TriState Capital Reports Third Quarter 2016 Financial Results

PITTSBURGH--()--TriState Capital Holdings, Inc. (NASDAQ: TSC) grew earnings per share (EPS) to $0.30 in the third quarter of 2016, with EPS increasing 36.4% from the third quarter of 2015 and 25.0% from the second quarter of 2016. The parent company of TriState Capital Bank and Chartwell Investment Partners also reported record revenue, net interest income and investment management fees, while continuing to drive strong loan and deposit growth, maintaining excellent credit quality, and enhancing its capital position.

TriState Capital’s net income grew to $8.5 million in the third quarter of 2016, increasing 38.2% from $6.1 million in the third quarter of 2015 and 24.8% from $6.8 million in the second quarter of 2016. Net income per diluted share was $0.30 in the third quarter of 2016, compared to $0.22 in the third quarter of 2015 and $0.24 in the second quarter of 2016. Third quarter 2016 earnings per share included approximately $0.03 from the reduction of previously accrued contingent consideration for The Killen Group (TKG) acquisition completed earlier this year.

TriState Capital delivered its best quarterly financial results ever as a public company, showcasing our uniquely diversified and low-risk-profile financial services business model and its proven ability to consistently generate robust earnings through sustainable revenue growth in commercial banking, private banking and investment management,” Chief Executive Officer James F. Getz said. “We are also pleased to report further success in increasing the number and depth of client relationships that come with deposits, which outpaced very healthy loan growth for the third consecutive quarter, as well as further enhancements to our already strong regulatory capital position to support the continued organic expansion of our balance sheet.”

THIRD QUARTER 2016 HIGHLIGHTS

  • Deposits grew $486.7 million, or 18.7%, from one year prior and $199.0 million, or 6.9%, during the quarter to $3.09 billion, outpacing loan growth for the third consecutive quarter
  • Loans grew $513.5 million, or 19.3%, from one year prior and $177.3 million, or 5.9%, during the quarter to $3.17 billion, supporting TriState Capital’s ongoing long-term compound annual growth goal of 15%
  • Strong credit quality continued, with adverse-rated credits declining to 1.59% at period end, from 2.08% one year prior, and non-performing assets representing 0.67% of total assets at the end of the most-recent and year-ago quarters
  • Non-interest income grew to a record $12.5 million, or 40.0% of revenues, with Chartwell investment management revenue enhanced by the first full quarter of contribution from the TKG acquisition that closed April 29
  • Assets under management (AUM) grew 2.0% during the quarter to $10.8 billion
  • About $120 million of private banking loans became newly eligible for beneficial risk-weighted capital treatment under Basel III rules, making about $12 million of additional regulatory capital available to the bank

TriState Capital’s total revenue, net interest income (NII) and non-interest income each hit record quarterly levels in the three months ended September 30, 2016. Total revenue grew to $31.2 million in the third quarter of 2016, increasing 24.6% from $25.0 million in the year-ago quarter and 5.3% from $29.6 million in the linked quarter.

TriState Capital’s diverse loan growth continues to support revenue expansion, even as net interest margin of 2.18% in the third quarter of 2016 reflects the lingering impact of the sustained low-rate environment, in light of the company’s continued commitment to asset sensitivity and strong credit quality in loans and investments. NII grew to $18.7 million in the third quarter of 2016, increasing 10.0% from $17.0 million in the third quarter of 2015 and 2.7% from $18.2 million in the linked quarter.

Investment management fees of $10.3 million in the third quarter of 2016 reflected Chartwell’s successful business development efforts, as well as the contributions of the TKG business acquired on April 29. Chartwell investment management fees were $7.0 million in the year-ago quarter and $9.4 million in the linked quarter.

All other non-interest income was $2.2 million in the third quarter of 2016, compared to $995,000 in the year-ago quarter and $2.0 million in the linked quarter. Total non-interest income was $12.5 million, or 40.0% of total revenue, in the third quarter of 2016, compared to $8.0 million, or 32.0%, in the year-ago period and $11.4 million, or 38.5%, in the linked quarter.

The bank’s efficiency ratio for the third quarter of 2016 was 62.01%, compared to 64.93% in the third quarter of 2015 and 59.63% in the second quarter of 2016. Non-interest expenses in the third quarter of 2016 were $20.5 million, or 2.27% of average assets on an annualized basis, compared to $17.3 million, or 2.25%, in the third quarter of 2015. Second quarter 2016 non-interest expenses were $19.5 million, or 2.29% of average assets on an annualized basis.

Non-interest expense for the three months ended September 30, 2016 represents the first full quarter of compensation and other costs associated with operating the business acquired from TKG on April 29. Third quarter non-interest expense also reflected a reduction of $1.2 million in the fair value of previously accrued contingent consideration associated with the TKG acquisition. The adjustment of this non-cash accrual reflects management’s current estimate of the earnout payable to TKG’s former owners in 2017, which favorably impacted third quarter 2016 earnings per share by approximately $0.03.

TriState Capital lowered its projected effective tax rate for the full year 2016 from approximately 34% to approximately 31% as a result of tax credits generated in the third quarter.

BALANCE SHEET GROWTH

Loans totaled $3.17 billion at September 30, 2016, increasing $513.5 million, or 19.3%, over balances at September 30, 2015 and $177.3 million, or 5.9%, from June 30. Private banking loans totaled $1.59 billion at September 30, 2016, growing 32.3% from the end of the year-ago quarter and 10.6% from the end of the linked quarter. Commercial loans totaled $1.59 billion at September 30, 2016, growing 8.6% from the end of the year-ago quarter and 1.7% from the end of the linked quarter.

Deposits totaled $3.09 billion at September 30, 2016, increasing $486.7 million, or 18.7%, from September 30, 2015 and $199.0 million, or 6.9%, from June 30. Deposit growth outpaced robust loan growth for the third consecutive quarter. This illustrates the ongoing success of TriState Capital’s efforts to grow stable and cost-effective relationship deposits and treasury management related liquidity from new and existing accounts through superior client focus and enhanced services and technology.

TriState Capital continues to manage a highly asset-sensitive balance sheet. At September 30, 2016, 87% of TriState Capital’s loan portfolio and 51% of its securities portfolio were floating rate. In addition, 28% of deposits were fixed-rate time deposits.

ASSET QUALITY

The bank’s solid asset quality metrics in the third quarter of 2016 continued to reflect TriState Capital’s disciplined credit culture and the growth of its private banking non-purpose margin loans secured by marketable securities. Private banking comprised 50% of the total loan portfolio at September 30, 2016.

Non-performing assets (NPAs) were $25.0 million at September 30, 2016, or 0.67% of total assets, compared to $20.9 million, or 0.67% of assets, at September 30, 2015 and $20.9 million, or 0.59%, at June 30, 2016. NPAs at September 30, 2016 included $3.6 million for collateral moved to other real estate owned (OREO) at fair value. Non-performing loans (NPLs) were $20.7 million at September 30, 2016, or 0.65% of total loans, compared to $19.1 million, or 0.72%, at September 30, 2015 and $19.1 million, or 0.64%, at June 30, 2016.

Adverse-rated credits declined 10.7% during the third quarter and 8.6% from September 30, 2015. Adverse-rated credits represented 1.59% of total loans at the end of the third quarter of 2016, 2.08% at September 30, 2015 and 1.89% at June 30, 2016.

The bank experienced net recoveries of $3.5 million in the third quarter of 2016, compared to net charge-off of $716,000 in the third quarter of 2015 and $1.4 million in the second quarter of 2016.

TriState Capital’s $542,000 credit to provision expense in the three months ended September 30, 2016 reflected declining adverse rated credits and net recoveries, offset by increases to specific reserves on NPLs. The bank reported a credit to provision expense of $1.3 million in the third quarter of 2015 and provision expense of $80,000 in the second quarter of 2016.

The company’s allowance for loan losses represented 0.64% of total loans at September 30, 2016, compared to 0.73% at September 30, 2015 and 0.57% at June 30, 2016.

INVESTMENT MANAGEMENT

Chartwell’s new business and new flows from existing accounts of $189 million and market appreciation of $400 million offset outflows of $381 million in the third quarter of 2016. While Chartwell experienced net outflows of $192 million in the third quarter, it delivered net inflows of $416 million year to date, as the industry generally saw net outflows for the three and nine months ended September 30, 2016.

Chartwell grew AUM by 2.0% to $10.8 billion at the end of the third quarter of 2016 from $10.6 billion at June 30, 2016. AUM grew by 41.6% from $7.6 billion at September 30, 2015, primarily driven by the April 29 closing of its TKG acquisition. Chartwell’s weighted average fee rate was 0.38% at September 30, 2016.

Investment management fees grew to $10.3 million in the third quarter of 2016 from $7.0 million in the third quarter of 2015 and $9.4 million in the second quarter of 2016. On an annualized run-rate basis, Chartwell’s revenues increased to $41.3 million at September 30, 2016, up 47.5% from $28.0 million at September 30, 2015 and in line with $41.2 million at June 30, 2016.

Chartwell earned $1.7 million in the third quarter, comprising 20.6% of TriState Capital Holdings’ consolidated net income for the third quarter of 2016.

CAPITAL STRENGTH AND FLEXIBILITY

During the third quarter of 2016, about $120 million of TriState Capital’s private banking loans became newly eligible for beneficial risk-weighted capital treatment under Basel III rules, which recognize the lower-risk profile of the majority of the bank’s portfolio of non-purpose margin loans. This had the favorable net effect of making about $12 million of additional regulatory capital available to the bank in the third quarter of 2016. Accordingly, the TriState Capital Bank subsidiary’s total risk-based capital ratio increased to 12.88% at September 30, 2016, from 12.24% at June 30, 2016.

TriState Capital Holdings, as of September 30, 2016, reported ratios of 13.05% for total risk-based capital, 11.73% for tier 1 risk-based capital, 11.73% for common equity tier 1 risk-based capital and 8.09% for tier 1 leverage.

In January 2016, the Board of Directors approved a share repurchase program of up to $10 million. Year-to-date, the company repurchased a total of 334,275 shares for approximately $4.3 million at an average cost of $12.89 per share. Of that total, in the third quarter of 2016, the company repurchased 76,553 shares for approximately $1.1 million at an average cost of $14.78 per share. Also during the third quarter, $5.2 million of the authorization was utilized for an option cancellation program. Fully vested options of 1,061,500 shares of common stock, granted in 2007 and expiring in 2017 with a $10 exercise price, were canceled at an average spread of $4.92.

This week, the company’s Board of Directors approved a new share repurchase program of up to $5 million. Under the authorization, purchases of shares may be made at the discretion of management from time to time in the open market or through negotiated transactions. In addition, the funds allocated to the program can be used to cancel options expiring in 2017.

CONFERENCE CALL

As previously announced, TriState Capital will hold a conference call tomorrow to review its financial results and operating performance.

The live conference call on October 20 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link http://dpregister.com/10094279 to receive a special dial-in number and PIN. Telephone participants who are unable to pre-register should dial in at least 10 minutes prior to the call and request the “TriState Capital earnings call.” The call may be accessed by dialing 888-339-0757 from the United States, 855-669-9657 from Canada or 412-902-4194 from other international locations.

A replay of the call will be available approximately one hour after the end of the conference through October 27. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 412-317-0088 from other international locations, and entering the conference number 10094279.

ABOUT TRISTATE CAPITAL

TriState Capital Holdings, Inc. (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 $3.6 billion in assets, as of September 30, 2016, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Edison, N.J., and New York City, as well as high-net-worth individuals nationwide through its national referral network of financial intermediaries. Its Chartwell Investment Partners subsidiary had $10.8 billion in assets under management, as of September 30, 2016, and serves as the advisor to The Berwyn Funds and Chartwell Mutual Funds. For more information, please visit http://investors.tristatecapitalbank.com.

FORWARD LOOKING STATEMENTS

This press release includes “forward-looking” statements related to TriState Capital that can generally be identified as describing TriState Capital’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect TriState Capital’s future results, please see the company’s most-recent annual and quarterly reports filed on Form 10-K and Form 10-Q.

NON-GAAP FINANCIAL DISCLOSURES

This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). Although TriState Capital believes non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP. Where non-GAAP disclosures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and accompanying tables.

   
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
 
As of and For the As of and For the
Three Months Ended Nine Months Ended
(Dollars in thousands) September 30,   June 30,   September 30, September 30,   September 30,
    2016   2016   2015 2016   2015
Period-end balance sheet data:
Cash and cash equivalents $ 120,736 $ 114,297 $ 100,424 $ 120,736 $ 100,424
Total investment securities 243,343 242,217 228,014 243,343 228,014
Loans held-for-investment 3,174,653 2,997,309 2,661,191 3,174,653 2,661,191
Allowance for loan losses   (20,211 )   (17,215 )   (19,350 ) (20,211 )   (19,350 )
Loans held-for-investment, net 3,154,442 2,980,094 2,641,841 3,154,442 2,641,841
Goodwill and other intangibles, net 67,671 68,134 51,205 67,671 51,205
Other assets   129,326     123,849     108,020   129,326     108,020  
Total assets   $ 3,715,518     $ 3,528,591     $ 3,129,504   $ 3,715,518     $ 3,129,504  
Total deposits $ 3,087,230 $ 2,888,192 $ 2,600,508 $ 3,087,230 $ 2,600,508
Borrowings, net 239,460 259,409 174,257 239,460 174,257
Other liabilities   45,689     43,296     34,199   45,689     34,199  
Total liabilities   3,372,379     3,190,897     2,808,964   3,372,379     2,808,964  
Total shareholders' equity   343,139     337,694     320,540   343,139     320,540  
Total liabilities and shareholders' equity   $ 3,715,518     $ 3,528,591     $ 3,129,504   $ 3,715,518     $ 3,129,504  
 
Income statement data:
Interest income $ 24,925 $ 23,795 $ 20,989 $ 72,080 $ 61,672
Interest expense   6,221     5,576     3,984   16,780     11,331  
Net interest income 18,704 18,219 17,005 55,300 50,341
Provision (credit) for loan losses   (542 )   80     (1,341 ) (340 )   (231 )
Net interest income after provision for loan losses   19,246     18,139     18,346   55,640     50,572  
Non-interest income:
Investment management fees 10,333 9,462 7,020 26,814 22,189
Net gain on the sale and call of investment securities 14 62 77 17
Other non-interest income   2,150     1,923     995   5,968     4,236  
Total non-interest income   12,497     11,447     8,015   32,859     26,442  
Non-interest expense:
Intangible amortization expense 463 438 390 1,291 1,169
Change in fair value of acquisition earnout (1,209 ) (1,209 )
Other non-interest expense   21,260     19,019     16,911   57,895     50,816  
Total non-interest expense   20,514     19,457     17,301   57,977     51,985  
Income before tax 11,229 10,129 9,060 30,522 25,029
Income tax expense   2,775     3,356     2,942   9,452     8,127  
Net income   $ 8,454     $ 6,773     $ 6,118   $ 21,070     $ 16,902  
   
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
 
As of and For the As of and For the
Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) September 30,   June 30,   September 30, September 30,   September 30,
    2016   2016   2015   2016   2015
Per share and share data:
Earnings per share:
Basic $ 0.31 $ 0.25 $ 0.22 $ 0.76 $ 0.61
Diluted $ 0.30 $ 0.24 $ 0.22 $ 0.75 $ 0.60
Book value per common share $ 12.12 $ 11.97 $ 11.44 $ 12.12 $ 11.44
Tangible book value per common share (1) $ 9.73 $ 9.56 $ 9.61 $ 9.73 $ 9.61
Common shares outstanding, at end of period 28,317,154 28,211,282 28,027,695 28,317,154 28,027,695
Weighted average common shares outstanding:
Basic 27,514,724 27,549,475 27,728,705 27,586,816 27,779,023
Diluted 28,307,632 28,225,404 28,281,244 28,276,223 28,207,659
 
Performance ratios:
Return on average assets (2) 0.93 % 0.80 % 0.79 % 0.82 % 0.76 %
Return on average equity (2) 9.88 % 8.16 % 7.64 % 8.42 % 7.23 %
Net interest margin (2) (3) 2.18 % 2.25 % 2.32 % 2.25 % 2.39 %
Bank efficiency ratio (1) 62.01 % 59.63 % 64.93 % 60.36 % 62.36 %
Efficiency ratio (1) 68.17 % 64.24 % 67.59 % 65.73 % 66.20 %
Non-interest expense to average assets (2) 2.27 % 2.29 % 2.25 % 2.25 % 2.35 %
 
Asset quality:
Non-performing loans $ 20,717 $ 19,148 $ 19,119 $ 20,717 $ 19,119
Non-performing assets $ 24,985 $ 20,878 $ 20,885 $ 24,985 $ 20,885
Other real estate owned $ 4,268 $ 1,730 $ 1,766 $ 4,268 $ 1,766
Non-performing assets to total assets 0.67 % 0.59 % 0.67 % 0.67 % 0.67 %
Non-performing loans to total loans 0.65 % 0.64 % 0.72 % 0.65 % 0.72 %
Allowance for loan losses to loans 0.64 % 0.57 % 0.73 % 0.64 % 0.73 %
Allowance for loan losses to non-performing loans 97.56 % 89.90 % 101.21 % 97.56 % 101.21 %
Net charge-offs (recoveries) $ (3,538 ) $ 1,411 $ 716 $ (2,577 ) $ 692
Net charge-offs (recoveries) to average total loans (2) (0.46 )% 0.20 % 0.11 % (0.12 )% 0.04 %
 
Revenue:
Total revenue (1) $ 31,187 $ 29,604 $ 25,020 $ 88,082 $ 76,766
Pre-tax, pre-provision net revenue (1) $ 10,673 $ 10,147 $ 7,719 $ 30,105 $ 24,781
 
Capital ratios:
Tier 1 leverage ratio 8.09 % 8.41 % 9.30 % 8.09 % 9.30 %
Common equity tier 1 risk-based capital ratio 11.73 % 11.25 % 12.22 % 11.73 % 12.22 %
Tier 1 risk-based capital ratio 11.73 % 11.25 % 12.22 % 11.73 % 12.22 %
Total risk-based capital ratio 13.05 % 12.76 % 13.99 % 13.05 % 13.99 %
 
Assets under management $ 10,800,000 $ 10,592,000 $ 7,625,000 $ 10,800,000 $ 7,625,000
 
(1) These measures are not measures recognized under GAAP and are therefore considered to be non-GAAP financial measures. See “Non-GAAP Financial Measures” for a reconciliation of these measures to their most directly comparable GAAP measures.
(2) Ratios are annualized.
(3) Net interest margin is calculated on a fully taxable equivalent basis.
 
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
 
Three Months Ended
September 30, 2016   June 30, 2016   September 30, 2015
(Dollars in thousands)   Average
Balance
 

Interest
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 $ 114,245 $ 150 0.52 % $ 105,954 $ 135 0.51 % $ 94,015 $ 84 0.35 %
Federal funds sold 6,445 6 0.37 % 6,041 5 0.33 % 6,197 2 0.13 %
Investment securities available-for-sale 182,354 828 1.81 % 185,477 816 1.77 % 172,922 597 1.37 %
Investment securities held-to-maturity 48,495 485 3.98 % 45,143 457 4.07 % 45,941 454 3.92 %
FHLB stock 12,347 144 4.64 % 11,984 102 3.42 % 6,371 49 3.05 %
Total loans   3,061,427     23,369   3.04 % 2,909,217     22,354   3.09 % 2,598,362     19,872   3.03 %
Total interest-earning assets   3,425,313     24,982   2.90 % 3,263,816     23,869   2.94 % 2,923,808     21,058   2.86 %
Other assets   171,986   157,736   132,225  
Total assets   $ 3,597,299   $ 3,421,552   $ 3,056,033  
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 190,270 $ 234 0.49 % $ 145,858 $ 154 0.42 % $ 97,493 $ 99 0.40 %
Money market deposit accounts 1,688,250 3,017 0.71 % 1,603,881 2,622 0.66 % 1,418,547 1,523 0.43 %
Time deposits 863,872 1,936 0.89 % 852,381 1,827 0.86 % 884,829 1,652 0.74 %
Borrowings:
FHLB borrowing 273,804 480 0.70 % 269,670 419 0.62 % 130,054 156 0.48 %
Subordinated notes payable, net   34,427     554   6.40 % 34,376     554   6.48 % 34,224     554   6.42 %
Total interest-bearing liabilities   3,050,623     6,221   0.81 % 2,906,166     5,576   0.77 % 2,565,147     3,984   0.62 %
Noninterest-bearing deposits 161,723 147,540 148,323
Other liabilities 44,565 34,075 24,743
Shareholders' equity   340,388   333,771   317,820  
Total liabilities and shareholders' equity   $ 3,597,299   $ 3,421,552   $ 3,056,033  
 
Net interest income (1) $ 18,761   $ 18,293   $ 17,074  
Net interest spread 2.09 % 2.17 % 2.24 %
Net interest margin (1) 2.18 % 2.25 % 2.32 %
 
(1) Net interest income and net interest margin are calculated on a fully taxable equivalent basis.
 
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
 
Nine Months Ended September 30,
2016   2015
(Dollars in thousands)   Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
Assets        
Interest-earning deposits $ 107,651 $ 418 0.52 % $ 104,953 $ 273 0.35 %
Federal funds sold 6,180 16 0.35 % 6,143 4 0.09 %
Investment securities available-for-sale 181,383 2,387 1.76 % 162,838 1,550 1.27 %
Investment securities held-to-maturity 46,977 1,409 4.01 % 40,616 1,190 3.92 %
FHLB stock 10,983 343 4.17 % 5,084 311 8.18 %
Total loans   2,935,663     67,710   3.08 % 2,510,374     58,534   3.12 %
Total interest-earning assets   3,288,837     72,283   2.94 % 2,830,008     61,862   2.92 %
Other assets   155,903   130,591  
Total assets   $ 3,444,740   $ 2,960,599  
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 160,310 $ 541 0.45 % $ 103,674 $ 318 0.41 %
Money market deposit accounts 1,614,669 7,847 0.65 % 1,343,867 4,079 0.41 %
Time deposits 869,879 5,540 0.85 % 883,679 4,945 0.75 %
Borrowings:
FHLB borrowing 243,686 1,191 0.65 % 103,315 328 0.42 %
Subordinated notes payable, net   34,376     1,661   6.45 % 34,174     1,661   6.50 %
Total interest-bearing liabilities   2,922,920     16,780   0.77 % 2,468,709     11,331   0.61 %
Noninterest-bearing deposits 153,763 149,224
Other liabilities 33,770 30,026
Shareholders' equity   334,287   312,640  
Total liabilities and shareholders' equity   $ 3,444,740   $ 2,960,599  
 
Net interest income (1) $ 55,503   $ 50,531  
Net interest spread 2.17 % 2.31 %
Net interest margin (1) 2.25 % 2.39 %
 
(1) Net interest income and net interest margin are calculated on a fully taxable equivalent basis.
     

TRISTATE CAPITAL HOLDINGS, INC.

LOAN COMPOSITION (UNAUDITED)

 
September 30, 2016 June 30, 2016 September 30, 2015
(Dollars in thousands)   Loan
Balance
  Percent of
Total Loans
  Loan
Balance
  Percent of
Total Loans
  Loan
Balance
  Percent of
Total Loans
Private banking loans $ 1,587,019   50.0 % $ 1,435,545   47.9 % $ 1,199,883   45.1 %
Middle-market banking loans:
Commercial and industrial 565,702 17.8 % 573,733 19.1 % 630,131 23.7 %
Commercial real estate   1,021,932     32.2 %   988,031     33.0 %   831,177     31.2 %
Total middle-market banking loans   1,587,634     50.0 %   1,561,764     52.1 %   1,461,308     54.9 %
Loans held-for-investment   $ 3,174,653     100.0 %   $ 2,997,309     100.0 %   $ 2,661,191     100.0 %
   
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
and Other
  Consolidated
Income statement data:
Interest income $ 24,855   $   $ 70   $ 24,925 $ 20,932   $   $ 57   $ 20,989
Interest expense   5,673         548     6,221   3,430         554     3,984  
Net interest income (loss) 19,182 (478 ) 18,704 17,502 (497 ) 17,005
Provision (credit) for loan losses   (542 )           (542 ) (1,341 )           (1,341 )
Net interest income (loss) after provision for loan losses   19,724         (478 )   19,246   18,843         (497 )   18,346  
Non-interest income:
Investment management fees 10,391 (58 ) 10,333 7,074 (54 ) 7,020
Net gain on the sale and call of investment securities 14 14
Other non-interest income   2,149     1         2,150   1,002     (7 )       995  
Total non-interest income   2,163     10,392     (58 )   12,497   1,002     7,067     (54 )   8,015  
Non-interest expense:
Intangible amortization expense 463 463 390 390
Change in fair value of acquisition earnout (1,209 ) (1,209 )
Other non-interest expense   13,227     8,009     24     21,260   12,015     4,936     (40 )   16,911  
Total non-interest expense   13,227     7,263     24     20,514   12,015     5,326     (40 )   17,301  
Income (loss) before tax 8,660 3,129 (560 ) 11,229 7,830 1,741 (511 ) 9,060
Income tax expense (benefit)   1,823     1,385     (433 )   2,775   2,442     660     (160 )   2,942  
Net income (loss)   $ 6,837     $ 1,744     $ (127 )   $ 8,454   $ 5,388     $ 1,081     $ (351 )   $ 6,118  
   
Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
and Other
  Consolidated
Income statement data:
Interest income $ 71,871   $   $ 209   $ 72,080 $ 61,509   $   $ 163   $ 61,672
Interest expense   15,130         1,650     16,780   9,689         1,642     11,331  
Net interest income (loss) 56,741 (1,441 ) 55,300 51,820 (1,479 ) 50,341
Provision (credit) for loan losses   (340 )           (340 ) (231 )           (231 )
Net interest income (loss) after provision for loan losses   57,081         (1,441 )   55,640   52,051         (1,479 )   50,572  
Non-interest income:
Investment management fees 26,981 (167 ) 26,814 22,332 (143 ) 22,189
Net gain on the sale and call of investment securities 77 77 17 17
Other non-interest income   5,966     2         5,968   4,242     (6 )       4,236  
Total non-interest income   6,043     26,983     (167 )   32,859   4,259     22,326     (143 )   26,442  
Non-interest expense:
Intangible amortization expense 1,291 1,291 1,169 1,169
Change in fair value of acquisition earnout (1,209 ) (1,209 )
Other non-interest expense   37,849     19,986     60     57,895   34,958     15,931     (73 )   50,816  
Total non-interest expense   37,849     20,068     60     57,977   34,958     17,100     (73 )   51,985  
Income (loss) before tax 25,275 6,915 (1,668 ) 30,522 21,352 5,226 (1,549 ) 25,029
Income tax expense (benefit)   7,476     2,833     (857 )   9,452   6,630     1,981     (484 )   8,127  
Net income (loss)   $ 17,799     $ 4,082     $ (811 )   $ 21,070   $ 14,722     $ 3,245     $ (1,065 )   $ 16,902  
 

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES

The information set forth above contains certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are “tangible common equity,” “tangible book value per common share,” “total revenue,” “pre-tax, pre-provision net revenue,” and “efficiency ratio.” Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.

“Tangible common equity” is defined as shareholders’ equity reduced by intangible assets, including goodwill. We believe this measure is important to management and investors to better understand and assess changes from period to period in shareholders’ equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a business purchase combination, has the effect of increasing both equity and assets, while not increasing our tangible equity or tangible assets.

“Tangible book value per common share” is defined as book value, excluding the impact of intangible assets, including goodwill, divided by common shares outstanding. We believe this measure is important to many investors who are interested in changes from period to period in book value per share exclusive of changes in intangible assets.

“Total revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale and call of investment securities. We believe adjustments made to our operating revenue allow management and investors to better assess our operating revenue by removing the volatility that is associated with certain other items that are unrelated to our core business.

“Pre-tax, pre-provision net revenue” is defined as net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities. We believe this measure is important because it allows management and investors to better assess our performance in relation to our core operating revenue, excluding the volatility that is associated with provision for loan losses or other items that are unrelated to our core business.

“Efficiency ratio” is defined as non-interest expense, excluding acquisition related items and intangible amortization expense, where applicable, divided by our total revenue. We believe this measure, particularly at the Bank, allows management and investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

     
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
September 30, June 30, September 30,
(Dollars in thousands, except per share data)   2016   2016   2015
Tangible book value per common share:
Total shareholders' equity $ 343,139 $ 337,694 $ 320,540
Less: intangible assets   67,671     68,134     51,205
Tangible common equity   $ 275,468     $ 269,560     $ 269,335
Common shares outstanding   28,317,154     28,211,282     28,027,695
Tangible book value per common share $ 9.73 $ 9.56 $ 9.61
   
Three Months Ended Nine Months Ended
September 30,   June 30,   September 30, September 30,   September 30,
(Dollars in thousands)   2016   2016   2015 2016   2015
Pre-tax, pre-provision net revenue:
Net interest income $ 18,704 $ 18,219 $ 17,005 $ 55,300 $ 50,341
Total non-interest income 12,497 11,447 8,015 32,859 26,442
Less: net gain on the sale and call of investment securities   14     62       77     17  
Total revenue 31,187 29,604 25,020 88,082 76,766
Less: total non-interest expense   20,514     19,457     17,301   57,977     51,985  
Pre-tax, pre-provision net revenue   $ 10,673     $ 10,147     $ 7,719   $ 30,105     $ 24,781  
 
Efficiency ratio:
Total non-interest expense $ 20,514 $ 19,457 $ 17,301 $ 57,977 $ 51,985
Plus: change in fair value of acquisition earnout 1,209 1,209
Less: acquisition related items 1
Less: intangible amortization expense   463     438     390   1,291     1,169  
Total non-interest expense, as adjusted (numerator)   $ 21,260     $ 19,019     $ 16,911   $ 57,894     $ 50,816  
Total revenue (denominator)   $ 31,187     $ 29,604     $ 25,020   $ 88,082     $ 76,766  
Efficiency ratio 68.17 % 64.24 % 67.59 % 65.73 % 66.20 %
   
BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended Nine Months Ended
September 30,   June 30,   September 30, September 30,   September 30,
(Dollars in thousands)   2016   2016   2015   2016   2015
Bank pre-tax, pre-provision net revenue:
Net interest income $ 19,182 $ 18,705 $ 17,502 $ 56,741 $ 51,820
Total non-interest income 2,163 1,984 1,002 6,043 4,259
Less: net gain on the sale and call of investment securities   14     62         77     17  
Total revenue 21,331 20,627 18,504 62,707 56,062
Less: total non-interest expense   13,227     12,299     12,015     37,849     34,958  
Pre-tax, pre-provision net revenue   $ 8,104     $ 8,328     $ 6,489     $ 24,858     $ 21,104  
 
Bank efficiency ratio:
Total non-interest expense (numerator)   $ 13,227     $ 12,299     $ 12,015     $ 37,849     $ 34,958  
Total revenue (denominator)   $ 21,331     $ 20,627     $ 18,504     $ 62,707     $ 56,062  
Efficiency ratio 62.01 % 59.63 % 64.93 % 60.36 % 62.36 %

Contacts

MEDIA CONTACT
Jack Horner, 267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
or
INVESTOR RELATIONS CONTACT
TriState Capital Holdings, Inc.
Brian Fetterolf, 412-304-0451
investorrelations@tscbank.com

Contacts

MEDIA CONTACT
Jack Horner, 267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
or
INVESTOR RELATIONS CONTACT
TriState Capital Holdings, Inc.
Brian Fetterolf, 412-304-0451
investorrelations@tscbank.com