TriState Capital Holdings, Inc. TSC grew earnings per share (EPS) to $0.30 in the third quarter of 2016, with EPS increasing 36.4% from the third quarter of 2015 and 25.0% from the second quarter of 2016. The parent company of TriState Capital Bank and Chartwell Investment Partners also reported record revenue, net interest income and investment management fees, while continuing to drive strong loan and deposit growth, maintaining excellent credit quality, and enhancing its capital position.
TriState Capital's net income grew to $8.5 million in the third quarter of 2016, increasing 38.2% from $6.1 million in the third quarter of 2015 and 24.8% from $6.8 million in the second quarter of 2016. Net income per diluted share was $0.30 in the third quarter of 2016, compared to $0.22 in the third quarter of 2015 and $0.24 in the second quarter of 2016. Third quarter 2016 earnings per share included approximately $0.03 from the reduction of previously accrued contingent consideration for The Killen Group (TKG) acquisition completed earlier this year.
"TriState Capital delivered its best quarterly financial results ever as a public company, showcasing our uniquely diversified and low-risk-profile financial services business model and its proven ability to consistently generate robust earnings through sustainable revenue growth in commercial banking, private banking and investment management," Chief Executive Officer James F. Getz said. "We are also pleased to report further success in increasing the number and depth of client relationships that come with deposits, which outpaced very healthy loan growth for the third consecutive quarter, as well as further enhancements to our already strong regulatory capital position to support the continued organic expansion of our balance sheet."
THIRD QUARTER 2016 HIGHLIGHTS
- Deposits grew $486.7 million, or 18.7%, from one year prior and $199.0 million, or 6.9%, during the quarter to $3.09 billion, outpacing loan growth for the third consecutive quarter
- Loans grew $513.5 million, or 19.3%, from one year prior and $177.3 million, or 5.9%, during the quarter to $3.17 billion, supporting TriState Capital's ongoing long-term compound annual growth goal of 15%
- Strong credit quality continued, with adverse-rated credits declining to 1.59% at period end, from 2.08% one year prior, and non-performing assets representing 0.67% of total assets at the end of the most-recent and year-ago quarters
- Non-interest income grew to a record $12.5 million, or 40.0% of revenues, with Chartwell investment management revenue enhanced by the first full quarter of contribution from the TKG acquisition that closed April 29
- Assets under management (AUM) grew 2.0% during the quarter to $10.8 billion
- About $120 million of private banking loans became newly eligible for beneficial risk-weighted capital treatment under Basel III rules, making about $12 million of additional regulatory capital available to the bank
TriState Capital's total revenue, net interest income (NII) and non-interest income each hit record quarterly levels in the three months ended September 30, 2016. Total revenue grew to $31.2 million in the third quarter of 2016, increasing 24.6% from $25.0 million in the year-ago quarter and 5.3% from $29.6 million in the linked quarter.
TriState Capital's diverse loan growth continues to support revenue expansion, even as net interest margin of 2.18% in the third quarter of 2016 reflects the lingering impact of the sustained low-rate environment, in light of the company's continued commitment to asset sensitivity and strong credit quality in loans and investments. NII grew to $18.7 million in the third quarter of 2016, increasing 10.0% from $17.0 million in the third quarter of 2015 and 2.7% from $18.2 million in the linked quarter.
Investment management fees of $10.3 million in the third quarter of 2016 reflected Chartwell's successful business development efforts, as well as the contributions of the TKG business acquired on April 29. Chartwell investment management fees were $7.0 million in the year-ago quarter and $9.4 million in the linked quarter.
All other non-interest income was $2.2 million in the third quarter of 2016, compared to $995,000 in the year-ago quarter and $2.0 million in the linked quarter. Total non-interest income was $12.5 million, or 40.0% of total revenue, in the third quarter of 2016, compared to $8.0 million, or 32.0%, in the year-ago period and $11.4 million, or 38.5%, in the linked quarter.
The bank's efficiency ratio for the third quarter of 2016 was 62.01%, compared to 64.93% in the third quarter of 2015 and 59.63% in the second quarter of 2016. Non-interest expenses in the third quarter of 2016 were $20.5 million, or 2.27% of average assets on an annualized basis, compared to $17.3 million, or 2.25%, in the third quarter of 2015. Second quarter 2016 non-interest expenses were $19.5 million, or 2.29% of average assets on an annualized basis.
Non-interest expense for the three months ended September 30, 2016 represents the first full quarter of compensation and other costs associated with operating the business acquired from TKG on April 29. Third quarter non-interest expense also reflected a reduction of $1.2 million in the fair value of previously accrued contingent consideration associated with the TKG acquisition. The adjustment of this non-cash accrual reflects management's current estimate of the earnout payable to TKG's former owners in 2017, which favorably impacted third quarter 2016 earnings per share by approximately $0.03.
TriState Capital lowered its projected effective tax rate for the full year 2016 from approximately 34% to approximately 31% as a result of tax credits generated in the third quarter.
BALANCE SHEET GROWTH
Loans totaled $3.17 billion at September 30, 2016, increasing $513.5 million, or 19.3%, over balances at September 30, 2015 and $177.3 million, or 5.9%, from June 30. Private banking loans totaled $1.59 billion at September 30, 2016, growing 32.3% from the end of the year-ago quarter and 10.6% from the end of the linked quarter. Commercial loans totaled $1.59 billion at September 30, 2016, growing 8.6% from the end of the year-ago quarter and 1.7% from the end of the linked quarter.
Deposits totaled $3.09 billion at September 30, 2016, increasing $486.7 million, or 18.7%, from September 30, 2015 and $199.0 million, or 6.9%, from June 30. Deposit growth outpaced robust loan growth for the third consecutive quarter. This illustrates the ongoing success of TriState Capital's efforts to grow stable and cost-effective relationship deposits and treasury management related liquidity from new and existing accounts through superior client focus and enhanced services and technology.
TriState Capital continues to manage a highly asset-sensitive balance sheet. At September 30, 2016, 87% of TriState Capital's loan portfolio and 51% of its securities portfolio were floating rate. In addition, 28% of deposits were fixed-rate time deposits.
ASSET QUALITY
The bank's solid asset quality metrics in the third quarter of 2016 continued to reflect TriState Capital's disciplined credit culture and the growth of its private banking non-purpose margin loans secured by marketable securities. Private banking comprised 50% of the total loan portfolio at September 30, 2016.
Non-performing assets (NPAs) were $25.0 million at September 30, 2016, or 0.67% of total assets, compared to $20.9 million, or 0.67% of assets, at September 30, 2015 and $20.9 million, or 0.59%, at June 30, 2016. NPAs at September 30, 2016 included $3.6 million for collateral moved to other real estate owned (OREO) at fair value. Non-performing loans (NPLs) were $20.7 million at September 30, 2016, or 0.65% of total loans, compared to $19.1 million, or 0.72%, at September 30, 2015 and $19.1 million, or 0.64%, at June 30, 2016.
Adverse-rated credits declined 10.7% during the third quarter and 8.6% from September 30, 2015. Adverse-rated credits represented 1.59% of total loans at the end of the third quarter of 2016, 2.08% at September 30, 2015 and 1.89% at June 30, 2016.
The bank experienced net recoveries of $3.5 million in the third quarter of 2016, compared to net charge-off of $716,000 in the third quarter of 2015 and $1.4 million in the second quarter of 2016.
TriState Capital's $542,000 credit to provision expense in the three months ended September 30, 2016 reflected declining adverse rated credits and net recoveries, offset by increases to specific reserves on NPLs. The bank reported a credit to provision expense of $1.3 million in the third quarter of 2015 and provision expense of $80,000 in the second quarter of 2016.
The company's allowance for loan losses represented 0.64% of total loans at September 30, 2016, compared to 0.73% at September 30, 2015 and 0.57% at June 30, 2016.
INVESTMENT MANAGEMENT
Chartwell's new business and new flows from existing accounts of $189 million and market appreciation of $400 million offset outflows of $381 million in the third quarter of 2016. While Chartwell experienced net outflows of $192 million in the third quarter, it delivered net inflows of $416 million year to date, as the industry generally saw net outflows for the three and nine months ended September 30, 2016.
Chartwell grew AUM by 2.0% to $10.8 billion at the end of the third quarter of 2016 from $10.6 billion at June 30, 2016. AUM grew by 41.6% from $7.6 billion at September 30, 2015, primarily driven by the April 29 closing of its TKG acquisition. Chartwell's weighted average fee rate was 0.38% at September 30, 2016.
Investment management fees grew to $10.3 million in the third quarter of 2016 from $7.0 million in the third quarter of 2015 and $9.4 million in the second quarter of 2016. On an annualized run-rate basis, Chartwell's revenues increased to $41.3 million at September 30, 2016, up 47.5% from $28.0 million at September 30, 2015 and in line with $41.2 million at June 30, 2016.
Chartwell earned $1.7 million in the third quarter, comprising 20.6% of TriState Capital Holdings' consolidated net income for the third quarter of 2016.
CAPITAL STRENGTH AND FLEXIBILITY
During the third quarter of 2016, about $120 million of TriState Capital's private banking loans became newly eligible for beneficial risk-weighted capital treatment under Basel III rules, which recognize the lower-risk profile of the majority of the bank's portfolio of non-purpose margin loans. This had the favorable net effect of making about $12 million of additional regulatory capital available to the bank in the third quarter of 2016. Accordingly, the TriState Capital Bank subsidiary's total risk-based capital ratio increased to 12.88% at September 30, 2016, from 12.24% at June 30, 2016.
TriState Capital Holdings, as of September 30, 2016, reported ratios of 13.05% for total risk-based capital, 11.73% for tier 1 risk-based capital, 11.73% for common equity tier 1 risk-based capital and 8.09% for tier 1 leverage.
In January 2016, the Board of Directors approved a share repurchase program of up to $10 million. Year-to-date, the company repurchased a total of 334,275 shares for approximately $4.3 million at an average cost of $12.89 per share. Of that total, in the third quarter of 2016, the company repurchased 76,553 shares for approximately $1.1 million at an average cost of $14.78 per share. Also during the third quarter, $5.2 million of the authorization was utilized for an option cancellation program. Fully vested options of 1,061,500 shares of common stock, granted in 2007 and expiring in 2017 with a $10 exercise price, were canceled at an average spread of $4.92.
This week, the company's Board of Directors approved a new share repurchase program of up to $5 million. Under the authorization, purchases of shares may be made at the discretion of management from time to time in the open market or through negotiated transactions. In addition, the funds allocated to the program can be used to cancel options expiring in 2017.
CONFERENCE CALL
As previously announced, TriState Capital will hold a conference call tomorrow to review its financial results and operating performance.
The live conference call on October 20 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link http://dpregister.com/10094279 to receive a special dial-in number and PIN. Telephone participants who are unable to pre-register should dial in at least 10 minutes prior to the call and request the "TriState Capital earnings call." The call may be accessed by dialing 888-339-0757 from the United States, 855-669-9657 from Canada or 412-902-4194 from other international locations.
A replay of the call will be available approximately one hour after the end of the conference through October 27. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 412-317-0088 from other international locations, and entering the conference number 10094279.
ABOUT TRISTATE CAPITAL
TriState Capital Holdings, Inc. TSC is a bank holding company headquartered in Pittsburgh, Pa., providing commercial banking, private banking and investment management services to middle-market companies, institutional clients and high-net-worth individuals. Its TriState Capital Bank subsidiary had $3.6 billion in assets, as of September 30, 2016, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Edison, N.J., and New York City, as well as high-net-worth individuals nationwide through its national referral network of financial intermediaries. Its Chartwell Investment Partners subsidiary had $10.8 billion in assets under management, as of September 30, 2016, and serves as the advisor to The Berwyn Funds and Chartwell Mutual Funds. For more information, please visit http://investors.tristatecapitalbank.com.
FORWARD LOOKING STATEMENTS
This press release includes "forward-looking" statements related to TriState Capital that can generally be identified as describing TriState Capital's future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect TriState Capital's future results, please see the company's most-recent annual and quarterly reports filed on Form 10-K and Form 10-Q.
NON-GAAP FINANCIAL DISCLOSURES
This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). Although TriState Capital believes non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP. Where non-GAAP disclosures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and accompanying tables.
| TRISTATE CAPITAL HOLDINGS, INC. | ||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) | ||||||||||||||||||||
| As of and For the | As of and For the | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Dollars in thousands) | September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Period-end balance sheet data: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 120,736 | $ | 114,297 | $ | 100,424 | $ | 120,736 | $ | 100,424 | ||||||||||
| Total investment securities | 243,343 | 242,217 | 228,014 | 243,343 | 228,014 | |||||||||||||||
| Loans held-for-investment | 3,174,653 | 2,997,309 | 2,661,191 | 3,174,653 | 2,661,191 | |||||||||||||||
| Allowance for loan losses | (20,211 | ) | (17,215 | ) | (19,350 | ) | (20,211 | ) | (19,350 | ) | ||||||||||
| Loans held-for-investment, net | 3,154,442 | 2,980,094 | 2,641,841 | 3,154,442 | 2,641,841 | |||||||||||||||
| Goodwill and other intangibles, net | 67,671 | 68,134 | 51,205 | 67,671 | 51,205 | |||||||||||||||
| Other assets | 129,326 | 123,849 | 108,020 | 129,326 | 108,020 | |||||||||||||||
| Total assets | $ | 3,715,518 | $ | 3,528,591 | $ | 3,129,504 | $ | 3,715,518 | $ | 3,129,504 | ||||||||||
| Total deposits | $ | 3,087,230 | $ | 2,888,192 | $ | 2,600,508 | $ | 3,087,230 | $ | 2,600,508 | ||||||||||
| Borrowings, net | 239,460 | 259,409 | 174,257 | 239,460 | 174,257 | |||||||||||||||
| Other liabilities | 45,689 | 43,296 | 34,199 | 45,689 | 34,199 | |||||||||||||||
| Total liabilities | 3,372,379 | 3,190,897 | 2,808,964 | 3,372,379 | 2,808,964 | |||||||||||||||
| Total shareholders' equity | 343,139 | 337,694 | 320,540 | 343,139 | 320,540 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,715,518 | $ | 3,528,591 | $ | 3,129,504 | $ | 3,715,518 | $ | 3,129,504 | ||||||||||
| Income statement data: | ||||||||||||||||||||
| Interest income | $ | 24,925 | $ | 23,795 | $ | 20,989 | $ | 72,080 | $ | 61,672 | ||||||||||
| Interest expense | 6,221 | 5,576 | 3,984 | 16,780 | 11,331 | |||||||||||||||
| Net interest income | 18,704 | 18,219 | 17,005 | 55,300 | 50,341 | |||||||||||||||
| Provision (credit) for loan losses | (542 | ) | 80 | (1,341 | ) | (340 | ) | (231 | ) | |||||||||||
| Net interest income after provision for loan losses | 19,246 | 18,139 | 18,346 | 55,640 | 50,572 | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Investment management fees | 10,333 | 9,462 | 7,020 | 26,814 | 22,189 | |||||||||||||||
| Net gain on the sale and call of investment securities | 14 | 62 | — | 77 | 17 | |||||||||||||||
| Other non-interest income | 2,150 | 1,923 | 995 | 5,968 | 4,236 | |||||||||||||||
| Total non-interest income | 12,497 | 11,447 | 8,015 | 32,859 | 26,442 | |||||||||||||||
| Non-interest expense: | ||||||||||||||||||||
| Intangible amortization expense | 463 | 438 | 390 | 1,291 | 1,169 | |||||||||||||||
| Change in fair value of acquisition earnout | (1,209 | ) | — | — | (1,209 | ) | — | |||||||||||||
| Other non-interest expense | 21,260 | 19,019 | 16,911 | 57,895 | 50,816 | |||||||||||||||
| Total non-interest expense | 20,514 | 19,457 | 17,301 | 57,977 | 51,985 | |||||||||||||||
| Income before tax | 11,229 | 10,129 | 9,060 | 30,522 | 25,029 | |||||||||||||||
| Income tax expense | 2,775 | 3,356 | 2,942 | 9,452 | 8,127 | |||||||||||||||
| Net income | $ | 8,454 | $ | 6,773 | $ | 6,118 | $ | 21,070 | $ | 16,902 | ||||||||||
| TRISTATE CAPITAL HOLDINGS, INC. | ||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) | ||||||||||||||||||||
| As of and For the | As of and For the | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (Dollars in thousands, except per share data) | September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Per share and share data: | ||||||||||||||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | 0.31 | $ | 0.25 | $ | 0.22 | $ | 0.76 | $ | 0.61 | ||||||||||
| Diluted | $ | 0.30 | $ | 0.24 | $ | 0.22 | $ | 0.75 | $ | 0.60 | ||||||||||
| Book value per common share | $ | 12.12 | $ | 11.97 | $ | 11.44 | $ | 12.12 | $ | 11.44 | ||||||||||
| Tangible book value per common share (1) | $ | 9.73 | $ | 9.56 | $ | 9.61 | $ | 9.73 | $ | 9.61 | ||||||||||
| Common shares outstanding, at end of period | 28,317,154 | 28,211,282 | 28,027,695 | 28,317,154 | 28,027,695 | |||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 27,514,724 | 27,549,475 | 27,728,705 | 27,586,816 | 27,779,023 | |||||||||||||||
| Diluted | 28,307,632 | 28,225,404 | 28,281,244 | 28,276,223 | 28,207,659 | |||||||||||||||
| Performance ratios: | ||||||||||||||||||||
| Return on average assets (2) | 0.93 | % | 0.80 | % | 0.79 | % | 0.82 | % | 0.76 | % | ||||||||||
| Return on average equity (2) | 9.88 | % | 8.16 | % | 7.64 | % | 8.42 | % | 7.23 | % | ||||||||||
| Net interest margin (2) (3) | 2.18 | % | 2.25 | % | 2.32 | % | 2.25 | % | 2.39 | % | ||||||||||
| Bank efficiency ratio (1) | 62.01 | % | 59.63 | % | 64.93 | % | 60.36 | % | 62.36 | % | ||||||||||
| Efficiency ratio (1) | 68.17 | % | 64.24 | % | 67.59 | % | 65.73 | % | 66.20 | % | ||||||||||
| Non-interest expense to average assets (2) | 2.27 | % | 2.29 | % | 2.25 | % | 2.25 | % | 2.35 | % | ||||||||||
| Asset quality: | ||||||||||||||||||||
| Non-performing loans | $ | 20,717 | $ | 19,148 | $ | 19,119 | $ | 20,717 | $ | 19,119 | ||||||||||
| Non-performing assets | $ | 24,985 | $ | 20,878 | $ | 20,885 | $ | 24,985 | $ | 20,885 | ||||||||||
| Other real estate owned | $ | 4,268 | $ | 1,730 | $ | 1,766 | $ | 4,268 | $ | 1,766 | ||||||||||
| Non-performing assets to total assets | 0.67 | % | 0.59 | % | 0.67 | % | 0.67 | % | 0.67 | % | ||||||||||
| Non-performing loans to total loans | 0.65 | % | 0.64 | % | 0.72 | % | 0.65 | % | 0.72 | % | ||||||||||
| Allowance for loan losses to loans | 0.64 | % | 0.57 | % | 0.73 | % | 0.64 | % | 0.73 | % | ||||||||||
| Allowance for loan losses to non-performing loans | 97.56 | % | 89.90 | % | 101.21 | % | 97.56 | % | 101.21 | % | ||||||||||
| Net charge-offs (recoveries) | $ | (3,538 | ) | $ | 1,411 | $ | 716 | $ | (2,577 | ) | $ | 692 | ||||||||
| Net charge-offs (recoveries) to average total loans (2) | (0.46 | )% | 0.20 | % | 0.11 | % | (0.12 | )% | 0.04 | % | ||||||||||
| Revenue: | ||||||||||||||||||||
| Total revenue (1) | $ | 31,187 | $ | 29,604 | $ | 25,020 | $ | 88,082 | $ | 76,766 | ||||||||||
| Pre-tax, pre-provision net revenue (1) | $ | 10,673 | $ | 10,147 | $ | 7,719 | $ | 30,105 | $ | 24,781 | ||||||||||
| Capital ratios: | ||||||||||||||||||||
| Tier 1 leverage ratio | 8.09 | % | 8.41 | % | 9.30 | % | 8.09 | % | 9.30 | % | ||||||||||
| Common equity tier 1 risk-based capital ratio | 11.73 | % | 11.25 | % | 12.22 | % | 11.73 | % | 12.22 | % | ||||||||||
| Tier 1 risk-based capital ratio | 11.73 | % | 11.25 | % | 12.22 | % | 11.73 | % | 12.22 | % | ||||||||||
| Total risk-based capital ratio | 13.05 | % | 12.76 | % | 13.99 | % | 13.05 | % | 13.99 | % | ||||||||||
| Assets under management | $ | 10,800,000 | $ | 10,592,000 | $ | 7,625,000 | $ | 10,800,000 | $ | 7,625,000 | ||||||||||
| (1) | These measures are not measures recognized under GAAP and are therefore considered to be non-GAAP financial measures. See "Non-GAAP Financial Measures" for a reconciliation of these measures to their most directly comparable GAAP measures. | |
| (2) | Ratios are annualized. | |
| (3) | Net interest margin is calculated on a fully taxable equivalent basis. |
| TRISTATE CAPITAL HOLDINGS, INC. | |||||||||||||||||||||||||||||||||
| AVERAGES AND YIELDS (UNAUDITED) | |||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||
| September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) |
Average Balance |
Interest |
Average Yield/ Rate |
Average Balance |
Interest |
Average Yield/ Rate |
Average Balance |
Interest |
Average Yield/ Rate |
||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||
| Interest-earning deposits | $ | 114,245 | $ | 150 | 0.52 | % | $ | 105,954 | $ | 135 | 0.51 | % | $ | 94,015 | $ | 84 | 0.35 | % | |||||||||||||||
| Federal funds sold | 6,445 | 6 | 0.37 | % | 6,041 | 5 | 0.33 | % | 6,197 | 2 | 0.13 | % | |||||||||||||||||||||
| Investment securities available-for-sale | 182,354 | 828 | 1.81 | % | 185,477 | 816 | 1.77 | % | 172,922 | 597 | 1.37 | % | |||||||||||||||||||||
| Investment securities held-to-maturity | 48,495 | 485 | 3.98 | % | 45,143 | 457 | 4.07 | % | 45,941 | 454 | 3.92 | % | |||||||||||||||||||||
| FHLB stock | 12,347 | 144 | 4.64 | % | 11,984 | 102 | 3.42 | % | 6,371 | 49 | 3.05 | % | |||||||||||||||||||||
| Total loans | 3,061,427 | 23,369 | 3.04 | % | 2,909,217 | 22,354 | 3.09 | % | 2,598,362 | 19,872 | 3.03 | % | |||||||||||||||||||||
| Total interest-earning assets | 3,425,313 | 24,982 | 2.90 | % | 3,263,816 | 23,869 | 2.94 | % | 2,923,808 | 21,058 | 2.86 | % | |||||||||||||||||||||
| Other assets | 171,986 | 157,736 | 132,225 | ||||||||||||||||||||||||||||||
| Total assets | $ | 3,597,299 | $ | 3,421,552 | $ | 3,056,033 | |||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 190,270 | $ | 234 | 0.49 | % | $ | 145,858 | $ | 154 | 0.42 | % | $ | 97,493 | $ | 99 | 0.40 | % | |||||||||||||||
| Money market deposit accounts | 1,688,250 | 3,017 | 0.71 | % | 1,603,881 | 2,622 | 0.66 | % | 1,418,547 | 1,523 | 0.43 | % | |||||||||||||||||||||
| Time deposits | 863,872 | 1,936 | 0.89 | % | 852,381 | 1,827 | 0.86 | % | 884,829 | 1,652 | 0.74 | % | |||||||||||||||||||||
| Borrowings: | |||||||||||||||||||||||||||||||||
| FHLB borrowing | 273,804 | 480 | 0.70 | % | 269,670 | 419 | 0.62 | % | 130,054 | 156 | 0.48 | % | |||||||||||||||||||||
| Subordinated notes payable, net | 34,427 | 554 | 6.40 | % | 34,376 | 554 | 6.48 | % | 34,224 | 554 | 6.42 | % | |||||||||||||||||||||
| Total interest-bearing liabilities | 3,050,623 | 6,221 | 0.81 | % | 2,906,166 | 5,576 | 0.77 | % | 2,565,147 | 3,984 | 0.62 | % | |||||||||||||||||||||
| Noninterest-bearing deposits | 161,723 | 147,540 | 148,323 | ||||||||||||||||||||||||||||||
| Other liabilities | 44,565 | 34,075 | 24,743 | ||||||||||||||||||||||||||||||
| Shareholders' equity | 340,388 | 333,771 | 317,820 | ||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,597,299 | $ | 3,421,552 | $ | 3,056,033 | |||||||||||||||||||||||||||
| Net interest income (1) | $ | 18,761 | $ | 18,293 | $ | 17,074 | |||||||||||||||||||||||||||
| Net interest spread | 2.09 | % | 2.17 | % | 2.24 | % | |||||||||||||||||||||||||||
| Net interest margin (1) | 2.18 | % | 2.25 | % | 2.32 | % | |||||||||||||||||||||||||||
| (1) | Net interest income and net interest margin are calculated on a fully taxable equivalent basis. |
| TRISTATE CAPITAL HOLDINGS, INC. | ||||||||||||||||||||||
| AVERAGES AND YIELDS (UNAUDITED) | ||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||
| (Dollars in thousands) |
Average Balance |
Interest |
Average Yield/ Rate |
Average Balance |
Interest |
Average Yield/ Rate |
||||||||||||||||
| Assets | ||||||||||||||||||||||
| Interest-earning deposits | $ | 107,651 | $ | 418 | 0.52 | % | $ | 104,953 | $ | 273 | 0.35 | % | ||||||||||
| Federal funds sold | 6,180 | 16 | 0.35 | % | 6,143 | 4 | 0.09 | % | ||||||||||||||
| Investment securities available-for-sale | 181,383 | 2,387 | 1.76 | % | 162,838 | 1,550 | 1.27 | % | ||||||||||||||
| Investment securities held-to-maturity | 46,977 | 1,409 | 4.01 | % | 40,616 | 1,190 | 3.92 | % | ||||||||||||||
| FHLB stock | 10,983 | 343 | 4.17 | % | 5,084 | 311 | 8.18 | % | ||||||||||||||
| Total loans | 2,935,663 | 67,710 | 3.08 | % | 2,510,374 | 58,534 | 3.12 | % | ||||||||||||||
| Total interest-earning assets | 3,288,837 | 72,283 | 2.94 | % | 2,830,008 | 61,862 | 2.92 | % | ||||||||||||||
| Other assets | 155,903 | 130,591 | ||||||||||||||||||||
| Total assets | $ | 3,444,740 | $ | 2,960,599 | ||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 160,310 | $ | 541 | 0.45 | % | $ | 103,674 | $ | 318 | 0.41 | % | ||||||||||
| Money market deposit accounts | 1,614,669 | 7,847 | 0.65 | % | 1,343,867 | 4,079 | 0.41 | % | ||||||||||||||
| Time deposits | 869,879 | 5,540 | 0.85 | % | 883,679 | 4,945 | 0.75 | % | ||||||||||||||
| Borrowings: | ||||||||||||||||||||||
| FHLB borrowing | 243,686 | 1,191 | 0.65 | % | 103,315 | 328 | 0.42 | % | ||||||||||||||
| Subordinated notes payable, net | 34,376 | 1,661 | 6.45 | % | 34,174 | 1,661 | 6.50 | % | ||||||||||||||
| Total interest-bearing liabilities | 2,922,920 | 16,780 | 0.77 | % | 2,468,709 | 11,331 | 0.61 | % | ||||||||||||||
| Noninterest-bearing deposits | 153,763 | 149,224 | ||||||||||||||||||||
| Other liabilities | 33,770 | 30,026 | ||||||||||||||||||||
| Shareholders' equity | 334,287 | 312,640 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,444,740 | $ | 2,960,599 | ||||||||||||||||||
| Net interest income (1) | $ | 55,503 | $ | 50,531 | ||||||||||||||||||
| Net interest spread | 2.17 | % | 2.31 | % | ||||||||||||||||||
| Net interest margin (1) | 2.25 | % | 2.39 | % | ||||||||||||||||||
| (1) | Net interest income and net interest margin are calculated on a fully taxable equivalent basis. |
|
TRISTATE CAPITAL HOLDINGS, INC. LOAN COMPOSITION (UNAUDITED) |
|||||||||||||||||||||
| September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||
| (Dollars in thousands) |
Loan Balance |
Percent of Total Loans |
Loan Balance |
Percent of Total Loans |
Loan Balance |
Percent of Total Loans |
|||||||||||||||
| Private banking loans | $ | 1,587,019 | 50.0 | % | $ | 1,435,545 | 47.9 | % | $ | 1,199,883 | 45.1 | % | |||||||||
| Middle-market banking loans: | |||||||||||||||||||||
| Commercial and industrial | 565,702 | 17.8 | % | 573,733 | 19.1 | % | 630,131 | 23.7 | % | ||||||||||||
| Commercial real estate | 1,021,932 | 32.2 | % | 988,031 | 33.0 | % | 831,177 | 31.2 | % | ||||||||||||
| Total middle-market banking loans | 1,587,634 | 50.0 | % | 1,561,764 | 52.1 | % | 1,461,308 | 54.9 | % | ||||||||||||
| Loans held-for-investment | $ | 3,174,653 | 100.0 | % | $ | 2,997,309 | 100.0 | % | $ | 2,661,191 | 100.0 | % | |||||||||
| TRISTATE CAPITAL HOLDINGS, INC. | ||||||||||||||||||||||||||||||||
| STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED) | ||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | Bank |
Investment Management |
Parent and Other |
Consolidated | Bank |
Investment Management |
Parent and Other |
Consolidated | ||||||||||||||||||||||||
| Income statement data: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 24,855 | $ | — | $ | 70 | $ | 24,925 | $ | 20,932 | $ | — | $ | 57 | $ | 20,989 | ||||||||||||||||
| Interest expense | 5,673 | — | 548 | 6,221 | 3,430 | — | 554 | 3,984 | ||||||||||||||||||||||||
| Net interest income (loss) | 19,182 | — | (478 | ) | 18,704 | 17,502 | — | (497 | ) | 17,005 | ||||||||||||||||||||||
| Provision (credit) for loan losses | (542 | ) | — | — | (542 | ) | (1,341 | ) | — | — | (1,341 | ) | ||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 19,724 | — | (478 | ) | 19,246 | 18,843 | — | (497 | ) | 18,346 | ||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||||||||
| Investment management fees | — | 10,391 | (58 | ) | 10,333 | — | 7,074 | (54 | ) | 7,020 | ||||||||||||||||||||||
| Net gain on the sale and call of investment securities | 14 | — | — | 14 | — | — | — | — | ||||||||||||||||||||||||
| Other non-interest income | 2,149 | 1 | — | 2,150 | 1,002 | (7 | ) | — | 995 | |||||||||||||||||||||||
| Total non-interest income | 2,163 | 10,392 | (58 | ) | 12,497 | 1,002 | 7,067 | (54 | ) | 8,015 | ||||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||||||||||||
| Intangible amortization expense | — | 463 | — | 463 | — | 390 | — | 390 | ||||||||||||||||||||||||
| Change in fair value of acquisition earnout | — | (1,209 | ) | — | (1,209 | ) | — | — | — | — | ||||||||||||||||||||||
| Other non-interest expense | 13,227 | 8,009 | 24 | 21,260 | 12,015 | 4,936 | (40 | ) | 16,911 | |||||||||||||||||||||||
| Total non-interest expense | 13,227 | 7,263 | 24 | 20,514 | 12,015 | 5,326 | (40 | ) | 17,301 | |||||||||||||||||||||||
| Income (loss) before tax | 8,660 | 3,129 | (560 | ) | 11,229 | 7,830 | 1,741 | (511 | ) | 9,060 | ||||||||||||||||||||||
| Income tax expense (benefit) | 1,823 | 1,385 | (433 | ) | 2,775 | 2,442 | 660 | (160 | ) | 2,942 | ||||||||||||||||||||||
| Net income (loss) | $ | 6,837 | $ | 1,744 | $ | (127 | ) | $ | 8,454 | $ | 5,388 | $ | 1,081 | $ | (351 | ) | $ | 6,118 | ||||||||||||||
| Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | Bank |
Investment Management |
Parent and Other |
Consolidated | Bank |
Investment Management |
Parent and Other |
Consolidated | ||||||||||||||||||||||||
| Income statement data: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 71,871 | $ | — | $ | 209 | $ | 72,080 | $ | 61,509 | $ | — | $ | 163 | $ | 61,672 | ||||||||||||||||
| Interest expense | 15,130 | — | 1,650 | 16,780 | 9,689 | — | 1,642 | 11,331 | ||||||||||||||||||||||||
| Net interest income (loss) | 56,741 | — | (1,441 | ) | 55,300 | 51,820 | — | (1,479 | ) | 50,341 | ||||||||||||||||||||||
| Provision (credit) for loan losses | (340 | ) | — | — | (340 | ) | (231 | ) | — | — | (231 | ) | ||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 57,081 | — | (1,441 | ) | 55,640 | 52,051 | — | (1,479 | ) | 50,572 | ||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||||||||
| Investment management fees | — | 26,981 | (167 | ) | 26,814 | — | 22,332 | (143 | ) | 22,189 | ||||||||||||||||||||||
| Net gain on the sale and call of investment securities | 77 | — | — | 77 | 17 | — | — | 17 | ||||||||||||||||||||||||
| Other non-interest income | 5,966 | 2 | — | 5,968 | 4,242 | (6 | ) | — | 4,236 | |||||||||||||||||||||||
| Total non-interest income | 6,043 | 26,983 | (167 | ) | 32,859 | 4,259 | 22,326 | (143 | ) | 26,442 | ||||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||||||||||||
| Intangible amortization expense | — | 1,291 | — | 1,291 | — | 1,169 | — | 1,169 | ||||||||||||||||||||||||
| Change in fair value of acquisition earnout | — | (1,209 | ) | — | (1,209 | ) | — | — | — | — | ||||||||||||||||||||||
| Other non-interest expense | 37,849 | 19,986 | 60 | 57,895 | 34,958 | 15,931 | (73 | ) | 50,816 | |||||||||||||||||||||||
| Total non-interest expense | 37,849 | 20,068 | 60 | 57,977 | 34,958 | 17,100 | (73 | ) | 51,985 | |||||||||||||||||||||||
| Income (loss) before tax | 25,275 | 6,915 | (1,668 | ) | 30,522 | 21,352 | 5,226 | (1,549 | ) | 25,029 | ||||||||||||||||||||||
| Income tax expense (benefit) | 7,476 | 2,833 | (857 | ) | 9,452 | 6,630 | 1,981 | (484 | ) | 8,127 | ||||||||||||||||||||||
| Net income (loss) | $ | 17,799 | $ | 4,082 | $ | (811 | ) | $ | 21,070 | $ | 14,722 | $ | 3,245 | $ | (1,065 | ) | $ | 16,902 | ||||||||||||||
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL
MEASURES
The information set forth above contains certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are "tangible common equity," "tangible book value per common share," "total revenue," "pre-tax, pre-provision net revenue," and "efficiency ratio." Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
"Tangible common equity" is defined as shareholders' equity reduced by intangible assets, including goodwill. We believe this measure is important to management and investors to better understand and assess changes from period to period in shareholders' equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a business purchase combination, has the effect of increasing both equity and assets, while not increasing our tangible equity or tangible assets.
"Tangible book value per common share" is defined as book value, excluding the impact of intangible assets, including goodwill, divided by common shares outstanding. We believe this measure is important to many investors who are interested in changes from period to period in book value per share exclusive of changes in intangible assets.
"Total revenue" is defined as net interest income and non-interest income, excluding gains and losses on the sale and call of investment securities. We believe adjustments made to our operating revenue allow management and investors to better assess our operating revenue by removing the volatility that is associated with certain other items that are unrelated to our core business.
"Pre-tax, pre-provision net revenue" is defined as net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities. We believe this measure is important because it allows management and investors to better assess our performance in relation to our core operating revenue, excluding the volatility that is associated with provision for loan losses or other items that are unrelated to our core business.
"Efficiency ratio" is defined as non-interest expense, excluding acquisition related items and intangible amortization expense, where applicable, divided by our total revenue. We believe this measure, particularly at the Bank, allows management and investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
| TRISTATE CAPITAL HOLDINGS, INC. | |||||||||||
| NON-GAAP FINANCIAL MEASURES (UNAUDITED) | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| (Dollars in thousands, except per share data) | 2016 | 2016 | 2015 | ||||||||
| Tangible book value per common share: | |||||||||||
| Total shareholders' equity | $ | 343,139 | $ | 337,694 | $ | 320,540 | |||||
| Less: intangible assets | 67,671 | 68,134 | 51,205 | ||||||||
| Tangible common equity | $ | 275,468 | $ | 269,560 | $ | 269,335 | |||||
| Common shares outstanding | 28,317,154 | 28,211,282 | 28,027,695 | ||||||||
| Tangible book value per common share | $ | 9.73 | $ | 9.56 | $ | 9.61 | |||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Pre-tax, pre-provision net revenue: | ||||||||||||||||||||
| Net interest income | $ | 18,704 | $ | 18,219 | $ | 17,005 | $ | 55,300 | $ | 50,341 | ||||||||||
| Total non-interest income | 12,497 | 11,447 | 8,015 | 32,859 | 26,442 | |||||||||||||||
| Less: net gain on the sale and call of investment securities | 14 | 62 | — | 77 | 17 | |||||||||||||||
| Total revenue | 31,187 | 29,604 | 25,020 | 88,082 | 76,766 | |||||||||||||||
| Less: total non-interest expense | 20,514 | 19,457 | 17,301 | 57,977 | 51,985 | |||||||||||||||
| Pre-tax, pre-provision net revenue | $ | 10,673 | $ | 10,147 | $ | 7,719 | $ | 30,105 | $ | 24,781 | ||||||||||
| Efficiency ratio: | ||||||||||||||||||||
| Total non-interest expense | $ | 20,514 | $ | 19,457 | $ | 17,301 | $ | 57,977 | $ | 51,985 | ||||||||||
| Plus: change in fair value of acquisition earnout | 1,209 | — | — | 1,209 | — | |||||||||||||||
| Less: acquisition related items | — | — | — | 1 | — | |||||||||||||||
| Less: intangible amortization expense | 463 | 438 | 390 | 1,291 | 1,169 | |||||||||||||||
| Total non-interest expense, as adjusted (numerator) | $ | 21,260 | $ | 19,019 | $ | 16,911 | $ | 57,894 | $ | 50,816 | ||||||||||
| Total revenue (denominator) | $ | 31,187 | $ | 29,604 | $ | 25,020 | $ | 88,082 | $ | 76,766 | ||||||||||
| Efficiency ratio | 68.17 | % | 64.24 | % | 67.59 | % | 65.73 | % | 66.20 | % | ||||||||||
| BANK SEGMENT | ||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Bank pre-tax, pre-provision net revenue: | ||||||||||||||||||||
| Net interest income | $ | 19,182 | $ | 18,705 | $ | 17,502 | $ | 56,741 | $ | 51,820 | ||||||||||
| Total non-interest income | 2,163 | 1,984 | 1,002 | 6,043 | 4,259 | |||||||||||||||
| Less: net gain on the sale and call of investment securities | 14 | 62 | — | 77 | 17 | |||||||||||||||
| Total revenue | 21,331 | 20,627 | 18,504 | 62,707 | 56,062 | |||||||||||||||
| Less: total non-interest expense | 13,227 | 12,299 | 12,015 | 37,849 | 34,958 | |||||||||||||||
| Pre-tax, pre-provision net revenue | $ | 8,104 | $ | 8,328 | $ | 6,489 | $ | 24,858 | $ | 21,104 | ||||||||||
| Bank efficiency ratio: | ||||||||||||||||||||
| Total non-interest expense (numerator) | $ | 13,227 | $ | 12,299 | $ | 12,015 | $ | 37,849 | $ | 34,958 | ||||||||||
| Total revenue (denominator) | $ | 21,331 | $ | 20,627 | $ | 18,504 | $ | 62,707 | $ | 56,062 | ||||||||||
| Efficiency ratio | 62.01 | % | 59.63 | % | 64.93 | % | 60.36 | % | 62.36 | % | ||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161019006416/en/
MEDIA CONTACT
Jack Horner, 267-932-8760, ext. 302
412-600-2295
(mobile)
jack@hornercom.com
or
INVESTOR
RELATIONS CONTACT
TriState Capital Holdings, Inc.
Brian
Fetterolf, 412-304-0451
investorrelations@tscbank.com
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