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TriState Capital Reports Third Quarter 2021 EPS of $0.44 on Record Net Income and Revenue, Organic Loan and Balance Sheet Growth, and Net Interest Margin Expansion

10/20/2021

-- Private banking loans primarily backed by marketable securities and commercial loans hit new period-end highs, while investment management performance was highlighted by strength of fixed income strategies --

PITTSBURGH--(BUSINESS WIRE)-- TriState Capital Holdings, Inc. (Nasdaq: TSC) reported third quarter 2021 financial results, including record net income, organic loan and balance sheet growth and its fourth consecutive quarter of net interest margin (NIM) expansion.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported net income available to common shareholders of $16.9 million in the third quarter of 2021, up 129.7% from $7.4 million in the third quarter of 2020 and up 7.7% from $15.7 million in the second quarter of 2021.

The company earned $0.44 per diluted share in the third quarter of 2021, compared to $0.26 in the third quarter of 2020 and $0.41 in the second quarter of 2021. Third quarter 2021 results include a higher number of diluted average shares outstanding and a $1.1 million increase in preferred dividends, compared to the year-ago quarter, both resulting from the company’s December 30, 2020 private placement of $105 million of common stock, convertible preferred stock and warrants.

“TriState Capital’s performance in the quarter and year to date showcased the tremendous earnings power of our investment management, private banking and commercial banking businesses, along with our ability to sustain profitable and responsible organic revenue growth,” Chairman and Chief Executive Officer James F. Getz said. “Our long record of consistent investment in talent and technology continue to fuel our success in strengthening relationships with our sophisticated clients, attracting new ones, and rapidly scaling each of our businesses. Our agile and low-cost funding capability also enabled TriState Capital to cross the $12 billion-asset milestone during the quarter, as each of our private banking, middle-market commercial and securities portfolios grew to new record levels and we maintain a balance sheet that is well positioned for rising interest rates. We are pleased with our new business pipelines and dialogue with clients, which we believe will enable TriState Capital to sustain our momentum in the near term and accelerate growth over the long term.”

TriState Capital also announced today that it entered into a definitive agreement with Raymond James Financial, Inc., under which Raymond James will acquire TriState Capital. The companies provided additional information on the transaction in a news release that will be made available at https://investors.tristatecapitalbank.com.

THIRD QUARTER 2021 HIGHLIGHTS

  • Chartwell year-to-date net inflows from retail and institutional clients totaled $499.0 million, including $149.0 million in fixed income strategies in the third quarter alone.
  • Total loans grew by 28.9% from September 30, 2020 and 6.3% during the quarter.
  • Commercial loans grew by 14.7% from September 30, 2020 and 2.7% during the quarter, led by fund finance solutions and other commercial and industrial (C&I) lending.
  • Private banking loans grew by 39.1% from September 30, 2020 and 8.6% during the quarter, as the company continued to leverage talent and proprietary technology to fortify its position as the nation’s leading independent provider of loans collateralized by marketable securities and other liquid assets.
  • Treasury management deposit accounts grew by 82.0% from September 30, 2020 and 8.2% during the quarter.
  • Net interest income (NII) increased by 39.4% from the year-ago quarter and 8.8% from the linked quarter on continued loan growth and NIM expansion to 1.65%.
  • The company maintained superior credit quality metrics, with period-end non-performing assets (NPAs) and non-performing loans (NPLs) declining by 21.4% and 22.8% respectively during the quarter, while adverse rated credits represented just 0.44% of total loans at period end.
  • Return on average common equity expanded to 10.67%, up 511 basis points from the year-ago period and 30 basis points from the linked quarter, as the company continues to productively deploy capital raised in December 2020.

REVENUE GROWTH

NII grew to a record $46.7 million in the third quarter of 2021, increasing 39.4% from $33.5 million in the year-ago quarter and 8.8% from $42.9 million in the second quarter of 2021. NIM expanded for the fourth consecutive quarter to 1.65% for the three months ended September 30, 2021, up from 1.46% in the third quarter of 2020 and 1.63% in the second quarter of 2021.

Non-interest income was $14.2 million in the third quarter of 2021, compared to $16.9 million in the year-ago quarter and $14.8 million in the linked quarter. Chartwell investment management fees of $9.4 million in the third quarter of 2021 are up 16.6% from $8.1 million in the same period the prior year and remained relatively consistent with the $9.5 million reported in the linked quarter. Fees from commercial and private banking clients’ use of TriState Capital’s interest rate swaps offering totaled $3.1 million in the third quarter of 2021, $4.0 million in the prior year quarter and $3.9 million in the linked quarter.

NII and non-interest income, excluding net gains and losses on the sale of debt securities, combined to generate record total revenue of $60.9 million for the third quarter of 2021, an increase of 30.6% from $46.6 million in the year-ago period and 5.6% from $57.7 million in the linked quarter. Total revenue, which is not a financial metric under generally accepted accounting principles (GAAP), is a measure that TriState Capital has consistently utilized to provide a greater understanding of the diversity and balance of its income-generating capabilities. Non-interest income represented 23.3% of total revenue in the third quarter of 2021 when excluding net gains on the sale of securities, compared to 28.2% in the year-ago period and 25.6% in the linked quarter.

EXPENSES REFLECT CONTINUED INVESTMENTS

TriState Capital continues to invest in talent, technology, products and risk and compliance management to support the continued responsible growth of its businesses and balance sheet, to provide a premier client experience, and to scale its efficient branchless operating model.

Third quarter 2021 non-interest expense of $38.0 million increased 20.9% from $31.4 million in the year-ago period and 10.4% from $34.4 million in the linked quarter. TriState Capital currently expects operating expense growth in the mid teens for full-year 2021.

TriState Capital Bank’s efficiency ratio for the third quarter of 2021 was 54.79%, compared to 58.73% in the third quarter of 2020 and 51.51% in the linked quarter. Efficiency ratio is a non-GAAP financial metric utilized to provide a greater understanding of a bank’s level of non-interest expense as a percentage of total revenue.

TriState Capital continued to maintain a low annualized non-interest expense to average assets ratio of 1.30% in the third quarter of 2021, compared to 1.31% in the third quarter of 2020 and 1.27% in the linked quarter.

Pre-tax, pre-provision net revenue of $22.9 million in the third quarter of 2021 increased 50.4% from $15.2 million in the year-ago period and decreased 1.6% from $23.2 million in the linked quarter. Pre-tax, pre-provision net revenue is a non-GAAP financial metric representing net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities.

Income before tax was $22.9 million in the third quarter of 2021, compared to $11.5 million in the third quarter of 2020 and $23.2 million in the linked quarter.

TriState Capital’s effective tax rate was 12.6% for the third quarter, reflecting a $3 million historic tax credit. Expenses associated with this tax credit are included in other expenses. The company’s effective tax rate is impacted by certain factors including the number, timing and size of tax credit investments, as well as the proportion of consolidated earnings attributed to investment management. The company’s 2021 effective tax rate, based on factors including anticipated tax credit investment opportunities, is currently expected to be in the mid teens.

Net income available to common shareholders and earnings per share in the third quarter of 2021 are net of $3.1 million in dividends payable to holders of the company’s Series A, Series B and Series C Non-Cumulative Perpetual Preferred Stock.

INVESTMENT MANAGEMENT

A combination of investment performance, strong client relationships and a robust new business effort contributed to positive net inflows of $499.0 million for the nine months ending September 30, 2021. In addition, Chartwell’s new business pipeline currently has in excess of $69 million in commitments from institutional investors.

Chartwell’s new business and new flows from existing accounts of $375.0 million was offset by market depreciation of $23.0 million and outflows of $409.0 million in the third quarter of 2021. Chartwell’s assets under management (AUM) totaled $11.45 billion on September 30, 2021, compared to $9.65 billion on September 30, 2020 and $11.51 billion on June 30, 2021.

Reflecting historically low interest rates and the performance of Chartwell’s investment professionals, its fixed income strategies attracted net positive inflows of $149.0 million in the third quarter of 2021. Chartwell fixed income assets grew by 2.6% during the third quarter to $6.75 billion on September 30, 2021, or 58.9% of total AUM.

Annual run-rate revenue was $39.0 million as of September 30, 2021, compared to $33.6 million on September 30, 2020 and $39.9 million on June 30, 2021. Chartwell’s weighted average fee rate was 0.34% at September 30, 2021. Investment management fee revenue was $9.4 million in the third quarter of 2021, compared to $8.1 million in the third quarter of 2020 and $9.5 million in the second quarter of 2021.

Initiatives to enhance Chartwell profitability continue to be reflected in the segment’s improving level of expenses relative to revenue. Investment management fees grew by 18.8%, outpacing a 12.6% increase in Chartwell segment non-interest expense, in the first nine months of 2021 compared to the same period the prior year. Year to date, compared to the first nine months of 2020, Chartwell generated a 138.7% increase in segment net income and a 53.4% increase in segment EBITDA, which is a non-GAAP financial metric representing net income before interest expense, income tax expense, depreciation expense and intangible amortization expense.

ORGANIC LENDING FRANCHISE GROWTH

TriState Capital’s client engagement and distribution capabilities continued to drive the organic growth of both sides of its balance sheet by expanding the number and depth of its premier relationships with high-quality middle-market commercial customers, as well as expanding the number of high-net-worth clients the bank serves through its growing national referral network of financial intermediaries.

Average loans totaled a record $9.43 billion in the third quarter of 2021, growing 27.6% from $7.39 billion in the prior year period and 7.0% from $8.81 billion in the linked quarter. Period-end loans totaled a record $9.87 billion on September 30, 2021, growing $2.21 billion, or 28.9%, from September 30, 2020, and $586.1 million, or 6.3%, from June 30, 2021.

TriState Capital continued to fortify its position as the nation’s leading independent provider of marketable securities-backed loans for clients of independent investment advisory firms, trust companies, broker-dealers, regional securities firms, family offices, insurance companies and other financial intermediaries that do not offer banking services themselves. Private banking loans totaled a record $6.20 billion at September 30, 2021, increasing $1.75 billion, or 39.1%, from one year prior and $490.4 million, or 8.6%, from the end of the linked quarter.

The company continued to grow relationships with top-quality middle-market sponsors and businesses, driving originations of C&I and commercial real estate (CRE) loans while managing credit quality within the portfolio. Commercial loans totaled $3.67 billion at September 30, 2021, increasing $469.3 million, or 14.7%, from one year prior and $95.6 million, or 2.7%, from the end of the linked quarter.

C&I loans grew to $1.34 billion at September 30, 2021, increasing $202.5 million, or 17.8%, from one year prior and $99.9 million, or 8.1%, from June 30, 2021, led by capital call lines of credit and other fund finance offerings, more than offsetting amortization and paydowns. The bank did not participate in the Paycheck Protection Program (PPP).

CRE loans totaled $2.32 billion at September 30, 2021, increasing $266.8 million, or 13.0%, from September 30, 2020 and down $4.3 million, or 0.2%, from June 30, 2021 as new production activity was offset by amortization and paydowns in the third quarter.

STRATEGIC DEPOSIT AND LIQUIDITY MANAGEMENT FRANCHISE EXPANSION

TriState Capital continues to deliver growth on its agile liquidity management franchise, which creates meaningful service-based client relationships and provides highly responsive funding. The bank is winning new business and enhancing the breadth and depth of existing client relationships with its nationally distributed service and liquidity management offerings for financial services businesses, payroll and other specialized payment servicers, real estate firms, high-net-worth individuals, family offices, middle market companies, municipalities and non-profits.

Average deposits totaled a record $10.25 billion in the third quarter of 2021, growing 25.0% from $8.21 billion in the third quarter of last year and 7.3% from $9.56 billion in the linked quarter. Period-end deposits totaled a record $10.76 billion at September 30, 2021, growing $2.57 billion, or 31.4%, from September 30, 2020, and $564.7 million, or 5.5%, from June 30, 2021.

Treasury management deposit accounts totaled $2.45 billion at September 30, 2021, increasing $1.10 billion, or 82.0%, from September 30, 2020 and $186.8 million, or 8.2%, from June 30, 2021.

The bank’s loan-to-deposit ratio at September 30, 2021 was 91.75%, compared to 93.53% at September 30, 2020 and 91.09% at June 30, 2021, reflecting the bank’s ability to manage liquidity levels in line with deployment opportunities.

INTEREST RATE MANAGEMENT

TriState Capital continues to maintain a balance sheet with significant flexibility to manage interest rate dynamics, while offering attractive deposit and loan pricing to clients. Ultimately, the bank favors an asset-sensitive approach over the long term.

Investment securities totaled a record $1.43 billion at September 30, 2021, up 74.3% from September 30, 2020 and 6.9% from June 30, 2021 as the bank continued to build on-balance sheet liquidity.

Approximately 60% of TriState Capital’s non-fixed rate deposits use the Effective Fed Funds Rate or another benchmark as reference points, and the remaining non-fixed rate deposits are priced at rates set with bank discretion. Total cost of funds for all deposits and interest-bearing liabilities averaged 0.49% during the third quarter of 2021, compared to 0.77% in the same period last year and 0.51% in the linked quarter. The total cost of deposits averaged 0.41% during the third quarter of 2021, compared to 0.67% in the same period last year and 0.42% in the linked quarter.

At September 30, 2021, 95% of the bank’s loans were floating rate and indexed to 30-day LIBOR or the Prime Rate. TriState Capital continued to constructively use interest rate floors on existing and new variable rate loans throughout the third quarter of 2021.

The yield on total loans averaged 2.32% during the third quarter of 2021, compared to 2.49% in the prior year period and 2.35% in the linked quarter. Loan yields resulted primarily from trends in 30-day LIBOR, which declined on average less than 1 basis point during the third quarter of 2021. Loan yields were also affected by higher rates of growth in balances of private bank loans relative to commercial bank loans. Loan yield movement was offset by a continued reduction in deposit costs.

NIM expanded for the fourth consecutive quarter to 1.65% for the third quarter of 2021, up 19 basis points from the same period the year prior and 2 basis points from the linked quarter.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the third quarter of 2021, reflecting its disciplined credit culture and lower risk profile resulting from the majority of its loans consisting of private banking non-purpose margin loans collateralized by marketable securities. Private banking grew to represent 62.9% of the total loan portfolio at September 30, 2021, while CRE and C&I comprised 23.5% and 13.6% of total loans, respectively.

COVID-19 deferral levels continued to decline in line with expectations to two loans representing $18.8 million or 0.2% of total loans on September 30, 2021, from four loans representing $41.0 million or 0.4% of total loans on June 30, 2021.

The allowance for credit losses on loans and leases (ACL) was $32.4 million at September 30, 2021, compared to $30.7 million at September 30, 2020 and $32.6 million at June 30, 2021. ACL on commercial loans represented 0.82% of commercial loans at period end, excluding private banking loans primarily collateralized by liquid, marketable securities that do not require a reserve, compared to 0.89% at September 30, 2020 and 0.85% at June 30, 2021. As a percentage of total loans, ACL was 0.33% at September 30, 2021, 0.40% at September 30, 2020 and 0.35% at June 30, 2021.

TriState Capital’s net charge offs (NCOs) were $238,000 in the third quarter of 2021, or 0.01% of total average loans of $9.43 billion. NCOs were $0 in the year-ago quarter and $2.3 million in the linked quarter.

During the third quarter of 2021, NPAs and NPLs declined by 21.4% and 22.8%, respectively, from June 30, 2021 to September 30, 2021.

NPAs were $10.8 million, or 0.09% of total assets, at September 30, 2021, compared to $9.5 million, or 0.10%, at September 30, 2020 and $13.7 million, or 0.12%, at June 30, 2021. NPLs were $8.6 million, or 0.09% of total loans, at September 30, 2021, compared to $6.8 million, or 0.09%, at September 30, 2020 and $11.2 million, or 0.12%, at June 30, 2021.

Total adverse-rated credits, including NPLs, were $43.5 million, or 0.44% of total loans, at September 30, 2021, compared to $38.8 million, or 0.51%, at September 30, 2020 and $34.1 million, or 0.37%, at June 30, 2021. TriState Capital maintains a very low ratio of criticized assets to total loans that was more than 10 times lower than the 4.41% most-recent quarter median for publicly traded commercial banks with assets of $10 billion to $20 billion, according to data from S&P Capital IQ.

TriState Capital’s provision for credit losses was de minimis in the third quarter of 2021, $7.4 million in the third quarter of 2020 and $96,000 in the linked quarter.

CAPITAL STRENGTH AND EFFICIENCY

The company’s strong balance sheet included $1.90 billion in cash, equivalents and securities at September 30, 2021. Cash, equivalents, securities and private banking loans -- which are primarily collateralized by marketable securities that are monitored daily, liquid and subject to favorable treatment under regulatory capital requirements -- represented 66.65% of total assets at the end of the third quarter of 2021.

As of September 30, 2021, estimated regulatory capital ratios for TriState Capital Holdings were 13.71% for total risk-based capital, 11.79% for tier 1 risk-based capital, 9.01% for common equity tier 1 risk-based capital, and 6.61% for tier 1 leverage. For TriState Capital Bank, the estimated capital ratios were 13.38% for total risk-based capital, 12.94% for tier 1 risk-based capital, 12.94% for common equity tier 1 risk-based capital, and 7.24% for tier 1 leverage.

TriState Capital had $9.8 million of common stock repurchase authority available at September 30, 2021 under previously disclosed buyback programs authorized by its Board of Directors. Since the Board first authorized share buybacks in 2014, the company has repurchased a total of 2.1 million shares for approximately $33.0 million at an average cost of $15.39 per share. The company has not repurchased shares on the open market since the second quarter of 2020.

CONFERENCE CALL

As previously announced, TriState Capital will hold an investor conference call tomorrow. The live conference call on October 21 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link https://dpregister.com/sreg/10160497/edacb54f34 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 investor call.” The call may be accessed by dialing 888-339-0757 from the United States or Canada, and 412-902-4194 from other international locations.

The live conference call will also be available through an audio webcast accessible at https://events.q4inc.com/attendee/650246783 or https://investors.tristatecapitalbank.com. These links may also be used to access an archived replay of the conference call.

A telephone replay of the call will be available approximately one hour after the end of the conference through October 28. 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 10160497.

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 $12.07 billion in assets as of September 30, 2021, 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 $11.45 billion in assets under management as of September 30, 2021, and serves institutional clients and TriState Capital’s financial intermediary network. For more information, please visit http://investors.tristatecapitalbank.com.

FORWARD-LOOKING STATEMENTS

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect TriState Capital’s current views with respect to, among other things, future events and the company’s financial performance, as well as the company’s goals and objectives for future operations, financial and business trends, business prospects and management’s outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other measures of future financial or business performance, strategies or expectations. These statements are often, but not always, made through the use of words or phrases such as “achieve,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “maintain,” “may,” “opportunity,” “outlook,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “sustain,” “target,” “trend,” “will,” “will likely result,” and “would,” or the negative versions of those words or other comparable statements of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about TriState Capital’s industry and beliefs or assumptions made by management, many of which, by their nature, are inherently uncertain. Although TriState Capital believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, TriState Capital cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that change over time and are difficult to predict, including, but not limited to, the following:

  • risks associated with the COVID-19 pandemic and their expected impact and duration, including effects on TriState Capital’s operations, its clients, economic conditions and the demand for its products and services;
  • TriState Capital’s ability to prudently manage its growth and execute its strategy, including the successful integration of past and future acquisitions, its ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and manage customer disintermediation;
  • deterioration of TriState Capital’s asset quality;
  • TriState Capital’s level of non-performing assets and the costs associated with resolving problem loans, including litigation and other costs;
  • possible additional loan and lease losses and impairment, changes in the value of collateral securing TriState Capital’s loans and leases and the collectability of loans and leases, particularly as a result of the COVID-19 pandemic and the programs implemented by the Coronavirus Aid, Relief, and Economic Security Act, including its automatic loan forbearance provisions;
  • possible changes in the speed of loan prepayments by customers and loan origination or sales volumes;
  • business and economic conditions generally and in the financial services industry, nationally and within TriState Capital’s local market areas, including the effects of an increase in unemployment levels, slowdowns in economic growth and changes in demand for products or services or the value of assets under management;
  • TriState Capital’s ability to maintain important deposit customer relationships, its reputation and otherwise avoid liquidity risks;
  • changes in management personnel;
  • TriState Capital’s ability to recruit and retain key employees;
  • volatility and direction of interest rates;
  • risks related to the phasing out of LIBOR and changes in the manner of calculating reference rates, as well as the impact of the phase out of LIBOR and introduction of alternative reference rates on the value of loans and other financial instruments that are linked to LIBOR;
  • changes in accounting policies, accounting standards, or authoritative accounting guidance, including the CECL model;
  • any impairment of TriState Capital’s goodwill or other intangible assets;
  • TriState Capital’s ability to develop and provide competitive products and services that appeal to its customers and target markets;
  • TriState Capital’s ability to provide investment management performance competitive with its peers and benchmarks;
  • fluctuations in the carrying value of the assets under management held by Chartwell, as well as the relative and absolute investment performance of such subsidiary’s investment products;
  • operational risks associated with TriState Capital’s business, including technology and cyber-security related risks;
  • increased competition in the financial services industry, particularly from regional and national institutions;
  • negative perceptions or publicity with respect to any products or services offered by TriState Capital;
  • adverse judgments or other resolution of pending and future legal proceedings, and costs incurred in defending such proceedings;
  • changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, including economic stimulus programs, and potential expenses associated with complying with such laws and regulations;
  • TriState Capital’s ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms;
  • regulatory limits on TriState Capital’s ability to receive dividends from its subsidiaries and pay dividends to shareholders;
  • changes and direction of government policy towards and intervention in the U.S. financial system;
  • natural disasters and adverse weather, acts of terrorism, regional or national civil unrest, cyber-attacks, an outbreak of hostilities, a public health outbreak (such as COVID-19) or other international or domestic calamities, and other matters beyond TriState Capital’s control;
  • the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory or compliance risk resulting from developments related to any of the risks discussed above; and
  • other factors that are discussed in TriState Capital’s filings with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if TriState Capital’s underlying assumptions prove to be incorrect, actual results may differ materially from what the company anticipates. Accordingly, readers should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for TriState Capital to predict which will arise. Any forward-looking statement speaks only as of the date on which it is made, and TriState Capital does not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. In addition, TriState Capital cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

NON-GAAP FINANCIAL DISCLOSURES

This news release and the accompanying tables contain certain 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, pre-tax, pre-provision net revenue and efficiency ratio. Although TriState Capital believes these 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 most directly comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and in the reconciliation tables accompanying this news release.

TRISTATE CAPITAL HOLDINGS, INC.
BALANCE SHEET DATA (UNAUDITED)

 

As of

 

September 30,

June 30,

September 30,

(Dollars in thousands)

2021

2021

2020

Cash and cash equivalents

$

469,932

 

$

529,453

 

$

608,302

 

Total investment securities

1,429,613

 

1,337,658

 

820,223

 

Loans and leases held-for-investment

9,869,011

 

9,282,922

 

7,654,446

 

Allowance for credit losses on loans and leases

(32,363)

 

(32,577)

 

(30,706)

 

Loans and leases held-for-investment, net

9,836,648

 

9,250,345

 

7,623,740

 

Goodwill and other intangibles, net

62,478

 

62,955

 

64,389

 

Other assets

360,197

 

360,761

 

377,136

 

Total assets

$

12,158,868

 

$

11,541,172

 

$

9,493,790

 

 

 

 

 

Deposits

$

10,756,141

 

$

10,191,433

 

$

8,183,713

 

Borrowings, net

355,654

 

345,600

 

395,439

 

Other liabilities

233,035

 

209,571

 

271,438

 

Total liabilities

11,344,830

 

10,746,604

 

8,850,590

 

 

 

 

 

Preferred stock

180,443

 

179,343

 

116,079

 

Common shareholders’ equity

633,595

 

615,225

 

527,121

 

Total shareholders’ equity

814,038

 

794,568

 

643,200

 

 

 

 

 

Total liabilities and shareholders’ equity

$

12,158,868

 

$

11,541,172

 

$

9,493,790

 

TRISTATE CAPITAL HOLDINGS, INC.
INCOME STATEMENT DATA (UNAUDITED)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

June 30,

September 30,

 

September 30,

September 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

Interest income:

 

 

 

 

 

 

Loans and leases

$

55,071

 

$

51,702

 

$

46,256

 

 

$

155,959

 

$

152,551

 

Investments

4,477

 

3,737

 

3,687

 

 

10,860

 

11,528

 

Interest-earning deposits

157

 

116

 

279

 

 

433

 

2,006

 

Total interest income

59,705

 

55,555

 

50,222

 

 

167,252

 

166,085

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

10,480

 

10,106

 

13,898

 

 

31,340

 

57,095

 

Borrowings

2,558

 

2,537

 

2,850

 

 

7,677

 

7,110

 

Total interest expense

13,038

 

12,643

 

16,748

 

 

39,017

 

64,205

 

Net interest income

46,667

 

42,912

 

33,474

 

 

128,235

 

101,880

 

Provision for credit losses

 

96

 

7,430

 

 

320

 

16,428

 

Net interest income after provision for credit losses

46,667

 

42,816

 

26,044

 

 

127,915

 

85,452

 

Non-interest income:

 

 

 

 

 

 

Investment management fees

9,436

 

9,451

 

8,095

 

 

27,887

 

23,471

 

Service charges on deposits

377

 

325

 

235

 

 

1,018

 

763

 

Net gain on the sale and call of debt securities

33

 

98

 

3,744

 

 

130

 

3,815

 

Swap fees

3,059

 

3,913

 

3,953

 

 

9,683

 

12,179

 

Commitment and other loan fees

740

 

564

 

381

 

 

1,630

 

1,262

 

Bank owned life insurance income

613

 

480

 

441

 

 

1,522

 

1,298

 

Other income (loss)

(28)

 

13

 

40

 

 

855

 

414

 

Total non-interest income

14,230

 

14,844

 

16,889

 

 

42,725

 

43,202

 

Non-interest expense:

 

 

 

 

 

 

Compensation and employee benefits

21,701

 

20,937

 

18,524

 

 

62,559

 

52,539

 

Premises and equipment expense

1,520

 

1,173

 

1,488

 

 

4,099

 

4,389

 

Professional fees

2,310

 

2,124

 

1,596

 

 

5,758

 

4,175

 

FDIC insurance expense

1,375

 

1,125

 

3,030

 

 

3,625

 

7,760

 

General insurance expense

363

 

341

 

294

 

 

1,002

 

834

 

State capital shares tax expense

790

 

777

 

366

 

 

2,217

 

1,115

 

Travel and entertainment expense

755

 

639

 

592

 

 

1,835

 

1,735

 

Technology and data services

4,274

 

3,687

 

2,576

 

 

11,061

 

7,294

 

Intangible amortization expense

477

 

478

 

478

 

 

1,433

 

1,466

 

Marketing and advertising

984

 

898

 

394

 

 

2,566

 

1,694

 

Other operating expenses

3,459

 

2,246

 

2,089

 

 

7,556

 

5,667

 

Total non-interest expense

38,008

 

34,425

 

31,427

 

 

103,711

 

88,668

 

Income before tax

22,889

 

23,235

 

11,506

 

 

66,929

 

39,986

 

Income tax expense

2,873

 

4,455

 

2,177

 

 

11,933

 

7,362

 

Net income

$

20,016

 

$

18,780

 

$

9,329

 

 

$

54,996

 

$

32,624

 

Preferred stock dividends

3,097

 

3,077

 

1,962

 

 

9,233

 

5,886

 

Net income available to common shareholders

$

16,919

 

$

15,703

 

$

7,367

 

 

$

45,763

 

$

26,738

 

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

 

As of and For the 

Three Months Ended

 

As of and For the

Nine Months Ended

 

September 30,

June 30,

September 30,

 

September 30,

September 30,

(Dollars in thousands, except per share data)

2021

2021

2020

 

2021

2020

Per share and share data:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

$

0.46

 

$

0.42

 

$

0.26

 

 

$

1.24

 

$

0.95

 

Diluted

$

0.44

 

$

0.41

 

$

0.26

 

 

$

1.20

 

$

0.93

 

Book value per common share

$

19.11

 

$

18.54

 

$

17.67

 

 

$

19.11

 

$

17.67

 

Tangible book value per common share (1)

$

17.23

 

$

16.65

 

$

15.51

 

 

$

17.23

 

$

15.51

 

Common shares outstanding, at end of period

33,154,343

 

33,176,934

 

29,828,143

 

 

33,154,343

 

29,828,143

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

31,357,356

 

31,280,481

 

28,286,250

 

 

31,287,924

 

28,230,180

 

Diluted

32,146,222

 

32,147,758

 

28,674,443

 

 

32,316,867

 

28,679,283

 

 

 

 

 

 

 

 

Performance ratios:

 

 

 

 

 

 

Return on average assets (2)

0.68

%

0.69

%

0.39

%

 

0.67

%

0.49

%

Return on average common equity (2)

10.67

%

10.37

%

5.56

%

 

10.06

%

6.90

%

Net interest margin (2) (3)

1.65

%

1.63

%

1.46

%

 

1.63

%

1.60

%

Total revenue (1)

$

60,864

 

$

57,658

 

$

46,619

 

 

$

170,830

 

$

141,267

 

Pre-tax, pre-provision net revenue (1)

$

22,856

 

$

23,233

 

$

15,192

 

 

$

67,119

 

$

52,599

 

Bank efficiency ratio (1)

54.79

%

51.51

%

58.73

%

 

52.41

%

53.66

%

Non-interest expense to average assets (2)

1.30

%

1.27

%

1.31

%

 

1.27

%

1.33

%

 

 

 

 

 

 

 

Asset quality:

 

 

 

 

 

 

Non-performing loans

$

8,625

 

$

11,175

 

$

6,754

 

 

$

8,625

 

$

6,754

 

Non-performing assets

$

10,803

 

$

13,743

 

$

9,478

 

 

$

10,803

 

$

9,478

 

Other real estate owned

$

2,178

 

$

2,568

 

$

2,724

 

 

$

2,178

 

$

2,724

 

Non-performing assets to total assets

0.09

%

0.12

%

0.10

%

 

0.09

%

0.10

%

Non-performing loans to total loans

0.09

%

0.12

%

0.09

%

 

0.09

%

0.09

%

ACL to loans and leases

0.33

%

0.35

%

0.40

%

 

0.33

%

0.40

%

ACL to non-performing loans

375.22

%

291.52

%

454.63

%

 

375.22

%

454.63

%

Net charge-offs (recoveries)

$

238

 

$

2,253

 

$

 

 

$

2,690

 

$

(170)

 

Net charge-offs to average total loans (2)

0.01

%

0.10

%

%

 

0.04

%

%

 

 

 

 

 

 

 

Capital ratios: (4)

 

 

 

 

 

 

Tier 1 leverage ratio

6.61

%

6.86

%

6.23

%

 

6.61

%

6.23

%

Common equity tier 1 risk-based capital ratio

9.01

%

9.06

%

8.48

%

 

9.01

%

8.48

%

Tier 1 risk-based capital ratio

11.79

%

11.94

%

10.56

%

 

11.79

%

10.56

%

Total risk-based capital ratio

13.71

%

13.94

%

12.85

%

 

13.71

%

12.85

%

Bank tier 1 leverage ratio

7.24

%

7.34

%

7.00

%

 

7.24

%

7.00

%

Bank common equity tier 1 risk-based capital ratio

12.94

%

12.80

%

11.89

%

 

12.94

%

11.89

%

Bank tier 1 risk based capital ratio

12.94

%

12.80

%

11.89

%

 

12.94

%

11.89

%

Bank total risk-based capital ratio

13.38

%

13.26

%

12.46

%

 

13.38

%

12.46

%

 

 

 

 

 

 

 

Investment Management Segment:

 

 

 

 

 

 

Assets under management

$

11,454,000

 

$

11,511,000

 

$

9,653,000

 

 

$

11,454,000

 

$

9,653,000

 

EBITDA (1)

$

1,847

 

$

2,063

 

$

1,551

 

 

$

5,826

 

$

3,799

 

(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.

(4)

 

Capital ratios are estimated until regulatory reports are filed.

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)

 

Three Months Ended

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

(Dollars in thousands)

Average
Balance

Interest
Income (1)/
Expense

Average
Yield/
Rate (2)

 

Average
Balance

Interest
Income (1)/
Expense

Average
Yield/
Rate (2)

 

Average
Balance

Interest
Income (1)/
Expense

Average
Yield/
Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

$

429,806

 

$

155

 

0.14

%

 

$

407,627

 

$

114

 

0.11

%

 

$

866,502

 

$

278

 

0.13

%

Federal funds sold

12,629

 

2

 

0.06

%

 

11,502

 

2

 

0.07

%

 

9,071

 

2

 

0.09

%

Debt securities available-for-sale

415,855

 

1,664

 

1.59

%

 

266,264

 

886

 

1.33

%

 

561,378

 

1,804

 

1.28

%

Debt securities held-to-maturity

943,733

 

2,686

 

1.13

%

 

1,040,658

 

2,705

 

1.04

%

 

262,128

 

1,701

 

2.58

%

Equity securities

163

 

 

%

 

 

 

%

 

 

 

%

FHLB stock

11,932

 

137

 

4.56

%

 

11,776

 

154

 

5.25

%

 

13,284

 

196

 

5.87

%

Total loans and leases

9,427,370

 

55,071

 

2.32

%

 

8,808,775

 

51,702

 

2.35

%

 

7,386,265

 

46,256

 

2.49

%

Total interest-earning assets

11,241,488

 

59,715

 

2.11

%

 

10,546,602

 

55,563

 

2.11

%

 

9,098,628

 

50,237

 

2.20

%

Other assets

382,763

 

 

 

 

347,923

 

 

 

 

420,887

 

 

 

Total assets

$

11,624,251

 

 

 

 

$

10,894,525

 

 

 

 

$

9,519,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

3,946,028

 

$

3,682

 

0.37

%

 

$

3,852,078

 

$

3,214

 

0.33

%

 

$

2,866,303

 

$

3,280

 

0.46

%

Money market deposit accounts

4,879,971

 

5,794

 

0.47

%

 

4,316,946

 

5,636

 

0.52

%

 

3,811,100

 

6,944

 

0.72

%

Certificates of deposit

899,855

 

1,004

 

0.44

%

 

929,906

 

1,256

 

0.54

%

 

1,121,824

 

3,674

 

1.30

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

FHLB borrowings

250,815

 

1,102

 

1.74

%

 

250,000

 

1,082

 

1.74

%

 

300,000

 

1,392

 

1.85

%

Line of credit borrowings

761

 

 

%

 

 

 

%

 

 

 

%

Subordinated notes payable, net

95,619

 

1,456

 

6.04

%

 

95,565

 

1,455

 

6.11

%

 

95,601

 

1,458

 

6.07

%

Total interest-bearing liabilities

10,073,049

 

13,038

 

0.51

%

 

9,444,495

 

12,643

 

0.54

%

 

8,194,828

 

16,748

 

0.81

%

Noninterest-bearing deposits

528,897

 

 

 

 

460,601

 

 

 

 

407,079

 

 

 

Other liabilities

213,552

 

 

 

 

203,033

 

 

 

 

274,480

 

 

 

Shareholders’ equity

808,753

 

 

 

 

786,396

 

 

 

 

643,128

 

 

 

Total liabilities and shareholders’ equity

$

11,624,251

 

 

 

 

$

10,894,525

 

 

 

 

$

9,519,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

46,677

 

 

 

 

$

42,920

 

 

 

 

$

33,489

 

 

Net interest spread (1)

 

 

1.60

%

 

 

 

1.57

%

 

 

 

1.39

%

Net interest margin (1)

 

 

1.65

%

 

 

 

1.63

%

 

 

 

1.46

%

(1)

 

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

(2)

 

Annualized.

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)

 

Nine Months Ended September 30,

 

2021

 

2020

(Dollars in thousands)

Average
Balance

Interest
Income (1)/
Expense

Average
Yield/
Rate (2)

 

Average
Balance

Interest
Income (1)/
Expense

Average
Yield/
Rate (2)

Assets

 

 

 

 

 

 

 

Interest-earning deposits

$

463,827

 

$

427

 

0.12

%

 

$

809,978

 

$

1,983

 

0.33

%

Federal funds sold

11,570

 

6

 

0.07

%

 

8,022

 

23

 

0.38

%

Debt securities available-for-sale

343,897

 

3,120

 

1.21

%

 

391,377

 

5,874

 

2.00

%

Debt securities held-to-maturity

875,157

 

7,291

 

1.11

%

 

252,296

 

4,805

 

2.54

%

Debt securities trading

104

 

1

 

1.29

%

 

76

 

1

 

1.76

%

Equity securities

55

 

 

%

 

 

 

%

FHLB stock

11,754

 

473

 

5.38

%

 

15,569

 

899

 

7.71

%

Total loans and leases

8,841,619

 

155,959

 

2.36

%

 

7,052,457

 

152,551

 

2.89

%

Total interest-earning assets

10,547,983

 

167,277

 

2.12

%

 

8,529,775

 

166,136

 

2.60

%

Other assets

368,728

 

 

 

 

380,908

 

 

 

Total assets

$

10,916,711

 

 

 

 

$

8,910,683

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

3,624,587

 

$

9,689

 

0.36

%

 

$

2,224,827

 

$

11,213

 

0.67

%

Money market deposit accounts

4,516,081

 

17,395

 

0.51

%

 

3,740,968

 

28,975

 

1.03

%

Certificates of deposit

947,127

 

4,256

 

0.60

%

 

1,297,637

 

16,907

 

1.74

%

Borrowings:

 

 

 

 

 

 

 

FHLB borrowings

251,557

 

3,256

 

1.73

%

 

340,493

 

4,711

 

1.85

%

Line of credit borrowings

1,769

 

55

 

4.16

%

 

8,047

 

261

 

4.33

%

Subordinated notes payable, net

95,565

 

4,366

 

6.11

%

 

46,851

 

2,138

 

6.10

%

Total interest-bearing liabilities

9,436,686

 

39,017

 

0.55

%

 

7,658,823

 

64,205

 

1.12

%

Noninterest-bearing deposits

471,727

 

 

 

 

391,689

 

 

 

Other liabilities

221,290

 

 

 

 

226,838

 

 

 

Shareholders’ equity

787,008

 

 

 

 

633,333

 

 

 

Total liabilities and shareholders’ equity

$

10,916,711

 

 

 

 

$

8,910,683

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

128,260

 

 

 

 

$

101,931

 

 

Net interest spread (1)

 

 

1.57

%

 

 

 

1.48

%

Net interest margin (1)

 

 

1.63

%

 

 

 

1.60

%

(1)

 

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

(2)

 

Annualized.

TRISTATE CAPITAL HOLDINGS, INC.
LOAN AND LEASE COMPOSITION (UNAUDITED)

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

(Dollars in thousands)

Loan

Balance

Percent of
Total Loans

 

Loan

Balance

Percent of
Total Loans

 

Loan

Balance

Percent of
Total Loans

Private banking loans

$

6,204,009

 

62.9

%

 

$

5,713,562

 

61.5

%

 

$

4,458,767

 

58.3

%

Middle-market banking loans:

 

 

 

 

 

 

 

 

Commercial and industrial

1,340,817

 

13.6

%

 

1,240,917

 

13.4

%

 

1,138,288

 

14.9

%

Commercial real estate

2,324,185

 

23.5

%

 

2,328,443

 

25.1

%

 

2,057,391

 

26.8

%

Total middle-market banking loans

3,665,002

 

37.1

%

 

3,569,360

 

38.5

%

 

3,195,679

 

41.7

%

Loans and leases held-for-investment

$

9,869,011

 

100.0

%

 

$

9,282,922

 

100.0

%

 

$

7,654,446

 

100.0

%

TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 

Three Months Ended September 30, 2021

 

Three Months Ended September 30, 2020

(Dollars in thousands)

Bank

Investment
Management

Parent
and Other

Consolidated

 

Bank

Investment
Management

Parent
and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

59,705

 

$

 

$

 

$

59,705

 

 

$

50,222

 

$

 

$

 

$

50,222

 

Interest expense

11,591

 

 

1,447

 

13,038

 

 

15,297

 

 

1,451

 

16,748

 

Net interest income (loss)

48,114

 

 

(1,447)

 

46,667

 

 

34,925

 

 

(1,451)

 

33,474

 

Provision for credit losses

 

 

 

 

 

7,430

 

 

 

7,430

 

Net interest income (loss) after provision for credit losses

48,114

 

 

(1,447)

 

46,667

 

 

27,495

 

 

(1,451)

 

26,044

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

9,780

 

(344)

 

9,436

 

 

 

8,293

 

(198)

 

8,095

 

Net gain on the sale and call of debt securities

33

 

 

 

33

 

 

3,744

 

 

 

3,744

 

Other non-interest income (loss)

4,768

 

(7)

 

 

4,761

 

 

5,027

 

23

 

 

5,050

 

Total non-interest income (loss)

4,801

 

9,773

 

(344)

 

14,230

 

 

8,771

 

8,316

 

(198)

 

16,889

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

477

 

 

477

 

 

 

478

 

 

478

 

Other non-interest expense

28,975

 

8,031

 

525

 

37,531

 

 

23,462

 

6,868

 

619

 

30,949

 

Total non-interest expense

28,975

 

8,508

 

525

 

38,008

 

 

23,462

 

7,346

 

619

 

31,427

 

Income (loss) before tax

23,940

 

1,265

 

(2,316)

 

22,889

 

 

12,804

 

970

 

(2,268)

 

11,506

 

Income tax expense (benefit)

2,719

 

(412)

 

566

 

2,873

 

 

2,357

 

251

 

(431)

 

2,177

 

Net income (loss)

$

21,221

 

$

1,677

 

$

(2,882)

 

$

20,016

 

 

$

10,447

 

$

719

 

$

(1,837)

 

$

9,329

 

 

Nine Months Ended September 30, 2021

 

Nine Months Ended September 30, 2020

(Dollars in thousands)

Bank

Investment
Management

Parent
and Other

Consolidated

 

Bank

Investment
Management

Parent
and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

167,252

 

$

 

$

 

$

167,252

 

 

$

166,085

 

$

 

$

 

$

166,085

 

Interest expense

34,629

 

 

4,388

 

39,017

 

 

61,844

 

 

2,361

 

64,205

 

Net interest income (loss)

132,623

 

 

(4,388)

 

128,235

 

 

104,241

 

 

(2,361)

 

101,880

 

Provision for credit losses

320

 

 

 

320

 

 

16,428

 

 

 

16,428

 

Net interest income (loss) after provision for credit losses

132,303

 

 

(4,388)

 

127,915

 

 

87,813

 

 

(2,361)

 

85,452

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

28,789

 

(902)

 

27,887

 

 

 

23,955

 

(484)

 

23,471

 

Net gain on the sale and call of debt securities

130

 

 

 

130

 

 

3,815

 

 

 

3,815

 

Other non-interest income

14,683

 

25

 

 

14,708

 

 

15,893

 

23

 

 

15,916

 

Total non-interest income (loss)

14,813

 

28,814

 

(902)

 

42,725

 

 

19,708

 

23,978

 

(484)

 

43,202

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

1,433

 

 

1,433

 

 

 

1,466

 

 

1,466

 

Other non-interest expense

77,201

 

23,300

 

1,777

 

102,278

 

 

64,462

 

20,498

 

2,242

 

87,202

 

Total non-interest expense

77,201

 

24,733

 

1,777

 

103,711

 

 

64,462

 

21,964

 

2,242

 

88,668

 

Income (loss) before tax

69,915

 

4,081

 

(7,067)

 

66,929

 

 

43,059

 

2,014

 

(5,087)

 

39,986

 

Income tax expense (benefit)

12,013

 

183

 

(263)

 

11,933

 

 

7,878

 

381

 

(897)

 

7,362

 

Net income (loss)

$

57,902

 

$

3,898

 

$

(6,804)

 

$

54,996

 

 

$

35,181

 

$

1,633

 

$

(4,190)

 

$

32,624

 

TRISTATE CAPITAL HOLDINGS, INC.
EARNINGS PER COMMON SHARE (UNAUDITED)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

June 30,

September 30,

 

September 30,

September 30,

(Dollars in thousands, except per share data)

2021

2021

2020

 

2021

2020

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

Net income

$

20,016

 

$

18,780

 

$

9,329

 

 

$

54,996

 

$

32,624

 

Less: Preferred dividends on Series A and Series B

1,963

 

1,962

 

1,962

 

 

5,887

 

5,886

 

Less: Preferred dividends on Series C

1,134

 

1,115

 

 

 

3,346

 

 

Net income available to common shareholders

$

16,919

 

$

15,703

 

$

7,367

 

 

$

45,763

 

$

26,738

 

 

 

 

 

 

 

 

Allocation of net income available:

 

 

 

 

 

 

Common shareholders

$

14,274

 

$

13,272

 

$

7,367

 

 

$

38,679

 

$

26,738

 

Series C convertible preferred shareholders

2,225

 

2,040

 

 

 

5,944

 

 

Warrant shareholders

420

 

391

 

 

 

1,140

 

 

Total

$

16,919

 

$

15,703

 

$

7,367

 

 

$

45,763

 

$

26,738

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

31,357,356

 

31,280,481

 

28,286,250

 

 

31,287,924

 

28,230,180

 

Series C convertible preferred stock, as-if converted

4,887,272

 

4,807,272

 

 

 

4,807,858

 

 

Warrants, as-if exercised

922,438

 

922,438

 

 

 

922,438

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.46

 

$

0.42

 

$

0.26

 

 

$

1.24

 

$

0.95

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

Income available to common shareholders after allocation

$

14,274

 

$

13,272

 

$

7,367

 

 

$

38,679

 

$

26,738

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

31,357,356

 

31,280,481

 

28,286,250

 

 

31,287,924

 

28,230,180

 

Restricted stock - dilutive

664,729

 

719,504

 

303,138

 

 

884,714

 

313,726

 

Stock options - dilutive

124,137

 

147,773

 

85,055

 

 

144,229

 

135,377

 

Diluted common shares

32,146,222

 

32,147,758

 

28,674,443

 

 

32,316,867

 

28,679,283

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.44

 

$

0.41

 

$

0.26

 

 

$

1.20

 

$

0.93

 

 

 

 

 

 

 

 

 

September 30,

June 30,

September 30,

 

September 30,

September 30,

 

2021

2021

2020

 

2021

2020

Anti-dilutive shares:

 

 

 

 

 

 

Restricted stock

10,750

 

10,750

 

785,762

 

 

11,500

 

566,498

 

Stock options

 

 

5,500

 

 

 

 

Series C convertible preferred stock, as-if converted

4,887,272

 

4,807,272

 

 

 

4,887,272

 

 

Warrants, as-if exercised

922,438

 

922,438

 

 

 

922,438

 

 

Total anti-dilutive shares

5,820,460

 

5,740,460

 

791,262

 

 

5,821,210

 

566,498

 

Earnings per common share (“EPS”) is computed using the two-class method, which requires that the Series C convertible preferred stock and warrants to be treated as participating classes of securities in the computation of EPS. In addition, net income is reduced by dividends declared on all series of preferred stock to derive net income available to common shareholders. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security. Net income available to common shareholders is reduced by the percentage of average common shares allocable to Series C convertible preferred holders and warrant holders on an as-if converted basis to arrive at net income allocable to common shareholders. Basic EPS is computed by dividing net income allocable to common shareholders by the weighted average number of its common shares outstanding for the period, excluding non-vested restricted stock. Diluted EPS reflects the potential dilution upon the exercise of stock options and warrants, and the vesting of restricted stock awards granted utilizing the treasury stock method. The Series C convertible preferred stock is excluded from diluted weighted average common shares outstanding because the payment of the dividend is considered in the net income allocable to common shareholders for the calculation of basic EPS.

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,” “total revenue,” “pre-tax, pre-provision net revenue” and “efficiency ratio.” These non-GAAP financial measures are supplemental measures that we believe provide management and our investors with a more detailed understanding of our performance, although 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 in accordance with GAAP. The non-GAAP financial measures presented herein are calculated as follows:

“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 so that they can better understand and assess changes from period to period in common shareholders’ equity exclusive of changes in intangible assets associated with prior acquisitions. Intangible assets are created when we buy businesses that 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 associated with prior acquisitions.

“EBITDA” is defined as net income before interest expense, income tax expense, depreciation expense and intangible amortization expense. We use 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 by excluding certain non-cash items and the volatility that is associated with certain discrete items that are unrelated to our core business.

“Total revenue” is defined as net interest income and total 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 core operating revenue by removing the volatility that is associated with certain items that are unrelated to our core business.

“Pre-tax, pre-provision net revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale and call of debt securities and total non-interest expense. 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 and lease losses and changes in our tax rates and other items that are unrelated to our core business.

“Efficiency ratio” is defined as total non-interest expense divided by our total revenue. We believe this measure allows management and investors to better assess our operating expenses in relation to our core operating revenue, particularly at the Bank.

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

September 30,

June 30,

September 30,

(Dollars in thousands, except per share data)

2021

2021

2020

Tangible common equity and tangible book value per common share:

 

 

 

Common shareholders’ equity

$

633,595

 

$

615,225

 

$

527,121

 

Less: goodwill and intangible assets

62,478

 

62,955

 

64,389

 

Tangible common equity (numerator)

$

571,117

 

$

552,270

 

$

462,732

 

Common shares outstanding (denominator)

33,154,343

 

33,176,934

 

29,828,143

 

Tangible book value per common share

$

17.23

 

$

16.65

 

$

15.51

 

INVESTMENT MANAGEMENT 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)

2021

2021

2020

 

2021

2020

Investment Management EBITDA:

 

 

 

 

 

 

Net income

$

1,677

 

$

1,196

 

$

719

 

 

$

3,898

 

$

1,633

 

Interest expense

 

 

 

 

 

 

Income tax expense

(412)

 

286

 

251

 

 

183

 

381

 

Depreciation expense

105

 

103

 

103

 

 

312

 

319

 

Intangible amortization expense

477

 

478

 

478

 

 

1,433

 

1,466

 

EBITDA

$

1,847

 

$

2,063

 

$

1,551

 

 

$

5,826

 

$

3,799

 

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

June 30,

September 30,

 

September 30,

September 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

Total revenue and pre-tax, pre-provision net revenue:

 

 

 

 

 

 

Net interest income

$

46,667

 

$

42,912

 

$

33,474

 

 

$

128,235

 

$

101,880

 

Total non-interest income

14,230

 

14,844

 

16,889

 

 

42,725

 

43,202

 

Less: net gain on the sale and call of debt securities

33

 

98

 

3,744

 

 

130

 

3,815

 

Total revenue

$

60,864

 

$

57,658

 

$

46,619

 

 

$

170,830

 

$

141,267

 

Less: total non-interest expense

38,008

 

34,425

 

31,427

 

 

103,711

 

88,668

 

Pre-tax, pre-provision net revenue

$

22,856

 

$

23,233

 

$

15,192

 

 

$

67,119

 

$

52,599

 

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)

2021

2021

2020

 

2021

2020

Bank total revenue:

 

 

 

 

 

 

Net interest income

$

48,114

 

$

44,356

 

$

34,925

 

 

$

132,623

 

$

104,241

 

Total non-interest income

4,801

 

5,381

 

8,771

 

 

14,813

 

19,708

 

Less: net gain on the sale and call of debt securities

33

 

98

 

3,744

 

 

130

 

3,815

 

Bank total revenue

$

52,882

 

$

49,639

 

$

39,952

 

 

$

147,306

 

$

120,134

 

 

 

 

 

 

 

 

Bank efficiency ratio:

 

 

 

 

 

 

Total non-interest expense (numerator)

$

28,975

 

$

25,570

 

$

23,462

 

 

$

77,201

 

$

64,462

 

Bank total revenue (denominator)

$

52,882

 

$

49,639

 

$

39,952

 

 

$

147,306

 

$

120,134

 

Bank efficiency ratio

54.79

%

51.51

%

58.73

%

 

52.41

%

53.66

%

 

MEDIA CONTACT
Jack Horner
267-932-8760, ext. 302
412-600-2295 (mobile)
jack@hornercom.com

INVESTOR RELATIONS CONTACT
Lambert
Jeff Schoenborn and Kate Croft
888-609-8351
TSC@lambert.com

Source: TriState Capital Holdings, Inc.

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