SOURCE: Peapack-Gladstone Financial Corporation

Peapack-Gladstone Financial Corporation

October 27, 2017 09:00 ET

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

BEDMINSTER, NJ--(Marketwired - Oct 27, 2017) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Company") reported record net income of $26.13 million and diluted earnings per share of $1.47 for the nine months ended September 30, 2017, compared to $19.17 million and $1.17, respectively, for the same nine month period last year, reflecting increases of $6.96 million, or 36 percent, and $0.30 per share, or 26 percent, respectively.

For the quarter ended September 30, 2017, the Company recorded net income of $10.21 million and diluted earnings per share of $0.56, compared to $7.12 million and $0.43 for the same three month period last year, reflecting increases of $3.09 million, or 43 percent, and $0.13 per share, or 30 percent, respectively.

The third quarter of 2017, when compared to the third quarter of 2016, reflected: increased net interest income (partially due to $1.2 million of recognition of deferred fees and prepayment income on two C&I credits); greater wealth management fee income (partially due to two months of fee income related to the recently acquired Murphy Capital Management ("MCM")); and a reduced provision for loan and lease losses (due to low charge-off levels and $79 million of loan sales). These positive effects were partially offset by higher operating expenses in the 2017 third quarter (partially due to two months of expenses related to MCM, as well as a full quarter of expenses related to Peapack Capital, the Bank's Equipment Finance subsidiary, which began operations in May 2017).

The following table summarizes specified financial measures for the third quarters of 2017 and 2016, respectively.

                         
                         
(Dollars in millions, except per share data)   September
2017
    September
2016
    Increase/
(Decrease)
 
Net interest income   $ 29.99     $ 24.27     $ 5.72     24 %
Provision for loan and lease losses   $ .40     $ 2.10     $ (1.70 )   -81 %
                               
Pretax income   $ 16.46     $ 11.54     $ 4.92     43 %
Net income   $ 10.21     $ 7.12     $ 3.09     43 %
Diluted EPS   $ 0.56     $ 0.43     $ 0.13     30 %
Total revenue   $ 38.82     $ 31.80     $ 7.02     22 %
                               
Return on average assets     0.97 %     0.77 %     0.20        
Return on average equity     11.09 %     9.44 %     1.65        
Efficiency ratio (A)     56.62 %     57.58 %     (0.96 )      
Book value per share   $ 20.86     $ 18.24     $ 2.62     14 %
Tang book value per share (A)   $ 20.03     $ 18.05     $ 1.98     11 %
     
(A)   See Non-GAAP financial measures reconciliation table beginning on page 24
     

Douglas L. Kennedy, President and CEO, said, "We had a very strong start to 2017, and that continued right through the third quarter of 2017. We continue to successfully execute on our strategic plan -- Expanding Our Reach."

Select third quarter highlights follow:

  • Growth in diluted EPS for Q3 2017 when compared to Q3 2016 was $0.13 per share, or 30 percent.
  • As previously announced, effective August 1, 2017, the Bank completed its acquisition of MCM, a registered investment advisory firm ("RIA"), based in Gladstone, NJ. 
  • At September 30, 2017, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (the "Bank") increased $1.3 billion to $4.8 billion from $3.5 billion at September 30, 2016, reflecting growth of 37 percent. The acquisition of MCM contributed approximately $900 million of AUA at September 30, 2017.
  • Fee income from the Private Wealth Management Division totaled $5.8 million for the third quarter of 2017, compared to $4.4 million for the same quarter in 2016, reflecting growth of 31 percent. Wealth management fee income, comprising nearly 15 percent of the Company's total revenue, contributes significantly to the Company's diversified revenue sources.
  • As previously announced on September 14, 2017, the Company announced its agreement to acquire Quadrant Capital Management, a RIA, headquartered in Fairfield, NJ which is expected to add approximately $400 million in AUA upon the closing expected in the fourth quarter of 2017. 
  • During the third quarter of 2017, the Company employed loan sales as a balance sheet management strategy, while improving returns. The $79 million of lower-yielding multifamily and residential mortgage loan sales generally funded increases in commercial and other loans, resulting in planned minimal net loan growth during the quarter.
  • Loans at September 30, 2017 totaled $3.67 billion. This reflected net growth of $404 million (12 percent) when compared to $3.27 billion of loans at September 30, 2016.
  • Commercial & Industrial (C&I) loans at September 30, 2017 totaled $846 million. This reflected net growth of $45 million compared to the prior quarter (6 percent compared to the prior quarter or 22 percent on an annualized basis), and net growth of $248 million (41 percent) when compared to $598 million in C&I loans at September 30, 2016.
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $3.40 billion at September 30, 2017. This reflected net growth of $86 million compared to the prior quarter (3 percent compared to the prior quarter or 10 percent on an annualized basis), and reflected growth of $393 million (13 percent) when compared to $3.01 billion of total "customer" deposit balances at September 30, 2016.
  • Asset quality metrics continued to be strong at September 30, 2017. Nonperforming assets at September 30, 2017, declining slightly from the June 30, 2017 level, were just $15.5 million, or 0.37 percent of total assets. Total loans past due 30 through 89 days and still accruing were $589 thousand, or 0.02 percent of total loans at September 30, 2017.
  • The Company's book value per share at September 30, 2017 of $20.86 reflected improvement when compared to $18.24 at September 30, 2016. Year over year growth in book value per share totaled $2.62 or 14 percent. 

Net Interest Income / Net Interest Margin

Net interest income and net interest margin were $29.99 million and 2.95 percent for the third quarter of 2017, compared to $26.97 million and 2.76 percent for the second quarter of 2017, and compared to $24.27 million and 2.74 percent for the same quarter last year, reflecting growth in net interest income of $5.72 million or 24 percent when compared to the same prior year period. Net interest income for the third quarter of 2017 benefitted from $1.2 million of recognition of deferred fees and prepayment premiums on two C&I credits and from loan growth during 2016 and into 2017, as well as benefitting slightly from the recent Federal Reserve rate hikes. The September 2017 quarter also included approximately $1.2 million of prepayment premiums received on the prepayment of certain multifamily loans, reflecting an increase from $780 thousand for the June 2017 quarter and $507 thousand for the September 2016 quarter.

Net interest margin for the third quarter of 2017 increased when compared to the second quarter of 2017, and the same quarter of 2016. The increase was due to the recognition of the deferred fees and increased prepayment premiums noted above, as well as the effect of the increased market rates on our adjustable rate assets, partially offset by the increased cost of deposits.

Net interest margin is also affected by the maintenance of liquid assets on the Company's balance sheet. Mr. Kennedy said, "In addition to approximately $400 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1.2 billion of secured funding available from the Federal Home Loan Bank, of which we only have $50 million drawn as of September 30, 2017."

The Company's interest rate sensitivity models indicate that the Company's net interest income and margin would continue to improve slightly in a rising interest rate environment, but such income and margin may also be impacted by competitive pressures in attracting new loans and deposits.

Wealth Management Business

In the September 2017 quarter, the Bank's wealth management business generated $5.79 million in fee income compared to $5.09 million for the June 2017 quarter, and $4.44 million for the September 2016 quarter.

The September 2017 quarter included approximately $900 thousand of income related to MCM, which was acquired effective August 1, 2017. The September 2017 quarter also included increased "recurring type" fee income (tied principally to asset management fees and custody fees), which was due to net inflows from new business, a healthy equity market which resulted in positive market action in client portfolios as well as additions to accounts from existing clients, all partially offset by normal levels of disbursements and outflows. Relative to the June 2017 quarter, the September 2017 quarter included reduced tax preparation fees, as such fees are seasonally high in the second quarter of each year.

The market value of the AUA of the wealth management division was $4.8 billion at September 30, 2017 an increase of $1.3 billion, or 37 percent, from $3.5 billion at September 30, 2016. The acquisition of MCM contributed approximately $900 million of AUA at September 30, 2017.

John P. Babcock, President of the PGB Private Wealth Management Division, said, "We were pleased to consummate the acquisition of MCM, as well as announce the agreement to acquire Quadrant Capital Management, with a planned closing in the fourth quarter of 2017. Our new business pipeline continues to be robust and we expect continued growth in our client base, the expansion of existing relationships and further pursuit of potential strategic acquisitions of wealth management firms."

Mr. Babcock went on to say, "Our differentiator continues to be our personalized, pro-active advice led approach, and the quality of our people. We combine investment, tax, financial, fiduciary, banking and lending capabilities into one integrated plan that helps our clients achieve their goals and objectives."

Loan Originations / Loans

During the third quarter of 2017, the Company employed loan sales as a balance sheet management strategy, while improving returns. The $79 million of lower-yielding multifamily and residential mortgage loan sales generally funded increases in commercial and other loans, resulting in planned minimal net loan growth during the third quarter of 2017. 

At September 30, 2017, loans totaled $3.67 billion, compared to $3.31 billion at December 31, 2016 and compared to $3.27 billion at September 30, 2016, representing net increases of $356 million compared to the December 2016 year end (11 percent or 14 percent on an annualized basis), and $404 million (12 percent) compared to a year ago at September 30, 2016.

Mr. Kennedy noted, "We actively managed our loan portfolio during this past quarter by selling off lower yielding loans, to fund higher yielding production. And we utilized our deposit growth to pay down wholesale borrowings. 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, 2017, residential mortgage loans decreased $6 million to $605 million when compared to the June 2017 quarter. During the September 2017 quarter, approximately $13 million of residential mortgage portfolio loans were sold with servicing retained. From September 30, 2016 to September 30, 2017, residential mortgage loans grew $105 million, or 21 percent.

For the September 2017 quarter, commercial real estate mortgage loans (not including multifamily loans) grew $16 million to $625 million when compared to the June 2017 quarter (3 percent or 10 percent on an annualized basis). From September 30, 2016 to September 30, 2017 commercial real estate mortgage loans grew $128 million, or 26 percent.

At September 30, 2017, the multifamily mortgage loan portfolio totaled $1.44 billion (or 39 percent of total loans), decreasing from $1.50 billion (or 41 percent of total loans) at June 30, 2017 and $1.54 billion (or 47 percent of total loans) at September 30, 2016. During the September 2017 quarter the Company sold $66 million of multifamily mortgage loans on a servicing retained basis. 

Mr. Kennedy said, "As I note each quarter, we have been actively managing 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 have continued to make significant progress on this front."

For the quarter ended September 30, 2017, commercial loans grew $45 million to $846 million when compared to the June 2017 quarter. From September 30, 2016 to September 30, 2017 commercial loans grew $248 million, or 41 percent. At September 30, 2017 the commercial loan portfolio comprised 23 percent of the overall loan portfolio up from 22 percent at June 30, 2017, and up from 18 percent one year ago at September 30, 2016.

Mr. Kennedy said, "We have seen, and believe we will continue to see, our C&I client base and corresponding loan portfolio grow. Additionally, as announced in April 2017, we were successful in bringing on a team of very experienced bankers to focus on equipment financing, and $56 million of volume has been funded since inception. While this team has been successfully integrated and has begun producing somewhat quicker than previously assumed, we still generally expect that revenue and profitability related to this group will lag related expenses by several quarters."

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

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

Deposits / Funding / Balance Sheet Management

During the September 2017 quarter, as noted previously, net loans were managed basically flat to the June 30, 2017 level, as $79 million of lower-yielding multifamily and residential mortgage loan sales generally funded increases in commercial and other loans, while customer deposit growth of $86 million, net (principally interest-bearing checking and retail certificates of deposit) and capital of $23 million funded the paydown of wholesale borrowings of $96 million, as well as funding the purchase price of MCM.

Brokered interest-bearing demand ("overnight") deposits totaled $180 million at September 30, 2017, and June 30, 2017 down $20 million from $200 million at September 30, 2016. The interest rate paid on these deposits provided an attractive funding source and allowed the Bank to engage in interest rate swaps as part of its asset-liability interest rate risk management. As of September 30, 2017, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million in 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 focus on providing high touch client service, a key element in growing its personal commercial core deposit base. We expect that our full array of treasury management capabilities, including our new Treasury Management platform and our new escrow management product software, as well as added treasury management sales professionals and private bankers, will help us grow commercial deposits."

Mr. Kennedy added, "Our overall balance sheet growth will be governed by our continued ability to generate economical core deposits. We will be intently focused on fully utilizing our enhanced in-house relationship-based loan profitability model to manage the origination of loans with competitive risk-adjusted returns."

Other Noninterest Income

The Company's total noninterest income for the September 2017 quarter totaled $8.83 million, or 23 percent of total revenue, compared to $8.17 million for the June 2017 quarter and to $7.54 million for the September 2016 quarter. Noninterest income, excluding wealth management fee income, totaled $3.04 million, $3.09 million, and $3.10 million for the September 2017, June 2017, and September 2016 quarters, respectively. 

The September 2017 quarter included $141 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $91 thousand for the June 2017 quarter, and $383 thousand for the September 2016 quarter. Originations of residential mortgage loans for sale were lower in the 2017 quarterly periods, compared to the prior year periods.

Gain on loans held for sale at lower of cost or fair value was $34 thousand for the third quarter of 2017. The Company did not sell any loans during the June 2017 quarter. The gain on sales of loans held for sale at lower of cost or fair value during the September 2016 quarter was $256 thousand. The Company sold loans in the September 2017 quarter, however the sales focused on lower-yielding loans, and with servicing retained, thus the gain on sale was lower in the 2017 period.

The third quarter of 2017 included $493 thousand of income related to the Company's SBA lending and sale program, compared to $142 thousand generated in the June 2017 quarter, and $243 thousand in the September 2016 quarter. 

The September 2017 quarter included $888 thousand of loan level, back-to-back swap income compared to $1.3 million in the June 2017 quarter and $670 thousand in the September 2016 quarter. This program provides a borrower with a fixed interest rate on a loan, while providing an adjustable rate to the Company, thus helping to manage the Company's interest rate risk, while contributing to income. 

Other income for the September 2017 quarter totaled $326 thousand, compared to $396 thousand for the June 2017 quarter and to $395 thousand for the September 2016 quarter. Letter of credit fees and unused line of credit fees make up a large portion of this line item. 

Operating Expenses

The Company's total operating expenses were $21.96 million for the quarter ended September 30, 2017, compared to $20.10 million for the June 2017 quarter and $18.17 million for the September 2016 quarter.

Compensation and employee benefits expense for the September 2017 quarter was $14.00 million compared to $12.75 million for the June 2017 quarter, and $11.52 million for the September 2016 quarter. The September 2017 quarter included a full quarter of expense related to the Equipment Finance team, and two months of expense related to MCM. Strategic hiring, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increases from the September 2016 quarter. 

Premises and equipment expense for the September 2017 quarter was $2.95 million compared to $3.03 million for the June 2017 quarter and $2.74 million for the September 2016 quarter. The previous quarter included approximately $150 thousand of fixed asset write-offs related to upgrades at the corporate headquarters.

Other expenses for the September 2017 quarter were $4.44 million compared to $3.71 million for the June 2017 quarter and $3.10 million for the September 2016 quarter. The September 2017 quarter included approximately $500 thousand of professional fees related to the MCM acquisition, a full quarter of other expenses related to the Equipment Finance business, and two months of other operating expense related to MCM. Further, when compared to the September 2016 quarter, the September 2017 quarter included increased advertising and marketing expenses relating to various target marketing campaigns.

Income Taxes

For the September 2017 quarter, the effective income tax rate was 38.0 percent, generally in line with the 38.2 percent for the June 2017 quarter and 38.3 percent for the September 2016 quarter. 

Provision for Loan and Lease Losses / Asset Quality

For the quarter ended September 30, 2017, the Company's provision for loan and lease losses was $400 thousand, compared to $2.20 million for the June 2017 quarter and $2.10 million for the September 2016 quarter. The Company's provision for loan and lease losses (and its allowance for loan and lease losses) reflect the Company's asset quality metrics and minimal net loan growth (in the September 2017 quarter due to the loan sales).

At September 30, 2017, the allowance for loan and lease losses of $35.92 million, held fairly steady at 234 percent of nonperforming loans and 0.98 percent of total loans, compared to $35.75 million at June 30, 2017, which was 229 percent of nonperforming loans and 0.98 percent of total loans, and compared to 282 percent of nonperforming loans and 0.95 percent of total loans at September 30, 2016.

Nonperforming assets at September 30, 2017 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.5 million, or 0.37 percent of total assets, compared to $16.0 million, or 0.38 percent of total assets, at June 30, 2017 and $11.4 million, or 0.30 percent of total assets, at September 30, 2016. Total loans past due 30 through 89 days and still accruing were $589 thousand at September 30, 2017, compared to $1.2 million at June 30, 2017 and $8.2 million at September 30, 2016. September 30, 2016 includes one commercial loan secured by real estate totaling $5.0 million that was 30 days past due. This loan was brought current in October 2016.

Capital / Dividends

The Company's capital position in the September 2017 quarter was benefitted by net income of $10.21 million and $9.60 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company.

At September 30, 2017, the Company's GAAP capital as a percent of total assets was 9.10 percent. The Company's regulatory leverage, common equity tier 1, tier 1 to risk weighted assets, and total risk based capital ratios were 8.75 percent, 10.78 percent, 10.78 percent and 13.28 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.63 percent, 11.86 percent, 11.86 percent and 12.92 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

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

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.18 billion as of September 30, 2017. 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 Private Wealth Management Division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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

  • inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
  • the impact of anticipated higher operating expenses in 2017 and beyond;
  • inability to manage our growth;
  • inability to successfully integrate our expanded employee base;
  • 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 and lease losses;
  • higher than expected increases in loan and lease losses or in the level of nonperforming loans;
  • unexpected changes in interest rates;
  • 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, 2016. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

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

(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,  
    2017     2017     2017     2016     2016  
Income Statement Data:                                        
Interest income   $ 37,491     $ 33,412     $ 31,385     $ 30,271     $ 29,844  
Interest expense     7,499       6,440       5,794       5,691       5,575  
  Net interest income     29,992       26,972       25,591       24,580       24,269  
Provision for loan and lease losses     400       2,200       1,600       1,500       2,100  
  Net interest income after provision for loan and lease losses     29,592       24,772       23,991       23,080       22,169  
Wealth management fee income     5,790       5,086       4,818       4,610       4,436  
Service charges and fees     816       815       771       815       812  
Bank owned life insurance     343       350       322       380       340  
Gain on loans held for sale at fair value (Mortgage banking)     141       91       47       197       383  
Gain on loans held for sale at lower of cost or fair value     34       -       -       353       256  
Fee income related to loan level, back-to-back swaps     888       1,291       456       874       670  
Gain on sale of SBA loans     493       142       155       121       243  
Other income     326       396       450       322       395  
Securities gains, net     -       -       -       -       -  
  Total other income     8,831       8,171       7,019       7,672       7,535  
Salaries and employee benefits     13,996       12,751       11,913       11,480       11,515  
Premises and equipment     2,945       3,033       2,816       2,903       2,736  
FDIC insurance expense     583       602       686       804       814  
Other expenses     4,437       3,709       3,889       3,778       3,101  
  Total operating expenses     21,961       20,095       19,304       18,965       18,166  
Income before income taxes     16,462       12,848       11,706       11,787       11,538  
Income tax expense     6,256       4,908       3,724       4,479       4,422  
Net income   $ 10,206     $ 7,940     $ 7,982     $ 7,308     $ 7,116  
                                         
Total revenue (A)   $ 38,823     $ 35,143     $ 32,610     $ 32,252     $ 31,804  
Per Common Share Data:                                        
Earnings per share (basic)   $ 0.57     $ 0.45     $ 0.47     $ 0.44     $ 0.43  
Earnings per share (diluted)     0.56       0.45       0.46       0.43       0.43  
Weighted average number of common shares outstanding:                                        
Basic     17,800,153       17,505,638       17,121,631       16,770,725       16,467,654  
Diluted     18,123,268       17,756,390       17,438,907       17,070,473       16,673,596  
Performance Ratios:                                        
Return on average assets annualized (ROAA)     0.97 %     0.79 %     0.82 %     0.75 %     0.77 %
Return on average equity annualized (ROAE)     11.09 %     9.06 %     9.62 %     9.27 %     9.44 %
Net interest margin (taxable equivalent basis)     2.95 %     2.76 %     2.71 %     2.63 %     2.74 %
Efficiency ratio (B)     56.62 %     57.18 %     59.20 %     59.45 %     57.58 %
Operating expenses / average assets annualized     2.10 %     2.00 %     1.97 %     1.96 %     1.98 %
     
(A)   Total revenue includes net interest income plus total other income.
(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 gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables beginning on page 24.
     
     
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED CONSOLIDATED FINANCIAL DATA  
(Dollars in Thousands, except share data)  
(Unaudited)  
    For the              
    Nine Months Ended              
    September 30,     Change  
    2017     2016     $     %  
Income Statement Data:                              
Interest income   $ 102,288     $ 86,777     $ 15,511     18 %
Interest expense     19,733       14,922       4,811     32 %
  Net interest income     82,555       71.855       10,700     15 %
Provision for loan and lease losses     4,200       6,000       (1,800 )   -30 %
  Net interest income after provision for loan and lease losses     78,355       65,855       12,500     19 %
Wealth management fee income     15,694       13,630       2,064     15 %
Service charges and fees     2,402       2.437       (35 )   -1 %
Bank owned life insurance     1,015       1,027       (12 )   -1 %
Gain on loans held for sale at fair value (Mortgage banking)     279       813       (534 )   -66 %
Gain on loans held for sale at lower of cost or fair value     34       880       (846 )   -96 %
Fee income related to loan level, back-to-back swaps     2,635       764       1,871     245 %
Gain on sale of SBA loans     790       502       288     57 %
Other income     1,172       1,074       98     9 %
Securities gains, net     -       119       (119 )   -100 %
  Total other income     24,021       21,246       2,775     13 %
Compensation and employee benefits     38,660       33,523       5,137     15 %
Premises and equipment     8,794       8,342       452     5 %
FDIC insurance expense (A)     1,871       3,954       (2,083 )   -53 %
Other expenses     12,035       10,328       1,707     17 %
  Total operating expenses     61,360       56,147       5,213     9 %
Income before income taxes     41,016       30,954       10,062     33 %
Income tax expense     14,888       11,785       3,103     26 %
Net income   $ 26,128     $ 19,169     $ 6,959     36 %
                               
Total revenue (B)   $ 106,576     $ 93,101     $ 13,475     14 %
Per Common Share Data:                              
Earnings per share (basic)   $ 1.49     $ 1.19     $ 0.30     25 %
Earnings per share (diluted)     1.47       1.17       0.30     26 %
Weighted average number of common shares outstanding:                              
Basic     17,478,293       16,167,153       1,311,140     8 %
Diluted     17,753,731       16,347,255       1,406,476     9 %
Performance Ratios:                              
Return on average assets annualized (ROAA)     0.86 %     0.71 %     0.15 %   21 %
Return on average equity annualized (ROAE)     9.94 %     8.79 %     1.15 %   13 %
Net interest margin (taxable equivalent basis)     2.81 %     2.78 %     0.03 %   1 %
Efficiency ratio (C)     57.59 %     60.96 %     -3.37 %   -6 %
Operating expenses / average assets annualized     2.02 %     2.09 %     -0.07 %   -3 %
     
(A)   Beginning July 1, 2016, the FDIC assessment system was revised resulting in a reduction of the Company's assessment rate. The revision 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)   Total revenue includes net interest income plus total other income.
(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 gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables beginning on page 24.
     
     
 
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
    As of
    Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,
    2017   2017   2017   2016   2016
ASSETS                              
Cash and due from banks   $ 4,446   $ 4,119   $ 4,910   $ 24,580   $ 17,861
Federal funds sold     101     101     101     101     101
Interest-earning deposits     88,793     89,600     113,953     138,010     141,593
  Total cash and cash equivalents     93,340     93,820     118,964     162,691     159,555
                               
Securities available for sale     315,112     315,224     300,232     305,388     249,616
FHLB and FRB stock, at cost     13,589     18,487     15,436     13,813     14,093
                               
Residential mortgage (A)     605,015     611,316     571,496     528,570     499,748
Multifamily mortgage     1,441,851     1,504,581     1,468,890     1,459,594     1,537,834
Commercial mortgage     625,467     609,444     573,253     551,233     497,267
Commercial loans (A)     845,831     800,927     687,805     637,102     598,078
Construction loans     -     -     -     1,405     430
Consumer loans     81,671     72,943     69,802     69,654     69,222
Home equity lines of credit     68,787     67,051     68,055     65,682     62,872
Other loans     815     458     477     492     449
  Total loans     3,669,437     3,666,720     3,439,778     3,313,732     3,265,900
  Less: Allowances for loan and lease losses     35,915     35,751     33,610     32,208     30,616
  Net loans     3,633,522     3,630,969     3,406,168     3,281,524     3,235,284
                               
Premises and equipment     29,832     29,806     30,113     30,371     30,223
Other real estate owned     137     373     671     534     534
Accrued interest receivable     6,803     6,776     6,823     8,153     6,383
Bank owned life insurance     44,380     44,172     43,992     43,806     43,541
Deferred tax assets, net     16,636     16,912     15,325     15,320     14,765
Goodwill and other intangible assets (B)     15,064     3,095     3,126     3,157     3,188
Other assets     7,917     6,045     6,712     13,876     17,201
  TOTAL ASSETS   $ 4,176,332   $ 4,165,679   $ 3,947,562   $ 3,878,633   $ 3,774,383
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits   $ 557,117   $ 548,427   $ 528,554   $ 489,485   $ 494,204
  Interest-bearing demand deposits     1,144,714     1,085,805     1,015,178     1,023,081     928,941
  Savings     121,830     121,480     122,262     120,056     119,650
  Money market accounts     1,046,997     1,081,366     1,049,909     1,048,494     997,572
  Certificates of deposit - Retail     528,251     475,395     440,991     457,000     466,003
Subtotal "customer" deposits     3,398,909     3,312,473     3,156,894     3,138,116     3,006,370
  IB Demand - Brokered     180,000     180,000     180,000     180,000     200,000
  Certificates of deposit - Brokered     83,788     88,780     93,750     93,721     93,690
Total deposits     3,662,697     3,581,253     3,430,644     3,411,837     3,300,060
                               
Overnight borrowings     -     87,000     34,550     -     -
Federal home loan bank advances     49,898     58,795     58,795     61,795     71,795
Capital lease obligation     9,240     9,407     9,556     9,693     9,828
Subordinated debt, net     48,862     48,829     48,796     48,764     48,731
Other liabilities     25,699     23,548     24,293     22,334     27,934
Due to brokers, securities settlements     -     -     -     -     7,003
  TOTAL LIABILITIES     3,796,396     3,808,832     3,606,634     3,554,423     3,465,351
Shareholders' equity     379,936     356,847     340,928     324,210     309,032
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 4,176,332   $ 4,165,679   $ 3,947,562   $ 3,878,633   $ 3,774,383
                               
Assets under administration at Peapack-Gladstone Bank's Private Wealth Management Division (market value, not included above)   $ 4.8   $ 3.9   $ 3.8   $ 3.7   $ 3.5
     
(A)   Includes loans held for sale at fair value and/or lower of cost or market.
(B)   Includes goodwill and intangibles from the MCM acquisition effective August 1, 2017.
     
     
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
   
    As of  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2017     2017     2017     2016     2016  
Asset Quality:                                        
Loans past due over 90 days and still accruing   $ -     $ -     $ -     $ -     $ -  
Nonaccrual loans (A)     15,367       15,643       11,494       11,264       10,840  
Other real estate owned     137       373       671       534       534  
  Total nonperforming assets   $ 15,504     $ 16,016     $ 12,165     $ 11,798     $ 11,374  
                                         
Nonperforming loans to total loans     0.42 %     0.43 %     0.33 %     0.34 %     0.34 %
Nonperforming assets to total assets     0.37 %     0.38 %     0.31 %     0.30 %     0.30 %
                                         
Performing TDRs (B)(C)   $ 9,658     $ 9,725     $ 15,030     $ 17,784     $ 18,078  
                                         
Loans past due 30 through 89 days and still accruing (D)   $ 589     $ 1,232     $ 622     $ 1,356     $ 8,238  
                                         
Classified loans   $ 44,170     $ 43,608     $ 43,002     $ 45,798     $ 49,627  
                                         
Impaired loans   $ 25,046     $ 25,294     $ 26,546     $ 29,071     $ 28,951  
                                         
Allowance for loan and lease losses:                                        
  Beginning of period   $ 35,751     $ 33,610     $ 32,208     $ 30,616     $ 29,219  
  Provision for loan and lease losses     400       2,200       1,600       1,500       2,100  
  Charge-offs, net     (236 )     (59 )     (198 )     92       (703 )
  End of period   $ 35,915     $ 35,751     $ 33,610     $ 32,208     $ 30,616  
                                         
ALLL to nonperforming loans     233.72 %     228.54 %     292.41 %     285.94 %     282.44 %
ALLL to total loans     0.98 %     0.98 %     0.98 %     0.97 %     0.95 %
 
(A)   September 30, 2017 and June 30, 2017 includes one legacy commercial mortgage totaling $4.9 million. The loan was past maturity at June 30, 2017, however interest payments continued to be made. The loan is secured by real estate valued at $7.2 million as of September 2016.
(B)   Amounts reflect TDRs that are paying according to restructured terms.
(C)   Amount does not include $9.1 million at September 30, 2017, $9.6 million at June 30, 2017, $4.6 million at March 31, 2017, $4.5 million at December 31, 2016 and $4.4 million at September 30, 2016 of TDRs included in nonaccrual loans.
(D)   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,  
    2017     2016     2016  
Capital Adequacy                        
                         
Equity to total assets (A)     9.10 %     8.36 %     8.19 %
                         
Tangible Equity to tangible assets (B)     8.77 %     8.28 %     8.11 %
                         
Book value per share (C)   $ 20.86     $ 18.79     $ 18.24  
                         
Tangible Book Value per share (D)   $ 20.03     $ 18.60     $ 18.05  
                         
                         
    Sept 30,     Dec 31,     Sept 30,  
    2017     2016     2016  
Regulatory Capital - Holding Company                                    
                                     
Tier I leverage   $ 365,300   8.75 %   $ 323,045   8.35 %   $ 308,250   8.39 %
                                     
Tier I capital to risk weighted assets     365,300   10.78       323,045   10.60       308,250   10.47  
                                     
Common equity tier I capital ratio to risk-weighted assets     365,298   10.78       323,042   10.60       308,247   10.47  
                                     
Tier I & II capital to risk-weighted assets     450,078   13.28       404,017   13.25       387,597   13.17  
                                     
Regulatory Capital - Bank                                    
                                     
Tier I leverage   $ 401,988   9.63 %   $ 360,097   9.31 %   $ 345,604   9.41 %
                                     
Tier I capital to risk weighted assets     401,988   11.86       360,097   11.82       345,604   11.74  
                                     
Common equity tier I capital ratio to risk-weighted assets     401,986   11.86       360,094   11.82       345,601   11.74  
                                     
Tier I & II capital to risk-weighted assets     437,904   12.92       392,305   12.87       376,220   12.78  
                                     
(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 beginning on page 24.
(C)   Book value per common share is calculated by dividing shareholders' equity by period end common shares outstanding.
(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. See Non-GAAP financial measures reconciliation tables beginning on page 24.
     
     
 
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
    For the Quarters Ended
    Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,
    2017   2017   2017   2016   2016
Residential loans retained   $ 22,322   $ 54,833   $ 64,831   $ 53,324   $ 43,284
Residential loans sold     10,596     6,491     3,115     11,429     25,128
  Total residential loans     32,918     61,324     67,946     64,753     68,412
                               
Commercial real estate     24,870     46,931     33,216     56,793     56,799
Multifamily     85,488     78,824     47,125     26,300     74,450
Commercial (C&I) loans (A) (B)     131,321     158,476     128,130     78,038     59,698
SBA     4,560     3,900     1,700     2,050     3,025
Wealth lines of credit (A)     15,200     14,905     7,200     2,400     1,200
  Total commercial loans     261,439     303,036     217,371     165,581     195,172
                               
Installment loans     1,967     2,075     2,146     1,826     1,591
                               
Home equity lines of credit (A)     6,879     5,444     6,973     5,878     7,064
                               
  Total loans closed   $ 303,203   $ 371,879   $ 294,436   $ 238,038   $ 272,239
                                 
                                 
     
     
    For the Nine Months Ended
    Sept 30,   Sept 30,
    2017   2016
Residential loans retained   $ 141,986   $ 93,543
Residential loans sold     20,202     53,412
  Total residential loans     162,188     146,955
             
Commercial real estate     105,017     102,692
Multifamily     211,437     333,194
Commercial (C&I) loans (A) (B)     417,927     188,495
SBA     10,160     6,365
Wealth lines of credit (A)     37,305     3,785
  Total commercial loans     781,846     634,531
             
Installment loans     6,188     3,154
             
Home equity lines of credit (A)     19,296     25,103
             
  Total loans closed   $ 969,518   $ 809,743
             
             
(A)   Includes loans and lines of credit that closed in the period, but not necessarily funded.
(B)   Includes equipment lease finance.
     
     
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
    Sept 30, 2017     Sept 30, 2016  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 302,669     $ 1,564   2.07 %   $ 193,902     $ 976   2.01 %
    Tax-exempt (1) (2)     27,099       194   2.86       27,516       212   3.08  
                                         
  Loans (2) (3):                                        
    Mortgages     612,904       4,934   3.22       486,909       3,983   3.27  
    Commercial mortgages     2,120,360       19,879   3.75       2,048,877       17,977   3.51  
    Commercial     795,063       9,654   4.86       573,211       5,826   4.07  
    Commercial construction     -       -   -       454       5   4.41  
    Installment     77,616       611   3.15       67,175       443   2.64  
    Home equity     67,251       653   3.88       62,560       519   3.32  
    Other     563       11   7.82       465       13   11.18  
    Total loans     3,673,757       35,742   3.89       3,239,651       28,766   3.55  
  Federal funds sold     101       -   0.25       101       -   0.25  
  Interest-earning deposits     103,103       276   1.07       111,204       131   0.47  
    Total interest-earning assets     4,106,729       37,776   3.68 %     3,572,374       30,085   3.37 %
Noninterest-earning assets:                                        
  Cash and due from banks     4,732                   17,292              
  Allowance for loan and lease losses     (36,547 )                 (30,022 )            
  Premises and equipment     29,996                   29,460              
  Other assets     86,493                   88,721              
    Total noninterest-earning assets     84,674                   105,451              
Total assets   $ 4,191,403                 $ 3,677,825              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 1,128,112     $ 1,487   0.53 %   $ 924,970     $ 645   0.28 %
  Money markets     1,084,009       1,580   0.58       915,139       737   0.32  
  Savings     120,893       16   0.05       119,986       17   0.06  
  Certificates of deposit - retail     502,637       1,864   1.48       466,967       1,615   1.38  
    Subtotal interest-bearing deposits     2,835,651       4,947   0.70       2,427,062       3,014   0.50  
  Interest-bearing demand - brokered     180,000       737   1.64       200,000       762   1.52  
  Certificates of deposit - brokered     87,095       481   2.21       93,674       501   2.14  
    Total interest-bearing deposits     3,102,746       6,165   0.79       2,720,736       4,277   0.63  
  Borrowings     98,114       439   1.79       87,258       380   1.74  
  Capital lease obligation     9,303       112   4.82       9,874       119   4.82  
  Subordinated debt     48,841       783   6.41       48,711       799   6.56  
  Total interest-bearing liabilities     3,259,004       7,499   0.92       2,866,579       5,575   0.78  
Noninterest-bearing liabilities:                                        
  Demand deposits     538,484                   479,659              
  Accrued expenses and other liabilities     25,807                   30,070              
  Total noninterest-bearing liabilities     564,291                   509,729              
Shareholders' equity     368,108                   301,517              
  Total liabilities and shareholders' equity   $ 4,191,403                 $ 3,677,825              
  Net interest income           $ 30,277                 $ 24,510      
    Net interest spread                 2.76 %                 2.59 %
    Net interest margin (4)                 2.95 %                 2.74 %
     
(1)   Average balances for available for sale securities are based on amortized cost.
(2)   Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)   Loans are stated net of unearned income and include nonaccrual loans.
(4)   Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
     
     
       
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
    Sept 30, 2017     June 30, 2017  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 302,669     $ 1,564   2.07 %   $ 293,990     $ 1,477   2.01 %
    Tax-exempt (1) (2)     27,099       194   2.86       25,109       190   3.03  
                                         
  Loans (2) (3):                                        
    Mortgages     612,904       4,934   3.22       589,848       4,739   3.21  
    Commercial mortgages     2,120,360       19,879   3.75       2,085,623       18,653   3.58  
    Commercial     795,063       9,654   4.86       713,120       7,267   4.08  
    Installment     77,616       611   3.15       71,364       554   3.11  
    Home equity     67,251       653   3.88       67,611       613   3.63  
    Other     563       11   7.82       481       11   9.15  
    Total loans     3,673,757       35,742   3.89       3,528,047       31,837   3.61  
  Federal funds sold     101       -   0.25       101       -   0.25  
  Interest-earning deposits     103,103       276   1.07       96,350       176   0.73  
    Total interest-earning assets     4,106,729       37,776   3.68 %     3,943,597       33,680   3.42 %
Noninterest-earning assets:                                        
  Cash and due from banks     4,732                   4,727              
  Allowance for loan and lease losses     (36,547 )                 (34,466 )            
  Premises and equipment     29,996                   30,144              
  Other assets     86,493                   76,747              
    Total noninterest-earning assets     84,674                   77,152              
Total assets   $ 4,191,403                 $ 4,020,749              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 1,128,112     $ 1,487   0.53 %   $ 1,075,832     $ 1,100   0.41 %
  Money markets     1,084,009       1,580   0.58       1,051,095       1,204   0.46  
  Savings     120,893       16   0.05       121,299       16   0.05  
  Certificates of deposit - retail     502,637       1,864   1.48       457,528       1,650   1.44  
    Subtotal interest-bearing deposits     2,835,651       4,947   0.70       2,705,754       3,970   0.59  
  Interest-bearing demand - brokered     180,000       737   1.64       180,000       726   1.61  
  Certificates of deposit - brokered     87,095       481   2.21       92,719       493   2.13  
    Total interest-bearing deposits     3,102,746       6,165   0.79       2,978,473       5,189   0.70  
  Borrowings     98,114       439   1.79       77,457       354   1.83  
  Capital lease obligation     9,303       112   4.82       9,463       114   4.82  
  Subordinated debt     48,841       783   6.41       48,808       783   6.42  
  Total interest-bearing liabilities     3,259,004       7,499   0.92       3,114,201       6,440   0.83  
Noninterest-bearing liabilities:                                        
  Demand deposits     538,484                   534,339              
  Accrued expenses and other liabilities     25,807                   21,787              
  Total noninterest-bearing liabilities     564,291                   556,126              
Shareholders' equity     368,108                   350,422              
  Total liabilities and shareholders' equity   $ 4,191,403                 $ 4,020,749              
  Net interest income           $ 30,277                 $ 27,240      
    Net interest spread                 2.76 %                 2.59 %
    Net interest margin (4)                 2.95 %                 2.76 %
     
(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, 2017     Sept 30, 2016  
    Average     Income/         Average     Income/      
    Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                        
Interest-earning assets:                                        
  Investments:                                        
    Taxable (1)   $ 295,348     $ 4,545   2.05 %   $ 198,080     $ 2,816   1.90 %
    Tax-exempt (1) (2)     26,453       583   2.94       26,234       623   3.17  
                                           
  Loans (2) (3):                                        
    Mortgages     582,785       14,145   3.24       475,607       11,728   3.29  
    Commercial mortgages     2,080,740       56,265   3.61       2,018,820       52,977   3.50  
    Commercial     719,354       23,301   4.32       550,770       16,319   3.95  
    Commercial construction     128       4   4.17       1,045       32   4.08  
    Installment     72,829       1,666   3.05       58,445       1,198   2.73  
    Home equity     67,061       1,822   3.62       57,938       1,434   3.30  
    Other     520       34   8.72       471       35   9.91  
    Total loans     3,523,417       97,237   3.68       3,163,096       83,723   3.53  
  Federal funds sold     101       -   0.25       101       -   0.24  
  Interest-earning deposits     112,221       716   0.85       89,536       294   0.44  
    Total interest-earning assets     3,957,540       103,081   3.47 %     3,477,047       87,456   3.35 %
Noninterest-earning assets:                                        
  Cash and due from banks     10,297                   16,342              
  Allowance for loan and lease losses     (34,655 )                 (28,227 )            
  Premises and equipment     30,139                   29,637              
  Other assets     78,938                   86,960              
    Total noninterest-earning assets     84,719                   104,712              
Total assets   $ 4,042,259                 $ 3,581,759              
                                         
LIABILITIES:                                        
Interest-bearing deposits:                                        
  Checking   $ 1,078,015     $ 3,448   0.43 %   $ 904,767     $ 1,823   0.27 %
  Money markets     1,067,942       3,718   0.46       851,370       1,912   0.30  
  Savings     120,939       49   0.05       118,884       50   0.06  
  Certificates of deposit - retail     469,867       5,084   1.44       453,451       4,649   1.37  
    Subtotal interest-bearing deposits     2,736,763       12,299   0.60       2,328,472       8,434   0.48  
  Interest-bearing demand - brokered     180,000       2,183   1.62       200,000       2,263   1.51  
  Certificates of deposit - brokered     91,158       1,465   2.14       93,663       1,494   2.13  
    Total interest-bearing deposits     3,007,921       15,947   0.71       2,622,135       12,191   0.62  
  Borrowings     78,704       1,096   1.86       154,819       1,432   1.23  
  Capital lease obligation     9,456       341   4.81       10,007       361   4.81  
  Subordinated debt     48,809       2,349   6.42       19,270       938   6.49  
  Total interest-bearing liabilities     3,144,890       19,733   0.84       2,806,231       14,922   0.71  
Noninterest-bearing liabilities:                                        
  Demand deposits     524,805                   459,907              
  Accrued expenses and Other liabilities     22,262                   24,958              
  Total noninterest-bearing liabilities     547,067                   484,865              
Shareholders' equity     350,302                   290,663              
  Total liabilities and Shareholders' equity   $ 4,042,259                 $ 3,581,759              
  Net interest income           $ 83,348                 $ 72,534      
    Net interest spread                 2.63 %                 2.64 %
    Net interest margin (4)                 2.81 %                 2.78 %
     
(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, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding. 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   2017     2017     2017     2016     2016  
Shareholders' equity   $ 379,936     $ 356,847     $ 340,928     $ 324,210     $ 309,032  
Less: Intangible assets, net     15,064       3,095       3,126       3,157       3,188  
  Tangible equity     364,872       353,752       337,802       321,053       305,844  
                                         
Period end shares outstanding     18,214,759       17,846,404       17,579,274       17,257,995       16,944,738  
Tangible book value per share   $ 20.03     $ 19.82     $ 19.22     $ 18.60     $ 18.05  
Book value per share     20.86       20.00       19.39       18.79       18.24  
                                         
Tangible Equity to Tangible Assets                                        
Total assets   $ 4,176,332     $ 4,165,679     $ 3,947,562     $ 3,878,633     $ 3,774,383  
Less: Intangible assets, net     15,064       3,095       3,126       3,157       3,188  
  Tangible assets     4,161,268       4,162,584       3,944,436       3,875,476       3,771,195  
Tangible equity to tangible assets     8.77 %     8.50 %     8.56 %     8.28 %     8.11 %
Equity to assets     9.10 %     8.57 %     8.64 %     8.36 %     8.19 %
                                         
                                         
       
       
    Three Months Ended  
      Sept 30,       June 30,       March 31,       Dec 31,       Sept 30,  
Efficiency Ratio     2017       2017       2017       2016       2016  
Net interest income   $ 29,992     $ 26,972     $ 25,591     $ 24,580     $ 24,269  
Total other income     8,831       8,171       7,019       7,672       7,535  
Less: Gain on loans held for sale at lower of cost or fair value     34       -       -       353       256  
Less: Securities gains, net     -       -       -       -       -  
Total recurring revenue     38,789       35,143       32,610       31,899       31,548  
                                         
Operating expenses     21,961       20,095       19,304       18,965       18,166  
Total operating expense     21,961       20,095       19,304       18,965       18,166  
                                         
Efficiency ratio     56.62 %     57.18 %     59.20 %     59.45 %     57.58 %
                                         
                                         
       
       
    Nine Months Ended  
    Sept 30,     Sept 30,  
Efficiency Ratio   2017     2016  
Net interest income   $ 82,555     $ 71,855  
Total other income     24,021       21,246  
                 
Less: Gain on loans held for sale at lower of cost or fair value     34       880  
Less: Securities gains, net     -       119  
Total recurring revenue     106,542       92,102  
                 
Operating expenses     61,360       56,147  
Total operating expense     61,360       56,147  
                 
Efficiency ratio     57.59 %     60.96 %
                 

Contact Information

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