Tristate Capital Reports Second Quarter 2021 EPS of $0.41 on Continued Organic Growth of AUM, Loans, Revenue, Pre-Tax Income and Net Income to New Record Levels

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PITTSBURGH–()–TriState Capital Holdings, Inc. (Nasdaq: TSC) reported second quarter 2021 financial results including fully organic growth in all of its investment management, private banking and commercial banking businesses, as assets under management (AUM), loans, net interest income, fee income, revenue, pre-tax income and net income reach new record high levels.

The parent company of TriState Capital Bank and Chartwell Investment Partners grew net income available to common shareholders to $15.7 million in the second quarter of 2021, up 86.1% from $8.4 million in the second quarter of 2020 and up 19.5% from $13.1 million in the first quarter of 2021. Income before tax was a record $23.2 million in the second quarter of 2021, increasing 87.7% from $12.4 million in the second quarter of 2020 and 11.7% from $20.8 million in the linked quarter.

The company earned $0.41 per diluted share in the second quarter of 2021, compared to $0.30 in the second quarter of 2020 and $0.35 in the first quarter of 2021. Second 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 strong top- and bottom-line performance during the second quarter reflects the value of our premier relationships and the power of our company with more than $23 billion of on-balance-sheet assets and client assets under management,” Chairman and Chief Executive Officer James F. Getz said. “Our three business lines worked in concert to drive continued growth in total revenue, pre-tax income and net income during the second quarter. Building on its breakout performance in the first quarter, Chartwell grew AUM to a new record of $11.51 billion, while delivering very strong revenue growth. Private banking was a primary driver of strong organic loan growth to $9.28 billion at TriState Capital Bank, complemented by commercial lending with our middle-market clients, further enhancing what we believe is a very attractive risk profile for the company and its balance sheet. As we enter the second half of 2021, we do so from a position of strength, supported by healthy new business pipelines, an agile funding franchise, a highly motivated team and relationships with exceptional clients nationwide.”

SECOND QUARTER 2021 HIGHLIGHTS

  • Chartwell’s investment management business continued its strong performance and grew AUM organically to a record $11.51 billion, up 24.4% from June 30, 2020 and 2.7% during the quarter and its fees increased 22.1% from the year-ago quarter and 5.0% from the linked quarter.
  • Chartwell’s retail and institutional distribution capability generated year-to-date net inflows of $533.0 million, while enhanced profitability supported product development including a new short duration high-grade fixed income fund to complement its Short Duration BB High Yield strategy.
  • Return on average common equity expanded to 10.37%, up 375 basis points from the year-ago period and 131 basis points from the linked quarter, as the company continues to productively deploy capital raised in December 2020.
  • Net interest income (NII) grew to a record $42.9 million, up 28.2% from the year-ago quarter and 11.0% from the linked quarter, on historic loan growth and continued net interest margin (NIM) expansion to 1.63%.
  • Period-end loans grew organically to a record $9.28 billion, up 29.5% from June 30, 2020 and 8.7%, during the quarter.
  • Private banking loans primarily collateralized by marketable securities and other liquid assets represented 61.5% of total loans at period end, growing 40.6% from June 30, 2020 and 13.1% during the quarter, while commercial loans increased by 14.9% from June 30, 2020 and 2.3% during the quarter.
  • The company maintained superior credit quality metrics, with period-end non-performing assets (NPAs), non-performing loans (NPLs), and adverse-rated credits declining by 46.0%, 50.8% and 33.0%, respectively, from March 31, 2021.

REVENUE GROWTH

NII grew to a record $42.9 million in the second quarter of 2021, increasing 28.2% from $33.5 million in the year-ago quarter and 11.0% from $38.7 million in the first quarter of 2021. NIM expanded for the third consecutive quarter to 1.63% for the three months ended June 30, 2021, up from 1.52% in the second quarter of 2020 and 1.59% in the first quarter of 2021.

Non-interest income grew to a record $14.8 million in the second quarter of 2021, up 14.2% from $13.0 million in the year-ago quarter and 8.7% from $13.7 million in the linked quarter. Chartwell investment management fees grew to $9.5 million in the second quarter of 2021, up 22.1% from $7.7 million in the same period the prior year and 5.0% from $9.0 million in the linked quarter, reflecting market appreciation and positive net inflows of client assets. Fees from commercial and private banking clients’ use of TriState Capital’s interest rate swaps offering totaled $3.9 million in the second quarter of 2021, $3.9 million in the prior year quarter and $2.7 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 $57.7 million for the second quarter of 2021, an increase of 24.1% from $46.5 million in the year-ago period and 10.2% from $52.3 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 25.6% of total revenue in the second quarter of 2021 when excluding net gains on the sale of securities, compared to 27.9% from the year-ago period and 26.1% from the linked quarter.

EXPENSES IN LINE WITH EXPECTATIONS

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.

Second quarter 2021 non-interest expense of $34.4 million was in-line with the company’s expectations, increasing 22.5% from $28.1 million in the year-ago period and increasing 10.1% from $31.3 million in the linked quarter. Non-interest expense for the first half of 2021 was $65.7 million, up 14.8% from the first half of 2020. TriState Capital continues to maintain its goal of annual operating expense growth of 10% to 12% for full-year 2021.

Operating expenses continue to be favorably impacted by what are expected to be sustainable reductions in annual Federal Deposit Insurance Corporation (FDIC) insurance expense as a percentage of average assets, as compared to prior years. FDIC insurance expense was $1.1 million in the second quarter of 2021, or an annualized 0.04% of average assets, compared to $2.6 million, or 0.11%, in the same period the prior year, and $1.1 million, or 0.04%, in the linked quarter.

TriState Capital Bank’s efficiency ratio for the second quarter of 2021 was 51.51%, compared to 50.39% in the second quarter of 2020 and 50.59% 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 1.27% in the second quarter of 2021, compared to 1.22% in the second quarter of 2020 and 1.24% in the linked quarter.

Pre-tax, pre-provision net revenue grew to a record $23.2 million in the second quarter of 2021, increasing 26.5% from $18.4 million in the year-ago period and 10.5% from $21.0 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.

TriState Capital’s effective tax rate was 19.2% for the second quarter of 2021. 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 high teens.

Net income available to common shareholders and earnings per share in the second 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 $27.0 million for the three months ending June 30, 2021. In addition, Chartwell’s new business pipeline currently has in excess of $65 million in commitments from institutional investors.

Chartwell’s new business and new flows from existing accounts of $458.0 million and market appreciation of $281.0 million more than offset outflows of $431.0 million in the second quarter of 2021. Chartwell’s assets under management grew to $11.51 billion at June 30, 2021, increasing 24.4% from $9.25 billion on June 30, 2020 and 2.7% from $11.20 billion on March 31, 2021.

Annual run-rate revenue grew to $39.9 million as of June 30, 2021, increasing 2.7% from March 31, 2021. Chartwell’s weighted average fee rate was 0.35% at June 30, 2021. Investment management fee revenue was $9.5 million in the second quarter of 2021, compared to $7.7 million in the second quarter of 2020 and $9.0 million in the first quarter of 2021.

Initiatives to enhance Chartwell profitability continue to be reflected in the segment’s improving level of expenses relative to revenue. Chartwell segment expenses were $8.3 million in the second quarter of 2021, compared to $7.5 million in the second quarter of 2020 and $7.9 million in the first quarter of 2021.

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 $8.81 billion in the second quarter of 2021, growing 24.2% from $7.09 billion in the prior year period and 6.4% from $8.28 billion in the linked quarter. Period-end loans totaled a record $9.28 billion on June 30, 2021, growing $2.11 billion, or 29.5%, from June 30, 2020, and $739.7 million, or 8.7%, from March 31, 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 $5.71 billion at June 30, 2021, increasing $1.65 billion, or 40.6%, from one year prior and $659.9 million, or 13.1%, from the end of the linked quarter.

The company continued to grow relationships with top-quality middle-market sponsors and businesses, driving originations of commercial and industrial (C&I) and commercial real estate (CRE) loans while managing credit quality within the portfolio. Commercial loans totaled $3.57 billion at June 30, 2021, increasing $461.7 million, or 14.9%, from one year prior and $79.8 million, or 2.3%, from the end of the linked quarter.

C&I loans grew to $1.24 billion at June 30, 2021, increasing $88.0 million, or 7.6%, from one year prior. C&I loans decreased $8.3 million, or 0.7%, from March 31, 2021, as new loan originations, draws and equipment finance production were offset by amortization and paydowns. The bank did not participate in the Paycheck Protection Program (PPP).

CRE loans grew to $2.33 billion at June 30, 2021, increasing $373.7 million, or 19.1%, from one year prior and $88.1 million, or 3.9%, from the end of the linked 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 $9.56 billion in the second quarter of 2021, growing 19.5% from $8.00 billion in the second quarter of last year and 8.0% from $8.85 billion in the linked quarter. Period-end deposits totaled a record $10.19 billion at June 30, 2021, growing $2.36 billion, or 30.1%, from June 30, 2020, and $941.4 million, or 10.2%, from March 31, 2021.

Treasury management deposit accounts totaled $2.27 billion at June 30, 2021, increasing $1.14 billion, or 101.9%, from June 30, 2020 and $450.1 million, or 24.8%, from March 31, 2021.

The bank’s loan-to-deposit ratio at June 30, 2021 was 91.09%, compared to 91.56% at June 30, 2020 and 92.36% at March 31, 2021, reflecting the bank’s differentiated 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 continues to favor an asset-neutral to asset-sensitive approach over the long term.

Investment securities totaled a record $1.34 billion at June 30, 2021, up 64.7% from June 30, 2020 and 8.7% from March 31, 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 0.51% during the second quarter of 2021, compared to 0.87% in the same period last year and 0.59% in the linked quarter. The total cost of deposits averaged 0.42% during the second quarter of 2021, compared to 0.80% in the same period last year and 0.49% in the linked quarter.

At June 30, 2021, 94% 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 second quarter of 2021.

The yield on total loans averaged 2.35% during the second quarter of 2021, compared to 2.69% in the prior year period and 2.41% in the linked quarter. Loan yields resulted primarily from trends in 30-day LIBOR which declined on average approximately 2 basis points during the second 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.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the second 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 61.5% of the total loan portfolio at June 30, 2021, while CRE and C&I comprised 25.1% and 13.4% of total loans, respectively.

COVID-19 deferral levels continued to decline in line with expectations to four loans representing $41.0 million or 0.4% of total loans on June 30, 2021, from eight loans representing $62.1 million or 0.7% of total loans on March 31, 2021.

The allowance for credit losses on loans and leases (ACL) was $32.6 million at June 30, 2021, compared to $23.3 million at June 30, 2020 and $34.6 million at March 31, 2021. ACL represented 0.91% of commercial loans at period end, excluding private banking loans primarily collateralized by liquid, marketable securities that do not require a reserve, compared to 0.75% at June 30, 2020 and 0.99% at March 31, 2021. As a percentage of total loans, ACL was 0.35% at June 30, 2021, 0.32% at June 30, 2020 and 0.41% at March 31, 2021.

TriState Capital’s net charge offs (NCOs) were $2.3 million in the second quarter of 2021, or 0.10% of total average loans of $8.81 billion. NCOs were $33,000 in the year-ago quarter and $199,000 in the linked quarter.

During the second quarter of 2021, NPAs, NPLs, and adverse-rated credits declined by 46.0%, 50.8% and 33.0%, respectively, from March 31, 2021 to June 30, 2021.

NPAs were $13.7 million, or 0.12% of total assets, at June 30, 2021, compared to $9.5 million, or 0.10%, at June 30, 2020 and $25.5 million, or 0.24%, at March 31, 2021. NPLs were $11.2 million, or 0.12% of total loans, at June 30, 2021, compared to $6.8 million, or 0.09%, at June 30, 2020 and $22.7 million, or 0.27%, at March 31, 2021.

Total adverse-rated credits, including NPLs, were $34.1 million, or 0.37% of total loans, at June 30, 2021, compared to $33.0 million, or 0.46%, at June 30, 2020 and $50.9 million, or 0.60%, at March 31, 2021.

TriState Capital recorded provision expense of $96,000 in the second quarter of 2021, $6.0 million in the second quarter of 2020 and $224,000 in the linked quarter.

CAPITAL STRENGTH AND EFFICIENCY

The company’s strong balance sheet included $1.87 billion in cash, equivalents and securities at June 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 65.68% of total assets at the end of the second quarter of 2021.

As of June 30, 2021, estimated regulatory capital ratios for TriState Capital Holdings were 13.94% for total risk-based capital, 11.94% for tier 1 risk-based capital, 9.06% for common equity tier 1 risk-based capital, and 6.86% for tier 1 leverage, reflecting the historic level of asset growth in the second quarter of 2021. For TriState Capital Bank, the estimated capital ratios were 13.26% for total risk-based capital, 12.80% for tier 1 risk-based capital, 12.80% for common equity tier 1 risk-based capital, and 7.34% for tier 1 leverage.

The company’s common shareholders equity to total assets was 5.3% on June 30, 2021. The ratio of common shareholders’ equity excluding intangible assets, or tangible common equity (TCE), to total assets excluding intangible assets was 4.81% on June 30, 2021. The TCE ratio was 9.58% excluding private banking loans primarily collateralized by liquid, marketable securities on June 30, 2021. The TCE ratio and TCE ratio excluding private banking loans are non-GAAP metrics utilized to provide a greater understanding of the capital adequacy of financial services companies.

TriState Capital had $9.8 million of common stock repurchase authority available at June 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 a conference call tomorrow to review its financial results and operating performance.

The live conference call on July 22 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link https://dpregister.com/sreg/10157838/e9f425b8be 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://services.choruscall.com/links/tsc210722.html 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 July 29. 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 10157838.

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 $11.46 billion in assets as of June 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 $11.51 billion in assets under management as of June 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 we hold 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 Investment Partners, LLC, the company’s registered investment advisor subsidiary, 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, tangible assets, tangible assets excluding private banking loans, tangible common equity ratio, tangible common equity ratio excluding private banking loans, 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

 

June 30,

March 31,

June 30,

(Dollars in thousands)

2021

2021

2020

Cash and cash equivalents

$

529,453

 

$

446,484

 

$

724,942

 

Total investment securities

1,337,658

 

1,231,074

 

812,140

 

Loans and leases held-for-investment

9,282,922

 

8,543,182

 

7,170,770

 

Allowance for credit losses on loans and leases

(32,577)

 

(34,644)

 

(23,276)

 

Loans and leases held-for-investment, net

9,250,345

 

8,508,538

 

7,147,494

 

Goodwill and other intangibles, net

62,955

 

63,433

 

64,867

 

Other assets

360,761

 

315,621

 

380,398

 

Total assets

$

11,541,172

 

$

10,565,150

 

$

9,129,841

 

 

 

 

 

Deposits

$

10,191,433

 

$

9,250,019

 

$

7,831,471

 

Borrowings, net

345,600

 

345,547

 

395,552

 

Other liabilities

209,571

 

195,298

 

269,987

 

Total liabilities

10,746,604

 

9,790,864

 

8,497,010

 

 

 

 

 

Preferred stock

179,343

 

178,243

 

116,079

 

Common shareholders’ equity

615,225

 

596,043

 

516,752

 

Total shareholders’ equity

794,568

 

774,286

 

632,831

 

 

 

 

 

Total liabilities and shareholders’ equity

$

11,541,172

 

$

10,565,150

 

$

9,129,841

 

TRISTATE CAPITAL HOLDINGS, INC.

INCOME STATEMENT DATA (UNAUDITED)

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

Interest income:

 

 

 

 

 

 

Loans and leases

$

51,702

 

$

49,186

 

$

47,377

 

 

$

100,888

 

$

106,295

 

Investments

3,737

 

2,646

 

3,940

 

 

6,383

 

7,841

 

Interest-earning deposits

116

 

160

 

344

 

 

276

 

1,727

 

Total interest income

55,555

 

51,992

 

51,661

 

 

107,547

 

115,863

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

10,106

 

10,754

 

15,953

 

 

20,860

 

43,197

 

Borrowings

2,537

 

2,582

 

2,224

 

 

5,119

 

4,260

 

Total interest expense

12,643

 

13,336

 

18,177

 

 

25,979

 

47,457

 

Net interest income

42,912

 

38,656

 

33,484

 

 

81,568

 

68,406

 

Provision for credit losses

96

 

224

 

6,005

 

 

320

 

8,998

 

Net interest income after provision for credit losses

42,816

 

38,432

 

27,479

 

 

81,248

 

59,408

 

Non-interest income:

 

 

 

 

 

 

Investment management fees

9,451

 

9,000

 

7,738

 

 

18,451

 

15,376

 

Service charges on deposits

325

 

316

 

315

 

 

641

 

528

 

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

98

 

(1)

 

14

 

 

97

 

71

 

Swap fees

3,913

 

2,711

 

3,853

 

 

6,624

 

8,226

 

Commitment and other loan fees

564

 

326

 

462

 

 

890

 

881

 

Bank owned life insurance income

480

 

429

 

429

 

 

909

 

857

 

Other income

13

 

870

 

186

 

 

883

 

374

 

Total non-interest income

14,844

 

13,651

 

12,997

 

 

28,495

 

26,313

 

Non-interest expense:

 

 

 

 

 

 

Compensation and employee benefits

20,937

 

19,921

 

16,569

 

 

40,858

 

34,015

 

Premises and equipment expense

1,173

 

1,406

 

1,515

 

 

2,579

 

2,901

 

Professional fees

2,124

 

1,324

 

1,109

 

 

3,448

 

2,579

 

FDIC insurance expense

1,125

 

1,125

 

2,560

 

 

2,250

 

4,730

 

General insurance expense

341

 

298

 

278

 

 

639

 

540

 

State capital shares tax expense

777

 

650

 

366

 

 

1,427

 

749

 

Travel and entertainment expense

639

 

441

 

279

 

 

1,080

 

1,143

 

Technology and data services

3,687

 

3,100

 

2,414

 

 

6,787

 

4,717

 

Intangible amortization expense

478

 

478

 

486

 

 

956

 

988

 

Marketing and advertising

898

 

684

 

686

 

 

1,582

 

1,300

 

Other operating expenses

2,246

 

1,851

 

1,834

 

 

4,097

 

3,578

 

Total non-interest expense

34,425

 

31,278

 

28,096

 

 

65,703

 

57,240

 

Income before tax

23,235

 

20,805

 

12,380

 

 

44,040

 

28,481

 

Income tax expense

4,455

 

4,605

 

1,979

 

 

9,060

 

5,185

 

Net income

$

18,780

 

$

16,200

 

$

10,401

 

 

$

34,980

 

$

23,296

 

Preferred stock dividends

3,077

 

3,059

 

1,962

 

 

6,136

 

3,924

 

Net income available to common shareholders

$

15,703

 

$

13,141

 

$

8,439

 

 

$

28,844

 

$

19,372

 

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

 

 

As of and For the

 

Three Months Ended

 

As of and For the

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands, except per share data)

2021

2021

2020

 

2021

2020

Per share and share data:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

$

0.42

 

$

0.36

 

$

0.30

 

 

$

0.78

 

$

0.69

 

Diluted

$

0.41

 

$

0.35

 

$

0.30

 

 

$

0.76

 

$

0.68

 

Book value per common share

$

18.54

 

$

17.97

 

$

17.31

 

 

$

18.54

 

$

17.31

 

Tangible book value per common share (1)

$

16.65

 

$

16.06

 

$

15.14

 

 

$

16.65

 

$

15.14

 

Common shares outstanding, at end of period

33,176,934

 

33,160,605

 

29,851,550

 

 

33,176,934

 

29,851,550

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

31,280,481

 

31,224,474

 

28,223,085

 

 

31,252,632

 

28,201,837

 

Diluted

32,147,758

 

32,187,034

 

28,527,961

 

 

32,278,282

 

28,687,804

 

 

 

 

 

 

 

 

Performance ratios:

 

 

 

 

 

 

Return on average assets (2)

0.69

%

0.64

%

0.45

%

 

0.67

%

0.54

%

Return on average common equity (2)

10.37

%

9.06

%

6.62

%

 

9.73

%

7.60

%

Net interest margin (2) (3)

1.63

%

1.59

%

1.52

%

 

1.61

%

1.67

%

Total revenue (1)

$

57,658

 

$

52,308

 

$

46,467

 

 

$

109,966

 

$

94,648

 

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

$

23,233

 

$

21,030

 

$

18,371

 

 

$

44,263

 

$

37,408

 

Bank efficiency ratio (1)

51.51

%

50.59

%

50.39

%

 

51.07

%

51.13

%

Non-interest expense to average assets (2)

1.27

%

1.24

%

1.22

%

 

1.26

%

1.34

%

 

 

 

 

 

 

 

Asset quality:

 

 

 

 

 

 

Non-performing loans

$

11,175

 

$

22,727

 

$

6,780

 

 

$

11,175

 

$

6,780

 

Non-performing assets

$

13,743

 

$

25,451

 

$

9,504

 

 

$

13,743

 

$

9,504

 

Other real estate owned

$

2,568

 

$

2,724

 

$

2,724

 

 

$

2,568

 

$

2,724

 

Non-performing assets to total assets

0.12

%

0.24

%

0.10

%

 

0.12

%

0.10

%

Non-performing loans to total loans

0.12

%

0.27

%

0.09

%

 

0.12

%

0.09

%

ACL to loans and leases

0.35

%

0.41

%

0.32

%

 

0.35

%

0.32

%

ACL to non-performing loans

291.52

%

152.44

%

343.30

%

 

291.52

%

343.30

%

Net charge-offs (recoveries)

$

2,253

 

$

199

 

$

33

 

 

$

2,452

 

$

(170)

 

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

0.10

%

0.01

%

%

 

0.06

%

%

 

 

 

 

 

 

 

Capital ratios: (4)

 

 

 

 

 

 

Tier 1 leverage ratio

6.86

%

7.13

%

6.30

%

 

6.86

%

6.30

%

Common equity tier 1 risk-based capital ratio

9.06

%

9.10

%

8.54

%

 

9.06

%

8.54

%

Tier 1 risk-based capital ratio

11.94

%

12.08

%

10.68

%

 

11.94

%

10.68

%

Total risk-based capital ratio

13.94

%

14.18

%

12.89

%

 

13.94

%

12.89

%

Bank tier 1 leverage ratio

7.34

%

7.65

%

7.11

%

 

7.34

%

7.11

%

Bank common equity tier 1 risk-based capital ratio

12.80

%

12.98

%

12.07

%

 

12.80

%

12.07

%

Bank tier 1 risk based capital ratio

12.80

%

12.98

%

12.07

%

 

12.80

%

12.07

%

Bank total risk-based capital ratio

13.26

%

13.49

%

12.52

%

 

13.26

%

12.52

%

 

 

 

 

 

 

 

Investment Management Segment:

 

 

 

 

 

 

Assets under management

$

11,511,000

 

$

11,203,000

 

$

9,254,000

 

 

$

11,511,000

 

$

9,254,000

 

EBITDA (1)

$

2,063

 

$

1,916

 

$

1,031

 

 

$

3,979

 

$

2,248

 

(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

 

June 30, 2021

 

March 31, 2021

 

June 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

$

407,627

 

$

114

 

0.11

%

 

$

555,427

 

$

158

 

0.12

%

 

$

1,098,510

 

$

342

 

0.13

%

Federal funds sold

11,502

 

2

 

0.07

%

 

10,557

 

2

 

0.08

%

 

7,883

 

1

 

0.05

%

Debt securities available-for-sale

266,264

 

886

 

1.33

%

 

348,835

 

570

 

0.66

%

 

329,015

 

2,026

 

2.48

%

Debt securities held-to-maturity

1,040,658

 

2,705

 

1.04

%

 

637,719

 

1,900

 

1.21

%

 

292,898

 

1,616

 

2.22

%

Debt securities trading

 

 

%

 

315

 

1

 

1.29

%

 

 

 

%

FHLB stock

11,776

 

154

 

5.25

%

 

11,551

 

182

 

6.39

%

 

13,269

 

305

 

9.24

%

Total loans and leases

8,808,775

 

51,702

 

2.35

%

 

8,276,059

 

49,186

 

2.41

%

 

7,094,744

 

47,377

 

2.69

%

Total interest-earning assets

10,546,602

 

55,563

 

2.11

%

 

9,840,463

 

51,999

 

2.14

%

 

8,836,319

 

51,667

 

2.35

%

Other assets

347,923

 

 

 

 

375,418

 

 

 

 

408,950

 

 

 

Total assets

$

10,894,525

 

 

 

 

$

10,215,881

 

 

 

 

$

9,245,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

3,852,078

 

$

3,214

 

0.33

%

 

$

3,065,983

 

$

2,793

 

0.37

%

 

$

2,327,513

 

$

2,719

 

0.47

%

Money market deposit accounts

4,316,946

 

5,636

 

0.52

%

 

4,345,454

 

5,964

 

0.56

%

 

3,862,068

 

7,377

 

0.77

%

Certificates of deposit

929,906

 

1,256

 

0.54

%

 

1,012,861

 

1,997

 

0.80

%

 

1,389,984

 

5,857

 

1.69

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

FHLB borrowings

250,000

 

1,082

 

1.74

%

 

253,889

 

1,072

 

1.71

%

 

300,000

 

1,284

 

1.72

%

Line of credit borrowings

 

 

%

 

4,589

 

55

 

4.86

%

 

22,747

 

260

 

4.60

%

Subordinated notes payable, net

95,565

 

1,455

 

6.11

%

 

95,511

 

1,455

 

6.18

%

 

44,417

 

680

 

6.16

%

Total interest-bearing liabilities

9,444,495

 

12,643

 

0.54

%

 

8,778,287

 

13,336

 

0.62

%

 

7,946,729

 

18,177

 

0.92

%

Noninterest-bearing deposits

460,601

 

 

 

 

424,535

 

 

 

 

417,732

 

 

 

Other liabilities

203,033

 

 

 

 

247,659

 

 

 

 

252,303

 

 

 

Shareholders’ equity

786,396

 

 

 

 

765,400

 

 

 

 

628,505

 

 

 

Total liabilities and shareholders’ equity

$

10,894,525

 

 

 

 

$

10,215,881

 

 

 

 

$

9,245,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

42,920

 

 

 

 

$

38,663

 

 

 

 

$

33,490

 

 

Net interest spread (1)

 

 

1.57

%

 

 

 

1.52

%

 

 

 

1.43

%

Net interest margin (1)

 

 

1.63

%

 

 

 

1.59

%

 

 

 

1.52

%

(1)

Calculated on a fully taxable equivalent basis.

(2)

Annualized.

TRISTATE CAPITAL HOLDINGS, INC.

AVERAGES AND YIELDS (UNAUDITED)

 

 

Six Months Ended June 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

$

481,119

 

$

272

 

0.11

%

 

$

781,406

 

$

1,705

 

0.44

%

Federal funds sold

11,032

 

4

 

0.07

%

 

7,491

 

21

 

0.56

%

Debt securities available-for-sale

307,322

 

1,456

 

0.96

%

 

305,442

 

4,070

 

2.68

%

Debt securities held-to-maturity

840,302

 

4,605

 

1.11

%

 

247,326

 

3,104

 

2.52

%

Debt securities trading

156

 

1

 

1.29

%

 

115

 

1

 

1.75

%

FHLB stock

11,664

 

336

 

5.81

%

 

16,724

 

703

 

8.45

%

Total loans and leases

8,543,889

 

100,888

 

2.38

%

 

6,883,718

 

106,295

 

3.11

%

Total interest-earning assets

10,195,484

 

107,562

 

2.13

%

 

8,242,222

 

115,899

 

2.83

%

Other assets

361,594

 

 

 

 

360,699

 

 

 

Total assets

$

10,557,078

 

 

 

 

$

8,602,921

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

3,461,202

 

$

6,007

 

0.35

%

 

$

1,900,563

 

$

7,933

 

0.84

%

Money market deposit accounts

4,331,121

 

11,600

 

0.54

%

 

3,705,517

 

22,031

 

1.20

%

Certificates of deposit

971,155

 

3,252

 

0.68

%

 

1,386,510

 

13,233

 

1.92

%

Borrowings:

 

 

 

 

 

 

 

FHLB borrowings

251,933

 

2,154

 

1.72

%

 

360,962

 

3,319

 

1.85

%

Line of credit borrowings

2,282

 

55

 

4.86

%

 

12,115

 

261

 

4.33

%

Subordinated notes payable, net

95,538

 

2,911

 

6.14

%

 

22,208

 

680

 

6.16

%

Total interest-bearing liabilities

9,113,231

 

25,979

 

0.57

%

 

7,387,875

 

47,457

 

1.29

%

Noninterest-bearing deposits

442,668

 

 

 

 

383,909

 

 

 

Other liabilities

225,223

 

 

 

 

202,755

 

 

 

Shareholders’ equity

775,956

 

 

 

 

628,382

 

 

 

Total liabilities and shareholders’ equity

$

10,557,078

 

 

 

 

$

8,602,921

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

81,583

 

 

 

 

$

68,442

 

 

Net interest spread (1)

 

 

1.56

%

 

 

 

1.54

%

Net interest margin (1)

 

 

1.61

%

 

 

 

1.67

%

(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)

 

 

June 30, 2021

 

March 31, 2021

 

June 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

$

5,713,562

 

61.5

%

 

$

5,053,621

 

59.2

%

 

$

4,063,116

 

56.6

%

Middle-market banking loans:

 

 

 

 

 

 

 

 

Commercial and industrial

1,240,917

 

13.4

%

 

1,249,208

 

14.6

%

 

1,152,880

 

16.1

%

Commercial real estate

2,328,443

 

25.1

%

 

2,240,353

 

26.2

%

 

1,954,774

 

27.3

%

Total middle-market banking loans

3,569,360

 

38.5

%

 

3,489,561

 

40.8

%

 

3,107,654

 

43.4

%

Loans and leases held-for-investment

$

9,282,922

 

100.0

%

 

$

8,543,182

 

100.0

%

 

$

7,170,770

 

100.0

%

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 

 

Three Months Ended June 30, 2021

 

Three Months Ended June 30, 2020

(Dollars in thousands)

Bank

Investment

Management

Parent

and Other

Consolidated

 

Bank

Investment

Management

Parent

and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

55,555

 

$

 

$

 

$

55,555

 

 

$

51,661

 

$

 

$

 

$

51,661

 

Interest expense

11,199

 

 

1,444

 

12,643

 

 

17,251

 

 

926

 

18,177

 

Net interest income (loss)

44,356

 

 

(1,444)

 

42,912

 

 

34,410

 

 

(926)

 

33,484

 

Provision for credit losses

96

 

 

 

96

 

 

6,005

 

 

 

6,005

 

Net interest income (loss) after provision for credit losses

44,260

 

 

(1,444)

 

42,816

 

 

28,405

 

 

(926)

 

27,479

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

9,774

 

(323)

 

9,451

 

 

 

7,897

 

(159)

 

7,738

 

Net gain on the sale and call of debt securities

98

 

 

 

98

 

 

14

 

 

 

14

 

Other non-interest income

5,283

 

12

 

 

5,295

 

 

5,215

 

30

 

 

5,245

 

Total non-interest income (loss)

5,381

 

9,786

 

(323)

 

14,844

 

 

5,229

 

7,927

 

(159)

 

12,997

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

478

 

 

478

 

 

 

486

 

 

486

 

Other non-interest expense

25,570

 

7,826

 

551

 

33,947

 

 

19,967

 

7,003

 

640

 

27,610

 

Total non-interest expense

25,570

 

8,304

 

551

 

34,425

 

 

19,967

 

7,489

 

640

 

28,096

 

Income (loss) before tax

24,071

 

1,482

 

(2,318)

 

23,235

 

 

13,667

 

438

 

(1,725)

 

12,380

 

Income tax expense (benefit)

4,565

 

286

 

(396)

 

4,455

 

 

2,173

 

102

 

(296)

 

1,979

 

Net income (loss)

$

19,506

 

$

1,196

 

$

(1,922)

 

$

18,780

 

 

$

11,494

 

$

336

 

$

(1,429)

 

$

10,401

 

 

Six Months Ended June 30, 2021

 

Six Months Ended June 30, 2020

(Dollars in thousands)

Bank

Investment

Management

Parent

and Other

Consolidated

 

Bank

Investment

Management

Parent

and Other

Consolidated

Income statement data:

 

 

 

Interest income

$

107,547

 

$

 

$

 

$

107,547

 

 

$

115,863

 

$

 

$

 

$

115,863

 

Interest expense

23,038

 

 

2,941

 

25,979

 

 

46,547

 

 

910

 

47,457

 

Net interest income (loss)

84,509

 

 

(2,941)

 

81,568

 

 

69,316

 

 

(910)

 

68,406

 

Provision for credit losses

320

 

 

 

320

 

 

8,998

 

 

 

8,998

 

Net interest income (loss) after provision for credit losses

84,189

 

 

(2,941)

 

81,248

 

 

60,318

 

 

(910)

 

59,408

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

19,009

 

(558)

 

18,451

 

 

 

15,662

 

(286)

 

15,376

 

Net gain on the sale and call of debt securities

97

 

 

 

97

 

 

71

 

 

 

71

 

Other non-interest income

9,915

 

32

 

 

9,947

 

 

10,866

 

 

 

10,866

 

Total non-interest income (loss)

10,012

 

19,041

 

(558)

 

28,495

 

 

10,937

 

15,662

 

(286)

 

26,313

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

956

 

 

956

 

 

 

988

 

 

988

 

Other non-interest expense

48,225

 

15,268

 

1,254

 

64,747

 

 

41,000

 

13,630

 

1,622

 

56,252

 

Total non-interest expense

48,225

 

16,224

 

1,254

 

65,703

 

 

41,000

 

14,618

 

1,622

 

57,240

 

Income (loss) before tax

45,976

 

2,817

 

(4,753)

 

44,040

 

 

30,255

 

1,044

 

(2,818)

 

28,481

 

Income tax expense (benefit)

9,294

 

596

 

(830)

 

9,060

 

 

5,521

 

130

 

(466)

 

5,185

 

Net income (loss)

$

36,682

 

$

2,221

 

$

(3,923)

 

$

34,980

 

 

$

24,734

 

$

914

 

$

(2,352)

 

$

23,296

 

TRISTATE CAPITAL HOLDINGS, INC.

EARNINGS PER COMMON SHARE (UNAUDITED)

 

 

Three Months Ended

 

Years Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands, except per share data)

2021

2021

2020

 

2021

2020

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

Net income

$

18,780

 

$

16,200

 

$

10,401

 

 

$

34,980

 

$

23,296

 

Less: Preferred dividends on Series A and Series B

1,962

 

1,962

 

1,962

 

 

3,924

 

3,924

 

Less: Preferred dividends on Series C

1,115

 

1,097

 

 

 

2,212

 

 

Net income available to common shareholders

$

15,703

 

$

13,141

 

$

8,439

 

 

$

28,844

 

$

19,372

 

 

 

 

 

 

 

 

Allocation of net income available:

 

 

 

 

 

 

Common shareholders

$

13,272

 

$

11,127

 

$

8,439

 

 

$

24,375

 

$

19,372

 

Series C convertible preferred shareholders

2,040

 

1,685

 

 

 

3,749

 

 

Warrant shareholders

391

 

329

 

 

 

720

 

 

Total

$

15,703

 

$

13,141

 

$

8,439

 

 

$

28,844

 

$

19,372

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

31,280,481

 

31,224,474

 

28,223,085

 

 

31,252,632

 

28,201,837

 

Series C convertible preferred stock, as-if converted

4,807,272

 

4,727,272

 

 

 

4,807,272

 

 

Warrants, as-if exercised

922,438

 

922,438

 

 

 

922,438

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.42

 

$

0.36

 

$

0.30

 

 

$

0.78

 

$

0.69

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

Income available to common shareholders after allocation

$

13,272

 

$

11,127

 

$

8,439

 

 

$

24,375

 

$

19,372

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

31,280,481

 

31,224,474

 

28,223,085

 

 

31,252,632

 

28,201,837

 

Restricted stock – dilutive

719,504

 

801,798

 

221,456

 

 

871,255

 

324,498

 

Stock options – dilutive

147,773

 

160,762

 

83,420

 

 

154,395

 

161,469

 

Diluted common shares

32,147,758

 

32,187,034

 

28,527,961

 

 

32,278,282

 

28,687,804

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.41

 

$

0.35

 

$

0.30

 

 

$

0.76

 

$

0.68

 

 

 

 

 

 

 

 

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

 

2021

2021

2020

 

2021

2020

Anti-dilutive shares:

 

 

 

 

 

 

Restricted stock

10,750

 

71,810

 

864,246

 

 

12,000

 

566,498

 

Stock options

 

 

5,500

 

 

 

 

Series C convertible preferred stock, as-if converted

4,807,272

 

4,727,272

 

 

 

4,807,272

 

 

Warrants, as-if exercised

922,438

 

922,438

 

 

 

922,438

 

 

Total anti-dilutive shares

5,740,460

 

5,721,520

 

869,746

 

 

5,741,710

 

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,” “tangible assets,” “tangible assets excluding private banking loans,” tangible common equity ratio,” “tangible common equity ratio excluding private banking loans,” “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.

“Tangible assets” is defined as total assets reduced by intangible assets, including goodwill. We believe this measure is important to many investors who are interested in changes from period to period in total assets exclusive of changes in intangible assets.

“Tangible assets excluding private banking loans” is defined as total assets reduced by intangible assets, including goodwill, and private banking loans. We believe this measure is important to many investors who are interested in changes from period to period in total assets exclusive of changes in intangible assets and private banking loans.

“Tangible common equity ratio” is defined as (i) common shareholders’ equity reduced by intangible assets, including goodwill, divided by (ii) total assets reduced by intangible assets, including goodwill. We believe this measure is important to many investors who are interested in changes from period to period in the ratio of common shareholders’ equity to total assets exclusive of changes in intangible assets.

Tangible common equity ratio excluding private banking loans” is defined as (i) common shareholders’ equity reduced by intangible assets, including goodwill, divided by (ii) total assets reduced by intangible assets, including goodwill, and private banking loans. We believe this measure is important to many investors who are interested in changes from period to period in the ratio of common shareholders’ equity to total assets exclusive of changes in intangible assets and private banking loans.

“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)

 

 

 

 

 

June 30,

March 31,

June 30,

(Dollars in thousands, except per share data)

2021

2021

2020

Tangible common equity and tangible book value per common share:

 

 

 

Common shareholders’ equity

$

615,225

 

$

596,043

 

$

516,752

 

Less: goodwill and intangible assets

62,955

 

63,433

 

64,867

 

Tangible common equity (numerator)

$

552,270

 

$

532,610

 

$

451,885

 

Common shares outstanding (denominator)

33,176,934

 

33,160,605

 

29,851,550

 

Tangible book value per common share

$

16.65

 

$

16.06

 

$

15.14

 

(Dollars in thousands)

June 30,

March 31,

June 30,

2021

2021

2020

Tangible common equity ratio excluding private banking channel loans:

 

 

 

Common shareholders’ equity

$

615,225

 

$

596,043

 

$

516,752

 

Less: goodwill and intangible assets

62,955

 

63,433

 

64,867

 

Tangible common equity (numerator)

$

552,270

 

$

532,610

 

$

451,885

 

Total assets

11,541,172

 

10,565,150

 

9,129,841

 

Less: goodwill and intangible assets

62,955

 

63,433

 

64,867

 

Tangible assets

$

11,478,217

 

$

10,501,717

 

$

9,064,974

 

Tangible common equity ratio

4.81

%

5.07

%

4.98

%

Less: private banking loans

5,713,562

 

5,053,621

 

4,063,116

 

Tangible assets excluding private banking loans (denominator)

$

5,764,655

 

$

5,448,096

 

$

5,001,858

 

Tangible common equity ratio excluding private banking loans

9.58

%

9.78

%

9.03

%

INVESTMENT MANAGEMENT SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

Investment Management EBITDA:

 

 

 

 

 

 

Net income

$

1,196

 

$

1,025

 

$

336

 

 

$

2,221

 

$

914

 

Interest expense

 

 

 

 

 

 

Income tax expense

286

 

310

 

102

 

 

596

 

130

 

Depreciation expense

103

 

103

 

107

 

 

206

 

216

 

Intangible amortization expense

478

 

478

 

486

 

 

956

 

988

 

EBITDA

$

2,063

 

$

1,916

 

$

1,031

 

 

$

3,979

 

$

2,248

 

TRISTATE CAPITAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

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

 

 

 

 

 

 

Net interest income

$

42,912

 

$

38,656

 

$

33,484

 

 

$

81,568

 

$

68,406

 

Total non-interest income

14,844

 

13,651

 

12,997

 

 

28,495

 

26,313

 

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

98

 

(1)

 

14

 

 

97

 

71

 

Total revenue

$

57,658

 

$

52,308

 

$

46,467

 

 

$

109,966

 

$

94,648

 

Less: total non-interest expense

34,425

 

31,278

 

28,096

 

 

65,703

 

57,240

 

Pre-tax, pre-provision net revenue

$

23,233

 

$

21,030

 

$

18,371

 

 

$

44,263

 

$

37,408

 

BANK SEGMENT

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

(Dollars in thousands)

2021

2021

2020

 

2021

2020

Bank total revenue:

 

 

 

 

 

 

Net interest income

$

44,356

 

$

40,153

 

$

34,410

 

 

$

84,509

 

$

69,316

 

Total non-interest income

5,381

 

4,630

 

5,229

 

 

10,012

 

10,937

 

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

98

 

(1)

 

14

 

 

97

 

71

 

Bank total revenue

$

49,639

 

$

44,784

 

$

39,625

 

 

$

94,424

 

$

80,182

 

 

 

 

 

 

 

 

Bank efficiency ratio:

 

 

 

 

 

 

Total non-interest expense (numerator)

$

25,570

 

$

22,655

 

$

19,967

 

 

$

48,225

 

$

41,000

 

Bank total revenue (denominator)

$

49,639

 

$

44,784

 

$

39,625

 

 

$

94,424

 

$

80,182

 

Bank efficiency ratio

51.51

%

50.59

%

50.39

%

 

51.07

%

51.13

%

 



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