SOURCE: Peapack-Gladstone Financial Corp

July 28, 2015 17:04 ET

Peapack-Gladstone Financial Corporation Reports Another Strong Quarter

BEDMINSTER, NJ--(Marketwired - Jul 28, 2015) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded net income of $10.25 million and diluted earnings per share of $0.67 for the six months ended June 30, 2015, compared to $6.81 million and $0.58, respectively, for the same six month period last year, reflecting increases of 50 percent and 16 percent, respectively. 

For the quarter ended June 30, 2015, the Corporation recorded net income of $5.24 million and diluted earnings per share of $0.34, compared to $3.78 million and diluted earnings per share of $0.32 for the same three month period last year, reflecting increases of 39 percent and 6 percent, respectively.

The following table summarizes earnings for the quarters ended:

    June     June            
(Dollars in millions, except EPS)   2015 (a)     2014 (b)     Improvement  
Pretax income   $ 8.38     $ 6.32     $ 2.06   33 %
Net income   $ 5.24     $ 3.78     $ 1.46   39 %
Diluted EPS   $ 0.34     $ 0.32     $ 0.02   6 %
Total revenue   $ 26.84     $ 22.40     $ 4.44   20 %
                             
Return on average assets     0.70 %     0.67 %     0.03      
Return on average equity     8.24 %     8.44 %     (0.20 )    
Efficiency ratio *     61.00 %     67.43 %     (6.43 )    
* June 2015 marks the eighth consecutive quarter of improved efficiency ratio.  
                             
a. The quarter ended June 2015 included a $2.20 million provision for loan losses. The 2015 quarter also included $373 thousand of fee income related to its loan level / "back-to-back" swap program, and is included in other income. There were 15,233,151 weighted average common shares outstanding for calculating diluted EPS for the 2015 quarter.
b. The quarter ended June 2014 included a $1.15 million provision for loan losses. The 2014 quarter also included income of $176 thousand from a gain from sale of loans held for sale at lower of cost or fair value. There were 11,846,075 weighted average common shares outstanding for calculating diluted EPS for the 2014 quarter.
   

Doug Kennedy, President and CEO, said, "We continued to successfully execute on our Growth Strategy -- Expanding Our Reach, generating strong results and demonstrating that our strategy is delivering positive operating leverage."

Q2 2015 highlights follow:

  • The Company continued to leverage the capital raised in the fourth quarter of 2014. The Company believes it has ample capital to support its continued growth and expansion for the immediate future.
  • Earnings and performance ratios for the second quarter of 2015 reflected improvement when compared to the second quarter of 2014's results (as reflected just above). Year over year growth in EPS was 6.3 percent, despite 2.776 million common shares issued in the December 2014 capital raise.
  • Loans at June 30, 2015 totaled $2.74 billion. This reflected growth of $867 million when compared to $1.87 billion at June 30, 2014. Year over year loan growth was 46 percent.
  • Asset quality metrics continued to be strong at June 30, 2015. Nonperforming assets at June 30, 2015 were $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were $1.7 million at June 30, 2015.
  • Commercial & Industrial (C&I) loans at June 30, 2015 totaled $438 million. This reflected growth of $280 million when compared to $158 million at June 30, 2014. Year over year C&I loan growth was 177 percent.
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew to $2.28 billion at June 30, 2015 from $1.83 billion at June 30, 2014. Year over year customer deposit growth totaled 24 percent.
  • The Company's net interest income for the second quarter of 2015 was $20.34 million. This reflected improvement when compared to $16.92 million for the second quarter of 2014. Year over year growth in net interest income was 20 percent.
  • At June 30, 2015, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") was nearly $3.5 billion, including the acquisition of Wealth Management Consultants, which occurred in the second quarter of 2015.
  • Fee income from the Private Wealth Management Division totaled $4.53 million for the second quarter of 2015, growing from $4.01 million for the second quarter of 2014. Year over year growth in wealth management fee income was 13 percent.
  • The book value per share at June 30, 2015 of $17.02 reflected improvement when compared to $15.48 at June 30, 2014. Year over year growth in book value per share totaled 10 percent.

Net Interest Income / Net Interest Margin

Net interest income was $20.34 million for the second quarter of 2015, compared to $16.92 million for the same quarter last year, reflecting growth of $3.42 million or 20 percent when compared to the prior year period. Net interest income for the second quarter of 2015 benefitted from significant loan growth during 2014, as well as during the first six months of 2015. 

While net interest income for the second quarter of 2015 improved compared to prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.80 percent for the June 2015 quarter compared to 3.14 percent for the June 2014 quarter. A portion of the decline in net interest margin for the June 2015 quarter was due to the maintenance of larger average interest earning deposit/cash balances ($70 million average for the June 2015 quarter, compared to $51 million for the June 2014 quarter), as well as larger balances of liquid investment securities ($275 million average for the June 2015 quarter, compared to $247 million for the June 2014 quarter). Mr. Kennedy said, "As I have said in previous quarters, given our rapid growth, we had decided to maintain greater liquidity on our balance sheet."

In addition to the maintenance of larger liquid balances for much of the quarter, net interest margin also continued to be impacted by the effect of low market yields, as well as competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits. The Company expects continued high liquidity levels and also expects continued loan and deposit growth in this competitive environment.

Loan Originations / Loans

Total loan originations were $417 million for the second quarter ended June 30, 2015, compared to $347 million for the March 2015 quarter and $269 million for the June 2014 quarter. At June 30, 2015, loans totaled $2.74 billion compared to $2.44 billion three months ago at March 31, 2015 and compared to $1.87 billion one year ago at June 30, 2014, representing increases of $300 million or 12 percent sequentially and $867 million or 46 percent, year over year.

The multifamily mortgage loan portfolio grew $526 million or 62 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The increase was net of participations sold over the year, including $48 million of participations sold in the current June 2015 quarter. The June 2015 quarter and the March 2015 quarter both included multifamily loan participations. These participations were part of the Company's balance sheet management strategy and will likely continue in 2015.

The commercial mortgage loan portfolio grew $54 million or 17 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The net increases in both the multifamily and commercial mortgage portfolios were attributable to: the addition of seasoned banking professionals over the course of 2014; continued attention to the client service aspect of the lending process; an expansion of New Jersey-based real estate marketing activities; and a focus on the Boroughs of 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 explained in past earnings releases, analysis have shown that multifamily lending could be grown quickly and had strong credit metrics and provided solid risk-adjusted returns. Loan originations in this asset class have been robust as we built our C&I (Commercial & Industrial) lending capabilities as part of our Strategic Plan. Going forward, multifamily lending and related participations will remain a focus of the Company, however we anticipate volumes will be less robust than the past several quarters." Mr. Kennedy went on to say, "As a result of our investment in and commitment to C&I banking, including the addition in 2014 and the first half of 2015 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in February 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow at an increased trajectory. We believe our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received." 

For the six months ended June 30, 2015 the Company closed $177 million of commercial loans. When comparing June 30, 2015 to June 30, 2014, commercial loans grew $280 million or 177 percent, to $438 million at June 30, 2015 from $158 million one year ago at June 30, 2014.

Deposits / Funding / Balance Sheet Management

Loan growth of $300 million in the June 2015 quarter was funded by customer deposit growth of $124 million, investment securities principal reductions and sales of $30 million, capital growth of $9 million, and various other borrowings. Mr. Kennedy noted, "Customer deposit growth for the June quarter was less than loan growth for the quarter; the deposit pipeline as of June 30, 2015 was very robust, and we have seen much of that pipeline fund throughout July, significantly reducing our June 30th overnight borrowing position." 

Brokered interest-bearing demand ("overnight") deposits continue to be maintained as an additional source of liquidity. The interest rate paid on these deposits allows the Bank to engage in interest rate swaps to hedge the asset-liability rate risk. These deposits increased to $293 million at June 30, 2015. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

From a liquidity/funding perspective, such brokered deposits, at a cost of approximately 25 to 30 basis points, are generally a more cost effective alternative than other borrowings and do not require use of pledged collateral, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits is used as the basis to transact longer term interest rate swaps, basically extending repricing generally to five years for asset matching / interest rate risk management purposes. As of June 30, 2015, the Company has transacted pay fixed, receive floating interest rate swaps totaling $150 million notional amount.

Certificates of deposit have also been utilized more extensively in 2015 compared to prior periods. The majority of these deposits have been longer term and have generally been transacted as part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than other borrowings. 

Mr. Kennedy noted, "The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management products will help support both core deposit growth and commercial lending opportunities."

Wealth Management Business

In the June 2015 quarter, Peapack-Gladstone Bank's wealth management business generated $4.53 million in fee income compared to $4.01 million for the June 2014 quarter, reflecting a 13 percent increase. 

The market value of the assets under administration (AUA) of the wealth management division was $3.45 billion at June 30, 2015, up approximately 21 percent from $2.84 billion at June 30, 2014. The growth in fee income and AUA was due to a combination of our acquisition of Wealth Management Consultants (NJ), LLC, new business and market value improvement.

John P. Babcock, President of Private Wealth Management, noted, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients."

Mr. Babcock further noted, "We are excited to join forces with Tom Ross and Wealth Management Consultants. The acquisition is consistent with building our advice led wealth business and Tom and his team will add depth to our already high-caliber wealth management team."

Other Noninterest Income

Service charges and fees for the June 2015 quarter were $837 thousand, compared to $708 thousand for the June 2014 quarter. Several categories reflected improvement in the quarter, including increased income associated with a new set of checking products put in place during the summer months of 2014.

The June 2015 quarter included $161 thousand of income from the sale of newly originated residential mortgage loans, up from $112 thousand in the same 2014 quarter. The volume of residential loans originated for sale were greater in the 2015 period compared to the 2014 period. 

Securities gains were $176 thousand for the June 2015 quarter compared to $79 thousand for the June 2014 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the interest rate environment, as well as the future outlook, we do not anticipate such sales to be employed as often in the immediate future.

Other income of $545 thousand for the June 2015 quarter was $428 thousand higher than the June 2014 quarter. The June 2015 quarter included $373 thousand of fee income related to the Company's loan level / back-to-back swap program, which was implemented during the June 2015 quarter after review and approval by the Board. Mr. Kennedy noted, "The program utilizes mirror interest rate swaps, one directly with the loan customer and one directly with a well-established counterparty. This enables a loan customer to benefit from a fixed rate loan, while the Company records a floating rate loan. The program provides enhanced interest rate risk management, as well as the potential for fee income for the Company. While we cannot predict the amount of fee income that may be recognized each period, this program will be a part of ongoing operations." 

Operating Expenses 

The Company's total operating expenses were $16.27 million for the quarter ended June 30, 2015 compared to $14.93 million in the same 2014 quarter, reflecting a net increase of $1.34 million or 9 percent.

Salary and benefits expense increased in the June 2015 quarter when compared to the same quarter last year due to strategic hiring in line with the Company's Strategic Plan. Also contributing to the increase is the acquisition of Wealth Management Consultants, which occurred in the June 2015 quarter. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company's growth contributed to the increase.

Premises and equipment expense and FDIC insurance expense for the quarter ended June 30, 2015 increased when compared to the same quarter last year. The increases were consistent with the Company's continued growth. 

Other expenses for the June 2015 quarter increased when compared to the June 2014 quarter. The current 2015 period included: increased wealth management division expenses due to growth in the business, increased advertising/marketing expenses, including a brand awareness campaign, and increased professional fee expenses associated with the Company's growth, as well as various project work. 

Mr. Kennedy noted, "Expense increases continue to track to our Plan. We expect that the trend of higher operating expenses will continue, as we bring on high caliber revenue producers, and continue to invest in our infrastructure, in line with our Plan. Further, we generally expect revenue and profitability related to new revenue producers to lag those expenses by several quarters. It is important to note, however, that revenue growth has outpaced expense growth considerably, which has caused our Efficiency Ratio to improve for the eighth consecutive quarter, to 61 percent for the current quarter."

Provision for Loan Losses / Asset Quality

For the quarter ended June 30, 2015, the Company's provision for loan losses was $2.20 million, compared to $1.15 million for the June 2014 quarter. Charge-offs, net of recoveries, for the second quarter of 2015 year were only $47 thousand. The larger provision in 2015 was due to loan growth in the quarter, as well as greater qualitative factor allocations of the allowance to C&I loans and Commercial Real Estate loans.

At June 30, 2015 the allowance for loan losses was 323 percent of nonperforming loans and 0.84 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 and asset quality metrics.

Nonperforming assets at June 30, 2015 were just $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $1.7 million at June 30, 2015.

Capital / Dividends

Capital in the June 2015 quarter was benefitted by net income of $5.2 million and by $1.7 million of voluntary share purchases in the Dividend Reinvestment Plan.

At June 30, 2015, the Company's leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.48 percent, 12.46 percent, 12.46 percent and 13.58 percent, respectively. The Company's ratios are all above the respective 5 percent, 6.5 percent, 8 percent, and 10 percent levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced on July 22, 2015, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 19, 2015 to shareholders of record on August 5, 2015.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.12 billion as of June 30, 2015. 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;
  • inability to successfully integrate our expanded employee base;
  • a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
  • declines in our net interest margin caused by the low interest rate environment and highly competitive market;
  • declines in value in our investment portfolio
  • higher than expected increases in our allowance for loan losses;
  • higher than expected increases in loan losses or in the level of nonperforming loans;
  • unexpected changes in interest rates;
  • a continued or unexpected decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • inability to successfully generate new business in new geographic markets;
  • inability to execute upon new business initiatives;
  • lack of liquidity to fund our various cash obligations;
  • reduction in our lower-cost funding sources;
  • our inability to adapt to technological changes;
  • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and
  • other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. 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
    June 30,   March 31,   Dec 31,   Sept 30,   June 30,
    2015   2015   2014   2014   2014
ASSETS                              
Cash and due from banks   $ 6,205   $ 7,439   $ 6,621   $ 6,596   $ 5,757
Federal funds sold     101     101     101     101     101
Interest-earning deposits     32,382     65,283     24,485     114,124     209,768
  Total cash and cash equivalents     38,688     72,823     31,207     120,821     215,626
                               
Securities available for sale     245,897     276,119     332,652     269,550     225,270
FHLB and FRB stock, at cost     15,590     10,598     11,593     9,121     9,946
                               
Loans held for sale, at fair value     745     4,245     839     351     2,650
                               
Residential mortgage     470,863     466,333     466,760     470,030     469,648
Multifamily mortgage     1,371,139     1,214,714     1,080,256     928,054     845,310
Commercial mortgage     375,440     339,037     308,491     332,507     321,437
Commercial loans     438,461     336,079     308,743     225,814     158,103
Construction loans     1,417     5,777     5,998     6,025     6,033
Consumer loans     29,996     28,206     28,040     27,597     23,414
Home equity lines of credit     51,675     50,399     50,141     48,200     48,740
Other loans     2,947     1,755     1,838     2,560     2,255
  Total loans     2,741,938     2,442,300     2,250,267     2,040,787     1,874,940
  Less: Allowances for loan losses     22,969     20,816     19,480     18,299     17,204
  Net loans     2,718,969     2,421,484     2,230,787     2,022,488     1,857,736
                               
Premises and equipment     31,637     32,068     32,258     30,825     31,095
Other real estate owned     956     1,103     1,324     949     1,036
Accrued interest receivable     6,451     5,943     5,371     5,126     4,858
Bank owned life insurance     32,565     32,404     32,634     32,448     32,258
Deferred tax assets, net     12,673     10,458     10,491     11,661     9,433
Other assets     13,999     12,212     13,241     11,181     11,063
  TOTAL ASSETS   $ 3,118,170   $ 2,879,457   $ 2,702,397   $ 2,514,521   $ 2,400,971
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits   $ 386,588   $ 377,399   $ 366,371   $ 383,268   $ 410,609
  Interest-bearing demand deposits     667,847     634,580     600,889     558,537     474,945
  Savings     120,606     115,515     112,878     111,897     116,172
  Money market accounts     717,246     714,466     700,069     713,383     673,375
  Certificates of deposit - Retail     384,235     310,678     198,819     165,834     157,067
Subtotal "customer" deposits     2,276,522     2,152,638     1,979,026     1,932,919     1,832,168
  IB Demand - Brokered     293,000     263,000     188,000     138,000     138,000
  Certificates of deposit - Brokered     94,224     106,694     131,667     132,500     145,000
Total deposits     2,663,746     2,522,332     2,298,693     2,203,419     2,115,168
                               
Overnight borrowings     87,500     -     54,600     -     -
Federal home loan bank advances     83,692     83,692     83,692     83,692     83,692
Capital lease obligation     10,475     10,594     10,712     9,734     9,836
Other liabilities     14,881     13,486     12,433     12,646     9,942
Due to brokers, securities settlements     -     -     -     16,960     -
  TOTAL LIABILITIES     2,860,294     2,630,104     2,460,130     2,326,451     2,218,638
Shareholders' equity     257,876     249,353     242,267     188,070     182,333
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    
$3,118,170
   
$2,879,457
   
$2,702,397
   
$2,514,521
   
$2,400,971
                               
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above)   $ 3,445,939   $ 3,053,110   $ 2,986,623   $ 2,857,727   $ 2,843,310
                               
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
       
    As of  
    June 30,     March 31,     Dec 31,     Sept 30,     June 30,  
    2015     2015     2014     2014     2014  
Asset Quality:                                        
Loans past due over 90 days and still accruing   $
-
    $
-
    $
-
    $
-
    $
-
 
Nonaccrual loans (A)     7,111       6,335       6,850       8,790       6,536  
Other real estate owned     956       1,103       1,324       949       1,036  
  Total nonperforming assets (A)   $ 8,067     $ 7,438     $ 8,174     $ 9,739     $ 7,572  
                                         
Nonperforming loans to total loans (A)     0.26 %     0.26 %     0.30 %     0.43 %     0.35 %
Nonperforming assets to total assets (A)     0.26 %     0.26 %     0.30 %     0.39 %     0.32 %
                                         
Accruing TDR's (B)   $ 13,695     $ 13,561     $ 13,601     $ 13,045     $ 12,730  
                                         
Loans past due 30 through 89 days and still accruing   $
1,744
    $
2,481
    $
1,755
    $
2,278
    $
1,536
 
                                         
Classified loans (A)   $ 38,676     $ 38,450     $ 35,809     $ 34,752     $ 34,929  
                                         
Impaired loans (A)   $ 20,806     $ 19,896     $ 20,451     $ 21,834     $ 19,813  
                                         
Allowance for loan losses:                                        
  Beginning of period   $ 20,816     $ 19,480     $ 18,299     $ 17,204     $ 16,587  
  Provision for loan losses     2,200       1,350       1,250       1,150       1,150  
  Charge-offs, net     (47 )     (14 )     (69 )     (55 )     (533 )
  End of period   $ 22,969     $ 20,816     $ 19,480     $ 18,299     $ 17,204  
                                         
                                         
ALLL to nonperforming loans     323.01 %     328.59 %     284.38 %     208.18 %     263.22 %
ALLL to total loans     0.84 %     0.85 %     0.87 %     0.90 %     0.92 %
                                         
Capital Adequacy                                        
Tier I leverage     8.48 %     8.80 %     9.11 %     7.57 %     8.01 %
                                         
Tier I capital to risk weighted assets     12.46 %     13.57 %     14.38 %     12.16 %     13.05 %
                                         
Common equity tier I capital ratio to risk-weighted assets (C)    
12.46
%    
13.57
%    
N/A
     
N/A
     
N/A
 
                                         
Tier I & II capital to risk-weighted assets     13.58 %     14.71 %     15.55 %     13.36 %     14.30 %
                                         
Equity to total assets     8.27 %     8.66 %     8.96 %     7.48 %     7.59 %
(end of period)                                        
                                         
Book value per share (D) (E)   $ 17.02     $ 16.61     $ 16.36     $ 15.80     $ 15.48  
                                         
(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 $2.2 million at June 30, 2015, $1.4 million at March 31, 2015, $1.4 million at December 31, 2014, $2.4 million at September 30, 2014, and $2.5 million at June 30, 2014 of TDR's included in nonaccrual loans.
(C) New capital ratio required under Basel III effective March 31, 2015.
(D) Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested
(E) Tangible book value per share was $16.80 at June 30, 2015, $16.57 at March 31, 2015, $16.32 at December 31, 2014, $15.75 at September 30, 2014, and $15.43 at June 30, 2014. 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
    June 30,   March 31,   Dec 31,   Sept 30,   June 30,
    2015   2015   2014   2014   2014
                               
Residential loans retained   $ 23,117   $ 16,986   $ 10,661   $ 20,540   $ 17,245
Residential loans sold     10,978     8,938     8,230     5,561     7,344
Total residential loans     34,095     25,924     18,891     26,101     24,589
                               
CRE (includes Community banking)     29,561     57,787     14,953     3,208     20,175
Multifamily (includes Community banking)     206,803     209,034     172,021     105,584     149,937
Commercial loans (includes Community banking)     136,483     40,696     89,905     74,029     62,668
Wealth lines of credit     6,150     10,260     -     -     -
Total commercial loans     378,997     317,777     276,879     182,821     232,780
                               
Installment loans     1,128     344     2,015     9,410     5,184
                               
Home equity lines of credit     3,225     3,377     4,140     2,550     6,709
                               
Total loans closed   $ 417,445   $ 347,422   $ 301,925   $ 220,882   $ 269,262
                               
         
    For the Six Months Ended    
    June 30,   June 30,    
    2015   2014    
Residential loans retained   $ 40,103   $ 28,898    
Residential loans sold     19,916     14,355    
Total residential loans     60,019     43,253    
                 
CRE (includes Community banking)     87,348     36,016    
Multifamily (includes Community banking)     415,837     375,080    
Commercial loans (includes Community banking)     177,179     78,625   (A)
Wealth lines of credit     16,410     -    
Total commercial loans     696,774     489,721    
                 
Installment loans     1,472     7,061    
                 
Home equity lines of credit     6,602     11,377   (A)
                 
Total loans closed   $ 764,867   $ 551,412    
                 
(A) Includes loans and lines of credit that closed in the period, but not necessarily funded.
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED CONSOLIDATED FINANCIAL DATA  
(Dollars in Thousands, except share data)  
(Unaudited)  
  For the Three Months Ended  
  June 30,   March 31,   Dec 31,   Sept 30,   June 30,  
  2015   2015   2014   2014   2014  
Income Statement Data:                              
Interest income $ 23,852   $ 22,361   $ 20,786   $ 19,210   $ 18,630  
Interest expense   3,508     2,778     2,434     2,162     1,707  
  Net interest income   20,344     19,583     18,352     17,048     16,923  
Provision for loan losses   2,200     1,350     1,250     1,150     1,150  
  Net interest income after provision for loan losses  
18,144
   
18,233
   
17,102
   
15,898
   
15,773
 
Wealth management fee income   4,532     4,031     3,822     3,661     4,005  
Service charges and fees   837     805     880     829     708  
Bank owned life insurance   248     537     274     276     276  
Gain on loans held for sale at fair value (Mortgage banking)  
161
   
148
   
128
   
87
   
112
 
(Loss)/gain on loans held for sale at lower of cost or fair value  
-
   
-
   
(3
)  
(7
)  
176
 
Other income   545     93     142     167     117  
Securities gains, net   176     268     44     39     79  
  Total other income   6,499     5,882     5,287     5,052     5,473  
Salaries and employee benefits   9,872     9,425     9,188     9,116     9,089  
Premises and equipment   2,778     2,616     2,627     2,564     2,334  
FDIC insurance expense   431     482     453     350     303  
Other expenses   3,185     3,245     3,310     2,663     3,204  
  Total operating expenses   16,266     15,768     15,578     14,693     14,930  
Income before income taxes   8,377     8,347     6,811     6,257     6,316  
Income tax expense   3,139     3,339     2,599     2,393     2,533  
Net income $ 5,238   $ 5,008   $ 4,212   $ 3,864   $ 3,783  
                               
                               
Total revenue $ 26,843   $ 25,465   $ 23,639   $ 22,100   $ 22,396  
                               
                               
Per Common Share Data:                              
                               
Earnings per share (basic) $ 0.34   $ 0.34   $ 0.32   $ 0.33   $ 0.32  
Earnings per share (diluted)   0.34     0.33     0.32     0.32     0.32  
                               
Weighted average number of common shares outstanding:                              
Basic   15,082,516     14,909,722     13,037,947     11,841,777     11,721,256  
Diluted   15,233,151     15,070,352     13,163,877     11,956,356     11,846,075  
                               
Performance Ratios:                              
                               
Return on average assets annualized  
0.70
%  
0.71
%  
0.64
%  
0.63
%  
0.67
%
Return on average common equity annualized  
8.24
%  
8.13
%  
8.01
%  
8.35
%  
8.44
%
Net interest margin (taxable equivalent basis)  
2.80
%  
2.88
%  
2.89
%  
2.89
%  
3.14
%
Efficiency ratio (A)   61.00 %   62.58 %   66.01 %   66.58 %   67.43 %
Operating expenses / average assets annualized  
2.16
%  
2.24
%  
2.36
%  
2.39
%  
2.65
%
                               
(A) Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED CONSOLIDATED FINANCIAL DATA  
(Dollars in Thousands, except share data)  
(Unaudited)  
       
    For the  
    Six Months Ended  
    June 30,  
Income Statement Data:   2015     2014  
Interest income   $ 46,213     $ 35,579  
Interest expense     6,286       3,085  
  Net interest income     39,927       32,494  
Provision for loan losses     3,550       2,475  
  Net interest income after provision for loan losses     36,377       30,019  
Wealth management fee income     8,563       7,759  
Service charges and fees     1,642       1,402  
Bank owned life insurance     785       542  
Gain on loans held for sale at fair Value (Mortgage banking)     309       224  
(Loss)/gain on loans held for sale at Lower of cost or fair value     -       176  
Other income     638       188  
Securities gains, net     444       177  
  Total other income     12,381       10,468  
Salaries and employee benefits     19,297       17,937  
Premises and equipment     5,394       4,772  
FDIC insurance expense     913       578  
Other expenses     6,430       5,982  
  Total operating expenses     32,034       29,269  
Income before income taxes     16,724       11,218  
Income tax expense     6,478       4,404  
Net income   $ 10,246     $ 6,814  
                 
                 
Total revenue (See footnote (A) below)   $ 52,308     $ 42,962  
                 
                 
Per Common Share Data:                
                 
Earnings per share (basic)   $ 0.68     $ 0.58  
Earnings per share (diluted)     0.67       0.58  
                 
Weighted average number ofcommon shares outstanding:                
Basic     14,996,596       11,664,410  
Diluted     15,189,781       11,814,806  
                 
Performance Ratios:                
                 
Return on average assets annualized     0.70 %     0.63 %
Return on average common equity annualized     8.19 %     7.74 %
                 
Net interest margin (taxable equivalent basis)     2.84 %     3.16 %
                 
Efficiency ratio (B)     61.77 %     68.69 %
                 
Operating expenses / average assets annualized     2.20 %     2.72 %
                 
(A) Total revenue includes a $176 thousand gain (for 2014) from sale of loans held for sale at lower of cost or fair value. Excluding this gain, total revenue was $42,786 (for 2014).
(B) Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
     
  June 30, 2015     June 30, 2014  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 244,087     $ 1,037   1.70 %   $ 189,254     $ 977   2.06 %
    Tax-exempt (1) (2)   30,941       210   2.71       57,847       312   2.16  
  Loans held for sale   2,049       24   4.64       1,026       15   5.89  
  Loans (2) (3):                                      
    Mortgages   466,033       3,800   3.26       496,232       4,203   3.39  
    Commercial mortgages   1,663,150       14,767   3.55       1,155,360       11,108   3.85  
    Commercial   360,517       3,347   3.71       143,988       1,443   4.01  
    Commercial construction   5,713       61   4.27       6,065       65   4.29  
    Installment   29,169       256   3.51       22,154       233   4.21  
    Home equity   51,710       417   3.23       47,489       382   3.22  
    Other   527       12   9.11       558       13   9.32  
    Total loans   2,576,819       22,660   3.52       1,871,846       17,447   3.73  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   69,780       39   0.22       51,177       21   0.17  
    Total interest-earning assets   2,923,777       23,970   3.28       2,171,251       18,772   3.46 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   6,385                   6,990              
  Allowance for loan losses   (21,493 )                 (17,310 )            
  Premises and equipment   31,983                   31,161              
  Other assets   66,131                   58,926              
    Total noninterest-earning assets   83,006                   79,767              
Total assets $ 3,006,783                 $ 2,251,018              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 670,473     $ 707   0.42 %   $ 431,656     $ 115   0.11 %
  Money markets   703,236       461   0.26       657,216       374   0.23  
  Savings   117,411       16   0.05       116,946       15   0.05  
  Certificates of deposit - retail   343,781       1,051   1.22       154,245       369   0.96  
    Subtotal interest-bearing deposits   1,834,901       2,235   0.49       1,360,063       873   0.26  
  Interest-bearing demand - brokered   265,802       215   0.32       138,000       70   0.20  
  Certificates of deposit - brokered   98,191       504   2.05       100,934       264   1.05  
    Total interest-bearing deposits   2,198,894       2,954   0.54       1,598,997       1,207   0.30  
  Borrowings   146,441       428   1.17       93,152       382   1.64  
  Capital lease obligation   10,515       126   4.79       9,867       118   4.78  
  Total interest-bearing liabilities   2,355,850       3,508   0.60       1,702,016       1,707   0.40  
Noninterest-bearing liabilities:                                      
  Demand deposits   384,604                   360,096              
  Accrued expenses and other liabilities   12,133                   9,606              
  Total noninterest-bearing liabilities   396,737                   369,702              
Shareholders' equity   254,196                   179,300              
  Total liabilities and shareholders' equity $ 3,006,783                 $ 2,251,018              
  Net interest income         $ 20,462                 $ 17,065      
    Net interest spread               2.68 %                 3.06 %
    Net interest margin (4)               2.80 %                 3.14 %
   
(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)  
           
  June 30, 2015     March 31,2015  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 244,087     $ 1,037   1.70 %   $ 273,946     $ 1,182   1.73 %
    Tax-exempt (1) (2)   30,941       210   2.71       37,631       231   2.46  
  Loans held for sale   2,049       24   4.64       774       10   5.10  
  Loans (2) (3):                                      
    Mortgages   466,033       3,800   3.26       465,722       3,785   3.25  
    Commercial mortgages   1,663,150       14,767   3.55       1,459,872       13,589   3.72  
    Commercial   360,517       3,347   3.71       316,109       2,897   3.67  
    Commercial construction   5,713       61   4.27       5,930       62   4.18  
    Installment   29,169       256   3.51       27,791       252   3.63  
    Home equity   51,710       417   3.23       50,660       405   3.20  
    Other   527       12   9.11       530       12   9.06  
    Total loans   2,576,819       22,660   3.52       2,326,614       21,002   3.61  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   69,780       39   0.22       91,657       43   0.18  
      Total interest-earning assets   2,923,777       23,970   3.28       2,730,723       22,468   3.29 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   6,385                   6,804              
  Allowance for loan losses   (21,493 )                 (20,056 )            
  Premises and equipment   31,983                   32,256              
  Other assets   66,131                   63,868              
    Total noninterest-earning assets   83,006                   82,872              
Total assets $ 3,006,783                 $ 2,813,595              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 670,473     $ 707   0.42 %   $ 630,557     $ 409   0.26 %
  Money markets   703,236       461   0.26       710,590       463   0.26  
  Savings   117,411       16   0.05       113,435       14   0.05  
  Certificates of deposit - retail   343,781       1,051   1.22       247,860       663   1.07  
    Subtotal interest-bearing deposits   1,834,901       2,235   0.49       1,702,442       1,549   0.36  
  Interest-bearing demand - brokered   265,802       215   0.32       240,500       185   0.31  
  Certificates of deposit - brokered   98,191       504   2.05       126,404       524   1.66  
    Total interest-bearing deposits   2,198,894       2,954   0.54       2,069,346       2,258   0.44  
  Borrowings   146,441       428   1.17       109,639       392   1.43  
  Capital lease obligation   10,515       126   4.79       10,635       128   4.81  
  Total interest-bearing liabilities   2,355,850       3,508   0.60       2,189,620       2,778   0.51  
Noninterest-bearing liabilities:                                      
  Demand deposits   384,604                   366,919              
  Accrued expenses and other liabilities   12,133                   10,752              
  Total noninterest-bearing liabilities   396,737                   377,671              
Shareholders' equity   254,196                   246,304              
  Total liabilities and shareholders' equity $ 3,006,783                 $ 2,813,595              
  Net interest income         $ 20,462                 $ 19,690      
    Net interest spread               2.68 %                 2.78 %
    Net interest margin (4)               2.80 %                 2.88 %
   
(1) Average balances for available for sale securities are based on amortized cost.
(2) Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
SIX MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
   
  June 30, 2015     June 30, 2014  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 258,934     $ 2,219   1.71 %   $ 198,401     $ 2,038   2.05 %
    Tax-exempt (1) (2)   34,268       441   2.57       59,025       649   2.20  
  Loans held for sale   1,415       34   4.75       1,174       25   4.29  
  Loans (2) (3):                                      
    Mortgages   465,878       7,585   3.26       514,702       8,756   3.40  
    Commercial mortgages   1,562,073       28,356   3.63       1,046,179       20,153   3.85  
    Commercial   338,435       6,244   3.69       138,300       2,845   4.11  
    Commercial construction   5,821       123   4.23       5,969       132   4.42  
    Installment   28,484       508   3.57       21,860       461   4.22  
    Home equity   51,188       822   3.21       47,162       755   3.20  
    Other   528       25   9.47       561       26   9.27  
    Total loans   2,452,407       43,663   3.56       1,774,733       33,128   3.73  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   80,658       82   0.20       41,468       33   0.16  
      Total interest-earning assets   2,827,783       46,439   3.28 %     2,074,902       35,873   3.46 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   6,594                   6,694              
  Allowance for loan losses   (20,778 )                 (16,653 )            
  Premises and equipment   32,118                   30,956              
  Other assets   65,006                   59,961              
    Total noninterest-earning assets   82,940                   80,958              
Total assets $ 2,910,723                 $ 2,155,860              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 650,909     $ 1,116   0.34 %   $ 416,568     $ 207   0.10 %
  Money markets   706,893       924   0.26       655,430       707   0.22  
  Savings   115,434       30   0.05       116,733       30   0.05  
  Certificates of deposit - retail   296,085       1,714   1.16       151,864       724   0.95  
    Subtotal interest-bearing deposits   1,769,321       3,784   0.43       1,340,595       1,668   0.25  
  Interest-bearing demand - brokered   253,221       400   0.32       106,851       113   0.21  
  Certificates of deposit - brokered   112,219       1,028   1.83       57,564       295   1.02  
    Total interest-bearing deposits   2,134,761       5,212   0.49       1,505,010       2,076   0.28  
  Borrowings   128,142       820   1.28       104,306       772   1.48  
  Capital lease obligation   10,575       254   4.80       9,907       237   4.78  
  Total interest-bearing liabilities   2,273,478       6,286   0.55       1,619,223       3,085   0.38  
Noninterest-bearing liabilities:                                      
  Demand deposits   375,527                   350,698              
  Accrued expenses and other liabilities   11,446                   9,800              
  Total noninterest-bearing liabilities   386,973                   360,498              
Shareholders' equity   250,272                   176,139              
  Total liabilities and shareholders' equity $ 2,910,723                 $ 2,155,860              
  Net interest income         $ 40,153                 $ 32,788      
    Net interest spread               2.73 %                 3.08 %
    Net interest margin (4)               2.84 %                 3.16 %
   
(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 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  
Tangible Book Value Per Share   June 30,
2015
  March 31,
2015
  Dec 31,
2014
  Sept 30,
2014
  June 30,
2014
 
Shareholders' equity   $ 257,876   $ 249,353   $ 242,267   $ 188,070   $ 182,333  
Less: Intangible assets     3,342     563     563     563     563  
  Tangible equity     254,534     248,790     241,704     187,507     181,770  
                                 
Period end shares outstanding     15,592,168     15,440,430     15,155,717     12,286,821     12,154,150  
Less: Restricted shares not yet vested     436,908     429,642     345,095     382,252     376,134  
Total outstanding shares     15,155,260     15,010,788     14,810,622     11,904,569     11,778,016  
Tangible book value per share     16.80     16.57     16.32     15.75     15.43  
Book value per share     17.02     16.61     16.36     15.80     15.48  
                                 
Tangible Equity to Tangible Assets                                
Total Assets     3,118,170     2,879,457     2,702,397     2,514,521     2,400,971  
Less: Intangible assets     3,342     563     563     563     563  
  Tangible assets     3,114,828     2,878,894     2,701,834     2,513,958     2,400,408  
Tangible equity to tangible assets     8.17 %   8.64 %   8.95 %   7.46 %   7.57 %
Equity to assets     8.27 %   8.66 %   8.96 %   7.48 %   7.59 %
                                 
                                 
    Three Months Ended  
Efficiency Ratio   June 30,
2015
  March 31,
2015
  Dec 31,
2014
  Sept 30,
2014
  June 30,
2014
 
                                 
Net interest income   $ 20,344   $ 19,583   $ 18,352   $ 17,048   $ 16,923  
Total other income     6,499     5,882     5,287     5,052     5,473  
Less: (Loss)/gain on loans held for sale at lower of cost or fair value    

-
   

-
   

(3
)  

(7
)  

176
 
Less: Securities gains, net     176     268     44     39     79  
Total recurring revenue     26,667     25,197     23,598     22,068     22,141  
                                 
Total operating expenses     16,266     15,768     15,578     14,693     14,930  
                                 
Efficiency ratio     61.00 %   62.58 %   66.01 %   66.58 %   67.43 %
                                 
                                 
    Six Months Ended                    
Efficiency Ratio   June 30,
2015
  June 30,
2014
                   
                                 
Net interest income   $ 39,927   $ 32,494                    
Total other income     12,381     10,468                    
Less: Gain on loans held for sale at lower of cost or fair value     -     176                    
Less: Securities gains, net     444     177                    
Total recurring revenue     51,864     42,609                    
                                 
Total operating expenses     32,034     29,269                    
                                 
Efficiency ratio     61.77 %   68.69 %                  
                                 

Contact Information

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