Peapack-Gladstone Financial Corporation Reports Fourth Quarter and Full Year Results and Announces a 5% Stock Repurchase Program

Company Release - 2/1/2021

BEDMINSTER, NJ, Feb. 01, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter and full year 2020 results. 

This earnings release should be read in conjunction with the Company’s Q4 2020 Investor Update (and Supplemental Financial Information), a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov .  

The Company recorded total revenue of $189.36 million, net income of $26.19 million and diluted earnings per share (“EPS”) of $1.37 for the year ended December 31, 2020, compared to $174.97 million, $47.43 million and $2.44, respectively, for the year ended December 31, 2019. 

The main driver of the decrease in net income and EPS for the 2020 twelve-month period was a $32.40 million provision for loan losses due to the current environment created by the COVID-19 pandemic, which led to increased qualitative loss factors when calculating the allowance for loan losses. This $32.40 million compared to a $4.00 million provision for the 2019 twelve-month period.   

The 2020 twelve-month period included increased net interest income and noninterest income. The increase in net interest income was due principally to earnings from the Paycheck Protection Program (“PPP”). The increase in noninterest income also benefitted from gain on sale of PPP loans and increases in wealth management income (primarily due to the acquisition of Point View Wealth Management acquired in September 2019) and mortgage banking income. These increases were partially offset by increased operating expenses (due in part to the previous mentioned firm acquired in September 2019, prepayment of FHLB advances, valuation allowance for a loan held for sale, the closure of one retail branch and consolidation of two private banking locations). 

The 2020 twelve-month period also included a tax benefit of $3.2 million recorded in the first quarter of 2020 caused by the changes in the treatment of tax net operating losses (“NOL”) under the provisions of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.   

For the quarter ended December 31, 2020, the Company recorded total revenue of $46.14 million, net income of $3.03 million and EPS of $0.16, compared to $46.44 million, $12.23 million and $0.64, respectively, for the same three-month period last year. 

The 2020 quarter included increased net interest income, due in part to earnings from the PPP, but also due to increased other interest-earnings assets.  Noninterest income also increased due to increases in wealth management income and mortgage banking income.  These increases were partially offset by increased operating expenses (due in part to the previous mentioned prepayment of FHLB advances ($4.78 million), valuation allowance for loan held for sale ($4.43 million) and consolidation of two private banking offices ($210,000), and an increase in the provision for loan and lease losses to $2.35 million due to the current environment created by the COVID-19 pandemic, compared to a $1.95 million provision for loan and lease losses for the 2019 quarter.   

On January 28, 2021, the Company authorized the repurchase of up to 948,735 shares, or approximately 5% of its outstanding shares, through March 31, 2022. Purchases will be conducted in accordance with the limitations set forth in the SEC’s Rule 10b-18.  

Douglas L. Kennedy, President and CEO, said, “Our capital is strong and believe that purchasing our Company’s stock is an opportunity for us to effectively manage our excess capital, while taking advantage of the Company’s discounted valuation relative to peers.”

Mr. Kennedy also said, “As noted in previous quarters, during 2020 we generally allowed our commercial and business clients to have their loan deferred for a six-month period. As of June 30, 2020, our deferrals stood at $914 million. As of September 30, 2020, deferrals were $828 million. As of December 31, 2020, our deferrals were $74 million (or 1.7% of the loan portfolio).” 

For more information about the Company’s loan deferrals, including a breakdown by loan type and industry, as well as detail concerning our loan exposure to industries, please see the Q4 2020 Investor Update (and Supplemental Financial Information). 

EXECUTIVE SUMMARY:

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

 

Year over Year Comparison

    Year Ended     Year Ended                    
    December 31,     December 31,       Increase/  
(Dollars in millions, except per share data)   2020     2019       (Decrease)  
Net interest income   $ 127.60     $ 120.27       $ 7.33       6 %
Wealth management fee income (A)     40.86       38.36         2.50       7  
Capital markets activity (B)     6.65       8.67         (2.02 )     (23 )
Other income (C)     14.25       7.67         6.58       86  
Total other income     61.76       54.70         7.06       13  
Operating expenses (D)     124.96       104.85         20.11       19  
Pretax income before provision for loan losses     64.40       70.12         (5.72 )     (8 )
Provision for loan and lease losses (E)     32.40       4.00         28.40       710  
Pretax income     32.00       66.12         (34.12 )     (52 )
Income tax expense (F)     5.81       18.69         (12.88 )     (69 )
Net income   $ 26.19     $ 47.43       $ (21.24 )     (45 )%
Diluted EPS   $ 1.37     $ 2.44       $ (1.07 )     (44 )%
                                   
Total Revenue   $ 189.36     $ 174.97       $ 14.39       8 %
                                   
Return on average assets annualized     0.45 %     0.99 %       (0.54 )        
Return on average equity annualized     5.11 %     9.70 %       (4.59 )        

 

  1. The twelve months ended December 31, 2020 included wealth management fee income and expense related to Point View Wealth Management, (“Point View”), which was acquired effective September 1, 2019.  
  2. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities. There were $1.6 million of fees related to loan level back-to-back swap activities in 2020 period, compared to $5.8 million in 2019.  
  3. The twelve months ended December 31, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.
  4. The twelve months ended December 31, 2020 includes a full year of operating expenses related to Point View, $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, $278,000 for the closure of a retail branch, and an increase in FDIC premium expense due to credits applied in 2019 available to the banking industry but unavailable in general. 
  5. The twelve months ended December 31, 2020 included a provision for loan and lease losses of $32.40 million, which was primarily due to the current environment created by the COVID-19 pandemic. 
  6. The 2020 period included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.

 

December 2020 Quarter Compared to Prior Year Quarter

 

    Three Months Ended       Three Months Ended                  
    December 31,       December 31,     Increase/  
(Dollars in millions, except per share data)   2020       2019     (Decrease)  
Net interest income   $ 31.74       $ 30.91     $ 0.83       3 %
Wealth management fee income     10.79         10.12       0.67       7  
Capital markets activity (A)     1.85         3.73       (1.88 )     (50 )
Other income     1.76         1.68       0.08       5  
Total other income     14.40         15.53       (1.13 )     (7 )
Operating expenses (B)     39.25         26.70       12.55       47  
Pretax income before provision for loan losses     6.89         19.74       (12.85 )     (65 )
Provision for loan and lease losses (C)     2.35         1.95       0.40       21  
Pretax income     4.54         17.79       (13.25 )     (74 )
Income tax expense     1.51         5.56       (4.05 )     (73 )
Net income   $ 3.03       $ 12.23     $ (9.20 )     (75 )%
Diluted EPS   $ 0.16       $ 0.64     $ (0.48 )     (76 )%
                                   
Total Revenue   $ 46.14       $ 46.44     $ (0.30 )     (1 )%
                                   
Return on average assets annualized     0.21 %       0.98 %     (0.77 )        
Return on average equity annualized     2.32 %       9.81 %     (7.49 )        
  1. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities. There were no fees related to loan level back-to-back swap activities in the quarter ended December 31, 2020, compared to $2.5 million in the December 2019 quarter.  
  2. The quarter ended December 31, 2020 includes $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, and an increase in FDIC premium expense due to credits applied in the 2019 period that were available to the banking industry in general.
  3. The December 2020 quarter included a provision for loan and lease losses of $2.35 million.


December 2020 Quarter Compared to Linked Quarter

    Three Months Ended     Three Months Ended                    
    December 31,     September 30,       Increase/  
(Dollars in millions, except per share data)   2020     2020       (Decrease)  
Net interest income   $ 31.74     $ 32.15       $ (0.41 )     (1 )%
Wealth management fee income     10.79       10.12         0.67       7  
Capital markets activity (A)     1.85       1.03         0.82       80  
Other income (B)     1.76       9.06         (7.30 )     (81 )
Total other income     14.40       20.21         (5.81 )     (29 )
Operating expenses (C)     39.25       28.46         10.79       38  
Pretax income before provision for loan losses     6.89       23.90         (17.01 )     (71 )
Provision for loan and lease losses (D)     2.35       5.15         (2.80 )     (54 )
Pretax (loss)/income     4.54       18.75         (14.21 )     (76 )
Income tax expense     1.51       5.20         (3.69 )     (71 )
Net income   $ 3.03     $ 13.55       $ (10.52 )     (78 )%
Diluted EPS   $ 0.16     $ 0.71       $ (0.55 )     (77 )%
                                   
Total Revenue   $ 46.14     $ 52.36       $ (6.22 )     (12 )%
                                   
Return on average assets annualized     0.21 %     0.89 %       (0.68 )        
Return on average equity annualized     2.32 %     10.53 %       (8.21 )        

 

  1. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities.  
  2. The quarter ended September 30, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.
  3. The quarter ended December 31, 2020 includes $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale and $210,000 for the consolidation of two private banking locations.
  4. The provision for loan and lease losses for the three months ended December 31, 2020 was less than the provision for the three months ended September 30, 2020 as certain qualitative factors related to COVID-19 pandemic were partially reduced.  

The Company’s near-term priorities include:

  • Actively deploy/manage capital and liquidity by expanding our lending activities and execution on our recently announced stock repurchase program. 
  • Grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and acquisition of wealth management firms. 
  • Expand our net interest margin. 
  • Continue to assess the economic recovery; modify our allowance for credit losses as justified given the economic environment. 
  • Invest in digital enhancements to improve the client acquisition and experience.
  • Grow fee income to 35% to 45% of total bank revenue. 

Other select highlights for the quarter included:

  • As previously announced, in the fourth quarter of 2020 the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. The proceeds raised will be used for general corporate purposes, which will include stock repurchases and could potentially include redemption of the Company’s existing 6% subordinated debt and acquisitions of wealth management firms.   
  • As previously announced, the Company repaid $105 million of FHLB advances at a cost of $4.8 million, which will provide a benefit to interest expense greater than the prepayment penalty over the remaining life of the advances.
  • As previously announced, effective in December 2020 the Company completed its lift out of teams from Lucas Capital Management, a registered investment advisor headquartered in Red Bank, NJ, which added nearly $250 million of assets under management and/or administration (“AUM/AUA”) and Noyes Capital Management, a registered investment advisor headquartered in New Vernon, NJ, which added approximately $150 million of AUM/AUA.
  • The Company recorded $210,000 of charges related to the consolidation of two private banking locations.   The Company expects to recoup the charges in less than a year.
  • Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the twelve-months ended December 31, 2020, continues to contribute significantly to the Company’s diversified revenue sources. 
  • As of December 31, 2020, total C&I loans (including PPP and loans held for sale) comprised 45% of the total loan portfolio.  
  • Deposits totaled $4.82 billion at December 31, 2020.  This reflected net growth of $575 million or 14% compared to $4.24 billion at December 31, 2019.  
  • The Company’s reported and core net interest margin improved in the quarter when compared to the September 2020 quarter. (See subsequent discussion of Net Interest Income / Net Interest Margin)
  • In addition to $1.3 billion (22% of total assets) of balance sheet liquidity (investments, interest-earning deposits and cash) as of December 31, 2020, the Company also has access to approximately $2.7 billion of available secured funding at the Federal Home Loan Bank and the Federal Reserve. 
  • The Company’s and Bank’s capital ratios at December 31, 2020 remain strong and the Company’s tangible book value per share at December 31, 2020 was $25.47 (compared to a book value of $27.78), reflecting an increase of over 4% from $24.47 (compared to a book value of $26.61) at December 31, 2019, despite a much higher than normal provision for loan and lease losses during 2020 ($32.4 million in 2020 compared to $4.0 million in 2019).  
  • Nonperforming assets at December 31, 2020 were $11.5 million, or 0.19% of total assets. Loans past due 30 to 89 days total $5.1 million at December 31, 2020.     

SUPPLEMENTAL QUARTERLY DETAILS :

Wealth Management Business

In the December 2020 quarter, the Bank’s wealth management business generated $10.79 million in fee income, compared to $10.12 million for the December 2019 quarter, and $10.12 million for the September 2020 quarter. 

The market value of the Company’s AUM/AUA increased from $7.6 billion at September 30, 2020 to a record $8.8 billion at December 31, 2020. 

In the December 2020 quarter the Company completed the lift out of teams from Lucas Capital Management and Noyes Capital Management which combined added approximately $400 million in AUM/AUA.

John P. Babcock, President of the Peapack Private Wealth Management division, said “2020 new business, new client acquisition and client retention were all strong and aided by favorable market action in the second half of the year, most notably in the quarter ended December 31, 2020.  2020 full year gross inflows totaled over $600 million”. Babcock went on to note, “We continue to look to grow our wealth business organically and through selective acquisition.  At year-end 2020, we combined two of our acquired RIAs – Lassus Wherley Associates and Point View Wealth Management into the Peapack Private bank entity and we continue to make significant progress on our infrastructure consolidation including launching our new trading platform and a new CRM system, as well as adding more resources to our financial planning team.”

Loans / Commercial Banking 

Total loans of $4.40 billion at December 31, 2020 (including PPP loans of $196 million) were relatively flat when compared to the December 31, 2019 balance, and declined $54 million from $4.46 billion at September 30, 2020, as paydown and payoff activity remains robust. Excluding PPP loan originations of $596 million, 2020 origination levels of approximately $885 million were less than 2019’s level of $1.3 billion, due to the impact of the COVID-19 pandemic in 2020. 

Total C&I loans (including $196 million of PPP loans) at December 31, 2020 were $1.98 billion.  This reflected net growth of $199 million when compared to $1.78 billion at December 31, 2019.  Excluding the $196 million of PPP loans at December 31, 2020, total C&I loans remained relatively flat in 2020 despite paydowns of several large lines of credit, as well as the Company’s workout and asset recovery efforts, including the workout and recovery of several nonaccrual and/or classified credits during the latter part of 2020. 

Although the Bank sold $355 million of PPP loans in the third quarter of 2020 (at a gain of $7.4 million), as of December 31, 2020, the Bank still held $196 million of PPP loans (almost all of which exceed $2.0 million in original principal amount) with approximately $1.2 million of net deferred fees which will be recognized into income over the remaining portion of the original two-year maturity of the loan or as forgiven or repaid. 

The Company maintains a well-diversified loan portfolio, by loan type and by industry concentration, as detailed in the Q4 2020 Investor Update (and Supplemental Financial Information).

Mr. Kennedy noted, “Our commercial pipelines going into the new year are strong. Further, and as I noted in prior periods, our Corporate Advisory business, which gives us the capability to engage in high level strategic debt, capital and valuation analysis, enables us to provide a unique boutique level of service, giving us a competitive advantage over many of our peers. Our Corporate Advisory pipelines are also strong.”

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. Total deposits at December 31, 2020 were $4.82 billion reflecting an increase of $575 million when compared to $4.24 billion at December 31, 2019. Noninterest bearing demand deposits increased $304 million, interest bearing demand increased $339 million, brokered deposits declined $70 million, and higher costing CDs declined $119 million.  Mr. Kennedy noted, “Of our total deposits, only 17% are not covered by FDIC insurance, reinforcing the “core” nature of our deposit base.”

For the quarter ended December 31, 2020, the Company’s balance sheet liquidity (investments, interest-earning deposits and cash) totaled $1.3 billion (or 22% of assets).  In addition to the $1.3 billion of balance sheet liquidity, the Company also had approximately $1.8 billion of secured funding available from the Federal Home Loan Bank. Additionally, the Company also had $988 million of secured funding available from the Federal Reserve Discount Window. As noted previously, during the fourth quarter of 2020, the Bank prepaid $105 million of FHLB advances with an average rate in excess of 3%. 

Mr. Kennedy noted, “As a commercial bank, a large portion of our loans reprice when the Fed changes rates. The 150-basis point reduction in target Fed Funds near the end of the first quarter of 2020 reduced the Company’s yield earned on assets. However, we were able and continue to strategically reprice our deposits over time to offset much of that decline. Further, when interest rate rise, our net interest income will improve. Our current modeling indicates that net interest income would improve 8.5% with an immediate 100 basis points rise in rates.” 

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

 

  Twelve Months Ended     Twelve Months Ended                  
  December 31, 2020     December 31, 2019                  
  NII     NIM     NII     NIM                  
                                               
NII/NIM excluding the below $ 123,099     2.58%     $ 119,032     2.67%                  
Prepayment premiums received on loan paydowns   1,452     0.02%       1,328     0.03%                  
Effect of maintaining excess interest earning cash   (1,320 )   -0.21%       (86 )   -0.07%                  
Effect of PPP loans   4,371     -0.08%           0.00%                  
NII/NIM as reported $ 127,602     2.31%     $ 120,274     2.63%                  
                                               
  Three Months Ended     Three Months Ended     Three Months Ended  
  December 31, 2020     September 30, 2020     December 31, 2019  
  NII     NIM     NII     NIM     NII     NIM  
                                               
NII/NIM excluding the below $ 30,897     2.51%     $ 30,327     2.45%     $ 30,385     2.61%  
Prepayment premiums received on loan paydowns   413     0.02%       104     0.01%       414     0.03%  
Effect of maintaining excess interest earning cash   (206 )   -0.24%       (266 )   -0.24%       115     -0.04%  
Effect of PPP loans   631     -0.04%       1,984     -0.02%           0.00%  
NII/NIM as reported $ 31,735     2.25%     $ 32,149     2.20%     $ 30,914     2.60%  

 

As shown above, the Company’s reported NIM increased 5 basis points compared to the linked quarter, while core NIM increased 6 basis points compared to the linked quarter. The Bank was able to strategically price down its cost of funds by 7 basis points during the December 2020 quarter. 

Future net interest income will be benefitted by the repricing of the Company’s time certificates of deposit (“CDs”). Over the next 12-months, approximately $460 million of CDs with an average rate of approximately 1.18% will mature. 

Other Noninterest Income (other than Wealth Management fee income) 

Noninterest income from Capital Markets activities (loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking income) totaled $1.85 million for the December 2020 quarter compared to $1.03 million for the September 2020 quarter and $3.73 million for the December 2019 quarter.  The December 2020 and September 2020 quarters reflected increased mortgage banking activity due to greater refinance activity in the current low rate environment. The higher mortgage banking activity was offset by a significant decrease in loan level back-to-back swap activities, as there has been, and will continue to be, minimal activity for such in the current environment.  

Operating Expenses

The Company’s total operating expenses were $39.25 million for the quarter ended December 31, 2020, compared to $28.46 million for the September 2020 quarter and $26.70 million for the December 2019 quarter.  The December 2020 quarter included the prepayment of FHLB advances ($4.8 million), a valuation allowance on a loan held for sale ($4.4 million) and consolidation of two private banking offices ($210,000).  FDIC insurance expense increased to $665,000 in the December 2020 quarter from $605,000 in the September 2020 quarter and the Company recorded none in the December 2019 quarter.  The increase in FDIC expense in 2020 quarter was due to average asset growth. There was no FDIC insurance expense in the December 2019 quarter due to credits applied which were available to the banking industry in general. The 2020 periods also included reduced deferral of expenses directly related to loan originations when compared to 2019 periods, due to reduced 2020 loan origination levels as a result of the impact of the COVID-19 pandemic.   

Mr. Kennedy noted, “While we continue to manage expenses closely and prudently, we will invest in digital enhancements to improve the client experience and grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and wealth M&A.”

Income Taxes

The effective tax rate for the three months ended December 31, 2020 was 33.29%, as compared to 27.75% for the September 2020 quarter and 31.23% for the December 2019 quarter. A tax return to book adjustment recorded in the December 2020 quarter, coupled with reduced pretax income in the that quarter, increased the December 2020 effective tax rate by approximately 5%.     

During the first quarter of 2020, the Company recorded a $3.34 million tax benefit, principally due to a $3.2 million Federal income tax benefit that resulted from a tax NOL carryback. The Company had a $23 million operating loss for tax purposes in 2018 (when the Federal tax rate was 21%) resulting from accelerated tax depreciation. Under the CARES Act, the Company was allowed to carry this NOL back to a period when the Federal tax rate was 35%, generating a permanent tax benefit.  

Asset Quality / Provision for Loan and Lease Losses

For further details, see the Q4 2020 Investor Update (and Supplemental Financial Information).

Nonperforming assets at December 31, 2020 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $11.5 million, or 0.19% of total assets, up slightly from $8.7 million, or 0.15% of total assets, at September 30, 2020 and down significantly from $28.9 million, or 0.56% of total assets, at December 31, 2019.  Total loans past due 30 through 89 days and still accruing were $5.1 million at December 31, 2020 (of which $4.7 million made their past due payments in January), compared to $6.6 million at September 30, 2020 and $1.9 million at December 31, 2019.  During the third and fourth quarter of 2020, the Company’s asset recovery and workout efforts reduced nonperforming and classified assets.    

For the quarter ended December 31, 2020, the Company’s provision for loan and lease losses was $2.35 million compared to $5.15 million for the September 2020 quarter and $1.95 million for the December 2019 quarter. The increased provision for loan and lease losses in the 2020 quarters when compared to the 2019 quarter reflect the current environment created by the COVID-19 pandemic, which led to increased qualitative loss factors when calculating the allowance for loan losses. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) also reflect, among other things, the Company’s assessment of asset quality metrics, net loan decline, net charge-offs/recoveries, and the composition of the loan portfolio. 

At December 31, 2020, the allowance for loan and lease losses was $67.31 million (1.53% of total loans), compared to $66.15 million at September 30, 2020 (1.48% of total loans), and $43.68 million at December 31, 2019 (0.99% of total loans).  

The Company plans to adopt CECL effective January 1, 2021 and does not expect its Day One CECL adjustment to be material. 

Capital 

The Company’s capital position during the December 2020 quarter was benefitted by net income of $3.03 million.

The Company’s and Bank’s capital ratios at December 31, 2020 all remain strong.  Such ratios remain well above regulatory well capitalized standards.

As previously noted, and as previously announced, in the fourth quarter of 2020 the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. Such funds benefitted the Company’s Regulatory Tier 2 Capital. The proceeds raised will be used for general corporate purposes, which will include stock repurchases and could potentially include redemption of the Company’s existing 6% subordinated debt and acquisitions of wealth management firms. 

The Company employs quarterly capital stress testing run under multiple scenarios, including a no growth, severely adverse case. In such case as of September 30, 2020, the Bank remains well capitalized over a two-year stress period. With a Pandemic stress overlay on this case, the Bank still remains well capitalized over the two-year stress period. For further details, see the Q4 2020 Investor Update (and Supplemental Financial Information)

As previously announced on January 28, 2021, the Company declared a cash dividend of $0.05 per share payable on February 26, 2021 to shareholders of record on February 11, 2021.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $5.9 billion and AUM/AUA administration of $8.8 billion as of December 31, 2020.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers.  Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions, to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy.  Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service.  Visit www.pgbank.com and www.peapackprivate.com for more information.

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 2021 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;
  • impact on our business from a pandemic event on our business, operations, customers, allowance for loan losses and capital levels;
  • 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; and
  • other unexpected material adverse changes in our operations or earnings.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and whether the gradual reopening of businesses will result in a meaningful increase in economic activity.  As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: 

  • demand for our products and services may decline, making it difficult to grow assets and income; 
  • if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; 
  • collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; 
  • our allowance for loan losses may have to be increased if borrowers experience financial difficulties, which will adversely affect our net income; 
  • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; 
  • as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; 
  • a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend; 
  • our wealth management revenues may decline with continuing market turmoil; 
  • a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill;
  • the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable successors;
  • we may face litigation, regulatory enforcement and reputation risk as a result of our participation in the PPP and the risk that the SBA may not fund some or all PPP loan guaranties;
  • our cyber security risks are increased as the result of an increase in the number of employees working remotely; and 
  • FDIC premiums may increase if the agency experience additional resolution costs.

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, 2019.  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,  
    2020     2020     2020     2020     2019  
Income Statement Data:                                        
Interest income   $ 38,532     $ 40,174     $ 41,649     $ 45,395     $ 45,556  
Interest expense     6,797       8,025       9,678       13,648       14,642  
Net interest income     31,735       32,149       31,971       31,747       30,914  
Wealth management fee income     10,791       10,119       9,996       9,955       10,120  
Service charges and fees     859       785       695       816       893  
Bank owned life insurance     313       314       318       328       325  
Gain on loans held for sale at fair value
   (Mortgage banking) (A)
    1,470       954       550       292       344  
Gain/(loss) on loans held for sale at lower of cost or
   fair value (B)
          7,429             (3 )     (4 )
Fee income related to loan level, back-to-back
   swaps (A)
                202       1,418       2,459  
Gain on sale of SBA loans (A)     375       79       258       1,054       929  
Other income     640       531       482       459       504  
Securities gains/(losses), net     (42 )           125       198       (45 )
Total other income     14,406       20,211       12,626       14,517       15,525  
Salaries and employee benefits     19,902       19,202       19,186       19,226       17,954  
Premises and equipment     4,189       4,109       4,036       4,043       3,898  
FDIC insurance expense     665       605       455       250        
FHLB prepayment penalty     4,784                          
Valuation allowance loans held for sale (C)     4,425                          
Other expenses     5,284       4,545       5,337       4,716       4,849  
Total operating expenses     39,249       28,461       29,014       28,235       26,701  
Pretax income before provision for loan losses     6,892       23,899       15,583       18,029       19,738  
Provision for loan and lease losses (D)     2,350       5,150       4,900       20,000       1,950  
Income/(loss) before income taxes     4,542       18,749       10,683       (1,971 )     17,788  
Income tax expense/(benefit) (E)     1,512       5,202       2,441       (3,344 )     5,555  
Net income   $ 3,030     $ 13,547     $ 8,242     $ 1,373     $ 12,233  
                                         
Total revenue (F)   $ 46,141     $ 52,360     $ 44,597     $ 46,264     $ 46,439  
Per Common Share Data:                                        
Earnings per share (basic)   $ 0.16     $ 0.72     $ 0.44     $ 0.07     $ 0.64  
Earnings per share (diluted)     0.16       0.71       0.43       0.07       0.64  
Weighted average number of common
   shares outstanding:
                                       
Basic     18,947,864       18,908,337       18,872,070       18,858,343       18,966,917  
Diluted     19,334,569       19,132,650       19,059,822       19,079,575       19,207,738  
Performance Ratios:                                        
Return on average assets annualized (ROAA)     0.21 %     0.89 %     0.56 %     0.11 %     0.98 %
Return on average equity annualized (ROAE)     2.32 %     10.53 %     6.56 %     1.08 %     9.81 %
Net interest margin (tax-equivalent basis)     2.25 %     2.20 %     2.27 %     2.57 %     2.60 %
GAAP efficiency ratio (F)     85.06 %     54.36 %     65.06 %     61.03 %     57.50 %
Operating expenses / average assets annualized     2.66 %     1.86 %     1.97 %     2.18 %     2.13 %

 

  1. 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.
  2. Includes gain on sale of PPP loans of $355 million completed in the September quarter.
  3. The December 2020 quarter reflects a $4.4 million write-down of a commercial real estate loan associated with an assisted living facility.
  4. The March 2020, June 2020 and September 2020 quarters included a higher provision for loan and lease losses primarily due to the environment created by the COVID-19 pandemic.
  5. The March 2020 quarter included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.
  6. Total revenue includes net interest income plus total other income.
  7. 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                  
    December 31,     Change  
    2020     2019     $     %  
Income Statement Data:                                
Interest income   $ 165,750     $ 180,670     $ (14,920 )     -8 %
Interest expense     38,148       60,396       (22,248 )     -37 %
Net interest income     127,602       120,274       7,328       6 %
Wealth management fee income     40,861       38,363       2,498       7 %
Service charges and fees     3,155       3,488       (333 )     -10 %
Bank owned life insurance     1,273       1,321       (48 )     -4 %
Gain on loans held for sale at fair value (Mortgage banking) (A)     3,266       721       2,545       353 %
Gain/(loss) on loans held for sale at lower of cost or
   fair value (B)
    7,426       (10 )     7,436       -74360 %
Fee income related to loan level, back-to-back swaps (A)     1,620       5,799       (4,179 )     -72 %
Gain on sale of SBA loans (A)     1,766       2,145       (379 )     -18 %
Other income     2,112       2,752       (640 )     -23 %
Securities gains/(losses), net     281       117       164       140 %
Total other income     61,760       54,696       7,064       13 %
Salaries and employee benefits     77,516       70,129       7,387       11 %
Premises and equipment     16,377       14,735       1,642       11 %
FDIC insurance expense     1,975       277       1,698       613 %
FHLB prepayment penalty     4,784             4,784     N/A  
Valuation allowance loans held for sale (C)     4,425             4,425     N/A  
Other expenses     19,882       19,707       175       1 %
Total operating expenses     124,959       104,848       20,111       19 %
Pretax income before provision for loan losses     64,403       70,122       (5,719 )     -8 %
Provision for loan and lease losses (D)     32,400       4,000       28,400       710 %
Income before income taxes     32,003       66,122       (34,119 )     -52 %
Income tax (benefit)/expense (E)     5,811       18,688       (12,877 )     -69 %
Net income   $ 26,192     $ 47,434     $ (21,242 )     -45 %
                                 
Total revenue (F)   $ 189,362     $ 174,970     $ 14,392       8 %
Per Common Share Data:                                
Earnings per share (basic)   $ 1.39     $ 2.46     $ (1.07 )     -43 %
Earnings per share (diluted)     1.37       2.44       (1.07 )     -44 %
Weighted average number of common shares outstanding:                                
Basic     18,896,825       19,268,870       (372,045 )     -2 %
Diluted     19,081,187       19,411,448       (330,261 )     -2 %
Performance Ratios:                                
Return on average assets annualized (ROAA)     0.45 %     0.99 %     (0.54 )%     -54 %
Return on average equity annualized (ROAE)     5.11 %     9.70 %     (4.59 )%     -47 %
Net interest margin (tax-equivalent basis)     2.31 %     2.63 %     (0.32 )%     -12 %
GAAP efficiency ratio (F)     65.99 %     59.92 %     6.07 %     10 %
Operating expenses / average assets annualized     2.16 %     2.19 %     (0.03 )%     -1 %

 

  1. 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.
  2. Includes gain on sale of PPP loans of $355 million completed in the September 2020 quarter.
  3. The 2020 year reflects a $4.4 million write down of a commercial real estate loan associated with an assisted living facility.
  4. The increase in the provision for loan and lease losses in 2020 was primarily due to the environment created by the COVID-19 pandemic. 
  5. 2020 year included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.
  6. Total revenue includes net interest income plus total other income.
  7. 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,  
    2020     2020     2020     2020     2019  
ASSETS                                        
Cash and due from banks   $ 10,629     $ 8,400     $ 5,608     $ 6,171     $ 6,591  
Federal funds sold     102       102       102       102       102  
Interest-earning deposits     642,591       670,863       617,117       767,730       201,492  
Total cash and cash equivalents     653,322       679,365       622,827       774,003       208,185  
Securities available for sale     622,689       596,929       539,742       400,558       390,755  
Equity security     15,117       15,159       15,159       14,034       10,836  
FHLB and FRB stock, at cost     13,709       18,433       18,598       40,871       24,068  
Residential mortgage     520,188       532,120       536,015       532,063       552,019  
Multifamily mortgage     1,127,198       1,168,796       1,178,494       1,203,487       1,210,003  
Commercial mortgage     694,034       722,678       761,910       760,648       761,244  
Commercial loans (A)     1,975,337       1,930,984       2,316,125       1,810,214       1,776,450  
Consumer loans     37,016       51,859       53,111       53,365       54,372  
Home equity lines of credit     50,547       52,194       54,006       55,856       57,248  
Other loans     225       260       272       347       349  
Total loans     4,404,545       4,458,891       4,899,933       4,415,980       4,411,685  
Less: Allowances for loan and lease losses     67,309       66,145       66,065       63,783       43,676  
Net loans     4,337,236       4,392,746       4,833,868       4,352,197       4,368,009  
Premises and equipment     21,609       21,668       21,449       21,243       20,913  
Other real estate owned     50       50       50       50       50  
Accrued interest receivable     22,495       22,192       15,956       11,816       10,494  
Bank owned life insurance     46,809       46,645       46,479       46,309       46,128  
Goodwill and other intangible assets     43,891       39,622       39,943       40,265       40,588  
Finance lease right-of-use assets     4,330       4,517       4,704       4,891       5,078  
Operating lease right-of-use assets     9,421       10,011       10,810       11,553       12,132  
Other assets (B)     99,764       110,770       111,630       113,668       45,643  
TOTAL ASSETS   $ 5,890,442     $ 5,958,107     $ 6,281,215     $ 5,831,458     $ 5,182,879  
                                         
LIABILITIES                                        
Deposits:                                        
Noninterest-bearing demand deposits   $ 833,500     $ 838,307     $ 911,989     $ 581,085     $ 529,281  
Interest-bearing demand deposits     1,849,254       1,858,529       1,804,102       1,680,452       1,510,363  
Savings     130,731       127,737       123,140       112,668       112,652  
Money market accounts     1,298,885       1,251,349       1,183,603       1,163,410       1,196,313  
Certificates of deposit – Retail     530,222       586,801       629,941       651,000       633,763  
Certificates of deposit – Listing Service     32,128       32,677       35,327       38,895       47,430  
Subtotal “customer” deposits     4,674,720       4,695,400       4,688,102       4,227,510       4,029,802  
IB Demand – Brokered     110,000       130,000       130,000       180,000       180,000  
Certificates of deposit – Brokered     33,764       33,750       33,736       33,723       33,709  
Total deposits     4,818,484       4,859,150       4,851,838       4,441,233       4,243,511  
Short-term borrowings     15,000       15,000       15,000       515,000       128,100  
FHLB advances (C)           105,000       105,000       105,000       105,000  
Paycheck Protection Program Liquidity Facility (D)     177,086       183,790       535,837              
Finance lease liability     6,753       6,976       7,196       7,402       7,598  
Operating lease liability     9,737       10,318       11,116       11,852       12,423  
Subordinated debt, net (E)     181,794       83,585       83,529       83,473       83,417  
Other liabilities (B)     154,466       156,472       163,719       160,173       91,227  
Due to brokers           15,088             10,885       7,951  
TOTAL LIABILITIES     5,363,320       5,435,379       5,773,235       5,335,018       4,679,227  
Shareholders’ equity     527,122       522,728       507,980       496,440       503,652  
TOTAL LIABILITIES AND                                        
SHAREHOLDERS’ EQUITY   $ 5,890,442     $ 5,958,107     $ 6,281,215     $ 5,831,458     $ 5,182,879  
Assets under management and / or administration at
   Peapack-Gladstone Bank’s Private Wealth Management
   Division (market value, not included above-dollars in billions)
  $ 8.8     $ 7.6     $ 7.2     $ 6.4     $ 7.5  

 

  1. Includes PPP loans of $196 million at December 31, 2020, $202 million at September 30, 2020 and $547 million at June 30, 2020.
  2. The increase in other assets and other liabilities at March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020 was primarily due to the change in the fair value of our back-to-back swap program.
  3. The Company prepaid $105 million of FHLB Advances with a weighted-average rate of 3.20% during the December 2020 quarter.
  4. Represents funding provided by the Federal Reserve for pledged PPP loans.
  5. The increase was due to the completion of a $100 million subordinated debt offering in December 22, 2020.

 

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

    As of  
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
    2020     2020     2020     2020     2019  
Asset Quality:                                        
Loans past due over 90 days and still accruing   $     $     $     $     $  
Nonaccrual loans (A)     11,410       8,611       26,697       29,324       28,881  
Other real estate owned     50       50       50       50       50  
Total nonperforming assets   $ 11,460     $ 8,661     $ 26,747     $ 29,374     $ 28,931  
                                         
Nonperforming loans to total loans     0.26 %     0.19 %     0.54 %     0.66 %     0.65 %
Nonperforming assets to total assets     0.19 %     0.15 %     0.43 %     0.50 %     0.56 %
                                         
Performing TDRs (B)(C)   $ 201     $ 2,278     $ 2,376     $ 2,389     $ 2,357  
                                         
Loans past due 30 through 89 days and still accruing (D)(E)   $ 5,053     $ 6,609     $ 3,785     $ 8,261     $ 1,910  
                                         
Loans subject to special mention   $ 162,103     $ 129,700     $ 27,922     $ 13,222     $ 13,643  
                                         
Classified loans   $ 37,771     $ 41,263     $ 63,562     $ 58,938     $ 58,908  
                                         
Impaired loans   $ 16,204     $ 15,514     $ 33,708     $ 36,369     $ 35,924  
                                         
Allowance for loan and lease losses:                                        
Beginning of period   $ 66,145     $ 66,065     $ 63,783     $ 43,676     $ 41,580  
Provision for loan and lease losses     2,350       5,150       4,900       20,000       1,950  
(Charge-offs)/recoveries, net     (1,186 )     (5,070 )     (2,618 )     107       146  
End of period   $ 67,309     $ 66,145     $ 66,065     $ 63,783     $ 43,676  
                                         
ALLL to nonperforming loans     589.91 %     768.15 %     247.46 %     217.51 %     151.23 %
ALLL to total loans (F)     1.53 %     1.48 %     1.35 %     1.44 %     0.99 %
General ALLL to total loans (G)     1.47 %     1.48 %     1.26 %     1.30 %     0.93 %

 

  1. Excludes residential and commercial loans held for sale of $8.5 million at December 31, 2020.  Excludes one commercial loan held for sale of $10.0 million at September 30, 2020.
  2. Amounts reflect TDRs that are paying according to restructured terms.
  3. Amount does not include $4.0 million at December 31, 2020, $5.2 million at September 30, 2020, $23.2 million at June 30, 2020, $25.9 million at March 31, 2020 and $25.8 million at December 31, 2019 of TDRs included in nonaccrual loans.
  4. Excludes a residential loan held for sale of $93,000 at December 31, 2020.
  5. December 31, 2020 includes $1.3 million of residential loans that are classified as delinquent due to an escrow payment shortage due to a recent change in escrow payment requirement.
  6. If PPP loans of $196 million were excluded from loans at December 31, 2020, the ALLL/loans ratio would be 1.61%; if PPP loans of $202 million were excluded from loans at September 30, 2020, ALLL/ loans ratio would be 1.56%; and if PPP loans of $547 million were excluded from loans at June 30, 2020, ALLL/loans ratio would be 1.52%.
  7. Total ALLL less specific reserves equals general ALLL.


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

    December 31,     September 30,     December 31,  
    2020     2020     2019  
Capital Adequacy                                    
Equity to total assets (A)(J)         8.95 %         8.77 %         9.72 %
Tangible Equity to tangible assets (B)         8.27 %         8.16 %         9.01 %
Tangible Equity to tangible assets excluding
   PPP loans (C)
        8.55 %         8.45 %         9.01 %
Book value per share (D)       $ 27.78         $ 27.62         $ 26.61  
Tangible Book Value per share (E)       $ 25.47         $ 25.53         $ 24.47  

 

    December 31,     September 30,     December 31,  
    2020     2020     2019  
Regulatory Capital – Holding Company                                                
Tier I leverage   $ 483,535     8.53%     $ 483,782     8.54%     $ 463,521     9.33%  
Tier I capital to risk-weighted assets     483,535       11.93       483,782       11.76       463,521       11.14  
Common equity tier I capital ratio
   to risk-weighted assets
    483,500       11.93       483,747       11.75       463,520       11.14  
Tier I & II capital to risk-weighted assets     716,210       17.67       618,993       15.04       590,614       14.20  
                                                 
Regulatory Capital – Bank                                                
Tier I leverage (F)   $ 549,575     9.71%     $ 547,761     9.68%     $ 527,833     10.63%  
Tier I capital to risk-weighted assets (G)     549,575       13.55       547,761       13.33       527,833       12.70  
Common equity tier I capital ratio
   to risk-weighted assets (H)
    549,540       13.55       547,726       13.33       527,832       12.70  
Tier I & II capital to risk-weighted assets (I)     600,478       14.81       599,314       14.58       571,509       13.76  

 

  1. Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
  2. 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.
  3. Tangible equity and tangible assets excluding PPP loans are calculated by excluding the balance of intangible assets from shareholders’ equity and excluding the balance of intangible assets and PPP loans from total assets. Tangible equity as a percentage of tangible assets excluding PPP loans at period end is calculated by dividing tangible equity by tangible assets excluding PPP loans at period end.  See Non-GAAP financial measures reconciliation included in these tables.
  4. Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding
  5. Tangible book value per 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.
  6. Regulatory well capitalized standard = 5.00% ($283 million)
  7. Regulatory well capitalized standard = 8.00% ($324 million)
  8. Regulatory well capitalized standard = 6.50% ($264 million)
  9. Regulatory well capitalized standard = 10.00% ($406 million)
  10. PPP loans with a balance of $196 million and $202 million increased total assets at December 31, 2020 and September 30, 2020, respectively.  Equity to total assets would be 9.26% and 9.08% if PPP loans were excluded from total assets at December 31, 2020 and September 30, 2020, respectively.

 

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

    For the Quarters Ended  
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
    2020     2020     2020     2020     2019  
Residential loans retained   $ 22,316     $ 32,599     $ 18,627     $ 14,831     $ 17,115  
Residential loans sold     64,630       54,521       37,061       19,391       21,255  
Total residential loans     86,946       87,120       55,688       34,222       38,370  
Commercial real estate           1,613       748       8,858       52,630  
Multifamily     1,184       1,500       11,960       61,998       63,627  
Commercial (C&I) loans (A) (B)     218,235       118,048       99,294       42,908       174,946  
SBA (C)     8,355       4,962       595,651       13,830       19,195  
Wealth lines of credit (A)     3,925       2,000       500       3,250       42,575  
Total commercial loans     231,699       128,123       708,153       130,844       352,973  
Installment loans     690       253       950       256       984  
Home equity lines of credit (A)     2,330       4,759       4,280       3,632       2,414  
Total loans closed   $ 321,665     $ 220,255     $ 769,071     $ 168,954     $ 394,741  

 

    For the Twelve Months Ended  
    Dec 31,     Dec 31,  
    2020     2019  
Residential loans retained   $ 88,373     $ 69,025  
Residential loans sold     175,603       49,976  
Total residential loans     263,976       119,001  
Commercial real estate     11,219       151,273  
Multifamily     76,642       220,491  
Commercial (C&I) loans (A) (B)     478,485       688,921  
SBA (C)     622,798       35,495  
Wealth lines of credit (A)     9,675       63,660  
Total commercial loans     1,198,819       1,159,840  
Installment loans     2,149       3,401  
Home equity lines of credit (A)     15,001       13,278  
Total loans closed   $ 1,479,945     $ 1,295,520  

 

  1. Includes loans and lines of credit that closed in the period but not necessarily funded.
  2. Includes equipment finance.
  3. Includes PPP loans of $596 million for the three months ended June 30, 2020 and for the twelve months ended December 31, 2020.


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

    December 31, 2020     December 31, 2019  
    Average     Income/             Average     Income/          
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                                
Interest-earning assets:                                                
Investments:                                                
Taxable (A)   $ 636,417     $ 2,033       1.28 %   $ 393,549     $ 2,428       2.47 %
Tax-exempt (A) (B)     8,137       101       4.96       12,037       147       4.88  
                                                 
Loans (B) (C):                                                
Mortgages     520,123       4,372       3.36       557,132       4,780       3.43  
Commercial mortgages     1,865,953       14,796       3.17       1,959,902       18,588       3.79  
Commercial     1,943,855       16,587       3.41       1,662,026       18,413       4.43  
Commercial construction     10,376       108       4.16       4,842.00       81.00       6.69  
Installment     44,581       320       2.87       54,562       524       3.84  
Home equity     51,545       429       3.33       58,082       662       4.56  
Other     281       6       8.54       379       10       10.55  
Total loans     4,436,714       36,618       3.30       4,296,925       43,058       4.01  
Federal funds sold     102             0.25       102             0.25  
Interest-earning deposits     614,024       148       0.10       159,759       560       1.40  
Total interest-earning assets     5,695,394       38,900       2.73 %     4,862,372       46,193       3.80 %
Noninterest-earning assets:                                                
Cash and due from banks     9,632                       5,600                  
Allowance for loan and lease losses     (68,862 )                     (42,374 )                
Premises and equipment     21,698                       20,946                  
Other assets     238,856                       166,868                  
Total noninterest-earning assets     201,324                       151,040                  
Total assets   $ 5,896,718                     $ 5,013,412                  
                                                 
LIABILITIES:                                                
Interest-bearing deposits:                                                
Checking   $ 1,850,917     $ 1,059       0.23 %   $ 1,407,151     $ 3,489       0.99 %
Money markets     1,273,681       811       0.25       1,169,413       3,456       1.18  
Savings     128,195       17       0.05       112,597       16       0.06  
Certificates of deposit – retail     602,068       2,106       1.40       660,159       3,734       2.26  
Subtotal interest-bearing deposits     3,854,861       3,993       0.41       3,349,320       10,695       1.28  
Interest-bearing demand – brokered     113,696       514       1.81       180,000       981       2.18  
Certificates of deposit – brokered     33,756       267       3.16       33,702       267       3.17  
Total interest-bearing deposits     4,002,313       4,774       0.48       3,563,022       11,943       1.34  
Borrowings     244,753       616       1.01       221,462       1,383       2.50  
Capital lease obligation     6,832       82       4.80       7,669       92       4.80  
Subordinated debt     94,437       1,325       5.61       83,385       1,224       5.87  
Total interest-bearing liabilities     4,348,335       6,797       0.63 %     3,875,538       14,642       1.51 %
Noninterest-bearing liabilities:                                                
Demand deposits     858,004                       539,501                  
Accrued expenses and other liabilities     166,933                       99,702                  
Total noninterest-bearing liabilities     1,024,937                       639,203                  
Shareholders’ equity     523,446                       498,671                  
Total liabilities and shareholders’ equity   $ 5,896,718                     $ 5,013,412                  
Net interest income           $ 32,103                     $ 31,551          
Net interest spread                     2.10 %                     2.29 %
Net interest margin (D)                     2.25 %                     2.60 %

 

  1. Average balances for available for sale securities are based on amortized cost.
  2. Interest income is presented on a tax-equivalent basis using a 21% 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)

    December 31, 2020     September 30, 20020  
    Average     Income/             Average     Income/          
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                                
Interest-earning assets:                                                
Investments:                                                
Taxable (A)   $ 636,417     $ 2,033       1.28 %   $ 553,607     $ 2,182       1.58 %
Tax-exempt (A) (B)     8,137       101       4.96       9,127       116       5.08  
                                                 
Loans (B) (C):                                                
Mortgages     520,123       4,372       3.36       529,500       4,437       3.35  
Commercial mortgages     1,865,953       14,796       3.17       1,929,319       15,115       3.13  
Commercial     1,943,855       16,587       3.41       2,134,399       17,653       3.31  
Commercial construction     10,376       108       4.16       4,395       55       5.01  
Installment     44,581       320       2.87       52,659       377       2.86  
Home equity     51,545       429       3.33       53,373       444       3.33  
Other     281       6       8.54       283       7       9.89  
Total loans     4,436,714       36,618       3.30       4,703,928       38,088       3.24  
Federal funds sold     102             0.25       102             0.25  
Interest-earning deposits     614,024       148       0.10       652,832       159       0.10  
Total interest-earning assets     5,695,394       38,900       2.73 %     5,919,596       40,545       2.74 %
Noninterest-earning assets:                                                
Cash and due from banks     9,632                       7,479                  
Allowance for loan and lease losses     (68,862 )                     (68,110 )                
Premises and equipment     21,698                       21,511                  
Other assets     238,856                       242,017                  
Total noninterest-earning assets     201,324                       202,897                  
Total assets   $ 5,896,718                     $ 6,122,493                  
                                                 
LIABILITIES:                                                
Interest-bearing deposits:                                                
Checking   $ 1,850,917     $ 1,059       0.23 %   $ 1,828,780     $ 1,130       0.25 %
Money markets     1,273,681       811       0.25       1,235,040       920       0.30  
Savings     128,195       17       0.05       125,016       16       0.05  
Certificates of deposit – retail     602,068       2,106       1.40       642,732       2,529       1.57  
Subtotal interest-bearing deposits     3,854,861       3,993       0.41       3,831,568       4,595       0.48  
Interest-bearing demand – brokered     113,696       514       1.81       130,000       636       1.96  
Certificates of deposit – brokered     33,756       267       3.16       33,742       267       3.17  
Total interest-bearing deposits     4,002,313       4,774       0.48       3,995,310       5,498       0.55  
Borrowings     244,753       616       1.01       475,465       1,221       1.03  
Capital lease obligation     6,832       82       4.80       7,054       84       4.76  
Subordinated debt     94,437       1,325       5.61       83,552       1,222       5.85  
Total interest-bearing liabilities     4,348,335       6,797       0.63 %     4,561,381       8,025       0.70 %
Noninterest-bearing liabilities:                                                
Demand deposits     858,004                       872,560                  
Accrued expenses and other liabilities     166,933                       173,816                  
Total noninterest-bearing liabilities     1,024,937                       1,046,376                  
Shareholders’ equity     523,446                       514,736                  
Total liabilities and shareholders’ equity   $ 5,896,718                     $ 6,122,493                  
Net interest income           $ 32,103                     $ 32,520          
Net interest spread                     2.10 %                     2.04 %
Net interest margin (D)                     2.25 %                     2.20 %

 

  1. Average balances for available for sale securities are based on amortized cost.
  2. Interest income is presented on a tax-equivalent basis using a 21% 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)

    December 31, 2020     December 31, 2019  
    Average     Income/             Average     Income/          
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                                
Interest-earning assets:                                                
Investments:                                                
Taxable (A)   $ 510,245     $ 8,782       1.72 %   $ 391,666     $ 10,228       2.61 %
Tax-exempt (A) (B)     9,479       477       5.03       14,930       728       4.88  
                                                 
Loans (B) (C):                                                
Mortgages     528,687       17,882       3.38       565,935       19,321       3.41  
Commercial mortgages     1,958,262       64,541       3.30       1,857,014       72,061       3.88  
Commercial     1,969,115       71,037       3.61       1,498,077       71,071       4.74  
Commercial construction     5,932       295       4.97       1,881       132       7  
Installment     51,007       1,532       3.00       54,555       2,246       4.12  
Home equity     53,853       1,940       3.60       60,036       2,981       4.97  
Other     311       29       9.32       391       42       10.74  
Total loans     4,567,167       157,256       3.44       4,037,889       167,854       4.16  
Federal funds sold     102             0.25       102             0.25  
Interest-earning deposits     504,753       968       0.19       223,629       4,457       1.99  
Total interest-earning assets     5,591,746       167,483       3.00 %     4,668,216       183,267       3.93 %
Noninterest-earning assets:                                                
Cash and due from banks     7,025                       5,477                  
Allowance for loan and lease losses     (61,401 )                     (40,328 )                
Premises and equipment     21,455                       21,176                  
Other assets     219,287                       142,156                  
Total noninterest-earning assets     186,366                       128,481                  
Total assets   $ 5,778,112                     $ 4,796,697                  
                                                 
LIABILITIES:                                                
Interest-bearing deposits:                                                
Checking   $ 1,742,846     $ 7,279       0.42 %   $ 1,342,901     $ 15,789       1.18 %
Money markets     1,227,295       6,185       0.50       1,189,880       16,434       1.38  
Savings     120,780       63       0.05       113,312       63       0.06  
Certificates of deposit – retail     654,652       11,476       1.75       631,999       14,210       2.25  
Subtotal interest-bearing deposits     3,745,573       25,003       0.67       3,278,092       46,496       1.42  
Interest-bearing demand – brokered     143,388       2,773       1.93       180,000       3,457       1.92  
Certificates of deposit – brokered     33,735       1,061       3.15       42,460       1,225       2.89  
Total interest-bearing deposits     3,922,696       28,837       0.74       3,500,552       51,178       1.46  
Borrowings     308,814       3,976       1.29       136,992       3,941       2.88  
Capital lease obligation     7,157       343       4.79       7,956       382       4.80  
Subordinated debt     86,246       4,992       5.79       83,300       4,895       5.88  
Total interest-bearing liabilities     4,324,913       38,148       0.88 %     3,728,800       60,396       1.62 %
Noninterest-bearing liabilities:                                                
Demand deposits     787,191                       505,486                  
Accrued expenses and other liabilities     153,648                       73,601                  
Total noninterest-bearing liabilities     940,839                       579,087                  
Shareholders’ equity     512,360                       488,810                  
Total liabilities and shareholders’ equity   $ 5,778,112                     $ 4,796,697                  
Net interest income           $ 129,335                     $ 122,871          
Net interest spread                     2.12 %                     2.31 %
Net interest margin (D)                     2.31 %                     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 21% federal tax rate. 
  3. Loans are stated net of unearned income and include nonaccrual loans.
  4. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts.  We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively.  We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, 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  
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
Tangible Book Value Per Share   2020     2020     2020     2020     2019  
Shareholders’ equity   $ 527,122     $ 522,728     $ 507,980     $ 496,440     $ 503,652  
Less:  Intangible assets, net     43,891       39,622       39,943       40,265       40,588  
Tangible equity     483,231       483,106       468,037       456,175       463,064  
                                         
Period end shares outstanding     18,974,703       18,924,953       18,905,135       18,852,523       18,926,810  
Tangible book value per share   $ 25.47     $ 25.53     $ 24.76     $ 24.20     $ 24.47  
Book value per share     27.78       27.62       26.87       26.33       26.61  
                                         
Tangible Equity to Tangible Assets                                        
Total assets   $ 5,890,442     $ 5,958,107     $ 6,281,215     $ 5,831,458     $ 5,182,879  
Less: Intangible assets, net     43,891       39,622       39,943       40,265       40,588  
Tangible assets     5,846,551       5,918,485       6,241,272       5,791,193       5,142,291  
Less: PPP Loans     195,574       201,991       547,004              
Tangible Assets excluding PPP Loans     5,650,977       5,716,494       5,694,268       5,791,193       5,142,291  
Tangible equity to tangible assets     8.27 %     8.16 %     7.50 %     7.88 %     9.01 %
Tangible equity to tangible assets excluding PPP loans     8.55 %     8.45 %     8.22 %     7.88 %     9.01 %
Equity to assets (A)     8.95 %     8.77 %     8.09 %     8.51 %     9.72 %

 

  1. Equity to total assets would be 9.26% if PPP loans of $196 million were excluded from total assets as of December 31, 2020. Equity to total assets would be 9.08% if PPP loans of $202 million were excluded from total assets as of September 30, 2020. Equity to total assets would be 8.86% if PPP loans of $547 million were excluded from total assets as of June 30, 2020.

 

    Three Months Ended  
    Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
Efficiency Ratio   2020     2020     2020     2020     2019  
Net interest income   $ 31,735     $ 32,149     $ 31,971     $ 31,747     $ 30,914  
Total other income     14,406       20,211       12,626       14,517       15,525  
Less:                                        
  (Gain)/loss on loans held for sale                                        
    at lower of cost or fair value           (7,429 )           3       4  
  Securities losses/(gains), net     42             (125 )     (198 )     45  
Total recurring revenue     46,183       44,931       44,472       46,069       46,488  
                                         
Operating expenses     39,249       28,461       29,014       28,235       26,701  
Less:                                        
  FHLB prepayment penalty     4,784                          
  Valuation allowance loans held for sale     4,425                          
Total operating expense     30,040       28,461       29,014       28,235       26,701  
                                         
Efficiency ratio     65.05 %     63.34 %     65.24 %     61.29 %     57.44 %

 

    For the Twelve Months Ended  
    Dec 31,     Dec 31,  
Efficiency Ratio   2020     2019  
Net interest income   $ 127,602     $ 120,274  
Total other income     61,760       54,696  
Less:                
  Securities (gains)/losses, net     (281 )     (117 )
  (Gain)/loss on loans held for sale                
    at lower of cost or fair value     (7,426 )     10  
Total recurring revenue     181,655       174,863  
                 
Operating expenses     124,959       104,848  
Less:                
  FHLB prepayment penalty     4,784        
  Valuation allowance loans held for sale     4,425        
Total operating expense     115,750       104,848  
                 
Efficiency ratio     63.72 %     59.96 %

 

Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308

 


Primary Logo

Source: Peapack-Gladstone Financial Corporation