Bank Holding Company TriState Capital to Sell Preferred Issue

TriState Capital Holdings (NASDAQ:TSC) will sell a new issue of fixed-to-floating rate preferred stock. Of course the dividends will be non-cumulative, but qualified.

Details are not know at this time excepting the issue will have a fixed coupon until 2026–longer than the more typical 5 years.

The company currently has a fixed-to-floating rate issue outstanding with a 6.75% coupon which trades strongly at $26.27–seen here.

The preliminary prospectus for the new issue can be read here.

31 thoughts on “Bank Holding Company TriState Capital to Sell Preferred Issue”

  1. Anyone buying this issue this morning (now trading on Fidelity) ? Trading appears rather thin.

    1. I’m trying but dealing with Merrill’s new ‘below IG’ rated crap and my accounts I have with them (never been an issue for me prior to today). Supposedly won’t be an issue in an hour or two but by then the price will have gone up another point probably.

    2. I’m not comfortable with the price, down around 25.25-35 maybe would wake me up. That said, I’m a relative noob here.

      1. I’m with you Mikeo. I’ve looked at the sister TSCAP which trades 6.37% to 6.5% (26.00 to 26.50) for the last few months. Today on extremely small volume TSCAP (186 shares) shot up .56. Somebody either forgot a limit order or they’re trying to jack up the TRSXL price. To me, (for what it’s worth I’m a noob also) It looks like TRSXL should be lower. I’ll consider at 25.25 or under due to 7 years until 1st call, but probably not at all due to non IG.

    3. have a bid in at $25 for 1/2 position.

      This is an unrated (kroll is a joke to me) small bank, a large short position in common stock, with an untested business strategy if the economy is pulling back, with a floating rate beyond 5 years, and an initial coupon too low for the risk.

      1. That’s why I haven’t pulled the trigger at current prices. I had a bid in at $25.25 on the open but lowered it a half hour ago to $25. My concerns mirror yours.

  2. I didn’t think I would find a bank that had a higher short ratio on its common stock (15.8) than NYCB. Schwab rating of D on the common stock.

    This is a “stinky” smelling bank as I believe somebody called Merchant Bank earlier this year. However, as Tim has pointed out the preferred stock trading has been strong.

    Should be interesting to see the coupon and market reaction. Might be interested

    1. This is a rather unique banking business strategy. I am not sure why the short interest is so high. In a downturn or a recession, a bank with this unique strategy would have to be considered totally untested. If I buy it (depending on coupon or price), it would be on my list to flip or move out of it if the economy got softer.

      1. Are you talking about TSC, Steve? The financials look pretty darned good to me (revenue and earnings are up nicely for at least 4 straight years). I’m also only seeing a 5.9% short interest ratio as reported by Merrill. I’ve been long TSCAP since its IPO and very happily so.

        1. Yes, impressive growth I agree. Preferred has traded nicely. My short information comes from Morningstar

          Short % of Float
          8.48
          Short Ratio
          15.83
          Shares Short Change
          -6.07%

          I tend to look at the short ratio.. … Also known as the “days to cover” ratio, the short ratio is calculated by dividing the number of shares sold short by the average daily trading volume.

          I compare it to another unloved bank NYCB.
          NYCB Short % of Float
          7.79
          NYCB Short Ratio
          11.60
          NYCB Shares Short Change
          11.81%

          1. By the way, I would never have surmised the short ratio being this high. It makes no sense to me. However, I have learned not to fight the market and short sellers over the years. I would only hold their preferred stock which clearly has not been affected by the short sellers

  3. It will price quickly and sell well. Going to be tough for retail to get at 25.

    BB+ by Kroll last time. Looking for the same.

  4. Tristate does not pay common stock dividends so they could decide to suspend the preferred dividend with little consequence.

    1. Also, they are prohibited from paying a dividend if it exceeds 25% of their ltm income

    1. Tim I was surprised to see a III rating of “C”. Positive ROE and ROA, assets climbing year in year out, BV climbing, continuously profitable, pfd div covered about 25x. Is it in line for a re-eval or does maybe the short tenure and company business model causing pause?

      1. Hi Alpha*–consider how conservative I am–that rating hasn’t gotten much attention of mine–I need to re-evaluate in the future.

        1. Tim I’m with you all the way on that conservative side. No shippers, BDCs or non-transparents, and almost all issues are IG.

          Lacking low-hanging fruit, been digging through unrated issues. Hope to find more like AXO (in under par) which for me anyway is an IG equivalent.

        2. Tim, you are very kind to share your views and ratings. It may be nice to include the date of each of the respective III ratings. Please do not construe as a request …. just a wishful thought. As is, we are very grateful for your website and all your efforts.
          In the past, I’ve used the III rating merely as one of several (many) factors in my DDD.
          Thanks again!

      2. For me, both the short tenure and unique business model coupled with its short ratio all give pause. But as you pointed out, it does look like a legitimate small growth stock.

    2. Hi Tim
      I believe there is a call date on July 1, 2024 and any dividend date thereafter, according to the 4th paragraph in the prospectus.
      Thanks for bringing this new issue to our attention.

    1. randy, III refers to Tim’s site, Innovative Income Investor. Safe to consider it not S&P/Moody’s, but far superior to Egan-Jones. 🙂

        1. libero, See the search box in upper right of this page. Enter a ticker such as AXOS. The search takes you to it’s pfd “AX” (which is actually AXO). Click on the the “AX”. Note the details and links that open.

          A quick link for some useful intel.

          1. Im new here. I noticed the rating as you explained but where is the actual description of what a B or C is supposed to signify?

              1. Thank you for the links….I was actually following the earlier replies and searched for this III Rating: C

                I believe this is Tim’s rating? So just trying to find his rating system if Im understanding the comments correctly.

  5. Unlike the new LTS issue, this is one I’m looking forward to if the rate is decent.

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