SOURCE: Peapack-Gladstone Financial Corporation

October 22, 2014 09:20 ET

Peapack-Gladstone Financial Corporation Reports Another Solid Quarter

BEDMINSTER, NJ--(Marketwired - Oct 22, 2014) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded net income of $10.68 million and diluted earnings per share of $0.90 for the nine months ended September 30, 2014. This compared to $6.87 million and $0.76, respectively for the same nine month period last year.

For the quarter ended September 30, 2014, the Corporation recorded net income of $3.86 million and diluted earnings per share of $0.32. This compared to $1.96 million and $0.22, respectively, for the same quarter last year.

The following table summarizes earnings for the quarters ended:

                         
      Sept       June       Sept  
      2014       2014       2013  
(Dollars in millions, except EPS)     (1)       (1)(2)       (3)  
Pretax income   $ 6.26     $ 6.32     $ 3.24  
Net income   $ 3.86     $ 3.78     $ 1.96  
Diluted EPS   $ 0.32     $ 0.32     $ 0.22  
Return on average assets     0.63 %     0.67 %     0.45 %
Return on average equity     8.35 %     8.44 %     6.28 %
Efficiency ratio     66.60 %     67.43 %     78.84 %
Total revenue   $ 22.10     $ 22.40     $ 18.16  
                         
(1)   The September 2014 and June 2014 quarterly earnings per share calculations include all of the 2.47 million shares issued in the December 12, 2013 capital raise.
     
(2)   The June 2014 quarter included a $176 thousand gain on sale of residential first mortgage loans sold, as a component of balance sheet management.
     
(3)   The September 2013 quarter included $933 thousand of compensation expense accruals related to the retirement of two senior officers.
     

Doug Kennedy, President and CEO, said, "We continue to focus on executing our Strategic Plan -- 'Expanding Our Reach.' This Plan focuses on the client experience and aggressively building and maintaining our private banking platform. Our growth and overall results reflect our continued success." 

Q3 2014 highlights follow:

  • As reflected in the table above, earnings and performance ratios for the September 2014 quarter reflected improvement when compared to the same quarter last year. The June 2014 quarter includes the $176 thousand gain on sale of residential first mortgage loans sold ($105 thousand after tax or a penny per share). 
  • Total loan balances at September 30, 2014 exceeded $2 billion and reached another record level for the Company at $2.04 billion. This level reflected growth when compared to $1.57 billion at December 31, 2013, and $1.40 billion one year ago at September 30, 2013. Year over year loan growth was 46 percent.
  • During the September 2014 quarter, Commercial & Industrial (C&I) loan originations totaled $74 million -- a record quarter for the Company.
  • During the period June through September 2014, three new seasoned commercial bankers joined the Company
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew to a record $1.93 billion at September 30, 2014, from $1.63 billion at December 31, 2013 and $1.57 billion at September 30, 2013. Year over year customer deposit growth totaled 23 percent.
  • The Company's net interest income for the September 2014 quarter reached another quarterly record level at $17.05 million. This level reflected improvement when compared to $16.92 million for the June 2014 quarter, and when compared to $13.37 million for the same quarter last year.
  • At September 30, 2014, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank ("The Bank") was $2.86 billion, also another record for the Company.
  • Fee income from the Private Wealth Management Division totaled $3.66 million for the September 2014 quarter growing from $3.30 million for the same quarter last year. The June 2014 quarter totaled $4.01 million as fee income for the second quarter of each calendar year is benefitted by tax return preparation fee income.
  • Asset quality metrics continue to be strong at September 30, 2014. Nonperforming assets at September 30, 2014 were just $9.7 million or 0.39 percent of total assets. The metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014. 
  • The book value per share at September 30, 2014 of $15.80 reflected improvement when compared to $14.79 at December 31, 2013 and $14.12 at September 30, 2013. Year-over-year growth in book value per share totaled 12 percent.

Net Interest Income / Net Interest Margin

Net interest income was $17.05 million for the third quarter of 2014, compared to $16.92 million for the June 2014 quarter and $13.37 million for the same quarter last year, reflecting growth of $3.68 million or 27 percent when compared to the prior year period. Net interest income for the third quarter of 2014 benefitted from significant loan growth during the first nine months of 2014 as well as the last quarter of 2013, principally multifamily and commercial mortgages.

While net interest income for the third quarter of 2014 improved compared to these prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.89 percent for the September 2014 quarter compared to 3.14 percent for the June 2014 quarter and 3.28 percent for the September 2013 quarter. The bulk of the decline in margin for the September 2014 quarter was due to the maintenance of much larger average interest earning deposit/cash balances -- $197.7 million average for the September 2014 quarter, compared to $51.2 million for the June 2014 quarter and $35.2 million for the September 2013 quarter. Mr. Kennedy said, "Given our rapid growth, we have decided to maintain greater liquidity on our balance sheet."

In general, in addition to the maintenance of larger interest bearing deposit/cash balances noted above, net interest margin also continues to be affected by the continued effect of low market yields, as well as competitive pressures in attracting new loans and deposits. 

Loan Originations / Loans

Total loan originations were $772 million for the nine months ended September 30, 2014. At September 30, 2014, loans totaled $2.04 billion as compared to $1.40 billion one year ago at September 30, 2013, representing an increase of $644 million or 46 percent. The multifamily and commercial mortgage loan portfolio grew $580 million or 85 percent when comparing the September 2014 balance to the September 2013 balance. The increase was attributable to the addition of seasoned banking professionals over the course of 2013; a more concerted focus on the client service aspect of the lending process; more of a focus on New Jersey markets; and a focus on New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.

Mr. Kennedy said, "As we have noted previously, our analysis showed that multifamily lending could be grown quickly, had strong credit metrics and that this type of lending provided solid risk-adjusted returns. Originations of this asset class has been a major focus as we build our C&I (Commercial & Industrial) lending capabilities, as part of our Strategic Plan launched in March 2013. Going forward, multifamily lending will remain a focus of the Company, but with the C&I lending program becoming more seasoned, including the addition of three seasoned C&I bankers since June 2014, we anticipate that C&I loan production will continue to improve as we move forward."

The Company closed $105 million of C&I loans in 2013, and an additional $153 million for the nine months ended September 30, 2014. At September 30, 2014, C & I loans totaled $226 million, more than double the $111 million one year ago at September 30, 2013.

Deposits / Funding / Balance Sheet Management 

Loan growth of $166 million and investment security growth of $43 million in the September 2014 quarter was funded by a reduction of $96 million in interest earning deposit/cash balances, as well as growth of $101 million in customer deposits. Also, Capital growth of $5.7 million for the September 2014 quarter provided additional funding.

Brokered interest-bearing demand deposits continue to be maintained as an additional source of liquidity. At a cost of less than a 25 basis points, such deposits are a more cost effective alternative than overnight wholesale borrowings, and do not require pledging of collateral. These deposits have been maintained at $138 million thus far throughout 2014 and, as a part of its liquidity management, the Company may maintain higher levels in future periods. The Company does ensure ample available collateralized liquidity as a backup to these short term brokered deposits.

Brokered certificates of deposit have also been utilized throughout 2014. The majority of these deposits have been longer term and have generally been transacted as a part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than medium/longer term wholesale borrowings, and also do not require pledging of collateral. 

Mr. Kennedy noted that "The June 2014 quarter included sales of $67 million of longer duration, lower coupon residential first mortgage loans, as well as $61 million of multifamily loan participations, as part of the Company's overall balance sheet management strategy. These transactions contributed to the Company's increased interest earning deposits/cash held as of the beginning of the September 2014 quarter." Mr. Kennedy went on to say, "The Company will continue to place intense focus on providing high touch client service and growing its core deposit base. Its full array of treasury management products will help support both core deposit growth and commercial lending opportunities. Private bankers, commercial bankers, relationship bankers and the treasury management team have robust pipelines of client deposits."

Wealth Management Business

In the September 2014 quarter, Peapack-Gladstone Bank's Wealth Management business generated $3.66 million in fee income compared to $3.30 million for the September 2013 quarter. The market value of the assets under administration (AUA) of the wealth management division was $2.86 billion at September 30, 2014, up from $2.58 billion at September 30, 2013. The growth in fee income and AUA was due to a combination of new business and market value improvement.

John P. Babcock, President of Private Wealth Management, noted, "Incorporating wealth into every conversation we have with all of our Company's clients, across all business lines, is integral to our strategy. As noted last quarter, over the course of 2014, three seasoned wealth advisors joined the Company from larger wealth management companies, and a seasoned two person team -- a Portfolio Manager and a Trust Officer -- from a larger wealth management company joined our Princeton Private Banking Team. These individuals complemented our existing high-caliber team. We will continue to build-out and grow our Wealth Management team, and expand the products, service, and advice we deliver to our clients."

Other Noninterest Income

The September 2014 quarter included $87 thousand of income from the sale of newly originated residential mortgage loans, down from $277 thousand in the same 2013 quarter. As noted in prior quarters, the rise in mortgage rates caused a decrease in residential mortgage loan originations and resultant mortgage banking income. Mr. Kennedy noted, "Reduced levels of mortgage banking income was expected and planned for, and reduced levels of mortgage banking income are expected to be ongoing. Fortunately, mortgage banking income is not a significant portion of our revenue."

Securities gains were $39 thousand for the September 2014 quarter compared to $188 thousand for the September 2013 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the short duration of the securities portfolio, sales have been employed much less often in recent periods.

Other income of $1.27 million for the September 2014 quarter was $250 thousand higher than the September 2013 quarter. Several categories reflected slight improvement in the quarter including, increased income associated with a new set of checking products put in place during the summer months.

Operating Expenses

The Company's total operating expenses were $14.69 million for the quarter ended September 30, 2014 compared to $14.17 million in the same 2013 quarter, reflecting a net increase of $528 thousand.

Salary and benefits expense increased due to strategic hiring in line with the Company's Strategic Plan, including private bankers, relationship bankers, commercial bankers, wealth advisors, risk management professionals and various support staff, including support staff associated with the commercial lending process. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, contributed to the increase. The September 2013 quarter included approximately $933 thousand of compensation expense accruals related to the retirement of two senior officers.

Also, when comparing the September 2014 expense levels to those in September 2013, the September 2014 quarter included increased occupancy costs associated with the new Princeton and Teaneck Private Banking offices. 

Mr. Kennedy noted, "Expense increases that were contemplated with our strategy, Expanding Our Reach, are tracking consistent with projections. We expect that the trend of higher operating expenses will continue as we close out 2014 and go into 2015, as we bring on high caliber revenue producers, and continue to invest in our infrastructure in line with our Strategic Plan. Further, we generally expect revenue and profitability related to new personnel to lag those expenses by several quarters. It is important to note, however, that we have seen an improvement in quarterly revenue since we launched our Plan, particularly in the recent quarters, as our Plan began to gain momentum. This revenue growth, which has outpaced expense growth considerably, has caused our Efficiency Ratio to decline to just below 67 percent for the current quarter."

Provision for Loan Losses / Asset Quality

For the quarter ended September 2014, the Company's provision for loan losses was $1.15 million, the same as the June 2014 provision, and up $400 thousand when compared to the $750 thousand provision for the September 2013 quarter. Charge-offs, net of recoveries, for the September 2014 quarter were only $55 thousand. 

At September 30, 2014 the allowance for loan losses was 208 percent of nonperforming loans and 0.90 percent of total loans.

The Company's provision for loan losses and net increase in its allowance for loan losses continue to track well with the Company's net loan growth.

Nonperforming assets totaled $9.7 million or 0.39 percent of total assets at September 30, 2014. Mr. Kennedy noted, "Those metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014." 

Capital / Dividends

Capital in the September 2014 quarter was benefitted by net income and by just over $2 million of voluntary share purchases in the Dividend Reinvestment Plan.

During the September 2014 quarter, the Company continued to employ the capital raised in December 2013 by continuing to grow loans. At September 30, 2014, the Company's leverage ratio, tier 1 and total risk based capital ratios were 7.57 percent, 12.16 percent and 13.36 percent, respectively. The Company's ratios are all above the levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced, on October 15, 2014 the Board of Directors declared a regular cash dividend of $0.05 per share payable on November 14, 2014 to shareholders of record on October 30, 2014.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $2.51 billion as of September 30, 2014. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as "expect," "look," "believe," "anticipate," "may," or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to

  • inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
  • inability to manage our growth;
  • a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
  • declines in our net interest margin caused by the low interest rate and highly competitive market;
  • declines in value in our investment portfolio;
  • higher than expected increases in our allowance for loan losses;
  • higher than expected increases in loan losses or in the level of nonperforming loans;
  • unexpected changes in interest rates;
  • a continued or unexpected decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
  • successful cyber attacks against our IT infrastructure and that of our IT providers;
  • higher than expected FDIC insurance premiums;
  • 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, 2013. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation's expectations.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

 (Tables to follow)

 
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
     
    As of
      Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,
      2014     2014     2014     2013     2013
ASSETS                              
Cash and due from banks   $ 6,596   $ 5,757   $ 6,373   $ 6,534   $ 5,886
Federal funds sold     101     101     101     101     101
Interest-earning deposits     114,124     209,768     95,059     28,512     33,528
  Total cash and cash equivalents     120,821     215,626     101,533     35,147     39,515
                               
Securities available for sale     269,550     225,270     248,070     268,447     273,952
FHLB and FRB Stock, at cost     9,121     9,946     12,765     10,032     7,707
                               
Loans held for sale, at fair value     351     2,650     1,769     2,001     724
Loans held for sale, at lower of cost or fair value     -     -     51,184     -     -
                               
Residential mortgage     470,030     469,648     481,850     532,911     527,927
Commercial mortgage     1,260,561     1,166,747     1,063,470     831,997     680,762
Commercial loans     225,814     158,103     143,389     131,795     110,843
Construction loans     6,025     6,033     6,075     5,893     8,390
Consumer loans     27,597     23,414     20,945     21,852     19,932
Home equity lines of credit     48,200     48,740     45,820     47,905     47,020
Other loans     2,560     2,255     1,851     1,848     2,075
  Total loans     2,040,787     1,874,940     1,763,400     1,574,201     1,396,949
  Less: Allowances for loan losses     18,299     17,204     16,587     15,373     14,056
  Net loans     2,022,488     1,857,736     1,746,813     1,558,828     1,382,893
                               
Premises and equipment     30,825     31,095     31,087     28,990     29,022
Other real estate owned     949     1,036     2,062     1,941     2,759
Accrued interest receivable     5,126     4,858     4,788     4,086     4,017
Bank owned life insurance     32,448     32,258     32,065     31,882     31,691
Deferred tax assets, net     11,661     9,433     9,366     9,762     7,951
Other assets     11,181     11,063     9,983     15,832     17,473
  TOTAL ASSETS   $ 2,514,521   $ 2,400,971   $ 2,251,485   $ 1,966,948   $ 1,797,704
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits   $ 383,268   $ 410,609   $ 350,987   $ 356,119   $ 345,736
  Interest-bearing demand deposits     558,537     474,945     407,127     378,340     338,626
  Savings     111,897     116,172     119,750     115,785     115,571
  Money market accounts     713,383     673,375     660,691     630,173     611,498
  Certificates of deposit - Retail     165,834     157,067     151,730     151,833     156,132
Subtotal "customer" deposits     1,932,919     1,832,168     1,690,285     1,632,250     1,567,563
  IB Demand - Brokered     138,000     138,000     138,011     10,000     -
  Certificates of deposit - Brokered     132,500     145,000     65,000     5,000     5,000
Total deposits     2,203,419     2,115,168     1,893,296     1,647,250     1,572,563
                               
Overnight borrowings     -     -     79,400     54,900     30,361
Federal home loan bank advances     83,692     83,692     83,692     74,692     47,692
Capital lease obligation     9,734     9,836     9,917     8,754     8,809
Other liabilities     12,646     9,942     9,308     10,695     11,861
Due to brokers, securities settlements     16,960     -     -     -     -
  TOTAL LIABILITIES     2,326,451     2,218,638     2,075,613     1,796,291     1,671,286
Shareholders' equity     188,070     182,333     175,872     170,657     126,418
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,514,521   $ 2,400,971   $ 2,251,485   $ 1,966,948   $ 1,797,704
                               
                               
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division(market value, not included above)   $ 2,857,727   $ 2,843,310   $ 2,745,955   $ 2,690,601   $ 2,581,813
                               
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
     
    As of
      Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,
      2014     2014     2014     2013     2013
Asset Quality:                              
Loans past due over 90 days and still accruing   $ -   $ -   $ -   $ -   $ -
Nonaccrual loans (A)     8,790     6,536     7,473     6,630     6,891
Other real estate owned     949     1,036     2,062     1,941     2,759
  Total nonperforming assets (A)   $ 9,739   $ 7,572   $ 9,535   $ 8,571   $ 9,650
                               
Nonperforming loans to total loans (A)     0.43%     0.35%     0.42%     0.42%     0.49%
Nonperforming assets to total assets (A)     0.39%     0.32%     0.42%     0.44%     0.54%
                               
Accruing TDR's (B)   $ 13,045   $ 12,730   $ 12,340   $ 11,114   $ 6,133
                               
Loans past due 30 through 89 days and still accruing   $ 2,278   $ 1,536   $ 5,027   $ 2,953   $ 2,039
                               
Classified loans (A)   $ 34,752   $ 34,929   $ 35,075   $ 33,828   $ 32,430
                               
Impaired loans (A)   $ 21,834   $ 19,813   $ 19,814   $ 17,744   $ 16,794
                               
Allowance for loan losses:                              
  Beginning of period   $ 17,204   $ 16,587   $ 15,373   $ 14,056   $ 13,438
  Provision for loan losses     1,150     1,150     1,325     1,325     750
  Charge-offs, net     (55)     (533)     (111)     (8)     (132)
  End of period     18,299     17,204     16,587     15,373     14,056
                               
                               
ALLL to nonperforming loans     208.18%     263.22%     221.96%     231.87%     203.98%
ALLL to total loans     0.90%     0.92%     0.94%     0.98%     1.01%
                               
Capital Adequacy                              
Tier 1 leverage     7.57%     8.01%     8.48%     9.00%     7.20%
                               
                               
Tier I capital to risk weighted assets     12.16%     13.05%     13.09%     14.07%     11.30%
                               
Tier I & II capital to risk-weighted assets     13.36%     14.30%     14.34%     15.33%     12.55%
                               
                               
Common equity to total Assets     7.48%     7.59%     7.81%     8.68%     7.03%
(End of period)                              
                               
Book value per share (C) (D)   $ 15.80   $ 15.48   $ 15.08   $ 14.79   $ 14.12
                               
     
 (A)   September 30, 2014 amount includes a $1.5 million commercial nonaccrual loan that was paid in full on October 8, 2014.
 (B)   Does not include $2.4 million at September 30, 2014, $2.5 million at June 30, 2014, $3.0 million at March 31, 2014, $2.9 million at December 31, 2013, and $3.3 million at September 30, 2013 of TDR's included in nonaccrual loans.
 (C)   Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested.
 (D)   Tangible book value per share was $15.75 at September 30, 2014, $15.43 at June 30, 2014, $15.03 at March 31, 2014, $14.75 at December 31, 2013, and $14.02 at September 30, 2013. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables.
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
       
      For the Quarters Ended
      Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,
      2014     2014     2014     2013     2013
                               
Residential loans retained   $ 20,540   $ 17,245   $ 11,653   $ 20,135   $ 31,517
Residential loans sold     5,561     7,344     7,011     11,743     13,516
Total residential loans     26,101     24,589     18,664     31,878     45,033
                               
CRE     3,208     20,175     15,841     11,972     20,357
Multifamily     105,584     149,937     225,143     152,456     143,727
Commercial loans (includes Community banking)     74,029     62,668     15,957     39,534     40,654
Total commercial loans     182,821     232,780     256,941     203,962     204,738
                               
Installment loans     9,410     5,184     1,877     3,081     2,489
                               
Home equity lines of credit     2,550     6,709     4,668     3,746     3,982
                               
Total loan originations   $ 220,882   $ 269,262   $ 282,150   $ 242,667   $ 256,242
                               
     
    For the Nine Months Ended
      Sept 30,     Sept 30,
      2014     2013
Residential loans retained   $ 49,438   $ 100,299
Residential loans sold     19,916     65,569
Total residential loans     69,354     165,868
             
CRE     39,224     46,927
Multifamily     480,664     242,252
Commercial loans (includes Community banking)      152,654      65,400
Total commercial loans     672,542     354,579
             
Installment loans     16,471     4,915
             
Home equity lines of credit     13,927     11,053
             
Total loan originations   $ 772,294   $ 536,415
             
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
       
    For the Three Months Ended  
      Sept 30,       June 30,       March 31,       Dec 31,       Sept 30,  
      2014       2014       2014       2013       2013  
Income Statement Data:                                        
Interest income   $ 19,210     $ 18,630     $ 16,949     $ 15,738     $ 14,423  
Interest expense     2,162       1,707       1,378       1,210       1,050  
  Net interest income     17,048       16,923       15,571       14,528       13,373  
Provision for loan losses     1,150       1,150       1,325       1,325       750  
  Net interest income after provision for loan losses     15,898       15,773       14,246       13,203       12,623  
Wealth management fee income     3,661       4,005       3,754       3,547       3,295  
Gain on loans held for sale at fair value (Mortgage banking)     87       112       112       171       277  
(Loss)/Gain on loans held for sale at lower of cost or fair value     (7 )     176       -       -       -  
Other income     1,272       1,101       1,031       1,130       1,022  
Securities gains, net     39       79       98       125       188  
  Total other income     5,052       5,473       4,995       4,973       4,782  
Salaries and employee benefits     9,116       9,089       8,848       8,308       8,927  
Premises and equipment     2,564       2,334       2,438       2,947       2,325  
FDIC insurance expense     350       303       275       286       275  
Other expenses     2,663       3,204       2,778       3,105       2,638  
  Total operating expenses     14,693       14,930       14,339       14,646       14,165  
Income before income taxes     6,257       6,316       4,902       3,530       3,240  
Income tax expense     2,393       2,533       1,871       1,135       1,276  
Net income   $ 3,864     $ 3,783     $ 3,031     $ 2,395     $ 1,964  
                                         
Total revenue   $ 22,100     $ 22,396     $ 20,566     $ 19,501     $ 18,155  
                                         
Per Common Share Data:                                        
                                         
Earnings per share (basic)   $ 0.33     $ 0.32     $ 0.26     $ 0.25     $ 0.22  
Earnings per share (diluted)     0.32       0.32       0.26       0.25       0.22  
                                         
Weighted average number of Common shares outstanding:                                        
Basic     11,841,777       11,720,329       11,606,933       9,638,913       8,950,931  
Diluted     11,956,356       11,845,148       11,710,940       9,746,550       9,013,419  
                                         
Performance Ratios:                                        
                                         
Return on average assets annualized     0.63 %     0.67 %     0.59 %     0.51 %     0.45 %
Return on average common equity annualized     8.35 %     8.44 %     7.01 %     7.42 %     6.28 %
                                         
Net interest margin (Taxable equivalent basis)     2.89 %     3.14 %     3.18 %     3.26 %     3.28 %
                                         
Efficiency ratio (A)     66.58 %     67.43 %     70.06 %     75.59 %     78.84 %
                                         
Operating expenses / average assets annualized     2.39 %     2.65 %     2.78 %     3.10 %     3.26 %
                                         
(A)   Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables.
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
   
      For the  
      Nine Months Ended  
      Sept 30,  
Income Statement Data:     2014       2013  
Interest income   $ 54,789     $ 41,315  
Interest expense     5,247       3,067  
  Net interest income     49,542       38,248  
Provision for loan losses     3,625       2,100  
  Net interest income after provision for loan losses     45,917       36,148  
Wealth management fee income     11,420       10,291  
Gain on loans held for sale at fair value (Mortgage banking)     310       1,138  
Gain on loans held for sale at lower of cost or fair value     169       522  
Other income     3,405       2,956  
Securities gains, net     216       715  
  Total other income     15,520       15,622  
Salaries and employee benefits     27,053       23,941  
Premises and equipment     7,336       6,967  
FDIC insurance expense     928       835  
Other expenses     8,645       8,794  
  Total operating expenses     43,962       40,537  
Income before income taxes     17,475       11,233  
Income tax expense     6,797       4,367  
Net income   $ 10,678     $ 6,866  
                 
Total revenue (See footnote (A) below)   $ 65,062     $ 53,870  
                 
Per Common Share Data:                
                 
Earnings per share (basic)   $ 0.91     $ 0.77  
Earnings per share (diluted)     0.90       0.76  
                 
Weighted average number of Common Shares outstanding                
Basic     11,723,873       8,910,514  
Diluted     11,833,507       8,976,905  
                 
Performance Ratios:                
                 
Return on average assets annualized     0.63 %     0.55 %
Return on average common equity annualized     7.95 %     7.35 %
                 
Net interest margin (Taxable equivalent basis)     3.06 %     3.26 %
                 
Efficiency ratio (B)     67.97 %     76.26 %
                 
Operating expenses / average assets annualized     2.60 %     3.22 %
                 
 
(A)   Total revenue includes a $176 thousand gain (for 2014) and a $522 thousand gain (for 2013) from sale of loans held for sale at lower of cost or fair value. Excluding these gains, total revenue was $64,886 (for 2014) and $53,348 (for 2013).
(B)   Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables.
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
             
    September 30, 2014     September 30, 2013  
      Average     Income/           Average     Income/      
      Balance     Expense   Yield       Balance     Expense   Yield  
ASSETS:                                    
Interest-Earning Assets:                                    
  Investments:                                    
    Taxable (1)   $ 192,207   $ 960   2.00 %   $ 237,559   $ 1,141   1.92 %
    Tax-exempt (1) (2)     47,701     268   2.25       54,465     328   2.41  
  Loans held for sale     1,026     10   3.90       1,617     21   5.27  
  Loans (2) (3):                                    
    Mortgages     464,227     3,879   3.34       543,722     4,611   3.39  
    Commercial mortgages     1,231,798     11,790   3.83       595,073     6,453   4.34  
    Commercial     166,092     1,597   3.85       108,042     1,264   4.68  
    Commercial construction     6,029     65   4.31       8,173     105   5.14  
    Installment     24,965     249   3.99       19,672     216   4.39  
    Home equity     48,371     394   3.26       47,562     401   3.37  
    Other     563     13   9.24       598     15   10.03  
    Total loans     1,942,045     17,987   3.70       1,322,842     13,065   3.95  
  Federal funds sold     101     -   0.10       101     -   0.10  
  Interest-earning deposits     197,705     109   0.22       35,168     21   0.24  
    Total interest-earning assets     2,380,785     19,334   3.25 %     1,651,752     14,576   3.53 %
Noninterest-Earning Assets:                                    
  Cash and due from banks     6,262                 5,962            
  Allowance for loan losses     (17,720)                 (13,615)            
  Premises and equipment     30,985                 28,984            
  Other assets     60,717                 65,163            
    Total noninterest-earning assets     80,244                 86,494            
Total assets   $ 2,461,029               $ 1,738,246            
                                     
LIABILITIES:                                    
Interest-Bearing deposits:                                    
  Checking   $ 541,920   $ 232   0.17 %   $ 349,392   $ 73   0.08 %
  Money markets     689,721     430   0.25       580,819     275   0.19  
  Savings     113,802     15   0.05       115,711     15   0.05  
  Certificates of deposit - retail     158,472     357   0.90       160,347     429   1.07  
  Subtotal interest-bearing deposits     1,503,915     1,034   0.28       1,206,269     792   0.26  
  Interest-bearing demand - brokered     138,000     84   0.24       -     -   -  
  Certificates of deposit - brokered     144,872     550   1.52       5,000     15   1.20  
  Total interest-bearing deposits     1,786,787     1,668   0.37       1,211,269     807   0.27  
  Borrowings     83,692     377   1.80       45,149     138   1.22  
  Capital lease obligation     9,770     117   4.79       8,828     105   4.76  
  Total interest-bearing liabilities     1,880,249     2,162   0.46       1,265,246     1,050   0.33  
Noninterest -bearing liabilities                                    
  Demand deposits     383,423                 337,684            
  Accrued expenses and other liabilities     12,165                 10,241            
  Total noninterest-bearing liabilities     395,588                 347,925            
Shareholders' equity     185,192                 125,075            
  Total liabilities and shareholders' equity   $ 2,461,029               $ 1,738,246            
Net interest income         $ 17,172               $ 13,526      
  Net interest spread               2.79 %               3.20 %
  Net interest margin (4)               2.89 %               3.28 %
                                       
 
(1)   Average balances for available for sale securities are based on amortized cost.
(2)   Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)   Loans are stated net of unearned income and include nonaccrual loans.
(4)   Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
 
    September 30, 2014     June 30, 2014  
      Average       Income/           Average       Income/      
      Balance       Expense   Yield       Balance       Expense   Yield  
ASSETS:                                        
Interest-Earning Assets:                                        
  Investments:                                        
    Taxable (1)   $ 192,207     $ 960   2.00 %   $ 189,254     $ 977   2.06 %
    Tax-exempt (1) (2)     47,701       268   2.25       57,847       312   2.16  
  Loans held for sale     1,026       10   3.90       1,026       15   5.89  
  Loans (2) (3):                                        
    Mortgages     464,227       3,879   3.34       496,232       4,203   3.39  
    Commercial mortgages     1,231,798       11,790   3.83       1,155,360       11,108   3.85  
    Commercial     166,092       1,597   3.85       143,988       1,443   4.01  
    Commercial construction     6,029       65   4.31       6,065       65   4.29  
    Installment     24,965       249   3.99       22,154       233   4.21  
    Home equity     48,371       394   3.26       47,489       382   3.22  
    Other     563       13   9.24       558       13   9.32  
    Total loans     1,942,045       17,987   3.70       1,871,846       17,447   3.73  
  Federal funds sold     101       -   0.10       101       -   0.10  
  Interest-earning deposits     197,705       109   0.22       51,177       21   0.17  
    Total interest-earning assets     2,380,785       19,334   3.25 %     2,171,251       18,772   3.46 %
Noninterest-Earning Assets:                                        
  Cash and due from banks     6,262                   6,990              
  Allowance for loan losses     (17,720 )                 (17,310 )            
  Premises and equipment     30,985                   31,161              
  Other assets     60,717                   58,926              
    Total noninterest-earning assets     80,244                   79,767              
Total assets   $ 2,461,029                 $ 2,251,018              
                                         
LIABILITIES:                                        
Interest-Bearing deposits:                                        
  Checking   $ 541,920     $ 232   0.17 %     431,656     $ 115   0.11 %
  Money markets     689,721       430   0.25       657,216       374   0.23  
  Savings     113,802       15   0.05       116,946       15   0.05  
  Certificates of deposit - retail     158,472       357   0.90       154,245       369   0.96  
    Subtotal interest-bearing deposits     1,503,915       1,034   0.28       1,360,063       873   0.26  
    Interest-bearing demand - brokered     138,000       84   0.24       138,000       70   0.20  
  Certificates of deposit - brokered     144,872       550   1.52       100,934       264   1.05  
    Total interest-bearing deposits     1,786,787       1,668   0.37       1,598,997       1,207   0.30  
  Borrowings     83,692       377   1.80       93,152       382   1.64  
  Capital lease obligation     9,770       117   4.79       9,867       118   4.78  
  Total interest-bearing liabilities     1,880,249       2,162   0.46       1,702,016       1,707   0.40  
Noninterest -bearing liabilities                                        
  Demand deposits     383,423                   360,096              
  Accrued expenses and other liabilities     12,165                   9,606              
  Total noninterest-bearing liabilities     395,588                   369,702              
Shareholders' equity     185,192                   179,300              
  Total liabilities and shareholders' equity   $ 2,461,029                 $ 2,251,018              
Net interest income           $ 17,172                 $ 17,065      
  Net interest spread                 2.79 %                 3.06 %
  Net interest margin (4)                 2.89 %                 3.14 %
                                         
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
NINE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
             
    September 30, 2014     September 30, 2013  
      Average       Income/           Average       Income/      
      Balance       Expense   Yield       Balance       Expense   Yield  
ASSETS:                                        
Interest-Earning Assets:                                        
  Investments:                                        
    Taxable (1)   $ 196,313     $ 2,998   2.04 %   $ 235,677     $ 3,503   1.98 %
    Tax-exempt (1) (2)     55,209       917   2.21       51,582       974   2.52  
  Loans held for sale     1,124       35   4.17       6,950       268   5.14  
  Loans (2) (3):                                        
    Mortgages     497,692       12,635   3.38       533,697       14,065   3.51  
    Commercial mortgages     1,108,732       31,943   3.84       504,444       16,888   4.46  
    Commercial     147,666       4,442   4.01       107,095       3,752   4.67  
    Commercial construction     5,989       197   4.39       8,853       317   4.77  
    Installment     22,906       710   4.13       20,228       670   4.42  
    Home equity     47,569       1,149   3.22       47,447       1,153   3.24  
    Other     562       39   9.25       605       44   9.70  
    Total loans     1,831,116       51,115   3.72       1,222,369       36,889   4.02  
  Federal funds sold     101       -   0.10       101       -   0.10  
  Interest-earning deposits     94,120       142   0.20       68,211       135   0.26  
    Total interest-earning assets     2,177,983       55,207   3.38 %     1,584,890       41,769   3.51 %
  Noninterest-Earning Assets:                                        
    Cash and due from banks     6,548                   5,887              
    Allowance for loan losses     (17,012 )                 (13,406 )            
    Premises and equipment     30,966                   29,344              
    Other assets     60,216                   70,674              
    Total noninterest-earning assets     80,718                   92,499              
Total assets   $ 2,258,701                 $ 1,677,389              
                                         
LIABILITIES:                                        
Interest-Bearing deposits:                                        
  Checking   $ 458,811     $ 438   0.13 %   $ 351,975     $ 225   0.09 %
  Money markets     666,986       1,137   0.23       561,713       729   0.17  
  Savings     115,746       45   0.05       113,486       44   0.05  
  Certificates of deposit - retail     154,091       1,081   0.94       166,235       1,385   1.11  
    Subtotal interest-bearing deposits     1,395,634       2,701   0.26       1,193,409       2,383   0.27  
  Interest-bearing demand - brokered     117,348       198   0.22       -       -   -  
  Certificates of deposit - brokered     86,986       845   1.30       5,000       45   1.20  
    Total interest-bearing deposits     1,599,968       3,744   0.31       1,198,409       2,428   0.27  
  Borrowings     97,359       1,149   1.57       23,226       322   1.85  
  Capital lease obligation     9,861       354   4.79       8,882       317   4.76  
  Total interest-bearing liabilities     1,707,188       5,247   0.41       1,230,517       3,067   0.33  
  Noninterest-bearing liabilities                                        
    Demand deposits     361,726                   313,420              
    Accrued expenses and other liabilities     10,597                   8,887              
    Total noninterest-bearing liabilities     372,323                   322,307              
  Shareholders' equity     179,190                   124,565              
  Total liabilities and shareholders' equity   $ 2,258,701                 $ 1,677,389              
  Net interest income           $ 49,960                 $ 38,702      
    Net interest spread                 2.97 %                 3.18 %
    Net interest margin (4)                 3.06 %                 3.26 %
                                         
 
(1)   Average balances for available for sale securities are based on amortized cost.
(2)   Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)   Loans are stated net of unearned income and include nonaccrual loans.
(4)   Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION
 

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses 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 titled 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) 
   
    Three Months Ended  

Tangible Book Value Per Share
    Sept 30,
2014
      June 30,
2014
      March 31,
2014
      Dec 31,
2013
      Sept 30,
2013
 
Shareholders' equity   $ 188,070     $ 182,333     $ 175,872     $ 170,657     $ 126,418  
Less: Intangible assets     563       563       563       563       563  
  Tangible equity     187,507       181,770       175,309       170,094       125,855  
                                         
Period end shares outstanding     12,286,821       12,154,150       12,032,913       11,788,517       9,078,236  
Less: Restricted shares not yet vested     382,252       376,134       368,608       253,540       103,156  
Total outstanding shares     11,904,569       11,778,016       11,664,305       11,534,977       8,975,080  
Tangible book value per share     15.75       15.43       15.03       14.75       14.02  
Book value per share     15.80       15.48       15.08       14.79       14.12  
                                         
Tangible Equity to Tangible Assets                                        
  Total Assets     2,514,521       2,400,971       2,251,485       1,966,948       1,797,704  
  Less: Intangible assets     563       563       563       563       563  
    Tangible assets     2,513,958       2,400,408       2,250,922       1,966,385       1,797,141  
                                         
  Tangible equity to tangible assets     7.46 %     7.57 %     7.79 %     8.65 %     7.00 %
  Equity to assets     7.48 %     7.59 %     7.81 %     8.68 %     7.03 %
                                           
                                         
    Three Months Ended  
      Sept 30,       June 30,       March 31,       Dec 31,       Sept 30,  
Efficiency Ratio     2014       2014       2014       2013       2013  
                                         
Net interest income   $ 17,048     $ 16,923     $ 15,571     $ 14,528     $ 13,373  
Total other income     5,052       5,473       4,995       4,973       4,782  
Less: (Loss)/gain on loans held for sale at lower of cost or fair value     (7 )     176       -       -       -  
Less: Securities gains, net     39       79       98       125       188  
Total recurring revenue     22,068       22,141       20,468       19,376       17,967  
                                         
Total operating expenses     14,693       14,930       14,339       14,646       14,165  
                                         
Efficiency ratio     66.58 %     67.43 %     70.06 %     75.59 %     78.84 %
                                         
                 
    Nine Months Ended  
                 
      Sept 30,       Sept 30,  
Efficiency Ratio     2014       2013  
                 
Net interest income   $ 49,542     $ 38,248  
Total other income     15,520       15,622  
Less: (Loss)/gain on loans held for sale at lower of cost or fair value     169       -  
Less: Securities gains, net     216       715  
Total recurring revenue     64,677       53,155  
                 
Total operating expenses     43,962       40,537  
                 
Efficiency ratio     67.97 %     76.26 %
                 

Contact Information

  • Contact:
    Jeffrey J. Carfora
    SEVP and CFO
    Peapack-Gladstone Financial Corporation
    T: 908-719-4308