TriState Capital Reports Fourth Quarter 2020 EPS of $0.37 on Strength of Fee and Spread Income, Loan Growth and Margin Expansion

January 27, 2021 4:15 PM EST

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-- Record annual revenue, net interest income and non-interest income achieved in 2020 while the company organically grew both loans and deposits at double-digit rates for the seventh consecutive year --

PITTSBURGH--(BUSINESS WIRE)-- TriState Capital Holdings, Inc. (Nasdaq: TSC) (“TriState Capital” or the “company”) reported fourth quarter and full year 2020 financial results including strong contributions by each of its investment management, private banking and commercial banking businesses, double-digit annual loan and deposit growth, assets under management growth, and year end margin expansion.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported fourth quarter 2020 net income available to common shareholders of $10.6 million or $0.37 per diluted share, compared to $12.6 million or $0.44 in the fourth quarter of 2019 and $7.4 million or $0.26 in the third quarter of 2020.

“TriState Capital achieved record levels of revenue, interest income, fees, loans and deposits while maintaining superior asset quality and showing meaningful growth in fourth quarter margins,” Chairman and Chief Executive Officer James F. Getz said. “Our unique business model demonstrated its ability to achieve profitable growth in the most extraordinary operating and rate environments in 2020. We believe our balance sheet and capital position have never been stronger, including more than $200 million of growth capital secured last year. We also believe TriState Capital is well positioned to achieve its goals for 2021, including double-digit organic loan growth with credit quality outperformance, double-digit revenue growth fueled by all of our banking and asset management businesses, and improved profitability while continuing to invest in our clients, people, technology, and risk and compliance infrastructure.”

FULL YEAR AND FOURTH QUARTER 2020 HIGHLIGHTS

  • Earnings reflected $3.0 million in fourth quarter provision expense toward building allowance for credit loss on loans and leases (ACL) by 145.5% from December 31, 2019 and 12.8% during the last three months of the year to $34.6 million at period end, representing 67.4% of adverse-rated credits, 1.01% of commercial loans and 0.42% of total loans.
  • The company maintained superior credit quality, including period-end non-performing assets representing 0.13% of total assets and non-performing loans representing 0.12% of total loans, as well as COVID-19 deferral levels declining to 1.0% of total loans.
  • Chartwell grew net income to $2.8 million in 2020, up 15.0% from the year prior, even as investment management fees declined 12.1% over the same period.
  • Assets under management increased 5.8% from December 31, 2019 and 6.3% during the quarter to $10.26 billion at period end, while Chartwell’s run rate revenues grew to $35.6 million at year end.
  • Fourth quarter funding costs declined 10 basis points and net interest margin improved by 7 basis points to 1.53% from the linked quarter, as the company managed deposit growth to 3.7% for the fourth quarter and 28.0% for the year, while expanding its liquidity relationships and franchise.
  • Commercial loans grew by 19.0% from December 31, 2019 and 7.3% during the quarter, with no Paycheck Protection Program lending.
  • Private banking loans grew 30.1% from December 31, 2019 and 7.8% during the quarter, as loans primarily collateralized by marketable securities represented 58.4% of total loans at the end of 2020.

REVENUE GROWTH

Net interest income (NII) grew to a record $36.1 million in the fourth quarter of 2020, increasing 9.1% from $33.1 million in the same period the year prior and 7.7% from $33.5 million in the linked quarter.

Non-interest income totaled $14.0 million in the fourth quarter of 2020, compared to $13.5 million in the same period the year prior and $16.9 million in the linked quarter.

Chartwell investment management fees were $8.6 million in the fourth quarter of 2020, compared to $8.9 million in the same period the year prior and $8.1 million in the linked quarter. Fees from the bank’s back-to-back, loan-level interest rate swap offering for clients totaled $4.1 million during the fourth quarter of 2020, compared to $3.4 million in the same period the year prior and $4.0 million in the linked quarter.

TriState Capital recorded a $133,000 net gain on the sale and call of debt securities in the fourth quarter of 2020, primarily attributed to the continued repositioning of a portion of the corporate bond portfolio into government agency securities to take advantage of significant market appreciation and enhance the overall credit quality of the securities portfolio. Net gain on the sale and call of debt securities was $70,000 in the same period a year prior and $3.7 million in the linked quarter.

NII and non-interest income, excluding net gains and losses on the sale of securities, combined to generate record total revenue of $49.9 million for the fourth quarter of 2020, compared to $46.5 million in the same period the year prior and $46.6 million in the linked quarter. Full year 2020 total revenue was a record $191.2 million, up 6.6% from $179.4 million in 2019. 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 its diverse fee-generating businesses. TriState Capital’s non-interest income represented 27.8% of total revenue for the fourth quarter of 2020.

EXPENSES IN LINE WITH EXPECTATIONS

To support the continued growth of each of its businesses and its balance sheet, the company increased annual non-interest expense by 9.8% in 2020, which was its lowest rate of growth since 2013. Non-interest expense was $123.1 million in 2020, compared to $112.1 million in 2019. Total non-interest expense was $34.4 million in the fourth quarter of 2020, $30.1 million in the same period the year prior and $31.4 million in the linked quarter.

Fourth quarter 2020 operating expenses were favorably impacted by what are expected to be sustainable reductions in Federal Deposit Insurance Corporation (FDIC) insurance expense as a percentage of average assets, as compared to prior years. Premium assessments in the fourth quarter reflected TriState Capital’s portfolio of private banking non-purpose margin loans collateralized by marketable securities, as well as the branchless bank approaching $10 billion in assets and becoming a “large institution” for examination purposes. FDIC insurance expense was $1.9 million in the fourth quarter of 2020, or an annualized 0.08% of average assets, compared to $1.8 million, or 0.10%, the same period the year prior and $3.0 million, or 0.13%, in the linked quarter.

Other fourth quarter of 2020 operating expense increases included investments in technology and new hires to support continued growth, as well as accruals for the performance-based variable compensation program in which virtually all of the company’s employees participate. Technology and data services expense was $3.5 million in the fourth quarter of 2020, compared to $2.3 million in the same period the year prior and $2.6 million in the linked quarter. New hires and bonus accruals reflecting the company’s record annual revenue and other key financial metrics were primary factors in compensation and benefits expense increasing to $18.7 million in the fourth quarter of 2020, from $16.7 million in the same period the year prior and $18.5 million in the linked quarter.

TriState Capital Bank’s efficiency ratio was 55.57% in 2020 and 54.49% in 2019. The bank’s efficiency ratio for the fourth quarter of 2020 was 60.95%, compared to 56.03% in the same period the year prior and 58.73% in the linked quarter. The efficiency ratio, which is a non-GAAP financial metric, is a measure utilized to provide a greater understanding of a bank’s level of non-interest expense as a percentage of total revenue. Non-interest expense represented just 1.40% of average assets in the fourth quarter of 2020, compared to 1.60% in the same period the prior year and 1.31% in the linked quarter.

Pre-tax, pre-provision net revenue was $15.5 million in the fourth quarter of 2020, compared to $16.4 million in the same period the year prior and $15.2 million in the linked quarter. Pre-tax, pre-provision net revenue is a non-GAAP financial metric representing net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities.

Pre-tax income was $12.7 million in the fourth quarter of 2020, compared to $15.7 million in the same period a year prior and $11.5 million in the linked quarter.

TriState Capital’s effective tax rate in 2020 was 0.4% for the fourth quarter and 14.1% for the full year. 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 tax rate, based on factors including anticipated tax credit investment opportunities, is currently expected to range from 15% to 17%.

Net income available to common shareholders, earnings per share and weighted average diluted shares in the fourth quarter of 2020 reflected the company’s previously disclosed $105 million sale of common stock, convertible preferred stock and warrants to funds managed by Stone Point Capital LLC on December 30, 2020. Net income available to common shareholders in the fourth quarter of 2020 also reflected $2.0 million in dividends payable to holders of the company’s Series A Non-Cumulative Perpetual Preferred Stock and Series B Non-Cumulative Perpetual Preferred Stock.

INVESTMENT MANAGEMENT

Chartwell’s operating leverage potential was on full display in 2020, with significant growth in profitability. The unit’s net income grew to $2.8 million in 2020, up 15.0% from $2.4 million the year prior, even as investment management fees declined 12.1% over the same period. Chartwell earnings grew to $1.2 million in the fourth quarter of 2020, increasing from $13,000 in the same period the year prior and up 62.3% from $719,000 in the linked quarter.

Segment non-interest expenses were $29.7 million in 2020, down from $33.6 million in 2019, and $7.7 million in the fourth quarter of 2020, down from $8.9 million in the same period the year prior and $7.3 million in the linked quarter.

Strong investment performance across Chartwell’s active equity and fixed income strategies contributed to positive net inflows of client assets in 2020, as well as the full recovery of assets under management and run rate revenues from the financial markets’ trough in March 2020. At the end of 2020, Chartwell had $115 million in unfunded institutional investor commitments in its new business pipeline.

Chartwell new business and new flows from existing accounts of $278 million and market appreciation of $747 million more than offset outflows of $415 million in the fourth quarter of 2020. Chartwell assets under management were $10.26 billion at December 31, 2020, compared to $9.70 billion one year prior and $9.65 billion at September 30, 2020.

Chartwell annual run rate revenue grew 6.0% during the fourth quarter of 2020 to $35.6 million at December 31, 2020. Chartwell’s weighted average fee rate was 0.35% at December 31, 2020.

ORGANIC LOAN GROWTH

TriState Capital’s client engagement and distribution capabilities continued to grow both sides of its balance sheet organically, expanding the number and depth of its premier relationships with high-quality middle-market commercial customers, as well as the family offices and high-net-worth clients the bank serves through its national referral network of investment advisors and other financial intermediaries.

Average loans totaled a record $7.86 billion in the fourth quarter of 2020, growing 25.8% from $6.25 billion in the same period the year prior and 6.4% from $7.39 billion in the linked quarter. Loans at December 31, 2020 totaled $8.24 billion, growing an annual record $1.66 billion, or 25.2%, from one year prior and a quarterly record $583.0 million, or 7.6%, from September 30, 2020.

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 and other financial services firms. Private banking loans totaled a record $4.81 billion at December 31, 2020, increasing $1.11 billion, or 30.1%, from one year prior and $349.0 million, or 7.8%, 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 $3.43 billion at December 31, 2020, increasing $547.5 million, or 19.0%, from one year prior and $233.9 million, or 7.3%, from the end of the linked quarter.

C&I loans grew to $1.27 billion at December 31, 2020, increasing by $188.4 million, or 17.4%, from one year prior and $135.9 million, or 11.9%, from the end of the linked quarter.

CRE loans grew to $2.16 billion at December 31, 2020, increasing $359.0 million, or 20.0%, from one year prior and $98.1 million, or 4.8%, from the end of the linked quarter. CRE loans represented 26.1% of total period-end loans.

TriState Capital’s 2020 commercial lending activity is attributed to its regional middle market and financial services franchise, including the continued expansion of its equipment finance and investment fund finance offerings. The bank does not offer small business lending products and did not participate in the Paycheck Protection Program.

STRATEGIC DEPOSIT FRANCHISE EXPANSION

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

Average deposits totaled $8.44 billion in the fourth quarter of 2020, growing 35.8% from $6.21 billion in the same period the year prior and 2.8% from $8.21 billion in the linked quarter. Deposits at December 31, 2020 totaled $8.49 billion, growing by an annual record $1.85 billion, or 28.0%, from one year prior and $305.4 million, or 3.7%, from September 30, 2020.

Treasury management deposit accounts grew to $1.46 billion at December 31, 2020, increasing $383.2 million, or 35.7%, from one year prior and $110.1 million, or 8.2%, from September 30, 2020.

The bank’s loan-to-deposit ratio was 97.04% at December 31, 2020, compared to 99.14% one year prior and 93.53% at the end of the linked quarter, as TriState Capital managed deposit balances in line with loan activity in the quarter and the improving cash markets.

INTEREST RATE MANAGEMENT

TriState Capital continues to maintain a balance sheet with significant flexibility to actively manage interest rate dynamics and profitability, while offering attractive deposit and loan pricing to clients, even as the Federal Reserve’s target Federal Funds Rate has declined dramatically since the third quarter of 2019.

Investment securities totaled a record $842.5 million at December 31, 2020, up 79.6% from one year prior and 2.7% from the end of the linked quarter.

Most of TriState Capital’s non-fixed rate deposits are linked to the Effective Fed Funds Rate or another benchmark, and the remaining deposits are priced at rates set with bank discretion. Total cost of funds for all deposits and interest-bearing liabilities averaged 0.67% during the fourth quarter of 2020, compared to 1.93% in the same period last year and 0.77% in the linked quarter. The cost of total deposits averaged 0.57% during the fourth quarter of 2020, compared to 1.92% in the same period last year and 0.67% in the linked quarter.

At December 31, 2020, 94% of the company’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 fourth quarter of 2020.

The yield on total loans averaged 2.44% during the fourth quarter of 2020, compared to 3.81% in the same period the year prior and 2.49% in the linked quarter. Loan yields resulted from trends in 30-day LIBOR during the fourth quarter of 2020, as well as an overall focus on premier relationships and product types, variable rate pricing, and strong asset quality.

TriState Capital reported a net interest margin of 1.53% for the fourth quarter of 2020, compared to 1.84% in the same period the year prior and 1.46% in the linked quarter as the company managed deposit costs and balances.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the fourth quarter of 2020, reflecting the company’s disciplined credit culture and the majority of its private banking non-purpose margin loans collateralized by marketable securities. Private banking grew to represent 58.4% of total loans at December 31, 2020, while CRE and C&I loans comprised 26.1% and 15.5% of total loans, respectively.

COVID-19 deferral levels have declined from 48 loans representing $185.9 million or 2.4% of total loans on October 20, 2020 to 13 loans representing $84.5 million or 1.0% of total loans on December 31, 2020.

TriState Capital recorded provision for credit loss of $3.0 million for the fourth quarter of 2020, in line with previously disclosed expectations, primarily reflecting the company’s reserve build. It recorded provision for credit loss of $728,000 for the fourth quarter of 2019 and $7.4 million for the linked quarter.

ACL totaled $34.6 million at the end of 2020, in line with previously disclosed expectations and including a “day 1” increase of $942,000 for implementation of the CECL accounting standard on December 31, 2020. The allowance increased 145.5% from $14.1 million at December 31, 2019 and 12.8% from $30.7 million at September 30, 2020. ACL represented 1.01% of commercial loans at December 31, 2020, excluding private banking loans primarily collateralized by liquid, marketable securities, compared to 0.49% at December 31, 2019 and 0.96% at September 30, 2020. As a percentage of total loans, ACL was 0.42% at December 31, 2020, 0.21% at December 31, 2019 and 0.40% at September 30, 2020.

Non-performing assets (NPAs) were $12.4 million, or 0.13% of total assets, at December 31, 2020, compared to $4.4 million, or 0.06%, at December 31, 2019 and $9.5 million, or 0.10%, at September 30, 2020. Non-performing loans (NPLs) were $9.7 million, or 0.12% of total loans, at December 31, 2020, compared to $184,000, or 0.00%, at December 31, 2019 and $6.8 million, or 0.09%, at September 30, 2020.

Total adverse-rated credits, including NPLs, were $51.3 million, or 0.62% of total loans, at December 31, 2020, compared to $35.0 million, or 0.53%, at December 31, 2019 and $38.8 million, or 0.51%, at September 30, 2020.

The company recorded net recoveries of $109,000 in the fourth quarter of 2020 and $6,000 in the year-ago quarter, and net charge-offs of $0 in the linked quarter.

CAPITAL STRENGTH AND EFFICIENCY

The company’s strong balance sheet included $1.28 billion in cash, equivalents and securities at December 31, 2020. 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 61.49% of total assets at the end of the fourth quarter of 2020.

As of December 31, 2020, estimated regulatory capital ratios for TriState Capital Holdings were 14.12% for total risk-based capital, 11.99% for tier 1 risk-based capital, 8.99% for common equity tier 1 risk-based capital, and 7.29% for tier 1 leverage. For TriState Capital Bank, the estimated capital ratios were 13.41% for total risk-based capital, 12.89% for tier 1 risk-based capital, 12.89% for common equity tier 1 risk-based capital, and 7.83% for tier 1 leverage.

The company’s tangible common equity (TCE) ratio was 5.25%, or 10.27% excluding private banking loans primarily collateralized by liquid, marketable securities. 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.

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 28 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/sreg/10150560/dee5e7d640 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/tsc210128.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 4. 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 10150560.

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 $9.8 billion in assets as of December 31, 2020, 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 $10.3 billion in assets under management as of December 31, 2020, 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,” “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 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)

2020

2020

2019

 

2020

2019

Cash and cash equivalents

$

435,442

 

$

608,302

 

$

403,855

 

 

$

435,442

 

$

403,855

 

Total investment securities

842,545

 

820,223

 

469,150

 

 

842,545

 

469,150

 

Loans and leases held-for-investment

8,237,418

 

7,654,446

 

6,577,559

 

 

8,237,418

 

6,577,559

 

Allowance for credit losses on loans and leases

(34,630)

 

(30,706)

 

(14,108)

 

 

(34,630)

 

(14,108)

 

Loans and leases held-for-investment, net

8,202,788

 

7,623,740

 

6,563,451

 

 

8,202,788

 

6,563,451

 

Goodwill and other intangibles, net

63,911

 

64,389

 

65,854

 

 

63,911

 

65,854

 

Other assets

352,130

 

377,136

 

263,500

 

 

352,130

 

263,500

 

Total assets

$

9,896,816

 

$

9,493,790

 

$

7,765,810

 

 

$

9,896,816

 

$

7,765,810

 

 

 

 

 

 

 

 

Deposits

$

8,489,089

 

$

8,183,713

 

$

6,634,613

 

 

$

8,489,089

 

$

6,634,613

 

Borrowings, net

400,493

 

395,439

 

355,000

 

 

400,493

 

355,000

 

Other liabilities

250,089

 

271,438

 

154,916

 

 

250,089

 

154,916

 

Total liabilities

9,139,671

 

8,850,590

 

7,144,529

 

 

9,139,671

 

7,144,529

 

Preferred stock

177,143

 

116,079

 

116,079

 

 

177,143

 

116,079

 

Common shareholders' equity

580,002

 

527,121

 

505,202

 

 

580,002

 

505,202

 

Total shareholders' equity

757,145

 

643,200

 

621,281

 

 

757,145

 

621,281

 

Total liabilities and shareholders' equity

$

9,896,816

 

$

9,493,790

 

$

7,765,810

 

 

$

9,896,816

 

$

7,765,810

 

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)

2020

2020

2019

 

2020

2019

Interest income:

 

 

 

 

 

 

Loans and leases

$

48,288

 

$

46,256

 

$

59,936

 

 

$

200,839

 

$

239,328

 

Investments

2,504

 

3,687

 

3,827

 

 

14,032

 

16,324

 

Interest-earning deposits

218

 

279

 

1,711

 

 

2,224

 

6,795

 

Total interest income

51,010

 

50,222

 

65,474

 

 

217,095

 

262,447

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

12,107

 

13,898

 

29,990

 

 

69,202

 

125,592

 

Borrowings

2,839

 

2,850

 

2,418

 

 

9,949

 

9,798

 

Total interest expense

14,946

 

16,748

 

32,408

 

 

79,151

 

135,390

 

Net interest income

36,064

 

33,474

 

33,066

 

 

137,944

 

127,057

 

Provision (credit) for credit loss

2,972

 

7,430

 

728

 

 

19,400

 

(968)

 

Net interest income after provision for credit losses

33,092

 

26,044

 

32,338

 

 

118,544

 

128,025

 

Non-interest income:

 

 

 

 

 

 

Investment management fees

8,564

 

8,095

 

8,862

 

 

32,035

 

36,442

 

Service charges on deposits

309

 

235

 

216

 

 

1,072

 

559

 

Net gain on the sale and call of debt securities

133

 

3,744

 

70

 

 

3,948

 

416

 

Swap fees

4,095

 

3,953

 

3,363

 

 

16,274

 

11,029

 

Commitment and other loan fees

453

 

381

 

537

 

 

1,715

 

1,788

 

Other income

449

 

481

 

443

 

 

2,161

 

2,548

 

Total non-interest income

14,003

 

16,889

 

13,491

 

 

57,205

 

52,782

 

Non-interest expense:

 

 

 

 

 

 

Compensation and employee benefits

18,658

 

18,524

 

16,709

 

 

71,197

 

69,176

 

Premises and equipment expense

1,486

 

1,488

 

1,592

 

 

5,875

 

5,458

 

Professional fees

2,026

 

1,596

 

2,482

 

 

6,201

 

6,188

 

FDIC insurance expense

1,920

 

3,030

 

1,830

 

 

9,680

 

5,292

 

General insurance expense

308

 

294

 

286

 

 

1,142

 

1,097

 

State capital shares tax

605

 

366

 

380

 

 

1,720

 

420

 

Travel and entertainment expense

688

 

592

 

1,406

 

 

2,423

 

4,620

 

Technology and data services

3,509

 

2,576

 

2,274

 

 

10,803

 

8,520

 

Intangible amortization expense

478

 

478

 

503

 

 

1,944

 

2,009

 

Marketing and advertising

708

 

394

 

602

 

 

2,402

 

2,263

 

Other operating expenses

4,049

 

2,089

 

2,055

 

 

9,716

 

7,106

 

Total non-interest expense

34,435

 

31,427

 

30,119

 

 

123,103

 

112,149

 

Income before tax

12,660

 

11,506

 

15,710

 

 

52,646

 

68,658

 

Income tax expense

50

 

2,177

 

1,106

 

 

7,412

 

8,465

 

Net income

$

12,610

 

$

9,329

 

$

14,604

 

 

$

45,234

 

$

60,193

 

Preferred stock dividends

1,987

 

1,962

 

1,962

 

 

7,873

 

5,753

 

Net income available to common shareholders

$

10,623

 

$

7,367

 

$

12,642

 

 

$

37,361

 

$

54,440

 

TRISTATE CAPITAL HOLDINGS, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

 

 

Three Months Ended

 

Years Ended

 

December 31,

September 30,

December 31,

 

December 31,

December 31,

(Dollars in thousands, except per share data)

2020

2020

2019

 

2020

2019

Per share and share data:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

$

0.37

 

$

0.26

 

$

0.45

 

 

$

1.32

 

$

1.95

 

Diluted

$

0.37

 

$

0.26

 

$

0.44

 

 

$

1.30

 

$

1.89

 

Book value per common share

$

17.78

 

$

17.67

 

$

17.21

 

 

$

17.78

 

$

17.21

 

Tangible book value per common share (1)

$

15.82

 

$

15.51

 

$

14.97

 

 

$

15.82

 

$

14.97

 

Common shares outstanding, at end of period

32,620,150

 

29,828,143

 

29,355,986

 

 

32,620,150

 

29,355,986

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

28,378,695

 

28,286,250

 

27,875,074

 

 

28,267,512

 

27,864,933

 

Diluted

28,867,958

 

28,674,443

 

29,020,118

 

 

28,738,468

 

28,833,335

 

 

 

 

 

 

 

 

Performance ratios:

 

 

 

 

 

 

Return on average assets (2)

0.51

%

0.39

%

0.78

%

 

0.50

%

0.89

%

Return on average common equity (2)

7.87

%

5.56

%

10.07

%

 

7.15

%

11.47

%

Net interest margin (2) (3)

1.53

%

1.46

%

1.84

%

 

1.58

%

1.97

%

Total revenue (1)

$

49,934

 

$

46,619

 

$

46,487

 

 

$

191,201

 

$

179,423

 

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

$

15,498

 

$

15,192

 

$

16,368

 

 

$

68,098

 

$

67,274

 

Bank efficiency ratio (1)

60.95

%

58.73

%

56.03

%

 

55.57

%

54.49

%

Non-interest expense to average assets (2)

1.40

%

1.31

%

1.60

%

 

1.35

%

1.66

%

 

 

 

 

 

 

 

Asset quality:

 

 

 

 

 

 

Non-performing loans

$

9,680

 

$

6,754

 

$

184

 

 

$

9,680

 

$

184

 

Non-performing assets

$

12,403

 

$

9,478

 

$

4,434

 

 

$

12,403

 

$

4,434

 

Other real estate owned

$

2,723

 

$

2,724

 

$

4,250

 

 

$

2,723

 

$

4,250

 

Non-performing assets to total assets

0.13

%

0.10

%

0.06

%

 

0.13

%

0.06

%

Non-performing loans to total loans

0.12

%

0.09

%

%

 

0.12

%

%

Allowance for credit losses on loans and leases to loans

0.42

%

0.40

%

0.21

%

 

0.42

%

0.21

%

Allowance for credit losses on loans and leases to non-performing loans

357.75

%

454.63

%

7,667.39

%

 

357.75

%

7,667.39

%

Net recoveries

$

(109)

 

$

 

$

(6)

 

 

$

(279)

 

$

(1,868)

 

Net recoveries to average total loans (2)

(0.01)

%

%

%

 

%

(0.03)

%

 

 

 

 

 

 

 

Capital ratios: (4)

 

 

 

 

 

 

Tier 1 leverage ratio

7.29

%

6.23

%

7.54

%

 

7.29

%

7.54

%

Common equity tier 1 risk-based capital ratio

8.99

%

8.48

%

9.32

%

 

8.99

%

9.32

%

Tier 1 risk-based capital ratio

11.99

%

10.56

%

11.75

%

 

11.99

%

11.75

%

Total risk-based capital ratio

14.12

%

12.85

%

12.05

%

 

14.12

%

12.05

%

Bank tier 1 leverage ratio

7.83

%

7.00

%

7.22

%

 

7.83

%

7.22

%

Bank common equity tier 1 risk-based capital ratio

12.89

%

11.89

%

11.26

%

 

12.89

%

11.26

%

Bank tier 1 risk-based capital ratio

12.89

%

11.89

%

11.26

%

 

12.89

%

11.26

%

Bank total risk-based capital ratio

13.41

%

12.46

%

11.57

%

 

13.41

%

11.57

%

 

 

 

 

 

 

 

Investment Management Segment:

 

 

 

 

 

 

Assets under management

$

10,263,000

 

$

9,653,000

 

$

9,701,000

 

 

$

10,263,000

 

$

9,701,000

 

EBITDA (1)

$

1,675

 

$

1,551

 

$

714

 

 

$

5,473

 

$

5,824

 

(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, 2020

 

September 30, 2020

 

December 31, 2019

(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

$

671,922

 

$

216

 

0.13

%

 

$

866,502

 

$

278

 

0.13

%

 

$

404,169

 

$

1,687

 

1.66

%

Federal funds sold

8,236

 

2

 

0.10

%

 

9,071

 

2

 

0.09

%

 

6,994

 

25

 

1.42

%

Debt securities available-for-sale

578,021

 

676

 

0.47

%

 

561,378

 

1,804

 

1.28

%

 

251,767

 

1,994

 

3.14

%

Debt securities held-to-maturity, net

227,465

 

1,633

 

2.86

%

 

262,128

 

1,701

 

2.58

%

 

206,383

 

1,653

 

3.18

%

Debt securities trading

2,126

 

4

 

0.75

%

 

 

 

%

 

 

 

%

Equity securities

 

 

%

 

 

 

%

 

1,898

 

4

 

0.84

%

FHLB stock

13,284

 

199

 

5.96

%

 

13,284

 

196

 

5.87

%

 

20,930

 

198

 

3.75

%

Total loans and leases

7,858,368

 

48,288

 

2.44

%

 

7,386,265

 

46,256

 

2.49

%

 

6,248,106

 

59,936

 

3.81

%

Total interest-earning assets

9,359,422

 

51,018

 

2.17

%

 

9,098,628

 

50,237

 

2.20

%

 

7,140,247

 

65,497

 

3.64

%

Other assets

405,461

 

 

 

 

420,887

 

 

 

 

326,013

 

 

 

Total assets

$

9,764,883

 

 

 

 

$

9,519,515

 

 

 

 

$

7,466,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,949,908

 

$

3,280

 

0.44

%

 

$

2,866,303

 

$

3,280

 

0.46

%

 

$

1,446,394

 

$

6,178

 

1.69

%

Money market deposit accounts

4,027,298

 

6,120

 

0.60

%

 

3,811,100

 

6,944

 

0.72

%

 

3,123,162

 

15,727

 

2.00

%

Certificates of deposit

1,003,219

 

2,707

 

1.07

%

 

1,121,824

 

3,674

 

1.30

%

 

1,358,319

 

8,086

 

2.36

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

FHLB borrowings

300,000

 

1,384

 

1.84

%

 

300,000

 

1,392

 

1.85

%

 

465,489

 

2,417

 

2.06

%

Line of credit borrowings

870

 

 

%

 

 

 

%

 

 

 

%

Subordinated notes payable, net

95,493

 

1,455

 

6.06

%

 

95,601

 

1,458

 

6.07

%

 

 

 

%

Total interest-bearing liabilities

8,376,788

 

14,946

 

0.71

%

 

8,194,828

 

16,748

 

0.81

%

 

6,393,364

 

32,408

 

2.01

%

Noninterest-bearing deposits

457,824

 

 

 

 

407,079

 

 

 

 

285,027

 

 

 

Other liabilities

275,766

 

 

 

 

274,480

 

 

 

 

173,977

 

 

 

Shareholders' equity

654,505

 

 

 

 

643,128

 

 

 

 

613,892

 

 

 

Total liabilities and shareholders' equity

$

9,764,883

 

 

 

 

$

9,519,515

 

 

 

 

$

7,466,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

36,072

 

 

 

 

$

33,489

 

 

 

 

$

33,089

 

 

Net interest spread

 

 

1.46

%

 

 

 

1.39

%

 

 

 

1.63

%

Net interest margin (1)

 

 

1.53

%

 

 

 

1.46

%

 

 

 

1.84

%

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2020

 

December 31, 2019

(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

$

775,276

 

$

2,199

 

0.28

%

 

$

313,413

 

$

6,628

 

2.11

%

Federal funds sold

8,076

 

25

 

0.31

%

 

8,803

 

167

 

1.90

%

Debt securities available-for-sale

438,293

 

6,550

 

1.49

%

 

250,064

 

8,119

 

3.25

%

Debt securities held-to-maturity, net

246,054

 

6,439

 

2.62

%

 

193,443

 

6,921

 

3.58

%

Debt securities trading

592

 

5

 

0.84

%

 

 

 

%

Equity securities

 

 

%

 

6,733

 

115

 

1.71

%

FHLB stock

14,994

 

1,098

 

7.32

%

 

18,043

 

1,270

 

7.04

%

Total loans and leases

7,255,035

 

200,839

 

2.77

%

 

5,669,507

 

239,328

 

4.22

%

Total interest-earning assets

8,738,320

 

217,155

 

2.49

%

 

6,460,006

 

262,548

 

4.06

%

Other assets

387,080

 

 

 

 

281,171

 

 

 

Total assets

$

9,125,400

 

 

 

 

$

6,741,177

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,407,087

 

$

14,493

 

0.60

%

 

$

1,058,064

 

$

21,480

 

2.03

%

Money market deposit accounts

3,812,942

 

35,095

 

0.92

%

 

2,943,541

 

69,336

 

2.36

%

Certificates of deposit

1,223,631

 

19,614

 

1.60

%

 

1,371,038

 

34,776

 

2.54

%

Borrowings:

 

 

 

 

 

 

 

FHLB borrowings

330,314

 

6,095

 

1.85

%

 

394,480

 

8,639

 

2.19

%

Line of credit borrowings

6,243

 

261

 

4.18

%

 

1,234

 

68

 

5.51

%

Subordinated notes payable, net

59,078

 

3,593

 

6.08

%

 

17,335

 

1,091

 

6.29

%

Total interest-bearing liabilities

7,839,295

 

79,151

 

1.01

%

 

5,785,692

 

135,390

 

2.34

%

Noninterest-bearing deposits

408,313

 

 

 

 

267,846

 

 

 

Other liabilities

239,137

 

 

 

 

128,618

 

 

 

Shareholders' equity

638,655

 

 

 

 

559,021

 

 

 

Total liabilities and shareholders' equity

$

9,125,400

 

 

 

 

$

6,741,177

 

 

 

 

 

 

 

 

 

 

 

Net interest income (1)

 

$

138,004

 

 

 

 

$

127,158

 

 

Net interest spread

 

 

1.48

%

 

 

 

1.72

%

Net interest margin (1)

 

 

1.58

%

 

 

 

1.97

%

(1)

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

TRISTATE CAPITAL HOLDINGS, INC.

LOAN AND LEASE COMPOSITION (UNAUDITED)

 

 

December 31, 2020

 

September 30, 2020

 

December 31, 2019

(Dollars in thousands)

Loan
Balance

Percent of
Loans

 

Loan
Balance

Percent of
Loans

 

Loan
Balance

Percent of
Loans

Middle-market banking loans:

 

 

 

 

 

 

 

 

Commercial and industrial

$

1,274,152

 

15.5

%

 

$

1,138,288

 

14.9

%

 

$

1,085,709

 

16.5

%

Commercial real estate

2,155,466

 

26.1

%

 

2,057,391

 

26.8

%

 

1,796,448

 

27.3

%

Total middle-market banking loans

3,429,618

 

41.6

%

 

3,195,679

 

41.7

%

 

2,882,157

 

43.8

%

Private banking loans

4,807,800

 

58.4

%

 

4,458,767

 

58.3

%

 

3,695,402

 

56.2

%

Loans and leases held-for-investment

$

8,237,418

 

100.0

%

 

$

7,654,446

 

100.0

%

 

$

6,577,559

 

100.0

%

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENTS OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

 

 

Three Months Ended December 31, 2020

 

Year Ended December 31, 2020

(Dollars in thousands)

Bank

Investment
Management

Parent
and Other

Consolidated

 

Bank

Investment
Management

Parent
and Other

Consolidated

Income statement data:

 

 

 

 

 

 

 

 

 

Interest income

$

51,010

 

$

 

$

 

$

51,010

 

 

$

217,095

 

$

 

$

 

$

217,095

 

Interest expense

13,495

 

 

1,451

 

14,946

 

 

75,339

 

 

3,812

 

79,151

 

Net interest income (loss)

37,515

 

 

(1,451)

 

36,064

 

 

141,756

 

 

(3,812)

 

137,944

 

Provision for credit losses on loans and leases

2,972

 

 

 

2,972

 

 

19,400

 

 

 

19,400

 

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

34,543

 

 

(1,451)

 

33,092

 

 

122,356

 

 

(3,812)

 

118,544

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Investment management fees

 

8,772

 

(208)

 

8,564

 

 

 

32,727

 

(692)

 

32,035

 

Net gain on the sale and call of debt securities

133

 

 

 

133

 

 

3,948

 

 

 

3,948

 

Other non-interest income

5,270

 

36

 

 

5,306

 

 

21,164

 

58

 

 

21,222

 

Total non-interest income (loss)

5,403

 

8,808

 

(208)

 

14,003

 

 

25,112

 

32,785

 

(692)

 

57,205

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

478

 

 

478

 

 

 

1,944

 

 

1,944

 

Other non-interest expense

26,078

 

7,237

 

642

 

33,957

 

 

90,541

 

27,735

 

2,883

 

121,159

 

Total non-interest expense

26,078

 

7,715

 

642

 

34,435

 

 

90,541

 

29,679

 

2,883

 

123,103

 

Income (loss) before tax

13,868

 

1,093

 

(2,301)

 

12,660

 

 

56,927

 

3,106

 

(7,387)

 

52,646

 

Income tax expense (benefit)

452

 

(74)

 

(328)

 

50

 

 

8,330

 

308

 

(1,226)

 

7,412

 

Net income (loss)

$

13,416

 

$

1,167

 

$

(1,973)

 

$

12,610

 

 

$

48,597

 

$

2,798

 

$

(6,161)

 

$

45,234

 

 

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 for loan losses

728

 

 

 

728

 

 

(968)

 

 

 

(968)

 

Net interest income (loss) after provision for loan 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 (loss)

4,585

 

14

 

(40)

 

4,559

 

 

15,051

 

31

 

842

 

15,924

 

Total non-interest income (loss)

4,655

 

8,991

 

(155)

 

13,491

 

 

15,467

 

36,920

 

395

 

52,782

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Intangible amortization expense

 

503

 

 

503

 

 

 

2,009

 

 

2,009

 

Other non-interest expense

21,073

 

8,387

 

156

 

29,616

 

 

77,945

 

31,560

 

635

 

110,140

 

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

 

TRISTATE CAPITAL HOLDINGS, INC.

EARNINGS PER COMMON SHARE (UNAUDITED)

 

 

Three Months Ended

 

Years Ended

 

December 31,

September 30,

December 31,

 

December 31,

December 31,

(Dollars in thousands, except per share data)

2020

2020

2019

 

2020

2019

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

Net income

$

12,610

 

$

9,329

 

$

14,604

 

 

$

45,234

 

$

60,193

 

Less: Preferred dividends on series A and B

1,963

 

1,962

 

1,962

 

 

7,849

 

5,753

 

Less: Preferred dividends on series C

24

 

 

 

 

24

 

 

Net income available to common shareholders

$

10,623

 

$

7,367

 

$

12,642

 

 

$

37,361

 

$

54,440

 

 

 

 

 

 

 

 

Allocation of net income available:

 

 

 

 

 

 

Common shareholders

$

10,578

 

$

7,367

 

$

12,642

 

 

$

37,320

 

$

54,440

 

Series C convertible preferred shareholders

38

 

 

 

 

34

 

 

Warrant shareholders

7

 

 

 

 

7

 

 

Total

$

10,623

 

$

7,367

 

$

12,642

 

 

$

37,361

 

$

54,440

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

28,378,695

 

28,286,250

 

27,875,074

 

 

28,267,512

 

27,864,933

 

Series C convertible preferred, as-if converted

102,767

 

 

 

 

25,832

 

 

Warrants, as-if exercised

20,053

 

 

 

 

5,041

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.37

 

$

0.26

 

$

0.45

 

 

$

1.32

 

$

1.95

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

Income available to common shareholders after allocation

$

10,578

 

$

7,367

 

$

12,642

 

 

$

37,320

 

$

54,440

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding:

 

 

 

 

 

 

Basic common shares

28,378,695

 

28,286,250

 

27,875,074

 

 

28,267,512

 

27,864,933

 

Restricted stock - dilutive

390,320

 

303,138

 

797,676

 

 

345,026

 

633,802

 

Stock options - dilutive

98,943

 

85,055

 

347,368

 

 

125,930

 

334,600

 

Diluted common shares

28,867,958

 

28,674,443

 

29,020,118

 

 

28,738,468

 

28,833,335

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.37

 

$

0.26

 

$

0.44

 

 

$

1.30

 

$

1.89

 

 

 

 

 

 

 

 

 

December 31,

September 30,

December 31,

 

December 31,

December 31,

 

2020

2020

2019

 

2020

2019

Anti-dilutive shares:

 

 

 

 

 

 

Restricted stock

647,717

 

781,262

 

27,000

 

 

581,717

 

31,500

 

Stock options

 

10,000

 

 

 

 

 

Warrants

922,438

 

 

 

 

922,438

 

 

Total anti-dilutive shares

1,570,155

 

791,262

 

27,000

 

 

1,504,155

 

31,500

 

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 Preferred Series C 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 (as defined herein). 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)

 

December 31,

September 30,

December 31,

(Dollars in thousands, except per share data)

2020

2020

2019

Tangible common equity and tangible book value per common share:

 

 

 

Common shareholders' equity

$

580,002

 

$

527,121

 

$

505,202

 

Less: goodwill and intangible assets

63,911

 

64,389

 

65,854

 

Tangible common equity

$

516,091

 

$

462,732

 

$

439,348

 

Common shares outstanding

32,620,150

 

29,828,143

 

29,355,986

 

Tangible book value per common share

$

15.82

 

$

15.51

 

$

14.97

 

(Dollars in thousands)

December 31,

September 30,

December 31,

2020

2020

2019

Tangible common equity ratio excluding private banking channel loans:

 

 

 

Common shareholders' equity

$

580,002

 

$

527,121

 

$

505,202

 

Less: goodwill and intangible assets

63,911

 

64,389

 

65,854

 

Tangible common equity (numerator)

$

516,091

 

$

462,732

 

$

439,348

 

Total assets

9,896,816

 

9,493,790

 

7,765,810

 

Less: goodwill and intangible assets

63,911

 

64,389

 

65,854

 

Tangible assets

9,832,905

 

9,429,401

 

7,699,956

 

Tangible common equity ratio

5.25

%

4.91

%

5.71

%

Less: private banking loans

4,807,800

 

4,458,767

 

3,695,402

 

Tangible assets excluding private banking loans (denominator)

5,025,105

 

4,970,634

 

4,004,554

 

Tangible common equity ratio excluding private banking loans

10.27

%

9.31

%

10.97

%

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)

2020

2020

2019

 

2020

2019

Investment Management EBITDA:

 

 

 

 

 

 

Net income

$

1,167

 

$

719

 

$

13

 

 

$

2,798

 

$

2,433

 

Interest expense

 

 

 

 

 

 

Income taxes expense (benefit)

(74)

 

251

 

88

 

 

308

 

918

 

Depreciation expense

104

 

103

 

110

 

 

423

 

465

 

Intangible amortization expense

478

 

478

 

503

 

 

1,944

 

2,009

 

EBITDA

$

1,675

 

$

1,551

 

$

714

 

 

$

5,473

 

$

5,824

 

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)

2020

2020

2019

 

2020

2019

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

 

 

 

 

 

 

Net interest income

$

36,064

 

$

33,474

 

$

33,066

 

 

$

137,944

 

$

127,057

 

Total non-interest income

14,003

 

16,889

 

13,491

 

 

57,205

 

52,782

 

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

133

 

3,744

 

70

 

 

3,948

 

416

 

Total revenue

49,934

 

46,619

 

46,487

 

 

191,201

 

179,423

 

Less: total non-interest expense

34,436

 

31,427

 

30,119

 

 

123,103

 

112,149

 

Pre-tax, pre-provision net revenue

$

15,498

 

$

15,192

 

$

16,368

 

 

$

68,098

 

$

67,274

 

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)

2020

2020

2019

 

2020

2019

Bank total revenue:

 

 

 

 

 

 

Net interest income

$

37,515

 

$

34,925

 

$

33,025

 

 

$

141,756

 

$

127,996

 

Total non-interest income

5,403

 

8,771

 

4,655

 

 

25,112

 

15,467

 

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

133

 

3,744

 

70

 

 

3,948

 

416

 

Bank total revenue

$

42,785

 

$

39,952

 

$

37,610

 

 

$

162,920

 

$

143,047

 

 

 

 

 

 

 

 

Bank efficiency ratio:

 

 

 

 

 

 

Total non-interest expense (numerator)

$

26,078

 

$

23,462

 

$

21,073

 

 

$

90,541

 

$

77,945

 

Bank total revenue (denominator)

$

42,785

 

$

39,952

 

$

37,610

 

 

$

162,920

 

$

143,047

 

Bank efficiency ratio

60.95

%

58.73

%

56.03

%

 

55.57

%

54.49

%

 

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

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

Source: TriState Capital Holdings, Inc.



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