Good morning, everyone, and welcome to the TriState Capital Holdings conference call to discuss financial results for the three months ended September 30, 2017. [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 are made. New risks and uncertainties come up from time to time, and management cannot predict these events or how they may affect the company. TriState Capital has no duty to, and does not intend to, update or revise forward-looking statements after the date on which they are 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 Mark Sullivan, Vice Chairman and Chief Financial Officer, for the question-and-answer session. At this time, I would like to turn the conference over to Mr. Getz. Please go ahead.

Good morning, and thank you for joining us today. As pleased as we are with the results we are reporting to you this week, we believe we're building even greater momentum heading into the fourth quarter of 2017. Our performance highlights the earnings power of our growing company's unique combination of investment management, national private banking and regional middle market commercial banking businesses, all enabled by our unrivaled financial services' distribution capability. On a year-over-year basis, TriState Capital delivered strong double-digit organic growth in earnings per share, net interest income, total revenue, total assets, loans across all channels, total deposits and average noninterest-bearing deposits. This multifaceted growth has generated powerful top line-driven results for the quarter, year-to-date and the last 12 months. Our third quarter revenue of $35 million grew more than 13% year-over-year. Year-to-date, revenue grew to more than $101 million, up nearly 15% compared to the first 9 months of last year. Top line expansion in the third quarter was driven by our record net interest income growth of 26% year-over-year to nearly $24 million. Year-to-date, NII of nearly $67 million is up more than 20%, compared to the first 9 months of last year. As designed, our expanding distribution of high-quality lending and deposit products with strong asset sensitivity is delivering robust NII growth in various interest-rate environments. Noninterest income also contributed meaningfully to our third quarter results, totaling nearly $12 million and representing 1/3 of total revenue. Significant revenue growth, coupled with our highly scalable infrastructure, improved TriState Capital Bank's efficiency ratio to 54.81% in the third quarter of 2017. Efficiency improved by 720 basis points from the third quarter of last year, and this ratio remains in line with our mid- to high-50s target range. Consolidated noninterest expenses were 2.1% of average assets, annualized in…

[Operator Instructions]. Our first question comes from Michael Perito of KBW.

A couple of questions from me. I guess I wanted to start first on the tax credit investment strategy. The color on the release about the next quarter was helpful. I'm just curious, though, I mean, is this something we should be thinking about to some degree next year as well, something that you guys plan on trying to continue?

Mike, this is Mark. In Q3, we were able to take the opportunity to reduce our effective tax rate for '17, but I think it's probably helpful to put some historical context on our program. Our investment in 2013 was about $3 million. Last year, it was a little greater than $9 million. And this year, it'll be north of $20 million. So it's grown as we've grown. One of the key things though is as much as it's opportunistic, it has to meet our underwriting standards before we'll make an investment, whether it's LIHTC, HTC, energy credit, whatever the case may be. As far as the continuation of the program, 2008 is somewhat complex and a bit of a tricky issue in that we're in a holding pattern right now, as we don't know what the rate will be in 2018, given the potential legislative changes in corporate tax reform. I think we can assume it will be significantly less than the current 35%. But we've got to keep in mind, too, that for the industry, they'll be a onetime charge because of the write-down of the deferred tax asset as a result of the lower rates. So I think as far as the program on a go forward, I think the best answer I can give you is we're on a holding pattern.

Okay. That's helpful, Mark. And then, I guess, for old time's sake, Mark, I'll ask a question on the net interest margin. Any thoughts around -- it seemed like the deposit strategy came to fruition a little bit in the third quarter here, which helped the margin kind of get back on track. Any updated thoughts around what kind of pricing you're seeing and the deposit market going forward here? And is the hope that you can continue to kind of build on what you did in the third quarter just to preserve kind of the left side asset sensitivity that you guys have built?

Yes. I think, Mike, looking on a go-forward basis, you've got to look both short-term and long-term. And short-term, specific to Q4, we don't have a Fed rate hike. So the margin, like, will be flat to possibly some slight compression. But more importantly, in the longer term outlook, the momentum that we're seeing in treasury management in terms of no cost and low-cost DDA coming on board, that's kind of translated into a flattening of our cost of funds. And so in '18, we'll keep a larger share of the anticipated rate hikes that are going to impact '18. I know you asked about NIM, but the thing to keep in mind is our focus is always NII, EPS, which is north of 20% in '17, we'll continue that way in '18.

But, Mike, I'm sure you noticed it was up this quarter.

I did. I appreciate the color.

The next question comes from Matt Olney of Stephens.

I wanted to ask another question on the tax credits. And Mark, if we assume we don't get any kind of benefit of the change of corporate tax rates for next year, could you just give us some color on the 2018 effective tax rate, just based off of the most recent investments you made here in the tax credit program?

Yes. I will say, assuming that there's a 35% rate, corporate rate in 2018, we would likely continue on the same path of the program that we were in on in '16 and '17. But again, I mean, there's a question we know the LIHTC is going to continue. There's a question if the historic tax credits will continue or not. There's some question in -- on the energy credits at this point. So again, I think, rather than sort of predict '18, I think it's best just to stay I think as an industry that a lot of people are kind of taking a wait-and-see attitude.

Okay, that's helpful, Mark. And then on the loan growth front, it sounds like the commercial real estate growth was strong this quarter, the best quarter we've had in a while. Could you just give us some more details about what types of credits you're adding in theory, average size, other -- or in geography, where it's at? And are there any types of credits you're avoiding on the CRE fund at this point of the cycle?

Yes. What you want to keep in mind, Matt, is that our commercial real estate portfolio is spread across 4 states and 5 loan production offices that cover multiple MSAs. The focus of the commercial real estate lending is on end-market borrower relationships with credit secured on by end-market properties. And if you look at -- our non-owned or occupied commercial real estate loans represent about $1.1 billion of the portfolio. We're about 28% of our total loans. And if you look at that and look at the breakup, there is some retail there. There is a rich retail loan portfolio is comprised of the smaller retail properties that we view as important in defensible physical locations. For example, we have no regional mall exposure at all. Our retail exposure is very well at approximately 3% of the loan portfolio. And then, of course, everyone talks about multifamily. Our multifamily loan portfolio is comprised totally of non-luxury properties and our footprint, with strong sponsor relationships, diversifying across all of our markets and MSAs. We believe in our underwriting and our strong relationship-based lending approach, which is made possible by that very strong experience and knowledge of our commercial real estate team. We believe that we're positioned smartly to do business in this product type. And we actively monitor this asset class. If you look at a breakdown compared to the total loan portfolio, about 3% is retail, 2% is industrial and warehouse CRE, 4% is off the CRE, 6% is multifamily, 4% is other CRE and about 12% is owned or occupied. And if you look at the pricing that we're seeing, it's ranging from anywhere like 250 basis points over LIBOR to maybe 325 over LIBOR. And the average size loan is about $3.5 million in size.

Okay. That's helpful, guys. And Mark, I just want to say, congrats to you and enjoyed working with you in the past, and good luck on the next stage of your life.

Thanks, Matt. I appreciate it.

[Operator Instructions]. The next question comes from Russell Gunther of D.A. Davidson.

I appreciate the commentary on the commercial real estate outlook. I wonder if we could just hone in on C&I, nice to see that up 4 consecutive quarters. Could you just share a little bit about how the pipeline's shaking up? And what's your expectations are for that loan bucket going forward?

Yes, the pipeline continues to be relatively strong. We have made, over the past couple of years, a commitment to that segment of the business, and particularly, to sole bank deals. And so we're really very committed to C&I growth. We also are emphasizing that the owned or occupied portion, with regard to the commercial real estate portfolio. So I think you're going to see it up pretty handily. If you look at the commercial portfolio, it's up about 18% over the past 12 months. And that's a major improvement over what you've seen in growth in times past. So this is a major part of our book of business. And we have carved out an interest in niche. We have very experienced bankers. And I think you're going to see it growing handily, and we're readily benefiting this. I mentioned, a few moments ago, from the M&A activity occurring particularly in the Philadelphia and the Cleveland region. So I think you can count on this meaningfully contributing to what we've given some guidance on under the 15% growth where we've continually given direction.

That's helpful, Jim. And then for my follow-up, I think we've talked in the past about provision, guidance, thinking about 8 to 10 basis points of loans. So as you kind of look out and we just talked about the commercial growth expectations, but kind of marrying that with the private banking growth that's becoming an increasingly larger portion of the loan bucket, how does that 8 to 10 basis points alone feel to you, even coming in a bit below it currently? Just some thoughts there.

Yes. Russell, Mark here. On the provision expense, if you look at banks $3 billion to $5 billion in assets and their credit cycle, a little bit of uptick, but probably averaging about 15 bps on loans outstanding. And then you look at us with over half of our loan portfolio in private banking, we would expect to continue to run significantly under that.

And one of the reasons is, Russell, we feel very confident in that is that -- that's why I pointed out in the script that we had no loans, 30-plus days past due at the end of this quarter, but for the past 2 years, we haven't had any loans, 30 days past due. And that gives you an idea of the segue into adverse-rated credits. But obviously, we have to put more reserves again. So this portfolio is really, at this point, in pretty decent shape.

Yes, certainly is. I appreciate that. And Mark, congratulations on the transition.

[Operator Instructions]. And we have a follow-up from Matt Olney of Stephens.

I just wanted to follow-up on your M&A initiatives, if you could give us any update as far as expectations and timing and remind us what you're looking for.

It's always in a state of flux as you're going through this courtship period. So I'd probably give you a different response last quarter than I'm giving this quarter. We have a couple of situations that we're actively working on, but we have nothing that I would say that would come to fruition within the next quarter or so at this point. But we are in discussions with an awful lot of people at this point, and we're in discussions with some people that it's been a couple of years that we've been talking with them that we feel that we're making some progress. But what you want to do, particularly on the asset management side, is you have to make the right decision. Sometimes, the best strategic decision you can make is not to do something. And so we're looking carefully at these companies and their track record but also their cultural fit with us. So I'm hoping that we can bring something to fruition next year.

There are no additional questions at this time. This concludes our question-and-answer session. I would like to turn the call back over to Jim Getz for closing remarks.

Thank you very much for your continued interest in support of TriState Capital and your participation today. We look forward to speaking with you again in January as we discuss our fourth quarter results. Thanks again, and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.