Peapack-Gladstone Financial Corporation Reports Third Quarter Results

BEDMINSTER, NJ - (NewMediaWire) - October 24, 2023 -  Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2023 financial results.

This earnings release should be read in conjunction with the Company’s Q3 2023 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 $55.9 million, net income of $8.8 million and diluted earnings per share (“EPS”) of $0.49 for the quarter ended September 30, 2023, compared to revenue of $61.9 million, net income of $20.1 million and diluted EPS of $1.09 for the quarter ended September 30, 2022.

The net interest margin declined to 2.28% for the quarter ended September 30, 2023, compared to 2.49% for the quarter ended June 30, 2023 and 2.98% for the quarter ended September 30, 2022.

The Company’s return on average assets was 0.54%, return on average equity was 6.20%, and return on average tangible equity was 6.75% for the quarter ended September 30, 2023. Loans grew by $44 million to $5.5 billion funded by deposit growth of $61 million to $5.3 billion during the third quarter.

The Company’s liquidity position remains strong as balance sheet liquidity was $756 million as of September 30, 2023, which was 11.59% of total assets.  The Company also had $2.8 billion of external borrowing capacity available, when combined with balance sheet liquidity provides us with 294% coverage of our uninsured deposits. Approximately 77% of our deposits are presently covered by FDIC insurance or are fully collateralized.

Douglas L. Kennedy, President and CEO, said, “Our third quarter results were impacted by the continuing compression of our net interest margin primarily driven by the rapid rise in our cost of funds. We were however encouraged to see signs of stabilization in the margin during the quarter as we look at our results on a monthly basis. In addition, our business continues to generated a sizable and consistent stream of noninterest income led by the revenue generated by our Wealth Management business. Noninterest income represented 35% of total revenue during the third quarter."

Mr. Kennedy also noted, “The third quarter results also reflect an elevated provision for credit losses driven by two credit relationships that were transferred to non-performing status during the quarter. Both of these relationships are in the freight industry which is currently facing a massive downturn due to supply and demand imbalances. As we move forward through this challenging economic environment consisting of persistent inflation and rapidly rising interest rates, we continue to analyze our loan portfolio for areas of concern. We believe the diversity of our portfolio and strength of our underwriting standards will protect us in the long term. Unfortunately, we have been forced to deal with a handful of credit issues that have arisen as a result of current economic conditions."

As previously announced, the Company has been approved by its regulators to open a location in mid-town Manhattan in 2024 and has hired a team of experienced professionals to gain entry into this lucrative market. The team, who predominantly started during the third quarter, is performing above expectations and is building robust pipelines.

Mr. Kennedy said, "From a strategic standpoint, the Company is adopting new technology and processes to improve the client experience, which includes empowering all employees to provide innovative solutions and a white glove experience in every interaction."

The following are select highlights for the period ended September 30, 2023:

 

Wealth Management:

 

·       Gross new business inflows for Q3 2023 totaled $160 million ($96 million managed). For the first nine months of 2023, gross business inflows totaled $688 million ($547 million managed).

·       AUM/AUA in our Wealth Management Division totaled $10.4 billion at September 30, 2023 compared to $9.3 billion at September 30, 2022, which is an increase of 12% year over year. 

·       Wealth Management fee income of $14.0 million for Q3 2023 comprised 25% of total revenue for the quarter.

 

Commercial Banking and Balance Sheet Management:

 

·       Total loans were $5.5 billion at September 30, 2023 reflecting growth of $193 million when compared to $5.3 billion at December 31, 2022.

·       Commercial & industrial lending (“C&I”) loan/lease balances comprised 42% of the total loan portfolio at September 30, 2023.

·       Fee income on unused commercial lines of credit totaled $794,000 for Q3 2023.

·       Fee income recorded by the Equipment Finance division related to equipment transfers to lessees totaled $2.3 million for Q3 2023.

·       The net interest margin ("NIM") was 2.28% in Q3 2023, a decline of 21 basis points compared to Q2 2023 and a decline of 70 basis points when compared to Q3 2022.

·       Total deposits increased $54 million to $5.3 billion from December 31, 2022.

·       Noninterest-bearing demand deposits have declined by $299 million since December 31, 2022.

·       Noninterest-bearing demand deposits represented 18% of total deposits as of September 30, 2023.

·       Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 89% of total deposits at September 30, 2023.

 

Capital Management:

 

·       During the quarter, the Company repurchased 100,000 shares of Company stock for a cost of $2.8 million. On a year to date basis 367,014 shares have been repurchased during 2023. The Company repurchased 930,977 shares of stock for a cost of $32.7 million during the year ended December 31, 2022.

·       At September 30, 2023, the Regulatory Tier 1 Leverage Ratio stood at 10.75% for Peapack-Gladstone Bank (the "Bank") and 9.05% for the Company. The Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.22% for the Bank and 11.13% for the Company at September 30, 2023. These ratios are significantly above well capitalized standards, as capital has benefited from net income generation.

 

Non-Core Items:

 

The September 2023 quarter included a:

 

·       $404,000 negative fair value adjustment on an equity security held for CRA investment, which decreased total revenue by $404,000, reduced net income by $293,000 and EPS by $0.01 for the September 2023 quarter. Management believes this to be a non-core item.

SUMMARY INCOME STATEMENT DETAILS:

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

September 2023 Year Compared to Prior Year

Nine Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

Increase/

 

(Dollars in millions, except per share data)

 

2023

 

 

2022

 

 

 

(Decrease)

 

Net interest income

 

$

119.41

 

 

$

128.04

 

 

 

$

(8.63

)

 

 

(7

)%

Wealth management fee income

 

 

41.99

 

 

 

41.67

 

 

 

 

0.32

 

 

 

1

 

Capital markets activity

 

 

2.45

 

 

 

8.30

 

 

 

 

(5.85

)

 

 

(70

)

Other income (A)

 

 

11.55

 

 

 

(0.36

)

 

 

 

11.91

 

 

N/A

 

Total other income

 

 

55.99

 

 

 

49.61

 

 

 

 

6.38

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

175.40

 

 

 

177.65

 

 

 

 

(2.25

)

 

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (B)

 

 

110.68

 

 

 

100.39

 

 

 

 

10.29

 

 

 

10

 

Pretax income before provision for credit losses

 

 

64.72

 

 

 

77.26

 

 

 

 

(12.54

)

 

 

(16

)

Provision for credit losses

 

 

9.06

 

 

 

4.42

 

 

 

 

4.64

 

 

 

105

 

Pretax income

 

 

55.66

 

 

 

72.84

 

 

 

 

(17.18

)

 

 

(24

)

Income tax expense

 

 

15.40

 

 

 

19.17

 

 

 

 

(3.77

)

 

 

(20

)

Net income

 

$

40.26

 

 

$

53.67

 

 

 

$

(13.41

)

 

 

(25

)%

Diluted EPS

 

$

2.23

 

 

$

2.88

 

 

 

$

(0.65

)

 

 

(23

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.84

%

 

 

1.16

%

 

 

 

(0.32

)

 

 

 

Return on average equity

 

 

9.66

%

 

 

13.46

%

 

 

 

(3.80

)

 


(A)  Other income for the nine months ended September 30, 2023 included fee income from equipment finance activity of $2.7 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the nine months ended September 30, 2022 included a $6.6 million loss on sale of securities and a fair value adjustment on a CRA equity security of negative $1.7 million. 

(B) The nine months ended September 2023 included one-time charges of $2.0 million related to the recent retirement of certain employees and $175,000 of expense associated with three retail branch closures. The nine months ended September 30, 2022 included $1.5 million of severance expense related to certain staff reorganizations.


September 2023 Quarter Compared to Prior Year Quarter

 

 

Three Months Ended

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

September 30,

 

 

Increase/

 

(Dollars in millions, except per share data)

 

2023

 

 

 

2022

 

 

(Decrease)

 

Net interest income

 

$

36.52

 

 

 

$

45.53

 

 

$

(9.01

)

 

 

(20

)%

Wealth management fee income

 

 

13.98

 

 

 

 

12.94

 

 

 

1.04

 

 

 

8

 

Capital markets activity

 

 

0.61

 

 

 

 

0.78

 

 

 

(0.17

)

 

 

(22

)

Other income (A)

 

 

4.76

 

 

 

 

2.66

 

 

 

2.10

 

 

 

79

 

Total other income

 

 

19.35

 

 

 

 

16.38

 

 

 

2.97

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

55.87

 

 

 

 

61.91

 

 

 

(6.04

)

 

 

(10

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

37.41

 

 

 

 

33.56

 

 

 

3.85

 

 

 

11

 

Pretax income before provision for credit losses

 

 

18.46

 

 

 

 

28.35

 

 

 

(9.89

)

 

 

(35

)

Provision for credit losses

 

 

5.86

 

 

 

 

0.60

 

 

 

5.26

 

 

 

877

 

Pretax income

 

 

12.60

 

 

 

 

27.75

 

 

 

(15.15

)

 

 

(55

)

Income tax expense

 

 

3.84

 

 

 

 

7.62

 

 

 

(3.78

)

 

 

(50

)

Net income

 

$

8.76

 

 

 

$

20.13

 

 

$

(11.37

)

 

 

(56

)%

Diluted EPS

 

$

0.49

 

 

 

$

1.09

 

 

$

(0.60

)

 

 

(55

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets annualized

 

 

0.54

%

 

 

 

1.30

%

 

 

(0.76

)

 

 

 

Return on average equity annualized

 

 

6.20

%

 

 

 

15.21

%

 

 

(9.01

)

 


(A)  Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000.  Other income for the September 2022 quarter included a fair value adjustment on a CRA equity security of negative $571,000. 


September 2023 Quarter Compared to Linked Quarter

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

June 30,

 

 

 

Increase/

 

(Dollars in millions, except per share data)

 

2023

 

 

2023

 

 

 

(Decrease)

 

Net interest income

 

$

36.52

 

 

$

38.92

 

 

 

$

(2.40

)

 

 

(6

)%

Wealth management fee income

 

 

13.98

 

 

 

14.25

 

 

 

 

(0.27

)

 

 

(2

)

Capital markets activity

 

 

0.61

 

 

 

0.87

 

 

 

 

(0.26

)

 

 

(30

)

Other income (A)

 

 

4.76

 

 

 

3.46

 

 

 

 

1.30

 

 

 

38

 

Total other income

 

 

19.35

 

 

 

18.58

 

 

 

 

0.77

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

55.87

 

 

 

57.50

 

 

 

 

(1.63

)

 

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (B)

 

 

37.41

 

 

 

37.69

 

 

 

 

(0.28

)

 

 

(1

)

Pretax income before provision for credit losses

 

 

18.46

 

 

 

19.81

 

 

 

 

(1.35

)

 

 

(7

)

Provision for credit losses

 

 

5.86

 

 

 

1.70

 

 

 

 

4.16

 

 

 

245

 

Pretax income

 

 

12.60

 

 

 

18.11

 

 

 

 

(5.51

)

 

 

(30

)

Income tax expense (C)

 

 

3.84

 

 

 

4.96

 

 

 

 

(1.12

)

 

 

(23

)

Net income

 

$

8.76

 

 

$

13.15

 

 

 

$

(4.39

)

 

 

(33

)%

Diluted EPS

 

$

0.49

 

 

$

0.73

 

 

 

$

(0.24

)

 

 

(33

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets annualized

 

 

0.54

%

 

 

0.82

%

 

 

 

(0.28

)

 

 

 

Return on average equity annualized

 

 

6.20

%

 

 

9.43

%

 

 

 

(3.23

)

 


(A) Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000.  Other income for the June 2023 quarter included a fair value adjustment on a CRA equity security of negative $209,000.

(B) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees.

(C) The three months ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.

 

SUPPLEMENTAL QUARTERLY DETAILS:

 

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division were $10.4 billion at September 30, 2023.  For the September 2023 quarter, the Wealth Management Team generated $14.0 million in fee income, compared to $14.3 million for the June 30, 2023 quarter and $12.9 million for the September 2022 quarter. The equity market declined slightly during Q3 2023, contributing to the decrease in AUM/AUA on a linked quarter basis.

 

John Babcock, President of the Bank's Wealth Management Division, noted, “In Q3 2023, total new accounts and client additions amounted to $160 million ($96 million managed). As we look ahead to the fourth quarter of 2023 and beyond, our new business pipeline is healthy and we remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes us in our market and continues to drive our growth and success.” 

Loans / Commercial Banking

Total loans grew $193 million or 4% (5% annualized) to $5.5 billion at September 30, 2023 when compared to $5.3 billion at December 31, 2022.

Total C&I loans and leases at September 30, 2023 were $2.3 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “Given economic uncertainty and rising interest rates, we believe loan demand will be muted somewhat compared to recent prior years.  Given the current environment, we believe we will achieve modest loan growth in 2023.”

Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We believe these business lines fit perfectly with our private banking business model.”

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

The Company’s NII of $36.5 million and NIM of 2.28% for Q3 2023 decreased $2.4 million and 21 basis points from NII of $38.9 million and NIM of 2.49% for the linked quarter (Q2 2023) and decreased $9.0 million and 70 basis points from NII of $45.5 million and NIM of 2.98% for the prior year (Q3 2022).  When comparing Q3 2023 to the linked and prior year quarter, the Company has seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 44%.  The intense competition for deposit balances from other banks and alternative investment opportunities due to the significant rise in interest rates at such a rapid pace were the primary drivers for increased deposit costs.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $54.2 million to $5.3 billion at September 30, 2023 from December 31, 2022.  Deposit inflows were benefitted by net growth in brokered/listing service certificates of deposit of $77.2 million partially offset by a decline in brokered interest-bearing deposits of $50.0 million. The Company saw limited net deposit outflows in 2023 mostly including larger deposit relationships using their funds for normal business purposes such as deployment of excess liquidity into higher yielding treasuries or the equity market, tax payments, or asset acquisitions or investment into their business.  The Company has also seen clients transition money from noninterest-bearing deposit accounts to higher yielding deposit accounts as a result of increases in the Fed Funds rate.

At September 30, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $756 million, or 12% of assets.

The Company maintains additional liquidity resources of approximately $2.8 billion through secured available funding with the Federal Home Loan Bank and 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. In addition, the Company also has access to the Bank Term Funding Program offered by the Federal Reserve Bank if needed.

The Company's total on and off-balance sheet liquidity totaled $3.6 billion, which is 294% of the total uninsured/uncollateralized deposits on the Company's balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $613,000 for the September 2023 quarter compared to $868,000 for the June 2023 quarter and $784,000 for the September 2022 quarter. The gain on sale of SBA loans was lower in Q3 2023 due to less activity in the higher interest rate environment and tighter margins.


Three Months Ended

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

(Dollars in thousands, except per share data)

 

2023

 

 

2023

 

 

2022

 

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

 

$

37

 

 

$

15

 

 

$

60

 

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

 

 

 

 

 

 

 

 

 

Gain on sale of SBA loans

 

 

491

 

 

 

838

 

 

 

622

 

Corporate advisory fee income

 

 

85

 

 

 

15

 

 

 

102

 

Total capital markets activity

 

$

613

 

 

$

868

 

 

$

784

 



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

Other noninterest income was $4.8 million for Q3 2023 compared to $3.5 million for Q2 2023 and $2.7 million for Q3 2022. Q3 2023 included $2.3 million of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases while Q2 2023 included $221,000 and Q3 2022 included $547,000 respectively. Additionally, Q3 2023 included $794,000 of unused line fees compared to $809,000 for Q2 2023 and $818,000 for Q3 2022.

Operating Expenses

The Company’s total operating expenses were $37.4 million for the third quarter of 2023, compared to $37.7 million for the June 2023 quarter and $33.6 million for the September 2022 quarter. The September 2023 quarter included expenses associated with the previously announced New York City expansion. The June 2023 quarter included one-time charge of $1.7 million associated with the recent retirement of certain employees.

Mr. Kennedy noted, “The Company is committed to be in a position of strength when industry headwinds recede as evidenced by the recent announcement of its decision to expand into New York City and the opening of a retail bank location in mid-town Manhattan. We will manage expenses closely and prudently, but will continue to invest to retain talent. We also plan to grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs if opportunities arise, and invest in digital and other software tools to further enhance the client experience.”

Income Taxes

 

The effective tax rate for the three months ended September 30, 2023 was 30.5%, as compared to 27.4% for the June 2023 quarter and 27.5% for the quarter ended September 30, 2022.  The higher tax rate for the September 30 quarter was primarily due to the impact of certain non-deductible expenses related to compensation and benefits.

 

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include modified loans that are performing in accordance with their terms) were $70.8 million, or 1.09% of total assets at September 30, 2023, as compared to $34.5 million, or 0.53% of total assets at June 30, 2023. The increase during the third quarter was primarily due to two freight related clients totaling $33.4 million that were transferred to nonaccrual status during the quarter. Management is working diligently to resolve both matters as quickly and efficiently as possible. Loans past due 30 to 89 days and still accruing were $9.8 million, or 0.18% of total loans at September 30, 2023 compared to $14.5 million, or 0.27% of total loans at June 30, 2023.

Criticized and classified loans totaled $148.2 million at September 30, 2023, reflecting an increase from June 30, 2023 and September 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.  

For the quarter ended September 30, 2023, the Company’s provision for credit losses was $5.9 million compared to $1.7 million for the June 2023 quarter and $665,000 for the September 2022 quarter. The increased provision for credit losses in the September 2023 quarter was primarily driven by specific provisions related to the two freight credits that were transferred to nonaccrual status during the quarter as described above. 

At September 30, 2023, the allowance for credit losses was $68.6 million (1.25% of total loans), compared to $62.7 million (1.15% of loans) at June 30, 2023, and $59.7 million (1.15% of loans) at September 30, 2022.

Capital

The Company’s capital position declined by $6.1 million during the September 2023 quarter as the Company repurchased 100,000 shares of common stock through the Company’s stock repurchase program at a cost of $2.8 million and paid a quarterly cash dividend of $893,000. Additionally, during the third quarter of 2023, the Company recorded a net loss in accumulated other comprehensive income of $13.7 million, net of tax. This amount was driven by a $15.0 million decline in the value of the available for sale securities portfolio partially offset by a $1.3 million gain on cash flow hedges. The total accumulated other comprehensive loss grew to $81.7 million as of September 30, 2023, ($91.0 million loss related to the available for sale securities portfolio partially offset by a $9.3 million gain on the cash flow hedges). These were partially offset by net income of $8.8 million.

Tangible book value per share declined during Q3 2023 to $28.77 at September 30, 2023 from $28.98 at June 30, 2023. Tangible book value per share is a non-GAAP financial measure.  See the reconciliation tables included in this release. The Company’s and Bank’s regulatory capital ratios as of September 30, 2023 remain strong, and generally reflect increases from September 30, 2022 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On September 27, 2023, the Company declared a cash dividend of $0.05 per share payable on November 27, 2023 to shareholders of record on November 9, 2023.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $10.4 billion as of September 30, 2023.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its 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 2023 and beyond;

·       our ability to successfully integrate wealth management firm acquisitions;

·       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, including potential recessionary conditions;

·       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;

·       the continuing impact of the COVID-19 pandemic on our business and results of operation;

·       higher than expected increases in our allowance for credit losses;

·       higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans;

·       inflation and changes in interest rates, which may adversely impact our 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;

·       a potential government shutdown;

·       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, including our expansion into New York City;

·       a reduction in our lower-cost funding sources;

·       changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;

·       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 governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;

·       changes in accounting policies and practices; and/or

·       other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2022.  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:

Frank A. Cavallaro, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-306-8933

 (Tables to follow)


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

 

 

For the Three Months Ended

 

 

 

Sept 30,

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

78,489

 

 

$

74,852

 

 

$

70,491

 

 

$

64,202

 

 

$

55,013

 

Interest expense

 

 

41,974

 

 

 

35,931

 

 

 

26,513

 

 

 

16,162

 

 

 

9,488

 

Net interest income

 

 

36,515

 

 

 

38,921

 

 

 

43,978

 

 

 

48,040

 

 

 

45,525

 

Wealth management fee income

 

 

13,975

 

 

 

14,252

 

 

 

13,762

 

 

 

12,983

 

 

 

12,943

 

Service charges and fees

 

 

1,319

 

 

 

1,320

 

 

 

1,258

 

 

 

1,150

 

 

 

1,060

 

Bank owned life insurance

 

 

310

 

 

 

305

 

 

 

297

 

 

 

321

 

 

 

299

 

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

 

 

37

 

 

 

15

 

 

 

21

 

 

 

25

 

 

 

60

 

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

 

 

 

 

 

 

 

 

 

 

 

293

 

 

 

 

Gain on sale of SBA loans

 

 

491

 

 

 

838

 

 

 

865

 

 

 

624

 

 

 

622

 

Corporate advisory fee income

 

 

85

 

 

 

15

 

 

 

80

 

 

 

8

 

 

 

102

 

Other income (A)

 

 

3,541

 

 

 

2,039

 

 

 

1,567

 

 

 

1,380

 

 

 

1,868

 

Fair value adjustment for CRA equity security

 

 

(404

)

 

 

(209

)

 

 

209

 

 

 

28

 

 

 

(571

)

Total other income

 

 

19,354

 

 

 

18,575

 

 

 

18,059

 

 

 

16,812

 

 

 

16,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

 

55,869

 

 

 

57,496

 

 

 

62,037

 

 

 

64,852

 

 

 

61,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits (B)

 

 

25,264

 

 

 

26,354

 

 

 

24,586

 

 

 

22,489

 

 

 

22,656

 

Premises and equipment

 

 

5,214

 

 

 

4,729

 

 

 

4,374

 

 

 

4,898

 

 

 

4,534

 

FDIC insurance expense

 

 

741

 

 

 

729

 

 

 

711

 

 

 

455

 

 

 

510

 

Other expenses

 

 

6,194

 

 

 

5,880

 

 

 

5,903

 

 

 

5,570

 

 

 

5,860

 

Total operating expenses

 

 

37,413

 

 

 

37,692

 

 

 

35,574

 

 

 

33,412

 

 

 

33,560

 

Pretax income before provision for credit losses

 

 

18,456

 

 

 

19,804

 

 

 

26,463

 

 

 

31,440

 

 

 

28,348

 

Provision for credit losses

 

 

5,856

 

 

 

1,696

 

 

 

1,513

 

 

 

1,930

 

 

 

599

 

Income before income taxes

 

 

12,600

 

 

 

18,108

 

 

 

24,950

 

 

 

29,510

 

 

 

27,749

 

Income tax expense (C)

 

 

3,845

 

 

 

4,963

 

 

 

6,595

 

 

 

8,931

 

 

 

7,623

 

Net income

 

$

8,755

 

 

$

13,145

 

 

$

18,355

 

 

$

20,579

 

 

$

20,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (basic)

 

$

0.49

 

 

$

0.73

 

 

$

1.03

 

 

$

1.15

 

 

$

1.11

 

Earnings per share (diluted)

 

 

0.49

 

 

 

0.73

 

 

 

1.01

 

 

 

1.12

 

 

 

1.09

 

Weighted average number of common
shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,856,961

 

 

 

17,930,611

 

 

 

17,841,203

 

 

 

17,915,058

 

 

 

18,072,385

 

Diluted

 

 

18,010,127

 

 

 

18,078,848

 

 

 

18,263,310

 

 

 

18,382,193

 

 

 

18,420,661

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets annualized (ROAA)

 

 

0.54

%

 

 

0.82

%

 

 

1.16

%

 

 

1.33

%

 

 

1.30

%

Return on average equity annualized (ROAE)

 

 

6.20

%

 

 

9.43

%

 

 

13.50

%

 

 

15.73

%

 

 

15.21

%

Return on average tangible common equity annualized (ROATCE) (D)

 

 

6.75

%

 

 

10.30

%

 

 

14.78

%

 

 

17.30

%

 

 

16.73

%

Net interest margin (tax-equivalent basis)

 

 

2.28

%

 

 

2.49

%

 

 

2.88

%

 

 

3.12

%

 

 

2.98

%

GAAP efficiency ratio (E)

 

 

66.97

%

 

 

65.56

%

 

 

57.34

%

 

 

51.52

%

 

 

54.21

%

Operating expenses / average assets annualized

 

 

2.31

%

 

 

2.36

%

 

 

2.26

%

 

 

2.15

%

 

 

2.17

%


(A) The September 2023 quarter included $2.3 million of fee income from equipment finance activity.

(B) The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees.

(C) The three months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) related to a recent New York City nexus determination change which included $563,000 from prior quarters.

(D) 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.

(E) 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 Nine Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

 

2023

 

 

2022

 

 

$

 

 

%

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

223,832

 

 

$

147,673

 

 

$

76,159

 

 

 

52

%

Interest expense

 

 

104,418

 

 

 

19,633

 

 

 

84,785

 

 

 

432

%

Net interest income

 

 

119,414

 

 

 

128,040

 

 

 

(8,626

)

 

 

-7

%

Wealth management fee income

 

 

41,989

 

 

 

41,668

 

 

 

321

 

 

 

1

%

Service charges and fees

 

 

3,897

 

 

 

3,075

 

 

 

822

 

 

 

27

%

Bank owned life insurance

 

 

912

 

 

 

922

 

 

 

(10

)

 

 

-1

%

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

 

 

73

 

 

 

458

 

 

 

(385

)

 

 

-84

%

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

 

 

 

 

 

 

 

 

 

 

N/A

 

Gain on sale of SBA loans

 

 

2,194

 

 

 

6,141

 

 

 

(3,947

)

 

 

-64

%

Corporate advisory fee income

 

 

180

 

 

 

1,696

 

 

 

(1,516

)

 

 

-89

%

Other income (A)

 

 

7,147

 

 

 

3,982

 

 

 

3,165

 

 

 

79

%

Loss on securities sale, net (B)

 

 

 

 

 

(6,609

)

 

 

6,609

 

 

 

-100

%

Fair value adjustment for CRA equity security

 

 

(404

)

 

 

(1,728

)

 

 

1,324

 

 

 

-77

%

Total other income

 

 

55,988

 

 

 

49,605

 

 

 

6,383

 

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

 

175,402

 

 

 

177,645

 

 

 

(2,243

)

 

 

-1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits (C)

 

 

76,204

 

 

 

66,987

 

 

 

9,217

 

 

 

14

%

Premises and equipment

 

 

14,317

 

 

 

13,821

 

 

 

496

 

 

 

4

%

FDIC insurance expense

 

 

2,181

 

 

 

1,484

 

 

 

697

 

 

 

47

%

Swap valuation allowance

 

 

 

 

 

673

 

 

 

(673

)

 

 

-100

%

Other expenses

 

 

17,977

 

 

 

17,423

 

 

 

554

 

 

 

3

%

Total operating expenses

 

 

110,679

 

 

 

100,388

 

 

 

10,291

 

 

 

10

%

Pretax income before provision for credit losses

 

 

64,723

 

 

 

77,257

 

 

 

(12,534

)

 

 

-16

%

Provision for credit losses

 

 

9,065

 

 

 

4,423

 

 

 

4,642

 

 

 

105

%

Income before income taxes

 

 

55,658

 

 

 

72,834

 

 

 

(17,176

)

 

 

-24

%

Income tax expense

 

 

15,403

 

 

 

19,167

 

 

 

(3,764

)

 

 

-20

%

Net income

 

$

40,255

 

 

$

53,667

 

 

$

(13,412

)

 

 

-25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (basic)

 

$

2.25

 

 

$

2.94

 

 

$

(0.69

)

 

 

-23

%

Earnings per share (diluted)

 

 

2.23

 

 

 

2.88

 

 

 

(0.65

)

 

 

-23

%

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,876,316

 

 

 

18,244,691

 

 

 

(368,375

)

 

 

-2

%

Diluted

 

 

18,091,524

 

 

 

18,652,042

 

 

 

(560,518

)

 

 

-3

%

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROAA)

 

 

0.84

%

 

 

1.16

%

 

 

(0.32

)%

 

 

-28

%

Return on average equity (ROAE)

 

 

9.66

%

 

 

13.46

%

 

 

(3.80

)%

 

 

-28

%

Return on average tangible common equity (ROATCE) (D)

 

 

10.55

%

 

 

14.81

%

 

 

(4.26

)%

 

 

-29

%

Net interest margin (tax-equivalent basis)

 

 

2.54

%

 

 

2.83

%

 

 

(0.29

)%

 

 

-10

%

GAAP efficiency ratio (E)

 

 

63.10

%

 

 

56.51

%

 

 

6.59

%

 

 

12

%

Operating expenses / average assets

 

 

2.31

%

 

 

2.17

%

 

 

0.14

%

 

 

6

%


(A) The nine months ended September 2023 included $2.7 million of fee income from equipment finance activity.

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

(C) The nine months ended September 30, 2023 included $2.0 million of expense associated with the recent retirement of certain employees. The nine months ended September 30, 2022 quarter included $1.5 million of severance expense related to corporate restructuring.

(D) 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.

(E) 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

 

 

 

Sept 30,

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

7,400

 

 

$

4,859

 

 

$

6,514

 

 

$

5,937

 

 

$

5,066

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

 

 

180,469

 

 

 

166,769

 

 

 

244,779

 

 

 

184,138

 

 

 

103,214

 

Total cash and cash equivalents

 

 

187,869

 

 

 

171,628

 

 

 

251,293

 

 

 

190,075

 

 

 

108,280

 

Securities available for sale

 

 

521,005

 

 

 

540,519

 

 

 

556,266

 

 

 

554,648

 

 

 

497,880

 

Securities held to maturity

 

 

108,940

 

 

 

110,438

 

 

 

111,609

 

 

 

102,291

 

 

 

103,551

 

CRA equity security, at fair value

 

 

12,581

 

 

 

12,985

 

 

 

13,194

 

 

 

12,985

 

 

 

12,957

 

FHLB and FRB stock, at cost (A)

 

 

34,158

 

 

 

35,402

 

 

 

30,338

 

 

 

30,672

 

 

 

14,986

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

585,295

 

 

 

575,238

 

 

 

544,655

 

 

 

525,756

 

 

 

519,088

 

Multifamily mortgage

 

 

1,871,853

 

 

 

1,884,369

 

 

 

1,871,387

 

 

 

1,863,915

 

 

 

1,856,675

 

Commercial mortgage

 

 

622,469

 

 

 

624,710

 

 

 

613,911

 

 

 

624,625

 

 

 

638,903

 

Commercial and industrial loans

 

 

2,321,917

 

 

 

2,278,133

 

 

 

2,266,837

 

 

 

2,213,762

 

 

 

2,099,917

 

Consumer loans

 

 

57,227

 

 

 

52,098

 

 

 

49,002

 

 

 

38,014

 

 

 

37,412

 

Home equity lines of credit

 

 

34,411

 

 

 

34,397

 

 

 

33,294

 

 

 

34,496

 

 

 

36,375

 

Other loans

 

 

265

 

 

 

269

 

 

 

443

 

 

 

304

 

 

 

259

 

Total loans

 

 

5,493,437

 

 

 

5,449,214

 

 

 

5,379,529

 

 

 

5,300,872

 

 

 

5,188,629

 

Less: Allowance for credit losses

 

 

68,592

 

 

 

62,704

 

 

 

62,250

 

 

 

60,829

 

 

 

59,683

 

Net loans

 

 

5,424,845

 

 

 

5,386,510

 

 

 

5,317,279

 

 

 

5,240,043

 

 

 

5,128,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

23,969

 

 

 

23,814

 

 

 

23,782

 

 

 

23,831

 

 

 

23,781

 

Other real estate owned

 

 

 

 

 

 

 

 

116

 

 

 

116

 

 

 

116

 

Accrued interest receivable

 

 

22,889

 

 

 

20,865

 

 

 

19,143

 

 

 

25,157

 

 

 

17,816

 

Bank owned life insurance

 

 

47,509

 

 

 

47,382

 

 

 

47,261

 

 

 

47,147

 

 

 

47,072

 

Goodwill and other intangible assets

 

 

46,286

 

 

 

46,624

 

 

 

46,979

 

 

 

47,333

 

 

 

47,698

 

Finance lease right-of-use assets

 

 

2,274

 

 

 

2,461

 

 

 

2,648

 

 

 

2,835

 

 

 

3,021

 

Operating lease right-of-use assets

 

 

12,800

 

 

 

13,500

 

 

 

12,262

 

 

 

12,873

 

 

 

13,404

 

Other assets

 

 

76,456

 

 

 

67,572

 

 

 

47,848

 

 

 

63,587

 

 

 

67,753

 

TOTAL ASSETS

 

$

6,521,581

 

 

$

6,479,700

 

 

$

6,480,018

 

 

$

6,353,593

 

 

$

6,087,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

947,405

 

 

$

1,024,105

 

 

$

1,096,549

 

 

$

1,246,066

 

 

$

1,317,954

 

Interest-bearing demand deposits

 

 

2,871,359

 

 

 

2,816,913

 

 

 

2,797,493

 

 

 

2,143,611

 

 

 

2,149,629

 

Savings

 

 

117,905

 

 

 

120,082

 

 

 

132,523

 

 

 

157,338

 

 

 

166,821

 

Money market accounts

 

 

761,833

 

 

 

763,026

 

 

 

873,329

 

 

 

1,228,234

 

 

 

1,178,112

 

Certificates of deposit – Retail

 

 

422,291

 

 

 

384,106

 

 

 

357,131

 

 

 

318,573

 

 

 

345,047

 

Certificates of deposit – Listing Service

 

 

9,103

 

 

 

10,822

 

 

 

15,922

 

 

 

25,358

 

 

 

30,647

 

Subtotal “customer” deposits

 

 

5,129,896

 

 

 

5,119,054

 

 

 

5,272,947

 

 

 

5,119,180

 

 

 

5,188,210

 

IB Demand – Brokered

 

 

10,000

 

 

 

10,000

 

 

 

10,000

 

 

 

60,000

 

 

 

85,000

 

Certificates of deposit – Brokered

 

 

119,463

 

 

 

69,443

 

 

 

25,895

 

 

 

25,984

 

 

 

25,974

 

Total deposits

 

 

5,259,359

 

 

 

5,198,497

 

 

 

5,308,842

 

 

 

5,205,164

 

 

 

5,299,184

 

Short-term borrowings

 

 

470,576

 

 

 

485,360

 

 

 

378,800

 

 

 

379,530

 

 

 

32,369

 

Finance lease liability

 

 

3,752

 

 

 

4,071

 

 

 

4,385

 

 

 

4,696

 

 

 

5,003

 

Operating lease liability

 

 

13,595

 

 

 

14,308

 

 

 

13,082

 

 

 

13,704

 

 

 

14,101

 

Subordinated debt, net

 

 

133,203

 

 

 

133,131

 

 

 

133,059

 

 

 

132,987

 

 

 

132,916

 

Due to brokers

 

 

 

 

 

 

 

 

8,308

 

 

 

 

 

 

 

Other liabilities

 

 

82,140

 

 

 

79,264

 

 

 

78,584

 

 

 

84,532

 

 

 

88,174

 

TOTAL LIABILITIES

 

 

5,962,625

 

 

 

5,914,631

 

 

 

5,925,060

 

 

 

5,820,613

 

 

 

5,571,747

 

Shareholders’ equity

 

 

558,956

 

 

 

565,069

 

 

 

554,958

 

 

 

532,980

 

 

 

515,514

 

TOTAL LIABILITIES AND

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

$

6,521,581

 

 

$

6,479,700

 

 

$

6,480,018

 

 

$

6,353,593

 

 

$

6,087,261

 

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

 

$

10.4

 

 

$

10.7

 

 

$

10.4

 

 

$

9.9

 

 

$

9.3

 


(A) FHLB means "Federal Home Loan Bank" and FRB means "Federal Reserve Bank."


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

 

 

As of

 

 

 

Sept 30,

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due over 90 days and still accruing

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Nonaccrual loans (A)

 

 

70,809

 

 

 

34,505

 

 

 

28,659

 

 

 

18,974

 

 

 

15,724

 

Other real estate owned

 

 

 

 

 

 

 

 

116

 

 

 

116

 

 

 

116

 

Total nonperforming assets

 

$

70,809

 

 

$

34,505

 

 

$

28,775

 

 

$

19,090

 

 

$

15,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

1.29

%

 

 

0.63

%

 

 

0.53

%

 

 

0.36

%

 

 

0.30

%

Nonperforming assets to total assets

 

 

1.09

%

 

 

0.53

%

 

 

0.44

%

 

 

0.30

%

 

 

0.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing modifications (B)(C)

 

$

248

 

 

$

248

 

 

$

248

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing TDRs (D)(E)

 

$

 

 

$

 

 

$

 

 

$

965

 

 

$

2,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 30 through 89 days and still accruing

 

$

9,780

 

 

$

14,524

 

 

$

2,762

 

 

$

7,592

 

 

$

7,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans subject to special mention

 

$

53,328

 

 

$

53,606

 

 

$

46,566

 

 

$

64,842

 

 

$

82,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans

 

$

94,866

 

 

$

58,655

 

 

$

58,010

 

 

$

42,985

 

 

$

27,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans

 

$

70,184

 

 

$

33,867

 

 

$

27,736

 

 

$

16,732

 

 

$

13,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses ("ACL"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of quarter

 

$

62,704

 

 

$

62,250

 

 

$

60,829

 

 

$

59,683

 

 

$

59,022

 

Provision for credit losses (F)

 

 

5,944

 

 

 

1,666

 

 

 

1,464

 

 

 

2,103

 

 

 

665

 

(Charge-offs)/recoveries, net (G)

 

 

(56

)

 

 

(1,212

)

 

 

(43

)

 

 

(957

)

 

 

(4

)

End of quarter

 

$

68,592

 

 

$

62,704

 

 

$

62,250

 

 

$

60,829

 

 

$

59,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL to nonperforming loans

 

 

96.87

%

 

 

181.72

%

 

 

217.21

%

 

 

320.59

%

 

 

379.57

%

ACL to total loans

 

 

1.25

%

 

 

1.15

%

 

 

1.16

%

 

 

1.15

%

 

 

1.15

%

Collectively evaluated ACL to total loans (H)

 

 

1.10

%

 

 

1.11

%

 

 

1.11

%

 

 

1.12

%

 

 

1.10

%



(A) Excludes $1.6 million in held for sale at September 30, 2023. Includes two freight credits totaling $33.4 million at September 30, 2023.

(B) Amounts reflect modifications that are paying according to modified terms.

(C) Excludes modifications included in nonaccrual loans of $3.1 million at September 30, 2023 and $777,000 at June 30, 2023.

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

(E) Excludes TDRs included in nonaccrual loans in the following amounts:  $13.4 million at December 31, 2022 and $12.9 million at September 30, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.

(F) Provision to roll forward the ACL excludes a credit of $88,000 at September 30, 2023, a provision of $30,000 at June 30, 2023, a provision of $49,000 at March 31, 2023, a credit of $173,000 at December 31, 2022 and a credit of $66,000 at September 30, 2022 related to off-balance sheet commitments.

(G) Net charge-offs for the quarters ended June 30, 2023 and December 31, 2022 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.

(H) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.


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

 

 

As of

 

 

 

September 30,

 

 

December 31,

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

2022

 

Capital Adequacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to total assets (A)

 

 

 

 

8.57

%

 

 

 

 

8.39

%

 

 

 

 

8.47

%

Tangible equity to tangible assets (B)

 

 

 

 

7.92

%

 

 

 

 

7.70

%

 

 

 

 

7.75

%

Book value per share (C)

 

 

 

$

31.37

 

 

 

 

$

29.92

 

 

 

 

$

28.77

 

Tangible book value per share (D)

 

 

 

$

28.77

 

 

 

 

$

27.26

 

 

 

 

$

26.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets excluding other comprehensive loss*

 

 

 

 

9.06

%

 

 

 

 

8.77

%

 

 

 

 

8.88

%

Tangible book value per share excluding other comprehensive loss*

 

 

 

$

33.36

 

 

 

 

$

31.43

 

 

 

 

$

30.29

 


*Excludes other comprehensive loss of $81.7 million for the quarter ended September 30, 2023, $74.2 million for the quarter ended December 31, 2022, and $75.0 million for the quarter ended September 30, 2022.  See Non-GAAP financial measures reconciliation included in these tables.

 

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter 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 quarter end is calculated by dividing tangible equity by tangible assets at quarter end.  See Non-GAAP financial measures reconciliation included in these tables.

(C) Book value per common share is calculated by dividing shareholders’ equity by quarter 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 quarter end common shares outstanding.  See Non-GAAP financial measures reconciliation tables.


As of

 

 

September 30,

 

December 31,

 

September 30,

 

 

2023

 

 

2022

 

 

2022

 

Regulatory Capital – Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier I leverage

 

$

592,061

 

 

9.05

%

 

$

557,627

 

 

8.90

%

 

$

540,464

 

 

8.70

%

Tier I capital to risk-weighted assets

 

 

592,061

 

 

11.13

 

 

 

557,627

 

 

11.02

 

 

 

540,464

 

 

10.86

 

Common equity tier I capital ratio
to risk-weighted assets

 

 

592,043

 

 

11.13

 

 

 

557,609

 

 

11.02

 

 

 

540,440

 

 

10.86

 

Tier I & II capital to risk-weighted assets

 

 

784,777

 

 

14.76

 

 

 

745,197

 

 

14.73

 

 

 

733,988

 

 

14.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital – Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier I leverage (E)

 

$

702,517

 

 

10.75

%

 

$

680,137

 

 

10.85

%

 

$

670,717

 

 

10.79

%

Tier I capital to risk-weighted assets (F)

 

 

702,517

 

 

13.22

 

 

 

680,137

 

 

13.45

 

 

 

670,717

 

 

13.48

 

Common equity tier I capital ratio
to risk-weighted assets (G)

 

 

702,499

 

 

13.22

 

 

 

680,119

 

 

13.45

 

 

 

670,693

 

 

13.48

 

Tier I & II capital to risk-weighted assets (H)

 

 

768,979

 

 

14.47

 

 

 

741,719

 

 

14.67

 

 

 

731,325

 

 

14.69

 


(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($261 million)

(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($452 million)

(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($372 million)

(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($558 million)


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

 

 

For the Quarters Ended

 

 

 

Sept 30,

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

Residential loans retained

 

$

21,310

 

 

$

39,358

 

 

$

30,303

 

 

$

28,051

 

 

$

17,885

 

Residential loans sold

 

 

2,503

 

 

 

1,072

 

 

 

1,477

 

 

 

1,840

 

 

 

4,898

 

Total residential loans

 

 

23,813

 

 

 

40,430

 

 

 

31,780

 

 

 

29,891

 

 

 

22,783

 

Commercial real estate

 

 

3,900

 

 

 

43,235

 

 

 

18,990

 

 

 

6,747

 

 

 

7,320

 

Multifamily

 

 

3,000

 

 

 

26,662

 

 

 

30,150

 

 

 

37,500

 

 

 

4,000

 

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

 

 

176,845

 

 

 

158,972

 

 

 

207,814

 

 

 

238,568

 

 

 

251,249

 

SBA

 

 

300

 

 

 

13,713

 

 

 

9,950

 

 

 

17,431

 

 

 

5,682

 

Wealth lines of credit (A)

 

 

6,875

 

 

 

3,950

 

 

 

23,225

 

 

 

7,700

 

 

 

4,450

 

Total commercial loans

 

 

190,920

 

 

 

246,532

 

 

 

290,129

 

 

 

307,946

 

 

 

272,701

 

Installment loans

 

 

6,999

 

 

 

4,587

 

 

 

12,086

 

 

 

1,845

 

 

 

1,253

 

Home equity lines of credit (A)

 

 

6,275

 

 

 

6,107

 

 

 

2,921

 

 

 

3,815

 

 

 

5,614

 

Total loans closed

 

$

228,007

 

 

$

297,656

 

 

$

336,916

 

 

$

343,497

 

 

$

302,351

 


 

 

For the Nine Months Ended

 

 

 

Sept 30,

 

 

Sept 30,

 

 

 

2023

 

 

2022

 

Residential loans retained

 

$

90,971

 

 

$

94,604

 

Residential loans sold

 

 

5,052

 

 

 

30,453

 

Total residential loans

 

 

96,023

 

 

 

125,057

 

Commercial real estate

 

 

66,125

 

 

 

46,855

 

Multifamily

 

 

59,812

 

 

 

344,214

 

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

 

 

543,631

 

 

 

727,079

 

SBA

 

 

23,963

 

 

 

42,309

 

Wealth lines of credit (A)

 

 

34,050

 

 

 

26,425

 

Total commercial loans

 

 

727,581

 

 

 

1,186,882

 

Installment loans

 

 

23,672

 

 

 

1,484

 

Home equity lines of credit (A)

 

 

15,303

 

 

 

10,852

 

Total loans closed

 

$

862,579

 

 

$

1,324,275

 


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

(B) Includes equipment finance.


PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
(Tax-Equivalent Basis, Dollars in Thousands)
(Unaudited)

 

 

For the Three Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

Average

 

 

Income/

 

 

 

 

 

Average

 

 

Income/

 

 

 

 

 

 

Balance

 

 

Expense

 

 

Yield

 

 

Balance

 

 

Expense

 

 

Yield

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable (A)

 

$

806,861

 

 

$

5,170

 

 

 

2.56

%

 

$

754,180

 

 

$

2,853

 

 

 

1.51

%

Tax-exempt (A) (B)

 

 

1,198

 

 

 

11

 

 

 

3.67

 

 

 

3,226

 

 

 

30

 

 

 

3.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (B) (C):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages

 

 

580,951

 

 

 

5,208

 

 

 

3.59

 

 

 

513,864

 

 

 

3,861

 

 

 

3.01

 

Commercial mortgages

 

 

2,502,351

 

 

 

27,746

 

 

 

4.44

 

 

 

2,510,616

 

 

 

23,121

 

 

 

3.68

 

Commercial

 

 

2,298,723

 

 

 

37,357

 

 

 

6.50

 

 

 

2,016,590

 

 

 

23,362

 

 

 

4.63

 

Commercial construction

 

 

12,346

 

 

 

282

 

 

 

9.14

 

 

 

12,073

 

 

 

143

 

 

 

4.74

 

Installment

 

 

56,248

 

 

 

967

 

 

 

6.88

 

 

 

38,338

 

 

 

399

 

 

 

4.16

 

Home equity

 

 

34,250

 

 

 

680

 

 

 

7.94

 

 

 

36,706

 

 

 

451

 

 

 

4.91

 

Other

 

 

234

 

 

 

7

 

 

 

11.97

 

 

 

263

 

 

 

7

 

 

 

10.65

 

Total loans

 

 

5,485,103

 

 

 

72,247

 

 

 

5.27

 

 

 

5,128,450

 

 

 

51,344

 

 

 

4.00

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

 

 

136,315

 

 

 

1,463

 

 

 

4.29

 

 

 

232,158

 

 

 

1,162

 

 

 

2.00

 

Total interest-earning assets

 

 

6,429,477

 

 

 

78,891

 

 

 

4.91

%

 

 

6,118,014

 

 

 

55,389

 

 

 

3.62

%

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

6,954

 

 

 

 

 

 

 

 

 

8,296

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(63,625

)

 

 

 

 

 

 

 

 

(59,464

)

 

 

 

 

 

 

Premises and equipment

 

 

23,880

 

 

 

 

 

 

 

 

 

23,580

 

 

 

 

 

 

 

Other assets

 

 

85,582

 

 

 

 

 

 

 

 

 

97,583

 

 

 

 

 

 

 

Total noninterest-earning assets

 

 

52,791

 

 

 

 

 

 

 

 

 

69,995

 

 

 

 

 

 

 

Total assets

 

$

6,482,268

 

 

 

 

 

 

 

 

$

6,188,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

2,813,080

 

 

$

24,318

 

 

 

3.46

%

 

$

2,408,206

 

 

$

5,127

 

 

 

0.85

%

Money markets

 

 

771,781

 

 

 

4,458

 

 

 

2.31

 

 

 

1,237,975

 

 

 

1,557

 

 

 

0.50

 

Savings

 

 

118,718

 

 

 

75

 

 

 

0.25

 

 

 

168,281

 

 

 

5

 

 

 

0.01

 

Certificates of deposit – retail

 

 

415,665

 

 

 

3,459

 

 

 

3.33

 

 

 

391,340

 

 

 

791

 

 

 

0.81

 

Subtotal interest-bearing deposits

 

 

4,119,244

 

 

 

32,310

 

 

 

3.14

 

 

 

4,205,802

 

 

 

7,480

 

 

 

0.71

 

Interest-bearing demand – brokered

 

 

10,000

 

 

 

136

 

 

 

5.44

 

 

 

85,000

 

 

 

345

 

 

 

1.62

 

Certificates of deposit – brokered

 

 

102,777

 

 

 

1,183

 

 

 

4.60

 

 

 

25,968

 

 

 

210

 

 

 

3.23

 

Total interest-bearing deposits

 

 

4,232,021

 

 

 

33,629

 

 

 

3.18

 

 

 

4,316,770

 

 

 

8,035

 

 

 

0.74

 

Borrowings

 

 

470,616

 

 

 

6,569

 

 

 

5.58

 

 

 

3,810

 

 

 

29

 

 

 

3.04

 

Capital lease obligation

 

 

3,863

 

 

 

46

 

 

 

4.76

 

 

 

5,106

 

 

 

61

 

 

 

4.78

 

Subordinated debt

 

 

133,163

 

 

 

1,730

 

 

 

5.20

 

 

 

132,874

 

 

 

1,363

 

 

 

4.10

 

Total interest-bearing liabilities

 

 

4,839,663

 

 

 

41,974

 

 

 

3.47

%

 

 

4,458,560

 

 

 

9,488

 

 

 

0.85

%

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

990,854

 

 

 

 

 

 

 

 

 

1,116,843

 

 

 

 

 

 

 

Accrued expenses and other liabilities

 

 

86,598

 

 

 

 

 

 

 

 

 

83,446

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

1,077,452

 

 

 

 

 

 

 

 

 

1,200,289

 

 

 

 

 

 

 

Shareholders’ equity

 

 

565,153