% to $0.38 for the quarter ended June 30, 2019, compared to $0.29 on a fully diluted basis for the same period in 2018.
• Average gross loans for the quarter ended June 30, 2019 increased 41.0% to $1.47 billion, compared to $1.04 billion for the same period in 2018.
  -- Excluding Day 1 loans from Athens, organic average loan growth was 7.9% year-over-year.
• Average deposits for the quarter ended June 30, 2019 increased 47.4% to $1.68 billion, compared to $1.14 billion for the same period in 2018.
  -- Excluding Day 1 deposits from Athens, organic average deposit growth was 11.9% year-over-year.

"Excluding Day 1 loans from Athens, organic average loan growth was 7.9% year-over-year and "in market" loan growth was 10.3% year-over-year, while our "out of market" loans declined $49 million from $124 million in the second quarter of 2018 to $75 million at June 30, 2019," said Mr. Anderson.  "In addition, our organic deposit growth was 11.9% year-over-year, excluding the Day 1 deposits acquired from Athens."

Dividend

On July 25, 2019, the board of directors of CapStar approved a quarterly dividend of $0.05 per share that will be paid on or about August 26, 2019 to all shareholders of record of CapStar's capital stock as of the close of business on August 12, 2019.

Conference Call and Webcast Information

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday July 26, 2019.  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 7628709.  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, 2019, on a consolidated basis, CapStar had total assets of $2.02 billion, gross loans of $1.44 billion, total deposits of $1.72 billion, and shareholders' equity of $262.66 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, CapStar's assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives and the timing, benefits, costs and synergies of recently completed and future acquisition, disposition and other growth opportunities, including, without limitation, those relating to the acceptance by customers of Athens of CapStar's products and services, the ability of CapStar to meet expectations regarding the benefits, costs, synergies, and financial and operational impact of the Athens merger, the possibility that any of the anticipated benefits, costs, synergies and financial and operational improvements of the Athens merger will not be realized or will not be realized as expected and the opportunities to enhance market share in certain markets and market acceptance of CapStar are generally in new markets. 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, 2018 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 its 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"): operating net income, operating diluted net income per share, operating return on average assets, operating return on average tangible equity, tangible book value per share and operating efficiency ratio. 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.

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

This information is preliminary and based on company data available at the time of the presentation.

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*This metric is a non-GAAP financial measure.  See below for discussion and 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.

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This information is preliminary and based on company data available at the time of the presentation.

(1)  Net Interest Margin, Securities yields, and Total interest-earning asset yields are calculated on a tax-equivalent basis

(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 company data available at the time of the presentation.

CONTACT

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