Bedminster, NJ, Jan. 28, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter 2021 results.
This earnings release should be read in conjunction with the Company’s Q4 2021 Investor Update, 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.
For the quarter ended December 31, 2021, the Company recorded total revenue of $56.17 million, net income of $14.86 million and diluted earnings per share (“EPS”) of $0.78, compared to revenue of $46.14 million, net income of $3.03 million and diluted EPS of $0.16, respectively, for the three-month period ended December 31, 2020.
For the year ended December 31, 2021, the Company recorded total revenue of $210.31 million, net income of $56.62 million and diluted earnings per share (“EPS”) of $2.93 compared to revenue of $189.36 million, net income of $26.19 million and diluted EPS of $1.37, respectively, for the year ended December 31, 2020.
Improvement in the 2021 periods was principally driven by the Company’s wealth management and commercial banking businesses. 2021 included increased wealth management income, corporate advisory fees and SBA income, as well as increased net interest income resulting from asset growth, coupled with margin improvement. The earnings for the full year of 2021 also benefitted from a significantly lower provision for loan losses.
The Q4 2021 period included a $893,000 swap valuation allowance recorded in operating expenses related to a loan placed on nonaccrual in Q3 2021. Q4 2021 also included a higher provision for loan losses due to the loan growth during the quarter.
Douglas L. Kennedy, President and CEO, said, “Our fourth quarter and full year results reflected continued solid growth in our wealth management business and commercial banking, including both corporate advisory and SBA activities. Increases in these areas year-over-year more than made up for the $7.4 million of PPP gains that the Company had recorded in 2020. As we look into the new year our pipelines for wealth management and commercial banking continue to be robust and we remain quite constructive toward 2022.”
During the fourth quarter of 2021 the Company repurchased 274,929 shares under its stock repurchase program at an average price of $33.50 for a total cost of $9.21 million. For the full year of 2021, the Company repurchased 894,744 shares at an average price of $31.99 for a total cost of $28.63 million.
On January 27, 2022, the Company authorized a new 5% stock repurchase program of up to 920,000 shares. Purchases will be conducted in accordance with the limitations set forth in the SEC’s Rule 10b-18.
Mr. Kennedy noted, “We believe that repurchasing our stock continues to be a great opportunity to take advantage of the Company’s discounted valuation relative to peers.”
EXECUTIVE SUMMARY:
The following tables summarize specified financial measures for the periods shown.
2021 Year Compared to Prior Year
| Year Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2021 | 2020 | (Decrease) | ||||||||||||||
| Net interest income | $ | 138.06 | $ | 127.60 | $ | 10.46 | 8 | % | |||||||||
| Wealth management fee income (A) | 52.99 | 40.86 | 12.13 | 30 | |||||||||||||
| Capital markets activity (B) | 10.62 | 6.65 | 3.97 | 60 | |||||||||||||
| Other income (C) | 8.64 | 14.25 | (5.61 | ) | (39 | ) | |||||||||||
| Total other income | 72.25 | 61.76 | 10.49 | 17 | |||||||||||||
| Operating expenses (A) (D) | 126.17 | 124.96 | 1.21 | 1 | |||||||||||||
| Pretax income before provision for loan losses | 84.14 | 64.40 | 19.74 | 31 | |||||||||||||
| Provision for loan and lease losses (E) | 6.48 | 32.40 | (25.92 | ) | (80 | ) | |||||||||||
| Pretax income | 77.66 | 32.00 | 45.66 | 143 | |||||||||||||
| Income tax expense (F) | 21.04 | 5.81 | 15.23 | 262 | |||||||||||||
| Net income | $ | 56.62 | $ | 26.19 | $ | 30.43 | 116 | % | |||||||||
| Diluted EPS | $ | 2.93 | $ | 1.37 | $ | 1.56 | 114 | % | |||||||||
| Total Revenue (G) | $ | 210.31 | $ | 189.36 | $ | 20.95 | 11 | % | |||||||||
| Return on average assets | 0.94 | % | 0.45 | % | 0.49 | ||||||||||||
| Return on average equity | 10.56 | % | 5.11 | % | 5.45 | ||||||||||||
(A) The 2021 results included twelve months of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas Capital Management (“Lucas”) and Noyes Capital Management (“Noyes”) and six months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.
(B) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities and mortgage banking activities. The 2021 results included $3.5 million of corporate advisory fee income. There were no fees related to loan level back-to-back swap activities in the twelve months ended December 31, 2021, compared to $1.6 million for 2020.
(C) The 2021 results included a cost of $842,000 related to the termination of interest rate swaps; a $1.1 million gain on loans held at lower of cost or fair value; $722,000 of fee income related to the referral of PPP loans to a third party; and $455,000 of additional BOLI income related to receipt of life insurance proceeds. The 2020 results included a $7.4 million gain on the sale of PPP loans.
(D) The 2021 results included $1.5 million of severance expense related to certain corporate restructurings within several areas of the Bank; $648,000 of expense related to the redemption of subordinated debt; and $2.2 million related to a swap valuation allowance. The 2020 results included $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 $278,000 for the closure of a retail branch.
(E) The 2020 results included a provision for loan and lease losses of $32.4 million, primarily due to the COVID-19 pandemic.
(F) The 2020 results included a $3.2 million tax benefit related to the carryback of tax NOLs.
(G) Total revenue equals the sum of net interest income plus total other income.
December 2021 Quarter Compared to Prior Year Quarter
| Three Months Ended | Three Months Ended | ||||||||||||||||
| December 31, | December 31, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2021 | 2020 | (Decrease) | ||||||||||||||
| Net interest income | $ | 37.21 | $ | 31.74 | $ | 5.47 | 17 | % | |||||||||
| Wealth management fee income (A) | 13.96 | 10.79 | 3.17 | 29 | |||||||||||||
| Capital markets activity (B) | 3.52 | 1.89 | 1.63 | 86 | |||||||||||||
| Other income (C) | 1.48 | 1.72 | (0.24 | ) | (14 | ) | |||||||||||
| Total other income | 18.96 | 14.40 | 4.56 | 32 | |||||||||||||
| Operating expenses (A) (D) | 31.70 | 39.25 | (7.55 | ) | (19 | ) | |||||||||||
| Pretax income before provision for loan losses | 24.47 | 6.89 | 17.58 | 255 | |||||||||||||
| Provision for loan and lease losses | 3.75 | 2.35 | 1.40 | 60 | |||||||||||||
| Pretax income | 20.72 | 4.54 | 16.18 | 356 | |||||||||||||
| Income tax expense | 5.86 | 1.51 | 4.35 | 288 | |||||||||||||
| Net income | $ | 14.86 | $ | 3.03 | $ | 11.83 | 390 | % | |||||||||
| Diluted EPS | $ | 0.78 | $ | 0.16 | $ | 0.62 | 387 | % | |||||||||
| Total Revenue (E) | $ | 56.17 | $ | 46.14 | $ | 10.03 | 22 | % | |||||||||
| Return on average assets annualized | 0.96 | % | 0.21 | % | 0.75 | ||||||||||||
| Return on average equity annualized | 10.94 | % | 2.32 | % | 8.62 | ||||||||||||
(A) The December 2021 quarter included a full quarter of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas and Noyes and the July 2021 acquisition of PPSG.
(B) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities, and mortgage banking activities. The December 2021 quarter included $2.2 million of corporate advisory fee income, the majority of which related to a large investment banking advisory event.
(C) The December 31, 2021 quarter included a $265,000 loss on the sale of loans.
(D) The December 2021 quarter included $893,000 related to a swap valuation allowance. The December 2020 quarter included $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
(E) Total revenue equals the sum of net interest income plus total other income.
December 2021 Quarter Compared to Linked Quarter
| Three Months Ended | Three Months Ended | ||||||||||||||||
| December 31, | September 30, | Increase/ | |||||||||||||||
| (Dollars in millions, except per share data) | 2021 | 2021 | (Decrease) | ||||||||||||||
| Net interest income | $ | 37.21 | $ | 35.21 | $ | 2.00 | 6 | % | |||||||||
| Wealth management fee income | 13.96 | 13.86 | 0.10 | 1 | |||||||||||||
| Capital markets activity (A) | 3.52 | 2.06 | 1.46 | 71 | |||||||||||||
| Other income (B) | 1.48 | 1.86 | (0.38 | ) | (20 | ) | |||||||||||
| Total other income | 18.96 | 17.78 | 1.18 | 7 | |||||||||||||
| Operating expenses (C) | 31.70 | 32.18 | (0.48 | ) | (1 | ) | |||||||||||
| Pretax income before provision for loan losses | 24.47 | 20.81 | 3.66 | 18 | |||||||||||||
| Provision for loan and lease losses | 3.75 | 1.60 | 2.15 | 134 | |||||||||||||
| Pretax income | 20.72 | 19.21 | 1.51 | 8 | |||||||||||||
| Income tax expense | 5.86 | 5.04 | 0.82 | 16 | |||||||||||||
| Net income | $ | 14.86 | $ | 14.17 | $ | 0.69 | 5 | % | |||||||||
| Diluted EPS | $ | 0.78 | $ | 0.74 | $ | 0.04 | 5 | % | |||||||||
| Total Revenue (D) | $ | 56.17 | $ | 52.99 | $ | 3.18 | 6 | % | |||||||||
| Return on average assets annualized | 0.96 | % | 0.95 | % | 0.01 | ||||||||||||
| Return on average equity annualized | 10.94 | % | 10.40 | % | 0.54 | ||||||||||||
(A) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.
(B) The December 31, 2021 quarter included a $265,000 loss on sale of loans.
(C) The December 2021 quarter included $893,000 related to a swap valuation allowance. The September 2021 quarter included $1.4 million related to a swap valuation allowance.
(D) Total revenue equals the sum of net interest income plus total other income.
Select highlights:
Peapack Private Wealth Management:
- AUM/AUA in our Peapack Private Wealth Management Division grew 8% (31% annualized) to $11.1 billion at December 31, 2021 from $10.3 billion at September 30, 2021, and 26% over the $8.8 billion at December 31, 2020.
- Gross new business inflows for 2021 totaled $840 million.
- Wealth Management fee income increased 30% to $14.0 million for Q4 2021 compared to $10.8 million for Q4 2020.
- On July 1, 2021, we closed on the acquisition of Princeton Portfolio Strategies Group (“PPSG”).
Commercial Banking and Balance Sheet Management:
- At December 31, 2021, total loans (excluding $14 million of PPP loans) grew 15% to $4.83 billion compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020.
- C&I loan/lease balances (excluding PPP loans) grew $216 million or 12% over 2020, with a large portion of that net growth occurring in Q4 2021.
- SBA Income ($4.9 million) and Corporate Advisory fees ($3.5 million) totaled $8.4 million in 2021.
- Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market) totaled 89% of total deposits at December 31, 2021, with an average cost of 0.17%.
- The net interest margin improved by 4 basis points in Q4 2021 compared to Q3 2021 and improved 21 basis points when compared to Q4 2020.
Capital Management:
- Continued to execute on the previously approved stock repurchase program – during Q4 repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. (For the year ended December 31, 2021, the Company repurchased 894,744 shares).
- Tangible book value per share increased 6.2% to $27.05 at December 31, 2021 from $25.47 at December 31, 2020, despite recent stock repurchase activity and a wealth acquisition. See the Non-GAAP financial measures reconciliation included in this release.
SUPPLEMENTAL QUARTERLY DETAILS:
Wealth Management
In the December 2021 quarter, the Bank’s wealth management business generated a record $13.96 million in fee income, compared to $13.86 million for the September 30, 2021 quarter and $10.79 million for the December 2020 quarter.
The market value of the Company’s AUM/AUA increased 26% to $11.1 billion at December 31, 2021 from $8.8 billion at December 31, 2020, due to organic new business, the PPSG acquisition, and favorable market conditions.
John P. Babcock, President of the Peapack Private Wealth Management division, said, “2021 showed continued strong business from new clients as well as additional business from existing clients. Positive net flows, combined with solid client retention and favorable market conditions, all contributed to our strong quarterly and full year results.” Mr. Babcock went on to note, “While we will continue to look at supplementing our organic growth with selective acquisitions, M&A activity in the RIA space is hyper-competitive with purchase price multiples reaching all-time highs – making it challenging for us to obtain acceptable returns on invested capital. Internally, we are focused on completing our One Team consolidation of the businesses and people we have acquired over the last several years under a single operating and technology framework, completing our migration to a single trading platform and re-organizing our wealth business under a new, streamlined organizational structure to ensure the highest level of client experience, maximum efficiency, and growth.”
Loans / Commercial Banking
At December 31, 2021, loans totaled $4.83 billion (excluding $14 million of PPP loans), compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020, reflecting growth of 15%. This growth was achieved despite over $900 million of net paydown/payoff activity over the twelve-month period.
Total C&I loans and leases (including the $14 million of PPP loans) at December 31, 2021 were $2.01 billion or 41% of the total loan portfolio.
Mr. Kennedy noted, “Our commercial loan pipelines continue to be strong going into the new year, standing at approximately $350 million with the likelihood of a first quarter closing. Notwithstanding significant payoff activity, we believe that we will achieve high single digit loan growth for 2022.”
Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by over $200 million of net growth in our C&I Portfolio, continued growth in Treasury Management income, and our over $3 million of corporate advisory fees by our investment banking group – this team had record earnings in 2021 and continues to have a robust pipeline of new business opportunities.”
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, 2021 increased $448 million to $5.27 billion from $4.82 billion at December 31, 2020. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $123 million, interest-bearing demand increased $439 million, while higher costing CDs declined $121 million and brokered deposits declined $25 million, when comparing December 31, 2021 to December 31, 2020.
Mr. Kennedy noted, “89% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 18% of our total deposits; both metrics reflect the relationship aspect of our deposit base.”
At December 31, 2021, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $971.2 million (or 16% of assets). This level is lower than the level at September 30, 2021 due to an increase in loan activity during Q4 2021 and more in line with historical levels.
The Company maintains backup liquidity of approximately $1.8 billion of secured funding with the Federal Home Loan Bank and $1.2 billion of secured funding from the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.
Mr. Kennedy noted, “We are well positioned for a rise in interest rates given that 40% of our loan portfolio reprices within three months and 52% within one year. Our current modeling, with what we believe include conservative deposit beta assumptions, indicates net interest income will improve approximately 3% in year one and 5% in year two after a 100 basis point rate shock.”
Net Interest Income (NII)/Net Interest Margin (NIM)
| Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| NII | NIM | NII | NIM | ||||||||||||||||||||
| NII/NIM excluding the below | $ | 134,206 | 2.50% | $ | 123,099 | 2.58% | |||||||||||||||||
| Prepayment premiums received on loan paydowns | 2,085 | 0.04% | 1,452 | 0.02% | |||||||||||||||||||
| Effect of maintaining excess interest earning cash | (420 | ) | -0.17% | (1,320 | ) | -0.21% | |||||||||||||||||
| Effect of PPP loans | 2,190 | 0.01% | 4,371 | -0.08% | |||||||||||||||||||
| NII/NIM as reported | $ | 138,061 | 2.38% | $ | 127,602 | 2.31% | |||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
| December 31, 2021 | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||
| NII | NIM | NII | NIM | NII | NIM | ||||||||||||||||||
| NII/NIM excluding the below | $ | 36,564 | 2.60% | $ | 34,635 | 2.56% | $ | 30,897 | 2.51% | ||||||||||||||
| Prepayment premiums received on loan paydowns | 555 | 0.04% | 325 | 0.02% | 413 | 0.02% | |||||||||||||||||
| Effect of maintaining excess interest earning cash | (68 | ) | -0.18% | (46 | ) | -0.14% | (206 | ) | -0.24% | ||||||||||||||
| Effect of PPP loans | 161 | 0.00% | 297 | -0.02% | 631 | -0.04% | |||||||||||||||||
| NII/NIM as reported | $ | 37,212 | 2.46% | $ | 35,211 | 2.42% | $ | 31,735 | 2.25% | ||||||||||||||
As shown above, the Company’s reported NII increased $2.0 million and NIM increased 4 basis points compared to the linked quarter. The Bank further lowered its cost of funds strategically and grew its average loan portfolio at rates/spreads beneficial to NIM.
Future net interest income and net interest margin should benefit from the following:
- Robust loan pipelines to generate loan growth.
- Continued downward repricing of maturing CDs.
- An increase in target Fed funds (should that occur).
Income from Capital Markets Activities
Noninterest income from Capital Markets activities (detailed below) totaled $3.52 million for the December 2021 quarter compared to $2.06 million for the September 2021 quarter and $1.90 million for the December 2020 quarter. The December 2021 quarterly results were driven by $2.18 million in Corporate Advisory income. The September 2021 quarter results were driven by $1.57 million in gains on sale of SBA loans. The December 2020 quarter reflected increased mortgage banking activity due to greater refinance activity in the low-rate environment. The December 2021, September 2021 and December 2020 quarters included no income from loan level, back-to-back swap activities, as there has been, and will continue to be, minimal activity for such in the current environment.
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| (Dollars in thousands, except per share data) | 2021 | 2021 | 2020 | |||||||||
| Gain on loans held for sale at fair value (Mortgage banking) | $ | 352 | $ | 408 | $ | 1,470 | ||||||
| Fee income related to loan level, back-to-back swaps | — | — | — | |||||||||
| Gain on sale of SBA loans | 989 | 1,569 | 375 | |||||||||
| Corporate advisory fee income | 2,180 | 84 | 50 | |||||||||
| Total capital markets activity | $ | 3,521 | $ | 2,061 | $ | 1,895 | ||||||
Other Noninterest Income (other than Wealth Management fee income and Income from Capital Markets Activities)
Other noninterest income (as defined above) totaled $1.48 million, $1.86 million, and $1.72 million, for the December 2021, September 2021, and December 2020 quarters, respectively. The December 2021 quarter included $265,000 net loss on loans held for sale.
Operating Expenses
The Company’s total operating expenses were $31.70 million for the quarter ended December 31, 2021, compared to $32.18 million for the September 2021 quarter and $39.25 million for the December 2020 quarter. The December 2021 and September 2021 quarters included $893,000 and $1.35 million related to a swap valuation allowance, respectively. The December and September 2021 quarters also included a full quarter’s worth of expense related to the teams hired from Lucas and Noyes and the acquisition of PPSG. The December 2020 quarter included $4.8 million for the prepayment of FHLB advances, $4.4 million for a valuation allowance on a loan held for sale and $210,000 related to the consolidation of two private banking offices.
Mr. Kennedy noted, “While we continue to manage expenses closely and prudently, we will invest in our existing people as the market demands in order to retain the talent we have acquired, grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and wealth M&A, and invest in digital enhancements to further enhance the client experience.”
Income Taxes
The effective tax rate for the three months ended December 31, 2021 was 28.31%, as compared to 26.22% for the September 2021 quarter and 33.29% for the quarter ended December 31, 2020. A tax return to book adjustment recorded in the December 2020 quarter coupled with reduced pretax income in the quarter, increased the December 2020 effective tax rate by approximately 5%.
The effective annual tax rate for 2021 was 27.09% compared to 18.16% for 2020. 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
Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at December 31, 2021 were $15.6 million, or 0.26% of total assets, compared to $25.9 million, or 0.42% of total assets, at September 30, 2021. The $10.3 million decline was largely due to a $2 million C&I loan moved back to accrual status, and a $7 million charge-off of the specific reserve on the commercial real estate loan with a large retail component located in Manhattan, and on deferral, that was placed on nonaccrual status in the third quarter of 2021.
For the quarter ended December 31, 2021, the Company’s provision for loan and lease losses was $3.8 million compared to $1.6 million for the September 2021 quarter and $2.4 million for the December 2020 quarter. The increased provision for loan and lease losses in the December 2021 quarter, when compared to the linked quarter and the 2020 quarter, was due principally to significant loan growth during the December 2021 quarter and additional specific reserves of $4.2 million on the commercial real estate loan noted above, offset by reduced qualitative loss factors related to the unemployment rate and amount of loan deferrals and other economic qualitative factors due to the COVID-19 pandemic.
Loans on deferral, and accruing, entered into during the COVID-19 pandemic have come down significantly from $914 million at June 30, 2020 to $13 million at December 31, 2021. The Company’s provision for loan and lease losses, and its allowance for loan and lease losses (ALLL) also reflect, among other things, the Company’s assessment of asset quality metrics, net charge-offs/recoveries, and the composition of the loan portfolio.
At December 31, 2021, the allowance for loan and lease losses was $61.70 million (1.27% of total loans), compared to $65.13 million at September 30, 2021 (1.42% of loans) and $67.31 million at December 31, 2020 (1.53% of total loans).
The Company will adopt CECL during the first quarter of 2022 and does not expect a material adjustment upon adoption.
Capital
The Company’s capital position during the December 2021 quarter was benefitted by net income of $14.86 million, which was offset by the purchase of shares through the Company’s stock repurchase program and the quarterly dividend. During the fourth quarter of 2021, the Company repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. GAAP Capital at December 31, 2021 was also impacted by an increase in the unrealized loss on available-for-sale securities in the fourth quarter of 2021, due to a rise in medium-term Treasury yields.
The Company’s and Bank’s capital ratios at December 31, 2021 all remain strong. Such ratios remain well above regulatory well capitalized standards.
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. At the time, the Company noted the proceeds raised would be used for general corporate purposes, which could include stock repurchases, the redemption of the Company’s then existing 6% subordinated debt and acquisitions of wealth management firms. Throughout the twelve months of 2021, the Company repurchased $29 million of stock. On June 30, 2021, the Company redeemed its 6% subordinated debt. On July 1, 2021, the Company closed on the acquisition of PPSG.
The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test on September 30, 2021, under severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period. With a Pandemic stress overlay, the Bank still remains well capitalized over the two-year stress period.
On January 27, 2022, the Company declared a cash dividend of $0.05 per share payable on February 25, 2022, to shareholders of record on February 10, 2022.
ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.1 billion and assets under management/administration of $11.1 billion as of December 31, 2021. 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 ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
- the impact of anticipated higher operating expenses in 2022 and beyond;
- our ability to successfully integrate wealth management firm acquisitions;
- our ability to manage our growth;
- our ability 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 the value in our investment portfolio;
- impact 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 delinquent, nonperforming, classified and criticized 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;
- a 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 pandemic 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. 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 worsens, 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 increase 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;
- a material decrease in net income or a net loss over several quarters could result in an elimination or 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, 2020. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308
(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, | ||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||
| Income Statement Data: | ||||||||||||||||||||
| Interest income | $ | 42,075 | $ | 40,067 | $ | 39,686 | $ | 38,239 | $ | 38,532 | ||||||||||
| Interest expense | 4,863 | 4,856 | 5,841 | 6,446 | 6,797 | |||||||||||||||
| Net interest income | 37,212 | 35,211 | 33,845 | 31,793 | 31,735 | |||||||||||||||
| Wealth management fee income | 13,962 | 13,860 | 13,034 | 12,131 | 10,791 | |||||||||||||||
| Service charges and fees | 996 | 959 | 896 | 846 | 859 | |||||||||||||||
| Bank owned life insurance | 308 | 311 | 466 | 611 | 313 | |||||||||||||||
| Gain on loans held for sale at fair value (Mortgage banking) (A) | 352 | 408 | 409 | 1,025 | 1,470 | |||||||||||||||
| (Loss)/Gain on loans held for sale at lower of cost or fair value (B) | (265 | ) | — | 1,125 | 282 | — | ||||||||||||||
| Fee income related to loan level, back-to-back swaps (A) | — | — | — | — | — | |||||||||||||||
| Gain on sale of SBA loans (A) | 989 | 1,569 | 932 | 1,449 | 375 | |||||||||||||||
| Corporate advisory fee income (A) | 2,180 | 84 | 121 | 1,098 | 50 | |||||||||||||||
| Loss on swap termination | — | — | (842 | ) | — | — | ||||||||||||||
| Other income (C) | 581 | 660 | 1,495 | 643 | 590 | |||||||||||||||
| Securities (losses)/gains, net | (139 | ) | (70 | ) | 42 | (265 | ) | (42 | ) | |||||||||||
| Total other income | 18,964 | 17,781 | 17,678 | 17,820 | 14,406 | |||||||||||||||
| Salaries and employee benefits (D) | 20,105 | 19,859 | 19,910 | 21,990 | 19,902 | |||||||||||||||
| Premises and equipment | 4,519 | 4,459 | 4,074 | 4,113 | 4,189 | |||||||||||||||
| FDIC insurance expense | 402 | 555 | 529 | 585 | 665 | |||||||||||||||
| FHLB prepayment penalty | — | — | — | — | 4,784 | |||||||||||||||
| Valuation allowance loans held for sale | — | — | — | — | 4,425 | |||||||||||||||
| Swap valuation allowance | 893 | 1,350 | — | — | — | |||||||||||||||
| Other expenses | 5,785 | 5,962 | 6,171 | 4,906 | 5,284 | |||||||||||||||
| Total operating expenses | 31,704 | 32,185 | 30,684 | 31,594 | 39,249 | |||||||||||||||
| Pretax income before provision for loan losses | 24,472 | 20,807 | 20,839 | 18,019 | 6,892 | |||||||||||||||
| Provision for loan and lease losses | 3,750 | 1,600 | 900 | 225 | 2,350 | |||||||||||||||
| Income before income taxes | 20,722 | 19,207 | 19,939 | 17,794 | 4,542 | |||||||||||||||
| Income tax expense | 5,867 | 5,036 | 5,521 | 4,616 | 1,512 | |||||||||||||||
| Net income | $ | 14,855 | $ | 14,171 | $ | 14,418 | $ | 13,178 | $ | 3,030 | ||||||||||
| Total revenue (E) | $ | 56,176 | $ | 52,992 | $ | 51,523 | $ | 49,613 | $ | 46,141 | ||||||||||
| Per Common Share Data: | ||||||||||||||||||||
| Earnings per share (basic) | $ | 0.80 | $ | 0.76 | $ | 0.76 | $ | 0.70 | $ | 0.16 | ||||||||||
| Earnings per share (diluted) | 0.78 | 0.74 | 0.74 | 0.67 | 0.16 | |||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 18,483,268 | 18,763,316 | 18,963,237 | 18,950,305 | 18,947,864 | |||||||||||||||
| Diluted | 19,070,594 | 19,273,831 | 19,439,439 | 19,531,689 | 19,334,569 | |||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets annualized (ROAA) | 0.96 | % | 0.95 | % | 0.97 | % | 0.89 | % | 0.21 | % | ||||||||||
| Return on average equity annualized (ROAE) | 10.94 | % | 10.40 | % | 10.86 | % | 10.03 | % | 2.32 | % | ||||||||||
| Return on average tangible common equity (ROATCE) (F) | 12.03 | % | 11.43 | % | 11.83 | % | 10.94 | % | 2.51 | % | ||||||||||
| Net interest margin (tax-equivalent basis) | 2.46 | % | 2.42 | % | 2.38 | % | 2.28 | % | 2.25 | % | ||||||||||
| GAAP efficiency ratio (G) | 56.44 | % | 60.74 | % | 59.55 | % | 63.68 | % | 85.06 | % | ||||||||||
| Operating expenses / average assets annualized | 2.05 | % | 2.16 | % | 2.06 | % | 2.14 | % | 2.66 | % | ||||||||||
(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.
(B) Includes a $1.1 million gain on sale of $57 million of PPP loans completed in the June 2021 quarter.
(C) Includes income of $722,000 from the referral of PPP loans to a third-party firm during the June 2021 quarter.
(D) The March 2021 quarter included $1.5 million of severance expense related to corporate restructuring.
(E) Total revenue equals the sum of net interest income plus total other income.
(F) Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(G) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the 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 | |||||||||||||||
| 2021 | 2020 | $ | % | |||||||||||||
| Income Statement Data: | ||||||||||||||||
| Interest income | $ | 160,067 | $ | 165,750 | $ | (5,683 | ) | -3 | % | |||||||
| Interest expense | 22,006 | 38,148 | (16,142 | ) | -42 | % | ||||||||||
| Net interest income | 138,061 | 127,602 | 10,459 | 8 | % | |||||||||||
| Wealth management fee income | 52,987 | 40,861 | 12,126 | 30 | % | |||||||||||
| Service charges and fees | 3,697 | 3,155 | 542 | 17 | % | |||||||||||
| Bank owned life insurance | 1,696 | 1,273 | 423 | 33 | % | |||||||||||
| Gain on loans held for sale at fair value (Mortgage banking) (A) | 2,194 | 3,266 | (1,072 | ) | -33 | % | ||||||||||
| Gain on loans held for sale at lower of cost or fair value (B) | 1,142 | 7,426 | (6,284 | ) | -85 | % | ||||||||||
| Fee income related to loan level, back-to-back swaps (A) | — | 1,620 | (1,620 | ) | -100 | % | ||||||||||
| Gain on sale of SBA loans (A) | 4,939 | 1,766 | 3,173 | 180 | % | |||||||||||
| Corporate advisory fee income (A) | 3,483 | 265 | 3,218 | 1214 | % | |||||||||||
| Loss on swap termination | (842 | ) | — | (842 | ) | N/A | ||||||||||
| Other income (C) | 3,379 | 1,847 | 1,532 | 83 | % | |||||||||||
| Securities (losses)/gains, net | (432 | ) | 281 | (713 | ) | -254 | % | |||||||||
| Total other income | 72,243 | 61,760 | 10,483 | 17 | % | |||||||||||
| Salaries and employee benefits (D) | 81,864 | 77,516 | 4,348 | 6 | % | |||||||||||
| Premises and equipment | 17,165 | 16,377 | 788 | 5 | % | |||||||||||
| FDIC insurance expense | 2,071 | 1,975 | 96 | 5 | % | |||||||||||
| FHLB prepayment penalty | — | 4,784 | (4,784 | ) | -100 | % | ||||||||||
| Valuation allowance loans held for sale | — | 4,425 | (4,425 | ) | -100 | % | ||||||||||
| Swap valuation allowance | 2,243 | — | 2,243 | N/A | ||||||||||||
| Other expenses | 22,824 | 19,882 | 2,942 | 15 | % | |||||||||||
| Total operating expenses | 126,167 | 124,959 | 1,208 | 1 | % | |||||||||||
| Pretax income before provision for loan losses | 84,137 | 64,403 | 19,734 | 31 | % | |||||||||||
| Provision for loan and lease losses (E) | 6,475 | 32,400 | (25,925 | ) | -80 | % | ||||||||||
| Income before income taxes | 77,662 | 32,003 | 45,659 | 143 | % | |||||||||||
| Income tax expense (F) | 21,040 | 5,811 | 15,229 | 262 | % | |||||||||||
| Net income | $ | 56,622 | $ | 26,192 | $ | 30,430 | 116 | % | ||||||||
| Total revenue (G) | $ | 210,304 | $ | 189,362 | $ | 20,942 | 11 | % | ||||||||
| Per Common Share Data: | ||||||||||||||||
| Earnings per share (basic) | $ | 3.01 | $ | 1.39 | $ | 1.62 | 117 | % | ||||||||
| Earnings per share (diluted) | 2.93 | 1.37 | 1.56 | 114 | % | |||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 18,788,679 | 18,896,825 | (108,146 | ) | -1 | % | ||||||||||
| Diluted | 19,292,602 | 19,081,187 | 211,415 | 1 | % | |||||||||||
| Performance Ratios: | ||||||||||||||||
| Return on average assets (ROAA) | 0.94 | % | 0.45 | % | 0.49 | % | 110 | % | ||||||||
| Return on average equity (ROAE) | 10.56 | % | 5.11 | % | 5.45 | % | 107 | % | ||||||||
| Return on average tangible common equity (ROATCE) (H) | 11.56 | % | 5.55 | % | 6.01 | % | 108 | % | ||||||||
| Net interest margin (tax-equivalent basis) | 2.38 | % | 2.31 | % | 0.07 | % | 3 | % | ||||||||
| GAAP efficiency ratio (I) | 59.99 | % | 65.99 | % | (6.00 | )% | -9 | % | ||||||||
| Operating expenses / average assets | 2.10 | % | 2.16 | % | (0.06 | )% | -3 | % | ||||||||
(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.
(B) Includes $1.1 million (2021) and $7.4 million (2020) of gains on sale of PPP loans of $57 million and $355 million completed in the twelve months ended December 31, 2021 and 2020, respectively.
(C) Includes income of $722,000 from the referral of PPP loans to a third-party firm during the twelve months ended December 31, 2021.
(D) 2021 included $1.5 million of severance expense related to corporate restructuring.
(E) 2020 included a higher provision for loan and lease losses primarily due to the COVID-19 pandemic.
(F) 2020 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.
(G) Total revenue equals the sum of net interest income plus total other income.
(H) Return on average tangible common equity is calculated by dividing tangible common equity by net income. See Non-GAAP financial measures reconciliation included in these tables.
(I) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the 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, | ||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 5,929 | $ | 9,299 | $ | 12,684 | $ | 8,159 | $ | 10,629 | ||||||||||
| Federal funds sold | — | — | — | 102 | 102 | |||||||||||||||
| Interest-earning deposits | 140,875 | 606,913 | 190,778 | 468,276 | 642,591 | |||||||||||||||
| Total cash and cash equivalents | 146,804 | 616,212 | 203,462 | 476,537 | 653,322 | |||||||||||||||
| Securities held to maturity | 108,680 | — | — | — | — | |||||||||||||||
| Securities available for sale | 796,753 | 843,779 | 823,820 | 875,301 | 622,689 | |||||||||||||||
| Equity security | 14,685 | 14,824 | 14,894 | 14,852 | 15,117 | |||||||||||||||
| FHLB and FRB stock, at cost | 12,950 | 12,950 | 12,901 | 13,699 | 13,709 | |||||||||||||||
| Residential mortgage | 501,340 | 510,878 | 504,181 | 498,884 | 520,188 | |||||||||||||||
| Multifamily mortgage | 1,595,866 | 1,497,683 | 1,420,043 | 1,178,940 | 1,127,198 | |||||||||||||||
| Commercial mortgage | 662,626 | 680,107 | 702,777 | 697,599 | 694,034 | |||||||||||||||
| Commercial loans (A) | 2,009,252 | 1,833,532 | 1,880,830 | 1,982,570 | 1,975,337 | |||||||||||||||
| Consumer loans | 33,687 | 30,689 | 31,889 | 36,519 | 37,016 | |||||||||||||||
| Home equity lines of credit | 40,803 | 42,512 | 44,062 | 45,624 | 50,547 | |||||||||||||||
| Other loans | 238 | 245 | 204 | 199 | 225 | |||||||||||||||
| Total loans | 4,843,812 | 4,595,646 | 4,583,986 | 4,440,335 | 4,404,545 | |||||||||||||||
| Less: Allowances for loan and lease losses | 61,697 | 65,133 | 63,505 | 67,536 | 67,309 | |||||||||||||||
| Net loans | 4,782,115 | 4,530,513 | 4,520,481 | 4,372,799 | 4,337,236 | |||||||||||||||
| Premises and equipment | 23,044 | 23,123 | 23,261 | 23,260 | 21,609 | |||||||||||||||
| Other real estate owned | — | — | — | 50 | 50 | |||||||||||||||
| Accrued interest receivable | 21,589 | 22,790 | 23,117 | 23,916 | 22,495 | |||||||||||||||
| Bank owned life insurance | 46,663 | 46,510 | 46,605 | 46,448 | 46,809 | |||||||||||||||
| Goodwill and other intangible assets | 48,902 | 49,333 | 43,156 | 43,524 | 43,891 | |||||||||||||||
| Finance lease right-of-use assets | 3,582 | 3,769 | 3,956 | 4,143 | 4,330 | |||||||||||||||
| Operating lease right-of-use assets | 9,775 | 10,307 | 9,569 | 10,186 | 9,421 | |||||||||||||||
| Other assets (B) | 62,451 | 66,175 | 66,466 | 64,912 | 99,764 | |||||||||||||||
| TOTAL ASSETS | $ | 6,077,993 | $ | 6,240,285 | $ | 5,791,688 | $ | 5,969,627 | $ | 5,890,442 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 956,482 | $ | 986,765 | $ | 959,494 | $ | 908,922 | $ | 833,500 | ||||||||||
| Interest-bearing demand deposits | 2,287,894 | 2,355,892 | 1,978,497 | 1,987,567 | 1,849,254 | |||||||||||||||
| Savings | 154,914 | 168,831 | 147,227 | 141,743 | 130,731 | |||||||||||||||
| Money market accounts | 1,307,051 | 1,287,686 | 1,213,992 | 1,256,605 | 1,298,885 | |||||||||||||||
| Certificates of deposit – Retail | 409,608 | 426,981 | 446,143 | 474,668 | 530,222 | |||||||||||||||
| Certificates of deposit – Listing Service | 31,382 | 31,382 | 31,631 | 31,631 | 32,128 | |||||||||||||||
| Subtotal “customer” deposits | 5,147,331 | 5,257,537 | 4,776,984 | 4,801,136 | 4,674,720 | |||||||||||||||
| IB Demand – Brokered | 85,000 | 85,000 | 85,000 | 110,000 | 110,000 | |||||||||||||||
| Certificates of deposit – Brokered | 33,818 | 33,804 | 33,791 | 33,777 | 33,764 | |||||||||||||||
| Total deposits | 5,266,149 | 5,376,341 | 4,895,775 | 4,944,913 | 4,818,484 | |||||||||||||||
| Short-term borrowings | — | — | — | 15,000 | 15,000 | |||||||||||||||
| FHLB advances | — | — | — | — | — | |||||||||||||||
| Paycheck Protection Program Liquidity Facility (C) | — | 48,496 | 83,586 | 168,180 | 177,086 | |||||||||||||||
| Finance lease liability | 5,820 | 6,063 | 6,299 | 6,528 | 6,753 | |||||||||||||||
| Operating lease liability | 10,111 | 10,644 | 9,902 | 10,509 | 9,737 | |||||||||||||||
| Subordinated debt, net (D) | 132,701 | 132,629 | 132,557 | 181,837 | 181,794 | |||||||||||||||
| Other liabilities (B) | 116,824 | 123,098 | 125,110 | 120,219 | 154,466 | |||||||||||||||
| TOTAL LIABILITIES | 5,531,605 | 5,697,271 | 5,253,229 | 5,447,186 | 5,363,320 | |||||||||||||||
| Shareholders’ equity | 546,388 | 543,014 | 538,459 | 522,441 | 527,122 | |||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | $ | 6,077,993 | $ | 6,240,285 | $ | 5,791,688 | $ | 5,969,627 | $ | 5,890,442 | ||||||||||
| Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions) | $ | 11.1 | $ | 10.3 | $ | 9.8 | $ | 9.4 | $ | 8.8 | ||||||||||
(A) Includes PPP loans of $14 million at December 31, 2021; $49 million at September 30, 2021; $84 million at June 30, 2021; $233 million at March 31, 2021; and $196 million at December 31, 2020.
(B) The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.
(C) Represents funding provided by the Federal Reserve for pledged PPP loans.
(D) The decrease was due to the redemption of a $50 million subordinated debt on June 30, 2021.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
| As of | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||
| Asset Quality: | ||||||||||||||||||||
| Loans past due over 90 days and still accruing | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Nonaccrual loans (A) | 15,573 | 25,925 | 5,962 | 11,767 | 11,410 | |||||||||||||||
| Other real estate owned | — | — | — | 50 | 50 | |||||||||||||||
| Total nonperforming assets | $ | 15,573 | $ | 25,925 | $ | 5,962 | $ | 11,817 | $ | 11,460 | ||||||||||
| Nonperforming loans to total loans | 0.32 | % | 0.56 | % | 0.13 | % | 0.27 | % | 0.26 | % | ||||||||||
| Nonperforming assets to total assets | 0.26 | % | 0.42 | % | 0.10 | % | 0.20 | % | 0.19 | % | ||||||||||
| Performing TDRs (B)(C) | $ | 2,479 | $ | 416 | $ | 190 | $ | 197 | $ | 201 | ||||||||||
| Loans past due 30 through 89 days and still accruing (D)(E) | $ | 8,606 | $ | 1,193 | $ | 1,678 | $ | 1,622 | $ | 5,053 | ||||||||||
| Loans subject to special mention | $ | 116,490 | $ | 115,935 | $ | 148,601 | $ | 166,013 | $ | 162,103 | ||||||||||
| Classified loans | $ | 50,702 | $ | 51,937 | $ | 11,178 | $ | 25,714 | $ | 37,771 | ||||||||||
| Impaired loans | $ | 18,052 | $ | 26,341 | $ | 6,498 | $ | 11,964 | $ | 16,204 | ||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||
| Beginning of period | $ | 65,133 | $ | 63,505 | $ | 67,536 | $ | 67,309 | $ | 66,145 | ||||||||||
| Provision for loan and lease losses | 3,750 | 1,600 | 900 | 225 | 2,350 | |||||||||||||||
| (Charge-offs)/recoveries, net | (7,186 | ) | 28 | (4,931 | ) | 2 | (1,186 | ) | ||||||||||||
| End of period | $ | 61,697 | $ | 65,133 | $ | 63,505 | $ | 67,536 | $ | 67,309 | ||||||||||
| ALLL to nonperforming loans | 396.18 | % | 251.24 | % | 1065.16 | % | 573.94 | % | 589.91 | % | ||||||||||
| ALLL to total loans | 1.27 | % | 1.42 | % | 1.39 | % | 1.52 | % | 1.53 | % | ||||||||||
| General ALLL to total loans (F) | 1.19 | % | 1.26 | % | 1.38 | % | 1.45 | % | 1.47 | % | ||||||||||
(A) Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan.
(B) Amounts reflect TDRs that are paying according to restructured terms.
(C) Amount excludes $1.1 million at December 31, 2021, $4.0 million at September 30, 2021, $3.9 million at June 30, 2021, $3.9 million at March 31, 2021 and $4.0 million at December 31, 2020 of TDRs included in nonaccrual loans.
(D) Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and at the lessee/borrower at December 31, 2021. Payment was received in January.
(E) 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.
(F) 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, | ||||||||||||||||
| 2021 | 2021 | 2020 | ||||||||||||||||
| Capital Adequacy | ||||||||||||||||||
| Equity to total assets (A) | 8.99 | % | 8.70 | % | 8.95 | % | ||||||||||||
| Tangible Equity to tangible assets (B) | 8.25 | % | 7.97 | % | 8.27 | % | ||||||||||||
| Book value per share (C) | $ | 29.70 | $ | 29.15 | $ | 27.78 | ||||||||||||
| Tangible Book Value per share (D) | $ | 27.05 | $ | 26.50 | $ | 25.47 | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||||||||
| 2021 | 2021 | 2020 | ||||||||||||||||||||||
| Regulatory Capital – Holding Company | ||||||||||||||||||||||||
| Tier I leverage | $ | 508,231 | 8.29% | $ | 501,188 | 8.56% | $ | 483,535 | 8.53% | |||||||||||||||
| Tier I capital to risk-weighted assets | 508,231 | 10.62 | 501,188 | 10.97 | 483,535 | 11.93 | ||||||||||||||||||
| Common equity tier I capital ratio to risk-weighted assets | 508,207 | 10.62 | 501,159 | 10.97 | 483,500 | 11.93 | ||||||||||||||||||
| Tier I & II capital to risk-weighted assets | 700,790 | 14.64 | 691,044 | 15.12 | 716,210 | 17.67 | ||||||||||||||||||
| Regulatory Capital – Bank | ||||||||||||||||||||||||
| Tier I leverage (E) | $ | 612,762 | 9.99% | $ | 594,610 | 10.15% | $ | 549,575 | 9.71% | |||||||||||||||
| Tier I capital to risk-weighted assets (F) | 612,762 | 12.80 | 594,610 | 13.01 | 549,575 | 13.55 | ||||||||||||||||||
| Common equity tier I capital ratio to risk-weighted assets (G) | 612,738 | 12.80 | 594,581 | 13.01 | 549,540 | 13.55 | ||||||||||||||||||
| Tier I & II capital to risk-weighted assets (H) | 672,614 | 14.05 | 651,841 | 14.26 | 600,478 | 14.81 | ||||||||||||||||||
(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding
(D) Tangible book value per share 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.
(E) Regulatory well capitalized standard = 5.00% ($307 million)
(F) Regulatory well capitalized standard = 8.00% ($383 million)
(G) Regulatory well capitalized standard = 6.50% ($311 million)
(H) Regulatory well capitalized standard = 10.00% ($479 million)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
| For the Quarters Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||||||
| Residential loans retained | $ | 22,953 | $ | 36,845 | $ | 37,083 | $ | 15,814 | $ | 22,316 | ||||||||||
| Residential loans sold | 20,694 | 24,041 | 25,432 | 45,873 | 64,630 | |||||||||||||||
| Total residential loans | 43,647 | 60,886 | 62,515 | 61,687 | 86,946 | |||||||||||||||
| Commercial real estate | 16,134 | 14,944 | 12,243 | 38,363 | — | |||||||||||||||
| Multifamily | 162,740 | 120,716 | 255,820 | 85,009 | 1,184 | |||||||||||||||
| Commercial (C&I) loans (A) (B) | 341,886 | 143,121 | 141,285 | 129,141 | 218,235 | |||||||||||||||
| SBA (C) | 27,630 | 11,570 | 15,976 | 58,730 | 8,355 | |||||||||||||||
| Wealth lines of credit (A) | 7,500 | 10,020 | 3,200 | 2,475 | 3,925 | |||||||||||||||
| Total commercial loans | 555,890 | 300,371 | 428,524 | 313,718 | 231,699 | |||||||||||||||
| Installment loans | 94 | 178 | 25 | 63 | 690 | |||||||||||||||
| Home equity lines of credit (A) | 5,359 | 2,535 | 4,140 | 1,899 | 2,330 | |||||||||||||||
| Total loans closed | $ | 604,990 | $ | 363,970 | $ | 495,204 | $ | 377,367 | $ | 321,665 | ||||||||||
| For the Twelve Months Ended | ||||||||
| Dec 31, | Dec 31, | |||||||
| 2021 | 2020 | |||||||
| Residential loans retained | $ | 112,695 | $ | 88,373 | ||||
| Residential loans sold | 116,040 | 175,603 | ||||||
| Total residential loans | 228,735 | 263,976 | ||||||
| Commercial real estate | 81,684 | 11,219 | ||||||
| Multifamily | 624,285 | 76,642 | ||||||
| Commercial (C&I) loans (A) (B) | 755,433 | 478,485 | ||||||
| SBA (C) | 113,906 | 622,798 | ||||||
| Wealth lines of credit (A) | 23,195 | 9,675 | ||||||
| Total commercial loans | 1,598,503 | 1,198,819 | ||||||
| Installment loans | 360 | 2,149 | ||||||
| Home equity lines of credit (A) | 13,933 | 15,001 | ||||||
| Total loans closed | $ | 1,841,531 | $ | 1,479,945 | ||||
(A) Includes loans and lines of credit that closed in the period but not necessarily funded.
(B) Includes equipment finance.
(C) Includes PPP loans of $9 million for the quarter ended June 30, 2021, $47 million for the quarter ended March 31, 2021 and $596 million 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, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (A) | $ | 885,390 | $ | 3,104 | 1.40 | % | $ | 636,417 | $ | 2,033 | 1.28 | % | ||||||||||||
| Tax-exempt (A) (B) | 5,443 | 54 | 3.97 | 8,137 | 101 | 4.96 | ||||||||||||||||||
| Loans (B) (C): | ||||||||||||||||||||||||
| Mortgages | 510,562 | 3,799 | 2.98 | 520,123 | 4,372 | 3.36 | ||||||||||||||||||
| Commercial mortgages | 2,209,160 | 17,708 | 3.21 | 1,865,953 | 14,796 | 3.17 | ||||||||||||||||||
| Commercial | 1,826,640 | 16,660 | 3.65 | 1,943,855 | 16,587 | 3.41 | ||||||||||||||||||
| Commercial construction | 20,426 | 176 | 3.45 | 10,376 | 108 | 4.16 | ||||||||||||||||||
| Installment | 33,400 | 253 | 3.03 | 44,581 | 320 | 2.87 | ||||||||||||||||||
| Home equity | 41,955 | 346 | 3.30 | 51,545 | 429 | 3.33 | ||||||||||||||||||
| Other | 270 | 6 | 8.89 | 281 | 6 | 8.54 | ||||||||||||||||||
| Total loans | 4,642,413 | 38,948 | 3.36 | 4,436,714 | 36,618 | 3.30 | ||||||||||||||||||
| Federal funds sold | — | — | — | 102 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 513,650 | 178 | 0.14 | 614,024 | 148 | 0.10 | ||||||||||||||||||
| Total interest-earning assets | 6,046,896 | 42,284 | 2.80 | % | 5,695,394 | 38,900 | 2.73 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 11,517 | 9,632 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (65,542 | ) | (68,862 | ) | ||||||||||||||||||||
| Premises and equipment | 23,117 | 21,698 | ||||||||||||||||||||||
| Other assets | 182,154 | 238,856 | ||||||||||||||||||||||
| Total noninterest-earning assets | 151,246 | 201,324 | ||||||||||||||||||||||
| Total assets | $ | 6,198,142 | $ | 5,896,718 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 2,321,970 | $ | 1,327 | 0.23 | % | $ | 1,850,917 | $ | 1,059 | 0.23 | % | ||||||||||||
| Money markets | 1,290,334 | 678 | 0.21 | 1,273,681 | 811 | 0.25 | ||||||||||||||||||
| Savings | 152,570 | 20 | 0.05 | 128,195 | 17 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 453,127 | 725 | 0.64 | 602,068 | 2,106 | 1.40 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 4,218,001 | 2,750 | 0.26 | 3,854,861 | 3,993 | 0.41 | ||||||||||||||||||
| Interest-bearing demand – brokered | 85,000 | 387 | 1.82 | 113,696 | 514 | 1.81 | ||||||||||||||||||
| Certificates of deposit – brokered | 33,810 | 267 | 3.16 | 33,756 | 267 | 3.16 | ||||||||||||||||||
| Total interest-bearing deposits | 4,336,811 | 3,404 | 0.31 | 4,002,313 | 4,774 | 0.48 | ||||||||||||||||||
| Borrowings | 25,890 | 25 | 0.39 | 244,753 | 616 | 1.01 | ||||||||||||||||||
| Capital lease obligation | 5,913 | 71 | 4.80 | 6,832 | 82 | 4.80 | ||||||||||||||||||
| Subordinated debt | 132,659 | 1,363 | 4.11 | 94,437 | 1,325 | 5.61 | ||||||||||||||||||
| Total interest-bearing liabilities | 4,501,273 | 4,863 | 0.43 | % | 4,348,335 | 6,797 | 0.63 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 1,042,477 | 858,004 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 111,357 | 166,933 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,153,834 | 1,024,937 | ||||||||||||||||||||||
| Shareholders’ equity | 543,035 | 523,446 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,198,142 | $ | 5,896,718 | ||||||||||||||||||||
| Net interest income | $ | 37,421 | $ | 32,103 | ||||||||||||||||||||
| Net interest spread | 2.37 | % | 2.10 | % | ||||||||||||||||||||
| Net interest margin (D) | 2.46 | % | 2.25 | % | ||||||||||||||||||||
(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) 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, 2021 | September 30, 2021 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (A) | $ | 885,390 | $ | 3,104 | 1.40 | % | $ | 820,574 | $ | 2,824 | 1.38 | % | ||||||||||||
| Tax-exempt (A) (B) | 5,443 | 54 | 3.97 | 6,035 | 64 | 4.24 | ||||||||||||||||||
| Loans (B) (C): | ||||||||||||||||||||||||
| Mortgages | 510,562 | 3,799 | 2.98 | 503,621 | 3,779 | 3.00 | ||||||||||||||||||
| Commercial mortgages | 2,209,160 | 17,708 | 3.21 | 2,133,259 | 16,114 | 3.02 | ||||||||||||||||||
| Commercial | 1,826,640 | 16,660 | 3.65 | 1,826,368 | 16,553 | 3.63 | ||||||||||||||||||
| Commercial construction | 20,426 | 176 | 3.45 | 24,596 | 198 | 3.22 | ||||||||||||||||||
| Installment | 33,400 | 253 | 3.03 | 32,219 | 245 | 3.04 | ||||||||||||||||||
| Home equity | 41,955 | 346 | 3.30 | 43,182 | 357 | 3.31 | ||||||||||||||||||
| Other | 270 | 6 | 8.89 | 252 | 5 | 7.94 | ||||||||||||||||||
| Total loans | 4,642,413 | 38,948 | 3.36 | 4,563,497 | 37,251 | 3.27 | ||||||||||||||||||
| Federal funds sold | — | — | — | — | — | — | ||||||||||||||||||
| Interest-earning deposits | 513,650 | 178 | 0.14 | 413,623 | 142 | 0.14 | ||||||||||||||||||
| Total interest-earning assets | 6,046,896 | 42,284 | 2.80 | % | 5,803,729 | 40,281 | 2.78 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 11,517 | 8,592 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (65,542 | ) | (64,100 | ) | ||||||||||||||||||||
| Premises and equipment | 23,117 | 23,311 | ||||||||||||||||||||||
| Other assets | 182,154 | 201,287 | ||||||||||||||||||||||
| Total noninterest-earning assets | 151,246 | 169,090 | ||||||||||||||||||||||
| Total assets | $ | 6,198,142 | $ | 5,972,819 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 2,321,970 | $ | 1,327 | 0.23 | % | $ | 2,098,827 | $ | 1,177 | 0.22 | % | ||||||||||||
| Money markets | 1,290,334 | 678 | 0.21 | 1,257,760 | 683 | 0.22 | ||||||||||||||||||
| Savings | 152,570 | 20 | 0.05 | 152,759 | 20 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 453,127 | 725 | 0.64 | 461,917 | 836 | 0.72 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 4,218,001 | 2,750 | 0.26 | 3,971,263 | 2,716 | 0.27 | ||||||||||||||||||
| Interest-bearing demand – brokered | 85,000 | 387 | 1.82 | 85,000 | 385 | 1.81 | ||||||||||||||||||
| Certificates of deposit – brokered | 33,810 | 267 | 3.16 | 33,796 | 266 | 3.15 | ||||||||||||||||||
| Total interest-bearing deposits | 4,336,811 | 3,404 | 0.31 | 4,090,059 | 3,367 | 0.33 | ||||||||||||||||||
| Borrowings | 25,890 | 25 | 0.39 | 64,332 | 57 | 0.35 | ||||||||||||||||||
| Capital lease obligation | 5,913 | 71 | 4.80 | 6,147 | 74 | 4.82 | ||||||||||||||||||
| Subordinated debt | 132,659 | 1,363 | 4.11 | 132,588 | 1,358 | 4.10 | ||||||||||||||||||
| Total interest-bearing liabilities | 4,501,273 | 4,863 | 0.43 | % | 4,293,126 | 4,856 | 0.45 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 1,042,477 | 997,450 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 111,357 | 137,387 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,153,834 | 1,134,837 | ||||||||||||||||||||||
| Shareholders’ equity | 543,035 | 544,856 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,198,142 | $ | 5,972,819 | ||||||||||||||||||||
| Net interest income | $ | 37,421 | $ | 35,425 | ||||||||||||||||||||
| Net interest spread | 2.37 | % | 2.33 | % | ||||||||||||||||||||
| Net interest margin (D) | 2.46 | % | 2.42 | % | ||||||||||||||||||||
(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) 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, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Average | Income/ | Average | Income/ | |||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||
| Taxable (A) | $ | 838,174 | $ | 11,577 | 1.38 | % | $ | 510,245 | $ | 8,782 | 1.72 | % | ||||||||||||
| Tax-exempt (A) (B) | 6,579 | 296 | 4.50 | 9,479 | 477 | 5.03 | ||||||||||||||||||
| Loans (B) (C): | ||||||||||||||||||||||||
| Mortgages | 503,616 | 15,359 | 3.05 | 528,687 | 17,882 | 3.38 | ||||||||||||||||||
| Commercial mortgages | 2,032,318 | 63,298 | 3.11 | 1,958,262 | 64,541 | 3.30 | ||||||||||||||||||
| Commercial | 1,881,683 | 66,652 | 3.54 | 1,969,115 | 71,037 | 3.61 | ||||||||||||||||||
| Commercial construction | 20,420 | 692 | 3.39 | 5,932 | 295 | 4.97 | ||||||||||||||||||
| Installment | 34,390 | 1,030 | 3.00 | 51,007 | 1,532 | 3.00 | ||||||||||||||||||
| Home equity | 44,735 | 1,479 | 3.31 | 53,853 | 1,940 | 3.60 | ||||||||||||||||||
| Other | 247 | 21 | 8.50 | 311 | 29 | 9.32 | ||||||||||||||||||
| Total loans | 4,517,409 | 148,531 | 3.29 | 4,567,167 | 157,256 | 3.44 | ||||||||||||||||||
| Federal funds sold | 48 | — | 0.13 | 102 | — | 0.25 | ||||||||||||||||||
| Interest-earning deposits | 477,477 | 545 | 0.11 | 504,753 | 968 | 0.19 | ||||||||||||||||||
| Total interest-earning assets | 5,839,687 | 160,949 | 2.76 | % | 5,591,746 | 167,483 | 3.00 | % | ||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and due from banks | 10,396 | 7,025 | ||||||||||||||||||||||
| Allowance for loan and lease losses | (67,075 | ) | (61,401 | ) | ||||||||||||||||||||
| Premises and equipment | 23,094 | 21,455 | ||||||||||||||||||||||
| Other assets | 197,893 | 219,287 | ||||||||||||||||||||||
| Total noninterest-earning assets | 164,308 | 186,366 | ||||||||||||||||||||||
| Total assets | $ | 6,003,995 | $ | 5,778,112 | ||||||||||||||||||||
| LIABILITIES: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| Checking | $ | 2,078,658 | $ | 4,426 | 0.21 | % | $ | 1,742,846 | $ | 7,279 | 0.42 | % | ||||||||||||
| Money markets | 1,260,865 | 2,882 | 0.23 | 1,227,295 | 6,185 | 0.50 | ||||||||||||||||||
| Savings | 146,210 | 75 | 0.05 | 120,780 | 63 | 0.05 | ||||||||||||||||||
| Certificates of deposit – retail | 483,889 | 4,058 | 0.84 | 654,652 | 11,476 | 1.75 | ||||||||||||||||||
| Subtotal interest-bearing deposits | 3,969,622 | 11,441 | 0.29 | 3,745,573 | 25,003 | 0.67 | ||||||||||||||||||
| Interest-bearing demand – brokered | 96,301 | 1,721 | 1.79 | 143,388 | 2,773 | 1.93 | ||||||||||||||||||
| Certificates of deposit – brokered | 33,790 | 1,058 | 3.13 | 33,735 | 1,061 | 3.15 | ||||||||||||||||||
| Total interest-bearing deposits | 4,099,713 | 14,220 | 0.35 | 3,922,696 | 28,837 | 0.74 | ||||||||||||||||||
| Borrowings | 110,077 | 473 | 0.43 | 308,814 | 3,976 | 1.29 | ||||||||||||||||||
| Capital lease obligation | 6,260 | 300 | 4.79 | 7,157 | 343 | 4.79 | ||||||||||||||||||
| Subordinated debt | 156,888 | 7,013 | 4.47 | 86,246 | 4,992 | 5.79 | ||||||||||||||||||
| Total interest-bearing liabilities | 4,372,938 | 22,006 | 0.50 | % | 4,324,913 | 38,148 | 0.88 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 959,912 | 787,191 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 134,948 | 153,648 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,094,860 | 940,839 | ||||||||||||||||||||||
| Shareholders’ equity | 536,197 | 512,360 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,003,995 | $ | 5,778,112 | ||||||||||||||||||||
| Net interest income | $ | 138,943 | $ | 129,335 | ||||||||||||||||||||
| Net interest spread | 2.26 | % | 2.12 | % | ||||||||||||||||||||
| Net interest margin (D) | 2.38 | % | 2.31 | % | ||||||||||||||||||||
(A) Average balances for available for sale securities are based on amortized cost.
(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
(C) Loans are stated net of unearned income and include nonaccrual loans.
(D) 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 other real estate owned 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 a reasonable measure of core expenses relative to core revenue.
We believe these non-GAAP financial measures provide information that is important to investors and useful in understanding our financial position, results and ratios because 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.
(Dollars in thousands, except share data)
| Three Months Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| Tangible Book Value Per Share | 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||||||
| Shareholders’ equity | $ | 546,388 | $ | 543,014 | $ | 538,459 | $ | 522,441 | $ | 527,122 | ||||||||||
| Less: Intangible assets, net | 48,902 | 49,333 | 43,156 | 43,524 | 43,891 | |||||||||||||||
| Tangible equity | $ | 497,486 | $ | 493,681 | $ | 495,303 | $ | 478,917 | $ | 483,231 | ||||||||||
| Period end shares outstanding | 18,393,888 | 18,627,910 | 18,829,877 | 19,034,870 | 18,974,703 | |||||||||||||||
| Tangible book value per share | $ | 27.05 | $ | 26.50 | $ | 26.30 | $ | 25.16 | $ | 25.47 | ||||||||||
| Book value per share | 29.70 | 29.15 | 28.60 | 27.45 | 27.78 | |||||||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||||||||||
| Total assets | $ | 6,077,993 | $ | 6,240,285 | $ | 5,791,688 | $ | 5,969,627 | $ | 5,890,442 | ||||||||||
| Less: Intangible assets, net | 48,902 | 49,333 | 43,156 | 43,524 | 43,891 | |||||||||||||||
| Tangible assets | $ | 6,029,091 | $ | 6,190,952 | $ | 5,748,532 | $ | 5,926,103 | $ | 5,846,551 | ||||||||||
| Tangible equity to tangible assets | 8.25 | % | 7.97 | % | 8.62 | % | 8.08 | % | 8.27 | % | ||||||||||
| Equity to assets | 8.99 | % | 8.70 | % | 9.30 | % | 8.75 | % | 8.95 | % | ||||||||||
| Three Months Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| Return on Average Tangible Equity | 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||||||
| Net income | $ | 14,855 | $ | 14,171 | $ | 14,418 | $ | 13,178 | $ | 3,030 | ||||||||||
| Average shareholders’ equity | $ | 543,035 | $ | 544,856 | $ | 530,971 | $ | 525,643 | $ | 523,446 | ||||||||||
| Less: Average intangible assets, net | 49,151 | 48,757 | 43,366 | 43,742 | 40,336 | |||||||||||||||
| Average tangible equity | $ | 493,884 | $ | 496,099 | $ | 487,605 | $ | 481,901 | $ | 483,110 | ||||||||||
| Return on average tangible common equity | 12.03 | % | 11.43 | % | 11.83 | % | 10.94 | % | 2.51 | % | ||||||||||
| For the Twelve Months Ended | ||||||||
| Dec 31, | Dec 31, | |||||||
| Return on Average Tangible Equity | 2021 | 2020 | ||||||
| Net income | $ | 56,622 | $ | 26,192 | ||||
| Average shareholders’ equity | $ | 536,197 | $ | 512,360 | ||||
| Less: Average intangible assets, net | 46,275 | 40,186 | ||||||
| Average tangible equity | $ | 489,922 | $ | 472,174 | ||||
| Return on average tangible common equity | 11.56 | % | 5.55 | % | ||||
| Three Months Ended | ||||||||||||||||||||
| Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | ||||||||||||||||
| Efficiency Ratio | 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||||||
| Net interest income | $ | 37,212 | $ | 35,211 | $ | 33,845 | $ | 31,793 | $ | 31,735 | ||||||||||
| Total other income | 18,964 | 17,781 | 17,678 | 17,820 | 14,406 | |||||||||||||||
| Add: | ||||||||||||||||||||
| Securities losses/(gains), net | 139 | 70 | (42 | ) | 265 | 42 | ||||||||||||||
| Less: | ||||||||||||||||||||
| Loss/(gain) on loans held for sale | ||||||||||||||||||||
| at lower of cost or fair value | 265 | — | (1,125 | ) | (282 | ) | — | |||||||||||||
| Income from life insurance proceeds | — | — | (153 | ) | (302 | ) | — | |||||||||||||
| Loss on swap termination | — | — | 842 | — | — | |||||||||||||||
| Total recurring revenue | $ | 56,580 | $ | 53,062 | $ | 51,045 | $ | 49,294 | $ | 46,183 | ||||||||||
| Operating expenses | $ | 31,704 | $ | 32,185 | $ | 30,684 | $ | 31,594 | $ | 39,249 | ||||||||||
| Less: | ||||||||||||||||||||
| FHLB prepayment penalty | — | — | — | — | 4,784 | |||||||||||||||
| Valuation allowance loans held for sale | — | — | — | — | 4,425 | |||||||||||||||
| Write-off of subordinated debt costs | — | — | 648 | — | — | |||||||||||||||
| Swap valuation allowance | 893 | 1,350 | — | — | — | |||||||||||||||
| Severance expense | — | — | — | 1,532 | — | |||||||||||||||
| Total operating expenses | $ | 30,811 | $ | 30,835 | $ | 30,036 | $ | 30,062 | $ | 30,040 | ||||||||||
| Efficiency ratio | 54.46 | % | 58.11 | % | 58.84 | % | 60.99 | % | 65.05 | % | ||||||||||
| For the Twelve Months Ended | ||||||||
| Dec 31, | Dec 31, | |||||||
| Efficiency Ratio | 2021 | 2020 | ||||||
| Net interest income | $ | 138,061 | $ | 127,602 | ||||
| Total other income | 72,243 | 61,760 | ||||||
| Add: | ||||||||
| Securities losses/(gains), net | 432 | (281 | ) | |||||
| Less: | ||||||||
| Loss/ on swap termination | 842 | — | ||||||
| Income from life insurance proceeds | (455 | ) | — | |||||
| (Gain) on loans held for sale | ||||||||
| at lower of cost or fair value | (1,142 | ) | (7,426 | ) | ||||
| Total recurring revenue | $ | 209,981 | $ | 181,655 | ||||
| Operating expenses | $ | 126,167 | $ | 124,959 | ||||
| Less: | ||||||||
| FHLB prepayment penalty | — | 4,784 | ||||||
| Valuation allowance loans held for sale | — | 4,425 | ||||||
| Write-off of subordinated debt costs | 648 | — | ||||||
| Swap valuation allowance | 2,243 | — | ||||||
| Severance expense | 1,532 | — | ||||||
| Total operating expenses | $ | 121,744 | $ | 115,750 | ||||
| Efficiency ratio | 57.98 | % | 63.72 | % | ||||
