“CapStar’s third quarter results demonstrate the hard work of our associates to mitigate the impact of the rapid rise in interest rates over the past year,” said
“Over the past five years, our team has repositioned
“I am thankful for the opportunity to have led
- Created a highly effective workforce elevating our Gallup engagement index to 73rd percentile nationally
- Elevated operating results being named by Bank Director as the nation’s 14th highest performing publicly traded bank in 2022 and the highest performing
Tennessee -based bank each of the past three years - Annualized growth in total assets of 12.5% to
$3.3 billion to include expansion into the dynamicRutherford /Williamson County , Asheville,Chattanooga , andKnoxville markets - Annualized growth in dividends per share of 19.9%
- Total shareholder return for the period of 12.5% as compared to negative 15.6% for the KRE regional bank index”
Revenue
Total revenue, defined as net interest income plus noninterest income, was
Third quarter net interest income decreased
Third quarter 2023 average earning assets increased
Over the past year, the Company has been proactive and disciplined in curtailing lending on commercial real estate investment properties and to non-depositors, focusing primarily on liquidity management. While third quarter 2023 end of period loan held for investment balances declined versus the second quarter of 2023, the Company maintains strong lending capabilities in robust markets.
The net interest margin decreased 35 basis points from the prior quarter to 2.71%. Excess interest-bearing cash reduced the net interest margin by 14 basis points in the third quarter of 2023, versus a 4 basis point adverse net interest margin impact for the second quarter of 2023. The remaining net interest margin decline was principally related to rising deposit rates as a result of intense market competition, which has eased somewhat recently. The total cost of deposits increased 59 basis points from the second quarter of 2023 to 2.85% in the third quarter of 2023, exceeding the 19 basis point loan yield increase in the third quarter of 2023 versus the second quarter of 2023.
Third quarter 2023 noninterest income as compared to the second quarter of 2023 benefited from increased treasury management revenue, service charges and BOLI offset by declines in mortgage banking and SBA lending. The Company’s Tri-Net business continues to remain disciplined awaiting a return to rational market pricing with limited originations and sales occurring in 2023.
Noninterest Expense and Operating Efficiency
Noninterest expense was
The efficiency ratio was 64.07% for the quarter ended
Asset Quality
Due to a decrease in end of period loans held for investment and unfunded commitments versus the second quarter of 2023 along with improved macroeconomic forecasts, the Company recorded a recovery of provision of
Past due loans increased to
Non-performing assets to total loans held for investment and OREO were 0.28% at
The allowance for credit losses related to loans declined to 1.05% as of
Asset Quality Data: | ||||||||||||||||||||
Annualized net charge-offs to average loans | 0.06 | % | 0.03 | % | 0.03 | % | 0.03 | % | 0.02 | % | ||||||||||
Criticized and classified loans to total loans | 1.40 | % | 1.36 | % | 1.76 | % | 1.31 | % | 1.79 | % | ||||||||||
Loans- past due to total end of period loans | 0.26 | % | 0.15 | % | 0.35 | % | 0.50 | % | 0.63 | % | ||||||||||
Loans-over 90 days past due to total period end loans | 0.17 | % | 0.08 | % | 0.05 | % | 0.44 | % | 0.27 | % | ||||||||||
Non-performing assets to total loans held for investment and OREO | 0.28 | % | 0.48 | % | 0.42 | % | 0.46 | % | 0.30 | % | ||||||||||
Allowance for credit losses on loans to non-performing loans | 376 | % | 228 | % | 249 | % | 222 | % | 333 | % |
Income Tax Expense
The Company’s third quarter effective income tax rate increased to 19.9% when compared to 18.6% in the prior quarter ended
Capital
The Company continues to be strongly capitalized with equity of
Book value per share of common stock as of
Total risk-based capital | 15.36 | % | 14.34 | % | 13.98 | % | 14.51 | % | 14.59 | % | ||||||||||
Common equity tier 1 capital | 13.38 | % | 12.40 | % | 12.09 | % | 12.61 | % | 12.70 | % | ||||||||||
Leverage | 11.08 | % | 11.05 | % | 11.20 | % | 11.40 | % | 11.22 | % | ||||||||||
Tangible common equity to tangible assets * | 9.34 | % | 9.64 | % | 9.67 | % | 10.03 | % | 9.65 | % |
As a component of the Company’s capital allocation strategy,
Liquidity
Liquidity sources remain strong at a total
The Company is pleased with
Dividend
On
Conference Call and Webcast Information
In light of the Company's announced merger,
Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)
Third quarter 2023 Earnings Release
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Interest income: | ||||||||||||||||
Loans, including fees | $ | 35,441 | $ | 27,335 | $ | 102,215 | $ | 71,476 | ||||||||
Securities: | ||||||||||||||||
Taxable | 1,964 | 1,966 | 5,940 | 5,643 | ||||||||||||
Tax-exempt | 301 | 314 | 923 | 958 | ||||||||||||
Federal funds sold | 40 | 7 | 163 | 31 | ||||||||||||
Restricted equity securities | 300 | 215 | 788 | 544 | ||||||||||||
Interest-bearing deposits in financial institutions | 3,218 | 617 | 6,305 | 1,076 | ||||||||||||
Total interest income | 41,264 | 30,454 | 116,334 | 79,728 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest-bearing deposits | 6,672 | 1,205 | 14,092 | 2,279 | ||||||||||||
Savings and money market accounts | 4,393 | 1,603 | 10,906 | 2,401 | ||||||||||||
Time deposits | 8,777 | 1,332 | 21,713 | 2,271 | ||||||||||||
Federal funds purchased | — | 2 | — | 2 | ||||||||||||
660 | 365 | 2,283 | 461 | |||||||||||||
Subordinated notes | 393 | 394 | 1,181 | 1,181 | ||||||||||||
Total interest expense | 20,895 | 4,901 | 50,175 | 8,595 | ||||||||||||
Net interest income | 20,369 | 25,553 | 66,159 | 71,133 | ||||||||||||
Provision for credit losses: | ||||||||||||||||
(Recovery of) provision for credit losses on loans | (1,017 | ) | 867 | (447 | ) | 926 | ||||||||||
Provision for credit losses on available-for-sale securities | — | — | 2,000 | — | ||||||||||||
Recovery of credit losses on unfunded commitments | (544 | ) | — | (650 | ) | — | ||||||||||
Total (recovery of) provision for credit losses | (1,561 | ) | 867 | 903 | 926 | |||||||||||
Net interest income after provision for credit losses | 21,930 | 24,686 | 65,256 | 70,207 | ||||||||||||
Noninterest income: | ||||||||||||||||
Deposit service charges | 1,347 | 1,251 | 3,979 | 3,575 | ||||||||||||
Interchange and debit card transaction fees | 1,195 | 1,245 | 3,293 | 3,803 | ||||||||||||
Mortgage banking | 749 | 765 | 2,997 | 4,436 | ||||||||||||
Tri-Net | 19 | (2,059 | ) | 46 | 39 | |||||||||||
Wealth management | 441 | 385 | 1,241 | 1,284 | ||||||||||||
SBA lending | 531 | 560 | 2,599 | 1,054 | ||||||||||||
Net gain on sale of securities | — | 7 | 5 | 8 | ||||||||||||
Other noninterest income | 1,996 | 1,118 | 4,605 | 4,038 | ||||||||||||
Total noninterest income | 6,278 | 3,272 | 18,765 | 18,237 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 9,573 | 8,712 | 30,447 | 28,191 | ||||||||||||
Data processing and software | 3,245 | 2,861 | 9,750 | 8,355 | ||||||||||||
Occupancy | 1,161 | 1,092 | 3,451 | 3,266 | ||||||||||||
Equipment | 591 | 743 | 2,087 | 2,235 | ||||||||||||
Professional services | 674 | 468 | 2,361 | 1,653 | ||||||||||||
Regulatory fees | 435 | 269 | 1,267 | 814 | ||||||||||||
Amortization of intangibles | 352 | 415 | 1,104 | 1,291 | ||||||||||||
Other operating | 1,041 | 3,371 | 4,831 | 6,935 | ||||||||||||
Total noninterest expense | 17,072 | 17,931 | 55,298 | 52,740 | ||||||||||||
Income before income taxes | 11,136 | 10,027 | 28,723 | 35,704 | ||||||||||||
Income tax expense | 2,211 | 1,988 | 5,548 | 7,018 | ||||||||||||
Net income | $ | 8,925 | $ | 8,039 | $ | 23,175 | $ | 28,686 | ||||||||
Per share information: | ||||||||||||||||
Basic net income per share of common stock | $ | 0.43 | $ | 0.37 | $ | 1.10 | $ | 1.30 | ||||||||
Diluted net income per share of common stock | $ | 0.43 | $ | 0.37 | $ | 1.09 | $ | 1.30 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 20,808,677 | 21,938,259 | 21,142,177 | 22,051,950 | ||||||||||||
Diluted | 20,823,971 | 21,988,085 | 21,172,712 | 22,104,687 |
This information is preliminary and based on
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2023 Earnings Release
Five Quarter Comparison | ||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Net interest income | $ | 20,369 | $ | 22,571 | $ | 23,219 | $ | 24,959 | $ | 25,553 | ||||||||||
(Recovery of) provision for credit losses | (1,561 | ) | 22 | 2,442 | 1,548 | 867 | ||||||||||||||
Net interest income after provision for credit losses | 21,930 | 22,549 | 20,777 | 23,411 | 24,686 | |||||||||||||||
Deposit service charges | 1,347 | 1,264 | 1,368 | 1,206 | 1,251 | |||||||||||||||
Interchange and debit card transaction fees | 1,195 | 1,060 | 1,038 | 1,250 | 1,245 | |||||||||||||||
Mortgage banking | 749 | 955 | 1,293 | 637 | 765 | |||||||||||||||
Tri-Net | 19 | 27 | — | 39 | (2,059 | ) | ||||||||||||||
Wealth management | 441 | 426 | 374 | 403 | 385 | |||||||||||||||
SBA lending | 531 | 977 | 1,091 | 1,446 | 560 | |||||||||||||||
Net gain on sale of securities | — | — | 5 | 1 | 7 | |||||||||||||||
Other noninterest income | 1,996 | 1,503 | 1,106 | 1,303 | 1,118 | |||||||||||||||
Total noninterest income | 6,278 | 6,212 | 6,275 | 6,285 | 3,272 | |||||||||||||||
Salaries and employee benefits | 9,573 | 10,533 | 10,341 | 9,875 | 8,712 | |||||||||||||||
Data processing and software | 3,245 | 3,294 | 3,211 | 2,797 | 2,861 | |||||||||||||||
Occupancy | 1,161 | 1,097 | 1,193 | 1,032 | 1,092 | |||||||||||||||
Equipment | 591 | 674 | 822 | 753 | 743 | |||||||||||||||
Professional services | 674 | 899 | 788 | 522 | 468 | |||||||||||||||
Regulatory fees | 435 | 419 | 413 | 266 | 269 | |||||||||||||||
Amortization of intangibles | 352 | 368 | 384 | 399 | 415 | |||||||||||||||
Other noninterest expense | 1,041 | 1,888 | 1,902 | 984 | 3,371 | |||||||||||||||
Total noninterest expense | 17,072 | 19,172 | 19,054 | 16,628 | 17,931 | |||||||||||||||
Net income before income tax expense | 11,136 | 9,589 | 7,998 | 13,068 | 10,027 | |||||||||||||||
Income tax expense | 2,211 | 1,785 | 1,552 | 2,735 | 1,988 | |||||||||||||||
Net income | $ | 8,925 | $ | 7,804 | $ | 6,446 | $ | 10,333 | $ | 8,039 | ||||||||||
Weighted average shares - basic | 20,808,677 | 21,065,115 | 21,561,007 | 21,887,351 | 21,938,259 | |||||||||||||||
Weighted average shares - diluted | 20,823,971 | 21,107,457 | 21,595,182 | 21,926,821 | 21,988,085 | |||||||||||||||
Net income per share, basic | $ | 0.43 | $ | 0.37 | $ | 0.30 | $ | 0.47 | $ | 0.37 | ||||||||||
Net income per share, diluted | 0.43 | 0.37 | 0.30 | 0.47 | 0.37 | |||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Cash and cash equivalents | $ | 352,393 | $ | 170,709 | $ | 175,557 | $ | 135,305 | $ | 199,913 | ||||||||||
Securities available-for-sale | 354,024 | 373,262 | 391,547 | 396,416 | 401,345 | |||||||||||||||
Securities held-to-maturity | — | — | 1,232 | 1,240 | 1,762 | |||||||||||||||
Loans held for sale | 36,391 | 48,895 | 31,501 | 44,708 | 43,122 | |||||||||||||||
Loans held for investment | 2,292,241 | 2,358,928 | 2,407,328 | 2,312,798 | 2,290,269 | |||||||||||||||
Allowance for credit losses on loans | (24,157 | ) | (25,524 | ) | (25,189 | ) | (23,806 | ) | (22,431 | ) | ||||||||||
Total assets | 3,264,540 | 3,179,016 | 3,232,751 | 3,117,169 | 3,165,706 | |||||||||||||||
Non-interest-bearing deposits | 432,203 | 414,828 | 463,243 | 512,076 | 628,846 | |||||||||||||||
Interest-bearing deposits | 2,364,477 | 2,295,931 | 2,286,844 | 2,167,743 | 2,004,827 | |||||||||||||||
79,766 | 79,733 | 85,199 | 44,666 | 149,633 | ||||||||||||||||
Total liabilities | 2,918,901 | 2,831,551 | 2,878,840 | 2,762,987 | 2,818,341 | |||||||||||||||
Shareholders' equity | 345,639 | 347,465 | 353,911 | 354,182 | 347,365 | |||||||||||||||
Total shares of common stock outstanding | 20,739,942 | 20,884,492 | 21,361,614 | 21,714,380 | 21,931,624 | |||||||||||||||
Book value per share of common stock | $ | 16.67 | $ | 16.64 | $ | 16.57 | $ | 16.31 | $ | 15.84 | ||||||||||
Tangible book value per share of common stock* | 14.50 | 14.47 | 14.43 | 14.19 | 13.72 | |||||||||||||||
Tangible book value per share of common stock less after-tax unrealized available for sale investment losses* | 17.33 | 16.95 | 16.56 | 16.57 | 16.16 | |||||||||||||||
Market value per share of common stock | 14.19 | 12.27 | 15.15 | 17.66 | 18.53 | |||||||||||||||
Total risk-based capital | 15.36 | % | 14.34 | % | 13.98 | % | 14.51 | % | 14.59 | % | ||||||||||
Tangible common equity to tangible assets* | 9.34 | % | 9.64 | % | 9.67 | % | 10.03 | % | 9.65 | % | ||||||||||
Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses* | 10.96 | % | 11.11 | % | 10.94 | % | 11.52 | % | 11.17 | % | ||||||||||
Common equity tier 1 capital | 13.38 | % | 12.40 | % | 12.09 | % | 12.61 | % | 12.70 | % | ||||||||||
Leverage | 11.08 | % | 11.05 | % | 11.20 | % | 11.40 | % | 11.22 | % |
_____________________
*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
Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)
Third quarter 2023 Earnings Release
Five Quarter Comparison | ||||||||||||||||||||
Average Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 268,211 | $ | 157,862 | $ | 153,464 | $ | 154,150 | $ | 154,543 | ||||||||||
Investment securities | 380,725 | 402,743 | 410,371 | 415,414 | 450,933 | |||||||||||||||
Loans held for sale | 34,625 | 37,031 | 29,578 | 37,945 | 94,811 | |||||||||||||||
Loans held for investment | 2,332,622 | 2,391,229 | 2,348,100 | 2,309,349 | 2,241,355 | |||||||||||||||
Assets | 3,230,738 | 3,196,593 | 3,150,436 | 3,124,928 | 3,146,841 | |||||||||||||||
Interest bearing deposits | 2,344,705 | 2,244,499 | 2,176,542 | 2,076,743 | 1,993,172 | |||||||||||||||
Deposits | 2,760,356 | 2,678,337 | 2,691,108 | 2,662,954 | 2,659,268 | |||||||||||||||
79,746 | 126,397 | 62,585 | 74,812 | 88,584 | ||||||||||||||||
Liabilities | 2,882,943 | 2,846,824 | 2,797,442 | 2,776,902 | 2,782,703 | |||||||||||||||
Shareholders' equity | 347,795 | 349,769 | 352,994 | 348,027 | 364,138 | |||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Annualized return on average assets | 1.10 | % | 0.98 | % | 0.83 | % | 1.31 | % | 1.01 | % | ||||||||||
Annualized return on average equity | 10.18 | % | 8.95 | % | 7.41 | % | 11.78 | % | 8.76 | % | ||||||||||
Net interest margin (1) | 2.71 | % | 3.06 | % | 3.24 | % | 3.44 | % | 3.50 | % | ||||||||||
Annualized noninterest income to average assets | 0.77 | % | 0.78 | % | 0.81 | % | 0.80 | % | 0.41 | % | ||||||||||
Efficiency ratio | 64.07 | % | 66.61 | % | 64.60 | % | 53.23 | % | 62.21 | % | ||||||||||
Loans by Type (at period end): | ||||||||||||||||||||
Commercial and industrial | $ | 485,028 | $ | 518,136 | $ | 534,521 | $ | 496,347 | $ | 499,048 | ||||||||||
Commercial real estate - owner occupied | 280,273 | 275,712 | 276,515 | 246,109 | 235,519 | |||||||||||||||
Commercial real estate - non-owner occupied | 799,084 | 802,574 | 840,755 | 803,611 | 832,156 | |||||||||||||||
Construction and development | 205,486 | 230,859 | 209,556 | 229,972 | 198,869 | |||||||||||||||
Consumer real estate | 429,028 | 429,517 | 425,649 | 402,615 | 386,628 | |||||||||||||||
Consumer | 50,860 | 52,759 | 55,125 | 53,382 | 52,715 | |||||||||||||||
Other | 42,482 | 49,371 | 65,207 | 80,762 | 85,334 | |||||||||||||||
Asset Quality Data: | ||||||||||||||||||||
Allowance for credit losses on loans to total loans | 1.05 | % | 1.08 | % | 1.05 | % | 1.03 | % | 0.98 | % | ||||||||||
Allowance for credit losses on loans to non-performing loans | 376 | % | 228 | % | 249 | % | 222 | % | 333 | % | ||||||||||
Nonaccrual loans | $ | 6,430 | $ | 11,216 | $ | 10,123 | $ | 10,714 | $ | 6,734 | ||||||||||
Loans - over 90 days past due | 3,874 | 1,815 | 1,182 | 10,222 | 6,096 | |||||||||||||||
Total non-performing loans | 6,430 | 11,216 | 10,123 | 10,714 | 6,734 | |||||||||||||||
OREO and repossessed assets | 11 | 11 | — | — | 165 | |||||||||||||||
Total non-performing assets | 6,441 | 11,227 | 10,123 | 10,714 | 6,899 | |||||||||||||||
Non-performing loans to total loans held for investment | 0.28 | % | 0.48 | % | 0.42 | % | 0.46 | % | 0.29 | % | ||||||||||
Non-performing assets to total assets | 0.20 | % | 0.35 | % | 0.31 | % | 0.34 | % | 0.22 | % | ||||||||||
Non-performing assets to total loans held for investment and OREO | 0.28 | % | 0.48 | % | 0.42 | % | 0.46 | % | 0.30 | % | ||||||||||
Annualized net charge-offs to average loans | 0.06 | % | 0.03 | % | 0.03 | % | 0.03 | % | 0.02 | % | ||||||||||
Net charge-offs | $ | 350 | $ | 184 | $ | 165 | $ | 172 | $ | 120 | ||||||||||
Interest Rates and Yields: | ||||||||||||||||||||
Loans | 5.98 | % | 5.79 | % | 5.49 | % | 5.03 | % | 4.62 | % | ||||||||||
Securities (1) | 2.78 | % | 2.64 | % | 2.52 | % | 2.53 | % | 2.29 | % | ||||||||||
Total interest-earning assets (1) | 5.48 | % | 5.33 | % | 4.99 | % | 4.66 | % | 4.17 | % | ||||||||||
Deposits | 2.85 | % | 2.26 | % | 1.77 | % | 1.20 | % | 0.62 | % | ||||||||||
Borrowings and repurchase agreements | 5.24 | % | 5.16 | % | 5.09 | % | 4.22 | % | 3.41 | % | ||||||||||
Total interest-bearing liabilities | 3.42 | % | 2.83 | % | 2.28 | % | 1.63 | % | 0.93 | % | ||||||||||
Other Information: | ||||||||||||||||||||
Full-time equivalent employees | 366 | 381 | 401 | 397 | 387 |
_____________________
This information is preliminary and based on
(1) Net Interest Margin, Securities yields, and Total interest-earning asset yields are calculated on a tax-equivalent basis.
Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)
Third quarter 2023 Earnings Release
For the Three Months Ended | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||
Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate | |||||||||||||||||||
Interest-Earning Assets | ||||||||||||||||||||||||
Loans (1) | $ | 2,332,622 | $ | 35,157 | 5.98 | % | $ | 2,241,355 | $ | 26,128 | 4.62 | % | ||||||||||||
Loans held for sale | 34,625 | 284 | 3.25 | % | 94,811 | 1,207 | 5.05 | % | ||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable investment securities (2) | 328,666 | 2,264 | 2.76 | % | 396,358 | 2,181 | 2.20 | % | ||||||||||||||||
Investment securities exempt from federal income tax (3) | 52,059 | 301 | 2.93 | % | 54,575 | 314 | 2.92 | % | ||||||||||||||||
Total securities | 380,725 | 2,565 | 2.78 | % | 450,933 | 2,495 | 2.29 | % | ||||||||||||||||
Cash balances in other banks | 242,700 | 3,218 | 5.26 | % | 120,624 | 617 | 2.03 | % | ||||||||||||||||
Funds sold | 2,012 | 40 | 7.89 | % | 755 | 7 | 3.65 | % | ||||||||||||||||
Total interest-earning assets | 2,992,684 | 41,264 | 5.48 | % | 2,908,478 | 30,454 | 4.17 | % | ||||||||||||||||
Noninterest-earning assets | 238,054 | 238,363 | ||||||||||||||||||||||
Total assets | $ | 3,230,738 | $ | 3,146,841 | ||||||||||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 915,604 | 6,672 | 2.89 | % | $ | 821,545 | 1,205 | 0.58 | % | ||||||||||||||
Savings and money market deposits | 597,310 | 4,393 | 2.92 | % | 709,591 | 1,603 | 0.90 | % | ||||||||||||||||
Time deposits | 831,791 | 8,777 | 4.19 | % | 462,036 | 1,332 | 1.14 | % | ||||||||||||||||
Total interest-bearing deposits | 2,344,705 | 19,842 | 3.36 | % | 1,993,172 | 4,140 | 0.82 | % | ||||||||||||||||
Borrowings and repurchase agreements | 79,746 | 1,053 | 5.24 | % | 88,584 | 761 | 3.41 | % | ||||||||||||||||
Total interest-bearing liabilities | 2,424,451 | 20,895 | 3.42 | % | 2,081,756 | 4,901 | 0.93 | % | ||||||||||||||||
Noninterest-bearing deposits | 415,651 | 666,096 | ||||||||||||||||||||||
Total funding sources | 2,840,102 | 2,747,852 | ||||||||||||||||||||||
Noninterest-bearing liabilities | 42,841 | 34,851 | ||||||||||||||||||||||
Shareholders’ equity | 347,795 | 364,138 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,230,738 | $ | 3,146,841 | ||||||||||||||||||||
Net interest spread (4) | 2.06 | % | 3.23 | % | ||||||||||||||||||||
Net interest income/margin (5) | $ | 20,369 | 2.71 | % | $ | 25,553 | 3.50 | % |
_____________________
(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
Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)
Third quarter 2023 Earnings Release
For the three months ended | For the nine months ended | |||||||||||||||||||||||||||
Annualized pretax preprovision return on assets | ||||||||||||||||||||||||||||
Annualized return on assets (GAAP) | 1.10 | % | 0.98 | % | 0.83 | % | 1.31 | % | 1.01 | % | 0.97 | % | 1.22 | % | ||||||||||||||
Effect of income tax and provision expense | 0.08 | % | 0.23 | % | 0.51 | % | 0.55 | % | 0.36 | % | 0.27 | % | 0.34 | % | ||||||||||||||
Annualized pretax preprovision return on assets | 1.18 | % | 1.21 | % | 1.34 | % | 1.86 | % | 1.37 | % | 1.24 | % | 1.56 | % | ||||||||||||||
Effect of operational (recoveries) losses | (0.07 | )% | — | — | (0.10 | )% | 0.28 | % | (0.02 | )% | 0.09 | % | ||||||||||||||||
Effect of the reversal of executive incentives | — | — | — | — | (0.10 | )% | — | (0.03 | )% | |||||||||||||||||||
Adjusted annualized pretax preprovision return on assets | 1.11 | % | 1.21 | % | 1.34 | % | 1.76 | % | 1.55 | % | 1.22 | % | 1.62 | % | ||||||||||||||
Annualized return on tangible common equity | ||||||||||||||||||||||||||||
Annualized return on equity (GAAP) | 10.18 | % | 8.95 | % | 7.41 | % | 11.78 | % | 8.76 | % | 8.85 | % | 10.41 | % | ||||||||||||||
Effect of goodwill and other intangibles | 1.52 | % | 1.34 | % | 1.10 | % | 1.81 | % | 1.29 | % | 1.32 | % | 1.53 | % | ||||||||||||||
Return on tangible common equity | 11.70 | % | 10.29 | % | 8.51 | % | 13.59 | % | 10.05 | % | 10.17 | % | 11.94 | % | ||||||||||||||
Effect of operational (recoveries) losses | (0.65 | )% | — | — | (0.97 | )% | 2.74 | % | (0.22 | )% | 0.91 | % | ||||||||||||||||
Effect of the reversal of executive incentives | — | — | — | — | (0.96 | )% | — | (0.32 | )% | |||||||||||||||||||
Adjusted return on tangible common equity | 11.05 | % | 10.29 | % | 8.51 | % | 12.62 | % | 11.83 | % | 9.95 | % | 12.53 | % | ||||||||||||||
Tangible book value per share of common stock | ||||||||||||||||||||||||||||
Book value per share of common stock (GAAP) | $ | 16.67 | $ | 16.64 | $ | 16.57 | $ | 16.31 | $ | 15.84 | $ | 16.67 | $ | 15.84 | ||||||||||||||
Effect of goodwill and other intangibles | (2.17 | ) | (2.17 | ) | (2.14 | ) | (2.12 | ) | (2.12 | ) | (2.17 | ) | (2.12 | ) | ||||||||||||||
Tangible book value per share of common stock | $ | 14.50 | $ | 14.47 | $ | 14.43 | $ | 14.19 | $ | 13.72 | $ | 14.50 | $ | 13.72 | ||||||||||||||
Tangible book value per share of common stock less after-tax unrealized available for sale investment losses | ||||||||||||||||||||||||||||
Tangible book value per share of common stock | $ | 14.50 | $ | 14.47 | $ | 14.43 | $ | 14.19 | $ | 13.72 | $ | 14.50 | $ | 13.72 | ||||||||||||||
Effect of after-tax unrealized losses | 2.83 | 2.48 | 2.13 | 2.38 | 2.44 | 2.83 | 2.44 | |||||||||||||||||||||
Tangible book value per share of common stock less after-tax unrealized available for sale investment losses | $ | 17.33 | $ | 16.95 | $ | 16.56 | $ | 16.57 | $ | 16.16 | $ | 17.33 | $ | 16.16 | ||||||||||||||
Tangible common equity to tangible assets | ||||||||||||||||||||||||||||
Equity to Assets (GAAP) | 10.59 | % | 10.93 | % | 10.95 | % | 11.36 | % | 10.97 | % | 10.59 | % | 10.97 | % | ||||||||||||||
Effect of goodwill and other intangibles | (1.25 | )% | (1.29 | )% | (1.28 | )% | (1.33 | )% | (1.32 | )% | (1.25 | )% | (1.32 | )% | ||||||||||||||
Tangible common equity to tangible assets | 9.34 | % | 9.64 | % | 9.67 | % | 10.03 | % | 9.65 | % | 9.34 | % | 9.65 | % | ||||||||||||||
Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses | ||||||||||||||||||||||||||||
Tangible common equity to tangible assets | 9.34 | % | 9.64 | % | 9.67 | % | 10.03 | % | 9.65 | % | 9.34 | % | 9.65 | % | ||||||||||||||
Effect of after-tax unrealized losses | 1.62 | % | 1.47 | % | 1.27 | % | 1.49 | % | 1.52 | % | 1.62 | % | 1.52 | % | ||||||||||||||
Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses | 10.96 | % | 11.11 | % | 10.94 | % | 11.52 | % | 11.17 | % | 10.96 | % | 11.17 | % | ||||||||||||||
Adjusted annualized noninterest expense as a percentage of average assets | ||||||||||||||||||||||||||||
Annualized noninterest expense as a percentage of average assets | 2.10 | % | 2.41 | % | 2.45 | % | 2.11 | % | 2.26 | % | 2.32 | % | 2.24 | % | ||||||||||||||
Effect of operational recoveries (losses) | 0.06 | % | — | — | 0.09 | % | (0.28 | )% | 0.02 | % | (0.09 | )% | ||||||||||||||||
Effect of the reversal of executive incentives | — | — | — | — | 0.10 | % | — | 0.03 | % | |||||||||||||||||||
Adjusted annualized noninterest expense as a percentage of average assets | 2.16 | % | 2.41 | % | 2.45 | % | 2.20 | % | 2.08 | % | 2.34 | % | 2.18 | % |
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NON-GAAP MEASURES
Certain releases may include financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information may include certain operating performance measures, which exclude charges that are not considered part of recurring operations. Such measures may include: “Annualized pre-tax pre-provision return on assets”, “Annualized return on tangible common equity”, “Tangible book value per share of common stock,” “Tangible book value per share of common stock less after-tax unrealized losses”, “Tangible common equity to tangible assets”, “Tangible common equity to tangible assets less after-tax unrealized available for sale investment losses”, “Adjusted annualized noninterest expense as a percentage of average assets”, or other measures.
Management may include 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.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements, as defined by federal securities laws, including statements about
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