BEDMINSTER, N.J., July 27, 2018 (GLOBE NEWSWIRE) -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the “Company”) recorded net income of $22.72 million and diluted earnings per share of $1.20 for the six months ended June 30, 2018, compared to $15.92 million and $0.91, respectively, for the six months ended June 30, 2017, reflecting increases of $6.80 million, or 43 percent, and $0.29 per share, or 32 percent, respectively.
For the same six-month periods, the Company’s total revenue increased $11.84 million when comparing the 2018 six-month period to the 2017 six-month period. Of the total revenue increase, $6.59 million (or 56 percent) was provided by increased wealth management fee income.
For the quarter ended June 30, 2018, the Company recorded net income of $11.91 million and diluted earnings per share of $0.62, compared to $7.94 million and $0.45 for the same three-month period last year, reflecting increases of $3.97 million, or 50 percent, and $0.17 per share, or 38 percent respectively.
For the same quarterly periods, the Company’s total revenue increased $5.84 million when comparing the June 2018 quarter to the June 2017 quarter. Of the total revenue increase, $3.04 million (or 52 percent) was provided by increased wealth management fee income.
Douglas L. Kennedy, President and CEO, said, “Increased wealth management business and income has been driven by our Strategy. Such fee income tends to be more stable and predictable than our other sources of income.”
Executive Summary:
The following tables summarize specified financial measures for the periods shown.
| Year over Year Comparison | |||||||||||||||||
| Six Months | Six Months | ||||||||||||||||
| Ended | Ended | ||||||||||||||||
| June 30, | June 30, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2018 (1) | 2017 | (Decrease) | ||||||||||||||
| Net interest income | $ | 57.64 | $ | 52.56 | $ | 5.08 | 10 | % | |||||||||
| Provision for loan and lease losses | 1.55 | 3.80 | (2.25 | ) | (59 | ) | |||||||||||
| Net interest income after provision | 56.09 | 48.76 | 7.33 | 15 | |||||||||||||
| Wealth management fee income | 16.49 | 9.90 | 6.59 | 67 | |||||||||||||
| Other income | 5.47 | 5.29 | 0.18 | 3 | |||||||||||||
| Total other income | 21.96 | 15.19 | 6.77 | 45 | |||||||||||||
| Operating expenses | 48.28 | 39.40 | 8.88 | 23 | |||||||||||||
| Pretax income | 29.77 | 24.55 | 5.22 | 21 | |||||||||||||
| Income tax expense | 7.05 | (2) | 8.63 | (1.58 | ) | (18 | ) | ||||||||||
| Net income | $ | 22.72 | $ | 15.92 | $ | 6.80 | 43 | % | |||||||||
| Diluted EPS | $ | 1.20 | $ | 0.91 | $ | 0.29 | 32 | % | |||||||||
| Return on average assets annualized | 1.06 | % | 0.80 | % | 0.26 | ||||||||||||
| Return on average equity annualized | 10.83 | % | 9.33 | % | 1.50 | ||||||||||||
(1) The June 2018 six months included results of operations of the Equipment Finance team hired in April 2017, Murphy Capital Management, acquired effective August 1, 2017, and Quadrant Capital Management, acquired effective November 1, 2017.
(2) The June 2018 six months reflected the reduced Federal income tax rate due to the new tax law signed in December 2017. The June 2018 six months included a $416 thousand reduction in income taxes, while the June six months 2017 included a $662 thousand reduction in income taxes, both associated with the vesting of restricted stock under ASU 2016-09.
| June 2018 Quarter Compared to Prior Year Quarter | |||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||
| June 30, | June 30, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2018 (1) | 2017 | (Decrease) | ||||||||||||||
| Net interest income | $ | 29.24 | $ | 26.97 | $ | 2.27 | 8 | % | |||||||||
| Provision for loan and lease losses | 0.30 | 2.20 | (1.90 | ) | (86 | ) | |||||||||||
| Net interest income after provision | 28.94 | 24.77 | 4.17 | 17 | |||||||||||||
| Wealth management fee income | 8.13 | 5.09 | 3.04 | 60 | |||||||||||||
| Other income | 3.61 | 3.09 | 0.52 | 17 | |||||||||||||
| Total other income | 11.74 | 8.18 | 3.56 | 44 | |||||||||||||
| Operating expenses | 24.94 | 20.10 | 4.84 | 24 | |||||||||||||
| Pretax income | 15.74 | 12.85 | 2.89 | 22 | |||||||||||||
| Income tax expense | 3.83 | (2) | 4.91 | (1.08 | ) | (22 | ) | ||||||||||
| Net income | $ | 11.91 | $ | 7.94 | $ | 3.97 | 50 | % | |||||||||
| Diluted EPS | $ | 0.62 | $ | 0.45 | $ | 0.17 | 38 | % | |||||||||
| Return on average assets annualized | 1.11 | % | 0.79 | % | 0.32 | ||||||||||||
| Return on average equity annualized | 11.11 | % | 9.06 | % | 2.05 | ||||||||||||
(1) The June 2018 quarter included results of operations of the Equipment Finance team hired in April 2017, Murphy Capital Management, acquired effective August 1, 2017, and Quadrant Capital Management, acquired effective November 1, 2017.
(2) The June 2018 quarter reflected the reduced Federal income tax rate due to the new tax law signed in December 2017.
| June 2018 Quarter Compared to Linked Quarter | |||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||
| June 30, | March 31, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2018 | 2018 | (Decrease) | ||||||||||||||
| Net interest income | $ | 29.24 | $ | 28.39 | $ | 0.85 | 3 | % | |||||||||
| Provision for loan and lease losses | 0.30 | 1.25 | (0.95 | ) | (76 | ) | |||||||||||
| Net interest income after provision | 28.94 | 27.14 | 1.80 | 7 | |||||||||||||
| Wealth management fee income | 8.13 | 8.37 | (0.24 | ) | (3 | ) | |||||||||||
| Other income | 3.61 | 1.85 | 1.76 | 95 | |||||||||||||
| Total other income | 11.74 | 10.22 | 1.52 | 15 | |||||||||||||
| Operating expenses | 24.94 | 23.34 | 1.60 | 7 | |||||||||||||
| Pretax income | 15.74 | 14.02 | 1.72 | 12 | |||||||||||||
| Income tax expense | 3.83 | 3.21 | (1) | 0.62 | 19 | ||||||||||||
| Net income | $ | 11.91 | $ | 10.81 | $ | 1.10 | 10 | % | |||||||||
| Diluted EPS | $ | 0.62 | $ | 0.57 | $ | 0.05 | 9 | % | |||||||||
| Return on average assets annualized | 1.11 | % | 1.01 | % | 0.10 | ||||||||||||
| Return on average equity annualized | 11.11 | % | 10.54 | % | 0.57 | ||||||||||||
(1) The March 2018 quarter included a $362 thousand reduction in income taxes associated with the vesting of restricted stock under ASU 2016-09.
Mr. Kennedy said, “We had a good start to 2018, as we continued to execute on our strategic plan – Expanding Our Reach. Earnings per share growth was 38 percent over the same quarter last year and return on average equity was 11.11 percent for the second quarter of 2018.”
Highlights for the quarter included:
- Wealth Management remains integral to the strategy and tends to be a diversified, predictable, and stable source of revenue:
- On June 29, 2018, the Company announced its agreement to acquire Lassus Wherley & Associates, P.C, a registered investment advisor, headquartered in New Providence, NJ, which is expected to add approximately $500 million of assets under management and/or administration (“AUM/AUA”) upon the closing in the third quarter of 2018.
- At June 30, 2018, the market value of AUM/AUA at the Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) increased $1.8 billion to $5.7 billion from $3.9 billion at June 30, 2017, reflecting growth of 46 percent. Organic growth was $500 million of the $1.8 billion in growth, while the Murphy Capital Management and Quadrant Capital Management acquisitions accounted for $1.3 billion of the growth.
- Fee income from the Private Wealth Management Division totaled $8.1 million for the quarter ended June 30, 2018, an increase of $3.0 million, or 60 percent, from $5.1 million for the quarter ended June 30, 2017.
- Wealth management fee income, which comprised approximately 20 percent of the Company’s total revenue for the quarter ended June 30, 2018, contributed significantly to the Company’s diversified revenue sources.
- In addition to wealth income, also contributing to the Company’s diversified revenue sources is fee income related to loan level, back-to-back swaps, and gain on sale of SBA loans.
- The loan portfolio continues to shift from lower yielding multifamily to higher yielding commercial and industrial lending (including Equipment Finance):
- Total C&I loans at June 30, 2018 were $1.07 billion (average yield of 4.54% for the six months of 2018). This reflected net growth of $269 million (34 percent) when compared to $801 million in C&I loans at June 30, 2017 (average yield of 4.01% for the six months of 2017).
- The Company continued to manage its balance sheet such that lower yielding, primarily fixed rate multifamily loans decline as a percentage of the overall loan portfolio and higher yielding, primarily floating rate or short duration C&I loans become a larger percentage of the overall loan portfolio. As of June 30, 2018, total C&I loans comprised 29 percent of the total loan portfolio, as compared to 22 percent a year earlier. As of June 30, 2018, total multifamily loans comprised 35 percent of the total loan portfolio, as compared to 41 percent a year earlier.
- The Bank’s concentration in multifamily and investor commercial real estate loans declined to 425 percent of risk based capital at June 30, 2018 from 552 percent at June 30, 2017.
- Deposits, funding, and interest rate risk continue to be actively managed, and reflect the current robust economic environment:
- Deposits totaled $3.52 billion at June 30, 2018 compared to $3.58 billion at June 30, 2017. Deposit balances reflected $117 million of net increases in the second half of 2017, but $175 million of net decreases the first half of 2018.
- The Bank is a significant provider of depository services to its wealth and commercial clients. During 2018, many of those clients are reallocating funds into managed assets with the Bank’s Wealth Management Group and in outside investment opportunities, and to pay income taxes. Most of these depositors remain clients of the Company.
- Other decreases during the first half of 2018 were part of programs to reduce reliance on wholesale sourced deposits and/or reduce volatility or operational risk. During the six-month period ended June 30, 2018, $113 million of listing service and brokered certificates of deposits matured. As the Company has noted previously, the Company has chosen to not participate in these programs at this time due to the higher current cost, and lack of a core customer. Additionally, the Company chose to exit certain large deposit relationships totaling approximately $90 million that it considered to be too volatile or that exposed the Company to increased operational risk.
- Total municipal deposits declined $25 million during the six-month period ended June 30, 2018 as the prepaid 2018 real estate tax inflows at the end of 2017 normalized in 2018.
- The Company has managed its balance sheet to remain slightly asset sensitive as of June 30, 2018, despite rising deposit betas and costs, which had been noted by the Company over the last several quarters.
- The Company continues to maintain over $1 billion of available secured funding at the Federal Home Loan Bank.
- Capital and asset quality continue to be strong.
- Asset quality metrics continued to be strong at June 30, 2018. Nonperforming assets at June 30, 2018 were $13.6 million, or 0.32 percent of total assets. Total loans past due 30 through 89 days and still accruing were $3.5 million, or 0.09 percent of total loans at June 30, 2018.
- The Company’s and Bank’s capital ratios at June 30, 2018 all increased significantly compared to the December 31, 2017 and June 30, 2017 levels. These capital positions were benefitted by net income, as well as capital generated through optional cash purchases in the Company’s Dividend Reinvestment Plan.
Supplemental Quarterly Details:
Wealth Management Business
In the June 2018 quarter, the Bank’s wealth management business generated $8.13 million in fee income compared to $8.37 million for the March 2018 quarter, and $5.09 million for the June 2017 quarter.
When compared to the June 2017 quarter, the June 2018 quarter included three months of income related to Murphy Capital, which was acquired effective August 1, 2017, and three months of income related to Quadrant Capital, which was acquired effective November 1, 2017, as well as increased earnings from organic growth in assets under management. When compared to the March 2018 quarter, the June 2018 quarter continued to be impacted by negative market action seen in the latter part of the March 2018 quarter, partially offset by the benefit from new business.
John P. Babcock, President of the newly branded “Peapack Private,” the Bank’s Private Wealth Management Division, said, “We continue to grow our wealth management business organically, hire experienced new colleagues and will continue to seek to acquire businesses that can add talent and expertise to our growing business.”
Commercial Banking / Loans
For the quarter ended June 30, 2018, total commercial and industrial loans grew $73 million (7 percent for the quarter, or 29 percent annualized) to $1.07 billion at the end of the second quarter, compared to $997 million at the end of the first quarter of 2018. New loan growth was principally funded by managed reductions in lower yielding multifamily loans.
Mr. Kennedy said, “With the launch of our Corporate Advisory Team in January 2018, we now have the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our competition.”
Funding / Interest Rate Risk Management
As noted and explained previously, the Company actively manages its deposit base to reduce reliance on wholesale sourced deposits and/or reduce volatility or operational risk.
For the quarter ended June 30, 2018, the Company utilized its increased capital, its liquidity, and its managed reductions in its lower yielding multifamily loan portfolio to fund its C&I loan growth and its decrease in overnight borrowings.
During the quarter ended June 30, 2018, the Company added $30 million of medium term FHLB advances, as well as $50 million notional of floating to fixed interest rate swaps, to help manage its interest rate risk position, and protect its asset sensitive position.
In addition to approximately $418 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.3 billion of secured funding available from the Federal Home Loan Bank, of which $180 million was drawn as of June 30, 2018.
Mr. Kennedy noted, “The Company continues to focus on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company is focused on various retail channels, as well as commercial channels, including its enhanced Treasury Management and Escrow offerings. Further, all our Private Bankers remain keenly focused on deposit gathering, including our new Professional Services Group, led by a seasoned commercial banker who joined us recently.”
Net Interest Income / Net Interest Margin
Net interest income and net interest margin were $29.24 million and 2.82 percent for the second quarter of 2018, compared to $28.39 million and 2.76 percent for the first quarter of 2018, and compared to $26.97 million and 2.76 percent for the same quarter last year. Net interest income for the second quarter of 2018 benefitted slightly from loan growth as well as $736 thousand (approximately 7 basis points of net interest margin) of prepayment premiums received on the prepayment of multifamily loans, which reflected an increase from $433 thousand (approximately 4 basis points of net interest margin) for the March 2018 quarter and a decrease from $780 thousand (approximately 8 basis points of net interest margin) in the June 2017 quarter. The June 2018 quarter also benefitted from the amortization of loan fees of $321 thousand related to the full paydown of a special mention C&I credit. In addition, the June and March 2018 quarters included three months of the impact of the subordinated debt issued in mid-December 2017.
Net interest margin for the second quarter of 2018 increased when compared to the first quarter of 2018, and the same quarter of 2017. The increase from the same quarter of 2017 was due to the effect of the increased market rates on our adjustable rate assets, partially offset by an increase in our cost of deposits and lower prepayment penalties. The increase from the March 2018 quarter was due to the higher prepayment premiums in the June 2018 quarter. The issuance of $35 million of subordinated debt in mid-December 2017 negatively impacted net interest margin slightly in the June and March 2018 quarters.
Excluding the effect of prepayment premiums, net interest margins would have been 2.75 percent, 2.72 percent, and 2.68 percent for the June 2018 quarter, March 2018 quarter, and the June 2017 quarter, respectively.
The Company’s interest rate sensitivity models indicate that the Company’s net interest income and margin would improve slightly in a rising interest rate environment. However, such income and margin may also be impacted by competitive pressures in attracting and/or retaining deposits.
Other Noninterest Income
The second quarter of 2018 included $814 thousand of income related to the Company’s SBA lending and sale program, compared to $31 thousand generated in the March 2018 quarter, and $142 thousand in the June 2017 quarter. At June 30, 2018, there were approximately $3 million of SBA loans held for sale.
The second quarter of 2018 also included $900 thousand of loan level, back-to-back swap income compared to $252 thousand in the March 2018 quarter and $1.3 million in the June 2017 quarter. This program provides a borrower with a degree of interest rate protection on a variable rate loan, while still providing an adjustable rate to the Company, thus helping to manage the Company’s interest rate risk, while contributing to income.
The Company noted that income from both of these programs are not linear each quarter, as some quarters will be higher than others.
Other income for the June 2018 quarter included increased fees associated with loans relative to the March 2018 and the June 2017 quarters.
The June 2018 quarter included a negative $36 thousand mark to market adjustment of a CRA investment security, which is classified as an equity security.
Operating Expenses
The Company’s total operating expenses were $24.94 million for the quarter ended June 30, 2018, compared to $23.34 million for the March 2018 quarter and $20.10 million for the June 2017 quarter.
Compensation and employee benefits expense for the June 2018 quarter was $15.83 million compared to $14.58 million for the March 2018 quarter, and $12.75 million for the June 2017 quarter. The June 2018 quarter included a full quarter of expense related to the Equipment Finance team (who joined in April 2017), Murphy Capital (which closed in August 2017), and Quadrant Capital (which closed in November 2017). Strategic hiring, normal salary increases and increased bonus/incentive accruals associated with the Company’s profitability and growth also contributed to the increase for the June 2018 quarter as compared to the June 2017 quarter.
Other expenses for the June 2018 quarter were $5.08 million compared to $4.91 million for the March 2018 quarter and $3.71 million for the June 2017 quarter. The June 2018 quarter included a full quarter of other expenses related to the Equipment Finance business, Murphy Capital, and Quadrant Capital. When compared to the June 2017 quarter, the June 2018 quarter included increased advertising and marketing expenses relating to various target marketing campaigns. Further, the June 2018 quarter included the write down of two OREO properties of approximately $200 thousand.
Income Taxes
The June and March 2018 quarters included a reduced Federal income tax rate due to the new tax law signed in December 2017. The March 2018 quarter also included a $362 thousand reduction in income taxes associated with the vesting of restricted stock under ASU 2016-09. The effective tax rate for the June 2018 quarter was 24.3 percent, compared to 22.9 percent for the March 2018 quarter, and 38.2 percent for the June 2017 quarter.
Asset Quality / Provision for Loan and Lease Losses
Late in the June 2018 quarter, the Company received full payoff of a $17.5 million C&I loan designated as special mention, as well as a $4.5 million commercial mortgage classified as substandard.
Nonperforming assets at June 30, 2018 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $13.6 million, or 0.32 percent of total assets, compared to $15.4 million, or 0.36 percent of total assets, at March 31, 2018 and $16.0 million, or 0.38 percent of total assets, at June 30, 2017. Total loans past due 30 through 89 days and still accruing were $3.5 million at June 30, 2018, compared to $674 thousand at March 31, 2018 and $1.2 million at June 30, 2017.
For the quarter ended June 30, 2018, the Company’s provision for loan and lease losses was $300 thousand, compared to $1.25 million for the March 2018 quarter and $2.20 million for the June 2017 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics, net loan growth, net charge-offs, and the composition of the loan portfolio.
At June 30, 2018, the allowance for loan and lease losses of $38.07 million (317 percent of nonperforming loans and 1.02 percent of total loans), compared to $37.70 million at March 31, 2018 (283 percent of nonperforming loans and 1.02 percent of total loans), and $35.75 million (229 percent of nonperforming loans and 0.98 percent of total loans) at June 30, 2017.
Capital / Dividends
The Company’s and Bank’s capital positions in the June 2018 quarter were benefitted by net income of $11.91 million and $2.39 million of voluntary share purchases under the Dividend Reinvestment Plan. Voluntary share purchases in the Dividend Reinvestment Plan can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company – 75,000 of the shares purchased during the June 2018 quarter were from authorized but unissued shares, while 268,349 shares were purchased in the open market.
The Bank’s regulatory capital ratios are all well above the ratios to be considered well capitalized under regulatory guidance.
On July 26, 2018, the Company’s Board of Directors declared a cash dividend of $0.05 per share payable on August 23, 2018 to shareholders of record on August 9, 2018.
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.27 billion and assets under management and/or administration of $5.7 billion as of June 30, 2018. 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 may contain 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 2018 and beyond;
- inability to manage our growth;
- inability to successfully integrate our expanded employee base;
- an 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 interest rate environment and/or our highly competitive market;
- declines in the 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;
- changes in interest rates;
- 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) that 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, 2017. 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 | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
| Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 39,674 | $ | 37,068 | $ | 36,439 | $ | 37,491 | $ | 33,412 | ||||||||||
| Interest expense | 10,431 | 8,675 | 7,853 | 7,499 | 6,440 | |||||||||||||||
| Net interest income | 29,243 | 28,393 | 28,586 | 29,992 | 26,972 | |||||||||||||||
| Provision for loan and lease losses | 300 | 1,250 | 1,650 | 400 | 2,200 | |||||||||||||||
| Net interest income after provision for loan and lease losses | 28,943 | 27,143 | 26,936 | 29,592 | 24,772 | |||||||||||||||
| Wealth management fee income | 8,126 | 8,367 | 7,489 | 5,790 | 5,086 | |||||||||||||||
| Service charges and fees | 873 | 831 | 837 | 816 | 815 | |||||||||||||||
| Bank owned life insurance | 345 | 336 | 341 | 343 | 350 | |||||||||||||||
| Gain on loans held for sale at fair value (Mortgage banking) | 79 | 94 | 122 | 141 | 91 | |||||||||||||||
| Gain on loans held for sale at lower of cost or fair value | — | — | 378 | 34 | — | |||||||||||||||
| Fee income related to loan level, back-to-back swaps | 900 | 252 | 179 | 888 | 1,291 | |||||||||||||||
| Gain on sale of SBA loans | 814 | 31 | 774 | 493 | 142 | |||||||||||||||
| Other income | 639 | 382 | 486 | 326 | 396 | |||||||||||||||
| Securities losses, net | (36 | ) | (78 | ) | — | — | — | |||||||||||||
| Total other income | 11,740 | 10,215 | 10,606 | 8,831 | 8,171 | |||||||||||||||
| Salaries and employee benefits | 15,826 | 14,579 | 15,296 | 13,996 | 12,751 | |||||||||||||||
| Premises and equipment | 3,406 | 3,270 | 3,194 | 2,945 | 3,033 | |||||||||||||||
| FDIC insurance expense | 625 | 580 | 495 | 583 | 602 | |||||||||||||||
| Other expenses | 5,084 | 4,908 | 5,266 | 4,437 | 3,709 | |||||||||||||||
| Total operating expenses | 24,941 | 23,337 | 24,251 | 21,961 | 20,095 | |||||||||||||||
| Income before income taxes | 15,742 | 14,021 | 13,291 | 16,462 | 12,848 | |||||||||||||||
| Income tax expense | 3,832 | 3,214 | 2,922 | 6,256 | 4,908 | |||||||||||||||
| Net income | $ | 11,910 | $ | 10,807 | $ | 10,369 | $ | 10,206 | $ | 7,940 | ||||||||||
| Total revenue (A) | $ | 40,983 | $ | 38,608 | $ | 39,192 | $ | 38,823 | $ | 35,143 | ||||||||||
| Per Common Share Data: | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.63 | $ | 0.58 | $ | 0.57 | $ | 0.57 | $ | 0.45 | ||||||||||
| Earnings per share (diluted) | 0.62 | 0.57 | 0.56 | 0.56 | 0.45 | |||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 18,930,893 | 18,608,309 | 18,197,708 | 17,800,153 | 17,505,638 | |||||||||||||||
| Diluted | 19,098,838 | 18,908,692 | 18,527,829 | 18,123,268 | 17,756,390 | |||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets annualized (ROAA) | 1.11 | % | 1.01 | % | 0.98 | % | 0.97 | % | 0.79 | % | ||||||||||
| Return on average equity annualized (ROAE) | 11.11 | % | 10.54 | % | 10.61 | % | 11.09 | % | 9.06 | % | ||||||||||
| Net interest margin (tax- equivalent basis) | 2.82 | % | 2.76 | % | 2.78 | % | 2.95 | % | 2.76 | % | ||||||||||
| GAAP efficiency ratio (B) | 60.86 | % | 60.45 | % | 61.88 | % | 56.57 | % | 57.18 | % | ||||||||||
| Operating expenses / average assets annualized | 2.32 | % | 2.19 | % | 2.28 | % | 2.10 | % | 2.00 | % | ||||||||||
(A) Total revenue includes net interest income plus total other income.
(B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
| For the Six Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2018 | 2017 | $ | % | |||||||||||||
| Income Statement Data: | ||||||||||||||||
| Interest income | $ | 76,742 | $ | 64,797 | $ | 11,945 | 18 | % | ||||||||
| Interest expense | 19,106 | 12,234 | 6,872 | 56 | % | |||||||||||
| Net interest income | 57,636 | 52,563 | 5,073 | 10 | % | |||||||||||
| Provision for loan and lease losses | 1,550 | 3,800 | (2,250 | ) | -59 | % | ||||||||||
| Net interest income after provision for loan and lease losses | 56,086 | 48,763 | 7,323 | 15 | % | |||||||||||
| Wealth management fee income | 16,493 | 9,904 | 6,589 | 67 | % | |||||||||||
| Service charges and fees | 1,704 | 1,586 | 118 | 7 | % | |||||||||||
| Bank owned life insurance | 681 | 672 | 9 | 1 | % | |||||||||||
| Gain on loans held for sale at fair value (Mortgage banking) | 173 | 138 | 35 | 25 | % | |||||||||||
| Gain on loans held for sale at lower of cost or fair value | — | — | — | N/A | ||||||||||||
| Fee income related to loan level, back-to-back swaps | 1,152 | 1,747 | (595 | ) | -34 | % | ||||||||||
| Gain on sale of SBA loans | 845 | 297 | 548 | 185 | % | |||||||||||
| Other income | 1,021 | 846 | 175 | 21 | % | |||||||||||
| Securities losses, net | (114 | ) | — | (114 | ) | N/A | ||||||||||
| Total other income | 21,955 | 15,190 | 6,765 | 45 | % | |||||||||||
| Salaries and employee benefits | 30,405 | 24,664 | 5,741 | 23 | % | |||||||||||
| Premises and equipment | 6,676 | 5,849 | 827 | 14 | % | |||||||||||
| FDIC insurance expense | 1,205 | 1,288 | (83 | ) | -6 | % | ||||||||||
| Other expenses | 9,992 | 7,598 | 2,394 | 32 | % | |||||||||||
| Total operating expenses | 48,278 | 39,399 | 8,879 | 23 | % | |||||||||||
| Income before income taxes | 29,763 | 24,554 | 5,209 | 21 | % | |||||||||||
| Income tax expense | 7,046 | 8,632 | (1,586 | ) | -18 | % | ||||||||||
| Net income | $ | 22,717 | $ | 15,922 | $ | 6,795 | 43 | % | ||||||||
| Total revenue (A) | $ | 79,591 | $ | 67,753 | $ | 11,838 | 17 | % | ||||||||
| Per Common Share Data: | ||||||||||||||||
| Earnings per share (basic) | $ | 1.21 | $ | 0.92 | $ | 0.29 | 32 | % | ||||||||
| Earnings per share (diluted) | 1.20 | 0.91 | 0.29 | 32 | % | |||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 18,770,492 | 17,314,695 | 1,455,797 | 8 | % | |||||||||||
| Diluted | 18,996,979 | 17,588,816 | 1,408,163 | 8 | % | |||||||||||
| Performance Ratios: | ||||||||||||||||
| Return on average assets annualized (ROAA) | 1.06 | % | 0.80 | % | 0.26 | % | 33 | % | ||||||||
| Return on average equity annualized (ROAE) | 10.83 | % | 9.33 | % | 1.50 | % | 16 | % | ||||||||
| Net interest margin (tax- equivalent basis) | 2.79 | % | 2.73 | % | 0.06 | % | 2 | % | ||||||||
| GAAP efficiency ratio (B) | 60.66 | % | 58.15 | % | 2.51 | % | 4 | % | ||||||||
| Operating expenses / average assets annualized | 2.25 | % | 1.99 | % | 0.26 | % | 13 | % | ||||||||
(A) Total revenue includes net interest income plus total other income.
(B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
| As of | |||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 4,458 | $ | 4,223 | $ | 4,415 | $ | 4,446 | $ | 4,119 | |||||||||
| Federal funds sold | 101 | 101 | 101 | 101 | 101 | ||||||||||||||
| Interest-earning deposits | 62,231 | 149,192 | 108,931 | 88,793 | 89,600 | ||||||||||||||
| Total cash and cash equivalents | 66,790 | 153,516 | 113,447 | 93,340 | 93,820 | ||||||||||||||
| Securities available for sale | 346,790 | 342,553 | 327,633 | 315,112 | 315,224 | ||||||||||||||
| Equity security (A) | 4,710 | 4,746 | — | — | — | ||||||||||||||
| FHLB and FRB stock, at cost | 21,533 | 23,703 | 13,378 | 13,589 | 18,487 | ||||||||||||||
| Residential mortgage (B) | 567,459 | 567,885 | 577,340 | 605,015 | 611,316 | ||||||||||||||
| Multifamily mortgage | 1,320,251 | 1,366,712 | 1,388,958 | 1,441,851 | 1,504,581 | ||||||||||||||
| Commercial mortgage | 637,705 | 643,761 | 626,656 | 625,467 | 609,444 | ||||||||||||||
| Commercial loans (B) | 1,069,526 | 996,788 | 958,481 | 845,831 | 800,927 | ||||||||||||||
| Consumer loans | 76,509 | 71,580 | 86,277 | 81,671 | 72,943 | ||||||||||||||
| Home equity lines of credit | 55,020 | 64,570 | 67,497 | 68,787 | 67,051 | ||||||||||||||
| Other loans | 431 | 420 | 402 | 815 | 458 | ||||||||||||||
| Total loans | 3,726,901 | 3,711,716 | 3,705,611 | 3,669,437 | 3,666,720 | ||||||||||||||
| Less: Allowances for loan and lease losses | 38,066 | 37,696 | 36,440 | 35,915 | 35,751 | ||||||||||||||
| Net loans | 3,688,835 | 3,674,020 | 3,669,171 | 3,633,522 | 3,630,969 | ||||||||||||||
| Premises and equipment | 28,404 | 28,923 | 29,476 | 29,832 | 29,806 | ||||||||||||||
| Other real estate owned | 1,608 | 2,090 | 2,090 | 137 | 373 | ||||||||||||||
| Accrued interest receivable | 7,202 | 7,306 | 9,452 | 6,803 | 6,776 | ||||||||||||||
| Bank owned life insurance | 44,980 | 44,779 | 44,586 | 44,380 | 44,172 | ||||||||||||||
| Goodwill and other intangible assets (C) | 23,477 | 23,656 | 23,836 | 15,064 | 3,095 | ||||||||||||||
| Other assets | 30,845 | 31,202 | 27,478 | 24,553 | 22,957 | ||||||||||||||
| TOTAL ASSETS | $ | 4,265,174 | $ | 4,336,494 | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | |||||||||
| LIABILITIES | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 527,453 | $ | 536,054 | $ | 539,304 | $ | 557,117 | $ | 548,427 | |||||||||
| Interest-bearing demand deposits | 1,053,004 | 1,089,980 | 1,152,483 | 1,144,714 | 1,085,805 | ||||||||||||||
| Savings | 120,986 | 126,026 | 119,556 | 121,830 | 121,480 | ||||||||||||||
| Money market accounts | 1,051,893 | 1,006,540 | 1,091,385 | 1,046,997 | 1,081,366 | ||||||||||||||
| Certificates of deposit – Retail | 431,679 | 408,621 | 344,652 | 299,493 | 226,766 | ||||||||||||||
| Certificates of deposit – Listing Service | 96,644 | 132,321 | 198,383 | 228,758 | 248,629 | ||||||||||||||
| Subtotal “customer” deposits | 3,281,659 | 3,299,542 | 3,445,763 | 3,398,909 | 3,312,473 | ||||||||||||||
| IB Demand – Brokered | 180,000 | 180,000 | 180,000 | 180,000 | 180,000 | ||||||||||||||
| Certificates of deposit – Brokered | 61,254 | 72,614 | 72,591 | 83,788 | 88,780 | ||||||||||||||
| Total deposits | 3,522,913 | 3,552,156 | 3,698,354 | 3,662,697 | 3,581,253 | ||||||||||||||
| Overnight borrowings | 127,350 | 216,000 | — | — | 87,000 | ||||||||||||||
| Federal home loan bank advances | 52,898 | 22,898 | 37,898 | 49,898 | 58,795 | ||||||||||||||
| Capital lease obligation | 8,728 | 8,900 | 9,072 | 9,240 | 9,407 | ||||||||||||||
| Subordinated debt, net | 83,133 | 83,079 | 83,024 | 48,862 | 48,829 | ||||||||||||||
| Other liabilities | 33,133 | 31,055 | 28,521 | 25,699 | 23,548 | ||||||||||||||
| TOTAL LIABILITIES | 3,828,155 | 3,914,088 | 3,856,869 | 3,796,396 | 3,808,832 | ||||||||||||||
| Shareholders’ equity | 437,019 | 422,406 | 403,678 | 379,936 | 356,847 | ||||||||||||||
| TOTAL LIABILITIES AND | |||||||||||||||||||
| SHAREHOLDERS’ EQUITY | $ | 4,265,174 | $ | 4,336,494 | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | |||||||||
| Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions) | $ | 5.7 | $ | 5.6 | $ | 5.5 | $ | 4.8 | $ | 3.9 | |||||||||
(A) Represents investment in CRA Investment Fund. This investment was classified as an equity security, carried at market, in accordance with the adoption of Accounting Standard Update 2016-01, Financial Instruments on January 1, 2018.
(B) Includes loans held for sale at fair value and/or lower cost or market.
(C) Includes goodwill and intangibles from the Murphy Capital Management and the Quadrant Capital Management acquisitions completed in August and November 2017, respectively.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||||
| Asset Quality: | ||||||||||||||||||||
| Loans past due over 90 days and still accruing | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Nonaccrual loans | 12,025 | 13,314 | 13,530 | 15,367 | 15,643 | |||||||||||||||
| Other real estate owned | 1,608 | 2,090 | 2,090 | 137 | 373 | |||||||||||||||
| Total nonperforming assets | $ | 13,633 | $ | 15,404 | $ | 15,620 | $ | 15,504 | $ | 16,016 | ||||||||||
| Nonperforming loans to total loans | 0.32 | % | 0.36 | % | 0.37 | % | 0.42 | % | 0.43 | % | ||||||||||
| Nonperforming assets to total assets | 0.32 | % | 0.36 | % | 0.37 | % | 0.37 | % | 0.38 | % | ||||||||||
| Performing TDRs (A)(B) | $ | 3,314 | $ | 7,888 | $ | 9,514 | $ | 9,658 | $ | 9,725 | ||||||||||
| Loans past due 30 through 89 days and still accruing | $ | 3,539 | $ | 674 | $ | 246 | $ | 589 | $ | 1,232 | ||||||||||
| Classified loans | $ | 52,515 | $ | 55,945 | $ | 41,706 | $ | 44,170 | $ | 43,608 | ||||||||||
| Impaired loans | $ | 30,711 | $ | 21,223 | $ | 23,065 | $ | 25,046 | $ | 25,294 | ||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||
| Beginning of period | $ | 37,696 | $ | 36,440 | $ | 35,915 | $ | 35,751 | $ | 33,610 | ||||||||||
| Provision for loan and lease losses | 300 | 1,250 | 1,650 | 400 | 2,200 | |||||||||||||||
| Charge-offs, net | 70 | 6 | (1,125 | ) | (236 | ) | (59 | ) | ||||||||||||
| End of period | $ | 38,066 | $ | 37,696 | $ | 36,440 | $ | 35,915 | $ | 35,751 | ||||||||||
| ALLL to nonperforming loans | 316.56 | % | 283.13 | % | 269.33 | % | 233.72 | % | 228.54 | % | ||||||||||
| ALLL to total loans | 1.02 | % | 1.02 | % | 0.98 | % | 0.98 | % | 0.98 | % | ||||||||||
(A) Amounts reflect TDRs that are paying according to restructured terms.
(B) Amount does not include $6.9 million at June 30, 2018, $8.0 million at March 31, 2018, $8.1 million at December 31, 2017, $9.1 million at September 30, 2017 and $9.6 million at June 30, 2017 of TDRs included in nonaccrual loans.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| June 30, | Dec 31, | June 30, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Capital Adequacy | ||||||||||||
| Equity to total assets (A) | 10.25 | % | 9.47 | % | 8.57 | % | ||||||
| Tangible Equity to tangible assets (B) | 9.75 | % | 8.97 | % | 8.50 | % | ||||||
| Book value per share (C) | $ | 22.99 | $ | 21.68 | $ | 20.00 | ||||||
| Tangible Book Value per share (D) | $ | 21.76 | $ | 20.40 | $ | 19.82 | ||||||
| June 30, | Dec 31, | June 30, | |||||||||||||||
| 2018 | 2017 | 2017 | |||||||||||||||
| Regulatory Capital – Holding Company | |||||||||||||||||
| Tier I leverage | $ | 416,123 | 9.71 | % | $ | 382,870 | 9.04 | % | $ | 354,462 | 8.82 | % | |||||
| Tier I capital to risk weighted assets | 416,123 | 12.16 | 382,870 | 11.31 | 354,462 | 10.69 | |||||||||||
| Common equity tier I capital ratio to risk-weighted assets | 416,121 | 12.16 | 382,868 | 11.31 | 354,459 | 10.69 | |||||||||||
| Tier I & II capital to risk-weighted assets | 537,322 | 15.71 | 502,334 | 14.84 | 439,042 | 13.24 | |||||||||||
| Regulatory Capital – Bank | |||||||||||||||||
| Tier I leverage | $ | 482,545 | 11.27 | % | $ | 448,812 | 10.61 | % | $ | 392,243 | 9.76 | % | |||||
| Tier I capital to risk weighted assets | 482,545 | 14.12 | 448,812 | 13.27 | 392,243 | 11.83 | |||||||||||
| Common equity tier I capital ratio to risk-weighted assets | 482,543 | 14.12 | 448,810 | 13.27 | 392,240 | 11.83 | |||||||||||
| Tier I & II capital to risk-weighted assets | 520,611 | 15.23 | 485,252 | 14.34 | 427,994 | 12.91 | |||||||||||
(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.
(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.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
| For the Quarters Ended | |||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||
| Residential loans retained | $ | 22,217 | $ | 11,642 | $ | 20,791 | $ | 22,322 | $ | 54,833 | |||||||||
| Residential loans sold | 6,488 | 7,672 | 8,282 | 10,596 | 6,491 | ||||||||||||||
| Total residential loans | 28,705 | 19,314 | 29,073 | 32,918 | 61,324 | ||||||||||||||
| Commercial real estate | 20,780 | 34,385 | 19,090 | 24,870 | 46,931 | ||||||||||||||
| Multifamily | 4,743 | 21,000 | 5,400 | 85,488 | 78,824 | ||||||||||||||
| Commercial (C&I) loans (A) (B) | 137,805 | 118,425 | 141,672 | 131,321 | 158,476 | ||||||||||||||
| SBA | 10,740 | 4,270 | 9,640 | 4,560 | 3,900 | ||||||||||||||
| Wealth lines of credit (A) | 11,560 | 19,238 | 14,800 | 15,200 | 14,905 | ||||||||||||||
| Total commercial loans | 185,628 | 197,318 | 190,602 | 261,439 | 303,036 | ||||||||||||||
| Installment loans | 1,036 | 1,350 | 802 | 1,967 | 2,075 | ||||||||||||||
| Home equity lines of credit (A) | 5,091 | 2,497 | 4,513 | 6,879 | 5,444 | ||||||||||||||
| Total loans closed | $ | 220,460 | $ | 220,479 | $ | 224,990 | $ | 303,203 | $ | 371,879 | |||||||||
| For the Six Months Ended | ||||||
| June 30, | June 30, | |||||
| 2018 | 2017 | |||||
| Residential loans retained | $ | 33,859 | $ | 119,664 | ||
| Residential loans sold | 14,160 | 9,606 | ||||
| Total residential loans | 48,019 | 129,270 | ||||
| Commercial real estate | 55,165 | 80,147 | ||||
| Multifamily | 25,743 | 125,949 | ||||
| Commercial (C&I) loans (A) (B) | 256,230 | 286,606 | ||||
| SBA | 15,010 | 5,600 | ||||
| Wealth lines of credit (A) | 30,798 | 22,105 | ||||
| Total commercial loans | 382,946 | 520,407 | ||||
| Installment loans | 2,386 | 4,221 | ||||
| Home equity lines of credit (A) | 7,588 | 12,417 | ||||
| Total loans closed | $ | 440,939 | $ | 666,315 | ||
(A) Includes loans and lines of credit that closed in the period, but not necessarily funded.
(B) Includes equipment finance.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2018 | June 30, 2017 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 361,537 | $ | 2,072 | 2.29 | % | $ | 293,990 | $ | 1,477 | 2.01 | % | ||||||||||||
| Tax-exempt (1) (2) | 20,647 | 181 | 3.51 | 25,109 | 190 | 3.03 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 562,460 | 4,708 | 3.35 | 589,848 | 4,739 | 3.21 | ||||||||||||||||||
| Commercial mortgages | 1,986,138 | 18,972 | 3.82 | 2,085,623 | 18,653 | 3.58 | ||||||||||||||||||
| Commercial | 1,047,299 | 12,397 | 4.73 | 713,120 | 7,267 | 4.08 | ||||||||||||||||||
| Installment | 71,933 | 635 | 3.53 | 71,364 | 554 | 3.11 | ||||||||||||||||||
| Home equity | 62,731 | 685 | 4.37 | 67,611 | 613 | 3.63 | ||||||||||||||||||
| Other | 450 | 11 | 9.78 | 481 | 11 | 9.15 | ||||||||||||||||||
| Total loans | 3,731,011 | 37,408 | 4.01 | 3,528,047 | 31,837 | 3.61 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 94,770 | 395 | 1.67 | 96,350 | 176 | 0.73 | ||||||||||||||||||
| Total interest-earning assets | 4,208,066 | 40,056 | 3.81 | % | 3,943,597 | 33,680 | 3.42 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 4,660 | 4,727 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (38,278 | ) | (34,466 | ) | ||||||||||||||||||||
| Premises and equipment | 28,704 | 30,144 | ||||||||||||||||||||||
| Other assets | 100,385 | 76,747 | ||||||||||||||||||||||
| Total noninterest-earning assets | 95,471 | 77,152 | ||||||||||||||||||||||
| Total assets | $ | 4,303,537 | $ | 4,020,749 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | 1,073,108 | 1,967 | 0.73 | % | 1,075,832 | 1,100 | 0.41 | % | ||||||||||||||||
| Money markets | 1,000,320 | 2,432 | 0.97 | 1,051,095 | 1,204 | 0.46 | ||||||||||||||||||
| Savings | 123,490 | 17 | 0.06 | 121,299 | 16 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 555,935 | 2,330 | 1.68 | 457,528 | 1,650 | 1.44 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,752,853 | 6,746 | 0.98 | 2,705,754 | 3,970 | 0.59 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 804 | 1.79 | 180,000 | 726 | 1.61 | ||||||||||||||||||
| Certificates of deposit – brokered | 63,364 | 399 | 2.52 | 92,719 | 493 | 2.13 | ||||||||||||||||||
| Total interest-bearing deposits | 2,996,217 | 7,949 | 1.06 | 2,978,473 | 5,189 | 0.70 | ||||||||||||||||||
| Borrowings | 221,340 | 1,155 | 2.09 | 77,457 | 354 | 1.83 | ||||||||||||||||||
| Capital lease obligation | 8,794 | 106 | 4.82 | 9,463 | 114 | 4.82 | ||||||||||||||||||
| Subordinated debt | 83,099 | 1,221 | 5.88 | 48,808 | 783 | 6.42 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,309,450 | 10,431 | 1.26 | % | 3,114,201 | 6,440 | 0.83 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 536,306 | 534,339 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 29,035 | 21,787 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 565,341 | 556,126 | ||||||||||||||||||||||
| Shareholders’ equity | 428,746 | 350,422 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 4,303,537 | $ | 4,020,749 | ||||||||||||||||||||
| Net interest income | $ | 29,625 | $ | 27,240 | ||||||||||||||||||||
| Net interest spread | 2.55 | % | 2.59 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.82 | % | 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 21 percent federal tax rate at June 30, 2018 and a 35 percent federal tax rate at June 30, 2017.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2018 | March 31, 2018 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 361,537 | $ | 2,072 | 2.29 | % | $ | 339,556 | $ | 1,925 | 2.27 | % | ||||||||||||
| Tax-exempt (1) (2) | 20,647 | 181 | 3.51 | 24,304 | 198 | 3.26 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 562,460 | 4,708 | 3.35 | 574,400 | 4,731 | 3.29 | ||||||||||||||||||
| Commercial mortgages | 1,986,138 | 18,972 | 3.82 | 2,013,128 | 18,407 | 3.66 | ||||||||||||||||||
| Commercial | 1,047,299 | 12,397 | 4.73 | 969,496 | 10,487 | 4.33 | ||||||||||||||||||
| Installment | 71,933 | 635 | 3.53 | 81,762 | 670 | 3.28 | ||||||||||||||||||
| Home equity | 62,731 | 685 | 4.37 | 65,158 | 660 | 4.05 | ||||||||||||||||||
| Other | 450 | 11 | 9.78 | 455 | 11 | 9.67 | ||||||||||||||||||
| Total loans | 3,731,011 | 37,408 | 4.01 | 3,704,399 | 34,966 | 3.78 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 94,770 | 395 | 1.67 | 99,471 | 357 | 1.44 | ||||||||||||||||||
| Total interest-earning assets | 4,208,066 | 40,056 | 3.81 | % | 4,167,831 | 37,446 | 3.59 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 4,660 | 4,686 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (38,278 | ) | (37,076 | ) | ||||||||||||||||||||
| Premises and equipment | 28,704 | 29,256 | ||||||||||||||||||||||
| Other assets | 100,385 | 99,541 | ||||||||||||||||||||||
| Total noninterest-earning assets | 95,471 | 96,407 | ||||||||||||||||||||||
| Total assets | $ | 4,303,537 | $ | 4,264,238 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 1,073,108 | $ | 1,967 | 0.73 | % | $ | 1,143,152 | $ | 1,757 | 0.61 | % | ||||||||||||
| Money markets | 1,000,320 | 2,432 | 0.97 | 1,033,937 | 1,946 | 0.75 | ||||||||||||||||||
| Savings | 123,490 | 17 | 0.06 | 121,065 | 16 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 555,935 | 2,330 | 1.68 | 555,564 | 2,149 | 1.55 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,752,853 | 6,746 | 0.98 | 2,853,718 | 5,868 | 0.82 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 804 | 1.79 | 180,000 | 680 | 1.51 | ||||||||||||||||||
| Certificates of deposit – brokered | 63,364 | 399 | 2.52 | 72,601 | 429 | 2.36 | ||||||||||||||||||
| Total interest-bearing deposits | 2,996,217 | 7,949 | 1.06 | 3,106,319 | 6,977 | 0.90 | ||||||||||||||||||
| Borrowings | 221,340 | 1,155 | 2.09 | 86,458 | 370 | 1.71 | ||||||||||||||||||
| Capital lease obligation | 8,794 | 106 | 4.82 | 8,963 | 107 | 4.78 | ||||||||||||||||||
| Subordinated debt | 83,099 | 1,221 | 5.88 | 83,043 | 1,221 | 5.88 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,309,450 | 10,431 | 1.26 | % | 3,284,783 | 8,675 | 1.06 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 536,306 | 539,882 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 29,035 | 29,358 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 565,341 | 569,240 | ||||||||||||||||||||||
| Shareholders’ equity | 428,746 | 410,215 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 4,303,537 | $ | 4,264,238 | ||||||||||||||||||||
| Net interest income | $ | 29,625 | $ | 28,771 | ||||||||||||||||||||
| Net interest spread | 2.55 | % | 2.53 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.82 | % | 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 21 percent federal tax rate.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
SIX MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
| June 30, 2018 | June 30, 2017 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (1) | $ | 350,608 | $ | 3,997 | 2.28 | % | $ | 291,627 | $ | 2,981 | 2.04 | % | ||||||||||||
| Tax-exempt (1) (2) | 22,465 | 379 | 3.37 | 26,125 | 389 | 2.98 | ||||||||||||||||||
| Loans (2) (3): | ||||||||||||||||||||||||
| Mortgages | 568,397 | 9,439 | 3.32 | 567,475 | 9,212 | 3.25 | ||||||||||||||||||
| Commercial mortgages | 1,999,558 | 37,379 | 3.74 | 2,060,602 | 36,386 | 3.53 | ||||||||||||||||||
| Commercial | 1,008,613 | 22,884 | 4.54 | 680,872 | 13,646 | 4.01 | ||||||||||||||||||
| Commercial construction | — | — | — | 194 | 4 | 4.12 | ||||||||||||||||||
| Installment | 76,820 | 1,305 | 3.40 | 70,395 | 1,055 | 3.00 | ||||||||||||||||||
| Home equity | 63,938 | 1,346 | 4.21 | 66,965 | 1,169 | 3.49 | ||||||||||||||||||
| Other | 453 | 22 | 9.71 | 498 | 23 | 9.24 | ||||||||||||||||||
| Total loans | 3,717,779 | 72,375 | 3.89 | 3,447,001 | 61,495 | 3.57 | ||||||||||||||||||
| Federal funds sold | 101 | — | 0.25 | 101 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 97,107 | 752 | 1.55 | 116,856 | 440 | 0.75 | ||||||||||||||||||
| Total interest-earning assets | 4,188,060 | 77,503 | 3.70 | % | 3,881,710 | 65,305 | 3.36 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 4,673 | 13,125 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (37,680 | ) | (33,694 | ) | ||||||||||||||||||||
| Premises and equipment | 28,979 | 30,211 | ||||||||||||||||||||||
| Other assets | 99,567 | 75,099 | ||||||||||||||||||||||
| Total noninterest-earning assets | 95,539 | 84,741 | ||||||||||||||||||||||
| Total assets | $ | 4,283,599 | $ | 3,966,451 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 1,107,936 | $ | 3,724 | 0.67 | % | $ | 1,052,551 | $ | 1,961 | 0.37 | % | ||||||||||||
| Money markets | 1,017,036 | 4,378 | 0.86 | 1,059,775 | 2,138 | 0.40 | ||||||||||||||||||
| Savings | 122,284 | 33 | 0.05 | 120,963 | 33 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 555,751 | 4,479 | 1.61 | 453,210 | 3,220 | 1.42 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 2,803,007 | 12,614 | 0.90 | 2,686,499 | 7,352 | 0.55 | ||||||||||||||||||
| Interest-bearing demand – brokered | 180,000 | 1,484 | 1.65 | 180,000 | 1,446 | 1.61 | ||||||||||||||||||
| Certificates of deposit – brokered | 67,957 | 828 | 2.44 | 93,223 | 984 | 2.11 | ||||||||||||||||||
| Total interest-bearing deposits | 3,050,964 | 14,926 | 0.98 | 2,959,722 | 9,782 | 0.66 | ||||||||||||||||||
| Borrowings | 154,271 | 1,525 | 1.98 | 68,838 | 657 | 1.91 | ||||||||||||||||||
| Capital lease obligation | 8,878 | 213 | 4.80 | 9,534 | 229 | 4.80 | ||||||||||||||||||
| Subordinated debt | 83,071 | 2,442 | 5.88 | 48,792 | 1,566 | 6.42 | ||||||||||||||||||
| Total interest-bearing liabilities | 3,297,184 | 19,106 | 1.16 | % | 3,086,886 | 12,234 | 0.79 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 538,084 | 517,853 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 28,799 | 20,460 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 566,883 | 538,313 | ||||||||||||||||||||||
| Shareholders’ equity | 419,532 | 341,252 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 4,283,599 | $ | 3,966,451 | ||||||||||||||||||||
| Net interest income | $ | 58,397 | $ | 53,071 | ||||||||||||||||||||
| Net interest spread | 2.54 | % | 2.57 | % | ||||||||||||||||||||
| Net interest margin (4) | 2.79 | % | 2.73 | % | ||||||||||||||||||||
(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 21 percent federal tax rate at June 30, 2018 and a 35 percent federal tax rate at June 30, 2017.
(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 | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| Tangible Book Value Per Share | 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||
| Shareholders’ equity | $ | 437,019 | $ | 422,406 | $ | 403,678 | $ | 379,936 | $ | 356,847 | ||||||||||
| Less: Intangible assets, net | 23,477 | 23,656 | 23,836 | 15,064 | 3,095 | |||||||||||||||
| Tangible equity | 413,542 | 398,750 | 379,842 | 364,872 | 353,752 | |||||||||||||||
| Period end shares outstanding | 19,007,312 | 18,921,114 | 18,619,634 | 18,214,759 | 17,846,404 | |||||||||||||||
| Tangible book value per share | $ | 21.76 | $ | 21.07 | $ | 20.40 | $ | 20.03 | $ | 19.82 | ||||||||||
| Book value per share | 22.99 | 22.32 | 21.68 | 20.86 | 20.00 | |||||||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||||||||||
| Total assets | $ | 4,265,174 | $ | 4,336,494 | $ | 4,260,547 | $ | 4,176,332 | $ | 4,165,679 | ||||||||||
| Less: Intangible assets, net | 23,477 | 23,656 | 23,836 | 15,064 | 3,095 | |||||||||||||||
| Tangible assets | 4,241,697 | 4,312,838 | 4,236,711 | 4,161,268 | 4,162,584 | |||||||||||||||
| Tangible equity to tangible assets | 9.75 | % | 9.25 | % | 8.97 | % | 8.77 | % | 8.50 | % | ||||||||||
| Equity to assets | 10.25 | % | 9.74 | % | 9.47 | % | 9.10 | % | 8.57 | % | ||||||||||
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | Dec 31, | Sept 30, | June 30, | ||||||||||||||||
| Efficiency Ratio | 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||
| Net interest income | $ | 29,243 | $ | 28,393 | $ | 28,586 | $ | 29,992 | $ | 26,972 | ||||||||||
| Total other income | 11,740 | 10,215 | 10,606 | 8,831 | 8,171 | |||||||||||||||
| Less: Gain on loans held for sale | ||||||||||||||||||||
| at lower of cost or fair value | — | — | 378 | 34 | — | |||||||||||||||
| Less: Securities losses, net | (36 | ) | (78 | ) | — | — | — | |||||||||||||
| Total recurring revenue | 41,019 | 38,686 | 38,814 | 38,789 | 35,143 | |||||||||||||||
| Operating expenses | 24,941 | 23,337 | 24,251 | 21,961 | 20,095 | |||||||||||||||
| Less: ORE provision | 204 | — | — | — | — | |||||||||||||||
| Total operating expense | 24,737 | 23,337 | 24,251 | 21,961 | 20,095 | |||||||||||||||
| Efficiency ratio | 60.31 | % | 60.32 | % | 62.48 | % | 56.62 | % | 57.18 | % | ||||||||||
| For the Six Months Ended | |||||||
| June 30, | June 30, | ||||||
| Efficiency Ratio | 2018 | 2017 | |||||
| Net interest income | $ | 57,636 | $ | 52,563 | |||
| Total other income | 21,955 | 15,190 | |||||
| Less: Gain on loans held for sale | |||||||
| at lower of cost or fair value | — | — | |||||
| Less: Securities losses, net | (114 | ) | — | ||||
| Total recurring revenue | 79,705 | 67,753 | |||||
| Operating expenses | 48,278 | 39,399 | |||||
| Less: ORE provision | 204 | — | |||||
| Total operating expense | 48,074 | 39,399 | |||||
| Efficiency ratio | 60.31 | % | 58.15 | % | |||
Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308