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TriState Capital Reports Third Quarter 2017 Financial Results

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TriState Capital Holdings, Inc. (NASDAQ:TSC) reported record growth in
net interest income in the third quarter of 2017, as well as
double-digit expansion of earnings, revenues, loans and deposits.

The parent company of TriState Capital Bank and Chartwell Investment
Partners grew earnings to $0.35 per diluted share in the third quarter
ended September 30, 2017, compared to $0.30 in the third quarter of 2016
and $0.29 in the second quarter of 2017. Third quarter 2016 earnings
were $0.27 per share after adjusting for the benefit of a $0.03 purchase
price adjustment from last year's acquisition of The Killen Group. Third
quarter earnings grew 29.6% compared to the same period last year after
excluding the purchase price adjustment and 20.7% from the linked
quarter.

Net income of $10.0 million in the third quarter of 2017 increased 18.7%
from $8.5 million in the third quarter of 2016 and 19.1% from $8.4
million in the linked quarter.

"TriState Capital continues to deliver strong and sustainable earnings
growth for the benefit of our shareholders, clients and employees,"
Chairman and Chief Executive Officer James F. Getz said. "Our 11th
consecutive quarter of double-digit growth in earnings per share is the
result of our singular focus on building a superior and unique financial
services company. Our teams continued to expand the breadth and depth of
our national private banking franchise, drive outsized growth in loans
and deposits in private banking and middle-market banking offerings, and
deliver highly credible investment management performance. With very
healthy pipelines, superior asset quality and a talented entrepreneurial
team, TriState Capital is well-positioned for a successful 2017 and a
strong start to 2018."

THIRD QUARTER 2017 HIGHLIGHTS

  • Total revenue grew to $35.3 million, up 13.2% from the third quarter
    of 2016, driven by a record increase in net interest income to $23.6
    million, up 26.2% from the third quarter of 2016
  • The return on average equity (ROAE) for the quarter was 10.69%,
    surpassing the 10% milestone
  • Total loans topped $3.93 billion at period end, up 23.8% from
    September 30, 2016 and 4.2% during the quarter
  • Total deposits of $3.77 billion at period end grew by 22.1% from
    September 30, 2016 and 6.8% during the quarter, while average
    noninterest-bearing deposits of $205.4 million grew 27.0% from the
    prior year quarter and 5.3% from the linked quarter
  • Non-performing assets (NPAs) declined to 0.23% of total assets,
    non-performing loans (NPLs) fell to 0.18% of total loans, and
    adverse-rated credits represented just 0.95% of total loans
  • The bank's efficiency ratio of 54.81% improved by 720 basis points
    from 62.01% in the third quarter of 2016

Total revenue was $35.3 million for the third quarter of 2017,
increasing by 13.2% from $31.2 million in the same period last year and
by 5.3% from $33.5 million in the second quarter of this year.

Net interest income for the third quarter of 2017 grew $4.9 million, or
26.2%, year-over-year to a record $23.6 million. During the quarter, net
interest income increased by $1.6 million, or 7.1%, from $22.0 million
reported in the second quarter of 2017. Net interest margin was 2.27% in
the third quarter of 2017, compared to 2.23% in the linked quarter.

Non-interest income totaled $11.7 million in the third quarter 2017,
compared to $12.5 million in the same period last year and $11.7 million
in the linked quarter. TriState Capital's non-interest income largely
includes Chartwell investment management fees, which were $9.2 million
in the third quarter of 2017, compared to $10.3 million in the third
quarter of 2016 and $9.1 million in the second quarter of 2017. Other
non-interest income was $2.5 million in the third quarter of 2017,
compared to $2.2 million in the year-ago quarter and $2.3 million in the
linked quarter, primarily reflecting borrower-facing interest rate swap
activity.

In the third quarter of 2017, non-interest expenses totaled $22.8
million, or an annualized 2.09% of average assets. Non-interest expenses
in the third quarter of 2016 were $20.5 million, or 2.27% of average
assets on an annualized basis, and included a reduction of $1.2 million
in the fair value of previously accrued contingent consideration
associated with last year's acquisition of The Killen Group.
Non-interest expense totaled $21.8 million, or an annualized 2.10%, in
the second quarter of 2017.

The bank's efficiency ratio for the third quarter of 2017 was 54.81%, an
improvement of 720 basis points from 62.01% in the quarter ended
September 30, 2016 and 22 basis points from 55.03% for the second
quarter ended June 30, 2017.

               
(Dollars in thousands, except per share data)     Q3 2017     Q2 2017     Q3 2016     FY 2016
Total non-interest expense (GAAP) $ 22,812 $ 21,784 $ 20,514 $ 78,794
Non-recurring items:
Change in fair value of previously accrued acquisition earn out 1,209 3,687
Acquisition-related expense (352 )
Severance expense                         (300 )
Non-interest expense excluding non-recurring items (non-GAAP) $ 22,812 $ 21,784 $ 21,723 $ 81,829
Net impact of non-recurring items on EPS $ $ $ 0.03 $ 0.07
 

The company continues to pursue investments in its tax credit program,
committing to an additional investment during the quarter. This
investment meaningfully reduces the company's 2017 annual effective tax
rate from 30.5% to 26.2% and will reduce the current year tax liability
by approximately $2.1 million. The company recognized 75% of this
reduction in the third quarter resulting in an effective tax rate of
17.9%. The remainder will be recognized in the fourth quarter in which
the tax rate is expected to be 26.2%.

BALANCE SHEET GROWTH

Loans totaled $3.93 billion at September 30, 2017, growing organically
by $756.0 million, or 23.8%, from balances at September 30, 2016 and
$159.4 million, or 4.2%, compared to June 30. Private banking loans of
$2.06 billion at September 30, 2017 reflect growth of $468.8 million, or
29.5%, from the end of the third quarter of 2016 and $87.7 million, or
4.5%, from the end of the linked quarter. Commercial loans totaled $1.87
billion at September 30, 2017, up 18.1% from the end of the year-ago
quarter and 4.0% from the end of the linked quarter, supported by growth
in commercial and industrial and commercial real estate lending.

Total deposits were $3.77 billion at September 30, 2017, increasing
$682.6 million, or 22.1%, from September 30, 2016 and $240.0 million, or
6.8%, from the linked quarter. Average noninterest-bearing deposits
totaled $205.4 million for the third quarter of 2017, increasing $43.6
million, or 27.0%, from a year ago and $10.4 million, or 5.3%, from the
linked 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 enhanced services and technology.

At September 30, 2017, 90% of TriState Capital's loan portfolio was
floating rate and 28% of deposits were fixed-rate certificates of
deposit.

ASSET QUALITY

The bank's superior asset quality 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 loans comprised 52.3% of the total loan portfolio at
September 30, 2017.

NPAs declined to $10.5 million, or 0.23% of total assets, at
September 30, 2017, compared to $25.0 million, or 0.67%, at
September 30, 2016 and $11.7 million, or 0.27%, at June 30, 2017. NPLs
declined to $6.9 million, or 0.18% of total loans, at September 30,
2017, compared to $20.7 million, or 0.65%, at September 30, 2016 and
$7.8 million, or 0.21%, June 30, 2017.

Adverse-rated credits were $37.4 million, or 0.95% of total loans, at
September 30, 2017, compared to $50.6 million, or 1.59%, at
September 30, 2016 and $33.8 million, or 0.90%, at June 30, 2017.

The company's allowance for loan losses (ALL) at the end of the third
quarter of 2017 reflected declining NPLs and continued to be influenced
by the lower levels of provision required by the low risk profile of the
bank's growing proportion of private banking loans in its portfolio. ALL
represented 0.41% of total loans at September 30, 2017, compared to
0.64% at September 30, 2016 and 0.42% at June 30, 2017.

INVESTMENT MANAGEMENT

Chartwell assets under management were $8.2 billion at September 30,
2017, compared to $8.0 billion at June 30, 2017. The investment manager
reported new business and new flows from existing accounts of $313
million and market appreciation of $141 million, which more than offset
outflows of $262 million in the third quarter of 2017. Chartwell's
weighted average fee rate was 0.45% at September 30, 2017.

Investment management fees of $9.2 million in the third quarter of 2017
compared to $10.3 million in the third quarter of 2016 and $9.1 million
in the second quarter of 2017. On an annualized run-rate basis,
Chartwell's revenues were $36.9 million at September 30, 2017, compared
to $41.3 million at September 30, 2016 and $36.4 million at June 30,
2017.

CAPITAL STRENGTH AND FLEXIBILITY

TriState Capital's earnings in the quarter continued to support superior
growth in the period, while the company maintained capital ratios that
exceed the highest required regulatory benchmark levels. As of
September 30, 2017, TriState Capital Holdings reported ratios of 11.80%
for total risk-based capital, 11.14% for tier 1 risk-based capital,
11.14% for common equity tier 1 risk-based capital, and 7.40% for tier 1
leverage.

In January 2017, TriState Capital's Board of Directors approved
additional share repurchases of up to $5 million. In combination with
authorizations granted in 2016, $2.2 million remains available. Over the
nine months ended September 30, 2017, the company repurchased a total of
281,556 shares for approximately $6.5 million at an average cost of
$23.00 per share.

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 19 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/10112829
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 26. 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 10112829.

ABOUT TRISTATE CAPITAL

TriState Capital Holdings, Inc. (NASDAQ: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 $4.4 billion in assets, as of September 30,
2017, 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 $8.2
billion in assets under management, as of September 30, 2017, 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
Three Months Ended
    As of and For the
Nine Months Ended
September 30,     June 30,     September 30, September 30,     September 30,
(Dollars in thousands)     2017     2017     2016 2017     2016
Period-end balance sheet data:
Cash and cash equivalents $ 136,579 $ 119,715 $ 120,736 $ 136,579 $ 120,736
Total investment securities 220,916 221,409 243,343 220,916 243,343
Loans held-for-investment 3,930,670 3,771,312 3,174,653 3,930,670 3,174,653
Allowance for loan losses       (15,979 )       (15,968 )       (20,211 )   (15,979 )       (20,211 )
Loans held-for-investment, net 3,914,691 3,755,344 3,154,442 3,914,691 3,154,442
Goodwill and other intangibles, net 65,821 66,283 67,671 65,821 67,671
Other assets       158,006         145,084         129,326     158,006         129,326  
Total assets     $ 4,496,013       $ 4,307,835       $ 3,715,518   $ 4,496,013       $ 3,715,518  
 
Deposits $ 3,769,870 $ 3,529,868 $ 3,087,230 $ 3,769,870 $ 3,087,230
Borrowings, net 279,162 363,612 239,460 279,162 239,460
Other liabilities       69,648         46,716         45,689     69,648         45,689  
Total liabilities       4,118,680         3,940,196         3,372,379     4,118,680         3,372,379  
 
Total shareholders' equity       377,333         367,639         343,139     377,333         343,139  
 
Total liabilities and shareholders' equity     $ 4,496,013       $ 4,307,835       $ 3,715,518   $ 4,496,013       $ 3,715,518  
 
Income statement data:
Interest income $ 35,575 $ 32,115 $ 24,925 $ 96,427 $ 72,080
Interest expense       11,970         10,082         6,221     29,873         16,780  
Net interest income 23,605 22,033 18,704 66,554 55,300
Provision (credit) for loan losses       283         516         (542 )   1,042         (340 )
Net interest income after provision for loan losses       23,322         21,517         19,246     65,512         55,640  
Non-interest income:
Investment management fees 9,214 9,130 10,333 27,684 26,814
Net gain on the sale and call of investment securities 15 241 14 254 77
Other non-interest income       2,477         2,341         2,150     6,889         5,968  
Total non-interest income       11,706         11,712         12,497     34,827         32,859  
Non-interest expense:
Intangible amortization expense 463 462 463 1,388 1,291
Change in fair value of acquisition earn out (1,209 ) (1,209 )
Other non-interest expense       22,349         21,322         21,260     64,366         57,895  
Total non-interest expense       22,812         21,784         20,514     65,754         57,977  
Income before tax 12,216 11,445 11,229 34,585 30,522
Income tax expense       2,184         3,024         2,775     8,640         9,452  
Net income     $ 10,032       $ 8,421       $ 8,454   $ 25,945       $ 21,070  
 
 

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

 
 
    As of and For the
Three Months Ended
    As of and For the
Nine Months Ended
September 30,     June 30,     September 30, September 30,     September 30,
(Dollars in thousands, except per share data)     2017     2017     2016     2017     2016
Per share and share data:
Earnings per share:
Basic $ 0.36 $ 0.31 $ 0.31 $ 0.94 $ 0.76
Diluted $ 0.35 $ 0.29 $ 0.30 $ 0.90 $ 0.75
Book value per common share $ 13.17 $ 12.83 $ 12.12 $ 13.17 $ 12.12
Tangible book value per common share (1) $ 10.88 $ 10.51 $ 9.73 $ 10.88 $ 9.73
Common shares outstanding, at end of period 28,642,573 28,665,726 28,317,154 28,642,573 28,317,154
Weighted average common shares outstanding:
Basic 27,515,923 27,601,702 27,514,724 27,581,229 27,586,816
Diluted 28,659,990 28,785,625 28,307,632 28,721,747 28,276,223
 
Performance ratios:
Return on average assets (2) 0.92 % 0.81 % 0.93 % 0.83 % 0.82 %
Return on average equity (2) 10.69 % 9.27 % 9.88 % 9.52 % 8.42 %
Net interest margin (2) (3) 2.27 % 2.23 % 2.18 % 2.25 % 2.25 %
Bank efficiency ratio (1) 54.81 % 55.03 % 62.01 % 55.88 % 60.36 %
Efficiency ratio (1) 63.32 % 63.64 % 68.17 % 63.65 % 65.73 %
Non-interest expense to average assets (2) 2.09 % 2.10 % 2.27 % 2.11 % 2.25 %
 
Asset quality:
Non-performing loans $ 6,936 $ 7,830 $ 20,717 $ 6,936 $ 20,717
Non-performing assets $ 10,517 $ 11,701 $ 24,985 $ 10,517 $ 24,985
Other real estate owned $ 3,581 $ 3,871 $ 4,268 $ 3,581 $ 4,268
Non-performing assets to total assets 0.23 % 0.27 % 0.67 % 0.23 % 0.67 %
Non-performing loans to total loans 0.18 % 0.21 % 0.65 % 0.18 % 0.65 %
Allowance for loan losses to loans 0.41 % 0.42 % 0.64 % 0.41 % 0.64 %
Allowance for loan losses to non-performing loans 230.38 % 203.93 % 97.56 % 230.38 % 97.56 %
Net charge-offs (recoveries) $ 272 $ 733 $ (3,538 ) $ 3,825 $ (2,577 )
Net charge-offs (recoveries) to average total loans (2) 0.03 % 0.08 % (0.46 )% 0.14 % (0.12 )%
 
Revenue:
Total revenue (1) $ 35,296 $ 33,504 $ 31,187 $ 101,127 $ 88,082
Pre-tax, pre-provision net revenue (1) $ 12,484 $ 11,720 $ 10,673 $ 35,373 $ 30,105
 
Capital ratios:
Tier 1 leverage ratio 7.40 % 7.45 % 8.09 % 7.40 % 8.09 %
Common equity tier 1 risk-based capital ratio 11.14 % 11.21 % 11.73 % 11.14 % 11.73 %
Tier 1 risk-based capital ratio 11.14 % 11.21 % 11.73 % 11.14 % 11.73 %
Total risk-based capital ratio 11.80 % 12.14 % 13.05 % 11.80 % 13.05 %
 
Investment Management Segment:
Assets under management $ 8,195,000 $ 8,003,000 $ 10,800,000 $ 8,195,000 $ 10,800,000
Adjusted EBITDA (1) $ 1,648 $ 1,692 $ 2,415 $ 5,815 $ 7,076
 
   

(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, 2017     June 30, 2017     September 30, 2016
(Dollars in thousands)     Average
Balance
   

Interest

Income (1)/

Expense

    Average
Yield/
Rate
Average
Balance
   

Interest

Income (1)/

Expense

    Average
Yield/
Rate
Average
Balance
   

Interest

Income (1)/

Expense

    Average
Yield/
Rate
Assets                        
Interest-earning deposits $ 131,115 $ 420 1.27 % $ 118,916 $ 323 1.09 % $ 114,245 $ 150 0.52 %
Federal funds sold 6,845 20 1.16 % 6,225 15 0.97 % 6,445 6 0.37 %
Investment securities available-for-sale 140,741 760 2.14 % 152,471 808 2.13 % 182,354 828 1.81 %
Investment securities held-to-maturity 60,220 631 4.16 % 61,359 639 4.18 % 48,495 485 3.98 %
FHLB stock 12,582 200 6.31 % 16,449 148 3.61 % 12,347 144 4.64 %
Total loans       3,787,231       33,604 3.52 %   3,619,251       30,242 3.35 %   3,061,427       23,369 3.04 %
Total interest-earning assets       4,138,734       35,635 3.42 %   3,974,671       32,175 3.25 %   3,425,313       24,982 2.90 %
Other assets       194,405   188,588   171,986
Total assets     $ 4,333,139 $ 4,163,259 $ 3,597,299
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 371,526 $ 1,173 1.25 % $ 304,973 $ 759 1.00 % $ 190,270 $ 234 0.49 %
Money market deposit accounts 2,021,755 6,263 1.23 % 1,914,429 5,150 1.08 % 1,688,250 3,017 0.71 %
Certificates of deposit 1,003,280 3,168 1.25 % 924,110 2,587 1.12 % 863,872 1,936 0.89 %
Borrowings:
FHLB borrowing 271,304 790 1.16 % 379,890 1,016 1.07 % 273,804 480 0.70 %
Line of credit borrowing 2,571 22 3.39 % 1,527 16 4.20 % %
Subordinated notes payable, net       34,629       554 6.35 %   34,579       554 6.43 %   34,427       554 6.40 %
Total interest-bearing liabilities       3,705,065       11,970 1.28 %   3,559,508       10,082 1.14 %   3,050,623       6,221 0.81 %
Noninterest-bearing deposits 205,368 194,957 161,723
Other liabilities 50,332 44,404 44,565
Shareholders' equity       372,374   364,390   340,388
Total liabilities and shareholders' equity     $ 4,333,139 $ 4,163,259 $ 3,597,299
 

Net interest income (1)

$ 23,665 $ 22,093 $ 18,761
Net interest spread 2.14 % 2.11 % 2.09 %

Net interest margin (1)

2.27 % 2.23 % 2.18 %
 
   

(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,
2017 2016
(Dollars in thousands)     Average
Balance
   

Interest

Income (1)/

Expense

    Average
Yield/
Rate
Average
Balance
   

Interest

Income (1)/

Expense

    Average
Yield/
Rate
Assets
Interest-earning deposits $ 121,640 $ 981 1.08 % $ 107,651 $ 418 0.52 %
Federal funds sold 6,501 45 0.93 % 6,180 16 0.35 %
Investment securities available-for-sale 153,665 2,422 2.11 % 181,383 2,387 1.76 %
Investment securities held-to-maturity 58,744 1,845 4.20 % 46,977 1,409 4.01 %
FHLB stock 13,803 450 4.36 % 10,983 343 4.17 %
Total loans       3,619,679       90,865 3.36 %   2,935,663       67,710 3.08 %
Total interest-earning assets       3,974,032       96,608 3.25 %   3,288,837       72,283 2.94 %
Other assets       189,483   155,903
Total assets     $ 4,163,515 $ 3,444,740
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 298,631 $ 2,295 1.03 % $ 160,310 $ 541 0.45 %
Money market deposit accounts 1,951,258 15,511 1.06 % 1,614,669 7,847 0.65 %
Certificates of deposit 954,352 8,007 1.12 % 869,879 5,540 0.85 %
Borrowings:
FHLB borrowing 307,143 2,360 1.03 % 243,686 1,191 0.65 %
Line of credit borrowing 1,375 39 3.79 % %
Subordinated notes payable, net       34,579       1,661 6.42 %   34,376       1,661 6.45 %
Total interest-bearing liabilities       3,547,338       29,873 1.13 %   2,922,920       16,780 0.77 %
Noninterest-bearing deposits 206,063 153,763
Other liabilities 45,596 33,770
Shareholders' equity       364,518   334,287
Total liabilities and shareholders' equity     $ 4,163,515 $ 3,444,740
 
Net interest income (1) $ 66,735 $ 55,503
Net interest spread 2.12 % 2.17 %

Net interest margin (1)

2.25 % 2.25 %
 
   

(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, 2017 June 30, 2017 September 30, 2016
(Dollars in thousands)     Loan
Balance
    Percent of
Total Loans
    Loan
Balance
    Percent of
Total Loans
    Loan
Balance
    Percent of
Total Loans
Private banking loans $ 2,055,808     52.3 % $ 1,968,139     52.2 % $ 1,587,019     50.0 %
Middle-market banking loans:
Commercial and industrial 648,720 16.5 % 639,808 17.0 % 565,702 17.8 %
Commercial real estate       1,226,142     31.2 %       1,163,365     30.8 %       1,021,932     32.2 %
Total middle-market banking loans       1,874,862     47.7 %       1,803,173     47.8 %       1,587,634     50.0 %
Loans held-for-investment     $ 3,930,670     100.0 %     $ 3,771,312     100.0 %     $ 3,174,653     100.0 %
 
 

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 
 
    Three Months Ended September 30, 2017     Three Months Ended September 30, 2016
(Dollars in thousands)     Bank     Investment
Management
    Parent
and Other
    Consolidated Bank     Investment
Management
    Parent
and Other
    Consolidated
Income statement data:                        
Interest income $ 35,512 $ $ 63 $ 35,575 $ 24,855 $ $ 70 $ 24,925
Interest expense       11,398             572         11,970   5,673                 548         6,221  
Net interest income (loss) 24,114 (509 ) 23,605 19,182 (478 ) 18,704
Provision (credit) for loan losses       283                     283   (542 )                       (542 )
Net interest income (loss) after provision for loan losses       23,831             (509 )       23,322   19,724                 (478 )       19,246  
Non-interest income:
Investment management fees 9,265 (51 ) 9,214 10,391 (58 ) 10,333
Net gain on the sale and call of investment securities 15 15 14 14
Other non-interest income       2,477                     2,477   2,149         1                 2,150  
Total non-interest income       2,492       9,265       (51 )       11,706   2,163         10,392         (58 )       12,497  
Non-interest expense:
Intangible amortization expense 463 463 463 463
Change in fair value of acquisition earn out (1,209 ) (1,209 )
Other non-interest expense       14,575       7,747       27         22,349   13,227         8,009         24         21,260  
Total non-interest expense       14,575       8,210       27         22,812   13,227         7,263         24         20,514  
Income (loss) before tax 11,748 1,055 (587 ) 12,216 8,660 3,129 (560 ) 11,229
Income tax expense (benefit)       1,987       435       (238 )       2,184   1,823         1,385         (433 )       2,775  
Net income (loss)     $ 9,761     $ 620     $ (349 )     $ 10,032 $ 6,837       $ 1,744       $ (127 )     $ 8,454  
 
 

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 
 
    Nine Months Ended September 30, 2017     Nine Months Ended September 30, 2016
(Dollars in thousands)     Bank     Investment
Management
    Parent
and Other
    Consolidated Bank     Investment
Management
    Parent
and Other
    Consolidated
Income statement data:

 

 

Interest income $ 96,220     $     $ 207     $ 96,427 $ 71,871     $     $ 209     $ 72,080
Interest expense       28,183             1,690         29,873   15,130                 1,650         16,780  
Net interest income (loss) 68,037 (1,483 ) 66,554 56,741 (1,441 ) 55,300
Provision (credit) for loan losses       1,042                     1,042   (340 )                       (340 )
Net interest income (loss) after provision for loan losses       66,995             (1,483 )       65,512   57,081                 (1,441 )       55,640  
Non-interest income:
Investment management fees 27,843 (159 ) 27,684 26,981 (167 ) 26,814
Net gain on the sale and call of investment securities 254 254 77 77
Other non-interest income       6,888       1               6,889   5,966         2                 5,968  
Total non-interest income       7,142       27,844       (159 )       34,827   6,043         26,983         (167 )       32,859  
Non-interest expense:
Intangible amortization expense 1,388 1,388 1,291 1,291
Change in fair value of acquisition earn out (1,209 ) (1,209 )
Other non-interest expense       41,868       22,398       100         64,366   37,849         19,986         60         57,895  
Total non-interest expense       41,868       23,786       100         65,754   37,849         20,068         60         57,977  
Income (loss) before tax 32,269 4,058 (1,742 ) 34,585 25,275 6,915 (1,668 ) 30,522
Income tax expense (benefit)       7,734       1,587       (681 )       8,640   7,476         2,833         (857 )       9,452  
Net income (loss)     $ 24,535     $ 2,471     $ (1,061 )     $ 25,945 $ 17,799       $ 4,082       $ (811 )     $ 21,070  
 

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," "adjusted EBITDA," "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.

"EBITDA" and "Adjusted EBITDA" are defined as net income before interest
expense, income taxes, depreciation and amortization adjusted for
acquisition related items. We use adjusted EBITDA particularly to assess
the strength of our investment management business. We believe this
measure is important because it allows management and investors to
better assess our investment management performance in relation to our
core operating earnings, excluding certain non-cash items and the
volatility that is associated with certain one-time items and other
discrete items that are unrelated to our core business.

"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)     2017     2017     2016
Tangible book value per common share:
Total shareholders' equity $ 377,333 $ 367,639 $ 343,139
Less: intangible assets       65,821       66,283       67,671
Tangible common equity     $ 311,512     $ 301,356     $ 275,468
Common shares outstanding       28,642,573       28,665,726       28,317,154
Tangible book value per common share $ 10.88 $ 10.51 $ 9.73
 
 

INVESTMENT MANAGEMENT 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)     2017     2017     2016 2017     2016
Investment Management EBITDA:
Net income $ 620 $ 683 $ 1,744 $ 2,471 $ 4,082
Interest expense
Income taxes expense 435 425 1,385 1,587 2,833
Depreciation expense 130 122 32 369 78
Intangible amortization expense       463       462       463     1,388       1,291  
EBITDA 1,648 1,692 3,624 5,815 8,284
Change in fair value of acquisition earn out (1,209 ) (1,209 )
Acquisition related items                             1  
Adjusted EBITDA     $ 1,648     $ 1,692     $ 2,415   $ 5,815     $ 7,076  
 
 

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 
 
    Three Months Ended     Nine Months Ended
September 30,     June 30,     September 30, September 30,     September 30,
(Dollars in thousands)     2017     2017     2016 2017     2016
Pre-tax, pre-provision net revenue:
Net interest income $ 23,605 $ 22,033 $ 18,704 $ 66,554 $ 55,300
Total non-interest income 11,706 11,712 12,497 34,827 32,859
Less: net gain on the sale and call of investment securities       15         241         14     254         77  
Total revenue 35,296 33,504 31,187 101,127 88,082
Less: total non-interest expense       22,812         21,784         20,514     65,754         57,977  
Pre-tax, pre-provision net revenue     $ 12,484       $ 11,720       $ 10,673   $ 35,373       $ 30,105  
 
Efficiency ratio:
Total non-interest expense $ 22,812 $ 21,784 $ 20,514 $ 65,754 $ 57,977
Plus: change in fair value of acquisition earn out 1,209 1,209
Less: acquisition related items 1
Less: intangible amortization expense       463         462         463     1,388         1,291  
Total non-interest expense, as adjusted (numerator)     $ 22,349       $ 21,322       $ 21,260   $ 64,366       $ 57,894  
Total revenue (denominator)     $ 35,296       $ 33,504       $ 31,187   $ 101,127       $ 88,082  
Efficiency ratio 63.32 % 63.64 % 68.17 % 63.65 % 65.73 %
 
 

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)     2017     2017     2016     2017     2016
Bank pre-tax, pre-provision net revenue:
Net interest income $ 24,114 $ 22,532 $ 19,182 $ 68,037 $ 56,741
Total non-interest income 2,492 2,582 2,163 7,142 6,043
Less: net gain on the sale and call of investment securities       15         241         14         254         77  
Total revenue 26,591 24,873 21,331 74,925 62,707
Less: total non-interest expense       14,575         13,688         13,227         41,868         37,849  
Pre-tax, pre-provision net revenue     $ 12,016       $ 11,185       $ 8,104       $ 33,057       $ 24,858  
 
Bank efficiency ratio:
Total non-interest expense (numerator)     $ 14,575       $ 13,688       $ 13,227       $ 41,868       $ 37,849  
Total revenue (denominator)     $ 26,591       $ 24,873       $ 21,331       $ 74,925       $ 62,707  
Bank efficiency ratio 54.81 % 55.03 % 62.01 % 55.88 % 60.36 %
 

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