UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 28, 2015
Date of Report (Date of earliest event reported)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
(Exact name of Registrant as Specified in its Charter)
New Jersey
(State or Other Jurisdiction of Incorporation)
| 001-16197 | 22-3537895 |
| (Commission File Number) | (IRS Employer Identification No.) |
500 Hills Drive, Suite 300
Bedminster, New Jersey 07921-1538
(Address of principal executive offices)
(908) 234-0700
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
INFORMATION TO BE INCLUDED IN THE REPORT
| Item 2.02 | Results of Operations and Financial Condition. |
On July 28, 2015, Peapack-Gladstone Financial Corporation issued a press release reporting earnings and other financial results for its second quarter of 2015, which ended June 30, 2015. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference in its entirety.
The information disclosed under this Item 2.02, including Exhibit 99.1, shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. | Title | |
|
99.1 |
Press Release dated July 28, 2015. |
The press release disclosed in this Item 9.01 as Exhibit 99.1 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PEAPACK-GLADSTONE FINANCIAL CORPORATION | ||
| Dated: July 29, 2015 | By: | /s/ Jeffrey J. Carfora |
| Jeffrey J. Carfora | ||
| Senior Executive Vice President and Chief Financial Officer and Chief Accounting Officer | ||
EXHIBIT INDEX
| Exhibit No. | Title |
|
99.1 |
Press Release dated July 28, 2015. |
Exhibit 99.1
Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS ANOTHER STRONG QUARTER
Bedminster, N.J. – July 28, 2015 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the “Corporation” or the “Company”) recorded net income of $10.25 million and diluted earnings per share of $0.67 for the six months ended June 30, 2015, compared to $6.81 million and $0.58, respectively, for the same six month period last year, reflecting increases of 50 percent and 16 percent, respectively.
For the quarter ended June 30, 2015, the Corporation recorded net income of $5.24 million and diluted earnings per share of $0.34, compared to $3.78 million and diluted earnings per share of $0.32 for the same three month period last year, reflecting increases of 39 percent and 6 percent, respectively.
The following table summarizes earnings for the quarters ended:
| June | June | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except EPS) | 2015 (a) | 2014 (b) | Improvement | |||||||||||||||||||||||||||||||||||||
| Pretax income | $ | 8.38 | $ | 6.32 | $ | 2.06 | 33 | % | ||||||||||||||||||||||||||||||||
| Net income | $ | 5.24 | $ | 3.78 | $ | 1.46 | 39 | % | ||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.34 | $ | 0.32 | $ | 0.02 | 6 | % | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 26.84 | $ | 22.40 | $ | 4.44 | 20 | % | ||||||||||||||||||||||||||||||||
| Return on average assets | 0.70 | % | 0.67 | % | 0.03 | |||||||||||||||||||||||||||||||||||
| Return on average equity | 8.24 | % | 8.44 | % | (0.20 | ) | ||||||||||||||||||||||||||||||||||
| Efficiency ratio * | 61.00 | % | 67.43 | % | (6.43 | ) | ||||||||||||||||||||||||||||||||||
* June 2015 marks the eighth consecutive quarter of improved efficiency ratio.
| (a) | The quarter ended June 2015 included a $2.20 million provision for loan losses. The 2015 quarter also included $373 thousand of fee income related to its loan level / “back-to-back” swap program, and is included in other income. There were 15,233,151 weighted average common shares outstanding for calculating diluted EPS for the 2015 quarter. |
| (b) | The quarter ended June 2014 included a $1.15 million provision for loan losses. The 2014 quarter also included income of $176 thousand from a gain from sale of loans held for sale at lower of cost or fair value. There were 11,846,075 weighted average common shares outstanding for calculating diluted EPS for the 2014 quarter. |
Doug Kennedy, President and CEO, said, “We continued to successfully execute on our Growth Strategy – Expanding Our Reach, generating strong results and demonstrating that our strategy is delivering positive operating leverage.”
Q2 2015 highlights follow:
| · | The Company continued to leverage the capital raised in the fourth quarter of 2014. The Company believes it has ample capital to support its continued growth and expansion for the immediate future. |
| · | Earnings and performance ratios for the second quarter of 2015 reflected improvement when compared to the second quarter of 2014’s results (as reflected just above). Year over year growth in EPS was 6.3 percent, despite 2.776 million common shares issued in the December 2014 capital raise. |
| · | Loans at June 30, 2015 totaled $2.74 billion. This reflected growth of $867 million when compared to $1.87 billion at June 30, 2014. Year over year loan growth was 46 percent. |
| · | Asset quality metrics continued to be strong at June 30, 2015. Nonperforming assets at June 30, 2015 were $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were $1.7 million at June 30, 2015. |
| · | Commercial & Industrial (C&I) loans at June 30, 2015 totaled $438 million. This reflected growth of $280 million when compared to $158 million at June 30, 2014. Year over year C&I loan growth was 177 percent. |
| · | Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) grew to $2.28 billion at June 30, 2015 from $1.83 billion at June 30, 2014. Year over year customer deposit growth totaled 24 percent. |
| · | The Company’s net interest income for the second quarter of 2015 was $20.34 million. This reflected improvement when compared to $16.92 million for the second quarter of 2014. Year over year growth in net interest income was 20 percent. |
| · | At June 30, 2015, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank (“the Bank”) was nearly $3.5 billion, including the acquisition of Wealth Management Consultants, which occurred in the second quarter of 2015. |
| · | Fee income from the Private Wealth Management Division totaled $4.53 million for the second quarter of 2015, growing from $4.01 million for the second quarter of 2014. Year over year growth in wealth management fee income was 13 percent. |
| · | The book value per share at June 30, 2015 of $17.02 reflected improvement when compared to $15.48 at June 30, 2014. Year over year growth in book value per share totaled 10 percent. |
Net Interest Income / Net Interest Margin
Net interest income was $20.34 million for the second quarter of 2015, compared to $16.92 million for the same quarter last year, reflecting growth of $3.42 million or 20 percent when compared to the prior year period. Net interest income for the second quarter of 2015 benefitted from significant loan growth during 2014, as well as during the first six months of 2015.
While net interest income for the second quarter of 2015 improved compared to prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.80 percent for the June 2015 quarter compared to 3.14 percent for the June 2014 quarter. A portion of the decline in net interest margin for the June 2015 quarter was due to the maintenance of larger average interest earning deposit/cash balances ($70 million average for the June 2015 quarter, compared to $51 million for the June 2014 quarter), as well as larger balances of liquid investment securities ($275 million average for the June 2015 quarter, compared to $247 million for the June 2014 quarter). Mr. Kennedy said, “As I have said in previous quarters, given our rapid growth, we had decided to maintain greater liquidity on our balance sheet.”
In addition to the maintenance of larger liquid balances for much of the quarter, net interest margin also continued to be impacted by the effect of low market yields, as well as competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits. The Company expects continued high liquidity levels and also expects continued loan and deposit growth in this competitive environment.
Loan Originations / Loans
Total loan originations were $417 million for the second quarter ended June 30, 2015, compared to $347 million for the March 2015 quarter and $269 million for the June 2014 quarter. At June 30, 2015, loans totaled $2.74 billion compared to $2.44 billion three months ago at March 31, 2015 and compared to $1.87 billion one year ago at June 30, 2014, representing increases of $300 million or 12 percent sequentially and $867 million or 46 percent, year over year.
The multifamily mortgage loan portfolio grew $526 million or 62 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The increase was net of participations sold over the year, including $48 million of participations sold in the current June 2015 quarter. The June 2015 quarter and the March 2015 quarter both included multifamily loan participations. These participations were part of the Company’s balance sheet management strategy and will likely continue in 2015.
The commercial mortgage loan portfolio grew $54 million or 17 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The net increases in both the multifamily and commercial mortgage portfolios were attributable to: the addition of seasoned banking professionals over the course of 2014; continued attention to the client service aspect of the lending process; an expansion of New Jersey-based real estate marketing activities; and a focus on the Boroughs of New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.
Mr. Kennedy said, “As explained in past earnings releases, analysis have shown that multifamily lending could be grown quickly and had strong credit metrics and provided solid risk-adjusted returns. Loan originations in this asset class have been robust as we built our C&I (Commercial & Industrial) lending capabilities as part of our Strategic Plan. Going forward, multifamily lending and related participations will remain a focus of the Company, however we anticipate volumes will be less robust than the past several quarters.” Mr. Kennedy went on to say, “As a result of our investment in and commitment to C&I banking, including the addition in 2014 and the first half of 2015 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in February 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow at an increased trajectory. We believe our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received.”
For the six months ended June 30, 2015 the Company closed $177 million of commercial loans. When comparing June 30, 2015 to June 30, 2014, commercial loans grew $280 million or 177 percent, to $438 million at June 30, 2015 from $158 million one year ago at June 30, 2014.
Deposits / Funding / Balance Sheet Management
Loan growth of $300 million in the June 2015 quarter was funded by customer deposit growth of $124 million, investment securities principal reductions and sales of $30 million, capital growth of $9 million, and various other borrowings. Mr. Kennedy noted, “Customer deposit growth for the June quarter was less than loan growth for the quarter; the deposit pipeline as of June 30, 2015 was very robust, and we have seen much of that pipeline fund throughout July, significantly reducing our June 30th overnight borrowing position.”
Brokered interest-bearing demand (“overnight”) deposits continue to be maintained as an additional source of liquidity. The interest rate paid on these deposits allows the Bank to engage in interest rate swaps to hedge the asset-liability rate risk. These deposits increased to $293 million at June 30, 2015. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.
From a liquidity/funding perspective, such brokered deposits, at a cost of approximately 25 to 30 basis points, are generally a more cost effective alternative than other borrowings and do not require use of pledged collateral, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits is used as the basis to transact longer term interest rate swaps, basically extending repricing generally to five years for asset matching / interest rate risk management purposes. As of June 30, 2015, the Company has transacted pay fixed, receive floating interest rate swaps totaling $150 million notional amount.
Certificates of deposit have also been utilized more extensively in 2015 compared to prior periods. The majority of these deposits have been longer term and have generally been transacted as part of the Company’s interest rate risk management. These certificates of deposit are also a more cost effective alternative than other borrowings.
Mr. Kennedy noted, “The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management products will help support both core deposit growth and commercial lending opportunities.”
Wealth Management Business
In the June 2015 quarter, Peapack-Gladstone Bank’s wealth management business generated $4.53 million in fee income compared to $4.01 million for the June 2014 quarter, reflecting a 13 percent increase.
The market value of the assets under administration (AUA) of the wealth management division was $3.45 billion at June 30, 2015, up approximately 21 percent from $2.84 billion at June 30, 2014. The growth in fee income and AUA was due to a combination of our acquisition of Wealth Management Consultants (NJ), LLC, new business and market value improvement.
John P. Babcock, President of Private Wealth Management, noted, “We continue to incorporate wealth into every conversation we have with all of the Company’s clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients.”
Mr. Babcock further noted, “We are excited to join forces with Tom Ross and Wealth Management Consultants. The acquisition is consistent with building our advice led wealth business and Tom and his team will add depth to our already high-caliber wealth management team.”
Other Noninterest Income
Service charges and fees for the June 2015 quarter were $837 thousand, compared to $708 thousand for the June 2014 quarter. Several categories reflected improvement in the quarter, including increased income associated with a new set of checking products put in place during the summer months of 2014.
The June 2015 quarter included $161 thousand of income from the sale of newly originated residential mortgage loans, up from $112 thousand in the same 2014 quarter. The volume of residential loans originated for sale were greater in the 2015 period compared to the 2014 period.
Securities gains were $176 thousand for the June 2015 quarter compared to $79 thousand for the June 2014 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the interest rate environment, as well as the future outlook, we do not anticipate such sales to be employed as often in the immediate future.
Other income of $545 thousand for the June 2015 quarter was $428 thousand higher than the June 2014 quarter. The June 2015 quarter included $373 thousand of fee income related to the Company’s loan level / back-to-back swap program, which was implemented during the June 2015 quarter after review and approval by the Board. Mr. Kennedy noted, “The program utilizes mirror interest rate swaps, one directly with the loan customer and one directly with a well-established counterparty. This enables a loan customer to benefit from a fixed rate loan, while the Company records a floating rate loan. The program provides enhanced interest rate risk management, as well as the potential for fee income for the Company. While we cannot predict the amount of fee income that may be recognized each period, this program will be a part of ongoing operations.”
Operating Expenses
The Company’s total operating expenses were $16.27 million for the quarter ended June 30, 2015 compared to $14.93 million in the same 2014 quarter, reflecting a net increase of $1.34 million or 9 percent.
Salary and benefits expense increased in the June 2015 quarter when compared to the same quarter last year due to strategic hiring in line with the Company’s Strategic Plan. Also contributing to the increase is the acquisition of Wealth Management Consultants, which occurred in the June 2015 quarter. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth contributed to the increase.
Premises and equipment expense and FDIC insurance expense for the quarter ended June 30, 2015 increased when compared to the same quarter last year. The increases were consistent with the Company’s continued growth.
Other expenses for the June 2015 quarter increased when compared to the June 2014 quarter. The current 2015 period included: increased wealth management division expenses due to growth in the business, increased advertising/marketing expenses, including a brand awareness campaign, and increased professional fee expenses associated with the Company’s growth, as well as various project work.
Mr. Kennedy noted, “Expense increases continue to track to our Plan. We expect that the trend of higher operating expenses will continue, as we bring on high caliber revenue producers, and continue to invest in our infrastructure, in line with our Plan. Further, we generally expect revenue and profitability related to new revenue producers to lag those expenses by several quarters. It is important to note, however, that revenue growth has outpaced expense growth considerably, which has caused our Efficiency Ratio to improve for the eighth consecutive quarter, to 61 percent for the current quarter.”
Provision for Loan Losses / Asset Quality
For the quarter ended June 30, 2015, the Company’s provision for loan losses was $2.20 million, compared to $1.15 million for the June 2014 quarter. Charge-offs, net of recoveries, for the second quarter of 2015 year were only $47 thousand. The larger provision in 2015 was due to loan growth in the quarter, as well as greater qualitative factor allocations of the allowance to C&I loans and Commercial Real Estate loans.
At June 30, 2015 the allowance for loan losses was 323 percent of nonperforming loans and 0.84 percent of total loans.
The Company’s provision for loan losses and net increase in its allowance for loan losses continue to track well with the Company’s net loan growth and asset quality metrics.
Nonperforming assets at June 30, 2015 were just $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $1.7 million at June 30, 2015.
Capital / Dividends
Capital in the June 2015 quarter was benefitted by net income of $5.2 million and by $1.7 million of voluntary share purchases in the Dividend Reinvestment Plan.
At June 30, 2015, the Company’s leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.48 percent, 12.46 percent, 12.46 percent and 13.58 percent, respectively. The Company’s ratios are all above the respective 5 percent, 6.5 percent, 8 percent, and 10 percent levels required to be considered well capitalized under regulatory guidelines applicable to banks.
As previously announced on July 22, 2015, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 19, 2015 to shareholders of record on August 5, 2015.
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.12 billion as of June 30, 2015. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to
| · | inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan; |
| · | inability to manage our growth; |
| · | inability to successfully integrate our expanded employee base; |
| · | a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas; |
| · | declines in our net interest margin caused by the low interest rate environment and highly competitive market; |
| · | declines in value in our investment portfolio |
| · | higher than expected increases in our allowance for loan losses; |
| · | higher than expected increases in loan losses or in the level of nonperforming loans; |
| · | unexpected changes in interest rates; |
| · | a continued or unexpected decline in real estate values within our market areas; |
| · | legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs; |
| · | successful cyberattacks against our IT infrastructure and that of our IT providers; |
| · | higher than expected FDIC insurance premiums; |
| · | adverse weather conditions; |
| · | inability to successfully generate new business in new geographic markets; |
| · | inability to execute upon new business initiatives; |
| · | lack of liquidity to fund our various cash obligations; |
| · | reduction in our lower-cost funding sources; |
| · | our inability to adapt to technological changes; |
| · | claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and |
| · | other unexpected material adverse changes in our operations or earnings. |
A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation’s expectations.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
(Tables to follow)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 6,205 | $ | 7,439 | $ | 6,621 | $ | 6,596 | $ | 5,757 | ||||||||||
| Federal funds sold | 101 | 101 | 101 | 101 | 101 | |||||||||||||||
| Interest-earning deposits | 32,382 | 65,283 | 24,485 | 114,124 | 209,768 | |||||||||||||||
| Total cash and cash equivalents | 38,688 | 72,823 | 31,207 | 120,821 | 215,626 | |||||||||||||||
| Securities available for sale | 245,897 | 276,119 | 332,652 | 269,550 | 225,270 | |||||||||||||||
| FHLB and FRB stock, at cost | 15,590 | 10,598 | 11,593 | 9,121 | 9,946 | |||||||||||||||
| Loans held for sale, at fair value | 745 | 4,245 | 839 | 351 | 2,650 | |||||||||||||||
| Residential mortgage | 470,863 | 466,333 | 466,760 | 470,030 | 469,648 | |||||||||||||||
| Multifamily mortgage | 1,371,139 | 1,214,714 | 1,080,256 | 928,054 | 845,310 | |||||||||||||||
| Commercial mortgage | 375,440 | 339,037 | 308,491 | 332,507 | 321,437 | |||||||||||||||
| Commercial loans | 438,461 | 336,079 | 308,743 | 225,814 | 158,103 | |||||||||||||||
| Construction loans | 1,417 | 5,777 | 5,998 | 6,025 | 6,033 | |||||||||||||||
| Consumer loans | 29,996 | 28,206 | 28,040 | 27,597 | 23,414 | |||||||||||||||
| Home equity lines of credit | 51,675 | 50,399 | 50,141 | 48,200 | 48,740 | |||||||||||||||
| Other loans | 2,947 | 1,755 | 1,838 | 2,560 | 2,255 | |||||||||||||||
| Total loans | 2,741,938 | 2,442,300 | 2,250,267 | 2,040,787 | 1,874,940 | |||||||||||||||
| Less: Allowances for loan losses | 22,969 | 20,816 | 19,480 | 18,299 | 17,204 | |||||||||||||||
| Net loans | 2,718,969 | 2,421,484 | 2,230,787 | 2,022,488 | 1,857,736 | |||||||||||||||
| Premises and equipment | 31,637 | 32,068 | 32,258 | 30,825 | 31,095 | |||||||||||||||
| Other real estate owned | 956 | 1,103 | 1,324 | 949 | 1,036 | |||||||||||||||
| Accrued interest receivable | 6,451 | 5,943 | 5,371 | 5,126 | 4,858 | |||||||||||||||
| Bank owned life insurance | 32,565 | 32,404 | 32,634 | 32,448 | 32,258 | |||||||||||||||
| Deferred tax assets, net | 12,673 | 10,458 | 10,491 | 11,661 | 9,433 | |||||||||||||||
| Other assets | 13,999 | 12,212 | 13,241 | 11,181 | 11,063 | |||||||||||||||
| TOTAL ASSETS | $ | 3,118,170 | $ | 2,879,457 | $ | 2,702,397 | $ | 2,514,521 | $ | 2,400,971 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 386,588 | $ | 377,399 | $ | 366,371 | $ | 383,268 | $ | 410,609 | ||||||||||
| Interest-bearing demand deposits | 667,847 | 634,580 | 600,889 | 558,537 | 474,945 | |||||||||||||||
| Savings | 120,606 | 115,515 | 112,878 | 111,897 | 116,172 | |||||||||||||||
| Money market accounts | 717,246 | 714,466 | 700,069 | 713,383 | 673,375 | |||||||||||||||
| Certificates of deposit - Retail | 384,235 | 310,678 | 198,819 | 165,834 | 157,067 | |||||||||||||||
| Subtotal “customer” deposits | 2,276,522 | 2,152,638 | 1,979,026 | 1,932,919 | 1,832,168 | |||||||||||||||
| IB Demand - Brokered | 293,000 | 263,000 | 188,000 | 138,000 | 138,000 | |||||||||||||||
| Certificates of deposit - Brokered | 94,224 | 106,694 | 131,667 | 132,500 | 145,000 | |||||||||||||||
| Total deposits | 2,663,746 | 2,522,332 | 2,298,693 | 2,203,419 | 2,115,168 | |||||||||||||||
| Overnight borrowings | 87,500 | — | 54,600 | — | — | |||||||||||||||
| Federal home loan bank advances | 83,692 | 83,692 | 83,692 | 83,692 | 83,692 | |||||||||||||||
| Capital lease obligation | 10,475 | 10,594 | 10,712 | 9,734 | 9,836 | |||||||||||||||
| Other liabilities | 14,881 | 13,486 | 12,433 | 12,646 | 9,942 | |||||||||||||||
| Due to brokers, securities settlements | — | — | — | 16,960 | — | |||||||||||||||
| TOTAL LIABILITIES | 2,860,294 | 2,630,104 | 2,460,130 | 2,326,451 | 2,218,638 | |||||||||||||||
| Shareholders’ equity | 257,876 | 249,353 | 242,267 | 188,070 | 182,333 | |||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | $ | 3,118,170 | $ | 2,879,457 | $ | 2,702,397 | $ | 2,514,521 | $ | 2,400,971 | ||||||||||
| Assets under administration at | ||||||||||||||||||||
| Peapack-Gladstone Bank’s | ||||||||||||||||||||
| Wealth Management Division | ||||||||||||||||||||
| (market value, not included above) | $ | 3,445,939 | $ | 3,053,110 | $ | 2,986,623 | $ | 2,857,727 | $ | 2,843,310 | ||||||||||
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||||||||
| Asset Quality: | ||||||||||||||||||||
| Loans past due over 90 days | ||||||||||||||||||||
| and still accruing | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Nonaccrual loans (A) | 7,111 | 6,335 | 6,850 | 8,790 | 6,536 | |||||||||||||||
| Other real estate owned | 956 | 1,103 | 1,324 | 949 | 1,036 | |||||||||||||||
| Total nonperforming assets (A) | $ | 8,067 | $ | 7,438 | $ | 8,174 | $ | 9,739 | $ | 7,572 | ||||||||||
| Nonperforming loans to | ||||||||||||||||||||
| total loans (A) | 0.26 | % | 0.26 | % | 0.30 | % | 0.43 | % | 0.35 | % | ||||||||||
| Nonperforming assets to | ||||||||||||||||||||
| total assets (A) | 0.26 | % | 0.26 | % | 0.30 | % | 0.39 | % | 0.32 | % | ||||||||||
| Accruing TDR’s (B) | $ | 13,695 | $ | 13,561 | $ | 13,601 | $ | 13,045 | $ | 12,730 | ||||||||||
| Loans past due 30 through 89 | ||||||||||||||||||||
| days and still accruing | $ | 1,744 | $ | 2,481 | $ | 1,755 | $ | 2,278 | $ | 1,536 | ||||||||||
| Classified loans (A) | $ | 38,676 | $ | 38,450 | $ | 35,809 | $ | 34,752 | $ | 34,929 | ||||||||||
| Impaired loans (A) | $ | 20,806 | $ | 19,896 | $ | 20,451 | $ | 21,834 | $ | 19,813 | ||||||||||
| Allowance for loan losses: | ||||||||||||||||||||
| Beginning of period | $ | 20,816 | $ | 19,480 | $ | 18,299 | $ | 17,204 | $ | 16,587 | ||||||||||
| Provision for loan losses | 2,200 | 1,350 | 1,250 | 1,150 | 1,150 | |||||||||||||||
| Charge-offs, net | (47 | ) | (14 | ) | (69 | ) | (55 | ) | (533 | ) | ||||||||||
| End of period | $ | 22,969 | $ | 20,816 | $ | 19,480 | $ | 18,299 | $ | 17,204 | ||||||||||
| ALLL to nonperforming loans | 323.01 | % | 328.59 | % | 284.38 | % | 208.18 | % | 263.22 | % | ||||||||||
| ALLL to total loans | 0.84 | % | 0.85 | % | 0.87 | % | 0.90 | % | 0.92 | % | ||||||||||
| Capital Adequacy | ||||||||||||||||||||
| Tier I leverage | 8.48 | % | 8.80 | % | 9.11 | % | 7.57 | % | 8.01 | % | ||||||||||
| Tier I capital to risk weighted assets | 12.46 | % | 13.57 | % | 14.38 | % | 12.16 | % | 13.05 | % | ||||||||||
| Common equity tier I capital ratio | ||||||||||||||||||||
| to risk-weighted assets (C) | 12.46 | % | 13.57 | % | N/A | N/A | N/A | |||||||||||||
| Tier I & II capital to | ||||||||||||||||||||
| risk-weighted assets | 13.58 | % | 14.71 | % | 15.55 | % | 13.36 | % | 14.30 | % | ||||||||||
| Equity to total assets | 8.27 | % | 8.66 | % | 8.96 | % | 7.48 | % | 7.59 | % | ||||||||||
| (end of period) | ||||||||||||||||||||
| Book value per share (D) (E) | $ | 17.02 | $ | 16.61 | $ | 16.36 | $ | 15.80 | $ | 15.48 | ||||||||||
| (A) | September 30, 2014 amount includes a $1.5 million commercial nonaccrual loan that was paid in full on October 8, 2014. |
| (B) | Does not include $2.2 million at June 30, 2015, $1.4 million at March 31, 2015, $1.4 million at December 31, 2014, $2.4 million at September 30, 2014, and $2.5 million at June 30, 2014 of TDR’s included in nonaccrual loans. |
| (C) | New capital ratio required under Basel III effective March 31, 2015. |
| (D) | Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested. |
| (E) | Tangible book value per share was $16.80 at June 30, 2015, $16.57 at March 31, 2015, $16.32 at December 31, 2014, $15.75 at September 30, 2014, and $15.43 at June 30, 2014. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
| For the Quarters Ended | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||||||||
| Residential loans retained | $ | 23,117 | $ | 16,986 | $ | 10,661 | $ | 20,540 | $ | 17,245 | ||||||||||
| Residential loans sold | 10,978 | 8,938 | 8,230 | 5,561 | 7,344 | |||||||||||||||
| Total residential loans | 34,095 | 25,924 | 18,891 | 26,101 | 24,589 | |||||||||||||||
| CRE (includes | ||||||||||||||||||||
| Community banking) | 29,561 | 57,787 | 14,953 | 3,208 | 20,175 | |||||||||||||||
| Multifamily (includes | ||||||||||||||||||||
| Community banking) | 206,803 | 209,034 | 172,021 | 105,584 | 149,937 | |||||||||||||||
| Commercial loans (includes | ||||||||||||||||||||
| Community banking) | 136,483 | 40,696 | 89,905 | 74,029 | 62,668 | |||||||||||||||
| Wealth lines of credit | 6,150 | 10,260 | — | — | — | |||||||||||||||
| Total commercial loans | 378,997 | 317,777 | 276,879 | 182,821 | 232,780 | |||||||||||||||
| Installment loans | 1,128 | 344 | 2,015 | 9,410 | 5,184 | |||||||||||||||
| Home equity lines of credit | 3,225 | 3,377 | 4,140 | 2,550 | 6,709 | |||||||||||||||
| Total loans closed | $ | 417,445 | $ | 347,422 | $ | 301,925 | $ | 220,882 | $ | 269,262 | ||||||||||
| For the Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2015 | 2014 | |||||||
| Residential loans retained | $ | 40,103 | $ | 28,898 | ||||
| Residential loans sold | 19,916 | 14,355 | ||||||
| Total residential loans | 60,019 | 43,253 | ||||||
| CRE (includes | ||||||||
| Community banking) | 87,348 | 36,016 | ||||||
| Multifamily (includes | ||||||||
| Community banking) | 415,837 | 375,080 | ||||||
| Commercial loans (includes | ||||||||
| Community banking) | 177,179 | 78,625 | (A) | |||||
| Wealth lines of credit | 16,410 | — | ||||||
| Total commercial loans | 696,774 | 489,721 | ||||||
| Installment loans | 1,472 | 7,061 | ||||||
| Home equity lines of credit | 6,602 | 11,377 | (A) | |||||
| Total loans closed | $ | 764,867 | $ | 551,412 | ||||
| (A) | Includes loans and lines of credit that closed in the period, but not necessarily funded. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||||||||
| Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 23,852 | $ | 22,361 | $ | 20,786 | $ | 19,210 | $ | 18,630 | ||||||||||
| Interest expense | 3,508 | 2,778 | 2,434 | 2,162 | 1,707 | |||||||||||||||
| Net interest income | 20,344 | 19,583 | 18,352 | 17,048 | 16,923 | |||||||||||||||
| Provision for loan losses | 2,200 | 1,350 | 1,250 | 1,150 | 1,150 | |||||||||||||||
| Net interest income after | ||||||||||||||||||||
| provision for loan losses | 18,144 | 18,233 | 17,102 | 15,898 | 15,773 | |||||||||||||||
| Wealth management fee income | 4,532 | 4,031 | 3,822 | 3,661 | 4,005 | |||||||||||||||
| Service charges and fees | 837 | 805 | 880 | 829 | 708 | |||||||||||||||
| Bank owned life insurance | 248 | 537 | 274 | 276 | 276 | |||||||||||||||
| Gain on loans held for sale at fair | ||||||||||||||||||||
| value (Mortgage banking) | 161 | 148 | 128 | 87 | 112 | |||||||||||||||
| (Loss)/gain on loans held for sale at | ||||||||||||||||||||
| lower of cost or fair value | — | — | (3 | ) | (7 | ) | 176 | |||||||||||||
| Other income | 545 | 93 | 142 | 167 | 117 | |||||||||||||||
| Securities gains, net | 176 | 268 | 44 | 39 | 79 | |||||||||||||||
| Total other income | 6,499 | 5,882 | 5,287 | 5,052 | 5,473 | |||||||||||||||
| Salaries and employee benefits | 9,872 | 9,425 | 9,188 | 9,116 | 9,089 | |||||||||||||||
| Premises and equipment | 2,778 | 2,616 | 2,627 | 2,564 | 2,334 | |||||||||||||||
| FDIC insurance expense | 431 | 482 | 453 | 350 | 303 | |||||||||||||||
| Other expenses | 3,185 | 3,245 | 3,310 | 2,663 | 3,204 | |||||||||||||||
| Total operating expenses | 16,266 | 15,768 | 15,578 | 14,693 | 14,930 | |||||||||||||||
| Income before income taxes | 8,377 | 8,347 | 6,811 | 6,257 | 6,316 | |||||||||||||||
| Income tax expense | 3,139 | 3,339 | 2,599 | 2,393 | 2,533 | |||||||||||||||
| Net income | $ | 5,238 | $ | 5,008 | $ | 4,212 | $ | 3,864 | $ | 3,783 | ||||||||||
| Total revenue | $ | 26,843 | $ | 25,465 | $ | 23,639 | $ | 22,100 | $ | 22,396 | ||||||||||
| Per Common Share Data: | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.34 | $ | 0.34 | $ | 0.32 | $ | 0.33 | $ | 0.32 | ||||||||||
| Earnings per share (diluted) | 0.34 | 0.33 | 0.32 | 0.32 | 0.32 | |||||||||||||||
| Weighted average number of | ||||||||||||||||||||
| common shares outstanding: | ||||||||||||||||||||
| Basic | 15,082,516 | 14,909,722 | 13,037,947 | 11,841,777 | 11,721,256 | |||||||||||||||
| Diluted | 15,233,151 | 15,070,352 | 13,163,877 | 11,956,356 | 11,846,075 | |||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets | ||||||||||||||||||||
| annualized | 0.70 | % | 0.71 | % | 0.64 | % | 0.63 | % | 0.67 | % | ||||||||||
| Return on average common | ||||||||||||||||||||
| equity annualized | 8.24 | % | 8.13 | % | 8.01 | % | 8.35 | % | 8.44 | % | ||||||||||
| Net interest margin | ||||||||||||||||||||
| (taxable equivalent basis) | 2.80 | % | 2.88 | % | 2.89 | % | 2.89 | % | 3.14 | % | ||||||||||
| Efficiency ratio (A) | 61.00 | % | 62.58 | % | 66.01 | % | 66.58 | % | 67.43 | % | ||||||||||
| Operating expenses / average | ||||||||||||||||||||
| assets annualized | 2.16 | % | 2.24 | % | 2.36 | % | 2.39 | % | 2.65 | % | ||||||||||
| (A) | Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
| For the | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| Income Statement Data: | 2015 | 2014 | ||||||
| Interest income | $ | 46,213 | $ | 35,579 | ||||
| Interest expense | 6,286 | 3,085 | ||||||
| Net interest income | 39,927 | 32,494 | ||||||
| Provision for loan losses | 3,550 | 2,475 | ||||||
| Net interest income after | ||||||||
| provision for loan losses | 36,377 | 30,019 | ||||||
| Wealth management fee income | 8,563 | 7,759 | ||||||
| Service charges and fees | 1,642 | 1,402 | ||||||
| Bank owned life insurance | 785 | 542 | ||||||
| Gain on loans held for sale at fair | ||||||||
| Value (Mortgage banking) | 309 | 224 | ||||||
| (Loss)/gain on loans held for sale at | ||||||||
| Lower of cost or fair value | — | 176 | ||||||
| Other income | 638 | 188 | ||||||
| Securities gains, net | 444 | 177 | ||||||
| Total other income | 12,381 | 10,468 | ||||||
| Salaries and employee benefits | 19,297 | 17,937 | ||||||
| Premises and equipment | 5,394 | 4,772 | ||||||
| FDIC insurance expense | 913 | 578 | ||||||
| Other expenses | 6,430 | 5,982 | ||||||
| Total operating expenses | 32,034 | 29,269 | ||||||
| Income before income taxes | 16,724 | 11,218 | ||||||
| Income tax expense | 6,478 | 4,404 | ||||||
| Net income | $ | 10,246 | $ | 6,814 | ||||
| Total revenue (See footnote (A) below) | $ | 52,308 | $ | 42,962 | ||||
| Per Common Share Data: | ||||||||
| Earnings per share (basic) | $ | 0.68 | $ | 0.58 | ||||
| Earnings per share (diluted) | 0.67 | 0.58 | ||||||
| Weighted average number of | ||||||||
| common shares outstanding: | ||||||||
| Basic | 14,996,596 | 11,664,410 | ||||||
| Diluted | 15,189,781 | 11,814,806 | ||||||
| Performance Ratios: | ||||||||
| Return on average assets annualized | 0.70 | % | 0.63 | % | ||||
| Return on average common equity annualized | 8.19 | % | 7.74 | % | ||||
| Net interest margin (taxable equivalent basis) | 2.84 | % | 3.16 | % | ||||
| Efficiency ratio (B) | 61.77 | % | 68.69 | % | ||||
| Operating expenses / average assets annualized | 2.20 | % | 2.72 | % | ||||
| (A) | Total revenue includes a $176 thousand gain (for 2014) from sale of loans held for sale at lower of cost or fair value. Excluding this gain, total revenue was $42,786 (for 2014). |
| (B) | Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2015 | June 30, 2014 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 244,087 | $ | 1,037 | 1.70 | % | $ | 189,254 | $ | 977 | 2.06 | % | ||||||||||||
| Tax-exempt (1) (2) | 30,941 | 210 | 2.71 | 57,847 | 312 | 2.16 | ||||||||||||||||||
| Loans held for sale | 2,049 | 24 | 4.64 | 1,026 | 15 | 5.89 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 466,033 | 3,800 | 3.26 | 496,232 | 4,203 | 3.39 | ||||||||||||||||||
| Commercial mortgages | 1,663,150 | 14,767 | 3.55 | 1,155,360 | 11,108 | 3.85 | ||||||||||||||||||
| Commercial | 360,517 | 3,347 | 3.71 | 143,988 | 1,443 | 4.01 | ||||||||||||||||||
| Commercial construction | 5,713 | 61 | 4.27 | 6,065 | 65 | 4.29 | ||||||||||||||||||
| Installment | 29,169 | 256 | 3.51 | 22,154 | 233 | 4.21 | ||||||||||||||||||
| Home equity | 51,710 | 417 | 3.23 | 47,489 | 382 | 3.22 | ||||||||||||||||||
| Other | 527 | 12 | 9.11 | 558 | 13 | 9.32 | ||||||||||||||||||
| Total loans | 2,576,819 | 22,660 | 3.52 | 1,871,846 | 17,447 | 3.73 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.10 | 101 | — | 0.10 | ||||||||||||||||||
| Interest-earning deposits | 69,780 | 39 | 0.22 | 51,177 | 21 | 0.17 | ||||||||||||||||||
| Total interest-earning assets | 2,923,777 | 23,970 | 3.28 | 2,171,251 | 18,772 | 3.46 | % | |||||||||||||||||
| Noninterest-Earning Assets: | ||||||||||||||||||||||||
| Cash and due from banks | 6,385 | 6,990 | ||||||||||||||||||||||
| Allowance for loan losses | (21,493 | ) | (17,310 | ) | ||||||||||||||||||||
| Premises and equipment | 31,983 | 31,161 | ||||||||||||||||||||||
| Other assets | 66,131 | 58,926 | ||||||||||||||||||||||
| Total noninterest-earning assets | 83,006 | 79,767 | ||||||||||||||||||||||
| Total assets | $ | 3,006,783 | $ | 2,251,018 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 670,473 | $ | 707 | 0.42 | % | $ | 431,656 | $ | 115 | 0.11 | % | ||||||||||||
| Money markets | 703,236 | 461 | 0.26 | 657,216 | 374 | 0.23 | ||||||||||||||||||
| Savings | 117,411 | 16 | 0.05 | 116,946 | 15 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 343,781 | 1,051 | 1.22 | 154,245 | 369 | 0.96 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 1,834,901 | 2,235 | 0.49 | 1,360,063 | 873 | 0.26 | ||||||||||||||||||
| Interest-bearing demand - brokered | 265,802 | 215 | 0.32 | 138,000 | 70 | 0.20 | ||||||||||||||||||
| Certificates of deposit – brokered | 98,191 | 504 | 2.05 | 100,934 | 264 | 1.05 | ||||||||||||||||||
| Total interest-bearing deposits | 2,198,894 | 2,954 | 0.54 | 1,598,997 | 1,207 | 0.30 | ||||||||||||||||||
| Borrowings | 146,441 | 428 | 1.17 | 93,152 | 382 | 1.64 | ||||||||||||||||||
| Capital lease obligation | 10,515 | 126 | 4.79 | 9,867 | 118 | 4.78 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,355,850 | 3,508 | 0.60 | 1,702,016 | 1,707 | 0.40 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 384,604 | 360,096 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 12,133 | 9,606 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 396,737 | 369,702 | ||||||||||||||||||||||
| Shareholders’ equity | 254,196 | 179,300 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 3,006,783 | $ | 2,251,018 | ||||||||||||||||||||
| Net interest income | $ | 20,462 | $ | 17,065 | ||||||||||||||||||||
| Net interest spread | 2.68 | % | 3.06 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.80 | % | 3.14 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2015 | March 31,2015 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 244,087 | $ | 1,037 | 1.70 | % | $ | 273,946 | $ | 1,182 | 1.73 | % | ||||||||||||
| Tax-exempt (1) (2) | 30,941 | 210 | 2.71 | 37,631 | 231 | 2.46 | ||||||||||||||||||
| Loans held for sale | 2,049 | 24 | 4.64 | 774 | 10 | 5.10 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 466,033 | 3,800 | 3.26 | 465,722 | 3,785 | 3.25 | ||||||||||||||||||
| Commercial mortgages | 1,663,150 | 14,767 | 3.55 | 1,459,872 | 13,589 | 3.72 | ||||||||||||||||||
| Commercial | 360,517 | 3,347 | 3.71 | 316,109 | 2,897 | 3.67 | ||||||||||||||||||
| Commercial construction | 5,713 | 61 | 4.27 | 5,930 | 62 | 4.18 | ||||||||||||||||||
| Installment | 29,169 | 256 | 3.51 | 27,791 | 252 | 3.63 | ||||||||||||||||||
| Home equity | 51,710 | 417 | 3.23 | 50,660 | 405 | 3.20 | ||||||||||||||||||
| Other | 527 | 12 | 9.11 | 530 | 12 | 9.06 | ||||||||||||||||||
| Total loans | 2,576,819 | 22,660 | 3.52 | 2,326,614 | 21,002 | 3.61 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.10 | 101 | — | 0.10 | ||||||||||||||||||
| Interest-earning deposits | 69,780 | 39 | 0.22 | 91,657 | 43 | 0.18 | ||||||||||||||||||
| Total interest-earning assets | 2,923,777 | 23,970 | 3.28 | 2,730,723 | 22,468 | 3.29 | % | |||||||||||||||||
| Noninterest-Earning Assets: | ||||||||||||||||||||||||
| Cash and due from banks | 6,385 | 6,804 | ||||||||||||||||||||||
| Allowance for loan losses | (21,493 | ) | (20,056 | ) | ||||||||||||||||||||
| Premises and equipment | 31,983 | 32,256 | ||||||||||||||||||||||
| Other assets | 66,131 | 63,868 | ||||||||||||||||||||||
| Total noninterest-earning assets | 83,006 | 82,872 | ||||||||||||||||||||||
| Total assets | $ | 3,006,783 | $ | 2,813,595 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 670,473 | $ | 707 | 0.42 | % | $ | 630,557 | $ | 409 | 0.26 | % | ||||||||||||
| Money markets | 703,236 | 461 | 0.26 | 710,590 | 463 | 0.26 | ||||||||||||||||||
| Savings | 117,411 | 16 | 0.05 | 113,435 | 14 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 343,781 | 1,051 | 1.22 | 247,860 | 663 | 1.07 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 1,834,901 | 2,235 | 0.49 | 1,702,442 | 1,549 | 0.36 | ||||||||||||||||||
| Interest-bearing demand - brokered | 265,802 | 215 | 0.32 | 240,500 | 185 | 0.31 | ||||||||||||||||||
| Certificates of deposit – brokered | 98,191 | 504 | 2.05 | 126,404 | 524 | 1.66 | ||||||||||||||||||
| Total interest-bearing deposits | 2,198,894 | 2,954 | 0.54 | 2,069,346 | 2,258 | 0.44 | ||||||||||||||||||
| Borrowings | 146,441 | 428 | 1.17 | 109,639 | 392 | 1.43 | ||||||||||||||||||
| Capital lease obligation | 10,515 | 126 | 4.79 | 10,635 | 128 | 4.81 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,355,850 | 3,508 | 0.60 | 2,189,620 | 2,778 | 0.51 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 384,604 | 366,919 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 12,133 | 10,752 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 396,737 | 377,671 | ||||||||||||||||||||||
| Shareholders’ equity | 254,196 | 246,304 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 3,006,783 | $ | 2,813,595 | ||||||||||||||||||||
| Net interest income | $ | 20,462 | $ | 19,690 | ||||||||||||||||||||
| Net interest spread | 2.68 | % | 2.78 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.80 | % | 2.88 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
SIX MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2015 | June 30, 2014 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 258,934 | $ | 2,219 | 1.71 | % | $ | 198,401 | $ | 2,038 | 2.05 | % | ||||||||||||
| Tax-exempt (1) (2) | 34,268 | 441 | 2.57 | 59,025 | 649 | 2.20 | ||||||||||||||||||
| Loans held for sale | 1,415 | 34 | 4.75 | 1,174 | 25 | 4.29 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 465,878 | 7,585 | 3.26 | 514,702 | 8,756 | 3.40 | ||||||||||||||||||
| Commercial mortgages | 1,562,073 | 28,356 | 3.63 | 1,046,179 | 20,153 | 3.85 | ||||||||||||||||||
| Commercial | 338,435 | 6,244 | 3.69 | 138,300 | 2,845 | 4.11 | ||||||||||||||||||
| Commercial construction | 5,821 | 123 | 4.23 | 5,969 | 132 | 4.42 | ||||||||||||||||||
| Installment | 28,484 | 508 | 3.57 | 21,860 | 461 | 4.22 | ||||||||||||||||||
| Home equity | 51,188 | 822 | 3.21 | 47,162 | 755 | 3.20 | ||||||||||||||||||
| Other | 528 | 25 | 9.47 | 561 | 26 | 9.27 | ||||||||||||||||||
| Total loans | 2,452,407 | 43,663 | 3.56 | 1,774,733 | 33,128 | 3.73 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.10 | 101 | — | 0.10 | ||||||||||||||||||
| Interest-earning deposits | 80,658 | 82 | 0.20 | 41,468 | 33 | 0.16 | ||||||||||||||||||
| Total interest-earning assets | 2,827,783 | 46,439 | 3.28 | % | 2,074,902 | 35,873 | 3.46 | % | ||||||||||||||||
| Noninterest-Earning Assets: | ||||||||||||||||||||||||
| Cash and due from banks | 6,594 | 6,694 | ||||||||||||||||||||||
| Allowance for loan losses | (20,778 | ) | (16,653 | ) | ||||||||||||||||||||
| Premises and equipment | 32,118 | 30,956 | ||||||||||||||||||||||
| Other assets | 65,006 | 59,961 | ||||||||||||||||||||||
| Total noninterest-earning assets | 82,940 | 80,958 | ||||||||||||||||||||||
| Total assets | $ | 2,910,723 | $ | 2,155,860 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 650,909 | $ | 1,116 | 0.34 | % | $ | 416,568 | $ | 207 | 0.10 | % | ||||||||||||
| Money markets | 706,893 | 924 | 0.26 | 655,430 | 707 | 0.22 | ||||||||||||||||||
| Savings | 115,434 | 30 | 0.05 | 116,733 | 30 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 296,085 | 1,714 | 1.16 | 151,864 | 724 | 0.95 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 1,769,321 | 3,784 | 0.43 | 1,340,595 | 1,668 | 0.25 | ||||||||||||||||||
| Interest-bearing demand - brokered | 253,221 | 400 | 0.32 | 106,851 | 113 | 0.21 | ||||||||||||||||||
| Certificates of deposit – brokered | 112,219 | 1,028 | 1.83 | 57,564 | 295 | 1.02 | ||||||||||||||||||
| Total interest-bearing deposits | 2,134,761 | 5,212 | 0.49 | 1,505,010 | 2,076 | 0.28 | ||||||||||||||||||
| Borrowings | 128,142 | 820 | 1.28 | 104,306 | 772 | 1.48 | ||||||||||||||||||
| Capital lease obligation | 10,575 | 254 | 4.80 | 9,907 | 237 | 4.78 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,273,478 | 6,286 | 0.55 | 1,619,223 | 3,085 | 0.38 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 375,527 | 350,698 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 11,446 | 9,800 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 386,973 | 360,498 | ||||||||||||||||||||||
| Shareholders’ equity | 250,272 | 176,139 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 2,910,723 | $ | 2,155,860 | ||||||||||||||||||||
| Net interest income | $ | 40,153 | $ | 32,788 | ||||||||||||||||||||
| Net interest spread | 2.73 | % | 3.08 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.84 | % | 3.16 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk- based capital ratios.
The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.
We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.
Non-GAAP Financial Reconciliation
(Dollars in thousands, except share data)
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| Tangible Book Value Per Share | 2015 | 2015 | 2014 | 2014 | 2014 | |||||||||||||||
| Shareholders’ equity | $ | 257,876 | $ | 249,353 | $ | 242,267 | $ | 188,070 | $ | 182,333 | ||||||||||
| Less: Intangible assets | 3,342 | 563 | 563 | 563 | 563 | |||||||||||||||
| Tangible equity | 254,534 | 248,790 | 241,704 | 187,507 | 181,770 | |||||||||||||||
| Period end shares outstanding | 15,592,168 | 15,440,430 | 15,155,717 | 12,286,821 | 12,154,150 | |||||||||||||||
| Less: Restricted shares not yet vested | 436,908 | 429,642 | 345,095 | 382,252 | 376,134 | |||||||||||||||
| Total outstanding shares | 15,155,260 | 15,010,788 | 14,810,622 | 11,904,569 | 11,778,016 | |||||||||||||||
| Tangible book value per share | 16.80 | 16.57 | 16.32 | 15.75 | 15.43 | |||||||||||||||
| Book value per share | 17.02 | 16.61 | 16.36 | 15.80 | 15.48 | |||||||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||||||||||
| Total Assets | 3,118,170 | 2,879,457 | 2,702,397 | 2,514,521 | 2,400,971 | |||||||||||||||
| Less: Intangible assets | 3,342 | 563 | 563 | 563 | 563 | |||||||||||||||
| Tangible assets | 3,114,828 | 2,878,894 | 2,701,834 | 2,513,958 | 2,400,408 | |||||||||||||||
| Tangible equity to tangible assets | 8.17 | % | 8.64 | % | 8.95 | % | 7.46 | % | 7.57 | % | ||||||||||
| Equity to assets | 8.27 | % | 8.66 | % | 8.96 | % | 7.48 | % | 7.59 | % | ||||||||||
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| Efficiency Ratio | 2015 | 2015 | 2014 | 2014 | 2014 | |||||||||||||||
| Net interest income | $ | 20,344 | $ | 19,583 | $ | 18,352 | $ | 17,048 | $ | 16,923 | ||||||||||
| Total other income | 6,499 | 5,882 | 5,287 | 5,052 | 5,473 | |||||||||||||||
| Less: (Loss)/gain on loans | ||||||||||||||||||||
| held for sale at lower of cost | ||||||||||||||||||||
| or fair value | — | — | (3 | ) | (7 | ) | 176 | |||||||||||||
| Less: Securities gains, net | 176 | 268 | 44 | 39 | 79 | |||||||||||||||
| Total recurring revenue | 26,667 | 25,197 | 23,598 | 22,068 | 22,141 | |||||||||||||||
| Total operating expenses | 16,266 | 15,768 | 15,578 | 14,693 | 14,930 | |||||||||||||||
| Efficiency ratio | 61.00 | % | 62.58 | % | 66.01 | % | 66.58 | % | 67.43 | % | ||||||||||
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| Efficiency Ratio | 2015 | 2014 | ||||||
| Net interest income | $ | 39,927 | $ | 32,494 | ||||
| Total other income | 12,381 | 10,468 | ||||||
| Less: Gain on loans | ||||||||
| held for sale at lower of cost | ||||||||
| or fair value | — | 176 | ||||||
| Less: Securities gains, net | 444 | 177 | ||||||
| Total recurring revenue | 51,864 | 42,609 | ||||||
| Total operating expenses | 32,034 | 29,269 | ||||||
| Efficiency ratio | 61.77 | % | 68.69 | % | ||||