SOURCE: Peapack-Gladstone Financial Corporation

Peapack-Gladstone Financial Corporation

October 28, 2016 09:00 ET

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

BEDMINSTER, NJ--(Marketwired - Oct 28, 2016) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $19.17 million and diluted earnings per share of $1.17 for the nine months ended September 30, 2016, compared to $15.63 million and $1.02, respectively, for the same nine month period last year, reflecting increases of $3.54 million or 23 percent, and $0.15 per share, or 15 percent, respectively.

For the quarter ended September 30, 2016, the Corporation recorded net income of $7.12 million and diluted earnings per share of $0.43, compared to $5.38 million and $0.35 for the same three month period last year, reflecting increases of $1.73 million, or 32 percent, and $0.08 per share, or 23 percent, respectively.

The 2016 nine month and three month periods, when compared to the same periods in 2015, reflected improved net interest income and improved non-interest income, partially offset by increased expenses. The increased expenses were principally due to 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. 

While the third quarter 2016 FDIC premium reflected an increase of $398 thousand relative to the same quarter in 2015, the third quarter of 2016 premium declined $767 thousand from the second quarter 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 quarter of 2016, when compared to the second quarter 2016 assessment rate.

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

                   
    September     September     Increase/  
 (Dollars in millions, except EPS)   2016     2015     (Decrease)  
 Net interest income   $ 24.27     $ 21.71     $ 2.56     12 %
 Provision for loan losses   $ 2.10     $ 1.60     $ 0.50     31 %
 Pretax income   $ 11.54     $ 8.82     $ 2.72     31 %
 Net income   $ 7.12     $ 5.38     $ 1.74     32 %
 Diluted EPS   $ 0.43     $ 0.35     $ 0.08     23 %
 Total revenue   $ 31.80     $ 27.32     $ 4.48     16 %
                               
 Return on average assets     0.77 %     0.66 %     0.11     17 %
 Return on average equity     9.44 %     8.19 %     1.25     15 %
 Efficiency ratio (A)     57.58 %     61.14 %     (3.56 )   (6 )%
 Book value per share (A)   $ 18.57     $ 17.33     $ 1.24     7 %
 
  (A) See Non-GAAP financial measures reconciliation table on page 28.
     

Mr. Kennedy said, "We had a very strong third quarter of 2016, as we continued to successfully execute our Plan. We again posted record net income and near record earnings per share, despite the additional expense base in the 2016 period." 

Additional Q3 2016 highlights follow:

  • Growth in diluted EPS for Q3 2016 when compared to Q3 2015 was $0.08 per share, or 23 percent.
  • At September 30, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (the "Bank") increased to $3.50 billion. 
  • Fee income from the Private Wealth Management Division totaled $4.4 million for the third quarter of 2016, compared to $4.2 million for the same quarter in 2015. Wealth management fee income, comprising approximately 14 percent of the Company's total revenue, contributed significantly to the Company's diversified revenue sources.
  • Loans at September 30, 2016, including multifamily loans held for sale, totaled $3.26 billion. This reflected net growth of $54 million compared to the prior quarter (2 percent compared to the prior quarter or 7 percent on an annualized basis), and $381 million (13 percent) when compared to the $2.88 billion at September 30, 2015.
  • Commercial & Industrial (C&I) loans at September 30, 2016 totaled $598 million. This reflected net growth of $22 million compared to the prior quarter (4 percent compared to the prior quarter or 15 percent on an annualized basis), and net growth of $141 million (31 percent) when compared to the $457 million at September 30, 2015.
  • Multifamily whole loans sold totaled $44 million in the third quarter of 2016, which resulted in a net gain on sale of $256 thousand. 
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $3.01 billion at September 30, 2016. This reflected net growth of $191 million compared to the prior quarter (7 percent compared to the prior quarter or 27 percent on an annualized basis), and $456 million (18 percent) when compared to the $2.55 billion at September 30, 2015.
  •  Asset quality metrics continued to be strong at September 30, 2016. Nonperforming assets at September 30, 2016 were just $11.4 million, or 0.30 percent of total assets. Total loans past due 30 through 89 days and still accruing were $8.2 million or 0.25 percent of total loans at September 30, 2016.
  • The Company's net interest income for the third quarter of 2016 was $24.3 million, reflecting growth of $93 thousand (less than 1 percent for the quarter or 1 percent on an annualized basis) when compared to $24.2 million for the June 2016 quarter, but reflected growth of $2.56 million (12 percent) when compared to the $21.71 million for the quarter ended September 30, 2015.
  • The Company's book value per share at September 30, 2016 of $18.57 reflected improvement when compared to $17.33 at September 30, 2015. Year over year growth in book value per share totaled 7 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 thus far in 2016. Despite the headwinds we noted going into 2016, we have delivered solid results thus far this year."

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $24.27 million and 2.74 percent for the third quarter of 2016, compared to $24.18 million and 2.79 percent for the second quarter of 2016, and compared to $21.71 million and 2.75 percent for the same quarter last year, reflecting growth in net interest income of $2.56 million or 12 percent when compared to the same prior year period. Net interest income for the third quarter of 2016 benefitted from loan growth during 2015 and the first nine months of 2016. Additionally, the September 2016 quarter included approximately $507 thousand of prepayment premiums received on the prepayment of certain multifamily loans, compared to $453 thousand for the June 2016 quarter, and compared to $76 thousand for the September 2015 quarter. The $507 thousand in premiums benefitted the net interest margin for the September 2016 quarter by 6 basis points.

Net interest income and net interest margin for the third quarter of 2016 was also impacted by the effect of the $50 million subordinated debt issued in June 2016. Interest on subordinated debt totaled $799 thousand for the third quarter, which reduced the net interest margin by approximately 9 basis points.

Net interest income for the third quarter of 2016 improved considerably compared to the same quarter in 2015, and net interest margin remained relatively flat at 2.74 percent for the 2016 quarter compared to 2.75 percent for the 2015 quarter. The net interest margin continues to be negatively 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 $409 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 $72 million drawn as of September 30, 2016."

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

Wealth Management Business

In the September 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.44 million in fee income compared to $4.90 million for the June 2016 quarter, and $4.17 million for the September 2015 quarter. Fee income for the September 2016 quarter was $463 thousand lower than the June 2016 quarter. The June quarter of each year historically reflects a high level of tax preparation income related to the Bank's wealth management clients.

Fee income for the September 2016 quarter increased by $267 thousand, or approximately 6 percent greater than the September 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. This net positive contribution to revenue from our wealth management business was partially offset by the broader market declines in the latter part of 2015, as well as the first quarter of 2016, which negatively impacted assets under administration ("AUA") and the correlated investment fee revenue at the outset of 2016.

The market value of the AUA of the wealth management division was $3.50 billion at September 30, 2016, increasing by $77 million, or 2 percent (9 percent on an annualized basis), from June 30, 2016 and increasing $244 million, (8 percent), from $3.25 billion at September 30, 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 will continue to grow our professional team as well as expand the products, services, and the advice we deliver to our clients. Our continued growth will be driven by our continued successful new business generation, strategic new hires, and the possible acquisition of wealth management firms in the Tri-State area. Over the past two quarters we have added talented, proven and experienced new team members in wealth advisory, portfolio management and fiduciary roles". Mr. Babcock went on to note, "While the broader market declines in the latter part of 2015 and the beginning of 2016 impacted fee revenue at the start of the year, we have been able to generate fee income in the September 2016 quarter greater than the September quarter of 2015 due to new business and positive net flows. We are cautiously optimistic about the market in the medium-to-longer term and have a solid new business pipeline. Notwithstanding market fluctuations, our business continues to grow and will be a significant driver of enhanced shareholder value as we move ahead."

Loan Originations / Loans

At September 30, 2016, loans, including multifamily loans held for sale, totaled $3.26 billion compared to $3.21 billion three months ago at June 30, 2016 and compared to $2.88 billion one year ago at September 30, 2015, representing net increases of $54 million compared to the prior quarter (2 percent compared to the prior quarter or 7 percent on an annualized basis), and $381 million (13 percent) compared to the prior year September 30 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 September 30, 2016, residential mortgage originations totaled $68 million. When comparing September 30, 2016 to September 30, 2015, residential mortgage loans grew $27 million, or 6 percent, to $497 million at September 30, 2016 from $470 million one year ago at September 30, 2015. We believe that residential mortgage volumes and the portfolio will increase through the remainder of 2016, and into 2017.

For the September 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $57 million. When comparing September 30, 2016 to September 30, 2015, commercial real estate mortgage loans (not including multifamily loans) grew $98 million, or 24 percent, to $497 million at September 30, 2016 from $399 million one year ago at September 30, 2015.

The September 2016 quarter included $74 million of multifamily loan originations, down significantly from the previous quarters. At September 30, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.54 billion (or 47.1 percent of total loans) compared to $1.56 billion (or 48.7 percent of total loans) three months ago at June 30, 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 $44 million of whole loans sold in the September 2016 quarter, bringing the total whole loans sold or participated for 2016 to $182 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2016, and beyond.

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 September 30, 2016 the Company closed $60 million of commercial loans. When comparing September 30, 2016 to September 30, 2015, commercial loans grew $141 million, or 31 percent, to $598 million at September 30, 2016 from $457 million one year ago at September 30, 2015. At September 30, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio unchanged from the 18 percent at June 30, 2016, and up from 16 percent one year ago at September 30, 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, "Three of the 15 largest manufacturers in New Jersey (as enumerated in a reputable NJ business publication) have moved business to Peapack-Gladstone Bank over the past 12 months." Mr. Waser further 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 last quarter, 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 September 2016 quarter, customer deposit growth of $191 million (principally noninterest-bearing, interest-bearing and money market) and increased capital of $13 million, basically funded a $29 million reduction in overnight borrowings, a $12 million reduction of FHLB Advances, an increase in loans of $54 million, an increase in investment securities of $43 million, and an increase in interest earning deposits (cash) of $79 million. 

Brokered interest-bearing demand ("overnight") deposits continued to be managed flat at $200 million at September 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. As of September 30, 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 September 2016 quarter totaled $7.54 million or nearly 24 percent of total revenue. 

Service charges and fees for the September 2016 quarter were $812 thousand, compared to $818 thousand for the June 2016 quarter and $832 thousand for the September 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 September 2016 quarter included $383 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $309 thousand for the June 2016 quarter, and $102 thousand for the September 2015 quarter. Originations of residential mortgage loans for sale were higher in the September 2016 quarter, compared to the other noted periods.

There were no securities gains for the September 2016 quarter compared to $18 thousand for the June 2016 quarter, and $83 thousand for the September 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 the lower of cost or fair value was $256 thousand for the September 2016 quarter, compared to $500 thousand for the June 2016 quarter. There were no such gains in the September 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 beyond.

The third quarter of 2016 included $243 thousand of income related to the Company's SBA lending and sale program, compared to $212 thousand generated in the June 2016 quarter. The SBA program was fully implemented in the March 2016 quarter, and the Company anticipates it will be a part of its normal ongoing operations.

The September 2016 quarter included $670 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.

Improvements in other income in the September 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 $18.17 million for the quarter ended September 30, 2016, compared to $18.76 million for the June 2016 quarter and $16.90 million for the same quarter in 2015.

As noted previously, the third quarter 2016 FDIC premium reflected a $398 thousand increase relative to the same quarter in 2015, however the third quarter of 2016 premium declined $767 thousand from the second quarter 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%, when compared to the second quarter 2016 assessment rate.

Salary and benefits expenses for the September 2016 quarter were $11.52 million compared to $11.10 million for the June 2016 quarter, and $10.32 million for the September 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 September 2015 quarter to the September 2016 quarter.

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

Provision for Loan Losses / Asset Quality

For the quarter ended September 30, 2016, the Company's provision for loan losses was $2.10 million, which was generally in line with the June 2016 quarter, and greater than the September 2015 quarter. Charge-offs, net of recoveries, for the third quarter of 2016 was $703 thousand. The provision in the September 2016 quarter was reflective of loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I.

At September 30, 2016 the allowance for loan losses was $30.62 million, which was 282 percent of nonperforming loans and 0.95 percent of total loans, compared to $29.22 million, which was 363 percent of nonperforming loans and 0.93 percent of total loans at June 30, 2016, and $24.37 million, which was 320 percent of nonperforming loans and 0.85 percent of total loans one year prior, at September 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 September 30, 2016 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were just $11.4 million or 0.30 percent of total assets, compared to $8.8 million or 0.24 percent of total assets at June 30, 2016 and $7.9 million or 0.24 percent of total assets at September 30, 2015. Total loans past due 30 through 89 days and still accruing were $8.2 million at September 30, 2016, compared to $6.6 million at June 30, 2016 and $2.7 million at September 30, 2015. There were no multifamily loans past due at quarter end. The increase in past due loans in the September 2016 quarter was due to one commercial loan secured by real estate totaling $5 million that was 30 days past due at September 30, 2016 but brought current on October 4, 2016. In addition to being brought current in early October, the Company believes there is adequate collateral coverage on the loan.

Capital / Dividends

The Company's capital position in the September 2016 quarter was benefitted by net income of $7.1 million and also by $5.4 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company.

At September 30, 2016, the Company's GAAP capital as a percent of total assets was 8.19 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.39 percent, 10.47 percent, 10.47 percent and 13.17 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.41 percent, 11.74 percent, 11.74 percent and 12.78 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

On October 27, 2016, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on November 25, 2016 to shareholders of record on November 10, 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 $3.77 billion as of September 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  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2016 (A)     2016     2016     2015 (B)     2015  
Income Statement Data:                                        
Interest income   $ 29,844     $ 29,035     $ 27,898     $ 27,123     $ 25,806  
Interest expense     5,575       4,859       4,488       4,304       4,100  
  Net interest income     24,269       24,176       23,410       22,819       21,706  
Provision for loan losses     2,100       2,200       1,700       1,950       1,600  
  Net interest income after provision for loan losses     22,169       21,976       21,710       20,869       20,106  
Wealth management fee income     4,436       4,899       4,295       4,307       4,169  
Service charges and fees     812       818       807       849       832  
Bank owned life insurance     340       345       342       252       260  
Gain on loans held for sale at fair value (Mortgage banking)     383       309       121       117       102  
Gain on loans held for sale at lower of cost or fair value     256       500       124       -       -  
Fee income related to loan level, back-to-back swaps     670       -       94       -       -  
Gain on sale of SBA loans     243       212       47       7       -  
Other income     395       347       332       191       164  
Securities gains, net     -       18       101       -       83  
Total other income     7,535       7,448       6,263       5,723       5,610  
Salaries and employee benefits     11,515       11,100       10,908       10,659       10,322  
Premises and equipment     2,736       2,742       2,864       3,390       2,785  
FDIC insurance expense     814       1,581       1,559       825       416  
Other expenses     3,101       3,352       3,875       5,119       3,376  
  Total operating expenses     18,166       18,775       19,206       19,993       16,899  
Income before income taxes     11,538       10,649       8,767       6,599       8,817  
Income tax expense     4,422       4,085       3,278       2,256       3,434  
Net income   $ 7,116     $ 6,564     $ 5,489     $ 4,343     $ 5,383  
                                         
Total revenue (C)   $ 31,804     $ 31,624     $ 29,673     $ 28,542     $ 27,316  
Per Common Share Data:                                        
Earnings per share (basic)   $ 0.43     $ 0.41     $ 0.35     $ 0.28     $ 0.35  
Earnings per share (diluted)     0.43       0.40       0.34       0.28       0.35  
Weighted average number of common shares outstanding:                                    
Basic     16,467,654       16,172,223       15,858,278       15,498,119       15,253,009  
Diluted     16,673,596       16,341,975       16,016,972       15,721,876       15,435,939  
Performance Ratios:                                        
Return on average assets                                        
Annualized (ROAA)     0.77 %     0.73 %     0.64 %     0.51 %     0.66 %
Return on average                                        
equity annualized (ROAE)     9.44 %     9.06 %     7.83 %     6.37 %     8.19 %
Net interest margin (taxable equivalent basis)     2.74 %     2.79 %     2.82 %     2.79 %     2.75 %
Efficiency ratio (D)     57.58 %     60.36 %     65.22 %     70.05 %     61.14 %
Operating expenses / average assets annualized     1.98 %     2.08 %     2.22 %     2.36 %     2.07 %
  (A) The quarter ended September 30, 2016 included a reduction in FDIC premium of approximately $750 thousand. 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, 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%.
  (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              
  Nine Months Ended              
  September 30,     Change  
Income Statement Data: 2016     2015     $     %  
Interest income $ 86,777     $ 72,019     $ 14,758     20 %
Interest expense   14,922       10,386       4,536     44 %
  Net interest income   71,855       61,633       10,222     17 %
Provision for loan losses   6,000       5,150       850     17 %
  Net interest income after provision for loan losses   65,855       56,483       9,372     17 %
Wealth management fee income   13,630       12,732       898     7 %
Service charges and fees   2,437       2,474       (37 )   -1 %
Bank owned life insurance   1,027       1,045       (18 )   -2 %
Gain on loans held for sale at fair value (Mortgage banking)   813       411       402     98 %
Gains on loans held for sale at lower of cost or fair value   880       -       880     N/A  
Fee income related to loan level, back-to-back swaps   764       373       391     105 %
Gain on sale of SBA loans   502       -       502     N/A  
Other income   1,074       429       645     150 %
Securities gains, net   119       527       (408 )   -77 %
  Total other income   21,246       17,991       3,255     18 %
Salaries and employee benefits   33,523       29,619       3,904     13 %
Premises and equipment   8,342       8,179       163     2 %
FDIC insurance expense   3,954       1,329       2,375     179 %
Other expenses   10,328       9,806       772     8 %
  Total operating expenses   56,147       48,933       7,214     15 %
Income before income taxes   30,954       25,541       5,413     21 %
Income tax expense   11,785       9,912       1,873     19 %
Net income $ 19,169     $ 15,629     $ 3,540     23 %
                             
                             
Total revenue (A) $ 93,101     $ 79,624     $ 13,477     17 %
                             
Per Common Share Data:                            
                             
Earnings per share (basic) $ 1.19     $ 1.04     $ 0.15     14 %
Earnings per share (diluted)   1.17       1.02       0.15     15 %
                             
Weighted average number of common shares outstanding:                            
Basic   16,167,153       15,083,006       1,084,144     7 %
Diluted   16,347,255       15,293,747       1,054,228     7 %
                             
Performance Ratios:                            
                             
Return on average assets annualized   0.71 %     0.69 %     0.02     3 %
Return on average common equity annualized   8.79 %     8.19 %     0.60     7 %
                             
Net interest margin (taxable equivalent basis)   2.78 %     2.81 %     (0.03 )   -1 %
                             
Efficiency ratio (B)   60.96 %     61.55 %     (0.59 )   -1 %
                             
Operating expenses / average assets annualized   2.09 %     2.15 %     (0.06 )   -3 %
  (A) Total revenue includes an $880 thousand gain (for 2016) from sale of loans held for sale at lower of cost or fair value.
  (B) 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
  Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,
  2016   2016   2016   2015   2015
ASSETS                            
Cash and due from banks $ 17,861   $ 18,261   $ 15,872   $ 11,550   $ 10,695
Federal funds sold   101     101     101     101     101
Interest-earning deposits   141,593     62,968     61,946     58,509     65,402
  Total cash and cash equivalents   159,555     81,330     77,919     70,160     76,198
                             
Securities available for sale   249,616     206,216     214,050     195,630     220,930
FHLB and FRB stock, at cost   14,093     14,623     13,254     13,984     11,737
                             
Loans held for sale   3,013     4,133     3,537     1,558     501
Multifamily loans held for sale, at lower of cost or fair value   30,000     60,291     38,066     82,200     27,023
                             
Residential mortgage   496,735     479,839     469,084     470,869     469,865
Multifamily mortgage   1,507,834     1,501,915     1,489,708     1,416,775     1,444,334
Commercial mortgage   497,267     459,744     414,677     413,118     399,592
Commercial loans   598,078     576,169     554,871     512,886     456,611
Construction loans   430     -     1,392     1,401     1,409
Consumer loans   69,222     67,614     44,198     45,044     32,563
Home equity lines of credit   62,872     63,188     53,328     52,649     50,370
Other loans   449     430     443     500     483
  Total loans   3,232,887     3,148,899     3,027,701     2,913,242     2,855,227
  Less: Allowances for loan losses   30,616     29,219     27,321     25,856     24,374
  Net loans   3,202,271     3,119,680     3,000,380     2,887,386     2,830,853
                             
Premises and equipment   30,223     29,199     29,609     30,246     31,310
Other real estate owned   534     767     861     563     330
Accrued interest receivable   6,383     7,733     7,497     6,820     6,839
Bank owned life insurance   43,541     43,325     43,101     42,885     32,727
Deferred tax assets, net   14,765     18,190     17,952     15,582     14,613
Other assets   20,389     19,216     19,771     17,645     15,902
  TOTAL ASSETS $ 3,774,383   $ 3,604,703   $ 3,465,997   $ 3,364,659   $ 3,268,963
                             
LIABILITIES                            
Deposits:                            
  Noninterest-bearing demand deposits $ 494,204   $ 469,809   $ 457,730   $ 419,887   $ 399,200
  Interest-bearing demand deposits   928,941     897,210     905,479     861,697     829,970
  Savings   119,650     120,617     119,149     115,007     117,665
  Money market accounts   997,572     861,664     820,757     810,709     792,685
  Certificates of deposit - Retail   466,003     466,079     446,833     434,450     411,335
Subtotal "customer" deposits   3,006,370     2,815,379     2,749,948     2,641,750     2,550,855
  IB Demand - Brokered   200,000     200,000     200,000     200,000     243,000
  Certificates of deposit - Brokered   93,690     93,660     93,630     93,720     93,690
Total deposits   3,300,060     3,109,039     3,043,578     2,935,470     2,887,545
                             
Overnight borrowings   -     29,450     21,100     40,700     -
Federal home loan bank advances   71,795     83,692     83,692     83,692     83,692
Capital lease obligation   9,828     9,961     10,092     10,222     10,350
Subordinated debt, net   48,731     48,698     -     -     -
Other liabilities   34,937     28,330     24,030     18,899     19,448
Due to brokers, securities settlements   -     -     -     -     1,528
  TOTAL LIABILITIES   3,465,351     3,309,170     3,182,492     3,088,983     3,002,563
Shareholders' equity   309,032     295,533     283,505     275,676     266,400
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,774,383   $ 3,604,703   $ 3,465,997   $ 3,364,659   $ 3,268,963
                             
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above) $ 3,495,206   $ 3,418,566   $ 3,307,799   $ 3,321,624   $ 3,250,835
                             
                             
                             
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
  As of  
  Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
  2016     2016     2016     2015     2015  
Asset Quality:                                      
Loans past due over 90 days and still accruing $ -     $ -     $ -     $ -     $ -  
Nonaccrual loans   10,840       8,049       7,278       6,747       7,615  
Other real estate owned   534       767       861       563       330  
  Total nonperforming assets $ 11,374     $ 8,816     $ 8,139     $ 7,310     $ 7,945  
                                       
Nonperforming loans to total loans   0.34 %     0.26 %     0.24 %     0.23 %     0.27 %
Nonperforming assets to total assets   0.30 %     0.24 %     0.23 %     0.22 %     0.24 %
                                       
Performing TDRs (A)(B) $ 18,078     $ 18,570     $ 16,033     $ 16,231     $ 14,609  
                                       
Loans past due 30 through 89 days and still accruing (C) $ 8,238     $ 6,576     $ 1,393     $ 2,143     $ 2,748  
                                       
Classified loans $ 49,627     $ 51,084     $ 48,817     $ 42,777     $ 41,985  
                                       
Impaired loans $ 28,951     $ 26,643     $ 23,335     $ 23,107     $ 22,224  
                                       
Allowance for loan losses:                                      
  Beginning of period $ 29,219     $ 27,321     $ 25,856     $ 24,374     $ 22,969  
  Provision for loan losses   2,100       2,200       1,700       1,950       1,600  
  Charge-offs, net   (703 )     (302 )     (235 )     (468 )     (195 )
  End of period $ 30,616     $ 29,219     $ 27,321     $ 25,856     $ 24,374  
                                       
                                       
ALLL to nonperforming loans   282.44 %     363.01 %     375.39 %     383.22 %     320.08 %
ALLL to total loans   0.95 %     0.93 %     0.90 %     0.89 %     0.85 %
     
  (A) Amounts reflect TDR's that are paying according to restructured terms.
     
  (B) Amount does not include $4.4 million at September 30, 2016, $4.2 million at June 30, 2016, $3.4 million at March 31, 2016, $2.6 million at December 31, 2015, and $2.8 million at September 30, 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)  
(Unaudited)  
   
   
  Sept 30,     Dec 31,     Sept 30,  
  2016     2015     2015  
 Capital Adequacy                      
                       
 Equity to total assets (A)   8.19 %     8.19 %     8.15 %
                       
 Tangible Equity to tangible assets (B)   8.11 %     8.10 %     8.06 %
                       
 Book value per share (C) $ 18.57     $ 17.61     $ 17.33  
                       
 Tangible Book Value per share (D) $ 18.38     $ 17.40     $ 17.12  
                       
                       
  Sept 30,     Dec 31,     Sept 30,  
  2016     2015     2015  
                                   
Regulatory Capital - Holding Company                                  
                                   
Tier I leverage $ 308,250   8.39 %   $ 273,738   8.10 %   $ 264,570   8.10 %
                                   
Tier I capital to risk weighted assets   308,250   10.47       273,738   10.42       264,570   10.35  
                                   
Common equity tier I capital ratio to risk-weighted assets   308,247   10.47       273,738   10.42       264,570   10.35  
                                   
                                   
Tier I & II capital to risk-weighted assets   387,597   13.17       299,593   11.40       288,944   11.30  
                                   
                                   
Regulatory Capital - Bank                                  
                                   
Tier I leverage $ 345,604   9.41 %   $ 271,641   8.04 %   $ 262,196   8.02 %
                                   
Tier I capital to risk weighted assets   345,604   11.74       271,641   10.34       262,196   10.26  
                                   
Common equity tier I capital ratio to risk-weighted assets   345,601   11.74       271,641   10.34       262,196   10.26  
                                   
Tier I & II capital to risk-weighted assets   376,220   12.78       297,497   11.32       286,570   11.21  
                                   
                                   
  (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
  Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,
  2016   2016   2016   2015   2015
                             
Residential loans retained $ 43,284   $ 32,513   $ 17,747   $ 18,847   $ 20,623
Residential loans sold   25,128     20,221     8,062     7,183     6,078
Total residential loans   68,412     52,734     25,809     26,030     26,701
                             
CRE (includes Community banking)   56,799     36,554     9,339     41,015     47,450
Multifamily (includes Community banking)   74,450     150,709     108,035     107,605     149,763
Commercial loans (includes Community banking) (A)   59,698     61,309     67,488     74,749     37,361
SBA   3,025     2,285     1,055     -     -
Wealth lines of credit (A)   1,200     785     1,800     35,550     24,000
Total commercial loans   195,172     251,642     187,717     258,919     258,574
                             
Installment loans   1,591     1,077     486     1,052     933
                             
Home equity lines of credit (A)   7,064     14,435     3,604     5,902     3,775
                             
Total loans closed $ 272,239   $ 319,888   $ 217,616   $ 291,903   $ 289,983
                             
                             
                             
  For the Nine Months Ended
  Sept 30,   Sept 30,
  2016   2015
Residential loans retained $ 93,543   $ 60,726
Residential loans sold   53,412     25,994
Total residential loans   146,955     86,720
           
CRE (includes Community banking)   102,692     134,798
Multifamily (includes Community banking)   333,194     565,600
Commercial loans (includes Community banking) (A)   188,495     214,540
SBA   6,365     -
Wealth lines of credit (A)   3,785     40,410
Total commercial loans   634,531     955,348
           
Installment loans   3,154     2,405
           
Home equity lines of credit (A)   25,103     10,377
           
Total loans closed $ 809,743   $ 1,054,850
           
           
 
     
  (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)  
   
  Sept 30, 2016     Sept 30, 2015  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 193,902     $ 976   2.01 %   $ 214,967     $ 959   1.78 %
    Tax-exempt (1) (2)   27,516       212   3.08       30,682       211   2.76  
                                       
  Loans (2) (3):                                      
    Mortgages   486,909       3,983   3.27       466,384       3,806   3.26  
    Commercial mortgages   2,048,877       17,977   3.51       1,839,606       16,119   3.50  
    Commercial   573,211       5,826   4.07       454,239       4,132   3.64  
    Commercial construction   454       5   4.41       1,742       18   4.13  
    Installment   67,175       443   2.64       31,361       268   3.42  
    Home equity   62,560       519   3.32       51,012       415   3.25  
    Other   465       13   11.18       510       12   9.41  
    Total loans   3,239,651       28,766   3.55       2,844,854       24,770   3.48  
  Federal funds sold   101       -   0.25       101       -   0.10  
  Interest-earning deposits   111,204       131   0.47       96,308       46   0.19  
      Total interest-earning assets   3,572,374       30,085   3.37 %     3,186,912       25,986   3.26 %
Noninterest-Earning Assets:                                      
Cash and due from banks   17,292                   7,434              
Allowance for loan losses   (30,022 )                 (23,726 )            
Premises and equipment   29,460                   31,574              
Other assets   88,721                   68,067              
      Total noninterest-earning assets   105,451                   83,349              
Total assets $ 3,677,825                 $ 3,270,261              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 924,970     $ 645   0.28 %   $ 810,106     $ 356   0.18 %
  Money markets   915,139       737   0.32       757,135       546   0.29  
  Savings   119,986       17   0.06       118,329       17   0.06  
  Certificates of deposit - retail   466,967       1,615   1.38       403,593       1,296   1.28  
    Subtotal interest-bearing deposits   2,427,062       3,014   0.50       2,089,163       2,215   0.42  
  Interest-bearing demand - brokered   200,000       762   1.52       292,456       857   1.17  
  Certificates of deposit - brokered   93,674       501   2.14       93,907       504   2.15  
    Total interest-bearing deposits   2,720,736       4,277   0.63       2,475,526       3,576   0.58  
  Borrowings   87,258       380   1.74       107,770       399   1.48  
  Capital lease obligation   9,874       119   4.82       10,394       125   4.81  
  Subordinated debt   48,711       799   6.56       -       -   N/A  
  Total interest-bearing liabilities   2,866,579       5,575   0.78       2,593,690       4,100   0.63  
Noninterest-bearing liabilities:                                      
  Demand deposits   479,659                   398,181              
  Accrued expenses and other liabilities   30,070                   15,619              
  Total noninterest-bearing liabilities   509,729                   413,800              
Shareholders' equity   301,517                   262,771              
  Total liabilities and shareholders' equity $ 3,677,825                 $ 3,270,261              
  Net interest income         $ 24,510                 $ 21,886      
    Net interest spread               2.59 %                 2.63 %
    Net interest margin (4)               2.74 %                 2.75 %
  (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)  
           
  Sept 30, 2016     June 30, 2016  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 193,902     $ 976   2.01 %   $ 200,804     $ 914   1.82 %
    Tax-exempt (1) (2)   27,516       212   3.08       27,127       211   3.11  
                                       
  Loans (2) (3):                                      
    Mortgages   486,909       3,983   3.27       473,293       3,927   3.32  
    Commercial mortgages   2,048,877       17,977   3.51       2,047,112       17,830   3.48  
    Commercial   573,211       5,826   4.07       552,955       5,392   3.90  
    Commercial construction   454       5   4.41       1,305       13   3.98  
    Installment   67,175       443   2.64       63,158       420   2.66  
    Home equity   62,560       519   3.32       58,146       475   3.27  
    Other   465       13   11.18       462       11   9.52  
    Total loans   3,239,651       28,766   3.55       3,196,431       28,068   3.51  
  Federal funds sold   101       -   0.25       101       -   0.25  
      Interest-earning deposits   111,204       131   0.47       79,264       76   0.39  
Total interest-earning assets   3,572,374       30,085   3.37 %     3,503,727       29,269   3.34 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   17,292                   16,122              
  Allowance for loan losses   (30,022 )                 (28,056 )            
  Premises and equipment   29,460                   29,452              
  Other assets   88,721                   88,907              
    Total noninterest-earning assets   105,451                   106,425              
Total assets $ 3,677,825                 $ 3,610,152              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 924,970     $ 645   0.28 %   $ 906,611     $ 607   0.27 %
  Money markets   915,139       737   0.32       818,453       602   0.29  
  Savings   119,986       17   0.06       120,094       17   0.06  
  Certificates of deposit - retail   466,967       1,615   1.38       450,675       1,545   1.37  
    Subtotal interest-bearing deposits   2,427,062       3,014   0.50       2,295,833       2,771   0.48  
  Interest-bearing demand - brokered   200,000       762   1.52       200,000       760   1.52  
  Certificates of deposit - brokered   93,674       501   2.14       93,642       496   2.12  
    Total interest-bearing deposits   2,720,736       4,277   0.63       2,589,475       4,027   0.62  
  Borrowings   87,258       380   1.74       222,667       573   1.03  
  Capital lease obligation   9,874       119   4.82       10,007       120   4.80  
  Subordinated debt   48,711       799   6.56       8,777       139   6.33  
  Total interest-bearing liabilities   2,866,579       5,575   0.78       2,830,926       4,859   0.69  
Noninterest-bearing liabilities:                                      
  Demand deposits   479,659                   464,074              
  Accrued expenses and other liabilities   30,070                   25,247              
  Total noninterest-bearing liabilities   509,729                   489,321              
Shareholders' equity   301,517                   289,905              
  Total liabilities and shareholders' equity $ 3,677,825                 $ 3,610,152              
  Net interest income         $ 24,510                 $ 24,410      
    Net interest spread               2.59 %                 2.65 %
    Net interest margin (4)               2.74 %                 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  
NINE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
     
  Sept 30, 2016     Sept 30, 2015  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 198,080     $ 2,816   1.90 %   $ 244,117     $ 3,178   1.74 %
    Tax-exempt (1) (2)   26,234       623   3.17       33,059       652   2.63  
                                       
  Loans (2) (3):                                      
    Mortgages   475,607       11,728   3.29       466,987       11,424   3.26  
    Commercial mortgages   2,018,820       52,977   3.50       1,655,600       44,475   3.58  
    Commercial   550,770       16,319   3.95       377,461       10,376   3.67  
    Commercial construction   1,045       32   4.08       4,446       141   4.23  
    Installment   58,445       1,198   2.73       29,454       776   3.51  
    Home equity   57,938       1,434   3.30       51,129       1,237   3.23  
    Other   471       35   9.91       522       37   9.45  
    Total loans   3,163,096       83,723   3.53       2,585,599       68,466   3.53  
  Federal funds sold   101       -   0.24       101       -   0.10  
  Interest-earning deposits   89,536       294   0.44       85,932       128   0.20  
      Total interest-earning assets   3,477,047       87,456   3.35 %     2,948,808       72,424   3.27 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   16,342                   6,877              
  Allowance for loan losses   (28,227 )                 (21,772 )            
  Premises and equipment   29,637                   31,935              
  Other assets   86,960                   66,038              
    Total noninterest-earning assets   104,712                   83,078              
Total assets $ 3,581,759                 $ 3,031,886              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 904,767     $ 1,823   0.27 %   $ 704,558     $ 1,028   0.19 %
  Money markets   851,370       1,912   0.30       723,824       1,470   0.27  
  Savings   118,884       50   0.06       116,410       48   0.05  
  Certificates of deposit - retail   453,451       4,649   1.37       332,315       3,010   1.21  
    Subtotal interest-bearing deposits   2,328,472       8,434   0.48       1,877,107       5,556   0.39  
  Interest-bearing demand - brokered   200,000       2,263   1.51       266,443       1,700   0.85  
  Certificates of deposit - brokered   93,663       1,494   2.13       106,048       1,532   1.93  
    Total interest-bearing deposits   2,622,135       12,191   0.62       2,249,598       8,788   0.52  
  Borrowings   154,819       1,432   1.23       121,277       1,219   1.34  
  Capital lease obligation   10,007       361   4.81       10,514       379   4.81  
  Subordinated debt   19,270       938   6.49       -       -   N/A  
  Total interest-bearing liabilities   2,806,231       14,922   0.71       2,381,389       10,386   0.58  
Noninterest-bearing liabilities:                                      
  Demand deposits   459,907                   383,161              
  Accrued expenses and other liabilities   24,958                   12,852              
  Total noninterest-bearing liabilities   484,865                   396,013              
Shareholders' equity   290,663                   254,484              
  Total liabilities and shareholders' equity $ 3,581,759                 $ 3,031,886              
  Net interest income         $ 72,534                 $ 62,038      
    Net interest spread               2.64 %                 2.69 %
    Net interest margin (4)               2.78 %                 2.81 %
  (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  
  Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,  
Tangible Book Value Per Share 2016   2016   2016   2015   2015  
Shareholders' equity $ 309,032   $ 295,533   $ 283,505   $ 275,676   $ 266,400  
Less: Intangible assets   3,188     3,277     3,264     3,281     3,311  
  Tangible equity   305,844     292,256     280,241     272,395     263,089  
                               
Period end shares outstanding   16,944,738     16,657,403     16,326,840     16,068,119     15,805,815  
Less: Restricted shares not yet vested   302,799     309,920     321,580     414,188     435,312  
Total outstanding shares   16,641,939     16,347,483     16,005,260     15,653,931     15,370,503  
Tangible book value per share   18.38     17.88     17.51     17.40     17.12  
Book value per share   18.57     18.08     17.71     17.61     17.33  
                               
Tangible Equity to Tangible Assets                              
Total Assets   3,774,383     3,604,703     3,465,997     3,364,659     3,268,963  
Less: Intangible assets   3,188     3,277     3,264     3,281     3,311  
  Tangible assets   3,771,195     3,601,426     3,462,733     3,361,378     3,265,652  
Tangible equity to tangible assets   8.11 %   8.12 %   8.09 %   8.10 %   8.06 %
Equity to assets   8.19 %   8.20 %   8.18 %   8.19 %   8.15 %
                               
                               
                               
  Three Months Ended  
  Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
Efficiency Ratio 2016     2016     2016     2015     2015  
                                       
Net interest income $ 24,269     $ 24,176     $ 23,410     $ 22,819     $ 21,706  
Total other income   7,535       7,448       6,263       5,723       5,610  
Less: Gain on loans held for sale at lower of cost or fair value   256       500       124       -       -  
Less: Securities gains, net   -       18       101       -       83  
Total recurring revenue   31,548       31,106       29,448       28,542       27,233  
                                       
Operating expenses   18,166       18,775       19,206       19,993       16,899  
Less: ORE provision   -       -       -       -       250  
Total operating expenses   18,166       18,775       19,206       19,993       16,649  
                                       
Efficiency ratio   57.58 %     60.36 %     65.22 %     70.05 %     61.14 %
                                       
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices   -       -       -       61.30 %     -  
                                       
                                       
    Nine Months Ended  
    Sept 30,     Sept 30,  
Efficiency Ratio   2016     2015  
                 
Net interest income   $ 71,855     $ 61,633  
Total other income     21,246       17,991  
Less: Gain on loans held for sale at lower of cost or fair value     880       -  
Less: Securities gains, net     119       527  
Total recurring revenue     92,102       79,097  
                 
Operating expenses     56,147       48,933  
Less: ORE provision     -       250  
Total operating expenses     56,147       48,683  
                 
Efficiency ratio     60.96 %     61.55 %
                 

Contact Information

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