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| 8-K - 8-K - TriState Capital Holdings, Inc. | tsc-20210827.htm |
1 TRISTATE CAPITAL | INVESTOR PRESENTATION TriState Capital Holdings, Inc. (NASDAQ: TSC) Second Quarter Ended June 30, 2021 Investor Presentation
2 TRISTATE CAPITAL | INVESTOR PRESENTATION Important Information Financial information and data: Unless noted otherwise herein, income statement data is for the trailing twelve-months ended June 30, 2021, compared to the same TTM period the year prior; and balance sheet data is as of June 30, 2021 compared to one year prior. Forward looking statements: This presentation may contain “forward- looking” statements. Such forward-looking statements are subject to risks that could cause actual results or outcomes to differ materially from those currently anticipated. TriState Capital has no duty to, and does not intend to, update or revise forward-looking statements after the date on which they are made. 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 measures: To the extent non-GAAP financial measures are presented herein, comparable GAAP measures and reconciliations can be found in TriState Capital’s most recent quarterly financial results news release. About this presentation
3 TRISTATE CAPITAL | INVESTOR PRESENTATION Why TSC Branchless, scalable and capital efficient model Premier private banking, commercial banking and niche investment management products and services to sophisticated corporate, institutional and high-net-worth clients Truly exceptional asset quality Unique and high quality lending relationships result in peer and industry leading asset quality metrics that keep credit costs low Fully organic revenue and balance sheet growth in 2020 with no PPP or mortgage lending Key Metrics ($000s) TTM at 6/30/21 Annual Growth Revenue1 $206,519 10% Deposits $10,191,433 30% Loans $9,282,922 29% AUM $11,511,000 24% Bank efficiency ratio 55.18% NPLs/ total loans 12 bps NCOs/ average loans 3 bps 1 Non-GAAP financial metric reconciled on slide 36.
4 TRISTATE CAPITAL | INVESTOR PRESENTATION Three Differentiated Businesses Drive Growth BUSINESS COMMERCIAL BANKING PRIVATE BANKING INVESTMENT MANAGEMENT MARKETPLACE Regional (primarily PA, OH, NJ, NY) National National SALES Regional loan offices National and inside sales National and inside sales DISTRIBUTION Businesses with annual revenues of $10M-$300M RIAs Regional broker/dealers Non-bank trust companies Family offices Institutional RIAs Wirehouses SOLUTIONS C&I and CRE lending Equipment finance Treasury & liquidity management Financial services & fund finance Loans backed by marketable securities or prime-issuer cash value life insurance Treasury & liquidity management Fixed income and equity management CAPITAL REQUIREMENTS Standard risk-based and leverage Primarily non-risk weighted Primarily for acquisition purposes SIZE $4B in loans $6B in loans $12B in AUM KEY FEATURES Exceptional credit quality Exceptional credit quality Dominant provider of securities- based lending 6 strategies beating their respective 3- & 5-year benchmarks
5 TRISTATE CAPITAL | INVESTOR PRESENTATION Sophisticated Client Solutions Businesses that are highly scalable with efficient use of capital for strong risk adjusted returns Model provides diversity of revenue and high credit quality reduces risk profile Three premier platforms that complement one another, have low correlation yet are symbiotic 1 1 Refers to Investment Fund Finance and Equipment Finance
6 TRISTATE CAPITAL | INVESTOR PRESENTATION Middle Market Commercial Lending Delivering 15% organic commercial loan growth YOY by sourcing and serving local clients through Mid-Atlantic representative offices 2021 growth reflects true, organic demand, and no PPP lending Bi lli on s Commercial Loans $1.92 $2.26 $2.88 $3.43 $3.57 CRE: owner-occupied CRE: non-owner occupied C&I 2017 2018 2019 2020 2Q21 $0B $1B $2B $3B $4B
7 TRISTATE CAPITAL | INVESTOR PRESENTATION 27% 24%16% 17% 16% Western PA Eastern PA Ohio New Jersey New York 30% 14% 22% 10% 5% 19% Finance & Insurance Service Real Estate Manufacturing Information All others 48% 10% 22% 1% 19% Non-owner-occupied Owner-occupied Multifamily/apartment Land Development Construction In-market relationships and diversified across industries, property type and geographies Middle Market Commercial Lending Commercial Loans $3.57B C&I Loans $1.24 CRE Loans $2.33B
8 TRISTATE CAPITAL | INVESTOR PRESENTATION Private banking loans collateralized by marketable securities • Fastest-growing loan product • Collateral monitored and priced daily through premier relationships by TSC experts and tech • Primarily marketable equity and fixed-income securities collateral • Minimal risk weighting - favorable regulatory capital treatment • Minimal reserve levels required under CECL • History of zero private banking losses since inception Capital Risk Profile 62% 38% Credit Risk Profile Responsible loan portfolio growth • Highly experienced lending and credit management talent • Expert teams dedicated to managing commercial and private banking loan credit risk, with career portfolio managers • Disciplined loan approval process • Commercial focus on the highest-quality borrowers with proven track records • Net charge-offs since 2008 total just $60M Product of differentiated model and investments in talent + tech Total Loans $9.28B Private Banking Commercial
9 TRISTATE CAPITAL | INVESTOR PRESENTATION Fastest Growing Portfolio Median LTV <30% Securities-based Lending Marketable securities collateral consist of liquid and primarily well-diversified portfolios Private Banking Loans over-collateralized by marketable securities or cash value life insurance (CVLI) policies from select, top-rated issuers No loss history TSC's fastest growing category of lending aimed at assisting financial advisors of all types provide enhanced value to their clients
10 TRISTATE CAPITAL | INVESTOR PRESENTATION Private Banking Loans TSC Network Advisors Unrivaled network of independent financial advisors, trust officers and family office executives seeking to add value for their clients TSC Network Firms Strong executive- and board-level relationships with broker-dealers, regional securities firms, RIAs, family offices and trust companies that do not offer banking services themselves Dominant independent provider of securities-based lending Private Banking Loans $2.27 $2.87 $3.70 $4.81 $5.71 2017 2018 2019 2020 2Q21 $0B $1B $2B $3B $4B $5B $6B
11 TRISTATE CAPITAL | INVESTOR PRESENTATION FINANCIAL ADVISORS & their clients Independent Provider of Advisor Solutions Serving those who serve high net worth individuals and families Through our referral network of 292 firms, TSC provides holistic solutions for 60,000+ advisors and, in turn, their HNW clients, by: Complementing advisors capabilities with unique and essential products and services which can be integrated into their environments Customizing technology, including digital lending platform, and in-person delivery to meet their needs and clients' expectations Optimizing risk management and monitoring through smart and scalable proprietary collateral monitoring system Respecting their relationships by supporting, and not competing with, them Chartwell’s Niche Investment Products Securities- Based Private Bank Lending Future Products Treasury Management Services Premium Cash Management Future Services
12 TRISTATE CAPITAL | INVESTOR PRESENTATION Investment Strategies 22% 5% 57% 14% Value Equity Growth Equity Conservative Allocation Fixed Income Large Cap Equity Distribution Channels 74% 7% 9% 10% Institutional Subadvisory Mutual Funds Advisory Services/ Managed Accounts Chartwell Investment Partners 50+ person boutique asset manager located outside of Philadelphia offering equity and fixed income strategies $11.51B AUM Augmenting institutional inflows while building strong Advisory Services momentum: Advisory Services up to 19% in MRQ from 8% when Chartwell was acquired in 2014 $11.51B AUM 2%
13 TRISTATE CAPITAL | INVESTOR PRESENTATION Investment Performance Investment management fees provide significant income diversification, generating over 17% of total revenue1 and over 60% of non-interest income2 Strong investment performance contributed to positive net inflows of $27M in 2Q21 and new-business pipeline commitments of >$65M from institutional investors Continue to leverage distribution synergies to expand Advisor Services capabilities Chartwell's strategies provide strong risk-adjusted returns through active management 1 TTM data. Non-GAAP financial metric reconciled on slide 39. 2 Non-interest income excludes net gains on the sale of debt securities. 3 Strategies outperforming their respective benchmarks for the 3 and 5 years ended June 30, 2021shown in white font. strategies outperforming their respective benchmarks for 3 and 5 years3 EQUITY ORIENTED STRATEGIES Small Cap Value Smid Value Mid Cap Value Small Cap Growth Large Cap Growth Dividend Value Covered Call Intermediate High Grade Core High Grade Core Plus High Yield Short Duration BB- Rated High Yield Short Duration High Grade Corporate FIXED INCOME ORIENTED STRATEGIES Chartwell Income Fund 6
14 TRISTATE CAPITAL | INVESTOR PRESENTATION Non-Interest Income Engine 1 Non-GAAP financial metric reconciled on slide 38. 2 Non-interest income excludes net gains (losses) on the sale of debt securities. Chartwell contributes significant investment management fee income Back-to-back, loan-level interest rate swap offerings for clients provide non-interest fees No regulatory capital required to generate fees making meaningful top-line contribution 27% of TTM revenue1 from non-interest income2 Non-interest Income $46.7 $48.0 $52.4 $53.3 $55.4 Investment management Swaps Other Non-Interest Income/Revenue 2017 2018 2019 2020 TTM $0M $15M $30M $45M $60M 0% 25% 50% 75% 100% 2
15 TRISTATE CAPITAL | INVESTOR PRESENTATION Revenue Growth 1 Non-GAAP financial metric reconciled on slide 38.. Organic loan growth drives net interest income Uncorrelated, but complementary, revenue streams enable robust organic growth complemented by strategic investment management acquisitions 12% compound annual revenue growth since 2016 Total Revenue $138 $161 $179 $191 $207 $91 $113 $127 $138 $151 $47 $48 $52 $53 $55 Net Interest Income Non-Interest Income, ex. Securities Gains/Losses 2017 2018 2019 2020 TTM $0M $50M $100M $150M $200M $250M
16 TRISTATE CAPITAL | INVESTOR PRESENTATION Operating Leverage Driven by revenue growth, scalable non-branch model and prudent expense management enable continued investment in growth 1.30% non-interest expense / average assets TTM, compared to 2.09% for the median peer1 Efficient branchless banking platform supports 55.18% bank efficiency ratio 2.16% all-in interest and non- interest expense / average deposits TTM, compared to 2.87% for the median peer1 Highly scalable investment manager, with Chartwell’s current business capable of doubling AUM 1 Peer data for bank holding companies with $10B-20B in assets for MRQ. 2 Analysis of MRQ net interest income plus non-interest income, annualized, divided by most recently available period-end FTE employees based on data from S&P Global Market Intelligence. Superior Revenue/ Employee $678K TSC $10B-$20B Bank Median 2017 2018 2019 2020 2Q21 $100K $200K $300K $400K $500K $600K $700K
17 TRISTATE CAPITAL | INVESTOR PRESENTATION Investments in best-in- class talent and technology beginning in 2016 are paying off for our clients and our business v v v102% 13 480 13 dedicated & experienced professionals 13 treasury management professionals providing high- touch service across regional footprint Treasury management deposits up ~102% More than 480 clients & growing Including deposit- only clients with essential need for treasury management services Treasury Management a Strategic Priority TRISTATE CAPITAL | INVESTOR PRESENTATION Growth in treasury management deposits to $2.27B contributed to ~48% total deposit growth, year-over- year
18 TRISTATE CAPITAL | INVESTOR PRESENTATION 19% 23% 12%7% 3% 6% 17% 7% Lending Client - Operating Accounts Payment Processors Real Estate (Investments & Services) Financial Entities (Funds, Custody, Trust) Financial Intermediaries Family Offices & Foundations Bankruptcy C&I Non-Lending Non-Profit Organizations Financial Entities (Banks) Other Treasury Management Deposits Sophisticated capability, expertise within industry verticals, high-touch service, combined with transparent fee structures driving growth in product, balance and revenue Deposit Balances $2.27B Treasury Management Deposit Accounts $1.12 $1.35 $1.46 $1.82 $2.27 06/30/20 09/30/20 12 /31/2 0 03/31/2 1 06/30/21 $0.0B $1.0B $2.0B $3.0B 1 Includes broker dealers and advisory 2 Includes Third party and class action 1% 3% 2% 2 1
19 TRISTATE CAPITAL | INVESTOR PRESENTATION Commercial Allowance/ Commercial Loans (Excludes Private Bank Loans) 0.67% 0.50% 0.42% 0.95% 0.85% 2017 2018 2019 2020 2Q21 0.0% 0.4% 0.8% 1.2% 1.6% Designed to maintain low annual credit costs relative to peers Superior Credit Quality NPLs / Total Loans $4.2 $5.1 $6.6 $8.2 $9.3 0.08% 0.04% —% 0.12% 0.12% Total Loans NPLs / Total Loans 2017 2018 2019 2020 2Q21 0.0% 0.2% 0.4% 0.6% 0.8% $0B $2B $4B $6B $8B $10B NCOs / Average Loans 0.39% 0.47% 0.47% 0.45% 0.28% 0.10% 0.02% (0.03)% (0.01)% 0.10% 2017 2018 2019 2020 2Q21 0.0% 0.2% 0.4% 0.6% 0.8% Allowance/Total Loans 0.34% 0.26% 0.21% 0.42% 0.35% 2017 2018 2019 2020 2Q21 0.0% 0.4% 0.8% 1.2% 1.6% US Bank Aggregate
20 TRISTATE CAPITAL | INVESTOR PRESENTATION Loans with Deferral Agreements/ Total Loans CRE 0.4% Commercial Loan Deferrals Commercial balances with deferral agreements at June 30, 2021 totaled $41M, or ~0.4% of total loans, compared to $85M, or ~1%, at December 31, 2020 Category Balances at 6/30/21 Deferrals at 6/30/21 Deferrals as % of Total Deferrals Deferrals as % of Total Loans CRE Multifamily $ 715.6 — % — bps Office $ 549.2 $ 13.5 32.9 % 1 bps Retail $ 319.5 $ 8.8 21.4 % 1 bps Industrial $ 338.1 $ — — % — bps Hotel $ 40.0 $ 10.9 26.5 % 1 bps Self Storage $ 50.6 $ 7.9 19.2 % 1 bps Total Loans $9.28B
21 TRISTATE CAPITAL | INVESTOR PRESENTATION Reserve Expectations Reflects TSC's focus on high-quality and seasoned commercial borrowers, proactive approach to managing credit risk, and majority of portfolio in private banking loans collateralized by marketable securities 39-98 bps below the year-end average for U.S. commercial banks with $10B-$20B of assets, 2010-20 Low TSC allowance/loans ratio reflects attractive risk profile Allowance/ Total Loans TSC Allowance / Loans TSC Commercial Allowance/ Commercial Loans $10B-$20B Commercial Bank Average ALL/ Loans 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 2Q 21 0% 1% 2% 3%
22 TRISTATE CAPITAL | INVESTOR PRESENTATION Floating Rate 94% ~ 86% ~ 8% ~ 6% Indexed to 30-Day LIBOR Indexed to Prime or Other Fixed-rate Flexible Balance Sheet Agile liability pricing ~ 49% ~ 31% ~ 9% ~ 6% ~ 5% Linked to EFF* or other benchmark Rates set at bank discretion Fixed-rate CDs (~5-7 month duration) Other fixed-rate term Non-interest bearing Enables active management of interest rate risk in changing markets Majority of funding through variable rate deposits repriced monthly Disciplined loan repricing Effective use of interest rate floors * Effective Federal Funds Rate Total Loans $9.28B Total Deposits $10.19B
23 TRISTATE CAPITAL | INVESTOR PRESENTATION Capital Profile 4.81% 9.58% 6.86% 5.50% 10.96% 7.60% 2Q21 Holding Co. Capital Ratios Pro-forma Series C and warrant conversion Tangible common equity ("TCE") to tangible assets TCE ratio ex. private banking loans Tier 1 leverage ratio 0% 5% 10% 15% Strong Balance Sheet Leads to Capital Efficiency Over 65% of balance sheet is comprised of cash & equivalents, investments and private banking loans primarily collateralized by liquid marketable securities or cash value life insurance policies 1 1 See "Reconciliation of Non-GAAP Financial Measures to GAAP Balance Sheet Items" for a reconciliation of these measures, which are not recognized under GAAP and are therefore considered to be non-GAAP financial measures, to their most directly comparable GAAP measures. “Pro-forma Series C and warrant conversion” reflects conversion of all outstanding Series C perpetual non-cumulative convertible non-voting preferred stock and warrants to TSC common stock. The company’s Series A and Series B non-cumulative perpetual preferred stock are not convertible. Period Ending Balance Sheet $4.78 $6.04 $7.77 $9.90 $11.54 10.30% 12.57% 11.47% 7.15% 10.37% Private Banking Channel Loans (net) Total Commercial Banking Loans (net) Cash and cash equivalents Total investment securities Goodwill and other intangibles, net Other assets Return on average common equity 2017 2018 2019 2020 2Q21 $0B $5B $10B $15B
24 TRISTATE CAPITAL | INVESTOR PRESENTATION Capital Strength Supports High-Growth Strategy Raised >$300M in past two years Raised $105M in new capital in 4Q20, issuing common stock, convertible preferred stock and warrants to funds managed by Stone Point Capital, LLC Raised >$97M in new capital in 2Q20 through registered offering of subordinated notes Non-cumulative perpetual preferred stock offerings in 2018-19 raised $116M, providing additional Tier 1 capital for holding company Deployed $66M raised in ‘13 IPO in three accretive investment management acquisitions1 while organically growing balance sheet by >$7B Capital Ratios Holding Co. Bank Tier 1 leverage 6.86% 7.34% CET 1 risk-based 9.06% 12.80% Tier 1 risk-based 11.94% 12.80% Total risk-based 13.94% 13.26% 1 Chartwell acquisition closed 3/5/2014,TKG acquisition closed 4/29/2016, and Columbia acquisition closed 4/6/2018.
25 TRISTATE CAPITAL | INVESTOR PRESENTATION Investment Profile TSC is well positioned to produce robust earnings as we expand each of our businesses in 2021 and beyond 1 Market data as of July 22,, 2021, shares outstanding as of 6/30/21 2 Collective ownership of officers, directors and their affiliated entities as a percentage of the company's common stock outstanding Investment Profile1 Closing Price $ 20.20 52-Week High $ 26.42 52-Week Low $ 12.09 Common Shares Outstanding 33.2 M Price/ LTM EPS 14.5x Price/ Book 1.1x Price/ Tangible Book 1.2x Float $ 27.8 M Average Daily Volume (3 mos.) ~ 102,000 Insider & Affiliate Ownership2 16 %
26 TRISTATE CAPITAL | INVESTOR PRESENTATION Appendix
27 TRISTATE CAPITAL | INVESTOR PRESENTATION Average Share Count Actual Actual Estimate Estimate Estimate For basic and diluted EPS calculations 1Q21 2Q21 3Q21 4Q21 2021 Diluted earnings per common share $ 0.35 0.41 Number of Weighted Average Basic Shares Outstanding Basic common shares outstanding 31,224,474 31,280,481 31,280,481 31,280,481 31,280,481 Additional shares from Series C conversion if all preferred dividends paid in kind and reinvested 4,727,272 4,807,272 4,887,272 4,967,272 4,848,039 Additional shares from warrant exercise if TSC common above $17.50 922,438 922,438 922,438 922,438 922,438 Total percentage allocation of net income available to common holders 36,874,184 37,010,191 37,090,191 37,170,191 37,050,958 Percentage Allocation of Net Income Available: Allocation based on basic common shares outstanding 84.68 % 84.52 % 84.34 % 84.15 % 84.43 % Allocation for Series C conversion if all preferred dividends paid in kind and reinvested 12.82 % 12.98 % 13.18 % 13.36 % 13.09 % Allocation for warrant exercise if TSC common above $17.50 2.50 % 2.49 % 2.49 % 2.48 % 2.49 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Number of Weighted Average Diluted Common Shares Outstanding: Basic common shares outstanding 31,224,474 31,280,481 31,280,481 31,280,481 31,280,481 Restricted stock dilution 801,798 719,504 719,504 719,504 719,504 Stock option dilution 160,762 147,773 147,773 147,773 147,773 Warrants dilution — — — — — Weighted average diluted common shares outstanding: 32,187,034 32,147,758 32,147,758 32,147,758 32,147,758 Calculating Net Income Available to Common Shareholders ($000s) Net income $ 16,200 18,780 Less: Preferred dividends on series A and B $ 1,962 $ 1,962 $ 1,962 $ 1,962 $ 7,849 Less: Preferred dividends on series C, if all preferred dividends paid in kind and reinvested $ 1,097 $ 1,115 $ 1,134 $ 1,153 $ 4,499 Net income available to common shareholders $ 13,141 15,703 Calculating Earnings Per Share Basic EPS = ($ net income available to common shareholders) x (% allocation based on common s/o) ÷ (number of weighted average basic common s/o) Diluted EPS1 = ($ net income available to common shareholders) x (% allocation based on common s/o) ÷ (number of weighted average diluted common s/o) (1) Warrants issued on December 30, 2020 granting the right to purchase, subject to certain adjustments, an aggregate of 922,438 shares of TSC common stock at an exercise price of $17.50 per share. The warrants are antidilutive compared to the basic EPS calculation.
28 TRISTATE CAPITAL | INVESTOR PRESENTATION Key Performance Ratios As of and For the Three Months Ended As of and For the Years Ended (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, December 31, December 31, 2021 2021 2020 2020 2020 2020 2019 Performance ratios: Return on average assets (1) 0.69 % 0.64 % 0.51 % 0.39 % 0.45 % 0.50 % 0.89 % Return on average common equity (2) 10.37 % 9.06 % 7.87 % 5.56 % 6.62 % 7.15 % 11.47 % Net interest margin 1.63 % 1.59 % 1.53 % 1.46 % 1.52 % 1.58 % 1.97 % Total revenue $ 57,658 $ 52,308 $ 49,934 $ 46,619 $ 46,467 $ 191,201 $ 179,423 Pre-tax, pre-provision net revenue $ 23,233 $ 21,030 $ 15,498 $ 15,192 $ 18,371 $ 68,098 $ 67,274 Bank efficiency ratio 51.51 % 50.59 % 60.95 % 58.73 % 50.39 % 55.57 % 54.49 % Non-interest expense to average assets 1.27 % 1.24 % 1.40 % 1.31 % 1.22 % 1.35 % 1.66 % Asset quality: Non-performing loans $ 11,175 $ 22,727 $ 9,680 $ 6,754 $ 6,780 $ 9,680 $ 184 Non-performing assets $ 13,743 $ 25,451 $ 12,404 $ 9,478 $ 9,504 $ 12,404 $ 4,434 Other real estate owned $ 2,568 $ 2,724 $ 2,724 $ 2,724 $ 2,724 $ 2,724 $ 4,250 Non-performing assets to total assets 0.12 % 0.24 % 0.13 % 0.10 % 0.10 % 0.13 % 0.06 % Non-performing loans to total loans 0.12 % 0.27 % 0.12 % 0.09 % 0.09 % 0.12 % — % Allowance for credit losses on loans and leases 0.35 % 0.41 % 0.42 % 0.40 % 0.32 % 0.42 % 0.21 % Allowance for credit losses on loans and leases to non-performing loans 291.52 % 152.44 % 357.75 % 454.63 % 343.30 % 357.75 % 7,667.39 % Net charge-offs (recoveries) $ 2,253 $ 199 $ (109) $ — $ 33 $ (279) $ (1,868) Net charge-offs (recoveries) to average total loans 0.10 % 0.01 % (0.01) % — % — % — % (0.03) % Investment management segment: Assets under management $ 11,511,000 $ 11,203,000 $ 10,263,000 $ 9,653,000 $ 9,254,000 $ 10,263,000 $ 9,701,000 EBITDA $ 2,063 $ 1,916 $ 1,675 $ 1,551 $ 1,031 $ 5,473 $ 5,824 (1) Net income divided by total average assets. (2) Net income available to common shareholders divided by average common equity.
29 TRISTATE CAPITAL | INVESTOR PRESENTATION Income Statement For the Three Months Ended For the Years Ended (Dollars in thousands, except per share data) June 30, March 31, December 31, September 30, June 30, December 31, December 31, 2021 2021 2020 2020 2020 2020 2019 Income statement data: Interest income $ 55,555 $ 51,992 $ 51,010 $ 50,222 $ 51,661 $ 217,095 $ 262,447 Interest expense 12,643 13,336 14,946 16,748 18,177 79,151 135,390 Net interest income 42,912 38,656 36,064 33,474 33,484 137,944 127,057 Provision (credit) for credit losses 96 224 2,972 7,430 6,005 19,400 (968) Net interest income after provision for credit losses 42,816 38,432 33,092 26,044 27,479 118,544 128,025 Non-interest income: Investment management fees 9,451 9,000 8,564 8,095 7,738 32,035 36,442 Net gain (loss) on the sale and call of debt securities 98 (1) 133 3,744 14 3,948 416 Other non-interest income 5,295 4,652 5,306 5,050 5,245 21,222 15,924 Total non-interest income 14,844 13,651 14,003 16,889 12,997 57,205 52,782 Non-interest expense: Intangible amortization expense 478 478 478 478 486 1,944 2,009 Other non-interest expense 33,947 30,800 33,957 30,949 27,610 121,159 110,140 Total non-interest expense 34,425 31,278 34,435 31,427 28,096 123,103 112,149 Income before tax 23,235 20,805 12,660 11,506 12,380 52,646 68,658 Income tax expense 4,455 4,605 50 2,177 1,979 7,412 8,465 Net income $ 18,780 $ 16,200 $ 12,610 $ 9,329 $ 10,401 $ 45,234 $ 60,193 Preferred stock dividends 3,077 3,059 1,987 1,962 1,962 7,873 5,753 Net income available to common shareholders $ 15,703 $ 13,141 $ 10,623 $ 7,367 $ 8,439 $ 37,361 $ 54,440 Earnings per common share: Basic $ 0.42 $ 0.36 $ 0.37 $ 0.26 $ 0.30 $ 1.32 $ 1.95 Diluted $ 0.41 $ 0.35 $ 0.37 $ 0.26 $ 0.30 $ 1.30 $ 1.89
30 TRISTATE CAPITAL | INVESTOR PRESENTATION Period-End Balance Sheet As of (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Period-end balance sheet data: Cash and cash equivalents $ 529,453 $ 446,484 $ 435,442 $ 608,302 $ 724,942 Total investment securities, net 1,337,658 1,231,074 842,545 820,223 812,140 Loans and leases held-for-investment 9,282,922 8,543,182 8,237,418 7,654,446 7,170,770 Allowance for credit losses on loans and leases (32,577) (34,644) (34,630) (30,706) (23,276) Loans and leases held-for-investment, net 9,250,345 8,508,538 8,202,788 7,623,740 7,147,494 Goodwill and other intangibles, net 62,955 63,433 63,911 64,389 64,867 Other assets 360,761 315,621 352,130 377,136 380,398 Total assets $ 11,541,172 $ 10,565,150 $ 9,896,816 $ 9,493,790 $ 9,129,841 Deposits $ 10,191,433 $ 9,250,019 $ 8,489,089 $ 8,183,713 $ 7,831,471 Borrowings, net 345,600 345,547 400,493 395,439 395,552 Other liabilities 209,571 195,298 250,089 271,438 269,987 Total liabilities 10,746,604 9,790,864 9,139,671 8,850,590 8,497,010 Preferred stock 179,343 178,243 177,143 116,079 116,079 Common shareholders' equity 615,225 596,043 580,002 527,121 516,752 Total shareholders' equity 794,568 774,286 757,145 643,200 632,831 Total liabilities and shareholders' equity $ 11,541,172 $ 10,565,150 $ 9,896,816 $ 9,493,790 $ 9,129,841
31 TRISTATE CAPITAL | INVESTOR PRESENTATION Capital Ratios As of June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 TSCH capital ratios: Tier 1 leverage ratio 6.86 % 7.13 % 7.29 % 6.23 % 6.30 % Common equity tier 1 risk-based capital ratio 9.06 % 9.10 % 8.99 % 8.48 % 8.54 % Tier 1 risk-based capital ratio 11.94 % 12.08 % 11.99 % 10.56 % 10.68 % Total risk-based capital ratio 13.94 % 14.18 % 14.12 % 12.85 % 12.89 % TSCB capital ratios: Tier 1 leverage ratio 7.34 % 7.65 % 7.83 % 7.00 % 7.11 % Common equity tier 1 risk-based capital ratio 12.80 % 12.98 % 12.89 % 11.89 % 12.07 % Tier 1 risk-based capital ratio 12.80 % 12.98 % 12.89 % 11.89 % 12.07 % Total risk-based capital ratio 13.26 % 13.49 % 13.41 % 12.46 % 12.52 %
32 TRISTATE CAPITAL | INVESTOR PRESENTATION Loan Composition (Dollars in thousands) As of June 30, March 31, December 31, September 30, June 30, Loan and Lease Composition 2021 2021 2020 2020 2020 Private banking $ 5,713,562 $ 5,053,621 $ 4,807,800 $ 4,458,767 $ 4,063,116 C&I 1,240,917 1,249,208 1,274,152 1,138,288 1,152,880 CRE 2,328,443 2,240,353 2,155,466 2,057,391 1,954,774 Loans and leases held-for-investment $ 9,282,922 $ 8,543,182 $ 8,237,418 $ 7,654,446 $ 7,170,770 Private banking 61.5 % 59.2 % 58.4 % 58.3 % 56.6 % C&I 13.4 % 14.6 % 15.5 % 14.9 % 16.1 % CRE 25.1 % 26.2 % 26.1 % 26.8 % 27.3 % Loans and leases held-for-investment 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
33 TRISTATE CAPITAL | INVESTOR PRESENTATION Deposit Composition (Dollars in thousands) As of June 30, March 31, December 31, September 30, June 30, Deposit Composition 2021 2021 2020 2020 2020 Noninterest-bearing checking accounts $ 513,529 $ 496,818 $ 456,426 $ 439,878 $ 422,341 Interest-bearing checking accounts 4,371,659 3,373,915 3,068,834 3,024,007 2,664,864 Money market deposit accounts 4,383,597 4,449,317 3,927,797 3,662,860 3,547,518 Certificates of deposit 922,648 929,969 1,036,032 1,056,968 1,196,748 Total deposits $ 10,191,433 $ 9,250,019 $ 8,489,089 $ 8,183,713 $ 7,831,471 Noninterest-bearing checking accounts 5.0 % 5.4 % 5.4 % 5.3 % 5.4 % Interest-bearing checking accounts 42.9 % 36.4 % 36.1 % 37.0 % 34.0 % Money market deposit accounts 43.0 % 48.1 % 46.3 % 44.8 % 45.3 % Certificates of deposit 9.1 % 10.1 % 12.2 % 12.9 % 15.3 % Total deposits 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
34 TRISTATE CAPITAL | INVESTOR PRESENTATION Average Balance Sheet Three Months Ended June 30, 2021 March 31, 2021 June 30, 2020 (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 $ 407,627 $ 114 0.11 % $ 555,427 $ 158 0.12 % $ 1,098,510 $ 342 0.13 % Federal funds sold 11,502 2 0.07 % 10,557 2 0.08 % 7,883 1 0.05 % Debt securities available-for-sale 266,264 886 1.33 % 348,835 570 0.66 % 329,015 2,026 2.48 % Debt securities held-to-maturity 1,040,658 2,705 1.04 % 637,719 1,900 1.21 % 292,898 1,616 2.22 % Debt securities trading — — — % 315 1 1.29 % — — — % FHLB stock 11,776 154 5.25 % 11,551 182 6.39 % 13,269 305 9.24 % Total loans and leases 8,808,775 51,702 2.35 % 8,276,059 49,186 2.41 % 7,094,744 47,377 2.69 % Total interest-earning assets 10,546,602 55,563 2.11 % 9,840,463 51,999 2.14 % 8,836,319 51,667 2.35 % Other assets 347,923 375,418 408,950 Total assets $ 10,894,525 $ 10,215,881 $ 9,245,269 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-bearing checking accounts $ 3,852,078 3,214 0.33 % $ 3,065,983 $ 2,793 0.37 % $ 2,327,513 $ 2,719 0.47 % Money market deposit accounts 4,316,946 5,636 0.52 % 4,345,454 5,964 0.56 % 3,862,068 7,377 0.77 % Certificates of deposit 929,906 1,256 0.54 % 1,012,861 1,997 0.80 % 1,389,984 5,857 1.69 % Borrowings: FHLB borrowings 250,000 1,082 1.74 % 253,889 1,072 1.71 % 300,000 1,284 1.72 % Line of credit borrowings — — — % 4,589 55 4.86 % 22,747 260 4.60 % Subordinated notes payable, net 95,565 1,455 6.11 % 95,511 1,455 6.18 % 44,417 680 6.16 % Total interest-bearing liabilities 9,444,495 12,643 0.54 % 8,778,287 13,336 0.62 % 7,946,729 18,177 0.92 % Noninterest-bearing deposits 460,601 424,535 417,732 Other liabilities 203,033 247,659 252,303 Shareholders' equity 786,396 765,400 628,505 Total liabilities and shareholders' equity $ 10,894,525 $ 10,215,881 $ 9,245,269 Net interest income (1) $ 42,920 $ 38,663 $ 33,490 Net interest spread (1) 1.57 % 1.52 % 1.43 % Net interest margin (1) 1.63 % 1.59 % 1.52 % (1) Calculated on a fully taxable equivalent basis.
35 TRISTATE CAPITAL | INVESTOR PRESENTATION Average Balance Sheet Years Ended December 31, 2020 2019 (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 $ 775,276 $ 2,199 0.28 % $ 313,413 $ 6,628 2.11 % Federal funds sold 8,076 25 0.31 % 8,803 167 1.90 % Debt securities available-for-sale 438,293 6,550 1.49 % 250,064 8,119 3.25 % Debt securities held-to-maturity 246,054 6,439 2.62 % 193,443 6,921 3.58 % Equity securities — — — % 6,733 115 1.71 % FHLB stock 14,994 1,098 7.32 % 18,043 1,270 7.04 % Total loans and leases 7,255,035 200,839 2.77 % 5,669,507 239,328 4.22 % Total interest-earning assets 8,738,320 217,155 2.49 % 6,460,006 262,548 4.06 % Other assets 387,080 281,171 Total assets $ 9,125,400 $ 6,741,177 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-bearing checking accounts $ 2,407,087 $ 14,493 0.60 % $ 1,058,064 $ 21,480 2.03 % Money market deposit accounts 3,812,942 35,095 0.92 % 2,943,541 69,336 2.36 % Certificates of deposit 1,223,631 19,614 1.60 % 1,371,038 34,776 2.54 % Borrowings: FHLB borrowings 330,314 6,095 1.85 % 394,480 8,639 2.19 % Line of credit borrowings 6,243 261 4.18 % 1,234 68 5.51 % Subordinated notes payable, net 59,078 3,593 6.08 % 17,335 1,091 6.29 % Total interest-bearing liabilities 7,839,295 79,151 1.01 % 5,785,692 135,390 2.34 % Noninterest-bearing deposits 408,313 267,846 Other liabilities 239,137 128,618 Shareholders' equity 638,655 559,021 Total liabilities and shareholders' equity $ 9,125,400 $ 6,741,177 Net interest income (1) $ 138,004 $ 127,158 Net interest spread (1) 1.48 % 1.72 % Net interest margin (1) 1.58 % 1.97 % (1) Calculated on a fully taxable equivalent basis.
36 TRISTATE CAPITAL | INVESTOR PRESENTATION Segments Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 (Dollars in thousands) Bank Investment Management Parent and Other Consolidated Bank Investment Management Parent and Other Consolidated Income statement data: Interest income $ 55,555 $ — $ — $ 55,555 $ 51,661 $ — $ — $ 51,661 Interest expense 11,199 — 1,444 12,643 17,251 — 926 18,177 Net interest income (loss) 44,356 — (1,444) 42,912 34,410 — (926) 33,484 Provision for credit losses 96 — — 96 6,005 — — 6,005 Net interest income (loss) after provision for credit losses 44,260 — (1,444) 42,816 28,405 — (926) 27,479 Non-interest income: Investment management fees — 9,774 (323) 9,451 — 7,897 (159) 7,738 Net gain on the sale and call of debt securities 98 — — 98 14 — — 14 Other non-interest income 5,283 12 — 5,295 5,215 30 — 5,245 Total non-interest income (loss) 5,381 9,786 (323) 14,844 5,229 7,927 (159) 12,997 Non-interest expense: Intangible amortization expense — 478 — 478 — 486 — 486 Other non-interest expense 25,570 7,826 551 33,947 19,967 7,003 640 27,610 Total non-interest expense 25,570 8,304 551 34,425 19,967 7,489 640 28,096 Income (loss) before tax 24,071 1,482 (2,318) 23,235 13,667 438 (1,725) 12,380 Income tax expense (benefit) 4,565 286 (396) 4,455 2,173 102 (296) 1,979 Net income (loss) $ 19,506 $ 1,196 $ (1,922) $ 18,780 $ 11,494 $ 336 $ (1,429) $ 10,401
37 TRISTATE CAPITAL | INVESTOR PRESENTATION Segments Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 (Dollars in thousands) Bank Investment Management Parent and Other Consolidated Bank Investment Management Parent and Other Consolidated Income statement data: Interest income $ 107,547 $ — $ — $ 107,547 $ 115,863 $ — $ — $ 115,863 Interest expense 23,038 — 2,941 25,979 46,547 — 910 47,457 Net interest income (loss) 84,509 — (2,941) 81,568 69,316 — (910) 68,406 Provision for credit losses 320 — — 320 8,998 — — 8,998 Net interest income (loss) after provision for credit losses 84,189 — (2,941) 81,248 60,318 — (910) 59,408 Non-interest income: Investment management fees — 19,009 (558) 18,451 — 15,662 (286) 15,376 Net gain on the sale and call of debt securities 97 — — 97 71 — — 71 Other non-interest income 9,915 32 — 9,947 10,866 — — 10,866 Total non-interest income (loss) 10,012 19,041 (558) 28,495 10,937 15,662 (286) 26,313 Non-interest expense: Intangible amortization expense — 956 — 956 — 988 — 988 Other non-interest expense 48,225 15,268 1,254 64,747 41,000 13,630 1,622 56,252 Total non-interest expense 48,225 16,224 1,254 65,703 41,000 14,618 1,622 57,240 Income (loss) before tax 45,976 2,817 (4,753) 44,040 30,255 1,044 (2,818) 28,481 Income tax expense (benefit) 9,294 596 (830) 9,060 5,521 130 (466) 5,185 Net income (loss) $ 36,682 $ 2,221 $ (3,923) $ 34,980 $ 24,734 $ 914 $ (2,352) $ 23,296
38 TRISTATE CAPITAL | INVESTOR PRESENTATION Reconciliation of Non-GAAP Financial Measures to GAAP Income Statement Items Revenue, a non-GAAP financial metric that TriState Capital has consistently utilized to provide a greater understanding of its significant fee-generating businesses, is the sum of net interest income and non-interest income, excluding net gains on the sale of debt securities. For a comprehensive discussion on the use of non-GAAP data, please refer to the Company’s most recent quarterly financial results news release filed with the Securities and Exchange Commission and available at www.tscbank.com For the Three Months Ended For the Years Ended June 30, March 31, December 31, September 30, June 30, December 31, December 31, (Dollars in thousands) 2021 2021 2020 2020 2020 2020 2019 Total revenue: Net interest income $ 42,912 $ 38,656 $ 36,064 $ 33,474 $ 33,484 $ 137,944 $ 127,057 Total non-interest income 14,844 13,651 14,003 16,889 12,997 57,205 52,782 Less: net gain (loss) on the sale and call of debt securities 98 (1) 133 3,744 14 3,948 416 Total revenue $ 57,658 $ 52,308 $ 49,934 $ 46,619 $ 46,467 $ 191,201 $ 179,423 Less: total non-interest expense 34,425 31,278 34,436 31,427 28,096 123,103 112,149 Pre-tax, pre-provision net revenue $ 23,233 $ 21,030 $ 15,498 $ 15,192 $ 18,371 $ 68,098 $ 67,274 Bank total revenue: Net interest income $ 44,356 $ 40,153 $ 37,515 $ 34,925 $ 34,410 $ 141,756 $ 127,996 Total non-interest income 5,381 4,630 5,403 8,771 5,229 25,112 15,467 Less: net gain (loss) on the sale and call of debt securities 98 (1) 133 3,744 14 3,948 416 Bank total revenue $ 49,639 $ 44,784 $ 42,785 $ 39,952 $ 39,625 $ 162,920 $ 143,047 Bank efficiency ratio: Total non-interest expense (numerator) $ 25,570 $ 22,655 $ 26,078 $ 23,462 $ 19,967 $ 90,541 $ 77,945 Total revenue (denominator) $ 49,639 $ 44,784 $ 42,785 $ 39,952 $ 39,625 $ 162,920 $ 143,047 Bank efficiency ratio 51.51 % 50.59 % 60.95 % 58.73 % 50.39 % 55.57 % 54.49 %
39 TRISTATE CAPITAL | INVESTOR PRESENTATION For the Three Months Ended For the Years Ended June 30, March 31, December 31, September 30, June 30, December 31, December 31, (Dollars in thousands) 2021 2021 2020 2020 2020 2020 2019 Investment Management EBITDA: Net income $ 1,196 $ 1,025 $ 1,167 $ 719 $ 336 $ 2,798 $ 2,433 Interest expense — — — — — — — Income taxes expense (benefit) 286 310 (74) 251 102 308 918 Depreciation expense 103 103 104 103 107 423 464 Intangible amortization expense 478 478 478 478 486 1,944 2,009 EBITDA $ 2,063 $ 1,916 $ 1,675 $ 1,551 $ 1,031 $ 5,473 $ 5,824 Reconciliation of Non-GAAP Financial Measures to GAAP Income Statement Items For a comprehensive discussion on the use of non-GAAP data, please refer to the Company’s most recent quarterly financial results news release filed with the Securities and Exchange Commission and available at www.tscbank.com
40 TRISTATE CAPITAL | INVESTOR PRESENTATION Reconciliation of Non-GAAP Financial Measures to GAAP Balance Sheet Items As of (Dollars in thousands, except per share data) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Tangible book value per common share: Common shareholders' equity $ 615,225 $ 596,043 $ 580,002 $ 527,121 $ 516,752 Less: goodwill and intangible assets 62,955 63,433 63,911 64,389 64,867 Tangible common equity (numerator) $ 552,270 $ 532,610 $ 516,091 $ 462,732 $ 451,885 Common shares outstanding 33,176,934 33,160,605 32,620,150 29,828,143 29,851,550 Tangible book value per common share $ 16.65 $ 16.06 $ 15.82 $ 15.51 $ 15.14 For a comprehensive discussion on the use of non-GAAP data, please refer to the Company’s most recent quarterly financial results news release filed with the Securities and Exchange Commission and available at www.tscbank.com
41 TRISTATE CAPITAL | INVESTOR PRESENTATION Reconciliation of Non-GAAP Financial Measures to GAAP Balance Sheet Items As of (Dollars in thousands, except per share data) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Tangible common equity ratio excluding private banking channel loans: Common shareholders' equity $ 615,225 $ 596,043 $ 580,002 $ 527,121 $ 516,752 Less: goodwill and intangible assets 62,955 63,433 63,911 64,389 64,867 Tangible common equity (numerator) $ 552,270 $ 532,610 $ 516,091 $ 516,091 $ 451,885 Plus: series C preferred stock conversion 63,264 62,164 61,064 Plus: warrant exercise 16,143 16,143 16,143 Tangible common equity (with series C preferred stock and warrants) $ 631,677 $ 610,917 $ 593,298 $ 516,091 $ 451,885 Total assets 11,541,172 10,565,150 9,896,816 9,493,790 9,129,841 Less: goodwill and intangible assets 62,955 63,433 63,911 64,389 64,867 Tangible assets $ 11,478,217 $ 10,501,717 $ 9,832,905 $ 9,429,401 $ 9,064,974 Tangible common equity ratio 4.81 % 5.07 % 5.25 % 5.47 % 4.98 % Tangible common equity ratio (with series C preferred stock and warrants) 5.50 % 5.82 % 6.03 % Tangible assets 11,478,217 10,501,717 9,832,905 9,429,401 9,064,974 Less: private banking loans 5,713,562 5,053,621 4,807,800 4,458,767 4,063,116 Tangible assets excluding private banking loans (denominator) $ 5,764,655 $ 5,448,096 $ 5,025,105 $ 4,970,634 $ 5,001,858 Tangible common equity ratio excluding private banking loans 9.58 % 9.78 % 10.27 % 10.38 % 9.03 % Tangible common equity ratio excluding private banking loans, including series C preferred stock and warrants 10.96 % 11.21 % 11.81 % On December 30, 2020, the company closed on its previously announced capital raise, issuing common stock, Series C preferred stock and warrants to funds managed by Stone Point Capital, LLC. For a comprehensive discussion on the use of non-GAAP data, please refer to the Company’s most recent quarterly financial results news release filed with the Securities and Exchange Commission and available at www.tscbank.com
42 TRISTATE CAPITAL | INVESTOR PRESENTATION Reconciliation of Non-GAAP Financial Measures to GAAP Balance Sheet Items As of (Dollars in thousands) June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Total Tier 1 Capital $ 743,882 $ 723,939 $ 707,711 $ 589,176 $ 579,146 Plus: series C preferred stock conversion 63,264 62,164 61,064 Plus: warrant exercise 16,143 16,143 16,143 Total Tier 1 Capital (with series C preferred stock and warrants) $ 823,289 $ 802,246 $ 784,918 $ 589,176 $ 579,146 Averge Assets 10,839,164 10,159,340 9,710,204 9,457,741 9,188,460 Tier 1 Leverage ratio 6.86 % 7.13 % 7.29 % 6.23 % 6.30 % Tier 1 Leveage ratio (with series C preferred stock and warrants) 7.60 % 7.90 % 8.08 % On December 30, 2020, the company closed on its previously announced capital raise, issuing common stock, Series C preferred stock and warrants to funds managed by Stone Point Capital, LLC. For a comprehensive discussion on the use of non-GAAP data, please refer to the Company’s most recent quarterly financial results news release filed with the Securities and Exchange Commission and available at www.tscbank.com