0001380846-19-000017.txt : 20190417 0001380846-19-000017.hdr.sgml : 20190417 20190417164806 ACCESSION NUMBER: 0001380846-19-000017 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190417 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190417 DATE AS OF CHANGE: 20190417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TriState Capital Holdings, Inc. CENTRAL INDEX KEY: 0001380846 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 204929029 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35913 FILM NUMBER: 19753474 BUSINESS ADDRESS: STREET 1: ONE OXFORD CENTRE STREET 2: 301 GRANT STREET, SUITE 2700 CITY: PITTSBURGH STATE: pa ZIP: 15219 BUSINESS PHONE: (412) 304-0304 MAIL ADDRESS: STREET 1: ONE OXFORD CENTRE STREET 2: 301 GRANT STREET, SUITE 2700 CITY: PITTSBURGH STATE: pa ZIP: 15219 FORMER COMPANY: FORMER CONFORMED NAME: TriState Capital Holdings Inc DATE OF NAME CHANGE: 20100617 FORMER COMPANY: FORMER CONFORMED NAME: Tristate CapitalHoldings Inc DATE OF NAME CHANGE: 20061113 8-K 1 tsc-03312019x8k.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________

FORM 8-K
_________

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 17, 2019

_________
TRISTATE CAPITAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
_________
Pennsylvania
 
001-35913
 
20-4929029
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
One Oxford Centre
301 Grant Street, Suite 2700
Pittsburgh, Pennsylvania 15219
(Address of principal executive offices)
(Zip Code)
(412) 304-0304
(Registrant’s telephone number, including area code)
_________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§ 240.12b-2 of this chapter).
    
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨

1


Item 2.02. Results of Operations and Financial Condition.
On April 17, 2019, TriState Capital Holdings, Inc. issued a press release which disclosed results of operations for the three months ended March 31, 2019. A copy of the press release is included as Exhibit 99 to this report.
The information in this report, including the exhibit attached hereto, is furnished solely pursuant to Item 2.02 of this Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.
Exhibit No.    Description


2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


TRISTATE CAPITAL HOLDINGS, INC.
 
 
By
/s/ James F. Getz
 
James F. Getz
 
Chairman, President and Chief Executive Officer


Date: April 17, 2019


3
 EX-99 2 tsc-release4x17x2019ex99.htm EXHIBIT 99 Exhibit
EXHIBIT 99

FOR IMMEDIATE RELEASE                    





TRISTATE CAPITAL FIRST QUARTER 2019 RESULTS INCLUDE RECORD LEVELS OF
REVENUE, NET INTEREST INCOME AND PRE-TAX INCOME

-- First quarter 2019 EPS totaled $0.48 as TriState Capital’s private banking and commercial banking businesses
continued to drive profitable balance sheet growth and Chartwell grew assets under management --

PITTSBURGH, April 17, 2019 - TriState Capital Holdings, Inc.’s (Nasdaq: TSC) financial results for the three months ended March 31, 2019, included 33% earnings growth over the first quarter of 2018, and record levels of revenue, net interest income, pre-tax income, loans and deposits.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported diluted earnings per share (EPS) of $0.48 in the first quarter of 2019, compared to $0.36 in the first quarter of 2018 and $0.50 in the fourth quarter of 2018. Net income available to common shareholders was $13.9 million in the first quarter of 2019, compared to $10.4 million in the prior year period and $14.4 million in the fourth quarter of 2018.

“Effective execution across all our business lines continues to be reflected in our record results and first quarter financial metrics,” Chairman and Chief Executive Officer James F. Getz said. “Critical mass is being reached for both Chartwell and TriState Capital Bank, and demand for the company’s investment management, private banking, commercial banking and treasury management offerings has never been stronger. Just as importantly, our ability to meet that demand and the expectations of our clients is better than ever, and we’re very well positioned to realize each of the full-year 2019 performance goals we introduced in January.”

FIRST QUARTER 2019 HIGHLIGHTS
•
Pre-tax income grew to $17.1 million, increasing 28.9% from the prior year period and 11.4% from the linked quarter.
•
Net interest income (NII) and non-interest income, excluding gains and losses on debt securities, combined to generate total revenue of $43.4 million, increasing 16.2% from the prior year period and 5.4% from the linked quarter.
•
Average loans grew to $5.18 billion, up 24.3% from the same period last year and 6.7% from the linked quarter.
•
Private banking loans of $2.98 billion comprised 55.9% of total loans at period end, reflecting growth of 27.3% from one year prior and 3.9% from December 31, 2018.
•
Average deposits grew to $5.04 billion, up 27.5% from the same period last year and 5.0% from the linked quarter.
•
Chartwell’s assets under management (AUM) grew to $9.73 billion at period end, up 16.6% compared to one year prior and 5.9% during the quarter.
•
Investment management fees grew to $9.4 million, increasing 5.8% from the same period last year and 2.2% from the linked quarter.

REVENUE GROWTH
TriState Capital’s record first quarter 2019 NII of $30.4 million increased 15.6% from $26.3 million in the year-ago quarter and 2.8% from $29.5 million in the linked fourth quarter of 2018, as the company continued to expand its deposit franchise to fund organic loan growth at double-digit annual rates, while reducing balance sheet risk via the continued growth in private banking loans backed by marketable securities.

Non-interest income grew to $13.1 million in the first quarter 2019, increasing 17.9% from $11.1 million in the prior year quarter and 12.9% from $11.6 million in the linked quarter.


1
EXHIBIT 99

TriState Capital’s non-interest income, which represented 30.0% of total revenue in the first quarter of 2019, is largely made up of Chartwell investment management fees. Investment management fees grew to $9.4 million in the first quarter of 2019, increasing 5.8% from $8.9 million in the prior year quarter and 2.2% from $9.2 million in the linked quarter. Borrower-facing interest rate swap activity also generated $1.8 million in fees in the first quarter of 2019, compared to $1.2 million in the prior year quarter of 2018 and $2.2 million in the linked quarter.

NII and non-interest income, excluding gains and losses on the sale of debt securities, combined to generate total revenue of $43.4 million for the first quarter 2019, growing 16.2% from $37.3 million in the year-ago period and 5.4% from $41.2 million in the linked quarter.

OPERATING LEVERAGE
TriState Capital Bank’s efficiency ratio for the first quarter of 2019 was 56.30%, compared to 54.48% in the first quarter of 2018 and 54.60% in the linked quarter. While this result reflects some seasonality in certain expenses, investments made in talent and building scale are expected to continue driving revenue growth, while incrementally improving operating leverage and the bank’s efficiency ratio this year and over the long run.

First quarter 2019 non-interest expense was $26.7 million, increasing 11.8% from $23.9 million in the year-ago period and 1.4% from $26.3 million in the fourth quarter of 2018. First quarter non-interest expense reflected typical seasonal increases in payroll taxes and other compensation and benefits expenses, as well as a valuation adjustment on other real estate owned.

TriState Capital’s effective tax rate was 15.1% for the first quarter of 2019. The company’s effective tax rate is impacted by certain factors including the number, timing and size of tax credit investments, as well as the proportion of consolidated earnings attributed to investment management, which has a higher effective tax rate than the bank.

Net income available to common shareholders and EPS in the first quarter of 2019 reflected $679,000 payable for the company’s quarterly cash dividend on Series A Non-Cumulative Perpetual Preferred Stock.

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

Average loans totaled a record $5.18 billion in the first quarter of 2019, growing 24.3% from $4.17 billion in the prior year period and 6.7% from $4.85 billion in the linked quarter. Loans at March 31, 2019, totaled $5.34 billion, growing $1.03 billion, or 24.0%, from March 31, 2018, and $203.9 million, or 4.0%, from December 31, 2018.

TriState Capital’s growing distribution capabilities helped drive new loan originations in its national private banking business for the first quarter of 2019. Private banking loans totaled $2.98 billion at March 31, 2019, increasing $639.9 million, or 27.3%, from one year prior and $112.4 million, or 3.9%, from the end of the linked quarter.

The company continued to grow relationships with middle-market borrowers in the first quarter of 2019 to drive originations of commercial and industrial loans and commercial real estate loans. Commercial loans totaled $2.35 billion at March 31, 2019, increasing $394.0 million, or 20.1%, from one year prior and $91.4 million, or 4.0%, from the end of the linked quarter.

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


2
EXHIBIT 99

Average deposits totaled $5.04 billion in the first quarter of 2019, growing 27.5% from $3.95 billion in the same period last year and 5.0% from $4.80 billion in the linked quarter. Deposits at March 31, 2019, totaled $5.34 billion, growing $1.24 billion, or 30.2%, from March 31, 2018, and $287.2 million, or 5.7%, from December 31, 2018.

INTEREST RATE MANAGEMENT
TriState Capital continues to maintain a balance sheet with significant flexibility to manage interest rate risk in changing markets. At March 31, 2019, 93% of the company’s loan portfolio was floating rate and 26% of deposits were fixed-rate certificates of deposit.

The yield on total loans averaged 4.49% during the first quarter of 2019, expanding by 69 basis points from 3.80% in the prior year period and 14 basis points from 4.35% in the linked quarter. Yields reflect the proportion of the portfolio dedicated to private banking non-purpose margin loans secured by marketable securities, and an overall focus on variable rate pricing, asset quality, and operating leverage.

Total cost of funds for all deposits and interest-bearing liabilities averaged 2.38% during the first quarter of 2019, compared to 1.43% in the same period last year and 2.19% in the linked quarter. The total cost of deposits averaged 2.36% during the first quarter of 2019, compared to 1.38% in the same period last year and 2.17% in the linked quarter.

TriState Capital reported a net interest margin of 2.10% for the first quarter of 2019, compared to 2.35% in the first quarter of 2018 and 2.12% in the fourth quarter of 2018.

INVESTMENT MANAGEMENT
Strong investment performance across Chartwell’s active equity and fixed income strategies contributed to growth in AUM and fees in the first quarter of 2019. Chartwell grew total AUM to $9.73 billion at March 31, 2019, increasing 16.6% from $8.34 billion at March 31, 2018, and 5.9% from $9.19 billion at December 31, 2018.

Chartwell’s new business and new flows from existing accounts of $279 million and market appreciation of $589 million more than offset outflows of $325 million in the first quarter of 2019.

Chartwell’s weighted average fee rate was 0.39% at March 31, 2019. Investment management fee revenue grew to $9.4 million in the first quarter of 2019, increasing 5.8% from $8.9 million in the first quarter of 2018 and 2.2% from $9.2 million in the fourth quarter of 2018.

ASSET QUALITY
TriState Capital maintained strong asset quality metrics in the first quarter of 2019, reflecting the company’s disciplined credit culture and the expansion of its private banking non-purpose margin loans secured by marketable securities. Private banking loans comprised 55.9% of the total loan portfolio at March 31, 2019, while total commercial real estate loans and commercial and industrial loans comprised 28.0% and 16.1% of total loans, respectively.

Non-performing assets (NPAs) were $10.5 million, or 0.16% of total assets, at March 31, 2019, compared to $6.1 million, or 0.12%, at March 31, 2018, and $5.7 million, or 0.09%, at December 31, 2018.

Non-performing loans (NPLs) were $7.3 million, or 0.14% of total loans, at March 31, 2019, compared to $2.5 million, or 0.06%, at March 31, 2018, and $2.2 million, or 0.04%, at December 31, 2018.

Adverse-rated credits were $29.1 million, or 0.55% of total loans, at March 31, 2019, compared to $29.0 million, or 0.67%, at March 31, 2018, and $24.8 million, or 0.48%, at December 31, 2018.

The increase in NPAs and NPLs during the first quarter of 2019 is largely attributed to a single commercial and industrial (“C&I”) loan being placed on non-accrual status. This C&I loan, which was made to an in-market borrower, is well-collateralized, paying and current to date, and the bank believes it is adequately reserved.


3
EXHIBIT 99

Net recoveries in the first quarter of 2019 were $1.9 million, as the bank’s proactive and persistent approach to securing successful resolutions resulted in a recovery from a large, in-market C&I credit that had been previously charged off in 2013. Net recoveries were $206,000 in the year-ago quarter and $206,000 in the linked quarter.

TriState Capital recorded a credit to provision of $377,000 in the first quarter of 2019, as general and specific reserves were more than offset by recoveries in the period. The company recorded provision expense of $195,000 in the first quarter of 2018 and a credit to provision of $581,000 in the fourth quarter of 2018.

The company’s allowance for loan losses (ALL) continued to reflect lower levels of provision required by the low risk profile of the growing proportion of private banking loans in the bank’s portfolio. ALL represented 0.28% of total loans at March 31, 2019, compared to 0.34% at March 31, 2018, and 0.26% at December 31, 2018.

CAPITAL STRENGTH AND FLEXIBILITY
As of March 31, 2019, TriState Capital Holdings reported regulatory capital ratios of 11.26% for total risk-based capital, 10.92% for tier 1 risk-based capital, 9.98% for common equity tier 1 risk-based capital, and 7.13% for tier 1 leverage.

During the three months ended March 31, 2019, the company repurchased a total of 20,000 shares of its common stock for approximately $433,000 at an average cost of $21.65 per share. Since the Board first authorized share buybacks in October 2014, the company has repurchased a total of 2,034,910 shares for approximately $30.9 million at an average cost of $15.21 per share. TriState Capital has $1.8 million of repurchase authority remaining under its buyback program announced in October 2018.

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 18 will be held at 8:30 a.m. ET. Telephone participants may avoid any delays by pre-registering for the call using the link http://dpregister.com/10129978 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 earnings call.” The call may be accessed by dialing 888-339-0757 from the United States, 855-669-9657 from Canada, or 412-902-4194 from other international locations.

A replay of the call will be available approximately one hour after the end of the conference through April 25. 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 10129978.

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 $6.3 billion in assets as of March 31, 2019, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Edison, N.J., and New York City, as well as high-net-worth individuals nationwide through its national referral network of financial intermediaries. Its Chartwell Investment Partners subsidiary had $9.7 billion in assets under management as of March 31, 2019, and serves institutional clients and TriState Capital’s financial intermediary network. For more information, please visit http://investors.tristatecapitalbank.com.

FORWARD LOOKING STATEMENTS
This news release includes “forward-looking statements” in reliance on the safe-harbor for such statements provided by the Private Securities Litigation Reform Act of 1995. The words “achieve,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “maintain,” “opportunity,” “plan,” “potential,” “project,” “sustain,” “target,” “trend,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” and similar expressions, among others, generally identify forward-looking statements. Examples of forward-looking statements include, without limitation, statements relating to TriState Capital’s future plans, objectives or goals and are based on current expectations, plans or forecasts. Such forward-

4
EXHIBIT 99

looking statements are subject to risks, uncertainties and changed circumstances that are difficult to predict and are often beyond TriState Capital’s ability to control. Actual results or outcomes could differ materially from those currently anticipated, discussed or projected by forward-looking statements. Such risks and uncertainties include, but are not limited to:
•
those related to difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the markets in which TriState Capital operates and in which its loans are concentrated, 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 level of non-performing assets and the costs associated with resolving problem loans including litigation and other costs;
•
possible loan losses, impairment and the collectability of loans;
•
changes in market interest rates which may increase funding costs and/or reduce earning asset yields and thus reduce margin;
•
the impact of changes in interest rates on the credit quality and value of underlying securities collateral of the loan portfolio and the effect of such changes on the market value of TriState Capital’s investment securities portfolio;
•
federal and state regulation, supervision and examination, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations issued thereunder, and potential expenses associated with complying with regulations;
•
TriState Capital’s ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including our ability to generate liquidity internally or raise capital on favorable terms;
•
possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations;
•
any impairment of TriState Capital’s goodwill or other intangible assets;
•
conditions in the financial markets that may limit TriState Capital’s access to additional funding to meet its liquidity needs;
•
the success of TriState Capital’s growth plans, including the successful integration of past and future acquisitions;
•
TriState Capital’s ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and customer disintermediation;
•
TriState Capital’s ability to develop and provide competitive products and services that appeal to its customers and target markets;
•
negative perceptions or publicity with respect to any products or services offered by TriState Capital;
•
fluctuations in the carrying value of Chartwell’s assets under management;
•
the relative and absolute investment performance of Chartwell’s investment products;
•
adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings;
•
system failure or breaches of TriState Capital’s network security;
•
TriState Capital’s ability to recruit and retain key employees;
•
Chartwell’s success in negotiating distribution arrangements and maintaining distribution channels for its products;
•
the failure by a key vendor to fulfill its obligations to TriState Capital;
•
the effects of problems encountered by other financial institutions that adversely affect TriState Capital or the banking industry generally;
•
the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability and man-made disasters including terrorist attacks;
•
possible changes in the speed of loan prepayments by TriState Capital’s customers and loan origination or sales volumes;
•
regulatory limits on TriState Capital’s ability to receive dividends from its subsidiaries and pay dividends to its preferred shareholders; and
•
the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above.

We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made, and TriState Capital disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of TriState Capital for any reason, except as specifically required by

5
EXHIBIT 99

law. For further information about the factors that could affect TriState Capital’s future results, please see the company’s most-recent annual and quarterly reports filed on Form 10-K and Form 10-Q, and other documents the company files with the Securities and Exchange Commission from time to time.

NON-GAAP FINANCIAL DISCLOSURES
This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). Specifically, TriState Capital reviews and reports tangible common equity, tangible book value per common share, EBITDA, total revenue 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 comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found within this news release and accompanying tables.

###

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

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


6
EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
BALANCE SHEET DATA (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
March 31,
December 31,
March 31,
(Dollars in thousands)
2019
2018
2018
Cash and cash equivalents
$
243,911

$
189,985

$
145,033

Total investment securities
487,087

466,759

245,350

Loans and leases held-for-investment
5,336,725

5,132,873

4,302,766

Allowance for loan and lease losses
(14,712
)
(13,208
)
(14,818
)
Loans and leases held-for-investment, net
5,322,013

5,119,665

4,287,948

Goodwill and other intangibles, net
67,361

67,863

64,897

Other assets
223,638

191,383

163,525

Total assets
$
6,344,010

$
6,035,655

$
4,906,753

 
 
 
 
Deposits
$
5,337,704

$
5,050,461

$
4,098,955

Borrowings, net
398,216

404,166

304,764

Other liabilities
111,533

101,674

62,805

Total liabilities
5,847,453

5,556,301

4,466,524

 
 
 
 
Preferred stock
38,468

38,468

38,440

Common shareholders’ equity
458,089

440,886

401,789

Total shareholders’ equity
496,557

479,354

440,229

 
 
 
 
Total liabilities and shareholders’ equity
$
6,344,010

$
6,035,655

$
4,906,753



7
EXHIBIT 99


TRISTATE CAPITAL HOLDINGS, INC.
INCOME STATEMENT DATA (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
March 31,
December 31,
March 31,
(Dollars in thousands)
2019
2018
2018
Interest income:
 
 
 
Loans and leases
$
57,262

$
53,238

$
39,027

Investments
4,353

3,706

1,784

Interest-earning deposits
1,287

1,218

605

Total interest income
62,902

58,162

41,416

 
 
 
 
Interest expense:
 
 
 
Deposits
29,333

26,214

13,401

Borrowings
3,197

2,416

1,753

Total interest expense
32,530

28,630

15,154

Net interest income
30,372

29,532

26,262

Provision (credit) for loan and lease losses
(377
)
(581
)
195

Net interest income after provision for loan and lease losses
30,749

30,113

26,067

Non-interest income:
 
 
 
Investment management fees
9,424

9,225

8,908

Service charges on deposits
136

150

134

Net gain (loss) on the sale and call of debt securities
28

(76
)
5

Swap fees
1,803

2,245

1,248

Commitment and other loan fees
531

375

332

Other income
1,147

(344
)
462

Total non-interest income
13,069

11,575

11,089

Non-interest expense:
 
 
 
Compensation and employee benefits
16,775

16,594

15,468

Premises and occupancy costs
1,270

1,594

1,290

Professional fees
995

1,191

1,095

FDIC insurance expense
1,421

1,210

1,146

General insurance expense
294

263

247

State capital shares tax
380

125

427

Travel and entertainment expense
835

1,178

646

Intangible amortization expense
502

503

461

Change in fair value of acquisition earn out
—

(218
)
—

Other operating expenses
4,200

3,863

3,070

Total non-interest expense
26,672

26,303

23,850

Income before tax
17,146

15,385

13,306

Income tax expense
2,582

265

2,905

Net income
$
14,564

$
15,120

$
10,401

Preferred stock dividends on Series A
679

679

—

Net income available to common shareholders
$
13,885

$
14,441

$
10,401



8
EXHIBIT 99

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)
2019
2018
2018
Per share and share data:
 
 
 
Earnings per common share:
 
 
 
Basic
$
0.50

$
0.52

$
0.38

Diluted
$
0.48

$
0.50

$
0.36

Book value per common share
$
15.61

$
15.27

$
13.87

Tangible book value per common share (1)
$
13.31

$
12.92

$
11.63

Common shares outstanding, at end of period
29,351,833

28,878,674

28,976,214

Weighted average common shares outstanding:
 
 
 
Basic
27,832,839

27,523,385

27,594,691

Diluted
28,703,636

28,786,353

28,711,106

 
 
 
 
Performance ratios:
 
 
 
Return on average assets (2)
0.92
 %
0.99
 %
0.89
 %
Return on average common equity (2)
12.50
 %
13.16
 %
10.65
 %
Net interest margin (2) (3)
2.10
 %
2.12
 %
2.35
 %
Total revenue (1)
$
43,413

$
41,183

$
37,346

Bank efficiency ratio (1)
56.30
 %
54.60
 %
54.48
 %
Non-interest expense to average assets (2)
1.77
 %
1.81
 %
2.03
 %
 
 
 
 
Asset quality:
 
 
 
Non-performing loans
$
7,329

$
2,237

$
2,477

Non-performing assets
$
10,453

$
5,661

$
6,053

Other real estate owned
$
3,124

$
3,424

$
3,576

Non-performing assets to total assets
0.16
 %
0.09
 %
0.12
 %
Non-performing loans to total loans
0.14
 %
0.04
 %
0.06
 %
Allowance for loan and lease losses to loans
0.28
 %
0.26
 %
0.34
 %
Allowance for loan and lease losses to non-performing loans
200.74
 %
590.43
 %
598.22
 %
Net charge-offs (recoveries)
$
(1,881
)
$
(206
)
$
(206
)
Net charge-offs (recoveries) to average total loans (2)
(0.15
)%
(0.02
)%
(0.02
)%
 
 
 
 
Capital ratios:
 
 
 
Tier 1 leverage ratio
7.13
 %
7.28
 %
7.96
 %
Common equity tier 1 risk-based capital ratio
9.98
 %
9.64
 %
11.09
 %
Tier 1 risk-based capital ratio
10.92
 %
10.58
 %
12.25
 %
Total risk-based capital ratio
11.26
 %
10.86
 %
12.84
 %
 
 
 
 
Investment Management Segment:
 
 
 
Assets under management
$
9,732,000

$
9,189,000

$
8,344,000

EBITDA (1)
$
2,621

$
1,890

$
1,515


(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.

9
EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
 
Three Months Ended
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
(Dollars in thousands)
Average
Balance
Interest Income (1)/
Expense
Average
Yield/
Rate
 
Average
Balance
Interest Income (1)/
Expense
Average
Yield/
Rate
 
Average
Balance
Interest Income (1)/
Expense
Average
Yield/
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits
$
202,474

$
1,256

2.52
%
 
$
211,333

$
1,162

2.18
%
 
$
150,121

$
579

1.56
%
Federal funds sold
8,595

31

1.46
%
 
9,959

57

2.27
%
 
7,042

26

1.50
%
Debt securities available-for-sale
236,235

1,986

3.41
%
 
260,877

2,045

3.11
%
 
142,323

958

2.73
%
Debt securities held-to-maturity
211,833

2,018

3.86
%
 
155,220

1,426

3.64
%
 
58,953

595

4.09
%
Equity securities
12,755

72

2.29
%
 
13,543

77

2.26
%
 
8,627

66

3.10
%
FHLB stock
20,498

305

6.03
%
 
15,970

186

4.62
%
 
14,195

194

5.54
%
Total loans and leases
5,177,844

57,262

4.49
%
 
4,853,414

53,237

4.35
%
 
4,165,180

39,027

3.80
%
Total interest-earning assets
5,870,234

62,930

4.35
%
 
5,520,316

58,190

4.18
%
 
4,546,441

41,445

3.70
%
Other assets
242,553

 
 
 
239,506

 
 
 
208,679

 
 
Total assets
$
6,112,787

 
 
 
$
5,759,822

 
 
 
$
4,755,120

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
$
792,690

$
4,542

2.32
%
 
$
722,386

$
3,976

2.18
%
 
$
464,247

$
1,621

1.42
%
Money market deposit accounts
2,682,390

16,540

2.50
%
 
2,605,148

14,844

2.26
%
 
2,281,606

8,113

1.44
%
Certificates of deposit
1,300,296

8,251

2.57
%
 
1,220,839

7,394

2.40
%
 
977,689

3,667

1.52
%
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
FHLB borrowings
459,333

2,585

2.28
%
 
352,337

1,811

2.04
%
 
310,000

1,147

1.50
%
Line of credit borrowings
4,139

58

5.68
%
 
3,652

51

5.54
%
 
5,373

52

3.92
%
Subordinated notes payable, net
34,933

554

6.43
%
 
34,883

554

6.30
%
 
34,731

554

6.47
%
Total interest-bearing liabilities
5,273,781

32,530

2.50
%
 
4,939,245

28,630

2.30
%
 
4,073,646

15,154

1.51
%
Noninterest-bearing deposits
261,682

 
 
 
249,330

 
 
 
228,257

 
 
Other liabilities
88,485

 
 
 
97,458

 
 
 
56,655

 
 
Shareholders’ equity
488,839

 
 
 
473,789

 
 
 
396,562

 
 
Total liabilities and shareholders’ equity
$
6,112,787

 
 
 
$
5,759,822

 
 
 
$
4,755,120

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (1)
 
$
30,400

 
 
 
$
29,560

 
 
 
$
26,291

 
Net interest spread
 
 
1.85
%
 
 
 
1.88
%
 
 
 
2.19
%
Net interest margin (1)
 
 
2.10
%
 
 
 
2.12
%
 
 
 
2.35
%

(1) 
Interest income and net interest margin are calculated on a fully taxable equivalent basis.




10
EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
LOAN AND LEASE COMPOSITION (UNAUDITED)
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
(Dollars in thousands)
Loan
Balance
Percent of
Total Loans
 
Loan
Balance
Percent of
Total Loans
 
Loan
Balance
Percent of
Total Loans
Private banking loans
$
2,981,973

55.9
%
 
$
2,869,543

55.9
%
 
$
2,342,024

54.4
%
Middle-market banking loans:
 
 
 
 
 
 
 
 
Commercial and industrial
862,405

16.1
%
 
785,320

15.3
%
 
683,417

15.9
%
Commercial real estate
1,492,347

28.0
%
 
1,478,010

28.8
%
 
1,277,325

29.7
%
Total middle-market banking loans
2,354,752

44.1
%
 
2,263,330

44.1
%
 
1,960,742

45.6
%
Loans and leases held-for-investment
$
5,336,725

100.0
%
 
$
5,132,873

100.0
%
 
$
4,302,766

100.0
%


TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
 
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
 
 
 
Interest income
$
62,830

$
—

$
72

$
62,902

 
$
41,350

$
—

$
66

$
41,416

Interest expense
31,919

—

611

32,530

 
14,549

—

605

15,154

Net interest income (loss)
30,911

—

(539
)
30,372

 
26,801

—

(539
)
26,262

Provision (credit) for loan and lease losses
(377
)
—

—

(377
)
 
195

—

—

195

Net interest income (loss) after provision for loan and lease losses
31,288

—

(539
)
30,749

 
26,606

—

(539
)
26,067

Non-interest income:
 
 
 
 
 
 
 
 
 
Investment management fees
—

9,533

(109
)
9,424

 
—

8,963

(55
)
8,908

Net gain on the sale and call of debt securities
28

—

—

28

 
5

—

—

5

Other non-interest income
2,877

21

719

3,617

 
2,176

—

—

2,176

Total non-interest income
2,905

9,554

610

13,069

 
2,181

8,963

(55
)
11,089

Non-interest expense:
 
 
 
 
 
 
 
 
 
Intangible amortization expense
—

502

—

502

 
—

461

—

461

Other non-interest expense
19,021

7,058

91

26,170

 
15,786

7,573

30

23,389

Total non-interest expense
19,021

7,560

91

26,672

 
15,786

8,034

30

23,850

Income (loss) before tax
15,172

1,994

(20
)
17,146

 
13,001

929

(624
)
13,306

Income tax expense (benefit)
2,024

563

(5
)
2,582

 
2,854

227

(176
)
2,905

Net income (loss)
$
13,148

$
1,431

$
(15
)
$
14,564

 
$
10,147

$
702

$
(448
)
$
10,401



11
EXHIBIT 99

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” and “efficiency ratio.” Although we believe these non-GAAP financial measures provide management and our investors with a more detailed understanding of our performance, these measures are not necessarily comparable to similar measures that may be presented by other companies. 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, 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 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.

“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 by removing the volatility that is associated with certain one-time items that are unrelated to our core business, 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)
2019
2018
2018
Tangible book value per common share:
 
 
 
Common shareholders’ equity
$
458,089

$
440,886

$
401,789

Less: intangible assets
67,361

67,863

64,897

Tangible common equity
$
390,728

$
373,023

$
336,892

Common shares outstanding
29,351,833

28,878,674

28,976,214

Tangible book value per common share
$
13.31

$
12.92

$
11.63




12
EXHIBIT 99

INVESTMENT MANAGEMENT SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
March 31,
December 31,
March 31,
(Dollars in thousands)
2019
2018
2018
Investment Management EBITDA:
 
 
 
Net income
$
1,431

$
1,468

$
702

Interest expense
—

—

—

Income taxes expense (benefit)
563

(207
)
227

Depreciation expense
125

126

125

Intangible amortization expense
502

503

461

EBITDA
$
2,621

$
1,890

$
1,515



TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
March 31,
December 31,
March 31,
(Dollars in thousands)
2019
2018
2018
Total revenue:
 
 
 
Net interest income
$
30,372

$
29,532

$
26,262

Total non-interest income
13,069

11,575

11,089

Less: net gain (loss) on the sale and call of debt securities
28

(76
)
5

Total revenue
$
43,413

$
41,183

$
37,346



BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
March 31,
December 31,
March 31,
(Dollars in thousands)
2019
2018
2018
Bank total revenue:
 
 
 
Net interest income
$
30,911

$
30,058

$
26,801

Total non-interest income
2,905

3,161

2,181

Less: net gain (loss) on the sale and call of debt securities
28

(76
)
5

Bank total revenue
$
33,788

$
33,295

$
28,977

 
 
 
 
Bank efficiency ratio:
 
 
 
Total non-interest expense (numerator)
$
19,021

$
18,179

$
15,786

Total revenue (denominator)
$
33,788

$
33,295

$
28,977

Bank efficiency ratio
56.30
%
54.60
%
54.48
%

13