Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2022

Banking and Thrift, Interest [Abstract]

Regulatory Capital Requirements

NOTE 11 – REGULATORY CAPITAL REQUIREMENTS

The Company and the Bank are subject to regulatory capital requirements administered by the Federal Reserve and the Bank is also subject to the regulatory capital requirements of the Tennessee Department of Financial Institutions. Failure to meet capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that could, in that event, have a material adverse effect on the institutions’ financial statements. The relevant regulations require the Company and the Bank to meet specific capital adequacy guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting principles. The capital classifications of the Company and the Bank are also subject to qualitative judgments by their regulators about components, risk weightings, and other factors. Those qualitative judgments could also affect the capital status of the Company and the Bank and the amount of dividends the Company and the Bank may distribute. The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of June 30, 2022, the Company and the Bank met all regulatory capital adequacy requirements to which they are subject.

The Company’s and the Bank’s capital amounts and ratios as of June 30, 2022 and December 31, 2021 are presented in the following table (dollars in thousands).

	Actual					Minimum capital requirement (1)					Minimum to be well-capitalized (2)
	Amount		Ratio			Amount		Ratio			Amount		Ratio
At June 30, 2022:
Total capital to risk-weighted assets:
CapStar Financial Holdings, Inc.	$	396,660		14.79	%	$	214,487		8.0	%	N/A		N/A
CapStar Bank		384,194		14.34			214,387		8.0		$	267,983		10	%
Tier I capital to risk-weighted assets:
CapStar Financial Holdings, Inc.		345,058		12.87			160,865		6.0		N/A		N/A
CapStar Bank		362,191		13.52			160,790		6.0			214,387		8.00
Common equity Tier 1 capital to risk weighted    assets:
CapStar Financial Holdings, Inc.		345,058		12.87			120,649		4.5		N/A		N/A
CapStar Bank		345,691		12.90			120,592		4.5			174,189		6.50
Tier I capital to average assets:
CapStar Financial Holdings, Inc.		345,058		11.10			124,395		4.0		N/A		N/A
CapStar Bank		362,191		11.66			124,276		4.0			155,345		5.00
At December 31, 2021:
Total capital to risk-weighted assets:
CapStar Financial Holdings, Inc.	$	384,116		16.29	%	$	188,610		8.0	%	N/A		N/A
CapStar Bank		370,919		15.74			188,471		8.0		$	235,589		10.0
Tier I capital to risk-weighted assets:
CapStar Financial Holdings, Inc.		332,567		14.11			141,458		6.0		N/A		N/A
CapStar Bank		348,902		14.81			141,354		6.0			188,471		8.0
Common equity Tier 1 capital to risk weighted    assets:
CapStar Financial Holdings, Inc.		332,567		14.11			106,093		4.5		N/A		N/A
CapStar Bank		332,402		14.11			106,015		4.5			153,133		6.5
Tier I capital to average assets:
CapStar Financial Holdings, Inc.		332,567		10.69			124,437		4.0		N/A		N/A
CapStar Bank		348,902		11.23			124,246		4.0			155,308		5.0

(1) For the calendar year 2022, the Company must maintain a capital conservation buffer of Tier 1 common equity capital in excess of minimum risk-based capital ratios by at least 2.5% to avoid limits on capital distributions and certain discretionary bonus payments to executive officers and similar employees.

(2) For the Company to be well-capitalized, the Bank must be well-capitalized and the Company must not be subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve to meet and maintain a specific capital level for any capital measure.