CapStar Financial (CSTR) 25 Jan 192018 Q4 Earnings call transcript

Good morning ladies and gentlemen and welcome to the CapStar Financial Holdings Fourth Quarter 2018 Earnings Conference Call. Hosting the call today from CapStar are Ms. Claire Tucker, President and Chief Executive Officer; Mr. Rob Anderson, Chief Financial Officer and Chief Administrative Officer; and Mr. Chris Tietz, Chief Credit Officer of CapStar Bank. call replay recorded on today's made will that for available CapStar's note is and being be Please website. the in Please the note are website and call available to at SEC's the of CapStar's the presentation release, that and this www.sec.gov materials that on at filed that will be SEC CapStar with Form X-K earnings Investor website page CapStar the referred www.ir.capstarbank.com. Relations the may CapStar within during certain security that constitute presentation, statements of Also forward-looking the meaning comments make federal laws. the

Forward-looking views other statements respect things, with future performance. CapStar's financial reflect current to, events among and its

are are risk, facts of from the CapStar's statements. today. statements and expressed the uncertainties, predict results guarantees of to are as expectations, statements Actual control. forward-looking based by and performance are not Forward-looking upon and results different not prove CapStar's many to materially forward-looking historical Accordingly, of may projections to which difficult estimates, or implied be subject beyond and future and are assumptions

You by this are as result otherwise statements revise in reliance forward-looking Except on as of whether future any today. not speak required undue statements, any which of forward-looking CapStar to update new only disclaims contained obligation or or to a information, events presentation law, cautioned place otherwise.

presentation referred most the included the presentation presentation non-GAAP to and financial of GAAP this financial In to measures. reconciliation impacting the and non-GAAP the in call. The comparable may measures in non-GAAP this include certain release measures uncertainties measures addition, statements risk materials assumption earnings forward-looking and directly of are and

earnings Tucker, transcript only any nor I Claire am responsible President not provided -- by Chief not Executive that, the over and does With turning on of webcast CapStar's authorized website. is transcripts archived live edit presentation CapStar The Officer. and guarantee are CapStar's the Finally, now and Ms. third-parties. accuracy to of teleconference located and its for

everyone. Good operator. you, morning Thank

in our call. fourth of you all, appreciate we participating earnings quarter of First each XXXX

We merger news report many to integration. fronts, Athens successful on solid Federal including on and good our our the have progress closing of

As XXth, Xst. on June you and transaction know, we announced closed this on the partnership October XXXX

have may sound, so you front the performance you, with attention profitable of some deck I our drivers four, quarter, of that to of your in the you growth. page share of which If of I fourth presentation stated the are reflective in strategy the direct

CapStar a This is leading all, generated $X.XX. we fourth X.X% acquisition total in X.X% of of earnings quarter ROAA for the quarter Athens of of for loan X.XX% non-GAAP share the XXXX. which per was an EPS track non-GAAP four for of quarter operating Xst, with $X.XX, is less synergies from low gross and the back ratio well than years. loan are on as loans a to tangible quality X.XX% share lastly, earn October First the CapStar, at company. the as our We fourth ratio per book value XX% the increase XXXX for level indicator in I legacy versus entire coming growth totaled Federal closed mentioned, XX.X% the was of on And on asset portfolio. legacy Operating classified at of fourth XXXX. criticized And over loans as

me Let turn over additional may the that detail. discussion provide Rob, so to he

increase power prior increase over a operating of $X.XX, Athens of EPS over following; year. night, diluted basis Federal. good an our and we the combination Page $X.XX, prior operating with reported an Last Claire five on you, average XX year, morning, of XX% return Thank EPS everyone. assets the demonstrates X.XX%, negative of GAAP point

to basis X.XX%, the X.XX%. points And prior margin deposit our prior net basis with cost decreased reflecting cost XX interest XX points quarter Athens. the deposit from quarter expanded Our to from lower the

improve were added operating also with able We our to scale. leverage

ratio synergies cost kick efficiency later in XX.XX% and in improved XXXX. our Our before is this to

loan on to growth. move Let's

CapStar EOP from guidance XXXX. in quarter portfolio provides top throughout $XXX,XXX. loans, XX.X% loans in granularity Athens the our provided added Athens on diversification you we Excluding the More loan one the $XXX loans of the specifically, which increased average legacy and end fourth the legacy through is of at loan book. million size and XXXX, Athens is day further

we above by see at end. several payoffs balance can ending talk quarterly about loan let was you credit. balance, Claire As back our for turn me our that, loan year to charts, With so average did investment held it to the experience

Thank you, Rob.

the the core the in of $X.X on trends and mark loans eight in lower top seven key to plus you graph, our see directionally loans the reserve further The the loss I is note of graph, soundness principle. loan believe very improvement quality with loans. million, reserve page million, metrics, credit fair will current which the left credit in criticized review to of that quarters. left and a classified the will our is criticized X.XX% In of reserve a loans. key a metrics. past which of acquired move reflect This We over to let's the aligned portfolio. moment, attributes equates metrics detail our $XX.X value classified credit substantiate credit In investor presentation these clean and on the as the focus Now, loan that you review

six As The the X.X%. is last previously, banks. nonperforming was of level Athens This to quarter. quality a criticized favorably X.X%. $X.X the leading for have criticized during loans including the points classified compares the basis of and classified ratio Inclusive points, franchise, at XX and basis CapStar, In for Athens southeastern of low loans a of net legacy OREO charge-off million I to and release earnings reported company. peer plus This evening, that CapStar. at of we ratio of our level assets distributed asset ratio loans in Tennessee, mentioned legacy is East indicator is

the analysis. on specific reserve strategy in we $X.X have now In a we've and placed We million in this which value $X.X third a you you its to made XXXX. an that we impairment healthcare with quarter. past, of loan we shared upon down quarter, pivot had As the our with the thorough loan we spoken last liquidation impaired charged of about based million

the Looking pivot, the we back, grew prior ways. portfolio in loan to too quickly of kind wrong the

Specifically, larger we and trade deal characteristics territory. in our credit with were extending core enterprise value sizes outside

it quarter the a sector healthcare with rate conservative. the in we was that the is portfolio The the look the deal pre-pivot, more has size of that our was As pre-pivot. in risk today, half rate underwriting average healthcare what has we charge-off loan growth improved, at and the slowed, fourth booked took in average XXXX,

East of For the Tennessee entire by the level of about or portfolio, loans Athens level loans XX%. the portfolio, XX%. is Including has the leveraged dropped leveraged

further East same. limits of diving and the sector. that We although around the We East portfolio, have average previously shared granularity concentrations diversity, entire we that It the and with with house to terms have base loan addition franchise, in CapStar industry loan our sector of for real you for addition healthcare. estate practice remained lending the is Tennessee and the commercial increased franchise Tennessee the size, provides deeper discipline capital of also the noteworthy, believe

provide and pleased our of ask in I'll the ensuing Rob asset to performance. as detail we're financial in more now move So, summary, quality years. the company with around XXXX we forward

boosted loan production points for accretion higher loan loan overall yield. which points. The from the contributed loans, Claire. yield. biggest points The on driver in basis and yield $XXX,XXX XX Athens of legacy quarter loan accounting was loan This loan XX QX. the loan Thanks yield which to XX of returned our increase in yield basis a was two was had basis quarter to four the status, CapStar for basis X.XX% new and points book. fourth accrual combined by million adding added yield our to Purchase points added The had loan one up quarter yield we our $XXX our loan basis or which X.XX%, than

sensitive. our sheet our variable in Finally, loan and XX% is of nature balance remains portfolio overall asset rate

on deposits. move to Let's

beta down XX legacy went a deposits, XX to cost, deposit deposits Excluding $XXX base. lower XXXX. added in points deposits Athens book. basis deposit decreased one EOP cost as the The cost Deposit on X.X% equates deposit day of grew points cost quarter quarter lower the from million and to our Fed sticky X.XX%, in with for deposit CapStar Athens basis reflecting basis moved the points. as XX% CapStar XX the negative fourth a Athens up provides

are NOW. Additionally, in DDA a our checking deposits or all XX% either some account, of of form

a on down, sheet that We purchase Xst in loan margin, deal in our page? our all how see to institutions added this happen this banks let's both about increase, So, did with this could deposit ran with margin. like happen. accounting as up, What's we legacy it, and fact cost Anything in our sheets. yield Athens went got good which both in added rate to balance the the not quarter helped balance impacted went October asset-sensitive and we mid-December,

head Additionally, close, us balance as able as we will higher into marked we bond slightly the reposition position were This we at some portfolio Athens the well securities. sheet yielding to XXXX. into

So, noninterest on let's move income. to our

assets and to X.XX% impact average proceeds. with the of Our non-interest was BOLI merger Athens income the

quarter. is which the a impact seasonality weighted from deposit increased to stronger points. the our Treasury in fourth XX and our fees income smaller due a charges proceeds, due had non-interest reflects consistent third basis last to quarter, margins service had the Mortgage to average messaging the quarter thinner would with our on Athens' of you consumer to charges decreased volumes jumbo but deposits. BOLI the assets market. quarter, Excluding also have and this been sale loan Management mix service to Tri-Net

The sheet. allows an base expenses. to with larger over Athens to on leverage expense a balance move let's So, partnership us

and $X.X operating to personnel XX.X%. the $X quarter of excludes approximately with expenses. the new of FTEs Our million elevated high-visibility our merger-related in Williamson new stock XXX compensation of the ratio in and expense, the our for Athens, the added related had acquisition we combining quarter accrual, This County. million we branch $X efficiency true-up in hires, over expense fourth elevated relocation of ratio million of approximately an was cost incentive By charges

the in the run institutions. rate We CDI of was in not which the expense of booked also quarter, worth legacy $XXX,XXX

expense combined to work the will cost As we both synergies. stated and the work diligently our through capture base sides merger, through cautiously

So, let bit. the a speak me for about merger

way integration can with we on are full As you a page progressing XX, see, our Athens. to

and We to setup integration quarter, second anticipate the for synergies cost systems in the our have appearing the quarter. third we begin

third-party providers helping teams customers. our a the We for to us along dedicated transition have ensure smooth and way

as results the in communities shareholders, The our power we As the clients, June, with what quarter our can for provided formula for some to combined you tangible serve. these it and winning deliver we expected which bases. a three the entity discussed the be in of and combination fourth constituent

a let's page me turn and the So, that let second. about for talk

benefits each First, the provides client bases. of the our respective combination to

we'll bringing platform. private East qualify an deals, clients, will include our clients Tennessee. for SBA to base For a and commercial yet to those Athens' a be bigger to strong banking and who larger platform credit, capital help private don't banking This Treasury management do Management products, traditional expertise wealth

in to we Middle clients Athens' leverage our and For finance title opportunities consumer have businesses. Tennessee,

handful we into the opportunities. sides identify in economics, executable a Although tangible no both partnership and of revenue synergies bake have deal to worked

how effective help of meaningful, our the importance to community. to the enrich Nashville. and made with to funds This made first the of of the October our foundation and you the $X.X donation it remind Athens payment we outside of we Foundation. On will donation million are these we the partnership, place relates close Athens the As sizable, an excited and the is charitable Xst about communities, $XXX,XXX operating indication in will I

bank. created to becoming institution shareholders, profitability and billion good of relates start. a profile, growth funding towards a with a goal that will quarter have short, a we prospects, a strong high-performing strong is fourth it profile the As a us base, our In capital $X our march

to ahead of track. As economics, we deal we book on back we that expected track are all be. our value to and where tangible relates Cost or pleased saves, IRR it are are say earn to on

shares. million bottom to for per common $XX.XX of it the initial at issuance of our at X.X dilution, page, preferred you year and value As relates can end. with at tangible This book the includes by stands the see moved both the down share shares Athens and our the table

the buyback So, price. I'll the let's in timing move on to shares be stock the of especially quarter quarter at no from due capital. the bought above expect capital our the announcement, we to to million stock regulatory announced third in of should all current back and remind although, increased of Post-acquisition, the us are well and we you fourth December $X in active XXXX, guidelines. ratios you

our paid shareholders Additionally, we on as have all shareholders to on of a and record preferred XXth declared Xth. February $X.XX February common dividend for to be

So, about expectations talk let's our for XXXX.

recall economies let profile partnership that the of XXXX, year so been well-positioned our solidified our financial just prospects, is can't I quarter and plan the remain growth we credit, which funding a have has say with The been operate, in Coming First, strategy clean very energized a a in into me we year. with coming to we which for ROA. posted and execute have and the X.XX% Athens, robust. team we

in recently are jobs already as consolidating Nashville a to is AllianceBernstein maintain offices Amazon With in Asurion jobs. a for for announced jobs, to Nashville, X,XXX and loan it than low & which more we some XXX and double-digit to announced all X,XXX Ernst accounting various heard, jobs, how new of guidance, X,XXX here. have that Young might Nashville. you high growth backdrop relates announced coming will single XXXX. As

will range NIM beta. our can X.XX% X.XX%. believe our maintaining deposit our challenge growth to cost at and and managing between acceptable be You our an expect I

Our year-end the synergies then XXs as efficiency mid ratio migrate by down to should Athens XXs cost associated partnership. the to capture the be with high we low in and

we As in the of and the reload our Brentwood we new a in branch. reminder, cost add quarter, first FICA

growth. continue associated gross to expect hiring fully with pace we -- responsible of Additionally, our

should and XXX income points. XX range basis between non-interest Our

range. wealth goal XX% loan X.XX% Our goal deposit a and this to X% to an in with target the We infancy We fee ratio. stages, has to reach. level. SBA been still X.XX% a run within ROAA a within its XXX% should sheet to And is to produce balance

approximately $X.X CDI million Our purchase be in should accounting run expense our loan should $X and accretion XXXX million. at

basis Given XXXX net our rate XX%. should credit, should clean points in we in in around than tax come have XX our charge-offs less and

So, back Claire with closing to that, comments. it let turn me some for

CapStar's loan of metrics credit Rob. and demonstrated we going remains our and strategy. sound, that that the growth strategy We the reported portfolio of you, reflective forward Thank is yesterday believe one in profitable this growth. profitability clean are

on we increased we've legacy discipline Although requested considered and in posted of the deal that of have fourth XXXX, our pricing of solid XX% transactions as from quarter growth the maintained loan of passed structure. that level has bankers terms

that our one-time to we I've to we deal been this -- of of and with full received as our Associates principles pursuit continue deliver is opportunities bank CapStar terms partners unparalleled with our each Athens communities pleased differentiating the shareholders, intend strong consistent economics excellence We're of on and operate. our the The synergies. that focus in relationships shared which a on integration capturing results continue of goal of Greenwich customer cost recognition competition. our those an our and We tactic all keenly particularly meaningful customer in of connectivity associates are soundness from CapStar. with delivering goals experience, focused to our for outreach consistent financial bring in the we with for successful and and from

Continued penetration our center status for wallet clients in and customer bankers. all increase primary the is of of and front with bank more

suite product products. product Treasury Tennessee are in East partners about new Management and such as offerings, loan SBA excited the Our the

that value. core believe for M&A Given increasing share the that and building will attractive explore we of organic operate, growth. And and opportunities financially potential we which financing through market strategic franchise shareholder to markets continue we have in have the our we opportunities continued

in to for appreciative on this our that from company. you. CapStar you call. are Thank your the of on have and lines call now made support the many of we're Operator, the open continued ready investment of We participants questions

comes question KBW. Thank you. [Operator Mealor Instructions] first of Catherine Our from

line now Your is open.

Thanks. Good morning.

morning Good Catherine.

morning. Good

Just to start margin. the with want

So, up pretty Rob guide. substantially the moved you NIM previous from your guide

happened? into change what guide it to that quarter Thanks. happened I how was went you one Fed is, then, And surprise does from thinking? question I the what or guess, quarter a kind you pauses here? if versus the anything does change So, in particular guess, that Does this of

positive question the in, quarter, so helps as that Yes, a margin. we for the did we in understand from returned good one to the Fed that's in December lot It's -- we're -- the asset basically, banks acquisition. the all both finalized moved Catherine. non-accrual. ran we the third sheets. purchase have accounting But of impact. sure. accounting loan that and a asset-sensitive attributes We balance that both accrual had we When the in got We've mark Basically, hadn't on

I forward. from rate get our increase now now, going to two we nine that. guidance So, six one next well-positioned think is I we're think maybe year, for correct potentially If months

then of deposit would sides, So, say quarter with fairly we on big say, adding was in well cost did their that controlled I Athens. Athens both and also a job deposit well. the I for pieces the beta the our would And on as great legacy book CapStar, on

So, adding that in really helped us.

that of front. that So, bit a a little on surprise was

I'm to and Catherine for showing I legacy to the with the do that believed can Tennessee was we always really add East what for think CapStar closed that the that, Athens I we're is great us going just begin as it looked with that us. a would having thing be pleased and to at we franchise combination with in combining October. combination

range the -- Do then we the get of you then hike. range? does to And like maybe Great. another feel don't just pause, that end or holds you bottom and if the Fed Fed true

out. be I see it range. we'll I we'll in the plays how think mean,

their get give to funding, competitive the we so loan that Nashville be still we and risk, don't see customers The that is deposit is want we Catherine. quarter there side. increases but it risk on for a looking market or two, very cost the would the in think much I for

Claire, then one then all Got helpful. dollars is pre-pivot is the us Thank much One healthcare commentary on on there on way how book And then current of the balance the is can that book. in thing credit. maybe follow-up and appreciate about give book? it. That's that you to the on I you. And healthcare post-pivot? a think

all going Chris of in He's to Catherine, front got detail him. right I'm that. to look, to respond ask the

Great.

I of to and intrinsic and Hi pause Catherine, for the burned book is at how would pre-pivot as million have lot profile swapping have are pre-pivot/post-pivot, we the you be funded to that's $XXX back and assets that is off that -- you? lower given a go on a so forth. healthcare would had now The the right is issue leverage, so there and about us that characteristics better more capitalized, secured, concern think

I about We've tell be I'll analysis. you, specific right comparison. done So, that can't pretty now. a the stark just it's

downs and I XXXX, about, to Catherine, had add choosing us the of course would with I to think the if ran lenders book, you that. down unitranche exit coming million example. in conditions back not offering And was consistent about Healthcare months, that result an XX significant $XXX our go credits, specific If million. book will, $XXX pay months. million, about XX terms a of are probably book to $XXX were that as the We've that either We XXXX, and and in last throughout

from think then, has million begun And point, run pre-pivot mid-XXXs to back it lot book of the Chris' I build off. that we've $XXX up the And now. to so, a to

it. Got

the So, to half it of say safe would still that's be book?

that important. they we of to in more think would We all transaction that pulled met say I and to what that pre-pivot simply But home. in profiles in pulled very books were keep because No, characteristics to thought I close frankness those don't chose some much [Indiscernible] we is so.

build So, levels. historically that, are loans I now, low say criticized we of except reflected historic anything into and some again, to at what working wouldn't our through that, classified and are they

on of criticized? or $XXX much one classified million is Great. And then that How follow-up.

$X it's Yes, million.

great. Okay, the Thanks color. for

you. Thank

Scouten from Thank Stephen Sandler question comes you. And our next of O'Neill.

line open. now is Your

Hey morning. Good everyone.

Stephen. morning Good

Good morning Stephen.

have the legacy deposit any around Rob, the color in of the of they cost, down point can -- NIM quarter? kind CapStar around of deposit betas. in breaking I those appreciate you the some Or move that versus -- funding how maybe much what and the what the betas, move But do in specifics the came the reacted core bank? Athens out from how XX basis you

Sure.

the in moved of So, recall, basis their quarter two CapStar of Athens had just third legacy the and XXX basis cost XX had Athens roughly a point XX up on legacy basis their book quarter if XX you up points to deposits. to in approximately about cost XX. We the side. moved we on points

the and talked sheet way. So, we and of their when power balance what really the all helping partnered sticky in with Athens deposit we've is about us this along is low-cost a book better fund

winning and I think that. I a of we'll on And to combination, is little a to our is and deposits. be executing going gathering help us Nashville So, partners tougher some think this Athens around to look

So, all it's a way good partnership around. the

hikes range combined really -- company, for any XQ, about Catherine's higher of And anticipate. at don't is betas beta probably a you maybe good you kind a if the question, might down get that for there doubling if XXXX? get being risk look the we of on on XQ the that NIM sure. point -- we know Yes, deposit rate any said than I is hikes don't can through we But think kind and rate like for we on

Well, certainly that's mean, risk. the I

we're to but you our to to slightly tick-up, book, And loan we'll the can it's to going grow As tricky. expect have and manage cost that. that be deposit have fund think through we going I to

the rate a where first, Half going year, in in the So, lands put on wouldn't from see months be we'll now. of what? know I I to and the that's six perhaps But I'd the don't but think a challenge I beta quarter. increase it anticipate that, first if

way? for any just cost what's moved and that for up Or Okay. the Fair be enough. saves maybe driving curious the And there's expedited in conversion. I'm potential the to to of transaction, on any if XQ Athens systems the get timing

the Stephen, doing pretty I April loaded in conversion and think terms we're Xth. locked of that weekend of

the of in. know, very you can't As not so my That's being we've that availability all. weekend I part the then of the But that's and long the operations on -- is very of teams of the got selecting core built time providers reminds team the in driver weekend expedited feel begin convert comfortable at really that synergies going out, see far to not come the that bear. more we that to very and we're that's me see to

how Okay, kind great. are on from right just we And is structure. if loan Or for loan loans, originations lastly pickup I booking Is Claire, and was conservatism take, around like end XXXX period more X%, to XXXX. growth it you push/pull of what's dynamics? really then growth, maybe back guidance? give to fourth mentioned your about quarter, can me, into these It downs? just we kind on hit look a stronger deals to going it as of want but pay in passing find more organic the those what's looked you or into days it guys maybe think given or of few the drive the slower the between

on they always want is describe they're and commercial their then we to, to supposed as know, that projects up, lines, a as the drawdown behave in great, book, real there payoff. they're think because, estate you it have which and we with means they completed them to way push/pull construction ramp I our

of a payoffs. level continue I think, see, we'll to strong So,

private be in bank thing, very in coming some good paying we're our and book, is in or terms obviously, the have purchasing in hurts shown that. groups companies, are an our that their it market and other happens, The always It's Nashville clients sell for to that equity battling off here particularly payoffs payoffs. so attractive in companies but and interest debts, recognized there C&I have of

example, having in larger I opportunities, on in going will ground some the think to some Adding good of example. got of East on I have Cleveland us think, relative instead We'll us. it, more market the our those to here. over Tennessee, where strong probably done hold to of we've group the loans team Athens there; some for sell for Athens a help bankers we've participations books loans to level allow the keep is to

that be enable we're to So, at will lower least levers there'll the different guidance. us that to able that the end think pull hit -- I of

and helpful as end the really strong the next. congrats of head year we the into on Okay,

appreciate Thank much. We so it. you

And you. Thank Stephens comes next question Tyler from our Incorporated. Stafford of

Your line is now open.

is this on this Terrell Andrew for morning. everybody. Hey, Tyler actually morning Good

Good morning Andrew.

Good morning.

Hey.

just X.XX% range. to on back color range, to I X.XX% appreciate So, maybe the the to the NIM go

or a GAAP core to Just clarify, is this accounting? basis on a NIM ex-purchase

No, it would include purchase accounting.

Okay. then Thanks. run fee move to income trying a of over the maybe to I'm rate fee to moving income. just kind get clean And to forward.

million anything BOLI that income unusual? there is So, $X benefit the this quarter in the other was fee line item than other

there. unfortunately, into Athens fairly Hogan, Dan than of that's bank. It's everything BOLI in is of to adding President that we're as mean are -- death that, I the the well. attached proceeds significantly. not the in But other No, the normal

that recognize title fourth quarter, on some Andrew, business, income Athens in before Rob have that I Yes. say, example, and have some not their would you mortgage sources through fee saying, does was good we've to what businesses. that just for adding had

So, I forward. think us those help will enhance going

impact margins peers. you. was Was sale a like any mix to just Athens Or refi Great. quickly. in then some this to higher to looked through volumes? nicely a coming the relatively there move of over component of gain Thank It on mortgage here? just of held compared And maybe

Athens We're volume, deck. Yes, predominantly points ran fee mortgage data I or we of the have the in terms XXX points. the there XX% sale believe for purchased on the in some do in the on the the and is quarter numbers back the basis mortgage stuff gain think I and about of about

for for questions me. it taking That's guys. Thanks it. Got my

Thank you.

you. Thank

Daniel from Raymond Cardenas of comes question James. next Our

Your line open. is now

good guys. morning Hey

Daniel. Good morning

Good morning.

activity kind given be expect back? So, efforts a Athens, you of your a on loan update us you million few with $X growth how given can announcement your maybe outlook weeks to buyback on aggressive give the could your and quick integration

Yes. very when and a certainly, tangible attractive looks it book are of above painful range at mean prices, I comps an banks us. price it's well to bank trading $X.XX value in in I this to to these that. at come our mean, that make ROA see

pricing think, I see especially at these active, be levels. you can So, us

And what's kind kind -- you little saw mean charge-off giving QX, Okay. I higher point be year. to to gave of you seems XXXX. that, XX It bit a anything on XX of maybe what then kind charge-off guidance pause for last a be project there QX than for seems giving QX in of that or to we of in it to the basis is concern you range? -- say, to absent

think XX points. No, is I than what I less basis said

previously, I'll our XX we with on we've this behind low in it, guided getting feel Chris think good from the Certainly, book. imminent the there horizon. credit and levels let nothing always at is fourth we us credit are think quarter, to about XX. I And about the metrics all but talk

Yes.

look majority, level. or reported if the classified and our over book. XX-month historically, look period the historically one, that loans you, to percent loss they're experience And vast you a we've XX-plus -- out comes when at at criticized of our -- low we of If that at XX

primarily that low of relatively out at transactions In we loss right book would look better low you addition, expectation consists where it secure or we have that. are a substantially when coming where now, of

loan it our be criticized disclosures classified as continue right of and assessment quarter. for and to our that's the is in levels now transparent we'll So,

me it's feel comment year. to add end Historically, the range the than of than very pegging leading before. indicators that basis think the out levels Yes. laid we that we've position XX, as and points my And And just be class about net less different the recovery calls we've being that, ran done a Daniel, could XX of what is XX I book range low think. the way quick of in good very I to most the spectrum. at Rob a would again, said, by to been it I

my other and been have right. Thanks All All great. guys. questions answered. Okay, asked

Thank you, Daniel.

Daniel. Thanks

Hunsicker question next Laurie Thank of comes Point. you. from [Operator Our Compass Instructions]

open. now is line Your

morning. Good thanks. Hi

Laurie. morning Good

Laurie. Good morning

Just the comprised about charge-offs. wanted know the credit, just that that of was? could color specific you healthcare what staying If I back a few a of us to most Can go we to give size credit your on little things.

Sure Laurie.

specific had that in our We $X.X we believe think that the my of was $X.X comments prior I value it that quarters to analysis already million. and appropriate. We did loan reserve million. I a assigned to in said liquidation the is down charged

Okay.

And right what value is carrying now? the so current

Approximately $XXX,XXX.

$XXX,XXX, okay.

in so appearing your -- your is correct? now in non-performers, still that that's And

well. the balances, last thing quarter I as the believe whole was residual quarter prior and That

healthcare are what And non-performers? your Okay. total

far that in non-performers, right space the it As now. healthcare as is

are no There others.

Yes.

your of quarter, Okay. And in healthcare? much $X.X million then charge-offs the how for were

That that was -- one it credit.

entire was credit. That That the was--

okay. one credit, that Just

Correct.

helpful. That's

this growth around on of of then it about quarter your your and comments exclusive we're loan comments thinking on And just Okay. and sort how charge-offs.

So, to if annually loss provision million that is or $X.X too a that run low? rate loan thinking of the we're million, $X is a rate good run in

look I'd at is say that would I charge-off, it the two pieces. what in Well,

the think lower end be of that was than So, was basis said think nothing and range. imminent we at has charge-off XX could the that I points there Chris one, less I guidance

The of second provision growth. for loan the piece is

We assumption. say, around modeling. have anywhere typically would is loan to on around I for XXX new a good growth a provisioning good XXX as guided XXX to you modeling

Perfect.

Okay. That's helpful.

sits then into or points are basis full dollar accretion And income. XX What income $XXX,XXX. for accretion this within year XXXX? accretion The Okay. I'm amount that the you using your quarter, is margin backing guidance

would accounting said XX, purchase roughly Which we $X is about in there on be million. page accretion

$X million, okay.

to okay, four of basis -- numbers your or so that drop to points round maybe three margin? going points to is basis So, XX

$XXX,XXX, Approximately, loan was quarter mentioned. mean, think I the yes. I this accretion I

Okay.

points thought backing into basis you a XX was higher number. I said Sorry,

Okay.

a putting that should guess, into here? together net as about thinking reported those we next widen pieces we margin. very you all that and wide gave I see so, And We're margin margin. How range something core actually at quarter? you core looking Is head on interest be could

margin. the is which the XX And loan yield, piece it on Yes, guidance accounting roughly nine I points, on say the Laurie. the certainly. purchase I what on includes the is margin, basis points mean was basis would

And you of your deposits? Okay. correspondent the have amount do dollar

is say, but a that's more Hang I'll on. team saying, I'd that. million, would but about have my million detailed $XXX I on. roughly and get $XXX do, I I number, say We're

Okay.

Okay, great. helpful. That's

just And you. of last Okay. picture for then question, bigger Claire, sort

you terms maybe to next As three about versus some over want we forward M&A targets thinking look asset as two about years? you think your M&A you these CapStar? to be how buyback the size at us forward in And at are also of big M&A, mentioned look levels? Thanks. help of of you how sort How

couple A of Laurie. things, question. Great

opportunities. major at a look number. when that include evaluate We we have certainly four criteria M&A scaled would Those just we

deal it is does that's -- in a worth be effort, your but will, enough to you efficiency. of the terms important what if because want it operating of You big also scale

Number two for like over be So, low-cost We'd would if one. deposits. that example. XX%, you to core would DA see will, be

one in bank on So, the the And other a three dissimilar company fee a Athens. a SBA might has we a back a made for that be we would attributes, not was that attractive of bank. sticky that acquisition core did be a of to or things very is lift-out which Number XXXX of standalone low-cost would of the be XXXX. that us have a that deposit the the example that Farmington is base, then January team mortgage. business team An product or to company in or bank complementary of would four income

would consider. are really we that So, drivers key those attributes the four

uses attractive about we those financially we mentioned, to along. but and internal for see capital our have of attractive organic believe most as M&A I And strategically rates will we with room really evaluate ample beneficial your and to is shareholders. As continue got consider alternative return our I we've most growth, buyback, weigh the and question of come which those on think, to to one the

years? Okay, great. be? would fast-forward How yourself think at And billion do today. we you size, you're if think big you two, then to How like about $X about three if you sitting

do -- just the all sweet various determine sizes we to I work certainly of virtue a financial as metrics of at by you -- lot the do where banks think it five billion to $X for a a four, example. of a years. over being the say pure bank $X is, spot us Well, in in if would in and terms trying if billion of three, high-performing context of looking the company, target next the at you look would for And I be

questions. Great. for Thank you my taking

interest. Sure. your Thanks for

Laurie. Thanks

our any over Thank closing Ms. you. And remarks. Claire gentlemen, back Tucker session. would call now like I conclude and the ladies does to for to turn question-and-answer this

participating each Thank on. I know season you've of and this of again, other could lot for earnings to call. you, Once the a in calls operator. you thanks you for obviously is got be you

the analysts, any of those the demonstrated. your and of appreciative of on CapStar, for And you investors you've the our attention. are that for we particularly time who that that confidence in we're very So, call appreciate you investment,

you of well. who investment with the considering in We that XXXX. we CapStar, you as is good those a For all dialogue believe are would welcome well-positioned certainly further do an company for

that take As deliver forward believe really company and to we've profitable the the we're promised. the in to we been we've both Rob continue that said, best position sound growth

call we has good a everyone with day. So, that, the and end hope will

in today's participating you conference. concludes Ladies today's for This program. gentlemen, thank and

a have Everyone, disconnect. all great day. may You