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Section 1: 8-K (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): October 18, 2017

_________
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
ý

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.     ý

1



Item 2.02.    Results of Operations and Financial Condition.
On October 18, 2017, TriState Capital Holdings, Inc. issued a press release which disclosed results of operations for the three and nine months ended September 30, 2017. 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
99
Press release dated October 18, 2017, filed herewith, for item 2.02.



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: October 18, 2017


3



EXHIBIT INDEX


Exhibit No.
Description
99
Press release dated October 18, 2017, filed herewith, for item 2.02.



4
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Section 2: EX-99 (EXHIBIT 99)

Exhibit
EXHIBIT 99


FOR IMMEDIATE RELEASE                                





TRISTATE CAPITAL REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS

PITTSBURGH, October 18, 2017 - TriState Capital Holdings, Inc. (NASDAQ: TSC) reported record growth in net interest income in the third quarter of 2017, as well as double-digit expansion of earnings, revenues, loans and deposits.

The parent company of TriState Capital Bank and Chartwell Investment Partners grew earnings to $0.35 per diluted share in the third quarter ended September 30, 2017, compared to $0.30 in the third quarter of 2016 and $0.29 in the second quarter of 2017. Third quarter 2016 earnings were $0.27 per share after adjusting for the benefit of a $0.03 purchase price adjustment from last year’s acquisition of The Killen Group. Third quarter earnings grew 29.6% compared to the same period last year after excluding the purchase price adjustment and 20.7% from the linked quarter.

Net income of $10.0 million in the third quarter of 2017 increased 18.7% from $8.5 million in the third quarter of 2016 and 19.1% from $8.4 million in the linked quarter.

“TriState Capital continues to deliver strong and sustainable earnings growth for the benefit of our shareholders, clients and employees,” Chairman and Chief Executive Officer James F. Getz said. “Our 11th consecutive quarter of double-digit growth in earnings per share is the result of our singular focus on building a superior and unique financial services company. Our teams continued to expand the breadth and depth of our national private banking franchise, drive outsized growth in loans and deposits in private banking and middle-market banking offerings, and deliver highly credible investment management performance. With very healthy pipelines, superior asset quality and a talented entrepreneurial team, TriState Capital is well-positioned for a successful 2017 and a strong start to 2018.”

THIRD QUARTER 2017 HIGHLIGHTS
Total revenue grew to $35.3 million, up 13.2% from the third quarter of 2016, driven by a record increase in net interest income to $23.6 million, up 26.2% from the third quarter of 2016
The return on average equity (ROAE) for the quarter was 10.69%, surpassing the 10% milestone
Total loans topped $3.93 billion at period end, up 23.8% from September 30, 2016 and 4.2% during the quarter
Total deposits of $3.77 billion at period end grew by 22.1% from September 30, 2016 and 6.8% during the quarter, while average noninterest-bearing deposits of $205.4 million grew 27.0% from the prior year quarter and 5.3% from the linked quarter
Non-performing assets (NPAs) declined to 0.23% of total assets, non-performing loans (NPLs) fell to 0.18% of total loans, and adverse-rated credits represented just 0.95% of total loans
The bank’s efficiency ratio of 54.81% improved by 720 basis points from 62.01% in the third quarter of 2016

Total revenue was $35.3 million for the third quarter of 2017, increasing by 13.2% from $31.2 million in the same period last year and by 5.3% from $33.5 million in the second quarter of this year.

Net interest income for the third quarter of 2017 grew $4.9 million, or 26.2%, year-over-year to a record $23.6 million. During the quarter, net interest income increased by $1.6 million, or 7.1%, from $22.0 million reported in the second quarter of 2017. Net interest margin was 2.27% in the third quarter of 2017, compared to 2.23% in the linked quarter.

Non-interest income totaled $11.7 million in the third quarter 2017, compared to $12.5 million in the same period last year and $11.7 million in the linked quarter. TriState Capital’s non-interest income largely includes Chartwell investment management fees, which were $9.2 million in the third quarter of 2017, compared to $10.3 million in the third quarter of 2016 and $9.1 million in the second quarter of 2017. Other non-interest income was $2.5 million in the third quarter of 2017, compared to

1

EXHIBIT 99

$2.2 million in the year-ago quarter and $2.3 million in the linked quarter, primarily reflecting borrower-facing interest rate swap activity.

In the third quarter of 2017, non-interest expenses totaled $22.8 million, or an annualized 2.09% of average assets. Non-interest expenses in the third quarter of 2016 were $20.5 million, or 2.27% of average assets on an annualized basis, and included a reduction of $1.2 million in the fair value of previously accrued contingent consideration associated with last year’s acquisition of The Killen Group. Non-interest expense totaled $21.8 million, or an annualized 2.10%, in the second quarter of 2017.

The bank’s efficiency ratio for the third quarter of 2017 was 54.81%, an improvement of 720 basis points from 62.01% in the quarter ended September 30, 2016 and 22 basis points from 55.03% for the second quarter ended June 30, 2017.

(Dollars in thousands, except per share data)
Q3 2017

Q2 2017

Q3 2016

 
FY 2016

Total non-interest expense (GAAP)
$
22,812

$
21,784

$
20,514

 
$
78,794

Non-recurring items:
 
 
 
 
 
Change in fair value of previously accrued acquisition earn out


1,209

 
3,687

Acquisition-related expense



 
(352
)
Severance expense



 
(300
)
Non-interest expense excluding non-recurring items (non-GAAP)
$
22,812

$
21,784

$
21,723

 
$
81,829

Net impact of non-recurring items on EPS
$

$

$
0.03

 
$
0.07


The company continues to pursue investments in its tax credit program, committing to an additional investment during the quarter. This investment meaningfully reduces the company’s 2017 annual effective tax rate from 30.5% to 26.2% and will reduce the current year tax liability by approximately $2.1 million. The company recognized 75% of this reduction in the third quarter resulting in an effective tax rate of 17.9%. The remainder will be recognized in the fourth quarter in which the tax rate is expected to be 26.2%.

BALANCE SHEET GROWTH
Loans totaled $3.93 billion at September 30, 2017, growing organically by $756.0 million, or 23.8%, from balances at September 30, 2016 and $159.4 million, or 4.2%, compared to June 30. Private banking loans of $2.06 billion at September 30, 2017 reflect growth of $468.8 million, or 29.5%, from the end of the third quarter of 2016 and $87.7 million, or 4.5%, from the end of the linked quarter. Commercial loans totaled $1.87 billion at September 30, 2017, up 18.1% from the end of the year-ago quarter and 4.0% from the end of the linked quarter, supported by growth in commercial and industrial and commercial real estate lending.

Total deposits were $3.77 billion at September 30, 2017, increasing $682.6 million, or 22.1%, from September 30, 2016 and $240.0 million, or 6.8%, from the linked quarter. Average noninterest-bearing deposits totaled $205.4 million for the third quarter of 2017, increasing $43.6 million, or 27.0%, from a year ago and $10.4 million, or 5.3%, from the linked quarter. This illustrates the ongoing success of TriState Capital’s efforts to grow stable and cost-effective relationship deposits and treasury management related liquidity from new and existing accounts through enhanced services and technology.

At September 30, 2017, 90% of TriState Capital’s loan portfolio was floating rate and 28% of deposits were fixed-rate certificates of deposit.

ASSET QUALITY
The bank’s superior asset quality continued to reflect TriState Capital’s disciplined credit culture and the growth of its private banking non-purpose margin loans secured by marketable securities. Private banking loans comprised 52.3% of the total loan portfolio at September 30, 2017.

NPAs declined to $10.5 million, or 0.23% of total assets, at September 30, 2017, compared to $25.0 million, or 0.67%, at September 30, 2016 and $11.7 million, or 0.27%, at June 30, 2017. NPLs declined to $6.9 million, or 0.18% of total loans, at September 30, 2017, compared to $20.7 million, or 0.65%, at September 30, 2016 and $7.8 million, or 0.21%, June 30, 2017.

2

EXHIBIT 99


Adverse-rated credits were $37.4 million, or 0.95% of total loans, at September 30, 2017, compared to $50.6 million, or 1.59%, at September 30, 2016 and $33.8 million, or 0.90%, at June 30, 2017.

The company’s allowance for loan losses (ALL) at the end of the third quarter of 2017 reflected declining NPLs and continued to be influenced by the lower levels of provision required by the low risk profile of the bank’s growing proportion of private banking loans in its portfolio. ALL represented 0.41% of total loans at September 30, 2017, compared to 0.64% at September 30, 2016 and 0.42% at June 30, 2017.

INVESTMENT MANAGEMENT
Chartwell assets under management were $8.2 billion at September 30, 2017, compared to $8.0 billion at June 30, 2017. The investment manager reported new business and new flows from existing accounts of $313 million and market appreciation of $141 million, which more than offset outflows of $262 million in the third quarter of 2017. Chartwell’s weighted average fee rate was 0.45% at September 30, 2017.

Investment management fees of $9.2 million in the third quarter of 2017 compared to $10.3 million in the third quarter of 2016 and $9.1 million in the second quarter of 2017. On an annualized run-rate basis, Chartwell’s revenues were $36.9 million at September 30, 2017, compared to $41.3 million at September 30, 2016 and $36.4 million at June 30, 2017.

CAPITAL STRENGTH AND FLEXIBILITY
TriState Capital’s earnings in the quarter continued to support superior growth in the period, while the company maintained capital ratios that exceed the highest required regulatory benchmark levels. As of September 30, 2017, TriState Capital Holdings reported ratios of 11.80% for total risk-based capital, 11.14% for tier 1 risk-based capital, 11.14% for common equity tier 1 risk-based capital, and 7.40% for tier 1 leverage.

In January 2017, TriState Capital’s Board of Directors approved additional share repurchases of up to $5 million. In combination with authorizations granted in 2016, $2.2 million remains available. Over the nine months ended September 30, 2017, the company repurchased a total of 281,556 shares for approximately $6.5 million at an average cost of $23.00 per share.

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 October 19 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/10112829 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 October 26. 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 10112829.

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 $4.4 billion in assets, as of September 30, 2017, 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 $8.2 billion in assets under management, as of September 30, 2017, and serves as the advisor to The Berwyn Funds and Chartwell Mutual Funds. For more information, please visit http://investors.tristatecapitalbank.com.


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EXHIBIT 99

FORWARD LOOKING STATEMENTS
This press release includes “forward-looking” statements related to TriState Capital that can generally be identified as describing TriState Capital’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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.

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). Although TriState Capital believes 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


4

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
As of and For the 
 Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
(Dollars in thousands)
2017
2017
2016
 
2017
2016
Period-end balance sheet data:
 
 
 
 
 
 
Cash and cash equivalents
$
136,579

$
119,715

$
120,736

 
$
136,579

$
120,736

Total investment securities
220,916

221,409

243,343

 
220,916

243,343

Loans held-for-investment
3,930,670

3,771,312

3,174,653

 
3,930,670

3,174,653

Allowance for loan losses
(15,979
)
(15,968
)
(20,211
)
 
(15,979
)
(20,211
)
Loans held-for-investment, net
3,914,691

3,755,344

3,154,442

 
3,914,691

3,154,442

Goodwill and other intangibles, net
65,821

66,283

67,671

 
65,821

67,671

Other assets
158,006

145,084

129,326

 
158,006

129,326

Total assets
$
4,496,013

$
4,307,835

$
3,715,518

 
$
4,496,013

$
3,715,518

 
 
 
 
 
 
 
Deposits
$
3,769,870

$
3,529,868

$
3,087,230

 
$
3,769,870

$
3,087,230

Borrowings, net
279,162

363,612

239,460

 
279,162

239,460

Other liabilities
69,648

46,716

45,689

 
69,648

45,689

Total liabilities
4,118,680

3,940,196

3,372,379

 
4,118,680

3,372,379

 
 
 
 
 
 
 
Total shareholders' equity
377,333

367,639

343,139

 
377,333

343,139

 
 
 
 
 
 
 
Total liabilities and shareholders' equity
$
4,496,013

$
4,307,835

$
3,715,518

 
$
4,496,013

$
3,715,518

 
 
 
 
 
 
 
Income statement data:
 
 
 
 
 
 
Interest income
$
35,575

$
32,115

$
24,925

 
$
96,427

$
72,080

Interest expense
11,970

10,082

6,221

 
29,873

16,780

Net interest income
23,605

22,033

18,704

 
66,554

55,300

Provision (credit) for loan losses
283

516

(542
)
 
1,042

(340
)
Net interest income after provision for loan losses
23,322

21,517

19,246

 
65,512

55,640

Non-interest income:
 
 
 
 
 
 
Investment management fees
9,214

9,130

10,333

 
27,684

26,814

Net gain on the sale and call of investment securities
15

241

14

 
254

77

Other non-interest income
2,477

2,341

2,150

 
6,889

5,968

Total non-interest income
11,706

11,712

12,497

 
34,827

32,859

Non-interest expense:
 
 
 
 
 
 
Intangible amortization expense
463

462

463

 
1,388

1,291

Change in fair value of acquisition earn out


(1,209
)
 

(1,209
)
Other non-interest expense
22,349

21,322

21,260

 
64,366

57,895

Total non-interest expense
22,812

21,784

20,514

 
65,754

57,977

Income before tax
12,216

11,445

11,229

 
34,585

30,522

Income tax expense
2,184

3,024

2,775

 
8,640

9,452

Net income
$
10,032

$
8,421

$
8,454

 
$
25,945

$
21,070



5

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
As of and For the 
 Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
(Dollars in thousands, except per share data)
2017
2017
2016
 
2017
2016
Per share and share data:
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
Basic
$
0.36

$
0.31

$
0.31

 
$
0.94

$
0.76

Diluted
$
0.35

$
0.29

$
0.30

 
$
0.90

$
0.75

Book value per common share
$
13.17

$
12.83

$
12.12

 
$
13.17

$
12.12

Tangible book value per common share (1)
$
10.88

$
10.51

$
9.73

 
$
10.88

$
9.73

Common shares outstanding, at end of period
28,642,573

28,665,726

28,317,154

 
28,642,573

28,317,154

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
27,515,923

27,601,702

27,514,724

 
27,581,229

27,586,816

Diluted
28,659,990

28,785,625

28,307,632

 
28,721,747

28,276,223

 
 
 
 
 
 
 
Performance ratios:
 
 
 
 
 
 
Return on average assets (2)
0.92
%
0.81
%
0.93
 %
 
0.83
%
0.82
 %
Return on average equity (2)
10.69
%
9.27
%
9.88
 %
 
9.52
%
8.42
 %
Net interest margin (2) (3)
2.27
%
2.23
%
2.18
 %
 
2.25
%
2.25
 %
Bank efficiency ratio (1)
54.81
%
55.03
%
62.01
 %
 
55.88
%
60.36
 %
Efficiency ratio (1)
63.32
%
63.64
%
68.17
 %
 
63.65
%
65.73
 %
Non-interest expense to average assets (2)
2.09
%
2.10
%
2.27
 %
 
2.11
%
2.25
 %
 
 
 
 
 
 
 
Asset quality:
 
 
 
 
 
 
Non-performing loans
$
6,936

$
7,830

$
20,717

 
$
6,936

$
20,717

Non-performing assets
$
10,517

$
11,701

$
24,985

 
$
10,517

$
24,985

Other real estate owned
$
3,581

$
3,871

$
4,268

 
$
3,581

$
4,268

Non-performing assets to total assets
0.23
%
0.27
%
0.67
 %
 
0.23
%
0.67
 %
Non-performing loans to total loans
0.18
%
0.21
%
0.65
 %
 
0.18
%
0.65
 %
Allowance for loan losses to loans
0.41
%
0.42
%
0.64
 %
 
0.41
%
0.64
 %
Allowance for loan losses to non-performing loans
230.38
%
203.93
%
97.56
 %
 
230.38
%
97.56
 %
Net charge-offs (recoveries)
$
272

$
733

$
(3,538
)
 
$
3,825

$
(2,577
)
Net charge-offs (recoveries) to average total loans (2)
0.03
%
0.08
%
(0.46
)%
 
0.14
%
(0.12
)%
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
Total revenue (1)
$
35,296

$
33,504

$
31,187

 
$
101,127

$
88,082

Pre-tax, pre-provision net revenue (1)
$
12,484

$
11,720

$
10,673

 
$
35,373

$
30,105

 
 
 
 
 
 
 
Capital ratios:
 
 
 
 
 
 
Tier 1 leverage ratio
7.40
%
7.45
%
8.09
 %
 
7.40
%
8.09
 %
Common equity tier 1 risk-based capital ratio
11.14
%
11.21
%
11.73
 %
 
11.14
%
11.73
 %
Tier 1 risk-based capital ratio
11.14
%
11.21
%
11.73
 %
 
11.14
%
11.73
 %
Total risk-based capital ratio
11.80
%
12.14
%
13.05
 %
 
11.80
%
13.05
 %
 
 
 
 
 
 
 
Investment Management Segment:
 
 
 
 
 
 
Assets under management
$
8,195,000

$
8,003,000

$
10,800,000

 
$
8,195,000

$
10,800,000

Adjusted EBITDA (1)
$
1,648

$
1,692

$
2,415

 
$
5,815

$
7,076


(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.

6

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
(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
$
131,115

$
420

1.27
%
 
$
118,916

$
323

1.09
%
 
$
114,245

$
150

0.52
%
Federal funds sold
6,845

20

1.16
%
 
6,225

15

0.97
%
 
6,445

6

0.37
%
Investment securities available-for-sale
140,741

760

2.14
%
 
152,471

808

2.13
%
 
182,354

828

1.81
%
Investment securities held-to-maturity
60,220

631

4.16
%
 
61,359

639

4.18
%
 
48,495

485

3.98
%
FHLB stock
12,582

200

6.31
%
 
16,449

148

3.61
%
 
12,347

144

4.64
%
Total loans
3,787,231

33,604

3.52
%
 
3,619,251

30,242

3.35
%
 
3,061,427

23,369

3.04
%
Total interest-earning assets
4,138,734

35,635

3.42
%
 
3,974,671

32,175

3.25
%
 
3,425,313

24,982

2.90
%
Other assets
194,405

 
 
 
188,588

 
 
 
171,986

 
 
Total assets
$
4,333,139

 
 
 
$
4,163,259

 
 
 
$
3,597,299

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
$
371,526

$
1,173

1.25
%
 
$
304,973

$
759

1.00
%
 
$
190,270

$
234

0.49
%
Money market deposit accounts
2,021,755

6,263

1.23
%
 
1,914,429

5,150

1.08
%
 
1,688,250

3,017

0.71
%
Certificates of deposit
1,003,280

3,168

1.25
%
 
924,110

2,587

1.12
%
 
863,872

1,936

0.89
%
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
FHLB borrowing
271,304

790

1.16
%
 
379,890

1,016

1.07
%
 
273,804

480

0.70
%
Line of credit borrowing
2,571

22

3.39
%
 
1,527

16

4.20
%
 


%
Subordinated notes payable, net
34,629

554

6.35
%
 
34,579

554

6.43
%
 
34,427

554

6.40
%
Total interest-bearing liabilities
3,705,065

11,970

1.28
%
 
3,559,508

10,082

1.14
%
 
3,050,623

6,221

0.81
%
Noninterest-bearing deposits
205,368

 
 
 
194,957

 
 
 
161,723

 
 
Other liabilities
50,332

 
 
 
44,404

 
 
 
44,565

 
 
Shareholders' equity
372,374

 
 
 
364,390

 
 
 
340,388

 
 
Total liabilities and shareholders' equity
$
4,333,139

 
 
 
$
4,163,259

 
 
 
$
3,597,299

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (1)
 
$
23,665

 
 
 
$
22,093

 
 
 
$
18,761

 
Net interest spread
 
 
2.14
%
 
 
 
2.11
%
 
 
 
2.09
%
Net interest margin (1)
 
 
2.27
%
 
 
 
2.23
%
 
 
 
2.18
%

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


7

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)

 
Nine Months Ended September 30,
 
2017
 
2016
(Dollars in thousands)
Average
Balance
Interest Income (1)/
Expense
Average
Yield/
Rate
 
Average
Balance
Interest Income (1)/
Expense
Average
Yield/
Rate
Assets
 
 
 
 
 
 
 
Interest-earning deposits
$
121,640

$
981

1.08
%
 
$
107,651

$
418

0.52
%
Federal funds sold
6,501

45

0.93
%
 
6,180

16

0.35
%
Investment securities available-for-sale
153,665

2,422

2.11
%
 
181,383

2,387

1.76
%
Investment securities held-to-maturity
58,744

1,845

4.20
%
 
46,977

1,409

4.01
%
FHLB stock
13,803

450

4.36
%
 
10,983

343

4.17
%
Total loans
3,619,679

90,865

3.36
%
 
2,935,663

67,710

3.08
%
Total interest-earning assets
3,974,032

96,608

3.25
%
 
3,288,837

72,283

2.94
%
Other assets
189,483

 
 
 
155,903

 
 
Total assets
$
4,163,515

 
 
 
$
3,444,740

 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest-bearing checking accounts
$
298,631

$
2,295

1.03
%
 
$
160,310

$
541

0.45
%
Money market deposit accounts
1,951,258

15,511

1.06
%
 
1,614,669

7,847

0.65
%
Certificates of deposit
954,352

8,007

1.12
%
 
869,879

5,540

0.85
%
Borrowings:
 
 
 
 
 
 
 
FHLB borrowing
307,143

2,360

1.03
%
 
243,686

1,191

0.65
%
Line of credit borrowing
1,375

39

3.79
%
 


%
Subordinated notes payable, net
34,579

1,661

6.42
%
 
34,376

1,661

6.45
%
Total interest-bearing liabilities
3,547,338

29,873

1.13
%
 
2,922,920

16,780

0.77
%
Noninterest-bearing deposits
206,063

 
 
 
153,763

 
 
Other liabilities
45,596

 
 
 
33,770

 
 
Shareholders' equity
364,518

 
 
 
334,287

 
 
Total liabilities and shareholders' equity
$
4,163,515

 
 
 
$
3,444,740

 
 
 
 
 
 
 
 
 
 
Net interest income (1)
 
$
66,735

 
 
 
$
55,503

 
Net interest spread
 
 
2.12
%
 
 
 
2.17
%
Net interest margin (1)
 
 
2.25
%
 
 
 
2.25
%

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

TRISTATE CAPITAL HOLDINGS, INC.
LOAN COMPOSITION (UNAUDITED)
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
(Dollars in thousands)
Loan
Balance
Percent of
Total Loans
 
Loan
Balance
Percent of
Total Loans
 
Loan
Balance
Percent of
Total Loans
Private banking loans
$
2,055,808

52.3
%
 
$
1,968,139

52.2
%
 
$
1,587,019

50.0
%
Middle-market banking loans:
 
 
 
 
 
 
 
 
Commercial and industrial
648,720

16.5
%
 
639,808

17.0
%
 
565,702

17.8
%
Commercial real estate
1,226,142

31.2
%
 
1,163,365

30.8
%
 
1,021,932

32.2
%
Total middle-market banking loans
1,874,862

47.7
%
 
1,803,173

47.8
%
 
1,587,634

50.0
%
Loans held-for-investment
$
3,930,670

100.0
%
 
$
3,771,312

100.0
%
 
$
3,174,653

100.0
%


8

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Three Months Ended September 30, 2017
 
Three Months Ended September 30, 2016
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
 
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
 
 
 
Interest income
$
35,512

$

$
63

$
35,575

 
$
24,855

$

$
70

$
24,925

Interest expense
11,398


572

11,970

 
5,673


548

6,221

Net interest income (loss)
24,114


(509
)
23,605

 
19,182


(478
)
18,704

Provision (credit) for loan losses
283



283

 
(542
)


(542
)
Net interest income (loss) after provision for loan losses
23,831


(509
)
23,322

 
19,724


(478
)
19,246

Non-interest income:
 
 
 
 
 
 
 
 
 
Investment management fees

9,265

(51
)
9,214

 

10,391

(58
)
10,333

Net gain on the sale and call of investment securities
15



15

 
14



14

Other non-interest income
2,477



2,477

 
2,149

1


2,150

Total non-interest income
2,492

9,265

(51
)
11,706

 
2,163

10,392

(58
)
12,497

Non-interest expense:
 
 
 
 
 
 
 
 
 
Intangible amortization expense

463


463

 

463


463

Change in fair value of acquisition earn out




 

(1,209
)

(1,209
)
Other non-interest expense
14,575

7,747

27

22,349

 
13,227

8,009

24

21,260

Total non-interest expense
14,575

8,210

27

22,812

 
13,227

7,263

24

20,514

Income (loss) before tax
11,748

1,055

(587
)
12,216

 
8,660

3,129

(560
)
11,229

Income tax expense (benefit)
1,987

435

(238
)
2,184

 
1,823

1,385

(433
)
2,775

Net income (loss)
$
9,761

$
620

$
(349
)
$
10,032

 
$
6,837

$
1,744

$
(127
)
$
8,454



9

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
 
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
 
 
 
Interest income
$
96,220

$

$
207

$
96,427

 
$
71,871

$

$
209

$
72,080

Interest expense
28,183


1,690

29,873

 
15,130


1,650

16,780

Net interest income (loss)
68,037


(1,483
)
66,554

 
56,741


(1,441
)
55,300

Provision (credit) for loan losses
1,042



1,042

 
(340
)


(340
)
Net interest income (loss) after provision for loan losses
66,995


(1,483
)
65,512

 
57,081


(1,441
)
55,640

Non-interest income:
 
 
 
 
 
 
 
 
 
Investment management fees

27,843

(159
)
27,684

 

26,981

(167
)
26,814

Net gain on the sale and call of investment securities
254



254

 
77



77

Other non-interest income
6,888

1


6,889

 
5,966

2


5,968

Total non-interest income
7,142

27,844

(159
)
34,827

 
6,043

26,983

(167
)
32,859

Non-interest expense:
 
 
 
 
 
 
 
 
 
Intangible amortization expense

1,388


1,388

 

1,291


1,291

Change in fair value of acquisition earn out




 

(1,209
)

(1,209
)
Other non-interest expense
41,868

22,398

100

64,366

 
37,849

19,986

60

57,895

Total non-interest expense
41,868

23,786

100

65,754

 
37,849

20,068

60

57,977

Income (loss) before tax
32,269

4,058

(1,742
)
34,585

 
25,275

6,915

(1,668
)
30,522

Income tax expense (benefit)
7,734

1,587

(681
)
8,640

 
7,476

2,833

(857
)
9,452

Net income (loss)
$
24,535

$
2,471

$
(1,061
)
$
25,945

 
$
17,799

$
4,082

$
(811
)
$
21,070



10

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,” “adjusted EBITDA,” “total revenue,” “pre-tax, pre-provision net revenue,” and “efficiency ratio.” Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.

“Tangible common equity” is defined as shareholders’ equity reduced by intangible assets, including goodwill. We believe this measure is important to management and investors to better understand and assess changes from period to period in shareholders’ equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a business purchase combination, has 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 book value, excluding the impact of 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 share exclusive of changes in intangible assets.

“EBITDA” and “Adjusted EBITDA” are defined as net income before interest expense, income taxes, depreciation and amortization adjusted for acquisition related items. We use adjusted 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, excluding certain non-cash items and the volatility that is associated with certain one-time items and other 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 investment securities. We believe adjustments made to our operating revenue allow management and investors to better assess our operating revenue by removing the volatility that is associated with certain other items that are unrelated to our core business.

“Pre-tax, pre-provision net revenue” is defined as 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. 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 losses or other items that are unrelated to our core business.

“Efficiency ratio” is defined as non-interest expense, excluding acquisition related items and intangible amortization expense, where applicable, divided by our total revenue. We believe this measure, particularly at the Bank, 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 and other discrete items that are unrelated to our core business.


11

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
September 30,
June 30,
September 30,
(Dollars in thousands, except per share data)
2017
2017
2016
Tangible book value per common share:
 
 
 
Total shareholders' equity
$
377,333

$
367,639

$
343,139

Less: intangible assets
65,821

66,283

67,671

Tangible common equity
$
311,512

$
301,356

$
275,468

Common shares outstanding
28,642,573

28,665,726

28,317,154

Tangible book value per common share
$
10.88

$
10.51

$
9.73



INVESTMENT MANAGEMENT SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
(Dollars in thousands)
2017
2017
2016
 
2017
2016
Investment Management EBITDA:
 
 
 
 
 
 
Net income
$
620

$
683

$
1,744

 
$
2,471

$
4,082

Interest expense



 


Income taxes expense
435

425

1,385

 
1,587

2,833

Depreciation expense
130

122

32

 
369

78

Intangible amortization expense
463

462

463

 
1,388

1,291

EBITDA
1,648

1,692

3,624

 
5,815

8,284

Change in fair value of acquisition earn out


(1,209
)
 

(1,209
)
Acquisition related items



 

1

Adjusted EBITDA
$
1,648

$
1,692

$
2,415

 
$
5,815

$
7,076




12

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
(Dollars in thousands)
2017
2017
2016
 
2017
2016
Pre-tax, pre-provision net revenue:
 
 
 
 
 
 
Net interest income
$
23,605

$
22,033

$
18,704

 
$
66,554

$
55,300

Total non-interest income
11,706

11,712

12,497

 
34,827

32,859

Less: net gain on the sale and call of investment securities
15

241

14

 
254

77

Total revenue
35,296

33,504

31,187

 
101,127

88,082

Less: total non-interest expense
22,812

21,784

20,514

 
65,754

57,977

Pre-tax, pre-provision net revenue
$
12,484

$
11,720

$
10,673

 
$
35,373

$
30,105

 
 
 
 
 
 
 
Efficiency ratio:
 
 
 
 
 
 
Total non-interest expense
$
22,812

$
21,784

$
20,514

 
$
65,754

$
57,977

Plus: change in fair value of acquisition earn out


1,209

 

1,209

Less: acquisition related items



 

1

Less: intangible amortization expense
463

462

463

 
1,388

1,291

Total non-interest expense, as adjusted (numerator)
$
22,349

$
21,322

$
21,260

 
$
64,366

$
57,894

Total revenue (denominator)
$
35,296

$
33,504

$
31,187

 
$
101,127

$
88,082

Efficiency ratio
63.32
%
63.64
%
68.17
%
 
63.65
%
65.73
%


BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
(Dollars in thousands)
2017
2017
2016
 
2017
2016
Bank pre-tax, pre-provision net revenue:
 
 
 
 
 
 
Net interest income
$
24,114

$
22,532

$
19,182

 
$
68,037

$
56,741

Total non-interest income
2,492

2,582

2,163

 
7,142

6,043

Less: net gain on the sale and call of investment securities
15

241

14

 
254

77

Total revenue
26,591

24,873

21,331

 
74,925

62,707

Less: total non-interest expense
14,575

13,688

13,227

 
41,868

37,849

Pre-tax, pre-provision net revenue
$
12,016

$
11,185

$
8,104

 
$
33,057

$
24,858

 
 
 
 
 
 
 
Bank efficiency ratio:
 
 
 
 
 
 
Total non-interest expense (numerator)
$
14,575

$
13,688

$
13,227

 
$
41,868

$
37,849

Total revenue (denominator)
$
26,591

$
24,873

$
21,331

 
$
74,925

$
62,707

Bank efficiency ratio
54.81
%
55.03
%
62.01
%
 
55.88
%
60.36
%



13
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