cstr-ex991

cstr-ex991_6.htm

Exhibit 99.1

EARNINGS RELEASE

CONTACT

Mike Fowler

Chief Financial Officer

(615) 732-7404

CapStar Financial Holdings, Inc. Reports Second Quarter 2020 Results

Strong Pre-tax Pre-provision Income led by Record Mortgage Results

NASHVILLE, TN, July 23, 2020 GlobeNewswire -- 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.

(1) Operating measures exclude merger-related expenses unrelated to CapStar’s normal operations. 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.

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

	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

	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	%

_____________________

*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

	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

	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

	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

	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	%