SOURCE: Peapack-Gladstone Financial Corporation

Peapack-Gladstone Financial Corporation

January 27, 2017 16:30 ET

Peapack-Gladstone Financial Corporation Reports a Strong Fourth Quarter and Year and Declares Its Quarterly Cash Dividend

BEDMINSTER, NJ--(Marketwired - Jan 27, 2017) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Company") recorded record net income of $26.48 million and diluted earnings per share of $1.60 for the year ended December 31, 2016, compared to $19.97 million and $1.29, respectively, for the year ended December 31, 2015, reflecting increases of $6.51 million or 33 percent, and $0.31 per share or 24 percent, respectively.

For the quarter ended December 31, 2016, the Company recorded net income of $7.31 million and diluted earnings per share of $0.43, compared to $4.34 million and $0.28 for the same quarterly period last year, reflecting increases of $2.97 million, or 68 percent, and $0.15 per share, or 54 percent, respectively.

During the fourth quarter of 2015 the Company recorded $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million and diluted earnings per share by $0.10 per share, for both the 2015 year and 2015 fourth quarter.

The 2016 year and 2016 fourth quarter, when compared to the same periods in 2015, reflected improved net interest income, wealth management fee income, and other non-interest income. Expenses for 2016 included increased FDIC premiums, increased investment in risk management related analytics and practices, and increased salary and benefits associated with strategic hiring which was in line with the Company's Strategic Plan.

The following table summarizes specified financial measures for the year ended 2016 and 2015, respectively:

                       
    Year       Year       Increase/  
(Dollars in millions, except EPS)   2016       2015(A)       (Decrease)  
Net interest income $ 96.44     $ 84.45     $ 11.99 14 %
Provision for loan losses $ 7.50     $ 7.10     $ 0.40 6 %
Pretax income $ 42.74     $ 32.14     $ 10.60 33 %
Net income $ 26.48     $ 19.97     $ 6.51 33 %
Diluted EPS $ 1.60     $ 1.29     $ 0.31 24 %
Total revenue $ 125.35     $ 108.17     $ 17.18 16 %
                         
Return on average assets   0.72 %     0.64 %     0.08    
Return on average equity   8.92 %     7.71 %     1.21    
Efficiency ratio (B)   60.57 %     63.80 %     (3.23)    
Tang book value per share (B) $ 18.91     $ 17.40     $ 1.51    
 
(A) The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B) See Non-GAAP financial measures reconciliation table on page 26.
   

The following table summarizes specified financial measures for the fourth quarter of 2016 and 2015, respectively:

                       
    Q4       Q4       Increase/  
(Dollars in millions, except EPS)   2016       2015(A)       (Decrease)  
Net interest income $ 24.58     $ 22.82     $ 1.76 8 %
Provision for loan losses $ 1.50     $ 1.95     $ (0.45) (23) %
Pretax income $ 11.79     $ 6.60     $ 5.19 79 %
Net income $ 7.31     $ 4.34     $ 2.97 68 %
Diluted EPS $ 0.43     $ 0.28     $ 0.15 54 %
Total revenue $ 32.25     $ 28.54     $ 3.71 13 %
                         
Return on average assets   0.75 %     0.51 %     0.24    
Return on average equity   9.27 %     6.37 %     2.90    
Efficiency ratio (B)   59.45 %     70.05 %     (10.60)    
Tang book value per share (B) $ 18.91     $ 17.40     $ 1.51    
 
(A) The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%, ROAE by 0.60% and increased the efficiency ratio by 8.75%.
(B) See Non-GAAP financial measures reconciliation table on page 26.
   

Mr. Kennedy said, "We had a very strong 2016, as we continued to successfully execute our Plan. We posted strong results, despite the additional FDIC Insurance and risk management expenses this past year."

Additional highlights follow:

  • Growth in diluted EPS for Q4 2016 when compared to Q4 2015 was $0.15 per share, or 54 percent, and for the full year of 2016 when compared to 2015 the growth was $0.31 per share, or 24 percent. At December 31, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (the "Bank") increased to $3.67 billion from $3.32 billion at the end of 2015, reflecting growth of 11 percent.
  • Fee income from the Private Wealth Management Division totaled $4.6 million for the fourth quarter of 2016, compared to $4.3 million for the same quarter in 2015, and totaled $18.2 million for the year ended 2016, growing from $17.0 million for the year ended 2015. Wealth management fee income, comprising approximately 15 percent of the Company's total revenue for the year ended December 31, 2016, contributed significantly to the Company's diversified revenue sources.
  • Loans at December 31, 2016 totaled $3.31 billion. This reflected net growth of $50 million compared to the September 2016 quarter (2 percent compared to the prior quarter or 6 percent on an annualized basis), and $317 million (11 percent) when compared to the $3.00 billion at December 31, 2015.
  • Commercial & Industrial (C&I) loans at December 31, 2016 totaled $637 million. This reflected net growth of $39 million compared to the September 2016 quarter (7 percent compared to the prior quarter or 26 percent on an annualized basis), and net growth of $124 million (24 percent) when compared to $513 million in loans at December 31, 2015.
  • Multifamily whole loans sold totaled $53 million in the fourth quarter of 2016, which resulted in a net gain on sale of loans of $353 thousand. Multifamily whole loans sold in 2016 totaled $200 million, which resulted in a net gain on sale of loans of $1.2 million. Additionally, multifamily loan participations sold in 2016 totaled $34 million.
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $3.14 billion at December 31, 2016. This reflected net growth of $132 million compared to the September 2016 quarter (4 percent compared to the prior quarter or 18 percent on an annualized basis), and $496 million (19 percent) when compared to the $2.64 billion at December 31, 2015.
  • Asset quality metrics continued to be strong at December 31, 2016. Nonperforming assets at December 31, 2016 were just $11.8 million, or 0.30 percent of total assets. Total loans past due 30 through 89 days and still accruing were $1.4 million or 0.04 percent of total loans at December 31, 2016.
  • The Company's book value per share at December 31, 2016 of $19.10 reflected improvement when compared to $17.61 at December 31, 2015. Year over year growth in book value per share totaled 8 percent.

Mr. Kennedy noted, "We continue to be pleased with our progress since launching our Strategic Plan - Expanding our Reach - in early 2013, and we are particularly pleased with our progress in 2016. Despite the headwinds we noted going into 2016, we have delivered solid results for the year."

Net Interest Income / Net Interest Margin
Net interest income and net interest margin was $24.58 million and 2.63 percent for the fourth quarter of 2016, compared to $24.27 million and 2.74 percent for the third quarter of 2016, and compared to $22.82 million and 2.79 percent for the same quarter last year, reflecting growth in net interest income of $1.76 million or 8 percent when compared to the same prior year period. Net interest income for the fourth quarter of 2016 benefitted from loan growth during 2016. The December 2016 quarter included approximately $464 thousand of prepayment premiums received on the prepayment of certain multifamily loans, a slight decrease from $507 thousand for the September 2016 quarter, but a slight increase when compared to $326 thousand for the December 2015 quarter. Given the size of the Company's multifamily loan portfolio, prepayment premiums on such loans have become a part of recurring net interest income. 

Net interest margin for the fourth quarter of 2016 was negatively impacted by 7 basis points when compared to the third quarter of 2016 and the fourth quarter of 2015 due to an increase in our interest earning cash balances during the 2016 quarter. This extra liquidity was generated by deposit growth, as well as continued multifamily loan sales, during the fourth quarter of 2016.

Net interest income and net interest margin for the fourth quarter of 2016 when compared to the fourth quarter of 2015 was also negatively impacted by the effect of the $50 million subordinated debt issue in June 2016. 

Net interest income for the fourth quarter of 2016 improved compared to the same quarter in 2015, and net interest margin declined to 2.63 percent for the 2016 quarter compared to 2.79 percent for the 2015 quarter. Besides the 7 basis impact from higher liquidity in the 2016 quarter, the net interest margin also continued to be negatively impacted by the effect of the low interest rate environment throughout 2016, as well as competitive pressures in attracting new loans and deposits. 

As noted above, the net interest margin is also affected by the maintenance of liquid assets on the Company's balance sheet. Mr. Kennedy said, "In addition to $468 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1.1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $62 million drawn as of December 31, 2016."

The Company's interest rate sensitivity models indicate that the Company's net interest income and margin would improve in a rising interest rate environment.

Wealth Management Business
In the December 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.61 million in fee income compared to $4.44 million for the September 2016 quarter, and $4.31 million for the December 2015 quarter. 

Fee income for the December 2016 quarter increased by $303 thousand, or approximately 7 percent, from the December 2015 quarter. Growth in fee income was due to several factors including continued healthy new business results and a positive market environment, partially offset by normal levels of disbursements and outflows. 

The market value of the AUA of the wealth management division was $3.67 billion at December 31, 2016, increasing by $178 million, or 5 percent (20 percent on an annualized basis), from September 30, 2016 and increasing $352 million, or11 percent from $3.32 billion at December 31, 2015.

John P. Babcock, President of PGB Private Wealth Management, said, "We continue to execute on our advice-led strategy, incorporating a wealth management conversation into every relationship we have with clients, across all business lines. We continue to add talented new professionals to our wealth management team and expand the products, services, and the advice we deliver to our clients. Our continued growth will be driven by organic new business, the expansion of existing relationships and potentially, strategic acquisitions of wealth management firms in the Tri-State area over the medium term." Mr. Babcock went on to note, "Quarter-over-quarter and year-over-year revenue gains and positive net AUA flows continue on an upward trajectory and we enter 2017 with a robust new business pipeline. While the post-election market lift also contributed to our positive quarter and year-end results, it is too soon to predict the near-term impact on the broader financial markets. Yet, we remain cautiously optimistic that much-discussed tax reform, infrastructure spending and anticipated pro-growth fiscal policies will provide the foundation for a healthy equity market in 2017. Notwithstanding potential market fluctuations, our business continues to grow and will be a significant driver of enhanced shareholder value as we move forward."

Loan Originations / Loans
At December 31, 2016, loans totaled $3.31 billion compared to $3.26 billion three months ago at September 30, 2016 and compared to $3.00 billion one year ago at December 31, 2015, representing net increases of $50 million compared to the prior quarter (2 percent compared to the prior quarter or 6 percent on an annualized basis), and $317 million (11 percent) compared to the prior year December 31 period. Mr. Kennedy noted, "We continue to believe we have a very high quality loan portfolio, as evidenced by very strong asset quality metrics."

For the quarter ended December 31, 2016, residential mortgage originations totaled $65 million. Residential mortgage loans grew $57 million, or 12 percent, to $527 million at December 31, 2016 from $471 million one year ago at December 31, 2015. 

For the December 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $57 million. Commercial real estate mortgage loans (not including multifamily loans) grew $138 million, or 33 percent, to $551 million at December 31, 2016 from $413 million one year ago at December 31, 2015.

The December 2016 quarter included $26 million of multifamily loan originations, down significantly from the previous quarters. At December 31, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.46 billion (or 44.1 percent of total loans) compared to $1.54 billion (or 47.1 percent of total loans) three months ago at September 30, 2016 and compared to $1.50 billion (or 50 percent of total loans) at December 31, 2015. The reductions included whole loans sold and participations sold, including $53 million of whole loans sold in the December 2016 quarter, bringing the total whole loans sold and participations sold for 2016 to $235 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2017.

Mr. Kennedy said, "As I explained previously, we anticipated multifamily loan originations and growth would be less than prior years, as we manage our balance sheet such that multifamily loans decline as a percentage of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. We made progress on this front late in 2015, and we are pleased this has continued into 2016." Mr. Kennedy further noted that, "This balance sheet management will likely not be linear each quarter, but will rather be apparent over periods of time."

For the quarter ended December 31, 2016 the Company closed $78 million of commercial loans. Commercial loans grew $124 million, or 24 percent, to $637 million at December 31, 2016 from $513 million one year ago at December 31, 2015. At December 31, 2016 the commercial loan portfolio comprised 19.2 percent of the overall loan portfolio up from the 18.3 percent at September 30, 2016, and up from 17.1 percent one year ago at December 31, 2015.

Mr. Kennedy said, "As a result of our continued investment in and commitment to C&I banking, we have seen, and believe we will continue to see, our C&I client base and corresponding loan portfolio grow."

Mr. Kennedy went on to say, "Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients."

Eric H. Waser, Head of Commercial Banking noted, "We are extremely pleased with how our "Advice Led" approach is capturing the attention of the business community."

Deposits / Funding / Balance Sheet Management
As noted previously, in June 2016, the Company issued $50 million of subordinated debt ($48.7 million net of underwriting fees and expenses) bearing interest at an annual rate of 6 percent for the first five years, and thereafter at an adjustable rate until maturity in June 2026 or earlier redemption.

During the December 2016 quarter, customer deposit growth of $132 million (principally interest-bearing checking and money market) and increased capital of $15 million, primarily funded a $10 million maturity of FHLB Advances, an increase in loans of $50 million, and an increase in investment securities of $56 million.

Brokered interest-bearing demand ("overnight") deposits declined $20 million to $180 million at December 31, 2016 compared to $200 million at December 31, 2015. The interest rate paid on these deposits allowed the Bank to fund at attractive rates and engage in interest rate swaps as part of its asset-liability interest rate risk management. As of December 31, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

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

Other Noninterest Income
The Company's total noninterest income for the December 2016 quarter totaled $7.67 million or nearly 24 percent of total revenue.

The December 2016 quarter included $197 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $383 thousand for the September 2016 quarter, and $117 thousand for the December 2015 quarter. Originations of residential mortgage loans for sale were higher in the September 2016 quarter, compared to the other noted periods.

Gain on sale of multifamily loans held for sale at the lower of cost or fair value was $353 thousand for the December 2016 quarter, compared to $256 thousand for the September 2016 quarter. There were no such gains in the December 2015 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans, in addition to participations. The Company anticipates that it will continue to employ both of these strategies into 2017, and beyond.

The fourth quarter of 2016 included $121 thousand of income related to the Company's SBA lending and sale program, compared to $243 thousand generated in the September 2016 quarter, and $7 thousand in the December 2015 quarter. The SBA program was fully implemented in the March 2016 quarter, and it is part of the Company's normal ongoing operations.

The December 2016 quarter included $874 thousand of loan level, back-to-back swap income compared to $670 thousand in the September 2016 quarter. There was no such income in the December 2015 quarter. This program is also a part of the Company's normal ongoing operations. 

Other income for the December 2016 quarter totaled $322 thousand, compared to $395 thousand for the September 2016 quarter and to $191 thousand for the December 2015 quarter. The September 2016 quarter included somewhat higher loan fees than the December 2016 quarter. The December 2016 quarter, when compared to the same quarter in 2015, includes increased loan servicing fees and increased unused line of credit fees.

Operating Expenses
The Company's total operating expenses were $18.97 million for the quarter ended December 31, 2016, compared to $18.17 million for the September 2016 quarter and $19.99 million for the same quarter in 2015.

While the fourth quarter 2016 FDIC premium was relatively flat to the third quarter of 2016, and the fourth quarter of 2015, it was down significantly from the first and second quarters of 2016. Beginning July 1, 2016 the FDIC assessment system was revised. Revisions for "small institutions" (under $10 billion in assets) resulted in, among other things, the elimination of risk categories and utilization of a financial ratios method to determine assessment rates. The changes reduced the Company's assessment rate by nearly 50% in the third and fourth quarters of 2016, when compared to the first and second quarters 2016 assessment rate.

Salary and benefits expenses for the December 2016 quarter were $11.48 million compared to $11.52 million for the September 2016 quarter, and $10.66 million for the December 2015 quarter. Strategic hiring that was in line with the Company's Plan, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the December 2015 quarter to the December 2016 quarter.

Premises and equipment expenses for the December 2016 quarter were $2.90 million compared to $2.74 million for the September 2016 quarter, and $3.39 million for the December 2015 quarter. The December 2015 quarter included approximately $700 thousand of premises and equipment expenses related to the closure of two branch offices in that quarter. 

Other expenses for the December 2016 quarter were $3.78 million compared to $3.10 million for the September 2016 quarter, and $5.12 million for the December 2015 quarter. The December 2016 quarter included increased marketing expenses associated with a targeted marketing campaign run throughout the quarter. The December 2015 quarter included approximately $1.75 million of other expenses related to the closure of two branch offices in that quarter. 

Mr. Kennedy noted, "Total expenses for 2016 came in under budget, as we worked to manage our expenses closely."

Provision for Loan Losses / Asset Quality
For the quarter ended December 31, 2016, the Company's provision for loan losses was $1.50 million, which was slightly lower than the September 2016 provision of $2.10 million and the December 2015 provision of $1.95 million. The Company had $92 thousand of net recoveries in the December 2016 quarter, compared to $703 thousand and $468 thousand of net charge-offs in the September 2016 and December 2015 quarters, respectively. 

At December 31, 2016 the allowance for loan losses was $32.21 million, which was 286 percent of nonperforming loans and 0.97 percent of total loans, compared to $30.62 million, which was 282 percent of nonperforming loans and 0.95 percent of total loans at September 30, 2016, and $25.86 million, which was 383 percent of nonperforming loans and 0.89 percent of total loans one year prior, at December 31, 2015.

The Company's provision for loan losses and its allowance for loan losses continue to track consistently with the Company's net loan growth and asset quality metrics.

Nonperforming assets at December 31, 2016 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were just $11.8 million or 0.30 percent of total assets, compared to $11.4 million or 0.30 percent of total assets at September 30, 2016 and $7.3 million or 0.22 percent of total assets at December 31, 2015. Total loans past due 30 through 89 days and still accruing were $1.4 million at December 31, 2016, compared to $8.2 million at September 30, 2016 and $2.1 million at December 31, 2015. There were no multifamily loans past due at December 31, 2016.

Capital / Dividends
The Company's capital position in the December 2016 quarter was benefitted by net income of $7.3 million and $6.9 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company.

At December 31, 2016, the Company's GAAP capital as a percent of total assets was 8.36 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.35 percent, 10.60 percent, 10.60 percent and 13.25 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.31 percent, 11.82 percent, 11.82 percent and 12.87 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

On January 26, 2017, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on February 23, 2017 to shareholders of record on February 9, 2017.

Mr. Kennedy said, "We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future."

ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.88 billion as of December 31, 2016. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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

  • inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
  • the impact of anticipated higher operating expenses in 2017 and beyond;
  • inability to manage our growth;
  • inability to successfully integrate our expanded employee base;
  • a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
  • declines in our net interest margin caused by the low interest rate environment and highly competitive market;
  • declines in value in our investment portfolio;
  • higher than expected increases in our allowance for loan losses;
  • higher than expected increases in loan losses or in the level of nonperforming loans;
  • unexpected changes in interest rates;
  • a continued or unexpected decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • inability to successfully generate new business in new geographic markets;
  • inability to execute upon new business initiatives;
  • lack of liquidity to fund our various cash obligations;
  • reduction in our lower-cost funding sources;
  • our inability to adapt to technological changes;
  • 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, 2015. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

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

 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
 
    For the Three Months Ended
      Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,
      2016     2016 (A)     2016     2016     2015 (B)
Income Statement Data:                              
Interest income   $ 30,271   $ 29,844   $ 29,035   $ 27,898   $ 27,123
Interest Expense     5,691     5,575     4,859     4,488     4,304
  Net interest income     24,580     24,269     24,176     23,410     22,819
Provision for loan losses     1,500     2,100     2,200     1,700     1,950
  Net interest income after provision for loan losses     23,080     22,169     21,976     21,710     20,869
Wealth management fee income     4,610     4,436     4,899     4,295     4,307
Service charges and fees     815     812     818     807     849
Bank owned life insurance     380     340     345     342     252
Gain on loans held for sale at fair value (Mortgage banking)     197     383     309     121     117
Gain on loans held for sale at lower of cost or fair value     353     256     500     124     -
Fee income related to loan level, back-to-back swaps     874     670     -     94     -
Gain on sale of SBA loans     121     243     212     47     7
Other income     322     395     347     332     191
Securities gains, net     -     -     18     101     -
  Total other income     7,672     7,535     7,448     6,263     5,723
Compensation and employee benefits     11,480     11,515     11,100     10,908     10,659
Premises and equipment     2,903     2,736     2,742     2,864     3,390
FDIC insurance expense     804     814     1,581     1,559     825
Other expenses     3,778     3,101     3,352     3,875     5,119
  Total operating expenses     18,965     18,166     18,775     19,206     19,993
Income before income taxes     11,787     11,538     10,649     8,767     6,599
Income tax expense     4,479     4,422     4,085     3,278     2,256
Net income   $ 7,308   $ 7,116   $ 6,564   $ 5,489   $ 4,343
                               
Total revenue   $ 32,252   $ 31,804   $ 31,624   $ 29,673   $ 28,542
Per Common Share Data:                              
Earnings per share (basic)   $ 0.44   $ 0.43   $ 0.41   $ 0.35   $ 0.28
Earnings per share (diluted)     0.43     0.43     0.40     0.34     0.28
Weighted average number of common shares outstanding:                              
Basic     16,770,725     16,467,654     16,172,223     15,858,278     15,498,119
Diluted     17,070,473     16,673,596     16,341,975     16,016,972     15,721,876
Performance Ratios:                              
Return on average assets annualized (ROAA)     0.75%     0.77%     0.73%     0.64%     0.51%
Return on average equity annualized (ROAE)     9.27%     9.44%     9.06%     7.83%     6.37%
Net interest margin (taxable equivalent basis)     2.63%     2.74%     2.79%     2.82%     2.79%
Efficiency ratio (D)     59.45%     57.58%     60.36%     65.22%     70.05%
Operating expenses / average assets annualized     1.96%     1.98%     2.08%     2.22%     2.36%
 
(A) The quarter ended December 31, 2016 and September 30, 2016 included a reduction in FDIC premium. The reduction was a result of an amendment to small institution pricing for deposit insurance by the FDIC effective the quarter after the FDIC reserve ratio reaches 1.15%. The reserve ratio reached 1.15% effective as of the quarter ended June 30, 2016.
(B) The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%and ROAE by 0.60%, and increased the efficiency ratio by 8.75%.
(C) Total revenue includes gain from sale of loans held for sale at lower of cost or fair value.
(D) Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.
   
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
 
      For the      
      Twelve Months Ended      
      December 31,     Change
Income Statement Data:     2016     2015 (A)     $   %
Interest income   $ 117,048   $ 99,142   $ 17,906   18%
Interest expense     20,613     14,690     5,923   40%
  Net interest income     96,435     84,452     11,983   14%
Provision for loan losses     7,500     7,100     400   6%
  Net interest income after provision for loan losses     88,935     77,352     11,583   15%
Wealth management fee income     18,240     17,039     1,201   7%
Service charges and fees     3,252     3,323     (71)   -2%
Bank owned life insurance     1,407     1,297     110   8%
Gain on loans held for sale at fair value (Mortgage banking)     1,010     528     482   91%
Gains on loans held for sale at lower of cost or fair value     1,233     -     1,233   N/A
Fee income related to loan level, back-to-back swaps     1,638     373     1,265   339%
Gain on sale of SBA loans     623     7     616   8,800%
Other income     1,396     620     776   125%
Securities gains, net     119     527     (408)   -77%
  Total other income     28,918     23,714     5,204   22%
Compensation and employee benefits     45,003     40,278     4,725   12%
Premises and equipment     11,245     11,569     (324)   -3%
FDIC insurance expense     4,758     2,154     2,604   121%
Other expenses     14,106     14,925     (819)   -5%
  Total operating expenses     75,112     68,926     6,186   9%
Income before income taxes     42,741     32,140     10,601   33%
Income tax expense     16,264     12,168     4,096   34%
Net income   $ 26,477   $ 19,972   $ 6,505   33%
                       
Total revenue   $ 125,353   $ 108,166   $ 17,187   16%
                       
Per Common Share Data:                      
                       
Earnings per share (basic)   $ 1.62   $ 1.31   $ 0.31   24%
Earnings per share (diluted)     1.60     1.29     0.31   24%
                       
Weighted average number of                      
common shares outstanding:                      
Basic     16,318,868     15,187,637     1,131,231   7%
Diluted     16,514,998     15,434,996     1,080,002   7%
                       
Performance Ratios:                      
                       
Return on average assets     0.72%     0.64%     0.08   13%
Return on average common equity     8.92%     7.71%     1.21   16%
                       
Net interest margin (taxable equivalent basis)     2.74%     2.80%     (0.06)   -2%
                       
Efficiency ratio (C)     60.57%     63.80%     (3.23)   -5%
                       
Operating expenses / average                      
assets     2.06%     2.21%     (0.15)   -7%
 
(A) The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05% and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B) Total revenue includes gains from sale of loans held for sale at lower of cost or fair value.
(C) Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and 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
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
 
    As of
      Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,
      2016     2016     2016     2016     2015
ASSETS                              
Cash and due from banks   $ 24,580   $ 17,861   $ 18,261   $ 15,872   $ 11,550
Federal funds sold     101     101     101     101     101
Interest-earning deposits     138,010     141,593     62,968     61,946     58,509
  Total cash and cash equivalents     162,691     159,555     81,330     77,919     70,160
                               
Securities available for sale     305,388     249,616     206,216     214,050     195,630
FHLB and FRB stock, at cost     13,813     14,093     14,623     13,254     13,984
                               
Loans held for sale, residential     1,200     3,013     4,133     3,537     1,558
SBA loans held for sale, at lower of cost or fair value     388     -     -     -     -
                               
Residential mortgage     527,370     496,735     479,839     469,084     470,869
Multifamily mortgage     1,459,594     1,537,834     1,562,206     1,527,774     1,498,975
Commercial mortgage     551,233     497,267     459,744     414,677     413,118
Commercial loans     636,714     598,078     576,169     554,871     512,886
Construction loans     1,405     430     -     1,392     1,401
Consumer loans     69,654     69,222     67,614     44,198     45,044
Home equity lines of credit     65,682     62,872     63,188     53,328     52,649
Other loans     492     449     430     443     500
  Total loans     3,312,144     3,262,887     3,209,190     3,065,767     2,995,442
  Less: Allowance for loan losses     32,208     30,616     29,219     27,321     25,856
  Net loans     3,279,936     3,232,271     3,179,971     3,038,446     2,969,586
                               
Premises and equipment     30,371     30,223     29,199     29,609     30,246
Other real estate owned     534     534     767     861     563
Accrued interest receivable     8,153     6,383     7,733     7,497     6,820
Bank owned life insurance     43,806     43,541     43,325     43,101     42,885
Deferred tax assets, net     15,320     14,765     18,190     17,952     15,582
Other assets     17,033     20,389     19,216     19,771     17,645
  TOTAL ASSETS   $ 3,878,633   $ 3,774,383   $ 3,604,703   $ 3,465,997   $ 3,364,659
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits   $ 489,485   $ 494,204   $ 469,809   $ 457,730   $ 419,887
  Interest-bearing demand deposits     1,023,081     928,941     897,210     905,479     861,697
  Savings     120,056     119,650     120,617     119,149     115,007
  Money market accounts     1,048,494     997,572     861,664     820,757     810,709
  Certificates of deposit - Retail     457,000     466,003     466,079     446,833     434,450
Subtotal "customer" deposits     3,138,116     3,006,370     2,815,379     2,749,948     2,641,750
  IB Demand - Brokered     180,000     200,000     200,000     200,000     200,000
  Certificates of deposit - Brokered     93,721     93,690     93,660     93,630     93,720
Total deposits     3,411,837     3,300,060     3,109,039     3,043,578     2,935,470
                               
Overnight borrowings     -     -     29,450     21,100     40,700
Federal home loan bank advances     61,795     71,795     83,692     83,692     83,692
Capital lease obligation     9,693     9,828     9,961     10,092     10,222
Subordinated debt, net     48,764     48,731     48,698     -     -
Other liabilities     22,334     27,934     28,330     24,030     18,899
Due to brokers, securities settlements     -     7,003     -     -     -
  TOTAL LIABILITIES     3,554,423     3,465,351     3,309,170     3,182,492     3,088,983
Shareholders' equity     324,210     309,032     295,533     283,505     275,676
  TOTAL LIABILITIES AND                              
  SHAREHOLDERS' EQUITY   $ 3,878,633   $ 3,774,383   $ 3,604,703   $ 3,465,997   $ 3,364,659
                               
Assets under administration at                              
  Peapack-Gladstone Bank's                              
  Wealth Management Division                              
  (market value, not included above)   $ 3,673,609   $ 3,495,206   $ 3,418,566   $ 3,307,799   $ 3,321,624
                               
 
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
    As of
      Dec 31,     Sept 30,     June 30,     Mar 31,     Dec 31,
      2016     2016     2016     2016     2015
Asset Quality:                              
Loans past due over 90 days and still accruing   $ -   $ -   $ -   $ -   $ -
Nonaccrual loans     11,264     10,840     8,049     7,278     6,747
Other real estate owned     534     534     767     861     563
  Total nonperforming assets   $ 11,798   $ 11,374   $ 8,816   $ 8,139   $ 7,310
                               
Nonperforming loans to total loans     0.34%     0.34%     0.26%     0.24%     0.23%
Nonperforming assets to total assets     0.30%     0.30%     0.24%     0.23%     0.22%
                               
Performing TDRs (A)(B)   $ 17,784   $ 18,078   $ 18,570   $ 16,033   $ 16,231
                               
Loans past due 30 through 89 days and still accruing (C)   $ 1,356   $ 8,238   $ 6,576   $ 1,393   $ 2,143
                               
Classified loans   $ 45,798   $ 49,627   $ 51,084   $ 48,817   $ 42,777
                               
Impaired loans   $ 29,071   $ 28,951   $ 26,643   $ 23,335   $ 23,107
                               
Allowance for loan losses:                              
  Beginning of period   $ 30,616   $ 29,219   $ 27,321   $ 25,856   $ 24,374
  Provision for loan losses     1,500     2,100     2,200     1,700     1,950
  Charge-offs, net     92     (703)     (302)     (235)     (468)
  End of period   $ 32,208   $ 30,616   $ 29,219   $ 27,321   $ 25,856
                               
                               
ALLL to nonperforming loans     285.94%     282.44%     363.01%     375.39%     383.22%
ALLL to total loans     0.97%     0.95%     0.93%     0.90%     0.89%
 
(A) Amounts reflect TDR's that are paying according to restructured terms.
(B) Amount does not include $4.5 million at December 31, 2016, $4.4 million at September 30, 2016, $4.2 million at June 30, 2016, $3.4 million at March 31, 2016 and $2.6 million at December 31, 2015 of TDRs included in nonaccrual loans.
(C) September 30, 2016 includes one commercial loan secured by real estate totaling $5.0 million that was 30 days past due at September 30, 2016 but brought current on October 4, 2016.
   
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands, Except Share Data)
(Unaudited)
                             
    Dec 31,       Sept 30,       Dec 31,  
    2016       2016       2015  
Capital Adequacy                            
                             
Equity to total assets (A)     8.36 %       8.19 %       8.19 %
                             
Tangible equity to tangible assets (B)     8.28 %       8.11 %       8.10 %
                             
Book value per share (C) $   19.10     $   18.57     $   17.61  
                             
Tangible book value per share (D) $   18.91     $   18.38     $   17.40  
                             
    Dec 31,       Sept 30,       Dec 31,  
    2016       2016       2015  
Regulatory Capital - Holding Company                            
                             
Tier I leverage $ 323,045 8.35 %   $ 308,250 8.39 %   $ 273,738 8.10 %
                             
Tier I capital to risk weighted assets   323,045 10.60       308,250 10.47       273,738 10.42  
                             
Common equity tier I capital ratio to risk-weighted assets   323,042 10.60       308,247 10.47       273,738 10.42  
                             
Tier I & II capital to risk-weighted assets   404,017 13.25       387,597 13.17       299,593 11.40  
                             
Regulatory Capital - Bank                            
                             
Tier I leverage $ 360,097 9.31 %   $ 345,604 9.41 %   $ 271,641 8.04 %
                             
Tier I capital to risk weighted assets   360,097 11.82       345,604 11.74       271,641 10.34  
                             
Common equity tier I capital ratio to risk-weighted assets   360,094 11.82       345,601 11.74       271,641 10.34  
                             
Tier I & II capital to risk-weighted assets   392,305 12.87       376,220 12.78       297,497 11.32  
                             
 
(A) Equity to total assets is calculated as total shareholders' equity as a percentage of total assets at period end.
(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested.
(D) Tangible book value per share is different than book value per share because it excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested. See Non-GAAP financial measures reconciliation included in these tables.
   
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
     
    For the Quarters Ended
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,
    2016     2016     2016     2016     2015
Residential loans retained $ 53,324   $ 43,284   $ 32,513   $ 17,747   $ 18,847
Residential loans sold   11,429     25,128     20,221     8,062     7,183
Total residential loans   64,753     68,412     52,734     25,809     26,030
                             
CRE (includes Community banking)   56,793     56,799     36,554     9,339     41,015
Multifamily (includes Community banking)   26,300     74,450     150,709     108,035     107,605
Commercial loans (includes Community banking) (A)   78,038     59,698     61,309     67,488     74,749
SBA   2,050     3,025     2,285     1,055     -
Wealth lines of credit (A)   2,400     1,200     785     1,800     35,550
Total commercial loans   165,581     195,172     251,642     187,717     258,919
                             
Installment loans   1,826     1,591     1,077     486     1,052
                             
Home equity lines of credit (A)   5,878     7,064     14,435     3,604     5,902
                             
Total loans closed $ 238,038   $ 272,239   $ 319,888   $ 217,616   $ 291,903
                             
                             
                             
  For the Twelve Months Ended
    Dec 31,     Dec 31,
    2016     2015
Residential loans retained $ 146,868   $ 79,573
Residential loans sold   64,840     33,177
Total residential loans   211,708     112,750
           
CRE (includes Community banking)   159,485     175,813
Multifamily (includes Community banking)   359,494     673,205
Commercial loans (includes Community banking) (A)   266,533     289,289
SBA   8,415     -
Wealth lines of credit (A)   6,185     75,960
Total commercial loans   800,112     1,214,267
           
Installment loans   4,980     3,457
           
Home equity lines of credit (A)   30,981     16,279
           
Total loans closed $ 1,047,781   $ 1,346,753

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

   
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
   
    Dec 31, 2016     Dec 31, 2015  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 241,443     $ 1,202   1.99 %   $ 192,678     $ 901   1.87 %
    Tax-exempt (1) (2)     30,179       216   2.86       25,516       206   3.23  
                                         
  Loans (2) (3):                                        
    Mortgages     505,366       4,062   3.22       466,536       3,820   3.28  
    Commercial mortgages     2,035,193       17,798   3.50       1,903,842       16,811   3.53  
    Commercial     605,781       5,888   3.89       486,353       4,725   3.89  
    Commercial construction     832       9   4.33       1,404       14   3.99  
    Installment     70,051       539   3.08       42,629       320   3.00  
    Home equity     64,371       530   3.29       51,516       420   3.26  
    Other     485       12   9.90       507       12   9.47  
    Total loans     3,282,079       28,838   3.51       2,952,787       26,122   3.54  
  Federal funds sold     101       -   0.25       101       -   0.10  
  Interest-earning deposits     223,188       257   0.46       123,045       76   0.25  
      Total interest-earning assets     3,776,990       30,513   3.23       3,294,127       27,305   3.32  
Noninterest-Earning Assets:                                        
  Cash and due from banks     10,747                   9,133              
  Allowance for loan losses     (31,575 )                 (24,858 )            
  Premises and equipment     30,441                   31,285              
  Other assets     85,224                   73,483              
      Total noninterest-earning assets     94,837                   89,043              
Total assets   $ 3,871,827                 $ 3,383,170              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 992,075     $ 724   0.29 %   $ 849,929     $ 466   0.22 %
  Money markets     1,021,819       864   0.34       813,112       577   0.28  
  Savings     119,518       17   0.06       115,930       17   0.06  
  Certificates of deposit - retail     463,377       1,621   1.40       420,831       1,401   1.33  
    Subtotal interest-bearing deposits     2,596,789       3,226   0.50       2,199,802       2,461   0.45  
  Interest-bearing demand - brokered     196,848       757   1.54       274,261       834   1.22  
  Certificates of deposit - brokered     93,704       501   2.14       93,704       502   2.14  
    Total interest-bearing deposits     2,887,341       4,484   0.62       2,567,767       3,797   0.59  
  Borrowings     67,958       332   1.95       88,548       383   1.73  
  Capital lease obligation     9,741       117   4.80       10,266       124   4.83  
  Subordinated debt     48,743       758   6.22       -       -   N/A  
  Total interest-bearing liabilities     3,013,783       5,691   0.76       2,666,581       4,304   0.65  
Noninterest-bearing liabilities:                                        
  Demand deposits     514,130                   428,412              
  Accrued expenses and                                        
  other liabilities     28,406                   15,541              
  Total noninterest-bearing liabilities     542,536                   443,953              
Shareholders' equity     315,508                   272,636              
  Total liabilities and                                        
    Shareholders' equity   $ 3,871,827                 $ 3,383,170              
  Net interest income           $ 24,822                 $ 23,001      
    Net interest spread                 2.47 %                 2.67 %
    Net interest margin (4)                 2.63 %                 2.79 %
 
(1)   Average balances for available for sale securities are based on amortized cost.
(2)   Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)   Loans are stated net of unearned income and include nonaccrual loans.
(4)   Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
     
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
   
    Dec 31, 2016     Sept 30, 2016  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 241,443     $ 1,202   1.99 %   $ 193,902     $ 976   2.01 %
    Tax-exempt (1) (2)     30,179       216   2.86       27,516       212   3.08  
                                         
  Loans (2) (3):                                        
  Mortgages     505,366       4,062   3.22       486,909       3,983   3.27  
    Commercial mortgages     2,035,193       17,798   3.50       2,048,877       17,977   3.51  
    Commercial     605,781       5,888   3.89       573,211       5,826   4.07  
    Commercial construction     832       9   4.33       454       5   4.41  
    Installment     70,051       539   3.08       67,175       443   2.64  
    Home equity     64,371       530   3.29       62,560       519   3.32  
    Other     485       12   9.90       465       13   11.18  
    Total loans     3,282,079       28,838   3.51       3,239,651       28,766   3.55  
  Federal funds sold     101       -   0.25       101       -   0.25  
  Interest-earning deposits     223,188       257   0.46       111,204       131   0.47  
      Total interest-earning assets     3,776,990       30,513   3.23 %     3,572,374       30,085   3.37 %
Noninterest-Earning Assets:                                        
  Cash and due from banks     10,747                   17,292              
  Allowance for loan losses     (31,575 )                 (30,022 )            
  Premises and equipment     30,441                   29,460              
  Other assets     85,224                   88,721              
      Total noninterest-earning assets     94,837                   105,451              
Total assets   $ 3,871,827                 $ 3,677,825              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 992,075     $ 724   0.29 %   $ 924,970     $ 645   0.28 %
  Money markets     1,021,819       864   0.34       915,139       737   0.32  
  Savings     119,518       17   0.06       119,986       17   0.06  
  Certificates of deposit - retail     463,377       1,621   1.40       466,967       1,615   1.38  
    Subtotal interest-bearing deposits     2,596,789       3,226   0.50       2,427,062       3,014   0.50  
  Interest-bearing demand - brokered     196,848       757   1.54       200,000       762   1.52  
  Certificates of deposit - brokered     93,704       501   2.14       93,674       501   2.14  
    Total interest-bearing deposits     2,887,341       4,484   0.62       2,720,736       4,277   0.63  
  Borrowings     67,958       332   1.95       87,258       380   1.74  
  Capital lease obligation     9,741       117   4.80       9,874       119   4.82  
  Subordinated debt     48,743       758   6.22       48,711       799   6.56  
  Total interest-bearing liabilities     3,013,783       5,691   0.76       2,866,579       5,575   0.78  
Noninterest-bearing liabilities:                                        
  Demand deposits     514,130                   479,659              
  Accrued expenses and                                        
  other liabilities     28,406                   30,070              
  Total noninterest-bearing liabilities     542,536                   509,729              
Shareholders' equity     315,508                   301,517              
  Total liabilities and                                        
    Shareholders' equity   $ 3,871,827                 $ 3,677,825              
  Net interest income           $ 24,822                 $ 24,510      
    Net interest spread                 2.47 %                 2.59 %
    Net interest margin (4)                 2.63 %                 2.74 %
(1)   Average balances for available for sale securities are based on amortized cost.
(2)   Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)   Loans are stated net of unearned income and include nonaccrual loans.
(4)   Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
     
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
TWELVE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
   
    Dec 31, 2016     Dec 31, 2015  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 208,980     $ 4,018   1.92 %   $ 231,152     $ 4,079   1.76 %
    Tax-exempt (1) (2)     27,225       840   3.09       31,158       858   2.75  
                                         
  Loans (2) (3):                                        
    Mortgages     483,088       15,790   3.27       466,873       15,244   3.27  
    Commercial mortgages     2,022,936       70,775   3.50       1,718,171       61,286   3.57  
    Commercial     564,598       22,206   3.93       404,908       15,101   3.73  
    Commercial construction     991       41   4.14       3,679       156   4.24  
    Installment     61,362       1,737   2.83       32,774       1,096   3.34  
    Home equity     59,555       1,964   3.30       51,227       1,657   3.23  
    Other     474       47   9.92       518       48   9.27  
    Total loans     3,193,044       112,560   3.53       2,678,150       94,588   3.53  
  Federal funds sold     101       -   0.24       101       -   0.10  
  Interest-earning deposits     128,488       551   0.43       95,287       204   0.21  
      Total interest-earning assets     3,557,798       117,969   3.32       3,035,848       99,729   3.29  
Noninterest-Earning Assets:                                        
  Cash and due from banks     9,580                   7,445              
  Allowance for loan losses     (29,068 )                 (22,550 )            
  Premises and equipment     29,839                   31,771              
  Other assets     86,228                   67,915              
      Total noninterest-earning assets     96,579                   84,581              
Total assets   $ 3,654,377                 $ 3,120,429              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 926,713     $ 2,547   0.27 %   $ 741,199     $ 1,495   0.20 %
  Money markets     894,215       2,775   0.31       746,329       2,047   0.27  
  Savings     119,043       68   0.06       116,289       64   0.06  
  Certificates of deposit - retail     455,946       6,270   1.38       354,626       4,411   1.24  
    Subtotal interest-bearing deposits     2,395,917       11,660   0.49       1,958,443       8,017   0.41  
  Interest-bearing demand - brokered     199,208       3,020   1.52       268,414       2,534   0.94  
  Certificates of deposit - brokered     93,674       1,995   2.13       102,937       2,034   1.98  
    Total interest-bearing deposits     2,688,799       16,675   0.62       2,329,794       12,585   0.54  
  Borrowings     132,985       1,764   1.33       113,027       1,602   1.42  
  Capital lease obligation     9,940       478   4.81       10,452       503   4.81  
  Subordinated debt     26,679       1,696   6.36       -       -   N/A  
  Total interest-bearing liabilities     2,858,403       20,613   0.72       2,453,273       14,690   0.60  
Noninterest-bearing liabilities:                                        
  Demand deposits     473,536                   394,567              
  Accrued expenses and                                        
  other liabilities     25,528                   13,530              
  Total noninterest-bearing liabilities     499,064                   408,097              
Shareholders' equity     296,908                   259,059              
  Total liabilities and                                        
    Shareholders' equity   $ 3,654,375                 $ 3,120,429              
  Net interest income           $ 97,356                 $ 85,039      
    Net interest spread                 2.60 %                 2.69 %
    Net interest margin (4)                 2.74 %                 2.80 %
(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 calculated 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 calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares no yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding ORE provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

       
    Three Months Ended  
    Dec 31,   Sept 30,   June 30,   March 31,   Dec 31,  
Tangible Book Value Per Share   2016   2016   2016   2016   2015  
Shareholders' equity   $ 324,210   $ 309,032   $ 295,533   $ 283,505   $ 275,676  
Less: Intangible assets     3,157     3,188     3,277     3,264     3,281  
  Tangible equity     321,053     305,844     292,256     280,241     272,395  
                                 
Period end shares outstanding     17,257,995     16,944,738     16,657,403     16,326,840     16,068,119  
Less: Restricted awards not yet vested     283,712     302,799     309,920     321,580     414,188  
Total outstanding shares     16,974,283     16,641,939     16,347,483     16,005,260     15,653,931  
Tangible book value per share     18.91     18.38     17.88     17.51     17.40  
Book value per share     19.10     18.57     18.08     17.71     17.61  
                                 
Tangible Equity to Tangible Assets                                
Total Assets   $ 3,878,633   $ 3,774,383   $ 3,604,703   $ 3,465,997   $ 3,364,659  
Less: Intangible assets     3,157     3,188     3,277     3,264     3,281  
  Tangible assets     3,875,476     3,771,195     3,601,426     3,462,733     3,361,378  
Tangible equity to tangible assets     8.28 %   8.11 %   8.12 %   8.09 %   8.10 %
Equity to assets     8.36 %   8.19 %   8.20 %   8.18 %   8.19 %
                                 
                                 
                                 
    Three Months Ended  
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
Efficiency Ratio   2016     2016     2016     2016     2015  
                                         
Net interest income   $ 24,580     $ 24,269     $ 24,176     $ 23,410     $ 22,819  
Total other income     7,672       7,535       7,448       6,263       5,723  
Less: Gain on loans                                        
  held for sale at lower of cost                                        
  or fair value     353       256       500       124       -  
Less: Securities gains, net     -       -       18       101       -  
Total recurring revenue     31,899       31,548       31,106       29,448       28,542  
                                         
Operating expenses     18,965       18,166       18,775       19,206       19,993  
Total operating expense     18,965       18,166       18,775       19,206       19,993  
                                         
Efficiency ratio     59.45 %     57.58 %     60.36 %     65.22 %     70.05 %
                                         
Efficiency ratio, excluding $2.5                                        
  million of charges relating                                        
  to the closure of two                                        
  branch offices     -       -       -       -       61.30 %
                                           
                                           
                                           
    Twelve Months Ended  
    Dec 31,     Dec 31,  
Efficiency Ratio   2016     2015  
                 
Net interest income   $ 96,435     $ 84,452  
Total other income     28,918       23,714  
Less: Gain on loans                
  held for sale at lower of cost                
  or fair value     1,233       -  
Less: Securities gains, net     119       527  
Total recurring revenue     124,001       107,639  
                 
Operating expenses     75,112       68,926  
Less: ORE provision     -       250  
Total operating expenses     75,112       68,676  
                 
Efficiency ratio     60.57 %     63.80 %
                 
Efficiency ratio, excluding $2.5                
  million of charges relating                
  to the closure of two                
  branch offices     -       61.71 %

Contact Information

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