Exhibit 99.1

 

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

PEAPACK-GLADSTONE FINANCIAL CORPORATION

REPORTS ANOTHER STRONG QUARTER

 

Bedminster, N.J. – July 28, 2015 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the “Corporation” or the “Company”) recorded net income of $10.25 million and diluted earnings per share of $0.67 for the six months ended June 30, 2015, compared to $6.81 million and $0.58, respectively, for the same six month period last year, reflecting increases of 50 percent and 16 percent, respectively.

For the quarter ended June 30, 2015, the Corporation recorded net income of $5.24 million and diluted earnings per share of $0.34, compared to $3.78 million and diluted earnings per share of $0.32 for the same three month period last year, reflecting increases of 39 percent and 6 percent, respectively.

The following table summarizes earnings for the quarters ended:

		June				June
(Dollars in millions, except EPS)		2015 (a)				2014 (b)				Improvement
Pretax income		$	8.38			$	6.32			$	2.06				33	%
Net income		$	5.24			$	3.78			$	1.46				39	%
Diluted EPS		$	0.34			$	0.32			$	0.02				6	%
Total revenue		$	26.84			$	22.40			$	4.44				20	%
Return on average assets			0.70	%			0.67	%			0.03
Return on average equity			8.24	%			8.44	%			(0.20	)
Efficiency ratio *			61.00	%			67.43	%			(6.43	)

 

* June 2015 marks the eighth consecutive quarter of improved efficiency ratio.

 

 

 

(a)

The quarter ended June 2015 included a $2.20 million provision for loan losses. The 2015 quarter also included $373 thousand of fee income related to its loan level / “back-to-back” swap program, and is included in other income. There were 15,233,151 weighted average common shares outstanding for calculating diluted EPS for the 2015 quarter.

(b)

The quarter ended June 2014 included a $1.15 million provision for loan losses. The 2014 quarter also included income of $176 thousand from a gain from sale of loans held for sale at lower of cost or fair value. There were 11,846,075 weighted average common shares outstanding for calculating diluted EPS for the 2014 quarter.

Doug Kennedy, President and CEO, said, “We continued to successfully execute on our Growth Strategy – Expanding Our Reach, generating strong results and demonstrating that our strategy is delivering positive operating leverage.”

Q2 2015 highlights follow:

·

The Company continued to leverage the capital raised in the fourth quarter of 2014. The Company believes it has ample capital to support its continued growth and expansion for the immediate future.

·

Earnings and performance ratios for the second quarter of 2015 reflected improvement when compared to the second quarter of 2014’s results (as reflected just above). Year over year growth in EPS was 6.3 percent, despite 2.776 million common shares issued in the December 2014 capital raise.

·

Loans at June 30, 2015 totaled $2.74 billion. This reflected growth of $867 million when compared to $1.87 billion at June 30, 2014. Year over year loan growth was 46 percent.

·

Asset quality metrics continued to be strong at June 30, 2015. Nonperforming assets at June 30, 2015 were $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were $1.7 million at June 30, 2015.

·

Commercial & Industrial (C&I) loans at June 30, 2015 totaled $438 million. This reflected growth of $280 million when compared to $158 million at June 30, 2014. Year over year C&I loan growth was 177 percent.

·

Total “customer” deposit balances (defined as deposits excluding brokered CDs and brokered “overnight” interest-bearing demand deposits) grew to $2.28 billion at June 30, 2015 from $1.83 billion at June 30, 2014. Year over year customer deposit growth totaled 24 percent.

·

The Company’s net interest income for the second quarter of 2015 was $20.34 million. This reflected improvement when compared to $16.92 million for the second quarter of 2014. Year over year growth in net interest income was 20 percent.

·

At June 30, 2015, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank (“the Bank”) was nearly $3.5 billion, including the acquisition of Wealth Management Consultants, which occurred in the second quarter of 2015.

·

Fee income from the Private Wealth Management Division totaled $4.53 million for the second quarter of 2015, growing from $4.01 million for the second quarter of 2014. Year over year growth in wealth management fee income was 13 percent.

·

The book value per share at June 30, 2015 of $17.02 reflected improvement when compared to $15.48 at June 30, 2014. Year over year growth in book value per share totaled 10 percent.

Net Interest Income / Net Interest Margin

Net interest income was $20.34 million for the second quarter of 2015, compared to $16.92 million for the same quarter last year, reflecting growth of $3.42 million or 20 percent when compared to the prior year period. Net interest income for the second quarter of 2015 benefitted from significant loan growth during 2014, as well as during the first six months of 2015.

While net interest income for the second quarter of 2015 improved compared to prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.80 percent for the June 2015 quarter compared to 3.14 percent for the June 2014 quarter. A portion of the decline in net interest margin for the June 2015 quarter was due to the maintenance of larger average interest earning deposit/cash balances ($70 million average for the June 2015 quarter, compared to $51 million for the June 2014 quarter), as well as larger balances of liquid investment securities ($275 million average for the June 2015 quarter, compared to $247 million for the June 2014 quarter). Mr. Kennedy said, “As I have said in previous quarters, given our rapid growth, we had decided to maintain greater liquidity on our balance sheet.”

In addition to the maintenance of larger liquid balances for much of the quarter, net interest margin also continued to be impacted by the effect of low market yields, as well as competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits. The Company expects continued high liquidity levels and also expects continued loan and deposit growth in this competitive environment.

Loan Originations / Loans

Total loan originations were $417 million for the second quarter ended June 30, 2015, compared to $347 million for the March 2015 quarter and $269 million for the June 2014 quarter. At June 30, 2015, loans totaled $2.74 billion compared to $2.44 billion three months ago at March 31, 2015 and compared to $1.87 billion one year ago at June 30, 2014, representing increases of $300 million or 12 percent sequentially and $867 million or 46 percent, year over year.

The multifamily mortgage loan portfolio grew $526 million or 62 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The increase was net of participations sold over the year, including $48 million of participations sold in the current June 2015 quarter. The June 2015 quarter and the March 2015 quarter both included multifamily loan participations. These participations were part of the Company’s balance sheet management strategy and will likely continue in 2015.

The commercial mortgage loan portfolio grew $54 million or 17 percent when comparing the June 30, 2015 balance to the June 30, 2014 balance. The net increases in both the multifamily and commercial mortgage portfolios were attributable to: the addition of seasoned banking professionals over the course of 2014; continued attention to the client service aspect of the lending process; an expansion of New Jersey-based real estate marketing activities; and a focus on the Boroughs of New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.

Mr. Kennedy said, “As explained in past earnings releases, analysis have shown that multifamily lending could be grown quickly and had strong credit metrics and provided solid risk-adjusted returns. Loan originations in this asset class have been robust as we built our C&I (Commercial & Industrial) lending capabilities as part of our Strategic Plan. Going forward, multifamily lending and related participations will remain a focus of the Company, however we anticipate volumes will be less robust than the past several quarters.” Mr. Kennedy went on to say, “As a result of our investment in and commitment to C&I banking, including the addition in 2014 and the first half of 2015 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in February 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow at an increased trajectory. We believe our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received.”

For the six months ended June 30, 2015 the Company closed $177 million of commercial loans. When comparing June 30, 2015 to June 30, 2014, commercial loans grew $280 million or 177 percent, to $438 million at June 30, 2015 from $158 million one year ago at June 30, 2014.

Deposits / Funding / Balance Sheet Management

Loan growth of $300 million in the June 2015 quarter was funded by customer deposit growth of $124 million, investment securities principal reductions and sales of $30 million, capital growth of $9 million, and various other borrowings. Mr. Kennedy noted, “Customer deposit growth for the June quarter was less than loan growth for the quarter; the deposit pipeline as of June 30, 2015 was very robust, and we have seen much of that pipeline fund throughout July, significantly reducing our June 30^th overnight borrowing position.”

Brokered interest-bearing demand (“overnight”) deposits continue to be maintained as an additional source of liquidity. The interest rate paid on these deposits allows the Bank to engage in interest rate swaps to hedge the asset-liability rate risk. These deposits increased to $293 million at June 30, 2015. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

From a liquidity/funding perspective, such brokered deposits, at a cost of approximately 25 to 30 basis points, are generally a more cost effective alternative than other borrowings and do not require use of pledged collateral, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits is used as the basis to transact longer term interest rate swaps, basically extending repricing generally to five years for asset matching / interest rate risk management purposes. As of June 30, 2015, the Company has transacted pay fixed, receive floating interest rate swaps totaling $150 million notional amount.

Certificates of deposit have also been utilized more extensively in 2015 compared to prior periods. The majority of these deposits have been longer term and have generally been transacted as part of the Company’s interest rate risk management. These certificates of deposit are also a more cost effective alternative than other borrowings.

Mr. Kennedy noted, “The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management products will help support both core deposit growth and commercial lending opportunities.”

Wealth Management Business

In the June 2015 quarter, Peapack-Gladstone Bank’s wealth management business generated $4.53 million in fee income compared to $4.01 million for the June 2014 quarter, reflecting a 13 percent increase.

The market value of the assets under administration (AUA) of the wealth management division was $3.45 billion at June 30, 2015, up approximately 21 percent from $2.84 billion at June 30, 2014. The growth in fee income and AUA was due to a combination of our acquisition of Wealth Management Consultants (NJ), LLC, new business and market value improvement.

John P. Babcock, President of Private Wealth Management, noted, “We continue to incorporate wealth into every conversation we have with all of the Company’s clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients.”

Mr. Babcock further noted, “We are excited to join forces with Tom Ross and Wealth Management Consultants. The acquisition is consistent with building our advice led wealth business and Tom and his team will add depth to our already high-caliber wealth management team.”

Other Noninterest Income

Service charges and fees for the June 2015 quarter were $837 thousand, compared to $708 thousand for the June 2014 quarter. Several categories reflected improvement in the quarter, including increased income associated with a new set of checking products put in place during the summer months of 2014.

The June 2015 quarter included $161 thousand of income from the sale of newly originated residential mortgage loans, up from $112 thousand in the same 2014 quarter. The volume of residential loans originated for sale were greater in the 2015 period compared to the 2014 period.

Securities gains were $176 thousand for the June 2015 quarter compared to $79 thousand for the June 2014 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the interest rate environment, as well as the future outlook, we do not anticipate such sales to be employed as often in the immediate future.

Other income of $545 thousand for the June 2015 quarter was $428 thousand higher than the June 2014 quarter. The June 2015 quarter included $373 thousand of fee income related to the Company’s loan level / back-to-back swap program, which was implemented during the June 2015 quarter after review and approval by the Board. Mr. Kennedy noted, “The program utilizes mirror interest rate swaps, one directly with the loan customer and one directly with a well-established counterparty. This enables a loan customer to benefit from a fixed rate loan, while the Company records a floating rate loan. The program provides enhanced interest rate risk management, as well as the potential for fee income for the Company. While we cannot predict the amount of fee income that may be recognized each period, this program will be a part of ongoing operations.”

Operating Expenses

The Company’s total operating expenses were $16.27 million for the quarter ended June 30, 2015 compared to $14.93 million in the same 2014 quarter, reflecting a net increase of $1.34 million or 9 percent.

Salary and benefits expense increased in the June 2015 quarter when compared to the same quarter last year due to strategic hiring in line with the Company’s Strategic Plan. Also contributing to the increase is the acquisition of Wealth Management Consultants, which occurred in the June 2015 quarter. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company’s growth contributed to the increase.

Premises and equipment expense and FDIC insurance expense for the quarter ended June 30, 2015 increased when compared to the same quarter last year. The increases were consistent with the Company’s continued growth.

Other expenses for the June 2015 quarter increased when compared to the June 2014 quarter. The current 2015 period included: increased wealth management division expenses due to growth in the business, increased advertising/marketing expenses, including a brand awareness campaign, and increased professional fee expenses associated with the Company’s growth, as well as various project work.

Mr. Kennedy noted, “Expense increases continue to track to our Plan. We expect that the trend of higher operating expenses will continue, as we bring on high caliber revenue producers, and continue to invest in our infrastructure, in line with our Plan. Further, we generally expect revenue and profitability related to new revenue producers to lag those expenses by several quarters. It is important to note, however, that revenue growth has outpaced expense growth considerably, which has caused our Efficiency Ratio to improve for the eighth consecutive quarter, to 61 percent for the current quarter.”

Provision for Loan Losses / Asset Quality

For the quarter ended June 30, 2015, the Company’s provision for loan losses was $2.20 million, compared to $1.15 million for the June 2014 quarter. Charge-offs, net of recoveries, for the second quarter of 2015 year were only $47 thousand. The larger provision in 2015 was due to loan growth in the quarter, as well as greater qualitative factor allocations of the allowance to C&I loans and Commercial Real Estate loans.

At June 30, 2015 the allowance for loan losses was 323 percent of nonperforming loans and 0.84 percent of total loans.

The Company’s provision for loan losses and net increase in its allowance for loan losses continue to track well with the Company’s net loan growth and asset quality metrics.

Nonperforming assets at June 30, 2015 were just $8.1 million or 0.26 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $1.7 million at June 30, 2015.

Capital / Dividends

Capital in the June 2015 quarter was benefitted by net income of $5.2 million and by $1.7 million of voluntary share purchases in the Dividend Reinvestment Plan.

At June 30, 2015, the Company’s leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.48 percent, 12.46 percent, 12.46 percent and 13.58 percent, respectively. The Company’s ratios are all above the respective 5 percent, 6.5 percent, 8 percent, and 10 percent levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced on July 22, 2015, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 19, 2015 to shareholders of record on August 5, 2015.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.12 billion as of June 30, 2015. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

 

 

 

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to

·

inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;

·

inability to manage our growth;

·

inability to successfully integrate our expanded employee base;

·

a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;

·

declines in our net interest margin caused by the low interest rate environment and highly competitive market;

·

declines in value in our investment portfolio

·

higher than expected increases in our allowance for loan losses;

·

higher than expected increases in loan losses or in the level of nonperforming loans;

·

unexpected changes in interest rates;

·

a continued or unexpected decline in real estate values within our market areas;

·

legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;

·

successful cyberattacks against our IT infrastructure and that of our IT providers;

·

higher than expected FDIC insurance premiums;

·

adverse weather conditions;

·

inability to successfully generate new business in new geographic markets;

·

inability to execute upon new business initiatives;

·

lack of liquidity to fund our various cash obligations;

·

reduction in our lower-cost funding sources;

·

our inability to adapt to technological changes;

·

claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and

·

other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation’s expectations.

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

 

(Tables to follow)

 

 

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)

 

		As of
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2015				2015				2014				2014				2014
ASSETS
Cash and due from banks		$	6,205			$	7,439			$	6,621			$	6,596			$	5,757
Federal funds sold			101				101				101				101				101
Interest-earning deposits			32,382				65,283				24,485				114,124				209,768
Total cash and cash equivalents			38,688				72,823				31,207				120,821				215,626
Securities available for sale			245,897				276,119				332,652				269,550				225,270
FHLB and FRB stock, at cost			15,590				10,598				11,593				9,121				9,946
Loans held for sale, at fair value			745				4,245				839				351				2,650
Residential mortgage			470,863				466,333				466,760				470,030				469,648
Multifamily mortgage			1,371,139				1,214,714				1,080,256				928,054				845,310
Commercial mortgage			375,440				339,037				308,491				332,507				321,437
Commercial loans			438,461				336,079				308,743				225,814				158,103
Construction loans			1,417				5,777				5,998				6,025				6,033
Consumer loans			29,996				28,206				28,040				27,597				23,414
Home equity lines of credit			51,675				50,399				50,141				48,200				48,740
Other loans			2,947				1,755				1,838				2,560				2,255
Total loans			2,741,938				2,442,300				2,250,267				2,040,787				1,874,940
Less: Allowances for loan losses			22,969				20,816				19,480				18,299				17,204
Net loans			2,718,969				2,421,484				2,230,787				2,022,488				1,857,736
Premises and equipment			31,637				32,068				32,258				30,825				31,095
Other real estate owned			956				1,103				1,324				949				1,036
Accrued interest receivable			6,451				5,943				5,371				5,126				4,858
Bank owned life insurance			32,565				32,404				32,634				32,448				32,258
Deferred tax assets, net			12,673				10,458				10,491				11,661				9,433
Other assets			13,999				12,212				13,241				11,181				11,063
TOTAL ASSETS		$	3,118,170			$	2,879,457			$	2,702,397			$	2,514,521			$	2,400,971
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	386,588			$	377,399			$	366,371			$	383,268			$	410,609
Interest-bearing demand deposits			667,847				634,580				600,889				558,537				474,945
Savings			120,606				115,515				112,878				111,897				116,172
Money market accounts			717,246				714,466				700,069				713,383				673,375
Certificates of deposit - Retail			384,235				310,678				198,819				165,834				157,067
Subtotal “customer” deposits			2,276,522				2,152,638				1,979,026				1,932,919				1,832,168
IB Demand - Brokered			293,000				263,000				188,000				138,000				138,000
Certificates of deposit - Brokered			94,224				106,694				131,667				132,500				145,000
Total deposits			2,663,746				2,522,332				2,298,693				2,203,419				2,115,168
Overnight borrowings			87,500				—				54,600				—				—
Federal home loan bank advances			83,692				83,692				83,692				83,692				83,692
Capital lease obligation			10,475				10,594				10,712				9,734				9,836
Other liabilities			14,881				13,486				12,433				12,646				9,942
Due to brokers, securities settlements			—				—				—				16,960				—
TOTAL LIABILITIES			2,860,294				2,630,104				2,460,130				2,326,451				2,218,638
Shareholders’ equity			257,876				249,353				242,267				188,070				182,333
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	3,118,170			$	2,879,457			$	2,702,397			$	2,514,521			$	2,400,971
Assets under administration at
Peapack-Gladstone Bank’s
Wealth Management Division
(market value, not included above)		$	3,445,939			$	3,053,110			$	2,986,623			$	2,857,727			$	2,843,310

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

 

		As of
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2015				2015				2014				2014				2014
Asset Quality:
Loans past due over 90 days
and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			7,111				6,335				6,850				8,790				6,536
Other real estate owned			956				1,103				1,324				949				1,036
Total nonperforming assets (A)		$	8,067			$	7,438			$	8,174			$	9,739			$	7,572
Nonperforming loans to
total loans (A)			0.26	%			0.26	%			0.30	%			0.43	%			0.35	%
Nonperforming assets to
total assets (A)			0.26	%			0.26	%			0.30	%			0.39	%			0.32	%
Accruing TDR’s (B)		$	13,695			$	13,561			$	13,601			$	13,045			$	12,730
Loans past due 30 through 89
days and still accruing		$	1,744			$	2,481			$	1,755			$	2,278			$	1,536
Classified loans (A)		$	38,676			$	38,450			$	35,809			$	34,752			$	34,929
Impaired loans (A)		$	20,806			$	19,896			$	20,451			$	21,834			$	19,813
Allowance for loan losses:
Beginning of period		$	20,816			$	19,480			$	18,299			$	17,204			$	16,587
Provision for loan losses			2,200				1,350				1,250				1,150				1,150
Charge-offs, net			(47	)			(14	)			(69	)			(55	)			(533	)
End of period		$	22,969			$	20,816			$	19,480			$	18,299			$	17,204
ALLL to nonperforming loans			323.01	%			328.59	%			284.38	%			208.18	%			263.22	%
ALLL to total loans			0.84	%			0.85	%			0.87	%			0.90	%			0.92	%
Capital Adequacy
Tier I leverage			8.48	%			8.80	%			9.11	%			7.57	%			8.01	%
Tier I capital to risk weighted assets			12.46	%			13.57	%			14.38	%			12.16	%			13.05	%
Common equity tier I capital ratio
to risk-weighted assets (C)			12.46	%			13.57	%			N/A				N/A				N/A
Tier I & II capital to
risk-weighted assets			13.58	%			14.71	%			15.55	%			13.36	%			14.30	%
Equity to total assets			8.27	%			8.66	%			8.96	%			7.48	%			7.59	%
(end of period)
Book value per share (D) (E)		$	17.02			$	16.61			$	16.36			$	15.80			$	15.48

 

(A)

September 30, 2014 amount includes a $1.5 million commercial nonaccrual loan that was paid in full on October 8, 2014.

(B)

Does not include $2.2 million at June 30, 2015, $1.4 million at March 31, 2015, $1.4 million at December 31, 2014, $2.4 million at September 30, 2014, and $2.5 million at June 30, 2014 of TDR’s included in nonaccrual loans.

(C)

New capital ratio required under Basel III effective March 31, 2015.

(D)

Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested.

(E)

Tangible book value per share was $16.80 at June 30, 2015, $16.57 at March 31, 2015, $16.32 at December 31, 2014, $15.75 at September 30, 2014, and $15.43 at June 30, 2014. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables.

 

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)

 

		For the Quarters Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2015				2015				2014				2014				2014
Residential loans retained		$	23,117			$	16,986			$	10,661			$	20,540			$	17,245
Residential loans sold			10,978				8,938				8,230				5,561				7,344
Total residential loans			34,095				25,924				18,891				26,101				24,589
CRE (includes
Community banking)			29,561				57,787				14,953				3,208				20,175
Multifamily (includes
Community banking)			206,803				209,034				172,021				105,584				149,937
Commercial loans (includes
Community banking)			136,483				40,696				89,905				74,029				62,668
Wealth lines of credit			6,150				10,260				—				—				—
Total commercial loans			378,997				317,777				276,879				182,821				232,780
Installment loans			1,128				344				2,015				9,410				5,184
Home equity lines of credit			3,225				3,377				4,140				2,550				6,709
Total loans closed		$	417,445			$	347,422			$	301,925			$	220,882			$	269,262

 

 

		For the Six Months Ended
		June 30,				June 30,
		2015				2014
Residential loans retained		$	40,103			$	28,898
Residential loans sold			19,916				14,355
Total residential loans			60,019				43,253
CRE (includes
Community banking)			87,348				36,016
Multifamily (includes
Community banking)			415,837				375,080
Commercial loans (includes
Community banking)			177,179				78,625	(A)
Wealth lines of credit			16,410				—
Total commercial loans			696,774				489,721
Installment loans			1,472				7,061
Home equity lines of credit			6,602				11,377	(A)
Total loans closed		$	764,867			$	551,412

 

(A)

Includes loans and lines of credit that closed in the period, but not necessarily funded.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

 

		For the Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2015				2015				2014				2014				2014
Income Statement Data:
Interest income		$	23,852			$	22,361			$	20,786			$	19,210			$	18,630
Interest expense			3,508				2,778				2,434				2,162				1,707
Net interest income			20,344				19,583				18,352				17,048				16,923
Provision for loan losses			2,200				1,350				1,250				1,150				1,150
Net interest income after
provision for loan losses			18,144				18,233				17,102				15,898				15,773
Wealth management fee income			4,532				4,031				3,822				3,661				4,005
Service charges and fees			837				805				880				829				708
Bank owned life insurance			248				537				274				276				276
Gain on loans held for sale at fair
value (Mortgage banking)			161				148				128				87				112
(Loss)/gain on loans held for sale at
lower of cost or fair value			—				—				(3	)			(7	)			176
Other income			545				93				142				167				117
Securities gains, net			176				268				44				39				79
Total other income			6,499				5,882				5,287				5,052				5,473
Salaries and employee benefits			9,872				9,425				9,188				9,116				9,089
Premises and equipment			2,778				2,616				2,627				2,564				2,334
FDIC insurance expense			431				482				453				350				303
Other expenses			3,185				3,245				3,310				2,663				3,204
Total operating expenses			16,266				15,768				15,578				14,693				14,930
Income before income taxes			8,377				8,347				6,811				6,257				6,316
Income tax expense			3,139				3,339				2,599				2,393				2,533
Net income		$	5,238			$	5,008			$	4,212			$	3,864			$	3,783
Total revenue		$	26,843			$	25,465			$	23,639			$	22,100			$	22,396
Per Common Share Data:
Earnings per share (basic)		$	0.34			$	0.34			$	0.32			$	0.33			$	0.32
Earnings per share (diluted)			0.34				0.33				0.32				0.32				0.32
Weighted average number of
common shares outstanding:
Basic			15,082,516				14,909,722				13,037,947				11,841,777				11,721,256
Diluted			15,233,151				15,070,352				13,163,877				11,956,356				11,846,075
Performance Ratios:
Return on average assets
annualized			0.70	%			0.71	%			0.64	%			0.63	%			0.67	%
Return on average common
equity annualized			8.24	%			8.13	%			8.01	%			8.35	%			8.44	%
Net interest margin
(taxable equivalent basis)			2.80	%			2.88	%			2.89	%			2.89	%			3.14	%
Efficiency ratio (A)			61.00	%			62.58	%			66.01	%			66.58	%			67.43	%
Operating expenses / average
assets annualized			2.16	%			2.24	%			2.36	%			2.39	%			2.65	%

 

(A)

Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

 

		For the
		Six Months Ended
		June 30,
Income Statement Data:		2015				2014
Interest income		$	46,213			$	35,579
Interest expense			6,286				3,085
Net interest income			39,927				32,494
Provision for loan losses			3,550				2,475
Net interest income after
provision for loan losses			36,377				30,019
Wealth management fee income			8,563				7,759
Service charges and fees			1,642				1,402
Bank owned life insurance			785				542
Gain on loans held for sale at fair
Value (Mortgage banking)			309				224
(Loss)/gain on loans held for sale at
Lower of cost or fair value			—				176
Other income			638				188
Securities gains, net			444				177
Total other income			12,381				10,468
Salaries and employee benefits			19,297				17,937
Premises and equipment			5,394				4,772
FDIC insurance expense			913				578
Other expenses			6,430				5,982
Total operating expenses			32,034				29,269
Income before income taxes			16,724				11,218
Income tax expense			6,478				4,404
Net income		$	10,246			$	6,814
Total revenue  (See footnote (A) below)		$	52,308			$	42,962
Per Common Share Data:
Earnings per share (basic)		$	0.68			$	0.58
Earnings per share (diluted)			0.67				0.58
Weighted average number of
common shares outstanding:
Basic			14,996,596				11,664,410
Diluted			15,189,781				11,814,806
Performance Ratios:
Return on average assets annualized			0.70	%			0.63	%
Return on average common equity annualized			8.19	%			7.74	%
Net interest margin (taxable equivalent basis)			2.84	%			3.16	%
Efficiency ratio (B)			61.77	%			68.69	%
Operating expenses / average assets annualized			2.20	%			2.72	%

 

(A)

Total revenue includes a $176 thousand gain (for 2014) from sale of loans held for sale at lower of cost or fair value. Excluding this gain, total revenue was $42,786 (for 2014).

(B)

Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

		June 30, 2015												June 30, 2014
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)		$	244,087			$	1,037				1.70	%		$	189,254			$	977				2.06	%
Tax-exempt (1) (2)			30,941				210				2.71				57,847				312				2.16
Loans held for sale			2,049				24				4.64				1,026				15				5.89
Loans (2) (3):
Mortgages			466,033				3,800				3.26				496,232				4,203				3.39
Commercial mortgages			1,663,150				14,767				3.55				1,155,360				11,108				3.85
Commercial			360,517				3,347				3.71				143,988				1,443				4.01
Commercial construction			5,713				61				4.27				6,065				65				4.29
Installment			29,169				256				3.51				22,154				233				4.21
Home equity			51,710				417				3.23				47,489				382				3.22
Other			527				12				9.11				558				13				9.32
Total loans			2,576,819				22,660				3.52				1,871,846				17,447				3.73
Federal funds sold			101				—				0.10				101				—				0.10
Interest-earning deposits			69,780				39				0.22				51,177				21				0.17
Total interest-earning assets			2,923,777				23,970				3.28				2,171,251				18,772				3.46	%
Noninterest-Earning Assets:
Cash and due from banks			6,385												6,990
Allowance for loan losses			(21,493	)											(17,310	)
Premises and equipment			31,983												31,161
Other assets			66,131												58,926
Total noninterest-earning assets			83,006												79,767
Total assets		$	3,006,783											$	2,251,018
LIABILITIES:
Interest-bearing deposits:
Checking		$	670,473			$	707				0.42	%		$	431,656			$	115				0.11	%
Money markets			703,236				461				0.26				657,216				374				0.23
Savings			117,411				16				0.05				116,946				15				0.05
Certificates of deposit – retail			343,781				1,051				1.22				154,245				369				0.96
Subtotal interest-bearing deposits			1,834,901				2,235				0.49				1,360,063				873				0.26
Interest-bearing demand - brokered			265,802				215				0.32				138,000				70				0.20
Certificates of deposit – brokered			98,191				504				2.05				100,934				264				1.05
Total interest-bearing deposits			2,198,894				2,954				0.54				1,598,997				1,207				0.30
Borrowings			146,441				428				1.17				93,152				382				1.64
Capital lease obligation			10,515				126				4.79				9,867				118				4.78
Total interest-bearing liabilities			2,355,850				3,508				0.60				1,702,016				1,707				0.40
Noninterest-bearing liabilities:
Demand deposits			384,604												360,096
Accrued expenses and
other liabilities			12,133												9,606
Total noninterest-bearing liabilities			396,737												369,702
Shareholders’ equity			254,196												179,300
Total liabilities and
shareholders’ equity		$	3,006,783											$	2,251,018
Net interest income						$	20,462											$	17,065
Net interest spread											2.68	%											3.06	%
Net interest margin (4)											2.80	%											3.14	%

 

(1)	Average balances for available for sale securities are based on amortized cost.
(2)	Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)	Loans are stated net of unearned income and include nonaccrual loans.
(4)	Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

		June 30, 2015												March 31,2015
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)		$	244,087			$	1,037				1.70	%		$	273,946			$	1,182				1.73	%
Tax-exempt (1) (2)			30,941				210				2.71				37,631				231				2.46
Loans held for sale			2,049				24				4.64				774				10				5.10
Loans (2) (3):
Mortgages			466,033				3,800				3.26				465,722				3,785				3.25
Commercial mortgages			1,663,150				14,767				3.55				1,459,872				13,589				3.72
Commercial			360,517				3,347				3.71				316,109				2,897				3.67
Commercial construction			5,713				61				4.27				5,930				62				4.18
Installment			29,169				256				3.51				27,791				252				3.63
Home equity			51,710				417				3.23				50,660				405				3.20
Other			527				12				9.11				530				12				9.06
Total loans			2,576,819				22,660				3.52				2,326,614				21,002				3.61
Federal funds sold			101				—				0.10				101				—				0.10
Interest-earning deposits			69,780				39				0.22				91,657				43				0.18
Total interest-earning assets			2,923,777				23,970				3.28				2,730,723				22,468				3.29	%
Noninterest-Earning Assets:
Cash and due from banks			6,385												6,804
Allowance for loan losses			(21,493	)											(20,056	)
Premises and equipment			31,983												32,256
Other assets			66,131												63,868
Total noninterest-earning assets			83,006												82,872
Total assets		$	3,006,783											$	2,813,595
LIABILITIES:
Interest-bearing deposits:
Checking		$	670,473			$	707				0.42	%		$	630,557			$	409				0.26	%
Money markets			703,236				461				0.26				710,590				463				0.26
Savings			117,411				16				0.05				113,435				14				0.05
Certificates of deposit – retail			343,781				1,051				1.22				247,860				663				1.07
Subtotal interest-bearing deposits			1,834,901				2,235				0.49				1,702,442				1,549				0.36
Interest-bearing demand - brokered			265,802				215				0.32				240,500				185				0.31
Certificates of deposit – brokered			98,191				504				2.05				126,404				524				1.66
Total interest-bearing deposits			2,198,894				2,954				0.54				2,069,346				2,258				0.44
Borrowings			146,441				428				1.17				109,639				392				1.43
Capital lease obligation			10,515				126				4.79				10,635				128				4.81
Total interest-bearing liabilities			2,355,850				3,508				0.60				2,189,620				2,778				0.51
Noninterest-bearing liabilities:
Demand deposits			384,604												366,919
Accrued expenses and
other liabilities			12,133												10,752
Total noninterest-bearing liabilities			396,737												377,671
Shareholders’ equity			254,196												246,304
Total liabilities and
shareholders’ equity		$	3,006,783											$	2,813,595
Net interest income						$	20,462											$	19,690
Net interest spread											2.68	%											2.78	%
Net interest margin (4)											2.80	%											2.88	%

 

(1)	Average balances for available for sale securities are based on amortized cost.
(2)	Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)	Loans are stated net of unearned income and include nonaccrual loans.
(4)	Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

SIX MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

 

		June 30, 2015												June 30, 2014
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)		$	258,934			$	2,219				1.71	%		$	198,401			$	2,038				2.05	%
Tax-exempt (1) (2)			34,268				441				2.57				59,025				649				2.20
Loans held for sale			1,415				34				4.75				1,174				25				4.29
Loans (2) (3):
Mortgages			465,878				7,585				3.26				514,702				8,756				3.40
Commercial mortgages			1,562,073				28,356				3.63				1,046,179				20,153				3.85
Commercial			338,435				6,244				3.69				138,300				2,845				4.11
Commercial construction			5,821				123				4.23				5,969				132				4.42
Installment			28,484				508				3.57				21,860				461				4.22
Home equity			51,188				822				3.21				47,162				755				3.20
Other			528				25				9.47				561				26				9.27
Total loans			2,452,407				43,663				3.56				1,774,733				33,128				3.73
Federal funds sold			101				—				0.10				101				—				0.10
Interest-earning deposits			80,658				82				0.20				41,468				33				0.16
Total interest-earning assets			2,827,783				46,439				3.28	%			2,074,902				35,873				3.46	%
Noninterest-Earning Assets:
Cash and due from banks			6,594												6,694
Allowance for loan losses			(20,778	)											(16,653	)
Premises and equipment			32,118												30,956
Other assets			65,006												59,961
Total noninterest-earning assets			82,940												80,958
Total assets		$	2,910,723											$	2,155,860
LIABILITIES:
Interest-bearing deposits:
Checking		$	650,909			$	1,116				0.34	%		$	416,568			$	207				0.10	%
Money markets			706,893				924				0.26				655,430				707				0.22
Savings			115,434				30				0.05				116,733				30				0.05
Certificates of deposit – retail			296,085				1,714				1.16				151,864				724				0.95
Subtotal interest-bearing deposits			1,769,321				3,784				0.43				1,340,595				1,668				0.25
Interest-bearing demand - brokered			253,221				400				0.32				106,851				113				0.21
Certificates of deposit – brokered			112,219				1,028				1.83				57,564				295				1.02
Total interest-bearing deposits			2,134,761				5,212				0.49				1,505,010				2,076				0.28
Borrowings			128,142				820				1.28				104,306				772				1.48
Capital lease obligation			10,575				254				4.80				9,907				237				4.78
Total interest-bearing liabilities			2,273,478				6,286				0.55				1,619,223				3,085				0.38
Noninterest-bearing liabilities:
Demand deposits			375,527												350,698
Accrued expenses and
other liabilities			11,446												9,800
Total noninterest-bearing liabilities			386,973												360,498
Shareholders’ equity			250,272												176,139
Total liabilities and
shareholders’ equity		$	2,910,723											$	2,155,860
Net interest income						$	40,153											$	32,788
Net interest spread											2.73	%											3.08	%
Net interest margin (4)											2.84	%											3.16	%

 

(1)	Average balances for available for sale securities are based on amortized cost.
(2)	Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)	Loans are stated net of unearned income and include nonaccrual loans.
(4)	Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

 

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk- based capital ratios.

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

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

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

		Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Tangible Book Value Per Share		2015				2015				2014				2014				2014
Shareholders’ equity		$	257,876			$	249,353			$	242,267			$	188,070			$	182,333
Less: Intangible assets			3,342				563				563				563				563
Tangible equity			254,534				248,790				241,704				187,507				181,770
Period end shares outstanding			15,592,168				15,440,430				15,155,717				12,286,821				12,154,150
Less: Restricted shares not yet vested			436,908				429,642				345,095				382,252				376,134
Total outstanding shares			15,155,260				15,010,788				14,810,622				11,904,569				11,778,016
Tangible book value per share			16.80				16.57				16.32				15.75				15.43
Book value per share			17.02				16.61				16.36				15.80				15.48
Tangible Equity to Tangible Assets
Total Assets			3,118,170				2,879,457				2,702,397				2,514,521				2,400,971
Less: Intangible assets			3,342				563				563				563				563
Tangible assets			3,114,828				2,878,894				2,701,834				2,513,958				2,400,408
Tangible equity to tangible assets			8.17	%			8.64	%			8.95	%			7.46	%			7.57	%
Equity to assets			8.27	%			8.66	%			8.96	%			7.48	%			7.59	%

 

 

		Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Efficiency Ratio		2015				2015				2014				2014				2014
Net interest income		$	20,344			$	19,583			$	18,352			$	17,048			$	16,923
Total other income			6,499				5,882				5,287				5,052				5,473
Less: (Loss)/gain on loans
held for sale at lower of cost
or fair value			—				—				(3	)			(7	)			176
Less: Securities gains, net			176				268				44				39				79
Total recurring revenue			26,667				25,197				23,598				22,068				22,141
Total operating expenses			16,266				15,768				15,578				14,693				14,930
Efficiency ratio			61.00	%			62.58	%			66.01	%			66.58	%			67.43	%

 

		Six Months Ended
		June 30,				June 30,
Efficiency Ratio		2015				2014
Net interest income		$	39,927			$	32,494
Total other income			12,381				10,468
Less: Gain on loans
held for sale at lower of cost
or fair value			—				176
Less: Securities gains, net			444				177
Total recurring revenue			51,864				42,609
Total operating expenses			32,034				29,269
Efficiency ratio			61.77	%			68.69	%