TriState Capital’s 34% EPS Growth Reflects Strong Third Quarter 2018 Performance by Private Banking, Commercial Banking and Investment Management Businesses

TriState Capital Holdings, Inc. (Nasdaq: TSC) reported financial results for the three months ended September 30, 2018, including continued expansion of its deposit franchise, profitable revenue growth driven by its private banking, commercial banking and investment management businesses, operating leverage improvement, and superior asset quality metrics.

The parent company of TriState Capital Bank and Chartwell Investment Partners

of $0.47 in the third quarter 2018, compared to $0.35 in the third quarter of 2017 and $0.48 in the second quarter of 2018. Net income available to common stockholders was $13.6 million in the third quarter of 2018, compared to $10.0 million in the prior year period and $13.8 million in the second quarter of 2018.

TriState Capital has delivered double-digit annual EPS growth in 18 of 22 quarters as a public company, even as we build our business for the long term, consistently investing in talent, technology, relationships and the strategic expansion of a deposit franchise designed to fund robust organic loan growth, Chairman and Chief Executive Officer James F. Getz said. Profitable growth and positive momentum continued through the third quarter of 2018. Based on the new business pipeline for all three businesses, including our liquidity and treasury management offering, we expect to sustain revenue growth while continuing to benefit from cost-effective funding and incremental operating leverage in the fourth quarter and next year.

THIRD QUARTER 2018 HIGHLIGHTS

  • Pre-tax income grew to $16.1 million, increasing 31.9% from the prior year period and 3.6% from the linked quarter.
  • Net interest income (NII) and non-interest income, excluding gains on investments, combined to generate total revenue of $41.6 million, increasing 17.8% from the prior year period and 0.7% from the linked quarter.
  • Average loans grew to $4.59 billion, up 21.3% from the same period last year and 4.9% from the linked quarter.
  • With growth outpacing loans, average deposits of $4.57 billion increased 27.0% from the same period last year and 11.6% from the linked quarter.
  • Investment performance across Chartwells equity and fixed income strategies attracted net inflows, as AUM grew to $9.87 billion at period end, up 20.4% compared to one year prior and 3.3% during the quarter.

REVENUE GROWTH

NII for the third quarter of 2018 was $28.8 million, increasing 22.1% from $23.6 million in the prior year quarter and in line with $28.8 million in the linked second quarter of 2018. Net interest margin (NIM) was 2.22% in the third quarter of 2018, compared to 2.27% in the prior year quarter and 2.38% in the linked quarter. Lower NIM was the result of higher funding costs from increased deposit volume, including from certificates of deposit. Third quarter growth in deposits outpaced loans in a rising rate environment, as TriState Capital strategically expands its deposit franchise in anticipation of continued organic loan growth.

Non-interest income grew to $12.8 million in the third quarter 2018, increasing 8.9% from $11.7 million in the prior year quarter and 2.0% from $12.5 million in the linked quarter.

TriState Capitals non-interest income, which represented 30.7% of total revenue in the third quarter of 2018, is largely made up of Chartwell investment management fees. On a stand-alone basis, Chartwells investment management fees grew to $9.9 million in the third quarter of 2018, increasing 7.0% from $9.3 million in the prior year quarter and 1.8% from $9.7 million in the linked quarter. Borrower-facing interest rate swap activity also generated $1.9 million in fees in the third quarter of 2018, compared to $1.4 million in the prior year quarter of 2017 and $1.9 million in the linked quarter.

Total revenue grew to $41.6 million in the third quarter of 2018, increasing 17.8% from $35.3 million in the prior year quarter and 0.7% from $41.3 million in the linked quarter.

OPERATING LEVERAGE

TriState Capital Banks efficiency ratio for the third quarter of 2018 was 52.86%, compared to 54.81% in the third quarter of 2017 and 50.49% in the linked quarter. The banks efficiency ratio for the first nine months of 2018 was 52.55%, versus 55.88% in the prior year period, as investments made in talent and building scale continue to increasingly drive revenue growth while building incremental operating leverage.

Third quarter 2018 non-interest expense was $25.7 million, compared to $22.8 million in the year-ago period and $25.3 million in the second quarter of 2018.

TriState Capitals effective tax rate was 12.6% for the first nine months 2018, reflecting previously disclosed tax credit investments from the first half of the year that reduced the companys estimated full-year tax liability. For full-year 2018, the company currently expects its effective tax rate to remain at or below the rate recorded for the first nine months of the year.

Net income available to common stockholders and EPS in the third quarter of 2018 reflected $679,000 payable for the companys quarterly cash dividend on Series A Non-Cumulative Perpetual Preferred Stock.

BALANCE SHEET GROWTH

TriState Capital continued the 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 $4.59 billion in the third quarter of 2018, growing 21.3% from $3.79 billion in the prior year period and 4.9% from $4.38 billion in the linked quarter.

Loans at September 30, 2018 totaled $4.76 billion, growing $827.7 million, or 21.1%, from September 30, 2017 and $205.4 million, or 4.5%, from June 30, 2018. Private banking loans totaled $2.63 billion at September 30, 2018, increasing by $571.9 million, or 27.8%, from one year prior and $139.6 million, or 5.6%, from the end of the linked quarter. Commercial loans totaled $2.13 billion at September 30, 2018, increasing by $255.7 million, or 13.6%, from one year prior and $65.8 million, or 3.2%, from the end of the linked quarter.

Average deposits totaled $4.57 billion in the third quarter of 2018, growing 27.0% from $3.60 billion in the same period last year and 11.6% from $4.10 billion in the linked quarter. Deposits at September 30, 2018 totaled $4.75 billion, growing $984.7 million, or 26.1%, from September 30, 2017 and $313.4 million, or 7.1%, from June 30, 2018.

INTEREST RATE RISK MANAGEMENT

TriState Capital continues to manage an asset-sensitive balance sheet. At September 30, 2018, 92% of the companys loan portfolio was floating rate and 26% of deposits were fixed-rate certificates of deposit. This positioning provides significant flexibility to manage interest rate risk in changing markets.

The banks yield on total loans averaged 4.19% during the third quarter of 2018, increasing 67 basis points from 3.52% in the prior year period and 10 basis points from 4.09% in the linked quarter.

TriState Capitals total cost of funds for all deposits and interest-bearing liabilities averaged 1.94% during the third quarter of 2018, compared to 1.21% in the same period last year and 1.67% in the linked quarter. The banks cost of total deposits averaged 1.92% during the third quarter of 2018, compared to 1.17% in the same period last year and 1.63% in the linked quarter.

INVESTMENT MANAGEMENT

Strong investment performance across Chartwells active equity and fixed income strategies contributed to net inflows and AUM growth in the third quarter of 2018. Chartwell grew total AUM to $9.87 billion at September 30, 2018, increasing 20.4% from $8.20 billion at September 30, 2017 and 3.3% from $9.55 billion at June 30, 2018.

Chartwells new business and new flows from existing accounts of $515 million and market appreciation of $172 million more than offset outflows of $376 million in the third quarter of 2018.

Chartwells weighted average fee rate was 0.41% at September 30, 2018. Investment management fees, on a stand-alone basis, grew to $9.9 million in the third quarter of 2018, increasing 7.0% from $9.3 million in the third quarter of 2017 and 1.8% from $9.7 million in the second quarter of 2018.

ASSET QUALITY

TriState Capital maintained strong asset quality metrics in the third quarter of 2018, reflecting the companys disciplined credit culture and the expansion of its private banking non-purpose margin loans secured by marketable securities. Private banking loans comprised 55.2% of the total loan portfolio at September 30, 2018, while commercial real estate loans and commercial and industrial loans comprised 28.6% and 16.2% of total loans, respectively.

Non-performing assets (NPAs) declined to $5.8 million, or 0.10% of total assets, at September 30, 2018, compared to $10.5 million, or 0.23%, at September 30, 2017 and $6.0 million, or 0.11%, at June 30, 2018.

Non-performing loans (NPLs) declined to $2.3 million, or 0.05% of total loans, at September 30, 2018, compared to $6.9 million, or 0.18%, at September 30, 2017 and $2.4 million, or 0.05%, June 30, 2018.

Adverse-rated credits declined to $28.2 million, or 0.59% of total loans, at September 30, 2018, compared to $37.4 million, or 0.95%, at September 30, 2017 and $30.0 million, or 0.66%, at June 30, 2018.

Net charge-offs in the third quarter of 2018 were $1.5 million, or 0.13% of average total loans, consisting of a $2.1 million charge-off that was fully reserved, offset by $564,000 in recoveries. Net charge-offs were $272,000, or 0.03% of average total loans, in the year-ago quarter and net recoveries were $88,000 in the linked quarter.

TriState Capital recorded a credit to provision of $234,000 in the third quarter of 2018, as recoveries were offset by loan growth in the period. The company recorded provision expense of $283,000 in the third quarter of 2017 and $415,000 in the second quarter of 2018.

The companys allowance for loan losses represented 0.29% of total loans at September 30, 2018, compared to 0.41% at September 30, 2017 and 0.34% at June 30, 2018, reflecting declining NPLs as well as the lower levels of provision required by the low risk profile of the banks growing proportion of private banking loans in its portfolio.

CAPITAL STRENGTH AND FLEXIBILITY

As of September 30, 2018, TriState Capital Holdings reported regulatory capital ratios of 11.89% for total risk-based capital, 11.57% for tier 1 risk-based capital, 10.52% for common equity tier 1 risk-based capital, and 7.53% for tier 1 leverage.

At its regular October 2018 meeting, TriState Capitals board of directors approved additional share repurchases of up to $5 million, which may be made at the discretion of management from time to time. Under all authorizations, $5.4 million is available. During the nine months ended September 30, 2018, the company repurchased a total of 169,936 shares for approximately $4.6 million at an average cost of $26.97 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 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/10125417 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 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 10125417.

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 $5.5 billion in assets, as of September 30, 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 $9.9 billion in assets under management, as of September 30, 2018, and serves as the advisor to The Berwyn Funds and Chartwell Mutual Funds. 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 Capitals 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 Capitals 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 Capitals 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 Chartwells assets under management;
  • the relative and absolute investment performance of Chartwells 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;
  • Chartwells 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;
  • 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 Capitals future results, please see the companys 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.

TRISTATE CAPITAL HOLDINGS, INC.

BALANCE SHEET DATA (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) 2018 2018 2017 2018 2017
Cash and cash equivalents $ 186,535 $ 164,367 $ 136,579 $ 186,535 $ 136,579
Total investment securities 393,139 288,674 220,916 393,139 220,916
Loans held-for-investment 4,758,356 4,552,928 3,930,670 4,758,356 3,930,670
Allowance for loan losses (13,583 ) (15,321 ) (15,979 ) (13,583 ) (15,979 )
Loans held-for-investment, net 4,744,773 4,537,607 3,914,691 4,744,773 3,914,691
Goodwill and other intangibles, net 68,365 68,867 65,821 68,365 65,821
Other assets 180,476 174,421 158,006 180,476 158,006
Total assets $ 5,573,288 $ 5,233,936 $ 4,496,013 $ 5,573,288 $ 4,496,013
Deposits $ 4,754,588 $ 4,441,202 $ 3,769,870 $ 4,754,588 $ 3,769,870
Borrowings, net 262,365 264,814 279,162 262,365 279,162
Other liabilities 88,715 74,026 69,648 88,715 69,648
Total liabilities 5,105,668 4,780,042 4,118,680 5,105,668 4,118,680
Preferred stock 38,468 38,432 38,468
Common shareholders’ equity 429,152 415,462 377,333 429,152 377,333
Total shareholders’ equity 467,620 453,894 377,333 467,620 377,333
Total liabilities and shareholders’ equity $ 5,573,288 $ 5,233,936 $ 4,496,013 $ 5,573,288 $ 4,496,013

TRISTATE CAPITAL HOLDINGS, INC.

INCOME STATEMENT DATA (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) 2018 2018 2017 2018 2017
Interest income:
Loans $ 48,470 $ 44,614 $ 33,604 $ 132,111 $ 90,865
Investments 2,893 2,300 1,531 6,977 4,536
Interest-earning deposits 1,061 870 440 2,536 1,026
Total interest income 52,424 47,784 35,575 141,624 96,427
Interest expense:
Deposits 22,182 16,696 10,604 52,279 25,813
Borrowings 1,423 2,297 1,366 5,473 4,060
Total interest expense 23,605 18,993 11,970 57,752 29,873
Net interest income 28,819 28,791 23,605 83,872 66,554
Provision (credit) for loan losses (234 ) 415 283 376 1,042
Net interest income after provision for loan losses 29,053 28,376 23,322 83,496 65,512
Non-interest income:
Investment management fees 9,828 9,686 9,214 28,422 27,684
Service charges on deposits 146 140 96 420 287
Net gain on the sale and call of debt securities 1 15 6 254
Swap fees 1,881 1,937 1,391 5,066 3,708
Commitment and other loan fees 373 331 423 1,036 1,240
Other income 523 407 567 1,392 1,654
Total non-interest income 12,751 12,502 11,706 36,342 34,827
Non-interest expense:
Compensation and employee benefits 16,967 15,742 14,683 48,177 42,798
Premises and occupancy costs 1,432 1,264 1,257 3,986 3,763
Professional fees 889 1,554 968 3,538 2,642
FDIC insurance expense 1,053 1,134 1,121 3,333 3,074
General insurance expense 278 242 245 767 805
State capital shares tax 485 484 398 1,396 1,148
Travel and entertainment expense 986 1,006 828 2,638 2,190
Intangible amortization expense 502 502 463 1,465 1,388
Other operating expenses 3,094 3,390 2,849 9,554 7,946
Total non-interest expense 25,686 25,318 22,812 74,854 65,754
Income before tax 16,118 15,560 12,216 44,984 34,585
Income tax expense 1,807 968 2,184 5,680 8,640
Net income $ 14,311 $ 14,592 $ 10,032 $ 39,304 $ 25,945
Preferred stock dividends on Series A 679 762 1,441
Net income available to common shareholders $ 13,632 $ 13,830 $ 10,032 $ 37,863 $ 25,945

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) 2018 2018 2017 2018 2017
Per share and share data:
Earnings per common share:
Basic $ 0.49 $ 0.50 $ 0.36 $ 1.37 $ 0.94
Diluted $ 0.47 $ 0.48 $ 0.35 $ 1.31 $ 0.90
Book value per common share $ 14.84 $ 14.35 $ 13.17 $ 14.84 $ 13.17
Tangible book value per common share (1) $ 12.47 $ 11.97 $ 10.88 $ 12.47 $ 10.88
Common shares outstanding, at end of period 28,920,978 28,947,883 28,642,573 28,920,978 28,642,573
Weighted average common shares outstanding:
Basic 27,588,607 27,628,120 27,515,923 27,603,784 27,581,229
Diluted 28,949,924 28,848,969 28,659,990 28,849,926 28,721,747
Performance ratios:
Return on average assets (2) 1.01 % 1.09 % 0.92 % 1.00 % 0.83 %
Return on average common equity (2) 12.78 % 13.57 % 10.69 % 12.36 % 9.52 %
Net interest margin (2) (3) 2.22 % 2.38 % 2.27 % 2.31 % 2.25 %
Total revenue (1) $ 41,570 $ 41,292 $ 35,296 $ 120,208 $ 101,127
Bank efficiency ratio (1) 52.86 % 50.49 % 54.81 % 52.55 % 55.88 %
Non-interest expense to average assets (2) 1.90 % 2.00 % 2.09 % 1.98 % 2.11 %
Asset quality:
Non-performing loans $ 2,269 $ 2,437 $ 6,936 $ 2,269 $ 6,936
Non-performing assets $ 5,845 $ 6,013 $ 10,517 $ 5,845 $ 10,517
Other real estate owned $ 3,576 $ 3,576 $ 3,581 $ 3,576 $ 3,581
Non-performing assets to total assets 0.10 % 0.11 % 0.23 % 0.10 % 0.23 %
Non-performing loans to total loans 0.05 % 0.05 % 0.18 % 0.05 % 0.18 %
Allowance for loan losses to loans 0.29 % 0.34 % 0.41 % 0.29 % 0.41 %
Allowance for loan losses to non-performing loans 598.63 % 628.68 % 230.38 % 598.63 % 230.38 %
Net charge-offs (recoveries) $ 1,504 $ (88 ) $ 272 $ 1,210 $ 3,825
Net charge-offs (recoveries) to average total loans (2) 0.13 % (0.01 )% 0.03 % 0.04 % 0.14 %
Capital ratios:
Tier 1 leverage ratio 7.53 % 7.68 % 7.40 % 7.53 % 7.40 %
Common equity tier 1 risk-based capital ratio 10.52 % 10.94 % 11.14 % 10.52 % 11.14 %
Tier 1 risk-based capital ratio 11.57 % 12.06 % 11.14 % 11.57 % 11.14 %
Total risk-based capital ratio 11.89 % 12.66 % 11.80 % 11.89 % 11.80 %
Investment Management Segment:
Assets under management $ 9,865,000 $ 9,554,000 $ 8,195,000 $ 9,865,000 $ 8,195,000
EBITDA (1) $ 1,867 $ 1,627 $ 1,648 $ 5,010 $ 5,815

(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.
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
Three Months Ended
September 30, 2018 June 30, 2018 September 30, 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 $ 207,346 $ 1,015 1.94 % $ 186,009 $ 842 1.82 % $ 131,115 $ 420 1.27 %
Federal funds sold 9,563 46 1.91 % 6,650 28 1.69 % 6,845 20 1.16 %
Debt securities available-for-sale 236,053 1,836 3.09 % 181,718 1,356 2.99 % 132,166 697 2.09 %
Debt securities held-to-maturity 76,341 699 3.63 % 72,166 678 3.77 % 60,220 631 4.16 %
Equity securities 11,219 71 2.51 % 8,620 64 2.98 % 8,575 63 2.91 %
FHLB stock 11,342 314 10.98 % 19,061 230 4.84 % 12,582 200 6.31 %
Total loans 4,594,755 48,470 4.19 % 4,378,514 44,614 4.09 % 3,787,231 33,604 3.52 %
Total interest-earning assets 5,146,619 52,451 4.04 % 4,852,738 47,812 3.95 % 4,138,734 35,635 3.42 %
Other assets 223,996 213,320 194,405
Total assets $ 5,370,615 $ 5,066,058 $ 4,333,139
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 657,402 $ 3,267 1.97 % $ 604,324 $ 2,576 1.71 % $ 371,526 $ 1,173 1.25 %
Money market deposit accounts 2,506,334 12,428 1.97 % 2,319,320 9,722 1.68 % 2,021,755 6,263 1.23 %
Certificates of deposit 1,155,888 6,487 2.23 % 928,210 4,398 1.90 % 1,003,280 3,168 1.25 %
Borrowings:
FHLB borrowings 221,576 853 1.53 % 418,187 1,743 1.67 % 271,304 790 1.16 %
Line of credit borrowings 1,277 16 4.97 % % 2,571 22 3.39 %
Subordinated notes payable, net 34,832 554 6.31 % 34,781 554 6.39 % 34,629 554 6.35 %
Total interest-bearing liabilities 4,577,309 23,605 2.05 % 4,304,822 18,993 1.77 % 3,705,065 11,970 1.28 %
Noninterest-bearing deposits 253,033 245,412 205,368
Other liabilities 78,802 68,491 50,332
Shareholders’ equity 461,471 447,333 372,374
Total liabilities and shareholders’ equity $ 5,370,615 $ 5,066,058 $ 4,333,139
Net interest income (1) $ 28,846 $ 28,819 $ 23,665
Net interest spread 1.99 % 2.18 % 2.14 %
Net interest margin (1) 2.22 % 2.38 % 2.27 %
(1) Interest income and net interest margin are calculated on a fully taxable equivalent basis.
TRISTATE CAPITAL HOLDINGS, INC.
AVERAGES AND YIELDS (UNAUDITED)
Nine Months Ended September 30,
2018 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 $ 181,368 $ 2,436 1.80 % $ 121,640 $ 981 1.08 %
Federal funds sold 7,761 100 1.72 % 6,501 45 0.93 %
Debt securities available-for-sale 187,041 4,150 2.97 % 145,169 2,215 2.04 %
Debt securities held-to-maturity 69,217 1,973 3.81 % 58,744 1,845 4.20 %
Equity securities 9,498 200 2.82 % 8,496 207 3.26 %
FHLB stock 14,856 738 6.64 % 13,803 450 4.36 %
Total loans 4,381,057 132,111 4.03 % 3,619,679 90,865 3.36 %
Total interest-earning assets 4,850,798 141,708 3.91 % 3,974,032 96,608 3.25 %
Other assets 215,388 189,483
Total assets $ 5,066,186 $ 4,163,515
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 576,032 $ 7,464 1.73 % $ 298,631 $ 2,295 1.03 %
Money market deposit accounts 2,369,910 30,263 1.71 % 1,951,258 15,511 1.06 %
Certificates of deposit 1,021,248 14,552 1.91 % 954,352 8,007 1.12 %
Borrowings:
FHLB borrowings 316,264 3,743 1.58 % 307,143 2,360 1.03 %
Line of credit borrowings 2,202 69 4.19 % 1,375 39 3.79 %
Subordinated notes payable, net 34,781 1,661 6.38 % 34,579 1,661 6.42 %
Total interest-bearing liabilities 4,320,437 57,752 1.79 % 3,547,338 29,873 1.13 %
Noninterest-bearing deposits 242,325 206,063
Other liabilities 68,064 45,596
Shareholders’ equity 435,360 364,518
Total liabilities and shareholders’ equity $ 5,066,186 $ 4,163,515
Net interest income (1) $ 83,956 $ 66,735
Net interest spread 2.12 % 2.12 %
Net interest margin (1) 2.31 % 2.25 %
(1) Interest income and net interest margin are calculated on a fully taxable equivalent basis.
TRISTATE CAPITAL HOLDINGS, INC.
LOAN COMPOSITION (UNAUDITED)
September 30, 2018 June 30, 2018 September 30, 2017
(Dollars in thousands) Loan Balance Percent of Total Loans Loan Balance Percent of Total Loans Loan Balance Percent of Total Loans
Private banking loans $ 2,627,749 55.2 % $ 2,488,162 54.6 % $ 2,055,808 52.3 %
Middle-market banking loans:
Commercial and industrial 771,546 16.2 % 741,901 16.3 % 648,720 16.5 %
Commercial real estate 1,359,061 28.6 % 1,322,865 29.1 % 1,226,142 31.2 %
Total middle-market banking loans 2,130,607 44.8 % 2,064,766 45.4 % 1,874,862 47.7 %
Loans held-for-investment $ 4,758,356 100.0 % $ 4,552,928 100.0 % $ 3,930,670 100.0 %
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
(Dollars in thousands) Bank Investment Management Parent and Other Consolidated Bank Investment Management Parent and Other Consolidated
Income statement data:
Interest income $ 52,354 $ $ 70 $ 52,424 $ 35,512 $ $ 63 $ 35,575
Interest expense 23,038 567 23,605 11,398 572 11,970
Net interest income (loss) 29,316 (497 ) 28,819 24,114 (509 ) 23,605
Provision (credit) for loan losses (234 ) (234 ) 283 283
Net interest income (loss) after provision for loan losses 29,550 (497 ) 29,053 23,831 (509 ) 23,322
Non-interest income:
Investment management fees 9,914 (86 ) 9,828 9,265 (51 ) 9,214
Net gain on the sale and call of debt securities 15 15
Other non-interest income 2,850 73 2,923 2,477 2,477
Total non-interest income 2,850 9,914 (13 ) 12,751 2,492 9,265 (51 ) 11,706
Non-interest expense:
Intangible amortization expense 502 502 463 463
Other non-interest expense 17,002 8,173 9 25,184 14,575 7,747 27 22,349
Total non-interest expense 17,002 8,675 9 25,686 14,575 8,210 27 22,812
Income (loss) before tax 15,398 1,239 (519 ) 16,118 11,748 1,055 (587 ) 12,216
Income tax expense (benefit) 1,676 282 (151 ) 1,807 1,987 435 (238 ) 2,184
Net income (loss) $ 13,722 $ 957 $ (368 ) $ 14,311 $ 9,761 $ 620 $ (349 ) $ 10,032

TRISTATE CAPITAL HOLDINGS, INC.

STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)

Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
(Dollars in thousands) Bank Investment Management Parent and Other Consolidated Bank Investment Management Parent and Other Consolidated
Income statement data:
Interest income $ 141,424 $ $ 200 $ 141,624 $ 96,220 $ $ 207 $ 96,427
Interest expense 56,027 1,725 57,752 28,183 1,690 29,873
Net interest income (loss) 85,397 (1,525 ) 83,872 68,037 (1,483 ) 66,554
Provision for loan losses 376 376 1,042 1,042
Net interest income (loss) after provision for loan losses 85,021 (1,525 ) 83,496 66,995 (1,483 ) 65,512
Non-interest income:
Investment management fees 28,621 (199 ) 28,422 27,843 (159 ) 27,684
Net gain on the sale and call of debt securities 6 6 254 254
Other non-interest income 7,875 1 38 7,914 6,888 1 6,889
Total non-interest income 7,881 28,622 (161 ) 36,342 7,142 27,844 (159 ) 34,827
Non-interest expense:
Intangible amortization expense 1,465 1,465 1,388 1,388
Other non-interest expense 49,011 23,988 390 73,389 41,868 22,398 100 64,366
Total non-interest expense 49,011 25,453 390 74,854 41,868 23,786 100 65,754
Income (loss) before tax 43,891 3,169 (2,076 ) 44,984 32,269 4,058 (1,742 ) 34,585
Income tax expense (benefit) 5,485 786 (591 ) 5,680 7,734 1,587 (681 ) 8,640
Net income (loss) $ 38,406 $ 2,383 $ (1,485 ) $ 39,304 $ 24,535 $ 2,471 $ (1,061 ) $ 25,945

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 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.

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)

September 30, June 30, September 30,
(Dollars in thousands, except per share data) 2018 2018 2017
Tangible book value per common share:
Common shareholders’ equity $ 429,152 $ 415,462 $ 377,333
Less: intangible assets 68,365 68,867 65,821
Tangible common equity $ 360,787 $ 346,595 $ 311,512
Common shares outstanding 28,920,978 28,947,883 28,642,573
Tangible book value per common share $ 12.47 $ 11.97 $ 10.88

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) 2018 2018 2017 2018 2017
Investment Management EBITDA:
Net income $ 957 $ 723 $ 620 $ 2,383 $ 2,471
Interest expense
Income taxes expense 282 277 435 786 1,587
Depreciation expense 126 125 130 376 369
Intangible amortization expense 502 502 463 1,465 1,388
EBITDA $ 1,867 $ 1,627 $ 1,648 $ 5,010 $ 5,815

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) 2018 2018 2017 2018 2017
Total revenue:
Net interest income $ 28,819 $ 28,791 $ 23,605 $ 83,872 $ 66,554
Total non-interest income 12,751 12,502 11,706 36,342 34,827
Less: net gain on the sale and call of debt securities 1 15 6 254
Total revenue $ 41,570 $ 41,292 $ 35,296 $ 120,208 $ 101,127

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) 2018 2018 2017 2018 2017
Bank total revenue:
Net interest income $ 29,316 $ 29,280 $ 24,114 $ 85,397 $ 68,037
Total non-interest income 2,850 2,850 2,492 7,881 7,142
Less: net gain on the sale and call of debt securities 1 15 6 254
Bank total revenue $ 32,166 $ 32,129 $ 26,591 $ 93,272 $ 74,925
Bank efficiency ratio:
Total non-interest expense (numerator) $ 17,002 $ 16,223 $ 14,575 $ 49,011 $ 41,868
Total revenue (denominator) $ 32,166 $ 32,129 $ 26,591 $ 93,272 $ 74,925
Bank efficiency ratio 52.86 % 50.49 % 54.81 % 52.55 % 55.88 %

TriState Capital Holdings, Inc.
MEDIA CONTACT
Jack
Horner
267-932-8760, ext. 302
412-600-2295 (mobile)
[email protected]
or
INVESTOR
RELATIONS CONTACT

Casteel Schoenborn
Jeff Schoenborn
888-609-8351
[email protected]