PITTSBURGH--(BUSINESS WIRE)--TriState Capital Holdings, Inc. (NASDAQ: TSC) reported record fourth quarter and full year financial results in 2016, with strong top- and bottom-line contributions by each of its growing commercial banking, private banking and investment management businesses.
Net income increased 27.4% to $28.6 million in 2016 from $22.5 million in 2015. Diluted earnings per share (EPS) increased 26.3% to $1.01 in 2016 from $0.80 in 2015. For the fourth quarter of 2016, the parent company of TriState Capital Bank and Chartwell Investment Partners reported net income of $7.6 million, or $0.27 per share, compared to $5.6 million, or $0.20, in the fourth quarter of 2015 and $8.5 million, or $0.30, in the third quarter of 2016.
“TriState Capital delivered double-digit EPS growth for the third consecutive year, driven primarily by record net interest income and non-interest income from strong contributions across all of our businesses, while maintaining superior asset quality and a very robust capital position,” Chief Executive Officer James F. Getz said. “Our focus is to continue growing our earnings in a meaningful manner, and by extension our book value. We expect ongoing expansion of what we believe is a premier investment management business in Chartwell, along with further organic growth in middle-market commercial banking and our highly differentiated national private banking franchise.”
FOURTH QUARTER AND FULL YEAR 2016 HIGHLIGHTS
- Revenue grew 24.5% for the quarter and 17.3% in 2016, compared to the same periods the year prior, driven by expansion of lending and increased investment management revenue
- Deposits grew 22.2% from one year prior and 6.5%, or 25.7% on an annualized basis, during the quarter
- Total loans grew 19.7% from one year prior and 7.1%, or 28.4% on an annualized basis, during the quarter
- Strong credit quality continued with non-performing assets (NPAs) declining to 0.56% of assets and adverse-rated credits declining to 1.25% of loans at December 31
- Non-interest income, including investment management fees, represented a record 38.3% of total revenue in 2016, growing 31.1% from the prior year
TriState Capital’s total revenue, net interest income and non-interest income all reached record quarterly levels in the three months ended December 31, 2016. Total revenue grew to $33.2 million in the fourth quarter of 2016, increasing 24.5% from $26.6 million in the year-ago quarter and 6.3% from $31.2 million in the linked quarter. For the 12 months of 2016, total revenue grew to $121.2 million, increasing 17.3% from $103.4 million the year prior.
TriState Capital’s diverse loan growth continues to support revenue expansion. Net interest income grew to $19.5 million in the fourth quarter of 2016, increasing 10.8% from $17.6 million in the fourth quarter of 2015 and 4.3% from $18.7 million in the linked quarter.
Fourth quarter 2016 non-interest income was $13.6 million, or 41.2% of total revenue, compared to $9.0 million in the year-ago period and $12.5 million in the linked quarter. TriState Capital’s non-interest income is largely comprised of Chartwell investment management fees, which were $10.2 million, or 30.8% of total revenue, in the fourth quarter of 2016, compared to $7.4 million in the year-ago quarter and $10.3 million in the linked quarter. Investment management fees reflected the contribution of The Killen Group (TKG) business acquired in April 2016 and strong performance of Chartwell’s investment strategies. Other non-interest income increased to $9.4 million in 2016, compared to $5.8 million in 2015, primarily reflecting the increased use of interest rate swaps by commercial borrowers.
Non-interest expenses were $20.8 million in the fourth quarter of 2016, compared to $18.1 million in the year-ago quarter and $20.5 million in the linked quarter. Non-interest expenses reflected ongoing operating costs for the business acquired from TKG, as well as an increase in TriState Capital Bank incentive compensation expense, given the success of the bank’s loan and deposit growth initiatives.
The efficiency ratio for the bank was 63.33% in the fourth quarter of 2016, compared to 62.01% in the linked quarter and 62.14% in the year-ago quarter. Year over year, the bank efficiency ratio declined 113 basis points to 61.17% in 2016.
Non-interest expenses also included non-recurring items. Third and fourth quarter 2016 non-interest expenses were reduced by adjustments in the fair value of previously accrued contingent consideration associated with the TKG transaction. For the fourth quarters of 2016 and 2015, the company incurred acquisition-related expenses. And, for the fourth quarter of 2016 the company recorded severance expense related to a previously announced small- and mid-cap growth investment team leadership change. Excluding non-recurring items, non-interest expenses were $22.6 million, or 2.38% of average assets on an annualized basis, in the fourth quarter of 2016, compared to $17.5 million, or 2.16%, in the prior-year quarter and $21.7 million, or 2.40%, in the linked quarter.
| (Dollars in thousands, except per share data) | Q4 2016 | Q3 2016 | Q4 2015 | FY 2016 | FY 2015 | ||||||||||||||||
| Total non-interest expense (GAAP) | $ | 20,817 | $ | 20,514 | $ | 18,058 | $ | 78,794 | $ | 70,043 | |||||||||||
| Non-recurring items: | |||||||||||||||||||||
| Change in fair value of previously accrued acquisition earn out | 2,478 | 1,209 | — | 3,687 | — | ||||||||||||||||
| Acquisition-related expense | (351 | ) | — | (601 | ) | (352 | ) | (601 | ) | ||||||||||||
| Severance expense | (300 | ) | — | — | (300 | ) | — | ||||||||||||||
| Non-interest expense excluding non-recurring items (non-GAAP) | $ | 22,644 | $ | 21,723 | $ | 17,457 | $ | 81,829 | $ | 69,442 | |||||||||||
| Net impact of non-recurring items on EPS | $ | 0.04 | $ | 0.03 | $ | (0.01 | ) | $ | 0.07 | $ | (0.01 | ) | |||||||||
BALANCE SHEET GROWTH
Loans totaled $3.40 billion at December 31, 2016, increasing 19.7% from December 31, 2015 and 7.1% from September, 2016. Private banking loans totaled $1.74 billion, growing 29.1% from one year prior and 9.4% during the fourth quarter. Commercial loans grew to $1.67 billion at December 31, 2016, increasing 11.3% from one year prior and 4.9% during the fourth quarter.
Deposits totaled $3.29 billion at December 31, 2016, increasing 22.2% from one year prior and 6.5% during the fourth quarter. Average deposits in the fourth quarter of 2016 grew by 46.5% for noninterest-bearing deposits and 18.3% for interest-bearing deposits, compared to the fourth quarter of 2015. These trends illustrate the ongoing success of TriState Capital’s efforts to grow stable, diversified 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 December 31, 2016, 89% of TriState Capital’s loan portfolio and 49% of its securities portfolio were floating-rate. In addition, 27% of deposits were fixed-rate certificates of deposit.
ASSET QUALITY
The bank’s solid asset quality metrics in the fourth 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 51.0% of total loans at December 31, 2016.
NPAs were $22.0 million at December 31, 2016, or 0.56% of total assets, compared to $18.4 million, or 0.56%, at December 31, 2015 and $25.0 million, or 0.67%, at September, 2016. Adverse-rated credits declined 21.7% from December 31, 2015 and 15.6% during the fourth quarter. Adverse-rated credits represented 1.25% of total loans at the end of the fourth quarter of 2016, 1.92% at December 31, 2015 and 1.59% at September 30.
TriState Capital took net charge-offs on loans totaling $50,000, or less than one basis point of average total loans, in 2016, compared to $2.3 million, or 0.09% of average total loans, in the prior year. Net charge offs in the fourth quarter of 2016 were $2.6 million, or 0.32% of average total loans, compared to net recoveries of $3.5 million, or 0.46%, in the linked quarter and net charge-offs of $1.6 million, or 0.23%, in the year-ago quarter.
Provision expense was $1.2 million for the fourth quarter of 2016 and $838,000 for the year, reflecting increases to specific reserves on non-performing loans (NPLs), offset by declining adverse-rated credits. The company recorded a credit to provision of $542,000 in the linked third quarter and provision expense $244,000 in the fourth quarter of 2015.
The company’s allowance for loan losses declined to 0.55% of total loans at December 31, 2016, from 0.64% at September 30 and 0.63% at December 31, 2015. This reflects the reduction in NPLs and the lower provision required for private banking loans.
INVESTMENT MANAGEMENT
Chartwell Investment Partners’ fee revenue was $10.2 million in the fourth quarter of 2016, compared to $7.4 million in the year-ago quarter and $10.3 million in the linked quarter. The boutique asset manager’s revenue reflected the contributions of the TKG business acquired in April 2016 and strong overall investment performance.
Chartwell’s net income grew to $2.9 million in the fourth quarter of 2016 and $6.9 million for calendar 2016. Excluding non-recurring items, Chartwell’s net income grew to $1.7 million, or 26% of consolidated earnings, in the fourth quarter of 2016, and increased to $5.1 million, or 19%, for the 12 months of 2016.
Chartwell’s total AUM were $8.1 billion at the end of the fourth quarter of 2016, compared to $10.8 billion at the end of the linked quarter and $8.0 billion at December 31, 2015. Period-end AUM reflects $245 million in new business, as well as $271 million of market appreciation, in the fourth quarter of 2016. Outflows were $3.3 billion in the quarter, primarily attributed to the previously disclosed conclusion of a sub-advisory relationship.
CAPITAL STRENGTH AND FLEXIBILITY
TriState Capital’s earnings in the quarter continued to support superior loan growth in the period, while the company maintained capital ratios that exceed the highest required regulatory benchmark levels. As of December 31, 2016, TriState Capital Holdings reported ratios of 12.66% for total risk-based capital, 11.49% for tier 1 risk-based capital, 11.49% for common equity tier 1 risk-based capital and 7.90% for tier 1 leverage.
At its regular January 2017 meeting, TriState Capital’s Board of Directors approved share repurchases of up to $5 million, in addition to buyback authorizations granted in 2016, of which $3.7 million remains available. Over the 12 months ended December 31, 2016, the company repurchased a total of 374,729 shares for approximately $5.1 million at an average cost of $13.68 per share. Also during 2016, $6.2 million of the authorization was utilized for an option cancellation program. Fully vested options for 1,174,500 shares of common stock, granted in 2007 and expiring in 2017 with a $10 exercise price, were canceled at an average spread of $5.28.
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 January 26 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/10098810 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 Holdings 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 call through February 2. 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 locations and entering the conference number 10098810.
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 has $3.8 billion in assets, as of December 31, 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 has $8.1 billion in assets under management, as of December 31, 2016, and serves institutional clients and TriState Capital’s financial intermediary network. 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.
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TRISTATE CAPITAL HOLDINGS, INC. SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) |
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As of and For the Three Months Ended |
As of and For the Years Ended |
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| (Dollars in thousands) | December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
| Period-end balance sheet data: | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 103,994 | $ | 120,736 | $ | 96,676 | $ | 103,994 | $ | 96,676 | |||||||||||||||
| Total investment securities | 238,473 | 243,343 | 225,411 | 238,473 | 225,411 | ||||||||||||||||||||
| Loans held-for-investment | 3,401,054 | 3,174,653 | 2,841,284 | 3,401,054 | 2,841,284 | ||||||||||||||||||||
| Allowance for loan losses | (18,762 | ) | (20,211 | ) | (17,974 | ) | (18,762 | ) | (17,974 | ) | |||||||||||||||
| Loans held-for-investment, net | 3,382,292 | 3,154,442 | 2,823,310 | 3,382,292 | 2,823,310 | ||||||||||||||||||||
| Goodwill and other intangibles, net | 67,209 | 67,671 | 50,816 | 67,209 | 50,816 | ||||||||||||||||||||
| Other assets | 138,489 | 129,326 | 105,958 | 138,489 | 105,958 | ||||||||||||||||||||
| Total assets | $ | 3,930,457 | $ | 3,715,518 | $ | 3,302,171 | $ | 3,930,457 | $ | 3,302,171 | |||||||||||||||
| Deposits | $ | 3,286,779 | $ | 3,087,230 | $ | 2,689,844 | $ | 3,286,779 | $ | 2,689,844 | |||||||||||||||
| Borrowings, net | 239,510 | 239,460 | 254,308 | 239,510 | 254,308 | ||||||||||||||||||||
| Other liabilities | 52,361 | 45,689 | 32,042 | 52,361 | 32,042 | ||||||||||||||||||||
| Total liabilities | 3,578,650 | 3,372,379 | 2,976,194 | 3,578,650 | 2,976,194 | ||||||||||||||||||||
| Total shareholders' equity | 351,807 | 343,139 | 325,977 | 351,807 | 325,977 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,930,457 | $ | 3,715,518 | $ | 3,302,171 | $ | 3,930,457 | $ | 3,302,171 | |||||||||||||||
| Income statement data: | |||||||||||||||||||||||||
| Interest income | $ | 26,232 | $ | 24,925 | $ | 21,923 | $ | 98,312 | $ | 83,596 | |||||||||||||||
| Interest expense | 6,719 | 6,221 | 4,312 | 23,499 | 15,643 | ||||||||||||||||||||
| Net interest income | 19,513 | 18,704 | 17,611 | 74,813 | 67,953 | ||||||||||||||||||||
| Provision (credit) for loan losses | 1,178 | (542 | ) | 244 | 838 | 13 | |||||||||||||||||||
| Net interest income after provision for loan losses | 18,335 | 19,246 | 17,367 | 73,975 | 67,940 | ||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||
| Investment management fees | 10,221 | 10,333 | 7,429 | 37,035 | 29,618 | ||||||||||||||||||||
| Net gain on sale and call of investment securities | — | 14 | 16 | 77 | 33 | ||||||||||||||||||||
| Other non-interest income | 3,428 | 2,150 | 1,597 | 9,396 | 5,832 | ||||||||||||||||||||
| Total non-interest income | 13,649 | 12,497 | 9,042 | 46,508 | 35,483 | ||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||
| Intangible amortization expense | 462 | 463 | 389 | 1,753 | 1,558 | ||||||||||||||||||||
| Change in the fair value of acquisition earn out | (2,478 | ) | (1,209 | ) | — | (3,687 | ) | — | |||||||||||||||||
| Other non-interest expense | 22,833 | 21,260 | 17,669 | 80,728 | 68,485 | ||||||||||||||||||||
| Total non-interest expense | 20,817 | 20,514 | 18,058 | 78,794 | 70,043 | ||||||||||||||||||||
| Income before tax | 11,167 | 11,229 | 8,351 | 41,689 | 33,380 | ||||||||||||||||||||
| Income tax expense | 3,596 | 2,775 | 2,765 | 13,048 | 10,892 | ||||||||||||||||||||
| Net income | $ | 7,571 | $ | 8,454 | $ | 5,586 | $ | 28,641 | $ | 22,488 | |||||||||||||||
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TRISTATE CAPITAL HOLDINGS, INC. SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) |
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As of and For the Three Months Ended |
As of and For the Years Ended |
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| (Dollars in thousands, except per share data) | December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
| Per share and share data: | |||||||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||
| Basic | $ | 0.27 | $ | 0.31 | $ | 0.20 | $ | 1.04 | $ | 0.81 | |||||||||||||||
| Diluted | $ | 0.27 | $ | 0.30 | $ | 0.20 | $ | 1.01 | $ | 0.80 | |||||||||||||||
| Book value per common share | $ | 12.38 | $ | 12.12 | $ | 11.62 | $ | 12.38 | $ | 11.62 | |||||||||||||||
| Tangible book value per common share (1) | $ | 10.02 | $ | 9.73 | $ | 9.81 | $ | 10.02 | $ | 9.81 | |||||||||||||||
| Common shares outstanding, at end of period | 28,415,654 | 28,317,154 | 28,056,195 | 28,415,654 | 28,056,195 | ||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||
| Basic | 27,614,296 | 27,514,724 | 27,750,118 | 27,593,725 | 27,771,345 | ||||||||||||||||||||
| Diluted | 28,349,644 | 28,307,632 | 28,324,251 | 28,359,152 | 28,237,453 | ||||||||||||||||||||
| Performance ratios: | |||||||||||||||||||||||||
| Return on average assets (2) | 0.79 | % | 0.93 | % | 0.69 | % | 0.81 | % | 0.74 | % | |||||||||||||||
| Return on average equity (2) | 8.67 | % | 9.88 | % | 6.84 | % | 8.48 | % | 7.13 | % | |||||||||||||||
| Net interest margin (2) (3) | 2.16 | % | 2.18 | % | 2.28 | % | 2.23 | % | 2.36 | % | |||||||||||||||
| Bank efficiency ratio (1) | 63.33 | % | 62.01 | % | 62.14 | % | 61.17 | % | 62.30 | % | |||||||||||||||
| Efficiency ratio (1) | 67.79 | % | 68.17 | % | 64.08 | % | 66.29 | % | 65.65 | % | |||||||||||||||
| Non-interest expense to average assets (2) | 2.19 | % | 2.27 | % | 2.23 | % | 2.23 | % | 2.32 | % | |||||||||||||||
| Asset quality: | |||||||||||||||||||||||||
| Non-performing loans | $ | 17,790 | $ | 20,717 | $ | 16,660 | $ | 17,790 | $ | 16,660 | |||||||||||||||
| Non-performing assets | $ | 21,968 | $ | 24,985 | $ | 18,390 | $ | 21,968 | $ | 18,390 | |||||||||||||||
| Other real estate owned | $ | 4,178 | $ | 4,268 | $ | 1,730 | $ | 4,178 | $ | 1,730 | |||||||||||||||
| Non-performing assets to total assets | 0.56 | % | 0.67 | % | 0.56 | % | 0.56 | % | 0.56 | % | |||||||||||||||
| Non-performing loans to total loans | 0.52 | % | 0.65 | % | 0.59 | % | 0.52 | % | 0.59 | % | |||||||||||||||
| Allowance for loan losses to loans | 0.55 | % | 0.64 | % | 0.63 | % | 0.55 | % | 0.63 | % | |||||||||||||||
| Allowance for loan losses to non-performing loans | 105.46 | % | 97.56 | % | 107.89 | % | 105.46 | % | 107.89 | % | |||||||||||||||
| Net charge-offs (recoveries) | $ | 2,627 | $ | (3,538 | ) | $ | 1,621 | $ | 50 | $ | 2,312 | ||||||||||||||
| Net charge-offs (recoveries) to average total loans (2) | 0.32 | % | (0.46 | )% | 0.23 | % | — | % | 0.09 | % | |||||||||||||||
| Revenue: | |||||||||||||||||||||||||
| Total revenue (1) | $ | 33,162 | $ | 31,187 | $ | 26,637 | $ | 121,244 | $ | 103,403 | |||||||||||||||
| Pre-tax, pre-provision net revenue (1) | $ | 12,345 | $ | 10,673 | $ | 8,579 | $ | 42,450 | $ | 33,360 | |||||||||||||||
| Capital ratios: | |||||||||||||||||||||||||
| Tier 1 leverage ratio | 7.90 | % | 8.09 | % | 9.05 | % | 7.90 | % | 9.05 | % | |||||||||||||||
| Common equity tier 1 risk-based capital ratio | 11.49 | % | 11.73 | % | 12.20 | % | 11.49 | % | 12.20 | % | |||||||||||||||
| Tier 1 risk-based capital ratio | 11.49 | % | 11.73 | % | 12.20 | % | 11.49 | % | 12.20 | % | |||||||||||||||
| Total risk-based capital ratio | 12.66 | % | 13.05 | % | 13.88 | % | 12.66 | % | 13.88 | % | |||||||||||||||
| Assets under management | $ | 8,055,000 | $ | 10,800,000 | $ | 8,005,000 | $ | 8,055,000 | $ | 8,005,000 | |||||||||||||||
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(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. | |
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(2) |
Ratios are annualized. | |
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(3) |
Net interest margin is calculated on a fully taxable equivalent basis. | |
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TRISTATE CAPITAL HOLDINGS, INC. AVERAGES AND YIELDS (UNAUDITED) |
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| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) |
Average Balance |
Interest
Income (1)/ |
Average Yield/ Rate |
Average Balance |
Interest
Income (1)/ |
Average Yield/ Rate |
Average Balance |
Interest
Income (1)/ |
Average Yield/ Rate |
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| Assets | ||||||||||||||||||||||||||||||||||||
| Interest-earning deposits | $ | 118,807 | $ | 177 | 0.59 | % | $ | 114,245 | $ | 150 | 0.52 | % | $ | 94,191 | $ | 89 | 0.37 | % | ||||||||||||||||||
| Federal funds sold | 5,922 | 6 | 0.40 | % | 6,445 | 6 | 0.37 | % | 6,240 | 2 | 0.13 | % | ||||||||||||||||||||||||
| Investment securities available-for-sale | 177,712 | 847 | 1.90 | % | 182,354 | 828 | 1.81 | % | 170,229 | 651 | 1.52 | % | ||||||||||||||||||||||||
| Investment securities held-to-maturity | 52,464 | 550 | 4.17 | % | 48,495 | 485 | 3.98 | % | 46,573 | 462 | 3.94 | % | ||||||||||||||||||||||||
| Investment securities trading | — | — | — | % | — | — | — | % | 162 | 1 | 2.45 | % | ||||||||||||||||||||||||
| FHLB stock | 8,518 | 150 | 7.01 | % | 12,347 | 144 | 4.64 | % | 7,910 | 77 | 3.86 | % | ||||||||||||||||||||||||
| Total loans | 3,249,874 | 24,563 | 3.01 | % | 3,061,427 | 23,369 | 3.04 | % | 2,747,727 | 20,711 | 2.99 | % | ||||||||||||||||||||||||
| Total interest-earning assets | 3,613,297 | 26,293 | 2.89 | % | 3,425,313 | 24,982 | 2.90 | % | 3,073,032 | 21,993 | 2.84 | % | ||||||||||||||||||||||||
| Other assets | 176,395 | 171,986 | 138,189 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 3,789,692 | $ | 3,597,299 | $ | 3,211,221 | ||||||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 204,555 | $ | 272 | 0.53 | % | $ | 190,270 | $ | 234 | 0.49 | % | $ | 118,029 | $ | 121 | 0.41 | % | ||||||||||||||||||
| Money market deposit accounts | 1,860,468 | 3,529 | 0.75 | % | 1,688,250 | 3,017 | 0.71 | % | 1,437,963 | 1,608 | 0.44 | % | ||||||||||||||||||||||||
| Certificates of deposit | 888,721 | 2,078 | 0.93 | % | 863,872 | 1,936 | 0.89 | % | 941,831 | 1,817 | 0.77 | % | ||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||
| FHLB borrowings | 185,000 | 286 | 0.62 | % | 273,804 | 480 | 0.70 | % | 171,195 | 212 | 0.49 | % | ||||||||||||||||||||||||
| Subordinated notes payable, net | 34,477 | 554 | 6.39 | % | 34,427 | 554 | 6.40 | % | 34,275 | 554 | 6.41 | % | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 3,173,221 | 6,719 | 0.84 | % | 3,050,623 | 6,221 | 0.81 | % | 2,703,293 | 4,312 | 0.63 | % | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 220,637 | 161,723 | 150,584 | |||||||||||||||||||||||||||||||||
| Other liabilities | 48,372 | 44,565 | 33,559 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 347,462 | 340,388 | 323,785 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,789,692 | $ | 3,597,299 | $ | 3,211,221 | ||||||||||||||||||||||||||||||
| Net interest income (1) | $ | 19,574 | $ | 18,761 | $ | 17,681 | ||||||||||||||||||||||||||||||
| Net interest spread | 2.05 | % | 2.09 | % | 2.21 | % | ||||||||||||||||||||||||||||||
|
Net interest margin (1) |
2.16 | % | 2.18 | % | 2.28 | % | ||||||||||||||||||||||||||||||
|
(1) |
Net interest income and net interest margin are calculated on a fully taxable equivalent basis. | |
|
TRISTATE CAPITAL HOLDINGS, INC. |
||||||||||||||||||||||
|
AVERAGES AND YIELDS (UNAUDITED) |
||||||||||||||||||||||
| Years Ended | ||||||||||||||||||||||
| December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
| Interest | Average | Interest | Average | |||||||||||||||||||
| Average |
Income (1)/ |
Yield/ | Average |
Income (1)/ |
Yield/ | |||||||||||||||||
|
(Dollars in thousands) |
Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
| Assets | ||||||||||||||||||||||
| Interest-earning deposits | $ | 110,455 | $ | 595 | 0.54 | % | $ | 102,240 | $ | 363 | 0.36 | % | ||||||||||
| Federal funds sold | 6,116 | 22 | 0.36 | % | 6,168 | 6 | 0.10 | % | ||||||||||||||
| Investment securities available-for-sale | 180,460 | 3,234 | 1.79 | % | 164,701 | 2,201 | 1.34 | % | ||||||||||||||
| Investment securities held-to-maturity | 48,357 | 1,958 | 4.05 | % | 42,117 | 1,651 | 3.92 | % | ||||||||||||||
| Investment securities trading | — | — | — | % | 41 | 1 | 2.44 | % | ||||||||||||||
| FHLB stock | 10,363 | 494 | 4.77 | % | 5,796 | 389 | 6.71 | % | ||||||||||||||
| Total loans | 3,014,645 | 92,273 | 3.06 | % | 2,570,200 | 79,245 | 3.08 | % | ||||||||||||||
| Total interest-earning assets | 3,370,396 | 98,576 | 2.92 | % | 2,891,263 | 83,856 | 2.90 | % | ||||||||||||||
| Other assets | 161,054 | 132,506 | ||||||||||||||||||||
| Total assets | $ | 3,531,450 | $ | 3,023,769 | ||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 171,431 | $ | 813 | 0.47 | % | $ | 107,292 | $ | 439 | 0.41 | % | ||||||||||
| Money market deposit accounts | 1,676,455 | 11,376 | 0.68 | % | 1,367,584 | 5,687 | 0.42 | % | ||||||||||||||
| Certificates of deposit | 874,615 | 7,618 | 0.87 | % | 898,336 | 6,762 | 0.75 | % | ||||||||||||||
| Borrowings: | ||||||||||||||||||||||
| FHLB borrowings | 228,934 | 1,477 | 0.65 | % | 120,425 | 540 | 0.45 | % | ||||||||||||||
| Subordinated notes payable, net | 34,402 | 2,215 | 6.44 | % | 34,199 | 2,215 | 6.48 | % | ||||||||||||||
| Total interest-bearing liabilities | 2,985,837 | 23,499 | 0.79 | % | 2,527,836 | 15,643 | 0.62 | % | ||||||||||||||
| Noninterest-bearing deposits | 170,573 | 149,567 | ||||||||||||||||||||
| Other liabilities | 37,441 | 30,917 | ||||||||||||||||||||
| Shareholders' equity | 337,599 | 315,449 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,531,450 | $ | 3,023,769 | ||||||||||||||||||
| Net interest income (1) | $ | 75,077 | $ | 68,213 | ||||||||||||||||||
| Net interest spread | 2.13 | % | 2.28 | % | ||||||||||||||||||
| Net interest margin (1) | 2.23 | % | 2.36 | % | ||||||||||||||||||
|
(1) |
Net interest income and net interest margin are calculated on a fully taxable equivalent basis. |
|
| TRISTATE CAPITAL HOLDINGS, INC. | |||||||||||||||||||||
| LOAN COMPOSITION (UNAUDITED) | |||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||||||||||||
| Loan | Percent of | Loan | Percent of | Loan | Percent of | ||||||||||||||||
|
(Dollars in thousands) |
Balance | Loans | Balance | Loans | Balance | Loans | |||||||||||||||
| Private banking loans | $ | 1,735,928 | 51.0 | % | $ | 1,587,019 | 50.0 | % | $ | 1,344,864 | 47.3 | % | |||||||||
| Middle-market banking loans: | |||||||||||||||||||||
| Commercial and industrial | 587,423 | 17.3 | % | 565,702 | 17.8 | % | 634,232 | 22.4 | % | ||||||||||||
| Commercial real estate | 1,077,703 | 31.7 | % | 1,021,932 | 32.2 | % | 862,188 | 30.3 | % | ||||||||||||
| Total middle-market banking loans | 1,665,126 | 49.0 | % | 1,587,634 | 50.0 | % | 1,496,420 | 52.7 | % | ||||||||||||
| Loans held-for-investment | $ | 3,401,054 | 100.0 | % | $ | 3,174,653 | 100.0 | % | $ | 2,841,284 | 100.0 | % | |||||||||
| TRISTATE CAPITAL HOLDINGS, INC. | ||||||||||||||||||||||||||||||||
| STATEMENTS OF INCOME BY REPORTABLE SEGMENT (UNAUDITED) | ||||||||||||||||||||||||||||||||
| Three Months Ended December 31, 2016 | Year Ended December 31, 2016 | |||||||||||||||||||||||||||||||
| Investment | Parent | Investment | Parent | |||||||||||||||||||||||||||||
|
(Dollars in thousands) |
Bank | Management | and Other | Consolidated | Bank | Management | and Other | Consolidated | ||||||||||||||||||||||||
| Income statement data: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 26,156 | $ | — | $ | 76 | $ | 26,232 | $ | 98,027 | $ | — | $ | 285 | $ | 98,312 | ||||||||||||||||
| Interest expense | 6,170 | — | 549 | 6,719 | 21,300 | — | 2,199 | 23,499 | ||||||||||||||||||||||||
| Net interest income (loss) | 19,986 | — | (473 | ) | 19,513 | 76,727 | — | (1,914 | ) | 74,813 | ||||||||||||||||||||||
| Provision for loan losses | 1,178 | — | — | 1,178 | 838 | — | — | 838 | ||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 18,808 | — | (473 | ) | 18,335 | 75,889 | — | (1,914 | ) | 73,975 | ||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||||||||
| Investment management fees | — | 10,277 | (56 | ) | 10,221 | — | 37,258 | (223 | ) | 37,035 | ||||||||||||||||||||||
| Net gain on the sale and call of investment securities | — | — | — | — | 77 | — | — | 77 | ||||||||||||||||||||||||
| Other non-interest income | 3,427 | 1 | — | 3,428 | 9,393 | 3 | — | 9,396 | ||||||||||||||||||||||||
| Total non-interest income | 3,427 | 10,278 | (56 | ) | 13,649 | 9,470 | 37,261 | (223 | ) | 46,508 | ||||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||||||||||||
| Intangible amortization expense | — | 462 | — | 462 | — | 1,753 | — | 1,753 | ||||||||||||||||||||||||
| Change in the fair value of acquisition earn out | — | (2,478 | ) | — | (2,478 | ) | — | (3,687 | ) | — | (3,687 | ) | ||||||||||||||||||||
| Other non-interest expense | 14,827 | 7,919 | 87 | 22,833 | 52,676 | 27,905 | 147 | 80,728 | ||||||||||||||||||||||||
| Total non-interest expense | 14,827 | 5,903 | 87 | 20,817 | 52,676 | 25,971 | 147 | 78,794 | ||||||||||||||||||||||||
| Income (loss) before tax | 7,408 | 4,375 | (616 | ) | 11,167 | 32,683 | 11,290 | (2,284 | ) | 41,689 | ||||||||||||||||||||||
| Income tax expense (benefit) | 2,092 | 1,524 | (20 | ) | 3,596 | 9,568 | 4,357 | (877 | ) | 13,048 | ||||||||||||||||||||||
| Net income (loss) | $ | 5,316 | $ | 2,851 | $ | (596 | ) | $ | 7,571 | $ | 23,115 | $ | 6,933 | $ | (1,407 | ) | $ | 28,641 | ||||||||||||||
| Three Months Ended December 31, 2015 | Year Ended December 31, 2015 | ||||||||||||||||||||||||||||||
| Investment | Parent | Investment | Parent | ||||||||||||||||||||||||||||
|
(Dollars in thousands) |
Bank | Management | and Other | Consolidated | Bank | Management | and Other | Consolidated | |||||||||||||||||||||||
| Income statement data: | |||||||||||||||||||||||||||||||
| Interest income | $ | 21,837 | $ | — | $ | 86 | $ | 21,923 | $ | 83,347 | $ | — | $ | 249 | $ | 83,596 | |||||||||||||||
| Interest expense | 3,759 | — | 553 | 4,312 | 13,448 | — | 2,195 | 15,643 | |||||||||||||||||||||||
| Net interest income (loss) | 18,078 | — | (467 | ) | 17,611 | 69,899 | — | (1,946 | ) | 67,953 | |||||||||||||||||||||
| Provision for loan losses | 244 | — | — | 244 | 13 | — | — | 13 | |||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 17,834 | — | (467 | ) | 17,367 | 69,886 | — | (1,946 | ) | 67,940 | |||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||||
| Investment management fees | — | 7,482 | (53 | ) | 7,429 | — | 29,814 | (196 | ) | 29,618 | |||||||||||||||||||||
| Net gain on the sale and call of investment securities | 16 | — | — | 16 | 33 | — | — | 33 | |||||||||||||||||||||||
| Other non-interest income | 1,599 | (2 | ) | — | 1,597 | 5,840 | (8 | ) | — | 5,832 | |||||||||||||||||||||
| Total non-interest income | 1,615 | 7,480 | (53 | ) | 9,042 | 5,873 | 29,806 | (196 | ) | 35,483 | |||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||||
| Intangible amortization expense | — | 389 | — | 389 | — | 1,558 | — | 1,558 | |||||||||||||||||||||||
| Other non-interest expense | 12,228 | 5,471 | (30 | ) | 17,669 | 47,186 | 21,403 | (104 | ) | 68,485 | |||||||||||||||||||||
| Total non-interest expense | 12,228 | 5,860 | (30 | ) | 18,058 | 47,186 | 22,961 | (104 | ) | 70,043 | |||||||||||||||||||||
| Income (loss) before tax | 7,221 | 1,620 | (490 | ) | 8,351 | 28,573 | 6,845 | (2,038 | ) | 33,380 | |||||||||||||||||||||
| Income tax expense (benefit) | 1,717 | 497 | 551 | 2,765 | 8,347 | 2,477 | 68 | 10,892 | |||||||||||||||||||||||
| Net income (loss) | $ | 5,504 | $ | 1,123 | $ | (1,041 | ) | $ | 5,586 | $ | 20,226 | $ | 4,368 | $ | (2,106 | ) | $ | 22,488 | |||||||||||||
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) | |||||||||||
| December 31, | September 30, | December 31, | |||||||||
| (Dollars in thousands, except per share data) | 2016 | 2016 | 2015 | ||||||||
| Tangible book value per common share: | |||||||||||
| Total shareholders' equity | $ | 351,807 | $ | 343,139 | $ | 325,977 | |||||
| Less: intangible assets | 67,209 | 67,671 | 50,816 | ||||||||
| Tangible common equity | $ | 284,598 | $ | 275,468 | $ | 275,161 | |||||
| Common shares outstanding | 28,415,654 | 28,317,154 | 28,056,195 | ||||||||
| Tangible book value per common share | $ | 10.02 | $ | 9.73 | $ | 9.81 | |||||
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Pre-tax, pre-provision net revenue: | ||||||||||||||||||||
| Net interest income | $ | 19,513 | $ | 18,704 | $ | 17,611 | $ | 74,813 | $ | 67,953 | ||||||||||
| Total non-interest income | 13,649 | 12,497 | 9,042 | 46,508 | 35,483 | |||||||||||||||
| Less: net gain on the sale and call of investment securities | — | 14 | 16 | 77 | 33 | |||||||||||||||
| Total revenue | 33,162 | 31,187 | 26,637 | 121,244 | 103,403 | |||||||||||||||
| Less: total non-interest expense | 20,817 | 20,514 | 18,058 | 78,794 | 70,043 | |||||||||||||||
| Pre-tax, pre-provision net revenue | $ | 12,345 | $ | 10,673 | $ | 8,579 | $ | 42,450 | $ | 33,360 | ||||||||||
| Efficiency ratio: | ||||||||||||||||||||
| Total non-interest expense | $ | 20,817 | $ | 20,514 | $ | 18,058 | $ | 78,794 | $ | 70,043 | ||||||||||
| Plus: change in fair value of acquisition earn out | 2,478 | 1,209 | — | 3,687 | — | |||||||||||||||
| Less: acquisition related items | 351 | — | 601 | 352 | 601 | |||||||||||||||
| Less: intangible amortization expense | 462 | 463 | 389 | 1,753 | 1,558 | |||||||||||||||
| Total non-interest expense, as adjusted (numerator) | $ | 22,482 | $ | 21,260 | $ | 17,068 | $ | 80,376 | $ | 67,884 | ||||||||||
| Total revenue (denominator) | $ | 33,162 | $ | 31,187 | $ | 26,637 | $ | 121,244 | $ | 103,403 | ||||||||||
| Efficiency ratio | 67.79 | % | 68.17 | % | 64.08 | % | 66.29 | % | 65.65 | % | ||||||||||
| BANK SEGMENT | ||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Bank pre-tax, pre-provision net revenue: | ||||||||||||||||||||
| Net interest income | $ | 19,986 | $ | 19,182 | $ | 18,078 | $ | 76,727 | $ | 69,899 | ||||||||||
| Total non-interest income | 3,427 | 2,163 | 1,615 | 9,470 | 5,873 | |||||||||||||||
| Less: net gain on the sale and call of investment securities | — | 14 | 16 | 77 | 33 | |||||||||||||||
| Total revenue | 23,413 | 21,331 | 19,677 | 86,120 | 75,739 | |||||||||||||||
| Less: total non-interest expense | 14,827 | 13,227 | 12,228 | 52,676 | 47,186 | |||||||||||||||
| Pre-tax, pre-provision net revenue | $ | 8,586 | $ | 8,104 | $ | 7,449 | $ | 33,444 | $ | 28,553 | ||||||||||
| Bank efficiency ratio: | ||||||||||||||||||||
| Total non-interest expense (numerator) | $ | 14,827 | $ | 13,227 | $ | 12,228 | $ | 52,676 | $ | 47,186 | ||||||||||
| Total revenue (denominator) | $ | 23,413 | $ | 21,331 | $ | 19,677 | $ | 86,120 | $ | 75,739 | ||||||||||
| Efficiency ratio | 63.33 | % | 62.01 | % | 62.14 | % | 61.17 | % | 62.30 | % | ||||||||||
