Peapack-Gladstone Financial Corporation Reports a Strong Third Quarter and Declares Its Quarterly Cash Dividend
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BEDMINSTER, NJ -- (Marketwired) -- 10/28/16 -- Peapack-Gladstone Financial Corporation (NASDAQ: 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.
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.
- 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.
- 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.
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.
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."
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.
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."
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.
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.
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.
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.
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.
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
- 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.
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)
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.
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
assets annualized 2.09% 2.15% (0.06) -3%
(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.
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
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.
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.
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.
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.
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.
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.
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%
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%
Contact: Jeffrey J. Carfora SEVP and CFO Peapack-Gladstone Financial Corporation T: 908-719-4308
Source: Peapack-Gladstone Financial Corporation
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