SOURCE: Peapack-Gladstone Financial Corporation

Peapack-Gladstone Financial Corporation

July 28, 2016 18:28 ET

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

BEDMINSTER, NJ--(Marketwired - Jul 28, 2016) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $12.05 million and diluted earnings per share of $0.74 for the six months ended June 30, 2016, compared to $10.25 million and $0.67, respectively, for the same six month period last year, reflecting increases of $1.81 million or 18 percent, and $0.07 per share, or 10 percent, respectively.

For the quarter ended June 30, 2016, the Corporation recorded net income of $6.56 million and diluted earnings per share of $0.40, compared to $5.24 million and $0.34 for the same three month period last year, reflecting increases of $1.33 million, or 25 percent, and $0.06 per share, or 18 percent, respectively.

During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums and increased investment in risk management related analytics and practices. The additional FDIC premium was estimated at $950 thousand, which reduced net income by $585 thousand and diluted earnings per share by approximately $0.04 per share, for the quarter.

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

                   
    June     June     Increase/  
(Dollars in millions, except EPS)   2016 (A)     2015     (Decrease)  
Net interest income   $ 24.18     $ 20.34     $ 3.84     19 %
Provision for loan losses   $ 2.20     $ 2.20     $ -     - %
Pretax income   $ 10.65     $ 8.38     $ 2.27     27 %
Net income   $ 6.56     $ 5.24     $ 1.32     25 %
Diluted EPS   $ 0.40     $ 0.34     $ 0.06     18 %
Total revenue   $ 31.62     $ 26.84     $ 4.78     18 %
                               
Return on average assets     0.73 %     0.70 %     0.03     4 %
Return on average equity     9.06 %     8.24 %     0.82     10 %
Efficiency ratio (B)     60.36 %     61.00 %     (0.64 )   (1) %
Book value per share   $ 18.08     $ 17.02     $ 1.06     6 %
 
(A)   The quarter ended June 2016 included $950 thousand of additional charges related to increased FDIC premiums, as described on the prior page. These charges reduced pretax income by $950 thousand, net income by $585 thousand, diluted earnings per share by $0.04 per share, ROAA by 0.06%, and ROAE by 0.80%, and increased the efficiency ratio by 3.06%.
(B)   See Non-GAAP financial measures reconciliation table on page 28.
     

Mr. Kennedy said, "We had a very strong second quarter of 2016, as we continued to successfully execute our Plan - Expanding Our Reach. We posted record net income and near record earnings per share, despite the additional FDIC premium expense." 

Additional Q2 2016 highlights follow:

  • Growth in diluted EPS for Q2 2016 when compared to Q2 2015 was $0.06 per share, or 18 percent, despite the additional expenses incurred in Q2 2016.
  • At June 30, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") stood at $3.42 billion. 
  • Fee income from the Private Wealth Management Division totaled $4.9 million for the second quarter of 2016, compared to $4.5 million for the same quarter in 2015. Wealth management fee income, at approximately 15 percent of the Company's total revenue, contributed significantly to the Company's diversified revenue sources.
  • Loans at June 30, 2016, including multifamily loans held for sale, totaled $3.21 billion. This reflected net growth of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) when compared to the $2.74 billion at June 30, 2015.
  • Commercial & Industrial (C&I) loans at June 30, 2016 totaled $576 million. This reflected net growth of $21 million compared to the prior quarter (4 percent compared to the prior quarter or 15 percent on an annualized basis), and net growth of $138 million (31 percent) when compared to the $438 million at June 30, 2015.
  • Multifamily whole loans sold totaled $80 million in the second quarter of 2016, which resulted in a net gain on sale of $500 thousand. 
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $2.82 billion at June 30, 2016. This reflected net growth of $65 million compared to the prior quarter (2 percent compared to the prior quarter or 10 percent on an annualized basis), and $539 million (24) when compared to the $2.28 billion at June 30, 2015.
  • Asset quality metrics continued to be strong at June 30, 2016. Nonperforming assets at June 30, 2016 were just $8.8 million, or 0.24 percent of total assets. Total loans past due 30 through 89 days and still accruing were $6.6 million or 0.21 percent of total loans at June 30, 2016.
  • The Company's net interest income for the second quarter of 2016 was $24.2 million, reflecting growth of $766 thousand (3 percent for the quarter or 13 percent on an annualized basis) when compared to $23.4 million for the March 2016 quarter, and growth of $3.83 million (19 percent) when compared to the $20.34 million for the quarter ended June 30, 2015.
  • The Company's book value per share at June 30, 2016 of $18.08 reflected improvement when compared to $17.02 at June 30, 2015. Year over year growth in book value per share totaled 6 percent.

Mr. Kennedy noted, "We were very pleased with our progress in 2015, and continue to be pleased with our progress thus far in 2016. As I described earlier this year, we did see some headwinds going into 2016. Despite those headwinds, we have delivered solid results again this quarter."

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $24.18 million and 2.79 percent for the second quarter of 2016, compared to $23.41 million and 2.82 percent for the first quarter of 2016, and compared to $20.34 million and 2.80 percent for the same quarter last year, reflecting growth in net interest income of $3.83 million or 19 percent when compared to the same prior year period. Net interest income for the second quarter of 2016 benefitted from loan growth during 2015 and the first quarter of 2016. Additionally, the June 2016 quarter included approximately $452 thousand of prepayment premiums received on the prepayment of certain multifamily loans, compared to $419 thousand for the March 2016 quarter, and compared to $86 thousand for the June 2015 quarter. The $452 thousand benefitted the net interest margin for the June 2016 quarter by 5 basis points.

Net interest income for the second quarter of 2016 improved considerably compared to the same quarter in 2015, and net interest margin remained relatively flat at 2.79 percent for the 2016 quarter compared to 2.80 percent for the 2015 quarter. The net interest margin continues to be impacted by the effect of the low interest rate environment throughout 2015 and 2016, as well as competitive pressures in attracting new loans and deposits.

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 $288 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $113 million drawn as of June 30, 2016."

Wealth Management Business

In the June 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.90 million in fee income compared to $4.30 million for the March 2016 quarter, and $4.53 million for the June 2015 quarter.  

Fee income for the June 2016 quarter was $604 thousand higher than the March 2016 quarter. The second quarter (June quarter) of each year historically reflects a high level of tax preparation income related to the Bank's wealth management clients. Additionally, the June 2016 quarter benefitted from continued new business, as well as positive market action relative to March 2016 quarter levels.

Fee income for the June 2016 quarter was $367 thousand, or approximately 8 percent greater than the June 2015 quarter. Growth in fee income was due to several factors including: the acquisition of Wealth Management Consultants, LLC ("WMC") which closed in May 2015; continued healthy new business results; and higher yields on new business as compared to lost/closed business. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, as well as the first quarter of 2016, which negatively impacted investment fee revenue. 

The market value of the assets under administration (AUA) of the wealth management division was $3.42 billion at June 30, 2016, increasing by $111 million, or 3 percent (13 percent on an annualized basis), from March 31, 2016 and decreasing $27 million, or less than one percent, from $3.45 billion at June 30, 2015, principally due to the broader market declines noted above.

Mr. John Babcock, President of Private Wealth Management, said, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We will continue to grow our professional team as well as expand our products, services, and the advice we deliver to our clients, through strategic hires, wealth management acquisitions, and organically." Mr. Babcock went on to note, "While the broader market declines in the second half of 2015 and the beginning of 2016 impacted fee revenue, we were still able to generate fee income in the June quarter greater than the June quarter of 2015 due to new business and positive net flows. We are cautiously optimistic about the market in the medium-to-longer term, we have a healthy new business pipeline and we continue to attract new clients every month. Notwithstanding market fluctuation, our business continues to grow and will be a significant driver to enhancing shareholder value as we move ahead."

Loan Originations / Loans

At June 30, 2016, loans, including multifamily loans held for sale, totaled $3.21 billion compared to $3.07 billion three months ago at March 31, 2016 and compared to $2.74 billion one year ago at June 30, 2015, representing net increases of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) compared to the prior year June 30th period. Mr. Kennedy noted, "We believe we have a very high quality loan portfolio, as evidenced by having no construction loans, and very strong asset quality metrics."

For the quarter ended June 30, 2016, residential mortgage originations totaled $53 million. In 2015, we successfully repositioned our residential mortgage business to serve as a lead product supporting new wealth business, as well as other banking relationships. We believe that residential mortgage volumes will increase through the remainder of 2016.

For the June 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $37 million. When comparing June 30, 2016 to June 30, 2015, commercial real estate mortgage loans (not including multifamily loans) grew $84 million, or 22 percent, to $460 million at June 30, 2016 from $375 million one year ago at June 30, 2015.

The June 2016 quarter included $151 million of multifamily loan originations, slightly higher than the previous quarter, but down significantly from the same 2015 quarter.

At June 30, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.56 billion (or 48.7 percent of total loans) compared to $1.53 billion (or 49.8 percent of total loans) three months ago at March 31, 2016 and compared to $1.50 billion (or 50.0 percent of total loans) at December 31, 2015. The increases were net of whole loans sold and participations, including $80 million of whole loans sold in the June 2016 quarter bringing the total whole loans sold or participated for 2016 to $138 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2016.

Mr. Kennedy said, "As I explained over the last several quarters, 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 June 30, 2016 the Company closed $61 million of commercial loans. When comparing June 30, 2016 to June 30, 2015, commercial loans grew $138 million, or 31 percent, to $576 million at June 30, 2016 from $438 million one year ago at June 30, 2015. At June 30, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio, up from 16 percent one year ago at June 30, 2015. 

Mr. Kennedy said, "As a result of our continued investment in and commitment to C&I banking, including the addition in 2015 and 2016, as well as future planned additions, of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in 2015, we have seen, and believe 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." 

Deposits / Funding / Balance Sheet Management

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 and until maturity in June 2026 or earlier redemption.  

During the June 2016 quarter, customer deposit growth of $65 million (principally noninterest-bearing and money market), the subordinated debt issuance of $49 million (net), and increased capital of $12 million, basically funded net asset growth of $139 million.

Brokered interest-bearing demand ("overnight") deposits continued to be managed flat at $200 million at June 30, 2016. 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. 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 direct cost of approximately 55 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of June 30, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.

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

Service charges and fees for the June 2016 quarter were $818 thousand, compared to $807 thousand for the March 2016 quarter and $837 thousand for the June 2015 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.

The June 2016 quarter included $309 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $121 thousand for the March 2016 quarter, and $161 thousand in the June 2015 quarter. Originations of residential mortgage loans for sale were much higher in the June 2016 quarter, compared to the other noted periods.

There were $18 thousand of securities gains for the June 2016 quarter compared to $101 thousand for the March 2016 quarter, and $176 thousand for the June 2015 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the shorter duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company's operations.

Gain on sale of multifamily loans held for sale at lower of cost or fair value was $500 thousand for the June 2016 quarter, compared to $124 thousand for the March 2016 quarter. There were no such gains in the June 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 throughout 2016, and potentially beyond.

Other income was $559 thousand for the June 2016 quarter compared to $473 thousand for the March 2016 quarter, and $545 thousand for the June 2015 quarter. The second quarter of 2016 included $212 thousand of income related to the Company's SBA lending and sale program, compared to $47 thousand generated in the March 2016 quarter. The SBA program was implemented in the March 2016 quarter, and the Company anticipates it will be a part of its normal ongoing operations. The June 2015 quarter included $373 thousand of loan level, back-to-back swap income. This program is also a part of the Company's normal ongoing operations. Due to the nature of this program, it is difficult to predict timing and amount of future income.

Other improvements in other income in the June 2016 quarter included greater loan servicing fees due principally to continued multifamily loan participations, and higher unused line of credit fees associated with the C&I lending business.  

Operating Expenses

The Company's total operating expenses were $18.78 million for the quarter ended June 30, 2016, compared to $19.21 million for the March 2016 quarter and $16.27 million for the same quarter in 2015. During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums of approximately $950 thousand.  

Salary and benefits expenses for the June 2016 quarter were $11.10 million compared to $10.91 million for the March 2016 quarter, and $9.87 million for the June 2015 quarter. Strategic hiring that was in line with the Company's Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the June 2015 quarter to the June 2016 quarter. 

Premises and equipment expense totaled $2.74 million for the quarter ended June 30, 2016, compared to $2.86 million for the March 2016 quarter, and $2.78 million for the same quarter last year. 

FDIC insurance expense for the June 2016 quarter was $1.58 million, compared to $1.56 million for the March 2016 quarter, and $431 thousand for the June 2015 quarter. As noted previously, the June 2016 and March 2016 quarters were impacted by the increased FDIC premiums. Mr. Kennedy noted, "I said at the beginning of this year that we generally expected an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). The increased expense recognized for the second and first quarters of 2016 were in line with that guidance. While we believe this increased cost will be temporary, we cannot predict when the additional FDIC premium will be eliminated."

Other expenses for the June 2016 quarter were $3.35 million, compared to $3.88 million for the March 2016 quarter and $3.19 million for the June 2015 quarter. 

Mr. Kennedy noted, "Total expenses for our second quarter of 2016 came in under budget, as we worked to manage our expenses closely." Mr. Kennedy went on to note, "At the beginning of this year I said that given our significant growth and high concentration in multifamily lending, Management had decided to accelerate approximately $2.0 million of costs over the next 3 to 12 months to ensure we adhere to best in class risk management practices. I also said that, we had originally planned for such expenditures over the next 24 to 30 months, but we felt it prudent to pull them forward."  

Provision for Loan Losses / Asset Quality

For the quarter ended June 30, 2016, the Company's provision for loan losses was $2.20 million, which is greater than the March 2016 quarter, and flat to the June 2015 quarter. Charge-offs, net of recoveries, for the second quarter of 2016 were only $302 thousand. The larger provision in the June 2016 quarter compared to the March 2016 quarter was due to loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I and Commercial Real Estate loans.

At June 30, 2016 the allowance for loan losses was $29.22 million, 363 percent of nonperforming loans and 0.93 percent of total loans, compared to $27.32 million, 375 percent of nonperforming loans and 0.90 percent of total loans at March 31, 2016, and $22.97 million, 323 percent of nonperforming loans and 0.84 percent of total loans one year prior, at June 30, 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 June 30, 2016 (which does not include TDR loans that are performing in accordance with their terms) were just $8.8 million or 0.24 percent of total assets, compared to $8.1 million at both March 31, 2016 and June 30, 2015. Total loans past due 30 through 89 days and still accruing were $6.6 million at June 30, 2016, compared to $1.4 million at March 31, 2016 and $1.7 million at June 30, 2015. There were no multifamily loans past due at quarter end. The increase in past due loans in the June 2016 quarter was due to one commercial real estate loan and one jumbo residential mortgage loan, with a combined total of $4.7 million, both of which became 30 days past due. The Company believes that there is adequate collateral coverage on both loans.

Capital / Dividends

The Company's capital position in the June 2016 quarter was benefitted by net income of $6.6 million and also by $5.7 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the Company.

At June 30, 2016, the Company's GAAP capital as a percent of total assets was 8.20 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.19 percent, 10.28 percent, 10.28 percent and 12.99 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.21 percent, 11.56 percent, 11.56 percent and 12.58 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

The Company's regulatory total risk based capital ratio at June 30, 2016 was benefitted by the $49 million (net) subordinated debt issuance that closed in June 2016. The Company down-streamed approximately $40 million of those proceeds to the Bank as capital, benefitting all the Bank's regulatory capital ratios.

On July 28, 2016, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on August 25, 2016 to shareholders of record on August 11, 2016.

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 $3.60 billion as of June 30, 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 2016 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 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  
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,  
    2016 (A)     2016 (B)     2015 (C)     2015     2015  
Income Statement Data:                                        
Interest income   $ 29,035     $ 27,898     $ 27,123     $ 25,806     $ 23,852  
Interest expense     4,859       4,488       4,304       4,100       3,508  
  Net interest income     24,176       23,410       22,819       21,706       20,344  
Provision for loan losses     2,200       1,700       1,950       1,600       2,200  
  Net interest income after provision for loan losses     21,976       21,710       20,869       20,106       18,144  
Wealth management fee income     4,899       4,295       4,307       4,169       4,532  
Service charges and fees     818       807       849       832       837  
Bank owned life insurance     345       342       252       260       248  
Gain on loans held for sale at fair value (Mortgage banking)     309       121       117       102       161  
Gain on loans held for sale at lower of cost or fair value     500       124       -       -       -  
Other income     559       473       198       164       545  
Securities gains, net     18       101       -       83       176  
  Total other income     7,448       6,263       5,723       5,610       6,499  
Salaries and employee benefits     11,100       10,908       10,659       10,322       9,872  
Premises and equipment     2,742       2,864       3,390       2,785       2,778  
FDIC insurance expense     1,581       1,559       825       416       431  
Other expenses     3,352       3,875       5,119       3,376       3,185  
Total operating expenses     18,775       19,206       19,993       16,899       16,266  
Income before income taxes     10,649       8,767       6,599       8,817       8,377  
Income tax expense     4,085       3,278       2,256       3,434       3,139  
Net income   $ 6,564     $ 5,489     $ 4,343     $ 5,383     $ 5,238  
                                         
Total revenue (See footnote (D) below)   $ 31,624     $ 29,673     $ 28,542     $ 27,316     $ 26,843  
Per Common Share Data:                                        
Earnings per share (basic)   $ 0.41     $ 0.35     $ 0.28     $ 0.35     $ 0.34  
Earnings per share (diluted)     0.40       0.34       0.28       0.35       0.34  
Weighted average number of
common shares outstanding:
                                       
Basic     16,172,223       15,858,278       15,498,119       15,253,009       15,082,516  
Diluted     16,341,975       16,016,972       15,721,876       15,435,939       15,233,151  
Performance Ratios:                                        
Return on average assets Annualized (ROAA)     0.73 %     0.64 %     0.51 %     0.66 %     0.70 %
Return on average equity annualized (ROAE)     9.06 %     7.83 %     6.37 %     8.19 %     8.24 %
Net interest margin (taxable equivalent basis)     2.79 %     2.82 %     2.79 %     2.75 %     2.80 %
Efficiency ratio (E)     60.36 %     65.22 %     70.05 %     61.14 %     61.00 %
Operating expenses / average assets annualized     2.08 %     2.22 %     2.36 %     2.07 %     2.16 %
     
(A)   The quarter ended June 2016 included $950 thousand of additional charges related to increased FDIC premiums. These charges reduced pretax income by $950 thousand, net income by $585 thousand, diluted earnings per share by $0.04 per share, ROAA by 0.06%, and ROAE by 0.80%, and increased the efficiency ratio by 3.06%.
     
(B)   The quarter ended March 31, 2016 included $950 thousand of additional charges related to increased FDIC premiums. These charges reduced pretax income by $950 thousand, net income by $595 thousand, diluted earnings per share by $0.03 per share, ROAA by 0.06%, and ROAE by 0.85%, and increased the efficiency ratio by 3.23%.
     
(C)   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, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
     
(D)   Total revenue includes a $500 thousand gain (for 2016) from sale of loans held for sale at lower of cost or fair value.
     
(E)   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.
     
     
   
SELECTED CONSOLIDATED FINANCIAL DATA  
(Dollars in Thousands, except share data)  
(Unaudited)  
             
    For the        
    Six Months Ended        
    June 30,     Change  
Income Statement Data:   2016 (A)     2015     $     %  
Interest income   $ 56,933     $ 46,213     $ 10,720     23 %
Interest expense     9,347       6,286       3,061     49 %
  Net interest income     47,586       39,927       7,659     19 %
Provision for loan losses     3,900       3,550       350     10 %
  Net interest income after provision for loan losses    

43,686
     

36,377
     

7,309
   
20
%
Wealth management fee income     9,194       8,563       631     7 %
Service charges and fees     1,625       1,642       (17 )   -1 %
Bank owned life insurance     687       785       (98 )   -12 %
Gain on loans held for sale at fair                              
  Value (Mortgage banking)     430       309       121     39 %
Gains on loans held for sale at lower of cost or fair value    
624
     
-
     
624
   
N/A
 
Other income     1,032       638       394     62 %
Securities gains, net     119       444       (325 )   -73 %
  Total other income     13,711       12,381       1,330     11 %
Salaries and employee benefits     22,008       19,297       2,711     14 %
Premises and equipment     5,606       5,394       212     4 %
FDIC insurance expense     3,140       913       2,227     244 %
Other expenses     7,227       6,430       797     12 %
  Total operating expenses     37,981       32,034       5,947     19 %
Income before income taxes     19,416       16,724       2,692     16 %
Income tax expense     7,363       6,478       885     14 %
Net income   $ 12,053     $ 10,246       1,807     18 %
                               
                               
Total revenue (See footnote (B) below)   $ 61,297     $ 52,308       8,989     17 %
                               
Per Common Share Data:                              
                               
Earnings per share (basic)   $ 0.75     $ 0.68     $ .07     10 %
Earnings per share (diluted)     0.74       0.67       .07     10 %
                               
Weighted average number of common shares outstanding:                              
Basic     16,015,251       14,996,596       1,025,859     7 %
Diluted     16,179,700       15,189,781       997,123     7 %
                               
Performance Ratios:                              
                               
Return on average assets annualized     0.68 %     0.70 %     -0.02 %   -3 %
Return on average common equity annualized     8.45 %     8.19 %     0.26 %   3 %
                               
Net interest margin (taxable equivalent basis)     2.80 %     2.84 %     -0.04 %   -1 %
                               
Efficiency ratio (C)     62.72 %     61.77 %     0.95 %   2 %
                               
Operating expenses / averageassets annualized     2.15 %     2.20 %     -0.05 %   -2 %
                               
(A)   The six months ended June 2016 included $1.90 million of additional charges related to increased FDIC premiums. These charges reduced pretax income by $1.90 million, net income by $1.18 million, diluted earnings per share by $0.08 per share, ROAA by 0.07%, and ROAE by 0.83%, and increased the efficiency ratio by 3.14%.
     
(B)   Total revenue includes a $624 thousand gain (for 2016) 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
    June 30,   March 31,   Dec 31,   Sept 30,   June 30,
    2016   2016   2015   2015   2015
ASSETS                              
Cash and due from banks   $ 18,261   $ 15,872   $ 11,550   $ 10,695   $ 6,205
Federal funds sold     101     101     101     101     101
Interest-earning deposits     62,968     61,946     58,509     65,402     32,382
  Total cash and cash equivalents     81,330     77,919     70,160     76,198     38,688
                               
Securities available for sale     206,216     214,050     195,630     220,930     245,897
FHLB and FRB stock, at cost     14,623     13,254     13,984     11,737     15,590
                               
Loans held for sale     4,133     3,537     1,558     27,524     745
Multifamily loans held for sale, at lower ofcost or fair value     60,291     38,066     82,200     -     -
                               
Residential mortgage     479,839     469,084     470,869     469,865     470,863
Multifamily mortgage     1,501,915     1,489,708     1,416,775     1,444,334     1,371,139
Commercial mortgage     459,744     414,677     413,118     399,592     375,440
Commercial loans     576,169     554,871     512,886     456,611     438,461
Construction loans     -     1,392     1,401     1,409     1,417
Consumer loans     67,614     44,198     45,044     32,563     29,996
Home equity lines of credit     63,188     53,328     52,649     50,370     51,675
Other loans     430     443     500     483     2,947
  Total loans     3,148,899     3,027,701     2,913,242     2,855,227     2,741,938
  Less: Allowances for loan losses     29,219     27,321     25,856     24,374     22,969
  Net loans     3,119,680     3,000,380     2,887,386     2,830,853     2,718,969
                               
Premises and equipment     29,199     29,609     30,246     31,310     31,637
Other real estate owned     767     861     563     330     956
Accrued interest receivable     7,733     7,497     6,820     6,839     6,451
Bank owned life insurance     43,325     43,101     42,885     32,727     32,565
Deferred tax assets, net     18,190     17,952     15,582     14,613     12,673
Other assets     19,216     19,771     17,645     15,902     13,999
  TOTAL ASSETS   $ 3,604,703   $ 3,465,997   $ 3,364,659   $ 3,268,963   $ 3,118,170
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits   $ 469,809   $ 457,730   $ 419,887   $ 399,200   $ 386,588
  Interest-bearing demand deposits     897,210     905,479     861,697     829,970     667,847
  Savings     120,617     119,149     115,007     117,665     120,606
  Money market accounts     861,664     820,757     810,709     792,685     717,246
  Certificates of deposit - Retail     466,079     446,833     434,450     411,335     384,235
Subtotal "customer" deposits     2,815,379     2,749,948     2,641,750     2,550,855     2,276,522
  IB Demand - Brokered     200,000     200,000     200,000     243,000     293,000
  Certificates of deposit - Brokered     93,660     93,630     93,720     93,690     94,224
Total deposits     3,109,039     3,043,578     2,935,470     2,887,545     2,663,746
                               
Overnight borrowings     29,450     21,100     40,700     -     87,500
Federal home loan bank advances     83,692     83,692     83,692     83,692     83,692
Capital lease obligation     9,961     10,092     10,222     10,350     10,475
Subordinated debt, net     48,698     -     -     -     -
Other liabilities     28,330     24,030     18,899     19,448     14,881
Due to brokers, securities settlements     -     -     -     1,528     -
    TOTAL LIABILITIES     3,309,170     3,182,492     3,088,983     3,002,563     2,860,294
  Shareholders' equity     295,533     283,505     275,676     266,400     257,876
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 3,604,703   $ 3,465,997   $ 3,364,659   $ 3,268,963   $ 3,118,170
                               
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above)   $ 3,418,566   $ 3,307,799   $ 3,321,624   $ 3,250,835   $ 3,445,939
                               
                               
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
       
    As of  
    June 30,     March 31,     Dec 31,     Sept 30,     June 30,  
    2016     2016     2015     2015     2015  
Asset Quality:                                        
Loans past due over 90 days and still accruing   $ -     $ -     $ -     $ -     $ -  
Nonaccrual loans     8,049       7,278       6,747       7,615       7,111  
Other real estate owned     767       861       563       330       956  
  Total nonperforming assets   $ 8,816     $ 8,139     $ 7,310     $ 7,945     $ 8,067  
                                         
Nonperforming loans to total loans     0.26 %     0.24 %     0.23 %     0.27 %     0.26 %
Nonperforming assets to total assets     0.24 %     0.23 %     0.22 %     0.24 %     0.26 %
                                         
Performing TDRs (A)(B)   $ 18,570     $ 16,033     $ 16,231     $ 14,609     $ 13,695  
                                         
Loans past due 30 through 89 days and still accruing   $ 6,576     $ 1,393     $ 2,143     $ 2,748     $ 1,744  
                                         
Classified loans   $ 51,084     $ 48,817     $ 42,777     $ 41,985     $ 38,676  
                                         
Impaired loans   $ 26,643     $ 23,335     $ 23,107     $ 22,224     $ 20,806  
                                         
Allowance for loan losses:                                        
  Beginning of period   $ 27,321     $ 25,856     $ 24,374     $ 22,969     $ 20,816  
  Provision for loan losses     2,200       1,700       1,950       1,600       2,200  
  Charge-offs, net     (302 )     (235 )     (468 )     (195 )     (47 )
  End of period   $ 29,219     $ 27,321     $ 25,856     $ 24,374     $ 22,969  
                                         
                                         
ALLL to nonperforming loans     363.01 %     375.39 %     383.22 %     320.08 %     323.01 %
ALLL to total loans     0.93 %     0.90 %     0.89 %     0.85 %     0.84 %
                                         
                                         
(A)   Amounts reflect TDR's that are paying according to restructured terms.
     
(B)   Amount does not include $4.2 million at June 30, 2016, $3.4 million at March 31, 2016, $2.6 million at December 31, 2015, $2.8 million at September 30, 2015, and $2.2 million at June 30, 2015 of TDRs included in nonaccrual loans.
     
     
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
   
    June 30,     Dec 31,     June 30,  
    2016     2015     2015  
Capital Adequacy                        
                         
Equity to total assets (A)     8.20 %     8.19 %     8.27 %
                         
Tangible Equity to tangible assets (B)     8.12 %     8.10 %     8.17 %
                         
Book value per share (C)   $ 18.08     $ 17.61     $ 17.02  
                         
Tangible Book Value per share (D)   $ 17.88     $ 17.40     $ 16.80  
                         
                   
    June 30,     Dec 31,     June 30,  
    2016     2015     2015  
                                     
Regulatory Capital - Holding Company                                    
                                     
Tier I leverage   $ 295,443   8.19 %   $ 273,738   8.10 %   $ 254,737   8.48 %
                                     
Tier I capital to risk weighted assets     295,443   10.28       273,738   10.42       254,737   10.78  
                                     
Common equity tier I capital ratio to risk-weighted assets     295,440   10.28       273,738   10.42       254,737   10.78  
                                     
Tier I & II capital to risk-weighted assets     373,360   12.99       299,593   11.40       277,706   11.75  
                                     
                                     
Regulatory Capital - Bank                                    
                                     
Tier I leverage   $ 332,115   9.21 %   $ 271,641   8.04 %   $ 242,811   8.08 %
                                     
Tier I capital to risk weighted assets     332,115   11.56       271,641   10.34       242,811   10.28  
                                     
Common equity tier I capital ratio to risk-weighted assets     332,112   11.56       271,641   10.34       242,811   10.28  
                                     
Tier I & II capital to risk-weighted assets     361,334   12.58       297,497   11.32       265,780   11.25  
                                     
(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
    June 30,   March 31,   Dec 31,   Sept 30,   June 30,
    2016   2016   2015   2015   2015
                               
Residential loans retained   $ 32,513   $ 17,747   $ 18,847   $ 20,623   $ 23,117
Residential loans sold     20,221     8,062     7,183     6,078     10,978
Total residential loans     52,734     25,809     26,030     26,701     34,095
                               
CRE (includes Community banking)     36,554     9,339     41,015     47,450     29,561
Multifamily (includes Community banking)     150,709     108,035     107,605     149,763     206,803
Commercial loans (includes Community banking) (A)     61,309     67,488     74,749     37,361     136,483
SBA     2,285     1,055     -     -     -
Wealth lines of credit (A)     785     1,800     35,550     24,000     6,150
Total commercial loans     251,642     187,717     258,919     258,574     378,997
                               
Installment loans     1,077     486     1,052     933     1,128
                               
Home equity lines of credit (A)     14,435     3,604     5,902     3,775     3,225
                               
Total loans closed   $ 319,888   $ 217,616   $ 291,903   $ 289,983   $ 417,445
                               
                               
     
    For the Six Months Ended
    June 30,   June 30,
    2016   2015
Residential loans retained   $ 50,260   $ 40,103
Residential loans sold     28,283     19,916
Total residential loans     78,543     60,019
             
CRE (includes            
Community banking)     45,893     87,348
Multifamily (includes            
Community banking)     258,744     415,837
Commercial loans (includes            
Community banking) (A)     128,797     177,179
SBA     3,340     -
Wealth lines of credit (A)     2,585     16,410
Total commercial loans     439,359     696,774
             
Installment loans     1,563     1,472
             
Home equity lines of credit (A)     18,039     6,602
             
Total loans closed   $ 537,504   $ 764,867
             
(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)  
   
    June 30, 2016     June 30, 2015  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 200,804     $ 914   1.82 %   $ 244,087     $ 1,037   1.70 %
    Tax-exempt (1) (2)     27,127       211   3.11       30,941       210   2.71  
                                           
  Loans (2) (3):                                        
  Mortgages     473,293       3,927   3.32       468,082       3,824   3.27  
    Commercial mortgages     2,047,112       17,830   3.48       1,663,150       14,767   3.55  
    Commercial     552,955       5,392   3.90       360,517       3,347   3.71  
    Commercial construction     1,305       13   3.98       5,713       61   4.27  
    Installment     63,158       420   2.66       29,169       256   3.51  
    Home equity     58,146       475   3.27       51,710       417   3.23  
    Other     462       11   9.52       527       12   9.11  
    Total loans     3,196,431       28,068   3.51       2,578,868       22,684   3.52  
  Federal funds sold     101       -   0.25       101       -   0.10  
  Interest-earning deposits     79,264       76   0.39       69,780       39   0.22  
      Total interest-earning assets     3,503,727       29,269   3.34 %     2,923,777       23,970   3.28 %
Noninterest-Earning Assets:                                        
  Cash and due from banks     16,122                   6,385              
  Allowance for loan losses     (28,056 )                 (21,493 )            
  Premises and equipment     29,452                   31,983              
  Other assets     88,907                   66,131              
    Total noninterest-earning assets     106,425                   83,006              
Total assets   $ 3,610,152                 $ 3,006,783              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 906,611     $ 607   0.27 %   $ 670,473     $ 359   0.21 %
  Money markets     818,453       602   0.29       703,236       461   0.26  
  Savings     120,094       17   0.06       117,411       16   0.05  
  Certificates of deposit - retail     450,675       1,545   1.37       343,781       1,051   1.22  
    Subtotal interest-bearing deposits     2,295,833       2,771   0.48       1,834,901       1,887   0.41  
  Interest-bearing demand - brokered     200,000       760   1.52       265,802       563   0.85  
  Certificates of deposit - brokered     93,642       496   2.12       98,191       504   2.05  
    Total interest-bearing deposits     2,589,475       4,027   0.62       2,198,894       2,954   0.54  
  Borrowings     222,667       573   1.03       146,441       428   1.17  
  Capital lease obligation     10,007       120   4.80       10,515       126   4.79  
  Subordinated debt     8,777       139   6.33       -       -   -  
  Total interest-bearing liabilities     2,830,926       4,859   0.69       2,355,850       3,508   0.60  
Noninterest-bearing liabilities:                                        
  Demand deposits     464,074                   384,604              
  Accrued expenses and other liabilities    
 25,247
                 
 12,133
             
  Total noninterest-bearing liabilities     489,321                   396,737              
Shareholders' equity     289,905                   254,196              
  Total liabilities and shareholders' equity   $
3,610,152
                $
3,006,783
             
  Net interest income           $ 24,410                 $ 20,462      
  Net interest spread                 2.65 %                 2.68 %
  Net interest margin (4)                 2.79 %                 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  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
             
    June 30, 2016     March 31, 2016  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 200,804     $ 914   1.82 %   $ 199,579     $ 926   1.86 %
    Tax-exempt (1) (2)     27,127       211   3.11       24,044       200   3.33  
                                           
  Loans (2) (3):                                        
    Mortgages     473,293       3,927   3.32       466,497       3,818   3.27  
    Commercial mortgages     2,047,112       17,830   3.48       1,960,127       17,170   3.50  
    Commercial     552,955       5,392   3.90       525,896       5,100   3.88  
    Commercial construction     1,305       13   3.98       1,395       14   4.01  
    Installment     63,158       420   2.66       44,906       335   2.98  
    Home equity     58,146       475   3.27       53,056       440   3.32  
    Other     462       11   9.52       486       12   9.88  
    Total loans     3,196,431       28,068   3.51       3,052,363       26,889   3.52  
  Federal funds sold     101       -   0.25       101       -   0.23  
  Interest-earning deposits     79,264       76   0.39       77,903       87   0.45  
      Total interest-earning assets     3,503,727       29,269   3.34 %     3,353,989       28,102   3.35 %
Noninterest-Earning Assets:                                        
  Cash and due from banks     16,122                   15,603              
  Allowance for loan losses     (28,056 )                 (26,582 )            
  Premises and equipment     29,452                   30,000              
  Other assets     88,907                   83,632              
    Total noninterest-earning assets     106,425                   102,653              
Total assets   $ 3,610,152                 $ 3,456,642              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 906,611     $ 607   0.27 %   $ 882,497     $ 571   0.26 %
  Money markets     818,453       602   0.29       819,818       573   0.28  
  Savings     120,094       17   0.06       116,560       16   0.05  
  Certificates of deposit - retail     450,675       1,545   1.37       442,563       1,489   1.35  
    Subtotal interest-bearing deposits     2,295,833       2,771   0.48       2,261,438       2,649   0.47  
  Interest-bearing demand - brokered     200,000       760   1.52       200,000       741   1.48  
  Certificates of deposit - brokered     93,642       496   2.12       93,674       497   2.12  
    Total interest-bearing deposits     2,589,475       4,027   0.62       2,555,112       3,887   0.61  
  Borrowings     222,667       573   1.03       155,274       479   1.23  
  Capital lease obligation     10,007       120   4.80       10,140       122   4.81  
  Subordinated debt     8,777       139   6.33       -       -   -  
  Total interest-bearing liabilities     2,830,926       4,859   0.69       2,720,526       4,488   0.66  
Noninterest-bearing liabilities:                                        
  Demand deposits     464,074                   435,770              
  Accrued expenses and other liabilities     25,247                   19,898              
  Total noninterest-bearing liabilities     489,321                   455,668              
Shareholders' equity     289,905                   280,448              
  Total liabilities and shareholders' equity   $ 3,610,152                 $ 3,456,642              
  Net interest income           $ 24,410                 $ 23,614      
    Net interest spread                 2.65 %                 2.69 %
    Net interest margin (4)                 2.79 %                 2.82 %
                                         
     
(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, 2016       June 30, 2015  
    Average     Income/           Average     Income/      
    Balance     Expense   Yield       Balance     Expense   Yield  
ASSETS:                                          
Interest-earning assets:                                          
  Investments:                                          
    Taxable (1)   $ 200,192     $ 1,840   1.84 %     $ 258,934     $ 2,219   1.71 %
    Tax-exempt (1) (2)     25,586       411   3.21         34,268       441   2.57  
                                             
  Loans (2) (3):                                          
    Mortgages     469,895       7,745   3.30         467,293       7,619   3.26  
    Commercial mortgages     2,003,619       35,000   3.49         1,562,073       28,356   3.63  
    Commercial     539,426       10,492   3.89         338,435       6,244   3.69  
    Commercial construction     1,350       27   4.00         5,821       123   4.23  
    Installment     54,032       755   2.79         28,484       508   3.57  
    Home equity     55,601       915   3.29         51,188       822   3.21  
    Other     474       23   9.70         528       25   9.47  
    Total loans     3,124,397       54,957   3.52         2,453,822       43,697   3.56  
  Federal funds sold     101       -   0.24         101       -   0.10  
  Interest-earning deposits     78,583       163   0.42         80,658       82   0.20  
      Total interest-earning assets     3,428,859       57,371   3.35 %       2,827,783       46,439   3.28 %
Noninterest-Earning Assets:                                          
  Cash and due from banks     15,862                     6,594              
  Allowance for loan losses     (27,319 )                   (20,778 )            
  Premises and equipment     29,726                     32,118              
  Other assets     86,070                     65,006              
    Total noninterest-earning assets     104,339                     82,940              
Total assets   $ 3,533,198                   $ 2,910,723              
                                           
LIABILITIES:                                          
Interest-bearing deposits:                                          
  Checking   $ 894,554     $ 1,178   0.26 %     $ 650,909     $ 673   0.21 %
  Money markets     819,135       1,175   0.29         706,893       924   0.26  
  Savings     118,327       33   0.06         115,434       30   0.05  
  Certificates of deposit - retail     446,619       3,034   1.36         296,085       1,714   1.16  
    Subtotal interest-bearing deposits     2,278,635       5,420   0.48         1,769,321       3,341   0.38  
  Interest-bearing demand - brokered     200,000       1,501   1.50         253,221       843   0.67  
  Certificates of deposit - brokered     93,658       993   2.12         112,219       1,028   1.83  
    Total interest-bearing deposits     2,572,293       7,914   0.62         2,134,761       5,212   0.49  
  Borrowings     188,971       1,052   1.11         128,142       820   1.28  
  Capital lease obligation     10,074       242   4.80         10,575       254   4.80  
  Subordinated debt     4,388       139   6.34         -       -   -  
  Total interest-bearing liabilities     2,775,726       9,347   0.67         2,273,478       6,286   0.55  
Noninterest-bearing liabilities:                                          
  Demand deposits     449,922                     375,527              
  Accrued expenses and other liabilities     22,373                     11,446              
  Total noninterest-bearing liabilities     472,295                     386,973              
Shareholders' equity     285,177                     250,272              
  Total liabilities and                                          
  shareholders' equity   $ 3,533,198                   $ 2,910,723              
  Net interest income           $ 48,024                   $ 40,153      
    Net interest spread                 2.68 %                   2.73 %
    Net interest margin (4)                 2.80 %                   2.84 %
     
(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, 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  
    June 30,     March 31,     Dec 31,     Sept 30,     June 30,  
Tangible Book Value Per Share   2016     2016     2015     2015     2015  
Shareholders' equity   $ 295,533     $ 283,505     $ 275,676     $ 266,400     $ 257,876  
Less: Intangible assets     3,277       3,264       3,281       3,311       3,342  
  Tangible equity     292,256       280,241       272,395       263,089       254,534  
                                         
Period end shares outstanding     16,657,403       16,326,840       16,068,119       15,805,815       15,592,168  
Less: Restricted shares not yet vested     309,920       321,580       414,188       435,312       436,908  
Total outstanding shares     16,347,483       16,005,260       15,653,931       15,370,503       15,155,260  
Tangible book value per share     17.88       17.51       17.40       17.12       16.80  
Book value per share     18.08       17.71       17.61       17.33       17.02  
                                         
Tangible Equity to Tangible Assets                                        
Total Assets     3,604,703       3,465,997       3,364,659       3,268,963       3,118,170  
Less: Intangible assets     3,277       3,264       3,281       3,311       3,342  
  Tangible assets     3,601,426       3,462,733       3,361,378       3,265,652       3,114,828  
Tangible equity to tangible assets     8.12 %     8.09 %     8.10 %     8.06 %     8.17 %
Equity to assets     8.20 %     8.18 %     8.19 %     8.15 %     8.27 %
                                         
                                         
       
    Three Months Ended  
    June 30,     March 31,     Dec 31,     Sept 30,     June 30,  
Efficiency Ratio   2016     2016     2015     2015     2015  
                                         
Net interest income   $ 24,176     $ 23,410     $ 22,819     $ 21,706     $ 20,344  
Total other income     7,448       6,263       5,723       5,610       6,499  
Less: Gain on loans held for sale at lower of cost or fair value     500       124       -       -       -  
Less: Securities gains, net     18       101       -       83       176  
Total recurring revenue     31,106       29,448       28,542       27,233       26,667  
                                         
Operating expenses     18,775       19,206       19,993       16,899       16,266  
Less: ORE provision     -       -       -       250       -  
Total operating expenses     18,775       19,206       19,993       16,649       16,266  
                                         
Efficiency ratio     60.36 %     65.22 %     70.05 %     61.14 %     61.00 %
                                         
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices     -       -       61.30 %     -       -  
                                         
                                         
       
    Six Months Ended  
    June 30,     June 30,  
Efficiency Ratio   2016     2015  
                 
Net interest income   $ 47,586     $ 39,927  
Total other income     13,711       12,381  
Less: Gain on loans held for sale at lower of cost or fair value     624       -  
Less: Securities gains, net     119       444  
Total recurring revenue     60,554       51,864  
                 
Operating expenses     37,981       32,034  
Less: ORE provision     -       -  
Total operating expenses     37,981       32,034  
                 
Efficiency ratio     62.72 %     61.77 %
                 

 

Contact Information

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