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

Company Release - 1/29/2018 9:00 AM ET

BEDMINSTER, N.J., Jan. 29, 2018 (GLOBE NEWSWIRE) -- Peapack-Gladstone Financial Corporation (NASDAQ:PGC) (the “Company”) reported record net income of $36.50 million and diluted earnings per share of $2.03 for the year ended December 31, 2017, compared to $26.48 million and $1.60, respectively, for the year ended December 31, 2016, reflecting increases of $10.02 million, or 38 percent, and $0.43 per share, or 27 percent, respectively.

For the quarter ended December 31, 2017, the Company recorded net income of $10.37 million and diluted earnings per share of $0.56, compared to $7.31 million and $0.43 for the same three-month period last year, reflecting increases of $3.06 million, or 42 percent, and $0.13 per share, or 30 percent, respectively.

For the quarter and year ended December 31, 2017, the Company recorded a $1.6 million tax benefit from the reduction of a deferred tax liability due to the new tax law.

Executive Summary:

The following three tables summarize specified financial measures for the periods shown. The explanatory footnotes following each table are integral to the table.

  
Year over Year Comparison 
  
  Year  Year  Increase/ 
(Dollars in millions, except per share data) 2017 (1)  2016  (Decrease) 
Net interest income111.14 (2) 96.44 14.70 15 %
Provision for loan and lease losses5.85 7.50 (1.65)-22 %
Net interest income after provision105.29 88.94 16.35 18 %
Wealth management fee income23.18 18.24 4.94 27 %
Other income11.45 (3) 10.68 (4) 0.77 7 %
Total other income34.63 28.92 5.71 20 %
Operating expenses85.61 (5) 75.12 10.49 14 %
Pretax income54.31 42.74 11.57 27 %
Income tax expense17.81 (6) 16.26 1.55 10 %
Net income36.50 26.48 10.02 38 %
Diluted EPS2.03 1.60 0.43 27 %
           
Return on average assets 0.89% 0.72% 0.17   
Return on average equity 10.12% 8.92% 1.20   
           
(1)2017 included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017.
(2)2017 included $1.2 million of recognition of deferred fees and prepayment income on two C&I credits.
(3)2017 included $412 thousand of gains on sales of loans held for sale at lower of cost or fair value.
(4)2016 included $1.23 million of gains on sales of loans held for sale at lower of cost or fair value.
(5)2017 included $660 thousand of investment banking expenses related to the Murphy Capital Management and the Quadrant Capital Management acquisitions, and also included $1.3 million of separation expenses related to two senior officers.
(6)2017 included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law, and also included a $662 thousand tax benefit related to the adoption of ASU 2016-09, Compensation – Stock Compensation.
  


  
December 2017 Quarter Compared to Prior Year Quarter 
  
  Qtr ended  Qtr ended    
  December  December  Increase/ 
(Dollars in millions, except per share data) 2017 (1)  2016  (Decrease) 
Net interest income28.59 24.58 4.01 16 %
Provision for loan and lease losses1.65 1.50 0.15 10 %
Net interest income after provision26.94 23.08 3.86 17 %
Wealth management fee income7.49 4.61 2.88 62 %
Other income3.11 (2) 3.07 (3) 0.04 1 %
Total other income10.60 7.68 2.92 38 %
Operating expenses24.25 (4) 18.97 5.28 28 %
Pretax income13.29 11.79 1.50 13 %
Income tax expense2.92 (5) 4.48 (1.56)-35 %
Net income10.37 7.31 3.06 42 %
Diluted EPS0.56 0.43 0.13 30 %
           
Return on average assets annualized 0.98% 0.75% 0.23   
Return on average equity annualized 10.61% 9.27% 1.34   
           
(1)The December 2017 quarter included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017.
(2)The December 2017 quarter included $378 thousand of gains on sales of loans held for sale at lower of cost or fair value.
(3)The December 2016 quarter included $353 thousand of gains on sales of loans held for sale at lower of cost or fair value.
(4)The December 2017 quarter included $300 thousand of investment banking expenses related to the Quadrant Capital Management acquisition, and also included $1.3 million of separation expenses related to two senior officers.
(5)The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law.
  


  
December 2017 Quarter Compared to Linked Quarter 
  
  Qtr ended  Qtr ended    
  December  September  Increase/ 
(Dollars in millions, except per share data) 2017 (1)  2017 (1)  (Decrease) 
Net interest income28.59 29.99 (2) (1.40)-5 %
Provision for loan and lease losses1.65 0.40 1.25 313 %
Net interest income after provision26.94 29.59 (2.65)-9 %
Wealth management fee income7.49 5.79 1.70 29 %
Other income3.11 (3) 3.05 (3) 0.06 2 %
Total other income10.60 8.84 1.76 20 %
Operating expenses24.25 (4) 21.96 (5) 2.29 10 %
Pretax income13.29 16.47 (3.18)-19 %
Income tax expense2.92 (6) 6.26 (3.34)-53 %
Net income10.37 10.21 0.16 2 %
Diluted EPS0.56 0.56 - - %
           
Return on average assets annualized 0.98% 0.97% 0.01   
Return on average equity annualized 10.61% 11.09% (0.48)  
           
(1)The 2017 periods shown included results of operations from Murphy Capital Management, acquired effective August 1, 2017, and from Quadrant Capital Management, acquired effective November 1, 2017.
(2)The September 2017 quarter included $1.2 million of recognition of deferred fees and prepayment income on two C&I credits.
(3)2017 included $412 thousand of gains on sales of loans held for sale at lower of cost or fair value (specifically $378 thousand in the December 2017 quarter and $34 thousand in the September 2017 quarter).
(4)The December 2017 quarter included $300 thousand of investment banking expenses related to the Quadrant Capital Management acquisition, and also included $1.3 million of separation expenses related to two senior officers.
(5)The September 2017 quarter included $360 thousand of investment banking expenses related to the Murphy Capital Management acquisition.
(6)The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law.
   

Douglas L. Kennedy, President and CEO, said, “We had a very strong 2017, as we continued to successfully execute on our strategic plan – Expanding Our Reach. Our earnings and returns for 2017 exceeded our expectations.  Earnings per share growth was 27 percent and return on average equity was 10.12 percent for 2017.”

Highlights for the year included:

  • Wealth Management is integral to the strategy and diversified revenue sources:
    • Effective November 1, 2017, the Bank acquired Quadrant Capital Management (“Quadrant”), a registered investment advisory firm (“RIA”), based in Fairfield, NJ, which contributed approximately $460 million of assets under management (“AUM”) at the time of acquisition.
    • Effective August 1, 2017, the Bank acquired Murphy Capital Management, LLC(“MCM”), an RIA, based in Gladstone, NJ.  MCM contributed approximately $850 million of AUM at the time of acquisition.
    • At December 31, 2017, the market value of AUM/AUA at the Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) increased $1.8 billion to $5.5 billion from $3.7 billion at December 31, 2016, reflecting growth of 49 percent.   Organic growth was $500 million of the $1.8 billion in growth, while acquisitions accounted for $1.3 billion of the growth.
    • Fee income from the Private Wealth Management Division totaled $23.2 million for the year ended December 31, 2017, an increase of $4.9 million, or 27 percent from $18.2 million for the year ended December 31, 2016. 
    • Wealth management fee income, comprising approximately 16 percent of the Company’s total revenue for the year ended December 31, 2017, contributed significantly to the Company’s diversified revenue sources.
    • In addition to wealth income, also contributing to the Company’s diversified revenue sources was fee income related to loan level, back-to-back swaps ($2.81 million for 2017 compared to $1.64 million for 2016), and gain on sale of SBA loans ($1.56 million for 2017 compared to $623 thousand for 2016).
  • Total balance sheet growth was managed to just under 10% with a focus on Commercial & Industrial lending:
    • Loans at December 31, 2017 totaled $3.71 billion.  This reflected net growth of $392 million, or 12 percent, when compared to the $3.31 billion at December 31, 2016.  This loan growth was principally funded by “customer” deposit growth (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits).
    • The Company continued to employ loan sales as a balance sheet management strategy, while improving returns. Multifamily and residential mortgage loan sales for 2017 totaled $109 million, with a net weighted average coupon of 3.30 percent, resulting in a gain of $412 thousand. These loan sales helped fund growth in commercial loans.
    • During the second quarter of 2017, the Company hired a team of very experienced bankers to focus on equipment financing. Net outstanding financings from this business totaled $148 million as of December 31, 2017, and were included in total commercial and industrial (“C&I”) loans.
    • Total C&I loans at December 31, 2017 were $958 million.  This reflected net growth of $321 million (50 percent) when compared to $637 million in C&I loans at December 31, 2016.
    • The Company continued to manage its balance sheet such that multifamily loans decline as percent of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. As of December 31, 2017, total C&I loans comprised 26 percent of the total loan portfolio, as compared to 19 percent a year earlier.  As of December 31, 2017, total multifamily loans comprised of 37 percent of the total loan portfolio, as compared to 44 percent a year earlier.
    • The Bank’s concentration in multifamily and investor commercial real estate loans declined to 467 percent of risk based capital at December 31, 2017 from 564 percent at December 31, 2016, and from 695 percent at December 31, 2015.
    • Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) totaled $3.45 billion at December 31, 2017.  This reflected net growth of $308 million (10 percent) when compared to $3.14 billion of total “customer” deposit balances at December 31, 2016.

  • Capital and asset quality continue to be strong.
    • Asset quality metrics continued to be strong at December 31, 2017.  Nonperforming assets at December 31, 2017 were $15.6 million, or 0.37 percent of total assets.  Total loans past due 30 through 89 days and still accruing were just $246 thousand, or 0.01 percent of total loans at December 31, 2017.
    • The Company’s and Bank’s capital ratios at December 31, 2017, all increased compared to the December 31, 2016 levels. These capital positions were benefitted by net income of $36.50 million and $36.59 million of voluntary share purchases under the Dividend Reinvestment Plan. Further, during 2017 the Company’s and Bank’s regulatory capital positions were also benefitted by $34.1 million of net proceeds from the mid-December 2017 subordinated debt issuance, and the subsequent downstream of a large portion of the proceeds to the Bank as regulatory capital.

Supplemental Quarterly Details:

Wealth Management Business

In the December 2017 quarter, the Bank’s wealth management business generated $7.49 million in fee income compared to $5.79 million for the September 2017 quarter, and $4.61 million for the December 2016 quarter. 

The December 2017 quarter included a full three months of income related to MCM, which was acquired effective August 1, 2017, and two months of income related to Quadrant, which was acquired effective November 1, 2017. The December 2017 quarter also included increased “recurring type” fee income (tied principally to asset management fees and custody fees), which was due to net inflows from new business, a healthy equity market which resulted in positive market action in client portfolios as well as additions to accounts from existing clients, all partially offset by normal levels of disbursements and outflows.

John P. Babcock, President of the PGB Private Wealth Management Division, said, “Our differentiator continues to be our personalized, pro-active advice led approach. Our new business pipeline continues to be strong and we expect continued growth organically and through potential strategic acquisitions of wealth management firms.”

Loans

During the fourth quarter of 2017, the Company continued to employ loan sales as a balance sheet management strategy, while improving returns. The $30 million of residential mortgage loan sales generally funded increases in commercial and industrial loans.

For the quarter ended December 31, 2017, commercial and industrial loans grew $113 million (13 percent for the quarter, or 53 percent annualized) to $958 million at year end, compared to $846 million at September 30, 2017. 

Mr. Kennedy said, “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.”

Funding

In mid-December 2017, the Company issued $35 million of subordinated debt ($34.1 million net of underwriting fees and expenses) bearing interest at an annual rate of 4.75 percent for the first five years, and thereafter at an adjustable rate until maturity in December 2027 or earlier redemption.

During the December 2017 quarter, customer deposit growth of $47 million, net (principally interest-bearing checking, money market and retail certificates of deposit), $24 million of capital growth, $34 million of net proceeds from the subordinated debt issuance, and $30 million of loan sales, funded loan growth, increased liquidity (investments and interest-bearing cash) of $33 million, and maturities of wholesale borrowings of $12 million and  brokered certificates of deposit of $11 million.

Mr. Kennedy noted, “The Company will continue to focus on providing high touch client service, a key element in growing its personal and commercial core deposit base.  We expect that our full array of treasury management capabilities, including our new Treasury Management platform and our new escrow management product software, as well as added treasury management sales professionals and private bankers, will help us grow commercial deposits.”

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

Net Interest Income / Net Interest Margin

Net interest income and net interest margin were $28.59 million and 2.78 percent for the fourth quarter of 2017, compared to $29.99 million and 2.95 percent for the third quarter of 2017, and compared to $24.58 million and 2.63 percent for the same quarter last year.  Net interest income for the fourth quarter of 2017 benefitted from loan growth as well as $945 thousand of prepayment premiums received on the prepayment of multifamily loans, which reflected a decrease from $1.3 million for the September 2017 quarter and an increase from $464 thousand in the December 2016 quarter.  The September 2017 quarter also benefitted from $1.2 million of recognition of deferred fees and prepayment premiums on two C&I credits.

Net interest margin for the fourth quarter of 2017 decreased when compared to the third quarter of 2017, and increased from the same quarter of 2016.  The increase from the same quarter of 2016 was due to the increased prepayment premiums noted above, as well as the effect of the increased market rates on our adjustable rate assets, partially offset by an increase in our cost of deposits. The decrease from the previous quarter was due to the lower prepayment premiums and the September quarter’s recognition of the deferred fees mentioned above.  The issuance of $35 million of subordinated debt issued in mid-December 2017 also negatively impacted net interest margin slightly.

Net interest margin is also affected by the maintenance of liquid assets on the Company’s balance sheet.  In addition to approximately $441 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 only $38 million was drawn as of December 31, 2017.

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, the Company noted, such income and margin may also be impacted by competitive pressures in attracting and/or retaining deposits.

Other Noninterest Income

The fourth quarter of 2017 included $774 thousand of income related to the Company’s SBA lending and sale program, compared to $493 thousand generated in the September 2017 quarter, and $121 thousand in the December 2016 quarter. 

The fourth quarter of 2017 also included $179 thousand of loan level, back-to-back swap income compared to $888 thousand in the September 2017 quarter and $874 thousand in the December 2016 quarter.  This program provides a borrower with a fixed interest rate on a loan, while providing an adjustable rate to the Company, thus helping to manage the Company’s interest rate risk, while contributing to income.    

Operating Expenses

The Company’s total operating expenses were $24.25 million for the quarter ended December 31, 2017, compared to $21.96 million for the September 2017 quarter and $18.97 million for the December 2016 quarter.

Compensation and employee benefits expense for the December 2017 quarter was $15.30 million compared to $14.00 million for the September 2017 quarter, and $11.48 million for the December 2016 quarter.  The December 2017 quarter included a full quarter of expense related to the Equipment Finance team (who joined in April 2017) and MCM (which closed in August 2017) and two months of expense related to Quadrant (which closed in November 2017). Additionally, the Company recorded expense of $1.3 million related to the separation of two senior officers. Strategic hiring, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth also contributed to the increase for the December 2017 quarter compared to the 2016 quarter.          

Other expenses for the December 2017 quarter were $5.27 million compared to $4.44 million for the September 2017 quarter and $3.78 million for the December 2016 quarter. The December 2017 quarter included approximately $300 thousand of investment banking fee expenses related to the Quadrant acquisition, a full quarter of other expenses related to the Equipment Finance business and MCM, and two months of other operating expenses related to Quadrant. Further, when compared to the December 2016 quarter, the December 2017 quarter included increased advertising and marketing expenses relating to various target marketing campaigns. The September 2017 quarter included approximately $360 thousand of investment banking fee expenses related to the MCM acquisition.

Income Taxes

The December 2017 quarter included a $1.60 million tax benefit from the reduction of the Company’s deferred tax liability due to the new tax law.  The December 2017 quarter taxes also benefitted from the vesting of restricted stock at market prices above initial grant prices.

Provision for Loan and Lease Losses / Asset Quality

For the quarter ended December 31, 2017, the Company’s provision for loan and lease losses was $1.65 million, compared to $400 thousand for the September 2017 quarter and $1.50 million for the December 2016 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 and net loan growth.

At December 31, 2017, the allowance for loan and lease losses of $36.44 million (269 percent of nonperforming loans and 0.98 percent of total loans), compared to $35.92 million at September 30, 2017 (234 percent of nonperforming loans and 0.98 percent of total loans), and $32.21 million (286 percent of nonperforming loans and 0.97 percent of total loans) at December 31, 2016.         

Nonperforming assets at December 31, 2017 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.6 million, or 0.37 percent of total assets, compared to $15.5 million, or 0.37 percent of total assets, at September 30, 2017 and $11.8 million, or 0.30 percent of total assets, at December 31, 2016.  Total loans past due 30 through 89 days and still accruing were $246 thousand at December 31, 2017, compared to $589 thousand at September 30, 2017 and $1.4 million at December 31, 2016.

Capital / Dividends

The Company’s and Bank’s capital positions in the December 2017 quarter were benefitted by net income of $10.37 million and $10.51 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company. The Company’s and Bank’s regulatory capital positions were also benefitted by the mid-December 2017 subordinated debt issuance, and subsequent downstream of a large portion of the proceeds to the Bank as regulatory capital.

The Bank’s regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

On January 25, 2018, the Company’s Board of Directors declared a regular cash dividend of $0.05 per share payable on February 23, 2018 to shareholders of record on February 8, 2018.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.26 billion as of December 31, 2017.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy.  Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its Private Wealth Management Division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

The foregoing 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;
  • 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 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;
  • unexpected changes in interest rates;
  • unexpected decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) 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, 2016.  We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

(Tables to follow)

 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
 For the Three Months Ended
  Dec 31, Sept 30, June 30, March 31, Dec 31,
  2017 2017 2017 2017 2016
Income Statement Data:          
Interest income$36,439 $37,491 $33,412 $31,385 $30,271 
Interest expense 7,853  7,499  6,440  5,794  5,691 
  Net interest income 28,586  29,992  26,972  25,591  24,580 
Provision for loan and lease losses 1,650  400  2,200  1,600  1,500 
Net interest income after
  provision for loan and lease losses
 26,936  29,592  24,772  23,991  23,080 
Wealth management fee income 7,489  5,790  5,086  4,818  4,610 
Service charges and fees 837  816  815  771  815 
Bank owned life insurance 341  343  350  322  380 
Gain on loans held for sale at fair
  value (Mortgage banking)
 122  141  91  47  197 
Gain on loans held for sale at
  lower of cost or fair value
 378  34  -  -  353 
Fee income related to loan level,
  back-to-back swaps
 179  888  1,291  456  874 
Gain on sale of SBA loans 774  493  142  155  121 
Other income 486  326  396  450  322 
Securities gains, net  -  -  -  -  - 
  Total other income 10,606  8,831  8,171  7,019  7,672 
Salaries and employee benefits 15,296  13,996  12,751  11,913  11,480 
Premises and equipment 3,194  2,945  3,033  2,816  2,903 
FDIC insurance expense 495  583  602  686  804 
Other expenses 5,266  4,437  3,709  3,889  3,778 
  Total operating expenses 24,251  21,961  20,095  19,304  18,965 
Income before income taxes 13,291  16,462  12,848  11,706  11,787 
Income tax expense 2,922  6,256  4,908  3,724  4,479 
Net income$10,369 $10,206 $7,940 $7,982 $7,308 
           
Total revenue (A)$39,192 $38,823 $35,143 $32,610 $32,252 
Per Common Share Data:          
Earnings per share (basic)$0.57 $0.57 $0.45 $0.47 $0.44 
Earnings per share (diluted) 0.56  0.56  0.45  0.46  0.43 
Weighted average number of
  common shares outstanding:
          
Basic 18,197,708  17,800,153  17,505,638  17,121,631  16,770,725 
Diluted 18,527,829  18,123,268  17,756,390  17,438,907  17,070,473 
Performance Ratios:          
Return on average assets annualized (ROAA) 0.98% 0.97% 0.79% 0.82% 0.75%
Return on average equity annualized (ROAE) 10.61% 11.09% 9.06% 9.62% 9.27%
Net interest margin (tax- equivalent basis) 2.78% 2.95% 2.76% 2.71% 2.63%
Efficiency ratio (B) 62.48% 56.62% 57.18% 59.20% 59.45%
           
Operating expenses / average
  assets annualized
 2.28% 2.10% 2.00% 1.97% 1.96%
(A)Total revenue includes net interest income plus total other income.
(B)Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value).  See Non-GAAP financial measures reconciliation included in these tables beginning on page 24.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
 For the    
 Twelve Months Ended    
 December 31,Change
  2017 2016 $ %
Income Statement Data:        
Interest income$138,727 $117,048 $21,679  19%
Interest expense 27,586  20,613  6,973  34%
  Net interest income 111,141  96,435  14,706  15%
Provision for loan and lease losses 5,850  7,500  (1,650) -22%
Net interest income after
 provision for loan and lease losses
 105,291  88,935  16,356  18%
Wealth management fee income 23,183  18,240  4,943  27%
Service charges and fees 3,239  3,252  (13) - 
Bank owned life insurance 1,356  1,407  (51) -4%
Gain on loans held for sale at fair
  value (Mortgage banking)
 401  1,010  (609) -60%
Gain on loans held for sale at
  lower of cost or fair value
 412  1,233  (821) -67%
Fee income related to loan level,
  back-to-back swaps
 2,814  1,638  1,176  72%
Gain on sale of SBA loans 1,564  623  941  151%
Other income 1,658  1,396  262  19%
Securities gains, net -  119  (119) -100%
  Total other income 34,627  28,918  5,709  20%
Compensation and employee benefits 53,956  45,003  8,953  20%
Premises and equipment 11,988  11,245  743  7%
FDIC insurance expense (A) 2,366  4,758  (2,392) -50%
Other expenses 17,301  14,106  3,195  23%
  Total operating expenses 85,611  75,112  10,499  14%
Income before income taxes 54,307  42,741  11,566  27%
Income tax expense 17,810  16,264  1,546  10%
Net income$36,497 $26,477 $10,020  38%
         
Total revenue (B)$145,768 $125,353 $20,415  16%
Per Common Share Data:        
Earnings per share (basic)$2.06 $1.62 $0.44  27%
Earnings per share (diluted) 2.03  1.60  0.43  27%
Weighted average number of
  common shares outstanding:
        
Basic 17,659,625  16,318,868  1,340,757  8%
Diluted 17,943,685  16,514,998  1,428,687  9%
Performance Ratios:        
Return on average assets (ROAA) 0.89% 0.72% 0.17% 24%
Return on average equity (ROAE) 10.12% 8.92% 1.20% 13%
Net interest margin (tax- equivalent basis) 2.80% 2.74% 0.06% 2%
Efficiency ratio (C) 58.90% 60.57% -1.67% -3%
Operating expenses / average
  assets annualized
 2.09% 2.06% 0.03% 1%
         
(A)Beginning July 1, 2016, the FDIC assessment system was revised resulting in a reduction of the Company’s assessment rate. 
(B)Total revenue includes net interest income plus total other income.
(C)Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value).  See Non-GAAP financial measures reconciliation included in these tables beginning on page 24.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
 As of
  Dec 31, Sept 30, June 30, March 31, Dec 31,
  2017 2017 2017 2017 2016
ASSETS          
Cash and due from banks$4,415$4,446$4,119$4,910$24,580
Federal funds sold 101 101 101 101 101
Interest-earning deposits 108,931 88,793 89,600 113,953 138,010
  Total cash and cash equivalents 113,447 93,340 93,820 118,964 162,691
           
Securities available for sale 327,633 315,112 315,224 300,232 305,388
FHLB and FRB stock, at cost 13,378 13,589 18,487 15,436 13,813
           
Residential mortgage (A) 577,340 605,015 611,316 571,496 528,570
Multifamily mortgage 1,388,958 1,441,851 1,504,581 1,468,890 1,459,594
Commercial mortgage 626,656 625,467 609,444 573,253 551,233
Commercial loans (A) 958,481 845,831 800,927 687,805 637,102
Construction loans - - - - 1,405
Consumer loans 86,277 81,671 72,943 69,802 69,654
Home equity lines of credit 67,497 68,787 67,051 68,055 65,682
Other loans 402 815 458 477 492
  Total loans 3,705,611 3,669,437 3,666,720 3,439,778 3,313,732
  Less: Allowances for loan and lease losses 36,440 35,915 35,751 33,610 32,208
  Net loans 3,669,171 3,633,522 3,630,969 3,406,168 3,281,524
           
Premises and equipment 29,476 29,832 29,806 30,113 30,371
Other real estate owned 2,090 137 373 671 534
Accrued interest receivable 9,452 6,803 6,776 6,823 8,153
Bank owned life insurance 44,586 44,380 44,172 43,992 43,806
Deferred tax assets, net 552 16,636 16,912 15,325 15,320
Goodwill and other intangible assets (B) 23,836 15,064 3,095 3,126 3,157
Other assets (C) 26,926 7,917 6,045 6,712 13,876
  TOTAL ASSETS$4,260,547$4,176,332$4,165,679$3,947,562$3,878,633
           
LIABILITIES          
Deposits:          
  Noninterest-bearing demand deposits$539,304$557,117$548,427$528,554$489,485
  Interest-bearing demand deposits 1,152,483 1,144,714 1,085,805 1,015,178 1,023,081
  Savings 119,556 121,830 121,480 122,262 120,056
  Money market accounts 1,091,385 1,046,997 1,081,366 1,049,909 1,048,494
  Certificates of deposit – Retail 543,035 528,251 475,395 440,991 457,000
Subtotal “customer” deposits 3,445,763 3,398,909 3,312,473 3,156,894 3,138,116
  IB Demand – Brokered 180,000 180,000 180,000 180,000 180,000
  Certificates of deposit – Brokered 72,591 83,788 88,780 93,750 93,721
Total deposits 3,698,354 3,662,697 3,581,253 3,430,644 3,411,837
           
Overnight borrowings - - 87,000 34,550 -
Federal home loan bank advances 37,898 49,898 58,795 58,795 61,795
Capital lease obligation 9,072 9,240 9,407 9,556 9,693
Subordinated debt, net 83,024 48,862 48,829 48,796 48,764
Other liabilities 28,521 25,699 23,548 24,293 22,334
  TOTAL LIABILITIES 3,856,869 3,796,396 3,808,832 3,606,634 3,554,423
Shareholders’ equity 403,678 379,936 356,847 340,928 324,210
  TOTAL LIABILITIES AND          
  SHAREHOLDERS’ EQUITY$4,260,547$4,176,332$4,165,679$3,947,562$3,878,633
           
Assets under management and / or
administration at Peapack-Gladstone
          
Bank’s Private Wealth Management
Division (market value, not
included above-dollars in billions)
$5.5 $4.8 $3.9 $3.8 $3.7
           
(A)Includes loans held for sale at fair value and/or lower of cost or market.
(B)Includes goodwill and intangibles from the Murphy Capital Management and the Quadrant Capital Management acquisitions completed in August and November 2017, respectively.
(C)Increase principally due to prepaid taxes.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
 
 As of
  Dec 31, Sept 30, June 30, March 31, Dec 31,
  2017 2017 2017 2017 2016
Asset Quality:          
Loans past due over 90 days
  and still accruing
$- $- $- $- $- 
Nonaccrual loans (A) 13,530  15,367  15,643  11,494  11,264 
Other real estate owned 2,090  137  373  671  534 
  Total nonperforming assets$15,620 $15,504 $16,016 $12,165 $11,798 
           
Nonperforming loans to
  total loans
 0.37% 0.42% 0.43% 0.33% 0.34%
Nonperforming assets to
  total assets
 0.37% 0.37% 0.38% 0.31% 0.30%
           
Performing TDRs (B)(C)$9,514 $9,658 $9,725 $15,030 $17,784 
           
Loans past due 30 through 89
  days and still accruing
$246 $589 $1,232 $622 $1,356 
           
Classified loans$41,706 $44,170 $43,608 $43,002 $45,798 
           
Impaired loans$23,065 $25,046 $25,294 $26,546 $29,071 
           
Allowance for loan and lease losses:          
  Beginning of period$35,915 $35,751 $33,610 $32,208 $30,616 
  Provision for loan and lease losses 1,650  400  2,200  1,600  1,500 
  Charge-offs, net (1,125) (236) (59) (198) 92 
  End of period$36,440 $35,915 $35,751 $33,610 $32,208 
           
ALLL to nonperforming loans 269.33% 233.72% 228.54% 292.41% 285.94%
ALLL to total loans 0.98% 0.98% 0.98% 0.98% 0.97%
           
(A)December 31, 2017, September 30, 2017 and June 30, 2017 includes one commercial mortgage totaling $4.9 million.  The loan was past maturity at June 30, 2017, however interest payments continued to be made.  The loan is secured by real estate valued at $7.0 million as of October 2017.
(B)Amounts reflect TDRs that are paying according to restructured terms.
(C)Amount does not include $8.1 million at December 31, 2017, $9.1 million at September 30, 2017, $9.6 million at June 30, 2017, $4.6 million at March 31, 2017 and $4.5 million at December 31, 2016 of TDRs included in nonaccrual loans.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
 
 
  Dec 31, Sept 30, Dec 31,
  2017 2017 2016
Capital Adequacy
 
Equity to total assets (A) 9.47% 9.10% 8.36%
 
Tangible Equity to tangible assets (B) 8.97% 8.77% 8.28%
 
Book value per share (C)$21.68 $20.86 $18.79 
 
Tangible Book Value per share (D)$20.40 $20.03 $18.60 
 
             
  Dec 31,  Sept 30,  Dec 31, 
  2017  2017  2016 
Regulatory Capital – Holding Company            
             
Tier I leverage$382,8709.04%$365,3008.75%$323,0458.35%
             
Tier I capital to risk weighted assets 382,87011.31  365,30010.78  323,04510.60 
             
Common equity tier I capital ratio
  to risk-weighted assets
 382,86811.31  365,29810.78  323,04210.60 
             
Tier I & II capital to
  risk-weighted assets
 502,33414.84  450,07813.28  404,01713.25 
             
Regulatory Capital – Bank            
             
Tier I leverage$448,81210.61%$401,9889.63%$360,0979.31%
             
Tier I capital to risk weighted assets 448,81213.27  401,98811.86  360,09711.82 
             
Common equity tier I capital ratio
  to risk-weighted assets
 448,81013.27  401,98611.86  360,09411.82 
             
Tier I & II capital to
  risk-weighted assets
 485,25214.34  437,90412.92  392,30512.87 
             
(A)Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
(B)Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively.  Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end.  See Non-GAAP financial measures reconciliation included in these tables beginning on page 24.
(C)Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding.
(D)Tangible book value per share is different than book value per share because it excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding.  See Non-GAAP financial measures reconciliation tables beginning on page 24.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
 For the Quarters Ended
  Dec 31, Sept 30, June 30, March 31, Dec 31,
  2017 2017 2017 2017 2016
Residential loans retained$20,791$22,322$54,833$64,831$53,324
Residential loans sold 8,282 10,596 6,491 3,115 11,429
  Total residential loans 29,073 32,918 61,324 67,946 64,753
           
Commercial real estate 19,090 24,870 46,931 33,216 56,793
Multifamily 5,400 85,488 78,824 47,125 26,300
Commercial (C&I) loans (A) (B) 141,672 131,321 158,476 128,130 78,038
SBA 9,640 4,560 3,900 1,700 2,050
Wealth lines of credit (A) 14,800 15,200 14,905 7,200 2,400
  Total commercial loans 190,602 261,439 303,036 217,371 165,581
           
Installment loans 802 1,967 2,075 2,146 1,826
           
Home equity lines of credit (A) 4,513 6,879 5,444 6,973 5,878
           
  Total loans closed$224,990$303,203$371,879$294,436$238,038
 


  
 For the Twelve Months Ended
  Dec 31,  Dec 31,
  2017  2016
Residential loans retained$162,777 $146,868
Residential loans sold 28,484  64,840
  Total residential loans 191,261  211,708
      
Commercial real estate 124,107  159,485
Multifamily 216,837  359,494
Commercial (C&I) loans (A) (B) 559,599  266,533
SBA 19,800  8,415
Wealth lines of credit (A) 52,105  6,185
  Total commercial loans 972,448  800,112
      
Installment loans 6,990  4,980
      
Home equity lines of credit (A) 23,809  30,981
      
  Total loans closed$1,194,508 $1,047,781
      
      
      
      


(A)Includes loans and lines of credit that closed in the period, but not necessarily funded.
(B)Includes equipment lease finance.
  


 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
 Dec 31, 2017Dec 31, 2016
  Average Income/   Average Income/  
  Balance ExpenseYield  Balance ExpenseYield 
ASSETS:            
Interest-earning assets:            
  Investments:            
   Taxable (1)$316,148 $1,7262.18 %$241,443 $1,2021.99 %
   Tax-exempt (1) (2) 24,836  1832.95  30,179  2162.86 
             
  Loans (2) (3):            
    Mortgages 598,407  4,8803.26  505,366  4,0623.22 
    Commercial mortgages 2,053,221  19,0393.71  2,035,193  17,7983.50 
    Commercial 886,170  9,2634.18  605,781  5,8883.89 
    Commercial construction -  --  832  94.33 
    Installment 85,390  6563.07  70,051  5393.08 
    Home equity 68,485  6673.90  64,371  5303.29 
    Other 638  116.90  485  129.90 
    Total loans 3,692,311  34,5163.74  3,282,079  28,8383.51 
  Federal funds sold 101  -0.25  101  -0.25 
  Interest-earning deposits 125,495  3050.97  223,188  2570.46 
    Total interest-earning assets 4,158,891  36,7303.53 % 3,776,990  30,5133.23 %
Noninterest-earning assets:            
  Cash and due from banks 5,096      10,747     
  Allowance for loan and lease losses (37,000)     (31,575)    
  Premises and equipment 29,670      30,441     
  Other assets 96,607      85,224     
    Total noninterest-earning assets 94,373      94,837     
Total assets$4,253,264     $3,871,827     
             
LIABILITIES:            
Interest-bearing deposits:            
  Checking$1,135,660 $1,5910.56 %$992,075 $7240.29 %
  Money markets 1,101,862  1,7810.65  1,021,819  8640.34 
  Savings 120,768  170.06  119,518  170.06 
  Certificates of deposit – retail 537,685  2,0341.51  463,377  1,6211.40 
    Subtotal interest-bearing deposits 2,895,975  5,4230.75  2,596,789  3,2260.50 
  Interest-bearing demand – brokered 180,000  7511.67  196,848  7571.54 
  Certificates of deposit – brokered 74,529  4452.39  93,704  5012.14 
    Total interest-bearing deposits 3,150,504  6,6190.84  2,887,341  4,4840.62 
  Borrowings 51,265  2672.08  67,958  3321.95 
  Capital lease obligation 9,136  1104.82  9,741  1174.80 
  Subordinated debt 56,444  8576.07  48,743  7586.22 
  Total interest-bearing liabilities 3,267,349  7,8530.96  3,013,783  5,6910.76 
Noninterest-bearing liabilities:            
  Demand deposits 567,041      514,130     
  Accrued expenses and
    other liabilities
 28,138      28,406     
  Total noninterest-bearing liabilities 595,179      542,536     
Shareholders’ equity 390,736      315,508     
  Total liabilities and
     shareholders’ equity
$4,253,264     $3,871,827     
  Net interest income  $28,877    $24,822  
  Net interest spread    2.57 %    2.47 %
  Net interest margin (4)    2.78 %    2.63 %
(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)
 Dec 31, 2017Sept 30, 2017
  Average Income/   Average Income/  
  Balance ExpenseYield  Balance ExpenseYield 
ASSETS:            
Interest-earning assets:            
  Investments:            
    Taxable (1)$316,148 $1,7262.18 %$302,669 $1,5642.07 %
    Tax-exempt (1) (2) 24,836  1832.95  27,099  1942.86 
             
  Loans (2) (3):            
    Mortgages 598,407  4,8803.26  612,904  4,9343.22 
    Commercial mortgages 2,053,221  19,0393.71  2,120,360  19,8793.75 
    Commercial 886,170  9,2634.18  795,063  9,6544.86 
    Installment 85,390  6563.07  77,616  6113.15 
    Home equity 68,485  6673.90  67,251  6533.88 
    Other 638  116.90  563  117.82 
    Total loans 3,692,311  34,5163.74  3,673,757  35,7423.89 
  Federal funds sold 101  -0.25  101  -0.25 
  Interest-earning deposits 125,495  3050.97  103,103  2761.07 
    Total interest-earning assets 4,158,891  36,7303.53 % 4,106,729  37,7763.68 %
Noninterest-earning assets:            
  Cash and due from banks 5,096      4,732     
  Allowance for loan and lease losses (37,000)     (36,547)    
  Premises and equipment 29,670      29,996     
  Other assets 96,607      86,493     
    Total noninterest-earning assets 94,373      84,674     
Total assets$4,253,264     $4,191,403     
             
LIABILITIES:            
Interest-bearing deposits:            
  Checking$1,135,660 $1,5910.56 %$1,128,112 $1,4870.53 %
  Money markets 1,101,862  1,7810.65  1,084,009  1,5800.58 
  Savings 120,768  170.06  120,893  160.05 
  Certificates of deposit – retail 537,685  2,0341.51  502,637  1,8641.48 
    Subtotal interest-bearing deposits 2,895,975  5,4230.75  2,835,651  4,9470.70 
  Interest-bearing demand – brokered 180,000  7511.67  180,000  7371.64 
  Certificates of deposit – brokered 74,529  4452.39  87,095  4812.21 
    Total interest-bearing deposits 3,150,504  6,6190.84  3,102,746  6,1650.79 
  Borrowings 51,265  2672.08  98,114  4391.79 
  Capital lease obligation 9,136  1104.82  9,303  1124.82 
  Subordinated debt 56,444  8576.07  48,841  7836.41 
    Total interest-bearing liabilities 3,267,349  7,8530.96  3,259,004  7,4990.92 
Noninterest-bearing liabilities:            
  Demand deposits 567,041      538,484     
  Accrued expenses and
    other liabilities
 28,138      25,807     
  Total noninterest-bearing liabilities 595,179      564,291     
Shareholders’ equity 390,736      368,108     
  Total liabilities and
     shareholders’ equity
$4,253,264     $4,191,403     
  Net interest income  $28,877    $30,277  
  Net interest spread    2.57 %    2.76 %
  Net interest margin (4)    2.78 %    2.95 %
(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
TWELVE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
 Dec 31, 2017Dec 31, 2016
  Average Income/   Average Income/  
  Balance ExpenseYield  Balance ExpenseYield 
ASSETS:            
Interest-earning assets:            
  Investments:            
    Taxable (1)$300,590 $6,2712.09 %$208,980 $4,0181.92 %
    Tax-exempt (1) (2) 26,046  7662.94  27,225  8403.09 
             
  Loans (2) (3):            
    Mortgages 586,722  19,0253.24  483,088  15,7903.27 
    Commercial mortgages