EX-99.1 2 ex99-1.htm EX-99.1

Exhibit 99.1

 

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

REPORTS A STRONG THIRD QUARTER AND

DECLARES ITS QUARTERLY CASH DIVIDEND

 

Bedminster, N.J. – October 28, 2016 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the “Corporation” or the “Company”) recorded record net income of $19.17 million and diluted earnings per share of $1.17 for the nine months ended September 30, 2016, compared to $15.63 million and $1.02, respectively, for the same nine month period last year, reflecting increases of $3.54 million or 23 percent, and $0.15 per share, or 15 percent, respectively.

For the quarter ended September 30, 2016, the Corporation recorded net income of $7.12 million and diluted earnings per share of $0.43, compared to $5.38 million and $0.35 for the same three month period last year, reflecting increases of $1.73 million, or 32 percent, and $0.08 per share, or 23 percent, respectively.

The 2016 nine month and three month periods, when compared to the same periods in 2015, reflected improved net interest income and improved non-interest income, partially offset by increased expenses. The increased expenses were principally due to increased FDIC premiums, increased investment in risk management related analytics and practices, and increased salary and benefits associated with strategic hiring which was in line with the Company’s Strategic Plan.

While the third quarter 2016 FDIC premium reflected an increase of $398 thousand relative to the same quarter in 2015, the third quarter of 2016 premium declined $767 thousand from the second quarter of 2016. Beginning July 1, 2016 the FDIC assessment system was revised. Revisions for “small institutions” (under $10 billion in assets) resulted in, among other things, the elimination of risk categories and utilization of a financial ratios method to determine assessment rates. The changes reduced the Company’s assessment rate by nearly 50% in the third quarter of 2016, when compared to the second quarter 2016 assessment rate.

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The following table summarizes specified financial measures for the third quarters of 2016 and 2015, respectively:

   September   September   Increase/ 
(Dollars in millions, except EPS)  2016   2015   (Decrease) 
Net interest income  $24.27   $21.71   $2.56    12%
Provision for loan losses  $2.10   $1.60   $0.50    31%
Pretax income  $11.54   $8.82   $2.72    31%
Net income  $7.12   $5.38   $1.74    32%
Diluted EPS  $0.43   $0.35   $0.08    23%
Total revenue  $31.80   $27.32   $4.48    16%
                     
Return on average assets   0.77%   0.66%   0.11    17%
Return on average equity   9.44%   8.19%   1.25    15%
Efficiency ratio (A)   57.58%   61.14%   (3.56)   (6)%
Book value per share (A)  $18.57   $17.33   $1.24    7%
                     

 

(A) See Non-GAAP financial measures reconciliation table on page 28.
   

Mr. Kennedy said, “We had a very strong third quarter of 2016, as we continued to successfully execute our Plan. We again posted record net income and near record earnings per share, despite the additional expense base in the 2016 period.”

Additional Q3 2016 highlights follow:

·Growth in diluted EPS for Q3 2016 when compared to Q3 2015 was $0.08 per share, or 23 percent.
·At September 30, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) increased to $3.50 billion.

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·Fee income from the Private Wealth Management Division totaled $4.4 million for the third quarter of 2016, compared to $4.2 million for the same quarter in 2015. Wealth management fee income, comprising approximately 14 percent of the Company’s total revenue, contributed significantly to the Company’s diversified revenue sources.
·Loans at September 30, 2016, including multifamily loans held for sale, totaled $3.26 billion. This reflected net growth of $54 million compared to the prior quarter (2 percent compared to the prior quarter or 7 percent on an annualized basis), and $381 million (13 percent) when compared to the $2.88 billion at September 30, 2015.
·Commercial & Industrial (C&I) loans at September 30, 2016 totaled $598 million. This reflected net growth of $22 million compared to the prior quarter (4 percent compared to the prior quarter or 15 percent on an annualized basis), and net growth of $141 million (31 percent) when compared to the $457 million at September 30, 2015.
·Multifamily whole loans sold totaled $44 million in the third quarter of 2016, which resulted in a net gain on sale of $256 thousand.
·Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) totaled $3.01 billion at September 30, 2016. This reflected net growth of $191 million compared to the prior quarter (7 percent compared to the prior quarter or 27 percent on an annualized basis), and $456 million (18 percent) when compared to the $2.55 billion at September 30, 2015.
·Asset quality metrics continued to be strong at September 30, 2016. Nonperforming assets at September 30, 2016 were just $11.4 million, or 0.30 percent of total assets. Total loans past due 30 through 89 days and still accruing were $8.2 million or 0.25 percent of total loans at September 30, 2016.

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·The Company’s net interest income for the third quarter of 2016 was $24.3 million, reflecting growth of $93 thousand (less than 1 percent for the quarter or 1 percent on an annualized basis) when compared to $24.2 million for the June 2016 quarter, but reflected growth of $2.56 million (12 percent) when compared to the $21.71 million for the quarter ended September 30, 2015.
·The Company’s book value per share at September 30, 2016 of $18.57 reflected improvement when compared to $17.33 at September 30, 2015. Year over year growth in book value per share totaled 7 percent.

Mr. Kennedy noted, “We continue to be pleased with our progress since launching our Strategic Plan – Expanding our Reach – in early 2013, and we are particularly pleased with our progress thus far in 2016. Despite the headwinds we noted going into 2016, we have delivered solid results thus far this year.”

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $24.27 million and 2.74 percent for the third quarter of 2016, compared to $24.18 million and 2.79 percent for the second quarter of 2016, and compared to $21.71 million and 2.75 percent for the same quarter last year, reflecting growth in net interest income of $2.56 million or 12 percent when compared to the same prior year period. Net interest income for the third quarter of 2016 benefitted from loan growth during 2015 and the first nine months of 2016. Additionally, the September 2016 quarter included approximately $507 thousand of prepayment premiums received on the prepayment of certain multifamily loans, compared to $453 thousand for the June 2016 quarter, and compared to $76 thousand for the September 2015 quarter. The $507 thousand in premiums benefitted the net interest margin for the September 2016 quarter by 6 basis points.

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Net interest income and net interest margin for the third quarter of 2016 was also impacted by the effect of the $50 million subordinated debt issued in June 2016. Interest on subordinated debt totaled $799 thousand for the third quarter, which reduced the net interest margin by approximately 9 basis points.

Net interest income for the third quarter of 2016 improved considerably compared to the same quarter in 2015, and net interest margin remained relatively flat at 2.74 percent for the 2016 quarter compared to 2.75 percent for the 2015 quarter. The net interest margin continues to be negatively impacted by the effect of the low interest rate environment throughout 2015 and 2016, as well as competitive pressures in attracting new loans and deposits.

The net interest margin is also affected by the maintenance of liquid assets on the Company’s balance sheet. Mr. Kennedy said, “In addition to $409 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $72 million drawn as of September 30, 2016.”

The Company’s interest rate sensitivity models indicate that the Company’s net interest income and margin would improve in a rising rate environment.

Wealth Management Business

In the September 2016 quarter, Peapack-Gladstone Bank’s wealth management business generated $4.44 million in fee income compared to $4.90 million for the June 2016 quarter, and $4.17 million for the September 2015 quarter.   Fee income for the September 2016 quarter was $463 thousand lower than the June 2016 quarter. The June quarter of each year historically reflects a high level of tax preparation income related to the Bank’s wealth management clients.

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Fee income for the September 2016 quarter increased by $267 thousand, or approximately 6 percent greater than the September 2015 quarter. Growth in fee income was due to several factors including continued healthy new business results and a positive market environment, partially offset by normal levels of disbursements and outflows. This net positive contribution to revenue from our wealth management business was partially offset by the broader market declines in the latter part of 2015, as well as the first quarter of 2016, which negatively impacted assets under administration (“AUA”) and the correlated investment fee revenue at the outset of 2016. 

The market value of the AUA of the wealth management division was $3.50 billion at September 30, 2016, increasing by $77 million, or 2 percent (9 percent on an annualized basis), from June 30, 2016 and increasing $244 million, (8 percent), from $3.25 billion at September 30, 2015.

John P. Babcock, President of PGB Private Wealth Management, said, “We continue to execute on our advice-led strategy, incorporating a wealth management conversation into every relationship we have with clients, across all business lines.  We will continue to grow our professional team as well as expand the products, services, and the advice we deliver to our clients.  Our continued growth will be driven by our continued successful new business generation, strategic new hires, and the possible acquisition of wealth management firms in the Tri-State area.  Over the past two quarters we have added talented, proven and experienced new team members in wealth advisory, portfolio management and fiduciary roles”. Mr. Babcock went on to note, “While the broader market declines in the latter part of 2015 and the beginning of 2016 impacted fee revenue at the start of the year, we have been able to generate fee income in the September 2016 quarter greater than the September quarter of 2015 due to new business and positive net flows. We are cautiously optimistic about the market in the medium-to-longer term and have a solid new business pipeline.  Notwithstanding market fluctuations, our business continues to grow and will be a significant driver of enhanced shareholder value as we move ahead.”

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Loan Originations / Loans

At September 30, 2016, loans, including multifamily loans held for sale, totaled $3.26 billion compared to $3.21 billion three months ago at June 30, 2016 and compared to $2.88 billion one year ago at September 30, 2015, representing net increases of $54 million compared to the prior quarter (2 percent compared to the prior quarter or 7 percent on an annualized basis), and $381 million (13 percent) compared to the prior year September 30 period. Mr. Kennedy noted, “We continue to believe we have a very high quality loan portfolio, as evidenced by very strong asset quality metrics.”

For the quarter ended September 30, 2016, residential mortgage originations totaled $68 million. When comparing September 30, 2016 to September 30, 2015, residential mortgage loans grew $27 million, or 6 percent, to $497 million at September 30, 2016 from $470 million one year ago at September 30, 2015. We believe that residential mortgage volumes and the portfolio will increase through the remainder of 2016, and into 2017.

For the September 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $57 million. When comparing September 30, 2016 to September 30, 2015, commercial real estate mortgage loans (not including multifamily loans) grew $98 million, or 24 percent, to $497 million at September 30, 2016 from $399 million one year ago at September 30, 2015.

The September 2016 quarter included $74 million of multifamily loan originations, down significantly from the previous quarters. At September 30, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.54 billion (or 47.1 percent of total loans) compared to $1.56 billion (or 48.7 percent of total loans) three months ago at June 30, 2016 and compared to $1.50 billion (or 50.0 percent of total loans) at December 31, 2015. The increases were net of whole loans sold and participations, including $44 million of whole loans sold in the September 2016 quarter, bringing the total whole loans sold or participated for 2016 to $182 million. These loan sales and participations were part of the Company’s balance sheet management strategy and will likely continue in 2016, and beyond.

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Mr. Kennedy said, “As I explained previously, we anticipated multifamily loan originations and growth would be less than prior years, as we manage our balance sheet such that multifamily loans decline as a percentage of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. We made progress on this front late in 2015, and we are pleased this has continued into 2016.” Mr. Kennedy further noted that, “This balance sheet management will likely not be linear each quarter, but will rather be apparent over periods of time.”

For the quarter ended September 30, 2016 the Company closed $60 million of commercial loans. When comparing September 30, 2016 to September 30, 2015, commercial loans grew $141 million, or 31 percent, to $598 million at September 30, 2016 from $457 million one year ago at September 30, 2015. At September 30, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio unchanged from the 18 percent at June 30, 2016, and up from 16 percent one year ago at September 30, 2015.

Mr. Kennedy said, “As a result of our continued investment in and commitment to C&I banking, we have seen, and believe we will continue to see, our C&I client base and corresponding loan portfolio grow.”

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Mr. Kennedy went on to say, “Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients.”

Eric H. Waser, Head of Commercial Banking noted, “Three of the 15 largest manufacturers in New Jersey (as enumerated in a reputable NJ business publication), have moved business to Peapack - Gladstone Bank over the past 12 months.” Mr. Waser further noted, “We are extremely pleased with how our “Advice Led” approach is capturing the attention of the business community”.

Deposits / Funding / Balance Sheet Management

As noted last quarter, in June 2016, the Company issued $50 million of subordinated debt ($48.7 million net of underwriting fees and expenses) bearing interest at an annual rate of 6 percent for the first five years, and thereafter at an adjustable rate and until maturity in June 2026 or earlier redemption.

During the September 2016 quarter, customer deposit growth of $191 million (principally noninterest-bearing, interest-bearing and money market) and increased capital of $13 million, basically funded a $29 million reduction in overnight borrowings, a $12 million reduction of FHLB Advances, an increase in loans of $54 million, an increase in investment securities of $43 million, and an increase in interest earning deposits (cash) of $79 million.

Brokered interest-bearing demand (“overnight”) deposits continued to be managed flat at $200 million at September 30, 2016. The interest rate paid on these deposits allowed the Bank to fund at attractive rates and engage in interest rate swaps as part of its asset-liability interest rate risk management. As of September 30, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

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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 solutions will help support both core deposit growth and commercial lending opportunities.”

Other Noninterest Income

The Company’s total noninterest income for the September 2016 quarter totaled $7.54 million or nearly 24 percent of total revenue.

Service charges and fees for the September 2016 quarter were $812 thousand, compared to $818 thousand for the June 2016 quarter and $832 thousand for the September 2015 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.

The September 2016 quarter included $383 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $309 thousand for the June 2016 quarter, and $102 thousand for the September 2015 quarter. Originations of residential mortgage loans for sale were higher in the September 2016 quarter, compared to the other noted periods.

There were no securities gains for the September 2016 quarter compared to $18 thousand for the June 2016 quarter, and $83 thousand for the September 2015 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the shorter duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company’s operations.

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Gain on sale of multifamily loans held for sale at the lower of cost or fair value was $256 thousand for the September 2016 quarter, compared to $500 thousand for the June 2016 quarter. There were no such gains in the September 2015 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans, in addition to participations. The Company anticipates that it will continue to employ both of these strategies throughout 2016, and beyond.

The third quarter of 2016 included $243 thousand of income related to the Company’s SBA lending and sale program, compared to $212 thousand generated in the June 2016 quarter. The SBA program was fully implemented in the March 2016 quarter, and the Company anticipates it will be a part of its normal ongoing operations.

The September 2016 quarter included $670 thousand of loan level, back-to-back swap income. This program is also a part of the Company’s normal ongoing operations. Due to the nature of this program, it is difficult to predict timing and amount of future income.

Improvements in other income in the September 2016 quarter included greater loan servicing fees due principally to continued multifamily loan participations, and higher unused line of credit fees associated with the C&I lending business.

Operating Expenses

The Company’s total operating expenses were $18.17 million for the quarter ended September 30, 2016, compared to $18.76 million for the June 2016 quarter and $16.90 million for the same quarter in 2015.

As noted previously, the third quarter 2016 FDIC premium reflected a $398 thousand increase relative to the same quarter in 2015, however the third quarter of 2016 premium declined $767 thousand from the second quarter of 2016. Beginning July 1, 2016 the FDIC assessment system was revised. Revisions for “small institutions” (under $10 billion in assets) resulted in, among other things, the elimination of risk categories and utilization of a financial ratios method to determine assessment rates. The changes reduced the Company’s assessment rate by nearly 50%, when compared to the second quarter 2016 assessment rate.

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Salary and benefits expenses for the September 2016 quarter were $11.52 million compared to $11.10 million for the June 2016 quarter, and $10.32 million for the September 2015 quarter. Strategic hiring that was in line with the Company’s Plan, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth, all contributed to the increase from the September 2015 quarter to the September 2016 quarter.

Mr. Kennedy noted, “Total expenses for our third quarter of 2016 came in under budget, as we worked to manage our expenses closely.”

Provision for Loan Losses / Asset Quality

For the quarter ended September 30, 2016, the Company’s provision for loan losses was $2.10 million, which was generally in line with the June 2016 quarter, and greater than the September 2015 quarter. Charge-offs, net of recoveries, for the third quarter of 2016 was $703 thousand. The provision in the September 2016 quarter was reflective of loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I.

At September 30, 2016 the allowance for loan losses was $30.62 million, which was 282 percent of nonperforming loans and 0.95 percent of total loans, compared to $29.22 million, which was 363 percent of nonperforming loans and 0.93 percent of total loans at June 30, 2016, and $24.37 million, which was 320 percent of nonperforming loans and 0.85 percent of total loans one year prior, at September 30, 2015.

The Company’s provision for loan losses and its allowance for loan losses continue to track consistently with the Company’s net loan growth and asset quality metrics.

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Nonperforming assets at September 30, 2016 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were just $11.4 million or 0.30 percent of total assets, compared to $8.8 million or 0.24 percent of total assets at June 30, 2016 and $7.9 million or 0.24 percent of total assets at September 30, 2015. Total loans past due 30 through 89 days and still accruing were $8.2 million at September 30, 2016, compared to $6.6 million at June 30, 2016 and $2.7 million at September 30, 2015. There were no multifamily loans past due at quarter end. The increase in past due loans in the September 2016 quarter was due to one commercial loan secured by real estate totaling $5 million that was 30 days past due at September 30, 2016 but brought current on October 4, 2016. In addition to being brought current in early October, the Company believes there is adequate collateral coverage on the loan.

Capital / Dividends

The Company’s capital position in the September 2016 quarter was benefitted by net income of $7.1 million and also by $5.4 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company.

At September 30, 2016, the Company’s GAAP capital as a percent of total assets was 8.19 percent. The Company’s regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.39 percent, 10.47 percent, 10.47 percent and 13.17 percent, respectively. The Bank’s regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.41 percent, 11.74 percent, 11.74 percent and 12.78 percent, respectively. The Bank’s regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

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On October 27, 2016, the Company’s Board of Directors declared a regular cash dividend of $0.05 per share payable on November 25, 2016 to shareholders of record on November 10, 2016.

Mr. Kennedy said, “We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future.”

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.77 billion as of September 30, 2016. 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

 

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·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;
·the impact of anticipated higher operating expenses in 2016 and beyond;
·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.

 

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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, 2015. 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)

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PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

 

   For the Three Months Ended 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
   2016(A)   2016   2016   2015(B)   2015 
Income Statement Data:                         
Interest income  $29,844   $29,035   $27,898   $27,123   $25,806 
Interest expense   5,575    4,859    4,488    4,304    4,100 
   Net interest income   24,269    24,176    23,410    22,819    21,706 
Provision for loan losses   2,100    2,200    1,700    1,950    1,600 
   Net interest income after                         
    provision for loan losses   22,169    21,976    21,710    20,869    20,106 
Wealth management fee income   4,436    4,899    4,295    4,307    4,169 
Service charges and fees   812    818    807    849    832 
Bank owned life insurance   340    345    342    252    260 
Gain on loans held for sale at fair                         
   value (Mortgage banking)   383    309    121    117    102 
Gain on loans held for sale at                         
   lower of cost or fair value   256    500    124    —    — 
Fee income related to loan level,                         
   back-to-back swaps   670    —    94    —    — 
Gain on sale of SBA loans   243    212    47    7    — 
Other income   395    347    332    191    164 
Securities gains, net   —    18    101    —    83 
   Total other income   7,535    7,448    6,263    5,723    5,610 
Salaries and employee benefits   11,515    11,100    10,908    10,659    10,322 
Premises and equipment   2,736    2,742    2,864    3,390    2,785 
FDIC insurance expense   814    1,581    1,559    825    416 
Other expenses   3,101    3,352    3,875    5,119    3,376 
   Total operating expenses   18,166    18,775    19,206    19,993    16,899 
Income before income taxes   11,538    10,649    8,767    6,599    8,817 
Income tax expense   4,422    4,085    3,278    2,256    3,434 
Net income  $7,116   $6,564   $5,489   $4,343   $5,383 
                          
Total revenue  (C)  $31,804   $31,624   $29,673   $28,542   $27,316 
Per Common Share Data:                         
Earnings per share (basic)  $0.43   $0.41   $0.35   $0.28   $0.35 
Earnings per share (diluted)   0.43    0.40    0.34    0.28    0.35 
Weighted average number of                         
   common shares outstanding:                         
Basic   16,467,654    16,172,223    15,858,278    15,498,119    15,253,009 
Diluted   16,673,596    16,341,975    16,016,972    15,721,876    15,435,939 
Performance Ratios:                         
Return on average assets                         
   Annualized (ROAA)   0.77%   0.73%   0.64%   0.51%   0.66%
Return on average                         
   equity annualized (ROAE)   9.44%   9.06%   7.83%   6.37%   8.19%
Net interest margin                         
   (taxable equivalent basis)   2.74%   2.79%   2.82%   2.79%   2.75%
Efficiency ratio (D)   57.58%   60.36%   65.22%   70.05%   61.14%
Operating expenses / average                         
   assets annualized   1.98%   2.08%   2.22%   2.36%   2.07%

 

  (A)  The quarter ended September 30, 2016 included a reduction in FDIC premium of approximately $750 thousand. The reduction was a result of an amendment to small institution pricing for deposit insurance by the FDIC effective the quarter after the FDIC reserve ratio reaches 1.15%. The reserve ratio reached 1.15% effective as of the quarter ended June 30, 2016.
  (B)  The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
  (C)  Total revenue includes gain from sale of loans held for sale at lower of cost or fair value.
  (D)  Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.    

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PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

 

   For the         
   Nine Months Ended         
   September 30,   Change 
Income Statement Data:  2016   2015   $   % 
Interest income  $86,777   $72,019   $14,758    20%
Interest expense   14,922    10,386    4,536    44%
   Net interest income   71,855    61,633    10,222    17%
Provision for loan losses   6,000    5,150    850    17%
   Net interest income after                    
     provision for loan losses   65,855    56,483    9,372    17%
Wealth management fee income   13,630    12,732    898    7%
Service charges and fees   2,437    2,474    (37)   -1%
Bank owned life insurance   1,027    1,045    (18)   -2%
Gain on loans held for sale at fair                    
   Value (Mortgage banking)   813    411    402    98%
Gains on loans held for sale at                    
   lower of cost or fair value   880    —    880    N/A 
Fee income related to loan level,                    
   back-to-back swaps   764    373    391    105%
Gain on sale of SBA loans   502    —    502    N/A 
Other income   1,074    429    645    150%
Securities gains, net   119    527    (408)   -77%
   Total other income   21,246    17,991    3,255    18%
Salaries and employee benefits   33,523    29,619    3,904    13%
Premises and equipment   8,342    8,179    163    2%
FDIC insurance expense   3,954    1,329    2,375    179%
Other expenses   10,328    9,806    772    8%
   Total operating expenses   56,147    48,933    7,214    15%
Income before income taxes   30,954    25,541    5,413    21%
Income tax expense   11,785    9,912    1,873    19%
Net income  $19,169   $15,629   $3,540    23%
                     
                     
Total revenue   (A)  $93,101   $79,624   $13,477    17%
                     
Per Common Share Data:                    
                     
Earnings per share (basic)  $1.19   $1.04   $0.15    14%
Earnings per share (diluted)   1.17    1.02    0.15    15%
                     
Weighted average number of                    
    common shares outstanding:                    
Basic   16,167,153    15,083,006    1,084,144    7%
Diluted   16,347,255    15,293,747    1,054,228    7%
                     
Performance Ratios:                    
                     
Return on average assets annualized   0.71%   0.69%   0.02    3%
Return on average common equity annualized   8.79%   8.19%   0.60    7%
                     
Net interest margin (taxable equivalent basis)   2.78%   2.81%   (0.03)   -1%
                     
Efficiency ratio (B)   60.96%   61.55%   (0.59)   -1%
                     
Operating expenses / average   2.09%   2.15%   (0.06)   -3%
   assets annualized                    

 
(A)Total revenue includes an $880 thousand gain (for 2016) from sale of loans held for sale at lower of cost or fair value.
(B)Calculated as (total operating expenses, excluding provision for losses on REO) 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.

 

21 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)

 

   As of 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
   2016   2016   2016   2015   2015 
ASSETS                         
Cash and due from banks  $17,861   $18,261   $15,872   $11,550   $10,695 
Federal funds sold   101    101    101    101    101 
Interest-earning deposits   141,593    62,968    61,946    58,509    65,402 
   Total cash and cash equivalents   159,555    81,330    77,919    70,160    76,198 
                          
Securities available for sale   249,616    206,216    214,050    195,630    220,930 
FHLB and FRB stock, at cost   14,093    14,623    13,254    13,984    11,737 
                          
Loans held for sale   3,013    4,133    3,537    1,558    501 
Multifamily loans held for sale, at lower of                         
   cost or fair value   30,000    60,291    38,066    82,200    27,023 
                          
Residential mortgage   496,735    479,839    469,084    470,869    469,865 
Multifamily mortgage   1,507,834    1,501,915    1,489,708    1,416,775    1,444,334 
Commercial mortgage   497,267    459,744    414,677    413,118    399,592 
Commercial loans   598,078    576,169    554,871    512,886    456,611 
Construction loans   430    —    1,392    1,401    1,409 
Consumer loans   69,222    67,614    44,198    45,044    32,563 
Home equity lines of credit   62,872    63,188    53,328    52,649    50,370 
Other loans   449    430    443    500    483 
   Total loans   3,232,887    3,148,899    3,027,701    2,913,242    2,855,227 
   Less: Allowances for loan losses   30,616    29,219    27,321    25,856    24,374 
   Net loans   3,202,271    3,119,680    3,000,380    2,887,386    2,830,853 
                          
Premises and equipment   30,223    29,199    29,609    30,246    31,310 
Other real estate owned   534    767    861    563    330 
Accrued interest receivable   6,383    7,733    7,497    6,820    6,839 
Bank owned life insurance   43,541    43,325    43,101    42,885    32,727 
Deferred tax assets, net   14,765    18,190    17,952    15,582    14,613 
Other assets   20,389    19,216    19,771    17,645    15,902 
   TOTAL ASSETS  $3,774,383   $3,604,703   $3,465,997   $3,364,659   $3,268,963 
                          
LIABILITIES                         
Deposits:                         
   Noninterest-bearing demand deposits  $494,204   $469,809   $457,730   $419,887   $399,200 
   Interest-bearing demand deposits   928,941    897,210    905,479    861,697    829,970 
   Savings   119,650    120,617    119,149    115,007    117,665 
   Money market accounts   997,572    861,664    820,757    810,709    792,685 
   Certificates of deposit - Retail   466,003    466,079    446,833    434,450    411,335 
Subtotal “customer” deposits   3,006,370    2,815,379    2,749,948    2,641,750    2,550,855 
   IB Demand - Brokered   200,000    200,000    200,000    200,000    243,000 
   Certificates of deposit - Brokered   93,690    93,660    93,630    93,720    93,690 
Total deposits   3,300,060    3,109,039    3,043,578    2,935,470    2,887,545 
                          
Overnight borrowings   —    29,450    21,100    40,700    — 
Federal home loan bank advances   71,795    83,692    83,692    83,692    83,692 
Capital lease obligation   9,828    9,961    10,092    10,222    10,350 
Subordinated debt, net   48,731    48,698    —    —    — 
Other liabilities   34,937    28,330    24,030    18,899    19,448 
Due to brokers, securities settlements   —    —    —    —    1,528 
   TOTAL LIABILITIES   3,465,351    3,309,170    3,182,492    3,088,983    3,002,563 
 Shareholders’ equity   309,032    295,533    283,505    275,676    266,400 
   TOTAL LIABILITIES AND                         
      SHAREHOLDERS’ EQUITY  $3,774,383   $3,604,703   $3,465,997   $3,364,659   $3,268,963 
                          
Assets under administration at                         
   Peapack-Gladstone Bank’s                         
   Wealth Management Division                         
   (market value, not included above)  $3,495,206   $3,418,566   $3,307,799   $3,321,624   $3,250,835 

 

22 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

 

   As of 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
   2016   2016   2016   2015   2015 
Asset Quality:                         
Loans past due over 90 days                         
   and still accruing  $—   $—   $—   $—   $— 
Nonaccrual loans   10,840    8,049    7,278    6,747    7,615 
Other real estate owned   534    767    861    563    330 
   Total nonperforming assets  $11,374   $8,816   $8,139   $7,310   $7,945 
                          
Nonperforming loans to                         
   total loans   0.34%   0.26%   0.24%   0.23%   0.27%
Nonperforming assets to                         
   total assets   0.30%   0.24%   0.23%   0.22%   0.24%
                          
Performing TDRs (A)(B)  $18,078   $18,570   $16,033   $16,231   $14,609 
                          
Loans past due 30 through 89                         
   days and still accruing (C)  $8,238   $6,576   $1,393   $2,143   $2,748 
                          
Classified loans  $49,627   $51,084   $48,817   $42,777   $41,985 
                          
Impaired loans  $28,951   $26,643   $23,335   $23,107   $22,224 
                          
Allowance for loan losses:                         
   Beginning of period  $29,219   $27,321   $25,856   $24,374   $22,969 
   Provision for loan losses   2,100    2,200    1,700    1,950    1,600 
   Charge-offs, net   (703)   (302)   (235)   (468)   (195)
   End of period  $30,616   $29,219   $27,321   $25,856   $24,374 
                          
                          
ALLL to nonperforming loans   282.44%   363.01%   375.39%   383.22%   320.08%
ALLL to total loans   0.95%   0.93%   0.90%   0.89%   0.85%
                          

 

(A)Amounts reflect TDR’s that are paying according to restructured terms.

 

(B)Amount does not include $4.4 million at September 30, 2016, $4.2 million at June 30, 2016, $3.4 million at March 31, 2016, $2.6

million at December 31, 2015, and $2.8 million at September 30, 2015 of TDRs included in nonaccrual loans.

 

(C)September 30, 2016 includes one commercial loan secured by real estate totaling $5.0 million that was 30 days past due at September 30, 2016 but brought current on October 4, 2016.

 

23 

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

 

   Sept 30,   Dec 31,   Sept 30, 
   2016   2015   2015 
Capital Adequacy               
                
Equity to total assets (A)   8.19%   8.19%   8.15%
                
Tangible Equity to tangible assets (B)   8.11%   8.10%   8.06%
                
Book value per share (C)  $18.57   $17.61   $17.33 
                
Tangible Book Value per share (D)  $18.38   $17.40   $17.12 

 

   Sept 30,   Dec 31,   Sept 30, 
   2016   2015   2015 
                         
Regulatory Capital – Holding Company                              
                               
Tier I leverage  $308,250    8.39%  $273,738    8.10%  $264,570    8.10%
                               
Tier I capital to risk weighted assets   308,250    10.47    273,738    10.42    264,570    10.35 
                               
Common equity tier I capital ratio                              
   to risk-weighted assets   308,247    10.47    273,738    10.42    264,570    10.35 
                               
Tier I & II capital to                              
   risk-weighted assets   387,597    13.17    299,593    11.40    288,944    11.30 
                               
                               
Regulatory Capital – Bank                              
                               
Tier I leverage  $345,604    9.41%  $271,641    8.04%  $262,196    8.02%
                               
Tier I capital to risk weighted assets   345,604    11.74    271,641    10.34    262,196    10.26 
                               
Common equity tier I capital ratio                              
   to risk-weighted assets   345,601    11.74    271,641    10.34    262,196    10.26 
                               
Tier I & II capital to                              
   risk-weighted assets   376,220    12.78    297,497    11.32    286,570    11.21 

 

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.  
(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively.  Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding less restricted shares not yet vested.  
(D) Tangible book value per share is different than book value per share because it excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested.  See Non-GAAP financial measures reconciliation included in these tables.

24 

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)

 

   For the Quarters Ended 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
   2016   2016   2016   2015   2015 
                     
Residential loans retained  $43,284   $32,513   $17,747   $18,847   $20,623 
Residential loans sold   25,128    20,221    8,062    7,183    6,078 
Total residential loans   68,412    52,734    25,809    26,030    26,701 
                          
CRE (includes                         
   Community banking)   56,799    36,554    9,339    41,015    47,450 
Multifamily (includes                         
   Community banking)   74,450    150,709    108,035    107,605    149,763 
Commercial loans (includes                         
   Community banking) (A)   59,698    61,309    67,488    74,749    37,361 
SBA   3,025    2,285    1,055    —    — 
Wealth lines of credit (A)   1,200    785    1,800    35,550    24,000 
Total commercial loans   195,172    251,642    187,717    258,919    258,574 
                          
Installment loans   1,591    1,077    486    1,052    933 
                          
Home equity lines of credit (A)   7,064    14,435    3,604    5,902    3,775 
                          
Total loans closed  $272,239   $319,888   $217,616   $291,903   $289,983 
                          

 

 

   For the Nine Months Ended 
   Sept 30,   Sept 30, 
   2016   2015 
Residential loans retained  $93,543   $60,726 
Residential loans sold   53,412    25,994 
Total residential loans   146,955    86,720 
           
CRE (includes          
   Community banking)   102,692    134,798 
Multifamily (includes          
   Community banking)   333,194    565,600 
Commercial loans (includes          
   Community banking) (A)   188,495    214,540 
SBA   6,365    — 
Wealth lines of credit (A)   3,785    40,410 
Total commercial loans   634,531    955,348 
           
Installment loans   3,154    2,405 
           
Home equity lines of credit (A)   25,103    10,377 
           
Total loans closed  $809,743   $1,054,850 

 

(A)Includes loans and lines of credit that closed in the period, but not necessarily funded.

 

25 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

   Sept 30, 2016   Sept 30, 2015 
   Average   Income/       Average   Income/     
   Balance   Expense   Yield   Balance   Expense   Yield 
ASSETS:                        
Interest-earning assets:                              
  Investments:                              
    Taxable (1)  $193,902   $976    2.01%  $214,967   $959    1.78%
    Tax-exempt (1) (2)   27,516    212    3.08    30,682    211    2.76 
  Loans (2) (3):                              
     Mortgages   486,909    3,983    3.27    466,384    3,806    3.26 
     Commercial mortgages   2,048,877    17,977    3.51    1,839,606    16,119    3.50 
     Commercial   573,211    5,826    4.07    454,239    4,132    3.64 
     Commercial construction   454    5    4.41    1,742    18    4.13 
     Installment   67,175    443    2.64    31,361    268    3.42 
     Home equity   62,560    519    3.32    51,012    415    3.25 
     Other   465    13    11.18    510    12    9.41 
     Total loans   3,239,651    28,766    3.55    2,844,854    24,770    3.48 
  Federal funds sold   101    —    0.25    101    —    0.10 
  Interest-earning deposits   111,204    131    0.47    96,308    46    0.19 
       Total interest-earning assets   3,572,374    30,085    3.37%   3,186,912    25,986    3.26%
Noninterest-Earning Assets:                              
  Cash and due from banks   17,292              7,434           
  Allowance for loan losses   (30,022)             (23,726)          
  Premises and equipment   29,460              31,574           
  Other assets   88,721              68,067           
     Total noninterest-earning assets   105,451              83,349           
Total assets  $3,677,825             $3,270,261           
                               
LIABILITIES:                              
Interest-bearing deposits:                              
   Checking  $924,970   $645    0.28%  $810,106   $356    0.18%
   Money markets   915,139    737    0.32    757,135    546    0.29 
   Savings   119,986    17    0.06    118,329    17    0.06 
   Certificates of deposit – retail   466,967    1,615    1.38    403,593    1,296    1.28 
     Subtotal interest-bearing deposits   2,427,062    3,014    0.50    2,089,163    2,215    0.42 
   Interest-bearing demand - brokered   200,000    762    1.52    292,456    857    1.17 
   Certificates of deposit – brokered   93,674    501    2.14    93,907    504    2.15 
     Total interest-bearing deposits   2,720,736    4,277    0.63    2,475,526    3,576    0.58 
   Borrowings   87,258    380    1.74    107,770    399    1.48 
   Capital lease obligation   9,874    119    4.82    10,394    125    4.81 
   Subordinated debt   48,711    799    6.56    —    —    N/A 
   Total interest-bearing liabilities   2,866,579    5,575    0.78    2,593,690    4,100    0.63 
Noninterest-bearing liabilities:                              
   Demand deposits   479,659              398,181           
   Accrued expenses and                              
     other liabilities   30,070              15,619           
   Total noninterest-bearing liabilities   509,729              413,800           
Shareholders’ equity   301,517              262,771           
   Total liabilities and                              
     shareholders’ equity  $3,677,825             $3,270,261           
   Net interest income       $24,510             $21,886      
     Net interest spread             2.59%             2.63%
     Net interest margin (4)             2.74%             2.75%

 

  (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.

26 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

   Sept 30, 2016   June 30, 2016 
   Average   Income/       Average   Income/     
   Balance   Expense   Yield   Balance   Expense   Yield 
ASSETS:                        
Interest-earning assets:                              
  Investments:                              
    Taxable (1)  $193,902   $976    2.01%  $200,804   $914    1.82%
    Tax-exempt (1) (2)   27,516    212    3.08    27,127    211    3.11 
  Loans (2) (3):                              
     Mortgages   486,909    3,983    3.27    473,293    3,927    3.32 
     Commercial mortgages   2,048,877    17,977    3.51    2,047,112    17,830    3.48 
     Commercial   573,211    5,826    4.07    552,955    5,392    3.90 
     Commercial construction   454    5    4.41    1,305    13    3.98 
     Installment   67,175    443    2.64    63,158    420    2.66 
     Home equity   62,560    519    3.32    58,146    475    3.27 
     Other   465    13    11.18    462    11    9.52 
     Total loans   3,239,651    28,766    3.55    3,196,431    28,068    3.51 
  Federal funds sold   101    —    0.25    101    —    0.25 
  Interest-earning deposits   111,204    131    0.47    79,264    76    0.39 
       Total interest-earning assets   3,572,374    30,085    3.37%   3,503,727    29,269    3.34%
Noninterest-Earning Assets:                              
  Cash and due from banks   17,292              16,122           
  Allowance for loan losses   (30,022)             (28,056)          
  Premises and equipment   29,460              29,452           
  Other assets   88,721              88,907           
     Total noninterest-earning assets   105,451              106,425           
Total assets  $3,677,825             $3,610,152           
                               
LIABILITIES:                              
Interest-bearing deposits:                              
   Checking  $924,970   $645    0.28%  $906,611   $607    0.27%
   Money markets   915,139    737    0.32    818,453    602    0.29 
   Savings   119,986    17    0.06    120,094    17    0.06 
   Certificates of deposit – retail   466,967    1,615    1.38    450,675    1,545    1.37 
     Subtotal interest-bearing deposits   2,427,062    3,014    0.50    2,295,833    2,771    0.48 
   Interest-bearing demand - brokered   200,000    762    1.52    200,000    760    1.52 
   Certificates of deposit – brokered   93,674    501    2.14    93,642    496    2.12 
     Total interest-bearing deposits   2,720,736    4,277    0.63    2,589,475    4,027    0.62 
   Borrowings   87,258    380    1.74    222,667    573    1.03 
   Capital lease obligation   9,874    119    4.82    10,007    120    4.80 
   Subordinated debt   48,711    799    6.56    8,777    139    6.33 
   Total interest-bearing liabilities   2,866,579    5,575    0.78    2,830,926    4,859    0.69 
Noninterest-bearing liabilities:                              
   Demand deposits   479,659              464,074           
   Accrued expenses and                              
     other liabilities   30,070              25,247           
   Total noninterest-bearing liabilities   509,729              489,321           
Shareholders’ equity   301,517              289,905           
   Total liabilities and                              
     shareholders’ equity  $3,677,825             $3,610,152           
   Net interest income       $24,510             $24,410      
     Net interest spread             2.59%             2.65%
     Net interest margin (4)             2.74%             2.79%

 

  (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.

 

27 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

NINE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

   Sept 30, 2016   Sept 30, 2015 
   Average   Income/       Average   Income/     
   Balance   Expense   Yield   Balance   Expense   Yield 
ASSETS:                        
Interest-earning assets:                              
  Investments:                              
    Taxable (1)  $198,080   $2,816    1.90%  $244,117   $3,178    1.74%
    Tax-exempt (1) (2)   26,234    623    3.17    33,059    652    2.63 
  Loans (2) (3):                              
     Mortgages   475,607    11,728    3.29    466,987    11,424    3.26 
     Commercial mortgages   2,018,820    52,977    3.50    1,655,600    44,475    3.58 
     Commercial   550,770    16,319    3.95    377,461    10,376    3.67 
     Commercial construction   1,045    32    4.08    4,446    141    4.23 
     Installment   58,445    1,198    2.73    29,454    776    3.51 
     Home equity   57,938    1,434    3.30    51,129    1,237    3.23 
     Other   471    35    9.91    522    37    9.45 
     Total loans   3,163,096    83,723    3.53    2,585,599    68,466    3.53 
  Federal funds sold   101    —    0.24    101    —    0.10 
  Interest-earning deposits   89,536    294    0.44    85,932    128    0.20 
       Total interest-earning assets   3,477,047    87,456    3.35%   2,948,808    72,424    3.27%
Noninterest-Earning Assets:                              
  Cash and due from banks   16,342              6,877           
  Allowance for loan losses   (28,227)             (21,772)          
  Premises and equipment   29,637              31,935           
  Other assets   86,960              66,038           
     Total noninterest-earning assets   104,712              83,078           
Total assets  $3,581,759             $3,031,886           
                               
LIABILITIES:                              
Interest-bearing deposits:                              
   Checking  $904,767   $1,823    0.27%  $704,558   $1,028    0.19%
   Money markets   851,370    1,912    0.30    723,824    1,470    0.27 
   Savings   118,884    50    0.06    116,410    48    0.05 
   Certificates of deposit – retail   453,451    4,649    1.37    332,315    3,010    1.21 
     Subtotal interest-bearing deposits   2,328,472    8,434    0.48    1,877,107    5,556    0.39 
   Interest-bearing demand - brokered   200,000    2,263    1.51    266,443    1,700    0.85 
   Certificates of deposit – brokered   93,663    1,494    2.13    106,048    1,532    1.93 
     Total interest-bearing deposits   2,622,135    12,191    0.62    2,249,598    8,788    0.52 
   Borrowings   154,819    1,432    1.23    121,277    1,219    1.34 
   Capital lease obligation   10,007    361    4.81    10,514    379    4.81 
   Subordinated debt   19,270    938    6.49    —    —    N/A 
   Total interest-bearing liabilities   2,806,231    14,922    0.71    2,381,389    10,386    0.58 
Noninterest-bearing liabilities:                              
   Demand deposits   459,907              383,161           
   Accrued expenses and                              
     other liabilities   24,958              12,852           
   Total noninterest-bearing liabilities   484,865              396,013           
Shareholders’ equity   290,663              254,484           
   Total liabilities and                              
     shareholders’ equity  $3,581,759             $3,031,886           
   Net interest income       $72,534             $62,038      
     Net interest spread             2.64%             2.69%
     Net interest margin (4)             2.78%             2.81%

 

  (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.

 

28 

 

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, excluding ORE provision, 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 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
Tangible Book Value Per Share  2016   2016   2016   2015   2015 
Shareholders’ equity  $309,032   $295,533   $283,505   $275,676   $266,400 
Less: Intangible assets   3,188    3,277    3,264    3,281    3,311 
   Tangible equity   305,844    292,256    280,241    272,395    263,089 
                          
Period end shares outstanding   16,944,738    16,657,403    16,326,840    16,068,119    15,805,815 
Less: Restricted shares not yet vested   302,799    309,920    321,580    414,188    435,312 
Total outstanding shares   16,641,939    16,347,483    16,005,260    15,653,931    15,370,503 
Tangible book value per share   18.38    17.88    17.51    17.40    17.12 
Book value per share   18.57    18.08    17.71    17.61    17.33 
                          
Tangible Equity to Tangible Assets                         
Total Assets   3,774,383    3,604,703    3,465,997    3,364,659    3,268,963 
Less: Intangible assets   3,188    3,277    3,264    3,281    3,311 
   Tangible assets   3,771,195    3,601,426    3,462,733    3,361,378    3,265,652 
Tangible equity to tangible assets   8.11%   8.12%   8.09%   8.10%   8.06%
Equity to assets   8.19%   8.20%   8.18%   8.19%   8.15%

 

29 

 

 

   Three Months Ended 
   Sept 30,   June 30,   March 31,   Dec 31,   Sept 30, 
Efficiency Ratio  2016   2016   2016   2015   2015 
                     
Net interest income  $24,269   $24,176   $23,410   $22,819   $21,706 
Total other income   7,535    7,448    6,263    5,723    5,610 
Less: Gain on loans                         
   held for sale at lower of cost                         
   or fair value   256    500    124    —    — 
Less: Securities gains, net   —    18    101    —    83 
Total recurring revenue   31,548    31,106    29,448    28,542    27,233 
                          
Operating expenses   18,166    18,775    19,206    19,993    16,899 
Less: ORE provision   —    —    —    —    250 
Total operating expenses   18,166    18,775    19,206    19,993    16,649 
                          
Efficiency ratio   57.58%   60.36%   65.22%   70.05%   61.14%
                          
Efficiency ratio, excluding $2.5                         
   million of charges relating                         
   to the closure of two                         
   branch offices   —    —    —    61.30%   — 

 

   Nine Months Ended 
   Sept 30,   Sept 30, 
Efficiency Ratio  2016   2015 
         
Net interest income  $71,855   $61,633 
Total other income   21,246    17,991 
Less: Gain on loans          
   held for sale at lower of cost          
   or fair value   880    — 
Less: Securities gains, net   119    527 
Total recurring revenue   92,102    79,097 
           
Operating expenses   56,147    48,933 
Less: ORE provision   —    250 
Total operating expenses   56,147    48,683 
           
Efficiency ratio   60.96%   61.55%

 

 

30