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Raymond James Financial acquiring TriState Capital in $1.1 billion deal

The deal is expected to close in 2022.
St. Petersburg's Raymond James Financial has announced plans to acquire Pennsylvania's TriState Capital Holdings in a deal worth $1.1 billion.
St. Petersburg's Raymond James Financial has announced plans to acquire Pennsylvania's TriState Capital Holdings in a deal worth $1.1 billion. [ Tampa Bay Times ]
Published Oct. 20
Updated Oct. 22

Raymond James Financial has announced plans to acquire Pittsburgh holding bank TriState Capital Holdings in a deal worth $1.1 billion.

The St. Petersburg wealth management firm announced late Wednesday that it will pay TriState common stock shareholders the equivalent of $31.09 per share in cash and Raymond James stock. TriState’s single preferred shareholder will see their holdings converted to common stock and sold at $30 per share, a nearly 32 percent premium on TriState’s closing price Wednesday. In all, the deal involves about $354 million in cash and 7.8 million shares of Raymond James stock.

If the deal goes through, TriState will continue operating as a standalone brand, with its management and 350 employees remaining in their current offices. The company’s Chartwell Investment Partners also will operate as its own brand under the umbrella of Raymond James’ Carillon Tower Advisors.

For Raymond James, one of Tampa Bay’s largest public companies, the acquisition is a rare blockbuster. The company has snapped up several smaller organizations in the past year, including boutique investment bank Financo, investment advisers Cebile Capital and British wealth management firm Charles Stanley. But billion-dollar purchases are uncommon for the historically conservative firm.

“Sometimes people think we’re too deliberate and we’re hoarding capital,” Raymond James chairperson and CEO Paul Reilly said on a Thursday conference call with investors. “But we’ve always said 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.”

That TriState is a bank, and not an investment firm, makes the move all the more unusual for Raymond James. Reilly called it more of a “one-off” than a harder pivot into banking.

“We’ve been approached many times for banking franchises, but they really don’t do anything for us,” he said. “There’s no real strategic advantage except a bigger loan portfolio. And here, we have everything that we’ve been looking at in banking — great technology, a high-growth engine, a high-quality management team, and we think a long-term growth business.”

Raymond James Bank, which has assets worth $35 billion, will align with a company that’s experienced double-digit annual growth in loans and investments. The company expects to see $3 billion in cost efficiencies in the first year of the TriState acquisition, largely by replacing some off TriState’s higher-cost deposits with its own lower-cost deposits.

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“It’s just like two organizations doing the same thing in a little different markets with a perfect fit — one needing capital and deposits, and one having excess capital and deposits,” Reilly said. “We see tremendous loan growth opportunity at TriState, as we do at Raymond James Bank. They’re different markets and different customers.”

Raymond James Financial has total assets under management of more than $1.2 trillion. TriState manages assets of approximately $12 billion, and it has issued about $10 billion in loans. Chartwell oversees assets worth about $11 billion.

Related: Raymond James sees $1 trillion in client assets, again

Retaining TriState and Chartwell as independent subsidiaries was important in maintaining client relations, Reilly said.

“The Raymond James name won’t appear on any client statement, on any information. It’ll just be TriState,” he said. “We are committed to keeping that independence. If we don’t, we’ll just mess up the business that we paid a fair but good price for.”

Raymond James stock dipped slightly when the markets opened Thursday, but closed about even for the day. TriState stock soared to $31, the highest it’s been in the past decade.

The acquisition is expected to go through in 2022.