TriState Capital Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
October 20, 2021

There are 13 speakers on the call.

Operator

Good morning, everyone, and thank you for joining the joint call with Raymond James Financial and TriState Capital Holding. This call is being recorded and a replay will be available on the Investor Relations page of the company's website at www.raymondjames.com and investors. Tristatecapitalbank.com. Now I'll turn the conference call over to Christi Hua, Head of Investor Relations at Raymond James Financial.

Speaker 1

Good morning. Thank you, Jamie. Thank you everyone for joining us as we discuss Raymond James Financial's Announced acquisition of TriState Capital Holdings. With us on the call today are Raymond James' Chairman and CEO, Paul Reilly CFO, Paul Shuckery and Jim Getz, Chairman and CEO of TriState Capital Holdings. Also available during the Q and A portion of the call are David Demas, TriState Capital's CFO Brian Fedoroff, President and CEO of TriState Capital Bank and Tim Riddle, Chartwell Investment Partners' CEO.

Speaker 1

The presentation being reviewed this morning is available on Raymond James Investor Relations website. Following the prepared remarks, the operator will open the line for questions. Statements included in this communication, which are not historical in nature, are intended to be and are hereby identified as forward looking statements For purposes of the Safe Harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements included, but are not limited to, statements about the benefits of the proposed acquisition of TriState Capital by Raymond James, including future financial and operating results, including the anticipated effects of the transaction on Raymond James' and TriState Capital's respective earnings, Statements related to the expected timing of the completion of the transaction, Raymond James' plans post transaction, objectives, expectations, intentions and other statements that are not historical facts. Forward looking statements may be identified by terminology such as may, will, should, Scheduled, plans, intends, anticipates, expects, believes, estimates, potential or continue or negatives of such terms or other comparable terminology.

Speaker 1

All forward looking statements are subject to risks, uncertainties and other factors that may cause the actual results, Performance or achievements of Raymond James or TriState Capital to differ materially from any results expressed or implied by such forward looking statements. Such factors include the ones listed in yesterday's press release concerning the transaction. Additional factors, which could affect future results for Raymond James and TriState Capital can be found in Raymond James' annual report on Form 10 ks, quarterly reports on Form 10 Q and current reports on Form 8 ks and TriState Capital's annual report on Form 10 ks, quarterly reports on Form 10 Q and current reports on Form 8 ks, In each case filed with the SEC and available on SEC's website at www.sec.gov. Raymond James and TriState which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Speaker 1

Now I'm pleased to turn the call over to TriState Capital Holdings' Chairman and CEO, Jim Getz. Mr. Getz?

Speaker 2

Thank you very much, Christy. Good morning and thank you for joining us. I'd like to personally welcome Paul Reilly and Paul Shukri to Pittsburgh. It's an honor and a pleasure to have you with us. While the Q3 results we reported yesterday will not be the focus Our comments today, we believe that they are indicative of the performance that attracted the attention of Raymond James in the first place.

Speaker 2

Once again, each of our asset management, private banking, commercial banking businesses contributed to strong organic growth and quarterly revenue, Net interest income, net income and net income available to common shareholders as well as a 69% increase in earnings per share over the same period last year. At Chartwell Investment Partners, our team's performance continued to attract positive net inflows, Totaling some $499,000,000 from institutional and retail clients year to date along with double digit Organic growth in assets under management and revenue. TriState Capital's middle market commercial lending team also continued to deliver differentiated results With nearly 15% fully organic growth over the last 12 months, and we continue to enhance TriState Capital's position as the nation's leading independent provider of private banking securities based loans, Primarily collateralized by marketable securities, these loans grew organically by 39% over the last 12 months to surpass $6,000,000,000 were 63% of total loans. Our national distribution network for this offering also continued to grow, Number 8.22 independent investment advisory firms, trust companies, broker dealers, regional securities firms, family offices, insurance companies and other financial intermediaries. Our agile and responsive funding mechanism continued to perform as designed, including our national treasury and liquidity management services for sophisticated clients.

Speaker 2

Treasury management deposit account balances are up more than $1,000,000,000 during the past 12 and $2,450,000,000 since we launched the offering. Overall, TriState Capital has continued to deliver profitable and responsible organic growth and we fully expect this record of success to continue. In fact, we expect to further accelerate our progress In partnership with our friends at Raymond James. So now let's discuss the announcement we made jointly with Raymond James yesterday afternoon. We believe the transaction is an extraordinarily opportunity for all of our stakeholders.

Speaker 2

For our clients, there are many clear benefits. They will continue to be served by the same talented people our clients deal with on a daily basis As TriState Capital and Chartwell will continue to operate independently within Raymond James. The technology, We've invested heavily and it will remain in place, including what we've deployed to provide an exceptional client experience. In addition, we believe the combination of our balance sheets will provide ample capital and liquidity to meet our clients' needs through commercial and Securities Back Lending. Furthermore, Raymond James will bring us additional resources to continue investing in people, Products and technology to help us further strengthen our client relationships.

Speaker 2

For our common stockholders, This transaction provides full and fair pricing, not only reflecting TriState Capital's high growth trajectory Since its 2,007 founding, but the foundation we have built to realize its growth potential in the years ahead. By receiving the vast majority of the purchase price in RJF common stock, we have partnered with a company that has generated strong returns for its shareholders since going public in 1983. For our employees, we intend to maintain the entire workforce Of TriState Capital and Chartwell, joining a partner that shares our commitment to responsive client service, rewarding results And the entrepreneurial mindset enabled us to attract some of the best in the business to our organization. Very importantly, we can also take tremendous pride in the opportunity to be part of a larger organization It is one of the most highly regarded diversified financial service companies in the nation. Raymond James shares our most important core values, Including independence, a long term perspective, integrity and putting clients squarely at the center of everything we do in every decision we make.

Speaker 2

We could not be more pleased to be partnering with Raymond James to take TriState Capital and Chartwell to the next level of success. So it is my pleasure to introduce Chairman and Chief Executive Officer of Raymond James, Paul Reilly.

Speaker 3

Thank you, Jim. And I can't tell you how excited I'm really to be here with you in Pittsburgh alongside your management team to discuss this transaction, which will bring together 2 strong franchises that always put clients first and make decisions for the long term. As we discussed at our Analyst and Investor Day in June, investing in a long term profitable growth has always been how we Prioritize our utilization of capital and this announcement further reinforces our commitment to utilizing our strong capital position to drive attractive returns for shareholders. While we have primarily grown organically, we make acquisitions only on a very selective basis When we have the conviction that the combination of the 2 firms will make each other stronger, which we are confident will be the case when TriState Capital and Chartwell The primary reason we've been successful at acquiring and integrating firms It's because we have stayed true to our acquisition criteria. The transaction first and foremost has to be a strong cultural fit, has to have a great strategic reason and has to make financial sense for our shareholders.

Speaker 3

I'm pleased to say The TriState Capital checks all those boxes. 1st and foremost, starting with the culture. Similar to our own, TriState has Terrific client centric franchise focused on serving clients with premier banking and asset management services. They value independence And have an entrepreneurial culture and energy that's propelled their consistent success. We've known each other for a while, First is our largest deposit client.

Speaker 3

But over the last few years, we followed the firm more closely and admired its leadership position in offering securities based lending or SBLs through a scalable and robust technology platform. And in addition to what Jim has already mentioned, We believe there are many strategic benefits to both firms in this combination and I'll outline a few in a minute. But first, beginning on Slide 4, I appreciate some of you listening may not be familiar with Raymond James. So let me provide a quick overview. Raymond James is a leading diversified financial services company.

Speaker 3

We are an S and P 500 and Fortune 400 company. 10 years ago, we set out to be the premier alternative to Wall Street, which means we wanted to keep a regional boutique family oriented firm Reflecting our culture yet grow to a size and scale that we can compete with the largest providers in our industry and provide the absolute best service and solutions to our advisors and clients. Our primary business is our Private Client Group or we referred to as PCG, where we serve more than 8,400 financial advisors in the U. S, Canada and the UK We manage more than $1,200,000,000,000 in client assets through multiple affiliation options. TCG is by far our largest business accounting for 2 thirds of our revenue and closer to 80% if you include ancillary revenues related to asset management And banking services to those clients.

Speaker 3

So this business is really the lifeblood of most everything we do. Our other businesses include Capital Markets business, which serves clients with M and A activity, equity and debt underwriting and Equity and Fixed Income Sales and Trading. Our bank subsidiary, Raymond James Bank has assets of nearly $35,000,000,000 serving corporation and PCG clients. Our asset management subsidiary, Carillon Towers Associates, which operates a multi boutique structure and manages retail and institutional fixed income and equity strategies of approximately 69,000,000,000 We always strive to be extremely well capitalized and have over 2 times the regulatory capital to be considered well capitalized And have a strong investment grade credit rating, including an A- rating with Fitch. Price Aid Capital on Slide 5, there's Quick snapshot of their business, which Jim introduced at the beginning of the call.

Speaker 3

The firm has had strong growth trajectory since inception. TriState Capital has annualized net revenues of $244,000,000 and a pre tax income of $92,000,000 representing a 38% tax margin pre tax margin. The firm operates an efficient bank model with total assets of 12,000,000,000 And total loans of nearly $10,000,000,000 In the past, I've joked that Raymond James has one branch and 2 ATMs and no plans to double either. And I'm happy to say TriState is one of the only banks in the country that keeps me honest in that statement as they don't have any branches or ATMs. TriState Capital is a leading provider of securities based lending and has a terrific digital lending platform and robust Risk Management and Technology System.

Speaker 3

Lastly, Chartwell Investment Partners, firm's asset management business has assets under management of approximately $11,000,000,000 which will fit nicely under Caroline Towers' associate, A multi boutique model. Moving to Slide 6, there are several key benefits to this combination. First, as I mentioned earlier, we are culturally aligned with strong values and a shared client focus. Next, TriState Capital is a leader in the attractive and high growth securities based lending business, generating tremendous growth enabled by its innovative digital lending technology platform and supported by a robust risk and collateral management technology system. Additionally, through the client cash sweep program, Raymond James has stable and large deposit base that can provide TriState with relatively Low cost funding to fuel its high growth levels.

Speaker 3

And through a second bank charter, we will remain separately it will remain separately branded. Raymond James can provide internal FDIC insurance deposit capacity to Raymond James Private Client Groups clients. Also TriState Capital diversify Raymond James Funding sources through its national treasury management and liquidity management services for its sophisticated clients. Next, TriState Capital has an excellent track record for maintaining strong credit quality across its private banking and commercial lending portfolios. Lastly, Carillon Towers Associates and Chartwell Investment Partners are complementary asset management businesses and will leverage Carillon Towers Associates' Multi boutique structure to increase scale, drive distribution and realize operational and market synergies.

Speaker 3

Moving to Slide 7. Raymond James is a firm centered on core values. We have always put clients first. We act with integrity, we're conservative and we take a long term view and we value our independence. And the TriState Capital family shares these values, which we always knew, but that alignment became even more evident as we went through the due diligence process Under the continued leadership of Jim Getz, TriState will continue to operate autonomously, keeping their brand name, Their client relationships, their pricing decisions, their dedicated employees, their offices, their separate client technology, their separate data systems and their separate bank subsidiary.

Speaker 3

We will preserve TriState's independence to ensure they maintain the entrepreneurial That has been instilled by Jim and the entire management team. TriState will serve their independent clients and not serve their Raymond James platform. Moving to Slide 8, through its investment banking business, TriState Capital is a leading provider of securities based loans through Financial Advisors. They have relationships with financial advisors at numerous broker dealers, RIA custodians, trust companies and other financial intermediaries. We know and love the SBL business as Raymond James Banks provides SBLs exclusively to our private client group clients.

Speaker 3

Both firms have enjoyed tremendous growth in these portfolios over the past several years. And as most of you know, SBA loans SBL loans are fully collateralized by marketable securities and have a 0% risk weighting, resulting in excellent risk adjusted returns. TriState Capital's SBL balances grew at a compounded 29% annual rate from 2016 to 2020 and actually accelerated that growth year to date. Similarly, Raymond James BL balances grew rapidly during the same period. Looking at the pro Pro form a combined loan mix, SBLs would grow from 21% of Raymond James total loan portfolio as of June 30 to 33% on a pro form a basis, including TriState Capital's loan balances.

Speaker 3

Again, this is a very attractive asset class providing excellent risk adjusted returns with significant headroom for more growth at Raymond James across and across the industry. On Slide 9, TriState's capital leading digital lending platform and robust Collateral management technology systems have supported strong loan growth in a reasonable and scalable manner. This technology is a true differentiator in the marketplace, bolstering TriState's dominant capital in the SVL business. On Slide 10, this combination provides significant deposit and capital synergies. As of June 30, Raymond James had approximately $63,000,000,000 in its client domestic cash sweep balances.

Speaker 3

The vast majority of those balances are held at Raymond James Bank Deposit Program or RJ BDP where clients cash balances are swept into interest bearing deposit accounts at RJ Bank and various third party banks. By sweeping cash into RJ BDP clients receive a higher aggregate FDIC insurance by spreading those deposits across multiple banks within the program. RJ BDP is a source of relatively low cost deposits, Fable deposits for RJ Bank and relied upon to fund its asset growth. As of June 30, $29,000,000,000 was swept into Raymond James Bank, which has a weighted average cost of deposits of 8 basis points, which includes a small amount of higher core deposit sources. TriState Capital has deposits of approximately $10,300,000,000 And has a weighted average cost of 41 basis points.

Speaker 3

While we both share the objective of continuing to strengthen and grow its independent deposit franchise, A portion of their current and future deposits is expected to be replaced by lower cost RJ BDP balances, helping fund TriState's rapid growth in a more profitable manner. Furthermore, having a second bank charter Provide more internal FDIC insurance deposit capability to Raymond James Private Client Group clients is especially valuable in this environment where demand for deposits from unaffiliated banks has meaningfully declined over the past 12 months. Turning to Slide 11, TriState Capital's deposits, which are sourced through numerous client relationships, would diversify the funding sources for Raymond James, which will become particularly valuable when deposits become precious in our industry again. TriState has also invested heavily in technology to support its treasury management business, which is led by 13 dedicated and experienced professionals and serves nearly 500 clients. On Slide 12, as the slide shows, both firms have a history of strong credit quality.

Speaker 3

TriState Capital highly experienced lending and credit management Themes combined with its disciplined loan approval process and collateral monitoring system have led to superb credit quality across the entire portfolio Similar to Raymond James Bank, TriState truly has a fantastic commercial lending business, which is primarily sourced directly in select markets and is very relationship focused. Another similarity is both Raymond James Bank and TriState Capital Bank Our concentrated and floating rate assets, which is nearly 94% of TriState's Capital Bank's assets being floating rate, providing significant upside in a rising short term interest rate environment. Turning to Slide 13, Caroline Towers Advisors and Chartwell Investment Partners Well, pro form a combined assets under management of approximately $80,000,000,000 are complementary asset management businesses. Chartwell will operate as a subsidiary of Carillon, while maintaining an independent brand and management, allowing Chartwell to leverage Carillon's multi boutique structure to increase scale, drive distribution and realize operational and marketing synergies. Turning to Slide 14, our capital position is strong with well over 2 times the required levels of regulatory capital to be considered well capitalized.

Speaker 3

This transaction structure and consideration mix allows current TriState Capital shareholders To participate in the future upside, while also enabling Raymond James to maintain our strong liquidity and capital positions With expected flexibility to repurchase shares to offset dilution associated with the transaction post closing, We believe this efficient deployment of liquidity and capital allows for further ability to maintain the dividend policy, Buy back stock to offset dilution and support continued loan growth. We are maintaining our commitment to deploy excess capital, Achieve a Tier 1 leverage ratio of approximately 10%, which will be significantly accelerated by this transaction. Now, I will turn the call over to Paul Shoukri to provide an overview of the transaction. Paul?

Speaker 4

Thanks, Paul. It is truly a privilege to be here this morning with the TriState Capital team to discuss this Exciting transaction. Turning to some of the details on the transaction on Slide 15. Under the terms of the agreement, Raymond James will acquire TriState and 0.25 Raymond James shares for each TriState Capital share, which represents per share consideration of $31.09 Based on the closing price of Raymond James common stock on October 19, 2021, Raymond James entered into an agreement with a sole holder of the TriState Capital Series C perpetual non cumulative convertible non voting preferred stock pursuant to which the Series C convertible preferred will be converted into common shares at the prescribed exchange ratio and cashed out $30 per share. The TriState Capital Series A and Series B preferred stock is expected to remain outstanding and be converted into preferred stock of Raymond James.

Speaker 4

Importantly, as both Jim and Paul explained, TriState Capital will continue operating as a separately branded firm and as a standalone division and subsidiary of Raymond James, With Jim Guest remaining as TriState Capital Holdings' Chairman and CEO Brian Fedoroff remaining as TriState Capital Bank's CEO and Tim Riddle remaining as Chartwell's CEO. Management and approximately 350 Associates are expected to remain with the firm in its existing office locations to support TriState Capital's continued growth and maintain their very high service levels. To support this retention, the transaction includes $15,000,000 of 2 year retention for certain associates. And importantly, many of TriState Capital's employees have existing retention in place, currently north of $50,000,000 worth, which will remain in place by converting to an equivalent value of Raymond James stock retention post closing. Both boards have approved this transaction and this acquisition is subject to customary closing conditions, including regulatory approvals and approval by TriState Capital Shareholders and is expected to close sometime in 2022.

Speaker 4

This timing will largely depend on the timing of the regulatory approvals. We project the transaction to be accretive to diluted earnings per share In the 1st full year post closing, excluding acquisition related expenses and over 8% accretion and diluted earnings per share after the 3rd year, and that assumes the full stock based consideration issued as part of this transaction. The accretion estimates increased meaningfully by approximately 400 basis points assuming share repurchases post closing to offset shares issued as part of the transaction consideration. We believe we would have sufficient capital and liquidity to do so, especially because we will largely be restricted from repurchasing shares between now and closing. And if we do have that anticipated capacity, These repurchases would not be guided by our typical price thresholds given the very specific purpose of offsetting the stock consideration associated with this transaction.

Speaker 4

We expect to generate cost synergies primarily by From the Raymond James Bank deposit program. Specifically, we are conservatively modeling $3,000,000,000 of deposit replacement In the 1st full year following closing, in that 75% of the future funding needs over the next few years would be funded with the lower cost Raymond James Bank deposit program balances. The actual amount and timing will obviously depend on a lot of different variables, which none of us can predict at this juncture. And importantly, while deposit replacement helps with short term accretion, our long term objective is to continue strengthening They're a fantastic depository franchise to strengthen client relationships and diversify our combined funding sources. So we will take a balanced approach focused on the long term just as we always do.

Speaker 4

Finally, our accretion Amit assumes short term interest rates increased 50 basis points in 2023 and another 50 basis points in 2024 for a total increase of 100 basis points over the next 3 years. It's important to note that 94% of TriState Capital's assets are floating rate, So this transaction significantly increases our upside exposure to higher short term interest rates. And we only model that TriState Capital's NIM increased around 30 basis points to around 2% after the first 100 basis points of rate increases, which is well below their NIM prior to the pandemic. Now let me flip to Slide 16 to provide a summary of the total consideration. The total consideration for the transaction will be about $354,000,000 of cash and 7,800,000 shares of Raymond James stock.

Speaker 4

At RJS current stock price, this represents total consideration of around $1,100,000,000 between the cash and the stock. This table also breaks out the components of the capital instruments reflected in this total consideration. Before I hand the call back over to Paul, let me explain our projected impact to our Tier 1 leverage ratio, which we have guided to work down to 10% over time, still twice the regulatory requirement. This transaction meaningfully accelerates our glide path to hitting this goal And we would expect an impact of about 150 to 200 basis points upon closing based on the current consideration mix. And we would expect to round another 100 basis points of incremental impact if we repurchase shares to offset the equity consideration in this transaction, which is our current expectation.

Speaker 4

So a total impact to our Tier 1 leverage ratio of somewhere around 250 to 300 basis points. But remember, we also expect our current ratio to grow between now and closing, giving our earnings and restrictions on buying back stock between now and closing. So with that, I'll turn the call back over to Paul Reilly. Paul?

Speaker 3

Thanks, Paul. And I know for those of you who followed us a long time, sometimes people think we're Too deliberate and we were hoarding capital, but I think we've always said, look, we're going to strike when we think it's a great deal for shareholders in the long term. And we are extremely excited about this transaction and could not be more optimistic about the Growth prospects for TriState as part of the Raymond James family. Jim and I are both confident the transaction will yield positive outcome for TriState Capital's associates and their clients and that our shareholders will benefit over the long term. I know there's a lot of questions.

Speaker 3

So with that, I'm going to turn it over to the operator. Operator?

Operator

Our first question today comes from Manan Gisalia from Morgan Stanley. Please go ahead with your question.

Speaker 5

Hi, good morning all. Congrats on the deal.

Speaker 6

Thanks, Paul.

Speaker 5

Paul, I was hoping you could talk a little bit more about the benefits from the deal beyond the loan portfolios that are coming The premium you're paying in the 8% EPS accretion suggests that there is room for significant growth in synergies between the two businesses. And I know you mentioned some of the synergies on the asset management side and also the digital platform and the risk management technology that TriState brings. Can you help us understand what additional synergies you see versus having grown the SBL and commercial loan portfolio organically?

Speaker 3

Well, first, I mean, I don't think we have the market to grow the SBLs organically because our bank will continue to be there to service the Raymond James clients. TriState is a whole different business serving independent advisors, RIAs and will continue to be separate and it's kind of one of these unique transactions You have a high quality organization that's very fast growing that needs capital And needs deposits. 1st, they're going to service their client deposit needs, but beyond that, they need deposits. And we have excess capital and we have excess Deposits, so we have difficulty deploying at a good cost. So not only do they get low cost deposits, but we're going to earn a lot higher Spread on that cash than we would depositing on our own and we just see with their growth and our growth just a tremendous Financial opportunity over time.

Speaker 3

So keeping them independent is important to make sure their independent clients know That their data, their operations and their technology is separate, no different than Carillon Towers where we have a lot of firms Advisors use our funds that aren't with us, but everything is separate and they service their clients. TriState will continue to service their clients. We believe just the financial arbitrage on deposits as they grow will be significant. And so it's just like 2 organizations Doing the same thing, a little different markets with a perfect fit, 1 needing capital and deposits and one having excess capital and deposits. And we see tremendous Loan growth opportunity at TriState as we do at Raymond James Bank, but different markets and different customers.

Speaker 5

Okay, great. And then another question I'm getting this morning is why structure the deal with A large equity component, which you will eventually buy back. Is there Are there some restrictions around what you can do with your capital until you buy back the stock? And is there Why not just do more cash right now as opposed to doing stock and then buying back the stock later on?

Speaker 3

I think it's kind of pretty simple. You have a buyer and a seller. The buyer was happy to use all cash. The buyer wanted the seller wanted stock. So We structured the transaction because that's what they wanted.

Speaker 3

It shows a long term commitment by the management team, which are large holders and Jim is Founder, to hold Raymond James stock, which we believe is good for the long term, both retention and in management. And we will buy back stock when we're permitted after the transaction till the transaction closes. By SEC rules, we have restrictions, but We will buy back stock to kind of simulate more of a cash buyback when we can. So We would have been happy to use it for cash. It wasn't a restriction, but this was what took to get the transaction done and we felt that from a retention standpoint, Probably long term, we were better off to have them invested in our future also.

Speaker 3

Great.

Speaker 5

Just to follow-up on that, is there a time frame within which you would buy back stock off of the deal is completed?

Speaker 3

Yes, we will I you can never predict what's going to happen in markets and everything else, but We're essentially until it closes are going to be restricted from buying back stock. So I don't know if these average transactions 6 months ish plus or minus, could be shorter, could be longer. So it's going to be we're going to have to clear that hurdle. And then our plan today is to be Much more aggressive in buying back stock to make this transaction more look like a cash purchase.

Speaker 4

Yes. I think just to reinforce that this would not be modern like our typical messaging around buying back stocks on an opportunistic basis. This would be

Speaker 2

a much

Speaker 4

more Deliberate action with a more tailored objective. So it'd be pretty quickly following closing subject to volumes and other things obviously.

Speaker 5

Okay, great. Thanks for taking my questions. I'll hop back in the queue and congrats again on the deal. Thanks.

Operator

Our next question comes from Devin Ryan from JMP Securities. Please go ahead with your question.

Speaker 7

Hey, great. Good morning, everyone. Congratulations to both sides here on the announcement. I guess just kind of following up on previous line of questioning, just trying to get a little bit better sense around your TriState's growth over the Tremendous momentum on the bank. And if we can just dig in a little bit more to what drove that, What TriState was doing well?

Speaker 7

And then as we think about the combination with Raymond James, clearly Adding capital, adding resources, adding funding efficiency, could that growth have been even better over the last 12 months This deal, let's say, happened a year ago, so was there opportunity left on the table? And just think about kind of the growth potential Moving forward, how should we be modeling that now that we have this combination? And then also if

Speaker 3

you can touch just a little

Speaker 7

bit more on Chartwell And what the opportunities are there specifically? And can you accelerate growth? Or is it more just you're providing a more Robust platform infrastructure that they can leverage like how should we think about the ability to actually expand assets and work with more clients there?

Speaker 3

Devin, good multipart question there.

Speaker 5

So a

Speaker 3

lot of areas to cover first. The SBL market is a big market. If you look at the industry, as you know, margin was the traditional source of funding. It could only be used for securities. If you look at the industry, that really the SBL market has been the growth market and margin has been pretty flat.

Speaker 3

So it is the Preferred financing mechanism. For most broker dealers or independent RIAs, They either have to go to a one off bank relationship, which isn't technology driven, isn't efficient or start their own bank, which isn't cheap And brings on extra regulators or go to really very limited alternatives in the marketplace. So TriState saw this trend, Created really a leading technology where they could go to these independent advisors, RIAs and other people And allow them to go on to their platform and efficiently not only put the loan on, but Have it effectively and quickly approved and really have SBLs where there really wasn't another source except a very, very cumbersome One off business. So they saw that the market is growing. And I'll tell you that I think their only limitation has been How fast can they process it and how much capital and cash they need because the market is huge.

Speaker 3

I think they're into the 2nd or 3rd inning into the SBL penetration. Given where they started and giving their capital, they've done a great job. But If you look at volumes and requests, I think they've actually had slower growth because of the capital, cash and operational funding. They're growing fast for their size organization, but I think they're very disciplined managers and we're going to make sure that they grew Thoughtfully and within their capital and cash raising needs. So I think with us and they believe too With that extra deposit base to fund those loans and extra capital, they could have grown much more quickly.

Speaker 3

And if you look into the future, Now the technology platform is really mature, I think with the capital and funding sources, they will be able to grow Substantially now, there's only so much you can do when you're ramping up too. So they're very focused on quality and service to their existing clients. But yes, I think The growth opportunity, I think they're in the early innings. They're a leader and we're willing To invest more capital in their investments and their technology and growth. And we both believe Strongly that they will grow quicker and more efficiently.

Speaker 3

So that's the reason and that's the synergy. It's just It's a unique point in time where 2 organizations that think the same have opposite needs on capital and liquidity and putting our low As you know, it's a challenge to earn off our deposits to put our lower cost deposits in Where they can earn a significant spread based on what they're earning, it's going to be very accretive for everybody. And so we're very confident, As common as you can be in any market, things could happen in the market, but long term. And right now, if you look at market outlook, short term should be Very, very synergistic and I think the growth will continue to be strong, much stronger than we can do it. We only lend at Raymond James Bank to Raymond James Bank Private client group and that's going to be the structure.

Speaker 3

They will lend to other advisors outside of the Raymond James family Separately, not on our platform.

Speaker 4

And as far as Chartwell goes, we think that's an exciting opportunity as well. They have around $11,000,000,000 of assets under management. And Carillon Tower Advisors has a multi boutique structure. And So Chartwell will be able to tap into that distribution to further enhance their client relationships. They have very good products On the particularly on the fixed income side, they have high grade, high yield type products, both short intermediate term products that have been generating pretty good Net flows over the last couple of years.

Speaker 4

And so that will be synergistic with our Carillon Tower Advisors multi boutique affiliation model, Keeping their separate brand and independence, just like all the Scout and Reams and other affiliates under that umbrella.

Speaker 7

Okay, terrific. And just real quick follow-up, I think I know the answer here, but if you think about just the pro form So the bank or the aggregate bank balance sheet with TriState Bank as well. Is there any consideration of Mix shift or are you comfortable, SBLs are obviously high quality safe Kind of loan, but on the commercial side, like is there any consideration of the pro form a mix Evolving at all and that could dictate how much capital you allocate to allow growth to occur in TriState? Or is it To the extent they see good opportunities, let them grow as fast as they can.

Speaker 4

We're going to want to continue to facilitate our combined growth, Devin, I mean the thresholds that you're referring to are thresholds that we set maybe 15 years ago when our bank was primarily a corporate lender. And so we were really setting those thresholds to manage credit risk on the balance sheet. But with the change in mix, SBLs now would represent 33% on a pro form a basis of the overall loan mix. And then a lot of our bank Today, again, their bank has securities portfolio with very limited credit risk. They have investment grade corporates in their securities portfolio.

Speaker 4

As you know, our securities portfolio is all agency backed mortgages. And so we some of those thresholds said 10 to 15 years ago really don't apply in the same way now that we're a much more diversified banking institution. But Most importantly, Raymond James has always been and will always be a private client group focused firm. And so that represents, Let's say, 67% of our revenues now. This transaction does not change that mix and nor Do we want to change that mix?

Speaker 4

We always want to focus 1st and foremost on the Private Client Group business because that is the lifeblood of almost all of our other This will actually be part of the lifeblood of TriState Capital as well as we use the deposits, The internal FDIC insurance capacity, which is a benefit to our clients, particularly in this market with third party bank demand for deposits has Declined to almost nothing. It will increase FDIC insurance for our Private Client Group clients and help Fund synergistically, TriState Capital's growth as well.

Speaker 7

All right, great. Thanks very much.

Operator

Our next question comes from Steven Chubak from Wolfe Research. Please go ahead with your question.

Speaker 8

Hi, good morning and congrats on the deal everybody. Certainly a really interesting transaction. First, I just wanted to start off with just a question on The assumptions underpinning some of the merger math or accretion math, I was hoping you could just outline what you're assuming in terms of revenue, SBL growth and expense synergies are underpinning that 8% accretion assumption. And I was hoping to get some insight too into just how the compensation model works at DSC. And as we think about incremental revenue growth, what's a reasonable assumption in terms of the marginal margin for every dollar of revenues?

Speaker 4

Thanks, Stephen. We as you know, we model fairly conservatively. So they've had fantastic growth across Their FBL and commercial lending portfolios, but we don't straight line that type of growth those type of growth rates in our projections. So In most of those cases, we're essentially cutting their historical growth rates almost in half, which would actually still be good growth over the 5 years, frankly, just given how strong that growth has been. But we wanted to be conservative in our modeling.

Speaker 4

And actually, your model, Stephen, that I saw last night Reasonable. I think the only major difference was we're factoring in increases in short term rates starting 2 years from now In years 23, 50 basis points each. So we get some obviously uplift there given that 94% of their Assets are floating rate assets. So this gives us a lot more exposure to higher short term rates. And then as far as expense synergies go, Really, it's mostly from the replacement of the $3,000,000,000 of deposits in year 1 and then 75% of the Funded growth going forward coming from our lower cost deposit base.

Speaker 4

But again, it's important to mention, 3 years ago, when we first met with Jim, the reason we were talking is because we needed another charter to provide more internal FDIC insurance capacity. And we wanted to diversify our funding sources Because as you may recall, I know sometimes we forget, but just 2 years ago, cash was precious. And I think we all believe that cash will become precious again. And so having a diversified funding source, which TriState has an excellent one. It's not something that we want to diminish in value over the next couple of years just to get short term accretion.

Speaker 4

We want to Continue strengthening their particularly their treasury management operation. They've got great technology there and great client relationships. And that's going to be an area of focus for us as well is kind of continuing to diversify the funding sources for the firm overall. So we're well positioned when funding becomes scarce again.

Speaker 8

Thanks for that perspective, Paul. And since you brought the point of rates, I have a multifaceted question at least on that topic. I'm curious how much a transaction actually increases your overall rate sensitivity. And SBL appetite has historically been much stronger during periods of low rates. I was hoping you could help handicap the impact the higher rates could actually have on SBL growth going forward.

Speaker 4

Yes. And that's part of the reason we significantly reduced kind of the growth rate going forward in our upgrade scenario. And so in terms of the exposure, Again, 94% of their assets are floating rate assets, so on the bank balance sheet. So it's pretty straightforward. And then even the parts that are fixed rate Our securities with relatively little duration that reprice over time with higher rates, too.

Speaker 4

So it gives us much more exposure to a higher short term interest rate environment going forward.

Speaker 8

And just final one for me, just on managing conflicts and potential revenue dis synergies. And recognizing that TSC is going to operate independently, how do you handicap the risk that TSC clients may be reluctant to partner with one of their largest competitors? And how do you manage also the potential conflict where TSC sales personnel are getting compensated for marketing SBL product whereas Ray J Advisors are not? I mean, I recognize that Ray J historically has had more of a, let's call it, pull versus push approach to marketing SBL products. Just want to get a sense of how you're mitigating some of those potential conflicts?

Speaker 3

Yes. So first, I think as We're in an industry that everyone competes and uses each other's products and services. You take any of the funds there, Carillon Towers, Promontory was owned by Bank of New York. I mean, it's just on and on and on and on. So the question is For their clients is, are they really going to be independent?

Speaker 3

And the answer is yes. Their operational data, just like in Carillon, everything they do is going to be separate. They're not going to their salespeople are not going to call on Raymond James. It's very, very different. So I think the key is being able to show people that one, they're independent.

Speaker 3

The Raymond James name won't appear on any client Statements on any information will be just TriState, very important to separately branding. And we're just not going to interfere with the business It's been very, very successful. And I think that when people see that happen just like in the mutual fund business or other products and services, They'll see that and the pricing is all determined by TriState. They'll see that it's A good deal and they have great client relationships, so why would they change? To change, there's probably one other Competitor that's associated with the financial services organization or you start a bank.

Speaker 3

So The question is, if you're going to be in the SBL business, do you do it yourself or you need a bank? Do you go where you just do one off relationships where you don't Technology and systems that are integrating, you don't have to service the platform that TriState's built or do you go to another competitor That has their name on the statements to their clients. I mean, so I think the choice will be pretty clear. I think we're a trusted name. We've Operate this way in Carillon Towers for many years and we are committed to keeping that independence because If we don't, we'll just mess up the business that we paid a fair but good price for.

Speaker 3

And so why would we do that? And So I think that most people will watch and if we do what we say we'll do, they'll be very comfortable and they'll see that independent. So Not an issue for us. That's how we've operated in other segments and we plan to continue to operate here that way.

Operator

Our next question comes from Alexander Blostein from Goldman Sachs. Please go ahead with your question.

Speaker 6

Thanks guys. Good morning. Thanks for taking the question. So Paul, maybe just a question on M and A strategy broadly. If you look at the type of deals you guys Don over the last couple of years that we're on a smaller side of things and focus more on kind of the advisory investment banking, maybe some asset management and So they're not more kind of balance sheet focused type of transactions.

Speaker 6

Does that signal at all that

Speaker 9

you guys are willing to

Speaker 6

look a little bit broader? I'm assuming for now this kind of takes you out of the acquisition market for a little bit of time, but just thinking about the type of deals that you could contemplate going forward?

Speaker 3

I think that we haven't changed our focus. We've always said that our number one was if we could get a group of great advisors to join us So a firm we do that, but there are very few firms and they're private and generally not for sale. We've looked at We've continued and will continue to focus on growing the M and A platform and even in all of our business It's asset management, but we've said we are going to look farther afield as we've purchased Northwest Securities in Our processing for retirement plans or other technology platforms that would help service advisors. This we believe, Ironically, you can buy those firms, but you don't deploy a lot of capital. You deploy cash, but it doesn't really affect your Tier 1 ratio.

Speaker 3

We can't grow the bank fast enough really to get back our Tier 1 down. So the choices are be what's a better investment buying stock or really investing in Something that's extremely high quality, a growth engine, where we can get a good return on that capital. And we believe that TriState is one of those. We really haven't looked at acquiring banks. We've been approached many times for banking franchises, but They really don't do anything for us.

Speaker 3

We'd buy assets. We'd use capital, but there's no real strategic advantage except a bigger loan portfolio. And here we have everything we've been looking at in banking, a great technology, a high growth engine, a high quality management team. We think a long term growth business. It needs our capital and cash, which is what we want to deploy.

Speaker 3

And I think it's going to help us grow for a long, long period of time. So that was the reason for it. I don't think it changes. In that sense, it's one off. We don't plan to look for another bank.

Speaker 3

But we do plan to continue focusing on our core businesses and we're happy We're growing TriState Capital and Raymond James Bank. I think that we have a good mix and balance on Deploying capital into areas we really like, which is really the private client group and retail oriented products of You know, SPLs and mortgages. So that's always been on our game plan. And this was just a very unusual opportunity and I think one of a kind To really accelerate that.

Speaker 4

Yes. And maybe the only thing I would add, Alex, is while this is a significant transaction for us, we will still have Plenty of balance sheet capacity and flexibility to pursue other acquisitions. And unlike a major private client group acquisition, which would have significant integration implications. We're really keeping This is TriState Capital separate, where there's not going to be a technology or systems integration on the back end that would Be highly disruptive to our technology or operations team. So saying all that to say we're still open for business on the acquisition front, but We're going to be, just as we always have, extremely deliberate, patient and run all the opportunities through the acquisition criteria that Paul Reilly mentioned on Paul earlier.

Speaker 3

Yes. I just want to reinforce, if you look at the Charles Stanley transaction in the U. K, again, they have the back office Service and we really aren't doing integrating them into our systems. Here it's the same thing. They're going to have their own systems in operation.

Speaker 3

There's going to be Kind of it will impact the financial reporting and how it rolls up. That's really the business will continue. So We don't see a high demand on certainly on relationships and getting to know each other and seeing what tools we can help Each other with, but it's going to be independent. There isn't that lift. So we have the capability and bandwidth if something comes up to react to it.

Speaker 6

Got it. Thanks for that.

Operator

And ladies and gentlemen, our next question comes from Christopher Allen from Compass Point.

Speaker 5

Please go

Operator

ahead with your question.

Speaker 4

Yes, good morning everyone. Congrats on

Speaker 2

the deal. I was wondering if you could give

Speaker 4

us some color maybe from the TSC side, What are the barriers to entry for competitors starting up a similar platform?

Speaker 2

To be quite honest, we have very limited formidable competition in the marketplace. And by that essentially, there are 2 other parties we periodically come across, you may have heard of a company called Goldman Sachs. They have an entity that goes out If you're speaking specifically about the private banking business that we have, they have an entity that So this is that type of business and there's a bank called Bancorp in Delaware that's out there. But by far we've been able to Get the dominant market share of this business and continue to grow our business pretty dramatically. And it's what I would characterize as responsible growth.

Speaker 2

All these loans are over collateralized price the market on a daily basis and highly liquid. And then if you take a look at our commercial banking business, we've carved out a niche there in all the businesses across the board, whether it's Chartwell or commercial banking or private banking, we have highly experienced individuals. We have very little turnover at our company and we look at it as we've built a foundation now of over $12,000,000,000 of Assets and what we're doing today with our friends at Raymond James is not about where we are today. It's Really about tomorrow and taking this company to a much higher pace and Leveraging off what they've put in place over the years of a very strong balance sheet and income statement over their past 59 year history.

Speaker 3

I think if you really look at what we were overly impressed with was that we looked at our own SBL business We serve our client our advisors and the technology and the systems that went into it. And when we did the due diligence, the sophistication Of their front end systems to be able to go into all these different advisors with different organizations and be able Get the SBL technology, which is obviously you could see by the thoughtfulness and the robustness of the technology developed over a long period of time. And then as they're focusing on even speeding up their back end processing, let's get these approved. When you're in the same organization, that flows a lot easier. When you're Servicing multiple organizations that technology gets to be critical and has to be customed and integrated and We were just really impressed with the technology and the systems they've developed and the lead they have and their continued development of it, Which we will support.

Speaker 3

So that's really the barrier. You can say you want to do this. We could say at Raymond James Bank, we wanted to do this with We have all the systems to process SBLs and everything else. But if we went to 3rd party, it'd take years to really create a system That probably wouldn't even be competitive by the time we rolled it out and it would be even further behind from where TriState Capital is focusing their technology development. So it's they found a niche very early on, developed to it, created Very robust technologies.

Speaker 3

And you can say you want to do it, but it's not an overnight thing. It would take years to do it. So that's the lead. And hopefully, the technology they continue to develop and invest just clearly sets them continually apart.

Speaker 2

If you look at our business, This is a company that has historically invested in their clients, their people, their infrastructure and their technology. And all you have to do is take a glance at our income statement. We have a separate category there for technology and you can see The amount of money that we've been consistently investing anywhere from $3,500,000 to $4,500,000 every

Speaker 10

single quarter. Yes. I would just add, when you do this on a held away basis across all the custodial platforms, each of those are key account relationships That effectively took years to develop. So the amount of expertise that's within the organization and building this ecosystem, if you will, How we work with those 3rd party custody platforms has taken over a decade to build. So basically our technology We built around the expertise and the client experience that we knew we needed to deliver, which includes Great things from an advisor perspective, ease of use, things like that.

Speaker 10

But from a custodial platform perspective includes safety, soundness, security, All those things. So it's been a tremendous amount of work both on the distribution side, the product development side, The technology side all coming together to sort of manifest the business into technology. And we've again, as we talked about before, there Couple of places where we've done that as well, treasury management, Paul and, you had referenced as well as in our Fund Finance and some other commercial verticals where we think again our technology spend has built on Expertise in the business that really separates us from others and we agree it would take a long time to replicate that on an organic basis.

Speaker 5

Great. Thanks, guys.

Operator

Our next question comes from James Mitchell from Seaport Research Partners.

Speaker 9

Just maybe you have $25,000,000,000 of client deposits Held away at 3rd party banks. You're targeting replacing $3,000,000,000 of Tri States. That seems a little conservative. Is there a reason why You couldn't replace more of that deposit funding more quickly or is it simply you want TriState to maintain those sweep relationships for longer term growth?

Speaker 3

First, their business is a relationship business. So whether it's with their SBL clients or their commercial clients, It's an asset and liability business, both loans and deposits. So you can whisk away and say all your deposits But then you kind of destroy the relationship. So the key is where we can, where those deposit relationships Aren't critical, they're one off. We will use they'll use our deposits.

Speaker 3

But where they're key to the relationships on the lending side, they need to maintain those. So We don't want to destroy the franchise by saying here, take out all these deposits and use ours and we'll have a short term gain, but a long term Hurting of the franchise. So that's the reason. So it could be more, but we're going to be very deliberate. We used, I think, What's the conservative target?

Speaker 3

But with their growth, we'll deploy more. And with if there's opportunities where they believe It doesn't match or the deposit relationships aren't important. They can utilize them, but we want them to maintain their client relationships, which is again Both asset and liability oriented. You can't sweep away one part of the relationship and assume the other part stays.

Speaker 9

No, that's all fair. But maybe on the flip side with that $25,000,000,000 of client cash, you've does it change now you have a second bank charter. Does it change the way you think about your capacity to hold client cash on yours or TriState's balance sheet? Now that you have a second charter, could you Benefit from rising rates over the next couple of years by moving some of that cash onto the balance sheets?

Speaker 3

We will over time, right? So Again, I don't think our strategy changes just like it has on with Raymond James Bank. We've chosen not to pile on a bunch of security and add cash, right? So The principal gives us cash that has a very good spread as they grow. We're confident they'll use more and more of that cash.

Speaker 3

And we think it's just a good fair to point conservative Projection of what we think on this, we don't want to be overly aggressive. Hopefully with their growth, they'll consume more than that more quickly, but that the market will determine that.

Speaker 4

And let's not forget, Raymond James Bank is also generating phenomenal growth and has significant cash needs as well. So And the cash that we have off balance sheet, Jim, as you know, that's all floating rate for the most part as well. So again, as Paul said, we're going to be deliberate. We're going to Expect and strength and hope to help TriState Capital strengthen their client relationships. And like everything else we do, we I'd like to build in a lot of flexibility for any kind of market environment, cash any kind of environment in terms of demand for cash, etcetera.

Speaker 10

Okay. All fair. Thanks.

Operator

Our next question comes from Bill Katz from Citigroup. Please go ahead with your question.

Speaker 11

Okay. Thank you very much for taking it. Congratulations as well. Just coming back to security based lending, appreciate that you're going to have separate brands and not calling each other's clients. But Paul, is there an opportunity to take TSC's technology and accelerate the de novo opportunity for the Raymond James side for Espial?

Speaker 3

Yes. So you can I think with for both sides, we may use borrowed technology platforms in terms of not Taking their technology, because ours is integrated into client reporting for our clients and to all sorts of systems? But in watching what they've done in terms So the front end and back end processing, we will probably as we develop our technology as use some of that approach and model to service our own clients. So, we're not going to have TriState. We'll not be servicing Raymond James client, Raymond James Bank will.

Speaker 3

But I think We've learned a lot from them in terms of the front end technology to advisors, some of the back end processing and decision making, And we'll certainly utilize those lessons in our own technology as we migrate it. So that will be an advantage. I think it will help us. The treasury management systems for their clients We think we can utilize and probably will borrow that kind of software and systems in the bank for their relationships Some things like that. So it will, I call it accelerate some of those as things that we do, they may borrow for their clients, But it's going to be separate.

Speaker 3

It's not going to be taking their technology and planning it in because frankly the integration would be huge And the changes would be huge. So I think we'll migrate over time more to taking Best in class and both of us learning those lessons and integrating them into the separate technologies.

Speaker 11

Okay, understood. And then just a follow-up, haven't spent any time really talking about the treasury services or maybe the opportunity for the investment bank. It seems like you're Again, opportunity on both of those. Is there any synergies that you could anticipate or acceleration of market share gains as a result of a more comprehensive So set of services that you can offer to middle market clients?

Speaker 4

Absolutely. We just acquired Sabeel, I guess a couple of months ago here now. And they focus on serving small, midsize and large private equity firms. And they actually have TriState Capital as a fantastic fund finance franchise That focuses on those type of firms. So that's an example of the synergy.

Speaker 4

We haven't even modeled those type of synergies. There's a lot of opportunities Even through their commercial lending platform, we were at dinner last night talking to some of their regional managers about investment Banking opportunities that they were not able to refer prior that they will be able to refer going forward with their commercial corporate clients. So We're really excited. We've been so focused on the securities based lending business and the deposit opportunity, There's a whole lot more in terms of synergy going forward in the combined franchise, which I think makes all of us really excited internally.

Speaker 5

Okay. Thank you.

Operator

And ladies and gentlemen, our final question for this morning comes from Kyle Voigt from KBW.

Speaker 12

Just a quick Clarification question for Paul regarding the expectation for the TriState NIM to increase to around 200 basis points with that 100 basis Point increase in short term rates. Does that include the impact of replacing some of those TriState deposits and having that 75% of incremental growth using RJF deposits or is that 200 basis points assumption just using the TriState current funding mix? So that's Part A. And then Part B would just be for those TriState deposits you expect to keep on balance sheet. Just wondering how we should think about The deposit beta for those deposits specifically?

Speaker 4

Great question and something we can provide more detail on as we Get down the road, but really the 2%, they should be able to do that without the benefit of our deposits. And as they've done more than that Just prior to the pandemic with their own deposit base. So we're really not giving them the benefit of our deposit In that 2% expectation. Now they do have floors in some of their floating rate loans. So really that benefit to NIM will be a little bit more back end weighted for the first 100 basis points.

Speaker 4

Really The 75 basis points after the first increase is where they'll see most

Speaker 5

of that benefits given some

Speaker 4

of their loan floors. But in terms of The second part of the question was around what was the second part of your question, Kyle?

Speaker 12

It was just around the TriState deposits you expect to just wondering how we should think about that.

Speaker 4

The deposit beta of the future kind of TriState deposit, Maybe David, you could speak to that, but it will obviously depend on the ones that we replace, presumably would have a higher deposit beta because it's not as relationship oriented as, for example, their treasury management system. So, oriented as, for example, their treasury management system. So I think their mix of deposits going forward Would have a lower deposit beta, all things being equal, than their deposit beta that they historically experienced as they've really Increase the quality of the deposit franchise with relationship oriented commercial clients. But I don't know, David or Brian, if you want to add to that. No, I think you've got it Paul.

Speaker 4

We see NIM going to 175 without any movement in rates and Paul's Projection about 2% easily. NIM on a go forward basis is quite accurate. So for every 25 basis point in rate move, you'll probably see us Pass on 5 to 10 basis points of that for the client and keep the remaining 15 or so.

Speaker 5

Yes. I think I

Speaker 10

would just add, as Paul said, Over the last couple of years, we've certainly focused on diversifying our deposit base, again, growing through relationships, Different products, different account types, very much on the liquidity as a service type of focus. So that will have a better beta That's been a pure interest rate relationship for sure. And again, we've been out here building for the same thing that Paul said, which is 2 years from now, we anticipate cash will normalize, whether that's an 2018 version or 2019 version. But we're preparing for either of those. So we expect pretty good data going forward and that's the Raymond James deposit sources will certainly enhance that even more.

Speaker 12

Got it. Thank you. Congrats on the deal.

Speaker 3

Yes. So let me just I'd like to a quick closing statement as first. I know this is always sudden and you have a lot to digest, but this relationship really goes back years on a commercial relationship and then discussions Really for a long period of time. And I don't know the amount of due diligence we did over the last few months, I'm sure they're still Ready to nap this weekend through all the requests and work that we've asked for over the last few months in this transaction is that We believe it's just great for both businesses as they do. Jim as a founder was under had no interest in I think in doing any transaction, but as we saw the Synergies

Speaker 5

in the

Speaker 3

future for both organizations became very excited for him and his associates, part of his family and We feel the same way with the Raymond James family. So we'll have an earnings call next week where I'm sure a few more questions will pop up. I Paul had one on the call. Yes. Just hate

Speaker 4

to end the call on a public service announcement, but because this is a public transaction, Public to public, we're really going to be limited in terms of answering questions. We're also in our quiet period technically until we release earnings. So we'll send us your questions, but we'll try to addressed them on our earnings call next week.

Speaker 3

So thank you for joining us on short notice. Again, you've always said we're Sometimes too deliberate, too conservative. So I think you just assume we're we did our homework and we're we wouldn't do any transaction That we didn't really believe will be a big boost long term to the franchise. So thank you and we'll talk to you next week.

Operator

Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.

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Earnings Conference Call
TriState Capital Q3 2021
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