Earnings wrap: Avenue, CapStar

Avenue eyes mortgage opportunities, paydowns slow CapStar growth

Avenue Bank posted a first-quarter profit of $872,000, nearly double its number from early 2012, as the six-year-old lender grew its net interest income by 28 percent on the back of strong loan growth.

Net loans at Avenue grew to $486 million during the quarter, up 8 percent from year-end 2012 and 22 percent from a year ago. President Kent Cleaver said the loan growth was spread evenly across commercial construction projects, commercial real estate deals and core commercial and industrial loans. Construction loans of late have seen a good number of build-to-suit retail projects with some office and warehouse loans mixed in, he said.

Looking to the rest of the 2013, Cleaver said the Avenue team sees a big growth opportunity in home mortgages. The bank’s activity in recent months has been split 60-40 in favor of refinancings versus new purchases.

“The green shoots we saw in 2011 and last year were not false,” he said. “We have a really good team and we want to continue to grow our infrastructure.”

Click here for Avenue’s first-quarter call report with regulators.

CapStar Bank earned $1.8 million in the first three months of the year, down from an early-2012 figure padded by a big tax benefit. In the last quarter of 2012, the bank posted a profit of $345,000 as it padded its loan reserves after absorbing American Security Bank & Trust.

Five-year-old CapStar, which late last year topped $1 billion in assets for the first time, grew more slowly in the first quarter. Total loans ticked up slightly to about $625 million, with the C&I book growing 5 percent to $294 million.

CFO Rob Anderson said the lender saw a “pretty large amount” of loan paydowns from customers that masked decent new loan production. (Executives at Pinnacle Financial Partners also have noted of late that more customers are paying down some of their debt.) Based on early Q2 numbers, he said, growth has been picking up again.

“Plus, there is a lot of activity still out there but it’s not necessarily translating into net growth,” Anderson said.

CapStar’s Q1 call report is available here.