TriState Capital Reports Fourth Quarter and Full Year 2017 Financial Results

Fourth quarter 2017 EPS grew 55.6%, or 47.8% on a core operating basis, compared to the fourth quarter of 2016

Full year 2017 EPS grew 30.7%, or 31.9% on a core operating basis, compared to 2016

PITTSBURGH--()--TriState Capital Holdings, Inc. (NASDAQ: TSC) reported strong double-digit growth in fourth quarter and full year 2017 earnings, with expansion of its commercial banking, private banking and investment management businesses generating record levels of revenue, loans and deposits.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported net income of $38.0 million, or $1.32 per diluted share, for 2017 and $28.6 million, or $1.01, for 2016. The company reported net income of $12.0 million, or $0.42 per share, for the fourth quarter of 2017, $7.6 million, or $0.27, for the year-ago quarter and $10.0 million, or $0.35, for the linked third quarter of 2017. Fourth quarter and full year 2017 reported earnings per share (EPS) included a one-time benefit of $0.08 from recent federal tax legislation, while fourth quarter and full year 2016 EPS included net benefits of $0.04 and $0.07, respectively, from non-recurring items.

The company grew core operating EPS to $1.24 in 2017, which is an increase of 31.9% from $0.94 in 2016. Fourth quarter 2017 core operating EPS was $0.34, increasing 47.8% from $0.23 in the year ago quarter.

TriState Capital’s financial results continue to demonstrate the earnings power of our diversified financial services company,” Chief Executive Officer James F. Getz said. “This marks the fourth consecutive year, and the twelfth consecutive quarter, that TriState Capital achieved double-digit EPS growth, driven by our rapidly expanding customer base, exceptional credit quality and record levels of revenue, deposits and loans, which surpassed the $4 billion milestone for the first time. TriState Capital is by every measure a growth company, and we look forward to continuing the expansion of our middle-market commercial banking business, our national private banking franchise and our premier investment management business in 2018.”

FOURTH QUARTER 2017 HIGHLIGHTS

  • Net interest income grew to a record $24.8 million, increasing 27.1% from the year-ago period and 5.1% from the linked quarter
  • Pre-tax income grew to a record $12.9 million, increasing 15.4% from the year-ago period and 5.5% from the linked quarter
  • Loans grew to a record $4.18 billion at period end, increasing 23.0% from one year prior and 6.5% during the quarter
  • Chartwell assets under management grew to $8.3 billion at period end, increasing 3.2% from one year prior and 1.4% during the quarter
  • Superior credit quality metrics included non-performing assets declining to 0.14% of assets, non-performing loans declining to 0.08% of loans and adverse-rated credits declining to 0.71% of loans at period end

TriState Capital’s record total revenue of $36.9 million in the fourth quarter of 2017 reflects growth of 11.2% from $33.2 million in the fourth quarter of 2016 and 4.5% from $35.3 million in the linked third quarter of 2017.

Net interest income (NII) of $24.8 million in the fourth quarter of 2017 reflected continued double-digit rates of loan growth, with NII increasing 27.1% from $19.5 million in the year-ago period and 5.1% from $23.6 million in the linked quarter.

Fourth quarter 2017 non-interest income totaled $12.1 million, compared to $13.6 million in the year-ago period and $11.7 million in the linked quarter. Non-interest income represented 32.8% of total revenue in the quarter ended December 31, 2017.

Chartwell investment management fee income was $9.4 million, or 25.5% of total revenue, in the fourth quarter of 2017, compared to $10.2 million in the same period last year and $9.2 million in the third quarter of 2017. Other non-interest income was $2.7 million in the fourth quarter of 2017, compared to $3.4 million in the year-ago period and $2.5 million in the linked quarter, primarily reflecting borrower-facing interest rate swap activity.

Total non-interest expenses were $25.7 million, or an annualized 2.24% of average assets, in the fourth quarter of 2017, including increased compensation costs tied to the company’s performance incentive program. Fourth quarter 2016 non-interest expense of $20.8 million was reduced by non-recurring adjustments in the fair value of previously accrued contingent consideration associated with that year’s acquisition of The Killen Group. Excluding non-recurring adjustments, fourth quarter 2016 non-interest expense, annualized, represented 2.38% of average assets. Third quarter 2017 non-interest expense totaled $22.8 million, or an annualized 2.09% of average assets.

The fourth quarter 2017 efficiency ratio for TriState Capital Bank was 61.42%, compared to 63.33% in the year-ago quarter and 54.81% in the linked quarter. TriState Capital’s full-year bank efficiency ratio improved to 57.39% in 2017, declining 378 basis points from 61.17% in 2016, as moderating expense growth resulted from the benefits of the company’s scale and prior investments in its distribution capabilities, operations and infrastructure.

Income tax expense for the fourth quarter and 12 months of 2017 reflected a $2.4 million, or $0.08 per share, one-time benefit from recent federal tax legislation. The adjustment was related to the acceleration of an incentive compensation deduction for tax purposes and favorable depreciation treatment associated with renewable energy credits, lowering the company’s 2017 effective tax rate to 20.0%. TriState Capital expects its 2018 effective tax rate to be approximately 21%.

         
(Dollars in thousands, except per share data)   Q4 2017   Q3 2017   Q4 2016   FY 2017   FY 2016
Income before tax (GAAP) $ 12,885 $ 12,216 $ 11,167 $ 47,470 $ 41,689
Non-recurring, non-interest expense items:
Change in fair value of previously accrued acquisition earn out

(2,478

)

(3,687 )
Acquisition-related expense 351 352
Severance expense             300           300  
Income before tax, excluding non-recurring items (non-GAAP) $ 12,885 $ 12,216 $ 9,340 $ 47,470 $ 38,654
Adjustment for deferred taxes resulting in tax expense reduction   $ 2,351   $   $     $ 2,351   $  
Net impact of non-recurring items and tax adjustment on EPS $ 0.08 $ $ 0.04 $ 0.08 $ 0.07
 

BALANCE SHEET GROWTH

Total loans at year-end surpassed $4 billion for the first time in TriState Capital’s history, driven by strong production across all categories of lending. The company reported total loans of $4.18 billion at December 31, 2017, an increase of 23.0% from December 31, 2016 and 6.5% from September 30, 2017. Private banking loans of $2.27 billion at December 31, 2017 grew 30.5% year-over-year and 10.2% from the linked quarter. Commercial loans of $1.92 billion at December 31, 2017 reflected growth of 15.2% compared to one year prior and 2.3% compared to September 30, 2017.

Deposits totaled $3.99 billion at December 31, 2017, an increase of 21.3% from the prior year-end and 5.8% from September 30, 2017. Fourth quarter 2017 average noninterest-bearing deposits grew 2.0% from the year ago period and 9.6% from the linked quarter. These growing sources of funding reflect the success of TriState Capital’s national deposit sales team and enhanced treasury management offerings.

TriState Capital continues to manage an asset-sensitive balance sheet. At December 31, 2017, 91% of the company’s loan portfolio was floating rate and 25% of deposits were fixed-rate certificates of deposit.

ASSET QUALITY

TriState Capital’s strong asset quality metrics continued to improve in the fourth quarter of 2017, reflective of the company’s disciplined credit culture and continuing growth of its private banking non-purpose margin loans backed by marketable securities. Private banking loans comprised 54.1% of total loans at December 31, 2017.

Non-performing assets (NPAs) totaled $6.8 million at December 31, 2017, declining 69.2% from $22.0 million at December 31, 2016 and 35.7% from $10.5 million at September 30, 2017. NPAs made up 0.14% of total assets at year-end, declining by 42 basis points during 2017 and 9 basis points during the fourth quarter.

Non-performing loans (NPLs) totaled $3.2 million at December 31, 2017, declining 82.1% from $17.8 million at December 31, 2016 and 54.1% from $6.9 million at September 30, 2017. NPLs made up 0.08% of total loans at year-end, declining by 44 basis points during 2017 and 10 basis points during the fourth quarter.

Adverse-rated credits declined 29.9% from December 31, 2016, and 20.0% during the fourth quarter. Adverse-rated credits represented 0.71% of total loans at the end of the fourth quarter of 2017, 1.25% at December 31, 2016 and 0.95% at September 30, 2017.

The company recorded net recoveries of $103,000 in the fourth quarter of 2017, compared to net charge-offs of $2.6 million, or 0.32% of average total loans, in the year-ago quarter and $272,000, or 0.03% in the linked quarter.

TriState Capital recorded a credit to provision of $1.7 million for the fourth quarter of 2017, reflecting net recoveries and declining non-performing loans and adverse rated credits. Provision expense was $1.2 million in the fourth quarter of 2016 and $283,000 in the third quarter of 2017.

The company’s allowance for loan losses (ALL) continued to reflect declining NPLs and lower levels of provision required by the low risk profile of the growing proportion of private banking loans in the bank’s portfolio. ALL represented 0.34% of total loans at December 31, 2017, 0.41% at September 30, 2017 and 0.55% at December 31, 2016.

INVESTMENT MANAGEMENT

For the fourth quarter of 2017, Chartwell Investment Partners’ fee revenue totaled $9.4 million compared to $10.2 million in the year ago period and $9.2 million in the linked quarter.

Chartwell grew total assets under management to $8.3 billion at December 31, 2017, increasing 3.2% from $8.2 billion one year prior and 1.4% during the fourth quarter from $8.1 billion. The investment manager reported new business and new flows from existing accounts of $317 million and market appreciation of $197 million, which more than offset outflows of $400 million in the fourth quarter of 2017. Chartwell’s weighted average fee rate was 0.45% at December 31, 2017.

CAPITAL STRENGTH AND FLEXIBILITY

TriState Capital’s earnings in the quarter continued to support superior growth in the period, while the company maintained capital ratios exceeding the highest required regulatory benchmark levels. As of December 31, 2017, TriState Capital Holdings reported ratios of 11.72% for total risk-based capital, 11.14% for tier 1 risk-based capital, 11.14% for common equity tier 1 risk-based capital and 7.25% for tier 1 leverage.

During 2017, the company repurchased 376,641 shares of TriState Capital Holdings’ common stock for approximately $8.7 million at an average cost of $23.03 per share, fully utilizing repurchase authorizations granted by its Board of Directors. Since the Board first authorized share buybacks in October 2014, the company repurchased a total of 1,751,370 shares of its common stock for approximately $23.7 million at an average cost of $13.53 per share.

At its regular January 2018 meeting, the Board approved additional share repurchases of up to $5 million, which may be made at the discretion of management from time to time in the open market or through negotiated transactions.

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 25 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/10115413 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 1. 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 10115413.

ABOUT TRISTATE CAPITAL

TriState Capital Holdings, Inc. (NASDAQ: TSC) is a bank holding company headquartered in Pittsburgh, Pa., providing commercial banking, private banking and investment management services to middle-market companies, institutional clients and high-net-worth individuals. Its TriState Capital Bank subsidiary had $4.7 billion in assets, as of December 31, 2017, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Edison, N.J., and New York City, as well as high-net-worth individuals nationwide through its national referral network of financial intermediaries. Its Chartwell Investment Partners subsidiary had $8.3 billion in assets under management, as of December 31, 2017, 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.

 
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
   

As of and For the
Three Months Ended

As of and For the
Years Ended

December 31,   September 30,   December 31, December 31,   December 31,
(Dollars in thousands)   2017   2017   2016   2017   2016
Period-end balance sheet data:
Cash and cash equivalents $ 156,153 $ 136,579 $ 103,994 $ 156,153 $ 103,994
Total investment securities 220,552 220,916 238,473 220,552 238,473
Loans held-for-investment 4,184,244 3,930,670 3,401,054 4,184,244 3,401,054
Allowance for loan losses   (14,417 )   (15,979 )   (18,762 )   (14,417 )   (18,762 )
Loans held-for-investment, net 4,169,827 3,914,691 3,382,292 4,169,827 3,382,292
Goodwill and other intangibles, net 65,358 65,821 67,209 65,358 67,209
Other assets   166,007     158,006     138,489     166,007     138,489  
Total assets   $ 4,777,897     $ 4,496,013     $ 3,930,457     $ 4,777,897     $ 3,930,457  
 
Deposits $ 3,987,611 $ 3,769,870 $ 3,286,779 $ 3,987,611 $ 3,286,779
Borrowings, net 335,913 279,162 239,510 335,913 239,510
Other liabilities   65,302     69,648     52,361     65,302     52,361  
Total liabilities   4,388,826     4,118,680     3,578,650     4,388,826     3,578,650  
Total shareholders' equity   389,071     377,333     351,807     389,071     351,807  
Total liabilities and shareholders' equity   $ 4,777,897     $ 4,496,013     $ 3,930,457     $ 4,777,897     $ 3,930,457  
 
Income statement data:
Interest income $ 37,868 $ 35,575 $ 26,232 $ 134,295 $ 98,312
Interest expense   13,069     11,970     6,719     42,942     23,499  
Net interest income 24,799 23,605 19,513 91,353 74,813
Provision (credit) for loan losses   (1,665 )   283     1,178     (623 )   838  
Net interest income after provision for loan losses 26,464 23,322 18,335 91,976 73,975
Non-interest income:
Investment management fees 9,416 9,214 10,221 37,100 37,035
Net gain on the sale and call of investment securities 56 15 310 77
Other non-interest income   2,667     2,477     3,428     9,556     9,396  
Total non-interest income   12,139     11,706     13,649     46,966     46,508  
Non-interest expense:
Intangible amortization expense 463 463 462 1,851 1,753
Change in the fair value of acquisition earn out (2,478 ) (3,687 )
Other non-interest expense   25,255     22,349     22,833     89,621     80,728  
Total non-interest expense   25,718     22,812     20,817     91,472     78,794  
Income before tax 12,885 12,216 11,167 47,470 41,689
Income tax expense   842     2,184     3,596     9,482     13,048  
Net income   $ 12,043     $ 10,032     $ 7,571     $ 37,988     $ 28,641  
 
 
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
   

As of and For the
Three Months Ended

As of and For the
Years Ended
December 31,   September 30,   December 31, December 31,   December 31,
(Dollars in thousands, except per share data)   2017   2017   2016   2017   2016
Per share and share data:
Earnings per common share:
Basic $ 0.44 $ 0.36 $ 0.27 $ 1.38 $ 1.04
Diluted $ 0.42 $ 0.35 $ 0.27 $ 1.32 $ 1.01
Book value per common share $ 13.61 $ 13.17 $ 12.38 $ 13.61 $ 12.38
Tangible book value per common share (1) $ 11.32 $ 10.88 $ 10.02 $ 11.32 $ 10.02
Common shares outstanding, at end of period 28,588,101 28,642,573 28,415,654 28,588,101 28,415,654
Weighted average common shares outstanding:
Basic 27,458,044 27,515,923 27,614,296 27,550,833 27,593,725
Diluted 28,679,619 28,659,990 28,349,644 28,711,322 28,359,152
 
Performance ratios:
Return on average assets (2) 1.05 % 0.92 % 0.79 % 0.89 % 0.81 %
Return on average equity (2) 12.51 % 10.69 % 8.67 % 10.30 % 8.48 %
Net interest margin (2) (3) 2.26 % 2.27 % 2.16 % 2.25 % 2.23 %
Total revenue (1) $ 36,882 $ 35,296 $ 33,162 $ 138,009 $ 121,244
Bank efficiency ratio (1) 61.42 % 54.81 % 63.33 % 57.39 % 61.17 %
Efficiency ratio (1) 68.48 % 63.32 % 67.79 % 64.94 % 66.29 %
Non-interest expense to average assets (2) 2.24 % 2.09 % 2.19 % 2.15 % 2.23 %
 
Asset quality:
Non-performing loans $ 3,183 $ 6,936 $ 17,790 $ 3,183 $ 17,790
Non-performing assets $ 6,759 $ 10,517 $ 21,968 $ 6,759 $ 21,968
Other real estate owned $ 3,576 $ 3,581 $ 4,178 $ 3,576 $ 4,178
Non-performing assets to total assets 0.14 % 0.23 % 0.56 % 0.14 % 0.56 %
Non-performing loans to total loans 0.08 % 0.18 % 0.52 % 0.08 % 0.52 %
Allowance for loan losses to loans 0.34 % 0.41 % 0.55 % 0.34 % 0.55 %
Allowance for loan losses to non-performing loans 452.94 % 230.38 % 105.46 % 452.94 % 105.46 %
Net charge-offs (recoveries) $ (103 ) $ 272 $ 2,627 $ 3,722 $ 50
Net charge-offs (recoveries) to average total loans (2) (0.01 )% 0.03 % 0.32 % 0.10 % %
 
Capital ratios:
Tier 1 leverage ratio 7.25 % 7.40 % 7.90 % 7.25 % 7.90 %
Common equity tier 1 risk-based capital ratio 11.14 % 11.14 % 11.49 % 11.14 % 11.49 %
Tier 1 risk-based capital ratio 11.14 % 11.14 % 11.49 % 11.14 % 11.49 %
Total risk-based capital ratio 11.72 % 11.80 % 12.66 % 11.72 % 12.66 %
 
Investment Management Segment:
Assets under management $ 8,309,000 $ 8,195,000 $ 8,055,000 $ 8,309,000 $ 8,055,000
Adjusted EBITDA (1) $ 1,605 $ 1,648 $ 2,797 $ 7,421 $ 9,873
 
 
(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
December 31, 2017   September 30, 2017   December 31, 2016
(Dollars in thousands)  

Average
Balance

 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
  Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
  Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
Assets            
Interest-earning deposits $ 142,458 $ 485 1.35 % $ 131,115 $ 420 1.27 % $ 118,807 $ 177 0.59 %
Federal funds sold 8,179 23 1.12 % 6,845 20 1.16 % 5,922 6 0.40 %
Investment securities available-for-sale 152,113 966 2.52 % 140,741 760 2.14 % 177,712 847 1.90 %
Investment securities held-to-maturity 58,311 618 4.20 % 60,220 631 4.16 % 52,464 550 4.17 %
Investment securities trading 746 4 2.13 % % %
FHLB stock 11,753 153 5.16 % 12,582 200 6.31 % 8,518 150 7.01 %
Total loans   3,984,768   35,679 3.55 % 3,787,231   33,604 3.52 % 3,249,874   24,563 3.01 %
Total interest-earning assets   4,358,328   37,928 3.45 % 4,138,734   35,635 3.42 % 3,613,297   26,293 2.89 %
Other assets   205,547 194,405 176,395
Total assets   $ 4,563,875 $ 4,333,139 $ 3,789,692
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 448,226 $ 1,411 1.25 % $ 371,526 $ 1,173 1.25 % $ 204,555 $ 272 0.53 %
Money market deposit accounts 2,142,251 6,839 1.27 % 2,021,755 6,263 1.23 % 1,860,468 3,529 0.75 %
Certificates of deposit 1,006,529 3,422 1.35 % 1,003,280 3,168 1.25 % 888,721 2,078 0.93 %
Borrowings:
FHLB borrowings 260,218 792 1.21 % 271,304 790 1.16 % 185,000 286 0.62 %
Line of credit borrowings 4,703 51 4.30 % 2,571 22 3.39 % %
Subordinated notes payable, net   34,680   554 6.34 % 34,629   554 6.35 % 34,477   554 6.39 %
Total interest-bearing liabilities   3,896,607   13,069 1.33 % 3,705,065   11,970 1.28 % 3,173,221   6,719 0.84 %
Noninterest-bearing deposits 225,094 205,368 220,637
Other liabilities 60,212 50,332 48,372
Shareholders' equity   381,962 372,374 347,462
Total liabilities and shareholders' equity   $ 4,563,875 $ 4,333,139 $ 3,789,692
 
Net interest income (1) $ 24,859 $ 23,665 $ 19,574
Net interest spread 2.12 % 2.14 % 2.05 %
Net interest margin (1) 2.26 % 2.27 % 2.16 %
 
 
(1) 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, 2017   December 31, 2016
(Dollars in thousands)   Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
  Average
Balance
 

Interest
Income (1)/
Expense

  Average
Yield/
Rate
Assets        
Interest-earning deposits $ 126,888 $ 1,466 1.16 % $ 110,455 $ 595 0.54 %
Federal funds sold 6,923 68 0.98 % 6,116 22 0.36 %
Investment securities available-for-sale 153,274 3,388 2.21 % 180,460 3,234 1.79 %
Investment securities held-to-maturity 58,635 2,463 4.20 % 48,357 1,958 4.05 %
Investment securities trading 188 4 2.13 % %
FHLB stock 13,286 603 4.54 % 10,363 494 4.77 %
Total loans   3,711,701   126,544 3.41 % 3,014,645   92,273 3.06 %
Total interest-earning assets   4,070,895   134,536 3.30 % 3,370,396   98,576 2.92 %
Other assets   193,532 161,054
Total assets   $ 4,264,427 $ 3,531,450
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 336,337 $ 3,706 1.10 % $ 171,431 $ 813 0.47 %
Money market deposit accounts 1,999,399 22,350 1.12 % 1,676,455 11,376 0.68 %
Certificates of deposit 967,503 11,429 1.18 % 874,615 7,618 0.87 %
Borrowings:
FHLB borrowings 295,315 3,152 1.07 % 228,934 1,477 0.65 %
Line of credit borrowings 2,214 90 4.07 % %
Subordinated notes payable, net   34,605   2,215 6.40 % 34,402   2,215 6.44 %
Total interest-bearing liabilities   3,635,373   42,942 1.18 % 2,985,837   23,499 0.79 %
Noninterest-bearing deposits 210,860 170,573
Other liabilities 49,279 37,441
Shareholders' equity   368,915 337,599
Total liabilities and shareholders' equity   $ 4,264,427 $ 3,531,450
 
Net interest income (1) $ 91,594 $ 75,077
Net interest spread 2.12 % 2.13 %
Net interest margin (1) 2.25 % 2.23 %
 
 
(1) Interest income and net interest margin are calculated on a fully taxable equivalent basis.
 
     
TRISTATE CAPITAL HOLDINGS, INC.
LOAN COMPOSITION (UNAUDITED)
 
December 31, 2017 September 30, 2017 December 31, 2016
(Dollars in thousands)   Loan
Balance
  Percent of
Loans
  Loan
Balance
  Percent of
Loans
  Loan
Balance
  Percent of
Loans
Private banking loans $ 2,265,737   54.1 % $ 2,055,808   52.3 % $ 1,735,928   51.0 %
Middle-market banking loans:
Commercial and industrial 667,684 16.0 % 648,720 16.5 % 587,423 17.3 %
Commercial real estate   1,250,823   29.9 %   1,226,142   31.2 %   1,077,703   31.7 %
Total middle-market banking loans   1,918,507   45.9 %   1,874,862   47.7 %   1,665,126   49.0 %
Loans held-for-investment   $ 4,184,244   100.0 %   $ 3,930,670   100.0 %   $ 3,401,054   100.0 %
 
   
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENTS OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Three Months Ended December 31, 2017 Year Ended December 31, 2017
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
and Other
  Consolidated
Income statement data:            
Interest income $ 37,809 $ $ 59 $ 37,868 $ 134,029 $ $ 266 $ 134,295
Interest expense   12,466         603     13,069   40,649         2,293     42,942  
Net interest income (loss) 25,343 (544 ) 24,799 93,380 (2,027 ) 91,353
Provision (credit) for loan losses   (1,665 )           (1,665 ) (623 )           (623 )
Net interest income (loss) after provision for loan losses   27,008         (544 )   26,464   94,003         (2,027 )   91,976  
Non-interest income:
Investment management fees 9,466 (50 ) 9,416 37,309 (209 ) 37,100
Net gain on the sale and call of investment securities 56 56 310 310
Other non-interest income   2,666     1         2,667   9,554     2         9,556  
Total non-interest income   2,722     9,467     (50 )   12,139   9,864     37,311     (209 )   46,966  
Non-interest expense:
Intangible amortization expense 463 463 1,851 1,851
Other non-interest expense   17,204     7,990     61     25,255   59,073     30,387     161     89,621  
Total non-interest expense   17,204     8,453     61     25,718   59,073     32,238     161     91,472  
Income (loss) before tax 12,526 1,014 (655 ) 12,885 44,794 5,073 (2,397 ) 47,470
Income tax expense (benefit)   1,477     (1,065 )   430     842   9,211     522     (251 )   9,482  
Net income (loss)   $ 11,049     $ 2,079     $ (1,085 )   $ 12,043   $ 35,583     $ 4,551     $ (2,146 )   $ 37,988  
 
   
Three Months Ended December 31, 2016 Year Ended December 31, 2016
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
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 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  
 

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,” “adjusted EBITDA,” “total revenue,” and “efficiency ratio.” Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.

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

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

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

“Total revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale and call of investment securities. We believe adjustments made to our operating revenue allow management and investors to better assess our operating revenue by removing the volatility that is associated with certain 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)       2017   2017   2016
Tangible book value per common share:
Total shareholders' equity $ 389,071 $ 377,333 $ 351,807
Less: intangible assets       65,358   65,821   67,209
Tangible common equity       $ 323,713   $ 311,512   $ 284,598
Common shares outstanding       28,588,101   28,642,573   28,415,654
Tangible book value per common share $ 11.32 $ 10.88 $ 10.02
 
     
INVESTMENT MANAGEMENT SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended Years Ended
December 31,   September 30,   December 31, December 31,   December 31,
(Dollars in thousands)     2017   2017   2016   2017   2016
Investment Management EBITDA:
Net income $ 2,079 $ 620 $ 2,851 $ 4,551 $ 6,933
Interest expense
Income taxes expense (1,065 ) 435 1,524 522 4,357
Depreciation expense 128 130 87 497 165
Intangible amortization expense     463     463   462     1,851   1,753  
EBITDA 1,605 1,648 4,924 7,421 13,208
Change in fair value of acquisition earn out (2,478 ) (3,687 )
Acquisition related items           351       352  
Adjusted EBITDA     $ 1,605     $ 1,648   $ 2,797     $ 7,421   $ 9,873  
 
   
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended Years Ended
December 31,   September 30,   December 31, December 31,   December 31,
(Dollars in thousands)   2017   2017   2016   2017   2016
Total revenue:
Net interest income $ 24,799 $ 23,605 $ 19,513 $ 91,353 $ 74,813
Total non-interest income 12,139 11,706 13,649 46,966 46,508
Less: net gain on the sale and call of investment securities   56     15         310     77  
Total revenue   $ 36,882     $ 35,296     $ 33,162     $ 138,009     $ 121,244  
 
Efficiency ratio:
Total non-interest expense $ 25,718 $ 22,812 $ 20,817 $ 91,472 $ 78,794
Plus: change in fair value of acquisition earn out 2,478 3,687
Less: acquisition related items 351 352
Less: intangible amortization expense   463     463     462     1,851     1,753  
Total non-interest expense, as adjusted (numerator)   $ 25,255     $ 22,349     $ 22,482     $ 89,621     $ 80,376  
Total revenue (denominator)   $ 36,882     $ 35,296     $ 33,162     $ 138,009     $ 121,244  
Efficiency ratio 68.48 % 63.32 % 67.79 % 64.94 % 66.29 %
 
   
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)   2017   2017   2016   2017   2016
Bank total revenue:
Net interest income $ 25,343 $ 24,114 $ 19,986 $ 93,380 $ 76,727
Total non-interest income 2,722 2,492 3,427 9,864 9,470
Less: net gain on the sale and call of investment securities   56     15         310     77  
Total revenue   $ 28,009     $ 26,591     $ 23,413     $ 102,934     $ 86,120  
 
Bank efficiency ratio:
Total non-interest expense (numerator)   $ 17,204     $ 14,575     $ 14,827     $ 59,073     $ 52,676  
Total revenue (denominator)   $ 28,009     $ 26,591     $ 23,413     $ 102,934     $ 86,120  
Bank efficiency ratio 61.42 % 54.81 % 63.33 % 57.39 % 61.17 %
 

Contacts

TriState Capital Holdings, Inc.
MEDIA CONTACT
Jack Horner, 267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
or
INVESTOR RELATIONS CONTACT
Casteel Schoenborn
Jeff Schoenborn and Kate Croft
888-609-8351
TSC@csirfirm.com

Contacts

TriState Capital Holdings, Inc.
MEDIA CONTACT
Jack Horner, 267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
or
INVESTOR RELATIONS CONTACT
Casteel Schoenborn
Jeff Schoenborn and Kate Croft
888-609-8351
TSC@csirfirm.com