TriState Capital Reports Record Revenue, Pre-Tax Income and Earnings for the Second Quarter of 2018

-- Results included double-digit growth in pre-tax income, earnings, loans, deposits and AUM --

PITTSBURGH--()--TriState Capital Holdings, Inc. (NASDAQ: TSC) reported record pre-tax income and earnings resulting from increasing revenues and operating leverage in the three months ended June 30, 2018, as loans, deposits and assets under management (AUM) grew at double-digit rates in the second quarter.

The parent company of TriState Capital Bank and Chartwell Investment Partners grew second quarter 2018 diluted earnings per share (EPS) to $0.48, including a net benefit of $0.08 primarily from a tax credit investment. EPS grew by 65.5% from $0.29 in the second quarter of 2017 and by 33.3% from $0.36 in the first quarter of 2018. Pre-tax income grew to a record $15.6 million, increasing 36.0% from the prior year period and 16.9% from the linked quarter.

The company’s second quarter results, including record pre-tax income, are the product of effective and timely execution of our growth strategy across our commercial banking, private banking, and investment management businesses,” Chairman and Chief Executive Officer James F. Getz said. “Importantly, all three of these business lines produced healthy organic growth, as TriState Capital Bank continued to expand loan and deposit balances at rates in excess of 20% and Chartwell delivered significant growth in assets under management. We fully expect our momentum to continue through the end of 2018 and beyond, as we believe TriState Capital has the strategy, distribution, products, talent and capital necessary to maintain a high level of performance for our clients and investors over the long term. We are doing well by helping our clients do well.”

Net income available to common stockholders was $13.8 million in the second quarter of 2018, increasing by 64.2% from $8.4 million in the prior year period and 33.0% from $10.4 million in the first quarter of 2018.

SECOND QUARTER 2018 HIGHLIGHTS

  • Total assets surpassed the $5 billion milestone, growing to $5.23 billion at period end, up 21.5% from one year prior and 6.7% during the quarter
  • Average loans grew to a record $4.38 billion, up 21.0% from the same period last year and 5.1% from the linked quarter
  • Average deposits grew to a record $4.10 billion, up 22.7% from the same period last year and 3.7% from the linked quarter
  • Chartwell AUM at period end of $9.55 billion grew by 19.4% compared to one year prior, or 6.0% organically, excluding AUM acquired in April 2018

REVENUE GROWTH

TriState Capital’s record total revenue of $41.3 million in the second quarter 2018 grew 23.2% from $33.5 million in the same period last year and 10.6% from $37.3 million in the first quarter of 2018.

Net interest income (NII) for the second quarter 2018 grew $6.8 million, or 30.7%, year-over-year to a record $28.8 million. Compared to the linked quarter, NII increased by $2.5 million, or 9.6%, from $26.3 million. Net interest margin grew to 2.38% in the second quarter of 2018, increasing by 15 basis points from the prior year quarter and 3 basis points from the linked quarter, resulting from loan yield expansion and lower-cost deposits gathered through TriState Capital’s liquidity and treasury management products and services.

Non-interest income totaled $12.5 million in the second quarter 2018, compared to $11.7 million in the second quarter of 2017 and $11.1 million in the linked quarter. TriState Capital’s non-interest income is largely made up of Chartwell investment management fees, which grew to $9.7 million in the second quarter of 2018, increasing 6.1% from $9.1 million in the second quarter of 2017 and 8.7% from $8.9 million in the first quarter of 2018. Other non-interest income was $2.8 million in the second quarter of 2018, compared to $2.3 million in the year-ago quarter and $2.2 million in the linked quarter, primarily reflecting borrower-facing interest rate swap activity.

OPERATING LEVERAGE

TriState Capital Bank’s efficiency ratio for the first half of 2018 improved to 52.38%, down 409 basis points from 56.47% in the comparable year-ago period, as investments made in talent and building scale continue to increasingly drive revenue growth while building incremental operating leverage.

Second quarter 2018 non-interest expense of $25.3 million included non-recurring expenses of approximately $0.01 per share incurred in connection with the previously disclosed May 2018 secondary public offering of TriState Capital common stock. Non-interest expense totaled $21.8 million in the year-ago period and $23.9 million in the first quarter of 2018.

The company regularly evaluates opportunities to prudently manage income tax expense, including through high-quality tax credit investments that meet TriState Capital Bank’s underwriting criteria. Accordingly, TriState Capital’s effective tax rate was 6.2% in the second quarter of 2018, reflecting a tax credit investment that will reduce the company’s full-year 2018 tax liability. The company’s effective rate is currently expected to be approximately 14% for full-year 2018.

Net income available to common stockholders and EPS in the second quarter of 2018 reflect $762,000 payable for the company’s first quarterly cash dividend on its Series A Non-Cumulative Perpetual Preferred Stock, declared in April.

BALANCE SHEET GROWTH

TriState Capital continued the strong organic growth of both sides of its balance sheet, expanding the number and depth of its relationships with middle-market commercial customers, as well as the high-net-worth clients the bank serves through registered investment advisors and other financial intermediaries in its national referral network.

Average loans totaled a record $4.38 billion in the second quarter of 2018, growing 21.0% from $3.62 billion in the same period last year and 5.1% from $4.17 billion in the linked quarter.

Loans at June 30, 2018 totaled $4.55 billion, growing by $781.6 million, or 20.7%, from balances at June 30, 2017 and $250.2 million, or 5.8%, from March 31, 2018. Private banking loans totaled $2.49 billion at June 30, 2018, increasing by $520.0 million, or 26.4%, from one year prior and $146.1 million, or 6.2%, from the end of the linked quarter. Commercial loans totaled $2.06 billion at June 30, 2018, increasing by $261.6 million, or 14.5%, from the end of the year-ago quarter and $104.0 million, or 5.3%, from the end of the linked quarter.

Deposits at June 30, 2018 totaled $4.44 billion, growing by $911.3 million, or 25.8%, from June 30, 2017 and $342.2 million, or 8.3%, from March 31, 2018.

ASSET SENSITIVITY

TriState Capital continues to manage an asset-sensitive balance sheet. At June 30, 2018, 92% of the company’s loan portfolio was floating rate and 24% of deposits were fixed-rate certificates of deposit. This positioning provides significant flexibility to manage interest rate risk in changing markets.

The bank’s yield on total loans averaged 4.09% during the second quarter of 2018, compared to 3.35% in the same period last year and 3.80% in the linked quarter.

TriState Capital’s total cost of funds for all deposits and interest-bearing liabilities averaged 1.67% during the second quarter of 2018, compared to 1.08% in the same period last year and 1.43% in the linked quarter. The bank’s cost of total deposits averaged 1.63% during the second quarter of 2018, compared to 1.02% in the same period last year and 1.38% in the linked quarter.

INVESTMENT MANAGEMENT

For the quarter ended June 30, 2018, Chartwell grew total AUM to $9.55 billion, increasing 19.4% from $8.00 billion at June 30, 2017 and 14.5% from $8.34 billion at March 31, 2018.

Excluding $1.07 billion in client AUM acquired from Columbia Partners, L.L.C. on April 6, 2018, Chartwell’s new business and new flows from existing accounts of $372 million and market appreciation of $228 million more than offset outflows of $457 million in the second quarter of 2018.

Chartwell’s weighted average fee rate was 0.41% at June 30, 2018. Investment management fee revenue grew to $9.7 million in the second quarter of 2018, increasing 6.1% from $9.1 million in the second quarter of 2017 and 8.7% from $8.9 million in the first quarter of 2018. Approximately $516,000 of Chartwell’s second quarter revenue is attributed to client AUM acquired in April 2018.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the second quarter of 2018, reflecting the company’s disciplined credit culture and the expansion of its private banking non-purpose margin loans secured by marketable securities. Private banking loans comprised 54.6% of the total loan portfolio at June 30, 2018, while commercial real estate loans and commercial and industrial loans comprised 29.1% and 16.3% of total loans, respectively.

Non-performing assets (NPAs) declined to $6.0 million, or 0.11% of total assets, at June 30, 2018, compared to $11.7 million, or 0.27%, at June 30, 2017 and $6.1 million, or 0.12%, at March 31, 2018.

Non-performing loans (NPLs) declined to $2.4 million, or 0.05% of total loans, at June 30, 2018, compared to $7.8 million, or 0.21%, at June 30, 2017 and $2.5 million, or 0.06%, March 31, 2018.

Adverse-rated credits were $30.0 million, or 0.66% of total loans, at June 30, 2018, compared to $33.8 million, or 0.90%, at June 30, 2017 and $29.0 million, or 0.67%, at March 31, 2018.

The company recorded net recoveries of $88,000 in the second quarter of 2018, compared to net charge-offs of $733,000, or 0.08% of average total loans, in the year-ago quarter and net recoveries of $206,000 in the linked quarter.

TriState Capital’s provision for loan loss expense was $415,000 in the second quarter of 2018, compared to $516,000 in the second quarter of 2017 and $195,000 for the first quarter of 2018.

The company’s allowance for loan losses (ALL) represented 0.34% of total loans at June 30, 2018, compared to 0.42% at June 30, 2017 and 0.34% at March 31, 2018, reflecting its declining NPLs as well as the lower levels of provision required by the low risk profile of the bank’s growing proportion of private banking loans in its portfolio.

CAPITAL STRENGTH AND FLEXIBILITY

As of June 30, 2018, TriState Capital Holdings reported regulatory capital ratios of 12.66% for total risk-based capital, 12.06% for tier 1 risk-based capital, 10.94% for common equity tier 1 risk-based capital, and 7.68% for tier 1 leverage.

In January 2018, TriState Capital’s Board of Directors approved share repurchases of up to $5 million, which may be made at the discretion of management from time to time and of which $2.5 million remains available. During the six months ended June 30, 2018, the company repurchased a total of 97,031 shares for approximately $2.5 million at an average cost of $25.37 per share.

CONFERENCE CALL

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

The live conference call on July 19 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link http://dpregister.com/10121950 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 July 26. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada, or 412-317-0088 from other international locations, and entering the conference number 10121950.

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 $5.1 billion in assets, as of June 30, 2018, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Edison, N.J., and New York City, as well as high-net-worth individuals nationwide through its national referral network of financial intermediaries. Its Chartwell Investment Partners subsidiary had $9.6 billion in assets under management, as of June 30, 2018, 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). Specifically, TriState Capital reviews and reports tangible common equity, tangible book value per common share, EBITDA, total revenue and efficiency ratio. 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
Six Months Ended

June 30,   March 31,   June 30, June 30,   June 30,
(Dollars in thousands)   2018   2018   2017 2018   2017
Period-end balance sheet data:
Cash and cash equivalents $ 164,367 $ 145,033 $ 119,715 $ 164,367 $ 119,715
Total investment securities 288,674 245,350 221,409 288,674 221,409
Loans held-for-investment 4,552,928 4,302,766 3,771,312 4,552,928 3,771,312
Allowance for loan losses   (15,321 )   (14,818 )   (15,968 ) (15,321 )   (15,968 )
Loans held-for-investment, net 4,537,607 4,287,948 3,755,344 4,537,607 3,755,344
Goodwill and other intangibles, net 68,867 64,897 66,283 68,867 66,283
Other assets   174,421     163,525     145,084   174,421     145,084  
Total assets   $ 5,233,936     $ 4,906,753     $ 4,307,835   $ 5,233,936     $ 4,307,835  
 
Deposits $ 4,441,202 $ 4,098,955 $ 3,529,868 $ 4,441,202 $ 3,529,868
Borrowings, net 264,814 304,764 363,612 264,814 363,612
Other liabilities   74,026     62,805     46,716   74,026     46,716  
Total liabilities   4,780,042     4,466,524     3,940,196   4,780,042     3,940,196  
 
Preferred stock 38,432 38,440 38,432
Common shareholders' equity   415,462     401,789     367,639   415,462     367,639  
Total shareholders' equity   453,894     440,229     367,639   453,894     367,639  
 
Total liabilities and shareholders' equity   $ 5,233,936     $ 4,906,753     $ 4,307,835   $ 5,233,936     $ 4,307,835  
 
Income statement data:
Interest income $ 47,784 $ 41,416 $ 32,115 $ 89,200 $ 60,852
Interest expense   18,993     15,154     10,082   34,147     17,903  
Net interest income 28,791 26,262 22,033 55,053 42,949
Provision for loan losses   415     195     516   610     759  
Net interest income after provision for loan losses   28,376     26,067     21,517   54,443     42,190  
Non-interest income:
Investment management fees 9,686 8,908 9,130 18,594 18,470
Net gain (loss) on the sale and call of investment securities 1 5 241 6 239
Other non-interest income   2,815     2,176     2,341   4,991     4,412  
Total non-interest income   12,502     11,089     11,712   23,591     23,121  
Non-interest expense:
Intangible amortization expense 502 461 462 963 925
Other non-interest expense   24,816     23,389     21,322   48,205     42,017  
Total non-interest expense   25,318     23,850     21,784   49,168     42,942  
Income before tax 15,560 13,306 11,445 28,866 22,369
Income tax expense   968     2,905     3,024   3,873     6,456  
Net income   $ 14,592     $ 10,401     $ 8,421   $ 24,993     $ 15,913  
Preferred stock dividends on Series A   762           762      
Net income available to common shareholders   $ 13,830     $ 10,401     $ 8,421   $ 24,231     $ 15,913  
 
   

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

 
As of and For the
Three Months Ended
As of and For the
Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
(Dollars in thousands, except per share data)   2018   2018   2017   2018   2017
Per share and share data:
Earnings per common share:
Basic $ 0.50 $ 0.38 $ 0.31 $ 0.88 $ 0.58
Diluted $ 0.48 $ 0.36 $ 0.29 $ 0.84 $ 0.55
Book value per common share $ 14.35 $ 13.87 $ 12.83 $ 14.35 $ 12.83
Tangible book value per common share (1) $ 11.97 $ 11.63 $ 10.51 $ 11.97 $ 10.51
Common shares outstanding, at end of period 28,947,883 28,976,214 28,665,726 28,947,883 28,665,726
Weighted average common shares outstanding:
Basic 27,628,120 27,594,691 27,601,702 27,611,498 27,614,423
Diluted 28,848,969 28,711,106 28,785,625 28,786,188 28,752,917
 
Performance ratios:
Return on average assets (2) 1.09 % 0.89 % 0.81 % 0.99 % 0.79 %
Return on average common equity (2) 13.57 % 10.65 % 9.27 % 12.14 % 8.90 %
Net interest margin (2) (3) 2.38 % 2.35 % 2.23 % 2.36 % 2.23 %
Total revenue (1) $ 41,292 $ 37,346 $ 33,504 $ 78,638 $ 65,831
Bank efficiency ratio (1) 50.49 % 54.48 % 55.03 % 52.38 % 56.47 %
Non-interest expense to average assets (2) 2.00 % 2.03 % 2.10 % 2.02 % 2.12 %
 
Asset quality:
Non-performing loans $ 2,437 $ 2,477 $ 7,830 $ 2,437 $ 7,830
Non-performing assets $ 6,013 $ 6,053 $ 11,701 $ 6,013 $ 11,701
Other real estate owned $ 3,576 $ 3,576 $ 3,871 $ 3,576 $ 3,871
Non-performing assets to total assets 0.11 % 0.12 % 0.27 % 0.11 % 0.27 %
Non-performing loans to total loans 0.05 % 0.06 % 0.21 % 0.05 % 0.21 %
Allowance for loan losses to loans 0.34 % 0.34 % 0.42 % 0.34 % 0.42 %
Allowance for loan losses to non-performing loans 628.68 % 598.22 % 203.93 % 628.68 % 203.93 %
Net charge-offs (recoveries) $ (88 ) $ (206 ) $ 733 $ (294 ) $ 3,553
Net charge-offs (recoveries) to average total loans (2) (0.01 )% (0.02 )% 0.08 % (0.01 )% 0.20 %
 
Capital ratios:
Tier 1 leverage ratio 7.68 % 7.96 % 7.45 % 7.68 % 7.45 %
Common equity tier 1 risk-based capital ratio 10.94 % 11.09 % 11.21 % 10.94 % 11.21 %
Tier 1 risk-based capital ratio 12.06 % 12.25 % 11.21 % 12.06 % 11.21 %
Total risk-based capital ratio 12.66 % 12.84 % 12.14 % 12.66 % 12.14 %
 
Investment Management Segment:
Assets under management $ 9,554,000 $ 8,344,000 $ 8,003,000 $ 9,554,000 $ 8,003,000
EBITDA (1) $ 1,627 $ 1,515 $ 1,692 $ 3,143 $ 4,167
(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
June 30, 2018   March 31, 2018   June 30, 2017
(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 $ 186,009 $ 842 1.82 % $ 150,121 $ 579 1.56 % $ 118,916 $ 323 1.09 %
Federal funds sold 6,650 28 1.69 % 7,042 26 1.50 % 6,225 15 0.97 %
Debt securities available-for-sale 181,718 1,356 2.99 % 142,323 958 2.73 % 143,967 740 2.06 %
Debt securities held-to-maturity 72,166 678 3.77 % 58,953 595 4.09 % 61,359 639 4.18 %
Equity securities 8,620 64 2.98 % 8,627 66 3.10 % 8,504 68 3.21 %
FHLB stock 19,061 230 4.84 % 14,195 194 5.54 % 16,449 148 3.61 %
Total loans   4,378,514     44,614   4.09 % 4,165,180     39,027   3.80 % 3,619,251     30,242   3.35 %
Total interest-earning assets   4,852,738     47,812   3.95 % 4,546,441     41,445   3.70 % 3,974,671     32,175   3.25 %
Other assets   213,320   208,679   188,588  
Total assets   $ 5,066,058   $ 4,755,120   $ 4,163,259  
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 604,324 $ 2,576 1.71 % $ 464,247 $ 1,621 1.42 % $ 304,973 $ 759 1.00 %
Money market deposit accounts 2,319,320 9,722 1.68 % 2,281,606 8,113 1.44 % 1,914,429 5,150 1.08 %
Certificates of deposit 928,210 4,398 1.90 % 977,689 3,667 1.52 % 924,110 2,587 1.12 %
Borrowings:
FHLB borrowings 418,187 1,743 1.67 % 310,000 1,147 1.50 % 379,890 1,016 1.07 %
Line of credit borrowings % 5,373 52 3.92 % 1,527 16 4.20 %
Subordinated notes payable, net   34,781     554   6.39 % 34,731     554   6.47 % 34,579     554   6.43 %
Total interest-bearing liabilities   4,304,822     18,993   1.77 % 4,073,646     15,154   1.51 % 3,559,508     10,082   1.14 %
Noninterest-bearing deposits 245,412 228,257 194,957
Other liabilities 68,491 56,655 44,404
Shareholders' equity   447,333   396,562   364,390  
Total liabilities and shareholders' equity   $ 5,066,058   $ 4,755,120   $ 4,163,259  
 
Net interest income (1) $ 28,819   $ 26,291   $ 22,093  
Net interest spread 2.18 % 2.19 % 2.11 %
Net interest margin (1) 2.38 % 2.35 % 2.23 %
(1)   Interest income and net interest margin are calculated on a fully taxable equivalent basis.
 

TRISTATE CAPITAL HOLDINGS, INC.

AVERAGES AND YIELDS (UNAUDITED)

 
Six Months Ended June 30,
2018   2017
(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 $ 168,164 $ 1,421 1.70 % $ 116,824 $ 561 0.97 %
Federal funds sold 6,845 54 1.59 % 6,325 25 0.80 %
Debt securities available-for-sale 162,129 2,314 2.88 % 151,778 1,518 2.02 %
Debt securities held-to-maturity 65,596 1,273 3.91 % 57,994 1,214 4.22 %
Equity securities 8,624 130 3.04 % 8,456 144 3.43 %
FHLB stock 16,641 424 5.14 % 14,424 250 3.50 %
Total loans   4,272,437     83,641   3.95 % 3,534,514     57,261   3.27 %
Total interest-earning assets   4,700,436     89,257   3.83 % 3,890,315     60,973   3.16 %
Other assets   211,012   186,982  
Total assets   $ 4,911,448   $ 4,077,297  
 
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 534,673 $ 4,198 1.58 % $ 261,579 $ 1,121 0.86 %
Money market deposit accounts 2,300,567 17,834 1.56 % 1,915,426 9,248 0.97 %
Certificates of deposit 952,813 8,065 1.71 % 929,482 4,840 1.05 %
Borrowings:
FHLB borrowings 364,392 2,890 1.60 % 325,359 1,570 0.97 %
Line of credit borrowings 2,672 52 3.92 % 768 16 4.20 %
Subordinated notes payable, net   34,756     1,108   6.43 % 34,553     1,108   6.47 %
Total interest-bearing liabilities   4,189,873     34,147   1.64 % 3,467,167     17,903   1.04 %
Noninterest-bearing deposits 236,882 206,416
Other liabilities 62,605 43,188
Shareholders' equity   422,088   360,526  
Total liabilities and shareholders' equity   $ 4,911,448   $ 4,077,297  
 
Net interest income (1) $ 55,110   $ 43,070  
Net interest spread 2.19 % 2.12 %
Net interest margin (1) 2.36 % 2.23 %
 

(1)

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

TRISTATE CAPITAL HOLDINGS, INC.

LOAN COMPOSITION (UNAUDITED)

 
June 30, 2018 March 31, 2018 June 30, 2017
(Dollars in thousands)   Loan
Balance
  Percent of
Total Loans
  Loan
Balance
Percent of
Total Loans
  Loan
Balance
  Percent of
Total Loans
Private banking loans $ 2,488,162   54.6 % $ 2,342,024 54.4 % $ 1,968,139   52.2 %
Middle-market banking loans:
Commercial and industrial 741,901 16.3 % 683,417 15.9 % 639,808 17.0 %
Commercial real estate   1,322,865     29.1 %   1,277,325   29.7 %   1,163,365     30.8 %
Total middle-market banking loans   2,064,766     45.4 %   1,960,742   45.6 %   1,803,173     47.8 %
Loans held-for-investment   $ 4,552,928     100.0 %   $ 4,302,766   100.0 %   $ 3,771,312     100.0 %
 
   

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 
Three Months Ended June 30, 2018 Three Months Ended June 30, 2017
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
and Other
  Consolidated
Income statement data:
Interest income $ 47,720   $   $ 64   $ 47,784 $ 32,047   $   $ 68   $ 32,115
Interest expense   18,440         553     18,993   9,515         567     10,082
Net interest income (loss) 29,280 (489 ) 28,791 22,532 (499 ) 22,033
Provision for loan losses   415             415   516             516
Net interest income (loss) after provision for loan losses   28,865         (489 )   28,376   22,016         (499 )   21,517
Non-interest income:
Investment management fees 9,743 (57 ) 9,686 9,182 (52 ) 9,130
Net gain on the sale and call of debt securities 1 1 241 241
Other non-interest income   2,849     1     (35 )   2,815   2,341             2,341
Total non-interest income   2,850     9,744     (92 )   12,502   2,582     9,182     (52 )   11,712
Non-interest expense:
Intangible amortization expense 502 502 462 462
Other non-interest expense   16,223     8,242     351     24,816   13,688     7,612     22     21,322
Total non-interest expense   16,223     8,744     351     25,318   13,688     8,074     22     21,784
Income (loss) before tax 15,492 1,000 (932 ) 15,560 10,910 1,108 (573 ) 11,445
Income tax expense (benefit)   955     277     (264 )   968   2,819     425     (220 )   3,024
Net income (loss)   $ 14,537     $ 723     $ (668 )   $ 14,592   $ 8,091     $ 683     $ (353 )   $ 8,421
   

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 
Six Months Ended June 30, 2018 Six Months Ended June 30, 2017
(Dollars in thousands)   Bank   Investment
Management
  Parent
and Other
  Consolidated Bank   Investment
Management
  Parent
and Other
  Consolidated
Income statement data: (unaudited) (unaudited)
Interest income $ 89,071   $   $ 129   $ 89,200 $ 60,708   $   $ 144   $ 60,852
Interest expense   32,990         1,157     34,147   16,785         1,118     17,903
Net interest income (loss) 56,081 (1,028 ) 55,053 43,923 (974 ) 42,949
Provision for loan losses   610             610   759             759
Net interest income (loss) after provision for loan losses   55,471         (1,028 )   54,443   43,164         (974 )   42,190
Non-interest income:
Investment management fees 18,707 (113 ) 18,594 18,578 (108 ) 18,470
Net gain on the sale and call of debt securities 6 6 239 239
Other non-interest income   5,026     1     (36 )   4,991   4,411     1         4,412
Total non-interest income   5,032     18,708     (149 )   23,591   4,650     18,579     (108 )   23,121
Non-interest expense:
Intangible amortization expense 963 963 925 925
Other non-interest expense   32,010     15,815     380     48,205   27,293     14,651     73     42,017
Total non-interest expense   32,010     16,778     380     49,168   27,293     15,576     73     42,942
Income (loss) before tax   28,493     1,930     (1,557 )   28,866 20,521     3,003     (1,155 )   22,369
Income tax expense (benefit)   3,809     504     (440 )   3,873   5,747     1,152     (443 )   6,456
Net income (loss)   $ 24,684     $ 1,426     $ (1,117 )   $ 24,993   $ 14,774     $ 1,851     $ (712 )   $ 15,913
 

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 common 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 common shareholders’ equity exclusive of changes in intangible assets. Intangible assets are created when we buy businesses which add relationships and revenue to our Company. Intangible assets have the effect of increasing both equity and assets, while not increasing our tangible equity or tangible assets.

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

“EBITDA” and “Adjusted EBITDA” are defined as net income before interest expense, income taxes, depreciation and 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 debt 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)

 
June 30, March 31, June 30,
(Dollars in thousands, except per share data)   2018   2018   2017
Tangible book value per common share:
Common shareholders' equity $ 415,462 $ 401,789 $ 367,639
Less: intangible assets   68,867     64,897     66,283
Tangible common equity   $ 346,595     $ 336,892     $ 301,356
Common shares outstanding   28,947,883     28,976,214     28,665,726
Tangible book value per common share $ 11.97 $ 11.63 $ 10.51
   

INVESTMENT MANAGEMENT SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 
Three Months Ended Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
(Dollars in thousands)   2018   2018   2017 2018   2017
Investment Management EBITDA:
Net income $ 723 $ 702 $ 683 $ 1,426 $ 1,851
Interest expense
Income taxes expense 277 227 425 504 1,152
Depreciation expense 125 125 122 250 239
Intangible amortization expense   502     461     462   963     925
EBITDA   $ 1,627     $ 1,515     $ 1,692   3,143     4,167
   

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 
Three Months Ended Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
(Dollars in thousands)   2018   2018   2017   2018   2017
Total revenue:
Net interest income $ 28,791 $ 26,262 $ 22,033 $ 55,053 $ 42,949
Total non-interest income 12,502 11,089 11,712 23,591 23,121
Less: net gain on the sale and call of investment securities   1     5     241     6     239
Total revenue   $ 41,292     $ 37,346     $ 33,504     78,638     65,831
   

BANK SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 
Three Months Ended Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
(Dollars in thousands)   2018   2018   2017   2018   2017
Bank total revenue:
Net interest income $ 29,280 $ 26,801 $ 22,532 $ 56,081 $ 43,923
Total non-interest income 2,850 2,181 2,582 5,032 4,650
Less: net gain on the sale and call of investment securities   1     5     241     6     239  
Bank total revenue   $ 32,129     $ 28,977     $ 24,873     61,107     48,334  
 
Bank efficiency ratio:
Total non-interest expense (numerator)   $ 16,223     $ 15,786     $ 13,688     $ 32,010     $ 27,293  
Total revenue (denominator)   $ 32,129     $ 28,977     $ 24,873     $ 61,107     $ 48,334  
Bank efficiency ratio 50.49 % 54.48 % 55.03 % 52.38 % 56.47 %

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