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TriState Capital Reports EPS of $1.89 for 2019 and $0.44 for the Fourth Quarter on Record Growth of Loans and Deposits

·24 mins read

-- All categories of lending, as well as net interest income and total revenue, hit new all-time high annual and quarterly levels --

TriState Capital Holdings, Inc. (Nasdaq: TSC) fourth quarter and full year 2019 financial results included record growth in loans and deposits, all-time high levels of annual and quarterly net interest income and revenue, and growth in client assets under management.

Net income available to common shareholders was $54.4 million, or $1.89 per diluted share, in 2019 and $12.6 million, or $0.44 per share, in the fourth quarter of last year, including approximately $0.03 per share for professional fees and other expenses associated with TriState Capital’s previously disclosed strategy to actively evaluate potential acquisition opportunities for its Chartwell Investment Partners business. The parent company of Chartwell and TriState Capital Bank reported net income available to common shareholders of $52.3 million, or $1.81 per share, in 2018, and $14.4 million, or $0.50 per share, in both the fourth quarter of 2018 and third quarter of 2019.

"Meaningful organic growth across each of our commercial banking, private banking and investment management businesses contributed to all-time-high quarterly and annual revenues for TriState Capital, even as the industry faced a challenging interest rate environment in 2019," Chief Executive Officer James F. Getz said. "With much of our strong fourth quarter production coming in December, we expect the full benefit of record loan growth to be realized in net interest income this year. Together with plans for continued double-digit organic balance sheet expansion, very competitive investment performance at Chartwell, underwriting discipline, and an emphasis on investing in our businesses while managing operating expenses, TriState Capital is very well positioned to continue growing earnings in 2020."

FULL YEAR AND FOURTH QUARTER 2019 HIGHLIGHTS

  • All categories of lending hit new record levels, with total loans growing organically by 28.1% for the year and 9.3% during the quarter.

  • Commercial and industrial (C&I) loans grew 38.3% for the year and 9.4% during the quarter, while commercial real estate loans grew 21.5% for the year and 8.5% during the quarter.

  • Private banking loans grew 28.8% for the year and 9.7% during the quarter.

  • Total deposits grew 31.4% for the year and 8.9% during the quarter.

  • Chartwell assets under management (AUM) grew to $9.70 billion at period end, as 92% of Chartwell’s investment strategies surpassed their benchmarks for the trailing three years and 75% surpassed their benchmarks for the trailing five years.

  • The company maintained superior asset quality metrics, including period-end non-performing assets representing 0.06% of total assets and non-performing loans representing $184,000 of the bank’s $6.58 billion loan portfolio.

Net interest income (NII) grew to a record $33.1 million in the fourth quarter of 2019, increasing 12.0% from $29.5 million in the year-ago quarter and 2.3% from $32.3 million in the linked quarter. Double-digit annual NII growth continued as the company grew deposits at a faster rate than loans, maintaining a loan-to-deposit ratio under 100%, and further expanding private banking loans backed by marketable securities as a proportion of the bank’s balance sheet.

Non-interest income totaled $13.5 million in the fourth quarter of 2019, compared to $11.6 million in the prior year quarter and $14.2 million in the linked quarter. TriState Capital’s non-interest income represented 28.9% of total revenue for the fourth quarter of 2019 when excluding net gains on the sale of debt securities. Total revenue is a financial measure not calculated in accordance with U.S. generally accepted accounting principles ("GAAP") representing the sum of NII and total non-interest income, as described in greater detail below.

Chartwell investment management fees were $8.9 million in the fourth quarter of 2019, compared to $9.2 million in the prior year quarter and $8.9 million in the linked quarter. Borrower-facing interest rate swap activity also generated $3.4 million in fees during the fourth quarter of 2019, compared to $2.2 million in the prior year quarter and a record $4.2 million in the linked quarter.

NII and non-interest income, excluding gains and losses on the sale of securities, combined to generate record total revenue of $46.5 million for the fourth quarter of 2019, an increase of 12.9% from $41.2 million in the prior year period and 0.3% from $46.4 million in the linked quarter. Full year 2019 total revenue was a record $179.4 million, up 11.2% from $161.4 million in 2018.

Non-interest expense totaled $112.1 million in 2019 and $30.1 million in the fourth quarter of last year. This included approximately $850,000, or about $0.03 per share after tax, in the fourth quarter of 2019 for professional fees and other expenses associated with due diligence on and discussions with an investment management acquisition candidate, which concluded before the parties reached a definitive agreement. No payments were made, or are due to, the former acquisition candidate.

TriState Capital’s previously disclosed strategy to actively evaluate potential acquisitions for its Chartwell unit remains unchanged. The company will continue to consider transactions that meet all of its clear acquisition criteria, including cultural compatibility, credible investment performance, complimentary investment products, and immediate earnings per share accretion.

Excluding acquisition-related costs, non-interest expense was $111.3 million in 2019, increasing by 10.0% from $101.2 million in 2018, and $29.3 million in the fourth quarter of 2019. Total non-interest expense was $26.3 million in the prior year quarter and $27.8 million in the linked quarter.

Compensation and employee benefits were $16.7 million in the fourth quarter of 2019, compared to $16.6 million in the prior year quarter and $18.7 million in the linked quarter. Investments in talent, building scale, and client acquisition, including the expansion of the workforce by 19 employees in 2019, were largely offset by TriState Capital’s performance-based incentive compensation program and expense-management discipline across each of the company’s business lines.

TriState Capital Bank’s efficiency ratio was 54.49% in 2019 and 53.09% in 2018. The bank’s efficiency ratio for the fourth quarter of 2019 was 56.03%, compared to 54.60% in the year-ago quarter and 50.70% in the linked quarter. Efficiency ratio is a financial measure not calculated in accordance with U.S. GAAP representing non-interest expense divided by total revenue. Non-interest expense represented just 1.60% of average assets in the fourth quarter of 2019, declining 21 basis points from the year-ago quarter and increasing 1 basis point from the linked quarter.

Pre-tax, pre-provision net revenue was $16.4 million in the fourth quarter of 2019, compared to $14.9 million in the year-ago period and $18.6 million in the linked quarter. Pre-tax, pre-provision net revenue is a financial measure not calculated in accordance with U.S. GAAP 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.

Pre-tax income was $15.7 million in the fourth quarter of 2019, compared to $15.4 million in the year-ago period and $19.4 million in the linked quarter.

TriState Capital’s effective tax rate was 12.3% for 2019. 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.

Net income available to common shareholders and earnings per share in the fourth quarter of 2019 reflected $2.0 million payable for the company’s quarterly cash dividends on Series A and Series B Non-Cumulative Perpetual Preferred Stock.

ORGANIC LOAN GROWTH

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

Average loans totaled a record $6.25 billion in the fourth quarter of 2019, growing 28.7% from $4.85 billion in the year- ago quarter and 8.2% from $5.78 billion in the linked quarter. Loans at December 31, 2019 totaled $6.58 billion, growing an annual record $1.44 billion, or 28.1%, from one year prior and a quarterly record $560.9 million, or 9.3%, from September 30, 2019.

TriState Capital’s growing distribution capabilities helped drive new loan originations in its private banking business for the fourth quarter of 2019, as the company fortifies its position as the nation’s leading provider of marketable securities-backed loans through independent investment advisory and other financial services firms. Private banking loans totaled $3.70 billion at December 31, 2019, increasing $825.9 million, or 28.8%, from one year prior and $327.3 million, or 9.7%, from the end of the linked quarter.

The company continued to grow relationships with middle-market enterprises in the fourth quarter of 2019 to drive originations of commercial and industrial (C&I) loans and commercial real estate (CRE) loans. Commercial loans totaled $2.88 billion at December 31, 2019, increasing $618.8 million, or 27.3%, from one year prior and $233.6 million, or 8.8%, from the end of the linked quarter.

C&I loans grew to $1.09 billion at December 31, 2019, increasing by $300.4 million, or 38.3%, from one year prior and $93.2 million, or 9.4%, from the end of the linked quarter. CRE loans grew to $1.80 billion at December 31, 2019, increasing $318.4 million, or 21.5%, from one year prior and $140.4 million, or 8.5%, from the end of the linked quarter. CRE loans represented 27.3% of total period-end loans.

STRATEGIC DEPOSIT FRANCHISE EXPANSION

TriState Capital continues to support private banking and commercial loan growth with the strategic and organic expansion of its deposit franchise. The bank’s national treasury management and liquidity management offerings are increasing the number and depth of depositor relationships with financial services businesses, high-net-worth individuals, family offices, middle market companies, professional service firms, specialized payment and transaction processors, municipalities and non-profits.

Average deposits totaled $6.21 billion in the fourth quarter of 2019, growing 29.5% from $4.80 billion in the same period last year and 4.4% from $5.95 billion in the linked quarter. Deposits at December 31, 2019 totaled $6.63 billion, growing by an annual record $1.58 billion, or 31.4%, from one year prior and a quarterly record $540.0 million, or 8.9%, from September 30, 2019.

Treasury management deposit accounts grew to $1.07 billion at December 31, 2019, increasing $471.3 million from December 31, 2018.

The bank’s loan-to-deposit ratio was 99.1% at December 31, 2019 compared to 101.6% one year prior and 98.7% at the end of the linked quarter.

INTEREST RATE MANAGEMENT

TriState Capital continues to maintain a balance sheet with significant flexibility to manage interest rate risk in changing markets.

The yield on total loans averaged 3.81% in the fourth quarter of 2019, compared to 4.35% in the prior year period and 4.23% in the linked quarter. Yields reflect the proportion of the portfolio dedicated to private banking non-purpose margin loans secured by marketable securities, an overall focus on variable rate pricing, asset quality, and operating leverage, and downward movement in 30-day LIBOR during the fourth quarter of 2019. At December 31, 2019, 92% of the company’s loan portfolio was floating rate and primarily indexed to 30-day LIBOR.

Total cost of funds for all deposits and interest-bearing liabilities averaged 1.93% during the fourth quarter of 2019, compared to 2.19% in the same period last year and 2.27% in the linked quarter. The cost of total deposits averaged 1.92% during the fourth quarter of 2019, compared to 2.17% in the same period last year and 2.27% in the linked quarter. At December 31, 2019, 22% of deposits were fixed-rate certificates of deposit.

TriState Capital reported a net interest margin of 1.84% for the fourth quarter of 2019, compared to 2.12% in the same period last year and 1.94% in the linked quarter.

INVESTMENT MANAGEMENT

Strong investment performance across Chartwell’s active equity and fixed income strategies contributed to growth in assets under management (AUM) during the fourth quarter of 2019. Chartwell AUM was $9.70 billion at December 31, 2019, compared to $9.19 billion one year prior and $9.62 billion at September 30, 2019.

Chartwell new business and new flows from existing accounts of $326 million and market appreciation of $303 million more than offset outflows of $543 million in the fourth quarter of 2019.

Chartwell’s weighted average fee rate was 0.36% at December 31, 2019. Investment management fee revenue totaled $8.9 million in the fourth quarter of 2019, compared to $9.2 million in the year-ago quarter and $8.9 million in the linked quarter.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the fourth quarter of 2019, reflecting the company’s disciplined credit culture and expansion of its private banking non-purpose margin loans secured by marketable securities. Private banking grew to represent 56.2% of total loans at December 31, 2019, while commercial real estate and commercial and industrial comprised 27.3% and 16.5% of total loans, respectively.

Non-performing assets (NPAs) were $4.4 million, or 0.06% of total assets, at December 31, 2019, compared to $5.7 million, or 0.09%, at December 31, 2018 and $4.4 million, or 0.06%, at September 30, 2019.

Non-performing loans (NPLs) were $184,000, or 0.00% of total loans, at December 31, 2019, compared to $2.2 million, or 0.04%, at December 31, 2018 and $184,000, or 0.00%, at September 30, 2019.

Adverse-rated credits were $35.0 million, or 0.53% of total loans at December 31, 2019, compared to $24.8 million, or 0.48%, at December 31, 2018 and $26.6 million, or 0.44%, at September 30, 2019.

The company recorded net recoveries of $6,000 in the fourth quarter of 2019 and $206,000 in the year-ago quarter. It recorded net charge-offs of $35,000 in the linked quarter.

TriState Capital recorded provision expense of $728,000 for the fourth quarter of 2019. It recorded credits to provision of $581,000 for the year-ago quarter and $607,000 for the linked quarter.

The company’s allowance for loan losses (ALL) continued to reflect overall credit quality, as well as lower levels of provision required by the growing proportion of low-risk-profile private banking loans in the bank’s portfolio. ALL represented 0.21% of total loans at December 31, 2019, 0.26% at December 31, 2018 and 0.22% at September 30, 2019.

CAPITAL STRENGTH AND FLEXIBILITY

The company’s regulatory capital levels benefited from retained earnings, as well as its Series B perpetual preferred stock offering completed in the second quarter of 2019. TriState Capital Holdings’ estimated regulatory capital ratios on December 31, 2019 were 12.05% for total risk-based capital, 11.75% for tier 1 risk-based capital, 9.32% for common equity tier 1 risk-based capital and 7.54% for tier 1 leverage.

The company repurchased 90,000 shares of its common stock last year, all in the first nine months of 2019, for approximately $1.8 million at an average cost of $20.21 per share. Since the Board first authorized share buybacks in October 2014, the company has repurchased a total of 2.1 million shares for approximately $32.3 million at an average cost of $15.36 per share. TriState Capital had $10.4 million of repurchase authority available at December 31, 2019, under previously disclosed buyback programs authorized by its Board of Directors.

CONFERENCE CALL

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

The live conference call on January 30 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/10137487 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, 855-669-9657 from Canada or 412-902-4194 from other international locations.

The live conference call will also be available through an audio webcast accessible at https://services.choruscall.com/links/tsc200130.html or http://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 call through February 6. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 412-317-0088 from other locations and entering the conference number 10137487.

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 $7.7 billion in assets, as of December 31, 2019, 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 $9.7 billion in assets under management, as of December 31, 2019, 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 includes "forward-looking statements" in reliance on the safe-harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. The words "achieve," "anticipate," "believe," "estimate," "expect," "intend," "maintain," "opportunity," "plan," "potential," "project," "sustain," "target," "trend," or similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," and similar expressions, among others, generally identify forward-looking statements. Examples of forward-looking statements include, without limitation, statements relating to TriState Capital’s future plans, objectives or goals and are based on current expectations, plans or forecasts. Such forward-looking statements are subject to risks, uncertainties and changed circumstances that are difficult to predict and are often beyond TriState Capital’s ability to control. Actual results or outcomes could differ materially from those currently anticipated, discussed or projected by forward-looking statements. Such risks and uncertainties include, but are not limited to:

  • those related to difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the markets in which TriState Capital operates and in which its loans are concentrated;

  • TriState Capital's level of non-performing assets and the costs associated with resolving problem loans;

  • possible loan losses, impairment and the collectability of loans;

  • changes in market interest rates which may increase funding costs and/or reduce earning asset yields and thus reduce margin;

  • the impact of changes in interest rates on the credit quality and value of underlying securities collateral of the loan portfolio and the effect of such changes on the market value of TriState Capital's investment securities portfolio;

  • federal and state regulation, supervision and examination, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations issued thereunder, and potential expenses associated with complying with regulations;

  • TriState Capital's ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including our ability to generate liquidity internally or raise capital on favorable terms;

  • possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations;

  • any impairment of TriState Capital's goodwill or other intangible assets;

  • conditions in the financial markets that may limit TriState Capital's access to additional funding to meet its liquidity needs;

  • the success of TriState Capital's growth plans, including the successful integration of past and future acquisitions, the ability to fully realize the cost savings and other benefits of its acquisitions, and the ability to manage risks related to business disruption following those acquisitions;

  • TriState Capital’s ability to develop and provide competitive products and services that appeal to its customers and target markets;

  • fluctuations in the carrying value of Chartwell’s assets under management;

  • the relative and absolute investment performance of Chartwell’s investment products;

  • system failure or breaches of TriState Capital's network security;

  • TriState Capital's ability to recruit and retain key employees;

  • Chartwell’s success in negotiating distribution arrangements and maintaining distribution channels for its products;

  • the failure by a key vendor to fulfill its obligations to TriState Capital;

  • the effects of problems encountered by other financial institutions that adversely affect TriState Capital or the banking industry generally;

  • regulatory limits on TriState Capital's ability to receive dividends from its subsidiaries and pay dividends to its preferred shareholders; and

  • the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above.

We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made, and TriState Capital disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of TriState Capital for any reason, except as specifically required by law. For further information about the factors that could affect TriState Capital’s future results, please see the company’s most-recent annual reports on Form 10-K and quarterly reports on Form 10-Q, and other documents the company files with the Securities and Exchange Commission from time to time.

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, pre-tax, pre-provision net revenue, and efficiency ratio. TriState Capital believes these non-GAAP financial measures, when considering along with its GAAP results, provide a greater understanding of its business and results of operations. However, these measures are not necessarily comparable to similar measures that may be presented by other companies. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP. Where non-GAAP disclosures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and accompanying tables.

TRISTATE CAPITAL HOLDINGS, INC.

BALANCE SHEET DATA (UNAUDITED)

As of and For the
Three Months Ended

As of and For the
Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2019

2019

2018

2019

2018

Cash and cash equivalents

$

403,855

$

383,948

$

189,985

$

403,855

$

189,985

Total investment securities

469,150

468,721

466,759

469,150

466,759

Loans and leases held-for-investment

6,577,559

6,016,680

5,132,873

6,577,559

5,132,873

Allowance for loan and lease losses

(14,108

)

(13,374

)

(13,208

)

(14,108

)

(13,208

)

Loans and leases held-for-investment, net

6,563,451

6,003,306

5,119,665

6,563,451

5,119,665

Goodwill and other intangibles, net

65,854

66,357

67,863

65,854

67,863

Other assets

263,500

276,117

191,383

263,500

191,383

Total assets

$

7,765,810

$

7,198,449

$

6,035,655

$

7,765,810

$

6,035,655

Deposits

$

6,634,613

$

6,094,605

$

5,050,461

$

6,634,613

$

5,050,461

Borrowings, net

355,000

330,000

404,166

355,000

404,166

Other liabilities

154,916

169,337

101,674

154,916

101,674

Total liabilities

7,144,529

6,593,942

5,556,301

7,144,529

5,556,301

Preferred stock

116,079

116,064

38,468

116,079

38,468

Common shareholders' equity

505,202

488,443

440,886

505,202

440,886

Total shareholders' equity

621,281

604,507

479,354

621,281

479,354

Total liabilities and shareholders' equity

$

7,765,810

$

7,198,449

$

6,035,655

$

7,765,810

$

6,035,655

TRISTATE CAPITAL HOLDINGS, INC.

INCOME STATEMENT DATA (UNAUDITED)

As of and For the
Three Months Ended

As of and For the
Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2019

2019

2018

2019

2018

Interest income:

Loans and leases

$

59,936

$

61,551

$

53,238

$

239,328

$

185,349

Investments

3,827

3,993

3,706

16,324

10,683

Interest-earning deposits

1,711

2,188

1,218

6,795

3,754

Total interest income

65,474

67,732

58,162

262,447

199,786

Interest expense:

Deposits

29,990

34,114

26,214

125,592

78,493

Borrowings

2,418

1,302

2,416

9,798

7,889

Total interest expense

32,408

35,416

28,630

135,390

86,382

Net interest income

33,066

32,316

29,532

127,057

113,404

Provision (credit) for loan and lease losses

728

(607

)

(581

)

(968

)

(205

)

Net interest income after provision for loan and lease losses

32,338

32,923

30,113

128,025

113,609

Non-interest income:

Investment management fees

8,862

8,902

9,225

36,442

37,647

Service charges on deposits

216

129

150

559

570

Net gain (loss) on the sale and call of debt securities

70

206

(76

)

416

(70

)

Swap fees

3,363

4,171

2,245

11,029

7,311

Commitment and other loan fees

537

464

375

1,788

1,411

Other income (loss)

443

371

(344

)

2,548

1,048

Total non-interest income

13,491

14,243

11,575

52,782

47,917

Non-interest expense:

Compensation and employee benefits

16,709

18,707

16,594

69,176

64,771

Premises and occupancy costs

1,933

1,704

1,594

6,741

5,580

Professional fees

2,482

1,305

1,191

6,188

4,729

FDIC insurance expense

1,830

994

1,210

5,292

4,543

General insurance expense

286

258

263

1,097

1,030

State capital shares tax

380

(720

)

125

420

1,521

Travel and entertainment expense

1,406

1,339

1,178

4,620

3,816

Intangible amortization expense

502

502

503

2,008

1,968

Change in fair value of acquisition earn out

(218

)

(218

)

Other operating expenses

4,591

3,684

3,863

16,607

13,417

Total non-interest expense

30,119

27,773

26,303

112,149

101,157

Income before tax

15,710

19,393

15,385

68,658

60,369

Income tax expense

1,106

3,059

265

8,465

5,945

Net income

$

14,604

$

16,334

$

15,120

$

60,193

$

54,424

Preferred stock dividends

1,962

1,962

679

5,753

2,120

Net income available to common shareholders

$

12,642

$

14,372

$

14,441

$

54,440

$

52,304

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

As of and For the
Three Months Ended

As of and For the
Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands, except per share data)

2019

2019

2018

2019

2018

Per share and share data:

Earnings per common share:

Basic

$

0.45

$

0.52

$

0.52

$

1.95

$

1.90

Diluted

$

0.44

$

0.50

$

0.50

$

1.89

$

1.81

Book value per common share

$

17.21

$

16.67

$

15.27

$

17.21

$

15.27

Tangible book value per common share (1)

$

14.97

$

14.41

$

12.92

$

14.97

$

12.92

Common shares outstanding, at end of period

29,355,986

29,296,970

28,878,674

29,355,986

28,878,674

Weighted average common shares outstanding:

Basic

27,875,074

27,863,767

27,523,385

27,864,933

27,583,519

Diluted

29,020,118

28,778,671

28,786,353

28,833,335

28,833,396

Performance ratios:

Return on average assets (2)

0.78

%

0.94

%

1.04

%

0.89

%

1.04

%

Return on average common equity (2)

10.07

%

11.82

%

13.16

%

11.47

%

12.57

%

Net interest margin (2) (3)

1.84

%

1.94

%

2.12

%

1.97

%

2.26

%

Total revenue (1)

$

46,487

$

46,353

$

41,183

$

179,423

$

161,391

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

$

16,368

$

18,580

$

14,880

$

67,274

$

60,234

Bank efficiency ratio (1)

56.03

%

50.70

%

54.60

%

54.49

%

53.09

%

Non-interest expense to average assets (2)

1.60

%

1.59

%

1.81

%

1.66

%

1.93

%

Asset quality:

Non-performing loans

$

184

$

184

$

2,237

$

184

$

2,237

Non-performing assets

$

4,434

$

4,434

$

5,661

$

4,434

$

5,661

Other real estate owned

$

4,250

$

4,250

$

3,424

$

4,250

$

3,424

Non-performing assets to total assets

0.06

%

0.06

%

0.09

%

0.06

%

0.09

%

Non-performing loans to total loans

%

%

0.04

%

%

0.04

%

Allowance for loan and lease losses to loans

0.21

%

0.22

%

0.26

%

0.21

%

0.26

%

Allowance for loan and lease losses to non-performing loans

7,667.39

%

7,268.48

%

590.43

%

7,667.39

%

590.43

%

Net charge-offs (recoveries)

$

(6

)

$

35

$

(206

)

$

(1,868

)

$

1,004

Net charge-offs (recoveries) to average total loans (2)

%

%

(0.02

)%

(0.03

)%

0.02

%

Capital ratios: (4)

Tier 1 leverage ratio

7.54

%

7.91

%

7.28

%

7.54

%

7.28

%

Common equity tier 1 risk-based capital ratio

9.32

%

9.58

%

9.64

%

9.32

%

9.64

%

Tier 1 risk-based capital ratio

11.75

%

12.15

%

10.58

%

11.75

%

10.58

%

Total risk-based capital ratio

12.05

%

12.40

%

10.86

%

12.05

%

10.86

%

Investment Management Segment:

Assets under management

$

9,701,000

$

9,615,000

$

9,189,000

$

9,701,000

$

9,189,000

EBITDA (1)

$

713

$

932

$

1,890

$

5,824

$

6,900

(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

December 31, 2019

September 30, 2019

December 31, 2018

(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

$

404,169

$

1,687

1.66

%

$

388,274

$

2,144

2.19

%

$

211,333

$

1,162

2.18

%

Federal funds sold

6,994

25

1.42

%

8,424

44

2.07

%

9,959

57

2.27

%

Debt securities available-for-sale

251,767

1,994

3.14

%

262,665

2,085

3.15

%

260,877

2,045

3.11

%

Debt securities held-to-maturity

206,383

1,653

3.18

%

174,331

1,537

3.50

%

155,220

1,426

3.64

%

Equity securities

1,898

4

0.84

%

4,720

12

1.01

%

13,543

77

2.26

%

FHLB stock

20,930

198

3.75

%

10,585

382

14.32

%

15,970

186

4.62

%

Total loans and leases

6,248,106

59,936

3.81

%

5,776,652

61,552

4.23

%

4,853,414

53,237

4.35

%

Total interest-earning assets

7,140,247

65,497

3.64

%

6,625,651

67,756

4.06

%

5,520,316

58,190

4.18

%

Other assets

326,013

288,216

239,506

Total assets

$

7,466,260

$

6,913,867

$

5,759,822

Liabilities and Shareholders' Equity

Interest-bearing deposits:

Interest-bearing checking accounts

$

1,446,394

$

6,178

1.69

%

$

1,116,624

$

5,795

2.06

%

$

722,386

$

3,976

2.18

%

Money market deposit accounts

3,123,162

15,727

2.00

%

3,106,186

18,870

2.41

%

2,605,148

14,844

2.26

%

Certificates of deposit

1,358,319

8,086

2.36

%

1,462,521

9,449

2.56

%

1,220,839

7,394

2.40

%

Borrowings:

FHLB borrowings

465,489

2,417

2.06

%

224,130

1,302

2.30

%

352,337

1,811

2.04

%

Line of credit borrowings

%

%

3,652

51

5.54

%

Subordinated notes payable, net

%

%

34,883

554

6.30

%

Total interest-bearing liabilities

6,393,364

32,408

2.01

%

5,909,461

35,416

2.38

%

4,939,245

28,630

2.30

%

Noninterest-bearing deposits

285,027

268,013

249,330

Other liabilities

173,977

137,934

97,458

Shareholders' equity

613,892

598,459

473,789

Total liabilities and shareholders' equity

$

7,466,260

$

6,913,867

$

5,759,822

Net interest income (1)

$

33,089

$

32,340

$

29,560

Net interest spread

1.63

%

1.68

%

1.88

%

Net interest margin (1)

1.84

%

1.94

%

2.12

%

(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)

Years Ended

December 31, 2019

December 31, 2018

(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

$

313,413

$

6,628

2.11

%

$

188,921

$

3,598

1.90

%

Federal funds sold

8,803

167

1.90

%

8,315

156

1.88

%

Debt securities available-for-sale

250,064

8,119

3.25

%

205,652

6,195

3.01

%

Debt securities held-to-maturity

193,443

6,921

3.58

%

90,895

3,399

3.74

%

Equity securities

6,733

115

1.71

%

10,517

277

2.63

%

FHLB stock

18,043

1,270

7.04

%

15,136

924

6.10

%

Total loans and leases

5,669,507

239,328

4.22

%

4,500,117

185,349

4.12

%

Total interest-earning assets

6,460,006

262,548

4.06

%

5,019,553

199,898

3.98

%

Other assets

281,171

221,467

Total assets

$

6,741,177

$

5,241,020

Liabilities and Shareholders' Equity

Interest-bearing deposits:

Interest-bearing checking accounts

$

1,058,064

$

21,480

2.03

%

$

612,921

$

11,440

1.87

%

Money market deposit accounts

2,943,541

69,336

2.36

%

2,429,203

45,106

1.86

%

Certificates of deposit

1,371,038

34,776

2.54

%

1,071,556

21,947

2.05

%

Borrowings:

FHLB borrowings

394,480

8,639

2.19

%

325,356

5,555

1.71

%

Line of credit borrowings

1,234

68

5.51

%

2,568

119

4.63

%

Subordinated notes payable, net

17,335

1,091

6.29

%

34,807

2,215

6.36

%

Total interest-bearing liabilities

5,785,692

135,390

2.34

%

4,476,411

86,382

1.93

%

Noninterest-bearing deposits

267,846

244,090

Other liabilities

128,618

75,473

Shareholders' equity

559,021

445,046

Total liabilities and shareholders' equity

$

6,741,177

$

5,241,020

Net interest income (1)

$

127,158

$

113,516

Net interest spread

1.72

%

2.05

%

Net interest margin (1)

1.97

%

2.26

%

(1)

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

TRISTATE CAPITAL HOLDINGS, INC.

LOAN COMPOSITION (UNAUDITED)

December 31, 2019

September 30, 2019

December 31, 2018

(Dollars in thousands)

Loan
Balance

Percent of
Loans

Loan
Balance

Percent of
Loans

Loan
Balance

Percent of
Loans

Private banking loans

$

3,695,402

56.2

%

$

3,368,142

56.0

%

$

2,869,543

55.9

%

Middle-market banking loans:

Commercial and industrial

1,085,709

16.5

%

992,508

16.5

%

785,320

15.3

%

Commercial real estate

1,796,448

27.3

%

1,656,030

27.5

%

1,478,010

28.8

%

Total middle-market banking loans

2,882,157

43.8

%

2,648,538

44.0

%

2,263,330

44.1

%

Loans and leases held-for-investment

$

6,577,559

100.0

%

$

6,016,680

100.0

%

$

5,132,873

100.0

%

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENTS OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

Three Months Ended December 31, 2019

Year Ended December 31, 2019

(Dollars in thousands)

Bank

Investment
Management

Parent
and Other

Consolidated

Bank

Investment
Management

Parent
and Other

Consolidated

Income statement data:

Interest income

$

65,470

$

$

4

$

65,474

$

262,332

$

$

115

$

262,447

Interest expense

32,445

(37

)

32,408

134,336

1,054

135,390

Net interest income (loss)

33,025

41

33,066

127,996

(939

)

127,057

Provision (credit) for loan and lease losses

728

728

(968

)

(968

)

Net interest income (loss) after provision for loan and lease losses

32,297

41

32,338

128,964

(939

)

128,025

Non-interest income:

Investment management fees

8,977

(115

)

8,862

36,889

(447

)

36,442

Net gain on the sale and call of debt securities

70

70

416

416

Other non-interest income

4,585

14

(40

)

4,559

15,051

31

842

15,924

Total non-interest income

4,655

8,991

(155

)

13,491

15,467

36,920

395

52,782

Non-interest expense:

Intangible amortization expense

502

502

2,008

2,008

Other non-interest expense

21,073

8,388

156

29,617

77,945

31,561

635

110,141

Total non-interest expense

21,073

8,890

156

30,119

77,945

33,569

635

112,149

Income (loss) before tax

15,879

101

(270

)

15,710

66,486

3,351

(1,179

)

68,658

Income tax expense (benefit)

1,190

88

(172

)

1,106

8,015

918

(468

)

8,465

Net income (loss)

$

14,689

$

13

$

(98

)

$

14,604

$

58,471

$

2,433

$

(711

)

$

60,193

Three Months Ended December 31, 2018

Year Ended December 31, 2018

(Dollars in thousands)

Bank

Investment
Management

Parent
and Other

Consolidated

Bank

Investment
Management

Parent
and Other

Consolidated

Income statement data:

Interest income

$

58,086

$

$

76

$

58,162

$

199,510

$

$

276

$

199,786

Interest expense

28,028

602

28,630

84,055

2,327

86,382

Net interest income (loss)

30,058

(526

)

29,532

115,455

(2,051

)

113,404

Provision (credit) for loan losses

(581

)

(581

)

(205

)

(205

)

Net interest income (loss) after provision for loan losses

30,639

(526

)

30,113

115,660

(2,051

)

113,609

Non-interest income:

Investment management fees

9,318

(93

)

9,225

37,939

(292

)

37,647

Net loss on the sale and call of debt securities

(76

)

(76

)

(70

)

(70

)

Other non-interest income

3,237

(811

)

2,426

11,112

1

(773

)

10,340

Total non-interest income

3,161

9,318

(904

)

11,575

11,042

37,940

(1,065

)

47,917

Non-interest expense:

Intangible amortization expense

503

503

1,968

1,968

Change in fair value of acquisition earn out

(218

)

(218

)

(218

)

(218

)

Other non-interest expense

18,179

7,772

67

26,018

67,190

31,760

457

99,407

Total non-interest expense

18,179

8,057

67

26,303

67,190

33,510

457

101,157

Income (loss) before tax

15,621

1,261

(1,497

)

15,385

59,512

4,430

(3,573

)

60,369

Income tax expense (benefit)

371

(207

)

101

265

5,856

579

(490

)

5,945

Net income (loss)

$

15,250

$

1,468

$

(1,598

)

$

15,120

$

53,656

$

3,851

$

(3,083

)

$

54,424

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." 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 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" is defined as net income before interest expense, income taxes, depreciation and amortization expenses. 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, 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 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.

"Pre-tax, pre-provision net revenue" is defined as net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities. We believe this measure is important because it allows management and investors to better assess our performance in relation to our core operating revenue, excluding the volatility that is associated with provision for loan losses or other items that are unrelated to our core business.

"Efficiency ratio" is defined as non-interest expense divided by our total revenue. 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, particularly by the Bank.

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

December 31,

September 30,

December 31,

(Dollars in thousands, except per share data)

2019

2019

2018

Tangible common equity and tangible book value per common share:

Common shareholders' equity

$

505,202

$

488,443

$

440,886

Less: goodwill and intangible assets

65,854

66,357

67,863

Tangible common equity

$

439,348

$

422,086

$

373,023

Common shares outstanding

29,355,986

29,296,970

28,878,674

Tangible book value per common share

$

14.97

$

14.41

$

12.92

INVESTMENT MANAGEMENT SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2019

2019

2018

2019

2018

Investment Management EBITDA:

Net income

$

13

$

316

$

1,468

$

2,433

$

3,851

Interest expense

Income taxes expense (benefit)

88

3

(207

)

918

579

Depreciation expense

110

111

126

465

502

Intangible amortization expense

502

502

503

2,008

1,968

EBITDA

$

713

$

932

$

1,890

$

5,824

$

6,900

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2019

2019

2018

2019

2018

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

Net interest income

$

33,066

$

32,316

$

29,532

$

127,057

$

113,404

Total non-interest income

13,491

14,243

11,575

52,782

47,917

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

70

206

(76

)

416

(70

)

Total revenue

$

46,487

$

46,353

$

41,183

$

179,423

$

161,391

Less: total non-interest expense

30,119

27,773

26,303

112,149

101,157

Pre-tax, pre-provision net revenue

$

16,368

$

18,580

$

14,880

$

67,274

$

60,234

BANK SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2019

2019

2018

2019

2018

Bank total revenue:

Net interest income

$

33,025

$

32,265

$

30,058

$

127,996

$

115,455

Total non-interest income

4,655

5,319

3,161

15,467

11,042

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

70

206

(76

)

416

(70

)

Bank total revenue

$

37,610

$

37,378

$

33,295

$

143,047

$

126,567

Bank efficiency ratio:

Total non-interest expense (numerator)

$

21,073

$

18,949

$

18,179

$

77,945

$

67,190

Bank total revenue (denominator)

$

37,610

$

37,378

$

33,295

$

143,047

$

126,567

Bank efficiency ratio

56.03

%

50.70

%

54.60

%

54.49

%

53.09

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20200129005738/en/

Contacts

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