Peapack-Gladstone Financial Corporation Reports First Quarter Results and Declares Its Quarterly Cash Dividend

BEDMINSTER, N.J., April 26, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) recorded net income of $11.43 million and diluted earnings per share of $0.58 for the quarter ended March 31, 2019, compared to $10.81 million and $0.57, respectively, for the quarter ended March 31, 2018, reflecting increases of $618,000, or 6%, and $0.01 per share, or 2%, respectively.

The increased net income in the 2019 quarter was driven by increased net interest income, increased wealth management fee income, and a reduced provision for loan losses, partially offset by increased operating expenses and a higher effective tax rate (due to significant changes to NJ State Tax law). Douglas L. Kennedy, President and CEO, said, “Our Strategy continues to drive growth in our wealth management business, both organically and through acquisition. This business generally provides a more stable and predictable revenue stream over time than other sources of income.”

EXECUTIVE SUMMARY:

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

March 2019 Quarter Compared to Prior Year Quarter

Three Months Ended

Three Months Ended

March 31,

March 31,

Increase/

(Dollars in millions, except per share data)

2019 (1)

2018

(Decrease)

Net interest income

$

30.01

$

28.39

$

1.62

6

%

Provision for loan and lease losses

0.10

1.25

(1.15

)

(92

)

Net interest income after provision

29.91

27.14

2.77

10

Wealth management fee income

9.17

8.37

0.80

10

Other income

2.56

1.85

0.71

38

Total other income

11.73

10.22

1.51

15

Operating expenses

25.72

23.34

2.38

10

Pretax income

15.92

14.02

1.90

14

Income tax expense (2)

4.49

3.21

1.28

40

Net income

$

11.43

$

10.81

$

0.62

6

%

Diluted EPS

$

0.58

$

0.57

$

0.01

2

%

Return on average assets annualized

0.98

%

1.01

%

(0.03

)

Return on average equity annualized

9.65

%

10.54

%

(0.89

)

March 2019 Quarter Compared to Linked Quarter

Three Months Ended

Three Months Ended

March 31,

December 31,

Increase/

(Dollars in millions, except per share data)

2019

2018 (1)

(Decrease)

Net interest income

$

30.01

$

29.39

$

0.62

2

%

Provision for loan and lease losses

0.10

1.50

(1.40

)

(93

)

Net interest income after provision

29.91

27.89

2.02

7

Wealth management fee income

9.17

8.55

0.62

7

Other income

2.56

2.70

(0.14

)

(5

)

Total other income

11.73

11.25

0.48

4

Operating expenses

25.72

25.52

0.20

1

Pretax income

15.92

13.62

2.30

17

Income tax expense (2)

4.49

2.89

1.60

55

Net income

$

11.43

$

10.73

$

0.70

7

%

Diluted EPS

$

0.58

$

0.55

$

0.03

5

%

Return on average assets annualized

0.98

%

0.96

%

0.02

Return on average equity annualized

9.65

%

9.32

%

0.33


Douglas L. Kennedy, President and CEO, said, “I am pleased with our results, especially our revenue growth this quarter which reflected increases of $1.10 million compared to the December 2018 quarter, and $3.13 million compared to the March 2018 quarter. Further, our focus on wealth management and fee income, provides a strong base for future performance.”

Highlights for the quarter included:

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

    • The March 2019 quarter included results from Lassus Wherley, which was acquired on September 1, 2018. Lassus Wherley, a registered investment advisor, headquartered in New Providence, NJ, added approximately $550 million of assets under management and/or administration (“AUM/AUA”).

    • At March 31, 2019, the market value of AUM/AUA at the Peapack Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) was $6.3 billion reflecting an increase of $697 million from $5.6 billion at March 31, 2018, reflecting growth of 13%. While new business and the Lassus Wherley acquisition accounted for significant growth, negative market action (particularly in the fourth quarter of 2018) partially offset some of that growth.

    • Wealth management fee income totaled $9.17 million for the quarter ended March 31, 2019, reflecting an increase of $622,000 or 7% from the December 2018 quarter, and an increase of $807,000, or 10%, from the March 2018 quarter.

    • Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the quarter ended March 31, 2019, continues to contribute significantly to the Company’s diversified revenue sources.

    • In addition to wealth management fee income, also contributing to the Company’s diversified revenue sources is fee income related to loan level, back-to-back swaps, and gain on sale of SBA loans.

  • The loan portfolio continues to shift from lower yielding multifamily to higher yielding commercial and industrial (C&I) lending (including equipment finance):

    • Total C&I loans (including equipment finance leases and loans of $429 million) at March 31, 2019 were $1.41 billion. This reflected net growth of $413 million (41%) when compared to $997 million at March 31, 2018.

    • As of March 31, 2019, total C&I loans (including equipment finance) comprised 36% of the total loan portfolio, as compared to 27% a year earlier. As of March 31, 2019, total multifamily loans comprised 28% of the total loan portfolio, as compared to 37% a year earlier.

    • The Bank’s concentration in commercial real estate loans declined to 379% of risk-based capital at March 31, 2019 from 446% at March 31, 2018.

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

    • Deposits totaled $3.92 billion at March 31, 2019. This reflected net growth of $367 million (10%) when compared to $3.55 billion at March 31, 2018.

    • The Company’s loan-to-deposit ratio improved to 99.5% at March 31, 2019, from 101.0% at December 31, 2018, and 104.5% at March 31, 2018.

    • The Company continues to have access to $1.3 billion of available secured funding at the Federal Home Loan Bank.

    • The Company has actively managed its balance sheet to remain generally balanced (not materially asset sensitive or materially liability sensitive), despite rising deposit betas and costs throughout all of 2018. At March 31, 2019, the Company’s interest rate sensitivity models indicate the Company is slightly asset sensitive, and that net interest income would improve slightly in a rising rate environment.

  • Capital and asset quality continue to be strong:

    • The Company’s and Bank’s capital ratios at March 31, 2019 generally increased compared to both the December 31, 2018 and the March 31, 2018 levels. And, such ratios remain well above regulatory well capitalized standards.

    • Asset quality metrics continued to be strong as of March 31, 2019 and were improved from December 31, 2018 and March 31, 2018 levels. Nonperforming assets at March 31, 2019 were $24.9 million, or 0.53% of total assets. Total loans past due 30 through 89 days and still accruing were $2.5 million, or 0.06% of total loans at March 31, 2019.


SUPPLEMENTAL QUARTERLY DETAILS
:

Wealth Management Business

In the March 2019 quarter, the Bank’s wealth management business generated $9.17 million in fee income compared to $8.55 million for the December 2018 quarter, and $8.37 million for the March 2018 quarter.

When compared to the March 2018 quarter, the March 2019 quarter included three months of income related to Lassus Wherley (approximately $1 million), which was acquired effective September 1, 2018, as well as increased earnings from organic growth in assets under management. These positive effects on fee income, were partially offset by negative market action, particularly in the fourth quarter of 2018.

John P. Babcock, President of the newly-branded “Peapack Private Wealth Management Division”, said, “Despite challenging market conditions in the December 2018 quarter that impacted our recurring fee revenues in the March 2019 quarter, I am pleased with our first quarter results. We had solid new business production in the first quarter of 2019 and have a strong pipeline as we look ahead over the next two quarters. We are making significant forward progress on integrating the systems, processes and people from our 2017 and 2018 acquisitions and continue to selectively look for additional acquisitions that can add talent and expertise to our wealth management organization.”

Loans / Commercial Banking

For the quarter ended March 31, 2019, total net loans declined by $32 million (1% for the quarter 3% annualized). Loan/line origination levels ($216 million for the March 31, 2019 quarter) were more than offset by paydown activity.

Total commercial and industrial loans (including Equipment Finance) grew $12 million (1% for the quarter, or 3% annualized) to $1.41 billion at the end of the first quarter, compared to $1.40 billion at the end of the fourth quarter of 2018. New loan growth was funded by managed reductions in lower yielding multifamily loans and deposit growth. There were several larger loan payoffs late in the March 31, 2019 quarter.

Mr. Kennedy said, “Commercial loan pipelines are very strong at the end of the quarter. However, 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, “We recently announced our strategic decision to expand our Corporate Advisory and Structured Finance businesses under a new Investment Banking Division, led by Eric Waser, our former head of commercial banking. Eric and his Corporate Advisory team have the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers.”

Kennedy went on to say, “We also recently announced that Greg Smith joined us as head of commercial banking. Greg is a seasoned commercial banking professional, whom I have known for many years. Greg joined us from Capital One Bank.”

Funding / Liquidity / Interest Rate Risk Management

As noted in prior quarters, the Company has actively managed its deposit base to reduce reliance on wholesale sourced deposits and/or reduce volatility or operational risk.

For the quarter ended March 31, 2019, the Company utilized its increased capital, deposit growth, and reductions in its multifamily loan portfolio, to fund its commercial loan (including Equipment Finance) growth and increase its on balance sheet liquidity (interest earning deposits and investment securities).

In addition to approximately $629 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.4 billion of secured funding available from the Federal Home Loan Bank, of which only $105 million was drawn as of March 31, 2019.

Mr. Kennedy noted, “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 our Private Bankers remain keenly focused on deposit gathering, including our new Professional Services Group, led by a seasoned commercial banker who joined us recently.”

Mr. Kennedy also noted, “We announced earlier this week that Rick DeBel will be joining us from Wells Fargo as EVP, Deposit Solutions, a newly created position. Rick’s responsibilities will include strengthening and expanding our retail and commercial deposit efforts. Rick will oversee our retail, platinum, treasury, and escrow services teams.”

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

Three Months Ended

Three Months Ended

Three Months Ended

March 31, 2019

December 31, 2018

March 31, 2018

NII

NIM

NII

NIM

NII

NIM

NII/NIM excluding the below

$

29,575

2.72

%

$

28,890

2.68

%

$

27,960

2.72

%

Prepayment premiums received on multifamily loan paydowns

432

0.04

%

495

0.04

%

433

0.04

%

Effect of maintaining excess interest earning cash during Q1 2019

143

-0.06

%

0

0.00

%

0

0.00

%

NII/NIM as reported

$

30,150

2.70

%

$

29,385

2.72

%

$

28,393

2.76

%

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

Mr. Kennedy said, “As the Company signaled last quarter, the Company’s margin (excluding prepayment premiums and the effect of maintaining higher liquidity) improved slightly in Q1 2019, when compared to Q4 2018."

Mr. Kennedy also noted, “Last quarter we said that our forecasting models indicated a net interest margin in the 3.00% range by the end of 2020. While we still believe our margin will improve over that same timeframe, the 3.00% target may be difficult to attain if the shape of the current yield curve remains for an extended period.”

Other Noninterest Income

The first quarter of 2019 included $419,000 of income related to the Company’s SBA lending and sale program, compared to $277,000 generated in the December 2018 quarter, and $31,000 in the March 2018 quarter.

The first quarter of 2019 included $270,000 of loan level, back-to-back swap income compared to $1.8 million in the December 2018 quarter and $252,000 in the March 2018 quarter. This program provides a borrower with a degree of interest rate protection on a variable rate loan, while still providing an adjustable rate to the Company, thus helping to manage the Company’s interest rate risk, while contributing to income.

The Company noted that income from both of these programs are not linear each quarter, as some quarters will be higher than others. The December 2018 quarter reflected higher swap income due to the Company’s higher level of loan activity coupled with borrowers’ desire to protect themselves from rates rising beyond current levels.

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

Other income for 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.

Operating Expenses

The Company’s total operating expenses were $25.72 million for the quarter ended March 31, 2019, compared to $25.52 million for the December 2018 quarter and $23.34 million for the March 2018 quarter. The March 2019 and the December 2018 quarters each included: three months of expense related to Lassus Wherley (which closed in September 2018). Strategic hiring and normal salary increases also contributed to the increase for the March 2019 quarter. FDIC insurance expense for the March 2019 quarter decreased by over 50% when compared to each of the linked (December 2018) and prior year (March 2018) quarters.

Income Taxes

The effective tax rate for the March 2019 quarter was 28.2%, compared to 21.2% for the December 2018 quarter, and 22.9% for the March 2018 quarter. The March 2019 quarter included higher NJ State Income Tax. The December 2018 quarter was benefitted by $3 million of life insurance proceeds that were not taxable. The March 2018 quarter included a tax benefit resulting from the vesting of restricted stock under ASU 2016-09.

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets at March 31, 2019 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $24.9 million, or 0.53% of total assets, compared to $25.7 million, or 0.56% of total assets, at December 31, 2018 and $15.4 million, or 0.36% of total assets, at March 31, 2018. Total loans past due 30 through 89 days and still accruing were $2.5 million at March 31, 2019, compared to $3.5 million at December 31, 2018 and $674,000 at March 31, 2018. The increase in nonperforming assets in the December 2018 quarter was due to one $15 million healthcare real estate secured loan which continues to pay as agreed, and which the Company still believes to be well secured.

For the quarter ended March 31, 2019, the Company’s provision for loan and lease losses was $100,000 compared to $1.5 million for the December 2018 quarter and $1.25 million for the March 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, and the composition of the loan portfolio. The reduced provision for the March 2019 quarter resulted from a reduced loan portfolio due to paydown activity in excess of origination activity, as well as net recoveries in the quarter.

At March 31, 2019, the allowance for loan and lease losses of $38.65 million (155% of nonperforming loans and 0.99% of total loans), compared to $38.50 million at December 31, 2018 (150% of nonperforming loans and 0.98% of total loans), and $37.70 million (283% of nonperforming loans and 1.02% of total loans) at March 31, 2018.

Capital / Dividends

The Company’s capital position in the March 2019 quarter was benefitted by net income of $11.43 million.

Voluntary share purchases in the Dividend Reinvestment Plan can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company – none of the shares purchased during the March 2019 quarter were from authorized but unissued shares, while 126,442 shares were purchased in the open market.

The Company’s and Bank’s capital ratios at March 31, 2019 all increased significantly compared to the March 31, 2018 levels. And, such ratios remain well above regulatory well capitalized standards.

On April 25, 2019, the Company’s Board of Directors declared a cash dividend of $0.05 per share payable on May 23, 2019 to shareholders of record on May 9, 2019.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.66 billion and wealth management assets under management and/or administration (AUM/AUA) of $6.3 billion as of March 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 ability 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.


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

For the Three Months Ended

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Income Statement Data:

Interest income

$

44,563

$

42,781

$

40,163

$

39,674

$

37,068

Interest expense

14,556

13,396

12,021

10,431

8,675

Net interest income

30,007

29,385

28,142

29,243

28,393

Provision for loan and lease losses

100

1,500

500

300

1,250

Net interest income after provision for loan and lease losses

29,907

27,885

27,642

28,943

27,143

Wealth management fee income

9,174

8,552

8,200

8,126

8,367

Service charges and fees

816

938

860

873

831

Bank owned life insurance

338

351

349

345

336

Gain on loans held for sale at fair value (Mortgage banking)

47

74

87

79

94

Gain on loans held for sale at lower of cost or fair value

(4,392

)

Fee income related to loan level, back-to-back swaps

270

1,838

854

900

252

Gain on sale of SBA loans

419

277

514

814

31

Other income (A)

606

3,571

444

639

382

Securities losses, net

59

46

(325

)

(36

)

(78

)

Total other income

11,729

11,255

10,983

11,740

10,215

Salaries and employee benefits

17,156

16,372

16,025

15,826

14,579

Premises and equipment

3,388

3,422

3,399

3,406

3,270

FDIC insurance expense

277

645

593

625

580

Other expenses

4,894

5,085

4,267

5,084

4,908

Total operating expenses

25,715

25,524

24,284

24,941

23,337

Income before income taxes

15,921

13,616

14,341

15,742

14,021

Income tax expense

4,496

2,887

3,617

3,832

3,214

Net income

$

11,425

$

10,729

$

10,724

$

11,910

$

10,807

Total revenue (B)

$

41,736

$

40,640

$

39,125

$

40,983

$

38,608

Per Common Share Data:

Earnings per share (basic)

$

0.59

$

0.56

$

0.56

$

0.63

$

0.58

Earnings per share (diluted)

0.58

0.55

0.56

0.62

0.57

Weighted average number of common shares outstanding:

Basic

19,350,452

19,260,033

19,053,849

18,930,893

18,608,309

Diluted

19,658,006

19,424,906

19,240,098

19,098,838

18,908,692

Performance Ratios:

Return on average assets annualized (ROAA)

0.98

%

0.96

%

0.99

%

1.11

%

1.01

%

Return on average equity annualized (ROAE)

9.65

%

9.32

%

9.68

%

11.11

%

10.54

%

Net interest margin (tax-equivalent basis)

2.70

%

2.72

%

2.69

%

2.82

%

2.76

%

GAAP efficiency ratio (C)

61.61

%

62.81

%

62.07

%

60.86

%

60.45

%

Operating expenses / average assets annualized

2.21

%

2.28

%

2.24

%

2.32

%

2.19

%


PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)
(Unaudited)

As of

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2019

2018

2018

2018

2018

ASSETS

Cash and due from banks

$

4,726

$

5,914

$

4,792

$

4,458

$

4,223

Federal funds sold

101

101

101

101

101

Interest-earning deposits

235,487

154,758

118,111

62,231

149,192

Total cash and cash equivalents

240,314

160,773

123,004

66,790

153,516

Securities available for sale

384,400

377,936

368,554

346,790

342,553

Equity security

4,778

4,719

4,673

4,710

4,746

FHLB and FRB stock, at cost

18,460

18,533

21,561

21,533

23,703

Residential mortgage

569,304

573,146

562,930

567,459

567,885

Multifamily mortgage

1,104,406

1,138,190

1,289,458

1,320,251

1,366,712

Commercial mortgage

705,221

702,165

644,900

637,705

643,761

Commercial loans

1,410,146

1,398,214

1,180,774

1,069,526

996,788

Consumer loans

54,276

58,678

64,478

76,509

71,580

Home equity lines of credit

57,639

62,191

59,930

55,020

64,570

Other loans

355

465

432

431

420

Total loans

3,901,347

3,933,049

3,802,902

3,726,901

3,711,716

Less: Allowances for loan and lease losses

38,653

38,504

37,293

38,066

37,696

Net loans

3,862,694

3,894,545

3,765,609

3,688,835

3,674,020

Premises and equipment

21,201

27,408

27,874

28,404

28,923

Other real estate owned

96

1,608

2,090

Accrued interest receivable

11,688

10,814

10,849

7,202

7,306

Bank owned life insurance

45,554

45,353

45,181

44,980

44,779

Goodwill and other intangible assets (A)

32,170

32,399

34,297

23,477

23,656

Finance lease right-of-use assets (B)

5,639

Operating lease right-of-use assets (B)

7,541

Other assets

27,867

45,378

34,011

30,845

31,202

TOTAL ASSETS

$

4,662,306

$

4,617,858

$

4,435,709

$

4,265,174

$

4,336,494

LIABILITIES

Deposits:

Noninterest-bearing demand deposits

$

476,013

$

463,926

$

503,388

$

527,453

$

536,054

Interest-bearing demand deposits

1,268,823

1,247,305

1,148,660

1,053,004

1,089,980

Savings

114,865

114,674

116,391

120,986

126,026

Money market accounts

1,209,835

1,243,369

1,097,630

1,051,893

1,006,540

Certificates of deposit – Retail

545,450

510,724

466,791

431,679

408,621

Certificates of deposit – Listing Service

68,055

79,195

85,241

96,644

132,321

Subtotal “customer” deposits

3,683,041

3,659,193

3,418,101

3,281,659

3,299,542

IB Demand – Brokered

180,000

180,000

180,000

180,000

180,000

Certificates of deposit – Brokered

56,165

56,147

61,193

61,254

72,614

Total deposits

3,919,206

3,895,340

3,659,294

3,522,913

3,552,156

Overnight borrowings

95,190

127,350

216,000

Federal home loan bank advances

105,000

108,000

84,000

52,898

22,898

Finance lease liability (B)

8,175

8,362

8,548

8,728

8,900

Operating lease liability (B)

7,683

Subordinated debt, net

83,249

83,193

83,138

83,133

83,079

Other liabilities

57,521

53,950

51,106

33,133

31,055

TOTAL LIABILITIES

4,180,834

4,148,845

3,981,276

3,828,155

3,914,088

Shareholders’ equity

481,472

469,013

454,433

437,019

422,406

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

$

4,662,306

$

4,617,858

$

4,435,709

$

4,265,174

$

4,336,494

Assets under management and / or administration at
Peapack-Gladstone Banks Private Wealth Management
Division (market value, not included above-dollars in billions)

$

6.3

$

5.8

$

6.4

$

5.7

$

5.6


PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

As of

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Asset Quality:

Loans past due over 90 days and still accruing

$

$

$

$

$

Nonaccrual loans (A)

24,892

25,715

10,722

12,025

13,314

Other real estate owned

96

1,608

2,090

Total nonperforming assets

$

24,892

$

25,715

$

10,818

$

13,633

$

15,404

Nonperforming loans to total loans

0.64

%

0.65

%

0.28

%

0.32

%

0.36

%

Nonperforming assets to total assets

0.53

%

0.56

%

0.24

%

0.32

%

0.36

%

Performing TDRs (B)(C)

$

4,274

$

4,303

$

19,334

$

18,665

$

7,888

Loans past due 30 through 89 days and still accruing

$

2,492

$

3,484

$

2,528

$

3,539

$

674

Classified loans

$

51,306

$

58,265

$

51,783

$

51,216

$

55,945

Impaired loans

$

29,185

$

31,300

$

31,345

$

30,711

$

21,223

Allowance for loan and lease losses:

Beginning of period

$

38,504

$

37,293

$

38,066

$

37,696

$

36,440

Provision for loan and lease losses

100

1,500

500

300

1,250

Charge-offs, net

49

(289

)

(1,273

)

70

6

End of period

$

38,653

$

38,504

$

37,293

$

38,066

$

37,696

ALLL to nonperforming loans

155.28

%

149.73

%

347.82

%

316.56

%

283.13

%

ALLL to total loans

0.991

%

0.979

%

0.981

%

1.021

%

1.016

%

General ALLL to total loans (D)

0.984

%

0.972

%

0.961

%

0.978

%

1.006

%


PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

March 31,

December 31,

March 31,

2019

2018

2018

Capital Adequacy

Equity to total assets (A)

10.33

%

10.16

%

9.74

%

Tangible Equity to tangible assets (B)

9.70

%

9.52

%

9.25

%

Book value per share (C)

$

24.76

$

24.25

$

22.32

Tangible Book Value per share (D)

$

23.11

$

22.58

$

21.07


2019

2018

2018

Regulatory Capital Holding Company

Tier I leverage

$450,244

9.76%

$438,240

9.82%

$401,498

9.46%

Tier I capital to risk weighted assets

450,244

12.19

438,240

11.76

401,498

11.77

Common equity tier I capital ratio to risk-weighted assets

450,242

12.19

438,238

11.76

401,496

11.77

Tier I & II capital to risk-weighted assets

572,146

15.49

559,937

15.03

522,273

15.32

Regulatory Capital Bank

Tier I leverage

$518,702

11.25%

$504,504

11.32%

$466,896

11.00%

Tier I capital to risk weighted assets

518,702

14.06

504,504

13.56

466,896

13.70

Common equity tier I capital ratio to risk-weighted assets

518,700

14.06

504,502

13.56

466,894

13.70

Tier I & II capital to risk-weighted assets

557,355

15.10

543,008

14.59

504,592

14.81


PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)

For the Quarters Ended

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Residential loans retained

$

10,839

$

24,937

$

14,412

$

22,217

$

11,642

Residential loans sold

3,090

4,686

6,717

6,488

7,672

Total residential loans

13,929

29,623

21,129

28,705

19,314

Commercial real estate

21,025

63,486

23,950

20,780

34,385

Multifamily

21,122

58,175

12,328

4,743

21,000

Commercial (C&I) loans (A) (B)

141,128

285,950

133,973

137,805

118,425

SBA

9,050

5,695

4,800

10,740

4,270

Wealth lines of credit (A)

7,380

5,850

6,100

11,560

19,238

Total commercial loans

199,705

419,156

181,151

185,628

197,318

Installment loans

558

649

1,634

1,036

1,350

Home equity lines of credit (A)

1,607

3,625

10,273

5,091

2,497

Total loans closed

$

215,799

$

453,053

$

214,187

$

220,460

$

220,479


PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

March 31, 2019

March 31, 2018

Average

Income/

Average

Income/

Balance

Expense

Yield

Balance

Expense

Yield

ASSETS:

Interest-earning assets:

Investments:

Taxable (1)

$

387,566

$

2,684

2.77

%

$

339,556

$

1,925

2.27

%

Tax-exempt (1) (2)

17,345

210

4.84

24,304

198

3.26

Loans (2) (3):

Mortgages

571,637

4,895

3.43

574,400

4,731

3.29

Commercial mortgages

1,824,371

18,021

3.95

2,013,128

18,407

3.66

Commercial

1,379,585

16,750

4.86

969,496

10,487

4.33

Installment

55,215

577

4.18

81,762

670

3.28

Home equity

60,421

766

5.07

65,158

660

4.05

Other

412

11

10.68

455

11

9.67

Total loans

3,891,641

41,020

4.22

3,704,399

34,966

3.78

Federal funds sold

101

0.25

101

0.25

Interest-earning deposits

237,251

1,270

2.14

99,471

357

1.44

Total interest-earning assets

4,533,904

45,184

3.99

%

4,167,831

37,446

3.59

%

Noninterest-earning assets:

Cash and due from banks

5,398

4,686

Allowance for loan and lease losses

(38,948

)

(37,076

)

Premises and equipment

21,467

29,256

Other assets

122,102

99,541

Total noninterest-earning assets

110,019

96,407

Total assets

$

4,643,923

$

4,264,238

LIABILITIES:

Interest-bearing deposits:

Checking

1,284,611

3,710

1.16

%

1,143,152

1,757

0.61

%

Money markets

1,208,004

4,335

1.44

1,033,937

1,946

0.75

Savings

114,003

16

0.06

121,065

16

0.05

Certificates of deposit – retail

607,178

3,234

2.13

555,564

2,149

1.55

Subtotal interest-bearing deposits

3,213,796

11,295

1.41

2,853,718

5,868

0.82

Interest-bearing demand – brokered

180,000

739

1.64

180,000

680

1.51

Certificates of deposit – brokered

56,154

365

2.60

72,601

429

2.36

Total interest-bearing deposits

3,449,950

12,399

1.44

3,106,319

6,977

0.90

Borrowings

105,900

834

3.15

86,458

370

1.71

Capital lease obligation

8,244

99

4.80

8,963

107

4.78

Subordinated debt

83,213

1,224

5.88

83,043

1,221

5.88

Total interest-bearing liabilities

3,647,307

14,556

1.60

%

3,284,783

8,675

1.06

%

Noninterest-bearing liabilities:

Demand deposits

471,265

539,882

Accrued expenses and other liabilities

51,791

29,358

Total noninterest-bearing liabilities

523,056

569,240

Shareholders’ equity

473,560

410,215

Total liabilities and shareholders’ equity

$

4,643,923

$

4,264,238

Net interest income

$

30,628

$

28,771

Net interest spread

2.39

%

2.53

%

Net interest margin (4)

2.70

%

2.76

%


PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

March 31, 2019

December 31, 2018

Average

Income/

Average

Income/

Balance

Expense

Yield

Balance

Expense

Yield

ASSETS:

Interest-earning assets:

Investments:

Taxable (1)

$

387,566

$

2,684

2.77

%

$

383,455

$

2,521

2.63

%

Tax-exempt (1) (2)

17,345

210

4.84

17,887

173

3.87

Loans (2) (3):

Mortgages

571,637

4,895

3.43

562,284

4,732

3.37

Commercial mortgages

1,824,371

18,021

3.95

1,947,674

18,825

3.87

Commercial

1,379,585

16,750

4.86

1,221,111

14,915

4.89

Installment

55,215

577

4.18

60,855

624

4.10

Home equity

60,421

766

5.07

61,423

759

4.94

Other

412

11

10.68

461

11

9.54

Total loans

3,891,641

41,020

4.22

3,853,808

39,866

4.14

Federal funds sold

101

0.25

101

0.25

Interest-earning deposits

237,251

1,270

2.14

122,813

636

2.07

Total interest-earning assets

4,533,904

45,184

3.99

%

4,378,064

43,196

3.95

%

Noninterest-earning assets:

Cash and due from banks

5,398

6,876

Allowance for loan and lease losses

(38,948

)

(37,774

)

Premises and equipment

21,467

27,749

Other assets

122,102

112,348

Total noninterest-earning assets

110,019

109,199

Total assets

$

4,643,923

$

4,487,263

LIABILITIES:

Interest-bearing deposits:

Checking

$

1,284,611

$

3,710

1.16

%

$

1,208,604

$

3,174

1.05

%

Money markets

1,208,004

4,335

1.44

1,124,780

3,684

1.31

Savings

114,003

16

0.06

115,316

16

0.06

Certificates of deposit – retail

607,178

3,234

2.13

569,151

2,914

2.05

Subtotal interest-bearing deposits

3,213,796

11,295

1.41

3,017,851

9,788

1.30

Interest-bearing demand – brokered

180,000

739

1.64

180,000

855

1.90

Certificates of deposit – brokered

56,154

365

2.60

59,061

386

2.61

Total interest-bearing deposits

3,449,950

12,399

1.44

3,256,912

11,029

1.35

Borrowings

105,900

834

3.15

143,348

1,043

2.91

Capital lease obligation

8,244

99

4.80

8,428

102

4.84

Subordinated debt

83,213

1,224

5.88

83,157

1,222

5.88

Total interest-bearing liabilities

3,647,307

14,556

1.60

%

3,491,845

13,396

1.53

%

Noninterest-bearing liabilities:

Demand deposits

471,265

496,238

Accrued expenses and other liabilities

51,791

38,498

Total noninterest-bearing liabilities

523,056

534,736

Shareholders’ equity

473,560

460,682

Total liabilities and shareholders’ equity

$

4,643,923

$

4,487,263

Net interest income

$

30,628

$

29,800

Net interest spread

2.39

%

2.42

%

Net interest margin (4)

2.70

%

2.72

%


PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding ORE provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

Three Months Ended

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

Tangible Book Value Per Share

2019

2018

2018

2018

2018

Shareholders’ equity

$

481,472

$

469,013

$

454,433

$

437,019

$

422,406

Less: Intangible assets, net

32,170

32,399

34,297

23,477

23,656

Tangible equity

449,302

436,614

420,136

413,542

398,750

Period end shares outstanding

19,445,363

19,337,662

19,203,727

19,007,312

18,921,114

Tangible book value per share

$

23.11

$

22.58

$

21.88

$

21.76

$

21.07

Book value per share

24.76

24.25

23.66

22.99

22.32

Tangible Equity to Tangible Assets

Total assets

$

4,662,306

$

4,617,858

$

4,435,709

$

4,265,174

$

4,336,494

Less: Intangible assets, net

32,170

32,399

34,297

23,477

23,656

Tangible assets

4,630,136

4,585,459

4,401,412

4,241,697

4,312,838

Tangible equity to tangible assets

9.70

%

9.52

%

9.55

%

9.75

%

9.25

%

Equity to assets

10.33

%

10.16

%

10.24

%

10.25

%

9.74

%


Three Months Ended

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

Efficiency Ratio

2019

2018

2018

2018

2018

Net interest income

$

30,007

$

29,385

$

28,142

$

29,243

$

28,393

Total other income

11,729

11,255

10,983

11,740

10,215

Less: Loss/(gain) on loans held for sale

at lower of cost or fair value

4,392

Less: Income from life insurance proceeds

(3,000

)

Add: Securities (gains)/losses, net

(59

)

(46

)

325

36

78

Total recurring revenue

41,677

41,986

39,450

41,019

38,686

Operating expenses

25,715

25,524

24,284

24,941

23,337

Less: ORE provision

28

204

Total operating expense

25,715

25,524

24,256

24,737

23,337

Efficiency ratio

61.70

%

60.79

%

61.49

%

60.31

%

60.32

%


Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308