FOR IMMEDIATE RELEASE
TRISTATE CAPITAL REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS
PITTSBURGH, October 21, 2015 - TriState Capital Holdings, Inc. (NASDAQ: TSC) reported higher net income and earnings per share, significant loan growth and strong improvement in credit metrics in the third quarter 2015.
Net income for the parent company of TriState Capital Bank and Chartwell Investment Partners was $6.1 million in the third quarter of 2015, increasing from $5.7 million in the second quarter and $5.7 million in the third quarter of 2014. Net income per diluted share was $0.22 in the third quarter of 2015, increasing from $0.20 in the second quarter and $0.20 in the third quarter of 2014.
“We are extremely pleased with the results we’ve posted, and more importantly, with the underlying trends that produced superior performance once again for TriState Capital,” said Chief Executive Officer James F. Getz. “Our strategy is being executed on all fronts. The exceptional growth of our lower-risk-profile private banking channel lending business, coupled with the strong contributions of our middle-market commercial banking and investment management businesses, enabled us to continue very positive momentum through the first nine months of 2015. The third quarter also illustrated TriState Capital's ability to acquire, retain and grow client relationships in a range of economic, interest rate and capital markets environments, thanks to our sales-driven culture and financial services distribution model.”
THIRD QUARTER 2015 HIGHLIGHTS
| |
| • | Pre-tax and net income increased to $9.1 million and $6.1 million, respectively |
| |
| • | Total loans grew 4.2%, or 16.6% annualized, during the quarter and 15.9% from one year prior |
| |
| • | Private banking channel loans grew 7.7%, or 30.5% annualized, during the quarter and 31.3% from one year prior |
| |
| • | NPAs declined by 21.9% during the quarter and 26.2% from one year prior, representing 0.67% of assets at September 30 |
| |
| • | Total adverse-rated credits declined 2.2% during the quarter and 22.4% from one year prior, representing 2.1% of total loans at September 30 |
| |
| • | Chartwell segment net income increased 4.3% from the linked quarter and 15.5% from the year-ago quarter. |
TriState Capital recorded a credit to provision expenses of $1.3 million and $231,000 for the three and nine months ended September 30, 2015, respectively. The third quarter credit provision was driven by a $1.1 million reserve reversal from payoffs on two substandard-rated credits and a $433,000 recovery on one loan previously charged-off. Provision expenses were $185,000 and $651,000 for the second quarter of 2015 and the third quarter of 2014, respectively.
TriState Capital’s loan growth continues to generate strong net interest income (NII) that continues to outpace margin compression. NII was $17.0 million in the third quarter of 2015, increasing 2.0% from $16.6 million in the second quarter and 4.4% from $16.2 million in the third quarter of 2014.
Investment management fees of $7.0 million reflected Chartwell’s net growth in new business and inflows in the third quarter of 2015, offset by general declines in U.S. equity markets for the three months ended September 30. Chartwell investment management fees were $7.5 million in the linked quarter and $7.4 million in the year-ago quarter.
Other non-interest income was $1.0 million in the third quarter of 2015, reflecting lower activity levels for swaps in the period, compared to $2.1 million in the linked quarter and $1.9 million in the year-ago quarter. Total non-interest income was $8.1 million, or 32.2% of total revenue, in the third quarter of 2015, compared to $9.6 million in the linked quarter and $9.3 million in the year-ago period.
Total revenue was $25.0 million in the third quarter of 2015, reflecting lower investment management fees and other non-interest income in the period, compared to $26.2 million in the linked quarter and $25.5 million in the year-ago quarter.
Third quarter 2015 non-interest expenses were $17.3 million, or 2.25% of average assets on an annualized basis, compared to $17.6 million, or 2.39%, in the linked quarter and $16.7 million, or 2.43%, in the prior year quarter. The efficiency ratio for the bank was 64.93% in the third quarter of 2015, compared to 60.78% in the linked quarter and 58.34% in the year-ago quarter as a result of lower total revenue in the current quarter.
BALANCE SHEET GROWTH
Loans totaled $2.66 billion at September 30, 2015, increasing 4.2%, or 16.6% annualized, from June 30. Total loans grew 15.9% over balances at September 30, 2014. Private banking channel loans totaled $1.20 billion, growing 7.7% from the end of the linked quarter and 31.3% from the end of the year-ago quarter. Commercial real estate (CRE) loans totaled $831.2 million, growing 2.8% from the end of the linked quarter and 21.1% from the end of the year-ago quarter. Commercial and industrial (C&I) loan balances were $630.1 million at September 30, 2015, decreasing 0.2% from the end of the linked quarter and 9.5% from one year prior.
Deposits grew by 2.0% during the third quarter to $2.60 billion at September 30, 2015, while deposit funding costs remained flat from the linked quarter. Compared to the year-ago quarter, deposits grew 15.9% at period end, while deposit funding costs increased 2 basis points. The bank continues to grow deposits and has extended time deposit maturities to 299 days at September 30, 2015 from 213 one year prior.
TriState Capital remains very well positioned to profit from a rising interest-rate environment as the bank continues to manage a highly asset-sensitive balance sheet. At September 30, 2015, 84% of TriState Capital’s loan portfolio and 58% of its securities portfolio were floating rate. In addition, 36% of deposits were fixed-rate time deposits.
ASSET QUALITY
TriState Capital’s strong asset quality metrics in the third quarter of 2015 reflected the bank’s strategic shift toward lower-risk-profile earning loans, particularly private banking channel margin lending, as well as the payoffs of two substandard-rated credits and a recovery on one loan previously charged-off.
The company’s allowance for loan losses reflects its growing portfolio of private banking channel margin loans secured by marketable securities, which require lower provision based on their lower risk profile, as well as a decrease in non-performing loans. The allowance for loan losses represented 0.73% of total loans at September 30, 2015, compared to 0.84% at June 30, 2015 and 0.97% at September 30, 2014.
TriState Capital experienced net charge-offs on loans totaling $716,000, or 0.11% of average total loans, in the current quarter and net recoveries of $17,000 in the linked quarter. Net charge-offs for the third quarter of 2014 were $1.1 million, or 0.19% of average total loans. Non-performing assets (NPAs) declined by $5.9 million, or 21.9%, to $20.9 million during the third quarter of 2015. NPAs represented 0.67% of total assets at September 30, 2015, improving from 0.89% at June 30, 2015 and 1.03% at September 30, 2014.
Adverse-rated credits declined 2.2% during the third quarter and 22.4% from September 30, 2014. Adverse-rated credits represented 2.1% of total loans at the end of the third quarter of 2015, 2.2% at June 30, 2015 and 3.1% at September 30, 2014.
INVESTMENT MANAGEMENT
In spite of U.S. equity market volatility in the third quarter, net inflows reflect Chartwell's continued strong performance relative to benchmarks across disciplines, as well as the productivity of the boutique investment manager's business development efforts. Third quarter assets under management (AUM) reflects $258 million in new business and new flows from existing accounts, offset by outflows of $197 million and market depreciation of $560 million. Chartwell’s AUM were $7.6 billion at the end of the third quarter of 2015, compared to $8.1 billion at the end of the second quarter of 2015 and $7.6 billion at September 30, 2014.
Chartwell net income grew to $1.1 million in the third quarter of 2015, increasing 4.3% from the linked quarter and 15.5% from the year-ago quarter. Chartwell profitability remained strong, comprising 18% of TriState Capital Holdings’ consolidated net income, as the lower investment management fees associated with recent equity market volatility were offset by lower incentive compensation expense in the third quarter of 2015.
The weighted average fee rate was 0.37% for each of the second and third quarters of 2015. Chartwell investment management fees were $7.0 million in the third quarter of 2015, compared to $7.5 million in the linked quarter and $7.4 million in the year-ago quarter.
CAPITAL STRENGTH AND FLEXIBILITY
TriState Capital’s earnings in the quarter funded superior loan growth in the period, while the company maintained capital ratios that exceed the highest required regulatory benchmark levels. As of September 30, 2015, TriState Capital Holdings reported ratios of 13.99% for total risk-based capital, 12.22% for tier 1 risk-based capital, 12.22% for common equity tier 1 risk-based capital and 9.30% for tier 1 leverage.
CONFERENCE CALL
As previously announced, TriState Capital will hold a conference call tomorrow to review its financial results and operating performance.
The live conference call on October 22 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/10073757 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 October 31. 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 10073757.
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 $3.1 billion in assets, as of September 30, 2015, 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 $7.6 billion in assets under management, as of September 30, 2015, 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.
###
MEDIA CONTACTS
Jack Horner
267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
INVESTOR RELATIONS CONTACT
TriState Capital Holdings, Inc.
Brian Fetterolf
412-304-0451
investorrelations@tscbank.com
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
|
| | | | | | | | | | | | | | | | |
| | As of and For the
Three Months Ended | | As of and For the
Nine Months Ended |
| (Dollars in thousands) | September 30, | June 30, | September 30, | | September 30, | September 30, |
| | 2015 | 2015 | 2014 | | 2015 | 2014 |
| Period-end balance sheet data: | | | | | | |
| Cash and cash equivalents | $ | 100,424 |
| $ | 100,235 |
| $ | 99,133 |
| | $ | 100,424 |
| $ | 99,133 |
|
| Total investment securities | 220,012 |
| 219,662 |
| 225,509 |
| | 220,012 |
| 225,509 |
|
| Loans held-for-sale | — |
| 4,084 |
| — |
| | — |
| — |
|
| Loans held-for-investment | 2,661,191 |
| 2,554,343 |
| 2,296,507 |
| | 2,661,191 |
| 2,296,507 |
|
| Allowance for loan losses | (19,350 | ) | (21,407 | ) | (22,376 | ) | | (19,350 | ) | (22,376 | ) |
| Loans held-for-investment, net | 2,641,841 |
| 2,532,936 |
| 2,274,131 |
| | 2,641,841 |
| 2,274,131 |
|
| Goodwill and other intangibles, net | 51,205 |
| 51,595 |
| 52,719 |
| | 51,205 |
| 52,719 |
|
| Other assets | 116,765 |
| 108,649 |
| 102,801 |
| | 116,765 |
| 102,801 |
|
| Total assets | $ | 3,130,247 |
| $ | 3,017,161 |
| $ | 2,754,293 |
| | $ | 3,130,247 |
| $ | 2,754,293 |
|
| | | | | | | |
| Total deposits | $ | 2,600,508 |
| $ | 2,550,695 |
| $ | 2,244,324 |
| | $ | 2,600,508 |
| $ | 2,244,324 |
|
| Borrowings | 175,000 |
| 125,000 |
| 165,000 |
| | 175,000 |
| 165,000 |
|
| Other liabilities | 34,199 |
| 27,068 |
| 37,610 |
| | 34,199 |
| 37,610 |
|
| Total liabilities | 2,809,707 |
| 2,702,763 |
| 2,446,934 |
| | 2,809,707 |
| 2,446,934 |
|
| | | | | | | |
| Total shareholders' equity | 320,540 |
| 314,398 |
| 307,359 |
| | 320,540 |
| 307,359 |
|
| | | | | | | |
| Total liabilities and shareholders' equity | $ | 3,130,247 |
| $ | 3,017,161 |
| $ | 2,754,293 |
| | $ | 3,130,247 |
| $ | 2,754,293 |
|
| | | | | | | |
| Income statement data: | | | | | | |
| Interest income | $ | 20,940 |
| $ | 20,426 |
| $ | 19,681 |
| | $ | 61,361 |
| $ | 56,980 |
|
| Interest expense | 3,984 |
| 3,808 |
| 3,435 |
| | 11,331 |
| 8,834 |
|
| Net interest income | 16,956 |
| 16,618 |
| 16,246 |
| | 50,030 |
| 48,146 |
|
| Provision (credit) for loan losses | (1,341 | ) | 185 |
| 651 |
| | (231 | ) | 10,368 |
|
| Net interest income after provision (credit) for loan losses | 18,297 |
| 16,433 |
| 15,595 |
| | 50,261 |
| 37,778 |
|
| Non-interest income: | | | | | | |
| Investment management fees | 7,020 |
| 7,514 |
| 7,418 |
| | 22,189 |
| 17,381 |
|
| Net gain on the sale of investment securities available-for-sale | — |
| — |
| — |
| | 17 |
| 1,428 |
|
| Other non-interest income | 1,044 |
| 2,117 |
| 1,872 |
| | 4,547 |
| 4,082 |
|
| Total non-interest income | 8,064 |
| 9,631 |
| 9,290 |
| | 26,753 |
| 22,891 |
|
| Non-interest expense: | | | | | | |
| Intangible amortization expense | 390 |
| 390 |
| 389 |
| | 1,169 |
| 909 |
|
| Other non-interest expense | 16,911 |
| 17,192 |
| 16,284 |
| | 50,816 |
| 44,040 |
|
| Total non-interest expense | 17,301 |
| 17,582 |
| 16,673 |
| | 51,985 |
| 44,949 |
|
| Income before tax | 9,060 |
| 8,482 |
| 8,212 |
| | 25,029 |
| 15,720 |
|
| Income tax expense | 2,942 |
| 2,754 |
| 2,506 |
| | 8,127 |
| 4,884 |
|
| Net income | $ | 6,118 |
| $ | 5,728 |
| $ | 5,706 |
| | $ | 16,902 |
| $ | 10,836 |
|
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) |
| | | | | | | | | | | | | | | | |
| | As of and For the
Three Months Ended | | As of and For the
Nine Months Ended |
| (Dollars in thousands, except per share data) | September 30, | June 30, | September 30, | | September 30, | September 30, |
| | 2015 | 2015 | 2014 | | 2015 | 2014 |
| Per share and share data: | | | | | | |
| Earnings per share: | | | | | | |
| Basic | $ | 0.22 |
| $ | 0.21 |
| $ | 0.20 |
| | $ | 0.61 |
| $ | 0.38 |
|
| Diluted | $ | 0.22 |
| $ | 0.20 |
| $ | 0.20 |
| | $ | 0.60 |
| $ | 0.37 |
|
| Book value per common share | $ | 11.44 |
| $ | 11.23 |
| $ | 10.70 |
| | $ | 11.44 |
| $ | 10.70 |
|
Tangible book value per common share (1) | $ | 9.61 |
| $ | 9.39 |
| $ | 8.87 |
| | $ | 9.61 |
| $ | 8.87 |
|
| Common shares outstanding, at end of period | 28,027,695 |
| 28,000,695 |
| 28,712,779 |
| | 28,027,695 |
| 28,712,779 |
|
| Average common shares outstanding: | | | | | | |
| Basic | 27,728,705 |
| 27,718,226 |
| 28,712,779 |
| | 27,779,023 |
| 28,699,015 |
|
| Diluted | 28,281,244 |
| 28,184,048 |
| 29,005,151 |
| | 28,207,659 |
| 29,138,533 |
|
| | | | | | | |
| Performance ratios: | | | | | | |
Return on average assets (2) | 0.79 | % | 0.78 | % | 0.83 | % | | 0.76 | % | 0.56 | % |
Return on average equity (2) | 7.64 | % | 7.36 | % | 7.42 | % | | 7.23 | % | 4.80 | % |
Net interest margin (2) (3) | 2.32 | % | 2.38 | % | 2.50 | % | | 2.38 | % | 2.62 | % |
Bank efficiency ratio (1) | 64.93 | % | 60.78 | % | 58.34 | % | | 62.36 | % | 59.82 | % |
Efficiency ratio (1) | 69.15 | % | 66.98 | % | 65.29 | % | | 67.72 | % | 64.57 | % |
Efficiency ratio, as adjusted (1) | 67.59 | % | 65.50 | % | 63.77 | % | | 66.20 | % | 63.20 | % |
Non-interest expense to average assets (2) | 2.25 | % | 2.39 | % | 2.43 | % | | 2.35 | % | 2.34 | % |
| | | | | | | |
| Asset quality: | | | | | | |
| Non-performing loans | $ | 19,119 |
| $ | 24,978 |
| $ | 26,898 |
| | $ | 19,119 |
| $ | 26,898 |
|
| Non-performing assets | $ | 20,885 |
| $ | 26,744 |
| $ | 28,311 |
| | $ | 20,885 |
| $ | 28,311 |
|
| Other real estate owned | $ | 1,766 |
| $ | 1,766 |
| $ | 1,413 |
| | $ | 1,766 |
| $ | 1,413 |
|
| Non-performing assets to total assets | 0.67 | % | 0.89 | % | 1.03 | % | | 0.67 | % | 1.03 | % |
| Allowance for loan losses to loans | 0.73 | % | 0.84 | % | 0.97 | % | | 0.73 | % | 0.97 | % |
| Allowance for loan losses to non-performing loans | 101.21 | % | 85.70 | % | 83.19 | % | | 101.21 | % | 83.19 | % |
| Net charge-offs (recoveries) | $ | 716 |
| $ | (17 | ) | $ | 1,097 |
| | $ | 692 |
| $ | 6,988 |
|
Net charge-offs (recoveries) to average total loans (2) | 0.11 | % | — | % | 0.19 | % | | 0.04 | % | 0.45 | % |
| | | | | | | |
| Revenue: | | | | | | |
Total revenue (1) | $ | 25,020 |
| $ | 26,249 |
| $ | 25,536 |
| | $ | 76,766 |
| $ | 69,609 |
|
Pre-tax, pre-provision net revenue (1) | $ | 7,719 |
| $ | 8,667 |
| $ | 8,863 |
| | $ | 24,781 |
| $ | 24,660 |
|
| | | | | | | |
| Capital ratios: | | | | | | |
Tangible equity to tangible assets (1) | 8.75 | % | 8.86 | % | 9.43 | % | | 8.75 | % | 9.43 | % |
| Tier 1 leverage ratio | 9.30 | % | 9.42 | % | 9.53 | % | | 9.30 | % | 9.53 | % |
| Common equity tier 1 risk-based capital ratio | 12.22 | % | 12.23 | % | N/A |
| | 12.22 | % | N/A |
|
| Tier 1 risk-based capital ratio | 12.22 | % | 12.23 | % | 9.60 | % | | 12.22 | % | 9.60 | % |
| Total risk-based capital ratio | 13.99 | % | 14.45 | % | 11.52 | % | | 13.99 | % | 11.52 | % |
| | | | | | | |
| Assets under management | $ | 7,625,000 |
| $ | 8,124,000 |
| $ | 7,578,000 |
| | $ | 7,625,000 |
| $ | 7,578,000 |
|
| |
(1) | These measures are not measures recognized under GAAP and are therefore considered to be non-GAAP financial measures. See “Non-GAAP Financial Measures” for a reconciliation of these measures to their most directly comparable GAAP measures. |
| |
(2) | Ratios are annualized. |
| |
(3) | Net interest margin is calculated on a fully taxable equivalent basis. |
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | September 30, 2015 | | June 30, 2015 | | September 30, 2014 |
| (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 | $ | 94,015 |
| $ | 84 |
| 0.35 | % | | $ | 102,353 |
| $ | 87 |
| 0.34 | % | | $ | 125,655 |
| $ | 114 |
| 0.36 | % |
| Federal funds sold | 6,197 |
| 2 |
| 0.13 | % | | 6,420 |
| 2 |
| 0.12 | % | | 7,665 |
| 1 |
| 0.05 | % |
| Investment securities available-for-sale | 172,922 |
| 597 |
| 1.37 | % | | 153,983 |
| 465 |
| 1.21 | % | | 179,163 |
| 522 |
| 1.16 | % |
| Investment securities held-to-maturity | 45,941 |
| 454 |
| 3.92 | % | | 40,051 |
| 384 |
| 3.85 | % | | 39,903 |
| 323 |
| 3.21 | % |
| Total loans | 2,598,362 |
| 19,872 |
| 3.03 | % | | 2,505,646 |
| 19,551 |
| 3.13 | % | | 2,240,116 |
| 18,779 |
| 3.33 | % |
| Total interest-earning assets | 2,917,437 |
| 21,009 |
| 2.86 | % | | 2,808,453 |
| 20,489 |
| 2.93 | % | | 2,592,502 |
| 19,739 |
| 3.02 | % |
| Other assets | 139,372 |
| | | | 136,861 |
| | | | 131,451 |
| | |
| Total assets | $ | 3,056,809 |
| | | | $ | 2,945,314 |
| | | | $ | 2,723,953 |
| | |
| | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Interest-bearing checking accounts | $ | 97,493 |
| $ | 99 |
| 0.40 | % | | $ | 98,183 |
| $ | 99 |
| 0.40 | % | | $ | 84,045 |
| $ | 86 |
| 0.41 | % |
| Money market deposit accounts | 1,418,547 |
| 1,523 |
| 0.43 | % | | 1,352,153 |
| 1,336 |
| 0.40 | % | | 1,136,000 |
| 1,125 |
| 0.39 | % |
Time deposits (excluding CDARS®) | 436,529 |
| 941 |
| 0.86 | % | | 459,546 |
| 1,089 |
| 0.95 | % | | 472,965 |
| 1,014 |
| 0.85 | % |
CDARS® time deposits | 448,300 |
| 711 |
| 0.63 | % | | 441,092 |
| 652 |
| 0.59 | % | | 395,254 |
| 529 |
| 0.53 | % |
| Borrowings: | | | | | | | | | | | |
| FHLB borrowing | 130,054 |
| 156 |
| 0.48 | % | | 79,176 |
| 78 |
| 0.40 | % | | 132,609 |
| 127 |
| 0.38 | % |
| Subordinated notes payable | 35,000 |
| 554 |
| 6.28 | % | | 35,000 |
| 554 |
| 6.35 | % | | 35,000 |
| 554 |
| 6.28 | % |
| Total interest-bearing liabilities | 2,565,923 |
| 3,984 |
| 0.62 | % | | 2,465,150 |
| 3,808 |
| 0.62 | % | | 2,255,873 |
| 3,435 |
| 0.60 | % |
| Noninterest-bearing deposits | 148,323 |
| | | | 137,647 |
| | | | 125,668 |
| | |
| Other liabilities | 24,743 |
| | | | 30,304 |
| | | | 37,508 |
| | |
| Shareholders' equity | 317,820 |
| | | | 312,213 |
| | | | 304,904 |
| | |
| Total liabilities and shareholders' equity | $ | 3,056,809 |
| | | | $ | 2,945,314 |
| | | | $ | 2,723,953 |
| | |
| | | | | | | | | | | | |
| Net interest income | | $ | 17,025 |
| | | | $ | 16,681 |
| | | | $ | 16,304 |
| |
| Net interest spread | | | 2.24 | % | | | | 2.31 | % | | | | 2.42 | % |
Net interest margin (1) | | | 2.32 | % | | | | 2.38 | % | | | | 2.50 | % |
| |
(1) | Net interest income and net interest margin are calculated on a fully taxable equivalent basis. |
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
|
| | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2015 | | 2014 |
| (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 | $ | 104,953 |
| $ | 273 |
| 0.35 | % | | $ | 173,697 |
| $ | 437 |
| 0.34 | % |
| Federal funds sold | 6,143 |
| 4 |
| 0.09 | % | | 7,715 |
| 3 |
| 0.05 | % |
| Investment securities available-for-sale | 162,838 |
| 1,550 |
| 1.27 | % | | 175,312 |
| 1,648 |
| 1.26 | % |
| Investment securities held-to-maturity | 40,616 |
| 1,190 |
| 3.92 | % | | 30,272 |
| 760 |
| 3.36 | % |
| Total loans | 2,510,374 |
| 58,534 |
| 3.12 | % | | 2,077,090 |
| 54,308 |
| 3.50 | % |
| Total interest-earning assets | 2,824,924 |
| 61,551 |
| 2.91 | % | | 2,464,086 |
| 57,156 |
| 3.10 | % |
| Other assets | 136,501 |
| | | | 109,406 |
| | |
| Total assets | $ | 2,961,425 |
| | | | $ | 2,573,492 |
| | |
| | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | |
| Interest-bearing deposits: | | | | | | | |
| Interest-bearing checking accounts | $ | 103,674 |
| 318 |
| 0.41 | % | | $ | 56,205 |
| $ | 119 |
| 0.28 | % |
| Money market deposit accounts | 1,343,867 |
| 4,079 |
| 0.41 | % | | 1,068,005 |
| 3,080 |
| 0.39 | % |
Time deposits (excluding CDARS®) | 446,137 |
| 3,017 |
| 0.90 | % | | 479,062 |
| 3,036 |
| 0.85 | % |
CDARS® time deposits | 437,542 |
| 1,928 |
| 0.59 | % | | 412,235 |
| 1,636 |
| 0.53 | % |
| Borrowings: | | | | | | | |
| FHLB borrowing | 103,315 |
| 328 |
| 0.42 | % | | 86,594 |
| 250 |
| 0.39 | % |
| Subordinated notes payable | 35,000 |
| 1,661 |
| 6.35 | % | | 15,000 |
| 713 |
| 6.36 | % |
| Total interest-bearing liabilities | 2,469,535 |
| 11,331 |
| 0.61 | % | | 2,117,101 |
| 8,834 |
| 0.56 | % |
| Noninterest-bearing deposits | 149,224 |
| | | | 125,690 |
| | |
| Other liabilities | 30,026 |
| | | | 28,873 |
| | |
| Shareholders' equity | 312,640 |
| | | | 301,828 |
| | |
| Total liabilities and shareholders' equity | $ | 2,961,425 |
| | | | $ | 2,573,492 |
| | |
| | | | | | | | |
| Net interest income | | $ | 50,220 |
| | | | $ | 48,322 |
| |
| Net interest spread | | | 2.30 | % | | | | 2.54 | % |
Net interest margin (1) | | | 2.38 | % | | | | 2.62 | % |
| |
(1) | Net interest income and net interest margin are calculated on a fully taxable equivalent basis. |
TRISTATE CAPITAL HOLDINGS, INC.
LOAN COMPOSITION (UNAUDITED)
|
| | | | | | | | | | | | | | | | | |
| | September 30, 2015 | | June 30, 2015 | | September 30, 2014 |
| (Dollars in thousands) | Loan
Balance | Percent of
Total Loans | | Loan
Balance | Percent of
Total Loans | | Loan
Balance | Percent of
Total Loans |
| Private banking channel loans | $ | 1,199,883 |
| 45.1 | % | | $ | 1,114,342 |
| 43.6 | % | | $ | 914,130 |
| 39.8 | % |
| Middle-market banking channel loans: | | | | | | | | |
| Commercial and industrial | 630,131 |
| 23.7 | % | | 631,122 |
| 24.7 | % | | 696,185 |
| 30.3 | % |
| Commercial real estate | 831,177 |
| 31.2 | % | | 808,879 |
| 31.7 | % | | 686,192 |
| 29.9 | % |
| Total middle-market banking channel loans | 1,461,308 |
| 54.9 | % | | 1,440,001 |
| 56.4 | % | | 1,382,377 |
| 60.2 | % |
| Loans held-for-investment | $ | 2,661,191 |
| 100.0 | % | | $ | 2,554,343 |
| 100.0 | % | | $ | 2,296,507 |
| 100.0 | % |
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2015 | | Three Months Ended September 30, 2014 |
| (Dollars in thousands) | Bank | Investment
Management | Parent
and Other | Consolidated | | Bank | Investment
Management | Parent
and Other | Consolidated |
| Income statement data: | | | |
| Interest income | $ | 20,883 |
| $ | — |
| $ | 57 |
| $ | 20,940 |
| | $ | 19,635 |
| $ | — |
| $ | 46 |
| $ | 19,681 |
|
| Interest expense | 3,430 |
| — |
| 554 |
| 3,984 |
| | 2,918 |
| — |
| 517 |
| 3,435 |
|
| Net interest income (loss) | 17,453 |
| — |
| (497 | ) | 16,956 |
| | 16,717 |
| — |
| (471 | ) | 16,246 |
|
| Provision (credit) for loan losses | (1,341 | ) | — |
| — |
| (1,341 | ) | | 651 |
| — |
| — |
| 651 |
|
| Net interest income (loss) after provision (credit) for loan losses | 18,794 |
| — |
| (497 | ) | 18,297 |
| | 16,066 |
| — |
| (471 | ) | 15,595 |
|
| Non-interest income: | | | | | | | | | |
| Investment management fees | — |
| 7,074 |
| (54 | ) | 7,020 |
| | — |
| 7,470 |
| (52 | ) | 7,418 |
|
| Net gain on the sale of investment securities available-for-sale | — |
| — |
| — |
| — |
| | — |
| — |
| — |
| — |
|
| Other non-interest income | 1,051 |
| (7 | ) | — |
| 1,044 |
| | 1,875 |
| (3 | ) | — |
| 1,872 |
|
| Total non-interest income | 1,051 |
| 7,067 |
| (54 | ) | 8,064 |
| | 1,875 |
| 7,467 |
| (52 | ) | 9,290 |
|
| Non-interest expense: | | | | | | | | | |
| Intangible amortization expense | — |
| 390 |
| — |
| 390 |
| | — |
| 389 |
| — |
| 389 |
|
| Other non-interest expense | 12,015 |
| 4,936 |
| (40 | ) | 16,911 |
| | 10,847 |
| 5,469 |
| (32 | ) | 16,284 |
|
| Total non-interest expense | 12,015 |
| 5,326 |
| (40 | ) | 17,301 |
| | 10,847 |
| 5,858 |
| (32 | ) | 16,673 |
|
| Income (loss) before tax | 7,830 |
| 1,741 |
| (511 | ) | 9,060 |
| | 7,094 |
| 1,609 |
| (491 | ) | 8,212 |
|
| Income tax expense (benefit) | 2,442 |
| 660 |
| (160 | ) | 2,942 |
| | 1,971 |
| 673 |
| (138 | ) | 2,506 |
|
| Net income (loss) | $ | 5,388 |
| $ | 1,081 |
| $ | (351 | ) | $ | 6,118 |
| | $ | 5,123 |
| $ | 936 |
| $ | (353 | ) | $ | 5,706 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2015 | | Nine Months Ended September 30, 2014 |
| (Dollars in thousands) | Bank | Investment
Management | Parent
and Other | Consolidated | | Bank | Investment
Management | Parent
and Other | Consolidated |
| Income statement data: | | | |
| Interest income | $ | 61,198 |
| $ | — |
| $ | 163 |
| $ | 61,361 |
| | $ | 56,934 |
| $ | — |
| $ | 46 |
| $ | 56,980 |
|
| Interest expense | 9,689 |
| — |
| 1,642 |
| 11,331 |
| | 8,245 |
| — |
| 589 |
| 8,834 |
|
| Net interest income (loss) | 51,509 |
| — |
| (1,479 | ) | 50,030 |
| | 48,689 |
| — |
| (543 | ) | 48,146 |
|
| Provision (credit) for loan losses | (231 | ) | — |
| — |
| (231 | ) | | 10,368 |
| — |
| — |
| 10,368 |
|
| Net interest income (loss) after provision (credit) for loan losses | 51,740 |
| — |
| (1,479 | ) | 50,261 |
| | 38,321 |
| — |
| (543 | ) | 37,778 |
|
| Non-interest income: | | | | | | | | | |
| Investment management fees | — |
| 22,332 |
| (143 | ) | 22,189 |
| | — |
| 17,484 |
| (103 | ) | 17,381 |
|
| Net gain on the sale of investment securities available-for-sale | 17 |
| — |
| — |
| 17 |
| | 1,428 |
| — |
| — |
| 1,428 |
|
| Other non-interest income | 4,553 |
| (6 | ) | — |
| 4,547 |
| | 4,044 |
| 38 |
| — |
| 4,082 |
|
| Total non-interest income | 4,570 |
| 22,326 |
| (143 | ) | 26,753 |
| | 5,472 |
| 17,522 |
| (103 | ) | 22,891 |
|
| Non-interest expense: | | | | | | | | | |
| Intangible amortization expense | — |
| 1,169 |
| — |
| 1,169 |
| | — |
| 909 |
| — |
| 909 |
|
| Other non-interest expense | 34,958 |
| 15,931 |
| (73 | ) | 50,816 |
| | 31,547 |
| 12,505 |
| (12 | ) | 44,040 |
|
| Total non-interest expense | 34,958 |
| 17,100 |
| (73 | ) | 51,985 |
| | 31,547 |
| 13,414 |
| (12 | ) | 44,949 |
|
| Income (loss) before tax | 21,352 |
| 5,226 |
| (1,549 | ) | 25,029 |
| | 12,246 |
| 4,108 |
| (634 | ) | 15,720 |
|
| Income tax expense (benefit) | 6,630 |
| 1,981 |
| (484 | ) | 8,127 |
| | 3,336 |
| 1,726 |
| (178 | ) | 4,884 |
|
| Net income (loss) | $ | 14,722 |
| $ | 3,245 |
| $ | (1,065 | ) | $ | 16,902 |
| | $ | 8,910 |
| $ | 2,382 |
| $ | (456 | ) | $ | 10,836 |
|
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 equity,” “tangible equity to tangible assets,” “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 equity” is defined as shareholders' equity reduced by intangible assets, including goodwill, if any. 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 equity to tangible assets” is defined as the ratio of shareholders' equity reduced by intangible assets, divided by total assets reduced by intangible assets. We believe this measure is important to many investors who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.
“Tangible book value per common share” is defined as book value, excluding the impact of goodwill, if any, 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. Goodwill is an intangible asset that is recorded in a purchase business combination.
“Total revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale of investment securities available-for-sale. 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 of investment securities available-for-sale. 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 divided by our total revenue. “Efficiency ratio, as adjusted” is defined as non-interest expense, excluding non-recurring expenses associated with the Chartwell acquisition and intangible amortization expense, where applicable, divided by our total revenue. We believe this measure, particularly at the Bank, allows management and investors to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
|
| | | | | | | | | |
| | September 30, | June 30, | September 30, |
| (Dollars in thousands, except per share data) | 2015 | 2015 | 2014 |
| Tangible equity to tangible assets: | | | |
| Total shareholders' equity | $ | 320,540 |
| $ | 314,398 |
| $ | 307,359 |
|
| Less: intangible assets | 51,205 |
| 51,595 |
| 52,719 |
|
| Tangible equity | $ | 269,335 |
| $ | 262,803 |
| $ | 254,640 |
|
| Total assets | $ | 3,130,247 |
| $ | 3,017,161 |
| $ | 2,754,293 |
|
| Less: intangible assets | 51,205 |
| 51,595 |
| 52,719 |
|
| Tangible assets | $ | 3,079,042 |
| $ | 2,965,566 |
| $ | 2,701,574 |
|
| Tangible equity to tangible assets | 8.75 | % | 8.86 | % | 9.43 | % |
| | | | |
| Tangible book value per common share: | | | |
| Tangible equity | $ | 269,335 |
| $ | 262,803 |
| $ | 254,640 |
|
| Common shares outstanding | 28,027,695 |
| 28,000,695 |
| 28,712,779 |
|
| Tangible book value per common share | $ | 9.61 |
| $ | 9.39 |
| $ | 8.87 |
|
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | June 30, | September 30, | | September 30, | September 30, |
| (Dollars in thousands) | 2015 | 2015 | 2014 | | 2015 | 2014 |
| Pre-tax, pre-provision net revenue: | | | | | | |
| Net interest income | $ | 16,956 |
| $ | 16,618 |
| $ | 16,246 |
| | $ | 50,030 |
| $ | 48,146 |
|
| Total non-interest income | 8,064 |
| 9,631 |
| 9,290 |
| | 26,753 |
| 22,891 |
|
| Less: net gain on the sale of investment securities available-for-sale | — |
| — |
| — |
| | 17 |
| 1,428 |
|
| Total revenue | 25,020 |
| 26,249 |
| 25,536 |
| | 76,766 |
| 69,609 |
|
| Less: total non-interest expense | 17,301 |
| 17,582 |
| 16,673 |
| | 51,985 |
| 44,949 |
|
| Pre-tax, pre-provision net revenue | $ | 7,719 |
| $ | 8,667 |
| $ | 8,863 |
| | $ | 24,781 |
| $ | 24,660 |
|
| | | | | | | |
| Efficiency ratio: | | | | | | |
| Total non-interest expense (numerator) | $ | 17,301 |
| $ | 17,582 |
| $ | 16,673 |
| | $ | 51,985 |
| $ | 44,949 |
|
| Total revenue (denominator) | $ | 25,020 |
| $ | 26,249 |
| $ | 25,536 |
| | $ | 76,766 |
| $ | 69,609 |
|
| Efficiency ratio | 69.15 | % | 66.98 | % | 65.29 | % | | 67.72 | % | 64.57 | % |
| | | | | | | |
| Efficiency ratio, as adjusted: | | | | | | |
Less: nonrecurring expenses (1) | $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | 45 |
|
| Less: intangible amortization expense | 390 |
| 390 |
| 389 |
| | 1,169 |
| 909 |
|
| Total non-interest expense, as adjusted (numerator) | $ | 16,911 |
| $ | 17,192 |
| $ | 16,284 |
| | $ | 50,816 |
| $ | 43,995 |
|
| Total revenue (denominator) | $ | 25,020 |
| $ | 26,249 |
| $ | 25,536 |
| | $ | 76,766 |
| $ | 69,609 |
|
| Efficiency ratio, as adjusted | 67.59 | % | 65.50 | % | 63.77 | % | | 66.20 | % | 63.20 | % |
| |
(1) | Nonrecurring expenses include costs associated with the Chartwell transaction. |
BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | June 30, | September 30, | | September 30, | September 30, |
| (Dollars in thousands) | 2015 | 2015 | 2014 | | 2015 | 2014 |
| Bank pre-tax, pre-provision net revenue: | | | | | | |
| Net interest income | $ | 17,453 |
| $ | 17,115 |
| $ | 16,717 |
| | $ | 51,509 |
| $ | 48,689 |
|
| Total non-interest income | 1,051 |
| 2,117 |
| 1,875 |
| | 4,570 |
| 5,472 |
|
| Less: net gain on the sale of investment securities available-for-sale | — |
| — |
| — |
| | 17 |
| 1,428 |
|
| Total revenue | 18,504 |
| 19,232 |
| 18,592 |
| | 56,062 |
| 52,733 |
|
| Less: total non-interest expense | 12,015 |
| 11,690 |
| 10,847 |
| | 34,958 |
| 31,547 |
|
| Pre-tax, pre-provision net revenue | $ | 6,489 |
| $ | 7,542 |
| $ | 7,745 |
| | $ | 21,104 |
| $ | 21,186 |
|
| | | | | | | |
| Bank efficiency ratio: | | | | | | |
| Total non-interest expense (numerator) | $ | 12,015 |
| $ | 11,690 |
| $ | 10,847 |
| | $ | 34,958 |
| $ | 31,547 |
|
| Total revenue (denominator) | $ | 18,504 |
| $ | 19,232 |
| $ | 18,592 |
| | $ | 56,062 |
| $ | 52,733 |
|
| Efficiency ratio | 64.93 | % | 60.78 | % | 58.34 | % | | 62.36 | % | 59.82 | % |
