Peapack-Gladstone Financial Corporation Reports a Strong Second Quarter and Declares Its Quarterly Cash Dividend
/EINPresswire.com/ -- BEDMINSTER, NJ -- (Marketwired) -- 07/28/16 -- Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $12.05 million and diluted earnings per share of $0.74 for the six months ended June 30, 2016, compared to $10.25 million and $0.67, respectively, for the same six month period last year, reflecting increases of $1.81 million or 18 percent, and $0.07 per share, or 10 percent, respectively.
For the quarter ended June 30, 2016, the Corporation recorded net income of $6.56 million and diluted earnings per share of $0.40, compared to $5.24 million and $0.34 for the same three month period last year, reflecting increases of $1.33 million, or 25 percent, and $0.06 per share, or 18 percent, respectively.
During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums and increased investment in risk management related analytics and practices. The additional FDIC premium was estimated at $950 thousand, which reduced net income by $585 thousand and diluted earnings per share by approximately $0.04 per share, for the quarter.
The following table summarizes specified financial measures for the second quarters of 2016 and 2015, respectively:
June June Increase/
(Dollars in millions, except EPS) 2016 (A) 2015 (Decrease)
-------- -------- -----------------
Net interest income $ 24.18 $ 20.34 $ 3.84 19%
Provision for loan losses $ 2.20 $ 2.20 $ - -%
Pretax income $ 10.65 $ 8.38 $ 2.27 27%
Net income $ 6.56 $ 5.24 $ 1.32 25%
Diluted EPS $ 0.40 $ 0.34 $ 0.06 18%
Total revenue $ 31.62 $ 26.84 $ 4.78 18%
Return on average assets 0.73% 0.70% 0.03 4%
Return on average equity 9.06% 8.24% 0.82 10%
Efficiency ratio (B) 60.36% 61.00% (0.64) (1)%
Book value per share $ 18.08 $ 17.02 $ 1.06 6%
(A) The quarter ended June 2016 included $950 thousand of additional
charges related to increased FDIC premiums, as described on the prior
page. These charges reduced pretax income by $950 thousand, net income
by $585 thousand, diluted earnings per share by $0.04 per share, ROAA
by 0.06%, and ROAE by 0.80%, and increased the efficiency ratio by
3.06%.
(B) See Non-GAAP financial measures reconciliation table on page 28.
Mr. Kennedy said, "We had a very strong second quarter of 2016, as we continued to successfully execute our Plan - Expanding Our Reach. We posted record net income and near record earnings per share, despite the additional FDIC premium expense."
Additional Q2 2016 highlights follow:
- Growth in diluted EPS for Q2 2016 when compared to Q2 2015 was $0.06 per share, or 18 percent, despite the additional expenses incurred in Q2 2016.
- At June 30, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") stood at $3.42 billion.
- Fee income from the Private Wealth Management Division totaled $4.9 million for the second quarter of 2016, compared to $4.5 million for the same quarter in 2015. Wealth management fee income, at approximately 15 percent of the Company's total revenue, contributed significantly to the Company's diversified revenue sources.
- Loans at June 30, 2016, including multifamily loans held for sale, totaled $3.21 billion. This reflected net growth of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) when compared to the $2.74 billion at June 30, 2015.
- Commercial & Industrial (C&I) loans at June 30, 2016 totaled $576 million. This reflected net growth of $21 million compared to the prior quarter (4 percent compared to the prior quarter or 15 percent on an annualized basis), and net growth of $138 million (31 percent) when compared to the $438 million at June 30, 2015.
- Multifamily whole loans sold totaled $80 million in the second quarter of 2016, which resulted in a net gain on sale of $500 thousand.
- Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $2.82 billion at June 30, 2016. This reflected net growth of $65 million compared to the prior quarter (2 percent compared to the prior quarter or 10 percent on an annualized basis), and $539 million (24) when compared to the $2.28 billion at June 30, 2015.
- Asset quality metrics continued to be strong at June 30, 2016. Nonperforming assets at June 30, 2016 were just $8.8 million, or 0.24 percent of total assets. Total loans past due 30 through 89 days and still accruing were $6.6 million or 0.21 percent of total loans at June 30, 2016.
- The Company's net interest income for the second quarter of 2016 was $24.2 million, reflecting growth of $766 thousand (3 percent for the quarter or 13 percent on an annualized basis) when compared to $23.4 million for the March 2016 quarter, and growth of $3.83 million (19 percent) when compared to the $20.34 million for the quarter ended June 30, 2015.
- The Company's book value per share at June 30, 2016 of $18.08 reflected improvement when compared to $17.02 at June 30, 2015. Year over year growth in book value per share totaled 6 percent.
Mr. Kennedy noted, "We were very pleased with our progress in 2015, and continue to be pleased with our progress thus far in 2016. As I described earlier this year, we did see some headwinds going into 2016. Despite those headwinds, we have delivered solid results again this quarter."
Net Interest Income / Net Interest Margin
Net interest income and net interest margin was $24.18 million and 2.79 percent for the second quarter of 2016, compared to $23.41 million and 2.82 percent for the first quarter of 2016, and compared to $20.34 million and 2.80 percent for the same quarter last year, reflecting growth in net interest income of $3.83 million or 19 percent when compared to the same prior year period. Net interest income for the second quarter of 2016 benefitted from loan growth during 2015 and the first quarter of 2016. Additionally, the June 2016 quarter included approximately $452 thousand of prepayment premiums received on the prepayment of certain multifamily loans, compared to $419 thousand for the March 2016 quarter, and compared to $86 thousand for the June 2015 quarter. The $452 thousand benefitted the net interest margin for the June 2016 quarter by 5 basis points.
Net interest income for the second quarter of 2016 improved considerably compared to the same quarter in 2015, and net interest margin remained relatively flat at 2.79 percent for the 2016 quarter compared to 2.80 percent for the 2015 quarter. The net interest margin continues to be impacted by the effect of the low interest rate environment throughout 2015 and 2016, as well as competitive pressures in attracting new loans and deposits.
The net interest margin is also affected by the maintenance of liquid assets on the Company's balance sheet. Mr. Kennedy said, "In addition to $288 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $113 million drawn as of June 30, 2016."
Wealth Management Business
In the June 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.90 million in fee income compared to $4.30 million for the March 2016 quarter, and $4.53 million for the June 2015 quarter.
Fee income for the June 2016 quarter was $604 thousand higher than the March 2016 quarter. The second quarter (June quarter) of each year historically reflects a high level of tax preparation income related to the Bank's wealth management clients. Additionally, the June 2016 quarter benefitted from continued new business, as well as positive market action relative to March 2016 quarter levels.
Fee income for the June 2016 quarter was $367 thousand, or approximately 8 percent greater than the June 2015 quarter. Growth in fee income was due to several factors including: the acquisition of Wealth Management Consultants, LLC ("WMC") which closed in May 2015; continued healthy new business results; and higher yields on new business as compared to lost/closed business. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, as well as the first quarter of 2016, which negatively impacted investment fee revenue.
The market value of the assets under administration (AUA) of the wealth management division was $3.42 billion at June 30, 2016, increasing by $111 million, or 3 percent (13 percent on an annualized basis), from March 31, 2016 and decreasing $27 million, or less than one percent, from $3.45 billion at June 30, 2015, principally due to the broader market declines noted above.
Mr. John Babcock, President of Private Wealth Management, said, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We will continue to grow our professional team as well as expand our products, services, and the advice we deliver to our clients, through strategic hires, wealth management acquisitions, and organically." Mr. Babcock went on to note, "While the broader market declines in the second half of 2015 and the beginning of 2016 impacted fee revenue, we were still able to generate fee income in the June quarter greater than the June quarter of 2015 due to new business and positive net flows. We are cautiously optimistic about the market in the medium-to-longer term, we have a healthy new business pipeline and we continue to attract new clients every month. Notwithstanding market fluctuation, our business continues to grow and will be a significant driver to enhancing shareholder value as we move ahead."
Loan Originations / Loans
At June 30, 2016, loans, including multifamily loans held for sale, totaled $3.21 billion compared to $3.07 billion three months ago at March 31, 2016 and compared to $2.74 billion one year ago at June 30, 2015, representing net increases of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) compared to the prior year June 30th period. Mr. Kennedy noted, "We believe we have a very high quality loan portfolio, as evidenced by having no construction loans, and very strong asset quality metrics."
For the quarter ended June 30, 2016, residential mortgage originations totaled $53 million. In 2015, we successfully repositioned our residential mortgage business to serve as a lead product supporting new wealth business, as well as other banking relationships. We believe that residential mortgage volumes will increase through the remainder of 2016.
For the June 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $37 million. When comparing June 30, 2016 to June 30, 2015, commercial real estate mortgage loans (not including multifamily loans) grew $84 million, or 22 percent, to $460 million at June 30, 2016 from $375 million one year ago at June 30, 2015.
The June 2016 quarter included $151 million of multifamily loan originations, slightly higher than the previous quarter, but down significantly from the same 2015 quarter.
At June 30, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.56 billion (or 48.7 percent of total loans) compared to $1.53 billion (or 49.8 percent of total loans) three months ago at March 31, 2016 and compared to $1.50 billion (or 50.0 percent of total loans) at December 31, 2015. The increases were net of whole loans sold and participations, including $80 million of whole loans sold in the June 2016 quarter bringing the total whole loans sold or participated for 2016 to $138 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2016.
Mr. Kennedy said, "As I explained over the last several quarters, we anticipated multifamily loan originations and growth would be less than prior years, as we manage our balance sheet such that multifamily loans decline as a percentage of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. We made progress on this front late in 2015, and we are pleased this has continued into 2016." "Mr. Kennedy further noted that, "This balance sheet management will likely not be linear each quarter, but will rather be apparent over periods of time."
For the quarter ended June 30, 2016 the Company closed $61 million of commercial loans. When comparing June 30, 2016 to June 30, 2015, commercial loans grew $138 million, or 31 percent, to $576 million at June 30, 2016 from $438 million one year ago at June 30, 2015. At June 30, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio, up from 16 percent one year ago at June 30, 2015.
Mr. Kennedy said, "As a result of our continued investment in and commitment to C&I banking, including the addition in 2015 and 2016, as well as future planned additions, of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow."
Mr. Kennedy went on to say, "Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients."
Deposits / Funding / Balance Sheet Management
In June 2016, the Company issued $50 million of subordinated debt ($48.7 million net of underwriting fees and expenses) bearing interest at an annual rate of 6 percent for the first five years, and thereafter at an adjustable rate and until maturity in June 2026 or earlier redemption.
During the June 2016 quarter, customer deposit growth of $65 million (principally noninterest-bearing and money market), the subordinated debt issuance of $49 million (net), and increased capital of $12 million, basically funded net asset growth of $139 million.
Brokered interest-bearing demand ("overnight") deposits continued to be managed flat at $200 million at June 30, 2016. The interest rate paid on these deposits allowed the Bank to fund at attractive rates and engage in interest rate swaps as part of its asset-liability interest rate risk management. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.
From a liquidity/funding perspective, such brokered deposits, at a direct cost of approximately 55 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of June 30, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.
Mr. Kennedy noted, "The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management solutions will help support both core deposit growth and commercial lending opportunities."
Other Noninterest Income
Service charges and fees for the June 2016 quarter were $818 thousand, compared to $807 thousand for the March 2016 quarter and $837 thousand for the June 2015 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.
The June 2016 quarter included $309 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $121 thousand for the March 2016 quarter, and $161 thousand in the June 2015 quarter. Originations of residential mortgage loans for sale were much higher in the June 2016 quarter, compared to the other noted periods.
There were $18 thousand of securities gains for the June 2016 quarter compared to $101 thousand for the March 2016 quarter, and $176 thousand for the June 2015 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the shorter duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company's operations.
Gain on sale of multifamily loans held for sale at lower of cost or fair value was $500 thousand for the June 2016 quarter, compared to $124 thousand for the March 2016 quarter. There were no such gains in the June 2015 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans, in addition to participations. The Company anticipates that it will continue to employ both of these strategies throughout 2016, and potentially beyond.
Other income was $559 thousand for the June 2016 quarter compared to $473 thousand for the March 2016 quarter, and $545 thousand for the June 2015 quarter. The second quarter of 2016 included $212 thousand of income related to the Company's SBA lending and sale program, compared to $47 thousand generated in the March 2016 quarter. The SBA program was implemented in the March 2016 quarter, and the Company anticipates it will be a part of its normal ongoing operations. The June 2015 quarter included $373 thousand of loan level, back-to-back swap income. This program is also a part of the Company's normal ongoing operations. Due to the nature of this program, it is difficult to predict timing and amount of future income.
Other improvements in other income in the June 2016 quarter included greater loan servicing fees due principally to continued multifamily loan participations, and higher unused line of credit fees associated with the C&I lending business.
Operating Expenses
The Company's total operating expenses were $18.78 million for the quarter ended June 30, 2016, compared to $19.21 million for the March 2016 quarter and $16.27 million for the same quarter in 2015. During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums of approximately $950 thousand.
Salary and benefits expenses for the June 2016 quarter were $11.10 million compared to $10.91 million for the March 2016 quarter, and $9.87 million for the June 2015 quarter. Strategic hiring that was in line with the Company's Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the June 2015 quarter to the June 2016 quarter.
Premises and equipment expense totaled $2.74 million for the quarter ended June 30, 2016, compared to $2.86 million for the March 2016 quarter, and $2.78 million for the same quarter last year.
FDIC insurance expense for the June 2016 quarter was $1.58 million, compared to $1.56 million for the March 2016 quarter, and $431 thousand for the June 2015 quarter. As noted previously, the June 2016 and March 2016 quarters were impacted by the increased FDIC premiums. Mr. Kennedy noted, "I said at the beginning of this year that we generally expected an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). The increased expense recognized for the second and first quarters of 2016 were in line with that guidance. While we believe this increased cost will be temporary, we cannot predict when the additional FDIC premium will be eliminated."
Other expenses for the June 2016 quarter were $3.35 million, compared to $3.88 million for the March 2016 quarter and $3.19 million for the June 2015 quarter.
Mr. Kennedy noted, "Total expenses for our second quarter of 2016 came in under budget, as we worked to manage our expenses closely." Mr. Kennedy went on to note, "At the beginning of this year I said that given our significant growth and high concentration in multifamily lending, Management had decided to accelerate approximately $2.0 million of costs over the next 3 to 12 months to ensure we adhere to best in class risk management practices. I also said that, we had originally planned for such expenditures over the next 24 to 30 months, but we felt it prudent to pull them forward."
Provision for Loan Losses / Asset Quality
For the quarter ended June 30, 2016, the Company's provision for loan losses was $2.20 million, which is greater than the March 2016 quarter, and flat to the June 2015 quarter. Charge-offs, net of recoveries, for the second quarter of 2016 were only $302 thousand. The larger provision in the June 2016 quarter compared to the March 2016 quarter was due to loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I and Commercial Real Estate loans.
At June 30, 2016 the allowance for loan losses was $29.22 million, 363 percent of nonperforming loans and 0.93 percent of total loans, compared to $27.32 million, 375 percent of nonperforming loans and 0.90 percent of total loans at March 31, 2016, and $22.97 million, 323 percent of nonperforming loans and 0.84 percent of total loans one year prior, at June 30, 2015.
The Company's provision for loan losses and its allowance for loan losses continue to track consistently with the Company's net loan growth and asset quality metrics.
Nonperforming assets at June 30, 2016 (which does not include TDR loans that are performing in accordance with their terms) were just $8.8 million or 0.24 percent of total assets, compared to $8.1 million at both March 31, 2016 and June 30, 2015. Total loans past due 30 through 89 days and still accruing were $6.6 million at June 30, 2016, compared to $1.4 million at March 31, 2016 and $1.7 million at June 30, 2015. There were no multifamily loans past due at quarter end. The increase in past due loans in the June 2016 quarter was due to one commercial real estate loan and one jumbo residential mortgage loan, with a combined total of $4.7 million, both of which became 30 days past due. The Company believes that there is adequate collateral coverage on both loans.
Capital / Dividends
The Company's capital position in the June 2016 quarter was benefitted by net income of $6.6 million and also by $5.7 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the Company.
At June 30, 2016, the Company's GAAP capital as a percent of total assets was 8.20 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.19 percent, 10.28 percent, 10.28 percent and 12.99 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.21 percent, 11.56 percent, 11.56 percent and 12.58 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.
The Company's regulatory total risk based capital ratio at June 30, 2016 was benefitted by the $49 million (net) subordinated debt issuance that closed in June 2016. The Company down-streamed approximately $40 million of those proceeds to the Bank as capital, benefitting all the Bank's regulatory capital ratios.
On July 28, 2016, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on August 25, 2016 to shareholders of record on August 11, 2016.
Mr. Kennedy said, "We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future."
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.60 billion as of June 30, 2016. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as "expect", "look", "believe", "anticipate", "may", or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to
- inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
- the impact of anticipated higher operating expenses in 2016 and beyond;
- inability to manage our growth;
- inability to successfully integrate our expanded employee base;
- a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
- declines in our net interest margin caused by the low interest rate environment and highly competitive market;
- declines in value in our investment portfolio
- higher than expected increases in our allowance for loan losses;
- higher than expected increases in loan losses or in the level of nonperforming loans;
- unexpected changes in interest rates;
- a continued or unexpected decline in real estate values within our market areas;
- legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
- successful cyberattacks against our IT infrastructure and that of our IT providers;
- higher than expected FDIC insurance premiums;
- adverse weather conditions;
- inability to successfully generate new business in new geographic markets;
- inability to execute upon new business initiatives;
- lack of liquidity to fund our various cash obligations;
- reduction in our lower-cost funding sources;
- our inability to adapt to technological changes;
- claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and
- other unexpected material adverse changes in our operations or earnings.
A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2015. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation's expectations.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
(Tables to follow)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
For the Three Months Ended
---------------------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2016 (A) 2016 (B) 2015 (C) 2015 2015
----------- ----------- ----------- ----------- -----------
Income
Statement
Data:
Interest
income $ 29,035 $ 27,898 $ 27,123 $ 25,806 $ 23,852
Interest
expense 4,859 4,488 4,304 4,100 3,508
----------- ----------- ----------- ----------- -----------
Net
interest
income 24,176 23,410 22,819 21,706 20,344
Provision
for loan
losses 2,200 1,700 1,950 1,600 2,200
----------- ----------- ----------- ----------- -----------
Net
interest
income
after
provision
for loan
losses 21,976 21,710 20,869 20,106 18,144
Wealth
management
fee income 4,899 4,295 4,307 4,169 4,532
Service
charges
and fees 818 807 849 832 837
Bank owned
life
insurance 345 342 252 260 248
Gain on
loans held
for sale
at fair
value
(Mortgage
banking) 309 121 117 102 161
Gain on
loans held
for sale
at lower
of cost or
fair value 500 124 - - -
Other
income 559 473 198 164 545
Securities
gains, net 18 101 - 83 176
----------- ----------- ----------- ----------- -----------
Total
other
income 7,448 6,263 5,723 5,610 6,499
----------- ----------- ----------- ----------- -----------
Salaries
and
employee
benefits 11,100 10,908 10,659 10,322 9,872
Premises
and
equipment 2,742 2,864 3,390 2,785 2,778
FDIC
insurance
expense 1,581 1,559 825 416 431
Other
expenses 3,352 3,875 5,119 3,376 3,185
----------- ----------- ----------- ----------- -----------
Total
operating
expenses 18,775 19,206 19,993 16,899 16,266
----------- ----------- ----------- ----------- -----------
Income
before
income
taxes 10,649 8,767 6,599 8,817 8,377
Income tax
expense 4,085 3,278 2,256 3,434 3,139
----------- ----------- ----------- ----------- -----------
Net income $ 6,564 $ 5,489 $ 4,343 $ 5,383 $ 5,238
=========== =========== =========== =========== ===========
Total
revenue
(See
footnote
(D) below) $ 31,624 $ 29,673 $ 28,542 $ 27,316 $ 26,843
=========== =========== =========== =========== ===========
Per Common
Share
Data:
Earnings
per share
(basic) $ 0.41 $ 0.35 $ 0.28 $ 0.35 $ 0.34
Earnings
per share
(diluted) 0.40 0.34 0.28 0.35 0.34
Weighted
average
number of
common
shares
outstanding:
Basic 16,172,223 15,858,278 15,498,119 15,253,009 15,082,516
Diluted 16,341,975 16,016,972 15,721,876 15,435,939 15,233,151
Performance
Ratios:
Return on
average
assets
Annualized
(ROAA) 0.73% 0.64% 0.51% 0.66% 0.70%
Return on
average
equity
annualized
(ROAE) 9.06% 7.83% 6.37% 8.19% 8.24%
Net
interest
margin
(taxable
equivalent
basis) 2.79% 2.82% 2.79% 2.75% 2.80%
Efficiency
ratio (E) 60.36% 65.22% 70.05% 61.14% 61.00%
Operating
expenses /
average
assets
annualized 2.08% 2.22% 2.36% 2.07% 2.16%
(A) The quarter ended June 2016 included $950 thousand of additional charges
related to increased FDIC premiums. These charges reduced pretax income
by $950 thousand, net income by $585 thousand, diluted earnings per
share by $0.04 per share, ROAA by 0.06%, and ROAE by 0.80%, and
increased the efficiency ratio by 3.06%.
(B) The quarter ended March 31, 2016 included $950 thousand of additional
charges related to increased FDIC premiums. These charges reduced pretax
income by $950 thousand, net income by $595 thousand, diluted earnings
per share by $0.03 per share, ROAA by 0.06%, and ROAE by 0.85%, and
increased the efficiency ratio by 3.23%.
(C) The quarter ended December 31, 2015 included $2.5 million of charges
related to the closure of two branch offices. These charges reduced
pretax income by $2.5 million, net income by $1.6 million, earnings per
share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and
increased the efficiency ratio by 2.09%.
(D) Total revenue includes a $500 thousand gain (for 2016) from sale of
loans held for sale at lower of cost or fair value.
(E) Calculated as (total operating expenses, excluding provision for losses
on REO) as a percentage of (net interest income plus noninterest income
less gain on securities and gain on loans held for sale at lower of cost
or fair value). See Non-GAAP financial measures reconciliation included
in these tables.
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
For the
Six Months Ended
June 30, Change
------------------------ --------------------
Income Statement Data: 2016 (A) 2015 $ %
----------- ----------- ---------- --------
Interest income $ 56,933 $ 46,213 $ 10,720 23%
Interest expense 9,347 6,286 3,061 49%
----------- ----------- ---------- --------
Net interest income 47,586 39,927 7,659 19%
Provision for loan losses 3,900 3,550 350 10%
----------- ----------- ---------- --------
Net interest income after
provision for loan losses
43,686 36,377 7,309 20%
Wealth management fee income 9,194 8,563 631 7%
Service charges and fees 1,625 1,642 (17) -1%
Bank owned life insurance 687 785 (98) -12%
Gain on loans held for sale
at fair
Value (Mortgage banking) 430 309 121 39%
Gains on loans held for sale
at lower of cost or fair
value 624 - 624 N/A
Other income 1,032 638 394 62%
Securities gains, net 119 444 (325) -73%
----------- ----------- ---------- --------
Total other income 13,711 12,381 1,330 11%
----------- ----------- ---------- --------
Salaries and employee
benefits 22,008 19,297 2,711 14%
Premises and equipment 5,606 5,394 212 4%
FDIC insurance expense 3,140 913 2,227 244%
Other expenses 7,227 6,430 797 12%
----------- ----------- ---------- --------
Total operating expenses 37,981 32,034 5,947 19%
----------- ----------- ---------- --------
Income before income taxes 19,416 16,724 2,692 16%
Income tax expense 7,363 6,478 885 14%
----------- ----------- ---------- --------
Net income $ 12,053 $ 10,246 1,807 18%
=========== =========== ========== ========
Total revenue (See footnote
(B) below) $ 61,297 $ 52,308 8,989 17%
=========== =========== ========== ========
Per Common Share Data:
Earnings per share (basic) $ 0.75 $ 0.68 $ .07 10%
Earnings per share (diluted) 0.74 0.67 .07 10%
Weighted average number of
common shares outstanding:
Basic 16,015,251 14,996,596 1,025,859 7%
Diluted 16,179,700 15,189,781 997,123 7%
Performance Ratios:
Return on average assets
annualized 0.68% 0.70% -0.02% -3%
Return on average common
equity annualized 8.45% 8.19% 0.26% 3%
Net interest margin (taxable
equivalent basis) 2.80% 2.84% -0.04% -1%
Efficiency ratio (C) 62.72% 61.77% 0.95% 2%
Operating expenses /
averageassets annualized 2.15% 2.20% -0.05% -2%
(A) The six months ended June 2016 included $1.90 million of additional
charges related to increased FDIC premiums. These charges reduced pretax
income by $1.90 million, net income by $1.18 million, diluted earnings
per share by $0.08 per share, ROAA by 0.07%, and ROAE by 0.83%, and
increased the efficiency ratio by 3.14%.
(B) Total revenue includes a $624 thousand gain (for 2016) from sale of
loans held for sale at lower of cost or fair value.
(C) Calculated as (total operating expenses, excluding provision for losses
on REO) as a percentage of (net interest income plus noninterest income
less gain on securities and loss or gain on loans held for sale at lower
of cost or fair value). See Non-GAAP financial measures reconciliation
included in these tables.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
As of
------------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2016 2016 2015 2015 2015
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and due from
banks $ 18,261 $ 15,872 $ 11,550 $ 10,695 $ 6,205
Federal funds sold 101 101 101 101 101
Interest-earning
deposits 62,968 61,946 58,509 65,402 32,382
---------- ---------- ---------- ---------- ----------
Total cash and cash
equivalents 81,330 77,919 70,160 76,198 38,688
Securities available
for sale 206,216 214,050 195,630 220,930 245,897
FHLB and FRB stock,
at cost 14,623 13,254 13,984 11,737 15,590
Loans held for sale 4,133 3,537 1,558 27,524 745
Multifamily loans
held for sale, at
lower ofcost or fair
value 60,291 38,066 82,200 - -
Residential mortgage 479,839 469,084 470,869 469,865 470,863
Multifamily mortgage 1,501,915 1,489,708 1,416,775 1,444,334 1,371,139
Commercial mortgage 459,744 414,677 413,118 399,592 375,440
Commercial loans 576,169 554,871 512,886 456,611 438,461
Construction loans - 1,392 1,401 1,409 1,417
Consumer loans 67,614 44,198 45,044 32,563 29,996
Home equity lines of
credit 63,188 53,328 52,649 50,370 51,675
Other loans 430 443 500 483 2,947
---------- ---------- ---------- ---------- ----------
Total loans 3,148,899 3,027,701 2,913,242 2,855,227 2,741,938
Less: Allowances
for loan losses 29,219 27,321 25,856 24,374 22,969
---------- ---------- ---------- ---------- ----------
Net loans 3,119,680 3,000,380 2,887,386 2,830,853 2,718,969
Premises and
equipment 29,199 29,609 30,246 31,310 31,637
Other real estate
owned 767 861 563 330 956
Accrued interest
receivable 7,733 7,497 6,820 6,839 6,451
Bank owned life
insurance 43,325 43,101 42,885 32,727 32,565
Deferred tax assets,
net 18,190 17,952 15,582 14,613 12,673
Other assets 19,216 19,771 17,645 15,902 13,999
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS $3,604,703 $3,465,997 $3,364,659 $3,268,963 $3,118,170
========== ========== ========== ========== ==========
LIABILITIES
Deposits:
Noninterest-bearing
demand deposits $ 469,809 $ 457,730 $ 419,887 $ 399,200 $ 386,588
Interest-bearing
demand deposits 897,210 905,479 861,697 829,970 667,847
Savings 120,617 119,149 115,007 117,665 120,606
Money market
accounts 861,664 820,757 810,709 792,685 717,246
Certificates of
deposit - Retail 466,079 446,833 434,450 411,335 384,235
---------- ---------- ---------- ---------- ----------
Subtotal "customer"
deposits 2,815,379 2,749,948 2,641,750 2,550,855 2,276,522
IB Demand -
Brokered 200,000 200,000 200,000 243,000 293,000
Certificates of
deposit - Brokered 93,660 93,630 93,720 93,690 94,224
---------- ---------- ---------- ---------- ----------
Total deposits 3,109,039 3,043,578 2,935,470 2,887,545 2,663,746
Overnight borrowings 29,450 21,100 40,700 - 87,500
Federal home loan
bank advances 83,692 83,692 83,692 83,692 83,692
Capital lease
obligation 9,961 10,092 10,222 10,350 10,475
Subordinated debt,
net 48,698 - - - -
Other liabilities 28,330 24,030 18,899 19,448 14,881
Due to brokers,
securities
settlements - - - 1,528 -
---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES 3,309,170 3,182,492 3,088,983 3,002,563 2,860,294
Shareholders'
equity 295,533 283,505 275,676 266,400 257,876
---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES
AND
SHAREHOLDERS'
EQUITY $3,604,703 $3,465,997 $3,364,659 $3,268,963 $3,118,170
========== ========== ========== ========== ==========
Assets under
administration at
Peapack-Gladstone
Bank's Wealth
Management Division
(market value, not
included above) $3,418,566 $3,307,799 $3,321,624 $3,250,835 $3,445,939
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
As of
-------------------------------------------
June March Sept June
30, 31, Dec 31, 30, 30,
2016 2016 2015 2015 2015
------- ------- ------- ------- -------
Asset Quality:
Loans past due over 90 days and
still accruing $ - $ - $ - $ - $ -
Nonaccrual loans 8,049 7,278 6,747 7,615 7,111
Other real estate owned 767 861 563 330 956
------- ------- ------- ------- -------
Total nonperforming assets $ 8,816 $ 8,139 $ 7,310 $ 7,945 $ 8,067
======= ======= ======= ======= =======
Nonperforming loans to total
loans 0.26% 0.24% 0.23% 0.27% 0.26%
Nonperforming assets to total
assets 0.24% 0.23% 0.22% 0.24% 0.26%
Performing TDRs (A)(B) $18,570 $16,033 $16,231 $14,609 $13,695
Loans past due 30 through 89
days and still accruing $ 6,576 $ 1,393 $ 2,143 $ 2,748 $ 1,744
Classified loans $51,084 $48,817 $42,777 $41,985 $38,676
Impaired loans $26,643 $23,335 $23,107 $22,224 $20,806
Allowance for loan losses:
Beginning of period $27,321 $25,856 $24,374 $22,969 $20,816
Provision for loan losses 2,200 1,700 1,950 1,600 2,200
Charge-offs, net (302) (235) (468) (195) (47)
------- ------- ------- ------- -------
End of period $29,219 $27,321 $25,856 $24,374 $22,969
======= ======= ======= ======= =======
ALLL to nonperforming loans 363.01% 375.39% 383.22% 320.08% 323.01%
ALLL to total loans 0.93% 0.90% 0.89% 0.85% 0.84%
(A) Amounts reflect TDR's that are paying according to restructured terms.
(B) Amount does not include $4.2 million at June 30, 2016, $3.4 million at
March 31, 2016, $2.6 million at December 31, 2015, $2.8 million at
September 30, 2015, and $2.2 million at June 30, 2015 of TDRs included
in nonaccrual loans.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
June 30, Dec 31, June 30,
2016 2015 2015
--------- --------- ---------
Capital Adequacy
Equity to total assets (A) 8.20% 8.19% 8.27%
Tangible Equity to tangible assets (B) 8.12% 8.10% 8.17%
Book value per share (C) $ 18.08 $ 17.61 $ 17.02
Tangible Book Value per share (D) $ 17.88 $ 17.40 $ 16.80
--------- --------- ---------
June 30, Dec 31, June 30,
2016 2015 2015
-------------- -------------- --------------
Regulatory Capital - Holding
Company
Tier I leverage $295,443 8.19% $273,738 8.10% $254,737 8.48%
Tier I capital to risk
weighted assets 295,443 10.28 273,738 10.42 254,737 10.78
Common equity tier I capital
ratio to risk-weighted
assets 295,440 10.28 273,738 10.42 254,737 10.78
Tier I & II capital to risk-
weighted assets 373,360 12.99 299,593 11.40 277,706 11.75
Regulatory Capital - Bank
Tier I leverage $332,115 9.21% $271,641 8.04% $242,811 8.08%
Tier I capital to risk
weighted assets 332,115 11.56 271,641 10.34 242,811 10.28
Common equity tier I capital
ratio to risk-weighted
assets 332,112 11.56 271,641 10.34 242,811 10.28
Tier I & II capital to risk-
weighted assets 361,334 12.58 297,497 11.32 265,780 11.25
(A) Equity to total assets is calculated as total shareholders' equity as a
percentage of total assets at period end.
(B) Tangible equity and tangible assets are calculated by excluding the
balance of intangible assets from shareholders' equity and total assets,
respectively. Tangible equity as a percentage of tangible assets at
period end is calculated by dividing tangible equity by tangible assets
at period end. See Non-GAAP financial measures reconciliation included
in these tables.
(C) Book value per common share is calculated by dividing shareholders'
equity by period end common shares outstanding less restricted shares
not yet vested.
(D) Tangible book value per share is different than book value per share
because it excludes intangible assets. Tangible book value per share is
calculated by dividing tangible equity by period end common shares
outstanding less restricted shares not yet vested. See Non-GAAP
financial measures reconciliation included in these tables.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
For the Quarters Ended
--------------------------------------------
March
June 30, 31, Dec 31, Sept 30, June 30,
2016 2016 2015 2015 2015
-------- -------- -------- -------- --------
Residential loans retained $ 32,513 $ 17,747 $ 18,847 $ 20,623 $ 23,117
Residential loans sold 20,221 8,062 7,183 6,078 10,978
-------- -------- -------- -------- --------
Total residential loans 52,734 25,809 26,030 26,701 34,095
CRE (includes Community
banking) 36,554 9,339 41,015 47,450 29,561
Multifamily (includes Community
banking) 150,709 108,035 107,605 149,763 206,803
Commercial loans (includes
Community banking) (A) 61,309 67,488 74,749 37,361 136,483
SBA 2,285 1,055 - - -
Wealth lines of credit (A) 785 1,800 35,550 24,000 6,150
-------- -------- -------- -------- --------
Total commercial loans 251,642 187,717 258,919 258,574 378,997
Installment loans 1,077 486 1,052 933 1,128
Home equity lines of credit (A) 14,435 3,604 5,902 3,775 3,225
-------- -------- -------- -------- --------
Total loans closed $319,888 $217,616 $291,903 $289,983 $417,445
======== ======== ======== ======== ========
For the Six Months Ended
June 30, June 30,
2016 2015
------------ ------------
Residential loans retained $ 50,260 $ 40,103
Residential loans sold 28,283 19,916
------------ ------------
Total residential loans 78,543 60,019
CRE (includes
Community banking) 45,893 87,348
Multifamily (includes
Community banking) 258,744 415,837
Commercial loans (includes
Community banking) (A) 128,797 177,179
SBA 3,340 -
Wealth lines of credit (A) 2,585 16,410
------------ ------------
Total commercial loans 439,359 696,774
Installment loans 1,563 1,472
Home equity lines of credit (A) 18,039 6,602
------------ ------------
Total loans closed $ 537,504 $ 764,867
============ ============
(A) Includes loans and lines of credit that closed in the period, but not
necessarily funded.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
June 30, 2016 June 30, 2015
-------------------------- --------------------------
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
---------- -------- ----- ---------- -------- -----
ASSETS:
Interest-earning
assets:
Investments:
Taxable (1) $ 200,804 $ 914 1.82% $ 244,087 $ 1,037 1.70%
Tax-exempt (1) (2) 27,127 211 3.11 30,941 210 2.71
Loans (2) (3):
Mortgages 473,293 3,927 3.32 468,082 3,824 3.27
Commercial
mortgages 2,047,112 17,830 3.48 1,663,150 14,767 3.55
Commercial 552,955 5,392 3.90 360,517 3,347 3.71
Commercial
construction 1,305 13 3.98 5,713 61 4.27
Installment 63,158 420 2.66 29,169 256 3.51
Home equity 58,146 475 3.27 51,710 417 3.23
Other 462 11 9.52 527 12 9.11
---------- -------- ----- ---------- -------- -----
Total loans 3,196,431 28,068 3.51 2,578,868 22,684 3.52
---------- -------- ----- ---------- -------- -----
Federal funds sold 101 - 0.25 101 - 0.10
Interest-earning
deposits 79,264 76 0.39 69,780 39 0.22
---------- -------- ----- ---------- -------- -----
Total interest-
earning assets 3,503,727 29,269 3.34% 2,923,777 23,970 3.28%
---------- -------- ----- ---------- -------- -----
Noninterest-Earning
Assets:
Cash and due from
banks 16,122 6,385
Allowance for loan
losses (28,056) (21,493)
Premises and
equipment 29,452 31,983
Other assets 88,907 66,131
---------- ----------
Total noninterest-
earning assets 106,425 83,006
---------- ----------
Total assets $3,610,152 $3,006,783
========== ==========
LIABILITIES:
Interest-bearing
deposits:
Checking $ 906,611 $ 607 0.27% $ 670,473 $ 359 0.21%
Money markets 818,453 602 0.29 703,236 461 0.26
Savings 120,094 17 0.06 117,411 16 0.05
Certificates of
deposit - retail 450,675 1,545 1.37 343,781 1,051 1.22
---------- -------- ----- ---------- -------- -----
Subtotal interest-
bearing deposits 2,295,833 2,771 0.48 1,834,901 1,887 0.41
Interest-bearing
demand - brokered 200,000 760 1.52 265,802 563 0.85
Certificates of
deposit - brokered 93,642 496 2.12 98,191 504 2.05
---------- -------- ----- ---------- -------- -----
Total interest-
bearing deposits 2,589,475 4,027 0.62 2,198,894 2,954 0.54
---------- -------- ----- ---------- -------- -----
Borrowings 222,667 573 1.03 146,441 428 1.17
Capital lease
obligation 10,007 120 4.80 10,515 126 4.79
Subordinated debt 8,777 139 6.33 - - -
---------- -------- ----- ---------- -------- -----
Total interest-
bearing
liabilities 2,830,926 4,859 0.69 2,355,850 3,508 0.60
---------- -------- ----- ---------- -------- -----
Noninterest-bearing
liabilities:
Demand deposits 464,074 384,604
Accrued expenses
and other
liabilities 25,247 12,133
---------- ----------
Total noninterest-
bearing
liabilities 489,321 396,737
Shareholders' equity 289,905 254,196
---------- ----------
Total liabilities
and shareholders'
equity $3,610,152 $3,006,783
========== ==========
Net interest income $ 24,410 $ 20,462
======== ========
Net interest spread 2.65% 2.68%
===== =====
Net interest margin
(4) 2.79% 2.80%
===== =====
(1) Average balances for available for sale securities are based on
amortized cost.
(2) Interest income is presented on a tax-equivalent basis using a 35
percent federal tax rate.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total
average interest-earning assets.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
June 30, 2016 March 31, 2016
------------------------- -------------------------
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
---------- ------- ----- ---------- ------- -----
ASSETS:
Interest-earning
assets:
Investments:
Taxable (1) $ 200,804 $ 914 1.82% $ 199,579 $ 926 1.86%
Tax-exempt (1) (2) 27,127 211 3.11 24,044 200 3.33
Loans (2) (3):
Mortgages 473,293 3,927 3.32 466,497 3,818 3.27
Commercial mortgages 2,047,112 17,830 3.48 1,960,127 17,170 3.50
Commercial 552,955 5,392 3.90 525,896 5,100 3.88
Commercial
construction 1,305 13 3.98 1,395 14 4.01
Installment 63,158 420 2.66 44,906 335 2.98
Home equity 58,146 475 3.27 53,056 440 3.32
Other 462 11 9.52 486 12 9.88
---------- ------- ----- ---------- ------- -----
Total loans 3,196,431 28,068 3.51 3,052,363 26,889 3.52
---------- ------- ----- ---------- ------- -----
Federal funds sold 101 - 0.25 101 - 0.23
Interest-earning
deposits 79,264 76 0.39 77,903 87 0.45
---------- ------- ----- ---------- ------- -----
Total interest-
earning assets 3,503,727 29,269 3.34% 3,353,989 28,102 3.35%
---------- ------- ----- ---------- ------- -----
Noninterest-Earning
Assets:
Cash and due from
banks 16,122 15,603
Allowance for loan
losses (28,056) (26,582)
Premises and
equipment 29,452 30,000
Other assets 88,907 83,632
---------- ----------
Total noninterest-
earning assets 106,425 102,653
---------- ----------
Total assets $3,610,152 $3,456,642
========== ==========
LIABILITIES:
Interest-bearing
deposits:
Checking $ 906,611 $ 607 0.27% $ 882,497 $ 571 0.26%
Money markets 818,453 602 0.29 819,818 573 0.28
Savings 120,094 17 0.06 116,560 16 0.05
Certificates of
deposit - retail 450,675 1,545 1.37 442,563 1,489 1.35
---------- ------- ----- ---------- ------- -----
Subtotal interest-
bearing deposits 2,295,833 2,771 0.48 2,261,438 2,649 0.47
Interest-bearing
demand - brokered 200,000 760 1.52 200,000 741 1.48
Certificates of
deposit - brokered 93,642 496 2.12 93,674 497 2.12
---------- ------- ----- ---------- ------- -----
Total interest-
bearing deposits 2,589,475 4,027 0.62 2,555,112 3,887 0.61
---------- ------- ----- ---------- ------- -----
Borrowings 222,667 573 1.03 155,274 479 1.23
Capital lease
obligation 10,007 120 4.80 10,140 122 4.81
Subordinated debt 8,777 139 6.33 - - -
---------- ------- ----- ---------- ------- -----
Total interest-
bearing liabilities 2,830,926 4,859 0.69 2,720,526 4,488 0.66
---------- ------- ----- ---------- ------- -----
Noninterest-bearing
liabilities:
Demand deposits 464,074 435,770
Accrued expenses and
other liabilities 25,247 19,898
---------- ----------
Total noninterest-
bearing liabilities 489,321 455,668
Shareholders' equity 289,905 280,448
---------- ----------
Total liabilities and
shareholders' equity $3,610,152 $3,456,642
========== ==========
Net interest income $24,410 $23,614
======= =======
Net interest spread 2.65% 2.69%
===== =====
Net interest margin
(4) 2.79% 2.82%
===== =====
(1) Average balances for available for sale securities are based on
amortized cost.
(2) Interest income is presented on a tax-equivalent basis using a 35
percent federal tax rate.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total
average interest-earning assets.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
SIX MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
June 30, 2016 June 30, 2015
------------------------- -------------------------
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
---------- ------- ----- ---------- ------- -----
ASSETS:
Interest-earning
assets:
Investments:
Taxable (1) $ 200,192 $ 1,840 1.84% $ 258,934 $ 2,219 1.71%
Tax-exempt (1) (2) 25,586 411 3.21 34,268 441 2.57
Loans (2) (3):
Mortgages 469,895 7,745 3.30 467,293 7,619 3.26
Commercial
mortgages 2,003,619 35,000 3.49 1,562,073 28,356 3.63
Commercial 539,426 10,492 3.89 338,435 6,244 3.69
Commercial
construction 1,350 27 4.00 5,821 123 4.23
Installment 54,032 755 2.79 28,484 508 3.57
Home equity 55,601 915 3.29 51,188 822 3.21
Other 474 23 9.70 528 25 9.47
---------- ------- ----- ---------- ------- -----
Total loans 3,124,397 54,957 3.52 2,453,822 43,697 3.56
---------- ------- ----- ---------- ------- -----
Federal funds sold 101 - 0.24 101 - 0.10
Interest-earning
deposits 78,583 163 0.42 80,658 82 0.20
---------- ------- ----- ---------- ------- -----
Total interest-
earning assets 3,428,859 57,371 3.35% 2,827,783 46,439 3.28%
---------- ------- ----- ---------- ------- -----
Noninterest-Earning
Assets:
Cash and due from
banks 15,862 6,594
Allowance for loan
losses (27,319) (20,778)
Premises and
equipment 29,726 32,118
Other assets 86,070 65,006
---------- ----------
Total noninterest-
earning assets 104,339 82,940
---------- ----------
Total assets $3,533,198 $2,910,723
========== ==========
LIABILITIES:
Interest-bearing
deposits:
Checking $ 894,554 $ 1,178 0.26% $ 650,909 $ 673 0.21%
Money markets 819,135 1,175 0.29 706,893 924 0.26
Savings 118,327 33 0.06 115,434 30 0.05
Certificates of
deposit - retail 446,619 3,034 1.36 296,085 1,714 1.16
---------- ------- ----- ---------- ------- -----
Subtotal interest-
bearing deposits 2,278,635 5,420 0.48 1,769,321 3,341 0.38
Interest-bearing
demand - brokered 200,000 1,501 1.50 253,221 843 0.67
Certificates of
deposit - brokered 93,658 993 2.12 112,219 1,028 1.83
---------- ------- ----- ---------- ------- -----
Total interest-
bearing deposits 2,572,293 7,914 0.62 2,134,761 5,212 0.49
---------- ------- ----- ---------- ------- -----
Borrowings 188,971 1,052 1.11 128,142 820 1.28
Capital lease
obligation 10,074 242 4.80 10,575 254 4.80
Subordinated debt 4,388 139 6.34 - - -
---------- ------- ----- ---------- ------- -----
Total interest-
bearing liabilities 2,775,726 9,347 0.67 2,273,478 6,286 0.55
---------- ------- ----- ---------- ------- -----
Noninterest-bearing
liabilities:
Demand deposits 449,922 375,527
Accrued expenses and
other liabilities 22,373 11,446
---------- ----------
Total noninterest-
bearing liabilities 472,295 386,973
Shareholders' equity 285,177 250,272
---------- ----------
Total liabilities
and
shareholders' equity $3,533,198 $2,910,723
========== ==========
Net interest income $48,024 $40,153
======= =======
Net interest spread 2.68% 2.73%
===== =====
Net interest margin
(4) 2.80% 2.84%
===== =====
(1) Average balances for available for sale securities are based on
amortized cost.
(2) Interest income is presented on a tax-equivalent basis using a 35
percent federal tax rate.
(3) Loans are stated net of unearned income and include nonaccrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total
average interest-earning assets.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk- based capital ratios.
The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding ORE provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.
We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.
Non-GAAP Financial Reconciliation
(Dollars in thousands, except share data)
Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
Tangible
Book Value
Per Share 2016 2016 2015 2015 2015
----------- ----------- ----------- ----------- -----------
Shareholders'
equity $ 295,533 $ 283,505 $ 275,676 $ 266,400 $ 257,876
Less:
Intangible
assets 3,277 3,264 3,281 3,311 3,342
----------- ----------- ----------- ----------- -----------
Tangible
equity 292,256 280,241 272,395 263,089 254,534
Period end
shares
outstanding 16,657,403 16,326,840 16,068,119 15,805,815 15,592,168
Less:
Restricted
shares not
yet vested 309,920 321,580 414,188 435,312 436,908
----------- ----------- ----------- ----------- -----------
Total
outstanding
shares 16,347,483 16,005,260 15,653,931 15,370,503 15,155,260
Tangible
book value
per share 17.88 17.51 17.40 17.12 16.80
Book value
per share 18.08 17.71 17.61 17.33 17.02
Tangible
Equity to
Tangible
Assets
Total
Assets 3,604,703 3,465,997 3,364,659 3,268,963 3,118,170
Less:
Intangible
assets 3,277 3,264 3,281 3,311 3,342
----------- ----------- ----------- ----------- -----------
Tangible
assets 3,601,426 3,462,733 3,361,378 3,265,652 3,114,828
Tangible
equity to
tangible
assets 8.12% 8.09% 8.10% 8.06% 8.17%
Equity to
assets 8.20% 8.18% 8.19% 8.15% 8.27%
Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
Efficiency Ratio 2016 2016 2015 2015 2015
-------- --------- ------- -------- --------
Net interest income $ 24,176 $ 23,410 $22,819 $ 21,706 $ 20,344
Total other income 7,448 6,263 5,723 5,610 6,499
Less: Gain on loans held
for sale at lower of cost
or fair value 500 124 - - -
Less: Securities gains,
net 18 101 - 83 176
-------- --------- ------- -------- --------
Total recurring revenue 31,106 29,448 28,542 27,233 26,667
-------- --------- ------- -------- --------
Operating expenses 18,775 19,206 19,993 16,899 16,266
Less: ORE provision - - - 250 -
-------- --------- ------- -------- --------
Total operating expenses 18,775 19,206 19,993 16,649 16,266
-------- --------- ------- -------- --------
Efficiency ratio 60.36% 65.22% 70.05% 61.14% 61.00%
Efficiency ratio,
excluding $2.5 million of
charges relating to the
closure of two branch
offices - - 61.30% - -
Six Months Ended
June 30, June 30,
Efficiency Ratio 2016 2015
-------- --------
Net interest income $ 47,586 $ 39,927
Total other income 13,711 12,381
Less: Gain on loans held for sale at lower of cost or
fair value 624 -
Less: Securities gains, net 119 444
-------- --------
Total recurring revenue 60,554 51,864
-------- --------
Operating expenses 37,981 32,034
Less: ORE provision - -
-------- --------
Total operating expenses 37,981 32,034
-------- --------
Efficiency ratio 62.72% 61.77%
Contact:
Jeffrey J. Carfora
SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308
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