-- Breakout quarter for investment management
business with growth in fees, net inflows and AUM, while
double-digit annual loan growth was achieved with the second
consecutive quarter of net interest margin expansion --
TriState Capital Holdings, Inc. (Nasdaq: TSC) reported first
quarter 2021 financial results including net income growth, record
pre-tax income and net interest income, net interest margin
expansion, and all-time-high levels of assets under management
(AUM), loans and deposits.
The parent company of TriState Capital Bank and Chartwell
Investment Partners grew net income available to common
shareholders to $13.1 million in the first quarter of 2021, up
20.2% from $10.9 million in the first quarter of 2020 and up 23.7%
from $10.6 million in the fourth quarter of 2020.
The company earned $0.35 per diluted share in the first quarter
of 2021, compared to $0.38 in the first quarter of 2020 and $0.37
in the fourth quarter of 2020. First quarter 2021 results reflect a
significantly higher number of diluted average shares outstanding
and a $1.1 million increase in preferred dividends, compared to the
linked 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 ability to surpass $10 billion in assets and
$11 billion in AUM reflects our success in building the TriState
Capital brand and driving meaningful demand for our core investment
management, private banking and commercial banking offerings, with
each of these businesses contributing to our exceptional growth in
net income, as well as record pre-tax income and total revenue in
the first quarter,” Chairman and Chief Executive Officer James F.
Getz said. “Chartwell experienced a breakout quarter, generating
impressive investment performance, investment management fee
growth, and strong net inflows of client assets. TriState Capital
Bank also expanded net interest margin and grew net interest income
through continued growth in private banking loans and in-market
commercial lending in the quarter. We continue to anticipate strong
and responsible top- and bottom-line growth in 2021, based on our
robust new-business pipelines, agile funding mechanism, financial
services distribution capability and strong risk management as we
enter a more favorable economic and credit environment.”
FIRST QUARTER 2021 HIGHLIGHTS
- Chartwell grew investment management fees by 17.8% from the
year-ago quarter and 5.1% from the linked quarter, generated $507.0
million in net client inflows, and grew AUM by 34.6% from March 31,
2020 and 9.2% during the quarter to a record $11.20 billion.
- Net interest income (NII) grew to a record $38.7 million, up
10.7% from the year-ago quarter and 7.2% from the linked quarter on
record average earning assets, lower funding costs and the second
consecutive quarter of net interest margin (NIM) expansion.
- Private banking loans primarily collateralized by marketable
securities and other liquid assets represented 59.2% of total loans
at period end, growing 29.1% from March 31, 2020 and 5.1% during
the quarter.
- Commercial loans increased by 14.7% from March 31, 2020 and
1.7% during the quarter, based on expansion with core clients and
select new prospects in core products, with no lending under the
Paycheck Protection Program.
- The company maintained superior credit quality metrics,
including period-end non-performing assets (NPAs) representing
0.24% of total assets, non-performing loans (NPLs) representing
0.27% of total loans, adverse-rated credits representing 0.60% of
total loans, and COVID-19 deferral levels declining to 0.7% of
total loans.
- Operating expenses increased 7.3% from the year-ago quarter and
declined 9.2% from the linked quarter, as the company continued to
invest in talent and technology to support scalable growth, product
innovation, and the client experience for high-net-worth
individuals, middle-market companies, financial services firms and
advisors.
REVENUE GROWTH
NII grew to a record $38.7 million in the first quarter of 2021,
increasing 10.7% from $34.9 million in the year-ago quarter and
7.2% from $36.1 million in the fourth quarter of 2020. TriState
Capital’s NIM expanded for the second consecutive quarter to 1.59%
for the first quarter of 2021. By comparison, the company reported
NIM of 1.84% for the first quarter of 2020 and 1.53% in the fourth
quarter of 2020.
Non-interest income totaled $13.7 million in the first quarter
of 2021, compared to $13.3 million in the same period the year
prior and $14.0 million in the linked quarter. Chartwell investment
management fees grew to $9.0 million in the first quarter of 2021,
up 17.8% from $7.6 million in the same period the prior year and
5.1% from $8.6 million in the linked quarter, reflecting market
appreciation and positive net inflows of client assets. Fees from
the bank’s back-to-back, loan-level interest rate swap offering for
clients totaled $2.7 million in the first quarter of 2021, compared
to $4.4 million in the prior year quarter and $4.1 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 $52.3 million for the first quarter of 2021, increasing
from $48.2 million in the year-ago period and $49.9 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 its significant fee-generating businesses.
Non-interest income represented 26.1% of total revenue in the first
quarter of 2021 when excluding net gains on the sale of securities,
compared to 27.5% from the year-ago period and 27.8% from the
linked quarter.
EXPENSES IN LINE WITH EXPECTATIONS
TriState Capital continues to invest in talent, technology 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.
First quarter 2021 non-interest expense of $31.3 million was
in-line with the company’s expectations, increasing 7.3% from $29.1
million in the year-ago period and decreasing 9.2% from $34.4
million in the linked quarter. 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 first quarter of 2021, or an annualized
0.04% of average assets, compared to $2.2 million, or 0.11%, in the
same period the prior year, and $1.9 million, or 0.08%, in the
linked quarter.
TriState Capital Bank’s efficiency ratio for the first quarter
of 2021 was 50.59%, compared to 51.86% in the first quarter of 2020
and 60.95% in the linked quarter. The efficiency ratio, which 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 1.24% in the first
quarter of 2021, compared to 1.47% in the first quarter of 2020 and
1.40% in the linked quarter.
Pre-tax, pre-provision net revenue was a record $21.0 million in
the first quarter of 2021, compared to $19.0 million in the
year-ago period and $15.5 million in the linked quarter. Pre-tax,
pre-provision net revenue is a non-GAAP financial metric
representing net income, without giving effect to loan loss
provision and income taxes, and excluding gains and losses on the
sale and call of investment securities.
Income before tax was a record $20.8 million in the first
quarter of 2021, compared to $16.1 million in the first quarter of
2020 and $12.7 million in the linked quarter.
TriState Capital’s effective tax rate was 22.1% for the first
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 first 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 the
fourth consecutive quarter of positive net inflows, totaling $507.0
million for the three months ending March 31, 2021. In addition,
Chartwell currently has in excess of $100 million in commitments
from institutional investors in its new business pipeline.
Chartwell’s new business and new flows from existing accounts of
$956.0 million and market appreciation of $433.0 million more than
offset outflows of $449.0 million in the first quarter of 2021.
Chartwell’s assets under management grew to $11.20 billion at March
31, 2021, increasing 34.6% from $8.32 billion on March 31, 2020 and
9.2% from $10.26 billion on December 31, 2020.
Annual run-rate revenue grew to $38.8 million as of March 31,
2021, increasing 9.1% from December 31, 2020. Chartwell’s weighted
average fee rate was 0.35% at March 31, 2021. Investment management
fee revenue was $9.0 million in the first quarter of 2021, compared
to $7.6 million in the first quarter of 2020 and $8.6 million in
the fourth quarter of 2020.
Initiatives to enhance Chartwell profitability continue to be
reflected in the segment’s moderating expenses. Chartwell segment
expenses were $7.9 million in the first quarter of 2021, compared
to $7.1 million in the first quarter of 2020 and $7.7 million in
the fourth quarter of 2020.
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 national referral network of investment advisors
and other financial intermediaries.
Average loans totaled a record $8.28 billion in the first
quarter of 2021, growing 24.0% from $6.67 billion in the prior year
period and 5.3% from $7.86 billion in the linked quarter.
Period-end loans totaled a record $8.54 billion on March 31, 2021,
growing $1.59 billion, or 22.8%, from March 31, 2020, and $305.8
million, or 3.7%, from December 31, 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 $5.05 billion at March 31, 2021, increasing $1.14
billion, or 29.1%, from one year prior and $245.8 million, or 5.1%,
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 $3.49 billion at March 31, 2021,
increasing $447.0 million, or 14.7%, from one year prior and $59.9
million, or 1.7%, from the end of the linked quarter.
C&I loans grew to $1.25 billion at March 31, 2021,
increasing $58.1 million, or 4.9%, from one year prior. C&I
loans decreased $24.9 million, or 2.0%, from December 31, 2020, as
new loan originations and draws were offset by paydowns on
revolving credit lines following record C&I growth of $135.9
million in the fourth quarter of last year.
CRE loans grew to $2.24 billion at March 31, 2021, increasing
$388.9 million, or 21.0%, from one year prior and $84.9 million, or
3.9%, from the end of the linked quarter. CRE loans represented
26.2% of total period-end loans.
STRATEGIC DEPOSIT AND LIQUIDITY MANAGEMENT FRANCHISE
EXPANSION
TriState Capital continues to deliver growth on its agile
liquidity management services franchise, which creates meaningful
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 deposit liquidity management offerings for 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 a record $8.85 billion in the first
quarter of 2021, growing 31.0% from $6.76 billion in the first
quarter of last year and 4.9% from $8.44 billion in the linked
quarter. Period-end deposits totaled a record $9.25 billion at
March 31, 2021, growing $1.47 billion, or 18.9%, from March 31,
2020, and $760.9 million, or 9.0%, from December 31, 2020.
Treasury management deposit accounts totaled $1.82 billion at
March 31, 2021, increasing $707.6 million, or 63.9%, from March 31,
2020 and $357.4 million, or 24.5%, from December 31, 2020.
The bank’s loan-to-deposit ratio at March 31, 2021 was 92.36%,
compared to 89.40% at March 31, 2020 and 97.04% at December 31,
2020.
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 $1.23 billion at March
31, 2021, up 102.9% from March 31, 2020 and 46.1% from December 31,
2020.
Most 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 0.59% during the first
quarter of 2021, compared to 1.64% in the same period last year and
0.67% in the linked quarter. The total cost of deposits averaged
0.49% during the first quarter of 2021, compared to 1.62% in the
same period last year and 0.57% in the linked quarter.
At March 31, 2021, 95% of the bank’s loans were floating rate
and indexed to 30-day LIBOR or the Prime Rate. TriState Capital
continued to constructively use interest rate floors on existing
and new variable rate loans throughout the first quarter of
2021.
The yield on total loans averaged 2.41% during the first quarter
of 2021, compared to 3.55% in the prior year period and 2.44% in
the linked quarter. Loan yields resulted from trends in 30-day
LIBOR which declined approximately 3 basis points during the first
quarter of 2021, as well as an overall focus on premier
relationships and product types, variable rate pricing, and strong
asset quality.
ASSET QUALITY
TriState Capital maintained strong asset quality metrics in the
first quarter of 2021, reflecting its disciplined credit culture
and the majority of its private banking non-purpose margin loans
collateralized by marketable securities. Private banking grew to
represent 59.2% of the total loan portfolio at March 31, 2021,
while CRE and C&I comprised 26.2% and 14.6% of total loans,
respectively.
COVID-19 deferral levels have declined to eight loans
representing $62.1 million or 0.7% of total loans on March 31, 2021
from 13 loans representing $84.5 million or 1.0% of total loans on
December 31, 2020.
The allowance for credit losses on loans and leases (ACL) was
$34.6 million at March 31, 2021, compared to $17.3 million at March
31, 2020 and $34.6 million at December 31, 2020. ACL represented
0.99% of commercial loans at period end, excluding private banking
loans primarily collateralized by liquid, marketable securities
that do not require a reserve, compared to 0.57% at March 31, 2020
and 1.01% at December 31, 2020. As a percentage of total loans, ACL
was 0.41% at March 31, 2021, 0.25% at March 31, 2020 and 0.42% at
December 31, 2020.
TriState Capital’s net charge offs (NCOs) were $199,000 in the
first quarter of 2021, or 0.01% of total average loans of $8.28
billion. Net recoveries were $203,000 in the year-ago quarter and
$109,000 in the linked quarter.
NPAs were $25.5 million, or 0.24% of total assets, at March 31,
2021, compared to $4.4 million, or 0.05%, at March 31, 2020 and
$12.4 million, or 0.13%, at December 31, 2020. NPLs were $22.7
million, or 0.27% of total loans, at March 31, 2021, compared to
$184,000, or 0.00%, at March 31, 2020 and $9.7 million, or 0.12%,
at December 31, 2020.
NPAs and NPLs increased by $13.0 million in the first quarter of
2021, primarily in connection with two unrelated commercial loans
that were moved to nonperforming status as the borrowers managed
through issues that are believed to be unique to each of the real
estate clients’ individual circumstances. The bank believes it is
adequately reserved for these NPLs.
Total adverse-rated credits, including NPLs, were $50.9 million,
or 0.60% of total loans, at March 31, 2021, compared to $34.6
million, or 0.50%, at March 31, 2020 and $51.3 million, or 0.62%,
at December 31, 2020.
TriState Capital recorded provision expense for credit loss of
$224,000 in the first quarter of 2021. The bank recorded provision
expense of $3.0 million in the first quarter of 2020 and $3.0
million in the linked quarter.
CAPITAL STRENGTH AND EFFICIENCY
The company’s strong balance sheet included $1.68 billion in
cash, equivalents and securities at March 31, 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 63.71% of total
assets at the end of the first quarter of 2021.
As of March 31, 2021, estimated regulatory capital ratios for
TriState Capital Holdings were 14.18% for total risk-based capital,
12.08% for tier 1 risk-based capital, 9.10% for common equity tier
1 risk-based capital, and 7.13% for tier 1 leverage. For TriState
Capital Bank, the estimated capital ratios were 13.49% for total
risk-based capital, 12.98% for tier 1 risk-based capital, 12.98%
for common equity tier 1 risk-based capital, and 7.65% for tier 1
leverage.
The ratio of common shareholders’ equity excluding intangible
assets, or tangible common equity (TCE), to total assets excluding
intangible assets was 5.07% on March 31, 2021. The TCE ratio was
9.78% excluding private banking loans primarily collateralized by
liquid, marketable securities on March 31, 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.
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 April 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/10153301/e511b6f47f 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/tsc210422.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 April 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
10153301.
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 $10.49
billion in assets as of March 31, 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 $11.20 billion in
assets under management as of March 31, 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
March 31,
December 31,
March 31,
(Dollars in thousands)
2021
2020
2020
Cash and cash equivalents
$
446,484
$
435,442
$
1,010,128
Total investment securities
1,231,074
842,545
606,736
Loans and leases held-for-investment
8,543,182
8,237,418
6,958,149
Allowance for credit losses on loans and
leases
(34,644
)
(34,630
)
(17,304
)
Loans and leases held-for-investment,
net
8,508,538
8,202,788
6,940,845
Goodwill and other intangibles, net
63,433
63,911
65,352
Other assets
315,621
352,130
367,000
Total assets
$
10,565,150
$
9,896,816
$
8,990,061
Deposits
$
9,250,019
$
8,489,089
$
7,782,759
Borrowings, net
345,547
400,493
330,000
Other liabilities
195,298
250,089
262,922
Total liabilities
9,790,864
9,139,671
8,375,681
Preferred stock
178,243
177,143
116,079
Common shareholders’ equity
596,043
580,002
498,301
Total shareholders’ equity
774,286
757,145
614,380
Total liabilities and shareholders’
equity
$
10,565,150
$
9,896,816
$
8,990,061
TRISTATE CAPITAL HOLDINGS, INC. INCOME
STATEMENT DATA (UNAUDITED)
For the
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2021
2020
2020
Interest income:
Loans and leases
$
49,186
$
48,288
$
58,918
Investments
2,646
2,504
3,901
Interest-earning deposits
160
218
1,383
Total interest income
51,992
51,010
64,202
Interest expense:
Deposits
10,754
12,107
27,244
Borrowings
2,582
2,839
2,036
Total interest expense
13,336
14,946
29,280
Net interest income
38,656
36,064
34,922
Provision for credit losses
224
2,972
2,993
Net interest income after provision for
credit losses
38,432
33,092
31,929
Non-interest income:
Investment management fees
9,000
8,564
7,638
Service charges on deposits
316
309
213
Net gain (loss) on the sale and call of
debt securities
(1
)
133
57
Swap fees
2,711
4,095
4,373
Commitment and other loan fees
326
453
419
Other income
1,299
449
616
Total non-interest income
13,651
14,003
13,316
Non-interest expense:
Compensation and employee benefits
19,921
18,658
17,446
Premises and equipment expense
1,406
1,486
1,386
Professional fees
1,324
2,026
1,470
FDIC insurance expense
1,125
1,920
2,170
General insurance expense
298
308
262
State capital shares tax expense
650
605
383
Travel and entertainment expense
441
688
864
Technology and data services
3,100
3,509
2,304
Intangible amortization expense
478
478
502
Marketing and advertising
684
708
613
Other operating expenses
1,851
4,049
1,744
Total non-interest expense
31,278
34,435
29,144
Income before tax
20,805
12,660
16,101
Income tax expense
4,605
50
3,206
Net income
$
16,200
$
12,610
$
12,895
Preferred stock dividends
3,059
1,987
1,962
Net income available to common
shareholders
$
13,141
$
10,623
$
10,933
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
As of and For the Three Months
Ended
March 31,
December 31,
March 31,
(Dollars in thousands, except per share
data)
2021
2020
2020
Per share and share data:
Earnings per common share:
Basic
$
0.36
$
0.37
$
0.39
Diluted
$
0.35
$
0.37
$
0.38
Book value per common share
$
17.97
$
17.78
$
16.74
Tangible book value per common share
(1)
$
16.06
$
15.82
$
14.55
Common shares outstanding, at end of
period
33,160,605
32,620,150
29,762,578
Weighted average common shares
outstanding:
Basic
31,224,474
28,378,695
28,180,589
Diluted
32,187,034
28,867,958
28,844,844
Performance ratios:
Return on average assets (2)
0.64
%
0.51
%
0.65
%
Return on average common equity (2)
9.06
%
7.87
%
8.59
%
Net interest margin (2) (3)
1.59
%
1.53
%
1.84
%
Total revenue (1)
$
52,308
$
49,934
$
48,181
Pre-tax, pre-provision net revenue (1)
$
21,030
$
15,498
$
19,037
Bank efficiency ratio (1)
50.59
%
60.95
%
51.86
%
Non-interest expense to average assets
(2)
1.24
%
1.40
%
1.47
%
Asset quality:
Non-performing loans
$
22,727
$
9,680
$
184
Non-performing assets
$
25,451
$
12,404
$
4,434
Other real estate owned
$
2,724
$
2,724
$
4,250
Non-performing assets to total assets
0.24
%
0.13
%
0.05
%
Non-performing loans to total loans
0.27
%
0.12
%
—
%
Allowance for credit losses on loans and
leases
0.41
%
0.42
%
0.25
%
Allowance for credit losses on loans and
leases to non-performing loans
152.44
%
357.75
%
9,404.35
%
Net charge-offs (recoveries)
$
199
$
(109
)
$
(203
)
Net charge-offs (recoveries) to average
total loans (2)
0.01
%
(0.01
)
%
(0.01
)
%
Capital ratios: (4)
Tier 1 leverage ratio
7.13
%
7.29
%
7.19
%
Common equity tier 1 risk-based capital
ratio
9.10
%
8.99
%
8.81
%
Tier 1 risk-based capital ratio
12.08
%
11.99
%
11.07
%
Total risk-based capital ratio
14.18
%
14.12
%
11.42
%
Bank tier 1 leverage ratio
7.65
%
7.83
%
7.36
%
Bank common equity tier 1 risk-based
capital ratio
12.98
%
12.89
%
11.34
%
Bank tier 1 risk based capital ratio
12.98
%
12.89
%
11.34
%
Bank total risk-based capital ratio
13.49
%
13.41
%
11.69
%
Investment Management Segment:
Assets under management
$
11,203,000
$
10,263,000
$
8,323,000
EBITDA (1)
$
1,916
$
1,675
$
1,217
(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
March 31, 2021
December 31, 2020
March 31, 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
$
555,427
$
158
0.12
%
$
671,922
$
216
0.13
%
$
464,302
$
1,363
1.18
%
Federal funds sold
10,557
2
0.08
%
8,236
2
0.10
%
7,099
20
1.13
%
Debt securities available-for-sale
348,835
(267
)
(0.31
)
%
578,021
676
0.47
%
281,870
2,044
2.92
%
Debt securities held-to-maturity
637,719
2,737
1.74
%
227,465
1,633
2.86
%
201,754
1,488
2.97
%
Debt securities trading
315
1
1.29
%
2,126
4
0.75
%
230
1
1.75
%
FHLB stock
11,551
182
6.39
%
13,284
199
5.96
%
20,179
398
7.93
%
Total loans and leases
8,276,059
49,186
2.41
%
7,858,368
48,288
2.44
%
6,672,692
58,918
3.55
%
Total interest-earning assets
9,840,463
51,999
2.14
%
9,359,422
51,018
2.17
%
7,648,126
64,232
3.38
%
Other assets
375,418
405,461
312,447
Total assets
$
10,215,881
$
9,764,883
$
7,960,573
Liabilities and Shareholders’
Equity
Interest-bearing deposits:
Interest-bearing checking accounts
$
3,065,983
$
2,793
0.37
%
$
2,949,908
$
3,280
0.44
%
$
1,473,614
$
5,214
1.42
%
Money market deposit accounts
4,345,454
5,964
0.56
%
4,027,298
6,120
0.60
%
3,548,965
14,655
1.66
%
Certificates of deposit
1,012,861
1,997
0.80
%
1,003,219
2,707
1.07
%
1,383,036
7,375
2.14
%
Borrowings:
FHLB borrowings
253,889
1,072
1.71
%
300,000
1,384
1.84
%
421,923
2,035
1.94
%
Line of credit borrowings
4,589
55
4.86
%
870
—
—
%
1,484
1
0.27
%
Subordinated notes payable, net
95,511
1,455
6.18
%
95,493
1,455
6.06
%
—
—
—
%
Total interest-bearing liabilities
8,778,287
13,336
0.62
%
8,376,788
14,946
0.71
%
6,829,022
29,280
1.72
%
Noninterest-bearing deposits
424,535
457,824
350,086
Other liabilities
247,659
275,766
153,207
Shareholders’ equity
765,400
654,505
628,258
Total liabilities and shareholders’
equity
$
10,215,881
$
9,764,883
$
7,960,573
Net interest income (1)
$
38,663
$
36,072
$
34,952
Net interest spread (1)
1.52
%
1.46
%
1.66
%
Net interest margin (1)
1.59
%
1.53
%
1.84
%
(1)
Calculated on a fully taxable equivalent
basis.
(2)
Annualized.
TRISTATE CAPITAL HOLDINGS, INC. LOAN
AND LEASE COMPOSITION (UNAUDITED)
March 31, 2021
December 31, 2020
March 31, 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
$
5,053,621
59.2
%
$
4,807,800
58.4
%
$
3,915,555
56.3
%
Middle-market banking loans:
Commercial and industrial
1,249,208
14.6
%
1,274,152
15.5
%
1,191,104
17.1
%
Commercial real estate
2,240,353
26.2
%
2,155,466
26.1
%
1,851,490
26.6
%
Total middle-market banking loans
3,489,561
40.8
%
3,429,618
41.6
%
3,042,594
43.7
%
Loans and leases held-for-investment
$
8,543,182
100.0
%
$
8,237,418
100.0
%
$
6,958,149
100.0
%
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
Three Months Ended March 31,
2021
Three Months Ended March 31,
2020
(Dollars in thousands)
Bank
Investment Management
Parent and Other
Consolidated
Bank
Investment Management
Parent and Other
Consolidated
Income statement data:
Interest income
$
51,992
$
—
$
—
$
51,992
$
64,202
$
—
$
—
$
64,202
Interest expense (benefit)
11,839
—
1,497
13,336
29,296
—
(16
)
29,280
Net interest income (loss)
40,153
—
(1,497
)
38,656
34,906
—
16
34,922
Provision for credit losses
224
—
—
224
2,993
—
—
2,993
Net interest income (loss) after provision
for credit losses
39,929
—
(1,497
)
38,432
31,913
—
16
31,929
Non-interest income:
Investment management fees
—
9,234
(234
)
9,000
—
7,765
(127
)
7,638
Net gain (loss) on the sale and call of
debt securities
(1
)
—
—
(1
)
57
—
—
57
Other non-interest income (loss)
4,631
21
—
4,652
5,652
(31
)
—
5,621
Total non-interest income (loss)
4,630
9,255
(234
)
13,651
5,709
7,734
(127
)
13,316
Non-interest expense:
Intangible amortization expense
—
478
—
478
—
502
—
502
Other non-interest expense
22,655
7,442
703
30,800
21,034
6,626
982
28,642
Total non-interest expense
22,655
7,920
703
31,278
21,034
7,128
982
29,144
Income (loss) before tax
21,904
1,335
(2,434
)
20,805
16,588
606
(1,093
)
16,101
Income tax expense (benefit)
4,729
310
(434
)
4,605
3,348
28
(170
)
3,206
Net income (loss)
$
17,175
$
1,025
$
(2,000
)
$
16,200
$
13,240
$
578
$
(923
)
$
12,895
TRISTATE CAPITAL HOLDINGS, INC.
EARNINGS PER COMMON SHARE (UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands, except per share
data)
2021
2020
2020
Basic earnings per common
share:
Net income
$
16,200
$
12,610
$
12,895
Less: Preferred dividends on Series A and
Series B
1,962
1,963
1,962
Less: Preferred dividends on Series C
1,097
24
—
Net income available to common
shareholders
$
13,141
$
10,623
$
10,933
Allocation of net income available:
Common shareholders
$
11,127
$
10,578
$
10,933
Series C convertible preferred
shareholders
1,685
38
—
Warrant shareholders
329
7
—
Total
$
13,141
$
10,623
$
10,933
Basic weighted average common shares
outstanding:
Basic common shares
31,224,474
28,378,695
28,180,589
Series C convertible preferred stock,
as-if converted
4,727,272
102,767
—
Warrants, as-if exercised
922,438
20,053
—
Basic earnings per common share
$
0.36
$
0.37
$
0.39
Diluted earnings per common
share:
Income available to common shareholders
after allocation
$
11,127
$
10,578
$
10,933
Diluted weighted average common shares
outstanding:
Basic common shares
31,224,474
28,378,695
28,180,589
Restricted stock - dilutive
801,798
390,320
427,404
Stock options - dilutive
160,762
98,943
236,851
Diluted common shares
32,187,034
28,867,958
28,844,844
Diluted earnings per common share
$
0.35
$
0.37
$
0.38
March 31,
December 31,
March 31,
2021
2020
2020
Anti-dilutive shares:
Restricted stock
71,810
647,717
545,320
Series C convertible preferred stock,
as-if converted
4,727,272
4,727,272
—
Warrants, as-if exercised
922,438
922,438
—
Total anti-dilutive shares
5,721,520
6,297,427
545,320
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. 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)
March 31,
December 31,
March 31,
(Dollars in thousands, except per share
data)
2021
2020
2020
Tangible common equity and tangible
book value per common share:
Common shareholders’ equity
$
596,043
$
580,002
$
498,301
Less: goodwill and intangible assets
63,433
63,911
65,352
Tangible common equity (numerator)
$
532,610
$
516,091
$
432,949
Common shares outstanding
(denominator)
33,160,605
32,620,150
29,762,578
Tangible book value per common share
$
16.06
$
15.82
$
14.55
(Dollars in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Tangible common equity ratio excluding
private banking channel loans:
Common shareholders' equity
$
596,043
$
580,002
$
498,301
Less: goodwill and intangible assets
63,433
63,911
65,352
Tangible common equity (numerator)
$
532,610
$
516,091
$
432,949
Total assets
10,565,150
9,896,816
8,990,061
Less: goodwill and intangible assets
63,433
63,911
65,352
Tangible assets
$
10,501,717
$
9,832,905
$
8,924,709
Tangible common equity ratio
5.07
%
5.25
%
4.85
%
Less: private banking loans
5,053,621
4,807,800
3,915,555
Tangible assets excluding private banking
loans (denominator)
$
5,448,096
$
5,025,105
$
5,009,154
Tangible common equity ratio excluding
private banking loans
9.78
%
10.27
%
8.64
%
INVESTMENT MANAGEMENT SEGMENT NON-GAAP
FINANCIAL MEASURES (UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2021
2020
2020
Investment Management EBITDA:
Net income
$
1,025
$
1,167
$
578
Interest expense
—
—
—
Income tax expense
310
(74
)
28
Depreciation expense
103
104
109
Intangible amortization expense
478
478
502
EBITDA
$
1,916
$
1,675
$
1,217
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2021
2020
2020
Total revenue and pre-tax,
pre-provision net revenue:
Net interest income
$
38,656
$
36,064
$
34,922
Total non-interest income
13,651
14,003
13,316
Less: net gain on the sale and call of
debt securities
(1
)
133
57
Total revenue
$
52,308
$
49,934
$
48,181
Less: total non-interest expense
31,278
34,436
29,144
Pre-tax, pre-provision net revenue
$
21,030
$
15,498
$
19,037
BANK SEGMENT NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2021
2020
2020
Bank total revenue:
Net interest income
$
40,153
$
37,515
$
34,906
Total non-interest income
4,630
5,403
5,709
Less: net gain on the sale and call of
debt securities
(1
)
133
57
Bank total revenue
$
44,784
$
42,785
$
40,558
Bank efficiency ratio:
Total non-interest expense (numerator)
$
22,655
$
26,078
$
21,034
Bank total revenue (denominator)
$
44,784
$
42,785
$
40,558
Bank efficiency ratio
50.59
%
60.95
%
51.86
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210421005974/en/
MEDIA Jack Horner 267-932-8760, ext. 302 412-600-2295
(mobile) jack@hornercom.com INVESTOR RELATIONS Lambert Jeff
Schoenborn and Kate Croft 888-609-8351 TSC@lambert.com
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