Attached files
| file | filename |
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| 8-K - 8-K - PEAPACK GLADSTONE FINANCIAL CORP | form8k-19353_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 A STRONG FOURTH QUARTER AND YEAR AND
DECLARES ITS QUARTERLY CASH DIVIDEND
Bedminster, N.J. – January 29, 2018 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) reported record net income of $36.50 million and diluted earnings per share of $2.03 for the year ended December 31, 2017, compared to $26.48 million and $1.60, respectively, for the year ended December 31, 2016, reflecting increases of $10.02 million, or 38 percent, and $0.43 per share, or 27 percent, respectively.
For the quarter ended December 31, 2017, the Company recorded net income of $10.37 million and diluted earnings per share of $0.56, compared to $7.31 million and $0.43 for the same three-month period last year, reflecting increases of $3.06 million, or 42 percent, and $0.13 per share, or 30 percent, respectively.
For the quarter and year ended December 31, 2017, the Company recorded a $1.6 million tax benefit from the reduction of a deferred tax liability due to the new tax law.
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Executive Summary:
The following three tables summarize specified financial measures for the periods shown. The explanatory footnotes following each table are integral to the table.
| Year over Year Comparison | ||||||||||||||||
| Year | Year | Increase/ | ||||||||||||||
| (Dollars in millions, except per share data) | 2017 (1) | 2016 | (Decrease) | |||||||||||||
| Net interest income | $ | 111.14 | (2) | $ | 96.44 | 14.70 | 15 | % | ||||||||
| Provision for loan and lease losses | $ | 5.85 | $ | 7.50 | $ | (1.65 | ) | -22 | % | |||||||
| Net interest income after provision | $ | 105.29 | $ | 88.94 | $ | 16.35 | 18 | % | ||||||||
| Wealth management fee income | $ | 23.18 | $ | 18.24 | $ | 4.94 | 27 | % | ||||||||
| Other income | $ | 11.45 | (3) | $ | 10.68 | (4) | $ | 0.77 | 7 | % | ||||||
| Total other income | $ | 34.63 | $ | 28.92 | $ | 5.71 | 20 | % | ||||||||
| Operating expenses | $ | 85.61 | (5) | $ | 75.12 | $ | 10.49 | 14 | % | |||||||
| Pretax income | $ | 54.31 | $ | 42.74 | $ | 11.57 | 27 | % | ||||||||
| Income tax expense | $ | 17.81 | (6) | $ | 16.26 | $ | 1.55 | 10 | % | |||||||
| Net income | $ | 36.50 | $ | 26.48 | $ | 10.02 | 38 | % | ||||||||
| Diluted EPS | $ | 2.03 | $ | 1.60 | $ | 0.43 | 27 | % | ||||||||
| Return on average assets | 0.89 | % | 0.72 | % | 0.17 | |||||||||||
| Return on average equity | 10.12 | % | 8.92 | % | 1.20 | |||||||||||
| (1) | 2017 included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017. |
| (2) | 2017 included $1.2 million of recognition of deferred fees and prepayment income on two C&I credits. |
| (3) | 2017 included $412 thousand of gains on sales of loans held for sale at lower of cost or fair value. |
| (4) | 2016 included $1.23 million of gains on sales of loans held for sale at lower of cost or fair value. |
| (5) | 2017 included $660 thousand of investment banking expenses related to the Murphy Capital Management and the Quadrant Capital Management acquisitions, and also included $1.3 million of separation expenses related to two senior officers. |
| (6) | 2017 included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law, and also included a $662 thousand tax benefit related to the adoption of ASU 2016-09, Compensation – Stock Compensation. |
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| December 2017 Quarter Compared to Prior Year Quarter | ||||||||||||||||
| Qtr ended | Qtr ended | |||||||||||||||
| December | December | Increase/ | ||||||||||||||
| (Dollars in millions, except per share data) | 2017 (1) | 2016 | (Decrease) | |||||||||||||
| Net interest income | $ | 28.59 | $ | 24.58 | $ | 4.01 | 16 | % | ||||||||
| Provision for loan and lease losses | $ | 1.65 | $ | 1.50 | $ | 0.15 | 10 | % | ||||||||
| Net interest income after provision | $ | 26.94 | $ | 23.08 | $ | 3.86 | 17 | % | ||||||||
| Wealth management fee income | $ | 7.49 | $ | 4.61 | $ | 2.88 | 62 | % | ||||||||
| Other income | $ | 3.11 | (2) | $ | 3.07 | (3) | $ | 0.04 | 1 | % | ||||||
| Total other income | $ | 10.60 | $ | 7.68 | $ | 2.92 | 38 | % | ||||||||
| Operating expenses | $ | 24.25 | (4) | $ | 18.97 | $ | 5.28 | 28 | % | |||||||
| Pretax income | $ | 13.29 | $ | 11.79 | $ | 1.50 | 13 | % | ||||||||
| Income tax expense | $ | 2.92 | (5) | $ | 4.48 | $ | (1.56 | ) | -35 | % | ||||||
| Net income | $ | 10.37 | $ | 7.31 | $ | 3.06 | 42 | % | ||||||||
| Diluted EPS | $ | 0.56 | $ | 0.43 | $ | 0.13 | 30 | % | ||||||||
| Return on average assets annualized | 0.98 | % | 0.75 | % | 0.23 | |||||||||||
| Return on average equity annualized | 10.61 | % | 9.27 | % | 1.34 | |||||||||||
| (1) | The December 2017 quarter included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017. |
| (2) | The December 2017 quarter included $378 thousand of gains on sales of loans held for sale at lower of cost or fair value. |
| (3) | The December 2016 quarter included $353 thousand of gains on sales of loans held for sale at lower of cost or fair value. |
| (4) | The December 2017 quarter included $300 thousand of investment banking expenses related to the Quadrant Capital Management acquisition, and also included $1.3 million of separation expenses related to two senior officers. |
| (5) | The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law. |
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| December 2017 Quarter Compared to Linked Quarter | ||||||||||||||||
| Qtr ended | Qtr ended | |||||||||||||||
| December | September | Increase/ | ||||||||||||||
| (Dollars in millions, except per share data) | 2017 (1) | 2017 (1) | (Decrease) | |||||||||||||
| Net interest income | $ | 28.59 | $ | 29.99 | (2) | $ | (1.40 | ) | -5 | % | ||||||
| Provision for loan and lease losses | $ | 1.65 | $ | 0.40 | $ | 1.25 | 313 | % | ||||||||
| Net interest income after provision | $ | 26.94 | $ | 29.59 | $ | (2.65 | ) | -9 | % | |||||||
| Wealth management fee income | $ | 7.49 | $ | 5.79 | $ | 1.70 | 29 | % | ||||||||
| Other income | $ | 3.11 | (3) | $ | 3.05 | (3) | $ | 0.06 | 2 | % | ||||||
| Total other income | $ | 10.60 | $ | 8.84 | $ | 1.76 | 20 | % | ||||||||
| Operating expenses | $ | 24.25 | (4) | $ | 21.96 | (5) | $ | 2.29 | 10 | % | ||||||
| Pretax income | $ | 13.29 | $ | 16.47 | $ | (3.18 | ) | -19 | % | |||||||
| Income tax expense | $ | 2.92 | (6) | $ | 6.26 | $ | (3.34 | ) | -53 | % | ||||||
| Net income | $ | 10.37 | $ | 10.21 | $ | 0.16 | 2 | % | ||||||||
| Diluted EPS | $ | 0.56 | $ | 0.56 | $ | — | — | % | ||||||||
| Return on average assets annualized | 0.98 | % | 0.97 | % | 0.01 | |||||||||||
| Return on average equity annualized | 10.61 | % | 11.09 | % | (0.48 | ) | ||||||||||
| (1) | The 2017 periods shown included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017. |
| (2) | The September 2017 quarter included $1.2 million of recognition of deferred fees and prepayment income on two C&I credits. |
| (3) | 2017 included $412 thousand of gains on sales of loans held for sale at lower of cost or fair value (specifically $378 thousand in the December 2017 quarter and $34 thousand in the September 2017 quarter). |
| (4) | The December 2017 quarter included $300 thousand of investment banking expenses related to the Quadrant Capital Management acquisition, and also included $1.3 million of separation expenses related to two senior officers. |
| (5) | The September 2017 quarter included $360 thousand of investment banking expenses related to the Murphy Capital Management acquisition. |
| (6) | The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law. |
Douglas L. Kennedy, President and CEO, said, “We had a very strong 2017, as we continued to successfully execute on our strategic plan – Expanding Our Reach. Our earnings and returns for 2017 exceeded our expectations. Earnings per share growth was 27 percent and return on average equity was 10.12 percent for 2017.”
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Highlights for the year included:
| · | Wealth Management is integral to the strategy and diversified revenue sources: |
| o | Effective November 1, 2017, the Bank acquired Quadrant Capital Management (“Quadrant”), a registered investment advisory firm (“RIA”), based in Fairfield, NJ, which contributed approximately $460 million of assets under management (“AUM”) at the time of acquisition. |
| o | Effective August 1, 2017, the Bank acquired Murphy Capital Management, LLC(“MCM”), an RIA, based in Gladstone, NJ. MCM contributed approximately $850 million of AUM at the time of acquisition. |
| o | At December 31, 2017, the market value of AUM/AUA at the Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) increased $1.8 billion to $5.5 billion from $3.7 billion at December 31, 2016, reflecting growth of 49 percent. Organic growth was $500 million of the $1.8 billion in growth, while acquisitions accounted for $1.3 billion of the growth. |
| o | Fee income from the Private Wealth Management Division totaled $23.2 million for the year ended December 31, 2017, an increase of $4.9 million, or 27 percent from $18.2 million for the year ended December 31, 2016. |
| o | Wealth management fee income, comprising approximately 16 percent of the Company’s total revenue for the year ended December 31, 2017, contributed significantly to the Company’s diversified revenue sources. |
| o | In addition to wealth income, also contributing to the Company’s diversified revenue sources was fee income related to loan level, back-to-back swaps ($2.81 million for 2017 compared to $1.64 million for 2016), and gain on sale of SBA loans ($1.56 million for 2017 compared to $623 thousand for 2016). |
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Total balance sheet growth was managed to just under 10% with a focus on Commercial & Industrial lending:
| o | Loans at December 31, 2017 totaled $3.71 billion. This reflected net growth of $392 million, or 12 percent, when compared to the $3.31 billion at December 31, 2016. This loan growth was principally funded by “customer” deposit growth (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits). |
| o | The Company continued to employ loan sales as a balance sheet management strategy, while improving returns. Multifamily and residential mortgage loan sales for 2017 totaled $109 million, with a net weighted average coupon of 3.30 percent, resulting in a gain of $412 thousand. These loan sales helped fund growth in commercial loans. |
| o | During the second quarter of 2017, the Company hired a team of very experienced bankers to focus on equipment financing. Net outstanding financings from this business totaled $148 million as of December 31, 2017, and were included in total commercial and industrial (“C&I”) loans. |
| o | Total C&I loans at December 31, 2017 were $958 million. This reflected net growth of $321 million (50 percent) when compared to $637 million in C&I loans at December 31, 2016. |
| o | The Company continued to manage its balance sheet such that multifamily loans decline as percent of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. As of December 31, 2017, total C&I loans comprised 26 percent of the total loan portfolio, as compared to 19 percent a year earlier. As of December 31, 2017, total multifamily loans comprised of 37 percent of the total loan portfolio, as compared to 44 percent a year earlier. |
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| o | The Bank’s concentration in multifamily and investor commercial real estate loans declined to 467 percent of risk based capital at December 31, 2017 from 564 percent at December 31, 2016, and from 695 percent at December 31, 2015. |
| o | Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) totaled $3.45 billion at December 31, 2017. This reflected net growth of $308 million (10 percent) when compared to $3.14 billion of total “customer” deposit balances at December 31, 2016. |
| · | Capital and asset quality continue to be strong. |
| o | Asset quality metrics continued to be strong at December 31, 2017. Nonperforming assets at December 31, 2017 were $15.6 million, or 0.37 percent of total assets. Total loans past due 30 through 89 days and still accruing were just $246 thousand, or 0.01 percent of total loans at December 31, 2017. |
| o | The Company’s and Bank’s capital ratios at December 31, 2017, all increased compared to the December 31, 2016 levels. These capital positions were benefitted by net income of $36.50 million and $36.59 million of voluntary share purchases under the Dividend Reinvestment Plan. Further, during 2017 the Company’s and Bank’s regulatory capital positions were also benefitted by $34.1 million of net proceeds from the mid-December 2017 subordinated debt issuance, and the subsequent downstream of a large portion of the proceeds to the Bank as regulatory capital. |
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Supplemental Quarterly Details:
Wealth Management Business
In the December 2017 quarter, the Bank’s wealth management business generated $7.49 million in fee income compared to $5.79 million for the September 2017 quarter, and $4.61 million for the December 2016 quarter.
The December 2017 quarter included a full three months of income related to MCM, which was acquired effective August 1, 2017, and two months of income related to Quadrant, which was acquired effective November 1, 2017. The December 2017 quarter also included increased “recurring type” fee income (tied principally to asset management fees and custody fees), which was due to net inflows from new business, a healthy equity market which resulted in positive market action in client portfolios as well as additions to accounts from existing clients, all partially offset by normal levels of disbursements and outflows.
John P. Babcock, President of the PGB Private Wealth Management Division, said, “Our differentiator continues to be our personalized, pro-active advice led approach. Our new business pipeline continues to be strong and we expect continued growth organically and through potential strategic acquisitions of wealth management firms.”
Loans
During the fourth quarter of 2017, the Company continued to employ loan sales as a balance sheet management strategy, while improving returns. The $30 million of residential mortgage loan sales generally funded increases in commercial and industrial loans.
For the quarter ended December 31, 2017, commercial and industrial loans grew $113 million (13 percent for the quarter, or 53 percent annualized) to $958 million at year end, compared to $846 million at September 30, 2017.
Mr. Kennedy said, “Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received.
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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.”
Funding
In mid-December 2017, the Company issued $35 million of subordinated debt ($34.1 million net of underwriting fees and expenses) bearing interest at an annual rate of 4.75 percent for the first five years, and thereafter at an adjustable rate until maturity in December 2027 or earlier redemption.
During the December 2017 quarter, customer deposit growth of $47 million, net (principally interest-bearing checking, money market and retail certificates of deposit), $24 million of capital growth, $34 million of net proceeds from the subordinated debt issuance, and $30 million of loan sales, funded loan growth, increased liquidity (investments and interest-bearing cash) of $33 million, and maturities of wholesale borrowings of $12 million and brokered certificates of deposit of $11 million.
Mr. Kennedy noted, “The Company will continue to focus on providing high touch client service, a key element in growing its personal and commercial core deposit base. We expect that our full array of treasury management capabilities, including our new Treasury Management platform and our new escrow management product software, as well as added treasury management sales professionals and private bankers, will help us grow commercial deposits.”
Mr. Kennedy added, “Our overall balance sheet growth will be governed by our continued ability to generate value-added core deposits. We will be intently focused on fully utilizing our enhanced in-house relationship-based loan profitability model to manage the origination of loans with competitive risk-adjusted returns.”
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Net Interest Income / Net Interest Margin
Net interest income and net interest margin were $28.59 million and 2.78 percent for the fourth quarter of 2017, compared to $29.99 million and 2.95 percent for the third quarter of 2017, and compared to $24.58 million and 2.63 percent for the same quarter last year. Net interest income for the fourth quarter of 2017 benefitted from loan growth as well as $945 thousand of prepayment premiums received on the prepayment of multifamily loans, which reflected a decrease from $1.3 million for the September 2017 quarter and an increase from $464 thousand in the December 2016 quarter. The September 2017 quarter also benefitted from $1.2 million of recognition of deferred fees and prepayment premiums on two C&I credits.
Net interest margin for the fourth quarter of 2017 decreased when compared to the third quarter of 2017, and increased from the same quarter of 2016. The increase from the same quarter of 2016 was due to the increased prepayment premiums noted above, as well as the effect of the increased market rates on our adjustable rate assets, partially offset by an increase in our cost of deposits. The decrease from the previous quarter was due to the lower prepayment premiums and the September quarter’s recognition of the deferred fees mentioned above. The issuance of $35 million of subordinated debt issued in mid-December 2017 also negatively impacted net interest margin slightly.
Net interest margin is also affected by the maintenance of liquid assets on the Company’s balance sheet. In addition to approximately $441 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.3 billion of secured funding available from the Federal Home Loan Bank, of which only $38 million was drawn as of December 31, 2017.
The Company’s interest rate sensitivity models indicate that the Company’s net interest income and margin would improve slightly in a rising interest rate environment. However, the Company noted, such income and margin may also be impacted by competitive pressures in attracting and/or retaining deposits.
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Other Noninterest Income
The fourth quarter of 2017 included $774 thousand of income related to the Company’s SBA lending and sale program, compared to $493 thousand generated in the September 2017 quarter, and $121 thousand in the December 2016 quarter.
The fourth quarter of 2017 also included $179 thousand of loan level, back-to-back swap income compared to $888 thousand in the September 2017 quarter and $874 thousand in the December 2016 quarter. This program provides a borrower with a fixed interest rate on a loan, while providing an adjustable rate to the Company, thus helping to manage the Company’s interest rate risk, while contributing to income.
Operating Expenses
The Company’s total operating expenses were $24.25 million for the quarter ended December 31, 2017, compared to $21.96 million for the September 2017 quarter and $18.97 million for the December 2016 quarter.
Compensation and employee benefits expense for the December 2017 quarter was $15.30 million compared to $14.00 million for the September 2017 quarter, and $11.48 million for the December 2016 quarter. The December 2017 quarter included a full quarter of expense related to the Equipment Finance team (who joined in April 2017) and MCM (which closed in August 2017) and two months of expense related to Quadrant (which closed in November 2017). Additionally, the Company recorded expense of $1.3 million related to the separation of two senior officers. Strategic hiring, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth also contributed to the increase for the December 2017 quarter compared to the 2016 quarter.
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Other expenses for the December 2017 quarter were $5.27 million compared to $4.44 million for the September 2017 quarter and $3.78 million for the December 2016 quarter. The December 2017 quarter included approximately $300 thousand of investment banking fee expenses related to the Quadrant acquisition, a full quarter of other expenses related to the Equipment Finance business and MCM, and two months of other operating expenses related to Quadrant. Further, when compared to the December 2016 quarter, the December 2017 quarter included increased advertising and marketing expenses relating to various target marketing campaigns. The September 2017 quarter included approximately $360 thousand of investment banking fee expenses related to the MCM acquisition.
Income Taxes
The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law. The December 2017 quarter taxes also benefitted from the vesting of restricted stock at market prices above initial grant prices.
Provision for Loan and Lease Losses / Asset Quality
For the quarter ended December 31, 2017, the Company’s provision for loan and lease losses was $1.65 million, compared to $400 thousand for the September 2017 quarter and $1.50 million for the December 2016 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics and net loan growth.
At December 31, 2017, the allowance for loan and lease losses of $36.44 million (269 percent of nonperforming loans and 0.98 percent of total loans), compared to $35.92 million at September 30, 2017 (234 percent of nonperforming loans and 0.98 percent of total loans), and $32.21 million (286 percent of nonperforming loans and 0.97 percent of total loans) at December 31, 2016.
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Nonperforming assets at December 31, 2017 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.6 million, or 0.37 percent of total assets, compared to $15.5 million, or 0.37 percent of total assets, at September 30, 2017 and $11.8 million, or 0.30 percent of total assets, at December 31, 2016. Total loans past due 30 through 89 days and still accruing were $246 thousand at December 31, 2017, compared to $589 thousand at September 30, 2017 and $1.4 million at December 31, 2016.
Capital / Dividends
The Company’s and Bank’s capital positions in the December 2017 quarter were benefitted by net income of $10.37 million and $10.51 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company. The Company’s and Bank’s regulatory capital positions were also benefitted by the mid-December 2017 subordinated debt issuance, and subsequent downstream of a large portion of the proceeds to the Bank as regulatory capital.
The Bank’s regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.
On January 25, 2018, the Company’s Board of Directors declared a regular cash dividend of $0.05 per share payable on February 23, 2018 to shareholders of record on February 8, 2018.
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.26 billion as of December 31, 2017. 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 Private 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 may contain 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 2018 and beyond; |
| · | inability to manage our growth; |
| · | inability to successfully integrate our expanded employee base; |
| · | 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 the value in our investment portfolio; |
| · | higher than expected increases in our allowance for loan and lease losses; |
| · | higher than expected increases in loan and lease losses or in the level of nonperforming loans; |
| · | unexpected changes in interest rates; |
| · | 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) that 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 |
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| · | 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, 2016. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’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 | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
| Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 36,439 | $ | 37,491 | $ | 33,412 | $ | 31,385 | $ | 30,271 | ||||||||||
| Interest expense | 7,853 | 7,499 | 6,440 | 5,794 | 5,691 | |||||||||||||||
| Net interest income | 28,586 | 29,992 | 26,972 | 25,591 | 24,580 | |||||||||||||||
| Provision for loan and lease losses | 1,650 | 400 | 2,200 | 1,600 | 1,500 | |||||||||||||||
| Net interest income after | ||||||||||||||||||||
| provision for loan and lease losses | 26,936 | 29,592 | 24,772 | 23,991 | 23,080 | |||||||||||||||
| Wealth management fee income | 7,489 | 5,790 | 5,086 | 4,818 | 4,610 | |||||||||||||||
| Service charges and fees | 837 | 816 | 815 | 771 | 815 | |||||||||||||||
| Bank owned life insurance | 341 | 343 | 350 | 322 | 380 | |||||||||||||||
| Gain on loans held for sale at fair | ||||||||||||||||||||
| value (Mortgage banking) | 122 | 141 | 91 | 47 | 197 | |||||||||||||||
| Gain on loans held for sale at | ||||||||||||||||||||
| lower of cost or fair value | 378 | 34 | — | — | 353 | |||||||||||||||
| Fee income related to loan level, | ||||||||||||||||||||
| back-to-back swaps | 179 | 888 | 1,291 | 456 | 874 | |||||||||||||||
| Gain on sale of SBA loans | 774 | 493 | 142 | 155 | 121 | |||||||||||||||
| Other income | 486 | 326 | 396 | 450 | 322 | |||||||||||||||
| Securities gains, net | — | — | — | — | — | |||||||||||||||
| Total other income | 10,606 | 8,831 | 8,171 | 7,019 | 7,672 | |||||||||||||||
| Salaries and employee benefits | 15,296 | 13,996 | 12,751 | 11,913 | 11,480 | |||||||||||||||
| Premises and equipment | 3,194 | 2,945 | 3,033 | 2,816 | 2,903 | |||||||||||||||
| FDIC insurance expense | 495 | 583 | 602 | 686 | 804 | |||||||||||||||
| Other expenses | 5,266 | 4,437 | 3,709 | 3,889 | 3,778 | |||||||||||||||
| Total operating expenses | 24,251 | 21,961 | 20,095 | 19,304 | 18,965 | |||||||||||||||
| Income before income taxes | 13,291 | 16,462 | 12,848 | 11,706 | 11,787 | |||||||||||||||
| Income tax expense | 2,922 | 6,256 | 4,908 | 3,724 | 4,479 | |||||||||||||||
| Net income | $ | 10,369 | $ | 10,206 | $ | 7,940 | $ | 7,982 | $ | 7,308 | ||||||||||
| Total revenue (A) | $ | 39,192 | $ | 38,823 | $ | 35,143 | $ | 32,610 | $ | 32,252 | ||||||||||
| Per Common Share Data: | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.57 | $ | 0.57 | $ | 0.45 | $ | 0.47 | $ | 0.44 | ||||||||||
| Earnings per share (diluted) | 0.56 | 0.56 | 0.45 | 0.46 | 0.43 | |||||||||||||||
| Weighted average number of | ||||||||||||||||||||
| common shares outstanding: | ||||||||||||||||||||
| Basic | 18,197,708 | 17,800,153 | 17,505,638 | 17,121,631 | 16,770,725 | |||||||||||||||
| Diluted | 18,527,829 | 18,123,268 | 17,756,390 | 17,438,907 | 17,070,473 | |||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets annualized (ROAA) | 0.98 | % | 0.97 | % | 0.79 | % | 0.82 | % | 0.75 | % | ||||||||||
| Return on average equity annualized (ROAE) | 10.61 | % | 11.09 | % | 9.06 | % | 9.62 | % | 9.27 | % | ||||||||||
| Net interest margin (tax- equivalent basis) | 2.78 | % | 2.95 | % | 2.76 | % | 2.71 | % | 2.63 | % | ||||||||||
| Efficiency ratio (B) | 62.48 | % | 56.62 | % | 57.18 | % | 59.20 | % | 59.45 | % | ||||||||||
| Operating expenses / average | ||||||||||||||||||||
| assets annualized | 2.28 | % | 2.10 | % | 2.00 | % | 1.97 | % | 1.96 | % | ||||||||||
| (A) | Total revenue includes net interest income plus total other income. |
| (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 gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables beginning on page 24. |
20
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
| For the | ||||||||||||||||
| Twelve Months Ended | ||||||||||||||||
| December 31, | Change | |||||||||||||||
| 2017 | 2016 | $ | % | |||||||||||||
| Income Statement Data: | ||||||||||||||||
| Interest income | $ | 138,727 | $ | 117,048 | $ | 21,679 | 19 | % | ||||||||
| Interest expense | 27,586 | 20,613 | 6,973 | 34 | % | |||||||||||
| Net interest income | 111,141 | 96,435 | 14,706 | 15 | % | |||||||||||
| Provision for loan and lease losses | 5,850 | 7,500 | (1,650 | ) | -22 | % | ||||||||||
| Net interest income after | ||||||||||||||||
| provision for loan and lease losses | 105,291 | 88,935 | 16,356 | 18 | % | |||||||||||
| Wealth management fee income | 23,183 | 18,240 | 4,943 | 27 | % | |||||||||||
| Service charges and fees | 3,239 | 3,252 | (13 | ) | — | |||||||||||
| Bank owned life insurance | 1,356 | 1,407 | (51 | ) | -4 | % | ||||||||||
| Gain on loans held for sale at fair | ||||||||||||||||
| value (Mortgage banking) | 401 | 1,010 | (609 | ) | -60 | % | ||||||||||
| Gain on loans held for sale at | ||||||||||||||||
| lower of cost or fair value | 412 | 1,233 | (821 | ) | -67 | % | ||||||||||
| Fee income related to loan level, | ||||||||||||||||
| back-to-back swaps | 2,814 | 1,638 | 1,176 | 72 | % | |||||||||||
| Gain on sale of SBA loans | 1,564 | 623 | 941 | 151 | % | |||||||||||
| Other income | 1,658 | 1,396 | 262 | 19 | % | |||||||||||
| Securities gains, net | — | 119 | (119 | ) | -100 | % | ||||||||||
| Total other income | 34,627 | 28,918 | 5,709 | 20 | % | |||||||||||
| Compensation and employee benefits | 53,956 | 45,003 | 8,953 | 20 | % | |||||||||||
| Premises and equipment | 11,988 | 11,245 | 743 | 7 | % | |||||||||||
| FDIC insurance expense (A) | 2,366 | 4,758 | (2,392 | ) | -50 | % | ||||||||||
| Other expenses | 17,301 | 14,106 | 3,195 | 23 | % | |||||||||||
| Total operating expenses | 85,611 | 75,112 | 10,499 | 14 | % | |||||||||||
| Income before income taxes | 54,307 | 42,741 | 11,566 | 27 | % | |||||||||||
| Income tax expense | 17,810 | 16,264 | 1,546 | 10 | % | |||||||||||
| Net income | $ | 36,497 | $ | 26,477 | $ | 10,020 | 38 | % | ||||||||
| Total revenue (B) | $ | 145,768 | $ | 125,353 | $ | 20,415 | 16 | % | ||||||||
| Per Common Share Data: | ||||||||||||||||
| Earnings per share (basic) | $ | 2.06 | $ | 1.62 | $ | 0.44 | 27 | % | ||||||||
| Earnings per share (diluted) | 2.03 | 1.60 | 0.43 | 27 | % | |||||||||||
| Weighted average number of | ||||||||||||||||
| common shares outstanding: | ||||||||||||||||
| Basic | 17,659,625 | 16,318,868 | 1,340,757 | 8 | % | |||||||||||
| Diluted | 17,943,685 | 16,514,998 | 1,428,687 | 9 | % | |||||||||||
| Performance Ratios: | ||||||||||||||||
| Return on average assets (ROAA) | 0.89 | % | 0.72 | % | 0.17 | % | 24 | % | ||||||||
| Return on average equity (ROAE) | 10.12 | % | 8.92 | % | 1.20 | % | 13 | % | ||||||||
| Net interest margin (tax- equivalent basis) | 2.80 | % | 2.74 | % | 0.06 | % | 2 | % | ||||||||
| Efficiency ratio (C) | 58.90 | % | 60.57 | % | -1.67 | % | -3 | % | ||||||||
| Operating expenses / average | ||||||||||||||||
| assets annualized | 2.09 | % | 2.06 | % | 0.03 | % | 1 | % | ||||||||
| (A) | Beginning July 1, 2016, the FDIC assessment system was revised resulting in a reduction of the Company’s assessment rate. |
| (B) | Total revenue includes net interest income plus total other income. |
| (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 beginning on page 24. |
21
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 4,415 | $ | 4,446 | $ | 4,119 | $ | 4,910 | $ | 24,580 | ||||||||||
| Federal funds sold | 101 | 101 | 101 | 101 | 101 | |||||||||||||||
| Interest-earning deposits | 108,931 | 88,793 | 89,600 | 113,953 | 138,010 | |||||||||||||||
| Total cash and cash equivalents | 113,447 | 93,340 | 93,820 | 118,964 | 162,691 | |||||||||||||||
| Securities available for sale | 327,633 | 315,112 | 315,224 | 300,232 | 305,388 | |||||||||||||||
| FHLB and FRB stock, at cost | 13,378 | 13,589 | 18,487 | 15,436 | 13,813 | |||||||||||||||
| Residential mortgage (A) | 577,340 | 605,015 | 611,316 | 571,496 | 528,570 | |||||||||||||||
| Multifamily mortgage | 1,388,958 | 1,441,851 | 1,504,581 | 1,468,890 | 1,459,594 | |||||||||||||||
| Commercial mortgage | 626,656 | 625,467 | 609,444 | 573,253 | 551,233 | |||||||||||||||
| Commercial loans (A) | 958,481 | 845,831 | 800,927 | 687,805 | 637,102 | |||||||||||||||
| Construction loans | — | — | — | — | 1,405 | |||||||||||||||
| Consumer loans | 86,277 | 81,671 | 72,943 | 69,802 | 69,654 | |||||||||||||||
| Home equity lines of credit | 67,497 | 68,787 | 67,051 | 68,055 | 65,682 | |||||||||||||||
| Other loans | 402 | 815 | 458 | 477 | 492 | |||||||||||||||
| Total loans | 3,705,611 | 3,669,437 | 3,666,720 | 3,439,778 | 3,313,732 | |||||||||||||||
| Less: Allowances for loan and lease losses | 36,440 | 35,915 | 35,751 | 33,610 | 32,208 | |||||||||||||||
| Net loans | 3,669,171 | 3,633,522 | 3,630,969 | 3,406,168 | 3,281,524 | |||||||||||||||
| Premises and equipment | 29,476 | 29,832 | 29,806 | 30,113 | 30,371 | |||||||||||||||
| Other real estate owned | 2,090 | 137 | 373 | 671 | 534 | |||||||||||||||
| Accrued interest receivable | 9,452 | 6,803 | 6,776 | 6,823 | 8,153 | |||||||||||||||
| Bank owned life insurance | 44,586 | 44,380 | 44,172 | 43,992 | 43,806 | |||||||||||||||
| Deferred tax assets, net | 552 | 16,636 | 16,912 | 15,325 | 15,320 | |||||||||||||||
| Goodwill and other intangible assets (B) | 23,836 | 15,064 | 3,095 | 3,126 | 3,157 | |||||||||||||||
| Other assets (C) | 26,926 | 7,917 | 6,045 | 6,712 | 13,876 | |||||||||||||||
| TOTAL ASSETS | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | $ | 3,947,562 | $ | 3,878,633 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 539,304 | $ | 557,117 | $ | 548,427 | $ | 528,554 | $ | 489,485 | ||||||||||
| Interest-bearing demand deposits | 1,152,483 | 1,144,714 | 1,085,805 | 1,015,178 | 1,023,081 | |||||||||||||||
| Savings | 119,556 | 121,830 | 121,480 | 122,262 | 120,056 | |||||||||||||||
| Money market accounts | 1,091,385 | 1,046,997 | 1,081,366 | 1,049,909 | 1,048,494 | |||||||||||||||
| Certificates of deposit – Retail | 543,035 | 528,251 | 475,395 | 440,991 | 457,000 | |||||||||||||||
| Subtotal “customer” deposits | 3,445,763 | 3,398,909 | 3,312,473 | 3,156,894 | 3,138,116 | |||||||||||||||
| IB Demand – Brokered | 180,000 | 180,000 | 180,000 | 180,000 | 180,000 | |||||||||||||||
| Certificates of deposit – Brokered | 72,591 | 83,788 | 88,780 | 93,750 | 93,721 | |||||||||||||||
| Total deposits | 3,698,354 | 3,662,697 | 3,581,253 | 3,430,644 | 3,411,837 | |||||||||||||||
| Overnight borrowings | — | — | 87,000 | 34,550 | — | |||||||||||||||
| Federal home loan bank advances | 37,898 | 49,898 | 58,795 | 58,795 | 61,795 | |||||||||||||||
| Capital lease obligation | 9,072 | 9,240 | 9,407 | 9,556 | 9,693 | |||||||||||||||
| Subordinated debt, net | 83,024 | 48,862 | 48,829 | 48,796 | 48,764 | |||||||||||||||
| Other liabilities | 28,521 | 25,699 | 23,548 | 24,293 | 22,334 | |||||||||||||||
| TOTAL LIABILITIES | 3,856,869 | 3,796,396 | 3,808,832 | 3,606,634 | 3,554,423 | |||||||||||||||
| Shareholders’ equity | 403,678 | 379,936 | 356,847 | 340,928 | 324,210 | |||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | $ | 3,947,562 | $ | 3,878,633 | ||||||||||
| Assets under management and / or | ||||||||||||||||||||
| administration at Peapack-Gladstone | ||||||||||||||||||||
| Bank’s Private Wealth Management | ||||||||||||||||||||
| Division (market value, not | ||||||||||||||||||||
| included above-dollars in billions) | $ | 5.5 | $ | 4.8 | $ | 3.9 | $ | 3.8 | $ | 3.7 | ||||||||||
|
(A)
|
Includes loans held for sale at fair value and/or lower of cost or market.
|
|
(B)
|
Includes goodwill and intangibles from the Murphy Capital Management and the Quadrant Capital Management acquisitions completed in August and November 2017, respectively. |
| (C) | Increase principally due to prepaid taxes. |
22
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
| Asset Quality: | ||||||||||||||||||||
| Loans past due over 90 days | ||||||||||||||||||||
| and still accruing | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Nonaccrual loans (A) | 13,530 | 15,367 | 15,643 | 11,494 | 11,264 | |||||||||||||||
| Other real estate owned | 2,090 | 137 | 373 | 671 | 534 | |||||||||||||||
| Total nonperforming assets | $ | 15,620 | $ | 15,504 | $ | 16,016 | $ | 12,165 | $ | 11,798 | ||||||||||
| Nonperforming loans to | ||||||||||||||||||||
| total loans | 0.37 | % | 0.42 | % | 0.43 | % | 0.33 | % | 0.34 | % | ||||||||||
| Nonperforming assets to | ||||||||||||||||||||
| total assets | 0.37 | % | 0.37 | % | 0.38 | % | 0.31 | % | 0.30 | % | ||||||||||
| Performing TDRs (B)(C) | $ | 9,514 | $ | 9,658 | $ | 9,725 | $ | 15,030 | $ | 17,784 | ||||||||||
| Loans past due 30 through 89 | ||||||||||||||||||||
| days and still accruing | $ | 246 | $ | 589 | $ | 1,232 | $ | 622 | $ | 1,356 | ||||||||||
| Classified loans | $ | 41,706 | $ | 44,170 | $ | 43,608 | $ | 43,002 | $ | 45,798 | ||||||||||
| Impaired loans | $ | 23,065 | $ | 25,046 | $ | 25,294 | $ | 26,546 | $ | 29,071 | ||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||
| Beginning of period | $ | 35,915 | $ | 35,751 | $ | 33,610 | $ | 32,208 | $ | 30,616 | ||||||||||
| Provision for loan and lease losses | 1,650 | 400 | 2,200 | 1,600 | 1,500 | |||||||||||||||
| Charge-offs, net | (1,125 | ) | (236 | ) | (59 | ) | (198 | ) | 92 | |||||||||||
| End of period | $ | 36,440 | $ | 35,915 | $ | 35,751 | $ | 33,610 | $ | 32,208 | ||||||||||
| ALLL to nonperforming loans | 269.33 | % | 233.72 | % | 228.54 | % | 292.41 | % | 285.94 | % | ||||||||||
| ALLL to total loans | 0.98 | % | 0.98 | % | 0.98 | % | 0.98 | % | 0.97 | % | ||||||||||
| (A) | December 31, 2017, September 30, 2017 and June 30, 2017 includes one commercial mortgage totaling $4.9 million. The loan was past maturity at June 30, 2017, however interest payments continued to be made. The loan is secured by real estate valued at $7.0 million as of October 2017. |
| (B) | Amounts reflect TDRs that are paying according to restructured terms. |
| (C) | Amount does not include $8.1 million at December 31, 2017, $9.1 million at September 30, 2017, $9.6 million at June 30, 2017, $4.6 million at March 31, 2017 and $4.5 million at December 31, 2016 of TDRs included in nonaccrual loans. |
23
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| Dec 31, | Sept 30, | Dec 31, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| Capital Adequacy | ||||||||||||
| Equity to total assets (A) | 9.47 | % | 9.10 | % | 8.36 | % | ||||||
| Tangible Equity to tangible assets (B) | 8.97 | % | 8.77 | % | 8.28 | % | ||||||
| Book value per share (C) | $ | 21.68 | $ | 20.86 | $ | 18.79 | ||||||
| Tangible Book Value per share (D) | $ | 20.40 | $ | 20.03 | $ | 18.60 | ||||||
| Dec 31, | Sept 30, | Dec 31, | ||||||||||||||||||||||
| 2017 | 2017 | 2016 | ||||||||||||||||||||||
| Regulatory Capital – Holding Company | ||||||||||||||||||||||||
| Tier I leverage | $ | 382,870 | 9.04 | % | $ | 365,300 | 8.75 | % | $ | 323,045 | 8.35 | % | ||||||||||||
| Tier I capital to risk weighted assets | 382,870 | 11.31 | 365,300 | 10.78 | 323,045 | 10.60 | ||||||||||||||||||
| Common equity tier I capital ratio | ||||||||||||||||||||||||
| to risk-weighted assets | 382,868 | 11.31 | 365,298 | 10.78 | 323,042 | 10.60 | ||||||||||||||||||
| Tier I & II capital to | ||||||||||||||||||||||||
| risk-weighted assets | 502,334 | 14.84 | 450,078 | 13.28 | 404,017 | 13.25 | ||||||||||||||||||
| Regulatory Capital – Bank | ||||||||||||||||||||||||
| Tier I leverage | $ | 448,812 | 10.61 | % | $ | 401,988 | 9.63 | % | $ | 360,097 | 9.31 | % | ||||||||||||
| Tier I capital to risk weighted assets | 448,812 | 13.27 | 401,988 | 11.86 | 360,097 | 11.82 | ||||||||||||||||||
| Common equity tier I capital ratio | ||||||||||||||||||||||||
| to risk-weighted assets | 448,810 | 13.27 | 401,986 | 11.86 | 360,094 | 11.82 | ||||||||||||||||||
| Tier I & II capital to | ||||||||||||||||||||||||
| risk-weighted assets | 485,252 | 14.34 | 437,904 | 12.92 | 392,305 | 12.87 | ||||||||||||||||||
| (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 beginning on page 24. |
| (C) | Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding. |
| (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. See Non-GAAP financial measures reconciliation tables beginning on page 24. |
24
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
| For the Quarters Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
| Residential loans retained | $ | 20,791 | $ | 22,322 | $ | 54,833 | $ | 64,831 | $ | 53,324 | ||||||||||
| Residential loans sold | 8,282 | 10,596 | 6,491 | 3,115 | 11,429 | |||||||||||||||
| Total residential loans | 29,073 | 32,918 | 61,324 | 67,946 | 64,753 | |||||||||||||||
| Commercial real estate | 19,090 | 24,870 | 46,931 | 33,216 | 56,793 | |||||||||||||||
| Multifamily | 5,400 | 85,488 | 78,824 | 47,125 | 26,300 | |||||||||||||||
| Commercial (C&I) loans (A) (B) | 141,672 | 131,321 | 158,476 | 128,130 | 78,038 | |||||||||||||||
| SBA | 9,640 | 4,560 | 3,900 | 1,700 | 2,050 | |||||||||||||||
| Wealth lines of credit (A) | 14,800 | 15,200 | 14,905 | 7,200 | 2,400 | |||||||||||||||
| Total commercial loans | 190,602 | 261,439 | 303,036 | 217,371 | 165,581 | |||||||||||||||
| Installment loans | 802 | 1,967 | 2,075 | 2,146 | 1,826 | |||||||||||||||
| Home equity lines of credit (A) | 4,513 | 6,879 | 5,444 | 6,973 | 5,878 | |||||||||||||||
| Total loans closed | $ | 224,990 | $ | 303,203 | $ | 371,879 | $ | 294,436 | $ | 238,038 | ||||||||||
| For the Twelve Months Ended | ||||||||
| Dec 31, | Dec 31, | |||||||
| 2017 | 2016 | |||||||
| Residential loans retained | $ | 162,777 | $ | 146,868 | ||||
| Residential loans sold | 28,484 | 64,840 | ||||||
| Total residential loans | 191,261 | 211,708 | ||||||
| Commercial real estate | 124,107 | 159,485 | ||||||
| Multifamily | 216,837 | 359,494 | ||||||
| Commercial (C&I) loans (A) (B) | 559,599 | 266,533 | ||||||
| SBA | 19,800 | 8,415 | ||||||
| Wealth lines of credit (A) | 52,105 | 6,185 | ||||||
| Total commercial loans | 972,448 | 800,112 | ||||||
| Installment loans | 6,990 | 4,980 | ||||||
| Home equity lines of credit (A) | 23,809 | 30,981 | ||||||
| Total loans closed | $ | 1,194,508 | $ | 1,047,781 | ||||
| (A) | Includes loans and lines of credit that closed in the period, but not necessarily funded. |
| (B) | Includes equipment lease finance. |
25
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| Dec 31, 2017 | Dec 31, 2016 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 316,148 | $ | 1,726 | 2.18 | % | $ | 241,443 | $ | 1,202 | 1.99 | % | ||||||||||||
| Tax-exempt (1) (2) | 24,836 | 183 | 2.95 | 30,179 | 216 | 2.86 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 598,407 | 4,880 | 3.26 | 505,366 | 4,062 | 3.22 | ||||||||||||||||||
| Commercial mortgages | 2,053,221 | 19,039 | 3.71 | 2,035,193 | 17,798 | 3.50 | ||||||||||||||||||
| Commercial | 886,170 | 9,263 | 4.18 | 605,781 | 5,888 | 3.89 | ||||||||||||||||||
| Commercial construction | — | — | — | 832 | 9 | 4.33 | ||||||||||||||||||
| Installment | 85,390 | 656 | 3.07 | 70,051 | 539 | 3.08 | ||||||||||||||||||
| Home equity | 68,485 | 667 | 3.90 | 64,371 | 530 | 3.29 | ||||||||||||||||||
| Other | 638 | 11 | 6.90 | 485 | 12 | 9.90 | ||||||||||||||||||
| Total loans | 3,692,311 | 34,516 | 3.74 | 3,282,079 | 28,838 | 3.51 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 125,495 | 305 | 0.97 | 223,188 | 257 | 0.46 | ||||||||||||||||||
| Total interest-earning assets | 4,158,891 | 36,730 | 3.53 | % | 3,776,990 | 30,513 | 3.23 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 5,096 | 10,747 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (37,000 | ) | (31,575 | ) | ||||||||||||||||||||
| Premises and equipment | 29,670 | 30,441 | ||||||||||||||||||||||
| Other assets | 96,607 | 85,224 | ||||||||||||||||||||||
| Total noninterest-earning assets | 94,373 | 94,837 | ||||||||||||||||||||||
| Total assets | $ | 4,253,264 | $ | 3,871,827 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 1,135,660 | $ | 1,591 | 0.56 | % | $ | 992,075 | $ | 724 | 0.29 | % | ||||||||||||
| Money markets | 1,101,862 | 1,781 | 0.65 | 1,021,819 | 864 | 0.34 | ||||||||||||||||||
| Savings | 120,768 | 17 | 0.06 | 119,518 | 17 | 0.06 | ||||||||||||||||||
| Certificates of deposit – retail | 537,685 | 2,034 | 1.51 | 463,377 | 1,621 | 1.40 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,895,975 | 5,423 | 0.75 | 2,596,789 | 3,226 | 0.50 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 751 | 1.67 | 196,848 | 757 | 1.54 | ||||||||||||||||||
| Certificates of deposit – brokered | 74,529 | 445 | 2.39 | 93,704 | 501 | 2.14 | ||||||||||||||||||
| Total interest-bearing deposits | 3,150,504 | 6,619 | 0.84 | 2,887,341 | 4,484 | 0.62 | ||||||||||||||||||
| Borrowings | 51,265 | 267 | 2.08 | 67,958 | 332 | 1.95 | ||||||||||||||||||
| Capital lease obligation | 9,136 | 110 | 4.82 | 9,741 | 117 | 4.80 | ||||||||||||||||||
| Subordinated debt | 56,444 | 857 | 6.07 | 48,743 | 758 | 6.22 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,267,349 | 7,853 | 0.96 | 3,013,783 | 5,691 | 0.76 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 567,041 | 514,130 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 28,138 | 28,406 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 595,179 | 542,536 | ||||||||||||||||||||||
| Shareholders’ equity | 390,736 | 315,508 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 4,253,264 | $ | 3,871,827 | ||||||||||||||||||||
| Net interest income | $ | 28,877 | $ | 24,822 | ||||||||||||||||||||
| Net interest spread | 2.57 | % | 2.47 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.78 | % | 2.63 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
26
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| Dec 31, 2017 | Sept 30, 2017 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 316,148 | $ | 1,726 | 2.18 | % | $ | 302,669 | $ | 1,564 | 2.07 | % | ||||||||||||
| Tax-exempt (1) (2) | 24,836 | 183 | 2.95 | 27,099 | 194 | 2.86 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 598,407 | 4,880 | 3.26 | 612,904 | 4,934 | 3.22 | ||||||||||||||||||
| Commercial mortgages | 2,053,221 | 19,039 | 3.71 | 2,120,360 | 19,879 | 3.75 | ||||||||||||||||||
| Commercial | 886,170 | 9,263 | 4.18 | 795,063 | 9,654 | 4.86 | ||||||||||||||||||
| Installment | 85,390 | 656 | 3.07 | 77,616 | 611 | 3.15 | ||||||||||||||||||
| Home equity | 68,485 | 667 | 3.90 | 67,251 | 653 | 3.88 | ||||||||||||||||||
| Other | 638 | 11 | 6.90 | 563 | 11 | 7.82 | ||||||||||||||||||
| Total loans | 3,692,311 | 34,516 | 3.74 | 3,673,757 | 35,742 | 3.89 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 125,495 | 305 | 0.97 | 103,103 | 276 | 1.07 | ||||||||||||||||||
| Total interest-earning assets | 4,158,891 | 36,730 | 3.53 | % | 4,106,729 | 37,776 | 3.68 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 5,096 | 4,732 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (37,000 | ) | (36,547 | ) | ||||||||||||||||||||
| Premises and equipment | 29,670 | 29,996 | ||||||||||||||||||||||
| Other assets | 96,607 | 86,493 | ||||||||||||||||||||||
| Total noninterest-earning assets | 94,373 | 84,674 | ||||||||||||||||||||||
| Total assets | $ | 4,253,264 | $ | 4,191,403 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 1,135,660 | $ | 1,591 | 0.56 | % | $ | 1,128,112 | $ | 1,487 | 0.53 | % | ||||||||||||
| Money markets | 1,101,862 | 1,781 | 0.65 | 1,084,009 | 1,580 | 0.58 | ||||||||||||||||||
| Savings | 120,768 | 17 | 0.06 | 120,893 | 16 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 537,685 | 2,034 | 1.51 | 502,637 | 1,864 | 1.48 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,895,975 | 5,423 | 0.75 | 2,835,651 | 4,947 | 0.70 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 751 | 1.67 | 180,000 | 737 | 1.64 | ||||||||||||||||||
| Certificates of deposit – brokered | 74,529 | 445 | 2.39 | 87,095 | 481 | 2.21 | ||||||||||||||||||
| Total interest-bearing deposits | 3,150,504 | 6,619 | 0.84 | 3,102,746 | 6,165 | 0.79 | ||||||||||||||||||
| Borrowings | 51,265 | 267 | 2.08 | 98,114 | 439 | 1.79 | ||||||||||||||||||
| Capital lease obligation | 9,136 | 110 | 4.82 | 9,303 | 112 | 4.82 | ||||||||||||||||||
| Subordinated debt | 56,444 | 857 | 6.07 | 48,841 | 783 | 6.41 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,267,349 | 7,853 | 0.96 | 3,259,004 | 7,499 | 0.92 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 567,041 | 538,484 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 28,138 | 25,807 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 595,179 | 564,291 | ||||||||||||||||||||||
| Shareholders’ equity | 390,736 | 368,108 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 4,253,264 | $ | 4,191,403 | ||||||||||||||||||||
| Net interest income | $ | 28,877 | $ | 30,277 | ||||||||||||||||||||
| Net interest spread | 2.57 | % | 2.76 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.78 | % | 2.95 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
27
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
TWELVE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| Dec 31, 2017 | Dec 31, 2016 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 300,590 | $ | 6,271 | 2.09 | % | $ | 208,980 | $ | 4,018 | 1.92 | % | ||||||||||||
| Tax-exempt (1) (2) | 26,046 | 766 | 2.94 | 27,225 | 840 | 3.09 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 586,722 | 19,025 | 3.24 | 483,088 | 15,790 | 3.27 | ||||||||||||||||||
| Commercial mortgages | 2,073,804 | 75,304 | 3.63 | 2,022,936 | 70,775 | 3.50 | ||||||||||||||||||
| Commercial | 761,401 | 32,564 | 4.28 | 564,598 | 22,206 | 3.93 | ||||||||||||||||||
| Commercial construction | 96 | 4 | 4.17 | 991 | 41 | 4.14 | ||||||||||||||||||
| Installment | 75,995 | 2,322 | 3.06 | 61,362 | 1,737 | 2.83 | ||||||||||||||||||
| Home equity | 67,420 | 2,489 | 3.69 | 59,555 | 1,964 | 3.30 | ||||||||||||||||||
| Other | 550 | 45 | 8.18 | 474 | 47 | 9.92 | ||||||||||||||||||
| Total loans | 3,565,988 | 131,753 | 3.69 | 3,193,004 | 112,560 | 3.53 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.24 | ||||||||||||||||||
| Interest-earning deposits | 115,567 | 1,021 | 0.88 | 128,488 | 551 | 0.43 | ||||||||||||||||||
| Total interest-earning assets | 4,008,292 | 139,811 | 3.49 | % | 3,557,798 | 117,969 | 3.32 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 8,986 | 9,580 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (35,246 | ) | (29,068 | ) | ||||||||||||||||||||
| Premises and equipment | 30,021 | 29,839 | ||||||||||||||||||||||
| Other assets | 83,060 | 86,228 | ||||||||||||||||||||||
| Total noninterest-earning assets | 86,821 | 96,579 | ||||||||||||||||||||||
| Total assets | $ | 4,095,113 | $ | 3,654,377 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 1,092,545 | $ | 5,039 | 0.46 | % | $ | 926,713 | $ | 2,547 | 0.27 | % | ||||||||||||
| Money markets | 1,076,492 | 5,499 | 0.51 | 894,215 | 2,775 | 0.31 | ||||||||||||||||||
| Savings | 120,896 | 66 | 0.05 | 119,043 | 68 | 0.06 | ||||||||||||||||||
| Certificates of deposit – retail | 486,960 | 7,118 | 1.46 | 455,946 | 6,270 | 1.38 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,776,893 | 17,722 | 0.64 | 2,395,917 | 11,660 | 0.49 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 2,934 | 1.63 | 199,208 | 3,020 | 1.52 | ||||||||||||||||||
| Certificates of deposit – brokered | 86,967 | 1,910 | 2.20 | 93,674 | 1,995 | 2.13 | ||||||||||||||||||
| Total interest-bearing deposits | 3,043,860 | 22,566 | 0.74 | 2,688,799 | 16,675 | 0.62 | ||||||||||||||||||
| Borrowings | 71,788 | 1,363 | 1.90 | 132,985 | 1,764 | 1.33 | ||||||||||||||||||
| Capital lease obligation | 9,375 | 451 | 4.81 | 9,940 | 478 | 4.81 | ||||||||||||||||||
| Subordinated debt | 50,733 | 3,206 | 6.32 | 26,679 | 1,696 | 6.36 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,175,756 | 27,586 | 0.87 | 2,858,403 | 20,613 | 0.72 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 535,451 | 473,536 | ||||||||||||||||||||||
| Accrued expenses and | ||||||||||||||||||||||||
| other liabilities | 23,413 | 25,530 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 558,864 | 499,066 | ||||||||||||||||||||||
| Shareholders’ equity | 360,493 | 296,908 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| shareholders’ equity | $ | 4,095,113 | $ | 3,654,377 | ||||||||||||||||||||
| Net interest income | $ | 112,225 | $ | 97,356 | ||||||||||||||||||||
| Net interest spread | 2.62 | % | 2.60 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.80 | % | 2.74 | % | ||||||||||||||||||||
| (1) | Average balances for available for sale securities are based on amortized cost. |
| (2) | Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. |
| (3) | Loans are stated net of unearned income and include nonaccrual loans. |
| (4) | Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. |
28
PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding. 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 | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| Tangible Book Value Per Share | 2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||||||
| Shareholders’ equity | $ | 403,678 | $ | 379,936 | $ | 356,847 | $ | 340,928 | $ | 324,210 | ||||||||||
| Less: Intangible assets, net | 23,836 | 15,064 | 3,095 | 3,126 | 3,157 | |||||||||||||||
| Tangible equity | 379,842 | 364,872 | 353,752 | 337,802 | 321,053 | |||||||||||||||
| Period end shares outstanding | 18,619,634 | 18,214,759 | 17,846,404 | 17,579,274 | 17,257,995 | |||||||||||||||
| Tangible book value per share | $ | 20.40 | $ | 20.03 | $ | 19.82 | $ | 19.22 | $ | 18.60 | ||||||||||
| Book value per share | 21.68 | 20.86 | 20.00 | 19.39 | 18.79 | |||||||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||||||||||
| Total assets | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | $ | 3,947,562 | $ | 3,878,633 | ||||||||||
| Less: Intangible assets, net | 23,836 | 15,064 | 3,095 | 3,126 | 3,157 | |||||||||||||||
| Tangible assets | 4,236,711 | 4,161,268 | 4,162,584 | 3,944,436 | 3,875,476 | |||||||||||||||
| Tangible equity to tangible assets | 8.97 | % | 8.77 | % | 8.50 | % | 8.56 | % | 8.28 | % | ||||||||||
| Equity to assets | 9.47 | % | 9.10 | % | 8.57 | % | 8.64 | % | 8.36 | % | ||||||||||
29
| Three Months Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| Efficiency Ratio | 2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||||||
| Net interest income | $ | 28,586 | $ | 29,992 | $ | 26,972 | $ | 25,591 | $ | 24,580 | ||||||||||
| Total other income | 10,606 | 8,831 | 8,171 | 7,019 | 7,672 | |||||||||||||||
| Less: Gain on loans held for sale | ||||||||||||||||||||
| at lower of cost or fair value | 378 | 34 | — | — | 353 | |||||||||||||||
| Less: Securities gains, net | — | — | — | — | — | |||||||||||||||
| Total recurring revenue | 38,814 | 38,789 | 35,143 | 32,610 | 31,899 | |||||||||||||||
| Operating expenses | 24,251 | 21,961 | 20,095 | 19,304 | 18,965 | |||||||||||||||
| Total operating expense | 24,251 | 21,961 | 20,095 | 19,304 | 18,965 | |||||||||||||||
| Efficiency ratio | 62.48 | % | 56.62 | % | 57.18 | % | 59.20 | % | 59.45 | % | ||||||||||
| Twelve Months Ended | ||||||||
| Dec 31, | Dec 31, | |||||||
| Efficiency Ratio | 2017 | 2016 | ||||||
| Net interest income | $ | 111,141 | $ | 96,435 | ||||
| Total other income | 34,627 | 28,918 | ||||||
| Less: Gain on loans held for sale | ||||||||
| at lower of cost or fair value | 412 | 1,233 | ||||||
| Less: Securities gains, net | — | 119 | ||||||
| Total recurring revenue | 145,356 | 124,001 | ||||||
| Operating expenses | 85,611 | 75,112 | ||||||
| Total operating expense | 85,611 | 75,112 | ||||||
| Efficiency ratio | 58.90 | % | 60.57 | % | ||||
30