Market Overview

TriState Capital's Second Quarter Results Reflect the Resilience of Its Differentiated Business Model, Credit Quality and Balance Sheet Strength

Share:

-- Growth during the quarter highlighted by Chartwell assets under management increasing 11.2% with robust sales pipeline, private banking loans primarily collateralized by marketable securities up by 3.8%, and commercial lending up by 2.1% --

TriState Capital Holdings, Inc. (NASDAQ:TSC) reported second quarter 2020 financial results that reflect the resilience of its differentiated business model, credit quality and balance sheet strength, including the profitable growth of its investment management, private banking and commercial banking businesses.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported net income available to common shareholders of $8.4 million in the second quarter of 2020, or $0.30 per diluted share. Net income available to common shareholders was $13.5 million, or $0.47 per diluted share, in the second quarter of 2019 and $10.9 million, or $0.38, in the first quarter of 2020.

"TriState Capital's second quarter results illustrate the resilience of our business model and our ability to generate profitable annualized double-digit loan growth in every environment," Chairman and Chief Executive Officer James F. Getz said. "Our balance sheet reflects strong liquidity and credit quality, demonstrating the strength of our relationships, our team's dedication to providing an exceptional client experience, and prudent risk management. Our Chartwell business, which provides a steady stream of non-interest income, grew assets under management to $9.25 billion with a strong pipeline of new business that we expect to fund in the coming quarters."

SECOND QUARTER 2020 HIGHLIGHTS

  • Chartwell client assets under management grew 11.2% during the quarter to $9.25 billion, drawing positive net inflows of $132.0 million year to date, including $75.0 million during the second quarter.
  • Private banking loans primarily collateralized by marketable securities represented 56.6% of total loans at period end, growing 27.4% from June 30, 2019 and 3.8% during the quarter, with a record number of new applications.
  • Commercial loans increased by 25.5% from June 30, 2019 and 2.1% during the quarter, with growth fully attributed to TriState Capital's regional middle-market franchise and well-established commercial credit offering.
  • TriState Capital's flexible business model and focus on operating leverage resulted in a record low bank efficiency ratio, with non-interest expense increasing a modest 1.9% from the prior year quarter and declining 3.6% from the linked quarter.
  • Allowance for loan and lease losses (ALLL) increased by 34.5% during the quarter to $23.3 million, representing 0.75% of commercial loans, or 0.32% of total loans, including marketable securities collateralized loans.
  • Even with a $6.7 million increase in provision expense from the year-ago quarter to $6.0 million, reflecting ALLL build, credit costs across the portfolio remain relatively low given the company's private banking loan portfolio, limited commercial exposure to the industries most directly impacted by the COVID-19 pandemic and the quality of commercial borrower sponsorship, as well as its proven approach to managing high quality commercial credits.

Net interest income (NII) was $33.5 million in the second quarter of 2020, compared to $31.3 million in the year-ago quarter and $34.9 million in the first quarter of 2020. Importantly, second quarter 2020 deposit costs were 41.4% lower than in the linked quarter. TriState Capital's net interest margin (NIM) was 1.52% for the second quarter of 2020, compared to 2.03% in the second quarter of 2019 and 1.84% in the first quarter of 2020. Second quarter NIM reflected the cost of significant average deposit balance growth and prevailing rates.

Total non-interest income was $13.0 million in the second quarter of 2020, compared to $12.0 million in the prior year quarter and $13.3 million in the linked quarter. Chartwell investment management fees were $7.7 million in the second quarter of 2020, reflecting market appreciation in the period and positive net inflows of client assets throughout the first half of the year. Investment management fees were $9.3 million in the prior year quarter and $7.6 million in the linked quarter.

Fees from the bank's back-to-back, loan-level interest rate swap offering for clients totaled $3.9 million in the second quarter of 2020, compared to $1.7 million in the prior year quarter and $4.4 million in the linked quarter. Second quarter swap fees were driven by strong engagement on the product with both commercial and private bank clients.

NII and non-interest income, excluding net gains on the sale of debt securities, combined to generate total revenue of $46.5 million for the second quarter of 2020, compared to $43.2 million in the year-ago period and $48.2 million in the linked quarter. Total revenue, which is not a financial metric under generally accepted accounting principles (GAAP), is a measure that TriState Capital has consistently utilized to provide a greater understanding of its significant fee-generating businesses. Non-interest income represented 27.9% of total revenue in the second quarter of 2020 when excluding net gains on the sale of securities, compared to 27.5% in each of the year-ago period and the linked quarter.

The company's investments in talent, client experience and building operating scale while managing fixed costs continue to support revenue growth and product innovation, as well as incremental operating leverage and the agility to respond to changing operating environments. TriState Capital Bank's efficiency ratio for the second quarter of 2020 was 50.39%, improving from 55.16% in the second quarter of 2019 and 51.86% in the linked quarter. The efficiency ratio, which is a non-GAAP financial metric, is a measure utilized to provide a greater understanding of a bank's level of non-interest expense as a percentage of total revenue.

Second quarter 2020 non-interest expense totaled $28.1 million, increasing 1.9% from $27.6 million in the year-ago period and decreasing 3.6% from $29.1 million in the first quarter of 2020. Excluding FDIC insurance premiums, which increased in the second quarter in tandem with significant growth in average deposits, second quarter 2020 non-interest expense decreased 3.8% from the year-ago period and 5.3% from the first quarter of 2020.

TriState Capital also continued to lower non-interest expense as a percentage of average assets to 1.22% in the second quarter of 2020, down from 1.71% in the second quarter of 2019 and 1.47% in the linked quarter.

Pre-tax income was $12.4 million in the second quarter of 2020, compared to $16.4 million in the second quarter of 2019 and $16.1 million in the linked quarter.

Pre-tax, pre-provision net revenue (PTPPNR) was $18.4 million in the second quarter of 2020, compared to $15.6 million in the year-ago period and $19.0 million in the linked quarter. PTPPNR, which is a non-GAAP financial metric, is a measure utilized to provide a greater understanding of a bank's pre-tax profitability before giving effect to provision and securities gains and losses.

TriState Capital's effective tax rate was 16.0% for the second quarter of 2020, compared to 10.5% in the second quarter of 2019 and 19.9% in the linked quarter. The company's effective tax rate is impacted by certain factors including the number, timing and size of tax credit investments, as well as the proportion of consolidated earnings attributed to investment management.

Net income available to common shareholders and earnings per share in the second quarter of 2020 is net of a $2.0 million payable for the company's quarterly cash dividends on Series A and Series B Non-Cumulative Perpetual Preferred Stock.

ORGANIC LENDING FRANCHISE GROWTH

TriState Capital's client-engagement and distribution capabilities continued to grow both sides of its balance sheet organically, expanding the number and depth of its premier relationships with high-quality middle-market commercial customers, as well as the high-net-worth clients the bank serves through its national referral network of investment advisors and other financial intermediaries.

Average loans totaled a record $7.09 billion in the second quarter of 2020, growing 29.9% from $5.46 billion in the prior year period and 6.3% from $6.67 billion in the linked quarter. Period-end loans totaled a record $7.17 billion on June 30, 2020, growing $1.51 billion, or 26.6%, from June 30, 2019, and $212.6 million, or 3.1%, from March 31, 2020.

TriState Capital continued to fortify its position as the nation's leading provider of marketable securities-backed loans through independent investment advisory and other financial services firms. Private banking loans totaled a record $4.06 billion at June 30, 2020, increasing $874.4 million, or 27.4%, from one year prior and $147.6 million, or 3.8%, from the end of the linked quarter.

The company continued to grow relationships with top-quality middle-market sponsors and businesses in the second quarter of 2020, driving originations of commercial and industrial (C&I) and commercial real estate (CRE) loans. Commercial loans totaled $3.11 billion at June 30, 2020, increasing $631.4 million, or 25.5%, from one year prior and $65.1 million, or 2.1%, from the end of the linked quarter.

C&I loans grew to $1.15 billion at June 30, 2020, increasing $244.8 million, or 27.0%, from one year prior. C&I loans decreased $38.2 million, or 3.2%, from the end of the linked quarter, as new loan originations were offset by net paydowns on revolving credit lines.

CRE loans grew to $1.95 billion at June 30, 2020, increasing $386.6 million, or 24.6%, from one year prior and $103.3 million, or 5.6%, from the end of the linked quarter. CRE loans represented 27.3% of total period-end loans.

TriState Capital's second quarter commercial loan growth is fully attributed to its regional middle-market franchise and well-established commercial credit product suite. The bank does not offer small business lending products and did not participate in the Paycheck Protection Program.

DEPOSIT FRANCHISE EXPANSION

TriState Capital continues to support private banking and commercial loan growth with its highly responsive funding capability and the organic, strategic expansion of its deposit franchise. The bank's national treasury management and liquidity management offerings are increasing the breadth and depth of depositor relationships with financial services businesses, high-net-worth individuals, family offices, middle market companies, professional service firms, specialized payment and transaction processors, municipalities and non-profits.

Average deposits totaled a record $8.00 billion in the second quarter of 2020, growing 49.7% from $5.34 billion in the similar period last year and 18.4% from $6.76 billion in the linked quarter. Period-end deposits totaled a record $7.83 billion at June 30, 2020, growing $2.04 billion, or 35.3%, from June 30, 2019, and $48.7 million, or 0.6%, from March 31, 2020. TriState Capital's highly responsive funding capability enabled the company to modulate deposit growth during the second quarter of 2020, after quickly accelerating deposit gathering in March of 2020 to build excess liquidity in anticipation of clients' potential credit needs at the outset of the COVID-19 pandemic in the United States.

Treasury management deposit accounts totaled $1.12 billion at June 30, 2020, increasing $143.4 million, or 14.7%, from June 30, 2019 and $14.4 million, or 1.3%, from March 31, 2020.

The bank's loan-to-deposit ratio at June 30, 2020 was 91.56%, compared to 97.89% at June 30, 2019 and 89.40% at March 31, 2020.

INTEREST RATE MANAGEMENT

TriState Capital continues to maintain a balance sheet with significant flexibility to actively manage interest rate dynamics and profitability, while offering attractive deposit and loan pricing to clients, even as the Federal Reserve's target Federal Funds Rate has declined dramatically since the third quarter of 2019.

Investment securities totaled a record $812.1 million at June 30, 2020, up 88.2% from June 30, 2019 and 33.9% from March 31, 2020.

Most of TriState Capital's non-fixed rate deposits are linked to the Effective Fed Funds Rate or another benchmark, and the remaining deposits are priced at rates set with bank discretion. Total cost of funds for all deposits and interest-bearing liabilities averaged 0.87% during the second quarter of 2020, compared to 2.42% in the same period last year and 1.64% in the linked quarter. The total cost of deposits averaged 0.80% during the second quarter of 2020, compared to 2.41% in the same period last year and 1.62% in the linked quarter.

At June 30, 2020, 93% of the company's loans were floating rate and indexed to 30-day LIBOR or the Prime Rate. TriState Capital continued to constructively use interest rate floors on existing and new variable rate loans throughout second quarter.

The yield on total loans averaged 2.69% during the second quarter of 2020, compared to 4.45% in the prior year period and 3.55% in the linked quarter. Yields reflect downward trends in 30-day LIBOR during the second quarter of 2020, the proportion of the portfolio comprising private banking non-purpose margin loans secured by marketable securities, and an overall focus on relationships, variable rate pricing, and strong asset quality.

INVESTMENT MANAGEMENT

Strong investment performance across Chartwell's active equity and fixed income strategies contributed to net inflows of $132.0 million in the first half of 2020, including $75.0 million during the second quarter of 2020. Chartwell currently has in excess of $140 million in commitments from institutional investors in its new business pipeline.

Chartwell's new business and new flows from existing accounts of $603.0 million and market appreciation of $856.0 million more than offset outflows of $528.0 million in the second quarter of 2020. Chartwell's assets under management were $9.25 billion at June 30, 2020, $9.49 billion at June 30, 2019 and $8.32 billion at March 31, 2020.

Annual run rate revenue grew 11.5% during the second quarter of 2020 to $32.0 million at June 30, 2020. Chartwell's weighted average fee rate increased to 0.35% at June 30, 2020. Investment management fee revenue was $7.7 million in the second quarter of 2020, compared to $9.3 million in the second quarter of 2019 and $7.6 million in the first quarter of 2020.

Initiatives to enhance Chartwell profitability continue to be reflected in moderating segment non-interest expenses, which were $7.5 million in the second quarter of 2020, compared to $8.4 million in the second quarter of 2019 and $7.1 million in the first quarter of 2020.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the second quarter of 2020, reflecting the company's disciplined credit culture and the majority of its private banking non-purpose margin loans collateralized by marketable securities. Private banking loans comprised 56.6% of the total loan portfolio at June 30, 2020, while CRE and C&I comprised 27.3% and 16.1% of total loans, respectively.

TriState Capital recorded provision expense of $6.0 million in the second quarter of 2020, compared to provision expense of $3.0 million in the linked quarter and a credit to provision of $712,000 in the second quarter of 2019.

ALLL increased by 34.51% in the second quarter of 2020 to $23.3 million at period end, compared to $14.0 million at June 30, 2019 and $17.3 million at March 31, 2020. The increase primarily reflected the company's general reserve build. ALLL represented 0.75% of commercial loans at period end, excluding private banking loans primarily collateralized by liquid, marketable securities that do not require a reserve, compared to 0.57% at June 30, 2019 and 0.57% at March 31, 2020. As a percentage of total loans, ALLL was 0.32% at June 30, 2020, 0.25% at June 30, 2019 and 0.25% at March 31, 2020.

TriState Capital's second quarter 2020 results, including provision expense and ALLL, reflect continued application of the incurred loss method for estimating credit losses. The company continues to anticipate implementation of the current expected credit losses (CECL) accounting standard on December 31, 2020.

Non-performing assets (NPAs) were $9.5 million, or 0.10% of total assets, at June 30, 2020, compared to $5.2 million, or 0.08%, at June 30, 2019 and $4.4 million, or 0.05%, at March 31, 2020. NPLs were $6.8 million, or 0.09% of total loans, at June 30, 2020, compared to $2.2 million, or 0.04%, at June 30, 2019 and $184,000, or 0.00%, at March 31, 2020. The increase in NPLs during the second quarter of 2020 is primarily attributed to a single commercial real estate loan that is collateralized and the company believes is adequately reserved.

Total adverse-rated credits, including NPLs, were $33.0 million, or 0.46% of total loans, at June 30, 2020, compared to $26.6 million, or 0.47%, at June 30, 2019 and $34.6 million, or 0.50%, at March 31, 2020.

TriState Capital recorded net charge-offs of $33,000 in the second quarter of 2020, compared to net recoveries of $16,000 in the year-ago quarter and $203,000 in the linked quarter.

STRONG BALANCE SHEET, AMPLE LIQUIDITY AND CAPITAL EFFICIENCY

The company's strong balance sheet included $1.54 billion in cash, equivalents and securities at June 30, 2020. Cash, equivalents, securities and private banking loans -- which are primarily collateralized by marketable securities that are monitored daily, liquid and subject to favorable treatment under regulatory capital requirements -- represented 61.34% of total assets at the end of the second quarter of 2020.

TriState Capital's regulatory capital levels benefited from the company's previously disclosed registered subordinated notes offerings, which raised $97.5 million in the second quarter of 2020, as well as retained earnings.

As of June 30, 2020, estimated regulatory capital ratios for TriState Capital Holdings were 12.89% for total risk-based capital, 10.68% for tier 1 risk-based capital, 8.54% for common equity tier 1 risk-based capital, and 6.30% for tier 1 leverage. For TriState Capital Bank, the estimated capital ratios were 12.52% for total risk-based capital, 12.07% for tier 1 risk-based capital, 12.07% for common equity tier 1 risk-based capital, and 7.11% for tier 1 leverage.

During the six months ended June 30, 2020, the company repurchased a total of 40,000 shares of its common stock for approximately $670,000 at an average cost of $16.76 per share. Since the company's Board of Directors first authorized share buybacks in October 2014, the company has repurchased a total of 2.1 million shares for approximately $33.0 million at an average cost of $15.39 per share. TriState Capital had $9.8 million of repurchase authority available at June 30, 2020, under previously disclosed buyback programs authorized by its Board of Directors.

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 July 23 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/10145071 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 investor 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.

The live conference call will also be available through an audio webcast accessible at https://services.choruscall.com/links/tsc200723.html or http://investors.tristatecapitalbank.com. These links may also be used to access an archived replay of the conference call.

A replay of the call will be available approximately one hour after the end of the conference through July 30. 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 10145071.

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 $9.06 billion in assets as of June 30, 2020, 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 $9.25 billion in assets under management as of June 30, 2020, and serves institutional clients and TriState Capital's financial intermediary network. For more information, please visit http://investors.tristatecapitalbank.com.

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect TriState Capital's current views with respect to, among other things, future events and the company's financial performance, as well as the company's goals and objectives for future operations, financial and business trends, business prospects and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. These statements are often, but not always, made through the use of words or phrases such as "achieve," "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "maintain," "may," "opportunity," "outlook," "plan," "potential," "predict," "projection," "seek," "should," "sustain," "target," "trend," "will," "will likely result," and "would," or the negative versions of those words or other comparable statements of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about TriState Capital's industry and beliefs or assumptions made by management, many of which, by their nature, are inherently uncertain. Although TriState Capital believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, TriState Capital cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that change over time and are difficult to predict, including, but not limited to, the following:

  • those associated with the COVID-19 pandemic and its expected impact and duration, including effects on TriState Capital's operations, its clients, economic conditions and the demand for its products and services;
  • TriState Capital's ability to prudently manage its growth and execute its strategy, including the successful integration of past and future acquisitions, its ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and manage customer disintermediation;
  • deterioration of TriState Capital's asset quality;
  • TriState Capital's level of non-performing assets and the costs associated with resolving problem loans including litigation and other costs;
  • possible loan and lease losses and impairment, changes in the value of collateral securing TriState Capital's loans and leases and the collectability of loans and leases;
  • possible changes in the speed of loan prepayments by customers and loan origination or sales volumes;
  • business and economic conditions generally and in the financial services industry, nationally and within TriState Capital's local market areas, including the effects of an increase in unemployment levels, slowdowns in economic growth and changes in demand for products or services or the value of assets under management;
  • TriState Capital's ability to maintain important deposit customer relationships, its reputation and otherwise avoid liquidity risks;
  • changes in management personnel;
  • TriState Capital's ability to recruit and retain key employees;
  • volatility and direction of interest rates;
  • risks related to the phasing out of LIBOR and changes in the manner of calculating reference rates, as well as the impact of the phase out of LIBOR and introduction of alternative reference rates on the value of loans and other financial instruments we hold that are linked to LIBOR;
  • changes in accounting policies, accounting standards, or authoritative accounting guidance, including the CECL model, which may increase the level of TriState Capital's allowance for credit losses upon adoption;
  • any impairment of TriState Capital's goodwill or other intangible assets;
  • TriState Capital's ability to develop and provide competitive products and services that appeal to its customers and target markets;
  • TriState Capital's ability to provide investment management performance competitive with its peers and benchmarks;
  • fluctuations in the carrying value of the assets under management held by Chartwell Investment Partners, LLC, the company's registered investment advisor subsidiary, as well as the relative and absolute investment performance of such subsidiary's investment products;
  • operational risks associated with TriState Capital's business, including technology cyber-security related risks;
  • increased competition in the financial services industry, particularly from regional and national institutions;
  • negative perceptions or publicity with respect to any products or services offered by TriState Capital;
  • adverse judgments or other resolution of pending and future legal proceedings, and costs incurred in defending such proceedings;
  • changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, and potential expenses associated with complying with such laws and regulations;
  • TriState Capital's ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms;
  • regulatory limits on TriState Capital's ability to receive dividends from its subsidiaries and pay dividends to shareholders;
  • changes and direction of government policy towards and intervention in the U.S. financial system;
  • natural disasters and adverse weather, acts of terrorism, cyber-attacks, an outbreak of hostilities, a public health outbreak (such as COVID-19) or other international or domestic calamities, and other matters beyond TriState Capital's control;
  • and the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory or compliance risk resulting from developments related to any of the risks discussed above.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if TriState Capital's underlying assumptions prove to be incorrect, actual results may differ materially from what the company anticipates. Accordingly, readers should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for TriState Capital to predict which will arise. Any forward-looking statement speaks only as of the date on which it is made, and TriState Capital does not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. In addition, TriState Capital cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

NON-GAAP FINANCIAL DISCLOSURES

This news release and the accompanying tables contain certain financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). Specifically, TriState Capital reviews and reports tangible common equity, tangible book value per common share, total revenue, EBITDA, pre-tax, pre-provision net revenue and efficiency ratio. Although TriState Capital believes these 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 most directly comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and in the reconciliation tables accompanying this news release.

TRISTATE CAPITAL HOLDINGS, INC.

BALANCE SHEET DATA (UNAUDITED)

 

As of and For the

Three Months Ended

 

As of and For the

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2020

2020

2019

 

2020

2019

Cash and cash equivalents

$

724,942

 

$

1,010,128

 

$

458,269

 

 

$

724,942

 

$

458,269

 

Total investment securities

812,140

 

606,736

 

431,426

 

 

812,140

 

431,426

 

Loans and leases held-for-investment

7,170,770

 

6,958,149

 

5,664,934

 

 

7,170,770

 

5,664,934

 

Allowance for loan and lease losses

(23,276

)

(17,304

)

(14,016

)

 

(23,276

)

(14,016

)

Loans and leases held-for-investment, net

7,147,494

 

6,940,845

 

5,650,918

 

 

7,147,494

 

5,650,918

 

Goodwill and other intangibles, net

64,867

 

65,352

 

66,859

 

 

64,867

 

66,859

 

Other assets

380,398

 

367,000

 

238,531

 

 

380,398

 

238,531

 

Total assets

$

9,129,841

 

$

8,990,061

 

$

6,846,003

 

 

$

9,129,841

 

$

6,846,003

 

 

 

 

 

 

 

 

Deposits

$

7,831,471

 

$

7,782,759

 

$

5,786,983

 

 

$

7,831,471

 

$

5,786,983

 

Borrowings, net

395,552

 

330,000

 

335,000

 

 

395,552

 

335,000

 

Other liabilities

269,987

 

262,922

 

135,039

 

 

269,987

 

135,039

 

Total liabilities

8,497,010

 

8,375,681

 

6,257,022

 

 

8,497,010

 

6,257,022

 

 

 

 

 

 

 

 

Preferred stock

116,079

 

116,079

 

116,142

 

 

116,079

 

116,142

 

Common shareholders' equity

516,752

 

498,301

 

472,839

 

 

516,752

 

472,839

 

Total shareholders' equity

632,831

 

614,380

 

588,981

 

 

632,831

 

588,981

 

Total liabilities and shareholders' equity

$

9,129,841

 

$

8,990,061

 

$

6,846,003

 

 

$

9,129,841

 

$

6,846,003

 

TRISTATE CAPITAL HOLDINGS, INC.

INCOME STATEMENT DATA (UNAUDITED)

 

As of and For the

Three Months Ended

 

As of and For the

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2020

2020

2019

 

2020

2019

Interest income:

 

 

 

 

 

 

Loans and leases

$

47,377

 

$

58,918

 

$

60,579

 

 

$

106,295

 

$

117,841

 

Investments

3,940

 

3,901

 

4,151

 

 

7,841

 

8,504

 

Interest-earning deposits

344

 

1,383

 

1,609

 

 

1,727

 

2,896

 

Total interest income

51,661

 

64,202

 

66,339

 

 

115,863

 

129,241

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

15,953

 

27,244

 

32,155

 

 

43,197

 

61,488

 

Borrowings

2,224

 

2,036

 

2,881

 

 

4,260

 

6,078

 

Total interest expense

18,177

 

29,280

 

35,036

 

 

47,457

 

67,566

 

Net interest income

33,484

 

34,922

 

31,303

 

 

68,406

 

61,675

 

Provision (credit) for loan and lease losses

6,005

 

2,993

 

(712

)

 

8,998

 

(1,089

)

Net interest income after provision for loan and lease losses

27,479

 

31,929

 

32,015

 

 

59,408

 

62,764

 

Non-interest income:

 

 

 

 

 

 

Investment management fees

7,738

 

7,638

 

9,254

 

 

15,376

 

18,678

 

Service charges on deposits

315

 

213

 

78

 

 

528

 

214

 

Net gain on the sale and call of debt securities

14

 

57

 

112

 

 

71

 

140

 

Swap fees

3,853

 

4,373

 

1,692

 

 

8,226

 

3,495

 

Commitment and other loan fees

462

 

419

 

256

 

 

881

 

787

 

Other income

615

 

616

 

587

 

 

1,231

 

1,734

 

Total non-interest income

12,997

 

13,316

 

11,979

 

 

26,313

 

25,048

 

Non-interest expense:

 

 

 

 

 

 

Compensation and employee benefits

16,569

 

17,446

 

16,985

 

 

34,015

 

33,760

 

Premises and equipment costs

1,515

 

1,386

 

1,451

 

 

2,901

 

2,445

 

Professional fees

1,109

 

1,470

 

1,406

 

 

2,579

 

2,401

 

FDIC insurance expense

2,560

 

2,170

 

1,047

 

 

4,730

 

2,468

 

General insurance expense

278

 

262

 

259

 

 

540

 

553

 

State capital shares tax

366

 

383

 

380

 

 

749

 

760

 

Travel and entertainment expense

279

 

864

 

1,040

 

 

1,143

 

1,875

 

Technology and data services

2,414

 

2,304

 

2,179

 

 

4,717

 

4,164

 

Intangible amortization expense

486

 

502

 

502

 

 

988

 

1,004

 

Marketing and advertising

686

 

613

 

536

 

 

1,300

 

1,144

 

Other operating expenses

1,834

 

1,744

 

1,800

 

 

3,578

 

3,683

 

Total non-interest expense

28,096

 

29,144

 

27,585

 

 

57,240

 

54,257

 

Income before tax

12,380

 

16,101

 

16,409

 

 

28,481

 

33,555

 

Income tax expense

1,979

 

3,206

 

1,718

 

 

5,185

 

4,300

 

Net income

$

10,401

 

$

12,895

 

$

14,691

 

 

$

23,296

 

$

29,255

 

Preferred stock dividends

1,962

 

1,962

 

1,150

 

 

3,924

 

1,829

 

Net income available to common shareholders

$

8,439

 

$

10,933

 

$

13,541

 

 

$

19,372

 

$

27,426

 

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

 

As of and For the

Three Months Ended

 

As of and For the

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands, except per share data)

2020

2020

2019

 

2020

2019

Per share and share data:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

$

0.30

 

$

0.39

 

$

0.49

 

 

$

0.69

 

$

0.98

 

Diluted

$

0.30

 

$

0.38

 

$

0.47

 

 

$

0.68

 

$

0.95

 

Book value per common share

$

17.31

 

$

16.74

 

$

16.12

 

 

$

17.31

 

$

16.12

 

Tangible book value per common share (1)

$

15.14

 

$

14.55

 

$

13.84

 

 

$

15.14

 

$

13.84

 

Common shares outstanding, at end of period

29,851,550

 

29,762,578

 

29,339,152

 

 

29,851,550

 

29,339,152

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

28,223,085

 

28,180,589

 

27,887,599

 

 

28,201,837

 

27,860,370

 

Diluted

28,527,961

 

28,844,844

 

28,790,673

 

 

28,687,804

 

28,747,718

 

 

 

 

 

 

 

 

Performance ratios:

 

 

 

 

 

 

Return on average assets (2)

0.45

%

0.65

%

0.91

%

 

0.54

%

0.94

%

Return on average common equity (2)

6.62

%

8.59

%

11.63

%

 

7.60

%

12.06

%

Net interest margin (2) (3)

1.52

%

1.84

%

2.03

%

 

1.67

%

2.06

%

Total revenue (1)

$

46,467

 

$

48,181

 

$

43,170

 

 

$

94,648

 

$

86,583

 

Pre-tax, pre-provision net revenue (1)

$

18,371

 

$

19,037

 

$

15,585

 

 

$

37,408

 

$

32,326

 

Bank efficiency ratio (1)

50.39

%

51.86

%

55.16

%

 

51.13

%

55.72

%

Non-interest expense to average assets (2)

1.22

%

1.47

%

1.71

%

 

1.34

%

1.74

%

 

 

 

 

 

 

 

Asset quality:

 

 

 

 

 

 

Non-performing loans

$

6,780

 

$

184

 

$

2,189

 

 

$

6,780

 

$

2,189

 

Non-performing assets

$

9,504

 

$

4,434

 

$

5,213

 

 

$

9,504

 

$

5,213

 

Other real estate owned

$

2,724

 

$

4,250

 

$

3,024

 

 

$

2,724

 

$

3,024

 

Non-performing assets to total assets

0.10

%

0.05

%

0.08

%

 

0.10

%

0.08

%

Non-performing loans to total loans

0.09

%

%

0.04

%

 

0.09

%

0.04

%

Allowance for loan and lease losses to loans

0.32

%

0.25

%

0.25

%

 

0.32

%

0.25

%

Allowance for loan and lease losses to non-performing loans

343.30

%

9,404.35

%

640.29

%

 

343.30

%

640.29

%

Net charge-offs (recoveries)

$

33

 

$

(203

)

$

(16

)

 

$

(170

)

$

(1,897

)

Net charge-offs (recoveries) to average total loans (2)

%

(0.01

)%

%

 

%

(0.07

)%

 

 

 

 

 

 

 

Capital ratios: (4)

 

 

 

 

 

 

Tier 1 leverage ratio

6.30

%

7.19

%

8.21

%

 

6.30

%

8.21

%

Common equity tier 1 risk-based capital ratio

8.54

%

8.81

%

9.83

%

 

8.54

%

9.83

%

Tier 1 risk-based capital ratio

10.68

%

11.07

%

12.56

%

 

10.68

%

12.56

%

Total risk-based capital ratio

12.89

%

11.42

%

12.82

%

 

12.89

%

12.82

%

Bank tier 1 leverage ratio

7.11

%

7.36

%

7.43

%

 

7.11

%

7.43

%

Bank common equity tier 1 risk-based capital ratio

12.07

%

11.34

%

11.38

%

 

12.07

%

11.38

%

Bank tier 1 risk based capital ratio

12.07

%

11.34

%

11.38

%

 

12.07

%

11.38

%

Bank total risk-based capital ratio

12.52

%

11.69

%

11.73

%

 

12.52

%

11.73

%

 

 

 

 

 

 

 

Investment Management Segment:

 

 

 

 

 

 

Assets under management

$

9,254,000

 

$

8,323,000

 

$

9,485,000

 

 

$

9,254,000

 

$

9,485,000

 

EBITDA (1)

$

1,031

 

$

1,217

 

$

1,557

 

 

$

2,248

 

$

4,178

 

(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.

(4)

 

Capital ratios are estimated until regulatory reports are filed.

TRISTATE CAPITAL HOLDINGS, INC.

AVERAGES AND YIELDS (UNAUDITED)

 

Three Months Ended

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

(Dollars in thousands)

Average

Balance

Interest

Income (1)/

Expense

Average

Yield/

Rate (2)

 

Average

Balance

Interest

Income (1)/

Expense

Average

Yield/

Rate (2)

 

Average

Balance

Interest

Income (1)/

Expense

Average

Yield/

Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

$

1,098,510

 

$

342

 

0.13

%

 

$

464,302

 

$

1,363

 

1.18

%

 

$

255,697

 

$

1,542

 

2.42

%

Federal funds sold

7,883

 

1

 

0.05

%

 

7,099

 

20

 

1.13

%

 

11,218

 

67

 

2.40

%

Debt securities available-for-sale

329,015

 

2,026

 

2.48

%

 

281,870

 

2,044

 

2.92

%

 

249,281

 

2,053

 

3.30

%

Debt securities held-to-maturity

292,898

 

1,616

 

2.22

%

 

201,754

 

1,488

 

2.97

%

 

181,495

 

1,712

 

3.78

%

Debt securities trading

 

 

%

 

230

 

1

 

1.75

%

 

 

 

%

Equity securities

 

 

%

 

 

 

%

 

7,701

 

28

 

1.46

%

FHLB stock

13,269

 

305

 

9.24

%

 

20,179

 

398

 

7.93

%

 

20,235

 

385

 

7.63

%

Total loans and leases

7,094,744

 

47,377

 

2.69

%

 

6,672,692

 

58,918

 

3.55

%

 

5,462,489

 

60,579

 

4.45

%

Total interest-earning assets

8,836,319

 

51,667

 

2.35

%

 

7,648,126

 

64,232

 

3.38

%

 

6,188,116

 

66,366

 

4.30

%

Other assets

408,950

 

 

 

 

312,447

 

 

 

 

266,905

 

 

 

Total assets

$

9,245,269

 

 

 

 

$

7,960,573

 

 

 

 

$

6,455,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,327,513

 

$

2,719

 

0.47

%

 

$

1,473,614

 

$

5,214

 

1.42

%

 

$

868,721

 

$

4,965

 

2.29

%

Money market deposit accounts

3,862,068

 

7,377

 

0.77

%

 

3,548,965

 

14,655

 

1.66

%

 

2,855,795

 

18,200

 

2.56

%

Certificates of deposit

1,389,984

 

5,857

 

1.69

%

 

1,383,036

 

7,375

 

2.14

%

 

1,361,372

 

8,990

 

2.65

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

FHLB borrowings

300,000

 

1,284

 

1.72

%

 

421,923

 

2,035

 

1.94

%

 

430,770

 

2,334

 

2.17

%

Line of credit borrowings

22,747

 

260

 

4.60

%

 

1,484

 

1

 

0.27

%

 

857

 

10

 

4.68

%

Subordinated notes payable, net

44,417

 

680

 

6.16

%

 

 

 

%

 

34,984

 

537

 

6.16

%

Total interest-bearing liabilities

7,946,729

 

18,177

 

0.92

%

 

6,829,022

 

29,280

 

1.72

%

 

5,552,499

 

35,036

 

2.53

%

Noninterest-bearing deposits

417,732

 

 

 

 

350,086

 

 

 

 

256,404

 

 

 

Other liabilities

252,303

 

 

 

 

153,207

 

 

 

 

113,031

 

 

 

Shareholders' equity

628,505

 

 

 

 

628,258

 

 

 

 

533,087

 

 

 

Total liabilities and shareholders' equity

$

9,245,269

 

 

 

 

$

7,960,573

 

 

 

 

$

6,455,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

33,490

 

 

 

 

$

34,952

 

 

 

 

$

31,330

 

 

Net interest spread (1)

 

 

1.43

%

 

 

 

1.66

%

 

 

 

1.77

%

Net interest margin (1)

 

 

1.52

%

 

 

 

1.84

%

 

 

 

2.03

%

(1)

 

Interest income and net interest margin are calculated on a fully taxable equivalent basis.

(2)

 

Annualized.

TRISTATE CAPITAL HOLDINGS, INC.

LOAN AND LEASE COMPOSITION (UNAUDITED)

 

Six Months Ended June 30,

 

2020

 

2019

(Dollars in thousands)

Average

Balance

Interest

Income (1)/

Expense

Average

Yield/

Rate (2)

 

Average

Balance

Interest

Income (1)/

Expense

Average

Yield/

Rate (2)

Assets

 

 

 

 

 

 

 

Interest-earning deposits

$

781,406

 

$

1,705

 

0.44

%

 

$

229,232

 

$

2,798

 

2.46

%

Federal funds sold

7,491

 

21

 

0.56

%

 

9,914

 

98

 

1.99

%

Debt securities available-for-sale

305,442

 

4,070

 

2.68

%

 

242,794

 

4,040

 

3.36

%

Debt securities held-to-maturity

247,326

 

3,104

 

2.52

%

 

196,580

 

3,730

 

3.83

%

Debt securities trading

115

 

1

 

1.75

%

 

 

 

%

Equity securities

 

 

%

 

10,214

 

99

 

1.95

%

FHLB stock

16,724

 

703

 

8.45

%

 

20,366

 

690

 

6.83

%

Total loans and leases

6,883,718

 

106,295

 

3.11

%

 

5,320,953

 

117,841

 

4.47

%

Total interest-earning assets

8,242,222

 

115,899

 

2.83

%

 

6,030,053

 

129,296

 

4.32

%

Other assets

360,699

 

 

 

 

254,796

 

 

 

Total assets

$

8,602,921

 

 

 

 

$

6,284,849

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

1,900,563

 

$

7,933

 

0.84

%

 

$

830,915

 

$

9,508

 

2.31

%

Money market deposit accounts

3,705,517

 

22,031

 

1.20

%

 

2,769,572

 

34,739

 

2.53

%

Certificates of deposit

1,386,510

 

13,233

 

1.92

%

 

1,331,003

 

17,241

 

2.61

%

Borrowings:

 

 

 

 

 

 

 

FHLB borrowings

360,962

 

3,319

 

1.85

%

 

444,973

 

4,920

 

2.23

%

Line of credit borrowings

12,115

 

261

 

4.33

%

 

2,489

 

68

 

5.51

%

Subordinated notes payable, net

22,208

 

680

 

6.16

%

 

34,958

 

1,090

 

6.29

%

Total interest-bearing liabilities

7,387,875

 

47,457

 

1.29

%

 

5,413,910

 

67,566

 

2.52

%

Noninterest-bearing deposits

383,909

 

 

 

 

259,028

 

 

 

Other liabilities

202,755

 

 

 

 

100,826

 

 

 

Shareholders' equity

628,382

 

 

 

 

511,085

 

 

 

Total liabilities and shareholders' equity

$

8,602,921

 

 

 

 

$

6,284,849

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

68,442

 

 

 

 

$

61,730

 

 

Net interest spread (1)

 

 

1.54

%

 

 

 

1.80

%

Net interest margin (1)

 

 

1.67

%

 

 

 

2.06

%

(1)

 

Interest income and net interest margin are calculated on a fully taxable equivalent basis.

(2)

 

Annualized.

TRISTATE CAPITAL HOLDINGS, INC.

LOAN AND LEASE COMPOSITION (UNAUDITED)

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

(Dollars in thousands)

Loan

Balance

Percent of

Total Loans

 

Loan

Balance

Percent of

Total Loans

 

Loan

Balance

Percent of

Total Loans

Private banking loans

$

4,063,116

 

56.6

%

 

$

3,915,555

 

56.3

%

 

$

3,188,668

 

56.3

%

Middle-market banking loans:

 

 

 

 

 

 

 

 

Commercial and industrial

1,152,880

 

16.1

%

 

1,191,104

 

17.1

%

 

908,054

 

16.0

%

Commercial real estate

1,954,774

 

27.3

%

 

1,851,490

 

26.6

%

 

1,568,212

 

27.7

%

Total middle-market banking loans

3,107,654

 

43.4

%

 

3,042,594

 

43.7

%

 

2,476,266

 

43.7

%

Loans and leases held-for-investment

$

7,170,770

 

100.0

%

 

$

6,958,149

 

100.0

%

 

$

5,664,934

 

100.0

%

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 

Three Months Ended June 30, 2020

 

Three Months Ended June 30, 2019

(Dollars in thousands)

Bank

Investment

Management

Parent

and Other

Consolidated

 

Bank

Investment

Management

Parent

and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

51,661

 

$

 

$

 

$

51,661

 

 

$

66,311

 

$

 

$

28

 

$

66,339

 

Interest expense

17,251

 

 

926

 

18,177

 

 

34,517

 

 

519

 

35,036

 

Net interest income (loss)

34,410

 

 

(926

)

33,484

 

 

31,794

 

 

(491

)

31,303

 

Provision (credit) for loan and lease losses

6,005

 

 

 

6,005

 

 

(712

)

 

 

(712

)

Net interest income (loss) after provision for loan and lease losses

28,405

 

 

(926

)

27,479

 

 

32,506

 

 

(491

)

32,015

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

7,897

 

(159

)

7,738

 

 

 

9,364

 

(110

)

9,254

 

Net gain on the sale and call of debt securities

14

 

 

 

14

 

 

112

 

 

 

112

 

Other non-interest income

5,215

 

30

 

 

5,245

 

 

2,478

 

4

 

131

 

2,613

 

Total non-interest income (loss)

5,229

 

7,927

 

(159

)

12,997

 

 

2,590

 

9,368

 

21

 

11,979

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

486

 

 

486

 

 

 

502

 

 

502

 

Other non-interest expense

19,967

 

7,003

 

640

 

27,610

 

 

18,903

 

7,930

 

250

 

27,083

 

Total non-interest expense

19,967

 

7,489

 

640

 

28,096

 

 

18,903

 

8,432

 

250

 

27,585

 

Income (loss) before tax

13,667

 

438

 

(1,725

)

12,380

 

 

16,193

 

936

 

(720

)

16,409

 

Income tax expense (benefit)

2,173

 

102

 

(296

)

1,979

 

 

1,658

 

264

 

(204

)

1,718

 

Net income (loss)

$

11,494

 

$

336

 

$

(1,429

)

$

10,401

 

 

$

14,535

 

$

672

 

$

(516

)

$

14,691

 

 

Six Months Ended June 30, 2020

 

Six Months Ended June 30, 2019

(Dollars in thousands)

Bank

Investment

Management

Parent

and Other

Consolidated

 

Bank

Investment

Management

Parent

and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

115,863

 

$

 

$

 

$

115,863

 

 

$

129,142

 

$

 

$

99

 

$

129,241

 

Interest expense

46,547

 

 

910

 

47,457

 

 

66,436

 

 

1,130

 

67,566

 

Net interest income (loss)

69,316

 

 

(910

)

68,406

 

 

62,706

 

 

(1,031

)

61,675

 

Provision (credit) for loan and lease losses

8,998

 

 

 

8,998

 

 

(1,089

)

 

 

(1,089

)

Net interest income (loss) after provision for loan and lease losses

60,318

 

 

(910

)

59,408

 

 

63,795

 

 

(1,031

)

62,764

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

15,662

 

(286

)

15,376

 

 

 

18,896

 

(218

)

18,678

 

Net gain on the sale and call of debt securities

71

 

 

 

71

 

 

140

 

 

 

140

 

Other non-interest income

10,866

 

 

 

10,866

 

 

5,355

 

25

 

850

 

6,230

 

Total non-interest income (loss)

10,937

 

15,662

 

(286

)

26,313

 

 

5,495

 

18,921

 

632

 

25,048

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

988

 

 

988

 

 

 

1,004

 

 

1,004

 

Other non-interest expense

41,000

 

13,630

 

1,622

 

56,252

 

 

37,923

 

14,987

 

343

 

53,253

 

Total non-interest expense

41,000

 

14,618

 

1,622

 

57,240

 

 

37,923

 

15,991

 

343

 

54,257

 

Income (loss) before tax

30,255

 

1,044

 

(2,818

)

28,481

 

 

31,367

 

2,930

 

(742

)

33,555

 

Income tax expense (benefit)

5,521

 

130

 

(466

)

5,185

 

 

3,683

 

827

 

(210

)

4,300

 

Net income (loss)

$

24,734

 

$

914

 

$

(2,352

)

$

23,296

 

 

$

27,684

 

$

2,103

 

$

(532

)

$

29,255

 

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," "EBITDA," "total revenue," "pre-tax, pre-provision net revenue" and "efficiency ratio." Although we believe these non-GAAP financial measures provide management and our investors with a more detailed understanding of our performance, these measures are not necessarily comparable to similar measures that may be presented by other companies. The non-GAAP financial measures presented herein are calculated as follows:

"Tangible common equity" is defined as common shareholders' equity reduced by intangible assets, including goodwill. We believe this measure is important to management and investors so that they can better understand and assess changes from period to period in common shareholders' equity exclusive of changes in intangible assets associated with prior acquisitions. Intangible assets are created when we buy businesses that add relationships and revenue to our Company. Intangible assets have 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 common shareholders' equity reduced by 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 common share exclusive of changes in intangible assets associated with prior acquisitions.

"EBITDA" is defined as net income before interest expense, income tax expense, depreciation expense and intangible amortization expense. We use 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 by excluding certain non-cash items and the volatility that is associated with certain 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 debt securities. We believe adjustments made to our operating revenue allow management and investors to better assess our core operating revenue by removing the volatility that is associated with certain 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 and lease losses and changes in our tax rates and other items that are unrelated to our core business.

"Efficiency ratio" is defined as total non-interest expense divided by our total revenue. We believe this measure allows management and investors to better assess our operating expenses in relation to our core operating revenue, particularly at the Bank.

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

June 30,

March 31,

June 30,

(Dollars in thousands, except per share data)

2020

2020

2019

Tangible common equity and tangible book value per common share:

 

 

 

Common shareholders' equity

$

516,752

 

$

498,301

 

$

472,839

 

Less: goodwill and intangible assets

64,867

 

65,352

 

66,859

 

Tangible common equity (numerator)

$

451,885

 

$

432,949

 

$

405,980

 

Common shares outstanding (denominator)

29,851,550

 

29,762,578

 

29,339,152

 

Tangible book value per common share

$

15.14

 

$

14.55

 

$

13.84

 

INVESTMENT MANAGEMENT SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

Three Months Ended

Six Months Ended

 

June 30,

March 31,

June 30,

June 30,

June 30,

(Dollars in thousands)

2020

2020

2019

2020

2019

Investment Management EBITDA:

 

 

 

 

 

Net income

$

336

 

$

578

 

$

672

 

$

914

 

$

2,103

 

Interest expense

 

 

 

 

 

Income tax expense

102

 

28

 

264

 

130

 

827

 

Depreciation expense

107

 

109

 

119

 

216

 

244

 

Intangible amortization expense

486

 

502

 

502

 

988

 

1,004

 

EBITDA

$

1,031

 

$

1,217

 

$

1,557

 

$

2,248

 

$

4,178

 

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2020

2020

2019

 

2020

2019

Total revenue and pre-tax, pre-provision net revenue:

 

 

 

 

 

 

Net interest income

$

33,484

 

$

34,922

 

$

31,303

 

 

$

68,406

 

$

61,675

 

Total non-interest income

12,997

 

13,316

 

11,979

 

 

26,313

 

25,048

 

Less: net gain on the sale and call of debt securities

14

 

57

 

112

 

 

71

 

140

 

Total revenue

$

46,467

 

$

48,181

 

$

43,170

 

 

$

94,648

 

$

86,583

 

Less: total non-interest expense

28,096

 

29,144

 

27,585

 

 

57,240

 

54,257

 

Pre-tax, pre-provision net revenue

$

18,371

 

$

19,037

 

$

15,585

 

 

$

37,408

 

$

32,326

 

BANK SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2020

2020

2019

 

2020

2019

Bank total revenue:

 

 

 

 

 

 

Net interest income

$

34,410

 

$

34,906

 

$

31,794

 

 

$

69,316

 

$

62,706

 

Total non-interest income

5,229

 

5,709

 

2,590

 

 

10,937

 

5,495

 

Less: net gain on the sale and call of debt securities

14

 

57

 

112

 

 

71

 

140

 

Bank total revenue

$

39,625

 

$

40,558

 

$

34,272

 

 

$

80,182

 

$

68,061

 

 

 

 

 

 

 

 

Bank efficiency ratio:

 

 

 

 

 

 

Total non-interest expense (numerator)

$

19,967

 

$

21,034

 

$

18,903

 

 

$

41,000

 

$

37,923

 

Bank total revenue (denominator)

$

39,625

 

$

40,558

 

$

34,272

 

 

$

80,182

 

$

68,061

 

Bank efficiency ratio

50.39

%

51.86

%

55.16

%

 

51.13

%

55.72

%

 

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com