Peapack-Gladstone Financial Corporation Reports Record Fourth Quarter and Full Year Results, Driven by Solid Wealth Management and Commercial Banking Activities

Company Release - 1/29/2020 9:00 AM ET

BEDMINSTER, N.J., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter and full year 2019 results, a quarterly dividend, and the status of the stock repurchase program. 

For the quarter ended December 31, 2019, the Company recorded revenue of $46.44 million, pretax income of $17.79 million, net income of $12.23 million and diluted earnings per share (“EPS”) of $0.64, compared to $40.64 million, $13.62 million, $10.73 million and $0.55, respectively, for the same three-month period last year. The 2019 quarter included increased net interest income and non-interest income, partially offset by an increased provision for loan and lease losses (due to loan growth) and increased operating expenses (due in part to the wealth management firm acquired in September 2019). In comparing the fourth quarter of 2019 to the fourth quarter of 2018, revenue increased 14% and pretax income increased 31%, reflecting favorable operating leverage during the period. For the same periods net income increased 14% and EPS increased 16%. The lower growth in net income and EPS relative to pre-tax income was due to a higher effective tax rate in 2019 caused by changes in NJ State tax law in 2018.       

For the twelve months ended December 31, 2019, the Company recorded total revenue of $174.97 million, pretax income of $66.12 million, net income of $47.43 million and diluted earnings per share of $2.44, compared to $159.36 million, $57.72 million, $44.17 million and $2.31, respectively, for the twelve months ended December 31, 2018, reflecting increases of 10% in revenue and 15% in pretax income, reflecting favorable operating leverage. Net income and EPS increased 7% and 6%, respectively, less than the increase in pretax income due to the increase in the effective tax rate in 2019. The effective tax rate was 28.26% for twelve months of 2019 compared to 23.48% for the twelve months of 2018. The increase was caused by changes in NJ State tax law in 2018.   

As previously announced, on July 25, 2019, the Company authorized the repurchase of up to 960,000 shares, or approximately 5% of its outstanding shares, through June 30, 2020. During the fourth quarter of 2019, under this program, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million. To date, under this program, the Company purchased 739,778 shares, at an average price of $28.39, for a total cost of $21.0 million. 220,222 shares remain to be purchased under the authorization.

Douglas L. Kennedy, President and CEO, said, “We were very pleased with our earnings this past quarter, as we continued to drive operating leverage. We acknowledge the challenges the Bank and the industry face given the recent Fed rate decreases and the shape of the yield curve. We were pleased our reported net interest margin (“NIM”) did not decrease and our NIM, adjusted for prepayment premiums and excess liquidity (see page 6), only decreased marginally in the fourth quarter, after the three rate decreases during the second half of 2019. Further, we believe our strategy (which results in a higher incidence of fee income - 33% of total revenue for the fourth quarter of 2019) will enable us to deliver higher quality earnings and increased shareholder value over time.”

EXECUTIVE SUMMARY:

The following tables summarize specified financial measures for the periods shown.

December 2019 Quarter Compared to Prior Year Quarter

  Three Months Ended   Three Months Ended         
  December 31,   December 31,  Increase/ 
(Dollars in millions, except per share data) 2019 (A)   2018 (B)  (Decrease) 
Net interest income $30.91   $29.39  $1.52   5%
Provision for loan and lease losses  1.95    1.50   0.45   30 
Net interest income after provision  28.96    27.89   1.07   4 
Wealth management fee income  10.12    8.55   1.57   18 
Capital markets activity  3.73    2.19   1.54   70 
Other income  1.68    0.51   1.17   229 
Total other income  15.53    11.25   2.74   24 
Operating expenses  26.70    25.52   1.18   5 
Pretax income  17.79    13.62   2.63   19 
Income tax expense  5.56    2.89   2.67   92 
Net income $12.23   $10.73  $(0.04)  (0)%
Diluted EPS $0.64   $0.55  $0.09   16%
                  
Total Revenue $46.44   $40.64  $5.80   14%
                  
Effective tax rate  31.25%   21.22%  10.03     
Return on average assets annualized  0.98%   0.96%  0.02     
Return on average equity annualized  9.81%   9.32%  0.49     

(A) The December 2019 quarter included a full quarter of wealth management fee income and expense related to Point View Wealth Management, (“Point View”), which was acquired effective September 1, 2019. The December 2019 quarter included a higher effective tax rate than the prior year quarter due to changes in NJ state tax law.
(B) The December 2018 quarter included $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM.

December 2019 Quarter Compared to Linked Quarter

  Three Months Ended  Three Months Ended          
  December 31,  September 30,   Increase/ 
(Dollars in millions, except per share data) 2019 (A)  2019   (Decrease) 
Net interest income $30.91  $30.09   $0.82   3%
Provision for loan and lease losses  1.95   0.80    1.15   144 
Net interest income after provision  28.96   29.29    (0.33)  (1)
Wealth management fee income  10.12   9.50    0.62   7 
Capital markets activity  3.73   2.77    0.96   35 
Other income  1.68   2.15    (0.47)  (22)
Total other income  15.53   14.42    1.11   8 
Operating expenses  26.70   26.26    0.44   2 
Pretax income  17.79   17.45    0.34   2 
Income tax expense  5.56   5.22    0.34   7 
Net income $12.23  $12.23   $0.00   0%
Diluted EPS $0.64  $0.63   $0.01   2%
                  
Total Revenue $46.44  $44.51   $1.93   4%
                  
Effective tax rate  31.25%  29.91%   1.34     
Return on average assets annualized  0.98%  1.00%   (0.02)    
Return on average equity annualized  9.81%  9.87%   (0.06)    

(A) The quarter ended December 31, 2019 included a full quarter of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019 compared to one month in the quarter ended September 30, 2019.


Year over Year Comparison
            

  Year Ended  Year Ended          
  December 31,  December 31,   Increase/ 
(Dollars in millions, except per share data) 2019 (A)  2018 (B)   (Decrease) 
Net interest income $120.27  $115.16   $5.11   4%
Provision for loan and lease losses  4.00   3.55    0.45   13 
Net interest income after provision  116.27   111.61    4.66   4 
Wealth management fee income  38.36   33.25    5.11   15 
Capital markets activity  8.67   5.81    2.86   49 
Other income  7.67   5.14    2.53   49 
Total other income  54.70   44.20    10.50   24 
Operating expenses  104.85   98.09    6.76   7 
Pretax income  66.12   57.72    8.40   15 
Income tax expense  18.69   13.55    5.14   38 
Net income $47.43  $44.17   $3.26   7%
Diluted EPS $2.44  $2.31   $0.13   6%
                  
Total Revenue $174.97  $159.36   $15.61   10%
                  
Effective tax rate  28.26%  23.48%   4.78     
Return on average assets annualized  0.99%  1.02%   (0.03)    
Return on average equity annualized  9.70%  10.13%   (0.43)    

             

  1. The year ended December 31, 2019 included a full year of wealth management fee income and expense related to Lassus Wherley, which was acquired effective September 1, 2018, and includes four months of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019. The 2019 twelve months included a higher effective tax rate than the prior year due to changes in NJ state tax law.
  2. The 2018 year includes $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM. 

Other highlights for the quarter included:

  • Wealth Management remains integral to our strategy and provides a diversified, predictable, and stable source of revenue over time:

    • As previously announced, effective September 1, 2019 the Company completed its acquisition of Point View, a registered investment advisor headquartered in Summit, NJ, which added nearly $350 million of assets under management and/or administration (“AUM/AUA”).
    • At December 31, 2019, the market value of AUM/AUA at the Peapack Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) was $7.5 billion reflecting an increase of $1.7 billion from $5.8 billion at December 31, 2018, reflecting growth of 29% from the end of the prior year.
    • Wealth management fee income totaled $10.12 million and $38.36 million for the quarter and year ended December 31, 2019, reflecting an increase of $1.6 million, or 18%, from the December 2018 quarter and $5.1 million or 15% from the 2018 year. 
    • Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the quarter ended December 31, 2019, continues to contribute significantly to the Company’s diversified revenue sources.
  •  Growth in Commercial Banking also continues to be integral to our strategy:

    • Total commercial and industrial (“C&I”) loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).
    • C&I momentum has continued to build and pipelines remain strong.
    • As of December 31, 2019, total C&I loans comprised 40% of the total loan portfolio, as compared to 36% at December 31, 2018. As of December 31, 2019, total multifamily loans comprised 27% of the total loan portfolio compared to 29% at December 31, 2018.
    • The Bank’s concentration in commercial real estate loans was 404% of risk-based capital at December 31, 2019 compared to 394% at December 31, 2018. The slight increase was due to management’s plan to generate volumes ahead of and at yields in excess of expected significant maturities/payoffs in 2020.

 

  • Deposits, funding, and interest rate risk continue to be actively managed:

    • Deposits totaled $4.24 billion at December 31, 2019. This reflected net growth of $348 million (9%) when compared to $3.90 billion at December 31, 2018 and increased $182 million (4% growth linked quarter; 18% annualized) when compared to the September 30, 2019 balance.
    • The Company’s loan-to-deposit ratio was 104.0% at December 31, 2019, up slightly from September 30, 2019 and December 31, 2018 levels .
    • The Company continues to have access to approximately $1.3 billion of available secured funding at the Federal Home Loan Bank.
    • With the transformation to a commercial bank balance sheet and business model, the Company’s interest rate sensitivity models indicate the Company is asset sensitive as of December 31, 2019, and that net interest income would improve in a rising rate environment but decline in a falling rate environment. Over the past six months, the Company has been managing its balance sheet and deposit costs to mitigate the effects of a falling rate environment. 
  • Capital and asset quality continue to be strong.

    • The Company’s and Bank’s capital ratios at December 31, 2019 remain strong, despite $21.0 million of share repurchases made during the third and fourth quarters as part of the Company’s stock repurchase program. At December 31, 2019 the Company’s tangible capital ratio stood at 9.01%. The Company believes its existing capital and capital generation from earnings will be more than adequate to support planned balance sheet growth, wealth acquisitions, and potential purchases under its stock repurchase program.
    • The Company authorized a 5% (960,000 shares) stock repurchase program on July 25, 2019 under which the Company has purchased 739,778 shares through the end of the fourth quarter.
    • The Company’s tangible book value per share at December 31, 2019 was $24.47 reflecting an increase of 8% from $22.58 at December 31, 2018.
    • Asset quality metrics continued to be strong as of December 31, 2019. Nonperforming assets at December 31, 2019 were $28.9 million, or 0.56% of total assets as compared to $25.7 million and 0.56% of total assets at December 31, 2018.
     

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the December 2019 quarter, the Bank’s wealth management business generated $10.12 million in fee income, reflecting an increase of $1.57 million (18% growth) compared to $8.55 million for the December 2018 quarter, and reflecting an increase of $619,000 from the September 2019 quarter (7% growth linked quarter, 26% annualized). The December 2019 quarter included three months of fee income related to Point View compared to one month in the September 2019 quarter, which was acquired effective September 1, 2019, as well as increased fees from net organic growth in assets under management. 

John P. Babcock, President of the “Peapack Private Wealth Management” division said, “I am pleased with our results; we had approximately $750 million of new business inflows in 2019 and have a strong pipeline as we finished the year strong. We are making significant forward progress on integrating the systems, processes and people from our 2017, 2018, and 2019 acquisitions and continue to selectively look for additional acquisitions that can add talent and expertise to our wealth management organization.”

Loans / Commercial Banking

Net loans increased to $4.37 billion at December 31, 2019 from $3.89 billion at December 31, 2018, reflecting 12% annual growth. Loan/line origination levels were robust as was paydown activity. Mr. Kennedy noted, “We were pleased to have strong net loan growth, despite increased paydown activity. And, we have entered the new year with strong loan pipelines.” 

Total C&I loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).  

Mr. Kennedy said, “The loan market continues to be extremely competitive from a structure/credit and a pricing perspective. As I have noted before, we will continue to be disciplined and not compromise our credit standards, but we will compete on price, as long as returns remain reasonable as measured by our proprietary loan pricing model.”

Mr. Kennedy also said, “Our newly expanded Corporate Advisory and Structured Finance businesses give us the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale sourced deposits, volatility, and/or operational risk.

For the quarter ended December 31, 2019, the Company utilized its excess balance sheet liquidity (basically interest-earning deposits), increased client deposits and short-term borrowings to fund its loan growth.

Mr. Kennedy noted, “As a commercial bank with an asset sensitive balance sheet, as the Fed reduces rates, our loans reprice faster than our deposits. Thus, we have been and will remain keenly focused on our comprehensive deposit rate reduction program with an eye toward relationship profitability.” 

As of December 31, 2019, in addition to approximately $610 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.55 billion of secured funding available from the Federal Home Loan Bank, of which only $233 million was drawn as of December 31, 2019.
             
Mr. Kennedy noted, “Depending on market conditions, we may utilize lower cost fixed rate wholesale borrowings and/or interest rate swaps, as opposed to retail deposits, to fund fixed rate loan production.”

Kennedy went on to note, “The northeast market continues to be extremely competitive for deposits. The Company is focused on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company is focused on multiple retail channels, as well as commercial channels, including its enhanced Treasury Management and Escrow offerings. Further, all of our Private Bankers remain keenly focused on deposit gathering.”

Net Interest Income (NII)/Net Interest Margin (NIM)

 Twelve Months Ended  Twelve Months Ended         
 December 31, 2019  December 31, 2018         
 NII  NIM  NII  NIM         
                        
NII/NIM excluding the below$119,032  2.67%  $112,840  2.69%         
Prepayment premiums received on loan paydowns 1,328  0.03%   2,002  0.05%         
Effect of maintaining excess interest earning cash during 2019 (86) -0.07%               
Material fees recognized on full paydowns of C&I loans       321  0.01%         
NII/NIM as reported$120,274  2.63%  $115,163  2.75%         
                        
 Three Months Ended  Three Months Ended  Three Months Ended 
 December 31, 2019  September 30, 2019  December 31, 2018 
 NII  NIM  NII  NIM  NII  NIM 
                        
NII/NIM excluding the below$30,385  2.61%  $29,896  2.67%  $28,899  2.70% 
Prepayment premiums received on loan paydowns 414  0.03%   236  0.02%   495  0.04% 
Effect of maintaining excess interest earning cash during 2019 115  -0.04%   (47) -0.09%   (9) -0.02% 
Material fees recognized on full paydowns of C&I loans                 
NII/NIM as reported$30,914  2.60%  $30,085  2.60%  $29,385  2.72% 

Net interest income and net interest margin comparisons are shown above.

Mr. Kennedy noted, “Given the yield curve as well as the recent Fed rate decreases, our reported NIM remained flat, but our core NIM declined slightly this quarter, as was expected. While our models indicate additional slight compression in Q1 2020, assuming no further Fed rate decreases, we believe our margin will gradually begin to improve after that. In addition to managing our balance sheet, asset yields and cost of deposits very closely, we will continue to focus even more on fee based activities.”    

Other Noninterest Income (other than Wealth Management fee income)

Noninterest income from Capital Markets activities (loan level back-to-back swap activities, SBA lending and sale program, and mortgage banking income) totaled $3.73 million for the December 2019 quarter compared to $2.77 million for the September 2019 quarter and $2.19 million for the December 2018 quarter. Income from these programs are not linear each quarter, as some quarters will be higher than others.

Other income totaled $504,000 for the fourth quarter of 2019, compared to $902,000 for the third quarter of 2019, and $3.6 million for the fourth quarter of 2018. The December 2018 quarter included $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of Murphy Capital Management.

The December 2018 quarter included a $4.39 million loss on the sale of $131 million of fixed rate multifamily loans, sold as part of the Company’s balance sheet management strategy.    

Operating Expenses

The Company’s total operating expenses were $26.70 million for the quarter ended December 31, 2019, compared to $26.26 million for the September 2019 quarter and $25.52 million for the December 2018 quarter. The December 2019 quarter included three months of expenses related to Point View’s operations compared to one month in the September 2019 quarter. Strategic hiring and normal salary increases also contributed to the increase for the December 2019 quarter. There was no FDIC insurance expense for the December 2019 quarter or the September 2019 quarter as the Bank utilized its small bank assessment credit from the FDIC. Mr. Kennedy said, “As we reported last quarter, the Company launched a company-wide expense review, with a goal of slowing expense growth, while continuing our investment in digital and in client acquisition initiatives. Both activities continue to be important given the current yield curve environment.”

Income Taxes

The effective tax rate for the December 2019 quarter was 31.2%, compared to 29.9% for the September 2019 quarter, and 21.2% for the December 2018 quarter. The effective tax rate for the year ended December 31, 2019 was 28.3% compared to 23.5% for the year ended December 31, 2018. The 2019 periods included higher NJ State Income Tax due to the change in NJ Tax law.

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets at December 31, 2019 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $28.9 million, or 0.56% of total assets, compared to $29.7 million, or 0.60% of total assets, at September 30, 2019 and $25.7 million, or 0.56% of total assets, at December 31, 2018. Total loans past due 30 through 89 days and still accruing were $1.9 million at December 31, 2019, compared to $6.3 million at September 30, 2019 and $3.5 million at December 31, 2018.    

For the quarter ended December 31, 2019, the Company’s provision for loan and lease losses was $2.0 million compared to $800,000 for the September 2019 quarter and $1.5 million for the December 2018 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics, net loan growth, net charge-offs/recoveries, and the composition of the loan portfolio.

At December 31, 2019, the allowance for loan and lease losses was $43.68 million (151% of nonperforming loans and 0.99% of total loans), compared to $41.58 million at September 30, 2019 (142% of nonperforming loans and 1.00% of total loans), and $38.50 million (150% of nonperforming loans and 0.98% of total loans) at December 31, 2018. 

Capital / Dividend / Stock Repurchase Program

The Company’s capital position during the December 2019 quarter was benefitted by net income partially offset by the purchase of shares through the Company’s stock repurchase program. During the quarter, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million.

The Company’s and Bank’s capital ratios at December 31, 2019 all remain strong. Such ratios remain well above regulatory well capitalized standards.

On January 28, 2020, the Company declared a cash dividend of $0.05 per share payable on February 26, 2020 to shareholders of record on February 11, 2020.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $5.2 billion and AUM/AUA of $7.5 billion as of December 31, 2019. 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:

  • our 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 2019 and beyond;
  • our inability to successfully integrate wealth management firm acquisitions;
  • our inability to manage our growth;
  • our inability to successfully integrate our expanded employee base;
  • an unexpected decline in the economy, in particular in our New Jersey and New York market areas;
  • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
  • declines in value in our investment portfolio;
  • higher than expected increases in our allowance for loan and lease losses;
  • higher than expected increases in loan and lease losses or in the level of nonperforming loans;
  • changes in interest rates;
  • decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT and third party providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • our inability to successfully generate new business in new geographic markets;
  • our inability to execute upon new business initiatives;
  • our 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;
  • our inability to retain key employees;
  • demands for loans and deposits in our market areas;
  • adverse changes in securities markets;
  • changes in accounting policies and practices;
  • effects related to a prolonged shutdown of the federal government which could impact SBA and other government lending programs; 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, 2018. 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.

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308


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, 
  2019  2019  2019  2019  2018 
Income Statement Data:                    
Interest income $45,556  $45,948  $44,603  $44,563  $42,781 
Interest expense  14,642   15,863   15,335   14,556   13,396 
Net interest income  30,914   30,085   29,268   30,007   29,385 
Provision for loan and lease losses  1,950   800   1,150   100   1,500 
Net interest income after provision for loan and
  lease losses
  28,964   29,285   28,118   29,907   27,885 
Wealth management fee income  10,120   9,501   9,568   9,174   8,552 
Service charges and fees  893   882   897   816   938 
Bank owned life insurance  325   332   326   338   351 
Gain on loans held for sale at fair value
  (Mortgage banking) (A)
  344   198   132   47   74 
Loss on loans held for sale at lower of cost or
  fair value
  (4)  (6)        (4,392)
Fee income related to loan level, back-to-back
  swaps (A)
  2,459   2,349   721   270   1,838 
Gain on sale of SBA loans (A)  929   224   573   419   277 
Other income (B)  504   902   740   606   3,571 
Securities gains/(losses), net  (45)  34   69   59   46 
Total other income  15,525   14,416   13,026   11,729   11,255 
Salaries and employee benefits  17,954   17,476   17,543   17,156   16,372 
Premises and equipment  3,898   3,849   3,600   3,388   3,422 
FDIC insurance expense     (277)  277   277   645 
Other expenses  4,849   5,211   4,753   4,894   5,085 
Total operating expenses  26,701   26,259   26,173   25,715   25,524 
Income before income taxes  17,788   17,442   14,971   15,921   13,616 
Income tax expense  5,555   5,216   3,421   4,496   2,887 
Net income $12,233  $12,226  $11,550  $11,425  $10,729 
                     
Total revenue (C) $46,439  $44,501  $42,294  $41,736  $40,640 
Per Common Share Data:                    
Earnings per share (basic) $0.64  $0.63  $0.59  $0.59  $0.56 
Earnings per share (diluted)  0.64   0.63   0.59   0.58   0.55 
Weighted average number of common
  shares outstanding:
                    
Basic  18,966,917   19,314,666   19,447,155   19,350,452   19,260,033 
Diluted  19,207,738   19,484,905   19,568,371   19,658,006   19,424,906 
Performance Ratios:                    
Return on average assets annualized (ROAA)  0.98%  1.00%  0.99%  0.98%  0.96%
Return on average equity annualized (ROAE)  9.81%  9.87%  9.49%  9.65%  9.32%
Net interest margin (tax- equivalent basis)  2.60%  2.60%  2.64%  2.70%  2.72%
GAAP efficiency ratio (D)  57.50%  59.01%  61.88%  61.61%  62.81%
Operating expenses / average assets annualized  2.13%  2.16%  2.25%  2.21%  2.28%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.
(C) Total revenue includes net interest income plus total other income.
(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.


PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)

  For the Twelve Months Ended         
  Dec 31,  Change 
  2019  2018  $  % 
Income Statement Data:                
Interest income $180,670  $159,686  $20,984   13%
Interest expense  60,396   44,523   15,873   36%
Net interest income  120,274   115,163   5,111   4%
Provision for loan and lease losses  4,000   3,550   450   13%
Net interest income after provision for loan and
  lease losses
  116,274   111,613   4,661   4%
Wealth management fee income  38,363   33,245   5,118   15%
Service charges and fees  3,488   3,502   (14)  0%
Bank owned life insurance  1,321   1,381   (60)  -4%
Gain on loans held for sale at fair value (Mortgage banking) (A)  721   334   387   116%
Loss on loans held for sale at lower of cost or fair value  (10)  (4,392)  4,382   -100%
Fee income related to loan level, back-to-back swaps (A)  5,799   3,844   1,955   51%
Gain on sale of SBA loans (A)  2,145   1,636   509   31%
Other income (B)  2,752   5,036   (2,284)  -45%
Securities gains/(losses), net  117   (393)  510   -130%
Total other income  54,696   44,193   10,503   24%
Salaries and employee benefits  70,129   62,802   7,327   12%
Premises and equipment  14,735   13,497   1,238   9%
FDIC insurance expense  277   2,443   (2,166)  -89%
Other expenses  19,707   19,344   363   2%
Total operating expenses  104,848   98,086   6,762   7%
Income before income taxes  66,122   57,720   8,402   15%
Income tax expense  18,688   13,550   5,138   38%
Net income $47,434  $44,170  $3,264   7%
                 
Total revenue (C) $174,970  $159,356  $15,614   10%
Per Common Share Data:                
Earnings per share (basic) $2.46  $2.33  $0.13   6%
Earnings per share (diluted)  2.44   2.31   0.13   6%
Weighted average number of common shares outstanding:                
Basic  19,268,870   18,965,305   303,565   2%
Diluted  19,411,448   19,148,645   262,803   1%
Performance Ratios:                
Return on average assets annualized (ROAA)  0.99%  1.02%  (0.03)%    
Return on average equity annualized (ROAE)  9.70%  10.13%  (0.43)%    
Net interest margin (tax- equivalent basis)  2.63%  2.75%  (0.12)%    
GAAP efficiency ratio (D)  59.92%  61.55%  (1.63)%    
Operating expenses / average assets annualized  2.19%  2.25%  (0.06)%    

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.
(C) Total revenue includes net interest income plus total other income.
(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.

.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)
(Unaudited)

  As of 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2019 (A)  2019  2019  2019  2018 
ASSETS                    
Cash and due from banks $6,591  $5,770  $5,351  $4,726  $5,914 
Federal funds sold  102   101   101   101   101 
Interest-earning deposits  201,492   221,242   298,575   235,487   154,758 
Total cash and cash equivalents  208,185   227,113   304,027   240,314   160,773 
Securities available for sale  390,755   349,989   378,839   384,400   377,936 
Equity security  10,836   7,881   4,847   4,778   4,719 
FHLB and FRB stock, at cost  24,068   21,403   18,338   18,460   18,533 
Residential mortgage  552,019   561,543   572,926   569,304   573,146 
Multifamily mortgage  1,210,003   1,197,093   1,129,476   1,104,406   1,138,190 
Commercial mortgage  761,244   721,261   694,674   705,221   702,165 
Commercial loans  1,776,450   1,575,076   1,518,591   1,410,146   1,398,214 
Consumer loans  54,372   53,829   53,995   54,276   58,678 
Home equity lines of credit  57,248   58,423   62,522   57,639   62,191 
Other loans  349   380   424   355   465 
Total loans  4,411,685   4,167,605   4,032,608   3,901,347   3,933,049 
Less: Allowances for loan and lease losses  43,676   41,580   39,791   38,653   38,504 
Net loans  4,368,009   4,126,025   3,992,817   3,862,694   3,894,545 
Premises and equipment  20,913   20,898   20,987   21,201   27,408 
Other real estate owned  50   336          
Accrued interest receivable  10,494   11,759   11,594   11,688   10,814 
Bank owned life insurance  46,128   45,940   45,744   45,554   45,353 
Goodwill and other intangible assets (A)  40,588   41,111   31,941   32,170   32,399 
Finance lease right-of-use assets (B)  5,078   5,265   5,452   5,639    
Operating lease right-of-use assets (B)  12,132   10,328   11,017   7,541    
Other assets  45,643   57,361   45,631   27,867   45,378 
TOTAL ASSETS $5,182,879  $4,925,409  $4,871,234  $4,662,306  $4,617,858 
                     
LIABILITIES                    
Deposits:                    
Noninterest-bearing demand deposits $529,281  $544,464  $544,431  $476,013  $463,926 
Interest-bearing demand deposits  1,510,363   1,352,471   1,388,821   1,268,823   1,247,305 
Savings  112,652   115,448   112,438   114,865   114,674 
Money market accounts  1,196,313   1,196,188   1,207,358   1,209,835   1,243,369 
Certificates of deposit – Retail  633,763   583,425   570,384   545,450   510,724 
Certificates of deposit – Listing Service  47,430   55,664   58,541   68,055   79,195 
Subtotal “customer” deposits  4,029,802   3,847,660   3,881,973   3,683,041   3,659,193 
IB Demand – Brokered  180,000   180,000   180,000   180,000   180,000 
Certificates of deposit – Brokered  33,709   33,696   33,682   56,165   56,147 
Total deposits  4,243,511   4,061,356   4,095,655   3,919,206   3,895,340 
Short-term borrowings  128,100   67,000          
FHLB advances  105,000   105,000   105,000   105,000   108,000 
Finance lease liability  7,598   7,793   7,985   8,175   8,362 
Operating lease liability (B)  12,423   10,619   11,269   7,683    
Subordinated debt, net  83,417   83,361   83,305   83,249   83,193 
Other liabilities  91,227   94,930   74,132   57,521   53,950 
Due to brokers, securities settlements  7,951             
TOTAL LIABILITIES  4,679,227   4,430,059   4,377,346   4,180,834   4,148,845 
Shareholders’ equity  503,652   495,350   493,888   481,472   469,013 
TOTAL LIABILITIES AND                    
SHAREHOLDERS’ EQUITY $5,182,879  $