FOR IMMEDIATE RELEASE
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, July 18, 2018 - 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.
###
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
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 | % |
