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 FIRST QUARTER AND

DECLARES ITS QUARTERLY CASH DIVIDEND

 

Bedminster, N.J. – April 27, 2018 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) recorded net income of $10.81 million and diluted earnings per share of $0.57 for the quarter ended March 31, 2018, compared to $7.98 million and $0.46, respectively, for the quarter ended March 31, 2017, reflecting increases of $2.83 million, or 35 percent, and $0.11 per share, or 24 percent, respectively.

Executive Summary:

The following tables summarize specified financial measures for the periods shown. The explanatory footnotes following each table are integral to the table.

March 2018 Quarter Compared to Prior Year Quarter

 

		Qtr ended				Qtr ended
		March				March				Increase/
(Dollars in millions, except per share data)		2018 (1)				2017				(Decrease)
Net interest income		$	28.39			$	25.59				2.80				11	%
Provision for loan and lease losses			1.25				1.60				(0.35	)			(22	)
Net interest income after provision			27.14				23.99				3.15				13
Wealth management fee income			8.37				4.82				3.55				74
Other income			1.85				2.20				(0.35	)			(16	)
Total other income			10.22				7.02				3.20				46
Operating expenses			23.34				19.30				4.04				21
Pretax income			14.02				11.71				2.31				20
Income tax expense			3.21	(2)			3.73	(2)			(0.52	)			(14	)
Net income		$	10.81			$	7.98				2.83				35	%
Diluted EPS		$	0.57			$	0.46				0.11				24	%
Return on average assets annualized			1.01	%			0.82	%			0.19
Return on average equity annualized			10.54	%			9.62	%			0.92

 

(1)	The March 2018 quarter included results of operations of the Equipment Finance team hired in April 2017, Murphy Capital Management, acquired effective August 1, 2017, and Quadrant Capital Management, acquired effective November 1, 2017.

(2)

The March 2018 quarter reflected the reduced Federal income tax rate due to the new tax law signed in December 2017.  The March 2018 quarter included a $362 thousand reduction in income taxes, while the March 2017 quarter included a $662 thousand reduction in income taxes, both associated with the vesting of restricted stock under ASU 2016-09.

   

 

March 2018 Quarter Compared to Linked Quarter

   

		Qtr ended				Qtr ended
		March				December				Increase/
(Dollars in millions, except per share data)		2018				2017				(Decrease)
Net interest income		$	28.39			$	28.59			$	(0.20	)			(1	)%
Provision for loan and lease losses			1.25				1.65				(0.40	)			(24	)
Net interest income after provision			27.14				26.94				0.20				1
Wealth management fee income			8.37	(1)			7.49				0.88				12
Other income			1.85				3.11	(2)			(1.26	)			(41	)
Total other income			10.22				10.60				(0.38	)			(4	)
Operating expenses			23.34	(1)			24.25	(3)			(0.91	)			(4	)
Pretax income			14.02				13.29				0.73				5
Income tax expense			3.21	(5)			2.92	(4)			0.29				10
Net income		$	10.81			$	10.37			$	0.44				4	%
Diluted EPS		$	0.57			$	0.56			$	0.01				2	%
Return on average assets annualized			1.01	%			0.98	%			0.03
Return on average equity annualized			10.54	%			10.61	%			(0.07	)

 

(1)	The March 2018 quarter included a full three months of operations of Quadrant Capital Management, acquired effective November 1, 2017. (The December 2017 quarter included two months of operations.)
(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 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.
(4)	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.
(5)	The March 2018 quarter reflected the reduced Federal income tax rate due to the new tax law. The March 2018 quarter also included a $362 thousand reduction in income taxes, associated with the vesting of restricted stock under ASU 2016-09.

 

Douglas L. Kennedy, President and CEO, said “We had a good start to 2018, as we continued to execute on our strategic plan – Expanding Our Reach. Earnings per share growth was 24 percent over the same quarter last year and return on average equity was 10.54 percent for the first quarter of 2018.”

 

Highlights for the quarter included:

·

Wealth Management remains integral to the strategy and diversified revenue sources:

o

The March 2018 quarter included results from both Quadrant Capital Management, acquired November 1, 2017, and Murphy Capital Management, acquired August 1, 2017.

o

At March 31, 2018, the market value of AUM/AUA at the Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) increased $1.8 billion to $5.6 billion from $3.8 billion at March 31, 2017, reflecting growth of 47 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 $8.4 million for the quarter ended March 31, 2018, an increase of $3.5 million, or 74 percent, from $4.8 million for the quarter ended March 31, 2017.

o

Wealth management fee income, comprised approximately 22 percent of the Company’s total revenue for the quarter ended March 31, 2018, contributed significantly to the Company’s diversified revenue sources.

o

In addition to wealth income, also contributing to the Company’s diversified revenue sources is fee income related to loan level, back-to-back swaps, and gain on sale of SBA loans. (At March 31, 2018, there were approximately $3 million of SBA loans held for sale).

 

·

The balance sheet growth was managed with a focus on Commercial and Industrial lending:

o

Loans at March 31, 2018 totaled $3.71 billion. This reflected net growth of $272 million, or 8 percent, when compared to the $3.44 billion at March 31, 2017.

o

During the second quarter of 2017, the Company hired a team of highly experienced bankers to focus on equipment financing. Net outstanding financings from this business totaled $178 million as of March 31, 2018, and were included in total commercial and industrial (“C&I”) loans.

o

Total C&I loans at March 31, 2018 were $997 million. This reflected net growth of $309 million (45 percent) when compared to $688 million in C&I loans at March 31, 2017.

o

The Company continued to manage its balance sheet such that lower yielding multifamily loans decline as a percentage of the overall loan portfolio and higher yielding C&I loans become a larger percentage of the overall loan portfolio. As of March 31, 2018, total C&I loans comprised 27 percent of the total loan portfolio, as compared to 20 percent a year earlier. As of March 31, 2018, total multifamily loans comprised of 37 percent of the total loan portfolio, as compared to 43 percent a year earlier.

o

The Bank’s concentration in multifamily and investor commercial real estate loans declined to 446 percent of risk based capital at March 31, 2018 from 552 percent at March 31, 2017.

o

Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) totaled $3.30 billion at March 31, 2018. This reflected net growth of $143 million (5 percent) when compared to $3.16 billion of total “customer” deposit balances at March 31, 2017. During the March 2018 quarter, $66 million of listing service deposits matured – the Company has chosen to not participate in listing service programs at this time, so maturing listing service deposits are not replaced with new listing service deposits. Other net deposit outflows in the quarter were concentrated primarily in a small number of larger depositors, who remain clients of the Company.

·

Capital and asset quality continue to be strong.

o

Asset quality metrics continued to be strong at March 31, 2018. Nonperforming assets at March 31, 2018 were $15.4 million, or 0.36 percent of total assets. Total loans past due 30 through 89 days and still accruing were $674 thousand, or 0.02 percent of total loans at March 31, 2018.

o

The Company’s and Bank’s capital ratios at March 31, 2018 all increased compared to the December 31, 2017 levels. These capital positions were benefitted by net income of $10.81 million and $10.62 million of voluntary share purchases under the Dividend Reinvestment Plan for the first quarter of 2018.

 

Supplemental Quarterly Details:

Wealth Management Business

In the March 2018 quarter, the Bank’s wealth management business generated $8.37 million in fee income compared to $7.49 million for the December 2017 quarter, and $4.82 million for the March 2017 quarter. 

The March 2018 quarter included a full three months of income related to Murphy Capital, which was acquired effective August 1, 2017, and three months of income related to Quadrant, which was acquired effective November 1, 2017. The March 2018 quarter included increased “recurring type” fee income (tied principally to asset management fees and custody fees), which was due to net inflows from new business, as well as additions to accounts from existing clients, partially offset by normal levels of disbursements and outflows.

John P. Babcock, President of the PGB Private Wealth Management Division, said “We continue to provide personalized, pro-active advice. Our new business pipeline continues to be strong and we expect continued growth through potential strategic acquisitions of wealth management firms, as well as organically.”

Loans

For the quarter ended March 31, 2018, total commercial and industrial loans grew $38 million (4 percent for the quarter, or 16 percent annualized) to $997 million at the end of the first quarter, compared to $958 million at end of year 2017. Additionally, commercial mortgage loans grew $17 million (3 percent for the quarter, or 11 percent annualized) to $644 million at the end of the first quarter, compared to $627 million at end of year 2017. This growth was principally funded by reductions in lower yielding multifamily and 1-4 family residential loans, as well as a partial paydown of a large investment credit line (included in consumer loans).

Mr. Kennedy said, “Our private banking business model addresses the needs and expectations of successful business owners and entrepreneurs. We have the capability to engage

in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service.”

Funding

As noted previously, during the first quarter of 2018, $66 million of listing service deposits matured - the Company has chosen not to participate in listing service programs at this time, so maturing listing service deposits are not replaced with new listing service deposits. Other net deposit outflows in the quarter were concentrated primarily in a small number of larger depositors, who remain clients of the Company.

Managed reductions in the lower yielding multifamily, 1-4 family residential, and investment credit line loan portfolios of $48 million funded the increased higher yielding C&I portfolio ($38 million), and commercial mortgage portfolio ($17 million). Capital growth of $19 million and overnight borrowings of $216 million funded the matured listing service deposits of $66 million, other net deposit outflows discussed above of $80 million, increased on balance sheet liquidity (cash and securities) by $60 million, and maturity of FHLB advances of $15 million.

In addition to approximately $501 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 $239 million was drawn as of March 31, 2018.

Mr. Kennedy noted, “The Company continues to focus on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company expects that our 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 result in growth of commercial deposits.”

Mr. Kennedy added, “Our overall loan growth will continue to be governed by our continued ability to generate value-added core deposits, and by our in-house relationship-based loan profitability model used to manage the origination of loans with competitive risk-adjusted returns.”

Net Interest Income / Net Interest Margin

Net interest income and net interest margin were $28.39 million and 2.76 percent for the first quarter of 2018, compared to $28.59 million and 2.78 percent for the fourth quarter of 2017, and compared to $25.59 million and 2.71 percent for the same quarter last year. Net interest income for the first quarter of 2018 benefitted from loan growth as well as $433 thousand (approximately 4 basis points of net interest margin) of prepayment premiums received on the prepayment of multifamily loans, which reflected a decrease from $945 thousand (approximately 9 basis points of net interest margin) for the December 2017 quarter and a decrease from $515 thousand (approximately 6 basis points of net interest margin) in the March 2017 quarter. In addition, the March 2018 quarter included three months of the subordinated debt issued in mid-December 2017.

Net interest margin for the first quarter of 2018 decreased when compared to the fourth quarter of 2017, and increased from the same quarter of 2017. The increase from the first quarter of 2017 was due to the effect of the increased market rates on our adjustable rate assets, partially offset by an increase in our cost of deposits and lower prepayment penalties. The decrease from the previous quarter was due to the significantly higher prepayment premiums in the December 2017 quarter. The issuance of $35 million of subordinated debt issued in mid-December 2017 also negatively impacted net interest margin slightly in the March 2018 quarter.

Excluding the effect of prepayment premiums, net interest margins would have been 2.72 percent, 2.69 percent, and 2.65 percent for the March 2018 quarter, December 2017 quarter, and the March 2017 quarter, respectively.

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, such income and margin may also be impacted by competitive pressures in attracting and/or retaining deposits.

Other Noninterest Income

The first quarter of 2018 included $31 thousand of income related to the Company’s SBA lending and sale program, compared to $774 thousand generated in the December 2017 quarter, and $155 thousand in the March 2017 quarter. At March 31, 2018, there were approximately $3 million of SBA loans held for sale. Such loans were sold in early April at a gain of approximately $275 thousand.

The first quarter of 2018 also included $252 thousand of loan level, back-to-back swap income compared to $179 thousand in the December 2017 quarter and $456 thousand in the March 2017 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.

The Company noted that income from both of these programs are not linear each quarter, as some quarters will be higher than others.

The March 2018 quarter included a negative $78 thousand mark to market adjustment of a CRA investment security which is classified as an equity security. Such security has been owned for years for CRA purposes, but under Accounting Standards Update 2016-01, Financial Instruments, equity securities now require a quarterly mark to market through the income statement.

Operating Expenses

The Company’s total operating expenses were $23.34 million for the quarter ended March 31, 2018, compared to $24.25 million for the December 2017 quarter and $19.30 million for the March 2017 quarter.

Compensation and employee benefits expense for the March 2018 quarter was $14.58 million compared to $15.30 million for the December 2017 quarter, and $11.91 million for the March 2017 quarter. The March 2018 quarter included a full quarter of expense related to the Equipment Finance team (who joined in April 2017) Murphy Capital (which closed in August 2017), and Quadrant (which closed in November 2017). Strategic hiring, normal salary increases and increased bonus/incentive accruals associated with the Company’s profitability and growth also contributed to the increase for the March 2018 quarter as compared to the March 2017 quarter. Additionally, the Company recorded expense of $1.3 million related to the separation of two senior officers in the December 2017 quarter.

Other expenses for the March 2018 quarter were $4.91 million compared to $5.27 million for the December 2017 quarter and $3.89 million for the March 2017 quarter. The March 2018 quarter included a full quarter of other expenses related to the Equipment Finance business, Murphy Capital, and Quadrant. The December 2017 quarter included approximately $300 thousand of investment banking fee expenses related to the Quadrant acquisition. Further, when compared to the March 2017 quarter, the March 2018 quarter included increased advertising and marketing expenses relating to various target marketing campaigns.

Income Taxes

The March 2018 quarter included a reduced Federal income tax rate due to the new tax law signed in December 2017. The March 2018 quarter also included a $362 thousand reduction in income taxes, while the March 2017 quarter included a $662 thousand reduction in income taxes, both associated with the vesting of restricted stock under ASU 2016-09. 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 effective tax rate for the March 2018 quarter was 22.9 percent. Excluding the $362 thousand benefit associated with ASU 2016-09, the effective tax rate for the March 2018 quarter would have been 25.5 percent.

 

Provision for Loan and Lease Losses / Asset Quality

For the quarter ended March 31, 2018, the Company’s provision for loan and lease losses was $1.25 million, compared to $1.65 million for the December 2017 quarter and $1.60 million for the March 2017 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, net loan growth and the composition of the loan portfolio.

At March 31, 2018, the allowance for loan and lease losses of $37.70 million (283 percent of nonperforming loans and 1.02 percent of total loans), compared to $36.44 million at December 31, 2017 (269 percent of nonperforming loans and 0.98 percent of total loans), and $33.61 million (292 percent of nonperforming loans and 0.98 percent of total loans) at March 31, 2017.

Nonperforming assets at March 31, 2018 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.4 million, or 0.36 percent of total assets, compared to $15.6 million, or 0.37 percent of total assets, at December 31, 2017 and $12.2 million, or 0.31 percent of total assets, at March 31, 2017. Total loans past due 30 through 89 days and still accruing were $674 thousand at March 31, 2018, compared to $246 thousand at December 31, 2017 and $622 thousand at March 31, 2017.

Capital / Dividends

The Company’s and Bank’s capital positions in the March 2018 quarter benefitted by net income of $10.81 million and $10.62 million of voluntary share purchases under the Dividend Reinvestment Plan. Voluntary share purchases in the Dividend Reinvestment Plan can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company – all of the share purchases in the March 2018 quarter were from authorized but unissued shares. The Company’s and Bank’s March 2018 and December 2017 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 April 24, 2018, the Company’s Board of Directors declared a cash dividend of $0.05 per share payable on May 22, 2018 to shareholders of record on May 8, 2018.

 

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.34 billion as of March 31, 2018. 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.

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 interest rate environment and/or 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

·

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, 2017. 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)

 

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,
		2018				2017				2017				2017				2017
Income Statement Data:
Interest income		$	37,068			$	36,439			$	37,491			$	33,412			$	31,385
Interest expense			8,675				7,853				7,499				6,440				5,794
Net interest income			28,393				28,586				29,992				26,972				25,591
Provision for loan and lease losses			1,250				1,650				400				2,200				1,600
Net interest income after
provision for loan and lease losses			27,143				26,936				29,592				24,772				23,991
Wealth management fee income			8,367				7,489				5,790				5,086				4,818
Service charges and fees			831				837				816				815				771
Bank owned life insurance			336				341				343				350				322
Gain on loans held for sale at fair
value (Mortgage banking)			94				122				141				91				47
Gain on loans held for sale at
lower of cost or fair value			—				378				34				—				—
Fee income related to loan level,
back-to-back swaps			252				179				888				1,291				456
Gain on sale of SBA loans			31				774				493				142				155
Other income			382				486				326				396				450
Securities losses, net			(78	)			—				—				—				—
Total other income			10,215				10,606				8,831				8,171				7,019
Salaries and employee benefits			14,579				15,296				13,996				12,751				11,913
Premises and equipment			3,270				3,194				2,945				3,033				2,816
FDIC insurance expense			580				495				583				602				686
Other expenses			4,908				5,266				4,437				3,709				3,889
Total operating expenses			23,337				24,251				21,961				20,095				19,304
Income before income taxes			14,021				13,291				16,462				12,848				11,706
Income tax expense			3,214				2,922				6,256				4,908				3,724
Net income		$	10,807			$	10,369			$	10,206			$	7,940			$	7,982
Total revenue (A)		$	38,608			$	39,192			$	38,823			$	35,143			$	32,610
Per Common Share Data:
Earnings per share (basic)		$	0.58			$	0.57			$	0.57			$	0.45			$	0.47
Earnings per share (diluted)			0.57				0.56				0.56				0.45				0.46
Weighted average number of
common shares outstanding:
Basic			18,608,309				18,197,708				17,800,153				17,505,638				17,121,631
Diluted			18,908,692				18,527,829				18,123,268				17,756,390				17,438,907
Performance Ratios:
Return on average assets annualized (ROAA)			1.01	%			0.98	%			0.97	%			0.79	%			0.82	%
Return on average equity annualized (ROAE)			10.54	%			10.61	%			11.09	%			9.06	%			9.62	%
Net interest margin (tax- equivalent basis)			2.76	%			2.78	%			2.95	%			2.76	%			2.71	%
GAAP efficiency ratio (B)			60.45	%			61.88	%			56.57	%			57.18	%			59.20	%
Operating expenses / average
assets annualized			2.19	%			2.28	%			2.10	%			2.00	%			1.97	%

 

(A)	Total revenue includes net interest income plus total other income.

(B)	Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables beginning on page 22.

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)

 

		As of
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
ASSETS
Cash and due from banks		$	4,223			$	4,415			$	4,446			$	4,119			$	4,910
Federal funds sold			101				101				101				101				101
Interest-earning deposits			149,192				108,931				88,793				89,600				113,953
Total cash and cash equivalents			153,516				113,447				93,340				93,820				118,964
Securities available for sale			342,553				327,633				315,112				315,224				300,232
Equity security (A)			4,746				—				—				—				—
FHLB and FRB stock, at cost			23,703				13,378				13,589				18,487				15,436
Residential mortgage (B)			567,885				577,340				605,015				611,316				571,496
Multifamily mortgage			1,366,712				1,388,958				1,441,851				1,504,581				1,468,890
Commercial mortgage			643,761				626,656				625,467				609,444				573,253
Commercial loans (B)			996,788				958,481				845,831				800,927				687,805
Consumer loans			71,580				86,277				81,671				72,943				69,802
Home equity lines of credit			64,570				67,497				68,787				67,051				68,055
Other loans			420				402				815				458				477
Total loans			3,711,716				3,705,611				3,669,437				3,666,720				3,439,778
Less: Allowances for loan and lease losses			37,696				36,440				35,915				35,751				33,610
Net loans			3,674,020				3,669,171				3,633,522				3,630,969				3,406,168
Premises and equipment			28,923				29,476				29,832				29,806				30,113
Other real estate owned			2,090				2,090				137				373				671
Accrued interest receivable			7,306				9,452				6,803				6,776				6,823
Bank owned life insurance			44,779				44,586				44,380				44,172				43,992
Deferred tax assets, net			629				552				16,636				16,912				15,325
Goodwill and other intangible assets (C)			23,656				23,836				15,064				3,095				3,126
Other assets (D)			30,573				26,926				7,917				6,045				6,712
TOTAL ASSETS		$	4,336,494			$	4,260,547			$	4,176,332			$	4,165,679			$	3,947,562
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	536,054			$	539,304			$	557,117			$	548,427			$	528,554
Interest-bearing demand deposits			1,089,980				1,152,483				1,144,714				1,085,805				1,015,178
Savings			126,026				119,556				121,830				121,480				122,262
Money market accounts			1,006,540				1,091,385				1,046,997				1,081,366				1,049,909
Certificates of deposit – Retail			540,942				543,035				528,251				475,395				440,991
Subtotal “customer” deposits			3,299,542				3,445,763				3,398,909				3,312,473				3,156,894
IB Demand – Brokered			180,000				180,000				180,000				180,000				180,000
Certificates of deposit – Brokered			72,614				72,591				83,788				88,780				93,750
Total deposits			3,552,156				3,698,354				3,662,697				3,581,253				3,430,644
Overnight borrowings			216,000				—				—				87,000				34,550
Federal home loan bank advances			22,898				37,898				49,898				58,795				58,795
Capital lease obligation			8,900				9,072				9,240				9,407				9,556
Subordinated debt, net			83,079				83,024				48,862				48,829				48,796
Other liabilities			31,055				28,521				25,699				23,548				24,293
TOTAL LIABILITIES			3,914,088				3,856,869				3,796,396				3,808,832				3,606,634
Shareholders’ equity			422,406				403,678				379,936				356,847				340,928
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	4,336,494			$	4,260,547			$	4,176,332			$	4,165,679			$	3,947,562
Assets under management and / or
administration at Peapack-Gladstone
Bank’s Private Wealth Management
Division (market value, not
included above-dollars in billions)		$	5.6			$	5.5			$	4.8			$	3.9			$	3.8

 

(A)	Represents investment in CRA Investment Fund.  This investment was classified as an equity security, carried at market, in accordance with the adoption of Accounting Standard Update 2016-01, Financial Instruments on January 1, 2018.

(B)	Includes loans held for sale at fair value and/or lower cost or market.

(C)	Includes goodwill and intangibles from the Murphy Capital Management and the Quadrant Capital Management acquisitions completed in August and November 2017, respectively.

(D)	Increase principally due to prepaid taxes.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

 

		As of
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
Asset Quality:
Loans past due over 90 days
and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			13,314				13,530				15,367				15,643				11,494
Other real estate owned			2,090				2,090				137				373				671
Total nonperforming assets		$	15,404			$	15,620			$	15,504			$	16,016			$	12,165
Nonperforming loans to
total loans			0.36	%			0.37	%			0.42	%			0.43	%			0.33	%
Nonperforming assets to
total assets			0.36	%			0.37	%			0.37	%			0.38	%			0.31	%
Performing TDRs (B)(C)		$	7,888			$	9,514			$	9,658			$	9,725			$	15,030
Loans past due 30 through 89
days and still accruing		$	674			$	246			$	589			$	1,232			$	622
Classified loans		$	55,945			$	41,706			$	44,170			$	43,608			$	43,002
Impaired loans		$	21,223			$	23,065			$	25,046			$	25,294			$	26,546
Allowance for loan and lease losses:
Beginning of period		$	36,440			$	35,915			$	35,751			$	33,610			$	32,208
Provision for loan and lease losses			1,250				1,650				400				2,200				1,600
Charge-offs, net			6				(1,125	)			(236	)			(59	)			(198	)
End of period		$	37,696			$	36,440			$	35,915			$	35,751			$	33,610
ALLL to nonperforming loans			283.13	%			269.33	%			233.72	%			228.54	%			292.41	%
ALLL to total loans			1.02	%			0.98	%			0.98	%			0.98	%			0.98	%

 

(A)

March 31, 2018, 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 $8.0 million at March 31, 2018, $8.1 million at December 31, 2017, $9.1 million at September 30, 2017, $9.6 million at June 30, 2017 and $4.6 million at March 31, 2017 of TDRs included in nonaccrual loans.

                         

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

 

		March 31,				Dec 31,				March 31,
		2018				2017				2017
Capital Adequacy
Equity to total assets (A)			9.74	%			9.47	%			8.64	%
Tangible Equity to tangible assets (B)			9.25	%			8.97	%			8.56	%
Book value per share (C)		$	22.32			$	21.68			$	19.39
Tangible Book Value per share (D)		$	21.07			$	20.40			$	19.22

 

  

		March 31,								Dec 31,								March 31,
		2018								2017								2017
Regulatory Capital – Holding Company
Tier I leverage		$	401,498				9.46	%		$	382,870				9.04	%		$	338,561				8.66	%
Tier I capital to risk weighted assets			401,498				11.77				382,870				11.31				338,561				10.79
Common equity tier I capital ratio
to risk-weighted assets			401,496				11.77				382,868				11.31				338,558				10.79
Tier I & II capital to
risk-weighted assets			522,273				15.32				502,334				14.84				420,967				13.41
Regulatory Capital – Bank
Tier I leverage		$	466,896				11.00	%		$	448,812				10.61	%		$	375,931				9.61	%
Tier I capital to risk weighted assets			466,896				13.70				448,812				13.27				375,931				11.98
Common equity tier I capital ratio
to risk-weighted assets			466,894				13.70				448,810				13.27				375,928				11.98
Tier I & II capital to
risk-weighted assets			504,592				14.81				485,252				14.34				409,541				13.05

 

(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 22.
(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 22.

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)

 

		For the Quarters Ended
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
Residential loans retained		$	11,642			$	20,791			$	22,322			$	54,833			$	64,831
Residential loans sold			7,672				8,282				10,596				6,491				3,115
Total residential loans			19,314				29,073				32,918				61,324				67,946
Commercial real estate			34,385				19,090				24,870				46,931				33,216
Multifamily			21,000				5,400				85,488				78,824				47,125
Commercial (C&I) loans (A) (B)			118,425				141,672				131,321				158,476				128,130
SBA			4,270				9,640				4,560				3,900				1,700
Wealth lines of credit (A)			19,238				14,800				15,200				14,905				7,200
Total commercial loans			197,318				190,602				261,439				303,036				217,371
Installment loans			1,350				802				1,967				2,075				2,146
Home equity lines of credit (A)			2,497				4,513				6,879				5,444				6,973
Total loans closed		$	220,479			$	224,990			$	303,203			$	371,879			$	294,436

 

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

 

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

		March 31, 2018												March 31, 2017
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)		$	339,556			$	1,925				2.27	%		$	289,237			$	1,504				2.08	%
Tax-exempt (1) (2)			24,304				198				3.26				27,152				199				2.93
Loans (2) (3):
Mortgages			574,400				4,731				3.29				544,854				4,473				3.28
Commercial mortgages			2,013,128				18,407				3.66				2,035,304				17,732				3.48
Commercial			969,496				10,487				4.33				648,266				6,380				3.94
Commercial construction			—				—				—				390				4				4.10
Installment			81,762				670				3.28				69,415				501				2.89
Home equity			65,158				660				4.05				66,311				557				3.36
Other			455				11				9.67				514				11				8.56
Total loans			3,704,399				34,966				3.78				3,365,054				29,658				3.53
Federal funds sold			101				—				0.25				101				—				0.25
Interest-earning deposits			99,471				357				1.44				137,589				264				0.77
Total interest-earning assets			4,167,831				37,446				3.59	%			3,819,133				31,625				3.31	%
Noninterest-earning assets:
Cash and due from banks			4,686												21,615
Allowance for loan and lease losses			(37,076	)											(32,913	)
Premises and equipment			29,256												30,279
Other assets			99,541												73,467
Total noninterest-earning assets			96,407												92,448
Total assets		$	4,264,238											$	3,911,581
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,143,152			$	1,757				0.61	%		$	1,029,012			$	862				0.34	%
Money markets			1,033,937				1,946				0.75				1,068,552				934				0.35
Savings			121,065				16				0.05				120,623				16				0.05
Certificates of deposit – retail			555,564				2,149				1.55				448,844				1,570				1.40
Subtotal interest-bearing deposits			2,853,718				5,868				0.82				2,667,031				3,382				0.51
Interest-bearing demand – brokered			180,000				680				1.51				180,000				720				1.60
Certificates of deposit – brokered			72,601				429				2.36				93,733				491				2.10
Total interest-bearing deposits			3,106,319				6,977				0.90				2,940,764				4,593				0.62
Borrowings			86,458				370				1.71				60,123				303				2.02
Capital lease obligation			8,963				107				4.78				9,605				115				4.79
Subordinated debt			83,043				1,221				5.88				48,775				783				6.42
Total interest-bearing liabilities			3,284,783				8,675				1.06				3,059,267				5,794				0.76
Noninterest-bearing liabilities:
Demand deposits			539,882												501,183
Accrued expenses and
other liabilities			29,358												19,151
Total noninterest-bearing liabilities			569,240												520,334
Shareholders’ equity			410,215												331,980
Total liabilities and
shareholders’ equity		$	4,264,238											$	3,911,581
Net interest income						$	28,771											$	25,831
Net interest spread											2.53	%											2.55	%
Net interest margin (4)											2.76	%											2.71	%

 

(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 21 percent federal tax rate at March 31, 2018 and a 35 percent federal tax rate at March 31, 2017.
(3)	Loans are stated net of unearned income and include nonaccrual loans.
(4)	Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

		March 31, 2018												Dec 31, 2017
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)		$	339,556			$	1,925				2.27	%		$	316,148			$	1,726				2.18	%
Tax-exempt (1) (2)			24,304				198				3.26				24,836				183				2.95
Loans (2) (3):
Mortgages			574,400				4,731				3.29				598,407				4,880				3.26
Commercial mortgages			2,013,128				18,407				3.66				2,053,221				19,039				3.71
Commercial			969,496				10,487				4.33				886,170				9,263				4.18
Installment			81,762				670				3.28				85,390				656				3.07
Home equity			65,158				660				4.05				68,485				667				3.90
Other			455				11				9.67				638				11				6.90
Total loans			3,704,399				34,966				3.78				3,692,311				34,516				3.74
Federal funds sold			101				—				0.25				101				—				0.25
Interest-earning deposits			99,471				357				1.44				125,495				305				0.97
Total interest-earning assets			4,167,831				37,446				3.59	%			4,158,891				36,730				3.53	%
Noninterest-earning assets:
Cash and due from banks			4,686												5,096
Allowance for loan and lease losses			(37,076	)											(37,000	)
Premises and equipment			29,256												29,670
Other assets			99,541												96,607
Total noninterest-earning assets			96,407												94,373
Total assets		$	4,264,238											$	4,253,264
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,143,152			$	1,757				0.61	%		$	1,135,660			$	1,591				0.56	%
Money markets			1,033,937				1,946				0.75				1,101,862				1,781				0.65
Savings			121,065				16				0.05				120,768				17				0.06
Certificates of deposit – retail			555,564				2,149				1.55				537,685				2,034				1.51
Subtotal interest-bearing deposits			2,853,718				5,868				0.82				2,895,975				5,423				0.75
Interest-bearing demand – brokered			180,000				680				1.51				180,000				751				1.67
Certificates of deposit – brokered			72,601				429				2.36				74,529				445				2.39
Total interest-bearing deposits			3,106,319				6,977				0.90				3,150,504				6,619				0.84
Borrowings			86,458				370				1.71				51,265				267				2.08
Capital lease obligation			8,963				107				4.78				9,136				110				4.82
Subordinated debt			83,043				1,221				5.88				56,444				857				6.07
Total interest-bearing liabilities			3,284,783				8,675				1.06				3,267,349				7,853				0.96
Noninterest-bearing liabilities:
Demand deposits			539,882												567,041
Accrued expenses and
other liabilities			29,358												28,138
Total noninterest-bearing liabilities			569,240												595,179
Shareholders’ equity			410,215												390,736
Total liabilities and
shareholders’ equity		$	4,264,238											$	4,253,264
Net interest income						$	28,771											$	28,877
Net interest spread											2.53	%											2.57	%
Net interest margin (4)											2.76	%											2.78	%

 

(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 21 percent federal tax rate at March 31, 2018 and a 35 percent federal tax rate at December 31, 2017.
(3)	Loans are stated net of unearned income and include nonaccrual loans.
(4)	Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

 

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, 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
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
Tangible Book Value Per Share		2018				2017				2017				2017				2017
Shareholders’ equity		$	422,406			$	403,678			$	379,936			$	356,847			$	340,928
Less:  Intangible assets, net			23,656				23,836				15,064				3,095				3,126
Tangible equity			398,750				379,842				364,872				353,752				337,802
Period end shares outstanding			18,921,114				18,619,634				18,214,759				17,846,404				17,579,274
Tangible book value per share		$	21.07			$	20.40			$	20.03			$	19.82			$	19.22
Book value per share			22.32				21.68				20.86				20.00				19.39
Tangible Equity to Tangible Assets
Total assets		$	4,336,494			$	4,260,547			$	4,176,332			$	4,165,679			$	3,947,562
Less: Intangible assets, net			23,656				23,836				15,064				3,095				3,126
Tangible assets			4,312,838				4,236,711				4,161,268				4,162,584				3,944,436
Tangible equity to tangible assets			9.25	%			8.97	%			8.77	%			8.50	%			8.56	%
Equity to assets			9.74	%			9.47	%			9.10	%			8.57	%			8.64	%

 

 

 

		Three Months Ended
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
Efficiency Ratio		2018				2017				2017				2017				2017
Net interest income		$	28,393			$	28,586			$	29,992			$	26,972			$	25,591
Total other income			10,215				10,606				8,831				8,171				7,019
Less:  Gain on loans held for sale
at lower of cost or fair value			—				378				34				—				—
Less:  Securities losses, net			(78	)			—				—				—				—
Total recurring revenue			38,686				38,814				38,789				35,143				32,610
Operating expenses			23,337				24,251				21,961				20,095				19,304
Total operating expense			23,337				24,251				21,961				20,095				19,304
Efficiency ratio			60.32	%			62.48	%			56.62	%			57.18	%			59.20	%