Company News »

TriState Capital Reports Third Quarter 2014 Financial Results

Business Wire
Share on StockTwits
Published on

TriState Capital Holdings, Inc. (NASDAQ:TSC) today reported record earnings and non-interest income for the third quarter of 2014, as the bank holding company continued to execute its strategy for driving profitable growth in loans, deposits and investment management fees.

The holding company for TriState Capital Bank and Chartwell Investment Partners, Inc. reported net income of $5.7 million in the third quarter of 2014, compared to $514,000 in the second quarter of 2014 and $1.3 million in the third quarter of last year. Diluted earnings per share were $0.20 in the third quarter of 2014, compared to $0.02 in the second quarter of 2014 and $0.05 in the third quarter of last year.

“Record net income in the quarter highlights the diversity and combined earnings power of our high-growth banking and investment management businesses, as we continue to manage risk within our portfolio, position the company to take advantage of any shift in interest rates, and leverage our scalable operating model,” Chief Executive Officer James F. Getz said. “We believe our third quarter results clearly reflect the underlying profitability and differentiated strategy of the company.”

THIRD QUARTER 2014 HIGHLIGHTS

  • Net interest income grew to $16.2 million, driven by double-digit annualized loan growth.
  • Total loans increased 4.2%, or 16.6% annualized.
  • Non-interest income was $9.3 million, or 36.4% of total revenue.
  • Annualized provision expense and net charge offs to average loans were 0.12% and 0.19%, respectively.
  • Non-performing assets were 1.03% of total assets.

THIRD QUARTER 2014 RESULTS

Loan growth drove TriState Capital’s third quarter 2014 net interest income (NII) to a record $16.2 million, compared to $16.0 million in the linked second quarter and $15.8 million in the year-ago third quarter of 2013. Third quarter 2014 NII grew by 1.3% from the linked quarter and 3.0% from the year-ago quarter on expansion of lower-risk lending, most notably marketable-securities-backed loans originated through TriState Capital’s private banking channel. Net interest margin (NIM) was 2.58% in the third quarter of 2014 and 2.57% in the linked quarter, excluding interest expense from the company’s June 2014 subordinated debt placement. NIM was 2.50% in the third quarter of 2014, reflecting a full three months of this interest expense, and 2.55% in the linked quarter.

Third quarter 2014 non-interest income of $9.3 million increased by 1.9% from $9.1 million in the linked quarter and more than eight-fold from $1.1 million in the year-ago quarter. It was primarily boosted by the Chartwell investment management business acquired in March 2014 and higher swap fees. Non-interest income, excluding net gains on sales of investment securities, represented 36.4% of total revenue in the third quarter of 2014, compared to 35.2% in the linked quarter and 6.6% in the year-ago quarter.

Third quarter 2014 total revenue of $25.5 million increased by 3.2% from $24.7 million in the linked quarter and by 51.2% from $16.9 million in the year-ago quarter.

Total non-interest expenses were $16.7 million, or 2.43% of average assets on an annualized basis, in the third quarter of 2014, compared to $15.5 million, or 2.34%, in the linked quarter and $10.0 million, or 1.81%, in the year-ago period. Third quarter 2014 compensation and benefits expenses increased from the linked period, reflecting improved financial performance compared to the second quarter, when results lowered incentive compensation accruals at TriState Capital Bank. Compensation and benefits expenses were higher than in the year-ago quarter, largely as a result of the March 2014 acquisition of Chartwell.

The third quarter 2014 efficiency ratio, as adjusted, for the bank was 59.68%, compared to 57.32%, in the linked quarter and 58.73% in the year-ago quarter.

Third quarter 2014 pre-tax, pre-provision net revenue was $8.9 million, compared to $9.3 million in the linked quarter and $6.9 million in the year-ago quarter. It reflected the first full three months’ of interest expense associated with the company’s June 2014 subordinated debt placement, which was $554,000 in the third quarter of 2014 and $159,000 in the linked quarter.

BALANCE SHEET GROWTH

Third quarter 2014 net interest income was driven by the bank’s continued loan growth, which reflects the bank’s current focus on expanding private banking channel and commercial real estate (CRE) loans at a faster rate than its commercial and industrial (C&I) portfolio.

Loans totaled $2.3 billion at Sept. 30, 2014, increasing 4.2%, or 16.6% annualized, during the third quarter of 2014. Total loans grew 30.0% over the 12 months ended Sept. 30, 2014. Private banking channel loans totaled $914.1 million, growing 17.2%, annualized, from the end of the linked quarter and 79.8% from the end of the year-ago quarter. CRE loans totaled $686.2 million, growing 33.5%, annualized, from the end of the linked quarter and 37.3% from the end of the year-ago quarter. C&I loan balances were $696.2 million at Sept. 30, 2014, increasing 0.5%, annualized, from the end of the linked quarter and decreasing 8.2% from one year prior.

The bank grew deposit balances by 3.3%, annualized, during the third quarter to $2.24 billion at September 30, 2014, while deposit funding costs remained unchanged from the linked quarter. Compared to the year-ago quarter, deposits grew 19.5% at period end, while deposit funding costs declined 6 basis points.

TriState Capital remains very well positioned to profit from a rising interest-rate environment, and the bank continues to manage a highly asset-sensitive balance sheet. At Sept. 30, 2014, 81% of TriState Capital’s loans and 57% of its securities portfolio were floating rate. In addition, 39% of deposits were fixed-rate time deposits. The duration of the investment portfolio was 1.8 as of Sept. 30, 2014, which the company believes to be meaningfully lower than its peers.

ASSET QUALITY

TriState Capital’s third quarter provision expense was $651,000, compared to $9.1 million in the linked quarter and $4.9 million in the year-ago quarter. Provision expense, on an annualized basis, represented 0.12% and 0.52% of average loans for the three and 12 months ended Sept. 30, 2014, respectively. By comparison, TriState Capital’s full-year provision from 2010 through 2013 averaged 0.46% of average loans, and it ranged between 0.40% and 0.53%.

Net charge offs to average loans, annualized, were 0.19% in the third quarter of 2014, 0.95% in the linked quarter and 0.98% in the year-ago quarter. Non-performing assets represented 1.03% of total assets at Sept. 30, 2014, compared to 1.08% at June 30, 2014 and 0.99% at September 30, 2013.

The allowance for loan losses represented 0.97% of total loans at Sept. 30, 2014, compared to 1.04% at June 30, 2014 and 1.03% at Sept. 30, 2013, which is a function of the growing portfolio of loans secured by marketable securities, which generally have lower provision based on their lower risk profile. The allowance for loan losses measured 83.19% of non-performing loans at the end of the third quarter, compared to 81.43% at the end of the second quarter and 84.83% at the end of the year-ago quarter.

INVESTMENT MANAGEMENT

Chartwell’s assets under management (AUM) were $7.6 billion at Sept. 30, 2014, compared to $7.9 billion at June 30, 2014 and $7.5 billion at Dec. 31, 2013. Third quarter AUM reflects $111 million in new business and new flows from existing accounts, offset by outflows of $175 million and $246 million in market depreciation. The weighted average fee rate for the third quarter was 0.38%, unchanged from the linked quarter.

Chartwell investment management fees for the third quarter of 2014 were $7.4 million, compared to $7.5 million in the second quarter of this year. Third quarter revenues reflect inflows including those into new funds launched this year and other higher income-producing assets, strong product performance relative to benchmarks across disciplines, outflows, and the impact of general domestic equity market performance in the three months ended Sept. 30. From the Chartwell acquisition closing on March 5 through September 30, TriState Capital’s investment management fees have totaled $17.4 million.

CAPITAL STRENGTH

TriState Capital’s capital ratios continue to exceed the highest required regulatory benchmark levels. As of Sept. 30, 2014, TriState Capital Holding’s tier 1 leverage ratio was 9.53% and the ratio of tangible equity to tangible assets was 9.43%.

SHARE REPURCHASE PROGRAM

The company’s Board of Directors this week approved a share repurchase program of up to $10 million, authorizing TriState Capital Holdings to repurchase up to 1,000,000 shares of its common stock. The program authorizes repurchases totaling up to approximately 3.5% of TriState Capital Holdings’ 28,712,779 common shares outstanding at Sept. 30, 2014. Under the authorization, which expires Dec. 31, 2015, purchases may be made at the discretion of management from time to time in the open market or through negotiated transactions.

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 Oct. 23 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/10053325 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 Holdings, Inc. Conference 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 9 a.m. ET on Nov. 7, 2014. The replay may be accessed by dialing 877-344-7529 from the United States or 412-317-0088 from other locations and entering the conference number 10053325.

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 has $2.7 billion in assets, as of Sept. 30, 2014, and serves middle-market commercial customers through regional representative offices in Pittsburgh, Philadelphia, Cleveland, Princeton, 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 has $7.6 billion in assets under management, as of Sept. 30, 2014, and serves institutional clients and TriState Capital’s financial intermediary network. For more information, please visit http://investors.tristatecapitalbank.com.

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.

TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
As of and For the
Three Months Ended
As of and For the
Nine Months Ended
(Dollars in thousands) September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
Period-end balance sheet data:
Cash and cash equivalents $ 99,133 $ 192,523 $ 139,841 $ 99,133 $ 139,841
Total investment securities 225,509 203,440 239,406 225,509 239,406
Total loans 2,296,507 2,204,257 1,766,504 2,296,507 1,766,504
Allowance for loan losses (22,376 ) (22,822 ) (18,281 ) (22,376 ) (18,281 )
Total loans, net of allowance for loan losses 2,274,131 2,181,435 1,748,223 2,274,131 1,748,223
Goodwill and other intangibles, net 52,719 53,108 52,719
Other assets 102,801 102,415 73,427 102,801 73,427
Total assets $ 2,754,293 $ 2,732,921 $ 2,200,897 $ 2,754,293 $ 2,200,897
Total deposits $ 2,244,324 $ 2,225,770 $ 1,878,694 $ 2,244,324 $ 1,878,694
Borrowings 165,000 155,000 20,000 165,000 20,000
Other liabilities 37,610 51,168 13,137 37,610 13,137
Total liabilities 2,446,934 2,431,938 1,911,831 2,446,934 1,911,831
Total shareholders’ equity 307,359 300,983 289,066 307,359 289,066
Total liabilities and shareholders’ equity $ 2,754,293 $ 2,732,921 $ 2,200,897 $ 2,754,293 $ 2,200,897
Income statement data:
Interest income $ 19,681 $ 18,991 $ 18,384 $ 56,980 $ 53,966
Interest expense 3,435 2,953 2,612 8,834 8,566
Net interest income 16,246 16,038 15,772 48,146 45,400
Provision for loan losses 651 9,109 4,911 10,368 7,714
Net interest income after provision for loan losses 15,595 6,929 10,861 37,778 37,686
Non-interest income:
Investment management fees 7,418 7,509 17,381
Net gain on the sale of investment securities available-for-sale 414 1,428 784
Other non-interest income 1,872 1,198 1,118 4,082 3,426
Total non-interest income 9,290 9,121 1,118 22,891 4,210
Non-interest expense:
Amortization expense 389 390 909
Other non-interest expense 16,284 15,094 10,016 44,040 29,604
Total non-interest expense 16,673 15,484 10,016 44,949 29,604
Income before tax 8,212 566 1,963 15,720 12,292
Income tax expense 2,506 52 633 4,884 4,235
Net income $ 5,706 $ 514 $ 1,330 $ 10,836 $ 8,057
TRISTATE CAPITAL HOLDINGS, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
As of and For the
Three Months Ended
As of and For the
Nine Months Ended
(Dollars in thousands, except per share data) September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
Per share and share data:
Earnings per share:
Basic $ 0.20 $ 0.02 $ 0.05 $ 0.38 $ 0.31
Diluted $ 0.20 $ 0.02 $ 0.05 $ 0.37 $ 0.31
Book value per common share $ 10.70 $ 10.48 $ 10.08 $ 10.70 $ 10.08
Tangible book value per common share (1) $ 8.87 $ 8.63 $ 10.08 $ 8.87 $ 10.08
Common shares outstanding, at end of period 28,712,779 28,712,779 28,690,279 28,712,779 28,690,279
Average common shares outstanding:
Basic 28,712,779 28,693,741 28,690,034 28,699,015 23,207,969
Diluted 29,005,151 29,198,699 29,149,732 29,138,533 25,951,426
Performance ratios:
Return on average assets (2) 0.83 % 0.08 % 0.24 % 0.56 % 0.50 %
Return on average equity (2) 7.42 % 0.68 % 1.81 % 4.80 % 4.20 %
Net interest margin (2) (3) 2.50 % 2.55 % 2.93 % 2.62 % 2.90 %
Bank efficiency ratio (1) 59.68 % 57.32 % 59.30 % 60.42 % 60.63 %
Bank efficiency ratio, as adjusted (1) 59.68 % 57.32 % 58.73 % 60.34 % 60.43 %
Efficiency ratio (1) 65.29 % 62.57 % 59.30 % 64.57 % 60.63 %
Efficiency ratio, as adjusted (1) 63.77 % 61.00 % 58.73 % 63.20 % 60.43 %
Non-interest expense to average assets (2) 2.43 % 2.34 % 1.81 % 2.34 % 1.84 %
Pre-tax, pre-provision net revenue per average employee (2) $ 192 $ 208 $ 219 $ 201 $ 210
Asset quality:
Non-performing loans $ 26,898 $ 28,025 $ 21,550 $ 26,898 $ 21,550
Non-performing assets $ 28,311 $ 29,438 $ 21,840 $ 28,311 $ 21,840
Other real estate owned $ 1,413 $ 1,413 $ 290 $ 1,413 $ 290
Non-performing assets to total assets 1.03 % 1.08 % 0.99 % 1.03 % 0.99 %
Allowance for loan losses to total loans 0.97 % 1.04 % 1.03 % 0.97 % 1.03 %
Allowance for loan losses to non-performing loans 83.19 % 81.43 % 84.83 % 83.19 % 84.83 %
Net charge-offs (recoveries) $ 1,097 $ 5,039 $ 4,338 $ 6,988 $ 7,307
Net charge-offs (recoveries) to average total loans (2) 0.19 % 0.95 % 0.98 % 0.45 % 0.57 %
Revenue:
Total revenue (1) $ 25,536 $ 24,745 $ 16,890 $ 69,609 $ 48,826
Pre-tax, pre-provision net revenue (1) $ 8,863 $ 9,261 $ 6,874 $ 24,660 $ 19,222
Capital ratios:
Tangible equity to tangible assets (1) 9.43 % 9.25 % 13.13 % 9.43 % 13.13 %
Tier 1 leverage ratio 9.53 % 9.52 % 13.23 % 9.53 % 13.23 %
Assets under management $ 7,578,000 $ 7,888,000 $ $ 7,578,000 $
(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, 2014 June 30, 2014 September 30, 2013
(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 $ 125,655 $ 114 0.36 % $ 214,268 $ 173 0.32 % $ 135,519 $ 129 0.38 %
Federal funds sold 7,665 1 0.05 % 7,911 1 0.05 % 6,900 1 0.06 %
Investment securities available-for-sale 179,163 522 1.16 % 158,987 463 1.17 % 218,513 814 1.48 %
Investment securities held-to-maturity 39,903 323 3.21 % 25,499 219 3.44 % 23,737 192 3.21 %
Investment securities trading % % 6,869 44 2.54 %
Total loans 2,240,116 18,779 3.33 % 2,129,381 18,194 3.43 % 1,750,101 17,263 3.91 %
Total interest-earning assets 2,592,502 19,739 3.02 % 2,536,046 19,050 3.01 % 2,141,639 18,443 3.42 %
Other assets 131,451 122,878 52,549
Total assets $ 2,723,953 $ 2,658,924 $ 2,194,188
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 84,045 $ 86 0.41 % $ 59,805 $ 27 0.18 % $ 5,348 $ 1 0.07 %
Money market deposit accounts 1,136,000 1,125 0.39 % 1,104,147 1,075 0.39 % 935,858 899 0.38 %
Time deposits (excluding CDARS(R)) 472,965 1,014 0.85 % 497,778 1,035 0.83 % 465,435 1,068 0.91 %
CDARS(R) time deposits 395,254 529 0.53 % 421,555 555 0.53 % 359,845 623 0.69 %
Borrowings:
FHLB borrowing 132,609 127 0.38 % 105,714 102 0.39 % 20,000 21 0.42 %
Subordinated notes payable 35,000 554 6.28 % 9,615 159 6.63 % %
Total interest-bearing liabilities 2,255,873 3,435 0.60 % 2,198,614 2,953 0.54 % 1,786,486 2,612 0.58 %
Noninterest-bearing deposits 125,668 125,633 102,649
Other liabilities 37,508 31,960 14,182
Shareholders’ equity 304,904 302,717 290,871
Total liabilities and shareholders’ equity $ 2,723,953 $ 2,658,924 $ 2,194,188
Net interest income $ 16,304 $ 16,097 $ 15,831
Net interest spread 2.42 % 2.47 % 2.84 %
Net interest margin (1) 2.50 % 2.55 % 2.93 %

(1) Net 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,
2014 2013
(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 $ 173,697 $ 437 0.34 % $ 159,669 $ 442 0.37 %
Federal funds sold 7,715 3 0.05 % 9,066 7 0.10 %
Investment securities available-for-sale 175,312 1,648 1.26 % 209,523 2,536 1.62 %
Investment securities held-to-maturity 30,272 760 3.36 % 10,233 238 3.11 %
Investment securities trading % 4,091 71 2.32 %
Total loans 2,077,090 54,308 3.50 % 1,707,014 50,840 3.98 %
Total interest-earning assets 2,464,086 57,156 3.10 % 2,099,596 54,134 3.45 %
Other assets 109,406 48,547
Total assets $ 2,573,492 $ 2,148,143
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 56,205 119 0.28 % $ 5,484 $ 3 0.07 %
Money market deposit accounts 1,068,005 3,080 0.39 % 923,962 2,834 0.41 %
Time deposits (excluding CDARS(R)) 479,062 3,036 0.85 % 479,609 3,614 1.01 %
CDARS(R) time deposits 412,235 1,636 0.53 % 354,172 2,051 0.77 %
Borrowings:
FHLB borrowing 86,594 250 0.39 % 20,000 64 0.43 %
Subordinated notes payable 15,000 713 6.36 % %
Total interest-bearing liabilities 2,117,101 8,834 0.56 % 1,783,227 8,566 0.64 %
Noninterest-bearing deposits 125,690 88,018
Other liabilities 28,873 20,126
Shareholders’ equity 301,828 256,772
Total liabilities and shareholders’ equity $ 2,573,492 $ 2,148,143
Net interest income $ 48,322 $ 45,568
Net interest spread 2.54 % 2.81 %
Net interest margin (1) 2.62 % 2.90 %

(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, 2014 June 30, 2014 September 30, 2013
(Dollars in thousands) Loan
Balance
Percent of
Total Loans
Loan
Balance
Percent of
Total Loans
Loan
Balance
Percent of
Total Loans
Middle-market banking channel loans:
Commercial and industrial $ 696,185 30.3 % $ 695,313 31.5 % $ 758,312 42.9 %
Commercial real estate 686,192 29.9 % 632,738 28.7 % 499,706 28.3 %
Total middle-market banking channel loans 1,382,377 60.2 % 1,328,051 60.2 % 1,258,018 71.2 %
Total private banking channel loans 914,130 39.8 % 876,206 39.8 % 508,486 28.8 %
Total loans $ 2,296,507 100.0 % $ 2,204,257 100.0 % $ 1,766,504 100.0 %
TRISTATE CAPITAL HOLDINGS, INC.
STATEMENT OF INCOME BY REPORTABLE SEGMENT (UNAUDITED)
Three Months Ended September 30, 2014
(Dollars in thousands) Bank Investment
Management
Consolidated
(unaudited)
Income statement data:
Interest income $ 19,681 $ $ 19,681
Interest expense 3,435 3,435
Net interest income 16,246 16,246
Provision for loan losses 651 651
Net interest income after provision for loan losses 15,595 15,595
Non-interest income:
Investment management fees 7,418 7,418
Net gain on the sale of investment securities available-for-sale
Other non-interest income 1,875 (3 ) 1,872
Total non-interest income 1,875 7,415 9,290
Non-interest expense:
Intangible amortization expense 389 389
Other non-interest expense 10,815 5,469 16,284
Non-interest expense 10,815 5,858 16,673
Income before tax 6,655 1,557 8,212
Income tax expense 1,833 673 2,506
Net income $ 4,822 $ 884 $ 5,706
Nine Months Ended September 30, 2014
(Dollars in thousands) Bank Investment
Management
Consolidated
Income statement data:
Interest income $ 56,980 $ $ 56,980
Interest expense 8,834 8,834
Net interest income 48,146 48,146
Provision for loan losses 10,368 10,368
Net interest income after provision for loan losses 37,778 37,778
Non-interest income:
Investment management fees 17,381 17,381
Net gain on the sale of investment securities available-for-sale 1,428 1,428
Other non-interest income 4,044 38 4,082
Total non-interest income 5,472 17,419 22,891
Non-interest expense:
Intangible amortization expense 909 909
Other non-interest expense 31,535 12,505 44,040
Non-interest expense 31,535 13,414 44,949
Income before tax 11,715 4,005 15,720
Income tax expense 3,158 1,726 4,884
Net income $ 8,557 $ 2,279 $ 10,836

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 equity,” “tangible equity to tangible assets,” “tangible book value per common share,” “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 equity” is defined as shareholders’ equity reduced by intangible assets, including goodwill, if any. 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 purchase business combination, has the effect of increasing both equity and assets, while not increasing our tangible equity or tangible assets.

“Tangible equity to tangible assets” is defined as the ratio of shareholders’ equity reduced by intangible assets, divided by total assets reduced by intangible assets. We believe this measure is important to many investors who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

“Tangible book value per common share” is defined as book value, excluding the impact of goodwill, if any, 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. Goodwill is an intangible asset that is recorded in a purchase business combination.

“Total revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale of investment securities available-for-sale. 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 of investment securities available-for-sale. 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 divided by our total revenue. “Efficiency ratio, as adjusted” is defined as non-interest expense excluding non-recurring expenses associated with the Chartwell acquisition 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.

TRISTATE CAPITAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
September 30, June 30, September 30,
(Dollars in thousands, except per share data) 2014 2014 2013
Tangible equity to tangible assets:
Total shareholders’ equity $ 307,359 $ 300,983 $ 289,066
Less: intangible assets 52,719 53,108
Tangible equity $ 254,640 $ 247,875 $ 289,066
Total assets $ 2,754,293 $ 2,732,921 $ 2,200,897
Less: intangible assets 52,719 53,108
Tangible assets $ 2,701,574 $ 2,679,813 $ 2,200,897
Tangible equity to tangible assets 9.43 % 9.25 % 13.13 %
Tangible book value per common share:
Tangible equity $ 254,640 $ 247,875 $ 289,066
Common shares outstanding 28,712,779 28,712,779 28,690,279
Tangible book value per common share $ 8.87 $ 8.63 $ 10.08
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2014 2014 2013 2014 2013
Pre-tax, pre-provision net revenue:
Net interest income before provision for loan losses $ 16,246 $ 16,038 $ 15,772 $ 48,146 $ 45,400
Total non-interest income 9,290 9,121 1,118 22,891 4,210
Less: net gain on the sale of investment securities available-for-sale 414 1,428 784
Total revenue 25,536 24,745 16,890 69,609 48,826
Less: total non-interest expense 16,673 15,484 10,016 44,949 29,604
Pre-tax, pre-provision net revenue $ 8,863 $ 9,261 $ 6,874 $ 24,660 $ 19,222
Efficiency ratio:
Total non-interest expense (numerator) $ 16,673 $ 15,484 $ 10,016 $ 44,949 $ 29,604
Total revenue (denominator) $ 25,536 $ 24,745 $ 16,890 $ 69,609 $ 48,826
Efficiency ratio 65.29 % 62.57 % 59.30 % 64.57 % 60.63 %
Efficiency ratio, as adjusted:
Less: Nonrecurring expenses (1) $ $ $ 97 $ 45 $ 97
Less: amortization expense 389 390 909
Total non-interest expense, as adjusted (numerator) $ 16,284 $ 15,094 $ 9,919 $ 43,995 $ 29,507
Total revenue (denominator) $ 25,536 $ 24,745 $ 16,890 $ 69,609 $ 48,826
Efficiency ratio, as adjusted 63.77 % 61.00 % 58.73 % 63.20 % 60.43 %

(1) Nonrecurring expenses include costs associated with the Chartwell transaction.

BANK SEGMENT
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
(Dollars in thousands) 2014 2014 2014
Bank pre-tax, pre-provision net revenue:
Net interest income before provision for loan losses $ 16,246 $ 16,038 $ 48,146
Total non-interest income 1,875 1,571 5,472
Less: net gain on the sale of investment securities available-for-sale 414 1,428
Total revenue 18,121 17,195 52,190
Less: total non-interest expense 10,815 9,857 31,535
Pre-tax, pre-provision net revenue $ 7,306 $ 7,338 $ 20,655
Bank efficiency ratio:
Total non-interest expense (numerator) $ 10,815 $ 9,857 $ 31,535
Total revenue (denominator) $ 18,121 $ 17,195 $ 52,190
Efficiency ratio 59.68 % 57.32 % 60.42 %
Bank efficiency ratio, as adjusted:
Less: nonrecurring expenses (1) $ $ $ 45
Total non-interest expense, as adjusted (numerator) $ 10,815 $ 9,857 $ 31,490
Total revenue (denominator) $ 18,121 $ 17,195 $ 52,190
Efficiency ratio, as adjusted 59.68 % 57.32 % 60.34 %

(1) Nonrecurring expenses include costs associated with the Chartwell transaction.

Share on StockTwits