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Section 1: 8-K (8-K)

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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): January 30, 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. ¨




Item 2.02. Results of Operations and Financial Condition.

On January 30, 2019, TriState Capital Holdings, Inc. issued a press release which disclosed results of operations for the three months and year ended December 31, 2018. 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 January 30, 2019, 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: January 30, 2019


3
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Section 2: EX-99 (EXHIBIT 99)

Exhibit
EXHIBIT 99



FOR IMMEDIATE RELEASE



TRISTATE CAPITAL REPORTS RECORD FINANCIAL RESULTS, INCLUDING
EPS OF $1.81 FOR FULL YEAR 2018 AND $0.50 FOR THE FOURTH QUARTER

-- EPS grew 37.1% for 2018 and 19.0% for the fourth quarter compared to a year ago, private banking and commercial loan balances hit new record levels, and investment management performance attracts positive net inflows of client assets --

PITTSBURGH, January 30, 2019 - TriState Capital Holdings, Inc. (Nasdaq: TSC) fourth quarter and full year 2018 financial results included record levels of earnings, new private banking and commercial loan originations, and deposit and treasury management business growth, as well as positive net inflows of client assets under management and improved operating leverage.

The parent company of TriState Capital Bank and Chartwell Investment Partners reported net income available to common shareholders of $52.3 million in 2018, an increase of 37.7% from $38.0 million in 2017. Diluted earnings per share (EPS) grew to $1.81 in 2018, an increase of 37.1% from $1.32 in 2017. For the fourth quarter of 2018, the company grew net income available to common shareholders to $14.4 million, up 19.9% from $12.0 million in the fourth quarter of 2017 and up 5.9% from $13.6 million in the linked third quarter of 2018. Fourth quarter EPS grew to $0.50, increasing 19.0% from $0.42 in the fourth quarter of 2017 and 6.4% from $0.47 in the linked quarter.

“TriState Capital’s record performance illustrates the consistent earnings power of our unique combination of businesses with diverse revenue streams, attractive risk profiles, growing client base, and a balance sheet built for growth and resilience across economic cycles and operating environments,” Chief Executive Officer James F. Getz said. “As we begin the new year, pipelines are very strong for each of our three business channels. We are very confident about demand trends for our select product offerings and markets, as well as our team’s ability to consistently execute against our growth strategy in 2019 and beyond.”

FOURTH QUARTER 2018 HIGHLIGHTS
Chartwell’s active investment strategies generated net inflows of $174 million in 2018 and $25 million in the quarter
Net interest income (NII) grew to a record $29.5 million, increasing 19.1% from the fourth quarter of 2017 and 2.5% from the linked quarter
Total loans surpassed $5 billion at period end, growing 22.7% from one year prior and 7.9% during the quarter
Private banking loans grew 26.6% from one year prior and 9.2% during the quarter, commercial and industrial loans grew 17.6% from one year prior and 1.8% during the quarter and commercial real estate loans grew 18.2% from one year prior and 8.8% during the quarter
Total assets surpassed $6 billion at period end, growing 26.3% from one year prior and 8.3% during the quarter
Total deposits surpassed $5 billion at period end, growing 26.7% from one year prior and 6.2% during the quarter, supported by continued growth in national deposits and family office deposits and demand for treasury and liquidity management products
Superior credit quality metrics continued to improve, with non-performing assets declining to 0.09% of assets, non-performing loans declining to 0.04% of loans and adverse-rated credits declining to 0.48% of loans at period end
Operating leverage drove further improvement in the bank’s efficiency ratio to 53.09% for the year and 54.60% for the quarter

RECORD NET INTEREST INCOME
TriState Capital’s record fourth quarter 2018 NII of $29.5 million increased 19.1% from $24.8 million in the year-ago quarter and 2.5% from $28.8 million in the linked quarter, 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.


1

EXHIBIT 99

Fourth quarter 2018 non-interest income totaled $11.6 million and represented 28.3% of total revenue for the period, reflecting a modest quarterly decline in Chartwell investment management fees, after positive net inflows of client assets last year were offset by market depreciation. In the fourth quarter of 2017 and third quarter of 2018 non-interest income totaled $12.1 million and $12.8 million, respectively. Fees from borrower-facing interest rate swap activity grew to $2.2 million during the fourth quarter of 2018, increasing 36.5% from the year-ago quarter and 19.4% from the linked quarter.

NII and non-interest income, excluding gains and losses on the sale of securities, combined to generate total revenue of $41.2 million for the fourth quarter of 2018, compared to $36.9 million in the year-ago period and $41.6 million in the linked quarter. Full year 2018 total revenue of $161.4 million increased 16.9% from $138.0 million in 2017.

OPERATING LEVERAGE
TriState Capital Bank’s efficiency ratio for the fourth quarter of 2018 was 54.60%, compared to 61.42% in the year-ago quarter and 52.86% in the linked quarter. The bank’s full-year efficiency ratio improved to 53.09% in 2018, from 57.39% in 2017, as investments made in talent and building scale continue to drive revenue growth while building incremental operating leverage.

Non-interest expense totaled $26.3 million in the fourth quarter of 2018, $25.7 million in the year-ago quarter and $25.7 million in the linked quarter. For the full year, non-interest expense totaled $101.2 million, increasing by 10.6% from 2017.

Fourth quarter 2018 non-interest expenses were reduced by a $218,000 adjustment in the fair value of previously accrued contingent consideration associated with last year’s acquisition of client assets under management from Columbia Partners, L.L.C.

TriState Capital’s 2018 effective tax rate was 9.8%, reflecting the favorable impact of tax credit investments and prudent tax expense management strategies. For 2019, the company currently expects an effective tax rate ranging in the mid to high teens. The company’s effective tax rate will vary according to 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.

Fourth quarter 2018 net income available to common shareholders, as well as EPS, reflected $679,000 of quarterly cash dividends payable on the company’s Series A Non-Cumulative Perpetual Preferred Stock.

ORGANIC LOAN GROWTH
TriState Capital continued to deliver 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 $4.85 billion in the fourth quarter of 2018, growing 21.8% from $3.98 billion in the year- ago quarter and 5.6% from $4.59 billion in the linked quarter. Loans at December 31, 2018 totaled $5.13 billion, growing $948.6 million, or 22.7%, from one year prior and $374.5 million, or 7.9%, from September 30, 2018.

TriState Capital’s growing distribution helped drive record new loan originations for the fourth quarter of 2018 in its national private banking business. Private banking loans grew to $2.87 billion at December 31, 2018, up $603.8 million, or 26.6%, from one year prior and $241.8 million, or 9.2%, from September 30, 2018.

The company grew relationships with middle-market borrowers in the fourth quarter of 2018 to drive record originations of commercial and industrial loans and commercial real estate loans. Total commercial loans grew to $2.26 billion at December 31, 2018, increasing by $344.8 million, or 18.0%, from one year prior and $132.7 million, or 6.2%, from September 30, 2018.

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

2

EXHIBIT 99

increasing the number and depth of depositor relationships with financial services businesses, high-net-worth individuals, family offices, middle market companies, municipalities, and non-profits.

Deposits at December 31, 2018 totaled $5.05 billion, growing by $1.06 billion, or 26.7%, from one year prior and $295.9 million, or 6.2%, from September 30, 2018. Average deposits totaled $4.80 billion in the fourth quarter of 2018, growing 25.5% from $3.82 billion in the same period last year and 4.9% from $4.57 billion in the linked quarter.

INTEREST RATE MANAGEMENT
TriState Capital continues to manage an asset-sensitive balance sheet, while maintaining significant flexibility to manage interest rate risk in changing markets. At December 31, 2018, 92% of the company’s loan portfolio was floating rate and 24% of deposits were fixed-rate certificates of deposit.

The yield on total loans averaged 4.35% in the fourth quarter of 2018, expanding 80 basis points from 3.55% in the fourth quarter of 2017 and 16 basis points from 4.19% in the third quarter of 2018.

Total cost of funds for all deposits and interest-bearing liabilities averaged 2.19% during the fourth quarter of 2018, compared to 1.26% in the fourth quarter of 2017 and 1.94% in the linked third quarter. The cost of total deposits averaged 2.17% for the three months ended December 31, 2018, compared to 1.21% for the three months ended December 31, 2017 and 1.92% in the third quarter of 2018.

INVESTMENT MANAGEMENT
Chartwell total assets under management (AUM) were $9.19 billion at December 31, 2018, compared to $8.31 billion one year prior and $9.87 billion at September 30, 2018. Chartwell reported new business and new flows from existing accounts of $372 million, which more than offset outflows of $347 million in the fourth quarter of 2018. AUM at the end of the fourth quarter of 2018 also reflected market depreciation of $701 million in the period. Fixed income represented 58% of client AUM at the end of the fourth quarter of 2018, with the balance in equity strategies.

Chartwell’s weighted average fee rate was 0.39% at December 31, 2018. Investment management fee revenue totaled $9.2 million in the fourth quarter of 2018, compared to $9.4 million in the year-ago quarter and $9.8 million in the linked quarter.

ASSET QUALITY
TriState Capital maintained strong asset quality metrics in the fourth quarter of 2018, reflecting the company’s disciplined credit culture and expansion of its private banking non-purpose margin loans secured by marketable securities. Private banking grew to represent 55.9% of total loans at December 31, 2018, while commercial real estate and commercial and industrial comprised 28.8% and 15.3% of total loans, respectively.

Non-performing assets (NPAs) totaled $5.7 million at December 31, 2018, declining 16.2% from $6.8 million at December 31, 2017 and 3.1% from $5.8 million at September 30, 2018. NPAs made up 0.09% of total assets at year-end, declining by 5 basis points during 2018 and 1 basis point during the fourth quarter.

Non-performing loans (NPLs) totaled $2.2 million at December 31, 2018, declining 29.7% from $3.2 million at December 31, 2017 and 1.4% from $2.3 million at September 30, 2018. NPLs made up 0.04% of total loans at year-end, declining by 4 basis points during 2018 and 1 basis point during the fourth quarter.

Adverse-rated credits declined 17.2% from December 31, 2017, and 12.2% during the fourth quarter of 2018. Adverse-rated credits represented 0.48% of total loans at the end of the fourth quarter of 2018, 0.71% at December 31, 2017 and 0.59% at September 30, 2018.

The company recorded net recoveries of $206,000 in the fourth quarter of 2018 and $103,000 in the year-ago quarter. Net charge-offs were $1.5 million, or 0.13% of average total loans, in the third quarter of 2018.

TriState Capital recorded a credit to provision of $581,000 for the fourth quarter of 2018, $1.7 million for the year-ago quarter and $234,000 for the third quarter of 2018. These credits to provision reflect net recoveries as well as declining non-performing loans and adverse rated credits.

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EXHIBIT 99


The company’s allowance for loan losses (ALL) continued to reflect declining NPLs and 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 0.26% of total loans at December 31, 2018, 0.34% at December 31, 2017 and 0.29% at September 30, 2018.

CAPITAL STRENGTH AND FLEXIBILITY
TriState Capital Holdings reported capital ratios as of December 31, 2018 of 10.86% for total risk-based capital, 10.58% for tier 1 risk-based capital, 9.64% for common equity tier 1 risk-based capital and 7.28% for tier 1 leverage.

During 2018, the company repurchased 263,540 shares of its common stock, including 93,604 shares in the fourth quarter of 2018 for approximately $2.2 million at an average cost of $23.75 per share. Since the Board first authorized share buybacks in October 2014, the company has repurchased a total of 2,014,910 shares for approximately $30.5 million at an average cost of $15.14 per share. TriState Capital has $2.2 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 January 31 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/10127209 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 call through February 7. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 412-317-0088 from other locations and entering the conference number 10127209.

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 $5.9 billion in assets, as of December 31, 2018, 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 $9.2 billion in assets under management, as of December 31, 2018, 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-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;

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EXHIBIT 99

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 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

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EXHIBIT 99

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)
[email protected]

INVESTOR RELATIONS CONTACT
Casteel Schoenborn
Jeff Schoenborn and Kate Croft
888-609-8351
[email protected]

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EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
BALANCE SHEET DATA (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
As of and For the 
 Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands)
2018
2018
2017
 
2018
2017
Cash and cash equivalents
$
189,985

$
186,535

$
156,153

 
$
189,985

$
156,153

Total investment securities
466,759

393,139

220,552

 
466,759

220,552

Loans held-for-investment
5,132,873

4,758,356

4,184,244

 
5,132,873

4,184,244

Allowance for loan losses
(13,208
)
(13,583
)
(14,417
)
 
(13,208
)
(14,417
)
Loans held-for-investment, net
5,119,665

4,744,773

4,169,827

 
5,119,665

4,169,827

Goodwill and other intangibles, net
67,863

68,365

65,358

 
67,863

65,358

Other assets
191,383

180,476

166,007

 
191,383

166,007

Total assets
$
6,035,655

$
5,573,288

$
4,777,897

 
$
6,035,655

$
4,777,897

 
 
 
 
 
 
 
Deposits
$
5,050,461

$
4,754,588

$
3,987,611

 
$
5,050,461

$
3,987,611

Borrowings, net
404,166

262,365

335,913

 
404,166

335,913

Other liabilities
101,674

88,715

65,302

 
101,674

65,302

Total liabilities
5,556,301

5,105,668

4,388,826

 
5,556,301

4,388,826

Preferred stock
38,468

38,468


 
38,468


Common shareholders' equity
440,886

429,152

389,071

 
440,886

389,071

Total shareholders' equity
479,354

467,620

389,071

 
479,354

389,071

Total liabilities and shareholders' equity
$
6,035,655

$
5,573,288

$
4,777,897

 
$
6,035,655

$
4,777,897



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EXHIBIT 99


TRISTATE CAPITAL HOLDINGS, INC.
INCOME STATEMENT DATA (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
As of and For the 
 Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands)
2018
2018
2017
 
2018
2017
Interest income:
 
 
 
 
 
 
Loans
$
53,238

$
48,470

$
35,679

 
$
185,349

$
126,544

Investments
3,706

2,893

1,681

 
10,683

6,217

Interest-earning deposits
1,218

1,061

508

 
3,754

1,534

Total interest income
58,162

52,424

37,868

 
199,786

134,295

 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
Deposits
26,214

22,182

11,672

 
78,493

37,485

Borrowings
2,416

1,423

1,397

 
7,889

5,457

Total interest expense
28,630

23,605

13,069

 
86,382

42,942

Net interest income
29,532

28,819

24,799

 
113,404

91,353

Provision (credit) for loan losses
(581
)
(234
)
(1,665
)
 
(205
)
(623
)
Net interest income after provision for loan losses
30,113

29,053

26,464

 
113,609

91,976

Non-interest income:
 
 
 
 
 
 
Investment management fees
9,225

9,828

9,416

 
37,647

37,100

Service charges on deposits
150

146

112

 
570

399

Net gain (loss) on the sale and call of debt securities
(76
)

56

 
(70
)
310

Swap fees
2,245

1,881

1,645

 
7,311

5,353

Commitment and other loan fees
375

373

222

 
1,411

1,462

Other income
(344
)
523

688

 
1,048

2,342

Total non-interest income
11,575

12,751

12,139

 
47,917

46,966

Non-interest expense:
 
 
 
 
 
 
Compensation and employee benefits
16,594

16,967

16,518

 
64,771

59,316

Premises and occupancy costs
1,594

1,432

1,247

 
5,580

5,010

Professional fees
1,191

889

1,231

 
4,729

3,873

FDIC insurance expense
1,210

1,053

1,164

 
4,543

4,238

General insurance expense
263

278

242

 
1,030

1,047

State capital shares tax
125

485

398

 
1,521

1,546

Travel and entertainment expense
1,178

986

928

 
3,816

3,118

Intangible amortization expense
503

502

463

 
1,968

1,851

Change in fair value of acquisition earn out
(218
)


 
(218
)

Other operating expenses
3,863

3,094

3,527

 
13,417

11,473

Total non-interest expense
26,303

25,686

25,718

 
101,157

91,472

Income before tax
15,385

16,118

12,885

 
60,369

47,470

Income tax expense
265

1,807

842

 
5,945

9,482

Net income
$
15,120

$
14,311

$
12,043

 
$
54,424

$
37,988

Preferred stock dividends on Series A
679

679


 
2,120


Net income available to common shareholders
$
14,441

$
13,632

$
12,043

 
$
52,304

$
37,988



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EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
 
As of and For the 
 Three Months Ended
 
As of and For the 
 Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands, except per share data)
2018
2018
2017
 
2018
2017
Per share and share data:
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
Basic
$
0.52

$
0.49

$
0.44

 
$
1.90

$
1.38

Diluted
$
0.50

$
0.47

$
0.42

 
$
1.81

$
1.32

Book value per common share
$
15.27

$
14.84

$
13.61

 
$
15.27

$
13.61

Tangible book value per common share (1)
$
12.92

$
12.47

$
11.32

 
$
12.92

$
11.32

Common shares outstanding, at end of period
28,878,674

28,920,978

28,591,101

 
28,878,674

28,591,101

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
27,523,385

27,588,607

27,458,044

 
27,583,519

27,550,833

Diluted
28,786,353

28,949,924

28,679,619

 
28,833,396

28,711,322

 
 
 
 
 
 
 
Performance ratios:
 
 
 
 
 
 
Return on average assets (2)
0.99
 %
1.01
%
1.05
 %
 
1.00
%
0.89
%
Return on average common equity (2)
13.16
 %
12.78
%
12.51
 %
 
12.57
%
10.30
%
Net interest margin (2) (3)
2.12
 %
2.22
%
2.26
 %
 
2.26
%
2.25
%
Total revenue (1)
$
41,183

$
41,570

$
36,882

 
$
161,391

$
138,009

Bank efficiency ratio (1)
54.60
 %
52.86
%
61.42
 %
 
53.09
%
57.39
%
Non-interest expense to average assets (2)
1.81
 %
1.90
%
2.24
 %
 
1.93
%
2.15
%
 
 
 
 
 
 
 
Asset quality:
 
 
 
 
 
 
Non-performing loans
$
2,237

$
2,269

$
3,183

 
$
2,237

$
3,183

Non-performing assets
$
5,661

$
5,845

$
6,759

 
$
5,661

$
6,759

Other real estate owned
$
3,424

$
3,576

$
3,576

 
$
3,424

$
3,576

Non-performing assets to total assets
0.09
 %
0.10
%
0.14
 %
 
0.09
%
0.14
%
Non-performing loans to total loans
0.04
 %
0.05
%
0.08
 %
 
0.04
%
0.08
%
Allowance for loan losses to loans
0.26
 %
0.29
%
0.34
 %
 
0.26
%
0.34
%
Allowance for loan losses to non-performing loans
590.43
 %
598.63
%
452.94
 %
 
590.43
%
452.94
%
Net charge-offs (recoveries)
$
(206
)
$
1,504

$
(103
)
 
$
1,004

$
3,722

Net charge-offs (recoveries) to average total loans (2)
(0.02
)%
0.13
%
(0.01
)%
 
0.02
%
0.10
%
 
 
 
 
 
 
 
Capital ratios:
 
 
 
 
 
 
Tier 1 leverage ratio
7.28
 %
7.53
%
7.25
 %
 
7.28
%
7.25
%
Common equity tier 1 risk-based capital ratio
9.64
 %
10.52
%
11.14
 %
 
9.64
%
11.14
%
Tier 1 risk-based capital ratio
10.58
 %
11.57
%
11.14
 %
 
10.58
%
11.14
%
Total risk-based capital ratio
10.86
 %
11.89
%
11.72
 %
 
10.86
%
11.72
%
 
 
 
 
 
 
 
Investment Management Segment:
 
 
 
 
 
 
Assets under management
$
9,189,000

$
9,865,000

$
8,309,000

 
$
9,189,000

$
8,309,000

EBITDA (1)
$
1,890

$
1,867

$
1,605

 
$
6,900

$
7,421


(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
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
(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
$
211,333

$
1,162

2.18
%
 
$
207,346

$
1,015

1.94
%
 
$
142,458

$
485

1.35
%
Federal funds sold
9,959

57

2.27
%
 
9,563

46

1.91
%
 
8,179

23

1.12
%
Debt securities available-for-sale
260,877

2,045

3.11
%
 
236,053

1,836

3.09
%
 
143,450

907

2.51
%
Debt securities held-to-maturity
155,220

1,426

3.64
%
 
76,341

699

3.63
%
 
58,311

618

4.20
%
Debt securities trading


%
 


%
 
746

4

2.13
%
Equity securities
13,543

77

2.26
%
 
11,219

71

2.51
%
 
8,663

59

2.70
%
FHLB stock
15,970

186

4.62
%
 
11,342

314

10.98
%
 
11,753

153

5.16
%
Total loans
4,853,414

53,237

4.35
%
 
4,594,755

48,470

4.19
%
 
3,984,768

35,679

3.55
%
Total interest-earning assets
5,520,316

58,190

4.18
%
 
5,146,619

52,451

4.04
%
 
4,358,328

37,928

3.45
%
Other assets
239,506

 
 
 
223,996

 
 
 
205,547

 
 
Total assets
$
5,759,822

 
 
 
$
5,370,615

 
 
 
$
4,563,875

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
$
722,386

$
3,976

2.18
%
 
$
657,402

$
3,267

1.97
%
 
$
448,226

$
1,411

1.25
%
Money market deposit accounts
2,605,148

14,844

2.26
%
 
2,506,334

12,428

1.97
%
 
2,142,251

6,839

1.27
%
Certificates of deposit
1,220,839

7,394

2.40
%
 
1,155,888

6,487

2.23
%
 
1,006,529

3,422

1.35
%
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
FHLB borrowings
352,337

1,811

2.04
%
 
221,576

853

1.53
%
 
260,218

792

1.21
%
Line of credit borrowings
3,652

51

5.54
%
 
1,277

16

4.97
%
 
4,703

51

4.30
%
Subordinated notes payable, net
34,883

554

6.30
%
 
34,832

554

6.31
%
 
34,680

554

6.34
%
Total interest-bearing liabilities
4,939,245

28,630

2.30
%
 
4,577,309

23,605

2.05
%
 
3,896,607

13,069

1.33
%
Noninterest-bearing deposits
249,330

 
 
 
253,033

 
 
 
225,094

 
 
Other liabilities
97,458

 
 
 
78,802

 
 
 
60,212

 
 
Shareholders' equity
473,789

 
 
 
461,471

 
 
 
381,962

 
 
Total liabilities and shareholders' equity
$
5,759,822

 
 
 
$
5,370,615

 
 
 
$
4,563,875

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (1)
 
$
29,560

 
 
 
$
28,846

 
 
 
$
24,859

 
Net interest spread
 
 
1.88
%
 
 
 
1.99
%
 
 
 
2.12
%
Net interest margin (1)
 
 
2.12
%
 
 
 
2.22
%
 
 
 
2.26
%

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

10

EXHIBIT 99

TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
 
Years Ended
 
December 31, 2018
 
December 31, 2017
(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
$
188,921

$
3,598

1.90
%
 
$
126,888

$
1,466

1.16
%
Federal funds sold
8,315

156

1.88
%
 
6,923

68

0.98
%
Debt securities available-for-sale
205,652

6,195

3.01
%
 
144,735

3,122

2.16
%
Debt securities held-to-maturity
90,895

3,399

3.74
%
 
58,635

2,463

4.20
%
Debt securities trading


%
 
188

4

2.13
%
Equity securities
10,517

277

2.63
%
 
8,539

266

3.12
%
FHLB stock
15,136

924

6.10
%
 
13,286

603

4.54
%
Total loans
4,500,117

185,349

4.12
%
 
3,711,701

126,544

3.41
%
Total interest-earning assets
5,019,553

199,898

3.98
%
 
4,070,895

134,536

3.30
%
Other assets
221,467

 
 
 
193,532

 
 
Total assets
$
5,241,020

 
 
 
$
4,264,427

 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest-bearing checking accounts
$
612,921

$
11,440

1.87
%
 
$
336,337

$
3,706

1.10
%
Money market deposit accounts
2,429,203

45,106

1.86
%
 
1,999,399

22,350

1.12
%
Certificates of deposit
1,071,556

21,947

2.05
%
 
967,503

11,429

1.18
%
Borrowings:
 
 
 
 
 
 
 
FHLB borrowings
325,356

5,555

1.71
%
 
295,315

3,152

1.07
%
Line of credit borrowings
2,568

119

4.63
%
 
2,214

90

4.07
%
Subordinated notes payable, net
34,807

2,215

6.36
%
 
34,605

2,215

6.40
%
Total interest-bearing liabilities
4,476,411

86,382

1.93
%
 
3,635,373

42,942

1.18
%
Noninterest-bearing deposits
244,090

 
 
 
210,860

 
 
Other liabilities
75,473

 
 
 
49,279

 
 
Shareholders' equity
445,046

 
 
 
368,915

 
 
Total liabilities and shareholders' equity
$
5,241,020

 
 
 
$
4,264,427

 
 
 
 
 
 
 
 
 
 
Net interest income (1)
 
$
113,516

 
 
 
$
91,594

 
Net interest spread
 
 
2.05
%
 
 
 
2.12
%
Net interest margin (1)
 
 
2.26
%
 
 
 
2.25
%

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


TRISTATE CAPITAL HOLDINGS, INC.
LOAN COMPOSITION (UNAUDITED)
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
(Dollars in thousands)
Loan
Balance
Percent of
Loans
 
Loan
Balance
Percent of
Loans
 
Loan
Balance
Percent of
Loans
Private banking loans
$
2,869,543

55.9
%
 
$
2,627,749

55.2
%
 
$
2,265,737

54.1
%
Middle-market banking loans:
 
 
 
 
 
 
 
 
Commercial and industrial
785,320

15.3
%
 
771,546

16.2
%
 
667,684

16.0
%
Commercial real estate
1,478,010

28.8
%
 
1,359,061

28.6
%
 
1,250,823

29.9
%
Total middle-market banking loans
2,263,330

44.1
%
 
2,130,607

44.8
%
 
1,918,507

45.9
%
Loans held-for-investment
$
5,132,873

100.0
%
 
$
4,758,356

100.0
%
 
$
4,184,244

100.0
%

11

EXHIBIT 99


TRISTATE CAPITAL HOLDINGS, INC.
STATEMENTS OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
 
Three Months Ended December 31, 2018
 
Year Ended December 31, 2018
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
 
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
 
 
 
 
 
 
 
 
 
Interest income
$
58,086

$

$
76

$
58,162

 
$
199,510

$

$
276

$
199,786

Interest expense
28,028


602

28,630

 
84,055


2,327

86,382

Net interest income (loss)
30,058


(526
)
29,532

 
115,455


(2,051
)
113,404

Provision (credit) for loan losses
(581
)


(581
)
 
(205
)


(205
)
Net interest income (loss) after provision for loan losses
30,639


(526
)
30,113

 
115,660


(2,051
)
113,609

Non-interest income:
 
 
 
 
 
 
 
 
 
Investment management fees

9,318

(93
)
9,225

 

37,939

(292
)
37,647

Net loss on the sale and call of debt securities
(76
)


(76
)
 
(70
)


(70
)
Other non-interest income
3,237


(811
)
2,426

 
11,112

1

(773
)
10,340

Total non-interest income
3,161

9,318

(904
)
11,575

 
11,042

37,940

(1,065
)
47,917

Non-interest expense:
 
 
 
 
 
 
 
 
 
Intangible amortization expense

503


503

 

1,968


1,968

Change in fair value of acquisition earn out

(218
)

(218
)
 

(218
)

(218
)
Other non-interest expense
18,179

7,772

67

26,018

 
67,190

31,760

457

99,407

Total non-interest expense
18,179

8,057

67

26,303

 
67,190

33,510

457

101,157

Income (loss) before tax
15,621

1,261

(1,497
)
15,385

 
59,512

4,430

(3,573
)
60,369

Income tax expense (benefit)
371

(207
)
101

265

 
5,856

579

(490
)
5,945

Net income (loss)
$
15,250

$
1,468

$
(1,598
)
$
15,120

 
$
53,656

$
3,851

$
(3,083
)
$
54,424



12

EXHIBIT 99

 
Three Months Ended December 31, 2017
 
Year Ended December 31, 2017
(Dollars in thousands)
Bank
Investment
Management
Parent
and Other
Consolidated
 
Bank
Investment
Management
Parent
and Other
Consolidated
Income statement data:
 
 
 
 
 
 
 
 
 
Interest income
$
37,809

$

$
59

$
37,868

 
$
134,029

$

$
266

$
134,295

Interest expense
12,466


603

13,069

 
40,649


2,293

42,942

Net interest income (loss)
25,343


(544
)
24,799

 
93,380


(2,027
)
91,353

Provision (credit) for loan losses
(1,665
)


(1,665
)
 
(623
)


(623
)
Net interest income (loss) after provision for loan losses
27,008


(544
)
26,464

 
94,003


(2,027
)
91,976

Non-interest income:
 
 
 
 
 
 
 
 
 
Investment management fees

9,466

(50
)
9,416

 

37,309

(209
)
37,100

Net gain on the sale and call of debt securities
56



56

 
310



310

Other non-interest income
2,666

1


2,667

 
9,554

2


9,556

Total non-interest income
2,722

9,467

(50
)
12,139

 
9,864

37,311

(209
)
46,966

Non-interest expense:
 
 
 
 
 
 
 
 
 
Intangible amortization expense

463


463

 

1,851


1,851

Other non-interest expense
17,204

7,990

61

25,255

 
59,073

30,387

161

89,621

Total non-interest expense
17,204

8,453

61

25,718

 
59,073

32,238

161

91,472

Income (loss) before tax
12,526

1,014

(655
)
12,885

 
44,794

5,073

(2,397
)
47,470

Income tax expense (benefit)
1,477

(1,065
)
430

842

 
9,211

522

(251
)
9,482

Net income (loss)
$
11,049

$
2,079

$
(1,085
)
$
12,043

 
$
35,583

$
4,551

$
(2,146
)
$
37,988


13

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 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 common 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 common shareholders’ equity exclusive of changes in intangible assets. Intangible assets are created when we buy businesses which 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 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.

“EBITDA” is defined as net income before interest expense, income taxes, depreciation and amortization expenses. 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, 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 operating revenue by removing the volatility that is associated with certain items that are unrelated to our core business.

“Efficiency ratio” is defined as non-interest expense 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 that are unrelated to our core business.


TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
December 31,
September 30,
December 31,
(Dollars in thousands, except per share data)
2018
2018
2017
Tangible book value per common share:
 
 
 
Common shareholders' equity
$
440,886

$
429,152

$
389,071

Less: goodwill and intangible assets
67,863

68,365

65,358

Tangible common equity
$
373,023

$
360,787

$
323,713

Common shares outstanding
28,878,674

28,920,978

28,591,101

Tangible book value per common share
$
12.92

$
12.47

$
11.32


INVESTMENT MANAGEMENT SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands)
2018
2018
2017
 
2018
2017
Investment Management EBITDA:
 
 
 
 
 
 
Net income
$
1,468

$
957

$
2,079

 
$
3,851

$
4,551

Interest expense



 


Income taxes expense (benefit)
(207
)
282

(1,065
)
 
579

522

Depreciation expense
126

126

128

 
502

497

Intangible amortization expense
503

502

463

 
1,968

1,851

EBITDA
$
1,890

$
1,867

$
1,605

 
$
6,900

$
7,421


14

EXHIBIT 99


TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands)
2018
2018
2017
 
2018
2017
Total revenue:
 
 
 
 
 
 
Net interest income
$
29,532

$
28,819

$
24,799

 
$
113,404

$
91,353

Total non-interest income
11,575

12,751

12,139

 
47,917

46,966

Less: net gain (loss) on the sale and call of debt securities
(76
)

56

 
(70
)
310

Total revenue
$
41,183

$
41,570

$
36,882

 
$
161,391

$
138,009


BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 
Three Months Ended
 
Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
December 31,
(Dollars in thousands)
2018
2018
2017
 
2018
2017
Bank total revenue:
 
 
 
 
 
 
Net interest income
$
30,058

$
29,316

$
25,343

 
$
115,455

$
93,380

Total non-interest income
3,161

2,850

2,722

 
11,042

9,864

Less: net gain (loss) on the sale and call of debt securities
(76
)

56

 
(70
)
310

Bank total revenue
$
33,295

$
32,166

$
28,009

 
$
126,567

$
102,934

 
 
 
 
 
 
 
Bank efficiency ratio:
 
 
 
 
 
 
Total non-interest expense (numerator)
$
18,179

$
17,002

$
17,204

 
$
67,190

$
59,073

Total revenue (denominator)
$
33,295

$
32,166

$
28,009

 
$
126,567

$
102,934

Bank efficiency ratio
54.60
%
52.86
%
61.42
%
 
53.09
%
57.39
%


15
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