-- Organic growth of commercial loans, private
banking loans primarily backed by marketable securities, and
liquidity management franchise continues, while Chartwell delivered
strong fixed income and equity performance over benchmarks and
celebrates the 25th anniversary of its founding --
TriState Capital Holdings, Inc. (Nasdaq: TSC) reported first
quarter 2022 financial results, including record net interest
income, organic loan and balance sheet growth and its sixth
consecutive quarter of net interest margin (NIM) expansion.
The parent company of TriState Capital Bank and Chartwell
Investment Partners reported net income available to common
shareholders of $18.5 million, or $0.48 per diluted share, in the
first quarter of 2022, compared to $13.1 million, or $0.35 per
diluted share, in the first quarter of 2021 and $19.9 million, or
$0.52 per diluted share, in the fourth quarter of 2021.
“Deliberate double-digit organic growth and TriState Capital’s
synergistic businesses contributed to meaningful expansion in our
client base and financial performance in the first quarter of 2022,
and we are really excited about the opportunity that our agile
businesses and our asset-sensitive balance sheet provide us to
succeed in a highly dynamic environment,” President and Chief
Executive Officer Brian S. Fetterolf said. “The company’s success
and strength are entirely made possible by phenomenal clients and
the exceptional talent we have been able to attract and develop
together as one team. As we continue to work toward completing our
transaction with Raymond James, we are incredibly proud of how our
team members have kept their focus on delivering best-in-class
client experience and business excellence at scale.”
FIRST QUARTER 2022 HIGHLIGHTS
- TriState Capital continued to progress toward the closing of
its previously announced agreement to be acquired by Raymond James
Financial, Inc. (“Raymond James”), which is currently expected to
close by the end of the second quarter of 2022, subject to
customary conditions including receipt of regulatory
approvals.
- Pre-tax income increased by 29.5% from the year-ago quarter and
13.4% from the linked quarter.
- Net interest income (NII) increased by 38.7% from the year-ago
quarter and 4.8% from the linked quarter on continued growth in the
bank’s asset-sensitive balance sheet, with NIM expansion to
1.70%.
- Total loans grew by 31.6% from March 31, 2021 and 4.5% during
the quarter.
- Commercial loans grew by 14.0% from March 31, 2021 and 2.6%
during the quarter, led by fund finance solutions and other
commercial and industrial (C&I) lending.
- Private banking loans grew by 43.8% from March 31, 2021 and
5.5% during the quarter, as the company continued to leverage
talent and proprietary technology to fortify its position as the
nation’s leading independent provider of loans collateralized by
marketable securities and other liquid assets working with non-bank
affiliated financial intermediaries.
- Treasury management deposit accounts grew by 64.2% from March
31, 2021 and 4.3% during the quarter.
- The company maintained superior credit quality metrics, with
period-end non-performing assets (NPAs) and non-performing loans
(NPLs) declining to 0.01% of assets and 0.00% of loans,
respectively, while adverse rated credits represented just 0.29% of
total loans at period-end.
- Record fees of $4.7 million from clients’ use of interest rate
swaps and Chartwell investment management fees of $9.1 million
contributed to non-interest income of $15.1 million.
- Chartwell year-to-date inflows from retail and institutional
clients totaled $416.0 million, as fixed income and equity
strategies delivered strong performance over benchmarks through
period-end.
REVENUE GROWTH
NII grew to a record $53.6 million in the first quarter of 2022,
increasing 38.7% from $38.7 million in the year-ago quarter and
4.8% from $51.1 million in the fourth quarter of 2021 on organic
loan growth and the sixth consecutive quarter of NIM expansion. NII
reflected continued organic loan growth and TriState Capital’s
sixth consecutive quarter of NIM expansion to 1.70% for the three
months ended March 31, 2022, up from 1.59% in the first quarter of
2021 and 1.68% in the fourth quarter of 2021.
Non-interest income was $15.1 million in the first quarter of
2022, compared to $13.7 million in the year-ago quarter and $15.9
million in the linked quarter. Chartwell investment management fees
were $9.1 million in the first quarter of 2022, compared to $9.0
million in the same period the prior year and $9.6 million in the
linked quarter. Fees from commercial and private banking clients’
use of TriState Capital’s interest rate swaps offering totaled a
record $4.7 million in the first quarter of 2022, compared to $2.7
million in the prior year quarter and $4.4 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 $68.7 million for the first quarter of 2022, which grew
31.3% from $52.3 million in the prior year period and 2.6% from
$66.9 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 the combined
performance of its diverse fee-generating businesses. Non-interest
income represented 22.0% of total revenue in the first quarter of
2022 when excluding net gains on the sale of securities, compared
to 26.1% in the year-ago period and 23.6% in the linked
quarter.
EXPENSES REFLECT CONTINUED INVESTMENTS IN BUSINESSES AND
CLIENT EXPERIENCE
TriState Capital continues to invest in talent, technology,
product, and risk and compliance management to support the
continued responsible growth of its businesses, providing a premier
client experience as it continues to scale its efficient branchless
operating model. First quarter 2022 non-interest expense of $41.2
million included approximately $400,000, or $0.01 per diluted share
net of taxes, incurred in connection with the pending Raymond James
transaction, announced in October 2021. Fourth quarter 2021
non-interest expense of $42.8 million included approximately $2.7
million, or $0.06 per diluted share net of taxes, incurred in
connection with the transaction announced in October 2021. First
quarter 2021 non-interest expense totaled $31.3 million.
TriState Capital Bank’s efficiency ratio for the first quarter
of 2022 was 50.42%, compared to 50.59% in the first quarter of 2021
and 51.10% in the linked quarter. The improvement in the efficiency
ratio demonstrates TriState Capital’s continued ability to scale
its operational efficiency and resiliency while driving responsible
growth. Efficiency ratio is a non-GAAP financial metric utilized to
provide a greater understanding of a bank’s level of non-interest
expense as a percentage of total revenue.
TriState Capital continued to maintain a low annualized
non-interest expense to average assets ratio of 1.27% in the first
quarter of 2022, compared to 1.24% in the first quarter of 2021 and
1.36% in the linked quarter.
Pre-tax, pre-provision net revenue of $27.5 million in the first
quarter of 2022 increased 30.8% from $21.0 million in the year-ago
period and 13.9% from $24.2 million in the linked quarter. Pre-tax,
pre-provision net revenue is a non-GAAP financial metric
representing net interest income and non-interest income, and
excluding gains and losses on the sale and call of debt securities
and total non-interest expense.
Pre-tax income was $27.0 million in the first quarter of 2022,
increasing 29.5% from $20.8 million in the first quarter of 2021
and 13.4% from $23.8 million in the linked quarter.
TriState Capital’s effective tax rate was 19.7% for the first
quarter of 2022, compared to 22.1% in the first quarter of 2021 and
3.0% in the linked quarter. The company’s effective tax rate is
impacted by certain factors including the number, timing and size
of tax credit investments.
Net income available to common shareholders, earnings per share
and weighted average diluted shares in the first quarter of 2022
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 fixed income and equity strategy performance
relative to benchmarks and a robust new business effort contributed
to inflows of $416.0 million for the three months ended March 31,
2022, as Chartwell celebrates the 25th anniversary of its founding
in April 2022.
Chartwell’s new business and new flows from existing accounts of
$416.0 million were offset by market depreciation of $407.0 million
and outflows of $623.0 million in the first quarter of 2022.
Chartwell’s assets under management (AUM) totaled $11.23 billion on
March 31, 2022, compared to $11.20 billion on March 31, 2021 and
$11.84 billion on December 31, 2021. The rate of net outflows
experienced by Chartwell in the period are believed to be in line
with or below levels experienced by the industry in the first
quarter of the year.
Annual run-rate revenue was $36.8 million as of March 31, 2022,
compared to $38.8 million on March 31, 2021 and $40.0 million on
December 31, 2021. Chartwell’s weighted average fee rate was 0.33%
at March 31, 2022. Investment management fee revenue was $9.1
million in the first quarter of 2022, compared to $9.0 million in
the first quarter of 2021 and $9.6 million in the fourth quarter of
2021.
ORGANIC LENDING FRANCHISE GROWTH
TriState Capital’s client engagement and distribution
capabilities continued to drive organic loan growth by expanding
the number and depth of its premier relationships with high-quality
middle-market commercial customers, as well as expanding the number
of high-net-worth clients the bank serves through its growing
national referral network of financial intermediaries.
Average loans totaled a record $10.83 billion in the first
quarter of 2022, growing 30.9% from $8.28 billion in the prior year
period and 6.0% from $10.21 billion in the linked quarter.
Period-end loans totaled a record $11.25 billion on March 31, 2022,
growing $2.70 billion, or 31.6%, from March 31, 2021, and $483.6
million, or 4.5%, from December 31, 2021.
TriState Capital continued to fortify its position as the
nation’s leading independent provider of marketable
securities-based loans for clients of independent investment
advisory firms, trust companies, broker-dealers, regional
securities firms, family offices, and other financial
intermediaries that do not offer banking services themselves.
Private banking loans totaled a record $7.27 billion at March 31,
2022, increasing $2.21 billion, or 43.8%, from one year prior and
$381.7 million, or 5.5%, 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 $3.98 billion at March 31, 2022,
increasing $489.2 million, or 14.0%, from one year prior and $101.9
million, or 2.6%, from the end of the linked quarter.
C&I loans grew to $1.56 billion at March 31, 2022,
increasing $315.1 million, or 25.2%, from one year prior and $50.9
million, or 3.4%, from December 31, 2021, including utilization of
fund finance offerings and growth in equipment finance and
traditional lending to middle-market companies.
CRE loans totaled $2.41 billion at March 31, 2022, increasing
$174.1 million, or 7.8%, from March 31, 2021 and up $51.0 million,
or 2.2%, from December 31, 2021 as new production activity offset
increased amortization and paydowns in the first quarter.
STRATEGIC DEPOSIT AND LIQUIDITY MANAGEMENT FRANCHISE
EXPANSION
TriState Capital continues to deliver growth in its agile
liquidity management franchise, which creates meaningful
service-based client relationships and provides highly responsive
funding. The bank is winning new business and enhancing the breadth
and depth of existing client relationships with its nationally
distributed service and liquidity management offerings for
financial services businesses, payroll and other specialized
payment servicers, real estate firms, high-net-worth individuals,
family offices, middle market companies, municipalities and
non-profits.
Average deposits totaled a record $11.65 billion in the first
quarter of 2022, growing 31.7% from $8.85 billion in the first
quarter of last year and 5.5% from $11.04 billion in the linked
quarter. Period-end deposits totaled a record $12.17 billion at
March 31, 2022, growing $2.92 billion, or 31.5%, from March 31,
2021, and $661.1 million, or 5.7%, from December 31, 2021.
Treasury management deposit accounts totaled $2.98 billion at
March 31, 2022, increasing $1.17 billion, or 64.2%, from March 31,
2021 and $122.2 million, or 4.3%, from December 31, 2021.
The bank’s loan-to-deposit ratio at March 31, 2022 was 92.45%,
compared to 92.36% at March 31, 2021 and 93.56% at December 31,
2021, as TriState Capital grew deposit balances in line with loan
activity in the quarter.
INTEREST RATE MANAGEMENT
TriState Capital continues to favor an asset-sensitive approach
to maintaining a balance sheet with significant flexibility to
manage interest rate dynamics, while offering attractive deposit
and loan pricing to clients.
Approximately 60% of TriState Capital’s non-fixed rate deposits
use the Effective Federal 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 0.47% during
the first quarter of 2022, compared to 0.59% in the same period
last year and 0.45% in the linked quarter. The total cost of
deposits averaged 0.37% during the first quarter of 2022, compared
to 0.49% in the same period last year and 0.37% in the linked
quarter.
At March 31, 2022, 95% of the company’s loans were floating rate
and indexed to 30-day LIBOR, the Prime Rate, or another benchmark
rate such as SOFR. TriState Capital continued to constructively use
interest rate floors on existing and new variable rate loans
throughout the first quarter of 2022.
The yield on total loans averaged 2.29% during the first quarter
of 2022, compared to 2.41% in the prior year period and 2.30% in
the linked quarter. Loan yields were affected primarily by growth
in balances of private bank loans relative to commercial bank
loans. The interest rate environment’s impact on first quarter of
2022 loan yields was partially offset by continued management of
deposit costs.
Investment securities totaled a record $1.54 billion at March
31, 2022, up 25.0% from March 31, 2021 and 9.4% from December 31,
2021 as the bank continued to build on-balance sheet liquidity.
NIM expanded for the sixth consecutive quarter to 1.70% for the
first quarter of 2022, up 11 basis points from the same period the
year prior and two basis points from the linked quarter.
ASSET QUALITY
TriState Capital maintained strong asset quality metrics in the
first quarter of 2022, reflecting its disciplined credit culture
and lower risk profile resulting from the majority of its loans
consisting of private banking non-purpose margin loans
collateralized by marketable securities. Private banking grew to
represent 64.6% of the total loan portfolio at March 31, 2022,
while CRE and C&I comprised 21.5% and 13.9% of total loans,
respectively.
The allowance for credit losses on loans and leases (ACL) was
$25.0 million at March 31, 2022, compared to $34.6 million at March
31, 2021 and $28.6 million at December 31, 2021. ACL on commercial
loans represented 0.58% of commercial loans at period end,
excluding private banking loans primarily collateralized by liquid,
marketable securities that do not require a reserve, compared to
0.99% at March 31, 2021 and 0.69% at December 31, 2021. As a
percentage of total loans, ACL was 0.22% at March 31, 2022, 0.41%
at March 31, 2021 and 0.27% at December 31, 2021.
TriState Capital’s net charge offs (NCOs) were $4.2 million in
the first quarter of 2022, or 0.16% of total average loans of
$10.83 billion, reflecting charge offs associated with an in-market
commercial and industrial credit for which had previously been
fully reserved. NCOs were $199,000 in the year-ago quarter and $4.2
million in the linked quarter.
NPAs were $2.0 million, or 0.01% of total assets, at March 31,
2022, compared to $25.5 million, or 0.24%, at March 31, 2021 and
$6.3 million, or 0.05%, at December 31, 2021. NPLs were $0.0
million, or 0.00% of total loans, at March 31, 2022, compared to
$22.7 million, or 0.27%, at March 31, 2021 and $4.3 million, or
0.04%, at December 31, 2021.
Total adverse-rated credits, including NPLs, were $32.1 million,
or 0.29% of total loans, at March 31, 2022, compared to $50.9
million, or 0.60%, at March 31, 2021 and $36.9 million, or 0.34%,
at December 31, 2021.
TriState Capital’s provision for credit losses was $563,000 in
the first quarter of 2022, $224,000 in the first quarter of 2021
and $488,000 in the linked quarter.
CAPITAL STRENGTH AND EFFICIENCY
The company’s strong balance sheet included $2.02 billion in
cash, equivalents and securities at March 31, 2022. 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 67.91% of total
assets at the end of the first quarter of 2022.
As of March 31, 2022, estimated regulatory capital ratios for
TriState Capital Holdings were 13.23% for total risk-based capital,
11.52% for tier 1 risk-based capital, 8.91% for common equity tier
1 risk-based capital, and 6.16% for tier 1 leverage. For TriState
Capital Bank, the estimated capital ratios were 14.42% for total
risk-based capital, 14.08% for tier 1 risk-based capital, 14.08%
for common equity tier 1 risk-based capital, and 7.52% for tier 1
leverage.
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 $13.60
billion in assets as of March 31, 2022, 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 $11.23 billion in
assets under management as of March 31, 2022, and serves
institutional clients and TriState Capital’s financial intermediary
network. For more information, please visit
http://investors.tristatecapitalbank.com.
In light of the pending acquisition by Raymond James, the
company will not hold a quarterly investor conference call and
webcast. For more information related to the acquisition, please
refer to the company’s and Raymond James’ filings with the
Securities and Exchange Commission.
PARTICIPANTS IN THE SOLICITATION
Raymond James, TriState Capital, and certain of their respective
directors and executive officers may be deemed participants in the
solicitation of proxies in respect of the proposed transaction.
Information about the directors and executive officers of Raymond
James can be found in Raymond James’s definitive proxy statement in
connection with its 2021 annual meeting of shareholders, as filed
with the SEC on January 8, 2021, and other documents subsequently
filed by Raymond James with the SEC. Information about the
directors and executive officers of TriState Capital can be found
in TriState Capital’s definitive proxy statement in connection with
its 2021 annual meeting of shareholders, as filed with the SEC on
April 7, 2021, and other documents subsequently filed by TriState
Capital with the SEC. Other information regarding the participants
in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the definitive proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the
transaction when they become available.
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;
- risks associated with the acquisition of our company by Raymond
James, including risks related to the failure of our company to
satisfy conditions of the closing of the acquisition, which could
result in the acquisition not closing, which could have a material
adverse impact on the value of our stock;
- TriState Capital’s ability to prudently manage its growth and
execute its strategy;
- 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
such as SOFR on the value of loans and other financial instruments
that are linked to LIBOR;
- changes in accounting policies, accounting standards, or
authoritative accounting guidance, including the CECL model;
- any impairment of TriState Capital’s goodwill or other
intangible assets;
- TriState Capital’s ability to develop and provide competitive
products and services that appeal to its customers and target
markets;
- TriState Capital’s ability to provide investment management
performance competitive with its peers and benchmarks;
- fluctuations in the carrying value of the assets under
management held by Chartwell, as well as the relative and absolute
investment performance of such subsidiary’s investment
products;
- operational risks associated with TriState Capital’s business,
including technology and cyber-security related risks;
- increased competition in the financial services industry,
particularly from regional and national institutions;
- negative perceptions or publicity with respect to any products
or services offered by TriState Capital;
- adverse judgments or other resolution of pending and future
legal proceedings, and costs incurred in defending such
proceedings;
- changes in the laws, rules, regulations, interpretations or
policies relating to financial institutions, accounting, tax,
trade, monetary and fiscal matters, including economic stimulus
programs, and potential expenses associated with complying with
such laws and regulations;
- TriState Capital’s ability to comply with applicable capital
and liquidity requirements, including its ability to generate
liquidity internally or raise capital on favorable terms;
- regulatory limits on TriState Capital’s ability to receive
dividends from its subsidiaries and pay dividends to
shareholders;
- changes and direction of government policy towards and
intervention in the U.S. financial system;
- natural disasters and adverse weather, acts of terrorism,
regional or national civil unrest, cyber-attacks, an outbreak of
hostilities, a public health outbreak (such as COVID-19) or other
international or domestic calamities, and other matters beyond
TriState Capital’s control;
- the effects of any reputation, credit, interest rate, market,
operational, legal, liquidity, regulatory or compliance risk
resulting from developments related to any of the risks discussed
above; and
- other factors that are discussed in TriState Capital’s filings
with the Securities and Exchange Commission.
The foregoing factors should not be construed as exhaustive and
should be read together with the other cautionary statements
included in this press release. If one or more events related to
these or other risks or uncertainties materialize, or if TriState
Capital’s underlying assumptions prove to be incorrect, actual
results may differ materially from what the company anticipates.
Accordingly, readers should not place undue reliance on any such
forward-looking statements. New factors emerge from time to time,
and it is not possible for TriState Capital to predict which will
arise. Any forward-looking statement speaks only as of the date on
which it is made, and TriState Capital does not undertake any
obligation to update or review any forward-looking statement,
whether as a result of new information, future developments or
otherwise. In addition, TriState Capital cannot assess the impact
of each factor on its business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements.
NON-GAAP FINANCIAL DISCLOSURES
This news release and the accompanying tables contain certain
financial information determined by methods other than in
accordance with U.S. generally accepted accounting principles
(“GAAP”). Specifically, TriState Capital reviews and reports
tangible common equity, tangible book value per common share,
EBITDA, total revenue, pre-tax, pre-provision net revenue and
efficiency ratio. Although TriState Capital believes these non-GAAP
financial measures provide a greater understanding of its business,
these measures are not necessarily comparable to similar measures
that may be presented by other companies. These disclosures should
not be viewed as a substitute for financial measures determined in
accordance with GAAP. Where non-GAAP disclosures are used, the most
directly comparable GAAP financial measure, as well as the
reconciliation to the comparable GAAP financial measure, can be
found within this news release and in the reconciliation tables
accompanying this news release.
TRISTATE CAPITAL HOLDINGS, INC.
BALANCE SHEET DATA (UNAUDITED)
As of
March 31,
December 31,
March 31,
(Dollars in thousands)
2022
2021
2021
Cash and cash equivalents
$
481,874
$
452,016
$
446,484
Total investment securities
1,538,437
1,405,678
1,231,074
Loans and leases held-for-investment
11,246,919
10,763,324
8,543,182
Allowance for credit losses on loans and
leases
(25,024
)
(28,563
)
(34,644
)
Loans and leases held-for-investment,
net
11,221,895
10,734,761
8,508,538
Goodwill and other intangibles, net
61,523
62,000
63,433
Other assets
373,938
350,397
315,621
Total assets
$
13,677,667
$
13,004,852
$
10,565,150
Deposits
$
12,165,476
$
11,504,389
$
9,250,019
Borrowings, net
470,262
470,163
345,547
Other liabilities
203,791
193,578
195,298
Total liabilities
12,839,529
12,168,130
9,790,864
Preferred stock
182,644
181,544
178,243
Common shareholders’ equity
655,494
655,178
596,043
Total shareholders’ equity
838,138
836,722
774,286
Total liabilities and shareholders’
equity
$
13,677,667
$
13,004,852
$
10,565,150
TRISTATE CAPITAL HOLDINGS, INC.
INCOME STATEMENT DATA
(UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2022
2021
2021
Interest income:
Loans and leases
$
61,228
$
59,227
$
49,186
Investments
6,157
4,669
2,646
Interest-earning deposits
192
149
160
Total interest income
67,577
64,045
51,992
Interest expense:
Deposits
10,746
10,164
10,754
Borrowings
3,230
2,757
2,582
Total interest expense
13,976
12,921
13,336
Net interest income
53,601
51,124
38,656
Provision for credit losses
563
488
224
Net interest income after provision for
credit losses
53,038
50,636
38,432
Non-interest income:
Investment management fees
9,085
9,567
9,000
Service charges on deposits
415
389
316
Net gain on the sale and call of debt
securities
—
112
(1
)
Swap fees
4,660
4,408
2,711
Commitment and other loan fees
601
818
326
Bank owned life insurance income
606
620
429
Other income (loss)
(270
)
7
870
Total non-interest income
15,097
15,921
13,651
Non-interest expense:
Compensation and employee benefits
24,994
22,040
19,921
Premises and equipment expense
1,989
1,738
1,406
Professional fees
2,280
5,062
1,324
FDIC insurance expense
1,584
1,455
1,125
General insurance expense
371
368
298
State capital shares tax expense
798
694
650
Travel and entertainment expense
696
799
441
Technology and data services
4,123
3,758
3,100
Intangible amortization expense
478
478
478
Marketing and advertising
896
1,058
684
Other operating expenses
2,976
5,333
1,851
Total non-interest expense
41,185
42,783
31,278
Income before tax
26,950
23,774
20,805
Income tax expense
5,309
710
4,605
Net income
$
21,641
$
23,064
$
16,200
Preferred stock dividends
3,133
3,115
3,059
Net income available to common
shareholders
$
18,508
$
19,949
$
13,141
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)
2022
2021
2021
Per share and share data:
Earnings per common share:
Basic
$
0.49
$
0.54
$
0.36
Diluted
$
0.48
$
0.52
$
0.35
Book value per common share
$
19.49
$
19.70
$
17.97
Tangible book value per common share
(1)
$
17.66
$
17.83
$
16.06
Common shares outstanding, at end of
period
33,636,462
33,263,498
33,160,605
Weighted average common shares
outstanding:
Basic
31,699,023
31,396,278
31,224,474
Diluted
32,774,847
32,580,999
32,187,034
Performance ratios:
Return on average assets (2)
0.67
%
0.73
%
0.64
%
Return on average common equity (2)
11.40
%
12.25
%
9.06
%
Net interest margin (2) (3)
1.70
%
1.68
%
1.59
%
Total revenue (1)
$
68,698
$
66,933
$
52,308
Pre-tax, pre-provision net revenue (1)
$
27,513
$
24,150
$
21,030
Bank efficiency ratio (1)
50.42
%
51.10
%
50.59
%
Non-interest expense to average assets
(2)
1.27
%
1.36
%
1.24
%
Asset quality:
Non-performing loans
$
—
$
4,313
$
22,727
Non-performing assets
$
2,005
$
6,318
$
25,451
Other real estate owned
$
2,005
$
2,005
$
2,724
Non-performing assets to total assets
0.01
%
0.05
%
0.24
%
Non-performing loans to total loans
—
%
0.04
%
0.27
%
Allowance for credit losses on loans and
leases to loans
0.22
%
0.27
%
0.41
%
Allowance for credit losses on loans and
leases to non-performing loans
N/A
662.25
%
152.44
%
Net charge-offs (recoveries)
$
4,193
$
4,197
$
199
Net charge-offs to average total loans
(2)
0.16
%
0.16
%
0.01
%
Capital ratios: (4)
Tier 1 leverage ratio
6.16
%
6.36
%
7.13
%
Common equity tier 1 risk-based capital
ratio
8.91
%
8.96
%
9.10
%
Tier 1 risk-based capital ratio
11.52
%
11.64
%
12.08
%
Total risk-based capital ratio
13.23
%
13.43
%
14.18
%
Bank tier 1 leverage ratio
7.52
%
7.76
%
7.65
%
Bank common equity tier 1 risk-based
capital ratio
14.08
%
14.22
%
12.98
%
Bank tier 1 risk based capital ratio
14.08
%
14.22
%
12.98
%
Bank total risk-based capital ratio
14.42
%
14.60
%
13.49
%
Investment Management Segment:
Assets under management
$
11,230,000
$
11,844,000
$
11,203,000
EBITDA (1)
$
1,316
$
1,391
$
1,916
(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, 2022
December 31, 2021
March 31, 2021
(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
$
410,702
$
189
0.19 %
$
423,351
$
147
0.14 %
$
555,427
$
158
0.12 %
Federal funds sold
11,677
3
0.10 %
9,896
2
0.08 %
10,557
2
0.08 %
Debt securities available-for-sale
704,444
3,144
1.81 %
575,965
2,520
1.74 %
348,835
570
0.66 %
Debt securities held-to-maturity
798,893
2,865
1.45 %
839,798
2,011
0.95 %
637,719
1,900
1.21 %
Debt securities trading
—
—
— %
1,895
3
0.63 %
315
1
1.29 %
Equity securities
4,939
16
1.31 %
4,985
—
— %
—
—
— %
FHLB stock
11,811
138
4.74 %
11,802
140
4.71 %
11,551
182
6.39 %
Total loans and leases
10,830,464
61,228
2.29 %
10,213,833
59,227
2.30 %
8,276,059
49,186
2.41 %
Total interest-earning assets
12,772,930
67,583
2.15 %
12,081,525
64,050
2.10 %
9,840,463
51,999
2.14 %
Other assets
378,246
381,218
375,418
Total assets
$
13,151,176
$
12,462,743
$
10,215,881
Liabilities and Shareholders’
Equity
Interest-bearing deposits:
Interest-bearing checking accounts
$
4,269,019
$
3,707
0.35 %
$
4,195,332
$
3,416
0.32 %
$
3,065,983
$
2,793
0.37 %
Money market deposit accounts
6,032,665
6,352
0.43 %
5,385,794
5,905
0.43 %
4,345,454
5,964
0.56 %
Certificates of deposit
698,367
687
0.40 %
842,758
843
0.40 %
1,012,861
1,997
0.80 %
Borrowings:
FHLB borrowings
250,111
1,026
1.66 %
250,000
1,092
1.73 %
253,889
1,072
1.71 %
Line of credit borrowings
—
—
— %
8,370
93
4.41 %
4,589
55
4.86 %
Senior & subordinated notes payable,
net
220,220
2,204
4.06 %
118,765
1,572
5.25 %
95,511
1,455
6.18 %
Total interest-bearing liabilities
11,470,382
13,976
0.49 %
10,801,019
12,921
0.47 %
8,778,287
13,336
0.62 %
Noninterest-bearing deposits
652,805
617,241
424,535
Other liabilities
187,171
217,375
247,659
Shareholders’ equity
840,818
827,108
765,400
Total liabilities and shareholders’
equity
$
13,151,176
$
12,462,743
$
10,215,881
Net interest income (1)
$
53,607
$
51,129
$
38,663
Net interest spread (1)
1.66 %
1.63 %
1.52 %
Net interest margin (1)
1.70 %
1.68 %
1.59 %
(1)
Interest income and net interest margin
are calculated on a fully taxable equivalent basis.
(2)
Annualized.
TRISTATE CAPITAL HOLDINGS, INC.
LOAN AND LEASE COMPOSITION
(UNAUDITED)
March 31, 2022
December 31, 2021
March 31, 2021
(Dollars in thousands)
Loan
Balance
Percent of
Total Loans
Loan
Balance
Percent of
Total Loans
Loan
Balance
Percent of
Total Loans
Private banking loans
$
7,268,162
64.6 %
$
6,886,498
64.0 %
$
5,053,621
59.2 %
Middle-market banking loans:
Commercial and industrial
1,564,309
13.9 %
1,513,423
14.1 %
1,249,208
14.6 %
Commercial real estate
2,414,448
21.5 %
2,363,403
21.9 %
2,240,353
26.2 %
Total middle-market banking loans
3,978,757
35.4 %
3,876,826
36.0 %
3,489,561
40.8 %
Loans and leases held-for-investment
$
11,246,919
100.0 %
$
10,763,324
100.0 %
$
8,543,182
100.0 %
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE
SEGMENT (UNAUDITED)
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
Interest income
$
67,561
$
—
$
16
$
67,577
$
51,992
$
—
$
—
$
51,992
Interest expense
11,776
—
2,200
13,976
11,839
—
1,497
13,336
Net interest income (loss)
55,785
—
(2,184
)
53,601
40,153
—
(1,497
)
38,656
Provision for credit losses
563
—
—
563
224
—
—
224
Net interest income (loss) after provision
for credit losses
55,222
—
(2,184
)
53,038
39,929
—
(1,497
)
38,432
Non-interest income:
Investment management fees
—
9,444
(359
)
9,085
—
9,234
(234
)
9,000
Net gain on the sale and call of debt
securities
—
—
—
—
(1
)
—
—
(1
)
Other non-interest income (loss)
6,167
(31
)
(124
)
6,012
4,631
21
—
4,652
Total non-interest income (loss)
6,167
9,413
(483
)
15,097
4,630
9,255
(234
)
13,651
Non-interest expense:
Intangible amortization expense
—
478
—
478
—
478
—
478
Other non-interest expense
31,238
8,208
1,261
40,707
22,655
7,442
703
30,800
Total non-interest expense
31,238
8,686
1,261
41,185
22,655
7,920
703
31,278
Income (loss) before tax
30,151
727
(3,928
)
26,950
21,904
1,335
(2,434
)
20,805
Income tax expense (benefit)
5,833
199
(723
)
5,309
4,729
310
(434
)
4,605
Net income (loss)
$
24,318
$
528
$
(3,205
)
$
21,641
$
17,175
$
1,025
$
(2,000
)
$
16,200
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)
2022
2021
2021
Basic earnings per common
share:
Net income
$
21,641
$
23,064
$
16,200
Less: Preferred dividends on Series A and
Series B
1,962
1,962
1,962
Less: Preferred dividends on Series C
1,171
1,153
1,097
Net income available to common
shareholders
$
18,508
$
19,949
$
13,141
Allocation of net income available:
Common shareholders
$
15,575
$
16,798
$
11,127
Series C convertible preferred
shareholders
2,480
2,658
1,685
Warrant shareholders
453
493
329
Total
$
18,508
$
19,949
$
13,141
Basic weighted average common shares
outstanding:
Basic common shares
31,699,023
31,396,278
31,224,474
Series C convertible preferred stock,
as-if converted
5,047,272
4,967,272
4,727,272
Warrants, as-if exercised
922,438
922,438
922,438
Basic earnings per common share
$
0.49
$
0.54
$
0.36
Diluted earnings per common
share:
Income available to common shareholders
after allocation
$
15,575
$
16,798
$
11,127
Diluted weighted average common shares
outstanding:
Basic common shares
31,699,023
31,396,278
31,224,474
Restricted stock - dilutive
956,414
1,028,637
801,798
Stock options - dilutive
119,410
156,084
160,762
Diluted common shares
32,774,847
32,580,999
32,187,034
Diluted earnings per common share
$
0.48
$
0.52
$
0.35
March 31,
December 31,
March 31,
2022
2021
2021
Anti-dilutive shares:
Restricted stock
48,147
37,500
71,810
Stock options
—
—
—
Series C convertible preferred stock,
as-if converted
5,047,272
4,967,272
4,727,272
Warrants, as-if exercised
922,438
922,438
922,438
Total anti-dilutive shares
6,017,857
5,927,210
5,721,520
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
common shares outstanding for the period, excluding non-vested
restricted stock. Diluted EPS reflects the potential dilution upon
the exercise of stock options and warrants, and the vesting of
restricted stock awards granted utilizing the treasury stock
method. The Series C convertible preferred stock is excluded from
diluted weighted average common shares outstanding because the
payment of the dividend is considered in the net income allocable
to common shareholders for the calculation of basic EPS.
TRISTATE CAPITAL HOLDINGS, INC. NON-GAAP FINANCIAL
MEASURES
The information set forth above contains certain financial
information determined by methods other than in accordance with
GAAP. These non-GAAP financial measures are “tangible common
equity,” “tangible book value per common share,” “EBITDA,” “total
revenue,” “pre-tax, pre-provision net revenue” and “efficiency
ratio.” These non-GAAP financial measures are supplemental measures
that we believe provide management and our investors with a more
detailed understanding of our performance, although these measures
are not necessarily comparable to similar measures that may be
presented by other companies. These disclosures should not be
viewed as a substitute for financial measures in accordance with
GAAP. The non-GAAP financial measures presented herein are
calculated as follows:
“Tangible common equity” is defined as common shareholders’
equity reduced by intangible assets, including goodwill. We believe
this measure is important to management and investors so that they
can better understand and assess changes from period to period in
common shareholders’ equity exclusive of changes in intangible
assets associated with prior acquisitions. Intangible assets are
created when we buy businesses that add relationships and revenue
to our company. Intangible assets have the effect of increasing
both equity and assets, while not increasing our tangible equity or
tangible assets.
“Tangible book value per common share” is defined as common
shareholders’ equity reduced by intangible assets, including
goodwill, divided by common shares outstanding. We believe this
measure is important to many investors who are interested in
changes from period to period in book value per common share
exclusive of changes in intangible assets associated with prior
acquisitions.
“EBITDA” is defined as net income before interest expense,
income tax expense (benefit), 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 credit 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)
2022
2021
2021
Tangible common equity and tangible
book value per common share:
Common shareholders’ equity
$
655,494
$
655,178
$
596,043
Less: goodwill and intangible assets
61,523
62,000
63,433
Tangible common equity (numerator)
$
593,971
$
593,178
$
532,610
Common shares outstanding
(denominator)
33,636,462
33,263,498
33,160,605
Tangible book value per common share
$
17.66
$
17.83
$
16.06
INVESTMENT MANAGEMENT SEGMENT
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2022
2021
2021
Investment Management EBITDA:
Net income
$
528
$
(112
)
$
1,025
Interest expense
—
—
—
Income tax expense
199
916
310
Depreciation expense
111
109
103
Intangible amortization expense
478
478
478
EBITDA
$
1,316
$
1,391
$
1,916
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2022
2021
2021
Total revenue and pre-tax,
pre-provision net revenue:
Net interest income
$
53,601
$
51,124
$
38,656
Total non-interest income
15,097
15,921
13,651
Less: net gain on the sale and call of
debt securities
—
112
(1
)
Total revenue
$
68,698
$
66,933
$
52,308
Less: total non-interest expense
41,185
42,783
31,278
Pre-tax, pre-provision net revenue
$
27,513
$
24,150
$
21,030
BANK SEGMENT
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended
March 31,
December 31,
March 31,
(Dollars in thousands)
2022
2021
2021
Bank total revenue:
Net interest income
$
55,785
$
52,785
$
40,153
Total non-interest income
6,167
6,370
4,630
Less: net gain on the sale and call of
debt securities
—
112
(1
)
Bank total revenue
$
61,952
$
59,043
$
44,784
Bank efficiency ratio:
Total non-interest expense (numerator)
$
31,238
$
30,170
$
22,655
Bank total revenue (denominator)
$
61,952
$
59,043
$
44,784
Bank efficiency ratio
50.42
%
51.10
%
50.59
%
TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended
March 31,
December 31,
(Dollars in thousands)
2022
2021
Income Before Taxes (GAAP)
$
26,950
$
23,774
Non-recurring non-interest expense*
432
2,665
Income Before Taxes, excluding
non-recurring items (non-GAAP)
27,382
26,439
Estimated effect of non-recurring item on
Income Tax Expense**
90
560
Net Impact of Non-recurring expense and
effect on Income Tax Expense**
342
2,105
Net impact of non-recurring expense and
taxes on diluted EPS
0.01
0.06
*Non-recurring expenses incurred in
connection with the pending transaction announced in October
(agreement to be acquired by Raymond James)
**Tax impact estimated using 21% federal
tax rate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005776/en/
MEDIA CONTACT Jack Horner 412-600-2295 (mobile)
jack@hornercom.com INVESTOR RELATIONS CONTACT Lambert Jeff
Schoenborn and Kate Croft 888-609-8351 TSC@lambert.com
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