Attached files
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| 8-K - 8-K - PEAPACK GLADSTONE FINANCIAL CORP | form8k-15934_pgfc.htm |
Exhibit 99.1
Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS ANOTHER SOLID QUARTER
Bedminster, N.J. – April 22, 2016 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the “Corporation” or the “Company”) recorded record net income of $5.49 million and diluted earnings per share of $0.34 for the three months ended March 31, 2016, compared to $5.01 million and $0.33, respectively, for the same three month period last year, reflecting increases of $481 thousand or 10 percent and $0.01 per share or 3 percent, respectively.
During the first quarter of 2016, as previously disclosed, the Company recorded increased FDIC premiums and increased investment in risk management related analytics and practices. The additional FDIC premium was estimated at $950 thousand, and the additional risk management related expenses were approximately $675 thousand, of which approximately $350 thousand are believed to be one time charges. The combination of the $950 thousand and the $350 thousand of charges reduced pretax income by $1.30 million, net income by $814 thousand, and diluted earnings per share by approximately $0.05 per share, for the quarter.
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The following table summarizes specified financial measures for the quarters ended:
| March | March | Increase/ | ||||||||||||||
| (Dollars in millions, except EPS) | 2016(A) | 2015 | (Decrease) | |||||||||||||
| Net interest income | $ | 23.41 | $ | 19.58 | $ | 3.83 | 20 | % | ||||||||
| Provision for loan losses | $ | 1.70 | $ | 1.35 | $ | 0.35 | 26 | % | ||||||||
| Pretax income | $ | 8.77 | $ | 8.35 | $ | 0.42 | 5 | % | ||||||||
| Net income | $ | 5.49 | $ | 5.01 | $ | 0.48 | 10 | % | ||||||||
| Diluted EPS | $ | 0.34 | $ | 0.33 | $ | .01 | 3 | % | ||||||||
| Total revenue | $ | 29.67 | $ | 25.47 | $ | 4.20 | 16 | % | ||||||||
| Return on average assets | 0.64 | % | 0.71 | % | (0.07 | ) | (10 | )% | ||||||||
| Return on average equity | 7.83 | % | 8.13 | % | (0.30 | ) | (4 | )% | ||||||||
| Efficiency ratio (B) | 65.22 | % | 62.58 | % | 2.64 | 4 | % | |||||||||
| Book value per share | $ | 17.71 | $ | 16.61 | $ | 1.10 | 7 | % | ||||||||
| (A) | The quarter ended March 31, 2016 included $1.30 million of charges related to increased FDIC premiums and increased investment in risk management related analytics and practices, as described on the prior page. These charges reduced pretax income by $1.30 million, net income by $814 thousand, diluted earnings per share by $0.05 per share, ROAA by 0.09%, and ROAE by 1.16%, and increased the efficiency ratio by 4.41%. Excluding these $1.30 million of charges, pretax income would have been $10.07 million, net income would have been $6.30 million, diluted EPS would have been $0.39 per share, ROAA would have been 0.73%, ROAE would have been 8.99%, and the efficiency ratio would have been 60.81%. |
| (B) | See Non-GAAP financial measures reconciliation table on page 26. |
Mr. Kennedy said, “We had a very solid first quarter of 2016, as we continued to successfully execute our Plan – Expanding Our Reach, while making additional investment in our risk management analytics and practices.”
Additional Q1 2016 highlights follow:
| · | Growth in diluted EPS for Q1 2016 when compared to Q1 2015 was $0.01 per share or 3 percent, despite the additional expenses incurred in Q1 2016 as noted above. |
| · | At March 31, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (“the Bank”) stood at $3.31 billion. |
| · | Fee income from the Private Wealth Management Division totaled $4.3 million for the first quarter of 2016, compared to $4.0 million for the same quarter in 2015. Wealth management fee income, at approximately 15 percent of the Company’s total revenue, contributed significantly to the Company’s diversified revenue sources. |
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| · | Loans at March 31, 2016, including multifamily loans held for sale, totaled $3.07 billion. This reflected net growth of $70 million compared to the prior quarter (2 percent compared to the prior quarter or 9 percent on an annualized basis), and $623 million (26 percent compared to the prior year period) when compared to the $2.44 billion at March 31, 2015. |
| · | Commercial & Industrial (C&I) loans at March 31, 2016 totaled $555 million. This reflected net growth of $42 million compared to the prior quarter (8 percent compared to the prior quarter or 33 percent on an annualized basis), and net growth of $219 million (65 percent compared to the prior year period) when compared to the $336 million at March 31, 2015. The $42 million C&I growth for the first quarter of 2016 represented 60% of the total net loan growth for the first quarter of 2016. |
| · | Multifamily loan participations in the first quarter of 2016 totaled approximately $34 million, which resulted in upfront fees (deferred income) and ongoing servicing fees. Multifamily whole loans sold totaled $23 million in the first quarter of 2016, which resulted in a gain on sale of $124 thousand. |
| · | Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) totaled $2.75 billion at March 31, 2016. This reflected net growth of $108 million compared to the prior quarter (4 percent compared to the prior quarter or 16 percent on an annualized basis), and $597 million (28 percent compared to the prior year period) when compared to the $2.15 billion at March 31, 2015. |
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| · | Asset quality metrics continued to be strong at March 31, 2016. Nonperforming assets at March 31, 2016 were just $8.1 million or 0.23 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $1.4 million or 0.05 percent of total loans at March 31, 2016. |
| · | The Company’s net interest income for the first quarter of 2016 was $23.4 million, reflecting growth of $591 thousand (3 percent for the quarter or 10 percent on an annualized basis) when compared to $22.8 million for the December 2015 quarter, and growth of $3.83 million (20 percent) when compared to the $19.58 million for the quarter ended March 31, 2015. |
| · | The book value per share at March 31, 2016 of $17.71 reflected improvement when compared to $16.61 at March 31, 2015. Year over year growth in book value per share totaled 7 percent. |
Mr. Kennedy noted, “We were very pleased with our progress in 2015, and continue to be pleased with our progress thus far in 2016. As I described last quarter, we did see some headwinds going into 2016. Despite those headwinds, we delivered solid results this quarter.”
Net Interest Income / Net Interest Margin
Net interest income and net interest margin was $23.41 million and 2.82 percent for the first quarter of 2016, compared to $22.82 million and 2.79 percent for the fourth quarter of 2015, and compared to $19.58 million and 2.88 percent for the same quarter last year, reflecting growth in net interest income of $3.83 million or 20 percent when compared to the same prior year period. Net interest income for the first quarter of 2016 benefitted from significant loan growth during 2015. Additionally, the 2016 quarter included approximately $419 thousand of prepayment premiums received on the prepayment of certain multifamily loans. This income benefitted the net interest margin for the quarter by 5 basis points.
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While net interest income for the first quarter of 2016 improved considerably compared to the same quarter in 2015, the net interest margin declined to 2.82 percent for the 2016 quarter from 2.88 percent for the 2015 quarter. The net interest margin continued to be 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 $292 million of cash, cash equivalents and investment securities on our balance sheet, we also have $1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $105 million drawn as of March 31, 2016.”
Wealth Management Business
In the March 2016 quarter, Peapack-Gladstone Bank’s wealth management business generated $4.30 million in fee income compared to $4.31 million for the December 2015 quarter, and $4.03 million for the March 2015 quarter.
Fee income for the first quarter of 2016 was basically flat to the fourth quarter of 2015. For the first quarter of 2016, the benefit of new business, as well as certain tax preparation income, was basically offset by the effect of the broader market declines during the first quarter of 2016.
Fee income for the first quarter of 2016 was approximately 7 percent greater than the first quarter of 2015. Growth in fee income was due to several factors including: the acquisition of Wealth Management Consultants, LLC (“WMC”) which closed in May 2015; continued healthy new business results; higher yields on new business as compared to lost/closed business; and the conversion of lower fee custody relationships to higher fee advisory relationships. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, as well as the first quarter of 2016, which negatively impacted investment fee revenue.
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The market value of the assets under administration (AUA) of the wealth management division was $3.31 billion at March 31, 2016, basically flat to December 31, 2015 and up $255 million or 8 percent from $3.05 billion at March 31, 2015, principally due to the items noted just above.
Mr. Babcock, President of Private Wealth Management, said, “We continue to incorporate wealth into every conversation we have with all of the Company’s clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients.” Mr. Babcock went on to note, “While the headwinds created by the recent declines in the markets impacted revenue in the first quarter of 2016, we were still able to generate fee income flat to the fourth quarter of 2015, and greater than the first quarter of 2015. We continue to remain optimistic about the market in the medium-to-longer term and we believe this, coupled with our continued strong new business and new client acquisitions, will lead to improved results over time and will be a significant driver to enhancing shareholder value as our business continues to grow.”
Loan Originations / Loans
At March 31, 2016, loans, including multifamily loans held for sale, totaled $3.07 billion compared to $3.00 billion three months ago at December 31, 2015 and compared to $2.44 billion one year ago at March 31, 2015, representing net increases of $70 million compared to the prior quarter (2 percent compared to the prior quarter or 9 percent on an annualized basis), and $623 million (26 percent) compared to the prior year period.
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For the quarter ended March 31, 2016, residential mortgage originations totaled $26 million. In 2015, we successfully repositioned our residential mortgage business to serve as a lead product for new wealth business, as well as support for full banking relationships. We believe that residential mortgage volumes will increase through the remainder of 2016.
The March 2016 quarter included $108 million of multifamily loan originations, flat to the December 2015 quarter, but down significantly from the quarters prior to December 2015.
At March 31, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.53 billion compared to $1.50 billion three months ago at December 31, 2015 and compared to $1.21 billion one year ago at March 31, 2015. The increases were net of participations and whole loans sold, including $34 million of participations and $23 million of whole loans sold in the current March 2016 quarter. These participations and loan sales were part of the Company’s balance sheet management strategy and will likely continue in 2016.
Mr. Kennedy said, “As I explained over the last several quarters, we anticipated multifamily loan originations and growth would be less than past quarters, 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 March 31, 2016 the Company closed $67 million of commercial loans. When comparing March 31, 2016 to March 31, 2015, commercial loans grew $219 million, or 65 percent, to $555 million at March 31, 2016 from $336 million one year ago at March 31, 2015. At March 31, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio, up from 14 percent one year ago at March 31, 2015.
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Mr. Kennedy said, “As a result of our investment in and commitment to C&I banking, including the addition in 2015 and 2016 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in 2015, we have seen, and believe 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.”
Deposits / Funding / Balance Sheet Management
During the March 2016 quarter, customer deposit growth of $108 million (principally noninterest-bearing and interest-bearing checking), as well as increased capital of $8 million, funded net asset growth of $101 million and reduced overnight borrowings of $20 million.
Brokered interest-bearing demand (“overnight”) deposits stayed flat at $200 million at March 31, 2016. The interest rate paid on these deposits allows the Bank to fund at attractive rates and engage in interest rate swaps to hedge its asset-liability interest rate risk. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.
From a liquidity/funding perspective, such brokered deposits, at a direct cost of approximately 52 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of March 31, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.
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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
Service charges and fees for the March 2016 quarter were $807 thousand, compared to $849 thousand for the December 2015 quarter and $805 thousand for the March 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 March 2016 quarter included $121 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $117 thousand for the December 2015 quarter, and $148 thousand in the March 2015 quarter.
There were $101 thousand of securities gains for the March 2016 quarter compared to none for the December 2015 quarter, and $268 thousand for the March 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 lower of cost or fair value was $124 thousand for the March 2016 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans ($23 million in the first quarter of 2016), in addition to participations. The Company anticipates that it will continue to employ both of these strategies throughout 2016.
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Other income was $473 thousand for the March 2016 quarter compared to $198 thousand for the December 2015 quarter, and $93 thousand for the March 2015 quarter. The first quarter of 2016 included $94 thousand of income related to the Company’s loan level / back-to-back swap program, which was implemented in mid-2015. The first quarter of 2016 also included $47 thousand of income related to its newly implemented SBA lending and sale program. While both of these programs are part of the Company’s normal ongoing operations, the Company cannot predict the amount of income that may be generated going forward, due to the newness of these programs.
Other improvements in other income in the current 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 $19.21 million for the quarter ended March 31, 2016, compared to $19.99 million for the December 2015 quarter and $15.77 million for the same quarter in 2015. During the first quarter of 2016, as previously disclosed, the Company incurred an increased FDIC premium accrual and increased investment in risk management related analytics and practices. The additional FDIC premium was estimated at $950 thousand, and the additional risk management related expenses were approximately $675 thousand, of which approximately $350 thousand are believed to be one time charges. The December 2015 quarter included $2.5 million of charges related to the branch closures.
Salary and benefits expenses for the March 2016 quarter were $10.91 million compared to $10.66 million for the December 2015 quarter, and $9.43 million for the same quarter last
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year. Strategic hiring that was in line with the Company’s Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth, all contributed to the increase from the March 2015 quarter to the March 2016 quarter. Premises and equipment expense totaled $2.86 million for the quarter ended March 31, 2016, compared to $3.39 million for the December 2015 quarter, and $2.62 million for the same quarter last year. The December 2015 quarter included $722 thousand related to the branch closures.
FDIC insurance expense for the March 2016 quarter was $1.56 million, compared to $825 thousand for the December 2015 quarter, and $482 thousand for the March 2015 quarter. The December 2015 quarter was partially impacted, and the March 2016 quarter was fully impacted, by the increased FDIC premiums previously disclosed. Mr. Kennedy noted, “I said last quarter that we generally expected an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). The increased expense recognized for the first quarter of 2016 was in line with that guidance. While we believe this increased cost will be temporary, we cannot predict when the additional FDIC premium will be eliminated.”
Other expenses for the March 2016 quarter were $3.88 million, compared to $5.12 million for the December quarter and $3.25 million for the March 2015 quarter. The March 2016 quarter included additional risk management related expenses, as previously disclosed. The December 2015 quarter included $1.73 million related to the branch closures.
Mr. Kennedy noted, “Total expenses for our first quarter of 2016 came in under budget, as we worked to manage our expenses closely.” Mr. Kennedy went on to note, “Last quarter I said that given our significant growth and high concentration in multifamily lending, Management had decided to accelerate approximately $2.0 million of costs over the next 3 to 12 months to ensure we adhere to best in class risk management practices. I also said that, we had originally planned for such expenditures over the next 24 to 30 months, but we felt it prudent to pull them forward. Our first quarter of 2016 expenses related to this initiative were in line with that guidance.”
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Provision for Loan Losses / Asset Quality
For the quarter ended March 31, 2016, the Company’s provision for loan losses was $1.70 million, compared to $1.35 million for the March 2015 quarter. Charge-offs, net of recoveries, for the first quarter of 2016 were only $235 thousand. The larger provision in 2016 was due to loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I and Commercial Real Estate loans.
At March 31, 2016 the allowance for loan losses was $27.32 million, 375 percent of nonperforming loans and 0.90 percent of total loans, compared to $25.86 million, 383 percent of nonperforming loans, and 0.86 percent of total loans at December 31, 2015, and $20.82 million, 329 percent of nonperforming loans and 0.85 percent of total loans one year prior, at March 31, 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 March 31, 2016 (which does not include TDR loans that are performing in accordance with their terms) were just $8.1 million or 0.23 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $1.4 million at March 31, 2016. There were no multifamily loans past due at quarter end.
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Capital / Dividends
The Company’s capital position in the March 2016 quarter was benefitted by net income of $5.5 million and also by $4.3 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the Company.
At March 31, 2016, the Company’s GAAP capital as a percent of total assets was 8.18 percent. The Company’s regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.19 percent, 10.56 percent, 10.56 percent and 11.58 percent, respectively. The Company’s regulatory capital ratios are all above the required ratios under regulatory guidance.
As previously announced on April 21, 2016, the Board of Directors declared a regular cash dividend of $0.05 per share payable on May 16, 2016 to shareholders of record on May 5, 2016.
Mr. Kennedy said, “We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future. We continue to assess other potential sources of capital to support growth, such as subordinated debt.”
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.47 billion as of March 31, 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.
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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; |
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| · | 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 | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| 2016(A) | 2015(B) | 2015 | 2015 | 2015 | ||||||||||||||||
| Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 27,898 | $ | 27,123 | $ | 25,806 | $ | 23,852 | $ | 22,361 | ||||||||||
| Interest expense | 4,488 | 4,304 | 4,100 | 3,508 | 2,778 | |||||||||||||||
| Net interest income | 23,410 | 22,819 | 21,706 | 20,344 | 19,583 | |||||||||||||||
| Provision for loan losses | 1,700 | 1,950 | 1,600 | 2,200 | 1,350 | |||||||||||||||
| Net interest income after | ||||||||||||||||||||
| provision for loan losses | 21,710 | 20,869 | 20,106 | 18,144 | 18,233 | |||||||||||||||
| Wealth management fee income | 4,295 | 4,307 | 4,169 | 4,532 | 4,031 | |||||||||||||||
| Service charges and fees | 807 | 849 | 832 | 837 | 805 | |||||||||||||||
| Bank owned life insurance | 342 | 252 | 260 | 248 | 537 | |||||||||||||||
| Gain on loans held for sale at fair | ||||||||||||||||||||
| value (Mortgage banking) | 121 | 117 | 102 | 161 | 148 | |||||||||||||||
| Gain on loans held for sale at | ||||||||||||||||||||
| lower of cost or fair value | 124 | — | — | — | — | |||||||||||||||
| Other income | 473 | 198 | 164 | 545 | 93 | |||||||||||||||
| Securities gains, net | 101 | — | 83 | 176 | 268 | |||||||||||||||
| Total other income | 6,263 | 5,723 | 5,610 | 6,499 | 5,882 | |||||||||||||||
| Salaries and employee benefits | 10,908 | 10,659 | 10,322 | 9,872 | 9,425 | |||||||||||||||
| Premises and equipment | 2,864 | 3,390 | 2,785 | 2,778 | 2,616 | |||||||||||||||
| FDIC insurance expense | 1,559 | 825 | 416 | 431 | 482 | |||||||||||||||
| Other expenses | 3,875 | 5,119 | 3,376 | 3,185 | 3,245 | |||||||||||||||
| Total operating expenses | 19,206 | 19,993 | 16,899 | 16,266 | 15,768 | |||||||||||||||
| Income before income taxes | 8,767 | 6,599 | 8,817 | 8,377 | 8,347 | |||||||||||||||
| Income tax expense | 3,278 | 2,256 | 3,434 | 3,139 | 3,339 | |||||||||||||||
| Net income | $ | 5,489 | $ | 4,343 | $ | 5,383 | $ | 5,238 | $ | 5,008 | ||||||||||
| Total revenue | $ | 29,673 | $ | 28,542 | $ | 27,316 | $ | 26,843 | $ | 25,465 | ||||||||||
| Per Common Share Data: | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.35 | $ | 0.28 | $ | 0.35 | $ | 0.34 | $ | 0.34 | ||||||||||
| Earnings per share (diluted) | 0.34 | 0.28 | 0.35 | 0.34 | 0.33 | |||||||||||||||
| Weighted average number of | ||||||||||||||||||||
| common shares outstanding: | ||||||||||||||||||||
| Basic | 15,858,278 | 15,498,119 | 15,253,009 | 15,082,516 | 14,909,722 | |||||||||||||||
| Diluted | 16,016,972 | 15,721,876 | 15,435,939 | 15,233,151 | 15,070,352 | |||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets | ||||||||||||||||||||
| Annualized (ROAA) | 0.64% | 0.51% | 0.66% | 0.70% | 0.71% | |||||||||||||||
| Return on average | ||||||||||||||||||||
| equity annualized (ROAE) | 7.83% | 6.37% | 8.19% | 8.24% | 8.13% | |||||||||||||||
| Net interest margin | ||||||||||||||||||||
| (taxable equivalent basis) | 2.82% | 2.79% | 2.75% | 2.80% | 2.88% | |||||||||||||||
| Efficiency ratio (C) | 65.22% | 70.05% | 61.14% | 61.00% | 62.58% | |||||||||||||||
| Operating expenses / average | ||||||||||||||||||||
| assets annualized | 2.22% | 2.36% | 2.07% | 2.16% | 2.24% | |||||||||||||||
| (A) | The quarter ended March 31, 2016 included $1.30 million of charges related to increased FDIC premiums and increased investment in risk management related analytics and practices. These charges reduced pretax income by $1.30 million, net income by $814 thousand, diluted earnings per share by $0.05 per share, ROAA by 0.09%, and ROAE by 1.16%, and increased the efficiency ratio by 4.41%. Excluding these $1.30 million of charges, pretax income would have been $10.07 million, net income would have been $6.30 million, diluted EPS would have been $0.39 per share, ROAA would have been 0.73%, ROAE would have been 8.99%, and the efficiency ratio would have been 60.81%. |
| (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%. Excluding these $2.5 million of charges, pretax income would have been $9.10 million, net income would have been $5.90 million, diluted EPS would have been $0.38 per share, ROAA would have been 0.70%, ROAE would have been 8.65%, and the efficiency ratio would have been 61.30%. |
| (C) | 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
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 15,872 | $ | 11,550 | $ | 10,695 | $ | 6,205 | $ | 7,439 | ||||||||||
| Federal funds sold | 101 | 101 | 101 | 101 | 101 | |||||||||||||||
| Interest-earning deposits | 61,946 | 58,509 | 65,402 | 32,382 | 65,283 | |||||||||||||||
| Total cash and cash equivalents | 77,919 | 70,160 | 76,198 | 38,688 | 72,823 | |||||||||||||||
| Securities available for sale | 214,050 | 195,630 | 220,930 | 245,897 | 276,119 | |||||||||||||||
| FHLB and FRB stock, at cost | 13,254 | 13,984 | 11,737 | 15,590 | 10,598 | |||||||||||||||
| Loans held for sale | 3,537 | 1,558 | 27,524 | 745 | 4,245 | |||||||||||||||
| Multifamily loans held for sale, at lower of | ||||||||||||||||||||
| cost or fair value | 38,066 | 82,200 | — | — | — | |||||||||||||||
| Residential mortgage | 469,084 | 470,869 | 469,865 | 470,863 | 466,333 | |||||||||||||||
| Multifamily mortgage | 1,489,708 | 1,416,775 | 1,444,334 | 1,371,139 | 1,214,714 | |||||||||||||||
| Commercial mortgage | 414,677 | 413,118 | 399,592 | 375,440 | 339,037 | |||||||||||||||
| Commercial loans | 554,871 | 512,886 | 456,611 | 438,461 | 336,079 | |||||||||||||||
| Construction loans | 1,392 | 1,401 | 1,409 | 1,417 | 5,777 | |||||||||||||||
| Consumer loans | 44,198 | 45,044 | 32,563 | 29,996 | 28,206 | |||||||||||||||
| Home equity lines of credit | 53,328 | 52,649 | 50,370 | 51,675 | 50,399 | |||||||||||||||
| Other loans | 443 | 500 | 483 | 2,947 | 1,755 | |||||||||||||||
| Total loans | 3,027,701 | 2,913,242 | 2,855,227 | 2,741,938 | 2,442,300 | |||||||||||||||
| Less: Allowances for loan losses | 27,321 | 25,856 | 24,374 | 22,969 | 20,816 | |||||||||||||||
| Net loans | 3,000,380 | 2,887,386 | 2,830,853 | 2,718,969 | 2,421,484 | |||||||||||||||
| Premises and equipment | 29,609 | 30,246 | 31,310 | 31,637 | 32,068 | |||||||||||||||
| Other real estate owned | 861 | 563 | 330 | 956 | 1,103 | |||||||||||||||
| Accrued interest receivable | 7,497 | 6,820 | 6,839 | 6,451 | 5,943 | |||||||||||||||
| Bank owned life insurance | 43,101 | 42,885 | 32,727 | 32,565 | 32,404 | |||||||||||||||
| Deferred tax assets, net | 17,952 | 15,582 | 14,613 | 12,673 | 10,458 | |||||||||||||||
| Other assets | 19,771 | 17,645 | 15,902 | 13,999 | 12,212 | |||||||||||||||
| TOTAL ASSETS | $ | 3,465,997 | $ | 3,364,659 | $ | 3,268,963 | $ | 3,118,170 | $ | 2,879,457 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 457,730 | $ | 419,887 | $ | 399,200 | $ | 386,588 | $ | 377,399 | ||||||||||
| Interest-bearing demand deposits | 905,479 | 861,697 | 829,970 | 667,847 | 634,580 | |||||||||||||||
| Savings | 119,149 | 115,007 | 117,665 | 120,606 | 115,515 | |||||||||||||||
| Money market accounts | 820,757 | 810,709 | 792,685 | 717,246 | 714,466 | |||||||||||||||
| Certificates of deposit - Retail | 446,833 | 434,450 | 411,335 | 384,235 | 310,678 | |||||||||||||||
| Subtotal “customer” deposits | 2,749,948 | 2,641,750 | 2,550,855 | 2,276,522 | 2,152,638 | |||||||||||||||
| IB Demand - Brokered | 200,000 | 200,000 | 243,000 | 293,000 | 263,000 | |||||||||||||||
| Certificates of deposit - Brokered | 93,630 | 93,720 | 93,690 | 94,224 | 106,694 | |||||||||||||||
| Total deposits | 3,043,578 | 2,935,470 | 2,887,545 | 2,663,746 | 2,522,332 | |||||||||||||||
| Overnight borrowings | 21,100 | 40,700 | — | 87,500 | — | |||||||||||||||
| Federal home loan bank advances | 83,692 | 83,692 | 83,692 | 83,692 | 83,692 | |||||||||||||||
| Capital lease obligation | 10,092 | 10,222 | 10,350 | 10,475 | 10,594 | |||||||||||||||
| Other liabilities | 24,030 | 18,899 | 19,448 | 14,881 | 13,486 | |||||||||||||||
| Due to brokers, securities settlements | — | — | 1,528 | — | — | |||||||||||||||
| TOTAL LIABILITIES | 3,182,492 | 3,088,983 | 3,002,563 | 2,860,294 | 2,630,104 | |||||||||||||||
| Shareholders’ equity | 283,505 | 275,676 | 266,400 | 257,876 | 249,353 | |||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | $ | 3,465,997 | $ | 3,364,659 | $ | 3,268,963 | $ | 3,118,170 | $ | 2,879,457 | ||||||||||
| Assets under administration at | ||||||||||||||||||||
| Peapack-Gladstone Bank’s | ||||||||||||||||||||
| Wealth Management Division | ||||||||||||||||||||
| (market value, not included above) | $ | 3,307,799 | $ | 3,321,624 | $ | 3,250,835 | $ | 3,445,939 | $ | 3,053,110 | ||||||||||
21
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
| Asset Quality: | ||||||||||||||||||||
| Loans past due over 90 days | ||||||||||||||||||||
| and still accruing | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Nonaccrual loans | 7,278 | 6,747 | 7,615 | 7,111 | 6,335 | |||||||||||||||
| Other real estate owned | 861 | 563 | 330 | 956 | 1,103 | |||||||||||||||
| Total nonperforming assets | $ | 8,139 | $ | 7,310 | $ | 7,945 | $ | 8,067 | $ | 7,438 | ||||||||||
| Nonperforming loans to | ||||||||||||||||||||
| total loans | 0.24% | 0.23% | 0.27% | 0.26% | 0.26% | |||||||||||||||
| Nonperforming assets to | ||||||||||||||||||||
| total assets | 0.23% | 0.22% | 0.24% | 0.26% | 0.26% | |||||||||||||||
| Performing TDRs (A)(B) | $ | 16,033 | $ | 16,045 | $ | 14,609 | $ | 13,695 | $ | 13,561 | ||||||||||
| Loans past due 30 through 89 | ||||||||||||||||||||
| days and still accruing | $ | 1,393 | $ | 2,143 | $ | 2,748 | $ | 1,744 | $ | 2,481 | ||||||||||
| Classified loans | $ | 48,817 | $ | 42,777 | $ | 41,985 | $ | 38,676 | $ | 38,450 | ||||||||||
| Impaired loans | $ | 23,335 | $ | 23,107 | $ | 22,224 | $ | 20,806 | $ | 19,896 | ||||||||||
| Allowance for loan losses: | ||||||||||||||||||||
| Beginning of period | $ | 25,856 | $ | 24,374 | $ | 22,969 | $ | 20,816 | $ | 19,480 | ||||||||||
| Provision for loan losses | 1,700 | 1,950 | 1,600 | 2,200 | 1,350 | |||||||||||||||
| Charge-offs, net | (235 | ) | (468 | ) | (195 | ) | (47 | ) | (14 | ) | ||||||||||
| End of period | $ | 27,321 | $ | 25,856 | $ | 24,374 | $ | 22,969 | $ | 20,816 | ||||||||||
| ALLL to nonperforming loans | 375.39% | 383.22% | 320.08% | 323.01% | 328.59% | |||||||||||||||
| ALLL to total loans | 0.90% | 0.86% | 0.85% | 0.84% | 0.85% | |||||||||||||||
| (A) | Amounts reflect TDR’s that are paying according to restructured terms. |
| (B) | Amount does not include $3.4 million at March 31, 2016, $2.6 million at December 31, 2015, $2.8 million at September 30, 2015, $2.2 Million at June 30, 2015, and $1.4 million at March 31, 2015 of TDRs included in nonaccrual loans. |
22
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| March 31, | Dec 31, | March 31, | ||||||||||
| 2016 | 2015 | 2015 | ||||||||||
| Capital Adequacy | ||||||||||||
| Equity to total assets (A) | 8.18% | 8.19% | 8.66% | |||||||||
| Tangible Equity to tangible assets (B) | 8.09% | 8.10% | 8.64% | |||||||||
| Book value per share (C) | $ | 17.71 | $ | 17.61 | $ | 16.61 | ||||||
| Tangible Book Value per share (D) | $ | 17.51 | $ | 17.40 | $ | 16.57 | ||||||
| March 31, | Dec 31, | March 31, | ||||||||||||||||||||||
| 2016 | 2015 | 2015 | ||||||||||||||||||||||
| Regulatory Capital – Holding Company | ||||||||||||||||||||||||
| Tier I leverage | $ | 282,915 | 8.19% | $ | 273,738 | 8.10% | $ | 247,534 | 8.80% | |||||||||||||||
| Tier I capital to risk weighted assets | 282,915 | 10.56 | 273,738 | 10.42 | 247,534 | 11.53 | ||||||||||||||||||
| Common equity tier I capital ratio | ||||||||||||||||||||||||
| to risk-weighted assets | 282,912 | 10.56 | 273,738 | 10.42 | 247,534 | 11.53 | ||||||||||||||||||
| Tier I & II capital to | ||||||||||||||||||||||||
| risk-weighted assets | 310,236 | 11.58 | 299,593 | 11.40 | 268,350 | 12.50 | ||||||||||||||||||
| Regulatory Capital – Bank | ||||||||||||||||||||||||
| Tier I leverage | $ | 280,971 | 8.14% | $ | 271,641 | 8.04% | $ | 236,425 | 8.41% | |||||||||||||||
| Tier I capital to risk weighted assets | 280,971 | 10.49 | 271,641 | 10.34 | 236,425 | 11.02 | ||||||||||||||||||
| Common equity tier I capital ratio | ||||||||||||||||||||||||
| to risk-weighted assets | 280,968 | 10.49 | 271,641 | 10.34 | 236,425 | 11.02 | ||||||||||||||||||
| Tier I & II capital to | ||||||||||||||||||||||||
| risk-weighted assets | 308,292 | 11.51 | 297,497 | 11.32 | 257,242 | 11.99 | ||||||||||||||||||
| (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. |
23
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
| For the Quarters Ended | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
| Residential loans retained | $ | 17,747 | $ | 18,847 | $ | 20,623 | $ | 23,117 | $ | 16,986 | ||||||||||
| Residential loans sold | 8,062 | 7,183 | 6,078 | 10,978 | 8,938 | |||||||||||||||
| Total residential loans | 25,809 | 26,030 | 26,701 | 34,095 | 25,924 | |||||||||||||||
| CRE (includes | ||||||||||||||||||||
| Community banking) | 9,339 | 41,015 | 47,450 | 29,561 | 57,787 | |||||||||||||||
| Multifamily (includes | ||||||||||||||||||||
| Community banking) | 108,035 | 107,605 | 149,763 | 206,803 | 209,034 | |||||||||||||||
| Commercial loans (includes | ||||||||||||||||||||
| Community banking) | 67,488 | 74,749 | 37,361 | 136,483 | 40,696 | |||||||||||||||
| SBA | 1,055 | — | — | — | — | |||||||||||||||
| Wealth lines of credit | 1,800 | 35,550 | 24,000 | 6,150 | 10,260 | |||||||||||||||
| Total commercial loans | 187,717 | 258,919 | 258,574 | 378,997 | 317,777 | |||||||||||||||
| Installment loans | 486 | 1,052 | 933 | 1,128 | 344 | |||||||||||||||
| Home equity lines of credit | 3,604 | 5,902 | 3,775 | 3,225 | 3,377 | |||||||||||||||
| Total loans closed | $ | 217,616 | $ | 291,903 | $ | 289,983 | $ | 417,445 | $ | 347,422 | ||||||||||
Includes loans and lines of credit that closed in the period, but not necessarily funded.
24
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| March 31, 2016 | March 31, 2015 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 199,579 | $ | 926 | 1.86 | % | $ | 273,946 | $ | 1,182 | 1.73 | % | ||||||||||||
| Tax-exempt (1) (2) | 24,044 | 200 | 3.33 | 37,631 | 231 | 2.46 | ||||||||||||||||||
| Loans held for sale | 1,042 | 11 | 4.22 | 774 | 10 | 5.10 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 465,860 | 3,807 | 3.27 | 465,722 | 3,785 | 3.25 | ||||||||||||||||||
| Commercial mortgages | 1,959,721 | 17,170 | 3.50 | 1,459,872 | 13,589 | 3.72 | ||||||||||||||||||
| Commercial | 525,896 | 5,100 | 3.88 | 316,109 | 2,897 | 3.67 | ||||||||||||||||||
| Commercial construction | 1,395 | 14 | 4.01 | 5,930 | 62 | 4.18 | ||||||||||||||||||
| Installment | 44,906 | 335 | 2.98 | 27,791 | 252 | 3.63 | ||||||||||||||||||
| Home equity | 53,056 | 440 | 3.32 | 50,660 | 405 | 3.20 | ||||||||||||||||||
| Other | 486 | 12 | 9.88 | 530 | 12 | 9.06 | ||||||||||||||||||
| Total loans | 3,051,320 | 26,878 | 3.52 | 2,326,614 | 21,002 | 3.61 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.23 | 101 | — | 0.10 | ||||||||||||||||||
| Interest-earning deposits | 77,903 | 87 | 0.45 | 91,657 | 43 | 0.18 | ||||||||||||||||||
| Total interest-earning assets | 3,353,989 | 28,102 | 3.35 | % | 2,730,723 | 22,468 | 3.29 | % | ||||||||||||||||
| Noninterest-Earning Assets: | ||||||||||||||||||||||||
| Cash and due from banks | 15,603 | 6,804 | ||||||||||||||||||||||
| Allowance for loan losses | (26,582 | ) | (20,056 | ) | ||||||||||||||||||||
| Premises and equipment | 30,000 | 32,256 | ||||||||||||||||||||||
| Other assets | 83,632 | 63,868 | ||||||||||||||||||||||
| Total noninterest-earning assets | 102,653 | 82,872 | ||||||||||||||||||||||
| Total assets | $ | 3,456,642 | $ | 2,813,595 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 882,497 | $ | 571 | 0.26 | % | $ | 630,557 | $ | 314 | 0.20 | % | ||||||||||||
| Money markets | 819,818 | 573 | 0.28 | 710,590 | 463 | 0.26 | ||||||||||||||||||
| Savings | 116,560 | 16 | 0.05 | 113,435 | 14 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 442,563 | 1,489 | 1.35 | 247,860 | 663 | 1.07 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,261,438 | 2,649 | 0.47 | 1,702,442 | 1,454 | 0.34 | ||||||||||||||||||
| Interest-bearing demand - brokered | 200,000 | 741 | 1.48 | 240,500 | 280 | 0.47 | ||||||||||||||||||
| Certificates of deposit – brokered | 93,674 | 497 | 2.12 | 126,404 | 524 | 1.66 | ||||||||||||||||||
| Total interest-bearing deposits | 2,555,112 | 3,887 | 0.61 | 2,069,346 | 2,258 | 0.44 | ||||||||||||||||||
| Borrowings | 155,274 | 479 | 1.23 | 109,639 | 392 | 1.43 | ||||||||||||||||||
| Capital lease obligation | 10,140 | 122 | 4.81 | 10,635 | 128 | 4.81 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,720,526 | 4,488 | 0.66 | 2,189,620 | 2,778 | 0.51 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 435,770 | 366,919 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 19,898 | 10,752 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 455,668 | 377,671 | ||||||||||||||||||||||
| Shareholders’ equity | 280,448 | 246,304 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 3,456,642 | $ | 2,813,595 | ||||||||||||||||||||
| Net interest income | $ | 23,614 | $ | 19,690 | ||||||||||||||||||||
| Net interest spread | 2.69 | % | 2.78 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.82 | % | 2.88 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. | |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. | |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. | |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
25
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| March 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 199,579 | $ | 926 | 1.86 | % | $ | 192,678 | $ | 901 | 1.87 | % | ||||||||||||
| Tax-exempt (1) (2) | 24,044 | 200 | 3.33 | 25,516 | 206 | 3.23 | ||||||||||||||||||
| Loans held for sale | 1,042 | 11 | 4.22 | 681 | 11 | 6.61 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 465,860 | 3,807 | 3.27 | 465,855 | 3,809 | 3.27 | ||||||||||||||||||
| Commercial mortgages | 1,959,721 | 17,170 | 3.50 | 1,903,842 | 16,811 | 3.53 | ||||||||||||||||||
| Commercial | 525,896 | 5,100 | 3.88 | 486,353 | 4,725 | 3.89 | ||||||||||||||||||
| Commercial construction | 1,395 | 14 | 4.01 | 1,404 | 14 | 3.99 | ||||||||||||||||||
| Installment | 44,906 | 335 | 2.98 | 42,629 | 320 | 3.00 | ||||||||||||||||||
| Home equity | 53,056 | 440 | 3.32 | 51,516 | 420 | 3.26 | ||||||||||||||||||
| Other | 486 | 12 | 9.88 | 507 | 12 | 9.47 | ||||||||||||||||||
| Total loans | 3,051,320 | 26,878 | 3.52 | 2,952,106 | 26,111 | 3.54 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.23 | 101 | — | 0.10 | ||||||||||||||||||
| Interest-earning deposits | 77,903 | 87 | 0.45 | 123,045 | 76 | 0.25 | ||||||||||||||||||
| Total interest-earning assets | 3,353,989 | 28,102 | 3.35 | % | 3,294,127 | 27,305 | 3.32 | % | ||||||||||||||||
| Noninterest-Earning Assets: | ||||||||||||||||||||||||
| Cash and due from banks | 15,603 | 9,133 | ||||||||||||||||||||||
| Allowance for loan losses | (26,582 | ) | (24,858 | ) | ||||||||||||||||||||
| Premises and equipment | 30,000 | 31,285 | ||||||||||||||||||||||
| Other assets | 83,632 | 73,483 | ||||||||||||||||||||||
| Total noninterest-earning assets | 102,653 | 89,043 | ||||||||||||||||||||||
| Total assets | $ | 3,456,642 | $ | 3,383,170 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 882,497 | $ | 571 | 0.26 | % | $ | 849,929 | $ | 466 | 0.22 | % | ||||||||||||
| Money markets | 819,818 | 573 | 0.28 | 813,112 | 577 | 0.28 | ||||||||||||||||||
| Savings | 116,560 | 16 | 0.05 | 115,930 | 17 | 0.06 | ||||||||||||||||||
| Certificates of deposit – retail | 442,563 | 1,489 | 1.35 | 420,831 | 1,401 | 1.33 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,261,438 | 2,649 | 0.47 | 2,199,802 | 2,461 | 0.45 | ||||||||||||||||||
| Interest-bearing demand - brokered | 200,000 | 741 | 1.48 | 274,261 | 834 | 1.22 | ||||||||||||||||||
| Certificates of deposit – brokered | 93,674 | 497 | 2.12 | 93,704 | 502 | 2.14 | ||||||||||||||||||
| Total interest-bearing deposits | 2,555,112 | 3,887 | 0.61 | 2,567,767 | 3,797 | 0.59 | ||||||||||||||||||
| Borrowings | 155,274 | 479 | 1.23 | 88,548 | 383 | 1.73 | ||||||||||||||||||
| Capital lease obligation | 10,140 | 122 | 4.81 | 10,266 | 124 | 4.83 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,720,526 | 4,488 | 0.66 | 2,666,581 | 4,304 | 0.65 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 435,770 | 428,412 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 19,898 | 15,541 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 455,668 | 443,953 | ||||||||||||||||||||||
| Shareholders’ equity | 280,448 | 272,636 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 3,456,642 | $ | 3,383,170 | ||||||||||||||||||||
| Net interest income | $ | 23,614 | $ | 23,001 | ||||||||||||||||||||
| Net interest spread | 2.69 | % | 2.67 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.82 | % | 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. |
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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 | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| Tangible Book Value Per Share | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||
| Shareholders’ equity | $ | 283,505 | $ | 275,676 | $ | 266,400 | $ | 257,876 | $ | 249,353 | ||||||||||
| Less: Intangible assets | 3,264 | 3,281 | 3,311 | 3,342 | 563 | |||||||||||||||
| Tangible equity | 280,241 | 272,395 | 263,089 | 254,534 | 248,790 | |||||||||||||||
| Period end shares outstanding | 16,326,840 | 16,068,119 | 15,805,815 | 15,592,168 | 15,440,430 | |||||||||||||||
| Less: Restricted shares not yet vested | 321,580 | 414,188 | 435,312 | 436,908 | 429,642 | |||||||||||||||
| Total outstanding shares | 16,005,260 | 15,653,931 | 15,370,503 | 15,155,260 | 15,010,788 | |||||||||||||||
| Tangible book value per share | 17.51 | 17.40 | 17.12 | 16.80 | 16.57 | |||||||||||||||
| Book value per share | 17.71 | 17.61 | 17.33 | 17.02 | 16.61 | |||||||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||||||||||
| Total Assets | 3,465,997 | 3,364,659 | 3,268,963 | 3,118,170 | 2,879,457 | |||||||||||||||
| Less: Intangible assets | 3,264 | 3,281 | 3,311 | 3,342 | 563 | |||||||||||||||
| Tangible assets | 3,462,733 | 3,361,378 | 3,265,652 | 3,114,828 | 2,878,894 | |||||||||||||||
| Tangible equity to tangible assets | 8.09% | 8.10% | 8.06% | 8.17% | 8.64% | |||||||||||||||
| Equity to assets | 8.18% | 8.19% | 8.15% | 8.27% | 8.66% | |||||||||||||||
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| Three Months Ended | ||||||||||||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||||||||||||||||
| Efficiency Ratio | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||
| Net interest income | $ | 23,410 | $ | 22,819 | $ | 21,706 | $ | 20,344 | $ | 19,583 | ||||||||||
| Total other income | 6,263 | 5,723 | 5,610 | 6,499 | 5,882 | |||||||||||||||
| Less: Gain on loans | ||||||||||||||||||||
| held for sale at lower of cost | ||||||||||||||||||||
| or fair value | 124 | — | — | — | — | |||||||||||||||
| Less: Securities gains, net | 101 | — | 83 | 176 | 268 | |||||||||||||||
| Total recurring revenue | 29,448 | 28,542 | 27,233 | 26,667 | 25,197 | |||||||||||||||
| Operating expenses | 19,206 | 19,993 | 16,899 | 16,266 | 15,768 | |||||||||||||||
| Less: ORE provision | — | — | 250 | — | — | |||||||||||||||
| Total operating expenses | 19,206 | 19,993 | 16,649 | 16,266 | 15,768 | |||||||||||||||
| Efficiency ratio | 65.22% | 70.05% | 61.14% | 61.00% | 62.58% | |||||||||||||||
| Efficiency ratio, excluding $2.5 | ||||||||||||||||||||
| million of charges relating | ||||||||||||||||||||
| to the closure of two | ||||||||||||||||||||
| branch offices | — | 61.30% | — | — | — | |||||||||||||||
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