TriState Capital Holdings, Inc.

Good morning, everyone, and welcome to the Tri-State Capital Holdings Conference call to discuss financial results for the three months ended March 31st, 2021. All participants will be in a listen-only mode. If you need assistance, you may say no to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. We do ask the participants please limit themselves to one question and one follow-up return. If you still have questions, please know you may re-enter the question queue. Please also note that today's event is being recorded. Before turning the call over to management, I'd like to remind everyone that today's call may contain forward-looking statements related to Tri-State Capital that reflect Tri-State Capital's current views with respect to, among other things, future events and the company's financial performance. as well as the company's future plans, objectives, or goals. Such forward-looking statements are subject to risks and assumptions 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, You should keep in mind that any forward-looking statements made by Tri-State Capital speak only as of the date on which they are made. New risks and uncertainties come up from time to time and management cannot predict these events or how they may affect the company. Tri-State 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 Tri-State Capital's future results, please see the company's most recent annual and quarterly reports filed with the Securities and Exchange Commission. Please note that annualized information referenced in this presentation is not predictive of future performance, which may differ materially from annualized information. To the extent non-GAAP financial measures are discussed in this call, They will be presented with their most comparable gap measures. Reconciliations of the non-gap measures can be found in Tri-State Capital's earnings release, which is available on its website at tristatecapitalbank.com. Representing Tri-State Capital Holdings today are Jim Goetz, Chairman and Chief Executive Officer, and Tim Riddle, Managing Partner and Chief Executive Officer of Chartwell Investment Partners. They will be joined by David DeMust, Chief Financial Officer, and Brian Federoff, President and CEO of Tri-State Capital Bank, for the question and answer session. At this time, I would like to turn the conference call over to Mr. Goetz.

Good morning, and thank you for joining us. Tri-State Capital's first quarter performance underscores the earnings power and potential of this company, which today operates a $10 billion plus bank and an $11 billion-plus asset management firm. All three of our businesses have been built on our core capabilities and distribution strength to drive strong demand for our client-focused products and services, which are in turn delivering continued and meaningful organic growth. We again delivered record net interest income and total revenue during the quarter, as well as all-time high pre-tax income assets under management, loans, and deposits. The performance enabled us to grow first quarter 2021 net income by 28% from the linked quarter and 26% over the same period last year. These results were achieved thanks to the trust and confidence of our clients, which they place in us, and the unrelenting efforts of our talented investment management, private banking, and commercial banking teams. Chartwell built on last year's strong performance to deliver a breakout quarter for our asset manager. Clearly, the markets provided a tailwind, which contributed to Chartwell strategies performing very well against benchmarks. At the same time, Chartwell is also differentiated by what we believe is a best-in-class business development and distribution capability. In the first quarter of 2021 alone, This business had more than a half billion dollars of net inflows led by Chartwell's short duration high yield product and its high grade fixed income product. To continue its momentum, Chartwell started the second quarter with more than $100 million in unfunded institutional commitments in its pipeline. Together, business development and investment performance led to Assets under management growth of 35% over the last year to $11.2 billion on March 31, 2021, an all-time high. First quarter investment management fees of $9 million were up nearly 18% for the same period last year, while Chartwell's run rate revenue as of March 31, 2021, was nearly $39 million, an increase of 35% from one year prior. At the same time, Chartwell's first quarter segment net income was up 77% from the same period last year, and we expect to continue improving asset management's contributions to consolidated earnings as we scale this business with the talent and infrastructure we have in place today. Before we turn to our other businesses, I would like Chartwell's CEO, Tim Riddle, to share a few of his thoughts with you given the standout performance our asset manager had in the first quarter. Tim?

Thank you, Jim. Chartwell's first quarter performance and our optimism about our ability to continue growing revenues and our contributions to Tri-State Capital's earnings are based on the strengths of our investment performance, client relationships, and distribution capabilities. The majority of our $940 million in AUM growth during the quarter, or 54% of it, resulted from positive net flows from existing accounts and from new business. So while AUM benefited from the market's tailwind in Q1, our ability to generate new business and net flows from existing client relationships were the primary drivers of AUM growth. We don't believe many active managers will be able to make that claim. We also made strategic decisions to enhance Chartwell's operating leverage and segment profitability. These efforts began well before the onset of the pandemic and continued throughout 2020. As a reminder, by the end of 2019, we had taken active measures which reduced our annual expense run rate by more than $2 million. For the full year 2020, Chartwell's expenses were down a full $4 million year over year. The efforts we've made to date have been very successful, and we believe position us well to deliver profitable growth at an even greater rate moving forward. In fact, with the team and infrastructure in place today, we believe we can grow Chartwell's AUM and revenue by another 50% or so. That confidence is supported by the success of our unparalleled distribution team and by Tri-State Capital's continued commitment to investing in distribution. We're also continuously continuously developing new products and new avenues to deliver those products to our clients and to prospective clients. As one example, within the past year, we launched collective investment trusts and collective trust funds. CITs and CTFs resonate with a broader base of prospective clients, particularly in the area of outsourced chief investment officer programs, or OCIO, which have become increasingly popular in the institutional market. And in fact, CITs and CTS have had a meaningful impact on our AUM growth, particularly over the last six months, accounting for approximately $70 million in inflows. Charwell is hitting its stride. With unique product offerings, credible performance, exceptional talent, and an enviable distribution capability, we are focused on scaling our business and enhancing profitability and earnings. With that, I'd like to turn it back to Jim.