TriState Capital Shares Jump 35% on $1.1B Buyout Offer From Raymond James

Source: Streetwise Reports   10/21/2021

TriState Capital Holdings Inc. shares hit a new 52-week high after the company reported it entered into a definitive agreement to be acquired by Raymond James Financial in a combination cash and stock transaction valued at $1.1 billion.

After U.S. markets closed for trading yesterday, TriState Capital Holdings Inc. (TSC:NASDAQ) and Raymond James Financial Inc. (RJF:NYSE) announced that the two companies entered into “a definitive agreement under which Raymond James will acquire TriState Capital in a combination cash and stock transaction, valued at approximately $1.1 billion.”

The companies advised that the agreement provides that “TriState Capital common stockholders will receive $6.00 cash and 0.25 Raymond James shares for each share of TriState Capital common stock, which represents per share consideration of $31.09 based on the closing price of Raymond James common stock on October 19, 2021.”

Raymond James Financials’ Chairman and CEO Paul Reilly commented, “TriState Capital has a terrific, client-centric franchise focused on serving clients with premier private banking, commercial banking and niche investment management products and services…As we have followed the firm and management team over the past several years, including as its largest deposit client, we’ve admired its leadership position in offering securities-based lending through a scalable and robust technology platform. Importantly, this acquisition further illustrates our commitment to utilize excess capital through organic and inorganic growth that we expect to drive strong returns for shareholders over the long term.”

TriState Capital Holdings’ Chairman and CEO Jim Getz remarked, “We founded TriState Capital 14 years ago because we saw an incredible opportunity to build a successful company built on a commitment to independence, a long-term perspective, integrity, and putting clients squarely at the center of everything we do and every decision we make…Raymond James shares those values and allows us to be part of one of the most highly regarded financial services companies in the nation. Our clients will continue to benefit from working with the same talented teams and the TriState Capital and Chartwell brands they already know so well, along with the technology we’ve invested in to provide an exceptional and responsive client experience.”

The report indicated that after the transaction is completed, TriState Capital will continue to be led by current Chairman Jim Getz and will operate as a separately stand-alone division and independently chartered bank subsidiary of Raymond James. TriState’s 350 associates are expected to remain with the firm at its present office locations.

The companies stated that merging of the two companies will provide TriState Capital with additional resources to expand its reach and gives Raymond James an additional bank charter and access to a leading treasury management business to diversify its deposit gathering capabilities and raise the level of its FDIC -insured deposit capacity.

The report stated that the transaction is expected to close in 2022, subject to approval by TriState Capital shareholders, ordinary closing conditions and required regulatory approvals.

In a separate news release yesterday afternoon, TriState Capital Holdings Inc. (TSC:NASDAQ) reported Q3/21 financial results for the period ended September 30, 2021. The company advised that in Q3/21 it posted record net income, organic loan and balance sheet growth and added that net interest margin (NIM) expanded for the fourth consecutive quarter.

TriState Capital Holdings, which is the parent company of both TriState Capital Bank and Chartwell Investment Partners, reported that net income inn Q3/21 increased by 129.7% to $16.9 million, compared to $7.4 million in Q3/20 and added that it was also 7.7% higher sequentially versus the $15.7 million earned in Q2/21. The company stated it posted $0.44 per diluted share in Q3/21, compared to $0.26 in Q3/20 and $0.41 during Q2/21.

The Holding company’s Chairman and CEO James F. Getz commented, “TriState Capital’s performance in the quarter and year to date showcased the tremendous earnings power of our investment management, private banking and commercial banking businesses, along with our ability to sustain profitable and responsible organic revenue growth…Our agile and low-cost funding capability also enabled TriState Capital to cross the $12 billion-asset milestone during the quarter, as each of our private banking, middle-market commercial and securities portfolios grew to new record levels and we maintain a balance sheet that is well positioned for rising interest rates.”

TriState advised that in Q3/21 it showed strong growth in several key areas of its business. The firm said it has achieved year-to-date net inflows from retail and institutional clients totaling $499.0 million and noted that this amount includes $149.0 million in fixed income strategies just in the third quarter.

The company stated that total loans in Q3/21 grew by 28.9% year-over-year and 6.3% sequentially. During the same period, commercial loans were up 14.7% versus Q3/20 and 2.7% compared to Q3/21. During Q3/21, private banking loans rose 39.1% and treasury management deposit accounts grew by 82.0%, compared to Q3/20.

TriState highlighted that net interest income (NII) grew to a record $46.7 million in Q3/21, up from $33.5 million in Q3/20, though non-interest income decreased to $14.2 million, versus $16.9 million in the prior year’s corresponding quarter.

The company advised that during Q3/21, it achieved record average deposits of $10.25 billion, representing a 25% gain over average deposits of $8.21 billion in Q3/20.

TriState is a bank holding company based in Pittsburgh, Pa. that offers commercial banking, private banking and investment management services. The firm serves mid-market companies, institutions and high-net-worth clients. The company listed that as of September 30, 2021, its banking subsidiary TriState Capital Bank had total assets of $12.07 billion. The holding company also owns Chartwell Investment Partners which as of September 30, 2021, had $11.45 billion in assets under management.

Raymond James is a large diversified financial holding company headquartered in St. Petersburg, Fla. The firm provides asset management, banking, capital markets, private client group and other services to individuals, companies, institutions and municipalities. The company has a network of over 8,400 financial advisors who in aggregate manage client assets of around $1.2 trillion. The company has a market cap of about $21 billion.

TriState began the day with a market cap of around $754.3 million with 33.16 million shares outstanding and a short interest of about 1.6%. TSC shares opened 29% higher today at $29.42 (+$6.67, +29.32%) over yesterday’s $22.75 closing price and reached a new 52-week high price this morning of $31.04. The stock has traded today between $29.27 and $31.04 per share and is currently trading at $30.89 (+$8.14, +35.78%).

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