Peapack-Gladstone Financial Corporation Reports Strong First Quarter Results

 Strong first quarter results driven by continued loan growth, margin improvement and increased wealth management and capital markets fees 

 

Bedminster, NJ – (NewMediaWire) – April 29, 2022 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its first quarter 2022 results. 

This earnings release should be read in conjunction with the Company’s Q1 2022 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.  

The Company recorded total revenue of $54.33 million, net income of $13.44 million and diluted earnings per share (“EPS”) of $0.71 for the quarter ended March 31, 2022, compared to revenue of $49.61 million, net income of $13.18 million and diluted EPS of $0.67, respectively, for the three months ended March 31, 2021.  

The 2022 first quarter included a $6.6 million loss on the sale of securities associated with a balance sheet repositioning executed in the quarter, fully described later in this release. The 2022 first quarter also included $1.5 million of severance expense associated with certain staff reorganizations within several areas of the Peapack-Gladstone Bank (“the Bank”) during the quarter. These two items reduced total revenue by $6.6 million, net income by $5.9 million, EPS by $0.31, ROA by 0.38%, and ROE by 4.31%, for the Q1 2022 period.

Douglas L. Kennedy, President and CEO said, “Our first quarter results were driven by continued strong loan growth, increased net interest income and net interest margin, and solid wealth management and capital markets fee income.”

The following are select highlights for the quarter:

Peapack Private Wealth Management:

• AUM/AUA in our Peapack Private Wealth Management Division totaled $10.7 billion at March 31, 2022. 
• Gross new business inflows for Q1 2022 totaled $350 million. 
• Wealth Management fee income increased 22% to $14.8 million for Q1 2022 compared to $12.1 million for Q1 2021. 
• Finalizing the consolidation of three offices of previously acquired firms into existing private banking locations.

Commercial Banking and Balance Sheet Management: 

• Total loans grew 6% (25% annualized) to $5.15 billion at March 31, 2022 compared to $4.84 billion at December 31, 2021; and grew 21% from $4.25 billion (excluding $187 million of PPP loans) at March 31, 2021.
• Commercial & industrial lending (“C&I”) loan/lease balances comprise 40% of the total loan portfolio at March 31, 2022.    
• U.S. Small Business Association (“SBA”) Income ($2.8 million) and corporate advisory fees ($1.6 million) totaled $4.4 million for the first quarter of 2022.
• Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 90% of total deposits at March 31, 2022, with an average cost of 0.15%. 
• The net interest margin (NIM) improved by 23 basis points in Q1 2022 compared to Q4 2021 and improved 41 basis points when compared to Q1 2021.  
• The Company executed a balance sheet repositioning resulting in an estimated four basis point improvement to future NIM, with no impact to balance sheet duration, tangible capital or tangible book value per share.  

Capital Management:

• Repurchased approximately 300,000 shares of Company stock at an average price of $37.26 for a total cost of $11.2 million. 
• Regulatory Tier 1 Leverage Ratio stood at 10.3% for the Bank and 8.4% for the Company, at March 31, 2022. Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 12.5% for the Bank and 10.2% for the Company.  These ratios are significantly above well capitalized standards. 

SUMMARY INCOME STATEMENT DETAILS:

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

March 2022 Quarter Compared to Prior Year Quarter

A. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities. 

B. Other income for the quarter ended March 31, 2022 included a $6.6 million loss on the sale of securities associated with a balance sheet repositioning executed in the quarter. The December 2021 quarter included a $265,000 loss on the sale of loans.

C. The March 2022 quarter included $1.5 million of severance expense related to certain staff reorganization within several areas of the Bank.

D. The March 31, 2022 quarter included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the quarter. The 2022 period also included $1.5 million of severance expense associated with certain staff reorganizations within several areas of the Bank during the quarter. These two items reduced net income by $5.9 million, EPS by $0.31, ROA by 0.38%, and ROE by 4.31%, for the Q1 2022 period.

E. Total revenue equals the sum of net interest income plus total other income.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management 

In the March 2022 quarter, the Bank’s wealth management business generated $14.83 million in fee income, compared to $13.96 million for the December 31, 2021 quarter and $12.13 million for the March 2021 quarter. 

The market value of the Company’s AUM/AUAstood at $10.7 billion at March 31, 2022. Gross new business inflows for the 2022 quarter totaled $350 million. 

John Babcock, President of the Peapack Private Wealth Management division, said “Our AUM/AUA were negatively impacted in Q1 2022 as the S&P was down 5% in Q1 2022.  Notwithstanding current volatility, economic and global uncertainties, and overall market declines, new business from existing clients as well as from new clients continue at a healthy pace.  In Q1 2022, total new accounts and client additions totaled $350 million – approximately $150 million of which was in our Delaware trust company.  Of the remaining $200 million, $160 million was new managed business and the remainder was custody. As we enter Q2 2022, our new business pipeline is strong.”  

Additionally, we are nearing the completion of our “One Team” integration, which consolidates the operating and technology platforms of our eight acquisitions made since 2015 into a singular operating and technology platform, and also streamlines our organizational structure.  In Q1 2022, we consolidated our Princeton Portfolio Strategies team (acquired in 2021) into our existing private banking office in Princeton. In August, we will combine our former Point View and Lassus Wherley locations together in a new private banking office in Summit, NJ. 

Loans / Commercial Banking 

At March 31, 2022, loans totaled $5.15 billion, compared to $4.25 billion (excluding $187 million of PPP loans) at March 31, 2021, reflecting growth of 21%. 

Total C&I loans and leases (including the $10 million of PPP loans) at March 31, 2022 were $2.04 billion or 40% of the total loan portfolio. 

Mr. Kennedy noted, “Our commercial loan pipelines continue to be strong going into the new year, standing at approximately $300 million with the likelihood of a second quarter closing. We believe that we will achieve mid to high single digit loan growth for the remainder of 2022.”

Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by strong growth in our C&I Portfolio, continued growth in Treasury Management income, and back-to-back quarters with large corporate advisory fees by our investment banking group – this team had record earnings in 2021 and started off 2022 with another large fee event.” 

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk.  Total deposits at March 31, 2022 increased $121 million to $5.39 billion from $5.27 billion at December 31, 2021 and increased $443 million from $4.94 billion at March 31, 2021. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $114 million, interest-bearing demand increased $375 million, savings and money market increased $68 million, while higher costing CDs declined $90 million and brokered deposits declined $25 million, when comparing March 31, 2022 to March 31, 2021. 

Mr. Kennedy noted, “90% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 19% of our total deposits; both metrics reflect the relationship aspect of our deposit base.”

At March 31, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $747.7 million (or 12% of assets). 

The Company maintains backup liquidity of approximately $1.8 billion of secured available funding with the Federal Home Loan Bank and $1.6 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.

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

	Three Months Ended				Three Months Ended				Three Months Ended
	March 31, 2022				December 31, 2021				March 31, 2021
	NII		NIM		NII		NIM		NII		NIM
NII/NIM excluding the below	$39,274		2.68%		$36,564		2.60%		$30,565		2.49%
Prepayment premiums received on loan paydowns	351		0.02%		555		0.04%		704		0.05%
Effect of maintaining excess interest earning cash	-3		-0.01%		-68		-0.18%		-195		-0.21%
Effect of PPP loans	0		0.00%		161		0.00%		719		-0.05%
NII/NIM as reported	$39,622		2.69%		$37,212		2.46%		$31,793		2.28%

Other Noninterest Income (other than Wealth Management fee income and Income from Capital Markets Activities)  

Other noninterest income (as defined above) included a $6.6 million loss on sale of securities, associated with the balance sheet repositioning executed in Q1 2022, described above. When excluding this loss, other noninterest income was $1.84 million for Q1 2022, compared to $1.48 million, and $2.12 million for the December 2021 and March 2021 quarters, respectively. The December 2021 quarter included a net loss of $265,000 on loans held for sale. 

Operating Expenses

The Company’s total operating expenses were $34.17 million for the quarter ended March 31, 2022, compared to $31.70 million for the December 2021 quarter and $31.59 million for the March 2021 quarter. Both the March 2022 and March 2021 quarters included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank.  The March 2022 and December 2021 quarters also included a full quarter’s worth of expense related to the acquisition of Princeton Portfolio Strategies Group (“PPSG”) which closed on July 1, 2021. Further, the March 2022 quarter included increased costs related to health insurance and corporate insurance, as well as the normal annual merit increases and year-end bonuses.   

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. We will also grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs, and investin digital enhancements to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended March 31, 2022 was 24.45%, as compared to 28.31% for the December 2021 quarter and 25.94% for the quarter ended March 31, 2021. The March 31, 2022 and 2021 quarters benefitted from the vesting of restricted stock at prices higher than grant prices.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at March 31, 2022 were $15.9 million, or 0.25% of total assets. Loans past due 30 to 89 days and still accruing were $606,000.  

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 March 31, 2022. 

On January 1, 2022, the Company implemented Current Expected Credit Losses (“CECL”) methodology for calculating the Company’s Allowance for Credit Losses (“ACL”). The day one CECL adjustment totaled $5.5 million (reduction to 12/31/2021 ACL, and benefit to Capital, net of tax effect). 

For the quarter ended March 31, 2022, the Company’s provision for credit losses was $2.4 million compared to $3.8 million for the December 2021 quarter and $225,000 for the March 2021 quarter. The increased provision for credit losses in the March 2022 and December 2021 quarters, when compared to the March 2021 quarter was due principally to significant loan growth during the March 2022 and December 2021 quarters, offset by improvement in macro-economic conditions and strong and stable asset quality metrics.

At March 31, 2022, the ACL was $58.39 million (1.13% of total loans), compared to $61.70 million at December 31, 2021 (1.27% of loans) and $67.54 million at March 31, 2021 (1.52% of total loans).  

Capital 

The Company’s capital position during the March 2022 quarter was benefitted by net income of $13.44 million and the CECL day one adjustment of $3.9 million, net of tax, which was offset by the purchase of approximately 300,000 shares through the Company’s stock repurchase program ($11.2 million) and the quarterly dividend ($920,000). U.S. Generally Accepted Accounting Principles (“GAAP”) Capital at March 31, 2022 was also impacted by an increase in the unrealized loss on available-for-sale securities in the first quarter of 2022 due to the significant rise in medium-term Treasury yields. 

Mr. Kennedy noted, “Despite capital spent on stock repurchases, and capital being affected by the increased unrealized loss on AFS securities, our tangible book value per share only declined 4%, from $27.05 at December 31, 2021 to $25.85 at March 31, 2022.” 

The Company’s and Bank’s capital ratios at March 31, 2022 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, and repurchased an additional $11 million during Q1 2022.  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 December 31, 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 April 28, 2022, the Company declared a cash dividend of $0.05 per share payable on May 26, 2022, to shareholders of record on May 12, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.3 billion and assets under management/administration of $10.7 billion as of March 31, 2022.  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 credit losses and capital levels;
•  higher than expected increases in our allowance for credit losses;
•  higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;
•  inflation and changes in interest rates, which may adversely impact or margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
•  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;
•  the current or anticipated impact of military conflict, terrorism or other geopolitical events;
•  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 continued 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 credit 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;
•  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, 2021.  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
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
		2022		2021		2021		2021		2021
Income Statement Data:
Interest income		$44,140		$42,075		$40,067		$39,686		$38,239
Interest expense		4,518		4,863		4,856		5,841		6,446
Net interest income		39,622		37,212		35,211		33,845		31,793
Wealth management fee income		14,834		13,962		13,860		13,034		12,131
Service charges and fees		952		996		959		896		846
Bank owned life insurance		313		308		311		466		611
Gain on loans held for sale at fair value    (Mortgage banking) (A)		247		352		408		409		1,025
Gain/(loss) 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)		2,844		989		1,569		932		1,449
Corporate advisory fee income (A)		1,561		2,180		84		121		1,098
Loss on swap termination		—		—		—		(842)		—
Other income (C)		1,254		581		660		1,495		643
Loss on securities sale, net (D)		(6,609)		—		—		—		—
Fair value adjustment for CRA equity security		(682)		(139)		(70)		42		(265)
Total other income		14,714		18,964		17,781		17,678		17,820
Salaries and employee benefits (E)		22,449		20,105		19,859		19,910		21,990
Premises and equipment		4,647		4,519		4,459		4,074		4,113
FDIC insurance expense		471		402		555		529		585
Swap valuation allowance		673		893		1,350		—		—
Other expenses		5,929		5,785		5,962		6,171		4,906
Total operating expenses		34,169		31,704		32,185		30,684		31,594
Pretax income before provision for credit losses		20,167		24,472		20,807		20,839		18,019
Provision for credit losses (F)		2,375		3,750		1,600		900		225
Income before income taxes		17,792		20,722		19,207		19,939		17,794
Income tax expense		4,351		5,867		5,036		5,521		4,616
Net income		$13,441		$14,855		$14,171		$14,418		$13,178
Total revenue (G)		$54,336		$56,176		$52,992		$51,523		$49,613
Per Common Share Data:
Earnings per share (basic)		$0.73		$0.80		$0.76		$0.76		$0.70
Earnings per share (diluted)		0.71		0.78		0.74		0.74		0.67
Weighted average number of common    shares outstanding:
Basic		18,339,013		18,483,268		18,763,316		18,963,237		18,950,305
Diluted		18,946,683		19,070,594		19,273,831		19,439,439		19,531,689
Performance Ratios:
Return on average assets annualized (ROAA)		0.87%		0.96%		0.95%		0.97%		0.89%
Return on average equity annualized (ROAE)		9.88%		10.94%		10.40%		10.86%		10.03%
Return on average tangible common equity (ROATCE) (H)		10.85%		12.03%		11.43%		11.83%		10.94%
Net interest margin (tax-equivalent basis)		2.69%		2.46%		2.42%		2.38%		2.28%
GAAP efficiency ratio (I)		62.88%		56.44%		60.74%		59.55%		63.68%
Operating expenses / average assets annualized		2.22%		2.05%		2.16%		2.06%		2.14%

 

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. Loss on sale of securities was a result of a balance sheet repositioning employed in the March  2022 quarter.

E. The March 2022 and 2021 quarters each included $1.5 million of severance expense related to corporate restructuring.

F. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

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 annualized 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
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
		2022		2021		2021		2021		2021
ASSETS
Cash and due from banks		$8,849		$5,929		$9,299		$12,684		$8,159
Federal funds sold		—		—		—		—		102
Interest-earning deposits		105,111		140,875		606,913		190,778		468,276
Total cash and cash equivalents		113,960		146,804		616,212		203,462		476,537
Securities available for sale		601,163		796,753		843,779		823,820		875,301
Securities held to maturity		106,816		108,680		—		—		—
CRA equity security, at fair value		14,003		14,685		14,824		14,894		14,852
FHLB and FRB stock, at cost		18,570		12,950		12,950		12,901		13,699
Residential mortgage		513,289		501,340		510,878		504,181		498,884
Multifamily mortgage		1,850,097		1,595,866		1,497,683		1,420,043		1,178,940
Commercial mortgage		669,899		662,626		680,107		702,777		697,599
Commercial loans (A)		2,041,720		2,009,252		1,833,532		1,880,830		1,982,570
Consumer loans		35,322		33,687		30,689		31,889		36,519
Home equity lines of credit		38,604		40,803		42,512		44,062		45,624
Other loans		226		238		245		204		199
Total loans		5,149,157		4,843,812		4,595,646		4,583,986		4,440,335
Less: Allowances for credit losses (B)		58,386		61,697		65,133		63,505		67,536
Net loans		5,090,771		4,782,115		4,530,513		4,520,481		4,372,799
Premises and equipment		22,960		23,044		23,123		23,261		23,260
Other real estate owned		—		—		—		—		50
Accrued interest receivable		22,890		21,589		22,790		23,117		23,916
Bank owned life insurance		46,805		46,663		46,510		46,605		46,448
Goodwill and other intangible assets		48,471		48,902		49,333		43,156		43,524
Finance lease right-of-use assets		3,395		3,582		3,769		3,956		4,143
Operating lease right-of-use assets		14,725		9,775		10,307		9,569		10,186
Due from brokers (C)		120,245		—		—		—		—
Other assets (D)		30,890		62,451		66,175		66,466		64,912
TOTAL ASSETS		$6,255,664		$6,077,993		$6,240,285		$5,791,688		$5,969,627
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$1,023,208		$956,482		$986,765		$959,494		$908,922
Interest-bearing demand deposits		2,362,987		2,287,894		2,355,892		1,978,497		1,987,567
Savings		162,116		154,914		168,831		147,227		141,743
Money market accounts		1,304,017		1,307,051		1,287,686		1,213,992		1,256,605
Certificates of deposit – Retail		384,909		409,608		426,981		446,143		474,668
Certificates of deposit – Listing Service		31,348		31,382		31,382		31,631		31,631
Subtotal “customer” deposits		5,268,585		5,147,331		5,257,537		4,776,984		4,801,136
IB Demand – Brokered		85,000		85,000		85,000		85,000		110,000
Certificates of deposit – Brokered		33,831		33,818		33,804		33,791		33,777
Total deposits		5,387,416		5,266,149		5,376,341		4,895,775		4,944,913
Short-term borrowings		122,085		—		—		—		15,000
Paycheck Protection Program Liquidity Facility (E)		—		—		48,496		83,586		168,180
Finance lease liability		5,573		5,820		6,063		6,299		6,528
Operating lease liability		15,155		10,111		10,644		9,902		10,509
Subordinated debt, net (F)		132,772		132,701		132,629		132,557		181,837
Other liabilities (D)		69,237		116,824		123,098		125,110		120,219
TOTAL LIABILITIES		5,732,238		5,531,605		5,697,271		5,253,229		5,447,186
Shareholders’ equity		523,426		546,388		543,014		538,459		522,441
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$6,255,664		$6,077,993		$6,240,285		$5,791,688		$5,969,627
Assets under management and / or administration at    Peapack-Gladstone Bank’s Private Wealth Management    Division (market value, not included above-dollars in billions)		$10.7		$11.1		$10.3		$9.8		$9.4

A. Includes PPP loans of $10 million at March 31, 2022; $14 million at December 31, 2021; $49 million at September 30, 2021; $84 million at June 30, 2021; and $187 million at March 31, 2021.

B. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

C. Includes $120 million due from FHLB related to securities sales at March 31, 2022.  The $120 million received on April 1, 2022, was used to reduce short term borrowings.

D. 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.

E. Represents funding provided by the Federal Reserve for pledged PPP loans.

F. 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
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
		2022		2021		2021		2021		2021
Asset Quality:
Loans past due over 90 days and still accruing		$—		$—		$—		$—		$—
Nonaccrual loans (A)		15,884		15,573		25,925		5,962		11,767
Other real estate owned		—		—		—		—		50
Total nonperforming assets		$15,884		$15,573		$25,925		$5,962		$11,817
Nonperforming loans to total loans		0.31%		0.32%		0.56%		0.13%		0.27%
Nonperforming assets to total assets		0.25%		0.26%		0.42%		0.10%		0.20%
Performing TDRs (B)(C)		$2,375		$2,479		$416		$190		$197
Loans past due 30 through 89 days and still accruing (D)		$606		$8,606		$1,193		$1,678		$1,622
Loans subject to special mention		$110,252		$116,490		$115,935		$148,601		$166,013
Classified loans		$47,386		$50,702		$51,937		$11,178		$25,714
Impaired loans		$16,147		$18,052		$26,341		$6,498		$11,964
Allowance for credit losses (“ACL”):
Beginning of period		$61,697		$65,133		$63,505		$67,536		$67,309
Day one CECL adjustment		(5,536)		—		—		—		—
Provision for credit losses (E)		2,489		3,750		1,600		900		225
(Charge-offs)/recoveries, net		(264)		(7,186)		28		(4,931)		2
End of period		$58,386		$61,697		$65,133		$63,505		$67,536
ACL to nonperforming loans		367.58%		396.18%		251.24%		1065.16%		573.94%
ACL to total loans		1.13%		1.27%		1.42%		1.39%		1.52%
General ACL to total loans (F)		1.09%		1.19%		1.26%		1.38%		1.45%

A. Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan. 

B. Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.

C. Excludes TDRs included in nonaccrual loans in the following amounts: $13.6 million at March 31, 2022; $1.1 million at December 31, 2021; $4.0 million at September 30, 2021; $3.9 million at June 30, 2021; and $3.9 million at March 31, 2021. 

D. Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021. Payment was received in January 2022.

E. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to rollforward the ACL excludes a credit of $114,000 related to the off-balance sheet commitments.

F. Total ACL less specific reserves equals general ACL.

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

		March 31,				December 31,				March 31,
		2022				2021				2021
Regulatory Capital – Holding Company
Tier I leverage		$513,838		8.37%		$508,231		8.29%		$491,384		8.66%
Tier I capital to risk-weighted assets		513,838		10.16		508,231		10.62		491,384		12.00
Common equity tier I capital ratio    to risk-weighted assets		513,814		10.16		508,207		10.62		491,355		12.00
Tier I & II capital to risk-weighted assets		705,184		13.94		700,790		14.64		724,599		17.70
Regulatory Capital – Bank
Tier I leverage (E)		$631,522		10.29%		$612,762		9.99%		$564,533		9.95%
Tier I capital to risk-weighted assets (F)		631,522		12.49		612,762		12.80		564,533		13.79
Common equity tier I capital ratio    to risk-weighted assets (G)		631,498		12.49		612,738		12.80		564,504		13.78
Tier I & II capital to risk-weighted assets (H)		690,096		13.65		672,614		14.05		615,925		15.04

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% ($405 million)

G. Regulatory well capitalized standard = 6.50% ($329 million)

H. Regulatory well capitalized standard = 10.00% ($506 million)

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED
(Dollars in Thousands)
(Unaudited)

		For the Quarters Ended
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
		2022		2021		2021		2021		2021
Residential loans retained		$41,547		$22,953		$36,845		$37,083		$15,814
Residential loans sold		15,669		20,694		24,041		25,432		45,873
Total residential loans		57,216		43,647		60,886		62,515		61,687
Commercial real estate		25,575		16,134		14,944		12,243		38,363
Multifamily		265,650		162,740		120,716		255,820		85,009
Commercial (C&I) loans/leases (A) (B)		143,029		341,886		143,121		141,285		129,141
SBA (C)		26,093		27,630		11,570		15,976		58,730
Wealth lines of credit (A)		9,400		7,500		10,020		3,200		2,475
Total commercial loans		469,747		555,890		300,371		428,524		313,718
Installment loans		131		94		178		25		63
Home equity lines of credit (A)		1,341		5,359		2,535		4,140		1,899
Total loans closed		$528,435		$604,990		$363,970		$495,204		$377,367

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 and $47 million for the quarter ended March 31, 2021.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

		March 31, 2022						March 31, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$928,828		$3,606		1.55%		$761,187		$2,629		1.38%
Tax-exempt (A) (B)		4,701		48		4.08		7,980		98		4.91
Loans (B) (C):
Mortgages		508,408		3,656		2.88		501,590		3,954		3.15
Commercial mortgages		2,353,032		18,175		3.09		1,840,363		14,420		3.13
Commercial		2,008,464		18,203		3.63		1,932,692		16,455		3.41
Commercial construction		18,087		160		3.54		15,606		139		3.56
Installment		34,475		254		2.95		37,695		276		2.93
Home equity		40,245		324		3.22		48,853		399		3.27
Other		283		6		8.48		246		5		8.13
Total loans		4,962,994		40,778		3.29		4,377,045		35,648		3.26
Federal funds sold		—		—		—		102		—		0.00
Interest-earning deposits		127,121		29		0.09		555,331		128		0.09
Total interest-earning assets		6,023,644		44,461		2.95%		5,701,645		38,503		2.70%
Noninterest-earning assets:
Cash and due from banks		7,455						11,129
Allowance for credit losses		(61,001)						(71,160)
Premises and equipment		23,022						22,634
Other assets		168,239						228,134
Total noninterest-earning assets		137,715						190,737
Total assets		$6,161,359						$5,892,382
LIABILITIES:
Interest-bearing deposits:
Checking		$2,330,340		$1,238		0.21%		$1,908,380		$978		0.20%
Money markets		1,294,100		539		0.17		1,259,597		794		0.25
Savings		156,554		5		0.01		135,202		17		0.05
Certificates of deposit – retail		426,166		606		0.57		533,488		1,470		1.10
Subtotal interest-bearing deposits		4,207,160		2,388		0.23		3,836,667		3,259		0.34
Interest-bearing demand – brokered		85,000		373		1.76		110,000		493		1.79
Certificates of deposit – brokered		33,823		261		3.09		33,769		261		3.09
Total interest-bearing deposits		4,325,983		3,022		0.28		3,980,436		4,013		0.40
Borrowings		55,513		64		0.46		186,006		209		0.45
Capital lease obligation		5,662		68		4.80		6,608		79		4.78
Subordinated debt		132,731		1,364		4.11		181,795		2,145		4.72
Total interest-bearing liabilities		4,519,889		4,518		0.40%		4,354,845		6,446		0.59%
Noninterest-bearing liabilities:
Demand deposits		978,288						848,325
Accrued expenses and other liabilities		119,003						163,569
Total noninterest-bearing liabilities		1,097,291						1,011,894
Shareholders’ equity		544,179						525,643
Total liabilities and shareholders’ equity		$6,161,359						$5,892,382
Net interest income				$39,943						$32,057
Net interest spread						2.55%						2.11%
Net interest margin (D)						2.69%						2.28%

A. Average balances for available for sale securities are based on amortized cost.A

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 DATA

UNAUDITED

THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

		March 31, 2022						December 31, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$928,828		$3,606		1.55%		$885,390		$3,104		1.40%
Tax-exempt (A) (B)		4,701		48		4.08		5,443		54		3.97
Loans (B) (C):
Mortgages		508,408		3,656		2.88		510,562		3,799		2.98
Commercial mortgages		2,353,032		18,175		3.09		2,209,160		17,708		3.21
Commercial		2,008,464		18,203		3.63		1,826,640		16,660		3.65
Commercial construction		18,087		160		3.54		20,426		176		3.45
Installment		34,475		254		2.95		33,400		253		3.03
Home equity		40,245		324		3.22		41,955		346		3.30
Other		283		6		8.48		270		6		8.89
Total loans		4,962,994		40,778		3.29		4,642,413		38,948		3.36
Federal funds sold		—		—		—		—		—		—
Interest-earning deposits		127,121		29		0.09		513,650		178		0.14
Total interest-earning assets		6,023,644		44,461		2.95%		6,046,896		42,284		2.80%
Noninterest-earning assets:
Cash and due from banks		7,455						11,517
Allowance for credit losses		(61,001)						(65,542)
Premises and equipment		23,022						23,117
Other assets		168,239						182,154
Total noninterest-earning assets		137,715						151,246
Total assets		$6,161,359						$6,198,142
LIABILITIES:
Interest-bearing deposits:
Checking		$2,330,340		$1,238		0.21%		$2,321,970		$1,327		0.23%
Money markets		1,294,100		539		0.17		1,290,334		678		0.21
Savings		156,554		5		0.01		152,570		20		0.05
Certificates of deposit – retail		426,166		606		0.57		453,127		725		0.64
Subtotal interest-bearing deposits		4,207,160		2,388		0.23		4,218,001		2,750		0.26
Interest-bearing demand – brokered		85,000		373		1.76		85,000		387		1.82
Certificates of deposit – brokered		33,823		261		3.09		33,810		267		3.16
Total interest-bearing deposits		4,325,983		3,022		0.28		4,336,811		3,404		0.31
Borrowings		55,513		64		0.46		25,890		25		0.39
Capital lease obligation		5,662		68		4.80		5,913		71		4.80
Subordinated debt		132,731		1,364		4.11		132,659		1,363		4.11
Total interest-bearing liabilities		4,519,889		4,518		0.40%		4,501,273		4,863		0.43%
Noninterest-bearing liabilities:
Demand deposits		978,288						1,042,477
Accrued expenses and other liabilities		119,003						111,357
Total noninterest-bearing liabilities		1,097,291						1,153,834
Shareholders’ equity		544,179						543,035
Total liabilities and shareholders’ equity		$6,161,359						$6,198,142
Net interest income				$39,943						$37,421
Net interest spread						2.55%						2.37%
Net interest margin (D)						2.69%						2.46%

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
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
Tangible Book Value Per Share		2022		2021		2021		2020		2021
Shareholders’ equity		$523,426		$546,388		$543,014		$538,459		$522,441
Less:  Intangible assets, net		48,471		48,902		49,333		43,156		43,524
Tangible equity		$474,955		$497,486		$493,681		$495,303		$478,917
Period end shares outstanding		18,370,312		18,393,888		18,627,910		18,829,877		19,034,870
Tangible book value per share		$25.85		$27.05		$26.50		$26.30		$25.16
Book value per share		28.49		29.70		29.15		28.60		27.45
Tangible Equity to Tangible Assets
Total assets		$6,255,664		$6,077,993		$6,240,285		$5,791,688		$5,969,627
Less: Intangible assets, net		48,471		48,902		49,333		43,156		43,524
Tangible assets		$6,207,193		$6,029,091		$6,190,952		$5,748,532		$5,926,103
Tangible equity to tangible assets		7.65%		8.25%		7.97%		8.62%		8.08%
Equity to assets		8.37%		8.99%		8.70%		9.30%		8.75%

 

		Three Months Ended
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
Return on Average Tangible Equity		2022		2021		2021		2021		2021
Net income		$13,441		$14,855		$14,171		$14,418		$13,178
Average shareholders’ equity		$544,179		$543,035		$544,856		$530,971		$525,643
Less:  Average intangible assets, net		48,717		49,151		48,757		43,366		43,742
Average tangible equity		$495,462		$493,884		$496,099		$487,605		$481,901
Return on average tangible common equity		10.85%		12.03%		11.43%		11.83%		10.94%

 

		Three Months Ended
		March 31,		Dec 31,		Sept 30,		June 30,		March 31,
Efficiency Ratio		2022		2021		2021		2021		2021
Net interest income		$39,622		$37,212		$35,211		$33,845		$31,793
Total other income		14,714		18,964		17,781		17,678		17,820
Add:
Fair value adjustment for CRA equity security		682		139		70		(42)		265
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 securities sale, net		6,609		—		—		—		—
Loss/(gain) on swap termination		—		—		—		842		—
Total recurring revenue		61,627		56,580		53,062		51,045		49,294
Operating expenses		34,169		31,704		32,185		30,684		31,594
Less:
Write-off of subordinated debt costs		—		—		—		648		—
Swap valuation allowance		673		893		1,350		—		—
Severance expense		1,476		—		—		—		1,532
Total operating expense		32,020		30,811		30,835		30,036		30,062
Efficiency ratio		51.96%		54.46%		58.11%		58.84%		60.99%