CapStar Financial (CSTR) 23 Apr 212021 Q1 Earnings call transcript

Good morning, ladies and gentlemen and welcome to CapStar Financial Holdings first quarter 2021 earnings conference call. Hosting the call today from CapStar are Tim Schools, President and Chief Executive Officer, Denis Duncan, Chief Financial Officer and Chris Tietz, Chief Credit Officer. Please note that today's call is being recorded and will be made available for replay on CapStar's website. Please note that CapStar's earnings release, the presentation materials that will be referred to in this call and Form 8-K that CapStar filed with the SEC are available on SEC's website at www.sec.gov and the Investor Relations page at CapStar's website at www.ir.capstarbank.com. Also during this presentation, CapStar may make certain comments that constitute forward-looking statements within the meaning of the federal securities laws.

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

not and are CapStar's statements historical are and Forward-looking based expectations, estimates -- facts upon

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forward-looking not future guarantees Accordingly, performance to subject are statements and assumptions are risks, uncertainties. of and

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these implied [indiscernible] to control. Actual -- forward-looking CapStar's to materially of beyond be which or predict may and results different statements. from be by may prove expressed difficult results

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

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

President turn Finally, teleconference conference beyond is located provided any guarantee of the third Chief not the Tim earnings website. With Officer. and and CapStar's CapStar's edit on Executive now and and responsible to accuracy over not will CapStar does parties archived live like the nor are authorized by webcast transcripts for transcripts Schools, I that, to

hear call. difficulties base now. get confirmation morning if I you. tangible are some am on the pre-tax we you participating a We were results difficulties. to here. are appreciate on XX.XX% We you for of a return But somebody of a hearing of to reported earnings of equity review and Okay. good began assets opportunity can don't share hard with average Are $X.XX, am a annualized Is a sound the common capital our with could operator. our the We XX.XX% the there year per hearing annualized all know. us? All of check? hearing I year. having We thank sorry right. strong about we I pre-provisioned quarter quarter. strong kind end way guess do able I provide that on time and but and cautiously X.XX% risk-based ratio was very capital remainder We optimistic our do of guidance the the at whereby not the total having

strong to risk remains profitability, In focus addition sound management. our our

first about are is While feel improving many and very there very well. of continue our to We quarter still it showed signs perform early economy, unknowns. and good an our credit customers

criticized in we quarter, our as as well and experienced This past loans levels improvements dues. classified

dues not renewed. past had elevated been were loans remember, you but yet at due If to that had matured year-end

So this anticipated. positive progress was

but loan credit We the believe continue we to banks many quarter, while unlike remain first to reserves reasons that be losses low it pandemic. prudent for to qualitative are the disciplined due releasing experience elevated metrics in is

loan for and loan resulting to allowance accounting fair marks Importantly, loans for provided we basis value this additional two for in excluding to losses strong growth growth reserves our points PPP X.XX%. experienced and increase

organic four, one, developing past two, And We capital practices. Number three, Number four initiatives. about management and growth. risk over earnings enhancing have profitability sound consistency. year spoken strategic maintaining accelerating disciplined the allocation. Number

a of initiatives. as associates. in leader state whole. our see I of working team am and our to banks, the our began the I hard our how benefits across and you last, and execution of them dedicated a tell two proud you cannot are integrated initial improving performance, They from each quarter have This term were in pandemic net margin, manager long their take through a Number four short we to second to to are one. our I at a doing strategic Related and we better families. interest how a are PPP focused being and walk on of like with and of term. endured work would profitability, these each

deposit excess are our be pricing and We proactively at to pricing. disciplined look doing on loan best invest cash,

we renewal for a was taxes. rate basis a dollar an XXX on risk with credit point spread offered multi quarter, existing This million that pre-tax expenses, passed before a loan fixed customer XX-year and

business that We are to do just volume. going not of kind to grow

management. when we also cheap be do expense want demonstrated prudent do be best growing but frugal. efficiently, cost. Profitability not revenue want just you not We to to are We cutting is

had portfolio their about a loans the two. to much We X.X% minimum several Number to only XX.X% will quarter on so quarter, a optimistic about see bankers am not of XX% XX% I to over growth exceeding and this year. approaching pipelines Tennessee I credits This our stronger in strong That from outstanding producers. the we investment I national additional Had Tennessee Middle strong from of manager loans growth, expectation years. been on Tennessee. XX%. decline XX commercial on core this strongest about as $XX continued have our Middle grew CapStar but have ago. going say our flat, average markets shared new of continuing of am three. in loans opportunity we where years results. East buy in and keep is we the to top to is added our just Today, On with enough relationship prior million reliance a to company this portfolio and three additional XX% credits driven excited additional or with first our really quarter four high area. an to heavy past would Middle management have and Knoxville and our chosen each Historically, our Number bankers forward. loan by loan we cannot of $XXX continue improving growth quarter probably shared Tennessee quarter national in by of million, a them in

a another reason customers is This participations. with and deemphasize team and know to frontline fantastic did working credit of Our them. well communicating and our job

many not feel are changing. of would in have manage partner and the some is suits always We one partners we do to level not that While and our do banks, see control. credits you not great challenged strong you this

strong our and sheet improved profile, capital a reserves levels. with have We balance strong credit strong

manager has prior relates capital. the we Lastly, continued evaluate past the our our risk things one business believe are of support is the peers. point, necessary in of a run Board having to to it In so level two equity and years how we strong strong of the to

However, capital has ago in several years to the we weighs raised IPO more able returns. hindsight, In deploy. also the was company recognize it been on than

do our of with investing in acquisition elected goal recall, to a partial might our business. the You transaction cash we last further on

a the rate, excess not substantial a goal our as will course It year and levels. share we sub-debt in With In repurchase quarter the very program in further serve onset of right. so forward. shareholders, execute the quarter, we this go chose last capital announced first capital to late capital offering year, the and as reversed be COVID do is to price the much. second was This quarter returning with if an did approved we of increasing a when additional lever conservative of attractive and to of we at raise

return it and the shareholders. our to organic to weighing will and We be growth our acquisition opportunities versus best try provide

financial business best stock to primary but there Our XX% We be invest our a is bank. Board profitable when run With that, capital hope Yesterday, further announced our turn we our and a are in will for safe performance will actions increase management but times cover quarterly our to quarter. our speak these our two of investment. in positive to to it the dividend. over the focus to also commitment I Dennis

quarter. slide net for good release the with interest income deck morning despite the fewer was the on days Tim fourth you quarter seven, million of In Thank the and in quarter consistent earnings everyone. $XX.X first

quarter, basis Net in income and net to in interest points deposits the $XXX,XXX down impacted the NIM slightly fourth XX They fees margin quarters. adversely $XX.X markets by from Adjusted for increased basis deposits On the for account an from quarter. NOW largely was points. Our from Investments on of growth. of the and the NIM continued first impacted earning on were the average average by hold and million XX a impact our about contributed quarter deposits the million in interest investments an on quarter slide prior shift sheet consistent $X.X excess adjusted the balance assets on the which PPP core margin benefited growth $XX quarter. over with X.XX% includes loan driven quarter our our from the of on $XX favorably fourth versus X.XX% quarter, was were large the loans adjusted million levels basis up basis million and continue over cash and up into loans the fourth by to up to continued few increase. quarter fourth fourth eight,

Our costs the to our lower continued the rates. points rates compared four quarter decline and basis to lower to fourth aggressively were as we in as deposit quarter continue deposit deposit

pipelines additional coupons The quarter a basis yield higher and Our and $XX the loans and Tennessee of strategically card additional annualized as Slide a and strength to market, and our PPP purchases run-off deposit slightly our from the excess loans portfolio at and end average balances the the build fee was are including bankers, less yields. Middle On out quarter interest slightly quarter about our strong of in we $X.X interchange businesses pricing bankers Total points mortgage on at XX adding XX, with income hiring in growth at PPP, for and of loan and the the through quarter continue fees $XX investment of worth revenue loans, loans with an across first with in our of loan transaction quarter-end. X.XX% the was priced lower record our over non three PPP $XXX to company. add increased opportunities, the due or million business, continuing within growth be round strategic the fourth SBA. Tri-Net fourth ongoing million to East addressed Knoxville at grow focus levels nine, slide rate million strengthen deposits. XX.X% declining fixed quarter debit loan including new in million

non XX, interest will the On our enhance going million also We insurance mortgage information income in forward. quarter purchased the regarding slide strength of additional which is business. additional bank-owned $XX provided in further life first

and loan quarter, a lower efficiency the resulted FCB, quarter discuss record in the While of XX $XX.X benefits, Chris operating XX which by volumes successful cost deferrals from quarter ratio were shows non expenses, it refinance Tietz, refinances. position. With expense focused And down credit our be slide volumes will our salaries strong interest I with growth. to for of the activity the savings principally FAS to XX.XX%, in million who to XX% and origination for in and volume continued slightly which discipline over were that, loan due turn will driven our being

Great. XX, Thank some in points page we the you past. I will emphasized Dennis. have reinforce On that

our risk to best interest our of Also, direct four portfolio. our committed borrowers classified. target that experiencing markets XX% communities this First, with bank will focused to This emphasize to on performance are robust I impact This X% and key or want ongoing customer greater of that We are deliver customers, and continuing each our and of We national consistent we two that our of criteria. time. relationships our demonstrated results and the less we that evaluate portfolio criticized now over our than indicators pandemic internal shareholders, against remain shared than with credits growing includes remain in reviews focus borrowers markets. in serves continued was our reviews. our teammates believe show target is

First, the assessment risk we of performance. make their direction operating forward-looking a of in

their Second, we sustainability adequacy of the evaluate and cash flow.

of These quality and and paying by forms return expected nine all XX% needed. owners payment liquidity. are weeks. and I are that the finally, interest tourism deferral pledged coverage look XX, in businesses have are and the support to and if some lodging, tied of in on representing down an our at collateral amortizing deferred the entertainment. the directly support by are to the to to impacted These basis Also of are coming we and borrowers pandemic. other evaluate willingness began. portfolio sectors XX% in capacity on the guarantors the are balances since predictable consistently of and X% borrowers of the provided we reduced tourism support remaining deferrals These X% in note borrowers. page their borrower, Third, regularly And pandemic live are balances to

deferrals. will next see believe not that me quarters, borrowers request the for surprise down would with the it I be new overall emerge some to While trend over few

While this businesses federal stimulus period. base I have an elixir that important recognize to many nothing has on, specific to we this provided during

possible. As rating credit assistance stimulus programs borrowers needs the worthiness to do, forward some and request our that them Through in we to who have year And pandemic. last is their stress not seek the this, them it any economic on remain accurately where needed for meet it. constructively committed will possible their expire, risk prudently and and understand the to in entirely work based they if capacity to step withstand remaining may aftermath with of we deferral

direction improvement impact those secured, or the and to are of and these vast consistent with with pandemic continuing believe observations of capital, we in believe that the improving As cases needed. well the the in quarters, direction we lingering of generally have portfolio risk environment. and if in with is impacted external have majority made in our that economic to in we access the continue Consistent credits acceptable prior the adequately see are to risk pandemic's many stability from effects, that to capitalized

In were all of the know oriented and Nashville addition, tourism hard year. entertainment last hit we sectors particularly

even out activity Nashville. the that is and get of levels, planning as owners clear down of this and reservations street, are nearly is walking Just sometimes. hotels ourselves restaurant looking it in to days pre-pandemic picking the the are volumes advance we in of returning hearing speaking without Anecdotally, up of the struggle book restaurant to we confirmed is that weekends window full

If turn key see XX, improvement page these themselves leading in to you will you observations manifesting indicators. with

levels XX at able expectations March be First, good to in our going these back line at maintain we forward. delinquencies are and will believe with we

remain loss and are rates and showing our classified loans low. Second, criticized incremental improvement

environment. cautiously With them of resolve and classified, off once and and will assessment rates. improvements, of different these two to XX criticized the you remain operating we to in months of for not the unusual observation that the the future is XX pandemic shake different but things our take are about optimistic remain vigilant effects remind I it industries credits to at

our signs window page our increased With these mind, XX things of see we believe when the and that, realities we despite temper feel and spending in economy activities sectors it themselves mind the we at out With as Dennis will tourism two is objects these post-pandemic reestablish that, I and we and turn the and this optimism that look Tim. With our first our last the the we how optimism, from to to all markets. of discretionary or turning believe recession that returning prudence similar economy. in of monitor maintaining in to the reserves in warranted back levels emerge

Okay. Actually, thank you Chris.

So completes today. for presentation that our

it turn we over for will operator, So questions.

[Operator Instructions].

Truist comes first of Your question Jennifer the of Demba from line Securities.

afternoon. you. Good Thank

Jennifer. Hi

annualized, asset strong. sense producers And press us that where a at class? XX.X% by came geographically you look call three months, of let's recent guess from how growth, loan in Can back many very I your the months? in, all have your six Tim. hired or to it, on last releases give I Question but revenue you

with own that's holding say say right of the balance would questions. Knoxville is one, it's I Nashville. its first So equal But now. would a I lot

X till So didn't mind, a keep get year, until and Knoxville in space in has in pandemic October. They till now October. their they an even last start hit. February didn't And office houses worked started

loans rent $XX commitments. in million $XX commitments. because they breakeven and loans year. the anyway, in It's with now first don't about and helped actually hit million unfunded million have have the we that in $XXX But So

would are say, coming strong. on I they So

almost say, in a So I keep say, heavily bank. I now mind, And professional weighted would we right generally. would broad equal a are commercial mix. Remember, still

community would kind banks. I of our stuff say, So occupied growth estate. a owner real C&I in and Less commercial mix of and

established markets very less this time. community in and Now growth are profitable banks but at those

in He at me portfolio of and my love loan with with count here the let first bankers, there an bankers who worked XX they $XXX bank. We million years. our his shared they three added quarter in for had On And Knoxville additional how it He's head. worked just everything. him had much in previously. banker

we had in came one Sumner Davidson a added portfolio. added And who we in then that $XX $XX million And over. a County. County. then so Davidson Rutherford-Williamson he We in County in a County in we here November portfolio. other two one had And we million added I guess, had have And added, gentleman

in that about the that November. last six added So whatever up we have to, adds since

much. Thanks so

Thank Yes. you.

Your from of the Hovde next of Brett Rabatin Group. line question comes

Hi guys. Good morning.

morning Brett. Good Hi.

Good morning.

talk to lot first pretty to XX might level, be with and about you for have to question. the from what know to else achieve I And expenses what talk of the achieve. newer a keep Can number a institutions, for the be then, in maybe expenses noise about expenses you growth from higher? trying got two quarter going it strongly be complicated able wanted I know And there's were you minute. might to you think, I the I a down FAS and might driver that here? a a But

a the your cash interest margin, don't that So PPP, long margins, Between it I dodge in the got mergers, I this is been on to really, want time. model hardest weighs have two have you, don't you but that internally. how your you know your model to done and trying I about have even excess environment modeling net the

are on so say are wouldn't we efficiency. on focused I And expenses. we focused really

focused are efficiency. We on

do opportunity. got have a help With when FAS couple XX. does that said, need to positions XX.X%, there's you think we we that fill. I And so And growth, loan

materially. it see up don't I going So

up rate it's But want at near You I point. really or we to out put hopefully, a number are know, don't modestly. this run

then and transactions? and enough. to one to And you point? about as And to how done? just Fair maybe Tim, other view impediments you additional Okay. sort guys for prospects just, do wanted view getting And about if M&A the optimistic you do might additional at of be things the this you talk potential environment any that

would first say are tired. employees thing I Well, our is,

our Not said, lives and And us, PPP. again, all to yourself, I endured in and in you converted last mean banks family listen year. led state the so, you of two pandemic and have all bought what of us if a I many people our

So our are and phenomenal tired. employees they are

we about horizon. excited am in So have on the real nothing CapStar I M&A. prospects the of

I have lot think our we in a transactions. learned three

We are not teeth. our perfect we but cutting are

I think have job. good done we a fairly

better on to deal a we of profitability this at luxury getting each higher have that lot capital have towards some We that ratios are And improve either and We right help we one. so the that want lower a have powder multiple. we buyback stocks. or that earnings company will we cash to got dry trade capital a we feel got use and and now,

huge do want to it's the for if we it but I this anything be we not next a would will going anything think certainly are did announce I We in So anything but to close prospect that can't say looking us. year. year. And we fall,

emphasize one, that of so to mortgage or And or as then you view Okay. mortgage commercial could, want the just deemphasize next speak. That's one I color. banking the and over a your if piece banking and outlook Do to around how you good business, that so? year for maybe just last

I Brett, take at that am crack to Dennis. this a one. is happy

first and quarter strong continued excited be mortgages levels just on. the to at for are We very seems has very, pretty that continuing

the to to market take going as are give our mortgage we good as us. results will them So long

mortgage are people the did another our had in be quarter first to got mortgage with Mortgage. results, a Farmington $X originations we continuing quarter. They of connection they of group. billion have a division, have phenomenal Surprisingly, seeing And are XXXX. And piece strong We refinancings the almost out there. great that just strong we in first

mortgage about Now, expenses you fourth that quarter. our a bit some year asked was our about, we record I said, last little were, think softening, a have what seen in quarter of

the was so And of little off first a that. quarter

quarter here. benefits do But some so mortgage because all incentive to And the But a the that to depends like. and are we mortgage state of in just and are the tax salaries to reasons. and lots well. the It see you will there continue that of desirability are Nashville Lots on of we and folks rates fourth. position optimistic compared first moving of less in no great

in as mortgage And are riding so maybe mortgage guys results They the are best good very, we going And keep country. company we busy. very in as best the southeast, our the can. little the are long to their

are $X I put Dennis So team. SouthTrust, I theirs. have far said. strategically, At as production. we At with and billion. annual to Brett, as Commerce, would really billion National mortgage what we of we our committed against And $X.X concur our mortgage up have program

We have got did billion. shop a they $X that's phenomenal, small

a into entity. were it's before so integrated have And They They here dominant very separate it bank. a community had we the got here Nashville. somewhat bank. our in But is operation business

opportunity we have that community banks. So to some indoor integrate an

banks Our markets. are mortgage a community somewhat portfolio

to it we to as company. want a% he going portfolio understands probably be that them. in to are for And our we speaking even cap of our on developing mortgage leader, working a revenue So

mortgage has we year, takes X.XX%. has that's to us pre-provision have us force. years to X.XX% we my X.XX% and at you without get happened is, when best What a don't to CapStar CapStar's mortgage have assets it say do goal, a when mortgage am pre-tax to great It's dominant and I two. X.XX% this committed have assets. it historically we great want going become pre-tax am so to me been And before, just, it So to my pre-provisioned at bank-only takes heard that to I

that the So in even I higher. bank the core us bar raise so to on times great takes want mortgage

color. the Thanks all appreciate I Tim. Great.

Brett. Thanks

with the Piper next Your from of question line Sandler. Stephen Scouten comes

Hi. Good afternoon everyone.

have it's to you funny call it's us. time for a for afternoon of the morning and sort It's Hi. because

on a basis Yes. I end reductions. the on maybe to Tim and SNC loan follow-up Dennis, guess just the lower again was very of but point. which little because growth impressive Good of period

Now off? run that its off to would a you Or like take there to to the much any of will of got is you own have to that license out kind of level, be that specific that left SNCs low such more portfolio? run

ahead, Go Chris.

Yes. portfolio, good relationships now, It's of point all folks. a a to question, couple We with in good these Stephen. X% things. our I of market. is do have want Right it of out Nearly non-SNC with non-credit and

We have some meaningful fees. treasury management

have And some with meaningful deposits. borrowers we have of We SNC outside lending transaction. activities those the we some do some that of

about So we is we us. I level for a would to just strategic say, But there. manageable be have do this what

are the volume that that for us going and but happen other of not to help sake kind a resource with just We make of objectives. use our can try volume as strategic

not them a I saw mean your to need I XX% quality call SNCs don't banker that? I Bryan Yes. a or to whatever, at to for And other that the And you XXXX have Steven, were on you just me. what doing one my a if anti have give That's Chris, paying but bankers that. of don't balance loans of am I And incentives commercial number But number really your I had I if I know of me. XX% it why loans. would Jordan end was other pay and have or somebody sheet. to not SNC. I I just can phone and want seen numbers are participations are day say, and staggering got point,

our So participations down. are

We certainly strategic. not are not are they but against them

less or fine. X% think I is

attention. on like down just $XX our bought not get I SNCs. going growth wasn't had they paying are gone said, XX% like were loans mean we would frankly, hyper grown $XX been have focused have million, I to would and We it. not I I million, and

customers they where we participation. months. are at. go really how where our that's So in they Knoxville one to we are know They don't the is find lead have feel goal. And XX million $XXX good and

That's great.

I given the continue But appear Okay. if obviously best capital, M&A. would is think you it floor buyback where know a to of mentioned capital to be trade you sort would maybe constraining Am I how growth low I it what's organic And ratio would can near missing just the that And then is? term, you follow-up the terms around ask way about on allocate on anything authorization. maybe Or to capital any today? the of repurchase the M&A. book tangible use take whatever want in or the that in versus you there? your guys and you TC

a environment. company, want of But now. happy that I Hold couple But levers. of us last that summer probably lot it the I am Well, over And excited gave a things. being questions. or to That's number lever prudent so, one I second. lot I XX that a of set to in lever. number a one, Board on the one, nor just am really just Running didn't have I lever here here. glasses months with place was have that my have

our am if Stephen, got other the deck, there's in go to been decks, we slide that have you I to have glad lever. studying we that then a slides. And have So and

Let Right back, me go mouse here. my slow. is

So on I and didn't XX/XX that slide of data. XX, this there's as peer the of a slide have sort presented is shows because

million penny-to-penny. can that's see like But outstanding match our mean Service are of $XX XX/XX, to million CETX are generally First not total about And excess I banks have I $XX trying well-run got on base. we you lower to there's our And And and than points XXX this. even we basis over. we so risk feel capital.

I hear are when book. to running company. a it's price you so And hard on you the

If it for. probably we business. hard. towards switch if use But we feel we the period it's buyback. So here the That's we wide investing margin what do looking are it close, will for we will a in our that buyback, it's at be will for during and more

as want are just what lever. another have or I But hand am So out it thinking. our pricing excited really targets we to don't to

maybe the back Got detail Thanks it. moving me. SNC Kind one more Tim. then Yes. That's there. of for And conversation. helpful to very just

out You impressive these the in have worked of that is lenders got now all much and new of portfolio team and which the you Knoxville.

So double near even pace is sustainable Is this it? kind you maybe And there think of digit is to could that term? here a growth? low be some that upside loan

Again, I I deliver. a I am to taught because do. always person under over promise not guidance and was

know are I like bankers and conversations So get we I inbound but like, would don't And from hey, excited. think, myself, I of am want to got to have these markets bankers other that I talk. ahead and

to We banker million but say what new in now town. a $XXX are can't talking a one I right town

so And our hoping. to count I loans see. on quarter. why every XX%. But And see not grow But our X% can't I bankers that will we don't and can am are on this you at for can't I loans hope the be. range sure our that end point what of year, And in time, X% it tell I markets year XX%. you up average will to

Yes.

comments more. what, people you its in, I the tell tell why heard doesn't When loans other thing. one from you of let all was one I grow I came you me and CapStar

in charge-off We are You the California? large Why are Nashville. in that. changing was

growth In year joined, credits before ago. and averaged I Athens group as far I then out X% not loan seven And backed are all acquisition, our And years did, CRE subtracted the participation. about loans in five Tennessee. I and loan what growth, shared in lending took as years the are I about We California. Nashville subtracted I total joined national I outstanding per the the

and to are And the we can keeping we change have same rely participations we that think quality. credit we working the with X$ to to So got doesn't think XX% do team that need we that. on

Yes. Understood.

Great. Tim, appreciate I Thanks Dennis. the for the color. Okay. time,

Yes.

Stephen. you Thank

comes from Your with line Raymond of Samma Ammar next the question James.

Hi Ammar.

afternoon, may good or morning just Good on May be. whichever a question be it credit.

got and coming have You hear organically growing as in on I allowance very plus the coverage. to commentary your X.X%, you be well. robust will marks obviously conservatism

trending about So level here how think in reserve should we that XXXX?

number adopted Remember It's hard haven't we to say. one, CECL.

that we think parallel to on running through. we trying CECL and are So are

adopt of that to have the You at year. a beginning

next beginning the So adoption our year. be next could of

two, criticized we quarter would you higher this year. at then are most about I while are classified and last think banks, And other one our the look that's still and excited So going direction thing they and optimistic, on. if than

little get office back So to October was off. to we of in COVID sudden took fourth and Go I back quarter. think all a the fourth it's just a trying quarter, everybody premature. in In

So December all end everybody's COVID wasn't a and minds. quarter in at our little necessarily first are and rosy a for think sudden it's the just We of releasing. preliminary we

There didn't is the situation conservative one other a where So that probably I this bank. first We growth, continued situation growth rest We loan quarter. the the or two we where if the see didn't there year just you we of in a want would are loan fund a things. And think that some like if partially could could of didn't is thing come banks. think do. was do in that it to get to it right the

been the made has technology, Can player drive updates? picture bigger changing in around more May us look the of Thank to gears, A you space, efficiency, changing especially industry. lot you be here thoughts question. and your as role landscape be Just profitability? can you you how of your a the even give the Okay. banking especially fintech in switching Tim. a

in to a model. model. you Well, got remember Technology our have plays part our

We are a bank. great commercial

cash the got have we on commercial competitive side. management very So

but that or a that customers, retail space growing In to is a banker with the And community banks. the lot to They bank is really important, sorry. need Technology and driving probably but space a wants is. banker. year. banker are most, consumer want and we times they a obviously a business, an into that's their needs couple office a the our commercial focus the brick-and-mortar a of not to where talk We more come don't space, a need

so there. And continue invest need we to to

I model three a met our state. saw, the we where every employee I think like just am to I I bit. think a did could where year. I our from We location spend off the feel something technology, in big $XX numbers finished summer we physically with a their opportunity last I across little And million review the strategic But weeks technology. plan and most benefit internal have I we a

at a on experience $XX we bought. expenses year from other $XX circuits, like my Our spend we technology. million, And often router, are software, million banks, have over

not vendor it using correctly. contracts we We are but are not maximizing

in technology as there's think better I perform as to be opportunity to our a million lower well cost internally So manual bring that. like $XX big that that it to whether work, or processes something

on it good you. quarter. taking for me. and a Thanks That Thank my Okay. be for congrats should questions

Ammar. Thanks

Ammar. Thanks

Mealor Catherine the comes final of from Our line KBW. with question

Good or Hi. afternoon. morning

are you? How Hi.

some coupon the right this does thought little margin maybe really X.XX%. loan the Good. challenging is was A I just, but on? could are, is new quarter it. coming that And How one that just like we looks are just about talk yield of compare to of where loans within question components guidance appreciate question on which now

they on plus some where week much and have I saw X.XX%. this or we that are walked was pretty said, I That's we coming one minus. seen mean away Like it's in. we

you XX-year I X.XX% yield, my the do so a one variable, But fixed, And X.XX% like gave choosing the be X%. like ones the gave I are they X.XX$X. say may book, example points. obviously you if you a was to we And talking I loan to would in

look was for at If it's originations right XX/XX the production it X.XX%s. a last Chris. just about new Catherine, came split it new I high variable/fix the and in and at month,

I can it. focused one income But you ran he customer, I invest mean have because me In a month best but this Just and I just real honestly he I had he into customers, good hey, a I $XX problem. somebody, environment, are this and said, this nowhere had tell our net or I million interest of said ago to we called on quick. that said, is he wish two

put into it. want have to it. going to I am I please don't So don't it. invest nowhere do my I And account. I said,

coming may basis from may that points so the income we doesn't I mean much. or but Fed. a in really at cash we ratio hurting investing the NIM it's the it standpoint, is it hurt that it much or XX something So be on be paying five,

ratio the to it that interest is short our to X.XX% So ratio term but be, the long our but goal how net X.XX%, want the term, say, we it hurts grow we maintain do environment. in income this in term or in short

the then move deposit And at and side, think it. bips on you your are down. for Got that XX deposits there's to still room

do. We

I number time. just just even some them, of them in of administratively, just just Some mature CDs. They just give, one, are

go as we customers continue that So well repriced CDs were there's to can got you have to. as

it. Got

what's SBA fees? your outlook Tri-Net Okay. And for and then

outlook I think the tremendous. for SBA is

would, And a so I quarter. would am I look guidance encourage to not again fourth I you person but at

say, let's get can consecutive or $XXX,XXX, just quarters were this have more pre-tax about they three and I they $X fees quarter And relatively $X.X then had a take feel penny. million, a quarter for they this to, to that, if like year, If $XXX,XXX quarter. $X.X confident a in as quarter, us And to a million $X more $X $XXX,XXX $XXX,XXX. fees. that's And of so million get they that they $XXX,XXX do about

going year. go quarter, $X.X first if they per the in $XXX,XXX $X just So $X.X add to million, to quarter are their or per and take they

storefronts runs and And that He's off He's person, Chris was betting a do could this peak are a great his fantastic. to centers, lot the business dialysis business been just DaVita gentleman But ask he talked quarters. Dollar at gentleman and there pro. Mark to keep, does I three go double is tougher to of think sit peak to I last and a harder runs at one. year. is little year But try. one. Barham, hard team the to it, are that's that, he General's really that. about, superstar ways CVSs in is a a little Niethammer, we Tri-Net our a a somebody so other, It's start last just have that is if his and a there other

this And on fees left PPP. a Got unamortized clarity then just pull How have it. through do you much to PPP year?

in We can right that I us. can might back have front get tell not with you. -- you We of

the margin. million, million to, think, I a interest slower million. I couple On the on forgiveness. is, do the like on There And net the was where $XX thought. something they in the what be NIM it's February to $X Catherine, total fees of close that The have new to books is issue fees, roughly on a fees in than period any we didn't fees come brought think of in that PPP

loans associated and those fees So we the have got then PPP $XXX loans. with million of

when the They manner. be forgiveness forgiven, within are those so forgiven. in probably the And any be seem we will don't But they going next side be it's be very hard year. to just predict loans to in forgiven know predictable to coming

So we real an have email. got quick, just

-- email? slide we real That's this million or in But we you So Eric Jeff may Catherine, when that's can million guess faster. this am to read cites Jeff, quick, just check Dennis, round this able I produced just $XX for it you just early, your did email just an number be nine, email. fees. $X right, three. I on with send

update. the $X million. We now million That's that is stale. is associated just that's round $XX actually That fees and three. an got So number with

million last our remaining know So don't amount $X is $XX the year. with PPPX I million. from

Okay.

million about it originally think $X or was I so.

$XX you was million to the am that $X remaining. not I So what's all-in, quoted, assuming Dennis, maybe million, that

might Catherine, That all-in, remaining was It range. somewhere what's that in not $X kind million be remaining. million like, the $X of looks to

Is that with number three?

Yes.

PPPX. with So

are is $X fees. So $XX about be our $X may fess. of about and from PPX they million the thinking, And another there million million old

unamortized pointing those forgiveness have are amortizing NIM, some Catherine, we those those out one loans basis have NIM get a those fees any and are had points But rounds hit the then were affecting that fees some when we don't forgiven, those in been of because when fees. Because beginning, amortized the been forget, two, the of those we to NIM we little And we you. and the windfall immediately.

forgiveness reported basis but loan the time So points. XX we by PPP shape, good that pretty favorably NIM this impacted

like. then thing of all excess something tell to is what manage the So pricing we year. number's which do on the we and will is doing of growing we rest going you that our portfolio what with we best that and But continue the try we move cash do the can loan and through away is are deposits to know the as and margin the

if Happy answers to, I a So a need just or that anything, question. follow-up you hope give me your call.

really was This This all helpful. understood. is Yes.

not sure that's in over think, a good to we couple million the are trying of estimating quarters. is a left, But dynamic. what's $X I the next Just make coming good,

Right.

and Thank so you All right. quarter. I a got. Thanks That's great all much.

Okay. Go Generals. Thank you.

Stephen with of have do question a Sandler. line Piper from the Scouten We follow-up

maybe into I the XX, point know just true Hi one out of guys. deep Thanks. I on trying for to think look don't figure want in the you to of just what run benefits said kind did happened FAS to this XX, rate follow-up you and I and out think and I pandemic maybe what quarter? the coming side. actual but this again starting at what too just expenses off kind the quarter decrease about run good this expense If salaries rate Tim, we guidance figure Just have is get question. slide am number recruiting you bonus? when trying

on. Hold All right.

am Dennis. slide go. getting this I to on, go just Just

the I bad number point. starting there isn't think, a Stephen, that's

mortgage couple The the have not. that of than so were as of growth, we you a mortgage grew is will if fourth elevated it the continue significant less in continues over of certainly XX from incentives mortgage to But that the the FAS then point. impact, quarter starting an of incentives level think But mortgage, then we got you fourth are to But But a hopeful good but we related that in were XX. fourth in benefits bit. impact to it first pretty first related might And loan quarter we good is we a mortgage in and quarter have loans less had the were first compared the salaries approximate FAS quarter. a the quarter benefit FAS pace and XX the at cents. quarter drop that was

way far think and don't it in don't any on have but material I the the it slide, about think as I Stephen, as way it's we number. the

think, bank-only our from expenses, As about disclose probably expenses think to million, that, but ought memory I a way are million. we like bank-only and to $XX.X I $XX think

difference the the mortgage. so would be And

look says just so has It's green so am page that hard noninterest operating done great. I that, so on expense. at at And mortgage because that line top follow to look our XX,

revenues. So go accordance I know and to that's commission that in based to that's going

So that's I as don't because that commission on much really focus largely the to mortgages. related

bank. the try core after. recurring for going are is our I we I what And on So focus efficiency expense and actually target a rate got bank-only that

to I did that's a like so roughly was think in And like that $X,XXX $XX.X I didn't you pandemic there under We million working it range. last for thank contribution quarter. And gave $XX employee million. said We know, And committee, you would tail every remember to we year here, for the bonus gave first their every we we employee, $XXX,XXX, the definitely their keep it. cut-off, get executive off. I don't in just

so in we any to we and there's wouldn't that We that think benefits recruiting one-time And had recur. really expense. then some We had there. expect don't

So we a think number. that that's

with going down, and now success. on So for bank the $XX.X up I mortgage based range in core maybe would say, million

Thanks Got Tim. helpful, Yes, of noise that. that That's would being yes. kind you up help if the I think from And something it. great. that Yes. becomes guys disclose, diminish able comes to end that's that

even internally. for Yes, right. us done I internally want because not to really have that do we that,

that hard understand. down. up great have job going shine of I hard when and at but it's for is and to that's sort We to the of know looked total doing it's team sort a

that. are we going So at look to

Yes. Thanks so much. Great. All right.

more was of Well, in a calling in company lot and with right. the again, we year about are last call. a appreciate excited And than and it CapStar beginning at what's ever. and are and man, got we but, we we concludes really year met by this great on have progress we All challenging that year going our levers it sure a

the original got bank. have commercial Bank, tremendous a is CapStar legacy We which

an have has to bolted equivalent that which on Knoxville, We commercial capable team.

highest we in the performance. mortgage, our about the banks. group, of all CRE were in XX% three performing ranked unbelievable then businesses community three Tri-Net, XXX have have specialty SBA. state's And There We and top with

are have hear a going more got title We you agency to soon. about

We going are and that up. try crank

So just excited we have have levers had we are year. the we of about that lot a just and before never

I at following. you list. just I appreciate looked So the know

listening to will are We talk top got two you of the have and the shareholders appreciate being the our and on you call We later new shareholders in all quarter. in we that XX.

in conference Thank call. today's you for participating

lines your disconnect now may time. this You at