TriState Capital Holdings, Inc.
Q2 2019 Earnings Call Transcript

Published: 18 Jul 2019

[Operator:]

Good morning, everyone. And welcome to the TriState Capital Holdings' Conference Call to discuss financial results for the three months ended June 30, 2019. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.Before turning the call over to management, I would like to remind everyone that today's call may contain forward-looking statements related to TriState Capital that may generally be identified as describing the company'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 Forms 10-K and 10-Q. You should keep in mind that any forward-looking statements made by TriState Capital speak only as of the date on which they were made. New risks and uncertainties come up from time to time and management cannot predict these events or how they may affect the company. TriState Capital has no duty to, and does not intend to, update or revise forward-looking statements after the date on which they were made.To the extent non-GAAP financial measures are discussed in this call, comparable GAAP measures and reconciliations can be found in TriState Capital's earnings release, which is available on its website at tristatecapitalbank.com.Representing TriState Capital today is Jim Getz, Chairman, President and Chief Executive Officer. He will be joined by David Demas, Chief Financial Officer for the question-and-answer session.At this time, I would like to turn the call over to Mr. Getz. Mr. Getz, please go ahead.

[Jim Getz:]

Thank you and good morning and thank you for joining us. Halfway through 2019, we are pleased by TriState Capital results. Within the 12 months ending June 30th, we’ve grown deposits by $1.3 billion and fully funded loan growth of $1.1 billion. Comparing our results for the first six months of 2019 to the similar period last year, TriState Capital delivered 12% growth in net interest income, 6% growth in non-interest income, 10% growth in revenue, 16% growth in pretax income; 13% growth in net income available to common shareholders, and 17% growth in tangible common equity. And our already superior credit metrics continue to improve and set us apart from peers and the industry.Our results bring us closer to achieving the ambitious financial performance goals we set for the full year 2019. One of those goals which we shared with you in January is to reach $7 billion in total assets by the end of this year. As of June 30th, we've grown TriState Capital Holdings' balance sheet to more than $6.8 billion adding more than $1.6 billion in strategic business assets from one year prior. With assets growing during the second quarter at 32% annualized rate, we expect to achieve this goal well before yearend.Driving this strong asset growth was record organic loan growth within our strategic lines of business, as total balances grew to $5.7 billion at June 30, 2019, an increase of some 24% compared to one year prior and nearly 25% annualized from March 31st. As a reminder, one of our 2019 goals is to deliver double-digit organic loan growth at a rate of 15% to 25%. And we're clearly executing on this while continuing to strengthen our market position and client relationships. Our private banking business which serves high net worth individuals, trusts and businesses access to our highly cultivated network of financial intermediary firms, demonstrates our ability to be a premier provider of products, experience and solutions on significant scale.We continue to expand a number and depth of our client relationships and our national financial intermediary network which is up to 201 firms. Private banking loans remain our fastest-growing lending category now taking, making up 56% of loans. Private banking loan balances cross the $3 billion threshold for the first time at quarter end, reflecting growth of more than $700 million or 28% during the past 12 months. Private banking loan originations in the second quarter were $300 million, compared to $253 million in the linked first quarter. Private banking loan applications increased by 17% from the first quarter, reflecting the continued healthy demand we are seeing for these loans throughout our premier national franchise.The investments we made in our talent, distribution and proprietary technology allow us to provide innovative financial solutions and an exceptional experience to our valuable private banking clients. For example, in 2019, we initiated our digital lending platform that is enhancing our ability to help investment advisors, trust officers and other intermediaries to serve their high net worth clients more easily, more effectively and in an appealing, digital environment that we designed specifically for themIn fact, 41% of all our incoming private banking loan applications are coming through our digital lending platform today. In addition to enhancing our ability to sustain the growth of this business, our digital lending power platform is a key part of our constant innovation and commitment to client experience that positions us as the nation's leading provider of marketable securities back loans through independent investment advisory firms. Our middle-market commercial banking business also continues formidable growth.Total commercial loans grew to $2.5 billion at June 30th, 2019, increasing 20% from one year prior. Let me repeat that. We are organically growing our commercial loans at 20% pace, while continuing to maintain excellent credit quality. This is exceptional performance compared to peers. Second quarter commercial and industrial loan origination was $66 million, while commercial real estate loan originations were $78 million. The quality of our high-touch commercial relationships combined with our disciplined underwriting helped us maintain the strong asset quality metrics that you have come to expect from us and which continue to set us apart from peers. And at $5.7 billion loan portfolio, we reported just $2.2 million in non-performing loans at June 30th, 2019. A mere 4 basis points of total loans and an improvement from 14 basis points at the linked quarter end and 5 basis points one year ago. By comparison, the median $5 billion to $10 billion asset Bank reported an NPL to loan ratio of 58 basis points based on the most recent quarter data.Our non-performing assets of $5.2 million made up just 8 basis points of total assets of $6.8 billion at quarter end, improved from 16 basis points at March 31st and 11 basis points at June 30th, 2018. The same peer group reported NPAs to assets of 45 basis points based on most recent quarter data. At the end of the second quarter, TriState Capital's allowance for loan and lease losses measured more than 640% of non-performing loans, which remains among the highest levels in the industry.Turning to the income statement. Pretax income was $16.4 million for the second quarter of 2018. Year-to-date year, pretax income increased to $33.6 million, up 16% for the same period last year. For full year 2019, our financial performance goal of growing pretax income at a double-digit pace of 15% to 25% is unchanged. Private banking and commercial loan growth drove a record level of net interest income which grew to $31.3 million for the second quarter and contributed meaningfully to the double-digit revenue growth achieved in the first half of the year, even in light of a challenging LIBOR and short-term interest rate environment.We've also continued to enhance non-interest income which is impactful and reducing the company's risk profile. Fees from interest rate swaps by our commercial customers were up 10% year-to-date compared to the first half of 2018. While swap fees quarter-over-quarter were down about $100,000. Based on what is already closed in the first few weeks of July in our pipeline, we believe borrower swap activity will remain healthy in the third quarter and full year 2019.Of course, investment management fees from our Chartwell Investment Partners subsidiary were the largest contributor to TriState Capital's non-interest income. Investment management fees for the second quarter were down $432,000 or about 4% compared to the second quarter of 2018, and up $84,000 or less than 1% for the first six months of 2019 compared to the prior year period. While the investment management industry as a whole has no doubt faced challenges, we're very optimistic about the opportunities we have in this business and confident in the team we have in place at Chartwell today. Two of our 2019 performance goals pertain to Chartwell surpassed $15 billion in Chartwell asset under management through organic and acquired growth and delivered double-digit organic growth of Chartwell revenues year-over-year.While we have very significant work to do during the remainder of the year, our ambitious 2019 financial performance goals remain unchanged. We have taken decisive action to strengthen our portfolio management teams and continue invest in marketing and distribution to support Chartwells growth. One of the most significant changes we made this year is with Chartwell's Berwyn Income Fund. As you may know, conservative allocation strategies have generally seen significant outflows and the Berwyn Income Fund was subject to this trend. Specifically the Morningstar 15% to 30% equity segment has seen significant net outflows of about $5 billion over the last 18 months resulting in a decline of about 18% of the categories AUM.In addition, this conservative allocation strategies intermediate performance and net fund flows were candidly not up to par, while the strategies equity allocation limits since inception had been up to 30%, it drifted well below 20% of the portfolio and the fund was holding relatively high levels of cash. And its Morningstar rating went from 5 stars to 3. In March of this year, we repositioned the Berwyn Income Fund by appointing a new and expanded portfolio management team which brings together some of the best and brightest of Chartwell, including David Dalrymple and Andy Toburen, who run top performing equity and fixed income strategies.The Berwyn Income Fund's ongoing objective remains unchanged providing investors with current income while seeking to preserve capital. We believe that we have the right team in place to deliver the performance necessary to reverse recent trends. And we are already seeing the benefits of this repositioning with the Berwyn Income Fund's performance in the second quarter.Overall the superior performance of Chartwells active investment strategies reinforces the confidence we have in our asset managers' potential through the end of the second quarter. 50% of its products were ahead of their respective benchmarks for one year performance. 85% were ahead for three year performance and 75% were ahead for five year performance. We believe this highly respectable performance will translate into growth in AUM at our investment manager. We continue to evaluate opportunities to grow this business acquisitively, growth and retain earnings which we've been growing at a rate of about 15% combined with our perpetual preferred stock offering provides us with ample capital to consider a range of options for such a transaction.The market environment has motivated potential sellers and made pricing expectations more realistic. That said, we are firmly committed to only pursuing deals that will be immediately accretive to TriState Capital shareholders and our strong fit for Chartwell, both culturally and in terms of how products complement or strengthen our own offerings.Another area where we've made strategic investments is in our national deposit and liquidity management franchise. And it's clear those investments are paying off. In 2016, we significantly enhanced our treasury management capabilities and team to support our efforts to grow treasury management deposits. And we increasingly make traction since. In relatively short time, we've developed the proven treasury management program that rivals super regional competition, offering sophisticated and high-touch service to our growing client base. Year-to-date, treasury management deposit balances have grown by approximately $375 million to a little under a $1 billion.We're very pleased with the progress we've made toward our goal of adding $500 million in treasury management deposits in 2019. We also maintain considerable flexibility in pricing deposits as we balance interest rate risk management with our commitment to build durable relationships with sophisticated depositors. About 32% of our deposits are of a term nature with seven-month duration. About 43% of our deposits are of an institutional nature and are set up to reprice with Federal Reserve rates or other indices.The balance is in our control. Until LIBOR and Federal Reserve rates return to a normalized spread of 10 to 15 basis points, we expect a temporary lag in overall deposit pricing and short-term margin compression due to declining loan rates. We are continuing to focus on the long-term building a business, winning and retaining durable, high-quality client relationships. In short, we're not going to forfeit valuable relationships or interrupt our long-term earnings growth trajectory for a short-term benefit.In fact, we view the current rate environment is helpful in building our deposit franchise, allowing us to pick up quality clients from competitors that do not have our flexibility or share our long-term philosophy. While we're on the topic the funding cost, on July 1st we paid off $35 million of subordinating debt, reducing the company's quarterly interest expense by some $503,000. As company established in 2007, a record of consistently delivering double-digit annual earnings growth has been achieved during periods of both rising and declining interest rates.Our lean branchless companies , three businesses are working in concert to generate revenues that are helping to drive solid operating leverage. Even as we've invested in talent, technology and products to achieve dramatic organic balance sheet growth. TriState Capital's non-interest expense as a percentage of average assets is consistently below that of peers. In the second quarter 2019, non-interest expense further improved to just 1.71% of average assets compared to a peer median of 2.40%. For the six months ended June 30th, 2019, TriState Capital Bank reported an efficiency ratio of 55.72%. Non-interest expenses which include investments in talent and technology that we've made to grow our business grew by 10% for the first half of the year compared to the prior year period.We remain committed to managing expenses and have maintained our 2019 goal of maintaining a mid-50 efficiency ratio and achieving a single-digit expense growth rate for the full year 2019. We believe our record of consistent execution and double-digit earnings growth combined with a relatively low risk and capital -light nature of two of our three business lines puts us in a very strong competitive position among the highest performing companies and the small cap financial services space.With that in mind, our Board granted $10 million in stock repurchase Authority subject to customary regulatory approval in addition to the $1.5 million that was available on June 30th. As always, we intend to be opportunistic about purchasing TriState Capital's common stock in the open market and believe we can accommodate stock buybacks in conjunction with the execution of our strategic growth objectives. Since October 2014, the company has repurchased just over 2 million shares for approximately $31.3 million at an average cost of $15.25 per share. Midway through 2019, we were in a strong position. We have a history of strong performance and strategic investments that are proven highly productive behind us and tremendous opportunities ahead in our private banking, commercial banking and investment management business lines.Our pipelines are strong across the board, our liquidity position has never been better and our teams are fully supported to execute on the goals we've set for 2019. That concludes my prepared remarks this morning. And ask -- I'll ask David Demas, our CFO to join me for Q&A. Operator, please open the lines for questions.

[Operator:]

[Operator Instructions]Our first question today comes from Matt Olney with Stephens. Please go ahead.

[MattOlney:]

Hey, thanks. Good morning, guys. I want to start with Chartwell and it looks like we saw the average fee at Chartwell slip in the second quarter. It seems like this is a mix shift issue we have seen for a while. And Jim with your comments about the Berwyn Income Fund, I assume that's what drove some of the slippage in 2Q. Can you give us what that average fee was for that fund in the second quarter? I'm just trying to understand if we'll see continued deterioration of the average fee at Chartwell.

[JimGetz:]

Okay. I just wanted to clarify one thing for you, Matt. The average rate fee for the company has not changed. It's 39 basis points and it's been 39 for a while. When we acquired Chartwell in 2014, it was 25 and it's improved since then. With regard to Berwyn Income Fund, the average fee of that fund is 50 basis points. And just to put that in perspective, Morningstar has it positioned in a conservative allocation strategy. And as I pointed out that strategy itself for getting anything going on with the fund has experienced $5 billion of outflows in the past 18 months.So it was the performance of the fund and changes that we've made in the management that brought on those flows but a substantial amount of it was people reallocating now. The product itself is most attracted to investors when the market is more challenged and the investors are seeking what I would characterize is the defense of the strategy. And we just weren't satisfied with the performance that we were experienced in 2018 and 2019. And so in March, we repositioned the product strategy and the investment team and the focus really now is on its main goal of capital preservation and providing the shareholder with a higher level of income and the team that's in place has done exactly that in a relatively short period of time.The dividend is up; the average weighted fee or the average fee on that continues to be at 50 basis points. And we believe the product is being well positioned for the future. But keep in mind that this hasn't been the type of stock market environment that this would excel in at this point. It's very much of a conservative allocation where someone might consider putting 5% of their assets in it or 10% of their assets during a more tumultuous type of market environment that we've -- than what we've generally experienced in 2017, 2018 and 2019.

[MattOlney:]

Okay. That's great commentary, Jim. But even if we assume the performance stabilizes at the Berwyn Income Fund, is it fair to assume just the mix shift could lower the overall level of fee the Chartwell partially given the growth of the other funds at Chartwell that have usually a lower fee base?

[JimGetz:]

Yes. That is true but I must point out that we've been seeing pretty decent flows into the mid cap product, which does have almost the comparable fee and the expenses on that fund -- fee into us is almost is somewhat lower but almost where the Berwyn fund is. And by the way Dave Dalrymple who is overseeing the equity portion of this particular of the Berwyn Income Fund is also managing that mid cap product.

[Operator:]

The next question comes from Michael Perito with KBW. Please go ahead.

[MichaelPerito:]

Hey. Good morning, Jim. How are you? A couple quick ones for me, just maybe first to start on the provision credit, low credit cost which obviously is a big piece of kind of the growth model here continue to be an earnings tailwind. Just curious we have CECL potentially coming up, and obviously the reserve -- there are limits how low it could go. so I'm just curious how you guys, did the mix of the portfolio seems like look pretty okay right now in terms of where it might be. I know private banking might continue to grow a little bit on a relative basis. But just any general thoughts on kind of reserved and where you expect that to trend moving forward here?

[JimGetz:]

Let me point one thing out to you. Michael, I would like to put this in a bit more perspective at least short term for the second quarter. And also relates to the first quarter. If you folks will remember, in the first quarter, we put a reserve on a credit. It was about a $5.2 million credit and we put a $1.2 million to reserve on that credit. And the reason we were able to release is because that they paid off the loan. So the whole was paid down and we adjust last quarter put a $1.2 million on it and as you noticed, we took $700,000 of that out of the reserve, and we left the remainder amount in the reserve.So I just wanted, so everyone knew what had, what happened here. And that's why you saw a reduction of the adverse rated credits this quarter and an improvement in the credit metrics.

[DavidDemas:]

Mike, it's David. Just add a little color to a couple of topics you raised. We would see allowance running between 25 and 30 basis points of total on book loans for the remainder of the year. We're making good progress on CECL. We've got a great team assembled and we're running parallel. We're currently working on calibration of the model. And at this point we're not prepared to share any preliminary expectations of where we think that will be at the start of the year. But hope to update you in the third quarter.

[MichaelPerito:]

Got it, thank you. And then just on the private banking loan growth. The last few years have given you guys kind of a variety of environments and on an annual basis you've driven pretty consistent loan growth. But I'm just curious with the prospect of rate cuts and everything going on, I mean do you have any thoughts or any initial indications on kind of how the consumer demand for this products may change, if at all? And just any general thought there would be helpful.

[JimGetz:]

I think at this point what we can comment on, I believe is 2019 and 2020 because for the most part I don't think there's anyone out there that really expects more than three or four rate cuts. And we feel we will be remained very competitive. The business continues to grow but more importantly as you notice we now have 201 intermediaries, every quarter we're coming to you with 3 to 5 additional leader intermediaries. So we're still tapping the market and we have an awful lot of work to do to get larger market share among the 201 intermediaries that we have now. And we're putting a lot of work into doing that. And what is helping us from an efficiency standpoint and that's why we pointed out to you the number of applications going through the digital lending platform. With just that really being positioned in the market effectively over the past six months.We're now doing over 40% of our loan applications through that which really saves us from need for additional personnel. And what we're now also developing is a more effective marketing using electronics to marketing communicate out to these folks to build up their knowledge with regard to the availability of the product. So we're pretty excited about the next 24 months and as you can see that it's growing pretty handily this year. But I think you're going to see over the next year and a half a more consequential growth.

[Operator:]

The next question comes from Russell Gunther with D.A. Davidson. Please go ahead.

[RussellGunther:]

Hey. Good morning, gentlemen. Wanted to first follow up on comments you made earlier to your expectations for margin compression in the near term. Could you guys share with us what you're modeling from a Fed Fund perspective in terms of any cuts for the rest of this year? And if you're able to sensitize to what a 25 basis point cut might mean in the short term to the margin?

[DavidDemas:]

So, Russell, as you know, there's everything in the marketplace from one to three cuts for the remainder of the year. When those occur is unknown. Also the relationship between LIBOR and EFF and that lag that Jim mentioned in his comments has a big impact on that. What I'll tell you is that as Jim mentioned the lag and the question of NIM will impact us on the way down. It benefited us on the way up. And so trying to predict where all that ends up or how all that shakes up and how soon is a little bit tough in this environment. So we're not in a position where we want to share any specific expectations or guidance.

[RussellGunther:]

I understood.

[JimGetz:]

I think Russell what we could give you some clear direction as how we look at this. And we obviously would like to have had a better NIM but we really want to refer you to the goals that we set for this year, which were financial goals but the way that we look at ourselves is that we're doing what we do best. And that's thinking and acting for the long term. The business model that we have has served us well through all interest rate environments over the past 13 years. It's robust. It's dynamic. It's complemented by a top-notch professional staff that's taken this company over the past 13 years from a piece of paper to $7 billion bank and a $10 billion money management firm.While quarter after quarter reducing the risk profile of the company and releasing meaningful earnings power. We're not going to let anything stand in the way of continuing to grow that in the quality manner that we have been in the past. And we have great expectations for our earnings this year. And we're more than willing to be held accountable to those eight goals that we outlined in detail. And we're reinforcing and reaffirming it at this particular meeting with. We're building a company here and we believe that we're making a lot of progress with it. And we're able to grow it for the future and also continue to enhance the earnings power of the company. And the earnings power comes from all kinds of other sources other than just spread.

[RussellGunther:]

Understood. No, I appreciate both of your comments there. Thank you. And then just as for my second question if we could switch to loan growth in the commercial portfolio. If you guys could share with us where strength came from across your footprint? And some of the growth dynamics at play in C&I and CRE portfolio?

[JimGetz:]

Sure. As we look at the commercial end of it, we've really been blessed by the fact that its roots really goes back to the recession. And we were able to build -- begin to build a client base at that period of time when most of our industry was looking inwardly. And we were able to select a lot of the middle market companies from the large regional banks that we are not -- we're unable to service them because they had legacy issues on their loan portfolio and they were looking inwardly. That set the whole basis for that book of business. And what is happening if you spend a lot of time visiting these folks and positioning yourself with them, you're going to find that the economy in this country is in very good shape. And we all learn more from our mistakes than our successes.And the same management team of these middle-market companies is in place today as were in place during the recession. And what they found themselves doing during the last recession, they have to let people go that no one likes to do and they had excessive inventory they had to sell at a discount. So we were able to establish our roots there. We've also put meaningful people with consequential experience in place in the marketplace. Our offices for the most part have been there and positioned for 10 years. We have excellent management in each of those locations, rapidly responding to the marketplace. I will reinforce the fact that the market is competitive from a rates standpoint.But we don't intend to lose any good client based on a spread. So we're willing to work with them. If we feel the credit is acceptable and that's one of the reasons why you'll find our credit metrics to be extraordinary. Everyone wants to reflect purely on the private banking loans secured by marketable. But we've done a yeoman's job on the credit metrics for the C&I and the commercial real estate portfolio. It's really been extraordinarily exceptional, and we feel we can continue to progress and to grow that business. What you're going to see is the C&I business percentage-wise continuing to grow at a higher percentage than the commercial real estate business. I suspect that commercial real estate business will stay within the range of about 28%, 32%, 33% for the next couple of years.

[DavidDemas:]

I might also add that, as you know, we've launched equipment finance, that offering. We've seen good growth there so far this year. We expect that growth to continue, especially in the third and fourth quarter as the companies think about equipment needs for 2020. And in the financial services space, we continue to see good connection with clients there and growth in the financial services space as well.

[RussellGunther:]

Very good, David. Thank you for that. Could you just share with us what the balance of the equipment finance portfolio is at this time?

[DavidDemas:]

So, I think it's about $40 million or so at this moment in time. We started that in January. Typically that's a business that has its biggest activity in the fourth quarter. So we'd expect those balances to continue to grow nicely through the remainder of the year.

[Operator:]

The next question is a follow-up from Matt Olney with Stephens. Please go ahead.

[MattOlney:]

Yes. Just a follow-up on the operating expense guidance for this year. I think you provided some guidance in the prepared remarks, but I missed that.

[JimGetz:]

Yes. We were looking for a single-digit. Okay? And you probably noticed there was a 10%. And if you look at past years, it's been 12% or 14% in years past, but we believe we can keep it under 10% for the year.

[MattOlney:]

Got it

[DavidDemas:]

And Matt, one of the drivers there is, we're a growth company, right. And so, we continue to invest in a lot of different areas of our business, professional services is up, normal costs associated with growth in the business, and facilities and equipment is up for three primary or two primary reasons, the technology build in the digital lending platform, equipment finance and treasury management, and you're seeing the depreciation expense of that start to pull through. We've also added space to our Pittsburg office to accommodate the 10% growth in our workforce. We're starting to see that rent expense pull through. And so, as Jim mentioned, we're not backing away from our goal of single-digit growth. We've got work to do in the second half of the year.

[MattOlney:]

And then, Dave, what about on the tax side? It looks like there were some more tax investments in 2Q, what's the expectation for the rate for full year?

[DavidDemas:]

So what you see now about 10.5% is our expectation for the full year. It's based on everything we know today, including planned tax credit investments that were committed to maintain through the course of the year.

[MattOlney:]

And then, on the CD side, I believe you said previously that the average duration of that CD book is about seven months. Did I hear that correctly? And then, with the average cost around $265 million, can you give us an idea of how this will work down over the next few quarters in the absence of a Fed rate or maybe with the Fed cut?

[DavidDemas:]

The average duration is seven months and the average cost is about $265 million. So, what we see, Matt, is that's going to provide us with a fair amount of agility that coupled with the index deposits that you mentioned in the 93% of our loan book that's indexed will provide us with agility as we see what the Fed does here over the next couple of months to reprice and continue to focus on our long-term goals that we publicly stated.

[MattOlney:]

And what was that amount of the index deposits on this then?

[DavidDemas:]

43%.

[MattOlney:]

43% of the total deposits.

[DavidDemas:]

43% of total deposits are indexed. Another 33% are time deposits that have an average surety or -- I'm sorry, duration of seven months. And then, the balance of that is discretionary within our control.

[MattOlney:]

Okay. And then, also I was looking for an update on the potential acquisition of an asset manager. I guess with the excess capital you have now, I'd assume you're getting closer to a deal announcement. I'm just curious if you could help characterize what type of financial impact this could potentially have for TriState with respect to -- especially with respect to net income and EPS?

[JimGetz:]

We're looking at companies, Matt, that are for the most part are on average between $5 billion and $10 billion in size, okay. And much -- this business is valued based on EBITDA and I'd say, on average these companies were looking at -- have an EBITDA of between $10 million and $12 million, okay. So I would expect that we'd be paying some -- the range would be somewhere between $40 million and $70-some million for the company. They would be accretive right out of the gate. So, you'd be looking at the first year a couple of pennies of earnings from them.

[Operator:]

Next question comes from Daniel Cardenas with Raymond James. Please go ahead. Mr. Cardenas, your line is open.

[DanielCardenas:]

All right, thank you. Sorry about that. I was on -- I was on hold. My questions have been asked and answered. Thanks, guys.

[JimGetz:]

Great. Well, have a good week.End of Q&A

[Operator:]

This concludes our question-and-answer session. I would now like to turn the conference back over to Jim Getz for any closing remarks.

[Jim Getz:]

Thank you very much for your continued interest and commitment to TriState Capital. And we continue to look forward to meeting with you over the next few quarters. Take care and have a good week.

[Operator:]

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.