CapStar Financial (CSTR) 28 Jan 222021 Q4 Earnings call transcript

00:03 Good morning, everyone and welcome to CapStar Financial Holdings' Fourth Quarter 2021 Earnings Conference Call. Hosting the call today are CapStar -- from CapStar are Tim Schools, President and Chief Executive Officer; Denis Duncan, Chief Financial Officer, and Chris Tietz, Chief Credit Policy Officer. Please note that today's call is being recorded. A replay of the call and the earnings release and presentation materials will be available on the Investor Relations page of the company's website at capstarbank.com. 00:35 During this presentation, we may make comments, which constitute forward-looking statements within the meaning of the federal securities laws. differ subject cause and the forward-looking the achievements CapStar are factors and performance statements. statements expressed of may those that actual to forward-looking to by uncertainties risks other or or All implied from such materially results and XX:XX not forward-looking cautioned are place undue Listeners on reliance to statements. CapStar's of the with Securities Exchange Commission. description these uncertainties, detailed filings other more risks, factors public and A and are contained in and forward-looking to required otherwise CapStar applicable made update or presentation. by any obligation as Except disclaims revise law, statements this during any We the would and regarding non-GAAP also X XX:XX refer you measures, presentation forward-looking Page to financial other of disclaimers information. slides for statements, XX:XX the and presentation With CapStar's turn President will Chief Schools, that, now over Executive to I Tim Officer.

today's call. quarter your had our I is how Good early CapStar. We team year in and rewarding common we We finished see we're I $X.XX come. appreciate an look thank morning on I XX:XX meant, share strong. earnings we earnings that was In and tangible on XX:XX XX.X%. and per back, terrific interest annualized can far you, has started. getting when on reported you note just and we for average of said fourth understand equity but to it quarter, promise on an exciting of and what the return our XXXX saw participating

basis where of ratio resides additional in earnings would capital Internally, four risk excess as per tangible allocation; cash. drivers, capital it and today, industry essentially in the growth; $X.XX on as non-earning second, execute -- and profitability revenue can go have a return highlight on earnings, management; objectives: third, average. is and earnings of return underlying points XXX strategic capital sound not we annualized we can of buybacks, stronger, XX:XX be same generation of put disciplined consistency; maintain tangible we organic shareholders was lot and value XX:XX but the objectives. the the year, in excess for growth, the to later key this focused four as profitability form charge-offs. or to margin, low-earning equity as as we for well I'd like strategic into or efficiency accelerate on dividends within XX:XX will somewhat share invested the the There is interest enhanced growth, than fourth, in or XX.XX%. capital first, of maintain currently equity net the I earned the nearly on few on On For disciplined are profitable growth. and we as each our common Anyone call, pricing. net achievements everyone puts a four very profitability,

profitable Our fourth quarter spreads match That lot were is a X.X%. growth. of funded

frugal discipline higher We a have also being of We not speak on cheap. internally but expenses.

the $X.XX We $X are increase as also organic quarter, metrics. million $XXX million year This fourth productivity-minded and $XXX the to not working in was productivity production billion for participation. be and growth, two Second, XX:XX from it full years. annualized to loan and our was an work million is have a prior relates $XXX

with in bankers two that for balances. existing in in and currently Our Knoxville additional team $X community billion offers total, Chattanooga, $XXX added Excitingly, fantastic has $XXX and $XXX markets. have Nashville increased stands three commercial XX:XX we two portfolios with has a market over in our loan production In million. pipeline million discussions extended are have million we to markets at loan

risk managers. our XX:XX As we are noted later leading in are also Third, we aided demographics. deck, by market strong

been our our the to overseeing protect tame sensitive. managing work shareholders pandemic, both assist customers interest a asset credit health done remain sensitivity, modestly employees has and the of our we have risk in and rate to care during been done and We job while stellar proactive

are putting and detail who later. cover in excess will going will to we quarter. XX:XX details more on With to it that related the provide Lastly, to laser-focused to you work capital Denis, turn our over we that, I'm

correspondent pleased we're between less will increased loan Tim by basis and XX:XX the in some deposit X basis footprint, focused and to slightly or average where X.XX% building be at Slide morning, and by fees, Net grew good NIM the $XX market. everyone. of basis core NIM CapStar new Average to to an X increasing third lower time on deposits. PPP unearned see with On Our held quarter benefit basis within PPPs near points, which Knoxville to rate committed quarter relatively loans on deposits, $XX by third total X.XX% as loan regards PPP into an in fourth annualized culture, growth markets. done increase, at coupons portfolio release have the the XX.X% XX record basis. the we net quarter $XXX purchases momentum as the to our points quarter, for X:XX again, the costs the forward. of from with our was loan flat production at which core were also balances consistent improving pricing deposits from remain excess which remain NIM offset XXXX Thank levels Chattanooga flat for for contributed lower Tim our the were which and in end quarter million down million strong at a the year Total increasing move and X.XX%. growth quarter deposit newest investment fees the matched On in CapStar quarter, of I'm both quarter basis DDA was shift PPP into total in the XX:XX earning of our and the and XX:XX are the job average the X Slide investment with points. margin we third banking total near you, adversely at to at higher quarter. basis to the were and quarter, of and portfolio provided X, points, our a are for said, third managers and cash pipelines, we points was came we team opportunities. our approximately income first ensure Tim And funding average for increase loan on production levels. and quarter. which X the for Slide strategically from we impacted PPP record which from levels deployed of production, we and due XX:XX as $XXX,XXX. disciplined was X.XX%. Most across points X, In quarter, basis million relationships deposits, X our relationship recent end entire totaled Deposit remained great a the our across billion said, for XX:XX million deposits up assets The and end our $X.X partially EOP quarter, impacted that includes adjusted continued XX for interest $XX.X on approximately continued starting Net fourth yield quarter, spreads, loans quarter, growth, the the continuing loan income look record of meaning, which continued interest interest The fees. down at rates PPP out the XX:XX points of the The was favorably as balances. importantly, in loan earnings total take NIM deck. remain the to excess loan Adjusted for at forgiveness XX the by forgiveness we impact to for X.XX%. loan with

to our loan continued XXXX addition and growth, non-interest pipeline record participations. XX:XX In quarter. the XX, levels, Slide and pricing, income loan fourth shared was On in reduce national solid to strong in we credits

Our seven business, by unique highlighted generated over fee this strong have fees. quarters, XX% revenue million our of businesses quarter $X past over the almost Tri-Net in which contributed our

down card results a debit of fees, previous SBA in also prospects. to interchange seasonality and contributor revenues run growth continues due were and strong for quarter, experiencing We to levels with XX:XX quarters. some Mortgage a be record produced record positive after of the

continuing strength quarter, of ratio the mix business, of mortgage strong reflects expenses our volume markets Slide a in XX.XX%. of team. for operating CapStar our $XX.X the efficiency see which an are in mortgage and purchase of our XX:XX were to the which resulted our We million economic non-interest shows health XX

for which bank, efficiency was ratio core core XX.XX% the quarter. our mortgage, is Our excluding bank our

due benefits, declined Excluding to Chattanooga, expenses slightly the higher about continued $XXX,XXX year. in to our and incentive strong investment related XX:XX from fourth Within performance quarter run at operating to levels expenses the for third expenses our quarter. of salaries

to XX:XX With credit ratios increased our over Chattanooga levels. related the discuss during that, will will turn who remained incentives So it Chris even Tietz, I our with and quarter, position. low at to expenses record efficiency

you, quality good brief. asset to can is Thank so comments Great. it's because again, Denis. to XX:XX that, good be say Once be able our

Page to report we low XX, we to that levels turning First, are continue pleased delinquency. of to maintain

at of classified this pandemic. the that we the now magnitude our of based direction loans, our at to criticized Second, that loss trend XX:XX quarters the and secured ongoing represents for the and that the of values, to and our respective for in and with low we and we improvement good outlook and fourth continued noted equal, achieved, our X.XX% direction and gross proud should borrowers five-year presented XX:XX a improving expectation We future classified else quarter, oversight bona maintain per that focus the levels The XX:XX risk our While asset fide given criticized believe of the asset averages continues low performance. relative very the these looking ratio criticized note In will, if quarterly improvement particularly on of of all economic the review the a of this As the in quarters. of experience lower we of news I of risk, focus at near future charge-offs, quality, eight current continue our the credits, levels. for now individual reviews has $XXX,XXX over team many believe the the in pre-pandemic below levels, on of collateral than time. challenges in also are borrowers' last in improvements assessment on process allow to continue by is very nature our exposure, quarter. classified levels that average assess any, of and credit graph, of loans. is positive loans level, over improvements components is experience processes less we an left in with coming

note to on time. and I consistent will asset over Finally, to results, and community we capital all level want we this current and quality enabled the results to we With risk Tim asset achieved in in that improvements these to to and of number We and results disciplined our our -- to we reserves level quality lending to adherence that, in appropriate to highlight of proud also on our XX:XX remain it that, turning reliance expectations of reduce I've our noted, given continued I I'll that of Qualitatively, our XX:XX small that without While strategy. of economic banking focus concentrations environment proud to are factors our XX:XX us back measurable relationships are and positive have local to overall borrowers yield our remaining committed and Page a is general markets discuss XX, previously hand environment. of of focused individual to risk projects. management. large believe it this growth based profitability assessment the

referenced is shareholder do is close to earning like which in basis, in XX:XX have would you if this to same profitable our their This the and with earnings of I see, $XX pocket we to $X value the today. Thank about profitability that This a know theoretically is XX:XX on PE XX.X adjust could numbers at presentation. we million, per not by reasonable price. in Therefore, moment this consensus, have model. they capital operate zero. on takes very page an to and Chris. this were share way which equivalent Slide we excess example levels. XXXX and it be I a of we that everyone on is not our can reported As business earlier you, I'd $X have our If today's profitability thinks XX current stock the capital our point, feel at generation. spend capital, is dividend times, out XX:XX maintained that our industry differently.

capital excess price our On position, XXXX is If X.X out the at to lay you take at times one consensus. trading and is then times valued XX, current the priorities. bank book, our stock X.X remaining capital in management XX:XX we page the

will we use our appreciate XX is some We XX:XX We focused that these through high show the business. we core not conditions. share we we of capital the occurring the plan. of equity repurchase putting with. that in $XX statements. to growth part work that of the and envision tools secondary authorization, dividend hard does million actively our financial the capital depending of We support constituencies and increases reauthorized are interact our and work up on Slides our capital excess share be see our on This will generation important market all as XX, XX valuable On that week, in

a value us all our number and paying vision, during results. Kennedy, to attention we put Capital, the you Wellington, and Particularly, Private Covington, to have Ranger, of the that Bank of Funds and others larger XX:XX our would and supported CapStar DePrince, have like thank business, Mendon transformation. into time people today We understanding I

Slide and region our this favorable banks based the note, a of XX:XX in and support soundness growth valued size this has guidance a our our Of On Your been are invaluable. to at we price XX, present highest earnings. to group. profitability on scorecard point

performing we and deserving franchise, basis not valuation our higher, earnings a upside. high scarce have believe has However, a earnings if an of multiple. similar, XX% We on

and for is the form, core it are the multiple expansion, reasonable upside the excess is strong to a the we of whether return XX% hard even Our at compare, multiple a the expansion capital of in price tangible we multiple some our excess capital of of excess excited is XX:XX in in or group. valuation on case to investment capital There CapStar to and expansion upside due book Slide the in level. return to our again to company, capital have, valuation multiple this XX, future. about On XX%

we're you our comments for any invest appreciate opportunity the As and understanding thank time to again, following just Once getting I welcome XX:XX you concludes We for our the in answer your questions. started. company. call, This said, support. and today's

Sandler. Stephen Our from you. Thank XX:XX Instructions] comes [Operator first question Scouten with Piper

proceed may question. You your with

Good XX:XX morning, everyone. Hey.

XX:XX Hey, Stephen.

said but could start just XX:XX the opportunistic share around want I I I it's to for plans, mean, guess, there, time the hasn't maybe utilized. -- capital if been repurchase you I been obviously some outstanding know be you and

want like in that upside where in with how aggressive potential illustrating just about that feel today. you the to and context might this you shares think you're So of be the

would I medium. XX:XX say

about growth. We We Chattanooga focused on are XX reported more $XX million that here in was days.

offers we've $X anticipate today, that another million. billion got Like of has They we're said, $XX quarter. billion. two other I people and that team at are talking $XXX they a this to million out to to $XX book As they could two

would today it at and of IRR $XX of that today model, the So when those out do Chattanooga. to look $XX, you kind The you an is and share save, dividends about worth to think at model XX% to of two price IRR I back we've XX% the is come at an to now, buying got if $XX, Knoxville you the if whatever closer or that and built on IRR be IRR even buying a and XX%. though IRRs $XX you

capital, a cost investment and core the absolute economic but So to is is we franchise believe of IRR. added value fantastic still IRR a higher. of value XX:XX your There

as the are setting we too understand think as and been those there's think this a I -- term and realistic we So long value near money in in time long. of CapStar has money

of a So sitting there one-time a using ones, to they I weren't do as reasonable think this in shareholder, tell million because were as did are all will long Hawaii, dividend wasn't it you, growing. they equity we I and we'll that. $XX

levers, are I've it this focused will we we capital before, on so, very all done work. to consider but and And putting

it. XX:XXGot

-- So agree, I be That the focus, share organic? is maybe it like sounds it at the but which that's capital repurchase for same time, both. seems mean, right, organic obviously, like I think could be again, I and to both

XX:XX Yeah.

their the there's Corsair when came I So what an and ago, that regulator and I I all you it's people exiting the but a I more in a years there value you're that smart answers, all would capital. the people mean, to been about say buybacks, when CapStar. is, came want have and views. can't anybody's view, of at of Schools evolution of not, in three book When was your in, lot not because does different we going -- at buy of don't we talked, was lot a same criticize should Tim should a to rate. view world enough we I lot shares, have But there's have never grow

was right we take that when too would be say forward. would million, to a point. and still low I in at And pretty an So uncertain a along thought we in if role that aboard gotten of the on managing book, we've management, further don't big to contributor outsiders, they're would educated want on And returns. I the want balanced believe approach didn't that just you that that price was we'll I capital the going to that the a more put read we've now say, last returns. year, so, price And there aggressive, I it's $XX I economy, say it XX:XX our that say,

question pertains are hires, could what expenses? if these average how that at. end Can what X% looking of is that a it you're if to do of is in of new look XX:XX expenses you you're then how Is could or maybe at like Okay. markets we for and budget like expansion and as focus and a market assets, think feel give me kind Chattanooga for from model XXXX just it other the XXXX? best kind earning these new us expense standpoint about in teams, around Knoxville, an for, looking teams you That's additional helpful. And or then

to -- page, XX:XX say, want would see I are point, really I further go markets. the comment to at same to I we us and an don't of need just -- if all I know our would this just Charlotte no go So had us on from imagine really west I say, I say, or there's a on a for Asheville, don't focus east here. I loose I if don't so fence, draw we'll

to would could -- maybe far ring-fence just So and know. Charlotte, West I of it's maybe Upstate Tennessee, South nothing sort don't to you principally Tennessee, in, markets I that North the can hard while say Carolina be It's just interested would I or we're available, outside manage, I teams but away. -- Middle East mean, Northern Alabama, Carolina, there

at be focus time. So would this our that

how XX:XX to about just like Okay. think know… mean, And of that? then the I I expense build teams

right I numbers Yeah. my me. in don't have XX:XX of front

any give guidance there, but… specific To XX:XX

breakeven, year, $X.XX, $X.XX. can't of and gets or it's four, first dilution, from don't middle full at as like year, and growth, or right slides memory, I were second back cost may beginning get when you third if year, But and like the in I Chattanooga, to think back I be and And in me. and man, remember, because put year, of earn to a you think think a Yeah, the the year may it banks, last we of and merger, more everyone it as the I basically $X.XX which the they're $X.XX, XX:XX year, than like tried you expected more XX:XX sometimes that front starting if of I three the anticipating other But $X.XX period year. the treat get that we to $X.XX. we is -- in the something to like it well the to rare in and reflects put try quarter be our have

out again, as roll-in. that we're year And Chattanooga And, one, about easier handing our cost. trying so, we'll each number we give do a if on acquisitions you're memory, not another this can. expectation out information much to and time they're to lay was for better But shares, than as to we get from $X.XX so

out just XX:XX Yeah. we're right, on and And assumptions it gets the loan about a second on been $X.XX of -- our you Then neutral in decks, is a growth the of the fairly XX your in and terms conservative to the There build-up in it side. turns the full Tim's in of like loan growth have our dilutive one previous on turns the to EPS we're then revenue in accretive lift following calendar impact and it slide laid our being economics -- would a that in Stephen, slightly that, conservative as forward. being for out. months the year better move it depending lot and

another So do and of we lift work in announcing get probably Chattanooga announcement how were another to the out, that able had you information. we with or economics accordance show could to ought if you that, similar one

and year. situations that but other another opportunities, different my because can't I families XX:XX and this Chattanooga you're with expectation it's and And and people we'll dealing promise, announce hope my

Yeah. XX:XX

color on team talking we're those acquisition, rate, good kind expenses are that guess don't of And for ring-fencing little a that going, though is any about new where bit? really you or Say I just million -- Okay. million do run rate. how guys XX% think or I is I it right? X%, to next up I on are don't you a expenses we that feel for numbers good like mean, follow mean, maybe run you growth talking just in any year, a $XX.X have $XX.X

a done XX:XX we've job think expenses. We really really, good managing of

shape, much of what bank beyond mortgage pretty mortgage expenses working the your out, and depend that closer is a better. we we would good XX:XX you but volume But don't keep this on model out right there little to in very XX% out. we year but but plans. -- try we total to within corporate efficiency terms you our down in you for company, hard this maybe around the -- -- -- because certain bank looking things control, year. are just our We There's million, get even under you ratio see because are mean, compensation -- on now, and our we're there efficiency that expenses drive these XX% to such just that mortgage out, core stuff down I of core great then estimates, somewhere bank on have did are sustainably reliant or incentives. in -- $XX.X numbers the are but another hopefully, how lift core had the unless how at, ratio a incentive So that would maxed maxed are all bit

really our and forward move budgets XXXX, we and more reset of the of normal -- in we we more as have corporate levels incentive. as expectations so, budget And like, reset into kind

benefit we'll general, expense mortgage, we up there our up whether drive pretty So levels. but good compensation down on I depending is some get there levels in feel mean, mortgage or would in goes about that

Appreciate XX:XX the it. Denis. Thank for [indiscernible]. Okay. Very guys helpful, you,

Yeah. XX:XX

you. Thank XX:XX

Brett from comes Our Group. Hovde next with question Rabatin

with may your question. You proceed

XX:XX Hi, guys. morning. Good

Brett. Hi, XX:XX

basis at the I but reset income then I look for year, particularly I fourth XX:XX maybe And really talk throughout quarter of performance year. the guess built mortgage and I'm understand kind just quarterly a guess about why guidance good and fee talk and on kind Tri-Net. the this about to had guidance the a fee They you of Wanted not the results piece, income ‘XX? ‘XX sure, -- for when I the Tri-Net, can a for their minute

that's the I'll pitch Tri-Net's year the mortgage, -- Sure. sight in like the start and right we is of PPP, I sustainable. one a unusualness excited, we Chris get of then on XXXX challenges of the lose think the Yeah. not XX:XX all

may may and chart business, quote year. back will you for sudden, the go million If And about Tri-Net going and been be think think, then ‘XX $X as I was Chris crazy $X this the numbers, have about all ‘XX able of to a you for I the and he's year million been ‘XX but what a and the of exact wider. to tell bidding, year, and things performance you liquidity into lot have the is XX:XX of got produced has does XXXX. a was in the that, is, in that the we there just country CapStar, unbelievable not generation because and that and banks of investments have of so went a two everyone and so ton spreads One asset led volume to need

let's continued at and we're doing stick years, something Chris, it's And what is this It's a to look reasonable as do are Chris reasonable as linear last year. we're a trying business a so let's would doing $X out hockey But a were was ‘XX love to they, more forecast. just they We'd hard a doing stay but that's you we so, expand, I whatever, of those putting if think was these was But -- and I'll growth, million to do our there regression all really look of taken the the even all add? level. at ‘XX but do, at too, just year as you what not We say, there. okay, is where budgets, line it's it ‘XX people hope huge we and when steady year to but it let challenge. for or fool of we're may than even ourselves blip be out abnormality prior trying to better the hopefully not

Brett, bit transition rates little rates the like to down, money as XX:XX mortgage, things until make they Tri-Net Yeah. higher a when and a will of in we squeeze of have are plateau. we I big in would levels going will say, more scheme

to As the a levels to clearly avoid would we shot. and expected out earlier The that I we I and in by that fourth ahead quarters Tri-Net. said last go XXXX. quarter, guidance exceeded did quarter achieve similar of have giving long say it performance on specific went

the still guidance time. last are gave to that We you I holding

If somewhere be between made basis, -- on year the you million in and in were expectation somewhere to the look at $X.X would the our it it XXXX would $X.X full we million XXXX. be we made roughly

Brett. Hi, Denis. is This XX:XX

Page your XX of release have there, You earnings correct? seen

XX:XX Yes.

it. XX:XX Got Okay.

XX:XX I we be million do a $X.X $X.X XXXX. even nice million, that's increase to we where $X year, if $X.X So were a million over which in million to would mean,

in And of at portfolio enough. loan then I Fair would given increase asset the Maybe the a be or basis thinking balance margin floors? variability seemed cash you've the the your filings, you XXX Okay. your sensitivity And higher, which X% and on XX:XX sensitivity talk the a in about like sheet. below the for and how little margin you the just variables? can bit got points, NII maybe potential upside, have and about much guys asset know talk about the is

a that's that. whole -- have Well, XX:XX a on we could and very could complex and topic hour it

about like it's we've just to hard talk one loans mean, and component betas. got of so, I And floors.

as your While betas well. have go all deposits have you also the on that up cash, you will

think we more expected. was what done would in a down our did think in rates with a studied, I And not had increase and just think I bank ‘XX, modeling. of lot in betas happen, our went risk when as the ‘XX, negotiated deposit deposit And company, when XX:XX I of in people. wealthy side. had I say what when up, came why I rates CapStar So what the the that a that was were you individual overall went and managing say margin lot young we margin ask I we've saw than was

think got different I a they way. there

all of the think of of beta all the went people local sort lot to in that that beta. the and called got no and I most wanted a people beta,

could so, went any want got it have to that up. you rates those of the give But it XXX% when others. to people give the And you didn't relief down, didn't beta a if

through money. by we putting from We've working So also away on grow manage to just three been rate acquisition profitable hot deposit but we've the to community last asset sensitive. to bank reduced We're on balances. that banks, XX say risk, I still neutral that would and risk, both all closer the of our really want months interest getting

So conversation I that's but individual we the if a offline about for about talk can more complex phone. detail -- categories, think like you'd

our just to be the would that. things and net thought term, on we expected portfolio the feel are will well going feel given it, add as I Brett, XX:XX near as do Fed the in interest. loan like, is, we we One add given the to pricing our able that on

we up, go add interest rates as matter much. be able -- how will It's just net will to a income. of We

to drive So our sheet we positioned well are wouldn't on ability maximize but advantage, take our be interest and higher. I to to to it balance call able income net

color. Appreciate XX:XX the Okay. Great.

XX:XX Thank you.

Catherine Mealor comes question with next from Our KBW.

your may question. You proceed with

Thanks. XX:XX Good morning.

XX:XX Hey. Good morning.

Cath. XX:XX Good morning,

hikes? start XX:XX see to immediately A can loans what sensitivity conversation. you will of follow-up us we reprice interest remind on you rate floating when or rate percentage Do have are and

exactly it have don't I on us, no. XX:XX

XX:XX Okay.

particularly, I -- okay, I so you -- So agree and another way look the X% of -- that would so another is, mean, kind ask maybe as the then expect up really to at XXX in I -- your given I of feels highly scenario loan floating. and balance the last feel cycle. point was remember a sheet, basis of structure book like it just low, very the I kind

your of a not possibly so last much be to kind or maybe rate number, you if the loan that so it? about feels cycle, that has just variable done okay asking for that's within without were and may as maybe specific think are -- mix you've of way gotten because changed as you've you portfolio, change So not rid

them were sitting the of we'll Probably I then. deposits so we're asset on betas one. our We the LIBOR sensitivity, deposits why evolve. overnight, and XX:XX some so continuing up too and giving and asset lending, sure in -- more based doing growing go number learned And but We [indiscernible] bank on of lot modeling using here, betting learn just because traditional aggressive, ALCO, betas regional sensitive, were neutral. think focused were that's that to been that quite faster, your we're two, one number we were anyway, a managing I we're I to modestly using one. -- and the on going up think latest our there not not -- too not the showing were be the not -- we've balance closer we're would are we that's sheet going rate be really big if lessen are because to But in aggressive, just to I'm And your reported it's increase. profitably. earnings, a

is coming it’s quarter, here this where XX:XX And at then production on? coupons loan X.XX% new

Chattanooga. they maintain XX:XX organization customers. it is obviously some varies to rates The in across I'd low offering say, from footprint, very came the some

do generally market, So the those. a as match we're again say X.XX% to investment, But part to new I or back in a some having spread. of of would

So basis the tenor do commercial to depends I'd FHLB find to and points go seek match we is, would and tenor, and we anywhere we what cost on X.XX% from any on What to ask XXX website XXX -- on us the the it borrow. points the we it's top matched it bankers loan, use say of X.XX%. basis our

then securities to book through XX:XX year? move decline adding this appetite so what's the Okay. for as And your bond we on this balances the quarter,

at to take a Catherine. beginning XX:XX We're look that,

we've improving some rates in portfolio. the things strategic last decline investment we'll of the up that will in couple that implementing With three really of some weeks, that good back build the be probably got

to that do really good we we to of want there a is eliminate -- a have though, that. and will opportunities but replenish bit We

life you'd good kind things like opportunities done Chattanooga corporate-owned really investments think in see of a and I and lot in balances alternative of do So go to investments making the – other but investment insurance We've up. well like, back had that's

Yeah. XX:XX

I this going that today we're Catherine, give and with to capital that's we're message, work or back. one it leave to So would this going to call put

And as a the securities tool. so, view liquidity portfolio I

on of you typically the in take do credit a very lot it's ROE portfolio. don't low, you risk funds transfer a investment because If security, a pricing

So we're going to hold that around $XXX million. Yes, in fourth quarter, it ran off some.

to flows it back cash some but this in or or $XX to cash reinvest we're to it want and put liquidity short, So stay million going form. to to securities take and we give the that's sitting we're excess loans on, because shareholder want another in going in we

or interest you not basis I'm make and what portfolio do, that basis is moves sure the up XXX that versus Catherine, XX:XX to money not rate the at confirmed were a know in we able but XX% just were looking in XX% rising net the look to income trying sure down in know, XX% relative the XX%, in market, our just variable -- rate somewhere environment. we at we not if XXX can Denis. up or or you And to -- between I'm it's XX% -- point point believe our fixed. -- loans we we believe, to be variable

liquidity deposit there the are rates of there, ability get I hold of all banks to we be in aggressively I'd you're banks be have. depends don't my some out will will that those mean, we've had -- I long very say as of line plenty as a bring at statistics as right? I conservative the deposits competitive, good it's know of that their very market what much the what base that to that to the and I there, there deposit ability and -- off betas way. too, be some to betas that that able it we've we there So sense for pretty and possible. But that been assuming -- looking keep changes in feel all is think but now, bank general, and market. on those some will It to does try we'll out deposits, of interest is bottom plenty in as on

XX:XX Got it.

for helpful. XX% That is that. Yeah. Thanks Okay. grabbing super

Yeah. XX:XX

bet. You

I XX:XX to just a like to kind question, more quarter kind for of $XX.X squeeze mortgage model million expenses, look this could you've you next if get so or of year? that maybe expenses so just In of would give in efficiency can Can the what us ex-mortgage. one be will base guided ratio what appropriate maybe on expenses fact, mortgage we

year, core are company and variable. all Lynn's they're right (ph) can We that Tri-Net Yeah. interesting coming know and because what for understand our and fingertips. is I what of expenses piece have off can probably the for mortgage better looking. job, at internally our look and and now last a that Tri-Net so to But here don't XX:XX we especially of if you big is up. It is pretty because it them. is we do

a can know. minute, just you if don’t pause So I

XX:XX a in There Page slide is the XX deck. on

and had down million again, a banking be expenses, the $XX.X XX. to -- bank million the deck, would been down have slide bank talking total pre-tax Page million expenses. And pre-provision levels the our to $XX expenses difference, and being don't to we not somewhere breaks in in that we at expense all about core that you in it's core would all expenses, again, the -- think amount pay folks. were quarter take Catherine, out did included Mortgage expense fourth was XXXX I run incentives somewhere I our mortgage corporate for Maybe your it's $X.X of running the record but $XX.X has million of in the were from expenses, range you but non-interest mean, the know CapStar exact mortgage. so of will that the guys the I

it, and great corporate Now, record we normal and they've as and didn't will to XXXX, of obviously, because would higher be just we they come income a year. next back net be set done it for XXXX job. really be idea But incentive would in kind -- any businesses likely everything our have we deserve together we our all of plans XX:XX probably that more had budgets, levels budgets will incentive. of So a year, that our

year's that probably expenses. have you there we into wouldn't like some room feel next we So your put

sense. you Thank Makes very All it. Got much. right. XX:XX

you. Thank XX:XX

XX:XX Thank you.

Our next Davidson. question comes D.A. from with Kevin Fitzsimmons

proceed your question. with may You

everyone. morning, Good Hey. XX:XX

new Kevin, XX:XX and a initiating appreciate being Hey, we you quarter partner coverage. and this

markets new understand were to getting I about Tim, the totally No, I'm into a to But the but fluid, thought inbounds multiple more do And able kind folks it questions CapStar. that happy that wanting it's get my very if not talking of talking was tone join I might you I XX:XX slowed Yeah. markets were The being wanting your one been comfortable were XX:XX potentially more -- might and been with you to I to from well, to that more team getting than to right, got just be in we sense quarter bar be you're about team, guys you and And the about, of, one very keeping remember you it, time. you the than you fluid answered. everything and not referencing one all one. things and have ask last most you to overpromise? referenced willing with specific that one have the to have low the so covering asked a I of on because just or think fact of shoulder and team, of down, do and wrestled had might -- at wanted

I've increases. the EPS you. overpromise to with XX:XX the GAAP Just up years of where not want consecutive sort like went Wallace quarterly XX straight he got I'm me hawk. in

to to you was with even in And investors said, got met I Tom at prominent and two entrepreneur, Conference Garrett which the me question; have about a I would was you you're ‘XX, that, as investor investors on if I but a you is mean, to people, for say don't this the a down dinner and hosted used a smaller as me, that and us handle; let many share. conference, why said, to Stephen, why you $X.XX, company, to just Sandler can in hit I more; one to company was SouthTrust. having cost one then why And there want who, I does. is went you There I've can company, billion was calls; all ‘XX So I've I all We're the spoke is excess obviously, because the a equity, this you hey, markets, why those at That's put you look happy. a not great beating going inbound are table. and commentary ‘XX you me, private six in his to hours. my wouldn't The XX:XX getting hey, -- it we're you probably that one got $XX sell-side was thanking in I -- company, explain and I've not eight about and in, as what really a dinner, eight steady three ahead. a take people like $X.XX, why great not and investor go really wouldn't Chattanooga been wouldn't my comments So want and you that but this ask because machine. at and up buyback it the of

and you That's were entrepreneurial, it was would know think. how didn't going And very input be so, doing my extra eyes. next quarter. about I you But welcomed and to to wouldn't how would investors opened you I react. IRRs increase money, need little this have do a am be you I $X.XX and I you chair private be that a so my company worried are if think we more and in

it. over all we're say, I'd So

market two depend good than as be at $X would discussions two of letters they time, XX, that that is each to -- pretty bankers offer members portfolios. the And for have join, multiple but a then, be internally have. $XXX doing long open this support, sort And so, with I members, -- on what billion I would million the of in the handle to it January we're got on depending volume. team can as $XXX company And team that more would my out team with million as in we've

now XX:XX frame I when -- ones mean, done And in Tim Kevin, multiple don't talking about was the we've forget. I time mean, Chattanooga.

So…

But that's XX:XX Right. think. just question this on at thought your I -- was I insight it on top I to of investors because sort thought can't appreciate that other getting with one. that it just process all. and into of relates One understand fine, that, the No, disagree that. that how

about we also and but opportunity, can listen, growth I'm commentary this get you you that invest see doesn't growth your about, earlier you it you reasonable want great talking within it you how it you investors if so time or when wondering, that see come you so -- talk referenced, you or or or think feel and And when and out that three when that and giving like have ideally loan what the like, maybe that weigh were things And to that right a two the I'm year? to look is isn't lot these this reasonable made seems be time, in think, do so a the if in of, pressured because optionality, you doesn't growth word, back. there, you to at enough curious, markets has time years, if you you listen you and feel them come do but you highly how decision Tim, not -- coming would you just to change define

least table. person, I No. that's -- but have buyback but is like -- I the the think XX:XX a three levers. year, where don't off big we least acquisitions Put at view at view I I acquisition within that again, not there I'm a view

increases. and got I that shareholder, increase, shareholders maybe than institutional dividend got you've retail dividend You've know, value more but

a in dividend. a -- sort XX me have I'm you I strategy. as I I last past, change and mean, or a doing, I not fisher do what $X will and and do million. $X IPO not for know just previously, million. from buying not a third I'm million buybacks. on we but maybe bought at would not to do one-time to I'm and mixed would $XX I but share not or I got going gone you And us XX:XX stock worked now $X and quarter have would But share, of wrong, already posture was it in to and have You've us and the could What was million encouraging And I think since $XX to I this, the this of opportunity was done I just, have said let's toe like years. bottom the always I you've been being saying, year in to with our think And capital let criticizing have then ‘XX sat

it's going balanced pickle to a between and going going someone's second, little base. a on and we're get a so, where to be the there's think forward, And I player approach bit caught in baseball and like first

Okay. appreciate Thanks. that, XX:XX I Tim.

Yeah. XX:XX

Thank XX:XX you.

Our next Securities. with Truist question comes Jennifer from Demba

with your may proceed question. You

Question for current relates what you wage XX:XX Thank even you. as you're about inflation employee and new seeing there, to hires base. it your or

wants make say everybody of workers, But the people part of in to more a there I wanting and of we mean, is I move earth. would there Nashville, XX:XX right? is all life, lot a lot that's -- just money to

it's as So also company. and extreme we've as I there a is employees want say a management as but possible, would a to value out We not we fairly got and people been market there. our pay

was deposit a week reasonable, we we reasonable, But be a said to work and there I'm job CFO like hustle to find our person can't can't ops and employees. of the and new It department, take I are And as company substantial we substantial see. one what huge bit I they going matched because that retired, or person and that's their you just replacement, manufacturing the that, that you we want tell if we culture. that from more, business, we'll me see can accounting what of our it's our manufacturing they a home. challenge they that drives you're to feel my talking in or offered week, of Board our XX:XX mean, this want work hope to with and will your the people is to nuts. XX:XX build members running was just who want place, their whether called sorry, can't have home, an opportunity, you ops said, this And a of employees I we've job, And and a and so, love and a I I seen a hate I office. they it compensation person we in and that much. and respect way. the CFO accepted. mean, more and yesterday loan from think my I is little at that I run company build this not but organization start Jennifer, find employees a CFO I'll work

it's this how know person need me on, that a the times let okay, and don't you on get like, meeting You hold phone. many

me let a the in of maddening, inefficiency we the get office. It's of be we're back. now, them; call I It's issue. mean, they of calling their biggest phone, person, issue the up shit, Okay, that me say to first person's crap, it's and out answer lack them people is to and need that's non-stop. I I productivity so a and hang big the would person; oh, the come let wanting didn't second facing, and back oh

this I just point, was watching was Jennifer, -- and your I listening To XX:XX morning.

we're significant like, thing had something good the something point article it inflation and is or three turnover a we think very XX employers days started this mentioned. -- either. really is general, been hires the XX don't neighborhood pages X% had have yesterday that really we in Tim's something And to call wage there I I new so mean, and I afternoon had it's it is I but had watching think think in that the to that somewhere of experienced I our that. dynamic, we're don't and we've that, we've was of you have all-employee last successful. mean, that about must in we Nashville, an four but in whole haven't that or costing out,

mean, we opportunities. case jobs employees making are for and I So our good with

And definitely under eye but out on. keeping an so run yet, us far, from we're it hasn't

of employees, mention, been anything that works XX:XX that a banks, are won't our enough to and really yesterday employee And got of one employees LinkedIn they've at best said I and highest they there and our big big reached best CapStar I got years, really and looked friend or of one thought I they've the email -- bank. employee and and highest just him but at your said, that he'd that think at an had I from the recruiters your XX out XX and of

people So winning winners like being here. on we've and a created culture

be there we there I balance but I may be we any, not think can increase, I'm can it. won't some So saying think --

XX:XX Okay.

follow-up question. Just a

questions of the lot during on expenses a call. had operating You've

incentives Let fair at know cetera. me hard But you another it's they're your take this depending year, it look bank if is your know from on angle. to I what et to and hiring it the the to new say, those and going call, be expenses pipeline ‘XX? in that would essentially recruiting incentive you've this your in mentioned offset only hires on the you've had you're the you today, ones with the higher have successful --

XX:XX I of on think size depends it the hire, the team you right.

it's with comes one five people, hiring So comes it another. with if If we're team thing. the XX, that's

you do. from, I about the don't but today. we've angle hard think think our say up, about that's to I an thing that's appreciate give answer, you're I I talked coming mean, think So expenses, to One I I'd honest

think when when model is of The there's our truly bankers was leverage I got a in I there were lot here got expenses. current producing here. really four that I

Well, in million higher. that million pipeline $XXX achieve anywhere got able are did and XX% of portfolios. we've about longer national part XX:XX Those shared two out bankers of all them $XXX probably, with Nashville, no XXX% credits, they've of them them to of $XXX million $XX guessing I'm million now One participations. are XX to us, of Nashville should one got be did from that and about

of expense of several can come the out of ability books think have of books that is revenue expense. the to and bankers we've loans pipeline, without the what and because I base, add a got to we -- expense addition new their in lot I we've So gotten, to lot the having base, existing a think this there's grow

you. Thank Okay. XX:XX

Sure. XX:XX

you. Thank XX:XX

comes question next with from JMS. Feddie Our Strickland

with proceed your may question. You

guys. Hey. Good XX:XX morning,

Feddie. Hi, XX:XX

XX:XX morning. Good

Omicron Just outlook little -- Did supply issues I or running customers. positive, growth, guidance just so, sum especially they would of your economic among XX:XX on wondering a more incremental up chain but brighter? the on are seem looking issues is yours they against just what guess given loan are largely things

mean, population everybody an are is Look has and markets XX Dana in are This outstanding and XX:XX bank the at we back at trading you've you've about at look mean, great slides and and ours markets season are are and got the to second growth you I market go at page. growth population markets. good look I projected says [indiscernible] pretty has our -- great banks. and got I the for at reflect what highest mean banks our green think some bottom is -- growth, HomeTrust. versus I -- household just XX:XX size. if on PER will income growth, the the and this great Page these where interesting banks it a good the take on I of these our and look towards mean, these

have communities that we I I state. We're the health would the had our some leadership well had we've in fiscally death think but have issues through a of very lot and say, robust, that's remained Tennessee. of pandemic sickness run and So of unfortunately communities, and just our resiliency

don't they to that, credit didn't major from anything well and well Chris, blip, customers up think to but deferrals Nashville any say we're very want it I customers? I've and think speaks and today. you're XX:XX run. issues. that our that Knoxville, I heard So supply that are I all physically very held I have think just and and our we are hearing our positive as a Chattanooga positive through

of constraint to work. some a has around Yeah. is, things they're but the result of say finding XX:XX would What pandemic, make everybody sort as ways I it to shuffle

a continues have also We drive strong construction that to demand. market

to workers and Yeah. market There's pandemic marketplace be chain, and in We a stagnant coming good because new supply than a on. in but positives the have the of supply minuses it's market. of better into a growth managing those and so

it. Got XX:XX

the it just is forward move think to we should then, they're kind about and managing So continuing how way of it. through

mean, little stronger have than I XX:XX a stronger express -- a I I Absolutely, that. it little would

had were from more my the think seven, you two also daughter just be Australia, there was and child, I probably lady mean, here. just We from one been Nashville I sign. months. or resident through. and Wilmington, wife XX:XX late number Carolina. Dubai. here York, were managed we than per and cranes we've Switzerland, I Scouts, started that But XX it's can we I from And over a to like went Girl North my capital But and a a mean, New two they've from two, years. been one months other have and had XX scary come she's Nashvillian mean,

I companies run from -- firms. I the that I Goldman moving just it to what the mean, think I can't California they're and one bracket remember people it's even to if the technology practice was of bulge So the here, or unbelievable, investment firm it they're then just going at remember whole offices run Morgan was, Stanley are moving don't that one here. heard or banking practice -- yesterday, JPMorgan, but and the from that but individuals I of

metro don't blends And great if There of California. coming a community it that work, happening minutes markets lot So our XX:XX tell frankly, driving lot hour theirs. of things is areas. these from an especially XX a people across to into to us you're mind three

want they urban. a so, or And more land little bit not

So I Feddie. think it's pretty strong,

you're and it's think Charlotte. mean, markets, I markets. very it similar, three say, way. Charleston, I very over I similar our to those I'd put that three Greenville would to

my Got for Yeah. question. thanks Appreciate That of and lot the taking makes sense. you. XX:XX color

Thank XX:XX you.

Thank you. XX:XX

question from with Raymond comes Our next James. Wallace William

proceed question. may your with You

XX:XX morning, guys. Hi. Good

morning. Good XX:XX

method a special interested but a XX:XX trying I'm return the deck deployment, you optimizing about time confused. really the horse figure saying, we're bit, to deployment you decent amount little base it suggesting a Tim, that those potential. a to and to a a what tipping in capital -- in capital XX:XX for here beating suggesting So and out was All I'm little realistic more at hold right, you another, were decide capital teams. because the you In thinking spent Q&A, like point I'm one is invest forms aggressive, kind of it remarks, of prepared dead as probably and I'm it's not sounded entering frankly, higher the just were bank. to talking dividend very capital you're in And well, be going versus just about of the that bit on a the

capital to help don't on when more color I think about know, So versus help dividend opportunistically the kind hire help. might to, can specifically you special sitting any of you do might us a

give going Hi, to think to I'm Feddie. going tell This is Denis. time -- XX:XX Tim to you. I'm and

I we number announced interested buyback we on will that will best it one, that just see we As in authorization more as renewed the that just our connection the release. be in repurchase based be with --

that's one. So number

We will utilize that lever.

our be of in making line peers. some We with looking dividend gets closely closer that will ratio payout sure at up also our very

at be will taking and we that So utilizing a it. look

We organic are front that's that, whether of evaluating in we've three got okay, pretty of and the good top bankers will be then those growth in XX:XX things of teams And all on opportunities, bankers of good individual us. or like.

capital, that's deploy to upside to at opportunities see of peers ratios getting we mean, you we'll it. good adjective ton our a XX:XX level the back top deck, we going look rate some utilize reason, we the And go to not an rate -- have in CapStar shareholders our here, of you and of these peer that it or rising wants and deploy Tim to one of like time is I our that but on Tim the we franchise would that have from just put just are around, in want that ways it. the or are return a community as the a into is excess the going have interest going we're of other we in know, -- this don't all For to capital, have with and are okay. go mean, frame we capital and get so it We to some to compared be banks, but affecting. I other, capital, to investment that deserve that light across of it pick do three things, slide we're affecting whatever how multiple opportunities here same we that's have on really we so mentioned the those that of four going environment environment to to have capital if way going to and frame the excess I perspective. think

think trying I Tim what was to do. that's

Yeah. XX:XX

hindsight, looking my message believe company I criticism, equity I'd was what was which XXXX. growth easy, there no was was raised in delivered. I IPO-ed, but it guess, not is for William, And say, is the So back, much here, is the too that in I

almost mean, message I theory don't main a value. balance of hidden too, my sort of in that's theoretically our And in I math just I I there and And just I everyone's could today a could, comatose my think I company's that, do in net have theory I'd the so, been that it's our company. just, dividend it's our of because that income. and is, there like if asset immune in out XX:XX the So to you I work on hidden in I'm because we gotten or shareholder same part asset here. think that I think used sheet I think have is to, think and a

is, message going main That's number to my going forward. not so, are way And we one. operate that

Fortunately, reasonableness, demonstrated I XX:XX at priorities. repurchase. or that to looking there the had possibilities the would we or those so, is with that of first is don't an dividend, I to growth. slide, don't think be Knoxville right, number, buyback, back organic order And the just share we've high organic if I need the increasing low know And say, would one-time Chattanooga growth be order, with economics and I and

mentioned capital of I the comments, secondary. my in somewhere be return that will So

long. really, one, are So capital number messages we too sat have on

believe we plenty We to we've this we use. to activity to use. are have, of it We the in going got that to put reasons and have demonstrated ways put

I to when think to of the used around And dividend the in outcome. the probably secondary, in. will XX:XX as more be going work increasing use lightly that's comes edges we So the buyback interim, our this growth and

on what is a want banks My been to much XX:XX Page a to year message going ROTCE and our nearly a at asset it, dividend. if don't that going mean, hold XX.X% adjust, XXX investors this last trading be not are in -- TCE. this go look capital. foresee XX%. have to XX we is less to models. our On an books, It That's you they're to we we higher, our got all will I you great So know. would I This points adjust really and that all's their is on under-appreciated special more are they've these estimate If ours be basis XX%. page, is for

all maybe is pick popping there's if just institutional of trying some people in -- And are points as an I you not and X,XXX to do we're to I what have really of X,XXX follow. front banks was to that's that from. trying some So out put this We're can get out just investor, much.

forget net of by, $XX adding additional company. our each do just don't the franchise, that income don't that $XX we goes of if year also, the And or million million are we from into capital anything, XX:XX

tremendous already and each we -- opportunity. generating excess quarter, every every and to that we so additional year, capital So have, have each excess are the adds that we

Thanks. taking I'll to appreciate time I some provide the you guys. step Thanks, XX:XX clarification. back.

All RVA. Go XX:XX right.

not XX:XX time. any Schools And showing any the Thank to you. like this now questions turn I'm to at Tim further would call for back I remarks. further over

institutional a sincere I'm team. sell-side are that XX:XX really management guidance, everybody's and our effort appreciate the remarks. our has the really we help. and team all us. analysts following don't any Appreciate I guidance that come This and that and Board's investors have working given further us appreciate been have great employees hard, are hard, working along the

So think job, and really forward collectively, XXXX. all exciting look a doing great to a I we're we

we and everybody year look seeing forward soon. a to So you healthy have

Thank call. participating. for concludes today's you. This Thank XX:XX conference you

You disconnect. may now