TriState provides securities-based loans for clients of independent investment advisory firms, trust companies, broker-dealers, regional securities firms, family offices, insurance companies and other financial intermediaries that do not offer proprietary banking services. Raymond James will acquire an additional banking license from the deal.

Raymond James has agreed to buy TriState Capital Holdings in a cash and stock deal valuing the latter firm at about $1.1 billion, and continuing a run of wealth management mergers and acquisitions in North America.

Nasdaq-listed Raymond James said in a statement yesterday that TriState Capital common stockholders will receive $6.00 cash and 0.25 Raymond James shares for each share of TriState Capital common stock, which represents per share a consideration of $31.09 based on the closing price of Raymond James' common stock on October 19.

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

TriState – also a US-listed business and founded 14 years ago – provides securities-based loans for clients of independent investment advisory firms, trust companies, broker-dealers, regional securities firms, family offices, insurance companies and other financial intermediaries that do not offer proprietary banking services. Operating without brick-and-mortar branches, it has more than $12 billion in assets.

The fact that Raymond James is buying a firm providing such loans comes at a time when the former firm has been expanding teams of wealth advisors across the country that use its affiliation business model. As independent RIAs have sprouted – often breaking away from large banks and broker-dealers – groups such as Raymond James have sought to tap into the market segment.

In its description of the TriState business, Raymond James said the firm’s banking franchise includes private banking and middle-market focused commercial lending with approximately $10 billion in loans. Additionally, the firm’s asset management franchise, Chartwell Investment Partners, manages assets of approximately $11 billion predominantly in equity and fixed income strategies.

“Our clients will continue to benefit from working with the same talented teams and the TriState Capital and Chartwell brands they already know so well, along with the technology we’ve invested in to provide an exceptional and responsive client experience. Raymond James’ strong balance sheet will provide supplemental capital and liquidity to continue enabling our fast-growing and highly scalable business model to meet clients’ commercial and securities-based lending and asset management needs,” Jim Getz, chairman and CEO of TriState Capital, said. 

Figures and benefits
TriState Capital has grown private banking securities-based lending organically at a 32 per cent compound annual rate since 2017 to $6.2 billion as of September 30, Raymond James said in its statement.  

“Raymond James provides TriState Capital with relatively low-cost capital and a stable funding base to enable continued and more profitable growth,” Raymond James said.

The deal wins Raymond James an additional bank charter and a national liquidity and treasury management business, diversifying Raymond James’ deposit gathering capabilities.

Chartwell Investment Partners, which will maintain an independent brand and management, will operate as a subsidiary of Carillon Tower Advisers with pro forma combined assets under management of about $80 billion. 

The transaction is expected to be accretive to Raymond James’ diluted earnings per share in the first full year after closing (excluding acquisition-related costs), with more than 8 per cent accretion in diluted earnings per share after the third year; accretion estimates increase meaningfully, by approximately 400 basis points, assuming share repurchases post-closing to offset shares issued as part of the transaction consideration. A big driver of cost synergies is replacing a portion of TriState Capital Bank’s current and future higher-cost deposits with Raymond James’ lower-cost deposits from the Raymond James Bank Deposit Program, Raymond James said.

Raymond James, based in St Petersburg, Florida, serves more than 8,400 financial advisors managing abpit $1.2 trillion in client assets through a multiple affiliation model.