FOR IMMEDIATE RELEASE
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, January 24, 2018 - 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.
###
MEDIA CONTACT
Jack Horner
267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com
INVESTOR RELATIONS CONTACT
Casteel Schoenborn
Jeff Schoenborn and Kate Croft
888-609-8351
TSC@csirfirm.com
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 | % |
